The Palestinian village Zaatara at the foot of Herodion. Credit: Pierre Klochendler/IPS.

If Herod the Great was a controversial figure of his time, 2,000 years on the controversy isn’t about his legacy; it’s about who holds the rights to excavate and preserve his artefacts.

A new exhibition at the Israel Museum which, for the first time, displays the king’s relics, might serve as a great tribute to him, but is also a powerful reminder of how the history of the Holy Land and today’s conflict between Israel and the Palestinians have become intertwined.

On top of a hill “raised to a greater height by the hand of man; rounded off in the shape of a breast,” as Flavius Josephus, Jewish historian of Rome described it, the old monarch had a fortress-palace erected as memorial for himself; and named it after himself – Herodion for Herod.

Herodion, from where the bulk of the exhibition originates, is visible from Jerusalem and dominates the Judaean desert, since 1967 part of the Israeli-occupied West Bank which the Palestinians seek as part of their future state.

Herodion is in Area C, namely 62 percent of the West Bank maintained under full Israeli control since the 1993 Oslo interim peace accords. An Israeli military base protects the site.

The Holy Land changed hands time and again since Herod’s time, but at 758 metres high, the lay of the land looks unchanged – at first glance.

Dotting the surroundings, Israeli settlements and Palestinian villages vie for rights to the land.

Appointed by the Romans, Herod ruled the vassal kingdom of Judaea, part of the Palaestina province of the Roman Empire, for 33 years between 37 and 4 BCE.

“He was a cultural bridge, working on both sides, caught between the exigencies of the Roman Empire and that of Judaism,” says David Mevorah, the exhibition’s curator. “By his people he was regarded as a convert Jew; by Rome as a client king. But Judaea prospered in his time.”

Exquisite tableware from glass and fine and glossy red roman pottery; a statue of Cleopatra, the last pharaoh of Ancient Egypt; a decorated basin, a gift from his patron Emperor Augustus, whose bust is on display; his royal highness’s bath – all were found in situ.

Adorned with stucco and rare frescoes of sacred landscapes and navy battles painted with pigments on plaster, also imported from Herodion is the royal chamber.

The jewel of Herod’s crown, so to speak, is the reconstruction of his mausoleum which sheltered what archaeologists believe is the sarcophagus in which his body was placed. The man surely possessed a taste for the arts – even on his deathbed.  “He was very aware of historic memory,” comments the curator.

Here nowadays, historic memory refers mostly to competitive national quests.

Excavations at Herodion began in 1972 under Israeli archaeologist Ehud Netzer. “No one asked us or consulted us, then or now,” protests Jamal Amro, a Palestinian scholar from Bir Zeit University familiar with the site.

“The Israelis plundered Herodion,” he adds. “Israel uses archaeology to shape history and validate the country’s occupation of the West Bank and East Jerusalem.”

After prolonged exploration, Netzer uncovered Herod’s tomb in 2007. Two years later, he died in tragic circumstances at the site.

It took three more years to move some 30 tonnes of carved masonry from Herodion to the museum. “We actually moved thousands of fragments to our laboratories, working intensively from here on restoration and reconstruction,” says Mevorah.

“We’ve performed quite an important role for world cultural heritage,” says Israel Museum director James Snyder. But the self-complimentary effusion has been short-lived.

Palestinians complain that Israeli archaeological activities in Palestinian territories are illegal. “According to international law, this is a crime,” declares Amro. “Israel must recognise the rights of the Palestinian nation to their historical sites.”

The Israeli government lists Herodion as a national heritage site. Granted full membership of the United Nations Educational, Scientific and Cultural Organisation (UNESCO), the Palestinian Authority now wants to nominate Herodion for recognition as a world heritage site.

“The Oslo Accord makes Israel responsible for custodianship over archaeology in the West Bank until a final settlement is reached,” retorts Snyder.

A ruthless ruler who had the last lineage of the Hasmonean dynasty that ruled before him executed, including high priests, opponents, his beloved second wife and three of his children, Herod was feared by his subjects. In Christianity, he’s ‘Horrid Herod’, thought of as a serial baby killer.

At the museum, he is mostly remembered as a master builder for his colossal projects, including expansion of the Second Temple in Jerusalem revered in Judaism. Centuries later, the Haram al-Sharif or Noble Sanctuary would be edified on its ruins.

For Amro, “Herod and Herodion are important not only to Jews but to Christians and Muslims. We should be in charge.”

“We borrowed the artefacts as authorised loans; we’ll retrocede them once the exhibition wraps by year’s end,” assures Snyder.

The question is where the relics will be returned to, and to whom. “To the authority in charge of archaeology in the West Bank,” clarifies Mevorah. That is, to the ‘Civil Administration’, a well-known euphemism for Israeli military authorities in the West Bank.

“They’ll never give back the artefacts to us, forget it,” protests Amro, not sure himself whether “it” refers to the site and its treasures or to the West Bank.

“When Israel signed the Camp David peace accord with Egypt in 1979 and withdrew from Sinai,” recalls Snyder, “there was a very intelligent division of material: what related to Egyptian heritage was returned to Egypt; what related to Jewish heritage stayed with Israel.”

Would such a model be applicable to Israel and Palestine were peace to be signed between them? “I’m just a museum director, but it was well done,” says Snyder.

The report warns that the institution’s oversight mechanisms include no capability to assess whether that lending – which comprises at least 40 percent of IFC portfolios, valued at some 20 billion dollars – is helping or harming local communities and overall development indicators.

In response, on Friday five international watchdog organisations, including Oxfam International and the Center for International Environmental Law, collectively called for “a fundamental overhaul of World Bank lending to financial markets actors”.

“For the first time, we’ve had an official body say this is a fundamentally problematic way of operation, that the IFC is missing the entire point of what these policies are for,” Peter Chowla, coordinator of the U.K.-based Bretton Woods Project (BWP), a watchdog and one of the organisations calling for an overhaul, told IPS. “That puts a far larger onus on the IFC to respond effectively.”

