The Rise of Interest Politics in Bangladesh

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The Rise of Interest Politics in BangladeshAuthor(s): Stanley A. KochanekReviewed work(s):Source: Asian Survey, Vol. 36, No. 7 (Jul., 1996), pp. 704-722Published by: University of California PressStable URL: http://www.jstor.org/stable/2645718 .

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THE RISE OF INTEREST POLITICSIN BANGLADESH____________ StanleyA. Kochanek

Ever since its creation n 1971, Bangladesh's urban-basedpolitical, ureaucratic,nd militaryliteshave dominatedhepoliticalprocess and have been accountable o no one but themselves.Organizedgroups n Bangladesh xist nly mong he 16% of thepopulationiving nurban reas. These groups nclude olitical arties, he tudent ommunity,tradeunions, usinessmen, iddle-class rofessionals,he military,nd thecivilianbureaucracy.n rural reas, ocial organizations based on patron-clientrelationshipsominated y the arger andowners.The increasinglydestitute,andless, nd near-landlessopulationn thecountrysides gradu-ally being organizedby nongovernmentalrganizationsNGOs) fundedlargely y internationalonors. There re thousands f theseorganizationsspreadthroughouthe countrysideut theyremainhighly ocalized,non-political, ndprimarilyoncerned ith overty lleviation.Influencen a highly raditionalociety ike Bangladesh, herefore,asbeen largely ndividual nd fragmented,nd interest roupshaveplayedavery imited irect olein the governmentalrocess. Like other rganiza-tions nd nstitutionsnBangladesh,modern ssociations epresentingiver-gent social forces have been rudimentarynd insufficientlyobilized,organized,ndcoherentodo more han poradicallyntervenen thepolit-ical process. The government, oreover,as notbeen nterestedn encour-aging these groups o participate. hus,mostsocial forces nd demandgroups ound irectction ndviolence obethe nly ffectiveevices vail-able for alling ttentiono their emands, edressingrievances,rforcingsome degree faccountabilityn a traditionallynresponsiveystem.As aresult,weak,poorly rganized, actionalizedocialforces onfrontedn al-most quallyweak,organized,actionalizedtate.

StanleyA. Kochanek s Professor f Political cience,PennsylvaniaStateUniversity.hisarticlesderived rom larger tudyf nterestoliticsn SouthAsia,andwas supported ya FulbrightouthAsia RegionalResearch ellowship orfield esearchnIndia,Pakistan, nd Bangladeshn 1993-1994.i 1996byTheRegents ftheUniversityf California

704

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STANLEYA.KOCHANEK705In December1994,however, ollowing 0 months fpolitical risis ndstalemate,hepolitical liteofBangladesh ameunder ntense ressureromthecountry's mergentusiness ommunity,hichdemanded hat heelite

stopholdingheeconomy ostage o political onflict. usiness eadersde-manded hat hegoverning angladeshNationalistarty BNP) and theop-positionAwamiLeague (AL) meetunder heauspicesof theFederationfBangladesh hambersf Commercend ndustryFBCCI) to settle heir if-ferences.'Althoughhe ffortailed,tmarkedhefirstime ince iberationthat hebusiness ommunityad made uch demand;treflectedhe ignifi-cant hanges hat avetaken lace nBangladeshivil ociety ndthe merg-ing roleof thebusiness ommunitynthepolitical rocess.Thisnew role,moreover, as reinforcedy thepart usiness layed n ending hepoliticalcrisis nMarch 1996. This article imsto outline heorigins, evelopment,and role of the Bangladeshbusiness ommunityn therapidly hanging,largely atrimonial,atron-clientolitical rocessn Bangladeshnd the m-pactof interestolitics n thegovernmentalrocess.

From risis oCrisisInDecember 990 thegovernmentfGeneralH. M. Ershad esigned,ndingalmost decadeofmilitary-bureaucraticule nBangladesh.Ershad'sresig-nationwas broughtboutby mass agitation, ithdrawalf militaryupport,andgrowingonor nhappiness ith is ncreasinglyorruptnd neffectivegovernment.heend of Ershad'spersonalizedulebroughtopower neu-tral nterimovernmenteadedbyChiefJustice hahabuddin hmed,whichsucceedednholdingnFebruary 991thefirstrulyair lection nBangla-desh n two decades.Although6partiesnteredhe ace, he ontestenteredn fivekeypolit-ical forces.The AwamiLeagueheadedby SheikhHasinaWajid,daughterftheassassinated ounderfBangladesh, heikhMujiburRahman,was thebestorganizedartynthe ountryndwasexpectedoemergewith major-ity. TheAL had played decisiverolein the creation fBangladesh ndcampaigned n a platformfdemocracy, ationalism,nd secularism. tschiefcompetitor as the BangladeshNationalist arty ed by BegumKhaledaZia,widow f General iaurRahman,he ssassinatedeader f theBangladesh esistancemovementuringhe1971war andthepresidentfBangladeshn 1976-79. TheBNP programalledfordemocracy,ational-ism, slam,and social ustice. The three ther ignificantoliticalforces

