When Muhammad Yunus flew back to Bangladesh in August, he was greeted by bleak scenes. The streets were still slick with blood, and the bodies of more than 1,000 protesters and children were piled up in morgues, riddled with bullets fired by police.

Sheikh Hasina had just been toppled by a student-led revolution after 15 years of authoritarian rule. She fled the country in a helicopter as civilians, seeking revenge for her atrocities, ransacked her residence.

At 84, Yunus – an economist who won a Nobel prize for pioneering microfinance for the poor – had long given up his political ambitions. He had faced years of vilification and persecution by Hasina, who viewed him a political threat, and had been living in the US for decades.

But when the student protesters asked him to lead an interim government to restore democracy to Bangladesh, he agreed.

“The damage she had done was monumental,” Yunus told the Guardian, describing the state of Bangladesh on his return. “It was a completely devastated country, like another Gaza, except it wasn’t buildings that had been destroyed but whole institutions, policies, people, international relationships.”

Hasina’s reign was dominated by allegations of tyranny, violence and corruption. It culminated in a bloody few weeks over July and August, when more than 1,400 people were killed in protests against her repressive rule, a violent crackdown by police that could amount to a “crime against humanity”, according to the UN. She has denied all use of excessive force.

Yunus’s return to Bangladesh was heralded as the dawn of a new era for the country. In the six months since he took charge, senior police officers – no longer under Hasina’s protection – have been prosecuted for extrajudicial killings, secret detention centres where Hasina’s critics were allegedly tortured have been emptied, human rights commissions have been established and Hasina is facing hundreds of charges, which she denies. Yunus has pledged that, sometime between December this year and March 2026, Bangladesh will hold its first free and fair elections in decades, after which he will hand over power.

But walking the streets of Dhaka, there is a feeling that the country stands at a precipice. While Yunus is still widely respected, questions have been raised over his governance capabilities and the pace of promised reform.

Political parties, particularly the Bangladesh National party (BNP), have been desperate to return to power and have exerted mounting pressure on Yunus to hold elections, calling into question his legitimacy. The students who led the revolution have also launched their own party.

The senior BNP figure Amir Chowdhury said elections could not come soon enough. “This government was only meant as an interim measure,” he said. “Right now nobody is accountable on a day-to-day basis and they don’t have the political weight, mandate and mobilisation to carry out reforms.”

Declining law and order

Police, facing public anger and criminal charges for their actions under Hasina, have been reluctant to return to their posts and the security situation has been rapidly declining. Gang crime is rampant on Dhaka’s streets and minority groups are experiencing harassment. On Monday, protesters burned an effigy of Jahangir Alam Chowdhury, the home affairs minister, demanding his removal from office over his failure to curb rising crime.

Yunus denied any suggestion that the streets were less safe than under Hasina’s rule, but others have warned that the country’s security situation threatened to spiral beyond his government’s control. Prominent student leader Nahid Islam, head of the new National Citizens party, said it would be “impossible to hold free and fair elections in this current law-and-order situation”.

In a strongly worded speech last week, Bangladesh’s army chief, Gen Waker-Uz-Zaman – who played a pivotal role in Hasina’s departure and Yunus’ return – said the country was in a “state of anarchy”, and if the divisions fuelling unrest continued, “the independence and sovereignty of this country will be at stake”.

Yunus maintained he had a “very good relationship” with the military, and that there was “no pressure” from the army chief. However, some took the general’s words as a strong rebuke of Yunus’s leadership and even a warning that military intervention might be on the horizon.

Yunus is determined to frame the country’s woes as consequences of Hasina’s rule: “Hasina’s regime wasn’t a government, it was a family of bandits. Any order from the boss and it was done. Someone’s causing problems? We’ll make them disappear. Want to hold an election? We will make sure you win all the seats. You want money? Here’s a million dollar loan from the bank you never have to pay back.”

The scale of the corruption carried out under Hasina has left the banking system highly exposed and the economy in tatters. Among Hasina’s relatives caught up in the financial scandals is her niece, Tulip Siddiq, a UK Labour MP. Siddiq resigned from her role at the Treasury as she faced questions over assets allegedly linked to Hasina’s regime and was named in a corruption investigation in Bangladesh. She has denied all wrongdoing.

Operations involving financial authorities in the UK, US and Switzerland are under way to try to recover upwards of $17bn estimated to have been taken from country’s banks by Hasina’s allies. But hopes of it being returned anytime soon are diminishing.

“Banks were given full licence to loot people’s money, with active participation from the government,” Yunus said. “They would send their officials with guns to get it all signed off.”

Yunus has also been accused of not doing enough to contain a surge in the hardline Islamic religious right in recent months. Under Hasina, Islamist parties such as Jamaat-e-Islami were banned, and Islamist political leaders faced widespread persecution. They are now free to operate and have seen a swell in support, while banned Islamist militant groups have also become more active. There have been incidents of teenage girls’ football matches being halted after intervention by local hardline Islamic groups and on Friday, police used tear gas to disperse hundreds of members of banned militant outfit Hizb-ut-Tahrir as they marched through Dhaka demanding an Islamic caliphate.

Yunus courts Trump

Some of the greatest pressures on Yunus have come from outside Bangladesh. When she was in power, Hasina enjoyed a close relationship with India and is now hiding out in the neighbouring nation as bilateral ties between the countries disintegrate. India has shown little interest in mending them while Yunus is in charge, with Delhi recently accusing Dhaka of “normalising terrorism”.

In December, a formal extradition request was made to India to send Hasina back to face trial in Bangladesh but Yunus confirmed there had been “no response” from the Indian government. He said Hasina would still face trial for crimes against humanity, even if in absentia.

Hasina is becoming increasingly vocal in her criticisms of Yunus: she recently called him a “mobster” who was unleashing “terrorists” on the country.

Yunus said India hosting her would be tolerated, but “allowing her to use India as a platform for her campaign to try to undo everything we have done is dangerous. It destabilises the country.”

India’s government is not Yunus’s only problem: the return of Donald Trump to the White House is also bad news. The Biden administration was one of Yunus’s biggest backers, both politically and financially. But the restoration of democracy in Bangladesh is unlikely to be a priority for Trump.

Bangladesh has taken a blow from Trump’s decimation of the US Agency for International Development (USAid), which had pledged the country more than $1bn in assistance in recent years. In a speech, Trump alleged millions of USAid dollars earmarked for strengthening Bangladesh political landscape had been used to elect a “radical left communist” without offering any evidence.

In an attempt to bring the US on side, Yunus recently invited Trump’s billionaire backer Elon Musk to bring his Starlink satellite internet network to Bangladesh. Sources around Yunus said a visit by Musk to the country was expected in April.

Yunus expressed hope that Trump might see Bangladesh as a “good investment opportunity” and trading partner, and said he intended to pitch this to Musk during his visit. “Trump’s a dealmaker, so I say to him: come, do deals with us,” he said. If he did not, Bangladesh would feel a little pain, Yunus said. “But this democratic process will not stop.”

Redwan Ahmed contributed reporting