To answer the original question, under Hawala, a person living in country A gives local currency to Hawala dealer. The dealer, through an affiliate or a subsidiary dealer in country B, delivers the funds to the beneficiary in country B in that country's currency. The entire transaction is requested, processed, and executed verbally. There is virtually no paper trail except, of course, the dealer in country A must somehow communicate with the dealer in country B, i.e., via email, fax, or phone. The transfer is almost as fast as a wire transfer through a commercial bank if not faster. The exchange rate used to deliver funds is several units of currency (of destination country) lower than the open foreign exchange market of the destination country but higher than the official bank rate, or what is called 'interbank' rate. Commercial banks charge a fixed fee for wire transfers regardless of the amount being wired whereas Hawala charges per unit of currency transmitted. Therefore, from purely financial utility point of view, Hawala may be cheaper for the sender than a wire through a commercial bank as long as the amount in question is a few hundred dollars. Beyond that equilibrium amount, Hawala will lose its immediate financial benefit. For example, assume that you wanted to send US$400 to your family in Pakistan from the United States and that the open market exchange rate in Pakistan is Rupess 60 per US dollar and the interbank rate is Rupees 55 per US dollar. You will give that amount to a Hawala dealer in the U.S. The dealer will inform you that the exchange rate will be, say, Rupees 57. The Pakistani affiliate of that dealer will deliver Pakistan Rupees 22,800 to your family. Remember, the US dollars you gave to the dealer did not leave the U.S; There was no exchange of funds between a US bank and a Pakistani bank; and the dealer did not file any regulatory report with the IRS. Also, the pure financial utility of Hawala will diminish if the open market exchange rate and the interbank rate in the destination country are so close together that there is no room for a profit margin for the dealer. Such is the case in most Western European countries, Malaysia, UAE, Saudi Arabia, and many other countries with strong economies. Most countries' tax code requires financial institutions to report money transfers of above a ceiling amount per customer per day to that country's revenue department. In the U.S., financial institutions are required by the Internal Revenue Code to report to the Treasury Department when a customer transmits $10,000 or more to a foreign country on a single day. The analysis of Hawala presented by the prior post seems accurate. There are a couple of issues that should be borne in mind. Now let us examine these issues. 1) Muslims are required (by Quran and Hadith) to write the transactions amongst themselves and have the transactions witnessed. Granted that writing of transactions is not a Fardh like prayer or fasting or the like. However, the Hawala system, as it exists today, does violate that requirement. 2) We know that the funds transmitted through Hawala do not circulate through the foreign exchange market of the country they are sent to. We also know that the system is practiced by expatriates of mostly developing Muslim countries. Although the individual end of sending the funds for the family is served adequately, the collective end of benefiting from the additional foreign exchange is ignored in the Hawala system. In the end, the family receiving the funds needs local currency and will get local currency either way. In Hawala system the local foreign exchange market will be deprived of its precious product, foreign exchange. Could that be 'unpatriotic'? 3) Foreign exchange dealerships are state licensed and, to a limited extent, federally regulated. Hawala dealers are not licensed or registered with any regulatory authority. Therefore, if someone does request them to transfer funds in excess of the per day ceiling established by the regulation, they do not report it. Hawala was a usual mode of money transmission up until early twentieth century. With the advent of International Monetary Fund in mid-twentieth century, most countries of the World had enacted legislation to regulate foreign exchange transactions. Of course, there are still countries that have no regulation of foreign exchange, but most countries have some degree of regulation. Usually, the poorer the country, the higher the regulation of foreign exchange. With the exception of a handful of Muslim countries, all have strong regulation of foreign exchange. Having examined that, I personally do not share the 'concerns' of the media. I do see, however, that the Hawala system has the potential for abuse given its nature. Allah knows best.You can read more about hawala in the following publications: The hawala alternative remittance system and its role in money laundering from Interpol