Made public this week, the audit is the result of a year of research by the Compliance Advisor/Ombudsman (CAO), an independent body charged with response to complaints from communities affected by IFC and other World Bank Group projects. The document focuses on the institution’s use of “financial intermediaries” – third-party entities such as banks or microfinance groups that use IFC money to engage in development projects.

According to the CAO, “A large portion of IFC financing is currently channeled to private sector projects in developing countries and emerging markets through third party entities.”

The CAO and other analyses suggest this practice has risen in recent years for the IFC and for other multilateral institutions, public and private.

“The use of financial intermediaries was fairly well hidden over the past decade, but they’ve been used increasingly in recent years as both civil society and governments have become more focused on project transparency,” Stephanie Fried, executive director of the Ulu Foundation, which focuses on international financial flows, told IPS.

“Yet as we see a rise in the use of these opaque bodies, we also see the IFC moving away from due diligence requirements. It’s simpler, after all, and they don’t need to be so accountable.”

Fried calls the new report “shockingly candid”, and notes that its findings will have “tremendous implications for the way that global finance is done.”

Do no harm

The crux of the CAO’s findings is twofold. First, in important commitments further strengthened last year, the IFC’s current stated policy is that its investments will not only “do no harm” but that they will actively “do good”, meaning improve development outcomes.

Second, in projects in which the institution is working through a financial intermediary, the IFC requires that entity to set up a system, known as an ESMS, aimed at ensuring that stringent environmental and social safeguards (“do no harm”) are met. However, while the IFC does make certain that the ESMS is in place, it does not engage in further analysis of the effects of this system on the ground – leaving that responsibility to the intermediary.

The CAO characterises this set-up as a “box-ticking exercise”, and warns that the mere creation of the system could become the end result, rather than enhancing environmental and social safeguards on the ground.

In a formal response, the IFC management does not deny that this is the way the system is currently constituted.

“IFC does not evaluate all information at the sub-client” level, the response reads, referring to project implementers below the financial intermediaries. “We do not consider this necessary or efficient,” as the intent is to have the intermediaries “manage this” through the ESMS.

The response also notes that IFC does “expect our (financial intermediary) partners to maintain all the requisite information about all their sub-clients … and this is evaluated by IFC as part of our on-going supervision process.”

Yet according to the CAO findings, BWP’s Chowla points out, even this system appears to break down fairly often, as in 35 percent of cases the IFC reportedly is unable to verify that its direct partners have implemented these safeguards.

Perhaps most damning in this regard, some 60 percent of “sub-clients” were found to have failed to improve their environment and social practices following IFC investment – which, CAO notes, “is where IFC seeks to really have an impact”.

Other models

According to a statement sent to IPS from the IFC’s Washington headquarters, the institution’s use of financial intermediaries allows it to provide access to finance for millions of individuals and micro, small and medium enterprises that the IFC would otherwise not be able to reach directly.

“IFC focuses on helping our (financial intermediary) clients improve their capacity to assess and manage the environmental and social risks inherent in their own financing activities – in line with IFC’s Sustainability Framework,” the statement says. “As the CAO report noted, nearly all of our clients comply with these standards.”

Armed with the new audit findings, however, campaigners are stepping up criticism of the Sustainability Framework itself. This is particularly important given that the World Bank recently began a widely watched reassessment of its environment and social safeguards, for which some worry that the IFC Sustainably Framework could act as a model.

“The World Bank has made it quite clear that it wants to streamline the safeguards process, to use more country systems to measure compliance,” BWP’s Chowla says.

“But we need to see whether they will take on board the message that using country systems does not mean being ignorant of results – that they still need to be accountable for results.”

Indeed, other due diligence models do exist. Stephanie Fried points particularly to those used by the Asian Development Bank (ADB) and the U.S. Overseas Private Investment Corporation (OPIC).

“Unlike IFC, the ADB and OPIC have insisted on maintaining responsibility for ensuring that things are being done responsibly under their investments, looking not only at the clients to whom they’re giving cash but also at the projects on the ground,” Fried says.

“That’s night and day compared to the IFC. We need to see compliance with the ‘do no harm’ mandate, and it appears that would be a complete redoing of the way in which the IFC is operating at the moment.”

The move marks the first investment the IFC has ever made in Myanmar, also known as Burma. Although the country joined the IFC in the mid-1950s, it had never received a loan by the time that most international financial institutions pulled out of Myanmar in the late 1980s, citing an increasingly dictatorial government.

Last August, however, following two years of contested pro-democracy reforms in Myanmar, the World Bank re-established an office in Yangon. Now, the Washington-based IFC has struck an agreement, along with several European financial institutions, to back a Cambodian bank’s proposal to create a major new programme to begin providing loans to micro and small businesses in Myanmar.

On the back of the IFC’s two-million-dollar investment, ACLEDA MFI Myanmar (named after its parent, the largest bank in Cambodia) is expected to begin operations by the end of this year. The IFC, which has also helped ACLEDA expand to Laos, says that the programme will be reaching out mostly to small businesses owned by women.

“Our investment in a microfinance institution is a good start to our support for Myanmar’s economic reforms in order to improve access to finance, create more jobs and reduce poverty for its people,” Sergio Pimenta, the IFC’s director for East Asia and the Pacific, said Wednesday in a statement.

According to a 2011 estimate by the United Nations Development Programme, which has been offering microcredit in Myanmar for a decade and a half, demand for loans by rural Myanmarese could be as high as 470 million dollars a year.

A microfinance initiative backed by major Western donors, including the United States, was set up in Myanmar in 2009, and began officially operating in 2011 after the passage of new national legislation formalising the domestic microfinance industry. Called the Livelihoods and Food Security Trust Fund (LIFT), the programme’s latest annual report says that it has already assisted 1.1 million people, around two percent of the population.

