Tuesday, July 11 2006 14:11 Hrs (IST) - World Time -

Dhaka: Bangladesh's domestic political compulsions some say India phobia have killed, for the time being at least, the $3-billion investment proposal of India's Tata Group in that country.

Besides a major setback in bilateral economic ties, it also pushes back the momentum in the development of energy resources and infrastructure of the entire region. Since a good deal of investment was to go to the energy sector, it would have helped Bangladesh join the region's larger energy developers-consumers, India and China.

It shuts a route that was thought to be mutually convenient for India and Bangladesh whereby the Tatas would utilise locally a part of the natural gas that successive regimes in Dhaka are not able to sell to India because of fears of a 'sell-out.'

Tata Sons chief Ratan Tata visited Bangladesh two years ago and offered to invest in gas-based industries and infrastructure sector. His initial offer of $2 billion was revised to $3 billion during long months of talks.

Tata signed an expression of interest with the Bangladesh government in 2004 and after long negotiations submitted a revised offer on April 30 seeking a final decision by June-end.

Tata planned to build steel, fertiliser, power and coal plants in Bangladesh. These would have had a spillover effect not only on India's northeast but also neighbouring countries where industrial development has been poor.

Everything becomes 'political' in volatile Bangladesh, more so when it comes to India. With that kind of a ground reality, it is 'frustrating', as Tata executive Alan Rosling put it, but not surprising to see that a government enjoying two-thirds majority in the national assembly says that it cannot decide on the offer because elections are a few months away.

Rosling's words sum the situation up, "You can't play football with only one team. If the government is not in a position to negotiate, we can't negotiate."

It is tempting to blame Motiur Rahman Nizami, the industry minister and chief of the ministerial team to take the final decision. He belongs to the Jamaat-e-Islami, that is ideologically anti-India. But the dominant Bangladesh Nationalist Party (BNP) of Prime Minister Khaleda Zia too did not push the offer for want of political will.

There is apparent sorrow on both sides of the border, but there is also evident relief in the Bangladeshi political establishment and sections of its trade and industry.

The government has blamed parties of the right and the left the Islamist conservatives and the left extremists who generally oppose any developmental project for fear of losing ground support.

It has also alleged lack of cooperation from the main opposition Awami League. But that is inter-changing of roles - BNP had frustrated the Sheikh Hasina government's efforts at selling natural gas to India during 1996-2001.

There are also 'economic patriots' who allege 'discrimination' by the government to favour Tata and blame the Indians for not willing to purchase Bangladeshi gas at international price.

"We can welcome the Tata proposal as long as it does not contradict our national interest," said Qazi Kholiquzzaman, president of the Bangladesh Economic Association. The BEA had organized a series of meetings to oppose the deal.

"An investment is an investment whether it comes from India or from England," noted Prof. Sabder Ali, a chemical engineer of Bangladesh University of Engineering and Technology (BUET), who said that major political parties suffered from "India phobia".

Bangladesh may have missed the bus. Mahmudur Rahman, chief of the Board of Investment (BOI) and energy advisor to the government, sums it up, "As a nation, we have to decide whether we really need FDI. We should not have double standards. When there is lack of FDI, people criticize BOI. But when it tries to bring in FDI, then they ask, what is the purpose?"