Thursday, 14 December 2006

Yunus: Poverty is a threat to Peace

The Nobel committee chose wisely this year when they awarded the Peace Prize to Muhammad Yunus, whose Grameen Bank revolutionized credit and proved that poor women of Bangladesh were better credit risks than wealthy men in suits from New York. Yunus' acceptance speech last weekend, heard on Democracy Now, tells the story worth repeating:

"This year's prize gives the highest honor and dignity to the hundreds of millions of women all around the world who struggle every day to make a living and bring hope for better lives for their children. This is an historic moment for all of them. By giving us this prize, the Norwegian Nobel Committee has given important support to the proposition that peace is inextricably linked to poverty. Poverty is a threat to peace.

World's income distribution gives a very telling story. 94% of the world income goes to 40% of the world population, while 60% of people live only with 6% of the world income. Half of the world population lives on two dollars a day.

The millennium began with a great global dream. World leaders gathered at the United Nations in 2000 and adopted, among others, a historic goal to reduce poverty by half by 2015. Never in human history had such a bold goal been adopted by the entire world in one voice, one that specified time and size.

But then came September 11 and the Iraq war, and suddenly the world became derailed from the pursuit of this dream, with the attention of the world leaders shifting from the war on poverty to the war on terrorism. ’Til now, over $530 billion has been spent on the war in Iraq by the USA alone.

I believe terrorism cannot be won by the military action. Terrorism must be condemned in the strongest possible language. We must stand solidly against it and find all the means to end it. We must address the root cause of terrorism to end terrorism for all time to come. I believe that putting resources into improving the lives of the poor is a better strategy than spending it on guns.

Peace should be understood in a human way, in a broad social, political and economic way. Peace is threatened by unjust economic, social and political order, absence of democracy, environmental degradation and absence of human rights.

Poverty is the absence of all human rights. The frustrations, hostility and anger generated by abject poverty cannot sustain peace in any society. For building stable peace, we must find ways to provide opportunities for people to live decent lives. The creation of opportunities for the majority of the people -- the poor -- is at the heart of the work that we have dedicated ourselves during the past 30 years.

I became involved in the poverty issue, not as a policymaker or as a researcher. I became involved because poverty was all around me, and I could not turn away from it. In 1974, I found it difficult to teach elegant theories of economics in the university classroom, in the backdrop of a terrible famine that was raging in Bangladesh. Suddenly, I felt the emptiness of all those theories in the face of the crushing hunger and poverty.

I wanted to do something immediate to help people around me, even if it was just one human being, to get through another day with a little more ease. That brought me face to face with poor people’s struggle to find the tiniest amounts of money to support their efforts to eke out a living.

I was shocked to discover a woman in the village, borrowing less than a dollar from the money lender, on the condition that he would have the exclusive right to buy all she produces at the price that he decides. This, to me, was a way of recruiting slave labor.

I decided to make a list of the victims of the money lending in the village next door to our campus. When my list was complete, I had names of 42 victims, who borrowed a total amount of $27. I was shocked. I offered this $27 from my own pocket to get these victims out of the clutches of the money lenders.

The excitement that was created among the people by this action got me further involved in it. If I could make so many people so happy with such a tiny amount of money, why shouldn’t I do more of it? That’s what I have been trying to do ever since.

The first thing I did was try to persuade the bank located in the campus to lend money to the poor. But that didn’t work. They didn’t agree. The bank said that the poor are not creditworthy. After all my efforts for several months, when it failed, I offered to become a guarantor for the loans to the poor.

When I gave the loans, I was stunned by the result I got. The poor paid back their loans on time, every time. But still, I kept confronting difficulties in expanding the program through the existing banks. That was when I decided to create a separate bank for the poor. I finally succeeded in doing that in 1983. I named it Grameen Bank or Village Bank.

Today, Grameen Bank gives loans to nearly 7 million poor people -- 97% of them are women -- in 73,000 villages of Bangladesh. Grameen Bank gives collateral-free income-generating loans, housing loans, student loans and micro-enterprise loans to the poor families and offers them a host of attractive savings, pension funds and insurance products for its members.

Since it introduced them in 1984, housing loans have been used to construct 640,000 houses. The legal ownership of these houses belongs to the women themselves. We focused on women, because we found giving loans to women always brought more benefits to the family.

