Bangladesh-Moscow Economic Ties: What are the New Developments?

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Bangladesh and Russia’s economic ties have grown over decades, building on a history of collaboration and mutual support. Beginning with the Soviet Union’s considerable support for Bangladesh’s War of Independence in 1971, the connection has evolved into a multidimensional cooperation. This partnership spans all areas, with both countries aggressively promoting economic connections, trade, and investment cooperation.

As the 52nd anniversary of diplomatic relations between Bangladesh and Russia approaches, the relationship has not only survived, but prospered, with a heavy focus on economic cooperation. Recent collaborative conversations, which serve as a microcosm of this lasting tie, demonstrate a commitment to diversifying the trade basket and increasing Russian investment in Bangladesh. High-level visits, such as the prominent appearance of Russian Foreign Minister Sergey Lavrov in Bangladesh, serve as symbolic checkpoints on this trip, underlining the strength of their partnership. Economic talks, such as those between Foreign Minister Dr. Hasan Mahmud and Russian Ambassador Alexander Mantytsky, highlight the common goal of increasing trade and investment.

In managing the complexity of international relations, both countries refute claims of foreign involvement while recognizing the legitimacy of the Bangladeshi administration. These debates, and their subsequent positive pattern, reflect a larger story of mutual collaboration and shared historical links, assuring the economic success and stability of the Bangladesh-Russia relationship. As we look further into these recent events, we discover the many layers of this long alliance, highlighting the unshakeable link that characterizes Bangladesh’s economic landscape with Moscow.

New Developments Between Dhaka – Moscow Trade Relation

Bangladesh’s Garment Exports to Russia: Defying Odds Amidst War

Despite the hurdles faced by the Russia-Ukraine war, Bangladesh’s garment exports to Russia have shown extraordinary endurance. Despite early interruptions and payment processing issues, the sector responded by using other routes via Poland and Hamburg, Germany. Accepting payments in Chinese yuan or US dollars facilitated transactions, resulting in an amazing 45.65% rise in the first quarter of the fiscal year 2022-23, totaling $42.30 million. This increase demonstrates Bangladesh’s garment sector’s flexibility and capability in capitalizing on possibilities provided by changes in the global trading scene.

Year Bangladesh’s RMG Exports to Russia (in million USD) Growth Rate (%)
2020-21 473.54 (FY)
2021-22 639 (FY) 35 %
2022-23 423 (FY) -38%
2023-24 (Q1-Q4) 125.80 (July-October) 39.42%

Russia’s Strategic Trade Propositions Elevate Economic Ties with Bangladesh

Recent events highlight Russia’s strong attempts to strengthen economic cooperation with Bangladesh. Russia proposes a government-to-government (G-to-G) method to export agricultural items while also meeting Bangladesh’s long-term energy demands via LNG supplies. Notably, Bangladesh exported $639 million in goods and services to Russia during the fiscal year 2021-22, while experiencing hurdles such as Western sanctions. The comprehensive plan also includes currency exchange options and significant investments in Bangladesh’s economic zones, indicating a strategic commitment to developing a mutually beneficial economic collaboration.

Russia-Bangladesh Economic Nexus

In spite of worldwide difficulties, economic relations between Russia and Bangladesh have fortified, as indicated by the substantial surge in Bangladesh’s exports to Russia during the initial quarter of the fiscal year 2023-24. In total, exports increased by $136.47 million, or 37.80%, with the garment industry accounting for a significant portion of this growth at $125.80 million, or 39.42%. The increase in apparel imports from alternative sources by Russia, which is a consequence of Western sanctions, has created a strategic market opportunity for Bangladesh. The trade data illustrates the adaptability and resilience of the economic relationship between Russia and Bangladesh amidst worldwide uncertainties.

Bangladesh’s Trade with Russia (In million USD)

Year Export Import
2017 464 465
2018 485 653
2019 548 630
2020 487 782
2021 665 482
2022 639 594

Upon examining historical trade data, it becomes evident that the economic partnership between the two countries has been steadily expanding, as evidenced by the most recent figures which indicate a positive trend. As of January 31, 2024, ongoing negotiations between Dhaka and Moscow pertain to the augmentation of Russian investments, the expansion of their respective export portfolios, and the completion of pending Memorandums of Understanding (MoUs). The emphasis on dual-currency trade signifies a proactive stance, underscoring a mutual dedication to bolstering financial flexibility and fostering economic expansion. In general, the present condition of bilateral economic cooperation demonstrates a favorable trend, suggesting that the two nations are capable of addressing obstacles and adjusting to shifting international conditions.

A Strategic Proposal for Wheat Facilitates Increased Bilateral Trade

The potential for increased wheat exports from Russia to Bangladesh, which was communicated on January 18, 2024, indicates a positive development in the direction of the bilateral economy. The substantial wheat supply of 2.7 million tons in 2023 highlights the potential for increased trade between the two countries. This proposition not only serves to advance the food security objectives of Bangladesh but also underscores Russia’s commitment to cultivating a strong economic alliance.

A Milestone in Strategic Partnerships: Bangladesh’s Yuan Payment for the Rooppur Nuclear Plant Signals Geopolitical Shifts

The geopolitical ramifications of Bangladesh’s choice to remunerate Russia in yuan for the Rooppur Nuclear Power Plant project challenge the dollar’s preeminence in international trade. This action not only initiates a more extensive transition towards alternative currencies but also forges strategic alliances, which may have an impact on global power structures and alliances. The initiative demonstrates a proactive approach to influencing the trajectory of economic collaborations in the future.

Multifaceted Cooperation: Relations between Russia and Bangladesh Prosper in Diverse Sectors

The post-meeting statements issued by Russian Ambassador Mantytskiy underscore the extensive collaboration that exists between Russia and Bangladesh in various domains, including politics, economics, technology, culture, and science. Constant cooperation in vital domains such as energy and food security exemplifies the robust and progressive character of the bilateral alliance. The positive perspective signifies a collective dedication to reciprocal development and affluence.

To summarize, Bangladesh and Russia’s decades-long economic connections have endured the test of time, maturing into a multidimensional alliance based on historical collaboration. The connection began with major Soviet Union backing during Bangladesh’s War of Independence in 1971 and has grown greatly since then. Recent developments in Bangladesh-Russia economic ties tell a story of resilience, adaptation, and common goals for mutual prosperity. Notably, the garment industry’s exceptional survival throughout the Russia-Ukraine conflict demonstrates Bangladesh’s economic resiliency. Despite early interruptions and payment processing issues, the industry saw 45.65% growth in the first quarter of the fiscal year 2022-23. Russia’s strategic trade proposals, which include a government-to-government (G to G) structure for agricultural exports and LNG supplies, demonstrate a forward-thinking attitude. Bangladesh’s total exports to Russia increased by 37.80% in the first four months of the fiscal year 2023-24, indicating a favorable trend. As the nation’s investigate opportunities for dual-currency commerce, wheat exports, and strategic initiatives, Bangladesh-Moscow’s economic connection seems bright and long-lasting.

– S. M. Saifee Islam is a Research Associate at the KRF Center for Bangladesh and Global Affairs (CBGA).

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