ECONOMIC DIPLOMACY OF BANGLADESH: ODA IN PERSPECTIVE

Fluctuating Country Programmable Aid (CPA), shifting priority from grants to loans and diverse preferences for funnelling foreign aid are radical developments of global aid diplomacy in recent times. This fact indicates how foreign aid is going to be a key subject matter of economic diplomacy. Though economic diplomacy of a developing state like Bangladesh has been shifting from foreign aid to international trade, the former is still significant to meet the development priorities of the country.

A set of literature explains indistinctiveness of economic diplomacy and foreign aid. Haan1 shows that economic diplomacy is a key to handle outbound and inbound Official Development Assistance (ODA). Dahal et al.2 state that economic diplomacy 

Mohammad Jasim Uddin, PhD is Senior Research Fellow, Bangladesh Institute of International and Strategic

Studies (BIISS). His e-mail address is: jasim_biiss@yahoo.com.
©Bangladesh Institute of International and Strategic Studies (BIISS), 2016.
1
 Arjan de Haan, “Development Cooperation as Economic Diplomacy”, The Hague Journal of Diplomacy, Vol.
6, Issue 1, 2011, pp. 203-217.
2
 Madan Kumar Dahal, Moham Man Sainju, Mohan Prasad Lohani, Shankar Prasad Sharma and Umakant
Parajuli, “Nepal: A Generic Guideline for Development through Economic Diplomacy”, 2008, available at 

deals with foreign aid usually disbursed for directing development programmes and the former plays a significant role to attain climate fund. Accordingly, climate diplomacy is a key subject matter of aid diplomacy. Rana3 argues that economic diplomacy eases tensions between Development Partners (DPs) and recipients. Showing aid diplomacy for donors, Baranay4 states that “economic diplomacy is the universal mechanism of involving the countries in direct dependence on donors.” He also quotes S. Rogov, “economic aid has political consequences.”5 Thus, economic diplomacy and ODA are interlinked. 

Existing literature on economic diplomacy of Bangladesh usually deal with external economic aspects of the country. Therefore, the issue of ODA comes, though not with a particular wide-ranging focus, in some of the literature. On what issues, at what levels, with which countries and organisations, by which actors and through what instruments, Bangladesh’s ODA-centric economic diplomacy should be advanced? Such explicit questions are yet to be studied. This paper is an attempt to address this research gap. It also reviews (a) long-term flow of external assistance (food, commodity and project aid), grants and loans received by Bangladesh, (b) major DPs of the country, their focused sectors and conditionalities, (c) sector-wise long-term disbursement of ODA in Bangladesh and; (d) long-term aid summary (pipeline, commitment and disbursement) of the country. It is to note that the paper is not an effort to (i) examine whether/how much ODA is required in Bangladesh’s development context and (ii) offer policy measures for specific actors assigned to deal with ODA-centric economic diplomacy of the country. 

The paper adopts a framework of economic diplomacy given by S. Khatibzadeh.6 The framework is consisted of five components: issues, actors, levels and instruments of economic diplomacy and countries with whom to practice economic diplomacy. As the components are qualitative and have causal relations with politicoeconomic institutions, the framework is adopted and applied on a single case, Bangladesh, and on a major pillar of economic diplomacy, ODA.7 For data elicitation, the paper examines documents (e.g., existing literature) and interview transcripts. Documentary information helps tactics of collecting explicit data and usually comes from a variety of sources e.g., government documents, academic studies, clippings and articles sourced from print media, documents from various organisations etc. On the other hand, the paper adopts semi-structured interview comprised of four phases: 

http://www.ifa.org.np/pdf/diplimacy.pdf, accessed on 12 June 2013. 3

 Kishan S. Rana, “Economic Diplomacy: What Might Best Serve A Developing Country”, International Journal
of Diplomacy and Economy, Vol. 1, Issue 3/4, 2013, pp. 232-247. 4
 Pavol Baranay, “Modern Economic Diplomacy”, 2009, p. 3, available at http://www.dec.lv/mi/Baranay_
Pavol_engl.pdf, accessed on 10 March 2011. 5
 Ibid. 6
 Saeed Khatibzadeh, “Iran’s Economic Diplomacy: An Assessment of Iran Economic and Trade Cooperation
with Japan, China and South Korea”, V.R.F. Series No. 417, 2006, available at http://www.ide.go.jp/English/
Publish/Download/Vrf/pdf/417.pdf, accessed on 26 December 2011. 7
 Mohammad Jasim Uddin, “Conceptualising Economic Diplomacy”, BIISS Journal, Vol. 36, No. 2, 2015, pp.
133-150.  

constructing topic guide, selecting respondents, arranging interview and setting up of interpretive outlines in realising relations of actors with predefined theoretical concepts and observations. The paper undertakes interpretive approach, a method of qualitative data analysis. The approach is of two types – thin and thick. To analyse scope of and observations on Bangladesh’s ODA-centric economic diplomacy, thick interpretation is adopted.

