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FM AMEMBASSY DHAKA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6717
INFO RUEHLM/AMEMBASSY COLOMBO 8429
RUEHIL/AMEMBASSY ISLAMABAD 2157
RUEHKT/AMEMBASSY KATHMANDU 9665
RUEHNE/AMEMBASSY NEW DELHI 0631
RUEHCI/AMCONSUL KOLKATA 1279

C O N F I D E N T I A L SECTION 01 OF 03 DHAKA 000502 
 
SIPDIS 
 
SIPDIS 
 
FOR S/CT COORDINATOR DAILEY FROM AMBASSADOR MORIARTY 
 
E.O. 12958: DECL: 05/04/2018 
TAGS: PTER PREL POGV ECON EAID KCOR BG
SUBJECT: BANGLADESH SCENESETTER FOR COUNTERTERRORISM 
COORDINATOR DAILEY 
 
Classified By: Ambassador James F. Moriarty, Reasons 1.4 (b) and (d) 
 
 
------------ 
SUMMARY 
------------ 
 
¶1.  (C) Your visit to Bangladesh comes at a critical juncture 
in the Caretaker Government's term.  The Government has begun 
a dialogue with the political parties to set the stage for 
parliamentary elections by the end of 2008, to 
institutionalize reforms initiated after the Government came 
to power in January 2007, and to ensure the Government's safe 
exit following elections.  Imprisoned former Prime Ministers 
Sheikh Hasina and Khaleda Zia maintain great influence in 
their respective parties, despite ongoing factional fighting 
between loyalists and so-called reformists.  There are 
increasing calls for Hasina and Zia to be released from 
prison.  Many are suspicious about the Army's political role 
and criticize its interference in the internal affairs of the 
parties.  Others fear a return to the status quo ante, and 
the violent "winner take all" political culture.  Underlying 
this fragile political and economic situation is the fact 
that Bangladesh remains a potential safe haven and transit 
hub for transnational terrorists because of its porous 
borders and limited law enforcement capacity.  Your visit 
will help reinforce bilateral cooperation in combating 
terrorism and extremism.  END SUMMARY. 
 
----------- 
DEMOCRACY 
----------- 
 
¶2.  (C)  The Caretaker Government (CTG) came to power in 
January 2007, the day after a State of Emergency was declared 
to quell political violence that was spinning out of control 
in the run-up to parliamentary elections. The CTG, made up of 
11 non-political advisers and strongly supported by the 
military, cancelled the elections and began cracking down on 
endemic political corruption and violence.  The crackdown 
initially won broad public support, but frustration with the 
Caretaker Government spilled onto the streets in late August; 
at that point a dispute at Dhaka University between students 
and soldiers became a rallying point for thousands of 
Bangladeshis disaffected by inflation, other economic woes 
and restrictions on political activity.  The Government 
stopped the protests by imposing a curfew backed up by a show 
of force from the army.  Government leaders acknowledged 
privately to us and others the need to stick to the elections 
roadmap, to open up political discourse, and to communicate 
more effectively with the public. 
 
¶3.  (C) Bangladeshis welcomed an easing of the ban on 
politics and the initiation of formal dialogue between the 
Election Commission and the parties on political reform in 
September 2007. The relaxation of the ban threw internal 
party disputes into sharp relief. The most visible struggle 
is within the Bangladesh Nationalist Party (BNP), which 
governed the country from 2001 to 2006 under former Prime 
Minister Khaleda Zia. The Awami League, the other major 
party, has also experienced internal strife between reformers 
and loyalists to former Prime Minister Sheikh Hasina, but has 
maintained a public show of unity. Army Chief General Moeen 
Uddin Ahmed repeatedly has stated that he has no political 
ambitions, even as he assumes by default a higher public 
profile than the Chief Adviser, who is the top official in 
the Caretaker Government.  General Moeen's term as Army Chief 
recently was extended by one year, to June 2009. 
 
¶4. (C) The Caretaker Government marked its first anniversary 
in January with a broad shake-up. Five widely respected 
Bangladesdhis took the place of advisers who resigned under 
pressure after a series of missteps contributed to the 
Government's eroding popularity. Five special assistants to 
the Chief Adviser also have been named to help the overworked 
Council manage its ambitious agenda.  These changes have 
helped make the Caretaker Government more effective, but the 
Government remains weak. 
 
¶5. (C) In the midst of the political jockeying, voter 
registration continues in preparation for national elections 
promised for no later than December 2008. While the mechanics 
of holding elections seem to be largely on track, there is 
still much debate about an "exit strategy" for the Caretaker 
Government and the military, who want to ensure a newly 
elected government maintains reforms and refrains from 
 
DHAKA 00000502  002 OF 003 
 
 
settling scores. They fear retribution from a resurgent 
political class that has been the main target of the 
anti-corruption campaign. 
 
¶6.  (C) The Government has begun a dialogue with the 
political parties, but the two sides have yet to resolve 
major stumbling blocks in the way of establishing a basic 
framework for elections and transfer of power.  Corruption 
cases against the two former prime ministers have languished 
in court for a multitude of reasons, including legal manuvers 
by the lawyers for the accused and apparent difficulties on 
the part of the Government in effectively marshaling evidence 
against the two ladies.  The result is that the Awami League, 
the BNP and at least one other political party have demanded 
the release of the imprisoned former Prime Ministers in the 
course of the political party dialogue with the Caretaker 
Government.  At the same time, there is much speculation 
about the role of the Bangladesh military in engineering the 
dialogue and its outcome. 
 