While the LIFT programme is overseen by the United Nations and exists largely to funnel donor monies in particular directions, the IFC sees the aim of the new ACLEDA initiative as being to pave the way for other international private-sector microfinance organisations.

“Through ACLEDA MFI Myanmar, IFC will help scale up the country’s microfinance industry and increase access to financial services for both the urban and rural poor,” Pimenta says. “This will help convince other players that affordable microfinance services can be delivered effectively in Myanmar.”

Responsible delivery

Microfinance remains a relatively young industry, having been created around two decades ago and having seen significant expansion only over more recent years. During that period, many of the world’s largest financial institutions have become involved in microfinance, offering banking services and small loans to impoverished individuals, communities and business owners.

According to many estimates, there are currently around 200 million users of microfinance programmes around the world – and upwards of another two billion that continue to lack access to financial services.

Proponents say such programmes allow applicants otherwise deemed uncreditworthy by most banks to participate more freely in the market economy, particularly helping women to set up or expand small businesses and, more generally, increasing financial inclusion.

But critics maintain that despite its successes, microfinance is little more than a way for multinational financial institutions to gain access to communities otherwise generally out of reach. They warn that for-profit programmes have a spotty record in furthering development or tamping down poverty levels, and at times have done more harm than good.

Given a notably rickety financial regulatory system, such dangers seem particularly apparent in Myanmar.

Microfinance leaders are clearly aware of this record. In a taped conversation posted by the IFC this month on microfinance and “responsible delivery”, Doris Kohn, a top official with the German banking group KfW (together with the IFC, the world’s largest microfinance partner), stated that microfinance is no “silver bullet” for development.

“There have been some bad experiences, but any industry experiences those, and there are some not-so-responsible players, but all in all this should not cloud the fact that there have been enormous achievements,” Kohn said. “We have seen some overheated markets and some … competition leading to over-indebted clients, so I do believe that regulation is needed to prevent that from happening.”

In Myanmar, however, financial regulation remains weak, although, pushed by the international community, the government has come out with a series of reforms and new laws aimed at strengthening long-maligned (or non-existent) regulatory authorities. Yet according to a new ranking by Maplecroft, a British risk assessor, the country remains one of the riskiest places to do business, ranked fifth from the bottom in the “extreme risk” category.

The worry for some scholars and activists, then, is that as Myanmar’s microfinance sector opens up, it will attract some of the industry’s more predatory or unscrupulous companies – the type against which KfW’s Kohn was warning.

Still others say that microfinance itself receives more emphasis from development institutions than it deserves.

“Far more important than microfinance is getting proper development banks – or central bank policies that provide similar functions – for medium and large domestic enterprises on a long-term, low-interest subsidised basis, as has been a cornerstone of all countries that have industrialised,” Rick Rowden, a development consultant who has worked in Myanmar, told IPS.

“Microfinance is nice and all, but it has little to do with the fundamentals of industrialisation or long-term development strategy.”

Three members of the Verapaz egg farm cooperative in El Salvador, with one of their daughters. Credit: Edgardo Ayala/IPS

When the International Year of Cooperatives (IYC) concluded last week, some of the overwhelming success stories highlighted at a two-day interactive session came both from developing and developed countries, including India, Brazil, China, Kenya, Rwanda, Ethiopia, Italy, France and the United States.

As Dame Pauline Green, president of the International Cooperative Alliance, pointed out, two of the largest domestic agricultural food businesses in India – the Indian Farmers Fertilizer Cooperative (IFFCO) and the Gujarat Cooperative Milk Marketing Federation (widely known as Amul) – are both highly successful cooperative business models.

Amul, which is owned by over three million small dairy farmers, mostly women, has helped elevate India as the world’s largest milk producer.

And last month, IFFCO partnered with Coop Federee, a major agricultural cooperative in Canada, to invest in a hefty 1.3-billion-dollar joint transnational cooperative venture for a fertiliser plant in Quebec.

In Brazil, Green said, a clearly defined government policy aimed at helping rural people, through cooperative businesses, has seen a massive reduction in poverty in the rural areas of the sprawling South American nation.

In Kenya, cooperatives account for nearly half of the country’s gross domestic product (GDP), while in Rwanda the cooperative economy has gone from zero to eight percent of GDP over the last 10 years.

“The cooperative model of business could be a valuable tool in building sustainable, grassroots agricultural businesses in Africa,” she added.

In Italy, she pointed out, about 90 percent of the production of parmesan cheese comes from cooperatives, while nearly all of the champagne produced in France is the result of cooperatives.

And in the United States, Ocean Spray, described as one of the world’s largest cranberry producers, registered a 20-percent increase in sales last year.

The world’s largest 300 cooperatives, primarily in the insurance and food and agriculture sectors, generated revenues of 1.6 trillion dollars and employed nearly 100 million people worldwide.

Asked if the cooperative model of enterprise may well be one of the answers to the global economic crisis, Green told IPS, “Without doubt the cooperative business model offers a proven solution to this global economic crisis we are mired in.”

She pointed out the important role cooperatives have played in building economic prosperity in Brazil, Russia, India and China (known, along with South Africa, as the emerging new coalition BRICS).

But in troubled regions like the Eurozone, cooperatives have also demonstrated that generally they are more resilient to the downturn than non-cooperative businesses, while cooperative banks are actually protecting against market failure.

“Moreover, we are seeing cooperatives choosing to release surplus capital rather than sack people in difficult markets like Spain,” Green said.

In Spain, the Mondragon workers cooperative has seen its members vote for two years running now to take pay cuts rather than lose people.

“It’s a recognition of the value of human capital in business. All of this in fact means that cooperatives are sustainable businesses and supporting and promoting them will help ensure we can climb out – and stay out of the financial crisis in which so much of the world once again finds itself,” Green said.