The paper reveals that understanding international aid dynamism, examining aid-oriented terms and conditions, meeting gap between commitment and disbursement of ODA, accessing Aid for Trade (AfT) and mobilising aid for addressing climate vulnerabilities are some of the major issues of Bangladesh’s ODA-centric economic diplomacy. Relevant actors, importantly the Government of Bangladesh (GoB) need to be aware of the issues while practicing economic diplomacy. The paper is structured as follows. Section two reviews literature. Section three explains several aspects of ODA in Bangladesh. Section four addresses economic diplomacy of ODA in Bangladesh perspective. Section five concludes the paper. 

Since its independence, Bangladesh accelerated its efforts towards practicing economic diplomacy though the term flourished in the country significantly in the 1990s. Tajuddin8 discussed how vital economic diplomacy was immediately after Bangladesh’s independence. Shafiullah9 explained important elements (e.g., foreign assistance, investment, manpower export, trade in goods, etc.) of Bangladesh’s economic diplomacy. Hasan10, Haq11 and Singh12 focused on linking economic diplomacy with foreign policy of Bangladesh. Absar13 stated that rules of the World Trade Organization (WTO) are planned in a way that the Least Developed Countries (LDCs) like Bangladesh are concerned with several trade conditionalities. Therefore, the country should be aware of labour and environmental standards while practicing economic, particularly trade diplomacy. Hussain14 identified nexus between economic diplomacy and foreign policy of Bangladesh. Hussain also showed how important Southeast and East Asia would be for Bangladesh’s economic and trade diplomacy. 8

 Mohammad Tajuddin, “Diplomacy of Bangladesh in the Formative Phase”, BIISS Journal, Vol. 19, No. 1, 1998, p. 68. 9

 M Shafiullah, “Economic Diplomacy and Bangladesh Syndrome”, The Independent, Dhaka, 27 December 2001. 10 A. Al Hasan, “Economic Foreign Policy (Diplomacy): Perspective Bangladesh – A New Concept”, Unpublished
Paper, Defence Services Command and Staff College, Bangladesh, 2002. 11 M. S. Haq, “Economic Diplomacy and Bangladesh”, The Independent, Dhaka, 18 June 2002. 12 Narendra Kr. Singh, Bangladesh Diplomacy and Foreign Policy, New Delhi: Anmol Publications Pvt. Ltd.,
2003.
13 Syeda Sharmin Absar, “Economic Diplomacy for Bangladesh: A Prescription for Less Developed Countries
in the World Trade Organisation Era”, Journal of South Asian Studies, Vol. 26, No. 3, 2003, pp. 349-57. 14 Akmal Hussain, “Bangladesh’s New Foreign Policy Direction in Southeast and East Asia: Perspective and
Goals”, Journal of International Development and Cooperation, Vol. 12, No. 1, 2005, pp. 1-14.

With some specific examples, Abdin15 revealed that foreign policy of Bangladesh should give special emphasis on its economic diplomacy. Reasons behind this were to dig up both geo-strategic and geo-economic platforms in order to take advantages of the forthcoming multilateralism. It would help Bangladesh in mobilising inward Foreign Direct Investment (FDI), availing modern technical and technological knowhow, boosting trade and receiving inbound ODA. Rashid16 supported the arguments of Abdin and also argued how important economic diplomacy in the coming decades would be for Bangladesh in negotiating complicated global economic issues. The GoB set some key tasks of Bangladesh’s economic diplomacy – “ensuring greater market access for exports, expanding overseas employment opportunities, increasing FDI inflow and exploring terms of ODA suited to developmental needs.”17 

Since second decade of the 21st century, literature on economic diplomacy of Bangladesh began to be context and sector specific. Ahmed18 argued that international economic diplomacy would in near future be increasingly guided by both bilateral and multilateral dialogue and cooperation. Bangladesh has to understand such dynamism not only for its economic survival but also for promoting its growth and development. Dorussen et al. 19 critically assessed how significant economic diplomacy would be for South Asia. Bangladesh as a part of the subcontinent should realise it. Sobhan20 focused on economic diplomacy and set its priority tasks for Bangladesh. The tasks are: signing Memorandum of Understanding (MoU)/agreement on global trade, FDI and avoidance of double taxation; tackling issues on debt; gaining ODA for both infrastructure and climate change issues. Islam21 questions whither economic diplomacy of Bangladesh. Shikha22 reassessed nexus between foreign policy and economic diplomacy of Bangladesh. She also showed how economic diplomacy at regional level would be beneficial for Bangladesh’s trade, FDI and ODA. Uddin23 argued that Bangladesh is yet to meet its foreign policy goals significantly through exercising economic diplomacy. Rahman24 observed that the country would require producing diverse sets of negotiators having specialisation in varied fields.  

