AUGUST 12, 1991

PERSONAL FILE 1936 Born in Geneva as Prince Karim. Educated at the College du Rosey, Switzerland, and Harvard University 1957 Becomes Aga Khan, Imam of the Ismaili Moslems, on the death of his grandfather, Sultan Mahomed Shah Aga Khan III 1967 Establishes the Aga Khan Foundation 1983 Founds Aga Khan University, Pakistan 1984 Establishes Aga Khan Fund for Economic Development 1990 Named Commander of French Legion d'Honneur for eminent services to humanity'


The Aga Khan speaks to William Dawkins and Edward Mortimer

Most people know at lease some of what the Aga Khan does for a living, even if they think - wrongly - that he spends his whole time horse racing. But what makes him tick?

Straddling the worlds of ancient Islam and modern business, the Harvard-educated Imam is a rare example of a Moslem religious leader who appears to reconcile these clashing worlds, undeterred by the rise of Islamic fundamentalism and the upheavals created by the Gulf crisis.

His basic job description is to cater for the spiritual and material well-being of 12m to 15m Ismaili Moslems, a task which falls to him as blood descendant of the Prophet Mohammed, 49th in a succession stretching back to the Prophet's daughter. His is a minority, generally moderate sect, of often entrepreneurial but sometimes poverty-stricken people scattered across 25 countries, mainly in Asia, Africa and Middle East.

Today, the spotlight is on the Imam's development aid work, rewarded recently with a Pound 4.7m grant from the Britain's Overseas Development Administration, one of the largest it has ever given to a non-governmental organisation. This was followed a few weeks later with Ecu 8m from the European Community, which, like the ODA money, was for rural development projects in Chitral, northern Pakistan.

The grants partly recognise the extent to which the Aga Khan network's projects extend beyond his own flock. "We bend over backwards not to be seen just as an Ismaili benefit society," says one of his aid staff. But they also mark recognition of the effectiveness of the Aga Khan's general aid strategy. His rule is that receivers of aid must make some financial contribution and have an ownership stake in the projects concerned.

So it is that the Aga Khan is in a reasonably optimistic mood, as he chats amiably over coffee at his headquarters in wooded park near Chantilly, the capital of equestrian France and home to some of his race horses.

He is pleased to see some developing countries gradually abandoning their old political dogma, which reflected the former rift between the communist and non-communist world and had paralysed the aid business for decades. "It is genuinely exciting to see things beginning to happen. New ideas are not being thrown out because they don't fit a pre-established external philosophy. We are bottoming out of 30 to 40 years of horrible blockage which had a terrible impact on the Third World," he says.

To take one example, the Aga Khan professes to be deeply cheered by Ugandan President Yoweri Museveni's decision to hand back Ismaili property confiscated in the 1970s by Idi Amin. As a result, the Aga Khan plans to restart development work in Uganda to try to entice back Ismailis thrown out by the old regime.

He does see one serious problem for his aid business in coming years; shortage of cash. As the schools and hospitals he funds grow in size and number, so do their operating costs. One solution, he argues, would be to offer tax incentives for businesses in the Third World to invest in charitable endowment funds, rather than hiding their spare cash.

Extraordinary though it is for a spiritual leader to advocate harnessing the black economy, a great deal is at stake. "What percentage of the national economies of the Third World are below the table?" he asks. "It would be completely wrong to say that these captains of entrepreneurship have no social conscience. Rather than keeping it outside the balance sheet, they would be willing to put it back on to the balance sheet if they could use it in accordance with something desirable.

"Unless this sort of thinking is more prominent in the developing world than it is there will be a continuing falling away in the provision of health care and education," he warns.

He denies that he was over-reached himself in the aid business, but admits freely that his public operations have only partly reached their target of becoming self-sustaining, or achieving the right balance between cash-earning economic development projects and cash-using aid programmes. "Frankly, up till now, it has not worked," mainly for reasons outside the organisation's control, such as the instability of the countries in which the network is active.

The Aga Khan has spent most of his professional life trying to weave a rational and businesslike pattern into the patchwork of aid and economic projects inherited from his grandfather, the previous Imam. The result is a network with three main strands in the Third World, employing nearly 14,000 people, excluding the more than 6,600 who work for the Aga Khan privately.

There is an economic development arm, which is run like a venture-capital fund with assets of $400 m and demands a profit from the businesses it backs, ranging from the installation of digital telephone exchanges in Pakistan in partnership with Alcatel of France, to tanning goatskins in Bangladesh and selling insurance and running hotels in Kenya. It aims to provide longer-term backing than purely commercial equity finance, able to help businesses survive the sharp economic swings typical of developing countries.

These profits contribute to the social development arm, which spends $150 annually from this and other sources on health, education, housing and agricultural development. Finally, there is the Geneva-based trust for culture, offering awards for Islamic architecture and sponsoring a range of activities to improve understanding of Islamic civilisation.

Most people think of the other side of the Aga Khan's life, his private businesses, as quite separate from the rest. But the two are increasingly working together and exchanging staff, he says. They include hotels in Sardinia and Italy, airlines in southern Europe and a newspaper in Kenya, with a combined annual turnover of $808m. On top of this comes one of Europe's leading thoroughbred racing and breeding businesses, inherited from his father and grandfather. The horses generate more controversy than any of the rest, but the Aga Khan maintains that they take up a minute amount of his time.

The Aga Khan sees the Ismaili community as more like a state than a non-governmental organisation, "In terms of the number of people that it affects, the size, nature and multiplicity of its activities", though it has not even a Vatican-size sovereign territory. As a quasi-head of state he admits to having an aid policy, "on a country-by-country basis", and he shares the current enthusiasm of other aid donors for "good government".

"It's absolutely essential." He says. "I cannot think of anything more central to development than good government. I don't think you can through external forces impose good government. Good government comes from within, not from outside - and I would tend to say good governance' rather than good government'." By "governance" he means the competence with which both public and private sector entities are run, "from higher education to the management of resources to intelligent and honest planning", with "clearly-stated objectives" and "answerability for the people who are responsible for running things".

As for the upheavals created by the Gulf crisis and the rise of Islamic fundamentalism, the Aga Khan feels that his main role is to counsel his own people rather than preach to governments. Fundamentalism is "divisive of society and damaging to the Islamic world's ability to deal with the modern world," he mourns. But he is confident that Islamic radicalism, almost unknown among the Ismailis themselves, will die away. The Gulf crisis, was "a historic period, but probably not a permanent one."

A professional in the development business, the Aga Khan applies exactly the same rigour to his bloodstock interests. He has always insisted that his 750 horses must be run as a self-financing business and cited lack of professionalism in UK Jockey Club testing procedures as the reason for withdrawing all his horses from Britain last year, after the club disqualified one of his winners for falling a dope test. There is no immediate prospect of a return, though the Aga Khan says he is encouraged by the recent report of the House of Commons home affairs committee, and is waiting to see how the industry takes up its recommendations.

At the age of 54, the Aga Khan probably has longer to run than most of his horses. He alone has the right to choose a successor from among his male descendants, a choice which he is keeping to himself, in line with tradition.

The field is narrow. He has three children, Princess Zahra, born in 1970, Prince Rahim, a year younger, and Prince Hussain, born in 1974, who have been encouraged to follow their own interests. But already, they are being drawn into their father's complex world. The two eldest, studying at North American universities - Harvard and McGill - are learning Urdu and have shown strong interest in Islamic studies, without any parental pressure, their father insists.

Source: Financial Times - Monday Interview

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