Date: November 30, 2009.
Title: BANGLADESH PM REMAINS COOL TOWARD NOBEL LAUREATE (CONFIDENTIAL)
Ambassador weighs in with Prime Minister
¶5. (C) Fearing GOB displeasure with him would jeopardize Grameen Bank and his other initiatives, Yunus requested the Ambassador put in a good word with the PM on behalf of Grameen and Yunus. In a November 5 meeting with Hasina, the Ambassador highlighted the upcoming visit of Ambassador-at-Large for Global Women’s Issues Melanne Verveer. The Prime Minister brightened saying that she remembered Verveer and looked forward to seeing her. The Ambassador then suggested that Verveer was also interested in meeting with Yunus; offering this as one of many examples where improved relations between the GOB and Yunus would be good for Bangladesh. At this, the Prime Minister theatrically rolled her eyes and shook her head. She spoke at length about her estrangement from Yunus and nodded her agreement when an advisor in the meeting characterized Yunus as ungrateful for the Grameen Phone deal that the Prime Minister had made possible.
¶6. (C) Most keenly, the Prime Minister felt Yunus had exercised poor judgement by courting military officers who had presented Yunus the possibility of coming to power through military backing in early 2007. She concluded the subject of Yunus by saying: “Perhaps we don’t work together. But we don’t stop him. When I was in Sweden [recently], Yunus was there and we exchanged hands. It is our family tradition.”
Foreign Minister blasts Yunus
¶7. (C) During Ambassador Verveer’s November 11 meeting with the Prime Minister, Ambassador Verveer noted Grameen’s good work and Professor Yunus’ plans to start a nursing school in Bangladesh. The PM did not comment except to note that health care was a top GOB priority and the GOB would support anyone in the private sector wishing to establish a nursing school. When Ambassador Verveer met with Foreign Minister
Dipu Moni the next day, however, the Foreign Minister had a litany of complaints against Yunus.
¶8. (C) In a one-on-one session that lasted more than an hour, the Foreign Minister presented a range of allegations against Yunus and Grameen. She complained about the high interest rates Grameen charges its customers and alleged that the bank used “vicious practices” to recruit customers and obtain loan payments. The Foreign Minister claimed Yunus broke rules and Grameen didn’t comply with Bangladesh law, including auditing requirements. She said many people in Bangladesh were upset when Yunus won the Nobel Peace Prize given his corrupt practices. She also said GOB leaders understood the power of Yunus’ international reputation and therefore “bite our tongues” when accolades were heaped upon him. On a personal note, the Foreign Minister also complained that Yunus did not visit Sheikh Hasina in the hospital when she was injured in a 2004 bomb attack.
¶1. (C) A prophet has no honor in his own country, at least as far as Nobel Peace Laureate Muhammad Yunus and Bangladesh’s Awami League government is concerned. Prime Minister Sheikh Hasina and Foreign Minister Dipu Moni made clear their distrust and suspicion of Yunus in several recent meetings with senior USG officials. While they claimed Yunus engaged in corrupt practices at Grameen Bank, his micro-credit brainchild, Yunus’ ties to the recent Caretaker Government and his brief contemplation of a role in Bangladesh politics are more likely the reasons for Awami League disdain.
Background: Ties to the caretakers
¶2. (C) During the term of the 2007-2008 Caretaker Government (CTG), some of the CTG’s military backers approached Muhammad Yunus about setting up a political party as an alternative to the two leading political parties, the Awami League (AL) and the Bangladesh Nationalist Party (BNP). It is likely some of the caretakers hoped Yunus’ international stature as a Nobel Peace Laureate and founding father of micro-credit could
translate into a domestic political force that could rid Bangladesh of its endemic corruption and dynastic politics.
Yunus briefly flirted with a political bid, but quickly decided he, and Grameen Bank, were better off remaining outside politics.
New GOB signals displeasure with Grameen
¶3. (C) No one in Bangladesh can escape politics, however. Following the December 2008 national elections that swept the Awami League and Prime Minister Sheikh Hasina into power, it soon became clear the new Government of Bangladesh (GOB) was not interested in helping Professor Yunus or Grameen Bank.
The Caretaker Government had passed an ordinance that empowered the Grameen Bank board of directors to appoint its Chairman. Previously, the GOB, which originally held a majority stake in Grameen Bank, had final authority over the Chairman’s appointment.
The Prime Minister signaled her displeasure with Yunus by refusing to ratify the CTG’s ordinance as required under Bangladesh law. The GOB therefore retains its power to appoint Grameen’s Chairman.
¶4. (C) At the same time, the Awami League Government decided not to renew the leases on close to 1,000 fish farms managed under Grameen’s fisheries program since 1986. According to Grameen Fisheries, it took poorly-run, government-owned fish ponds and transformed them into viable operations that support more than 10,000 families. The GOB now plans to reclaim the ponds. The GOB also has not granted approval of a Yunus plan to put establish a job placement/training venture.