15 Md. Joynal Abdin, “Economic Diplomacy”, The Daily Star, Dhaka, 31 August 2009. 16 Harun ur Rashid (ed.), Bangladesh Foreign Policy Realities, Priorities and Challenges, Dhaka: Academic Press

and Publishers Library (APPL), 2009.
17 Ministry of Foreign Affairs (MoFA), Government of Bangladesh, “Diplomatic Initiatives and Activities of the
MoFA in 2009”, Bangladesh Foreign Policy 2009 in Perspectives, 2009, p. 68. 18 Hemayetuddin Ahmed, “Economic Diplomacy in A Multi-polar World”, The Daily Star, Dhaka, 07 January
2010.
19 Han Dorussen, Syed Mansoob Murshed and Hugh Ward, “Any Tied that Bind? Economic Diplomacy on
the South Asian Subcontinent”, in Peter A.G. van Bergeijk, Maaike Okano-Heijmans and Jan Melissen (eds.),
Economic Diplomacy Economic and Political Perspectives, The Netherlands: Martinus Nijhoff Publishers, 2011. 20 Farooq Sobhan, “Focus on Economic Diplomacy: the Priority Tasks”, 2011, available at www.bei-bd.org/
downloadreports/publicationdownload/55/download, accessed on 23 November 2011. 21 M. Serajul Islam, “Whither Bangladesh’s Economic Diplomacy?”, The Daily Sun, Dhaka, 22 October 2012. 22 Meherun Nesa Shikha, “Economic Diplomacy between Bangladesh and East Asia”, The Daily Star, Dhaka,
19 May 2012.
23 Mohammad Jasim Uddin, “Economic Diplomacy and Foreign Policy”, The Daily Star, Dhaka, 28 February
2013.
24 AKM Masudur Rahman, “Economic Diplomacy and Bangladesh”, The Financial Express, Dhaka, 20 April 2014. 

Literature aforesaid were mainly focused on important aspects of economic diplomacy and foreign policy of Bangladesh as well as link between the two. A few were on why is economic diplomacy important for Bangladesh allied with subsidiary international economic issues. Some were on prioritising areas of identifying challenges and specifying areas-specific potential outlooks for Bangladesh’s economic diplomacy. Till now, sectors or contexts- specific major undertakings on economic diplomacy of the country are understudied. On what issues and at what levels ODAcentric economic diplomacy should be advanced? What are the major countries and organisations and who are the main actors? What are the vital instruments to address the major issues? Available literatures on Bangladesh’s economic diplomacy are yet to focus the questions and these are the mainstays of this paper. Before addressing these questions, the paper looks into a discourse of ODA in Bangladesh.

Bangladesh had to seek ODA to meet its development needs immediately after its independence. Several states, Global Financial Institutions (GFIs), voluntary and other organisations did respond. In 1974, after setting up of Bangladesh Aid Group (BAG) now known as Bangladesh Development Forum (BDF) aid started to flow officially to Bangladesh. In the BAG/BDF meeting, the GoB used to highlight its development plan and financial needs for upcoming year while DPs used to assess aid effectiveness and commit accordingly.25 Economic Relations Division (ERD) under the Ministry of Finance (MoF) is now a coordination point where both parties meet and assess their demands. Analyses of the flow of external assistance (Annex 1), grants and loans received (Annex 2), ODA by twenty major DPs (Annex 3) and disbursement by economic sectors (Annex 4) over the last four and half decades give an idea about the following: 

(i) changing quantity and composition of aid in Bangladesh e.g., project assistance, technical assistance and mainly loans have largely replaced contemporary grants and other forms of aid,

(ii) decreasing and increasing contribution of bilateral and multilateral [e.g., World Bank (WB), Asian Development Bank (ADB), International Monetary Fund (IMF) DPs respectively to total ODA, and

(iii) changing sectoral composition of aid in Bangladesh.  

In addition, some recent changes include:  

25 Rehman Sobhan, The Crisis of External Dependence: The Political Economy of Foreign Aid to Bangladesh,

Dhaka: University Press Limited, 1982.  

