NOBEL LAUREATE'S GRAMEEN BANK THRIVING UNDER

C O N F I D E N T I A L SECTION 01 OF 02 DHAKA 000583

SIPDIS

DEPT FOR SCA/PB

E.O. 12958: DECL: 05/29/2018
TAGS: PGOV EAID ECON PINR BG
SUBJECT: NOBEL LAUREATE'S GRAMEEN BANK THRIVING UNDER
CARETAKER GOVERNMENT; CONCERNED ABOUT FUTURE

Classified By: Ambassador James F. Moriarty. Reasons 1.4 (b) and (d)

Summary
=======


1. (C) According to its founder, Nobel Laureate Muhammad
Yunus, Grameen Bank is thriving under the Caretaker
Government and has been largely immune to the effects of high
food prices and natural disasters that have plagued
Bangladesh's economy this year. Grameen continues to expand
into new markets and businesses, including opening its first
branch in the U.S. and moving into the health care sector in
Bangladesh. What Grameen and its founder fear most is a
return to the confrontational politics and the culture of
impunity that existed before the state of emergency. While
many have called for Dr. Yunus to play a political role, and
while he has flirted with this in the past, the Grameen head
fears that politicization would threaten all that the Bank
has achieved. Yunus sees decentralization as key to
improving governance and service delivery and unlocking
Bangladesh's potential.

Grameen Bank Thrives Under CTG
==============================


2. (C) The Ambassador met with Nobel Laureate Dr. Muhammad
Yunus at his modest office in the Grameen Bank Headquarters
building in Mirpur, Dhaka. Pol/Econ Counselor (notetaker)
accompanied the Ambassador during the one-hour long meeting.
The meeting was followed by a brief presentation on the
launch of Grameen America's first branch in Queens, N.Y.
Yunus told the Ambassador that Grameen America has plans to
expand in the U.S., beginning in New Orleans, once the proof
of concept period in New York is completed.


3. (C) Yunus said that Grameen Bank's status in Bangladesh
was currently very healthy, with 7.45 million borrowers, 97
percent of whom are women. Grameen Bank had 2,499 branches
and 25,211 staff members, and was totally owned and operated
by its members. Grameen has been largely unaffected by the
natural disasters and high food prices that have plagued the
economy this year. Over the years, Grameen had expanded into
a family of 25 companies, including agriculture,
communications, education, energy, telecom, and IT.

Grameen Expands into Health Care Sector
=======================================


4. (C) Yunus became animated as he described Grameen's
expansion into the health care sector. Grameen Health Care
Services was intended to address the problem of lack of
qualified medical personnel at the local level. Yunus
envisioned an integrated health care delivery service, funded
through health insurance contributions by members, that would
include local health clinics, 50 bed hospitals at the
district level, and a national "Medical City" which would
provide more advanced care and also oversee education and
training of doctors and nurses, both for employment within
the system and opportunities abroad. Yunus said the biggest
challenge that the health sector currently faced was
competition from the GOB for hiring doctors, who were
attracted by the perks and the low expectations of the
government health care system. Yunus will soon travel to the
U.S. and meet representatives from Massachusetts General
Hospital and the Mayo Clinic to discuss possible
partnerships.

The Problem with Politicians
============================


5. (C) Yunus claimed Bangladesh's greatest resource was its
people, and noted that much of the country's success had been
achieved in spite of the Government. He said the biggest
problem facing the country was the dysfunctional political
system. Yunus told the Ambassador he had been offered the
position of Chief Adviser of the current caretaker government
but had turned it down. Still, he was full of praise for what
his friend Dr. Fakhruddin Ahmed's government had
accomplished. Yunus said the CTG had achieved more in two
years than a political government would have achieved in 50
years.


6. (C) Yunus said he feared the return of an unreconstructed
political class following elections. He recounted the

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difficulties that previous political governments and
bureaucrats had caused for Grameen and other NGOs. Yunus
blamed the senior leaders of the parties for the rampant
corruption in Bangladesh, saying they had created an
environment in which corruption could flourish with impunity.
Countering the conventional wisdom, Yunus praised the CTG for
its handling of this year's food crisis, noting the
government had done much better than a political government
would have.

Importance of Decentralization
==============================


7. (C) Yunus was dismissive of the Dhaka-based intellectuals
critical of the CTG. Grameen was in touch with the people,
he reported, and did not see any signs of famine or severe
distress. Yunus championed decentralization, noting he had
argued in favor of strong local government with former Prime
Ministers Sheikh Hasina and Begum Zia. Yunus claimed he had
been one of the early proponents of village government "Gram
Sarker," adding he was disappointed to see that abolished.
Yunus considered it imperative that the Upazila system be
retained and that elections be held. In addition, he saw no
role for Members of Parliament in overseeing local
administration.

Grameen Out of Politics
=======================


8. (C) Yunus confided to the Ambassador his reluctance to see
Grameen take a stand on political issues for fear it would
result in the destruction of all that he had built. Once
politicized, Grameen would become a target for the political
classes, who would seek to provoke divisions within the
organization. Yunus did not directly address the frequent
rumors that he was being considered as a consensus President
or Prime Minister. We have heard from others in recent days
that Yunus has been talking with the Government and its
supporters about a possible future role.

Comment
=======


9. (C) Yunus comes across as very sincere and committed to
the work of Grameen. He bears the scars of many
confrontations and disappointments with Government, both
politicians and bureaucrats, and this seems to color his
perceptions of the political parties and the two former prime
ministers. It is understandable why he would be a proponent
of strong local government, and his analysis of the
impediments to economic growth appears on the mark. While
Yunus was clear that Grameen should stay out of politics, and
while it would be hard to see him as a politician, he did not
close the door to some future "political" role.
Moriarty