Academic journal article International Social Science Review

The Hawallah Network: Culture and Economic Development in Afghanistan

Academic journal article International Social Science Review

The Hawallah Network: Culture and Economic Development in Afghanistan

Article excerpt


Although Afghanistan played a central role in the development of many ancient civilizations, in recent years it has become marginalized in world affairs because of the Afghan government's inability, or, perhaps, lack of desire to participate in the global economy. Since globalization poses many threats to Afghanistan's traditional society, its people and culture have remained resistant to change, a condition often referred to as "counter-globalization." This condition, however, should not be employed to explain Afghanistan's response to globalization. Indeed, some theorists have been critical of how culture has been misinterpreted in the context of globalization. John Tomlinson, for example, argues that the label of "counter-global" is unfair because it groups together those who act against change with those who avoid it. Furthermore, this label is based on an analysis of indigenous Third World cultures by critics who often hail from cultural backgrounds quite divergent from those that they critique. (1)

An unfortunate outcome of the use of the term "counter-global" is that it has become synonymous with "anti-global." In some cases it may be appropriate to apply such a term, but an examination of Afghan cultural and economic institutions and practices reveals that Afghans have been operating outside rather than against globalization. This is best illustrated by studying the use of the ancient system of Hawallah (translated to English as "bill of exchange" or "promissory note") which combines cultural and economic activities in Afghanistan. An understanding of the ideological underpinnings and operation of the Hawallah system in Afghanistan is crucial in determining the chances for success of current and long-term economic development programs in that country. This can help identify necessary changes in foreign policies of nations seeking to implement a developmental model in Afghanistan, especially in dealing with the closed nature of that system. Here it is important for developmental theorists rooted in Wilsonianism who believe that "what works for America will work for others" (2) to recognize that this has seldom been true in the Third World where the United States has tried to implement the "American model" to foster economic development. Furthermore, an examination of the collision between ancient and modern cultural systems will identity changes in the financial activities of Afghans that might be required to allow them to participate in the global economy. In short, this study will investigate the dangers that Hawallah networks pose for American efforts to reconstruct Afghanistan. In so doing, it will examine whether it is feasible, or even possible, to replace this culturally entrenched system with a modern economic system.

Origin of Hawallah and the Role of Islam

The Hawallah system consists of an underground banking network based on ancient methods of paperless transactions. Its roots can be traced back to a financial practice known as Fei Quan, or "flying money," used by the Chinese along the Old Silk Route in Asia. (3) This paperless monetary system developed in response to criminal activity against Silk Route traders. Rather than carry items of fiscal value along the route, a system of vouchers emerged. Paper tickets indicating the value or quantity of these vouchers were based on the amount of money traders deposited into the system at the starting point so that they could complete financial transactions at their final destinations. (4) This is quite similar to presenting a money order or bank draft, where the paper item has a prepaid amount indicated as payment of goods or services to be received at a later date.

Arab traders embraced the concept and practice of Fei Quan quite readily. They too had been plagued by crime along trade routes. But one major difference emerged within the Arab system; Hawallah, in its modern form, emerged during the Age of Islam and is thus influenced by Islamic principles. …

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