1. Dhaka Courier, ecember , 1994,pp. 8-9.

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706 ASIAN URVEY,VOL. XXXVI, O. 7, JULY 996were heJamaat-i-Islami,staunchMuslimfundamentalistarty; heJatiyaParty JP) of General rshad; nd a melange f leftist arties.2The election esultswere a major hockto the AL. Although he partyreceived 0.08% of thevote, t won only88 seats, nd was defeated ytheBNP, whichwon 140 seats with nly 30.81% of the vote. Ershad'spartyreceived surprising1.92% of thevote nd 35 seats,while heJamaat ndotherMuslim rthodoxartieswon 19 seats nd 14.41% ofthevote. Leftistpartieswere bletowinonly12seats nd4.73% and ndependentandidates6 seats and 8.05% of the vote. Althoughhe BNP fellslightlyhort f amajoritynthe300-seat egislature,twas ableto form governmenthentheJamaat-i-Islamielped telect28 of 30 seats reserved orwomen.De-spite heBNP's preferenceor presidentialystemfgovernment,hepartyagreed o accept political onsensusnsupportfrestoringparliamentarysystem.Following hepassageof the Twelfth mendmentill inAugust1991,KhaledaZia becamethe firstwomanprimeminister fBangladesh,andthenationppearedobeon the oad o a newbeginning.WhileKhaledaZia's governmentlayed critical ole nconsolidatingangladesh's ransi-tion odemocracynd succeedednkeepinghemilitaryn thebackground,her nexperiencedovernmentroved o befragile,nsecure,nd neffective,andby 1995 Bangladesh aced newpolitical risis.LegitimacynBangladesh s very losely ied to developmentolicybuttheBNP recordwas mixed. BNP economic olicy loselyfollowedWorldBank and International onetary und IMF) guidelines or structurale-form, nd although he government'structuraleform rogramwas amacroeconomicuccessuntil hepolitical risis f 1995-96, hisdid notre-sult n improved acroeconomicperformance.n theonehand, heBNP'seconomic oliciesenabledBangladesh o meet ll the MF and WorldBanktargets;axrevenueswereup,inflation as down,governmenteficits e-creased, avings nd nvestmentncreased, oreignxchange eserveswere ta record,nd nterestatesweredown.3 On theother and,Bangladeshwassimply ot ble toincreasetseconomic rowthatefrom naverage f 4%(from 973 to 1993) to a targeted %. Economists rguethatBangladeshneeds minimumrowth ate f5.5% inorder o offsettspopulation rowthrateof2.4% andlift ts over 50 million oor outofpoverty.t also needshigher rowthodealwith tsrisingevels ofunemployment.low growth

2. For an excellent nalysisof the fall of Ershadand the 1991 elections, ee TalukderManiruzzaman,The Fall of theMilitary ictator:1991Elections nd theProspects f CivilianRule in Bangladesh," acific Affairs5:2 (Summer 992), pp. 203-224,211-13.3. See World Bank, Bangladesh: Implementingtructural eformWashington, .C.:World Bank, 1993), and Federation f BangladeshChambers f Commerce nd Industry,"Growth ndDevelopment f theBangladesh conomy 973-1993,"Two Decades of FBCCI1973-1993 Dhaka,FBCCI, August 993).

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STANLEYA. KOCHANEK707has been attributedo low levels of nvestment,nadequateavings,ncreas-ingbad debts, nd most mportant,oorpoliticalmanagementndpoliticalupheaval.

BNP economic eformsavechanged he status uo,buttheyhavealsocreated nemieswhilefailing t the same time o attractmany upporters.Public sector abor unionsresent he oss of privileges nd have opposedretrenchmentndprivatization. hebureaucracy as resistediberalization,deregulation,nd privatizations threatso itspower, nfluence,ndperks.The middle lass resentsuts nfood ndfertilizerubsidies, ndthebusinesscommunityas campaignedgainst ariffeductionsnd oss oftariffrotec-tion. All groupshaveopposedtax increases esigned o raisethe evel ofdomestic esourcemobilization.Whilegroup esistance ndoppositionmade thegovernmentmbivalentand hesitantn carrying ut its reformrogram, rouppressures id notthreatents urvival.nitially,heBNPgovernmentucceeded nneutralizinga weakanddividedAL, gettinghe tudents nder ontrol,ndpushing heJamaat-i-Islaminto hebackgroundollowingtsoriginal igh rofile. hus,despiteHasina's claimthat we won theelection hrough eople's mandatebutwe sufferedebaclebecauseofconspiracy,"4heAL was unable o comeup with powerfulssuethattcoulduse totopple heBNP government. Lalso was unable odevelop n effectiveppositiontrategyndcontinuallylookedto thepast for ssues,which ailed oresonatewith heelectorate.Thepolitical limatewas altered ramaticallynJanuary994when, orthefirst ime ince tsdefeatn 1991,theAL was able togenerate majorpolitical hallengeoBNP ruleby winningmunicipallectionsnDhakaandChittagong,he wo argestndmostmportantities nBangladesh.TheALvictorieswere seen as a reactiono the ndecisivenessf theBNP govern-ment, esentmentver cuts n foodandfertilizerubsidies, nd slow eco-nomicgrowth. he AL insisted hat he lections roved hat hepeoplehadlostconfidencen thegovernmentnddemandedts mmediateesignation.The election esults aused shock nd alarm n theBNP, energizedheAL,and revitalizedheopposition.InMarch heBNP won a surprise ictoryna parliamentaryy-electionna traditional L stronghold,nd thepolitical nvironmenturned ostile ndbitter.TheAL refused oacceptdefeat ndcharged heBNP withmassiveriggingftheresults.The by-electionalvanized heoppositiono demandcreation fa neutralaretakerovernmento run heparliamentarylectionsscheduled or ebruary996. When hegovernmentgnored hedemand,heopposition oycotted arliamentnd took to thestreets o pressthe ssue.The resultwas a total talemate. alks between hegovernmentnd opposi-