and Hawala from the International Monetary Fund (IMF). A briefer overview is provided by Wikipedia. As Kamal indicated in his response to me, the hawala system as it is practiced today is not really in line with the rules of Islamic finance. Specifically, Islamic financial law requires transactions to be witnessed and recorded in writing. The lack of a paper trail is precisely what makes hawala problematic. The point is, it is problematic under Islamic law as much as under any other law system. Hawala is not an "Islamic" banking system. It is a banking system that is used by Muslims. There is a difference. If hawala transactions were performed according to Islamic law, they would be witnessed and recorded in writing. Such a system would be much more difficult to use for money laundering. From the various accounts that I have read, the idea behind the hawala system was developed many centuries ago in India and continues to flourish in that country, where it is known as "hundi". The basic mechanism of money transfer through hawala is a lawful transaction under Islamic law, based on the idea of transferring debt (read this for a look at what a real Islamic hawala system would be like). In the last century or so, the hawala system has been supplanted by modern banking systems established by Western countries. Because these systems are the formal and official ones, the hawala system has gone underground. It is the underground or unofficial status of the hawala system that makes it vulnerable to use by money launderers. The same would be true of any other undeground or unofficial banking system. People will continue to use hawala as long as it is convenient to them. The best answer seems to be to regulate it. It's not clear what Ashcroft's plans to "clamp down on Arab hawala transactions" amount to. I assume that "Arab hawala transactions" is the reporter's way of saying "transactions in the Arab hawala system" and it doesn't mean "all hawala transactions by Arabs".
Posted at 09:29 PM in Fiqh | Permalink | TrackBack (1)
Turning now to those two circumstances where a son and daughter, or a full brother and sister, are inheriting jointly, is the rationale for that Quranic injunction fixing a two to one ratio for such distribution based on gender? In other words, is the 'illah, the effective cause behind the injunction, gender?... ...If gender, as such, is the correctly identified 'illah in those cases, it must have a causal relationship with the injunction (the two to one ratio), and it must cause the same result (i.e., the same ratio) in every like circumstance. The result then should be the same in all cases where males and females of the same class are inheriting together from the decedent's estate, with the resulting injunction being a two to one distribution in all cases. As shown above, this two to one ratio is only apparent in the fixed allocations of two out of the four basic classes of relatives - sons and daughters and full brothers and sisters taking in their absence. Gender as such, is therefore considered to be an invalid 'illah and the claim that the sex-based inferiority of the female is the underlying rationale for the differences in the distribution cannot stand. To continue to believe so would violate the concept of ta'lil [finding the 'illah], one of the most fundamental pillars of Islamic legal theory.In this way, Chaudhry disposes of the idea that women in these cases inherit less because women are considered inferior. If women inherit less because women are inferior, women would always inherit less. They don't. Chaudhry then examines the obligation of male heirs to support female heirs and proposes this as the 'illah. As she shows, in all cases where the male heir has an obligation to support the female heir, the male heir receives a double share. In cases where the male heir does not have an obligation to support the female heir, the male heir does not receive a double share. The point of all of this is, Chaudhry is not just making these claims to defend Islam based on her wishes or desires nor is she making up some innovated or unsupported argument. Instead, she is using the methodology of Islamic jurisprudence itself to prove her case. People might be able to ignore the two articles I linked earlier in this entry as fanciful and say "oh, sure, liberal Western Muslims say that but traditional Muslims never heard of it". They can't brush off Chaudhry's article so easily. As a footnote to this, until 1971 the state of Idaho had a law regarding intestate succession that stated that in the case of competing petitions from otherwise qualified individuals of the same priority relationship, 'males must be preferred to females'. This law was overturned by the Supreme Court in Reed v. Reed, 404 U.S. 71 (1971). If even the "enlightened West" still had these laws as recently as 32 years ago, maybe we ought to cut developing Muslim countries a bit more slack, hmm?
