>The system was in place long before Western banking. The ancient Chinese >used a similar method called "flying money," or fei-ch'ien. Arab traders >used it as means of avoiding robbery in the days of the Silk Road. > >In both cases, a merchant who delivered goods received a certificate that >could be exchanged for money once he returned home. Both finance capitalists, trying to control terrorism, and marxists, need seriously to study the "hawala" informal but robust credit system that predates capitalism, and now coexists alongside capitalism. [Note BTW the racist implication that this system is any more secret that the secretive western capitalist banking system. Do you know the codes formulas for your credit worthiness? They are secret. ] Marxists who still hold it need to abandon a rigid sequential concept of historical materialism. While still embracing a probabilistic concept of largely dominant historical modes of production, marxist need to recognise that Marx's penetrating critique of capitalist political economy was based on his abstraction of its fundamental processes arising from commodity exchange. In real life numerous other ways of producing services or tangible products of labour based on wider social interactions coexist with capitalist commodity exchange, even while capitalist intensive commodity production eats into the heart of the social fabric. The article below shows that there is an economic basis as well as a social basis, in which Al Quaida groups swim like fish in water. Until the muslim workers on the edge of the capitalist heartlands are fully integrated into the global economy, they are likely to intensify their reliance on precapitalist forms of collective and cooperative support. Marxists should also be able to discern what is postive and progressive in this despite the literally reactionary nature of the such reliance. It reply implies that especially those people on the margin of the capitalist world economy need reliable supportive cooperative banking systems. Until the people of the world abolish the private nature of global finance capital, and insist financial circulations serve the people, not exploit them, the economic basis of anti-capitalist conspiracy will remain. This is rather a fundamental class of economic systems. BTW someone did a serious bit of internet research recently on islamic banking systems but I mislaid it in the flood of issues. Could someone give the reference for the post please? Chris Burford London The International Herald Tribune | www.iht.com Secretive Money-Moving System Scrutinized for bin Laden Funds Douglas Frantz New York Times Service Wednesday, October 3, 2001 QUETTA, Pakistan With nothing more than a telephone and a fax machine, Tarir Khan transfers money almost anywhere in the world - no questions asked, no names used and no trail for law enforcement to follow. Mr. Khan is a small cog in a far-reaching network of informal banking known as hawala, the Arabic word for trust. Though it is illegal in most countries, including here in Pakistan, authorities estimate billions of dollars flow unseen by regulators through the hawala system worldwide. As investigators scour the records of mainstream banks and brokerage houses around the globe trying to uncover the money trail behind Osama bin Laden's Qaida terrorist alliance, the ancient money-moving system is under new scrutiny. "This system is made for transferring enough money to get a pilot's license or make a deposit on an apartment without raising an eyebrow," Nikos Passas, an expert on transnational crime at Temple University and a consultant to government agencies, said by telephone in an interview. A senior government official in Pakistan said law enforcement authorities are certain Mr. bin Laden's network used hawala to transfer money to agents outside Afghanistan along with conventional means. But the nature of hawala will make tracking those particular exchanges almost impossible. A United States Treasury Department study identified hawala as the principle means of money laundering from drug trafficking and other crimes in Pakistan. The report said Pakistan, India and the Gulf state of Dubai formed the "hawala triangle" to move money secretly worldwide. In hawala, sums large and small are sent halfway around the world on a handshake and a code word. Records of transactions are kept only until the deal is completed, then they are destroyed, said hawala traders in Quetta.The operation is deceptively simple, especially because no cash moves across a border or through an electronic transfer system, the places where authorities are most likely to spot the transaction or maintain a record of it. Anyone can walk into a hawala shop in Quetta or a thousand other cities in South Asia, put down a stack of cash and ask that the sum be transferred to a recipient in another country. The sender does not have to provide his name or identify the recipient. Instead, he is given a code word, which the sender passes on to the recipient. The code word is all the recipient needs to pick up the same amount of cash on the other end from an associate of the original trader. The transaction can occur in the time it takes to make a couple of phone calls or send a fax. The system was in place long before Western banking. The ancient Chinese used a similar method called "flying money," or fei-ch'ien. Arab traders used it as means of avoiding robbery in the days of the Silk Road. In both cases, a merchant who delivered goods received a certificate that could be exchanged for money once he returned home. Millions of Pakistanis, Indians, Filipinos and other people from South Asia working in foreign countries use the system as a convenient and inexpensive means of sending money home to relatives. "They don't feel comfortable walking into a bank," Shaukat Aziz, Pakistan's finance minister, said in an interview. Mr. Aziz, a former executive vice president of Citibank in New York, said $2 billion to $5 billion moves through the hawala system annually in Pakistan, more than the amount of foreign transfers through the country's banking system. Pakistan is trying to draft laws to regulate the industry, but for now it thrives illegally in places like Quetta's Kandahari bazaar, a bustling business district where the main street is lined with dozens of money exchanges and hawala merchants. The majority of them are Afghans. Mr. Khan works out of a spare office on the third floor of a dilapidated walk-up building in the Kandahari bazaar. Behind his unmarked door is a single room containing two plain desks, a telephone, a fax machine and a broken computer. "It's very dangerous to talk about this because it is illegal," Mr. Khan, who arrived in Quetta from Afghanistan many years ago, said in an interview Tuesday afternoon as a colleague shook his head and told him to keep quiet. "I can't tell you much." Trust, he said, is the essential quality of a hawala trader. Most his customers are from the same part of Afghanistan, so there is an innate sense of trust. He said transfers are usually sent among family members and involve a few hundred dollars. Sometimes transactions are for as little as $50. He provides a five-digit code word - a letter and four numbers - which the recipient takes to one of Mr. Khan's associates as far away as the United States, Germany or Russia. The same associates accept money for transfer to relatives in Quetta. "They tell the code word and we hand over the money," he said. "Then we tear up the records on both ends." Most hawala merchants charge a small commission, usually $5 for transfers up to $500 and $10 for up to $1,000. Their main profit comes from currency fluctuations and extra fees for moving money for big clients. The system is used for far larger sums, often by drug traffickers, corrupt politicians and black market traders, according to local experts and law enforcement officials.
