The following post was contributed by Lamia Karim.
Jagdish Bhagwati gets two important points wrong in the context of Bangladeshi politics. In a democracy, it should not matter whether one is the daughter of the Father of the Nation. First, Sheikh Mujibur Rahman abandoned democratic principles and instituted one-party rule in 1974 (BAKSAL), which among other things led to his downfall. Second, his daughter, the current prime minister Sheikh Hasina, had spent time on the streets demonstrating against the former prime minster Khaleda Zia instead of working out their differences in parliament. Is that upholding the principles of democracy? Bangladesh is not an Islamic state; it is a Muslim majority country. Nor is it under Islamic sharia laws. The two elected prime ministers to date have both been women. Similar to India, we have dynastic democracy. Elite women play important roles in the country by virtue of their familial ties.
I am not surprised that Bhagwati as a proponent of free trade supports Hasina unconditionally. She has been good for the Indian government and economy. Since coming to power in 2008, she has given India the right to transit through Bangladesh to reach its northern states known as the seven sisters (Assam, Meghalaya, Tripura. Mizoram, Manipur, Nagaland, Arunachal). There are ongoing insurgent movements against the Indian government in all of these provinces. Currently, trade access is through the northern tip of West Bengal (close to the foothills of the Himalayas). It is a narrow stretch of dangerous terrain and prohibitively expensive. Thus, with free transit through Bangladesh, the Indian government will be able to move goods easily and inexpensively into the region, and open it up for market access. Along with trade, the Indian army will roll into this region to crush the separatist movements in northeastern India. This will lead to cross-border coalitions among insurgent groups in the region (NE India, Bangladesh, and Myanmar), smuggling, environmental degradation, and a rise in the trafficking in women. Remember, too, that China is building a road link from Kunming (Yunnan province) through Myanmar to reach a proposed deep-sea port in southeastern Bangladesh. Thus, this is an extremely volatile region with both Chinese and Indian trade interests that will be played on the backs of these peripheral states and people.
Regarding microfinance and Yunus, let us give credit where credit is due. While Yunus is not the first proponent of microfinance, he is credited with making the idea go global. As a friend noted, while SEWA was started in 1974, neither the Indian Central Bank nor its leader (Ella Bhatt) saw its potential of making it into a global institution. And very possibly, Bhatt probably did not want it to go global! Whether one likes the concept of microfinance or not, one cannot discredit Yunus’s contribution in this specific area. His rise to fame was supported by financial assistance from Western donors, as well as the World Bank and the IMF, institutions that promote structural adjustments and market deregulation. So, perhaps the blame really lies with these donor organizations that are trying to find a magic bullet to solve global poverty.
The key difference between the Grameen Bank and SEWA is the following: SEWA works with small traders and artisans, and it operates as a trade union with workers’ rights. These women already have marketable skills and market access. They need small sums of money at low-interest to manage their businesses. In contrast, Grameen is composed of rural women who are housewives with little or no trade skills or market access for that matter. Grameen operates on the following principle: the borrower knows best, and the role of the institution is to offer credit (loans), and leave it to the invisible hand of the market. In the context of rural Bangladesh where women are situated within dense networks of social and family obligations, one should not be surprised that this does not work as imagined. Loans to poor women result in all sorts of unanticipated consequences from the creation of women as moneylenders to increased violence against women, both at the household and community levels. Moreover, Grameen constructs the poor as consumers who can purchase the goods and services that the middle-class has access to without addressing the structural inequalities that produce poverty in society. See my forthcoming book for an analysis of social relations mediated by microfinance in Bangladesh.
Its charismatic founder is an advocate that the Western donors can identify with. He is humble in his manner, dedicated, and a proponent for capitalism for the poor (“capitalism should not be the handmaiden of the rich”). This sounds like an elixir of hope for the world’s poor. All we have to do is extend them loans, and the market will take care of the rest! Given Bhagwati’s scholarship, I am surprised that he lauds SEWA over Grameen, given that SEWA is a trade union organization, and Grameen works on the neoliberal notion of individual entrepreneurship.
Please see my op-ed for a more detailed analysis of the conflict between the Nobel laureate and Sheikh Hasina.