In a cumulative way, the bank has given out a loan totaling about $6 billion. Repayment rate, 99%. Grameen Bank routinely makes profit. Financially, it is self-reliant and has not taken donor money since 1995. Deposits and own resources of Grameen Bank today amount to 143% of all outstanding loans. According to Grameen Bank's internal survey, 58% of our borrowers have crossed the poverty line.

Grameen Bank was born as a tiny homegrown project run with the help of several of my students, all local girls and boys. Three of these students are still with me in Grameen Bank, after all these years, as its topmost executives. They are here today to receive this honor you gave us.

This idea, which began in Jobra, a small village in Bangladesh, has spread around the world. There are now Grameen-type programs in almost every country in the world.
The photo of the weaver comes from this 2002 article on Yunus and microcredit from Sustainable Times.


Rober mac said...

I have read an article on grameen bank. Now I have a lot of question about grameen bank.
Robert Mac

Omar Tarek Chowdhury

Dr. Muhammad Yunus, the self-proclaimed ‘banker to the poor’, has been awarded Nobel Peace Prize 2006 and following the announcement of the award mainstream media created an euphoria throughout in Bangladesh. The mainstream academia has also jumped on the bandwagon. The unrestrained wave of delight created by the mainstream of society representing the ruling class in the wake of Yunus' adornment with the coveted prize, has given it a ploy to camouflage its hollowness, intellectual shallowness and failure to govern the society it dominates. This ruling class is rotten to the core and morally and intellectually bankrupt. No wonder that in the era of neo-liberalism the opinion-makers and the dominant media, controlled by capital as they are, will be hyper-active to make people forget their woes and ‘feel good’. The award has provided a very good opportunity to them. The merriment-deluge washed away the sense of necessity that makes one analyze the significance of this world famous laurel which has been bestowed upon the founder-head of the Grameen Bank (GB).

Except a very few skeptics none will disagree that no other person has been adorned with so many awards and honorary degrees than Dr. Yunus, the teacher-turned-banker. The person advocating credit for the poor has so far won 68 awards, 28 honorary degrees and 15 felicitations from his motherland and other countries. Along with him the GB, his much acclaimed creation, has been awarded 8 national and international awards including Nobel Peace Prize 2006. These are, in a real sense, a recognition of his efforts to contain the poor in a way that helps to maintain the status quo and identify an effective alternative institutional method for profitable investment of finance capital. So, the mainstream policy-makers have come to recognize the merit of this method. The method devised by him has proved effective to all concerned ranging from the UN poverty-crusaders to the Citibank, from the promoters of technology-not-friendly-to-environment to the finance capital investors. These ground realities made it necessary for a wide range actors to construct a mythical image of Dr Yunus and in doing so there was an avalanche of awards, honors, etc., for him, an unending supply of chairs in the boards of 'independent' and 'not for profit' foundations floated and supported by multinational corporations (MNC). Reports with illusory images of his warm friendship with kings and queens and presidents and first ladies were circulated giving the impression of a fairy tale of friendship between a prince and a 'pauper-son'. The target for these image-bombardments was the psycho-world of the common people. The corporate controlled pundits, media and opinion-makers have 'illuminated' the psycho-world of common people with illusions and high pitched propaganda to drain people of their reasoning, the power of questioning and the capacity of digging out truth. Sometimes the power-owners appear successful, at least for the time being. Relying on his magnified image Dr. Yunus has successfully become a broker in the world of international finance capital, in the marketing of technology and in the mainstream political economy. (It should be mentioned that brokering, lobbying, etc. are recognized and dignified professions in the western world.) Muhammad Yunus has been and is being awarded repeatedly for efficiently acting as a broker on behalf of big corporations of the west and as a chain reaction one award has attracted another.

