The
US government and its allies stepped up their campaign against money
laundering and deepened their investigations into the sources of terrorist
funding after the events of September 11th. Among the sources identified
is the hawala system of so-called underground banking. Though illegal
in some states, the trust-based networks are in widespread use by Asian
migrants around the world for sending home remittances.
Soon
after the attacks on the World Trade Center and the Pentagon the US
government announced it had frozen the US assets of 15 individuals and
12 organisations suspected of being involved in the financing of terrorist
campaigns. The Bush administration also set up a special Foreign Terrorist
Asset Tracking Center involving personnel from different agencies, including
the CIA, FBI and Customs. Its premise is that, by striking at the financial
network, terrorist operations will be disrupted, forcing Al Qaeda -
the group initially identified as being behind the attacks - to devote
time and money to rebuilding. Washington could also invoke the International
Emergency Economic Powers Act to coerce other governments into taking
action against the financing. These powers were deployed, without success,
against Afghanistan following the East African embassy bombings in 1998.
Further legislation, allowing the federal government to impose sanctions
on countries and banks accused of money laundering, was blocked in the
Senate in 2000. Other legislation being considered would prevent US
banks from holding accounts for offshore shell banks.
But
the failure of the Clinton administration's best efforts to attack terrorist
financing after the 1993 World Trade Center bombing, together with conflicting
and overlapping responsibilities between competing agencies, led many
experts to suggest that the government will be hard-pressed to succeed.
William F. Wechsler, director for transnational threats at the National
Security Council from 1996-99, wrote in the New York Times that Al Qaeda's
global network of funding has more than one source. In addition to Osama
bib Laden, other wealthy donors, charities, legal and legal businesses
and informal or underground money transfer businesses are involved.
Among the 27 individuals and organizations whose assets were frozen
were three charities including the Al Rashid Trust, a welfare organization
that operated bakeries in Afghanistan. Also under investigation are
the relationships between Al Shamal Islamic Bank, set up by bin Laden
in Sudan in the 1990s, with banks in London, Frankfurt, Geneva and Johannesburg.
Experts also warned that the administration's efforts should not just
focus on banks, which hold less than a third of the USA's total assets.
More money is held in securities brokerages, insurance firms and money
transfer businesses.
Chief
among the targets in the money transfer business is the 'hawala' network
of informal transactions operating to and from Asia and the Middle East.
The hawala system operates more by trust than transparent accounting,
which means that large sums of money can be moved between countries
'beneath the radar' of international financial scrutiny. It works as
follows. Someone deposits money with one broker in exchange for a code
or token that allows them to access the same amount of money from another
broker, usually a member of the same social network of merchants or
brokers. Alternatively, the first broker phones or emails the second
broker to tell them to honour the transaction. The network trusts its
members to eventually settle debts with one another, often without written
records. There is no requirement to settle the accounts immediately,
because both brokers trust one another or know that they will need each
other's services at some later date. Gold, gems or other commodities
may be used to settle debts, again leaving no trail of money to follow.
For
transactions involving unusually large amounts, a group of hawala bankers
may divided the sum among themselves and so break the exchange down
into smaller amounts. This may also circumvent reporting requirements.
The bankers or brokers keep their cash in offshore accounts, commonly
in UAE or Singapore, rather than in banks in their home country. Hawala
networks have existed for hundreds of years, predating modern banking
and money transfer companies. The ties of trust are therefore often
the result if several generations of doing business with the same family
or clan members.
Attempts
to regulate or shut down the system may cause hardship for migrants,
who have relied upon it as a safe, cheap and quick form of sending money
home. US Senator Evan Bayh of the Senate Banking Committee announced
that he would introduce legislation to clamp down on informal or underground
banking. He specifically targeted the hawala network. A law was passed
in 1993 requiring hawala operators in the USA to be registered and report
all transactions greater than $3000, but it has not come fully into
operation. Bayh proposes tougher reporting requirements on hawala brokers.
The system is constantly under investigation by the State Department
as part of its programme against the narcotics trade. It has also long
suspected that the network finances terrorism, a view shared by the
Indian Central Bureau of Investigation, which suspects hawala brokers
of being behind the unrest in Kashmir.
Hawala,
also known as hundi in Pakistan, is used widely throughout Asia by migrant
workers for remittances. It is illegal in Pakistan but nonetheless widespread.
