DHAKA, Bangladesh: The inter-reaction of communal and international issues is raising levels of anxiety throughout South Asia. Bangladesh, which is not involved in any major dispute, is secular, democratic and open. But it is also the third most populous Muslim nation, and post-Sept. 11 events and the rise of Hindu fundamentalism in India have highlighted the Muslim/non-Muslim divide. Erosion of Indian secularism poses international dangers.

Bangladesh's relations with India have always had the ups and downs inevitable given the differences in size and geography. It is almost surrounded by India and cut off from Southeast Asia by hill country.

Slight friction might have been expected with the return in late 2001 to the prime ministership of Khaleda Zia, whose Bangladesh National Party has a reputation for being suspicious of India. But recent months have seen worse - Bangladesh portrayed by India as a hotbed of Islamic extremism, a center for operatives for Al Qaeda and Pakistani intelligence, and a base for terror attacks inside India.

In addition to officially inspired press reports, Indian ministers have repeated these allegations.

Opposition leaders in Bangladesh out to discredit the government have added their voices. Bombings actually attributable to localized political violence have been tagged "Al Qaeda." The presence of a small Islamist party in Begum Zia's coalition has been used to advance wild claims of growing fundamentalism.

Such claims have been picked up and embroidered by foreign media.

The U.S. ambassador had to come to Bangladesh's defense against Time magazine after it ran a lurid story about a shipload of jihadis arriving in Chittagong. The envoy said the report contained "numerous unsubstantiated allegations." She denied that Bangladesh was "a hotbed of radical Islam" or a "dangerous new front in America's war on terrorism."

India's northeastern states have many problems, particularly conflict between tribal people and settlers. Some troublemakers take cover in Bangladesh just as Bangladeshi criminals do in India. But with its own history of problems in the Chittagong Hill Tracts, and with security generally, Bangladesh has no obvious interest in disorder.

Beyond these specific issues, India seems increasingly to assume that Bangladesh is sympathetic to Pakistan, despite memories of the war of liberation from Pakistan and the lack of proven involvement of Bengali Muslims with Al Qaeda or the Taliban. The allegations have hurt Bangladesh internationally.

India's rhetoric appears linked to efforts by the governing Bharatiya Janata Party to drum up votes by appeals to Hindu communalism. BJP success in the Gujarat elections, which followed communal massacres, suggests that the formula works. If India's Muslims can be suspected (on no evidence) of support for Pakistan and Kashmiri militants, it is not surprising that Bangladesh is suspect, too.

Relations became more difficult for Bangladesh this month when India's Interior Ministry claimed that 20 million Bangladeshis are living in India illegally, are a security threat and must be repatriated. Even given a somewhat porous border, the number is far-fetched. Most likely the threat is just rhetoric. But it contains the seeds of a serious dispute with Bangladesh and may implicitly question the Indian identity of many Indian Muslims.

Bangladesh has tried to turn the other cheek. It cannot afford to do otherwise. Rather than turn to the mainstream Muslim world to balance the power of India, it has turned east. Begum Zia has recently been in Beijing and has exchanged visits with Thai and Burmese leaders. New transport routes to Southeast Asia are being opened, and Dha- ka is looking for private investment from Thailand and Malaysia and aid from China.

Bangladesh's Look East policy does not endear it to New Delhi. Nor can it be of more than marginal economic benefit compared with trade with India. On that, Bangladesh has itself mainly to blame for lack of progress. It has declined to export gas primarily for nationalistic reasons, thus depriving itself of badly needed revenue. On security grounds it has blocked Indian requests to use Bangladesh railways and rivers for transit to its northeastern states.

Dhaka clings to trade protection despite its ineffectiveness against smuggling from India. Begum Zia's government may want to take political risks for the sake of the economy and do gas, trade and transport deals, but India's hostility on other issues is hardening nationalistic attitudes here.

More "Hindu identity" talk from India's leaders might start to radicalize Muslims hitherto more interested in Bengali language issues and robust parliamentary politics than in the politics of religion.

The subcontinent can live with a contained Pakistan-India face-off five decades old. But it cannot live with communalism, which undermines the basis of modern India and sets India against another populous Muslim neighbor.