In a statement released here, U.N. Secretary-General Ban Ki-moon said there continues to be a hunger for policies and approaches that address social and economic goals that go beyond a one-dimensional bottom line.

As a strong partner in development, Ban said, the cooperative movement works with the United Nations every day to empower people, enhance human dignity and help achieve the Millennium Development Goals (MDGs), which include the reduction of extreme poverty and hunger by 50 percent by 2015.

The theme of 2012 World Food Day, commemorated on Oct. 16, was “Agricultural Cooperatives – key to feeding the world.”

According to U.N. figures, the number of hungry people worldwide has been estimated at nearly 870 million.

Jose Graziano da Silva, director general of the Food and Agriculture Organisation (FAO), said “cooperatives hold a key to feeding the world, but so do governments, civil society and private sector (in order) to achieve food security for all. We all need to work together.”

In its declaration presented to the United Nations, the 2012 International Summit of Cooperatives, held in Quebec City, Canada last month, reinforced “the amazing power or cooperatives”.

Pointing out that the cooperative sector is pervasive, Green told IPS that far from just being restricted to agriculture and farming, cooperatives touch every part of business.

Insurance, banking, health, housing, retail and education are all sectors which have strong cooperative components.

In the UK, she said, schools have become one of the fastest-growing parts of the cooperative economy.

“Renewable energy cooperatives have been springing up all over the globe, and of course media is another area which benefits from the cooperative model because it ensures independent journalism remains viable,” she noted.

In the northern part of Italy, social cooperatives are a significant feature of the regional economy where people with a disability, whom would otherwise be reliant on the state for support, or be part of the long-term unemployed, are starting and successfully running their own cooperatives.

Asked about the future, Green said: “We will of course be working closely with the UN to ensure that cooperatives are a key piece of its proposed 2015 economic agenda, but every indication from this meeting has been that cooperatives are ready and willing to enhance their engagement, and that the U.N. not only wants but needs us too.”

The International Summit brought together close to 2,800 delegates from 91 countries to celebrate the power of cooperatives. Photo Courtesy of Desjardins

The migratory seeds of cooperatives were sown and first thrived in Europe, but have since adapted to the climate of nations worldwide.

Faces from as far as Kenya and the Philippines and as close as the Canadian Arctic and Cuba flocked to Quebec for the opportunity to claim ownership of today’s fledging and diverse movement.

At the International Summit of Cooperatives, held in celebration of the U.N. International Year of Cooperatives, cooperators swapped stories, best practices and cards with the future in mind.

The hope is that this international year will turn into an international decade honouring cooperatives, Dame Pauline Green, the president of the International Cooperative Alliance (ICA), told IPS.

Summit participants gathered to publicise the efforts of the movement and to gain insight into the business challenges for cooperatives ahead.

“The summit was a great opportunity to exchange ideas and innovative practices,” said Monique Leroux, the CEO of Desjardins and the co-host, in a statement.

Going forward, a declaration was adopted by the co-hosts of the conference, Desjardins, ICA and St. Mary’s University to make a stronger case for cooperatives to the public and authorities of governance.

As for their goals in improving the cooperative enterprise, they pledged to harness new tools for communicating their goals to the public and to develop new ways of enhancing communication and consultation with members and management.

For Quebec, the summit was also a chance to pay tribute to Alphonse Desjardins, who initiated the first step to making credit unions an option for French Canadians who would otherwise have been forced to leave the province in pursuit of income opportunities.

The stories that emerged from the global gathering underscored the role that cooperatives have played in making it possible for people to remain rooted in their communities, keeping much needed talent from fleeing.

Mary Nirlungayuk, the corporate services vice president of the Arctic Cooperatives Limited, shared with IPS the story of how cooperatives in the north have created a channel of income for artist collectives and have popped up where others have not always tread – providing cable and construction services to partnering with airline and shipping companies to reduce the cost of transporting the annual inventory of goods.

The grassroots orientation of cooperatives made it viable model of enterprise for First Nations communities, striving to reconcile past traditions with present realities.

“They were created because it was very similar to the Aboriginal, First Nations concept that they would help each other,” Nirlungayuk told IPS. “And if it can work in these remote communities, why can’t it be more successful in other places.”

In Cuba, where the groundwork for a cooperative future is being laid, its delegation of 10 was there to learn from others as well as to demonstrate the weight of the movement within the country.

“We wanted to let the rest of the world see what is going on,” said Wendy Holm, who heads the delegation. “Socialist and capitalist co-ops are slightly different in form… One of the challenges is going to be to give them as much autonomy, while at the same time recognising that you’re (for instance) a farm co-op tasked to produce food for the wider population.”

The versatile construct of cooperatives has made it a blueprint for enterprises in the agriculture, insurance, housing, and retail sectors and among others. In the socialist economy of Cuba, Holm said cooperatives make the most sense in the shift to convert trouble-ridden enterprises away from state management.

The Cuban delegation was “interested in looking at as many cooperative endeavours as they can,” and had even met with a taxi co-op to learn how it could be adapted in Havana, Holm told IPS.

Though smaller than the Cuban delegation, the Philippines, with its modest contingent of four, also sought to make an imprint at the summit.

Youth delegate and speaker, Marie Antoinette Roxas, from the Philippines, was there to share her university, Iligan Institute of Technology’s cooperative initiatives. She told IPS that other youth head programmes that introduce financial literacy to children in elementary schools, as an effort to instill smart financial practices at a young age.

The student-run cooperative is also involved in designing income-generating activities; one project that has taken off has been its partnership with local tailors to make eco-friendly bags that are then sold with interest to its mother co-op, the university’s Multi-Purpose Cooperative.

While there were many opportunities to hear about different initiatives, Simel Esim, the chief of the ILO’s cooperative branch told IPS she wished there had been more opportunity to connect with the people behind them – and had hoped for more dialogue between delegates.