4. Daily Star Dhaka),August 3, 1993.

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708 ASIAN URVEY,VOL. XXXVI, O. 7,JULY 996tion, he interventionf a 39-day arbitration issionfrom he Common-wealthof Nations, new elections, nd the direct nterventionf theBangladesh usiness ommunityll failed oproduce settlement.he stale-matebrought olitical ncertaintyndeconomic risis, nd lasteduntil heMarch 1996resignationftheBNP government.he unprecedentednter-vention f thebusiness ommunity, oreover,ouched ff major ontro-versyand led to charges that business was attemptingo become thekingmaker f Bangladeshpolitics. The businesscommunityad clearlycomea long wayfrom hedaysof theAwamiLeague's socialist ffortsodestroyheBangladeshi ourgeoisies a political orce.

Development f a BangladeshiBusiness ClassHistorically,engaliMuslims layed n almost nsignificantole ntrade ndcommercenBritishndia. Thelimitedrade nd ndustryhat xistedntheeastern istrictsfBengal werecontrolledy BengaliHindu,Marwari,ndBritishraders. Atpartition,"oted ne observer,therewas not a singlelarge cale industrialnterprisenEast Bengalcontrolledy a BengaliMus-limnorwerethey resentnthe ute trade, ea or inlandwater ransport."5The Private ector n East PakistanDespitethecreation fPakistann 1947,thepattern fownershipn trade,commerce,nd industryidnot change n any significantay forBengaliMuslims. Lack ofcapital, preferenceor nvestmentn land,and theab-sence of a businessvacuum omparable o the one thatdeveloped nWestPakistan esultednboth pathyoward rade nd ndustrynd a lack of op-portunityorBengaliMuslims. The partitionf BengalintoEast Pakistanandthe ndian tate fWestBengaldidnotproduce he amemassexodusofrefugeeradersnd ndustrialistss occurredn WestPakistan.Hindu apitalin East Pakistan emainednplace andwas onlygradually undown overtime.Whatever ap existed,moreover, asquickly illed yWestPakistani-basedentrepreneursndnon-Bengali uslims.DevelopmentfindustrynEast Pakistanwas furtherinderedy nadequatenfrastructure,ackofman-agement now-how, shortagef skilledabor,ackofcapital ndcredit,ndthe igiditiesftheregulatoryystemreated ythenewgovernmentf Pak-istan.

As a result f these ombined actors,he ndustrialevelopmentfEastPakistanproceededvery slowlyand remainedargely n non-indigenoushands. At iberationnd establishmentfBangladeshn 1971,the ndustrial5. Rehman obhan, Growth nd Contradictions ithin heBangladesh ourgeoisie," our-nal of Social Studies, o. 9 (July 980), p. 3.

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710 ASIAN URVEY,VOL. XXXVI, O. 7, JULY 996TABLE 1 The LeadingBangladeshi usinessHouses in 1969-1970

Number f Estimated ssetsNo. BusinessGroup Companies (Rs Million)1. A. K. Khan 12 752. Gui BakshBhuiya 5 653. Zahurul slam 14 604. Md. FakirChand 10 605. MaqbulurRahman nd 9 50ZahurulQayyum6. Al-HajMuslimuddin 6 507. Al-Haj Shamsuzzoha 5 508. Khan BahadurMujiburRahman 4 459. Afil 7 4010. Sattar 5 3011. Ashraf 4 3012. Bhandari 6 3013. SafdarAli 7 3014. IbrahimMia 7 3015. Serajul slam Chowdhury 4 25

16. MohammadAbdusSamad 5 25(Delta Group)Total 110 695SOURCE: SergeiStepanovich aranov, ast Bengal: Characteristicsf EconomicDevelop-ment, 947-1971 (Dhaka: Jatiyaahitya rakashani, 986),transl. rom ussian), . 13.

Developmentf BengaliMuslimCapitalAfter 971Following he 1971 war, the new Awami League governmentf SheikhMujiburRahmannationalizedotonly he47% of theabandonedndustrialassets ontrolledynon-BengalisPakistanis)ut lsoBengaliMuslim ssetsin ute,cottonextiles,ugar, anking,nd nsurance.Overnight,he ize ofthepublic ectorncreased rom4% to 92% of total ndustrialssets nBan-gladesh, s well as 27% ofthe commercialstablishments,2 bankswith1,175 branches, nd both he ifeandgeneralnsurance usiness.9Bangla-deshembarkedpon tsgreat ocialist xperiment,nd thenewly mergingBengaliMuslimentrepreneursere forced o retreatntotrade, eal estatespeculation,nd construction.9. Rehman obhanand Muzaffer hmad, ublicEnterprisen an Intermediateegime:AStudy n thePoliticalEconomy f Bangladesh Dhaka: Bangladesh nstitutef DevelopmentStudies, 980),pp. 135-42.