(a) inflow of bilateral aid significantly from emerging sources(e.g., South Korea, Kuwait, Russia, China and India) rather than from some of the traditional ones (e.g., US, Canada, Kingdom of Saudi Arabia (KSA) and Australia),

(b) reduction of aid dependency and dropping of net aid flow by far to Bangladesh,

(c) declining contribution of aid to deficit financing, and

(d) changing political economy and operational modalities of foreign aid in Bangladesh.26  

In the 1980s and until the late 1990s, aid was guided by Structural Adjustment Policies (SAP). Since then conditionalities (Annex 5) for aid started to focus more on human rights, institutional reforms and governance issues of Bangladesh. It continued even after undertaking Poverty Reduction Strategy Paper (PRSP), a policy direction to gain aid and adjust needs of recipients and DPs. PRSP was a substitution of Five-Year Plan (FYP). However, the GoB continues to negotiate with DPs in line with its FYPs. Since late 1990s, there were further developments in Bangladesh’s aid programmes. For example, increasing amount of aid started to inflow to the Non-Government Organisations (NGOs), activities related to rural poverty, socioeconomic wellbeing of rural women and private sector development. The aims of growing sum of aid in private sector development were to facilitate market-oriented reforms, make the scenario of FDI and business friendly environment better and to support involvement of private entities in developmental activities. Besides, two recent developments are ODA in AfT27 and climate vulnerability. Still, projects funded by AfT in Bangladesh focus on developing trade policy and regulation, international trade, infrastructure related to trade and productive capacity. Climate aid is a recent experience. Bangladesh has already created Climate Change Trust Fund (CCTF) by its own resources. On the other hand, Bangladesh has formed Climate Change Resilience Fund (BCCRF) with the help of UK, Sweden, Denmark, EU, Switzerland, Australia and the US. While some of the donors (e.g., UK) have already assured to contribute more aid to BCCRF and said that the aid will not be mixed up with traditional ODA, some (e.g., Germany) have agreed to supply grants to the programmes on adaptation and mitigation.28  

26 Binayak Sen, interviewed by The Daily Star, Dhaka, on 07 June 2012, said: “In our economic reality we

cannot avoid foreign assistance, at least for now.”
27 Hasanuzzaman, “Aid for Trade (AfT) Agenda: Moving Ahead”, Journal of International Affairs, Vol. 14, No.
1&2, 2010, pp. 85-102; Hasanuzzaman, “Assessing the Aid for Trade (AfT) Agenda: Bangladesh Case Study”,
Asia Pacific Business Review, Vol. VI, No. 2, 2011, pp. 5-14. 28 The GoB as of 2015 has received more than hundred million as climate fund. For details see, Saleemul
Huq, “Innovation in Climate Finance”, available at http://www.icccad.net/innovation-in-climate-finance/,
accessed on 02 October 2015.

It is to be noted that over the decades, the GoB has failed to utilise approved project assistance. Again, DPs have not disbursed as much as they committed. In effect, aid gap among the pipeline, commitment and disbursement increased annually (Annex 6). Both sides have identified some reasons. Low capacity to absorb aid, poor capacity to implement projects, bureaucratic bottlenecks, lack of good governance, delays in appointment of consultants and awarding contracts are identified by DPs. On the contrary, the GoB has identified several reasons for shrivelling of overseas aid: (a) delays to get permission from DPs in different stages of tender process (b) lack of matching fund to use project loans (c) error in designing project (d) elongated duration for land acquisition (e) delays in employing or changing consultant (f ) delays in calling re-tender (g) contractor’s aversion to work due to rising expenditure (h) delays in implementing projects due to intricacy sometimes from high court, and (i) politicisation of bidding processes and delays in the bidding process. However, hitch continues between the DPs and GoB on the ways of utilising aid and conditionalities imposed. A contradiction was observed between the GoB and WB in funding Padma Bridge. In effect, two other donors in the project, ADB and Islamic Development Bank (IDB), also denied supplying loans to the project. At times, Multi Donor Trust Fund (MDTF) produces dilemma; if one denies, others follow it and this is because of intrusive approach of the DPs. Interaction between DPs and the GoB over foreign aid is thus friendly in public but sometimes conflicting practically.29 Therefore, the issue of aid effectiveness comes to the fore. 

The GoB has been involved with global initiatives on aid effectiveness. In 2005, it signed Paris Declaration (PD).30 Since then, it participated in several events focusing on harmonising global aid and enhancing its effectiveness. In 2008, the GoB agreed with Accra Agenda for Action (AAA) that is planned to fortify and intensify implementation of the PD.31 Both the Declaration and the Agenda helped the GoB formulate Harmonisation Action Plan (HAP) to publicise PD and speed up its functioning. The GoB in 2010 signed a Joint Cooperation Strategy (JCS) with its DPs to lessen hitch between the two. The aim of the JCS is to expedite effective aid utilisation and functioning of development projects. Thereafter, HAP and JCS have 