¶9. (C) Ambassadors Verveer and Moriarty met with Yunus November 11, as he was returning to Bangladesh from Germany, where he had joined Nelson Mandela and other luminaries in the Berlin Wall anniversary festivities. The Ambassadors relayed GOB complaints to Yunus, who said they echoed much of what he was hearing from his sources. He disputed all the allegations, noting that Grameen had nearly 8 million borrowers and had disbursed $8 billion in loans since its inception, more than 95 percent of which had been repaid. He said bank customers currently had the equivalent of half-a-billion dollars in savings at Grameen. According to Yunus, he and Grameen complied with all laws, including annual audits.
¶10. (C) Yunus agreed that the Prime Minister likely viewed him as part of the Caretaker Government that tried to remove her and her rival, Begum Khaleda Zia of the opposition BNP, from Bangladesh’s political scene. Yunus said the PM’s attitude was, “you’re either with me or against me.” (NOTE: For her part, BNP Chairperson Khaleda Zia has adopted a much friendlier tone towards Yunus, leading some to accuse him of harboring BNP sympathies. END NOTE.)
¶11. (C) Yunus said he would continue to forge ahead with his work at the bank and other Grameen initiatives, including in the areas of health care and social entrepreneurship. He predicted his work would be slowed by the GOB, however, since any new business or organization he planned to start would require some sort of GOB license or approval. Yunus said he had hoped someone would be able to mediate on his behalf; however, he understood the difficulty in doing so given that both Sheikh Hasina and FM Moni were not willing to meet him.
¶12. (C) Despite the wide ranging claims of Yunus’ misdeeds by the PM and FM, it is likely their biggest problem with Yunus is connected to his brief contemplation of politics. That foray, however short, is proof in their minds that Yunus — backed by his millions of borrowers — seeks to usurp them. The unwillingness of the Prime Minister and Foreign Minister to accept positive statements about Yunus from us means that for the time being we must find other ways to support the work of Grameen. Perhaps our efforts are best directed at specific Grameen projects, many of which include U.S. companies or organizations as partners. We will also continue to work with potential mediators such as PM Foreign Policy Advisor and longtime Yunus confidante Dr. Gowher Rizvi.
¶13. (C) This dispute also raises questions about the long-term future of Grameen Bank. Yunus is 69 years old. He told Ambassadors Moriarty and Verveer he had offered to retire on a number of occasions, but the bank board had refused his offers, claiming there would be a run on the bank if he left. Yunus said he had been grooming a successor, but claimed GOB leaders had wooed that person into their camp and now he was working against Yunus within the bank. If Grameen Bank is to continue transforming lives as it has for the last two decades, Yunus and the bank must find a way for Grameen to keep working even after Yunus is gone.
Here’s another cable sent by US Ambassador James F Moriarty.
Date: May 11, 2009.
Title: NOBEL LAUREATE REQUESTS USG HELP ON GRAMEEN BANK RULES (CONFIDENTIAL)
1. (C) Nobel Peace Laureate and Grameen Bank Chairman Muhammad Yunus asked that the USG assist him in urging Prime Minister Sheikh Hasina to change a long-standing rule that gives the Government of Bangladesh (GOB) control over his position as Grameen Bank Chairman. Bangladesh’s 2007-2008 Caretaker Government passed an ordinance removing the GOB’s authority to select the bank chairman, but the Parliament has not yet ratified that ordinance. In a May 10 meeting with the Ambassador, Professor Yunus requested our input on the best way to request the PM reconsider her refusal. The Ambassador pledged to assist Yunus in obtaining a meeting with the PM and in arguing on Yunus’ behalf with the Prime Minister and her advisers. Yunus also discussed with the Ambassador his disappointment over the new Awami League government. Yunus said the new government had to focus on the nation’s power needs and improve the quality of government bureacracy in order for Bangladesh to weather the current economic turmoil.
COMMENT: Yunus was clearly worried about the unwillingness to relinquish the GOB’s control over the selection of the Grameen Bank Chairman.
YUNUS SEEKS CHANGE TO OLD RULE ON GRAMEEN LEADERSHIP
2. (C) As a followup to the the Secretary’s meeting with Professor Yunus in Washington last month, the Ambassador called on Yunus May 10 at Grameen Bank headquarters in Dhaka. Yunus outlined in greater detail concerns he had raised with the Secretary regarding relations between the Government of Bangladesh (GOB) and Grameen Bank. According to Yunus, Parliament has refused to approve an amendment to legislation that established Grameen Bank in the early 1980s; the amendment would have given the bank’s Board of Directors, rather than the GOB (as has been the practice), the authority to select the Chairman of Grameen Bank, a position held by Yunus since the bank’s inception and renewed every two years.
