Pardee-CFLP-Remittances-TF-Report

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important role in country-wide tea and cotton trade; hundi of South Asia (includingIndia, Sri Lanka, Pakistan, Bangladesh, Iran, and Afghanistan); padala of thePhilippines, phei kwan of Thailand, and even the bills of exchange 1 of medievalEurope, which were used for transmitting money (El Qorchi, Maimbo, and Wilson2003; Hariharan 2012). Hawala translates as “transfer” in Arabic, and hundimeans “trust” in Hindi. The terms have been applied to both instruments of transferand credit (a promissory note or bill of payment) as well as to the complexsystem of credit relations within which they operate.In early mercantile networks, one of the main functions of hawala may havebeen facilitating trade rather than transfer of remittances. Martin (2009) arguesthat the historical trade dimension of hawala has often been underestimated,making it easy to overlook itspotentially complex connectionsto the movementof goods and capital. Somehistorical records indicatethat hundi or promissorynotes were developed in IndiaConflict-induced remittance systems haveoften proven to be highly entrepreneurialin character, encouraging local adaptationsthat create linkages between financialinstitutions of different levels and degrees offormality.earlier than paper money, were issued by brokers for the purpose of debt collection,and used among traders for financing internal trade (El Qorchi, Maimbo,and Wilson 2003, 19). Playing an important role in medieval Indian merchants’networks, hawala transactions have fostered administrative and military expansionof different regimes by creating reliable routes for monetary and trade flows(Martin 2009). The ability of hawala to successfully operate in the environmentsof incomplete or incompatible legal and fiscal systems has contributed to its independenceof formal regulatory frameworks.This self-sufficiency has been grounded in the mechanisms of effective selfregulationentailed in hawala arrangements; hawala is deeply embedded incultural and religious traditions and also has certain systemic characteristics. Oneof the elements responsible for hawala’s resilience is its composition as a chainof loosely connected transactions. Instead of a reciprocal set of exchanges, it canbe seen as a network of “relational contracts” among a multitude of participants.Schramm and Taube (2003) differentiate two distinct operating layers in thehawala contract: “core transactions” between the hawaladar and “peripheraltransactions” between hawaladar and their clients. They argue that the core1 A bill of exchange was “an obligation in the form of a payment order addressed to the person responsible forhonoring the payment” (El Qorchi, Maimbo, and Wilson 2003).Remittance Flows to Post-Conflict States: Perspectives on Human Security and Development 23
networks can be seen as “homogenous clubs” that enable their members effectivesafeguarding of their contractual agreements and lower transaction costs—asvoluntary groups “gaining mutual benefits from sharing” production costs andbenefits (Schramm and Taube 2003, 411). The authors liken the hawala networkto other informal financial institutions like rotating savings and credit associationsthat similarly arise in the contexts of insufficient formal financial institutions andenable people transactional security through reference to social and cultural safeguards.One of the main elements securing an orderly functioning of the networkis its reliance on social prestige and reputation. Cooperative behavior enhancesone’s reputation and increases the trust between the transactors, enabling themfurther benefits through continued participation in the network. Islamic religiousand ideological values are also of relevance in ensuring the widespread socialacceptance of certain norms of reciprocity that are instrumental to the functioningof the hawala transactional system (Schramm and Taube 2003). The unified ethicaland legal framework provided by Islamic religious traditions and Islamic law(Shari’a) helped facilitate dispute negotiation and regulate uncertainties involvedin complex business transactions between fragmented political alliances of thepre-modern Near and Middle East (Razavy 2005, 281).The importance of cultural values and templates is evident not only in thefunctioning of past hawala arrangements but also in present-day transnationaldiaspora networks. Monsutti (2004) describes how culturally recognized mechanismsof solidarity and competition have been instrumental in forging a durabletransnational community among the Hazaras (the third largest ethnic group ofAfghanistan) through remittance transfers. Cooperation among the Hazaras isshaped by the norms of domestic solidarity and hierarchical competition that areembedded in local patrilateral kinship structures. These patterns of