Yunus had pledged that his party would offer an alternative to the two main political parties which have dominated Bangladesh's politics for decades.
DHAKA: Bangladesh Nobel Peace Prize winner and micro-credit pioneer Muhammad Yunus announced on Thursday he had abandoned a dream to form a new party to breathe new life into the country's embattled democracy.
"I decided to enter into politics because of your support," Yunus said in an open letter. "Now ... I am informing you that I am not going to form any political party," he said.
"I had a plan ... but I came to understand that it is not possible and so accepting this reality I decided not to go forward," he added.
Yunus and his Grameen Bank, which specialises in lifting people out of extreme poverty by giving small loans to the very poor, were jointly awarded the Nobel Peace Prize last October.
His decision to enter politics followed a political crisis in January that led to the cancellation of elections and a state of emergency under a military-backed interim government.
But Yunus said he had no alternative but to drop his plans after he failed to find backers.
"People gave me inspiration to enter politics, but when I contacted them I did not get much response and they were not interested in joining the party. Others would not leave their existing political party," he said.
Yunus in February vowed that his "Citizen Power" party would offer an alternative to the two main political parties which have dominated Bangladesh's notoriously corrupt and dysfunctional politics for more than 30 years.
Critics of the two parties -- the Bangladesh Nationalist Party (BNP) and the Awami League -- say their confrontational approach and failure to tackle corruption has damaged democracy and led to January's crisis.
But many doubted whether Yunus would succeed in his plan and questioned whether he had over-estimated his popularity in rural areas, where his bank's high interest rates were disliked.
They also pointed to the difficulty of breaking the Awami League and BNP's stranglehold on power.
The two party leaders -- Khaleda Zia of the BNP and Sheikh Hasina Wajed of the Awami League -- are members of rival political dynasties and have alternated in government since democracy was reinstated in 1991.
Yunus had said he wanted to move politics away from the "destructive activities of the past."
For years Bangladeshi politics has been dominated by crippling national strikes, street protests and parliamentary boycotts by whichever party was in opposition.
"We have an age-old tradition of confrontation in politics. My politics will be the politics of unity and peace to establish honesty in politics and to change the fate of the nation," he said in February.
"These politics will be non-communal, secular, democratic and free of corruption."
Ataur Rahman, a professor of political science at Dhaka university, said Yunus' decision was not unexpected.
"He is a social leader, rather than a political leader, and Bangladesh has not yet reached the stage where there is the right atmosphere for creative people like Yunus to be successful," he said.
Bangladesh's interim government has said it would hold rescheduled elections before the end of 2008 after carrying out reforms to put democracy back on track.
As part of its anti-corruption drive it has detained scores of high-profile figures, including former ministers with links to both parties. Trials are due to start next week.
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