Comments on: The Hidden Finances of Insurgency

By: nadezhda

nadezhda — Sat, 30 May 2009 04:26:47 +0000

Well hawala is also a money transfer system that works internationally. So it’s a handy way to skirt exchange controls and money laundring regulations that governments impose via formal financial institutions.

But it’s also an immensely useful way to, for example, send remittances back home to places where Western Union or its equivalent doesn’t penetrate — or even in big cities, only at high costs.

It is true that Western Union and its competitors have been moving into remittance transfers over the past decade so that, at least in certain regions (e.g. from US to Latin American) the costs have come down and the convenience and availability have increased substantially. But I don’t know how competitive they’ve managed to become vis a vis hawala.

But that takes us back to my earlier point — if we’re going to crack down on informal services, based on trust networks, we have to offer reliable, cost-effective substitutes.

By: macaquerman

macaquerman — Sat, 30 May 2009 03:20:12 +0000

Another fine, informative post. thank you.

By: mikeyhemlok

mikeyhemlok — Sat, 30 May 2009 02:00:46 +0000

The difference between a healthy, sustainable village that supports the government and one that is vulnerable to insurgents isn’t a garrison or concertina and AP mines or rotating patrols.

A village is vulnerable when it hasn’t the basic necessities to function as a village. Give it a ten month stream, decent wells and crops that have value in the marketplace and you’ve begun to make a difference. Now, let people leverage that ag income with micro loans and allow some limited risk into the aid funding system, push the aid flow down to the village level and what you’ll find is people more interested in producing a sustainable future for their children than in challenging the government, except to the extent that the government is the problem rather than the solution. And that is above your pay grade, mine and theirs.

The solution is so fucking simple. Make the future better than the present. Give families something sustainable to work towards. Keep the thugs on both sides, the government thugs and the insurgent thugs, from co opting the people’s opportunities to improve their quality of life, and you’ve accomplished something. As long as political and economic considerations prevent your intervention from allowing a family to see their children get educated, get health care and grow to have something more than their parents, you don’t have a goddamn chance. Any social movement that can deliver services can provide a plausible story that they are the future. And you, with your air strikes and death and support for the life-draining corruption will lose. Every time.

The fact that this is somehow hard to understand is mind boggling…

mikey

By: Endymion

Endymion — Fri, 29 May 2009 23:31:13 +0000

Yeah, seconding the disgust with the scapegoating of hawala. For starters, it’s not a black market; in some extreme situations it’s the legal banking method and Western banks are the violators. But mostly it’s the mischaracterization of hawala as source of funding(which you’re not the first to do by a long shot). Money doesn’t magically originate in hawala, it’s just a system of ethics for reproducing a cash economy where the logistics of cash would be impractical.
A convenience store merchant in a place I used to live kept a slip of paper by the register for when people were short. I never saw him record more than 25 cents at a time, but that was hawala. The system’s scalability is one of it’s virtues, but to say that it’s more prone to criminality than a Western bank is a very blindered point of view; hawala requires a much stronger set of personal ethics to function than modern American banks even pretend to.
The fact that for some people it is the profitable course to stand against us is real, nevertheless the central problem is and always will be that we have convinced(or non-neutral others have convinced on our behalf) people that it is the ethical course to stand against us. Acceding to our banks’ desire to assimilate and control hawala would reinforce rather than disempower those beliefs.

By: nadezhda

nadezhda — Fri, 29 May 2009 21:06:09 +0000

I don’t have a link, but recently saw Holbrooke comments about pushing agriculture, crop substitution and trade policy to top of the agenda. The Colombia experiences — where the biggest recent advances have been in the areas where economic dev has been the focus rather than the War On Drugs — is giving the anti-drug-war folks more ammunition to shift US policy.

One thing you can say for Holbrooke, when he focuses on something, everybody else does as well. And Obama/Clinton gave him a small army of staff under him whose first priority is to get the rest of the USG marching to Holbrooke’s objectives.

I was really impressed with the organization of the tripartite meetings in DC. Not at the Karzai/Zardari level, which is pretty hopeless. But all the ministries and agency heads from both countries meeting with each other, often for the first time, and with their US counterparts. That was a huge bureaucratic undertaking to pull off in a very short timeframe, especially since each of those meetings had an MOU/action program that every US department head is now going to be responsible for to Holbrooke (with J Jones backing him up).

It may very well be too late, but I’m impressed that the current Admin is tackling these matters with unaccustomed focus and energy.

As for hawala, I hate when it’s called “black market”. True, it’s not the formal financial system, but it’s actually an organized, efficient way to deliver financial services to a lot of folks that the formal system fails to service adequately. If we’re going to tackle the abuses in hawala, which are real, we need to be offering a meaningful substitute.