FEATURE - Fighting Afghan Taliban with Islamic credit unions

By Katrina Manson

LASHKAR GAH, Afghanistan (Reuters) - After the Taliban made nine threatening phone calls and fired a Kalashnikov outside his house, Shah Mohammad Mir left his hometown for months before returning with a new car and a new telephone number.

His crime was lending tiny amounts of money to farmers with as few as five sheep or to women who embroider traditional fabric for a few dollars a month.

Mir is director of the Helmand Islamic Investment and Finance Corporation, an Islamic credit union funded by Britain which is part of a larger civilian effort to turn the population in Helmand away from the Taliban and into work.

Patrolled by armed men who guard its Lashkar Gah head office, the corporation already has three branches in Helmand -- one of Afghanistan's most dangerous provinces, where thousands of foreign troops are struggling to turn the tide on a rising insurgency.

Since the end of 2007, the credit union in Helmand has in total lent $1 million to 1,441 people, from farmers to flower sellers, from tailors to tradesmen.

"I'm just competing with the Taliban," said Mir, sporting a long wavy beard and grey turban. "It is our country, our Afghanistan, and we're prepared to work for it. The Taliban intimidated me into leaving my job but I'm not scared - I'm a young man and a young man is never scared at any point."

The loans are given in kind, in keeping with Islamic Sharia law and paid back with a 2 percent "administration charge" rather than interest repayments, which are forbidden under Islam.

The money, usually less than $2,000 each loan, means that farmers who would have grown poppy -- whose inputs are provided by the Taliban and repaid with their harvest -- can grow wheat and other crops independently and sell their own produce.