alliance-buildingand fragmentation have become pivotal in structuring social interaction in theabsence of effective state administration (Monsutti 2004). The cultural templatesof forging fictive kinship relations are of a particular importance in facilitating thetransnational networks of Afghani refugees in Pakistan, Iran, and beyond throughtransfers of money and merchandise. Hawala therefore contributes to buildingboth material wealth and social ties among the transnational Afghani community,providing Afghani refugees with means to cope with dispersion and insecurity(Monsutti 2004, 239). The relevance of Hazara patterns of cooperation in forgingnew global alliances underlines the importance of cultural practices and valuesof the migrants in the transnational circulation of material and social remittances24 A <strong>Pardee</strong> Center Task Force <strong>Report</strong> | October 2013
Page 1 and 2: Pardee Center TASK FORCE Report oct
Page 3 and 4: This series of papers, Pardee Cente
Page 5 and 6: AcknowledgementsThis Task Force on
Page 7 and 8: ITU International Telecommunication
Page 9 and 10: networks and migrant associations i
Page 11 and 12: to developing countries than other
Page 13 and 14: But most importantly, remittances a
Page 15 and 16: often mix in the countries of desti
Page 17 and 18: According to the World Bank estimat
Page 19 and 20: Because of its focus on the multidi
Page 21 and 22: eceiving remittances provides an en
Page 23 and 24: associations for post-conflict inst
Page 25 and 26: are proposed to avoid the associate
Page 27 and 28: Terry, D. 2005. Remittances as a De
Page 29: oader approach to post-conflict rem
Page 33 and 34: That personalized nature of hawala
Page 35 and 36: Customary law (xeer) and other trad
Page 37 and 38: the world (Lindley 2009, 531). Much
Page 40 and 41: ize the informal equal efforts to a
Page 42 and 43: struction and development. Means sh
Page 44 and 45: opportunities should focus on exist
Page 46 and 47: 2. Dodd-Frank Act and Remittances t
Page 48 and 49: leadership. Formal payments systems
Page 50 and 51: and financial institutions. 26 Reso
Page 52 and 53: closures should be both in English
Page 54 and 55: issued a new proposed regulation De
Page 56 and 57: “closed network,” in which all
Page 58 and 59: Some guidance may be found in the p
Page 60 and 61: the use of mobile devices for money
Page 62 and 63: Foreign TaxesUnder the 2012 regulat
Page 64 and 65: will be available in all cases. CFP
Page 66 and 67: Section II: Remittances in Post-Con
Page 68 and 69: Sri Lanka. The conflict also result
Page 70 and 71: Figure 2: Current Account, Trade Ba
Page 72 and 73: flows came from migrant workers in
Page 74 and 75: Informal Remittance Channels in Sri
Page 76 and 77: tory authorities, with some calls f
Page 78 and 79: 4. The Role of Remittances in Post-
Page 80 and 81:
Figure 1: Liberia Per Capita Income
Page 82 and 83:
associations, women’s groups, alu
Page 84 and 85:
Remittances to LiberiaValue of Remi
Page 86 and 87:
credit because of the need to be li
Page 88 and 89:
Remittance Transfers in Sierra Leon
Page 90 and 91:
Knowledge RemittanceThe Liberian di
Page 92 and 93:
process furthermore was a pioneerin
Page 94 and 95:
Levitt, Peggy and Deepak Lamba-Niev
Page 96 and 97:
Section III: Diaspora Networks andC
Page 98 and 99:
Post-Conflict Development,” this
Page 100 and 101:
One of the main challenges for mobi
Page 102 and 103:
6. Transnational Remittances and De
Page 104 and 105:
The Salvadoran Diaspora is very sig
Page 106 and 107:
annually during the 1990s to less t
Page 108 and 109:
Figure 2: Transnational Vicious Cyc
Page 110 and 111:
The transnational vicious cycle not
Page 112 and 113:
emittance flows is mixed, as initia
Page 114 and 115:
individuals, communities, and famil
Page 116 and 117:
areas. This issue can potentially b
Page 118 and 119:
This is a breakthrough moment: afte
Page 120 and 121:
Edwards, Sebastian and I. Igal Mage
Page 122 and 123:
y La Distribucion Del Ingreso, 1st
Page 124 and 125:
7. Remittances and Community Resili
Page 126 and 127:
For quantitative data collection, a
Page 128 and 129:
Remittances are perceived as playin
Page 130 and 131:
the affected population. Internatio
Page 132 and 133:
ReferencesAddleton, J. 1984. The im
Page 134 and 135:
8. Filling the Gap in Health Staffi
Page 136 and 137:
The alternative is for donors to se
Page 138 and 139:
cians in the U.S. in 2000 (Clemens
Page 141 and 142:
1. Remittances, Financial Inclusion
Page 143 and 144:
networks, and communities. The role
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• In the present era of heightene
Page 147 and 148:
the island of Kosrae, in the Federa
Page 149 and 150:
and Sweden and has held visiting pr
Page 151 and 152:
he organized a number of workshops
Page 153 and 154:
Pardee Center Conference ReportsDev
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