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STANLEYA. KOCHANEK711Theassassinationf SheikhMujib nAugust 975 and the ollapseoftheAwami League governmentrought gradualretreat romAL socialism.Massive andpersistentosses, owproductivity,ndpoormanagementfthe

public sector orced rethinkingfBangladeshindustrialolicy, nd re-sultednan efforto revive heprivateector nda gradual hrinkingfthesize of thepublic ector. Thechanges ameintwostages.The first etofmajor hanges ame n 1975-81 underGeneral iaurRahman,whose ndus-trialpolicy was designed o revive he private ectorby encouraging ewinvestmentnd by divesting he state f many f thesmaller ublic sectorunits. The resultwas a temporaryurst f private ectornvestmentnd thegradual mergencef a new class of entrepreneurs.neven moredramaticshiftn ndustrialolicy amefollowinghe ssassinationf General ia andthemilitaryoupof March1982 ledby General rshad.In an efforto im-prove theinvestmentlimate, ccelerate he ndustrializationrocess, ndcreatemoreemploymentpportunities,rshaddenationalizedhe Bengali-owneduteandcottonmills, nnounced new ndustrialolicy o foster ri-vate ector rowth,egan o privatizehepublic ector,nd embarked ponmajoreffort o liberalize heregulatoryystem.Thus, within 0 yearsofliberation,angladesh's reat ocialist xperimentameto an end, nd pub-lic sector ontrol f industrialssetsdeclined rom 2% in 1972 to 40% in1988.10Developmentf the ndustrial liteThe government'sost-1975ndustrialolicy ed to therapidgrowthf anewfamily-basedndustriallite. By thelate 1980s, informedstimatesplacedthe ize of thisnew elite t about100-200business roups f whomsome15-25were uite arge ndtheremainderelativelymallbutgrowing.Table2 attemptsoconstructlistofthe op14business ouses nBangla-desh and their elative anking. ecause of the argedatagaps,no effortsmade to developan exact order. nstead hehousesaregroupedntothreecategories thetop5, thetop 10,andthetop14.It is interestingo notethat nlythree f thetopBangladeshi ouses of1969-70 listednTable 1 survivedobe among he ophousesof the1980s.Thisoldelite nclude heA. K. Khangroup, heZahurulslamgroup,ndW.RahmanJute KhanBahadurMujiburRahman). The Zahurul slamgrouphas prosperednd emerged s the argest ndustrialroup n Bangladesh.

The A. K. Khangroup asslipped uthasspawnedwonewgroups-PacificIndustriesounded yMorshedKhan,nephew f A. K. Khan, nd theSidkogroupformedy M. R. Siddiqui, on-in-law f A. K. Khan. Similarly, or-10. See StanleyA. Kochanek,Patron-Clientoliticsand Business n Bangladesh NewDelhi: Sage Publications, 993), chs. 4 and5.

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TABLE 2 The Top 14 Industrial ouses of BangladeshNumberf Year Annual

Name f Group Companies Established Turnover* Founder hairmanTop 5Zahurulslam 24 1963 628.6a ZahurulslamIspahani 23 Pre-1947 b M. M. (Sadri) spahaniBEXIMCO 17 1966 524.3c A. S. F. RahmanAnwar 18 1971 _d Muhammadnwar ossainA. K. Khan 15 1945 400.0eA. M. ZahiruddinhanTop 10Muhammadhai(Panther) 9 1956 705.5 MuhammadhaiW.Rahman ute 10 1885 2,5 0.0 Latifur ahmanApex 4 1972 650.0 SyedManzur lahiPacific 5 1974 542.5 M. Morshed hanSquare 5 1958 503.18Samson howdhuryTop 14Elite 5 1954 473.9 Ramzul erajERBA(AlphaTobacco) 4 1969 385.9 AghaAhmed usufKarnaphuli 14 1954 350.0h Hedayet ossainChowdhury

Kumudini 3 1933 340.0 Mrs.Joya atiSOURCE: Based on ananalysisftheMetropolitanhamberfCommercend ndus-try,Members irectory988.* Annual urnoverfMCCI members'ompaniesnTkmillions.a Zahurulslam s universallyecognizednBangladeshs the argestndustrialroupnthecountry. hisgroupmade fortunengovernmentontractsuringheMujibperiod.Total ssets fthe roupn 1974were k 500million.No data ftotal ssetsare available or1988.b Unlike therarge akistaniouses, major ranchfthe spahani amilyived n EastPakistanndstayed ehindfter he 1971war.The vastmajorityf spahanissetswereocatedn the ast. Informedstimateslace he1972value f spahanissets tone-halfheRs 154millionssets f 1968. Their ayroll asdroppedrom0,000employeeso 12,000nBangladeshoday,which tillmakes hemneof the argestprivate-sectormployers. heymaintain veryowprofileut enjoy onsiderableinfluence.In 1988BEXIMCO sales nd ssets opped k1billionnd heymployed,500work-ers. In 1990the nnual urnovereached k3 billion.Estimateslace the otal urnoverftheAnwarGroup t Tk 1billion.In 1980thegroup mployed,750people.Sincethen, hey averegainedontrol favarietyftheir ationalizedssets.The W.Rahman ute roup as really ecome large radingouse, nly 0% oftheirturnovers a result f ndustrialctivity.SquarePharmaceuticalss really he oreof thegroup.Theother nits rerelativelysmall.TheKarnaphuliroups estimatedo have 14companies. urnoverata re availablefor nly ne ofthese ompanies.

