The U.S. Treasury Department asserted earlier this month that informal financial transactions through networks known as hawala are helping Iran evade international sanctions. In an email interview, Roger Ballard, a consultant anthropologist and director of the University of Manchester’s Center for Applied South Asian Studies who has written extensively on hawala, explained the long history of these networks and how they currently operate.
WPR: What purposes are the hawala networks in Iran used for, and what volume of transactions passes through them?
Roger Ballard: For well more than a thousand years, traders operating throughout the Indian Ocean region have routinely used hawala networks as a means of settling their debts with one another. Such networks were also used to facilitate trade between Western Europe and the Islamic world in the aftermath of the Crusades, with the result that letters of credit are still known as “awal” in Italian. The same systems are used to this day to implement value transfers swiftly and reliably across jurisdictional boundaries, whether on behalf of international traders or migrant workers. Best estimates suggest that value flow through such networks currently amounts to several hundred billion dollars per year.