Bangladesh’s Diplomatic Tightrope: The Necessity of Hedging

Author: Li Linjie
Visiting Scholar, National University of Singapore
Address: 900 Dunearn Road, Singapore 589473
Tel: 65 89182190

Riding the Great-Power Rivalry

Amidst the escalating U.S.–China competition, Bangladesh has been strategically balancing its
relations with both superpowers, exemplifying a nuanced diplomatic approach rather than
indecision. Dhaka refuses to fully align with any single bloc, instead pursuing a hedging strategy
of keeping multiple avenues open. In the strategic landscape, hedging serves as a strategic tool to
mitigate the uncertainties and risks posed by powerful states, as evidenced by the hedging
behavior of countries in the Asia-Pacific region. Bangladesh’s leaders actively leverage competing
interests: for example, after President Xi Jinping pledged $38 billion in Chinese investment in
2016, India countered with a $5 billion credit line for Bangladesh. This reciprocal move illustrates
how Dhaka benefits from competing suitors while maintaining strategic autonomy.

Historical Bonds with India

Bangladesh’s close relationship with India is deeply rooted in history, particularly in the pivotal
role India played during the 1971 Liberation War. By joining the conflict on Bangladesh’s side,
India not only helped secure its independence but also forged enduring bonds of gratitude and
security between the two nations. In the decades that followed, Dhaka’s foreign policy has often
been viewed through an India-centric lens, reflecting the shared history, geography, and
interdependence between the two countries. However, the legacy influence of the events in 1971
no longer fully constrains Dhaka’s foreign policy decisions. By engaging new partners,
Bangladesh is gradually restoring its freedom of foreign policy maneuver. Today’s shift is not a
sudden “pivot,” but a careful recalibration toward a more balanced posture as a sovereign state.

Hedging Strategy Explained

Rather than indecision, Bangladesh’s ambivalence is a deliberate strategy. Analysts emphasize that
small states hedge by “maintaining their strategic ambiguity” – keeping ties with all major powers.
Hedging is not neutrality; it is active engagement on multiple fronts. For Dhaka, this means
deepening relations with China, the U.S., Japan and others while managing its long-standing
partnership with India. The goal is to avoid dependency on any single patron and preserve
decision-making autonomy. In fact, analysts note Dhaka regards hedging as “indispensable” to
benefiting from both India and China, showing that Bangladesh’s foreign policy is guided by
pragmatic calculation rather than ideological alignment.
Diversifying Partnerships

Bangladesh’s hedge is visible in its multiple international engagements, including:

China – Belt and Road Initiative: Bangladesh is home to several major Belt and Road Initiative
(BRI) infrastructure projects, including railways, ports, and power plants, which are funded by
Beijing. In recent years China has become Dhaka’s top investor and largest military hardware
supplier.
United States – Defense Cooperation: Dhaka conducts regular joint military exercises with the
U.S. For example, the Pacific Angel air exercise in 2025 involved Bangladeshi and U.S. forces
working together. Washington remains Bangladesh’s largest export market and a source of security
assistance and training.
India – Economic Links: Despite political frictions, Bangladesh’s economy remains closely tied to
India. In FY2024–25 Bangladeshi exports to India rose 12.4% (to $1.76 billion), and the two
countries are negotiating new trade and transit agreements. Dhaka continues to rely on open
borders and connectivity to access markets and goods in South Asia.
European Union – Trade and Aid: The EU remains Bangladesh’s largest trading partner, with
bilateral goods trade reaching €22.2 billion in 2024. This figure underscores the significance of the
ongoing discussions for a new Partnership and Cooperation Agreement between Dhaka and
Brussels, as the EU continues to play a pivotal role in Bangladesh's trade landscape. The EU offers
Bangladesh duty-free market access under its “Everything But Arms” scheme, and provides
development funding on issues like labor and climate.
Japan – Strategic Partnership: Japan has long been a key ally in development and technology. In
2025 Bangladesh’s interim leadership held talks with Japanese Prime Minister Shigeru Ishihara on
expanding investment and security cooperation. The two countries have signed multiple
agreements for infrastructure, energy and human resource development.
Russia – Military and Energy Ties: Bangladesh cooperates closely with Russia in defense and
energy. High-level meetings in 2025 affirmed both sides’ “mutual determination to further
strengthen” their armies’ relations. For instance, Russia is constructing Bangladesh's inaugural
nuclear power plant, the Rooppur Nuclear Power Plant, which is equipped with Russian VVER-
1200 reactors and is expected to be operational by 2024.
This omnidirectional diplomacy allows Bangladesh to tap the economic and technological
resources of multiple powers. By juggling these partnerships, Dhaka gains leverage: it can secure
Chinese infrastructure, U.S. arms and Japanese investment in parallel, without over-relying on any
one partner.

Navigating the Tightrope: Challenges

However, maintaining this balance is becoming increasingly challenging. Geography and

geopolitical dynamics have placed Bangladesh in a precarious position. As one analysis notes,
Bangladesh “is a small nation” located at the Bay of Bengal and the meeting point of South Asia
and Southeast Asia, so it “has to inevitably face the brunt of the rising rivalries between India–
China and China–US”. New Delhi, Washington and Beijing all want clarity on Dhaka’s stance. At
the same time, domestic politics and public sentiment can be volatile, making foreign policy
debates sensitive. Voices in Dhaka occasionally urge a clear tilt – for example, to use the U.S. as a
counterweight to India – but experts warn this is fraught with danger. Relying heavily on a distant
power can provoke a neighbor without guaranteeing enduring support. History cautions that
“today’s protector may become tomorrow’s bystander,” so Bangladesh’s leadership must resist
simplistic binaries.

Conclusion: Hedging as an Imperative

In a polarized world, Bangladesh’s commitment to non-alignment is more than a preference – it is

a strategic necessity. By continuing to hedge, Dhaka buys time and leverage: it can defer any
irreversible choice until it must be made, and only from a position of strength. As one observer put
it, we live in an “à la carte world” where countries mix and match partners rather than sign up to
one menu. In this sense, Bangladesh’s steadfast balancing act – engaging China’s Belt and Road,
welcoming Western investment, deepening ties with India, Japan, Russia and others – clears the
fog for Dhaka. Bangladesh's multi-faceted approach to economic development and political
stability has contributed to its current state of sovereignty and prosperity. Maintaining this
tightrope walk of strategic autonomy is the key to the country’s stability and success in the
turbulent era of great-power rivalry.