No award is politics-,economics-,philosophy-, and ideology-neutral. While discussing an award it is worthwhile to take stock of the organizations or persons behind it, to whom it is awarded, and the reasons behind not awarding it to some other person than the one who has been tipped for it. Joseph Stalin was nominated for the Nobel Peace Prize but was not awarded it. Jean Paul Sartre, and in the near past, Arundhati Roy, the defiant voice, refused the Nobel Prize and Sahiyata Academy Award of India respectively. All these facts demand an analysis. Dr. Yunus was awarded the World Food Prize, known as the Alternative Nobel Prize, in 1994 and the prize is patronized by 74 organizations including the 'famous' US agri-business company Monsanto, Cargill and other US large soyabean and farm products exporting companies, the Agriculture Research Service of the US government, a number of financing companies and the 'famous' Coca-Cola. Yunus took initiative to float a joint venture company to market harmful agricultural technologies (genetically engineered seeds, Roundup herbicide, ‘transgenic’ or ‘genetically modified’ plant species) of Monsanto, a company despised in the west, in Bangladesh after being bestowed with the Alternative Nobel prize. Even US $150,000 was accepted by him to set up Grameen Monsanto Center for Environment-Friendly Technologies. This 'pious' act of brokering was initiated during the second micro credit summit. Monsanto in its zeal to send 'poverty' to a museum approached Dr. Yunus, would be curator of ‘poverty museum’, and he did not hesitate to collaborate. An adventure indeed! But he was later compelled to make a retreat with 'dignity' following a flurry of criticisms from different parts of the world by the environmentalists. However, the former university teacher offered no explanation to the members of the public, not even to his constituency -- the poor in Bangladesh. Probably highly innovative minds need not engage in 'petty' acts like offering public apology for making profit at the expense of the environment and food security of the country. Nor do the poor have the opportunity to map the minds that win friendship of MNCs and kings and queens. But a number of personalities and organizations should be acclaimed for compelling the Nobel-man retreat and they include Vandana Shiva, the philosopher and environment activist; late AZM Obaidullah, a famous Bangali poet; and Nayakrishi Andolon, a movement for ecology-friendly agriculture in Bangladesh. The now-futile venture of the microcredit evangelist is a stark example of harming the agriculture of his motherland, endangering food security, creating dependency, and all these mighty tasks were planned to be initiated by offering 'free' technology through microcredit, the 'panacea' for the poor. The myth of 'telephone ladies' has been created with the same tact. These 'simple' acts tell the intimate tales of the friendship between the poor’s banker and the mighty rulers, and help to explain reasons why the corporate owned media and the pundits, who are ideologically linked, are untiringly singing the same mantra, propaganda and gospel to build up the cult of the banker for the humble. An in-depth enquiry will show that many of the individuals and organizations engaged in this campaign are connected to each other through business and financial concerns. The link here is, also, finance and business. Just as the World Food Prize was related to the marketing of Monsanto-technology among the farmers of Bangladesh, the One World Broadcasting Trust Media Award (1988) and the World Technology Network Award (2003) from Britain, the Telecinco Award (2004) from Spain, connected to marketing of mobile phone, the Economist Innovation Award (2004) and the Leadership in Social Entrepreneurship Award (2004) from the US and many other awards were meant to expand corporate business interest. The German telephone giant Deutsh Telecom and the US software giant Microsoft are the patrons of the Petersberg Prize which was awarded to the Grameen Bank in 2004.

Dr. Yunus has received the Seoul Peace Prize from Korea a few days after he had been awarded the Nobel Peace Prize. Before he left for Seoul and after his return from there he did not forget to advice the caretaker government, mainly responsible to organize national election during its 90 days tenure, to take a quick decision on opening the Korean Export Processing Zone (EPZ) in Bangladesh.

It seems that formal functioning of the Korean EPZ is the top priority of the friend of the poor as MNCs have unrestrained liberty to plunder the natural resources of the country under the guise of foreign investment, as corruption, kick backs and absence of transparency is the norm in these deals, and as many people in this country about half-a dozen poor villagers shed their lives to safeguard the rights of people on the Fulbari coal mine in the northern Bangladesh; as the people of the country do not know the consequences of the agreements with companies like Asia Energy, which was awarded with the Fulbari coal mine on terms highly unfavorable to Bangladesh. It is interesting to note that though there are awards for those who can help the MNCs to maximize profit, there is none for advocacy work to create pressure and realize compensation for the irreparable loss of natural resources due to MNC operation. For example, there has been no award for anyone protesting against the damage done to gas and to bio-diversity by MNCs in the Magurchhara and the Tengratila gas fields, in north-eastern Bangladesh, which blew out due to their callous handling of the well-digging work. There has been no prize for advocacy work to safeguard people's rights and environment in the Fulbari coal mine and its surrounding areas, there is no patron to support lobbying work in Washington D.C. in favor of the female workers in the garments factories who need safer working condition so that no worker has to be killed in fire accidents in the factories.