Amidst the challenges of staying relevant and competitive, the biggest one ahead, said Esim, is going to be connecting with and preaching to people beyond the converted.

At the summit closing, Leroux announced Desjardins’ hopes of setting up another international gathering. Perhaps that will be on the agenda at the next summit in 2014.

The Maguey Women's cooperative was the first in Mexico to use solar energy in food production. Credit: Emilio Godoy/IPS

Cooperatives may face an immense challenge in garnering broader public recognition among consumers, but when it comes to chasing growth, they haven’t held back.

They are growing a rate comparable to their corporate competitors, and are outpacing them in the food and agricultural sector, a study released by McKinsey & Company reveals.

Cooperatives are developing at annual rate of 7.9 percent versus free market participants, who lead at 8.7 percent. While food and agricultural co-ops lead as an example, the study revealed that the insurance sector confronts obstacles in gaining access to capital and the right type of legislative environment that responds directly to the model.

The survey of 47 co-ops based in Asia, Europe, North America and the emerging markets upheld the cooperative movement’s self-perceptions about its ability to prioritise the interests of members over short-term financial gains. The results were matched with their analysis of 54 publicly listed companies.

Growth for small companies turned big can mean a break in their resolve to live up to their original standards. But cooperatives occupy a different territory of business, where the window for the measurement of growth is wider than the quarterly report structure that corporations are beholden to, said Juan Buchenau a senior financial sector specialist at the World Bank, at a panel during the Oct. 8-11 International Summit of Cooperatives here.

In the pursuit of a greater share of the market, cooperatives remain rooted in addressing their members’ needs, said Andrew Grant, the managing partner of McKinsey & Co. “If you’re better serving your members, you’re by definition meeting your market share.”

For 96 percent of the co-ops under review, growth was seen as essential to maintaining a diversified range of services. The findings illustrated differences in sources of growth, with co-ops propelled more by acquiring a greater market share, rather than by their entrance into rapidly rising markets with high growth potential.

“They are less nimble at placing their resources into the fastest growing part of their marketplace,” noted Grant at a press briefing. “They are less good at developing new products and services.”

Cooperatives are not unwilling to jump into the new markets, but rather are unable to swiftly release the capital to place their bidding, the McKinsey report stated. The principle of consensus that governs the cooperative model and puts the immediate interests of members first makes it difficult to cross the threshold.

The challenge and concern for cooperatives going forward is how to grow, without succumbing to the same type of responses exercised by other enterprises. For corporations, the pressure of a quarterly timetable means that “projects are thrown off the table” before they have been given a chance to fly, said Buchenau.

There needs to be more long-term patient capital within the free market, said Martin Sabia, the president and CEO of the Caisse in Quebec, at the panel on the economic order.

In identifying the weakness of cooperatives in penetrating emergent markets, the report stressed that cooperatives must play on their “natural strengths,” and build a following through the promotion of members’ needs.

But while this study demonstrates the economic power of cooperatives, Simel Esim, the chief of the International Labour Organisation’s Cooperative Branch, told IPS that it does not provide an accurate picture of how growth is understood within the movement.

“The McKinsey report is looking at traditional growth indicators, it’s not really addressing the co-op model in its uniqueness,” she told IPS. “For instance, co-ops have a longer life span, they employ workers, they have less worker turnover, move less from a local economy, they respond to local problems faster – these are the growth indicators that should be used.”

Instead of looking at the annual growth, she suggested assessing growth within a span of 10 to 20 years.

“We’re more interested in qualitative growth, rather than just numbers,” agreed Gianluca Salvatori, the CEO of Euricse, a research centre focused on cooperatives.

For Salvatori, growth in the qualitative sense means innovation, extending the cooperative experience in new sectors to respond to emerging needs, not merely responding to market indicators.

“The world they are trying to analyse and understand is far more complex,” Salvatori told IPS. “I don’t think growth in size is the main driver we have to implement as a strategy.”

Dame Pauline Green. Credit: Beatrice Paez

Under the banner “The Amazing Power of Cooperatives”, the summit seeks to demonstrate its contributions in proffering alternative, human-centred solutions for economic development across the world.

The summit marks the first occasion to bring nearly 2,800 cooperative participants from 91 countries into dialogue with one another.

To make their case, the summit’s organisers, Desjardins, Canada’s financial cooperative, and the International Cooperative Alliance (ICA) are letting the numbers do the talking, speaking to the fact that cooperatives sprout where there is a vacuum in services and opportunities in the community.

“With one million organisations, 100 million employees and one billion members we already have a global voice, now we need to make it resonate across the world,” said Monique Leroux, the CEO of Desjardins.

Addressing the crowd gathered at the opening ceremony, Dame Pauline Green, the president of ICA, fondly recalled one of her worldwide tours of cooperatives.

“There were desks squeezed into every corner of the room and the place was buzzing with members waiting to deposit or withdraw money,” says Green about her trip to a credit union on the outskirts of Manila. “Coffee and biscuits were being shared, and they showed me with such pride a seven-story building that they had built with credit union money.”

The building was purposed as a school for 650 local students, funds were also used to create a preschool, where mothers can drop off their children to supplement their family’s income, and a chapel, where members can seek a measure of comfort in times of distress.

This is a portrait of the movement at work, said Green.

But Green noted that while there are many success stories of cooperatives filling in areas neglected by other parts of the economy, cooperatives continue to be sidelined and discriminated in their efforts to reconfigure the direction of global economic policy.

She pointed to the fact that neither the World Bank nor the B20, which advises the G20 group of the world’s biggest economies, has a cooperative economist on their boards.

In his opening remarks, Riccardo Petrella, an Italian economist and political scientist, also discussed of the unwillingness of governments to strive for global economic policies that balance the needs of people with profit.

He went on to speak of the gross inequality that punctuates society and the misplaced values that put accumulation ahead of the equitable distribution of wealth.

