This is Part II an examination of the impact of the Rohingya crisis.
6. Economy. Concerns about stability, potential conflicts with Myanmar, and uncertainty will further discourage private investment.
The Rohingya crisis is just one more factor to add to the concerns of the private sector. This crisis is unlikely to make a big difference. Tourism expenditures in Cox’s Bazaar will be greatly reduced over the next 12 months certainly damaging the hotel and restaurant business. There may be some respite as there is likely to be a large inflow of foreign aid workers. For Bangladesh consumers this will result in shifts of expenditures from tourism [in the Cox’s Bazaar area] to other forms of consumption. Some of this shift may be to foreign travel but our estimate is that the effect will be small. Most Bangladesh households do not choose between going to Cox’s Bazaar and going abroad. On the other hand the crisis will lead to higher government and NGO expenditures. This will increase the level of the Government deficit and act as an expansionary force on the economy. Increased foreign aid flows and foreign NGO expenditures will, along with a higher deficit, lead to more rapid economic growth. On balance the crisis will be an expansionary force on the economy. No impact on remittances or on exports should be expected. Some increase in foreign assistance expenditures will help the balance of payments but the effect will be limited. The major problems facing the economy—export growth, export diversification, power supply, Dhaka, FDI, the education system and general growth of the manufacturing sector will not be effected.
7. Military: Bangladesh will probably increase its military expenditures in the face of the crisis. Conflict with Myanmar is now more likely. This may be a further expansionary economic force. These greater military expenditures will also be needed to handle the Rohingya camps. This assumes that peace will be maintained and that Bangladesh and Myanmar will not get into a shooting war.
8. Relations with India will become frosty. If Indians throw out the 40,000 Rohingya reported to be in India there will be a lot of resentment. There will be increased anger at India for supporting Myanmar in carrying out such a nasty inhuman attack and then condoning the expulsion of Rohingya to Bangladesh. India’s behavior is very troublesome for Bangladesh. The former foreign secretary of India “reminding Bangladesh” of the alleged 20 million Bangladeshis in India was a crude threat unworthy of a senior officer of the Indian Government. All that comment did was to make Bangladeshi elites angry. The bitter truth is that there are political groups in India who are working with the Buddhists in Myanmar to carry out the ethnic cleansing. Indian’s individual response stresses the humanitarian disaster, but the Indian Government’s naive realpolitick is only annoying.
9. Relations with China will be less effected but the result is not good for China’s reputation. Although there is much hype about the money coming from China this is an illusion. In fact the real sources of financial support are the United States and Japan through the World Bank and the ADB. These flows plus the bilateral flows from Japan are in total far higher than the actual disbursed financing from India [less than $100 million per annum], Russia [less than $500 million] and China [less than $750 million] combined. There is a lot of noise about Chinese project financing but in fact there is relatively little companied to the two main development banks and Japan. The betrayal of Bangladesh’s interests by Russia, India and China is unfortunate and is a real lesson. These three countries turn out to be fair weather friends.
10. Fundamentalism and security: There is no doubt that some Rohingya will be attracted to Islamic fundamentalist views. Why would you think otherwise when the young men have seen their families abused and killed? Young men will seek outlet for their anger. Most Rohingya will find solace in their God and in prayer. ISIS agents and promoters of fundamentalist views will try to corrupt the Rohingya and lead them towards violence. This is an issue that the Government is alert to its importance, but nevertheless it is deeply dangerous. Given the vulnerability of the young men to the appeal to fight for vengeance and fairness, great care must be taken to prevent fundamentalist jihadist recruiters from indoctrinating young Rohingya. The development of jihadist Rohingya will be contained by the work of the Government in both preventing attempts to indoctrinate young men and women and also by providing an educational system that guards against such efforts. The authorities must be very careful, balancing firmness and compassion.
In summary Bangladesh faces serious challenges in managing the influx of Rohingya. Contrary to most opinion our view is the impact is limited on both politics and economics. The political impact will be modest and largely improve the reputation of the AL. The economic impact will be mildly expansionary. There will be a large impact locally on Cox’s Bazaar for the next few years. There are security concerns but the security forces will contain this. Of course all will not go well. There will be serious epidemics, much human suffering, and severe psychological damage to the Rohingya children. But the Bangladesh nation will survive this challenge with honor.