29 Naomi Hossain, “The Real-life Relationship between Donors and Recipients in Bangladesh: Explanatory

Research into the Sociology of Aid Relations”, Unpublished Paper, Institute for Development Studies,
University of Sussex, February 2004.
30 PD is a practical action-oriented roadmap to improve quality of aid and its impact on development. It
gives implementation measures and establishes monitoring system to assess progress and ensures that
donors and recipients hold each other accountable for their commitments. It outlines five principles for
making aid effective: ownership, alignment, harmonisation, results and mutual accountability. For details,
see at http://www.oecd.org/dac/effectiveness/parisdeclarationandaccraagendaforaction.htm, accessed on
16 August 2015.
31 AAA takes stock of progress and sets agenda for accelerated advancement towards Paris targets.  It
proposes four areas for improvement: ownership, inclusive partnerships, delivering results and capacity
development. For details, see, ibid.  

produced two developments: (i). growing number of joint arrangements in the form of Sector-Wide Approach (SWAp) and partnerships under Multi-Donor Trust Fund (MDTF); and (ii). exercising common procedures in financial management and procurement in case of partnerships under the joint arrangements.32 On the other hand, Bangladesh has become one of the few countries in the world to set up a locally developed online aid information platform called Aid Information Management System (AIMS) - a web-based software application that helps Bangladesh to track and manage its aid flows. To manage aid in a coordinated way, the GoB has also created Aid Effective Unit (AEU) in its ERD. Besides, a Local Consultative Framework (LCF) is launched jointly by the GoB and DPs to evaluate development projects. Again, holding of meetings among DPs and Project Directors in ERD has been a regular phenomenon. These help the GoB improve interaction with DPs, speed up inflowing committed aid and reach a consensus on how to further utilise disbursed aid. Even after that, the GoB needs to pay attention to aid-driven developmental activities to be planned, executed and monitored well.

Availability of ODA for a recipient and its management clearly fall within the rubric of economic diplomacy.33 Persistent and required inflow of ODA is vital for a recipient like Bangladesh and the inflow relies partly on how Bangladesh showcases herself before international community and fits it in economic diplomacy of global aid. It is thus significant to recapitulate on which issues, at what levels, with which countries, by what actors and through what instruments, Bangladesh’s ODA-centric economic diplomacy should be advanced. 

Supplying 0.7 per cent of gross national income by rich economies as ODA to low-income economies is a global consensus. Some of the rich economies are yet to meet the consensus. Likewise, DPs are yet to disburse what they have committed. Therefore, issues of lessening gap between commitment of ODA and its disbursement, assessing preconditions of ODA effectively and realising dynamism of global ODA are crucial.34 These will help Bangladesh understand the rationales of having ODA and carrying out its implementation. One of the 

32 Economic Relations Division (ERD), Ministry of Finance (MoF), Aid Effectiveness and Bangladesh Context,

Aid Effectiveness Unit, Foreign Aid Budget and Accounts (FABA), Government of Bangladesh, 2012.
33 Kishan S Rana and Bipul Chatterjee, “Introduction: The Role of Embassies”, in Kishan S Rana and Bipul
Chatterjee (eds.), Economic Diplomacy: India’s Experience, Jaipur: CUTS International, 2011, pp. 1-23. 34 Author’s interview with Dr Maxim Basak, Second Secretary, Embassy of the Russian Federation in
Bangladesh, in 2014.  

important sources of Bangladesh’s ODA is Japan. Sometimes, Bangladesh’s uneconomical consumption of Japanese ODA and recent initiative of Japan to curb its ODA for low-income states could reduce Japan’s ODA to Bangladesh. On the other hand, Japan is uneasy to MDTF since engaging more than one DP in a single project creates dilemma. Bangladesh has to exercise effective economic diplomacy to respond to the issues and should deepen its interaction with Japan to get ODA uninterruptedly. Besides, there are some developing countries (e.g., Russia, India, China, etc.) that are emerging as the new DPs. Economic relations between Bangladesh and the developing countries are growing. Therefore, assessing whether the emerging DPs could be the new sources of ODA for Bangladesh is important. 