Green has been bringing the case of cooperatives to various international and governmental bodies and stakeholders around the world, from Beijing to Washington.

“Our argument has been that cooperative businesses want to see a more diversified global economy,” said Green. “The world needs a global economy that puts people at the heart of decision-making and not just the red-blooded pursuit of economic development at any cost.”

With over eight years of experience on the ICA board, Green has made it her ambition to make the cooperative model the blueprint to guide global institutions in their policy decision-making.

IPS spoke with Green to discuss the challenges the cooperatives face in today’s economic climate.

Q: Cooperatives are active in all corners of the globe, but in what regions does the movement need to gain a firm grounding?

A: There’s a huge raft of energy that needs to go into countries involved in the Arab Spring. What we want to do is to engage through social media. We want to attract them at the grassroots level, on things like cooperative housing, things like professional cooperatives. Those people, when they came out on the streets in the Arab Spring, weren’t just looking for political freedom, they were looking for economic fairness.

By 2050, we won’t have enough productive land in the world to feed the estimated nine billion population. (Of) the remaining land that is available to increase production, 73 percent or 80 percent of it is in Africa. The issue becomes how do we energise African small holders, how do we make it in a way that the benefits are given back to peasant farmers.

Our fear is that nothing will happen and we’ll just see the multinationals buying up the small holders and they’ll get a tiny shot in the arm, which will last for a short while.

Q: What are the key priorities of the ICA?

A: The key thing for us is that the global economy does not recognise our sort of business. Our serious initiative for this year is try to impact the global economy. A billion people around the world are not starry-eyed idealists, they’re realists.

We believe we can open some of the doors for our businesses big and small, and demonstrate their worth to governments.

Q: Not all enterprises are immune to corruption. Do cooperatives have a unique approach to dealing with or mitigating corruption?

A: The strength of the cooperative movement is its accountability to its members. Its ordinary members are on the board of cooperatives, driving the direction and holding management accountable. More than often, these things are discovered through the process of an ordinary person who will ask the awkward questions. You have a totally diverse set of people with different skills.

Emmanuel Kargbo, a 26-year-old farmer, pushes a motorised soil tiller recently given to his farming cooperative. Before he was trained to use it, it would take him more than twice as long to do it by hand. Credit: Damon Van der Linde/IPS

Youth worldwide are facing limited job prospects in the traditional channels of employment, and in the midst of the job crunch, cooperatives are seeking ways to connect with this untapped pool of talent.

It begins with reserving a seat for young, future cooperative leaders this Oct. 8 to 12 at the International Summit of Cooperatives in Quebec City. About 150 youth from across the globe have been invited to represent their respective cooperative organisations.

It’s an opportunity for them to network with their peers and learn from their cooperative elders, said Stephanie Guico, the coordinator of the Future Leaders programe at the conference. While there will be special panels and events designed around them, the young leaders, from the ages 20-35, will be expected to bring their own contributions.

“I hope they’re going to bring a youth voice, innovative ideas, new perspectives. I hope they won’t censor themselves,” Guico told IPS. “There’s a lot to be gained from listening to youth who are more in touch with integration into the virtual area and ways of collaborating and communicating that are new.”

“I think there’s a generation now that has grown up with a certain type of cooperation through social media,” said Charles Gould, executive director of the International Cooperative Association, a non-governmental organisation that strives to shape global policy on behalf of cooperatives.

“It ought to make them more receptive to the cooperative model but they haven’t heard about it as a business model,” he told IPS.

No one knows more about creating connections through social media to answer a need than social entrepreneur Dev Aujla, who will be addressing the young leaders.

Aujla, founder of DreamNow, a charitable organisation in the business of turning ideas into social goods, collaborated with Rolling Stone Magazine’s “climate hero” Billy Parrish, a climate change activist, to write a book.

Parrish and Aujla’s paths crossed online, as Facebook friends who had never met but who shared similar principles, and dedicated their lives to mobilising youth to address their community’s issues. Their book “Making Good” serves as a game plan for youth interested in pursuing careers as social entrepreneurs.

The non-linear career path often comes with the territory if you become a social entrepreneur, and while it can be daunting, it is becoming an attractive option for those wanting a job that pays well enough and is rooted in serving the community, said Aujla.

And for those interested, the cooperative model can provide a base of support, because it doesn’t require a lot of a capital, and he said, with cooperatives “you can take any industry you can imagine and reinvent in a way that does good.”

The cooperative model speaks in the language that today’s generation has been reared on, through exposure to the dialogue on climate change and other environmental issues, “this whole generation knows they want to do something good and are just being turned on the idea,” adds Aujla.

But while youth have more access to information to educate themselves on the issues of today, the cooperative model isn’t all that familiar because it’s not always included in academic curriculum, said Guico, who completed a Bachelor’s Degree in International Development.

Social media can aid the cooperative movement in its efforts to connect with youth, but more education about how they can offer an alternative route for employment is needed.

“Realistically, it’s going to take a different presentation of the model and a better explanation of it,” said Gould.

It took doing her own research and meeting the right people for Guico to find her way into the cooperative movement. The same goes for others around her. “Most people stumbled upon the movement, which said something about how good the cooperative movement is doing at promoting itself and communicating its identity.”

Part of the issue Guico finds is that cooperatives operate in a more discreet manner than corporations. “We would have to impose ourselves before there’s a perception of our importance,” she said.

Another reason cooperatives are not on the minds of many youth is that schools do not delve deeply, if at all into what the model offers, Guico notes. “Most educational institutions are geared towards the capitalist model, anything that it is too complex, they tend to simplify or minimise it.”

Without the decision to explore cooperatives on her own, Guico might have continued to presume that cooperatives are only in the trade of making crafts and operating as small-scale agricultural enterprises, as she was led to believe.

