China, India duel for riverine lifeblood of Bangladesh

Bangladesh’s economy faces a perfect storm with double-digit inflation pinching wallets, foreign exchange reserves dwindling and economic growth fading away. To weather the crisis, the government is desperately seeking foreign loans.

Enter China into the eye of the tempest. With a timely US$5 billion soft loan, Beijing has positioned itself as Bangladesh’s potential financial savior. Beijing’s support comes just after Dhaka received a $1.4 billion tranche of a $4.7 billion IMF loan package.

But China’s offer has a geopolitical twist. Bangladesh’s economic vulnerability has opened an opportunity for China to counter India’s influence in the Bay of Bengal region as the two regional giants compete for control over the Teesta River project.

The Teesta River, also spelled Tista River, is crucial for both Bangladesh and India for irrigation and hydropower. It has also been a source of bilateral tension for years due to India’s reluctance to share the river’s water downstream.

Now, Beijing’s $5 billion loan is seemingly tied to making China the lead on completing the Teesta management and restoration project, provisionally estimated at $1 billion.

If China is indeed handed the project’s lead, it will inevitably spur new tension between Dhaka and Delhi. That’s in part because Indian Foreign Secretary Vinay Mohan Kwatra during a recent visit offered Indian funding for development projects on the river.

India’s Teesta offer was taken with a grain of salt in Dhaka. Before Kwatra’s visit, a major Indian newspaper, The Hindu, expressed concern about China’s proposed Teesta development project in Bangladesh.

India’s apprehension stems from the project’s location near the Siliguri Corridor, a strategically important strip of land