It was a fact that pulling out of WB loans for Bangladesh’s Padma Bridge gave rise to off-putting impression over other donors. In effect, ADB and Japan International Cooperation Agency (JICA) called their loans off to the project. Lessening hiccups among the GoB and GFIs (e.g., WB, ADB, JICA, etc.) as well as gaps between or among the GFIs are crucial. Since, it could interrupt persistent inflow of ODA to Bangladesh. Again, poor implementation in Annual Development Programmes, low Country Policy and Institutional Assessment (CPIA) rating and lack of consensus on the modalities of ODA are critical challenges of Bangladesh to avail sufficient International Development Association (IDA) allocations. Therefore, the issue of how to fully access allocations provided by IDA is important. Another vital issue is AfT. Despite unconvincing negotiation on Doha Development Agenda (DDA) and economic recession in Europe, both AfT commitment and disbursement are in rising trend.35 AfT is going to be potential as it helps developing economies improve transport connectivity, trade-related capacity building and realise benefits of liberalising trade. Though multiparty DPs are eager to supply growing ODA to facilitate international trade of developing economies, Bangladesh has not yet received adequate fund from such donors on its trade-related aspects. The GoB needs to push DPs for supplying fiduciary assistance to Bangladesh’s infrastructure-related development projects to promote trade-facilitation measures of the country. Therefore, negotiating persistently at multilateral level (e.g., the WTO) to avail required amount of AfT and upgrading existing mechanisms of releasing ODA in utilising AfT funds effectively are significant.  

Like AfT, ODA for climate change related issues is almost recent. The GFIs, some of the Organisation for Economic Co-operation and Development (OECD) states and globally agreed arrangements on climate change issues are committing ODA for the LDCs to help them face climate change related hazards. Therefore, 

35 Organisation for Economic and Cooperation Development (OECD), Aid for Trade and Development Results:

A Management Framework, The Development Dimension, OECD Publishing, 19 June 2013.

competition to avail such ODA is growing among the LDCs. Again, some of the DPs want to mix up traditional ODA and assistance for climate change issues. The LDCs argue that ODA for climate change issues must be separated from contemporary ODA and provided as grants. They oppose even minimum engagement of the WB with global climate financing. The GoB should be aware of the issues. Therefore, blending of Bangladesh’s climate diplomacy with its economic diplomacy is important to avail ODA for climate vulnerabilities bilaterally and multilaterally.36 Besides, it is evident that a significant portion of global ODA is being mobilised through International NGOs (INGOs). NGOs and Civil Society Organisations (CSOs) are growing in number in Bangladesh. It is thus essential to support renowned national and local NGOs so that they can increase interactions with INGOs to get ODA.

Except loans with tough conditions, no sources of ODA should in general be left aside by Bangladesh, which are soft loans or grants as well as based on the country’s development priorities or aspirations.37 Priority thus needs to be given to countries and organisations which have already provided and are still willing to offer soft foreign assistance. Hence, some of OECD, Development Assistance Committee (DAC), Middle-east and Organization of the Petroleum Exporting Countries (OPEC) states (identified in Annex 3), along with emerging South Korea, Russia, India and China are important sources. Among the GFIs, the WB, ADB, International Monetary Fund (IMF) and IDB need to be under close eyes. It is also essential to focus on New Development Bank (NDB), Asian Infrastructure Investment Bank (AIIB), JICA, UK aid, Canadian and Switzerland International Development Agencies and UN agencies, Organisation of Islamic Conference (OIC), etc. To address climate vulnerabilities, mobilising ODA from bilateral DPs is crucial. Sources supplying generally to development projects are vital as they are committing to provide ODA also to climate vulnerabilities. The United Nations Framework Convention on Climate Change (UNFCCC), UN Collaborative Programme on Reducing Emissions from Deforestation and Forest Degradation in Developing States (UN-REDD), European Commission (EC) and United Nations Development Programme (UNDP) are important sources for climate financing. The GoB should negotiate persistently with these organisations. Economic diplomacy should also be carried out with BASIC (Brazil, South Africa, India and China) and OPEC states. Besides, three major blocs i.e. European Union (EU), the US supported by Japan and Canada, and G-77 developing countries in the UN and China are 

36 Author’s interview with Dr Qazi Kholiquzzaman Ahmad, Chairman, Palli Karma-Sahayak foundation

(PKSF), Bangladesh, in 2014.
37 Author’s interview with Dr Jiban Ranjan Majumder, Joint Chief, ERD and Economic Minister, Economic
Wing, Bangladesh Embassy in Japan, in 2014. 

important stakeholders, with whom Bangladesh needs to continue negotiation. Furthermore, other regional groups e.g. African Group, LDC Group and Alliance of Small Island States (AOSIS), Environmental Integrity and Umbrella Group should be under the close eye of GoB. Voluntary organisations providing climate funds should as well not be overlooked. 

For mobilising ODA, the GoB should focus not only on GFIs but also pay attention to bilateral, regional, multilateral and plurilateral (EU) levels. At regional level, Bangladesh needs to work on how to mobilise South Asian Association for Regional Cooperation i.e. SAARC fund. As several global organisations (e.g., UN), International CSOs (ICSOs) and INGOs offer assistance, the GoB also needs to value the sources. For climate fund, Bangladesh should first concentrate to bilateral level, as some (e.g. UK, Switzerland and Canada) of bilateral donors have already created their own climate funds, committed to supply climate aid and started disbursing some of the aid to help the most vulnerable countries. Accessing such aid by meeting conditions provided by bilateral DPs is vital. As the EU is keen to supply fund to climate change related projects, availing fund at plurilateral level is also crucial.

