WikiLeaks cables: Bangladesh Gas

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US nudged Bangladesh to allocate gas blocks

BS Reporter / New Delhi December 25, 2010, 0:15 IST

Every time India would ask Bangladesh for rights to explore gas, Dhaka would say the country had to first find if there was gas available at offshore locations. For the last one year, the issue hasn?t even been mentioned in discussions with Bangladesh, top petroleum ministry officials said. But India?s loss has been the US gain and it managed to walk away with the prize.
WikiLeaks tapes released late last night revealed how US-based ConocoPhillips was selected from a field of seven bidders and awarded two offshore blocks for exploring gas in 2009. The company was awarded a production sharing contract, with a provision to export the gas in the form of liquefied natural gas in the untapped areas of the Bay of Bengal. The bidders had agreed to stay away from disputed waters in the Bay of Bengal, something US Ambassador to Bangladesh, James Moriarty mentioned in his cables sent in July 2009. Conoco got the contract in October 2009.
Moriarty met Bangladesh Prime Minister Hasina Wajed?s energy adviser, Tawfiq Elahi Chowdhury, and got him to assure that ConocoPhillips would be awarded two of the uncontested blocks and Chevron given permission to go ahead with the first of the three compressors necessary to improve flow in Bangladesh?s main gas pipeline. Within three months, the Bangladesh government complied.
Defending themselves against the charge that they had allowed the US to have an advantage by not being proactive themselves, Indian Petroleum Ministry officials said Indian finds of gas had reduced the pressure to secure gas from Bangladesh.
WikiLeaks tapes also revealed that Moriarty urged Chowdhury to approve plans by British company Global Coal Management (GCM) to begin open-cast coal mining in the country?s Phulbari area. In the cable, Moriarty quoted Chowdhury saying the coal mine was ?politically sensitive in the light of the impoverished, historically oppressed tribal community residing on the land?.
The energy advisor, however, agreed to build support for the project through the parliamentary process, Moriarty said in the cable.
In a cable posted by WikiLeaks that was sent in July last year, Moriarty said he had urged Chowdhury to authorise coal mining, adding ?open-pit mining seemed the best way forward?. Later on in the cable, Moriarty said, ?Asia Energy, the company behind the Phulbari project, has 60 per cent US investment. Asia Energy officials told the ambassador they were cautiously optimistic that the project would win government approval in the coming months.?
The ?Phulbari killings? as they are known took the lives of three boys in 2006 when police fired at a demonstration near the mine site. Asia Energy?s shares had crashed in the international market as a result and the company had to undergo a brand change, including a name changing.
In the WikiLeaks cables, Moriarty?s conversations with Indian ambassador Pinaki Ranjan Chakravatry, by contrast, revealed no discussions of a commercial nature, only a general approval by India of the change in government in Bangladesh and US endorsement of a joint South Asian task force on counterterrorism.
India?s high commissioner in Dhaka obligingly told the US ambassador that while India would ?prefer a primarily bilateral engagement?, Bangladesh might want a regional force for political reasons ? allegations that she was too close to India.
Chakravarty spoke of Bangladesh?s keenness to ?invest heavily in Bangladesh?s moribund railway system? including reconnecting the Bangladeshi railroad system to Agartala in Tripura. He said Indian companies would be interested in setting up power plants in Bangladesh, though the price of electricity ?is still under negotiation?. The US takeaway from the conversation is that regional counter-terrorism cooperation would help US assets enormously. Much of the rest is yet to become a reality

Bangladesh army's advancing business interests

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The five star Dhaka Radisson hotel - which offers guests use of the nearby deluxe army golf course - is owned by the Bangladesh Army Welfare Trust (AWT) and was established on military land. ??Shahidul Alam/Drik/Majority World

By Kamal Ahmed
BBC News, Dhaka

The army is becoming increasingly involved in business activities.?The Bangladeshi army has over the years played a key role in the country’s political life, but it has now also emerged as a major player in the business arena, with interests spread across all the major sectors of the economy.
Following the example of the Pakistan army, it has been thriving under successive civilian governments. But there are now signs of unease about it within the force itself and within wider society.?Evidence of the army’s wealth and influence is not hard to find.?The five star Dhaka Radisson hotel – which offers guests use of the nearby deluxe army golf course – is owned by the Bangladesh Army Welfare Trust (AWT) and was established on military land.

