Bangladesh’s 'post-uprising' reform drive stalls as old power structures resist change: LSE analysis

Bangladesh’s push to overhaul its political and economic institutions after the 2024 uprising has largely stalled, according to an analysis published by the London School of Economics and Political Science.

Economist Zahid Hussain and Tom Felix Joehnk, writing in South Asia @ LSE on September 14, said entrenched bureaucratic interests, changing political incentives and competing public narratives have slowed the reform process.

The authors said the uprising that toppled the Awami League government created a rare opportunity for institutional change, with broad public support for reforms to the country’s political and economic systems.

But attempts to translate that momentum into structural change have faced resistance, particularly where reforms threaten existing privileges and influence, leaving much of the institutional framework largely intact, they said.

Two years later, however, they argue that the institutions underpinning Bangladesh’s politics remain largely intact.

“Ultimately, however, the popular uprising has barely altered the institutions that underpin the country’s politics,” the authors wrote.

The analysis, titled “The Stalled Remaking of Bangladesh,” examines three major reform battles — restructuring the tax administration, modernising Chattogram Port and implementing the July Charter — to explain why institutional change has proved difficult.

The authors said the failure cannot simply be attributed to a lack of political will.

Muhammad Yunus’s Interim Government, which governed from 2024 to 2026, enacted more than 100 ordinances and repeatedly confronted entrenched interests. Yet many of its initiatives stalled, were diluted or remain only partially implemented.

The problem, they argue, is that reform changes existing distributions of power and privilege, creating concentrated groups with strong incentives to block it.

The stakes are particularly high for the new BNP government.

The authors said Bangladesh’s once rapidly growing economy has stalled, citing an International Monetary Fund projection that GDP growth could fall below 3% over the medium term without decisive reforms.

They also identified the potential return from exile of former Prime Minister Sheikh Hasina as a source of political uncertainty.

Together, the pressures risk producing the political turmoil and economic inertia that the post-2024 transition had been expected to overcome, the analysis said.

Tax reform hits bureaucratic wall

One of the clearest confrontations came over tax administration.

Bangladesh has one of the world’s lowest tax-to-GDP ratios, while tax exemptions have often been granted through discretion rather than transparent rules and tax policy has tended to favour elites, according to Hussain and Joehnk.

The Interim Government proposed separating tax policymaking from tax administration, following a model used in many modern revenue systems.

Revenue officials responded with strikes and work stoppages, while disruptions at customs facilities threatened to paralyse trade.

The authors argue that the resistance exposed more than a disagreement over administrative design.

The existing structure concentrated authority and informal rents within an organised bureaucracy. Officials who stood to lose could mobilise quickly, while the much larger group that could potentially benefit from reform remained fragmented.

The BNP-led government has formally reaffirmed the separation of tax policy and administration, but implementation remains in limbo.

For the authors, the episode shows how organised insiders can effectively veto reform even after a government formally adopts it.

The effort to modernise Chattogram Port also ran into a different but related resistance.

The Interim Government sought to bring internationally established operators, including DP World and Maersk, into container terminal management to improve efficiency, attract investment and weaken entrenched rent-seeking networks.

The move brought together groups with different interests.

Labour unions feared losing bargaining power, bureaucrats sought to retain discretion and business intermediaries resisted disruption to established patronage networks, the analysis said.

The battle soon moved beyond port efficiency. Critics argued that allowing foreign operators to manage strategic facilities would undermine sovereignty and public control. Non-disclosure agreements with prospective operators were also portrayed as evidence of secrecy.

Hussain and Joehnk said such agreements are standard in major infrastructure negotiations, but Bangladesh’s low-trust environment allowed them to become a potent argument against the reform.

They stressed that concerns over sovereignty and transparency were not necessarily insincere. Instead, the episode demonstrated how institutional battles are fought through public narratives as much as through formal policymaking.

The BNP government has not abandoned the port reform and negotiations with international operators remain formally alive.

But competing proposals from politically connected domestic interests have left the process unresolved, according to the analysis.

July Charter loses momentum after BNP victory

The July Charter exposed another weakness: broad public support does not necessarily create a durable political coalition for reform.

The Charter emerged from more than nine months of negotiations involving all major political parties and proposed wide-ranging changes to Bangladesh’s political institutions.

Its proposals received broad endorsement in a referendum, but implementation subsequently lost momentum.

Critics questioned the constitutional validity of the referendum because such a mechanism was not explicitly provided for, shifting debate from the substance of reform towards competing interpretations of constitutionalism and democratic authority.

The political incentives also changed after the election.

Major parties had endorsed key reforms and campaigned for a “Yes” vote. But after the BNP secured an outright parliamentary majority, the authors argue, it had less incentive to embrace reforms capable of constraining a majority government.

Senior BNP leaders subsequently said in parliament that the party had supported the Charter primarily to avoid delaying the election, according to the analysis.

The BNP government continues to reaffirm its commitment to implementing the Charter.

Yet many of its central institutional provisions have lapsed, been repealed or are awaiting redrafting following further consultations, leaving much of the promised institutional transformation unrealised.

Hussain and Joehnk argue that the three episodes expose a common problem confronting Bangladesh’s reform agenda.

Those who risk losing power, discretion or privilege from institutional change tend to be concentrated and well organised. Those who stand to benefit are often more numerous but fragmented and vulnerable to competing arguments over sovereignty, legitimacy and procedure.

Institutional change therefore requires more than popular support or political will, they argue. It needs political commitments capable of surviving changing electoral incentives, coalitions strong enough to withstand organised resistance and a persuasive public narrative capable of sustaining reform.

Without those conditions, the authors conclude, Bangladesh’s biggest obstacle to institutional transformation will remain not a shortage of reform ideas, but the political forces benefiting from the status quo.

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