India has given a $1 billion line of credit to Bangladesh to help boost its infrastructure, officials said on Tuesday, as New Delhi seeks to re-energise ties with a neighbour seen as crucial to its security. Ties between the two countries suffered under the previous regime in Dhaka over Indian worries Bangladesh was being used by militants as a base.
But Bangladeshi Prime Minister Sheikh Hasina, on a state visit, has sought to improve relations. The two countries signed three pacts on Monday, including on fighting crime and sharing electricity from India. Much of the $1 billion assistance will go into ramping up the Bangladeshi railway network and dredging of rivers. "We have agreed on the importance of showing sensitivity to each other's concerns," Prime Minister Manmohan Singh said at a dinner on Monday for Hasina.
Indian officials said they hoped the Hasina government would respond to India's security concerns over its immediate neighbourhood being used by Islamist groups and India's north-east insurgents to launch attacks on India. Some goodwill gestures have been made by Dhaka, including what Indian media say is the recent capture and handing over of the chief of the ULFA, an armed separatist group, to India.
"India is keen to have a friendly co-operative Bangladesh which will not align itself with hostile powers, be it China or Pakistan," said Brahma Chellaney strategic studies professor at the New Delhi-based Centre for Policy Research. A divisive issue has been sharing of water from common rivers from the Himalayas flowing into Bangladesh which are considered as a lifeline for millions of people in India and Bangladesh.
Bangladesh had strongly protested an Indian plan to dam a common river for a 1,500 Megawatts power plant, a proposal India is likely to drop, officials said. India's reluctance to open up its markets for more Bangladeshi goods also adds to common Bangladeshis' resentment of a giant neighbour's refusal to be accommodative.
The two have also failed to make any progress over Indian access to huge reserves of natural gas in Bangladesh and the matter could be referred for international arbitration.
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