In Canada, St. Mary’s University in Halifax offers a Master’s programme designed around the cooperative enterprise. The university is sponsoring Imagine 2012, a joint event of the summit, on cooperative economics that precedes it.

But the online programme, which gathers people from around the world, is targeted at cooperators entrenched in the movement. Most students have been working in the industry for 15 to 20 years and are seeking to learn new management tools and connect with other industry leaders.

“If people were only learning about it in the ways that are more typical to how (we’re) learning, I think our sector would be much further ahead,” said Karen Miner, the managing director of the Cooperative and Credit Union Management programme at St. Mary’s.

“We would be much better educated about the sector and even on ourselves. We have a large number of managers of co-ops that come from the traditional business background, myself included,” Miner told IPS.

Laure Waridel, an ecosociologist who will also be speaking to youth at the summit, also finds that not enough value is given to the social economy in university courses, particularly in management.

Waridel, who taught a course at McGill University in Montreal, sought to incorporate some lessons on social entrepreneurship in her lectures by inviting guest speakers working in the social economy to her lectures.

The cooperative model, which prides itself in embracing democratic and participatory values, where youth can help influence and shape the future of cooperatives, has a lot of room for growth and new members, Waridel said.

“The message to future leaders is that we need to prepare a transition for another economy,” she told IPS. “It’s very clear that the dominant model in which we are now is unsustainable.”

Cooperative members at the APROHFI wholesale centre in Honduras select the best potatoes to sell to supermarkets. Credit: Thelma Mejía/IPS

The banner year for the global cooperative movement is winding down into its last months, but its leaders have echoed a resounding message: cooperatives, a values-based business model, can usher a transition to a more socially responsible economy.

This message will be at core of the International Summit of Cooperatives, a gathering of more than 2,000 participants active in the cooperative movement, to take place in Québec City from Oct. 8 to 12.

With 2012 designated by the U.N. as the International Year of Cooperatives, Monique Leroux, the CEO of Desjardins, the largest cooperative financial group in Canada, thought it was time to bring her dream of launching a summit into action.

“We want to use the summit as an opportunity to make sure the world in general, and governments have a better understanding of the cooperative movement,” said Leroux. “We need to do a better job in promoting who we are.”

Desjardins partnered with the International Alliance of Cooperatives, a non-governmental organisation that advocates on behalf cooperatives, to create a venue where new networks and solutions to propel the movement forward can be forged.

The shift to a new paradigm for the economy is now underway, and the time is ripe for cooperatives to demonstrate their value because there is an upswell of disenchantment with the economy as it stands, said Charles Gould, the executive director of IAC.

Cooperatives tend to arise in response to an unaddressed need in the community. The core values that underpin the cooperative model – self-help, democracy, equality, equity and solidarity – guide the way decisions are reached, Gould added.

The values bear the implication that the interests of the communities served will be factored into any business calculation. In the face of the financial crisis, the cooperative model proved its resilience, because by design the board is accountable to all its members, said Leroux. The one-member, one vote rule means that the interests of the largest shareholders do not trump the rest.

“It’s a more sustainable model, it doesn’t take unknown risks because it’s not trying to maximise profit,” said Gould.

“We believe that by 2020, by the end of this decade, it’s conceivable that the cooperative can be the fastest growing form of enterprise in the world,” he told IPS. “We’ve been asking cooperatives and our members what would have to change for that to happen.”

Gould identified several areas that will help build momentum for the movement, and bolster its profile as a viable alternative to the classic setup of a corporation.

For one, cooperatives need new forms of capital to grow that are aligned with their values and design. The summit marks an opportunity for Desjardins and its partners to share their innovations in creating new financial products, credit services designed to reflect the context of the community served, said France Michaud, the communications supervisor at Developpement International Desjardins (DID).

Aside from raising capital, cooperatives also have to do a better job at promoting and invoking their identity, making the model and the values it stands for known to the public, Gould noted. Brands like Ocean Spray and Sunkist are household names but are not always tagged as examples of cooperatives.

There are several misleading perceptions about cooperatives that downplay their importance in the economy, said Stephanie Guico, the programme coordinator of the Future Leaders Program at the summit. One is the view that they belong to the past, another that they are mainly poor people’s organisations.

Poverty alleviation is central to the mandate of many cooperatives, but people often don’t realise they are businesses concerned about their sustainability, Guico added.

For the cooperative model to thrive, the legislative and regulatory landscape has to adjust itself. “There are many countries where the general business regime is designed around the corporate construct, because it has been such a dominant model,” Gould told IPS. “We have to make sure we’re not subject to restrictions that were imposed to prevent problems other business forms are subject to.”

Gould noted that the governments of China and Iran are expressing interest in the cooperative model, and that these countries are on his list to watch for growth. “Some of these countries recognise the need to diversify from state-owned enterprises and see how the global economy has changed,” he said. “But don’t want to move to capitalist models…and are intrigued that the cooperative model could be a way of getting people to step up in a self-help way.”

In Quebec, the groundwork for an alternative economy is being sown through a collection of seemingly small efforts led by members of the global cooperative movement, said Laure Waridel, an eco-sociologist, who has been invited to speak at the summit.

She cited one local organic farm as an example, because it has opted to subsist with the help of its customers, who are willing to pay an advance for its share of the harvest.

Waridel, also recognised as a pioneer who helped bring the fair trade movement to Canada, has been studying the efforts of people in the countryside of Québec to create a sustainable livelihood.

“What I’m interested in is to find the connecting dots between many initiatives in Québec that are seen as marginal,” she told IPS. “You put them together, you see that there is a proposal for another economy.”

Arely Domínguez, right, and other members of El Guapo at the inauguration of the bankomunales exhibit. Credit: Estrella Gutiérrez/IPS

“We were used to losing, so a group of us said to ourselves: let’s lose something here,” said Carmen Caravallo, describing the start of a “bankomunal”, a self-managed microfinance fund based on investment, in her rural community in eastern Venezuela.