Although South Asian states view climate change related concerns in their own way, SAARC being a regional entity should persistently raise its voice at global forums so that multiparty sources disburse their committed funds for climate vulnerabilities in time. Bangladesh needs to be aligned with SAARC initiatives. The country should also persist negotiating at meetings of Ad Hoc Working Group on Long-term Cooperative Action under the Convention (AWG-LCA), Ad Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto Protocol (AWG-KP), Meetings of Parties (MOP), Subsidiary Body for Implementation (SBI) and Subsidiary Body for Scientific and Technological Advice (SBSTA).38 The GoB should as well negotiate with G77 and China, LDC group and wider plenary taking all parties into account. 

The Prime Minister (PM) and her Office, Ministry of Planning (MoP), Ministry of Finance (MoF), particularly Economic Relations Division (ERD), Ministry of Commerce (MoC), Ministry of Foreign Affairs (MoFA) and its overseas counterparts are important actors of Bangladesh’s ODA-centric economic diplomacy. Other actors in Bangladesh include CSOs and local NGOs, INGOs (e.g., Saferworld), embassies and consulates of major donors and offices of global, regional and unilateral financial institutions e.g., the WB, IMF, ADB, IDB, JICA, etc. 

38 Author’s interview with Dr Abdur Rob Khan, Associate Professor, North South University, and Director,

Institute of Development, Environment and Strategic Studies (IDESS), Bangladesh, in 2014. 

It is atypical that the MoFA deals with foreign aid. Rather, the MoP or MoF is usually assigned to do it. Diplomatic offices abroad maintain interactions with DPs in countries of assignments. Very few emerging states (e.g., India) appoint permanent expert on global aid in their diplomatic establishments abroad. Such practice is not available in many donor countries. What is available is growing amount of aid supplied by overseas NGOs to recipient ones. Given that, making contact, if possible, with INGOs and realising their outbound aid priorities are within the assignments of foreign embassies. Bangladesh’s foreign diplomatic offices are to understand such dynamism of global aid and increase interactions with DPs in countries of assignments. Therefore, assigning aid diplomats in vital foreign embassies of Bangladesh is important.39 

Bangladesh is one of those countries which carried out 2011 Survey on Monitoring Paris Declaration (PD). In 2008 and 2010, PD Evaluation Phase I and II were completed. The ERD under the MoF of Bangladesh took part in both evaluations. Being coordinator of Asia-Pacific region in 2011 Busan High Level Forum (HLF), it played a key role in drafting documents to be adopted in the HLF. In 2014, representatives from the ERD and MoF also played significant role participating in the high level meeting on Global Partnership for Effective Development Cooperation held in Mexico that reiterated political promise to make development cooperation effective. On the other hand, spokespersons from the ERD and MoC actively participated in several global conferences on AfT and raised their voices. However, survey, evaluation or forum aforesaid focus on aid effectiveness and thus concerned stakeholders need to continue to increase their involvement with such global arrangements. They should take attempts to achieve better ranking in identified indicators of global survey and evaluation on overseas aid.

It is to be noted that Bangladesh so far has received ODA even from such arrangements [e.g., Saudi fund, Kuwait fund, OPEC fund, Least Development Fund (LDF)] that do not have branch-offices in the country. At times, it creates dilemma e.g., inconsistent contact between donor and recipient. Therefore, disbursement of aid is delayed. It is essential to negotiate with those arrangements in order to launch branch-points in home country. It is also important to influence headquarters of some regional financial institutions (e.g., ADB) and GFIs to more empower their branch-offices placed in the recipient country. It will help the GoB taking quick decision on aid to be disbursed, minimising its aid-driven project costs and saving time.  

39 Author’s interview with Professor Shamsul Alam, Member, General Economics Division (GED), Planning

Commission, Bangladesh, in 2014.  

A recent experience is that some donors are making their priority lists where they would supply ODA in future. For example, the Netherlands has already made its priority lists. It has included Bangladesh as one of its priority countries-list to supply ODA for the long-term developmental aspects. The GoB should realise donors’ psychology40 and convince them. It is crucial to shrivel hitch among the major GFIs, bilateral donors and the GoB. Bangladesh needs to be aware of new crisis on earlier tension as well as work on future aid diplomacy (of major and new DPs) and priorities of donors. The GoB also needs to continue regular interactions with separate donors.

