Moving Money in Times of Crisis: Informal Financial Networks in Syria’s Conflict Economy

• In Event: 2124 - Economic Sociology: Maintaining Markets

Abstract

How do market actors sustain economic exchange under conditions of war, when social ties become disrupted, legal orders become unsettled, and the value of money fluctuates wildly? This paper takes the case of hawala, an unregulated system of cross-border money transfers, which has survived and flourished in the face of the protracted civil war in Syria. Developed centuries ago to sustain long-distance trade, hawala is a financial system based on networks of brokers who send and receive cash on behalf of their customers, which include refugees, humanitarian organizations, businessmen, and smugglers. While formal financial institutions have mostly broken down during the conflict, hawala has endured and even expanded, rendering it the primary channel for moving money into, out of, and around Syria. Drawing on nine months of ongoing fieldwork in Lebanon and Turkey, including sixty-two interviews, I identify and investigate three mechanisms that have facilitated the preservation and expansion of this economic institution: brokerage, pricing, and standardization. First, by analyzing how hawala agents link disconnected sites and disparate exchange partners, I show how brokerage work mitigates dislocation and uncertainty. Second, I discuss pricing practices around the value of money, and explain how brokers navigate fluctuating and highly localized black market exchange rates in conducting their transactions. Third, I examine how agents’ standardization of their trade practices allows them to navigate different legal and political jurisdictions, including the shifting boundaries of legality that result from the war itself. The mechanisms discussed in the paper shed light on how wartime economic institutions may remain surprisingly robust in the face of profound conflict, violence, and dislocation.

Author

• Gozde Guran, Princeton University