VZCZCXRO6398
RR RUEHAG RUEHAST RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHDA #0029/01 0650649
ZNR UUUUU ZZH
R 060649Z MAR 07
FM AMCONSUL ADANA
TO RUEHC/SECSTATE WASHDC 4450
INFO RUEHAK/AMEMBASSY ANKARA 0996
RUEHIT/AMCONSUL ISTANBUL 0858
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RHEFDIA/DIA WASHINGTON DC
RUEHKA/AMEMBASSY DHAKA 0001
RUEHDA/AMCONSUL ADANA 1053

UNCLAS SECTION 01 OF 02 ADANA 000029 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON TU
SUBJECT: GRAMEEN BANK: HELPING TURKEY'S POOREST 
 
 
ADANA 00000029  001.2 OF 002 
 
 
Summary 
----------- 
 
¶1. (SBU) Using the micro-credit model established by its parent 
bank in Bangladesh, Grameen's branch in Turkey has been offering 
loans - and life-coaching - to poor vendors, craftswomen and 
farmers in Diyarbakir.  Though Grameen now has six offices with 
ambitious expansion plans throughout SE Turkey, project director 
Khan Chowdhury cautioned that micro-credit does not fix poverty; 
it gives poor families slightly more resources and hopefully 
allows them to keep their children in school.  Grameen's 
initiative in SE Turkey should be welcomed - especially since it 
may compete with charities associated with religious 
fundamentalists - but serious economic development in the region 
requires expanding the formal economy rather than making life a 
bit more bearable in the informal sector.  End summary. 
 
From Dhaka to Diyarbakir 
-------------------------------- 
 
¶2. (SBU) Grameen has been operating in Turkey since 2003 after a 
Diyarbakir AK Party MP, Aziz Akgul, learned about the program 
and encouraged their leadership to expand here.  Khan Chowdhury, 
a Bangladeshi, was sent to open the office, which operates with 
support from the governor's office.  They now have six branch 
offices, five in the southeast (both in big cities and in rural 
areas) and one in Ankara.  In the coming years Chowdhury plans 
to open about six new offices per year.  Offices are financed 
with support from the Soros Foundation, the Ministries of 
Finance and Interior and private companies including Finans Bank 
and HSBC have helped provide start-up funds.  Other regions, 
including Samsun, Van and Sanliurfa have used the Grameen model 
to establish their own micro-credit programs. 
 
¶3. (SBU) Grameen uses the same model in Turkey as in other 
countries, providing micro-loans to poor entrepreneurs whose 
lack of assets denies them access to the banking system.  All of 
their members are women.  In Turkey, first-time borrowers take 
loans as small as YTL 100 (USD 70), with an annual interest rate 
of 15 percent.  The program has about 4,600 members who 
generally return for credit multiple times; some have expanded 
their business and now secure larger loans of YTL 1,000-2,000. 
Chowdhury cautioned, however, that poverty alleviation is a slow 
process and it is too early to claim that loan recipients have 
"graduated" and are no longer poor.  "We're allowing them to 
raise 4-5 goats rather than 2, so it's a matter of small 
increments," he said. 
 
"Discipline, Unity, Courage and Hard Work." 
--------------------------------------------- ---------- 
 
¶4. (SBU) In the Cami Kebir  neighborhood, a warren of narrow 
streets and ramshackle apartment buildings inside Diyarbakir's 
imposing Roman-era grey basalt walls, we joined Grameen members 
at a weekly meeting with one of the loan officers.  A 
second-floor room in an ancient apartment was filled with about 
thirty women, ranging in age from mid-20s to late 50s; nearly 
all wore traditional head-coverings.  They sat on rugs scattered 
across the floor clutching their Grameen ledger-books and small 
amounts of cash. 
 
¶5. (SBU) At the top of the meeting, they chanted Grameen's four 
principles: "Discipline, Unity, Courage and Hard Work."  These 
principles form one of Grameen's 10 "decisions" (adapted from 16 
in Grameen's native Bangladesh, 
http://www.grameen-info.org/bank/the16.html), which encourage 
healthy, industrious habits in addition to the core goal 
fostering of sound financial management.  In SE Turkey, the 
decision urging members to keep their children in education is 
particularly important and Grameen is hoping to establish a 
scholarship fund that will provide support to help members' 
children attending secondary school or university.  Chowdhury 
noted that many members, because they can't read, memorize the 
10 decisions.  Members must, however, learn to write their names 
before they can join the program and Grameen provides 
rudimentary training for those who need it. 
 
¶6. (SBU) The members then gave progress reports to the Grameen 
officer, handing in the interest owed on their loan, which is 
labeled a "service charge" in Turkey and other Muslim countries. 
 Both the officer and the member then sign the ledger-book that 
charts the progress of the loan.  The members briefly described 
their businesses: making embroidery for sale in street markets; 
purchasing cigarettes for resale; buying fabric and sewing 
clothes; making dough for a "borek" (cheese pastry) bakery; and 
operating a small hair salon at home.  In rural areas most loans 
are for the purchase of livestock: 200 YTL funds the purchase of 
a sheep. 
 
ADANA 00000029  002.2 OF 002 
 
 
 
Reaching Down to the Bottom of the Ladder 
--------------------------------------------- -------- 
 
¶7. (SBU) In Diyarbakir Grameen is beginning to offer small loans 
with no interest rates to beggars, who are encouraged to sell 
small items to supplement their income from hand-outs.  If their 
vending activities increase, they could eventually give up 
begging and join the mainstream economy.  The fact that Grameen 
is introducing "beggar loans," a program used by 70,000 in 
Bangladesh, underscores the depth of the poverty in some areas 
of southeastern Turkey.  A recent study by TESEV, an 
Istanbul-based think-tank, indicated that per capita income in 
the region is less than half the Turkish average and overall 
development (based on the UN Human Development Index) in the 
poorest provinces is lower than in India. 
 
Comment 
------------ 
 
¶8. (SBU) In Diyarbakir, Grameen's assistance provides the least 
fortunate with desperately needed working capital as well as 
useful guidance regarding the need to educate their children and 
practice sound money management.  While such bottom-up poverty 
reduction can deliver marginal improvements to families scraping 
by in the informal sector, for the SE to grow out of its 
systemic poverty it needs to pull more of the population into 
the mainstream manufacturing and services sectors.  Meanwhile, 
in the same neighborhoods where Grameen operates, growing 
numbers of families are coming under the influence of religious 
charities, some of which are reportedly connected to Turkish 
Hizbollah, a shadowy Islamic organization that is also stepping 
up its charitable activities. 
GREEN