Besides, developing and capitalising expertise of Bangladesh prior to international review on AfT, supporting national NGOs and CSOs to create and maintain contact with INGOs and ICSOs eager to supply aid to developmental aspects are vital. Furthermore, requesting, persistently negotiating and creating pressure on donors to functionalise their new and earlier commitments on ODA, synchronising strategies and development goals of donors and the GoB are essential. Negotiating with DPs on conditionalities of aid and their flexibilisation is also essential. 

For mobilising climate fund, besides traditional sources of ODA, especially ERD, Ministry of Environment (MoE), NGOs and INGOs working on climate vulnerabilities in Bangladesh and their experts are key actors. DPs, global communities aware of climate change issues, three major and other regional blocs identified in section 4.2 are also vital. One of the important instruments for mobilising climate aid is to take active part in climate change related bilateral, regional and multilateral forums in order to demand Bangladesh’s needs justifiably. Dispatching delegations comprised of public and private (e.g., NGOs, CSOs, professionals, media) entities to the Conference of the Parties (CoPs) is essential. It is also essential to increase diplomatic initiatives for being a co-chair or member of Technology Executive Committee (TEC), Technical Assistance (TA) and high-level discussion groups on climate finance for helping to design governance and structure of Green Climate Fund (GCF). Besides, the GoB needs to be fully aware of First Start Finance (FSF), Global Climate Fund (GCF), adaptation fund, Special Climate Change Fund (SCCF) and their developments. Playing active role in sideline meetings of multi-party negotiations within and with G-77 plus China is vital. Again, it is also vital to organise regional dialogue in between the two CoPs in reaching regional consensus on climate fund. Furthermore, intensifying diplomatic steps to be the leader of LDCs for raising the concerns of Bangladesh is needed.41 Importantly (a) increasing bilateral efforts (signing MoU/agreement); (b) utilising already disbursed ODA effectively; (c) be fully aware of climate change 

40 Author’s interview with M M Akash, Professor, Department of Economics, University of Dhaka, in 2014.

41 Author’s interview with Dr Qazi Kholiquzzaman Ahmad, op. cit. 

related global developments; (d) increasing negotiation capability; (e) showcasing climate change oriented success stories globally; and (f ) promoting sectors (e.g., energy) where donors (e.g., Germany) are keen to support are significant instruments for mobilising ODA on climate vulnerabilities. However, climate aid has to be in addition to traditional ODA and the GoB should raise its voice if there is any disagreement between the two.

This paper aimed at identifying important issues of Bangladesh’s ODA-centric economic diplomacy and ways of dealing with the issues. It finds that the major issues include: (a) realising global aid dynamism; (b) reducing commitment-disbursement gap of aid; (c) lessening difficulties among the GoB and GFIs as well as between/among the GFIs; (d) examining conditionalities of aid; (e) assessing cost benefit of using MDTF in a single project; (f ) studying emerging DPs as new sources of ODA; (g) assessing aid modalities to fully access IDA allocations; (h) examining conditionalities to access AfT and global climate fund; and (i) blending of climate and economic diplomacy. While addressing the issues, the GoB in general needs to focus not only on the GFIs but also at multiple levels in order to mobilise ODA. Thus, advocating organisations and actors governing ODA, increasing capacity of the GoB to continue active interactions with vital DPs and major GFIs as well as understanding country-aid ownership are indispensable.

In particular, there are several instruments of economic diplomacy that this paper identifies to deal with major issues of Bangladesh’s ODA-centric economic diplomacy. These include:  

(a) negotiating with DPs on aid conditionalities and their flexibilisation, realising outbound aid priorities and psychology of donors, assigning aid diplomats in vital foreign embassies of Bangladesh, managing better ranks in several indicators of various surveys and evaluations on global aid;

(b) participating actively in global aid forums and raising voice by dispatching delegations, studying long-term plans of major DPs and continuing negotiations to be included in priority lists of DPs, encouraging non-traditional DPs to set up their country-level offices in Bangladesh, influencing headquarters of regional and global financial institutions to more empower their branch offices in Bangladesh;

(c) meeting gap between major GFIs, bilateral donors and the GoB, strengthening already established joint aid assessment mechanisms, pressurising DPs to continue their commitments, advocating local NGOs, INGOs and requesting DPs to harmonise their aid strategies with Bangladesh’s developmental goals;

(d) for mobilising climate aid, important instruments are (i) participating actively through dispatching experts in climate change related multiple-level forums; (ii) increasing bilateral efforts through signing MoUs and agreements; (iii) showcasing Bangladesh to climate change related global watchdogs and donors on how already disbursed funds are being utilised and how committed funds would be used; and (iv) aligning climate diplomacy with economic diplomacy.