SALEEM SAMAD
On the eve of Pakistan Foreign Secretary Amna Baloch’s official visit to the Foreign Office Consultation (FOC) in the capital, Dhaka, the Interim Government of Prof Muhammad Yunus has prepared US $4.52 billion in financial claims from Pakistan authorities, comprising its fair share of undivided Pakistan’s pre-1971 assets, including aid money, provident funds, and savings instruments.
The FOC meeting of diplomatic engagement, held after 15 years of hiatus, between Dhaka and Islamabad, seeks to normalize bilateral relations.
The relations between the two South Asian countries have never been warm since the independence of Bangladesh in 1971. Pakistan President Zulfiqar Ali Bhutto visited Bangladesh in 1974 with a promise to restore the tattered relations. In 1985, President Muhammad Zia-ul-Haq visited Bangladesh, Prime Minister Benazir Bhutto (1989) and President Pervez Musharraf (2002).
On the other hand, Bangladesh’s first President, Sheikh Mujibur Rahman, attended the Lahore OIC Summit in 1974. Later, President H.M. Ershad visited Islamabad (1986), and Prime Minister Sheikh Hasina visited Pakistan (1998). The relationship failed to attain heights. Instead, the ties got entangled in a stalemate, caused by mistrust, suspicion, and a lack of diplomatic understanding.
However, relations slightly normalized under the military regimes of General Ziaur Rahman (1976-1992) and General Hussain Muhammad Ershad (1993-1990) with Pakistan. Both the Generals graduated from Kakul Pakistan Military Academy and had several course mates who were at the helms of affairs in Rawalpindi military headquarters.
At the FOC meeting, Bangladesh formally demanded $4.52 billion from Pakistan as its share of pre-1971 assets, along with a formal apology for war crimes committed against Bangladeshis by the marauding Pakistan military, said Foreign Secretary Jashim Uddin.
Pakistan’s delegation, led by its Foreign Secretary, Amna Baloch, assured Bangladesh officials of “remaining engaged” on the issues of settling $4.52 billion owed to Bangladesh and making an apology for the Pakistani war crimes committed in 1971.
However, after the collapse of the autocrat Sheikh Hasina’s regime last August, Pakistani Prime Minister Shehbaz Sharif and Chief Adviser Prof Muhammad Yunus have twice had parleys – on the sidelines of the UN General Assembly in New York in September last year and at the D-8 summit in Cairo in December.
Since then, Bangladesh and Pakistan have eased the visa regime for both nationals of Pakistan and Bangladesh.
Both countries are showing keen interest in boosting trade, said an official who is privy to the FOC, adding that Pakistan also wants to enhance cultural exchanges and establish direct air connectivity.
Bangladesh High Commissioner to Pakistan Iqbal Hussain Khan told journalists in Dhaka that a Pakistani airline – Fly Jinnah has secured approval for direct flights between Dhaka and Karachi, while Air Sial, another private one, has applied for permission to operate flights. No official and private Bangladesh airlines expressed their desire to fly Dhaka-Karachi flights.
Pakistan exported products like cotton, sugar, rice, and wheat in FY 2023–24. Bangladesh exported $61.98 million to Pakistan and imported goods worth $627.8 million.
As Pakistan serves as a gateway for goods to Afghanistan, Dhaka can explore the potentiality of trading premium quality goods to and from the landlocked country through Pakistan.
The last FOC in 2015 covered sensitive issues, which remain unresolved. However, officials stress these should not hinder current engagement.
Meanwhile, Indian Modi Media writes that the Bangladesh-Pakistan FOC meeting is a big threat for India as Pakistan and Bangladesh decide to come closer.
Nivedita Dash writes on India.com that after the fall of Sheikh Hasina, relations between Bangladesh and Pakistan are continuously deepening. Yunus government supported by pro-Pakistan fundamentalists has completely opened the doors of Dhaka to Islamabad.
There is a threat to regional stability and security issues will be jeopardized, with the two South Asian countries coming close and closer.
Her article dipped in a sauce of lies and more lies, further claims that “During the 15-year rule of Sheikh Hasina in Bangladesh, Dhaka had completely cut off ties with Pakistan, but the interim government led by Mohammad Yunus has rolled out the red carpet for Pakistan. Since then, Islamabad has completely intensified its activities in Dhaka.”
Like India, Hasina has never cut ties with Pakistan nor intended to sever relations. Well, both Dhaka and Islamabad lowered their diplomatic status and there were no High Commissioner in each other’s capitals for quite some time.
Two diplomats, one each from Dhaka and Islamabad were declared persona non grata.
On the diplomatic front, Hasina had announced a moratorium on visas for Pakistan nationals, except for official visits to Bangladesh. Pakistan also reciprocated. This impacted on direct flights from Karachi-Dhaka route and PIA flights were stalled until now for lack of passengers.