Ten years later, Caravallo and the other members of the bankomunal in Llanada de Puerto Santo, in the state of Sucre, “are getting used to winning,” she told IPS. “Now we are a family, and we have learned to be responsible; we have improved our lives with money that belongs to us, and strange as it may seem, we feel we are very much in charge,” she added.

Bankomunales, present in 14 countries on four continents, are the brainchild of Venezuelan social entrepreneur Salomón Raydán, who demonstrated that the poor can be self-financed, after Muhammad Yunus of Bangladesh, the father of microcredit, had shown that they could be financed.

The 54-year-old Caravallo, who is in mourning after the recent death of one of her three children, said the road has been “slow, hard and paved with mistrust.” But after three years “people began to make a profit, and saw that we were reliable and responsible.”

In her community of 1,000 people, in one of the poorest states in the country, she is treasurer of the local bankomunal, which began with 20 members and now has 107 as well as “a long waiting list to join.”

Similar experiences have been repeated in 180 bankomunales throughout Venezuela, which have a combined total of 25,465 members who contributed a minimum of 2.30 dollars to become both investors and clients.

Raydán, a philosopher and sociologist by training, told IPS the idea was born 15 years ago, out of his experiences as an adviser for small farmer financial assistance programmes and from what he learned about the way of life of poor rural communities.

Poverty is defined by the irregularity of income, more than the lack of it, he said. “Insecure and fluctuating resources do not allow the poor to face spending that is needed for survival, and so poverty takes root,” said Raydán, the head of the Foundation for Rural Finance (FUNDEFIR).

“Eighty percent of poor people in the world have access to credit through informal systems,” mostly self-managed in their communities, he said.

“But these sources are insecure and they do not add value for their users. They need to be adapted to offer more transparency, training, security and efficiency, so they become more formal, although that doesn’t mean they need to be regulated according to the rules of the state that has excluded them,” said Raydán.

These mutual credit associations began to operate in 1997, granting multiple and variable loans, in contrast with traditional systems that make rotating loans of fixed amounts, which are widespread in poor areas of the developing South.

Furthermore, “their members are not just savers, but investors; they are active, not passive,” he emphasised.

“Only 2.5 percent of the poor population of the world has access to banking services, and microcredit systems serve 105 million people, while the demand for microfinance is two billion people,” he said.

Venezuelan microinvestors acquire a certificate of assets worth 2.30 dollars. No one can acquire more than 15 percent of the total assets, members of different bankomunales who have arrived in Caracas for a photo exhibit about the system tell IPS enthusiastically.

Members are the leading lights of the show launched in September in a gallery in the capital city, where powerful images are shown of open-air meetings or gatherings in borrowed spaces – meetings of credit committees and activities involving the granting or payment of loans.

There are also images of members on cultivated land in both rural and urban areas, grocery stores set up in homes, other small shops, home renovations, sewing or repair workshops, and minifactories producing different products. Other members are depicted next to children wearing new school uniforms, or holding up new kitchen utensils.

Credits are granted for “any legal purpose,” in general to be repaid in three to 18 months, with interest decided by each organisation. Loan amounts vary: a new association may only lend up to 100 dollars, while a more established one may have a ceiling of 2,000 dollars.

All decisions are made at well-attended meetings, and the credit committee gives its decision on each request within 24 hours. “We know each other and we know everyone’s payment capacity; we work on trust,” said Arely Domínguez, head of the bankomunal in El Guapo, a village that was reborn from tragedy.

In December 1999 a flood burst the dam near the village, located 125 kilometres from Caracas, in the north-central state of Miranda. The low-lying land in El Guapo, home to some 3,000 people, was flooded.

FUNDEFIR was one of the organisations to come to their aid, and a year later Domínguez and 34 others founded their bankomunal, which now has 117 members and makes an average of 10 loans a week, totalling 6,000 dollars.

First of all, like everyone else involved in the initiative, they received training and advice from FUNDEFIR. “We learned how to balance our accounts, write budgets, do audits, assess risks and use computers,” said Domínguez, a 49-year-old schoolteacher with two daughters.

Up to August, bankomunales had granted 275,631 credits to 84,884 people, for a total 3.6 million dollars at the official exchange rate.

In El Guapo, the bankomunal operates in the building of a cultural association, but most of the associations meet in members’ houses. Officers are elected at general meetings and work on an honorary basis.

The vast majority of members are women, but the number of men is increasing. One-third of loans are requested for consumption, one-third for enterprises and one-third for emergencies, especially health problems.

Every loan is backed up to at least 40 percent by certificates of assets of the member and his or her sponsors, “to be in the safe zone,” a mantra repeated by the members. “There are hardly ever any problems, but on the second default, they are out,” Caravallo said.

Profits are calculated monthly and distributed to the members annually. “One of the principles of bankomunales is distribution rather than accumulation,” said Raydán. “The profits have little economic importance, but a great deal of educational importance.”

It is “a financial education programme, not a microfinance programme, and the profits help generate a sense of entrepreneurship,” he said.

The model has spread to Bolivia, Brazil, Chile, Colombia, Dominican Republic, Haiti, Peru, Germany, Spain, Hungary, Portugal, Senegal and Indonesia.

The Spanish version, Comunidades Autofinanciadas, won the 2009 prize for the best microfinance programme in Europe, while FUNDEFIR’s system was voted in 2010 one of the 25 social projects in the world most likely to be globalised, by Ashoka Globaliser, an international foundation that promotes social enterprise.

FUNDEFIR has financial support from Total Oil and Gas Venezuela, a subsidiary of the transnational French oil corporation Total, which works in the east of the country.

Diana Vilera, the sustainable development manager, told IPS the company “seeks to promote projects that are a tool for people to be lifted out of poverty.”

“Oil companies take a lot out of the planet and the environment, and we have a duty to contribute whatever we can, beyond the business angle,” she said.