A laborer making cement at a hospital being rebuilt by British forces in Basra, in southern Iraq. He earns just a few dollars a day but is lucky to have a job at all.
Orphans serenade British Army Captain Stephen Morte in Basra. Using American money, the facility has launched a business providing sewing classes to women.
The British military certainly deserves some credit for recently bringing microfinance to the vanguard of the coalition's strategy. But CHF International, a Maryland-based nonprofit, launched the first microfinance program in Iraq in the summer of 2003 and has been quietly working at it, often alone, ever since. CHF operates in crowded marketplaces and on sweltering streets lined with struggling small businesses. Taking money from private investors and the United States Agency for International Development (USAID), the federal agency responsible for nonmilitary aid worldwide, its people work at great risk. They reach even lower than the military financiers do, to the foundation of the Iraqi economy--individual butchers, tailors, barbers, and seamstresses. "Iraqis are entrepreneurial people," says Elissa McCarter, a CHF director in the Washington area. "With access to [finance], they are able to generate a stream of income to support themselves and their families, and, to a certain degree, increase employment for others as businesses grow."
Since May 31, 2006, CHF's Access to Credit Services Initiative has lent more than $43 million to more than 16,000 people in south and south-central Iraq. Kadija Al-Salam, a nurse in the town of Mukaradeeb, is one them. Neighbors often asked Al-Salam (not her real name) to help deliver their babies, and she decided to open a clinic so she could do more. She received a small loan from ACSI to increase the number of available beds to three and to purchase new equipment.
To an optimist, Basra is the soil in which microfinance might take root and eventually spread. Morte is one of those optimists.
Acknowledging CHF's success and microfinance's potential, James Baker's Iraq Study Group--the brain trust exploring new options in Iraq--recently consulted with Richard Hill, the firm's director of strategic initiatives and analysis. As a rule, though, microfinance is designed to foster slow, incremental improvement in a relatively stable environment. "Not a day goes by that our operations are not negatively affected by the security situation," McCarter says. "Violence leads to work stoppages both for our clients and for our own operations due to curfews, road closures, destruction of client businesses, deaths, bank closures, etc." CHF now relies almost entirely on locally hired staff in Basra; Westerners are just too vulnerable to murder and kidnapping. Even McCarter concedes that the company's efforts are only "scratching the surface" of the problem.
Indeed, it's possible, given the pace of deterioration in Baghdad, that microfinance is simply too little too late. "It's [best] in that initial period after a conflict where you've got goodwill and general acceptance of new ideas," says the International Crisis Group's Templer, who has studied microfinance in conflict zones such as Afghanistan. "It all diminishes very rapidly. If you don't seize the moment, you miss an opportunity."
But Basra isn't Baghdad. The violence here represents a power struggle between Shiite factions rather than the seeds of a Sunni--Shiite civil war. So while to a pessimist, even the most successful Baswari finance operation is irrelevant as long as Baghdad burns, to an optimist, this is the soil in which microfinance might take root and eventually spread.
Morte is one of those optimists. Back in his office after visiting the orphanage, Morte grabbed an envelope stuffed with $30,000 and headed to a decaying park at the edge of the base. There, three Iraqis waited: the son of a dominant Baswari tribal leader, the son's business partner, and an interpreter.
Some months earlier, Morte's commander, Bowron, had resolved to strengthen the British presence in their neighborhood, Qarmat Ali, one of the most dangerous in Basra. But knowing that a frontal assault would have sparked a general uprising, he'd decided to retake Qarmat Ali with a little cash. So he sent Morte out to find the sheik's son and offer him the chance to bid on a contract to rebuild curbs in the town on behalf of the local government--work that required a dozen laborers per day.
With every payment Morte subsequently rendered, he sensed a change. In October, Morte mentioned to the sheik's son, almost casually, that the British Army was thinking of returning to Qarmat Ali: "Will we be welcomed?"
The son touched his chest in a sign of respect. Yes, he said. "The sheiks of the area are very happy, because you've done good work here."
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