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STANLEYA. KOCHANEK713merZahurulslam employeesuchas Habibullah hanand ZiaulHaq havebroken way to formheir wn ndependentnits.Thesame can be saidofLatifur ahman fW. RahmanJute nd MaqbulurRahman,whoboth repart f an old tea plantationamily.The Ispahanigroup s theonlyformer akistani ouse to survive n Ban-gladesh. At thetimeof partitionn 1947,the spahanis, ne of the argestMuslim ndustrialamiliesn Britishndia,moved heir ase from alcutta oEast Pakistan.Althoughhe amily as very lose to theMuslim eague andinvestednbothwings f Pakistan, hevastmajorityf spahani ssetswerelocated n theEast. Unlike hePakistani-basedouses, he spahanis tayedbehind n Bangladesh fter hecivil war. Although largeportionf theirassets were nationalized,he group ontinuedn trade nd real estate, ndwith enationalizationn 1982, the spahanis egainedmany f their ormerassets. Theycontrol 3 companies nd remain ne of the argest ndustrialgroups n Bangladesh.The groupmaintains very ow profile nd s quietlybeginningoexpand.Exceptfor heAnwar,Apex, nd Pacific roups, ll of the opgroups adtheir tart rior o iberation. he oldesthouses re W. RahmanJute 1885),Kumudini1933),A. K. Khan 1945), and spahani pre-1947).Fourgroupsareproductsf the1950s: Md.Bhai, Square, lite, ndKarnaphuli. ahurulIslam, Beximco, ndAlphaTobacco areproducts f the1960s. It is alsointerestingo note hat everal roupsreeither on-Bengali,on-Muslim,rwerefounded yWest BengalMuslims. Thosenon-indigenousroups n-clude: Ispahani,Muslims,ran-Calcutta),d. Bhai IsmailiMuslims), am-son Chowdhury f Square (Bengali Christian),nd Mrs. JoyaPati ofKumudiniBengali Hindu). Others reBengaliMuslimswhomigratedoEast Pakistanfterartition-SyedManzur lahiofApex Calcutta), atifurRahman fW. RahmanJuteAssam), nd theElitegroup Calcutta).Mostofthemajor litegroups tartedn uteandtextiles ndthen iversified. llarefamily-basedndmost ounders ere uitewelleducated.Except or heestablishedlite ike spahani ndA. K. Khan,most fthenewentrepreneursgrewvery ast ndwerehighly ependentpongovernmentatronagentheform fcontracts,oans, nd credit.Beyond he op14business roups, angladesh asdeveloped 00 to 200smaller roups,most f whichhave also beenheavily ependentngovern-ment inancinghrough evelopmentnstitutions. study f 462 borrowersconductedytheBangladeshnstitutefDevelopmenttudies BIDS) pro-vides a useful ndicatorf the sourcesof entrepreneurshipn Bangladesh.Almost70% of Bangladeshi ntrepreneursere drawnfromndustryndtrade; he emainderamefrom hemilitary,hebureaucracy,ransport,erv-

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714 ASIAN URVEY,VOL. XXXVI, O. 7,JULY 996ices, and theprofessions.11 s elsewhere n theSubcontinent,herefore,Bangladesh asdeveloped amily-basedusiness roups nd a certain egreeof concentrationf economicpower. But a study fBangladesh usinessgroupsn1984-85 oncludedhatwealthwas much ess concentratedn Ban-gladesh han n IndiaorPakistan.The topfour roups ontrollednly9.2%ofthe assets nBangladesh,whereasn Indiathey ontrolled7.2% and inPakistan 16.4%.12The larger roupsisted n Table 2 constitutehecore of thenew ndige-nous Bangladeshindustriallite. While many f the new elite are drawnfrom heold, established usiness amilies, largenumber renewgroupsthathave benefited rom hepatronage f successiveregimes.Most topgroups re politically ellconnectednd nterconnectedyfamily,marriage,and business elationships.he leaders fthenew ndustriallite reactiveinpolitics ndbusiness ssociations,nd although he ize and character fthe lite re stillhighly luid nddependheavily n an individual's oliticalconnections ith he egimeftheday, t s clear hat hemost uccessfulrethosewho havebeen ble to maintainignificantonnectionsespite hangesin regime.Thispatternf ndigenousntrepreneurialevelopmentas had amajor mpact n thepatternf ndustrialization,hedevelopmentf associa-tional ife nBangladesh,nd the mergencef thebusiness ommunitys aforcenthepolitical rocess.

Business AssociationsBangladesh nheritedhemixed raditionsf British luralism nd Pakistanicorporatism.Business associations n Bangladeshcontinue o functionwithin he egalframework,tructures,nd traditionsfthePakistani eriod.Associations re organizedunderthe Trade Organizations rdinance f1961, which emainedn forceunder he Laws (Continuance nd Enforce-ment)Order f 1971designed oprovide egal continuityor henew state.TheTradeOrganizations rdinance ives governmenthepowerto controlandregulatehe reation,nternalrganization,ndactivitiesfbusiness s-sociationsn thecountry. espite the ordinance, owever, he number fassociations nBangladesh as proliferatedndunrecognizedrganizationsabound.The immediateost-liberationnvironmentnBangladeshwas hostile o-wardbusiness nd ts associations.Most trade nd ndustryameunder hecontrol f thepublic sector, nd a shattered rivate ectorwas reduced o

11. See Rahman obhan and Binayak en, The Social Background f EntrepreneurshipnBangladesh:AnOccupational rofile f BorrowersromDFI's, ResearchReport o.71, Ban-gladesh nstitutefDevelopment tudies,January 988.12. Iftikhar ostafa, A Study f the nternal rganizationf BusinessGroupswith FocusonBangladesh,"npublishedissertation,ornellUniversity,988,p. 107.

