Sunday, December 03, 2006

International Newletter on Sustainable Local Development
Newsletter #34
December 1, 2006


Message from the Editorial Team

Micro-credit cannot claim to be a major element in the eradication of poverty
The awarding of the Nobel Peace Prize to Muhammad Yunus : commentary

Uniting local and global initiatives : some European examples
Research Group for an alternative economic Strategy (GRESEA)
Helsinki Citizens’ Assembly (HCA)
Initiatives for another world is a platform for networks (IPAM)
Network of resource centres for sustainable development and international solidarity (RITIMO)

Message from the Editorial Team
The attribution of the Nobel Peace Prize to Muhammad Yunus, founder of Grameen Bank of Bangladesh, is very significant in more than one respect. In particular, this prize recognizes that lasting peace cannot be established on our planet without the abolition of poverty. Moreover, this prize shows that it is possible to develop strategies by and for developing countries which fall under a plan to fight poverty.

Nevertheless, micro-credit raises criticisms and comments on its limits, especially when one presents it as the solution to the problem of poverty and underdevelopment.

Thus, we consider it useful to present a summary of an article by Jean-Michel Servet published in a daily Geneva newspaper on October 25th. Although we are not experts on this question, we think that micro-finance - term that we find more accurate - is an instrument to fight poverty on the condition that it be part and parcel of a more global approach to the development of communities.

Our own observations in our respective countries are in accordance with those of the author, namely that in the majority of the cases, these tools allow the destitute to ease the effects of poverty and exclusion. This usually allows for more dignity and viewing the future with more optimism. But, for the majority of cases which we know, people remain below or close to the poverty line. All in all, when it is understood that micro-finance is one of the instruments, and that one does not create illusions on its role and its objectives, it is an extremely valid tool.

In addition, we are including four European initiatives, presented and summarized by Martine Théveniaut. These initiatives testify to the promptness to act by the European civil society in step towards greater social and economic justice in Europe, as well as between Europeans and the countries of the South. The inventory will be continued in the subsequent issues, depending on available space, in order to facilitate the gathering of energies which could contribute to promote the preparation of the 4th meetings of the globalisation of solidarity, scheduled in Europe in 2009.

As we come to the end of 2006, we wish to thank our faithful readers for the attention which they pay to our publication and for the comments and suggestions which they address to us. Presently 200 individuals receive our newsletter directly. As several readers diffuse it internally within their organizations, there are a few hundred more people who receive it.

Brunilda Rafael of Marseilles has volunteered to help us with the translation into Spanish. We welcome her to the team.

NEXT ISSUE: February 1, 2007

Editorial Team
Francisco Botelho
Yvon Poirier
Martine Théveniaut

Micro-credit cannot claim to be a major element in the eradication of poverty
There are too many myths, it is urgent to draw attention to the limits of micro-credit

The quasi-unanimity around the supposed virtues of micro-credit is so strong, that it seems incongruous to question the reasons for which the Norwegian Nobel Committee awarded their prize to Muhammad Yunus and the Grameen Bank. After a period of euphoria, disappointments are likely to result in casting anathema on a technique, which when employed with moderation and in appropriate local circumstances and with adapted methods of accompaniment, has proven a certain degree of effectiveness.

More important change and a much stronger will than these small loans are needed to meet the needs of the planet.

Today micro-finance is not limited to micro-credit. Secured savings are often of more important service than credit. Financial transfers for migrants and micro-insurance are developing. But where there is a lack of hospitals, dispensaries, medication and doctors, micro-insurance will not make them miraculously appear, just because there is a demand for them. To propose services, which do not exist, has more negative than positive impact. For the poor, access to water, education, health, and transportation are more urgent needs that have to be solved.

A common mistake is the belief that Muhammad Yunus is the first to have developed micro-credit, whereas the first initiatives were mainly by Christian activists in Latin America. Another error would be to imagine that the Grameen Bank always implements a model of solidarity loans for small groups; in 2002 a very severe crisis of unpaid debts resulted in the promotion of individual loans.