The right to freedom of speech is guaranteed in the First Amendment to the Constitution. Yet there are certain types of speech that are against the law. These are when the speech is slanderous or libelous, making false and damaging statements about another person. In short, our freedom of speech is not absolute, but rather there is a certain line, set by the law, beyond which the speech is deemed so injurious to others that it should not be allowed. Legal systems are always seeking such a balance, and Islamic law is no different. In particular, Islamic law distinguishes between a sin and a crime. A sin is a disobedience of God, and is punishable by Him. A crime is something that is punished by the state. A study of the sources of Islamic law will quickly show that although many things are mentioned as sins, only certain types of sins are designated as also being crimes, which the state is given the authority to punish. And the acts that are designated as crimes are those which harm others. For instance theft, slander, assault, murder.I returned to the issue again a couple of months ago in my blog entry Islam and Individual Freedom. I summed up my view as:
[E]ach person has a right to his or her religion, life, intellect, progeny, and property and the law's purpose is to protect these rights from being violated by others. Acts that harm others or violate their rights should be punished by the law. Acts that harm only the self are God's exclusive preserve and people should leave it to Him.The Kamali article presents a third argument supporting this same position:
Haqq (right) can be subdivided further in terms of enforceability: religious moral (dini) and juridical (qada'i). The former, although validated by the Shari'ah, cannot be proven or enforced by a court... Most of the rights of God [...] are in this category. As no one is expected or authorized to demand their enforcement, they are basically unjustifiable, despite the fact that the judge is vested with discretionary powers (ta'zir) to discipline those who seriously neglect them. Rights without a particular party as the right-bearer, such as a religious endowment (waqf) for the poor and the indigent, also fall into this category. Juridical rights, on the other hand, are susceptible to proof at the behest of the right-bearer, and a Shari'ah court has the power to adjudicate them. Some examples of this right are the creditor's right to demand repayment from a debtor and a wife's right to maintenance by her husband (Abu Sinnah 1971; al Mawsu'ah al Fiqhiyah 1987). Contrary to the assertion of western commentators that the Shari'ah recognizes no separation between law and religion, there is evidently such recognition as regards matters of haqq. Legal rights and duties are identified and separated from their purely religious counterparts... The Shari'ah is in unison with religion in matters of belief, 'ibadat (worship practices), and in commitment to basic values, yet it clearly recognizes a functional separation between law and religion on an extensive scale.There is a common thread running through all of this. Rights that belong to a specific person or group are considered in Islamic thought as juridical rights or legal rights. A violation of a juridical right will cause harm to someone. You can look at it that the government is only authorized to intervene when doing so will prevent harm. Or you can look at it that legal action will only commence when there is an injured party who seeks to enforce their right. Either way, the result is the same: violation of a juridical right leads to legal action. I referred to this violation as a crime. Rights that belong to God or that have no person that bears them are considered in Islamic thought as religious or moral rights. Violation of a religious right does not harm another person. You can look at it that the "injured party" is God, who will mete out justice in His own court, or you can look at it that no legal action can commence without a person who is seeking to enforce their rights. Either way, violation of religious rights does not lead to legal action. I referred to this violation as a sin. The distinction between crimes and sins is, I think, the most familiar and understandable to Western readers and that's why I made that distinction when I first wrote on the issue. When I wrote on the issue a second time, I focused on what I think is the reason that governments should limit themselves to prosecuting actions that harm others: to do otherwise is to attempt to usurp rights that God has reserved to Himself. Any devout Muslim should be very wary of such a usurpation. I also argued (not quoted here) that when the Prophet Muhammad (peace be upon him) implemented the Quran, he only sought to punish acts that harmed others. Devout Muslims should also be wary of departing from how the Prophet (pbuh) implemented the Quran. The Kamali essay puts the same argument in the language and terminology of the Islamic legal scholars, as set out above. It also shows that something that has been an intuition on my part, based on what I believe to be the fundamental moral principles of Islam, is in fact a recognized part of the Islamic discourse. Inshallah, in future posts I will share more of what I've learned from Kamali's article.
