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Alongside global political economy — a rhizome of informal finance

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Abstract

One contemporary issue confronting global finance is the nature and extent of its participation in and contribution to a global war on terror. To date, efforts have involved a variety of methods, including both an increase in the surveillance of financial transactions and the regulation of previously unregulated methods of financial exchange. This paper offers a conceptualisation of one informal value transfer method (known by its Arabic name — hawala) in the form of a rhizome, using the concept as developed by Deleuze and Guattari in A Thousand Plateaus. This paper argues that the ability of hawala to regenerate itself along multiple paths situates the procedure as a rhizome, and that standard methods for financial regulation fail to appreciate the crucial difference this regenerative ability makes for attempts at control and regulation. Consequently, the activity that the state is seeking to control will merely be displaced, to reform and regenerate itself yet again. To ground this argument in the present condition of the global political economy, the specific example considered is Al Barakaat, a transnational Somali firm that fell victim to the global war on terror in late 2001.

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Notes

  1. For an analysis of this public discourse, see de Goede (2003). She in turn refers to Nikos Passas (1999: 9–12) concerning the inappropriate usage of the term. In a desire to communicate with an audience that is not composed of global finance specialists and financial criminologists, the generic usage of ‘hawala’ is continued. At the same time, those readers that are specialists may consider that this action is performed ‘under erasure’.

  2. With regard to discursive power see Lukes (2005, 2007); Gaventa (2007).

  3. See de Goede (2003) for a detailed deconstruction of this discourse portraying hawala as implicitly illegal and the source of terrorist financing.

  4. Ballard also remarks on the simplified nature of conventional descriptions of hawala. ‘Although useful as a basic introduction, if left undeveloped they do more to obscure than to illuminate the extremely complex series of transactions which underpin the contemporary system of globally-oriented hawala’ (Ballard 2003a: 9). See in particular the section ‘A worked example’ in Ballard (2005: 333–4).

  5. The use of more conventional inter-state trade to accomplish money laundering (with intentions of avoiding capital controls and taxation) also has been studied (de Boyrie et al. 2005a, 2005b; deKieffer 2008).

  6. For one story of the use of hawala/hundi to fund militants and undermine democratic governance in India, see Kapoor (1996). In this case we should not assume that the hawaladars involved in these transactions were not co-conspirators, or at least sympathetic to the political cause of the militants.

  7. This argument is similar to the American anti-drug advertisements produced after 2001 warning people that by buying illegal drugs they were helping to finance terrorism.

  8. See variously Pearce and Seymour (2005); UK Remittance Working Group (2005); DFID (2005); Sander (2003) and the website at http://www.sendmoneyhome.org.

  9. The situation is not unique to either the UAE or the Forty Recommendations of the FATF on money laundering and terrorist financing; see Walter (2008) for an analysis of compliance by Asian states with international standards for banking and securities since the 1997 Asian Crisis.

  10. Among the exceptions to the conventional approach are Nordstrom (2004, 2007); Masciandaro (2004a), Jerez (2003), Naylor (2002) and Strange (1996).

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Acknowledgements

Previous versions of this paper were presented at the International Studies Association Conference (Chicago, 2007) and Political Studies Association (UK) Annual Conference (University of Reading, 2006). It has benefited from related research conducted for the CHALLENGE project (The Changing Landscape of European Liberty and Security) with the financial support of the Sixth Framework Programme of the European Commission's DG for Research, see www.libertysecurity.org. I appreciate the comments and suggestions made by my fellow panel members — David Bailey, Earl Gammon, Seán Molloy and Julian Reid — along with Andreas Antoniades, Roger Ballard, Antoine Bousquet, and the journal's editors and anonymous reviewers. Naturally, all errors and misconceptions found in this paper remain my responsibility.

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    William Vlcek

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Vlcek, W. Alongside global political economy — a rhizome of informal finance. J Int Relat Dev 13, 429–451 (2010). https://doi.org/10.1057/jird.2010.17

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