Textile workbench in crisis

The backbone of the Bengal economy: Textile workers processing raw synthetic fibers in Patiya Upazila, Chattogram, Bangladesh, September 6, 2026.

The Iran war is having a severe impact in Bangladesh: the week before last, the independent MP Rumeen Farhana, one of the opposition's most important spokesmen, called for a kind of general reckoning with the country's new government in parliament. Prime Minister Tarique Rahman has been in office for six months now after his party, the Bangladesh Nationalist Party (BNP), secured a resounding victory in elections in February. The previous record of the Islamic-conservative BNP, which has been trying to give itself a more modern and moderate image for some time, has been mixed, which is why Farhana's speech met with a lot of response.

Farhana particularly addressed the energy crisis, for which the government is of course not solely responsible. Since the war between the US and Iran broke out shortly after Rahman took office, fuel prices in Bangladesh have risen significantly, as in many countries in Asia. There were problems with the electricity supply and gas became a scarce commodity in many cases. The opposition sees this as an indication of failure given the BNP's full-blown promises during the election campaign. There was talk of ten million new jobs, criticized Farhana. Now, however, the Rahman team is responsible for the loss of 62,000 jobs: »More than 900 factories have closed. Will new jobs be created? For those who still have jobs, only God knows how long their jobs will be secure," The Daily Star quoted the MP as saying.

Rahman's government has hinted that Bangladesh could join the so-called Mecca Pact, a new military alliance between Saudi Arabia, Pakistan and Turkey.

The government, meanwhile, boasts of having connected 12,000 public institutions to high-speed broadband internet in its first 180 days - Rahman had made digitalization a key part of his vision of a modern Bangladesh. Aside from the fact that the number is difficult to verify, there are not many such success reports. The news that the Danish logistics group Maersk Line, one of the major players in the global shipping industry, has announced interest in investing in the shipyards in Bangladesh is therefore being celebrated. Even the Danish ambassador, according to the daily newspaper Business Standard, was present at the meeting between company representatives and Trade and Industry Minister Khandakar Abdul Muktadir the week before last. But those involved were not more specific than stating their intention to create new jobs.

The country relies as ever on the textile industry, the backbone of Bangladesh's export economy, which is, however, suffering greatly from the energy crisis. After a decline of 0.9 percent in July compared to the same month last year, the country's exports increased significantly in August, according to an export report from the Ministry of Economic Affairs, and at 4.43 billion US dollars were even a good 13 percent higher than the same month last year. However, there is great skepticism among experts as to whether this sudden increase will last, according to the daily newspaper Dhaka Tribune.

A loan of one billion US dollars from the Islamic Development Bank (IDB), the development bank of the Organization of Islamic Cooperation, is unlikely to change the dependence on the textile industry. The loan is intended to expand the output of a state-owned oil refinery by an additional 3 million tons of refined oil. Prime Minister Rahman used the meeting with bank representatives last week to outline his economic policy plans. They want to break away from the strong dependence on the textile sector and build new industries and double the gross domestic product by 2034. Rahman's government is actually making changes in foreign policy. At the end of June, the Prime Minister made a two-day state visit to China and, accompanied by a number of ministers and high-ranking advisors, met his counterpart Li Qiang and the dictatorial President Xi Jinping, who is also chairman of the Communist Party and military commander-in-chief; 13 declarations of intent for increased cooperation from media to water management were signed. The news last week that Bangladesh wanted to buy several Chinese Chengdu J-10 fighter jets should also be seen in this context. The government justified the purchase with their successful deployment in Pakistan against India's air force in May 2025, which was met with resentment in India.

Relations with Bangladesh's large western neighbor have deteriorated after the change of government in Dhaka. The main reason is one woman: Sheikh Hasina, the former authoritarian Prime Minister of Bangladesh who was overthrown at the beginning of August 2024 after weeks of student protests and who has been living in exile in India ever since. In mid-July she announced her intention to return home in December, even though she was threatened with immediate arrest and a death sentence. She is accused, among other things, of ordering the use of deadly live ammunition against demonstrators. In mid-July, Bangladesh froze assets worth the equivalent of $6.19 billion due to corruption allegations, which the government attributed to Hasina, her family and the ten largest corporations in the country. The fact that she was able to speak freely to the press on August 5th at an event organized by the Foreign Correspondents Club in New Delhi, India, caused severe criticism in her home country.

India's government under Prime Minister Narendra Modi still wants to improve relations, the British broadcaster BBC recently reported. Rahman's government's suggestion that Bangladesh could join the so-called Mecca Pact, a new military alliance between Saudi Arabia, Pakistan and Turkey, has not gone down well with the Indian government. The big neighbor had helped Bangladesh fight for independence from Pakistan at great cost in 1971, and relations were close for 50 years. However, since the pro-India Hasina government's repressive crackdown on the protests and its subsequent overthrow, India's role in Bangladesh is no longer associated with freedom.