------------- 
DEVELOPMENT 
------------- 
 
¶7. (C) Bangladesh's largest rice crop of the year is in the 
early stages of harvest.  All signs point to a good crop, 
which will help augment the country's declining food 
stockpiles, drawn down radically in the wake of Cyclone Sidr 
and two floods in 2007.  However, inflation, particularly of 
food prices, remains dangerously high for Bangladesh's 
desperately poor population, 84 percent of which subsists on 
less than $2 a day.  Millions of Cyclone Sidr victims remain 
in need of food, shelter and livelihood support.  The 
Government of Bangladesh and international donors have not 
sustained the strong levels of assistance they provided 
victims in the cyclone's immediate aftermath.  The Government 
has criticized the international community for failing to 
follow through on promises to assist Bangladesh with 
reconstruction efforts. 
 
¶8.  (C) Energy development and high fuel prices also are 
major challenges for the Government of Bangladesh.  The 
Caretaker Government has continued the policies of previous 
governments by heavily subsidizing fuel and fertilizer 
prices.  While the Government recently raised the price of 
compressed natural gas (CNG), it will leave for its successor 
significant debts as a result of the subsidies.  Most experts 
agree the subsidies must be eased gradually or better 
targeted, though they recognize the likely political fallout 
of exacerbating inflation.  The Caretaker Government has 
taken small steps to address the nation's severe energy 
shortage, including by soliciting bids for offshore oil 
exploration, but Bangladesh's expanding energy needs continue 
to outstrip supply. 
 
¶9.  (C) Investors remain skittish, due to the Caretaker 
Government's anti-corruption campaign (which targeted 
entrepreneurs as well as politicians), the uncertainty 
surrounding the transition to a new government by the end of 
the year, and doubts about the Caretaker Government's 
capacity to push decisions through its cautious bureacracy. 
Public perceptions of the Caretaker Government are at an 
all-time low, particularly with regard to economics.  In a 
survey conducted in March by The Asia Foundation, 80 to 90 
percent of Bangladeshis surveyed said they were worse off 
economically under this government than under the previous 
one.  Economists estimate GDP growth in Bangladesh this 
fiscal year (July 2007-June 2008) will fall to 6.0 percent or 
below, from last year's growth of 6.5 percent. 
 
------------------------------- 
DENIAL OF SPACE TO TERRORISTS 
------------------------------- 
 
¶10.  (C) Although Bangladesh is a moderate Muslim-majority 
nation, its porous borders -- particularly its maritime 
borders -- make it a potential transit point and safe-haven 
for terrorists. The USG funds many programs in Bangladesh to 
counter terrorism, including a wide range of training under 
the Anti-Terrorist Assistance program coordinated by the 
State Department. USAID and Public Affairs Section programs 
also address root causes of extremism through outreach to 
leaders of influence, including religious figures, and to 
madrasas. Human rights concerns have prevented the USG from 
engaging the paramilitary Rapid Action Batallion (RAB), which 
is the lead counterterrorism force in Bangladesh. RAB's 
 
DHAKA 00000502  003 OF 003 
 
 
record has improved under the Caretaker Government; during 
the first two weeks of March the United Kingdom provided 
human rights training to build on that positive trend. 
 
¶11.  (C) Bangladesh continues to arrest alleged members of 
Jamaatul Mujahedin Bangladesh (JMB), the banned Islamic 
extremist group responsible for a wave of bombings and 
suicide attacks in late 2005, and to recover bomb-making 
materials and weapons from their hideouts. Those arrests, 
along with the execution in March 2007 of six senior JMB 
leaders, appear to have depleted the organization and left it 
rudderless. Earlier this month, the Secretary of State 
designated Harakat ul-Jihad-i-Islami/Bangladesh (HUJI-B) as a 
Foreign Terrorist Organization and as a Specially Designated 
Global Terrorist. The designation elicited minimal public 
response from the government and society at large. 
 
¶12.  (C) Bangladesh's legal framework to address terrorist 
finance remains weak.  It has neither an anti-terrorism law 
nor an anti-terrorism financing law.  We have concerns that a 
revised anti-money laundering law may not be fully compliant 
with international standards, and we are working with the 
Government to amend the legislation.  We continue to work 
with the Government to help develop a Financial Intelligence 
Unit in the central bank. 
 
-------------------- 
YOUR VISIT 
-------------------- 
 
¶13. (C) Your visit coincides with that of Assistant Secretary 
for South and Central Asian Affairs Richard Boucher.  You 
should emphasize the importance of continued bilateral 
cooperation in combating terrorism and extremism.  You also 
should underscore the importance of adherence to 
international standards of human rights and due process, 
including in the pursuit of terrorism suspects.  Strict 
adherence to human rights norms will remain a key component 
for future USG assistance, including potentially the RAB. 
You should voice USG support for a peaceful transition in 
Bangladesh by the end of 2008.  You can commend the Caretaker 
Government for its work in tackling Bangladesh's endemic 
corruption, which creates a fertile environment for 
terrorism, while noting the importance of due process in 
prosecuting those suspected of corruption. 
Moriarty