Economic governance in failed states : a study of the money men in Afghanistan

Abstract

Can transitive state-building and post-conflict reconstruction models ever exist in a vacuum, or must they always be crafted to specific circumstances? Much of the current discourse and practice around state-building and war economies seeks to understand how change can be achieved through an analytic lens that poses dichotomies of formal versus informal institutions, public versus private authority, and legal versus illegal or morally unacceptable activity. Through an examination of the 'money men', or hawala networks, in Afghanistan, this thesis reflects on the political, social, and economic mechanisms of institutional change that tend to be excluded from such thinking on post-conflict states. It argues that the above dichotomies not only begin to dissolve when considering the predicament of local money dealers, but that more important dynamics emerge around the legitimacy of change and the challenge of how to reconcile broad models with specific and unique contexts. For all the media and policy attention given to the 'money men' of Afghanistan in the wake of 9111, little remains known about the institutions that support these groups, how they have survived and adapted throughout the centuries, and why they continue to persist into the present day despite state collapse and subsequent efforts to regulate, disrupt, or replace them with formal structures. Using a dynamic bottom-up approach, this study combines archival and qualitative research methods to unravel the money dealer's unique predicament in Afghanistan. As prospects for security and development worsen in major parts of Afghanistan, and opium trafficking - supported by informal financial mechanisms - is consistently identified as one of the major obstacles to a durable peace, it seems timely to improve on current examinations of how powerful socio-economic networks like those of the money men persist and function under strain. There are clear implications for aid and regulation in the context of post-conflict reconstruction; hence the study addressees these two areas throughout, framing the analysis with a critique of the 'liberal peace' paradigm. In providing a bottom-up perspective, this thesis draws extensively on interviews conducted in and around the money bazaars of Afghanistan and NWFP in Pakistan where it was necessary to employ the use of sociological, anthropological, psychological, and political science concepts to enhance the excessively macro-level, state-focused debate that dominates thinking on economic governance systems in 'failed states' within the field of politics and international relations. The melding of both new and existing concepts across disciplines permits a fresh and more rigorous examination of what form economic governance can take when chaos supposedly reigns. Boundaries between peace and war, the legal and illegal, cultural and rational economic, criminal and benign, and the pressures of survival and profit, are found to meet and blur in ways that inspire both a revision of the widespread criminalisation accounts of 'informal economies' and closer focus on the burgeoning question of 'legitimacy contests' in transition. Overall, in response to the challenge facing 'state-builders' of how to reconcile broad models with unique contexts, the thesis examines what key mechanisms of political, social and economic change are revealed when the typical IR view of state-building is adjusted to consider the institutions that not only support society during periods of instability, but also have the potential to be harnessed for greater international stability.