In order to create Grameen Bank in 1983, when the concept of “micro-credit” was little known or understood, Yunus sought support from the GOB to transform his micro-credit venture from a charitable organization to a full-fledged bank. The GOB passed an ordinance creating Grameen Bank. The ordinance decreed that the GOB would own 60 percent of the bank and would have the authority to appoint the bank’s Chairman. Since 1983, the GOB’s share of Grameen Bank has gradually declined; now the government only owns 5 percent of the bank. The GOB has also continued to re-appoint Yunus the bank’s Chairman. However, Yunus has long desired to change the rule giving the GOB control of his position as Chairman. (NOTE: Yunus’ efforts in this regard are detailed in part in his first book, “Banker to the Poor.” END NOTE.)
4. (C) Over the years, Yunus told the Ambassador, he had applied repeatedly to the GOB to amend the rules regarding the selection of the Chairman. During the recent Caretaker Government (CTG) of 2007-2008, Yunus was successful in persuading the CTG to amend the Grameen Bank ordinance so the GOB no longer had the authority to appoint the bank’s Chairman. Bangladesh’s Constitution requires, however, that an elected government approve all ordinances passed by a caretaker government. When Sheikh Hasina’s Awami League formed a new government following December 2008 elections, Yunus urged the GOB to approve the ordinance that made Grameen Bank leadership independent of the GOB. Despite strong support from several Cabinet Ministers, the Prime Minister refused to approve the legislation.
5. (C) Yunus requested USG assistance with his efforts to have the Prime Minister reverse her decision. In response to a query from the Ambassador, Yunus said he had thus far only spoken with members of the PM’s cabinet and not with the Prime Minister herself. The Ambassador recommended Yunus seek a meeting with the PM as a first step in advocating she approve the amendment to the Grameen Bank legislation. The Ambassador pledged to assist Yunus in obtaining the meeting and in urging the Prime Minister to change the Grameen Bank legislation.
YUNUS SAYS HASINA SHOULD BE “BUILDING BRIDGES”
6. (C) The Ambassador and Professor Yunus went on to discuss more generally the Prime Minister’s performance during her first four months in office. Yunus was critical of the Prime Minister’s actions to strengthen central government at the expense of local government. He also criticized the Awami League government for exacting petty retributions against the opposition Bangladesh Nationalist Party (BNP) and its leader Begum Khaleda Zia. “This is a divisive strategy,” Yunus said. The Prime Minister “must build bridges.” 7. (C) According to Yunus, the new government leadership must also address the nation’s power crisis and improve the quality of government bureaucracy in order to keep Bangladesh on its development path. If the government and business can begin to meet the nation’s immense power needs, then the rest of the economy will continue to grow, Yunus said. With regard to quality of governance, Yunus observed that the GOB desperately needed professional civil servants who had the expertise to manage their portfolios and who were not subject to the whims of politics.
GRAMEEN FORGES AHEAD IN HEALTH CARE
8. (SBU) Yunus updated the Ambassador on Grameen’s progress in developing health care services for the poor in Bangladesh. Grameen recently finalized an agreement with Harvard to establish Grameen Medical College in Bangladesh, to train doctors with an emphasis on medical treatment of the poor. At the same time, Grameen is partnering with the Nike Foundation, Bayer and a Glasgow, Scotland university to open three nursing colleges in different parts of Bangladesh. Yunus noted the lamentable state of nursing in Bangladesh, which only had one nurse for every three doctors. Yunus also described Grameen’s partnership with GE Healthcare, through which GE will produce basic medical equipment that can be used in village house calls by local health care workers.
9. (C) Despite, or perhaps because of, Yunus’ international reputation, many among Bangladesh’s political elite regard the Nobel Laureate with suspicion. In the atmosphere of Bangladesh’s cult-of-personality politics, Sheikh Hasina and others likely view Yunus’ achievements and stature as a threat to their authority; in their minds, his very brief attempt to a establish a political party in the early days of the 2007-2008 Caretaker Government is proof of an alleged desire to usurp Bangladesh’s long-time leaders, including the Prime Minister. Using this logic, then, it is not surprising the Prime Minister wishes to retain a lever of power over the Grameen Bank Chairman. Yunus and his supporters, including the United States, need to convince the Prime Minister that an independent Grameen Bank is in her interest. We will emphasize that an independent Grameen Bank can support the PM’s stated desire to further alleviate poverty in Bangladesh, and that Yunus as an independent bank chairman can enhance her standing on the world stage. We will work with Yunus to make these points with the Prime Minister and her advisers. We will also note the potential negative consequences of any attempt to sideline such an internationally respected figure as Muhammad Yunus.