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STANLEYA.KOCHANEK715indenting,eal estate speculation, ontracting,nd smuggling.Officially,Bangladeshn 1971 had eight ecognized hambersfcommerce,en ndus-try ssociations,nd thetatteredemnantftheold zonalcommitteeftheFederation f PakistanChambersof Commerce nd IndustryFPCCI).Although ro-Awami eaguebusinessmenontrolledhemajor ssociations,theAL governmentas divided ndlargelyndifferento them. Businessassociationsn Bangladesh id notstart o recover ntil herevival f theprivate ector n the ate 1970s nd did notbegin o come nto heir wn untilthe1980s. Theirdevelopment,owever, as beenerratic. ike other roupsin society-political arties, rade nions, tudent rganizations,nd profes-sional ssociations-business ssociations aveproliferatedut reorganiza-tionallyweak, highly actionalized,nd have traditionallylayed only alimited ole n thepolitical rocess.The rehabilitationnd restorationf business ssociations egan with hereconstructionf the hreemost mportanthambers f commerceocated nNarayanganj, haka, and Chittagong. hese efforts ereparalleled y thecreation f a newapex association o replace heold FPCCI. As a result fthisprocess ftransformation,hemost mportantssociations epresentingtrade nd ndustrynBangladesh ecame hose ocated n Dhaka,the apital,and theport ityof Chittagong. oday the two largest hambers re theDhaka and Chittagong hambers f Commerce nd IndustryDCCI andCCCI), both f which rehighly oliticized, oorly rganized,nddominatedby petty raders.Consequently,hemost mportantusiness ssociationnBangladeshs theMetropolitanhamber fCommerce nd ndustryMCCI),formerlyheNarayanganjhamber. he MCCI was foundedn1904byBrit-ishmerchantsnNarayanganjnd is theoldest, ichest,ndbestorganizedchambernthecountry. he MCCI speakson behalf fthe ndustrialliteandhas come to representome80% of industrynBangladesh, ncludingmostof the largedomestic nd foreign radeand industryouses. TheMCCI, DCCI, and CCCI, therefore,ach representifferentnterests,e-gions, ndbusinessgroups nd are in strong ompetition ith ach other.Untilrecently,hese hambersompletelyvershadowed he FederationfBangladesh hambersf Commerce nd ndustryFBCCI), the fficiallyec-ognized pexassociation fBangladeshi usiness.

TheFBCCIFormed n 1973 at a timewhen herewas littlendustryeft n theprivatesector nd ittle ealneedfor federation,heFBCCI was argelyhe reationofa smallhandfulf former embersfthe ld EastPakistanonalcommit-tee of the FPCCI as a wayofenhancingheir rominence. rom tsveryinception,hefederationasplaguedbyinternalonflictnd has haddiffi-culty ompetinguccessfully ith he lder stablishedhambers. ts nabil-

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716 ASIAN URVEY,VOL. XXXVI, O. 7, JULY 996ity o establishtself s thepremierssociationn the ountry as beendue toits turbulentistory, epeated rganizationalreakdown,ack of resourcesand staff,nd competitionrom stablishedhambers.As a result, ntil e-cently hefederation as seenas ustanotherhamberndenjoyed o specialstatus.In 1993 theFBCCI had 175 membersecognized nder heTradeOrgani-zationsOrdinance-56 chambers f commerce nd 119 industryssocia-tions.13The overwhelming ajorityf these hambers nd associationsrevery mall, withfew members, o permanentffice r staff,nd limitedresources. heywere reated o representheir ounderr arephantom rga-nizations hat xist nly n paper. Since therate f ndustrialrowthnBan-gladeshhas been quitemodest, henumberf associations eflects eitherrising ide f business ctivity or growing onsciousnessnd senseof col-lective nterest n thepartof the business ommunity. ather t tends oreflect he individualismndparticularismf Bangladeshi ociety nd itsbusinessmen.The election f theBNP government,change n thefederation'seader-ship,and the desireon thepartof someof Bangladesh'smajorbusinesshousesto create morefavorable usiness limate ed to an attemptoen-hance he oleof theFBCCI in thepolitical rocess. As part f this ffortheIslamgroup, EXIMCO, and ArabBangladesh ank,which s ownedby topBangladeshi usinesshouses, ombinedwith heDCCI and theBangladeshGarment anufacturersndExportersssociation o fund national onven-tion fsome400 to500 businessmenn August 993 n Dhaka sponsored ytheFederation o celebrate he20th nniversaryf tsfounding.14Thepur-poseofthe wo-day onference, hichwas nauguratedytheprimeministerandaddressedytheministersffinance,ommerce,ndustry,ndplanning,was topressbusinessdemands n theBNP government,entilate usinessgrievances,mprove he image of the private ector, ounter overnmentcomplaintshat usinesswas notrespondingo governmentncentivesndpolicies, ndcreate nindependentounter-voiceo thedominantoleplayedbythe MF andWorldBank neconomic olicy.15In his welcoming ddressto the prime minister, BCCI PresidentMahburbur ahman eviewed he turbulentistoryf theprivate ector nBangladesh ince iberationnd sought o counter he charge hatbusinesswas "weak,docileandsometimesnept"n tsresponseothegrowth ppor-tunitiesresentedo itbytheBNP government.e blamed heproblemsftheprivate ector nthehostile nvironmentf the ast ndthegovernment's

13. AnnualReport, 993 (Dhaka: FBCCI, 1993).14. See Two Decades of FBCCI. 1973-1993.15. This assessments based on interviewsn Dhaka,August 993.

