IV.  POLITICAL ENVIRONMENT

Nature of Bilateral Relationship with the United States

U.S.-Bangladesh relations are excellent.  U.S. policies have
focused primarily on efforts to promote Bangladesh's economic
development and political progress in the context of a democratic
system.

A centerpiece of the bilateral relationship is a large U.S.
economic aid program totaling almost $106 million in 1994.  Since
the country's independence in 1971, the United States has
provided over $3 billion in economic assistance to Bangladesh.


Major Political Issues Affecting Business Climate

While there are no major bilateral or international political
issues which affect the business climate, domestic politics have
had an impact.  Bangladesh became an independent country in
December 1971 as the result of a war of independence with what
was then the western wing of Pakistan.  The political rivalries
which emerged during the war and immediately thereafter have been
at the root of the instability which has characterized politics
in Bangladesh during its first quarter century.  Bangladesh
politics exhibit a rough-and-tumble nature difficult for outside
observers to understand.  Violence among political parties is one
aspect of a relatively new and still maturing political process.
As a result, political demonstrations and general strikes, called
hartals, disrupt business operations.  The local business
community has publicly voiced its concerns about the economic
impact of such political agitation and has appealed to all
parties to restrict their disagreements to the Parliament rather
than fighting them out in the streets.


Synopsis of Political System

Bangladesh is a parliamentary democracy headed by Prime Minister
Khaleda Zia of the Bangladesh Nationalist Party (BNP) which won
free elections in 1991.  The BNP holds a slim but secure majority
in the Parliament.  Members of Parliament are to be elected at
least once every five years.  The Parliament has 300 elected
members, with 30 additional seats reserved for women who are
chosen after the election by the seated Parliament.  Candidates
may contest a maximum of five seats in any one election but may
only hold one.  Parliament elects Bangladesh's president to a
five-year term.  The President's duties are largely ceremonial.
The parliamentary opposition is led by Sheikh Hasina Wajed and
her party, the Awami League.

Following its war of independence and the establishment of its
Constitution in 1972, Bangladesh held its first parliamentary
election in March 1973, which gave the Awami League a solid
mandate.  In August 1975, this elected government was overthrown
in the first of a series of military coups and counter-coups
which characterized Bangladesh's political scene for nearly ten
years.  In March 1982, then Army Chief of Staff, General H.M.
Ershad, seized power.  He declared himself President in December
1982.  Despite efforts to legitimize his regime through coercion
and political manipulation, Ershad was eventually forced to
resign in December 1990, following months of popular
demonstrations.

In February 1991, the Bangladesh Nationalist Party won a
parliamentary plurality and formed the government.  The Awami
League won 85 seats; Ershad's Jatiyo Party, 35; and the Jamaat-e-
Islami, 18.  Both domestic and independent foreign observers have
described that election as free and fair, perhaps the most honest
in Bangladesh's history.  Subsequent local council, municipal and
by-elections have been generally regarded as free and fair and,
while not violence free, have been generally peaceful.

The Awami League won municipal elections in January 1994, in
Bangladesh's two largest cities, Dhaka and Chittagong.  The Awami
League, however, has charged that a BNP victory in a March 1994,
parliamentary by-election was the result of vote rigging.  Partly
as a result, the Awami League, later joined by other opposition
parties, began to agitate for the appointment of a caretaker
government to supervise new elections.  Under the constitution,
national elections are not required to be held until February
1996.  The Awami League called for a series of nationwide strikes
in the spring of 1994 to support its demand and also boycotted
the Parliament.