Politics of Survival

Written by Taha Kehar  •  June 2013 PDF Print E-mail

A strong cooperation between the international community and local socio-economic networks is required to ensure post-conflict reconstruction in Afghanistan. However, local variants of financial institutions in the region have come to be viewed with suspicion. Hawala - an ancient financial system operating in the Muslim world - has been wrongly condemned for funding terrorist outfits across the world. Despite growing concerns about its questionable political agenda, hawala may provide a suitable remedy for the war-torn country to climb out of its predicament and give it a new lease of life.

Edwina Thompson provides a detailed scrutiny on the extent to which the indigenous financial institutions can facilitate reconstruction, development and global economic governance. Trust is the Coin of the Realm aims to question and re-define the legitimacy of external mechanisms to enforce political change through unique state-building models. Based on primary research conducted in Afghanistan, the study demonstrates that any form of development in Afghanistan can only occur if the international community engages with socio-economic networks operating within the region. The politics of survival and change is vested in obtaining trust.

Although the book adopts a largely theoretical focus, discussions on the role of policy add a pragmatic touch to what would otherwise become a purely academic discourse. The author has painstakingly outlined the objective of her fieldwork, the scope of her methodology and the challenges involved in conducting research in Afghanistan. A careful explanation of these details highlights the inter-disciplinary context of the work and allows the reader to assess the strengths and weaknesses of the analysis. However, it is important to note that Trust is the Coin of the Realm is based on a series of underlying academic preferences and biases. Thompson’s starting point is the concept of the international system of states. While the decision to use this theoretical framework appears convincing, it is difficult to ignore the influence it has on the course of the study. The approach is skewed towards analyzing hawala within the sphere of international relations. As a result, the book is neither a comprehensive nor conclusive guide on the workings of one of the world’s oldest financial system.

Conventional wisdom on hawala presents an inaccurate view of its scope and functions. By providing a historical context of its institutional legacy, the author skillfully deviates from these myths and explores the reality of the system. The role of hawala in encouraging humanitarian efforts across the world has been used as an example to negate the misperceptions held about such institutions. This serves to show that Western biases about hawala need to be revisited and revised.

By turning her focus specifically on the operation of hawala in Afghanistan, Thompson has highlighted the social, economic and political issues that have affected its scope and influence. The role of the localized notion of ‘bazaar’ and ‘family firm’ has been emphasized as an important means of granting legitimacy to the institutions. Through such sensitive portrayals of hawala as a culturally determined system, a fresh and enlightening perspective on the ancient financial system has been achieved. The author has used this motif to highlight the flexible nature of the local financial institutions in the exercise of state-building. It propagates the idea that the ‘informal economy’ can bring Afghanistan out of its quagmire. While this notion appears to be somewhat controversial, it provides a far more effective solution to the introduction of largely unpopular formal regulatory measures.

A collaboration between the hawaladars and the formal structure of the global political economy can strengthen economic governance and encourage reconstruction. Thompson shows the accuracy of this position through a range of astute observations and interviews with ‘local money-men’ who act as agents to ensure development in the war economy. These observations provide a convincing argument for the overall integration of the informal socio-economic network within formal peace-building strategies. This is an innovative approach as it breaks away from mainstream literature on international relations and adopts a politically sensitive perspective on the issue.

Policymakers have realized that strategies provided by international agencies are gradually falling out of favor. In order to rectify the financial status of a war economy, regulators, aid practitioners and stabilization advisers must account for indigenous factors. Hawaladars have enjoyed a limited range of opportunities to bringing their businesses within the legitimate sphere of the formal economy. This is a major setback because hawala has served as the bastion of the humanitarian cause. The book puts the traditional financial system within the context of the overall reform program conducted by international agencies. It examines the subtle dimensions of the overall legitimacy of hawala and shows how the system operates to positively impact stabilization efforts in Afghanistan through a complex array of bargaining strategies.

Edwina Thompson has provided an integrated model that encourages international agencies to engage with local institutions in the war economies. The approach builds on the essence of trust that arises out of the integration of the political economy with the local sphere of finance. Trust is the key ingredient, which can guarantee economic recovery against the backdrop of counter-insurgency. It can be obtained through a culturally sensitive understanding of the prevailing system of finance. Hawala is a ‘complex site of governance and institutional local power’ and involves strategies that are based on religious, ethnic, cultural and economic factors. A realistic approach that accounts for socio-economic elements, the study offers various insights into the flexible nature of economic governance. It highlights the risks involved in failing to account for these factors in the overall state-building processes. Economic recovery is essentially a question of survival. There is an urgent need to break away from mainstream discourses on the subject. International organizations must explore the scope and potential of hawala to effectively implement post-conflict reconstruction, global economic governance and financial security in Afghanistan. 

Title: Trust is the Coin of

the Realm - Lessons

from the Money

Men in Afghanistan

Author: Edwina Thompson

Publisher: Oxford University Press (2011)

Pages: 354, Paperback

ISBN: 978-0199062980

Taha Kehar is a blogger on social issues and has previously worked for a media magazine. He is currently pursuing Law Studies at the School of Oriental and African Studies.

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