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STANLEYA. KOCHANEK717lack of urgencyn mplementingtsdeclared olicies fprivatization,eregu-lation, nd decontrol f the economy. He demanded cceleration f theprivatizationrocess, shift f most egulatoryowers rom overnmentobusiness ssociations, reaterabordiscipline, overnmentid tosick ndus-tries, nd higherevels of protectionordomesticndustry. he chief auseof slowgrowth,e insisted,was not the failure f theprivate ector o re-spond ofavorable overnmentoliciesbutthepoorperformance,rift,ndlack of dynamismf thegovernment. overnment-businesselations, e in-sisted,mustbecome ess adversarial, ith loser ooperation nd coordina-tionbetween hetwo.16Althoughheprimeministerromised reaterooperation,onventionel-egates bothprivately nd publicly utlined whole ist of problems on-frontingusiness-governmentelations. heywere specially ritical f thegovernment'soorpoliticalmanagementnd nabilityo control hebureau-cracy nd ts mplementationf BNP policies.17The business roup rguedthat heBNP's decision-makingtylewas slow,personalized,ndhighly en-tralized.Theprimeministerotally ominatedheprocess nd all decisionswerepassed up to herforfinal pproval.She and herministers, oreover,were poorly nformed,nexperienced,nd did not always understandheproblems resentedo them or ecision.KhaledaZia, they ointed ut,hadnever eldpublic ffice rior o becoming rimeministerndonly ive f her40 ministers adhad previous xperiencengovernment. s a result,venwhen ll agreed o actinresponse o business emands, hey id notdo soeither ecausetheydid not want o or becausetheydid not knowhow todirect he dministrationffectively.NP ministers, oreover, eredividedintocliques and factions, pent greatdeal of time n their arliamentarydistricts,ocusedmost f their ttentionnpolitics ather han ffectived-ministration,isregardedargerssues and becametooengrossednnarrowpolicies, rsimply riftedrom ne crisis o thenext. n theprimeminister'sabsence,ministers ere unableto reach a consensusdue to personalityclashes, utwhen he waspresent heywere oo nhibitedo conduct frankdiscussion.Given hehighly olitical ocus f thegovernment,usiness rgued, olicyandpolicy mplementationecame ncreasinglyoncentratednthehands fthebureaucracy, hich, n turn,uffered rom varietyf problemshatmade theprocess fpolicydevelopmentnd mplementationery low andcumbersome. irst, hemultilayeredystemfdecision-makingesultednpoor coordination,uplication,nddelay;filesmovedupwithin achminis-try rom ssistant o senior ssistant odeputy ecretaryo oint secretaryo

16. Two Decades of FBCCI. 1973-1993,pp.12-17.17. The followingection s based on interviewsnDhaka with onvention elegates.

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STANLEYA.KOCHANEK719Rahman's ravels nd hisbusiness onnections ith heEast Asiantigers adconvinced im thatbusiness n Bangladeshneeded ess personal elationswith governmentnd greaterrelianceon organizedcollectiveaction.Although e had beenpresidentf theMCCI in 1989,hefelt hat he ham-berwas too narrowly asedtobecome an effective latformor ollectiveaction, nd that well funded,rofessionalizedederation ould trengthenthevoice of thebusiness ommunityndenhance ts role neconomic eci-sion-making.8Capturingontrol fthefederation,owever,was not n easy task. Eversince tscreationthad beena largely neffectual,ighly oliticized, nd attimesmoribundrganizationowhich herising usiness liteprovidedittlesupportn personnel, oney, r leadership.Most pastpresidents erepettytraders r drawn romhe maller usiness ousesofBangladesh, nd wereconcerned rimarily ithrecognitionndaccess to governmento protecttheirwn nterests. hefederation,oreover, as dominated y these malltraderswho resented ig business ndwere highly oliticized.Federationelectionsweretraditionally anipulatedy competing actions hatcon-trolledargeblocs of votesby paying hemembershipees ofmany mall,moribund hambers f commerce nd industryssociations ocated n thehinterland. lectoralconflictwas usually so intense hatmost electionsendedup in the courts ue to charges f electoralrregularity.iventhisenvironment,ost rominentusiness eaderswerereluctantoget nvolvedintheunseemly, etty olitics fthefederation.The October1994 federationlections, owever,marked majorbreakwith hepast. For thefirstimenyears everalmajor andidatesnteredherace forpresidentnd theorganizationeld ts firstmeaningfullection nover a decade. Initially,3 candidates nteredhefield utfour ventuallywithdrew. ftheninewhoremained,ourwere onsiderederious ontend-ersand eachrepresentedifferentconomic, olitical,ndfactionalnterests.SalmanRahman,whoenjoyed hesupportfbigbusiness nd severalkeymembersntheBangladesh abinet,was seenas thefavorite. is chief ivalwas RedwanAhmed, BNP memberfParliamentndpresidentf theBan-gladeshGarment anufacturersndExporters ssociation, hemost mpor-tant, ynamic,ndexport-orientedndustrynthe ountry. hmed, owever,was opposedby sections f hisown party.The two othermajor andidateswereMirzaAbuMansur f theHardware ssociation ndKazi Md.ShafiqueIslam, vice-presidentf the FBCCI. Mansurwas supported y owners fsick ndustries,wamiLeaguers, nd membersftheJatiya arty,nd Md.Shafique. slamwas supported y newly nrolled ssociations.

