Shifting winds: Bangladesh in an age of fragmented interdependence

The US and China can continue restricting each other's technologies while conducting hundreds of billions of dollars' worth of trade. India can belong to the Quad while purchasing Russian oil. The Gulf monarchies can remain closely aligned with Washington on security while deepening business ties with Beijing. The examples could go on, but they demonstrate one thing: such pragmatism is characteristic of an age in which the geopolitical winds are constantly changing.

Washington and Beijing remain the world's principal systemic competitors, but their rivalry does not provide a blueprint for the emerging international order. That order is neither one of classical bipolarity nor fully developed multipolarity. Instead, it is one of fragmented interdependence—security blocs, transactional relationships, flexible coalitions and overlapping spheres of influence built upon trade, finance, production, migration and supply chains that are too costly for any major economy to abandon.
The previous model cast China as the Dragon, the US as the Eagle, India as the Elephant and Bangladesh as the Hidden Tiger. Such metaphors were useful for understanding the balance of power in South Asia, but they are now as misleading as they are informative. Today, power is distributed by function rather than geography. The EU leverages its vast market through labour and climate regulations, standards and investment screening. Britain brings strengths in finance, diplomacy, higher education, development and its global diaspora. Japan provides patient infrastructure finance, Australia contributes additional weight to Indo-Pacific security, and Canada combines trade diversification, critical minerals, education and migration.

Elsewhere, the Gulf states act as investors, energy powers, diplomatic brokers and destinations for labour migrants rather than merely allies of Washington. Russia continues to wield influence through energy, arms exports, nuclear projects and strategic disruption. ASEAN economies offer manufacturing capacity and regional integration. India is another case in point: cooperation with the US in the maritime domain does not prevent it from maintaining strategic autonomy and close ties with Moscow. Middle powers have increasingly gained the freedom to choose partners by issue rather than by bloc.

As a result, economic security now influences virtually every investment decision. As HSF Kramer observed in its 2025 report on mergers and acquisitions, the "China Plus One" strategy is redirecting investment towards Southeast Asia and India. Cost, however, is no longer the only consideration. Governments and businesses increasingly ask whether a location is politically stable, legally reliable and resilient to risks arising from export controls, sanctions and investment screening. Artificial intelligence, data, critical minerals, energy and ports have all become strategic assets. Joint ventures and local partnerships may reduce risks, but only sound regulation can convert investor interest into long-term capital.

Bangladesh forms part of this interconnected system, albeit with highly uneven exposures. In fiscal year 2024–25, goods exports totalled $48.28 billion, with garments accounting for $39.35 billion, or more than 80% of total exports. The EU purchased almost $19.7 billion worth of garments, while the US remained the largest single-country market. Western demand is therefore not merely an abstract geopolitical consideration but a vital economic resource that sustains factories, jobs and foreign exchange earnings. At the same time, access to European markets increasingly depends on compliance with labour, environmental and governance standards.

China occupies a similarly important position as Bangladesh's largest trading partner and a major supplier of industrial inputs, infrastructure and defence equipment. This relationship is primarily one of production inputs rather than an alternative export destination. India is even more inescapable because of geography, turning politics into everyday questions of borders, water, transit, security and energy. 

Bangladesh imports around 2,656 MW of electricity from India—almost 9% of its installed generating capacity. This interconnection provides valuable energy security while also highlighting the risks associated with contractual dependence and excessive concentration.
Japan officially recognises Bangladesh as its largest development partner and continues to finance major transport and port infrastructure projects. Britain contributes through finance, commerce, higher education and its influential Bangladeshi diaspora. Canada and Australia add migration opportunities, development cooperation, education and selective trade. Russia remains central to the Rooppur Nuclear Power Plant. 

The Gulf, meanwhile, is indispensable as a source of energy, employment and foreign exchange. During the first eleven months of fiscal year 2025–26, Saudi Arabia and the UAE together accounted for $9.56 billion in recorded remittances to Bangladesh. None of these relationships can easily be replaced, and each serves a distinct strategic purpose.

This diversified network provides Bangladesh with room for manoeuvre, but not immunity. Export concentration, dependence on imported energy and foreign financing, weaknesses in the banking sector and long-term infrastructure commitments all create vulnerabilities that external actors can exploit. As Bangladesh approaches graduation from least-developed country (LDC) status—still officially scheduled for November 2026, although an extension request remains under consideration—productivity, competitiveness and compliance with international standards will become even more important. Preferential market access can no longer be taken for granted, while tariff measures are increasingly accompanied by conditions relating to sourcing, labour standards, data governance and national security.

What Bangladesh needs is a doctrine of disciplined multi-alignment: cooperating with different partners across different sectors while maintaining clear national red lines, avoiding exclusive dependence and rejecting agreements that undermine sovereignty, transparency or long-term resilience. This approach is more demanding than simply trying to please everyone. It requires the government to understand which dependencies are acceptable, which technologies are strategically sensitive, which projects are commercially viable and where Bangladesh must retain national control.

Five practical priorities should guide this strategy. First, diversify exports, products, investors and sources of infrastructure finance. Second, restore regulatory credibility through democratic governance, contract enforcement, transparent procurement and policy consistency. Third, reduce excessive dependence on garments, imported energy and any single geopolitical partner or export market. Fourth, invest in maritime capabilities, ports, logistics, skills, technology, data governance and economic diplomacy. Fifth, build functional partnerships with the EU, the UK, Japan, Canada, Australia, the Gulf states and ASEAN while maintaining constructive relations with China, India and the US.

Democracy belongs at the centre of this strategy, not on its margins. Major powers may apply democratic principles selectively, but such inconsistencies do not diminish the value of strong domestic institutions. Democratic elections, accountable government and the rule of law make foreign policy less risky, strengthen confidence in contracts, reinforce labour standards, support claims for preferential market access and ensure public ownership of major international commitments. Legitimacy also strengthens Bangladesh's bargaining position, because partners know that agreements are more likely to survive both public scrutiny and changes of government.

Bangladesh's opportunity is not to become an outpost or to auction its strategic loyalty project by project. It is to become indispensable to many partners while remaining dangerously dependent on none. The shifting geopolitical winds will favour countries that can achieve that balance. To do so, Bangladesh will need stronger institutions, clearer priorities and a well-defined national destination.

Zillur Rahman is a political analyst and the President of the Centre for Governance Studies (CGS). He hosts Tritiyo Matra on Channel i and writes on geopolitics, strategic affairs, and governance. Follow him on X: @zillur.

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.