A third mistaken belief is to think that micro-credit is aimed at the poorest of the poor. The constraints exerted by multilateral and bilateral co-operation have made the Grameen Bank turn to an increasingly less poverty-stricken clientele. Of the 7000 to 10,000 listed micro-credit institutions, only a hundred or so can claim to serve a poor clientele and be profitable, or recover their costs in an autonomous fashion. There are a limited number of existing opportunities sponsored by certain high-risk funds, as well as ethical or sharing investments (...) In Peru, micro-credit institutions lend at a 5% interest rate per month, but they essentially provide services only to populations above the poverty line and living in urban zones; they leave the subsidized NGO’s to intervene in rural areas of extreme poverty, low population density and high levels of illiteracy.

Measuring the impact
They show that micro-credit improves the management of family budgets (by bridging the gap between the periods of need and those of regular income from work). It stabilizes small entrepreneurial activities, which is extremely useful. But, micro-credit cannot claim to be a major element in the eradication of poverty, regardless of the affirmations of the Nobel Prize Committee. Generally micro-credit loans are used for health and food expenses, which prove their role for necessities of life. But these expenditures largely outweigh the investments that generate income. Micro-credit can thus lead to over-indebtedness and therefore create more drama than hope.

In light of the Nobel Committee’s decision, ignorance of reality is illustrated: micro-credit proves to be a post-conflict factor of peace.

No reference is made to the essential role of micro-credit in post-conflict situations. This original financial technique was undoubtedly a factor in the renewal of social bonds not only in Cambodia, Uganda, Bosnia, Rwanda but also in Bangladesh. The Grameen Bank was created just after the partition of Pakistan, which had plunged the new State into war and a major crisis. The view of the Nobel Prize Committee on micro-credit only related to the economic basis, which in turn risks to spread a number of illusions.

Summary of an article by Jean Michel Servet published in the Tribune de Genève, Wednesday, October 25, 2006 - p. 15. He is a professor at the IUED of Geneva, and founder of the research program on micro-finance at the French Institute of Pondicherry (India). He is the author of Barefoot Bankers, Micro-finance (Paris, Odile Jacob, 2006).
See also the book review by Sylvain Allemand in Alternatives économiques, September 2006

Uniting local and global initiatives : some European examples
Research Group for an alternative economic Strategy (GRESEA) It was born in 1978 at a meeting of persons in charge of non-governmental organizations for development, trade unionists and academics. Centered on international economy, its research related particularly to the activities of production, new information technologies, the debt of Third World countries, or on the emergence of regional common markets. A place of reflection, analysis and proposal, GRESEA is also a center of training and information on the mechanisms and the actors of international economy and in particular on the North-South dimension of the latter.

GRESEA has just created BELWATCH: an observatory of the practices of active multinationals in Belgium.
BELWATCH is a working method aimed at supervising multinational corporations to detect any bad practices: behaviour with regard to the workers, damage caused to the environment or breaches committed in regards to legal provisions, for example.

One of the axes of work is reflection and awareness of the stakes in the Cotonou file.

Free trade is one of the key notions of the current dominating economic speech. By free trade, it is necessary to imply free movement of goods, services and capital. People are another matter, that of policing those from abroad! The free trade concept occupies a central place in the policy of co-operation of the European Union (EU) with regard to old colonies, the 79 ACP countries (Africa, Caribbean and Pacific). The trade section of the agreement known as Cotonou (capital of Bénin where it was signed in June 2000) foresees under the title of sustainable development and harmonious insertion in the world economy, the progressive creation of free trade zones between the EU and six ACP groupings defined on the basis of existing initiatives regarding regional integration. These future agreements, compatible with the rules of the World Trade Organization (WTO), will put an end to the more than 25 years of preferential and nonreciprocal trade arrangement in favour of the ACP countries. The negotiations of these new trade agreements, known as the Agreements of Economic Partnership or APE, have been in effect since 2002. When they are concluded, the reciprocity will be gradually introduced into trade relations of the UE-ACP. With less than one year and half until the 2008 deadline, and taking into account the process of revision in progress, a special number of Gresea Échos is devoted to the topic. A term at the University of Alternatives on the subject: Europe – Africa : a new economic imperialism coming of age? is organized in November from the content of the GRESEA Echos. The program is available on their website.

