Nobel Peace Prize laureate Muhammad Yunus’s transition from economist to head of Bangladesh’s interim government has proven fatal for Bangladesh. Since assuming power in August 2024, Yunus has presided over a nation sliding into political chaos, radical Islamism, economic distress and social fragmentation. Bangladesh has devolved into a governance crisis that threatens Bangladesh’s economic stability and democratic future.

Since Prime Minister Sheikh Hasina was ousted on August 5, 2024 after massive student protests, the secular forces in Bangladesh represented by her Awami League party have faced a backlash. The rise of radical Islamic influence under Yunus’s watch threatens to transform Bangladesh from a secular democracy into a theocratic state. Organizations such as Hizb ut-Tahrir openly rally for a caliphate, while Hefazat-e-Islam Bangladesh, a Deobandi Islamist advocacy group, pushes against women’s rights. Mufti Syed Muhammad Faizul Karim, who is the leader of the radical Islamist Jamaat-Char Monai, stated that his party wants to implement Islamic Sharia law and redesign the nation’s system of governance based on Taliban-style rule in Afghanistan. The passive response of Yunus’s interim government to these demands signals either weakness or tacit approval of the country’s Islamization.

Radical Islamism

The Bangladesh Nationalist Party (BNP) and the Islamist party Bangladesh Jamaat-e-Islami are two of the main beneficiaries of the protests, which were led by the Students Against Discrimination and contributed to the fall of Hasina.

In the past, the BNP and Jamaat-e-Islami governed together as part of a coalition led by BNP leader Khaleda Zia. During that period (2001-2006), jihadism grew in the country, striking not only Bangladesh but also India with terrorist attacks. A few days before leaving office, Hasina banned Jamaat-e-Islami, which had been barred from participating in elections since 2013, after judges ruled that the Islamist party’s statutes violated Bangladesh’s secular constitution. Yet, Yunus’s interim government lifted the bans imposed on Jamaat-e-Islami, its student wing Islami Chhatra Shibir, and “all associated organizations.” At the same time, the interim government banned Hasina’s Awami League party. Yunus also freed from prison hundreds of jihadists, and in the post-Hasina era, Islamist flags and “Islamic State” banners are seen on the streets of Dhaka.

Yunus is now supporting the enemies of Hasina and her Awami League party, which led Bangladesh’s fight for independence from Pakistan and played a crucial role in the 1971 war of liberation. Jamaat-e-Islami, on the other hand, collaborated with the Pakistani army during the war of liberation, killing and raping thousands of Bengalis and exterminating an entire generation of secular intellectuals. Now, Islamist candidates from Jamaat-e-Islami will be allowed to run in the next elections, but not the secular Awami candidates.

Yunus also wants to introduce new banknotes, eliminating the image of Sheikh Mujibur Rahman, founder and first president of Bangladesh, a symbol of the independence struggle, and Hasina’s father. It is clear that Yunus is trying to redefine Bangladesh’s national identity. This is a great gift for Pakistan, which never wanted Bangladesh’s independence, and now can reconnect with it, and further distance it from India.

Now that he is leading Bangladesh’s interim government, Yunus has shown himself to be extremely accommodating to Islamists. Above all, he appears reluctant to relinquish power. Army Chief of Staff General Waker-Uz-Zaman has publicly called for elections to be held by December 2025, and emphasized the need for political stability through an elected government. Yunus, however, maintains that the elections should be postponed until April 2026. Jamaat-e-Islami supports extending the election deadline.

Minorities

The interim government’s failure to protect minorities represents perhaps its most damaging moral failure. Despite Yunus’s attempts to downplay the violence against Hindu minorities and other religious groups, the systematic attacks on these communities have continued and increased.

In 2024, at least 100 homes and shops of the indigenous people belonging to the Chakma community were burnt down in Bangladesh’s Chittagong Hill Tracts. The Bangladesh Army did not intervene, revealing the government’s passive complicity. The absence of a commission on minorities and the fact that the National Human Rights Commission has been vacant since November 2024 underscore the regime’s disregard for vulnerable populations.

It is also noteworthy that press freedom, under an administration that promised democratic renewal, has suffered severe setbacks. The cancellation of press credentials for more than a hundred journalists and the targeted attacks and accusation of newspapers, such as the Daily Starand Prothom Alo, reveal an authoritarian tendency. The new Cyber Security Ordinance 2025, which has been criticized for potentially suppressing dissent, and the amendments to the Anti-Terrorism Act, which have enabled the banning of all activities of the Awami League, demonstrate how quickly the country is descending into chaos.

The Economy

Despite being an economist, Yunus’s most visible failure has been its inability to control spiraling inflation, which reached 10.87%, up from 9.92% in September 2024, with food inflation soaring to catastrophic levels of 14%. Even with the central bank’s desperate measure of raising the interest rate to 10%, citizens continue to bear the brunt of economic mismanagement. The promise of economic recovery under a Nobel Peace Prize-winning economist, who has been a darling of the US Democratic administrations, has turned into a nightmare for millions of Bangladeshis who struggle with basic necessities as their purchasing power decreases daily.

The economic indicators paint a grim picture of Bangladesh under Yunus’ stewardship. The World Bank revised its economic growth forecast from 5.7% in April 2024 to 4% in October for the financial year 2025, while the Asian Development Bank projects an even more pessimistic 3.9% growth. Foreign direct investment has plummeted, with inflows having fallen for the fourth consecutive year — dropping 13.2% to $1.27 billion, the lowest in five years. The garment industry, Bangladesh’s economic backbone, also faces a crisis: 69 factory closures affected more than 76,500 workers between August 2024 and March 2025.

Diplomacy

Diplomatically, Yunus has managed to alienate Bangladesh’s most important neighbor and economic partner, India. His frequent attacks, blaming India for various domestic problems including floods, demonstrate a tendency to scapegoat rather than solve problems.

Meanwhile, his courtship of China and Pakistan reveals a foreign policy that lacks strategic thinking. In April 2025, Yunus invited China to establish an economic base in Bangladesh, stressing that Dhaka is the “sole guardian of the ocean” in the subcontinent, and saying:

“The seven states of India, known as the Seven Sisters, are landlocked. They have no way to reach the ocean. We are the only guardians of the ocean in this region. This opens up huge possibilities. This could be an extension of the Chinese economy—build, produce, and market things, bring them back to China, and export to the rest of the world.”

Furthermore, the warming ties with Pakistan, despite the absence of a formal apology for the 1971 genocide, dishonors the victims of that brutal period. On June 19, 2025, China hosted a first trilateral meeting with Bangladesh and Pakistan, aimed at enhancing cooperation in trade, and revealing an intent to isolate India in the subcontinent.

Conclusion

As Bangladesh approaches what should be a democratic transition, the country finds itself more divided, economically weaker, and internationally more isolated than at any point. The interim government has failed in its fundamental responsibilities of maintaining law and order, protecting all citizens regardless of religion, preserving press freedom, managing the economy, and preparing for free and fair elections. The political situation under Yunus reveals a government sliding into being another failed state, ripe for terrorists, and unable to chart a constructive course.