i) Defence ii) Law and Order ii) Justice iv) Need fulfilment v) Da'wah i.e., communicating the message of Allah to mankind. vi) Enjoining right conduct and forbidding wrong (al-amr bi al-maruf wa al-nahy an al-munkar). vii) Civil administration. viii) Fulfilment of such socially obligatory duties (furud kifayah) as the private sector fails to fulfil.He goes on to explain each of these in more detail. For instance he defines "need fulfillment" as providing food, water, clothing, shelter, education and transport. Siddiqi identifies six functions that are necessary in the current circumstances:
i) Protection of the environment. ii) Supply of necessary public goods other than those included in the first list. iii) Scientific research. iv) Capital formation and economic development. v) Subsidies for priority private activities. vi) Expenditure necessitated by stabilization policies.After explaining his reasoning for each of these items, he goes on to look at historical precedents to support his views. He sets out a theory of public expenditure based on the above. He looks at how the people can be encouraged to save and to work if they are receiving public funds. Finally, he looks at the limits on public expenditure, and what the priorities are if not all needs can be met.
...The Shari'ah ... confines the scope of restrictions [on expression] to measures necessary to repel an imminent danger to normal order in society. The individual's freedom to investigate facts and ideas and to formulate and express an opinion are integral to Islam's approach to the dignity of the individual and the quest for ascertaining the truth... ...Seditious (i.e., political) fitnah is an abuse of the freedom of expression that threatens the legitimacy of a lawful government as well as the collapse of a society's normal order. This theoretical characterization may appear fairly uncontroversial, but problems arise when it is translated into practice. Defining its scope and establishing a correct balance among conflicting values often tend to be problematic. For instance, while sedition by definition undermines the authority of a legitimate government, the very legitimacy of the government in question is not always self evident, as in the case of the Soviet-installed regimes that ruled Afghanistan during the 1980s (Kamali 1985). Such regimes often imprison and persecute their internal opponents on charges of sedition and other crimes against the state. It should also be noted that words and acts constitute fitnah only if they succeed, or are likely to succeed, in posing a threat to a society's normal order. An isolated opinion that remains ineffective and does not incite opposition to a lawful government would therefore fail to qualify as fitnah... ...Abu Zahrah thus concluded that the imam(leader) may not fight the rebels over mere differences of opinion unless they break the peace and embark on violence... ...'Awdah ... outlines the rights and duties of those whose views are in opposition to those of the community and its legitimate government. The opposition has the right to propagate its views through peaceful means and enjoys the freedom, within the limits of the Shari'ah, to say what it wishes. The community also has the right to refute such views. If either side verbally or otherwise violates the Shari'ah's injunctions pertaining, for example, to blasphemy and slander, the perpetrator can be punished under the normal rules of law as an ordinary offender. The opposition is entitled to assemble, provided that it does not renounce obedience to the imam or obstruct or violate the rights of others. This is based on the precedent of 'Ali and his treatment of the Kharijites who, although isolating themselves from the rest of the community in Nahrawan, still obeyed his regional governor. The caliph fought the Kharijites only after they murdered his governor. They then refused to surrender the murderer to the authorities on the grounds that it had been a communal act committed by every one of them. Faced with this open challenge to his authority, 'Ali declared war...As you can see from this, Islamic law approaches the question in very much the same way that the U.S. Supreme Court has done. Kamali calls on the governments of Muslim countries to follow this model in order to guarantee freedom of expression for their citizens.
Muslims have common share in three: grass, water and fire.Water issues are obviously extremely important in many parts of the Middle East and North Africa where water is scarce. Identifying Islamic Approaches to Water Management reviews a book that looks to find solutions within Islamic law for modern water rights issues. This page looks at water laws in Palestine, Islamic and otherwise. National Water Law (Somalia) is an actual water law written for Somalia based on Islamic legal principles. Finally, An Islamic Perspective on the Wealth of Nations, a Muslim libertarian treatise, discusses water rights briefly. I don't know enough about water law in general or Islamic water law in particular to comment further, but I do want to point out these resources for people who are more knowledgeable in law. Also, I post it as a reminder that Islamic law is about a lot more than just stonings and veils. It covers economic law as well and has a great deal of relevance for today's issues.
Posted at 11:33 PM in Fiqh | Permalink | TrackBack (1)