It is known to all that huge amounts of fund necessary for education and research in the universities in the west are often provided through grants, assistance, investments, etc. by many Foundations and Endowments set up by MNCs. Such donations obviously influence the activities of these universities. These financial supports influence, directly and indirectly, the ideology of the faculties, the boards of directors, the boards of regents, etc.; the decision-making process; curricula; and areas and subjects of research in the universities. The MNCs efficiently manipulate these bodies and process to advance their own interest. Awarding honorary degrees is an old tactic to build up someone's image or to polish someone's palm. There are precedents of awarding honorary degrees to despised and despotic rulers from different countries. Compared to those instances awarding Dr. Yunus scores of honorary degrees and awards seems to be 'small, innocent' act. However, there is a need to remain awake to the ramifications of such awards and honors instead of naively looking at them the as the 'recognition of a person’s extraordinary contribution’.

Muhammad Yunus was selected as one of the ''25 most influential businessmen in the world in the last 25 years.'' Wharton School of Business made this selection in 2004 for a documentary made for the Public Broadcasting System (PBS), US. The rich and powerful tycoons in the list included Bill Gates, George Soros, Oprah Winfrey, Jeff Bezos, Richard Branson, Warren Buffertt, Michael Dell, Alan Greenspan, Lee Lacocca, Charles Schwab, Frederick Smith, and Sam Walton. The image of Dr. Yunus that has been built up gradually as a friend of the poor is, apparently, not in accordance with these rich people. Then, there comes the big question: what is the below-the-surface reason for his inclusion in this group of moneyed people? Is it a mere whim of a leading business school? But an analysis of the politico-economic factors brings forth a different answer: the efficient performance of Dr. Yunus as a new pathfinder for the investment of capital, as a broker and salesman of technology is the actual reason for his getting selected by the corporate circle as one of the 25 most influential businessperson in the last quarter century. The capacity of the Grameen Bank in this area is what has prompted the corporate circle to make its decision correctly.

A few more examples will help to show the close deals between Muhammad Yunus and the corporate world. He is a member of the advisory body of the Stockholm Challenge, the global network of the entrepreneurs of information and communication technology. The other members of the board include the senior vice-president of the chief research and science office of the San Microsystems, one of the leading computer companies; the president and CEO of Ericson; a member of the European parliament; a leading entrepreneur of Russia, Western Europe and the US. This list is enough for anyone to understand that safeguarding corporate interest, instead of pushing back poverty to a history museum is the main objective of this corporate network.

Dr. Yunus is co-president and a member of the advisory board of PlaNet Finance (PF), a French organization for financing microcredit programs. Sanofi-Aventis, a multinational pharmaceutical company, is one of the financing patrons of PF. Should anyone believe that Sanofi-Aventis and other multinationals are so eager to eliminate poverty from the face of the earth? One may pray that their eagerness should not be like that of Monsanto. If they are a bit less enthusiastic about poverty elimination that would a favor to the poor.

Dr. Yunus, as a member, adorns the advisory board of the Holcim Foundation, 'independent of business interest’ established and run by one of the biggest cement and construction material producers in this poverty-ridden world. The Swiss company's revenue in 2000 was US $ 8.2 billion. A look at the activities of the Rockfeller and Ford Foundations that have been criticized and condemned by many will help understand the reasons behind establishing such foundations and the type of activities they often carry out.

Apart from the close connections and deals with the MNCs Dr. Yunus has an organizational structure to turn microcredit into a vehicle for the investment of capital and marketing of technology producedby the MNCs. The Grameen Bank acts as a brand name or a franchise. Microcredit programs, broadly designed after the Grameen model are now being run in more than 100 countries, in continents east and west, in the north and the south. While Bill Clinton initiated it in the US state of Arkansas, the Reserve Bank of India, 'inspired' with the neo-liberal ideology, has liberalized their rules so that the program can be introduced among the starving tea farm workers in north-eastern India and among the poor in south India. It is a single string tying all: finance capital, the idle-capital seeking interest.