‘Commercial advantage’

There are five other top hotels in Dhaka, but none can provide a package that exploits military real estate.
The military’s interests include the hotel and hospitality trade.?Capitalising on its success with the Dhaka Radisson, the AWT is now building another five-star hotel in the port city of Chittagong.
A leading hotelier who did not wish to be identified told the BBC that the use of cheaper military-land amid sky-rocketing land prices in Dhaka has given the army a clear commercial advantage against other players.
In addition to a recently-built fast-food shop aimed at the affluent middle class in Dhaka, the army’s other big business these days is the Trust Bank. Set up under civilian rule, it has now grown into a fully-fledged commercial bank with about 40 branches nationwide.
In 2007, the military-backed caretaker government granted it exclusive rights to receive fees for passports.?Former senior civil servant Akbar Ali Khan says that this is against the government’s procurement rules – and there should have been an open tender to ensure that the cheapest and best passport service was selected.

The landfilling by the back of Sonargaon Hotel started during the recent caretaker government, which is considered to have been backed by the military. Little is known about such fills, but military vehicles are regularly seen plying the newly made roads and military trucks are parked there. ??Shahidul Alam/Drik/Majority World

Impropriety denied

While bank officials say it played by the rules and received no special favours from the government, its audited accounts – first released in 2007 – caused much controversy.?They revealed that the-then army chief, Gen Moeen U Ahmed, got loans several times larger than the rules allow.?The army’s business empire is thought to be worth around $500m.?At the time, he was chairman of the Trust Bank by virtue of the fact that he was head of the army. And Bangladesh was being ruled by an army-backed interim government.?Gen Ahmed denies any impropriety, arguing that questions over the size of the loan are an attempt “to malign” him.
And there are other parts of the forces which have their own banks. The Civil Defence Force runs the Bangladesh Ansar and Village Defence Party Bank – known as the Ansar VDP Bank. This bank, set up in 1995 by the government, has not yet received any banking licence and functions like a credit society.
But the army’s interests do not end here.

Ice cream sales

If you are buying any ice-cream in rural areas of the country, you may be getting a product of an army-owned business, that of the Sena Kallyan Sangstha (SKS).?The SKS is a welfare foundation whose function is to care for the welfare of veterans and family members of servicemen.?Among other things, the SKS now owns concerns in food, textiles, jute, garments, electronics, real estate and travel.
It is now evident that the Bangladeshi armed forces have been largely following the business model developed so successfully by their Pakistani counterparts.?In Pakistan, the military’s Fauji Foundation has a huge involvement in trade and industry.
Using the Pakistani model, the AWT was founded in 1998 during the previous rule of the Awami League led by the Prime Minister Sheikh Hasina. The irony is that military business interests have thrived more under civilian rule than under martial law regimes.
The growth of military involvement in commerce has had serious repercussions for the armed forces themselves.?The official probe into the country’s worst ever mutiny by the paramilitary Bangladesh Rifles (BDR) border guards in 2009 – which left at least 68 high ranking military officials dead – bears this out.
Commission Chairman M Anisuzzaman Khan said that the mutiny was partly fuelled by resentment among the BDR’s rank-and-file over the corruption of army officers engaged in the retail sale of consumer items.?It recommended that no forces – military or civil defence – should be allowed to engage in commercial or business activities.?”Law and order forces are meant for defending the country, they are not supposed to run factories or business units,” Mr Khan said.

Unease

But an empire worth at least $500m is growing daily and becoming stronger. Plans obtained by the BBC reveal that the army’s business ambitions include power plants and even the insurance businesses – no potential business sector seems out of its sights.?Critics argue that the army should concentrate on serving the country.?Although the army headquarters agreed to respond to the queries made by the BBC, our repeated requests for interviews did not materialise and no response was actually made.?But a number of retired generals have expressed their unease over the army’s extensive exposure in the fields of trade and industry.
Lt Gen (Retired) Mahbubur Rahman – who entered politics few years back and served as the chairman of the standing committee on the Ministry of Defence in the previous parliament – told the BBC that the military “should keep within its charter of duties and not engage or get involved in any financial transactions – especially for business”.?”We have witnessed how such activities can bring disaster,” he said.
A number of leading figures in business and civil society have admitted that many army-owned businesses are virtually indistinguishable from other commercial enterprises in the way they operate.?But as its ambitions develop, it seems that the debate about whether or not the army should engage in such activities will also grow.
Related article.
Moeen U Ahmed and Trust Bank