18. Based on interviews ithbusiness eaders n Dhaka,August 994.

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720 ASIAN URVEY,VOL. XXXVI, O. 7, JULY 996In one of themost ntenselyoughtlectionsn federationistory,almanRahman merged ictorious inning 21 of 598 votes ast. RedwanAhmedwas nextwith nly 123 votes, ollowed y Mansurwith112 and slam with

83. Rahman mmediatelyeclared hat e would et about o raiseTK 20 to30million o enablehim o build secretariatndprofessionalizeheorgani-zation.19Andshortlyfter he lection, eopenlyntervenednthepoliticalprocess by attemptingo mediate he conflict etween he BNP and theAwamiLeague. Rahman eclared hat he conomy ouldnot fford polit-ical crisis, nd called upon hegovernmentnd theopposition o enter dia-logue under FBCCI sponsorship o try to reconcile their differences.Instability,artal general trikes),nd governmentaralysis, e argued, adhurt ffortso attractoreignnvestment,lowed conomic rowth,nd ham-strung heeconomy.20Although hefederation'sffortailed, t representedhefirst ime n thehistory f the country hat he business ommunityttemptedo hold thepolitical literesponsibleor ts ctions nd the ffecthese ctionswerehav-ing on the economy. The intervention,owever, parked n immediateresponse rom heBangladeshintelligentsia,ho saw thebusiness ommu-nity'sgesture s "understandable"ut simply not acceptable." One criticargued hat ifthebusiness ommunityegins o dabble nmatters olitical,theres reallyittle hat s wrongnthe ct." But "thefact emains hatwhenmen n business uddenly ell hemselveshat hey reperfectlyuited or herole of kingmakernpolitics, here s reason o worry."The crisis, nsistedthecritics,must e left o thepoliticiansoresolve ndnotbusiness.2'Despiterepeated ffortsybusiness ndother roups obreak hedead-lock,Bangladesh's oliticians roved nable oresolve he risis nd a stale-mate ensued. All 147 oppositionMPs resignedfromParliament nDecember 8, 1994, nd thenext11months ere onsumed y politicalma-neuveringnd general trikes. inally, n November4, 1995,PrimeMinis-terKhaleda Zia decidedto dissolveParliamentnd hold new elections nJanuary 8, 1996. The major opposition arties, owever, eclared heywouldboycott ny lectionshatwerenotheldunder neutralaretakerov-ernment.ostponinghepollsthree imesnan effortopersuadehe pposi-tionparties o participate,heBNP failed o winagreementnd, despiteboycott, ent head with he lectionsnFebruary5. Itswept hepollsbutfailed oresolve hepoliticalmpasse, nd nfactmade matters orse.Thenearvoterless lections-no more han15% of theelectorate oted-wereaccompanied y widespread igging.

19. Dhaka Courier, ctober 1, 1994,p. 18.20. Ibid.,December , 30, 1994.21. Ibid.,December , 1994,p. 15.

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722 ASIAN URVEY,VOL. XXXVI, O. 7, JULY 996is one way of developing hisgreaterenseofaccountability.he interven-tion f theBangladeshi usiness ommunitynthe25-month olitical risisrepresentsart f a larger fforty organized usiness o move theBangla-deshpolitical ystem wayfromtspatron-client,atrimonialrientationo-ward systemased on greaterollective esponsibility.angladesh eedsmore roup-orientedystemn which hegenuinenterestsfvotersnd sec-tors f civil society anbe reflectedn decision-makingndleadershipc-countability.n thepast,policies nBangladeshwereborn n the deas ofleaders nd not n the nterestsf classesororganized roups.This s begin-ning o change.Bangladesh,ikemostdevelopingountries,aces tsgreat-est challenge otfromhemodern,rganizedectors fsocietywithwhomgovernmentsan negotiate,utfrom herepeatedhallenges f thepartiallymobilized, norganizedectorswhosemembers eelfrozen utof the ystem.Governmentsolation rom ocial forcesnthepasthas ledto shallow evelsofpolicy upportnd majorproblems f implementation. hile organizedsectors f society peraten nstitutionallyefinedimits ndpolicy renas,tis the unorganizedemandgroups hat reate he real threat o order ndstability. he weakness f the ystems the bsence f effectivelyrganizedgroups nd notfeared ominancef thegovernmentalrocess. The newlyactivated,ndigenouslyased business ommunityfBangladeshmayrepre-sent hebeginningf thedevelopmentf a more table nd effectiveoliticalorder.