The Grameen Foundation USA (GFUSA) was established in 1997 to propagate and to expand the activities of interest seeking finance capital among the poor. Dr. Yunus is one of the founder-members and board members of this Foundation, a strategic partner of the GB. This Foundation has now spread out its credit net over 7 million breathing souls in 22 countries through 52 networks. This Foundation invests finance capital among the poor through its marketing of telephone, and through its window of microcredit which is financed by the capital market and commercial banks. It is closely connected with the Citibank, one of the largest financing organizations in the world. Along with Dr. Yunus, some former or present executives of Kane Property Company, GuideStar, Citibank, Microsoft, Citigroup, Calvert Funds and similar other large corporations and financing organizations are on the board of this Foundation. One can guess the power and brokering capacity of this Foundation from the fact that it is closely connected with the Clinton Global Initiative from the days of its inception. Former US president Clinton recommended Yunus for the Nobel award in 2005 for the second time though this move of Clinton went beyond all norms. Because Clinton was not empowered to make such a recommendation as Amartya Sen had been. While this act of recommendation was under way the GFUSA and Citibank joined hands as partner of the Clinton Initiative to jointly invest US $ 50 million and, if possible, $ 300 million, as microcredit. This Foundation has a special role in mobilizing capital, expanding GB-model micro credit all over the world, building up image of microcredit and its guru, and making public relations work. There is a similar type of power brokering house of Dr. Yunus in Australia to mobilize international power.

Undoubtedly, Dr. Yunus has become a blue-eyed boy of the corporate world for his excellent performance and innovations in the field of investment and marketing of finance capital and technology among the poor through microcredit. The third world is not a risk-free area for investment. The defaulting industrialists in Bangladesh are a stark example of this. There are other relevant questions that need to be addressed before an investment is made. The risk of socio-political upheavals in the country in question, the carrying capacity of the economy, the market size, etc. demand serious attention. Dr. Yunus has a 'magic wand' that creates an ensured market, an ensured return, an almost full return of the capital, an instant return, and all these he has done with his 'panacea' -- microcredit. This is what makes him dear to the corporate world and the corporate world is paying him back with laurels, awards, honors, etc. and facilitating his job by building up a larger-than-life image of the salesman. Thus, the underfed, undernourished multitude is fed with the fairy tales of friendship between the 'banker to the poor' and the spellbound kings, queens, presidents and first ladies. The Nobel Peace Prize to Dr. Yunus has reaffirmed this fact only.

P.S.: Patrick Bond (Director, Centre for Civil Society (South Africa) and author of Looting Africa: The Economics of Exploitation) repored in the South African daily The Mercury (Oct. 25, 2006): ‘So why then did Norway’s Nobel committee give Yunus the award? Colleagues in Oslo point out to me that he was strongly supported by friends in the Norwegian elite, including a former top finance ministry bureaucrat and leading officials of the national phone company, Telenor, which owns 62% of lucrative GrameenPhone, a company in control of 60% of Bangladesh’s cellphone market.

1. Websites: Grameen Bank, GFUSA, World Food Prize, Clinton Initiatives, Holcim Foundation, PlaNet Finance, Monsanto, GAIA Foundation, Stockholm Challange, Nobel Prize, natural-law
2. British agriculturalist Mark Griffiths’ letter to Dr. Muhammad Yunus, (June 29, 1998)
3. Vandana Shiva’s E-mail to Dr. Muhammad Yunus, (July 4, 1998)
4. Briefings of Rural Advancement Foundation International (RAFI), Canada and USA
5. BBC report on termination of Grameen-Monsanto deal. July 27, 1998
6. ‘Gene firm tightens grip on food chain’ by Louise Jury. The Independent (UK), 16.8.98
7. ‘Unmasking the microcredit success lie’ by Patrick Bond. The Mercury (SA), 25.10.06

Omar Tarek Chowdhury, Writer and translator. Translates pro-people political literature and contributes to alternative periodicals and newspapers.

Walker said...

Interesting article by Mr Chowdhury, but at the end of the day the recipients of the microcredit extended by the Grameen Bank and made respectable by Dr Yunus are still lifted from poverty and contributing to the social order, when the prevailing wisdom within the credit industry prior to the GB was to consider them too large a risk. As a human being, Yunus, like any of us, has his warts and blind spots, but he is MORE effective because he understands BOTH worlds than the theoreticist who decries the powerful but affects no changes.

Yunus serves as a bridge between the powerless and the powerful, and has been effective in helping the poor in the world as it exists. He deserves more honor for that than he deserves condemnation for working within an imperfect and even corrupt system.

Corruption will occur in any system, even one which Chowdhury might design.

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