For further information:

Helsinki Citizens' Assembly (HCA) The European Assembly of citizens is the French branch of this international network

The European network (HCA) was born in 1990 in Prague from a will to extend the dialogue between the actors of the civil societies in Eastern and Western Europe, in reference to the Helsinki Agreements of 1975 as well as in conjunction with a bottoms-up approach to co-operation and security in Europe. Since its inception, this network works for peace and the peaceful resolution of conflicts, the promotion of democratic values and the development of civic participation in the world.

HCA is a network of individuals, movements and organizations which includes over 35 national committees and groups and a great number of sections or local contacts in more than thirty countries. This network developed a significant activity of solidarity with the democrats of the former Yugoslavia, but also with other areas of the Balkans, the Caucase, Russia, and the Maghreb. Within HCA exists a HCA-Youth Network which organizes meetings gathering young people from the Balkans and Western Europe. This international Youth-Network publishes a quarterly review in English called The Collage.

HCA regularly organizes debates on current events or topics. Thus, in November two debates were held in Paris. A first to discuss experiences of dialogue between the civil societies in Turkey and Armenia and a second about the area of the Caucase again a hot zone. They are two current event subjects illustrating the need for setting up a citizens’ dialogue vis-à-vis political manoeuvres. In both cases, the fabric of the civil society pains to be maintained and to renew its strategy regarding the current situations.

For further information:
YVON, j’ai ajouté ces sites en anglais :

Initiatives for another world is a platform for networks (IPAM)
New forms of struggles, new movements are opposed to ultra-liberal globalisation and the fight for political, social and cultural rights, for peace and democracy, for sustainable development, etc. These movements appeared during international meetings, in local struggles with a global implication and in social fights. These forms of struggles generally intervene in a context marked by the exactions of liberalism, but also by situations of quasi permanent wars which break with the traditional forms of the conflict and which often make difficult the discernment necessary to implement actions of solidarity. In this context, reflection as well as practices must be revisited and constantly challenged. Combining reflection and action by developing meetings with those organized or not, who endeavour in the field of international solidarity and seek to build adequate answers is one of the major objectives of IPAM. The implementation of this strategy rests upon the articulation between the emerging struggles and resistances, social practices and reflection.

The HCA, the AITEC (International Association of Technicians, Experts and Researchers), AMORCES (Agency for international solidarity, culture and development), the CEDETIM (Center of studies and initiatives for international solidarity), the CEDIDELP (Resource centre on Development, Freedom and Peace) and EXCHANGES and PARTNERSHIPS (To promote the exchanges and the partnerships between the civil societies) are founders of the IPAM network. Their commitment is founded on partnership and collective work. The networks of partners are composed of associations of international solidarity, NGOs, local associations, associations of inhabitants, citizens groups and also trade unions or groups engaging in various conflicts.

For further information:

Network of resource centres for sustainable development and international solidarity (RITIMO)
Launched in March 2002 by Ritimo (network of information centres for development and international solidarity), at an international meeting of documentary centres, the rinoceros project aims to create a space for international information for responsible and sustainable development. It is a shared space of information which proposes analyses of the civil societies and alternative-globalisation movements from all continents. This site uses the freeware GNU/GPL under license and is hosted by Globenet. It has recently started to host Rinoceros infos. The site was initially developed in French. To develop true international value of views expressed, the English, Spanish and Portuguese parts are being created. There is no translation of information. These will remain available in their original languages.

On-line one finds articles, files, selection of books and websites, a directory of the actors of change, a publication of upcoming international events, a DPH (Dialogues For Humanity) experience base. It offers methodological tools to find information easily and to build collectively an information system for action. It promotes international citizens’ campaigns to act, challenge, and exert pressure.

For further information:; (in French, English and Spanish)

Excerpts and layout of information : Martine Theveniaut

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Special thanks to:
Évéline Poirier from Canada for the English translation
Paul M. Makédonski and Brunilda Rafael for the Spanish translation

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Yvon Poirier