The row over lowering diplomatic ties sparked after Pakistan’s parliament adopted a resolution condemning Bangladesh for the trials of those Islamist leaders, who were henchmen of Pakistan occupation forces and had raised armed militia and committed crimes against humanity in Bangladesh.
The parliament resolution read that those war criminals hanged in Bangladesh had sacrificed their lives for the sake of the unity of Pakistan and were regarded as martyrs.
Nivedita Dash is also worried that Pakistan’s army and its spy agency ISI (Inter-Service Intelligence) have become active in Bangladesh. Along with this, Pakistan is now also trying to increase its trade presence with Bangladesh.
The claim includes $200m foreign aid sent to East Pakistan (now Bangladesh) after the 1970 Bhola Cyclone, which was deliberately diverted to Lahore during independence war in 1971.
The Bhola Cyclone was a catastrophic tropical cyclone that struck a coastal region in November 1970. It is considered the deadliest tropical cyclone ever recorded, with an estimated 300,000 to 500,000 deaths.
The foreign aid deposited with the Dhaka branch of the State Bank of Pakistan was siphoned in 1971 to its bank’s Lahore branch, Ministry of Foreign Affairs officials stated.
Bangladesh officials argued at the FOC that comprising its fair share of undivided Pakistan’s pre-1971 assets, including aid money, provident funds, and savings instruments.
The financial claims do not include reparation for an untold humanitarian crisis caused by war crimes, when ten million war refugees who took shelter in neighboring India and rape as a weapon of war was employed during the brutal birth of Bangladesh in 1971.
Some categories of those affected in the war are still being compensated through modest monthly doles.
Similarly, hundreds of Bangla-speaking government employees who had been stationed in West Pakistan were later repatriated home in 1973-74. On their return, they discovered that their provident fund balances and savings instruments accrued were never refunded by Pakistan. These financial losses are part of the broader US $4.52 billion claim.
The Foreign Ministry officials said Bangladesh has consistently sought its rightful share for the return of the US $200 million in cyclone aid that was illegally misappropriated at the peak of the liberation war in 1971.
According to foreign ministry records, based on population alone, Bangladesh was entitled to 56 per cent of those assets. If contributions to foreign exchange earnings are considered, the share stands at 54 per cent, and by any parity principle, Bangladesh should be entitled to at least 50 per cent.
A post-war assessment prepared by the Bangladesh Planning Commission on 16 December 1971 estimated that West Pakistan had withheld Bangladesh Taka (BDT) 9 million (Pakistan Rupees 20.76 million) in provident fund deposits belonging to East Pakistani civil servants.
Similarly, BDT 15.7 million (Rupees 36.26 million) held in the Rupali Bank’s (formerly Muslim Commercial Bank) Karachi branch during the war was never returned. Pakistan later converted this amount into shares and informed Muslim Commercial Bank – unfortunately, the bank never responded and money was never transferred.
Adding to the grievance, the Bangladesh government honored the obligations of various pre-independence instruments sold by the Pakistani government – including defense savings certificates and income tax bonds – effectively paying debts that it believes Pakistan should have settled.
A report titled “Statement of Bangladesh Bank Claims Receivable from State Bank of Pakistan and Government of Pakistan” lays out a detailed breakdown.
As of 16 December 1971, the total value of the currency in circulation was Rupees 8.71 million, at least half of which Bangladesh owes. Pakistan’s bank sectors alone owe Bangladesh, Rupees 56 million.
The Bangladesh government also accepted liability of BDT 213.8 million (Rupees 493.50 million) of some of Pakistan’s central government and provincial government debt securities, claims which Dhaka has lodged.
These include BDT 140.7 million (Rupee 324.77 million) in central government loans, BDT 27.7 million (Rupee 63.94 million) in East Pakistan government loans, BDT 11.5 million (Rupee 26.55 million) in West Pakistan government loans, BDT 24.6 million (Rupee 56.79 million) in savings certificates issued against international trading unit investments, and BDT 0.65 million (Rupee 1,500 million) in Savings Certificates linked to Pakistani Prize Bonds.
It is understood that Islamabad will review the claim of Bangladesh US$4.52 and hold further parleys to resolve the debt issue. Bangladesh had waited for 54 years to speak up, it will take another several years for Pakistan to make up its mind and relay its decision on the financial claims.
Meanwhile, according to data from the State Bank of Pakistan, Pakistan’s reserves stood at $15.75 billion, reports BBC news portal.
That is, Pakistan will have to spend more than a quarter of its reserves to meet Bangladesh’s demands, BBC concluded.
First published in the Stratheia Policy Journal, Islamabad, Pakistan on 18 April 2025
Saleem Samad is an award-winning independent journalist based in Bangladesh. A media rights defender with Reporters Without Borders (@RSF_inter). Recipient of Ashoka Fellowship and Hellman-Hammett Award. He could be reached at saleemsamad@hotmail.com; Twitter (X): @saleemsamad
https://stratheia.com/bangladeshs-sudden-claim-of-pre-1971-assets-jolts-pakistan/