June 5, 2004
AND A CANADIAN LESBIAN SHALL LEAD THEM?:
Remaking Iraq Without Guns: Microlending to Iraq's women would be a simple and powerful way to foster democracy. (IRSHAD MANJI, 6/05/04, NY Times)
When the heads of the world's leading industrialized nations meet in Georgia next week, they can do something unexpectedly positive for the Middle East, Muslim women, economic freedom and even democracy — if they take seriously a small but powerful idea on their agenda: microlending in Iraq.It's obvious by now that the reconstruction of Iraq demands long-term thinking, which means using non-military "soft power" as much as hard ammunition. One of the best ways to achieve stability is by offering tiny loans to promote the creation of small businesses. Iraq has no dearth of budding entrepreneurs who could use the help. Chief among them are women, who have shown themselves able and eager to take on more roles.
An investment in Muslim women benefits men and children too. Testifying to this multiplier effect are the signs in some Afghan schools: "Educate a boy and you educate that boy; educate a girl and you educate her entire family." Indeed, the 30-year record of microlending shows that Muslim women have helped nourish their neighborhoods and towns by building their own businesses. As for the repayment rate? A banker's fantasy fulfilled: 98 percent.
With that in mind, suppose Washington joined a coalition of rich allies around the world — the Group of 8 nations as well as private foundations — to offer women in Iraq a coherent program of microbusiness loans. Pursuing this type of soft power could also compel government transparency in a way that even popular movements couldn't. Only a broad and inclusive business class that can be taxed by the state will, in turn, convince the state to develop institutions that respond to people. Americans know this principle better than anybody. It's called representation with taxation.
Microlending are an excellent idea on any number of levels: (1) it's cheap; (2) in cultures where repayment of debts is a matter of honor it tends to be effective; (3) it will grow the economy from the ground up; (4) it will empower women; and (5) as Ms Manji points out with great insight, it will create an incentive for the state to tax people, which in turn makes the state responsive to people. Posted by Orrin Judd at June 5, 2004 9:06 AM
Except that to most orthodox Muslims, the concept of charging any interest is verboten. Equity stakes are preferred. Win/Win or Lose/Lose is considered just. Win/Lose is considered predatory on the poor.
I suppose the only difference with the Western tradition is that we draw a line at "usury" or interest rates above some value (30-40%), but that's a question of degree, not value
Posted by: tim bleknap at June 5, 2004 12:32 PMChristians used not to be able to charge interest, which is why Jews ended up in moneylending. There are various ways around the prohibition on interest, along with simply ignoring it.
Posted by: David Cohen at June 5, 2004 9:26 PMUsury can be finessed. What can't is that microlending simply doesn't scale. (It's called micro for a reason.)
The 98% rate only applies to initial/pilot projects, with intensive support activities for strictly selected borrowers and peer-pressure from other women in the village who don't get their loans until the first one is repaid. Once the population expands beyond the original participants, looser selection criteria are used, non-entrepreneurial sorts get loans, and the repayment rate drops toward 50%.
A feel-good solution that slowly dissolves in contact with reality. It can't hurt, but it won't help much. Sorry.
Kelly:
"Much" is quite subjective. A few thousand jobs created isn't much in the West, but in Iraq, it's the equivalent of a million.
Posted by: Michael Herdegen at June 6, 2004 2:58 PM