Thousands of small exchanges involving no more than a few hundred dollars
are made between the Gulf and Pakistan. Government attempts to regulate
it, and the black market, have only served to drive it deeper underground,
or into the areas where the state has little control, such as Peshawar
and the North-West Frontier.
London
is a also major international centre for hawala bankers. In India, the
authorities stepped up their investigations into the accounts and financial
transactions of Non-Resident Indians in the UK and USA. In India itself,
their focus is on Banglaore. In July, Indian police carried out a number
of coordinate raids against hawala operators in Delhi suspected of funding
Kashmir militants. They made no arrests but did seize evidence.
There
are other sources of income under investigation. The US administration
estimated that only twenty per cent of Al Qaeda's funding comes from
Saudi Arabia, UAE and other Gulf States. Much of this is thought to
be money paid by wealthy individuals for protection. Even before September
11, the US was concerned that the Saudi Arabian authorities were not
doing enough to crack down on funding terrorism. A third concern is
the profusion of charities set up to aid Afghans during and after their
struggles against the USSR, made use of the requirement that devote
Muslims should contribute one fortieth of their income to help the poor.
Although the majority of such charities are legitimate, helping the
poor through mosques and clinics, there are grounds for believing that
they may also channel money to Al Qaeda. According to testimony at the
embassy bombing trial from a former insider in Al Qaeda, it directly
benefited from religious charities
Al
Qaeda also owns and operates companies in trucking, construction, currency
trading, imports and exports, as well as owns farms and sells farm good
abroad. Finally, behind the complex web of charities, banks and companies
are particular individuals in Saudi Arabia and the United Arab Emirates.
Particular organizations are dispensable to the financing network.
The
United Nations Convention for the Suppression of the Financing of Terrorism
was adopted in 19999 but is still to be ratified. Only four countries
have ratified the Convention, the UK, Botswana, Sri Lanka and Uzbekistan.
The USA has not done so. Egypt rounded up 80 suspects claiming to be
working for charities shortly before September 11. The country has worked
hard to shut down the funding local terrorist activities. Saudi Arabia,
Kuwait and other Gulf countries have said that they will regulate donations
made at mosques more tightly.
Massive
raid on hawala operators, evidence of terrorist link collected, Hindustan
Times 2.7.01; Finance network behind bin Laden must be destroyed: experts,
Jacques Charmelot Agence France Presse 21.9.01; Muslim charities come
under scrutiny amid concerns that some donations funneled to militant
groups, Salah Nasrawi The Associated Press 21.9.01; Hawala operators
feel the heat of US terror attacks, Bansy Kalappa The Times of India
23.9.01; NRI bank transactions under scanner for terrorist links, The
Statesman 23.9.01; Attacks aided by 'privatisation of terrorism', Jimmy
Burns, Harvey Morris and Michael Peel Financial Times 24.9.01; Bin Laden
funded by bogus charities, Daniel McGrory and James Doran The Times
25.9.01; U.S. effort to deny funds to terrorists may run into difficulty,
as transactions in Muslim world often avoid banks, John Daniszewski
and Paul Watson Los Angeles Times 26.9.01; Terror networks rely on 'hawala';
Ancient system under scrutiny, Vincent J. Schodolski, Chicago Tribune
26.9.01; Terror's Money Trail, William F. Wechsler The New York Times
26.9.01; Experts see huge task attacking terrorist funds, David Williams
Agence France Presse 26.9.01; Charity helps poor and 'jihad'; U.S. alleges
it funnels cash to terrorists, Margaret Coker The Atlanta Journal and
Constitution 27.9.01; Bayh seeks law to target terrorist funding, The
Associated Press 28.9.01; Links to bin Laden among America's friends
in the Gulf Islamic extremists are bankrolled by respectable, even royal
sources, Neil Tweedie The Daily Telegraph 29.9.01; Other legislation
being considered would prevent US banks from holding accounts for offshore
shell banks; Funding terror: When slaughter is cheap, Jamie Doward The
Observer 30.9.01; Terrorists' cash flows in secret world, Antonio Fins
Sun-Sentinel 30.9.01
-
September
11 - Impacts on Migrant Remittances
The
attacks on New York and Washington on September 11 directly threatened
the two cities' many communities of migrant workers and could disrupt
the essential outflow of remittances to the Caribbean, Latin America
and India
The
Central Bank of Edcuador (BCE) announced that daily remittances from
New York fell from $2.3 million a day to $1.5 million a day after the
attacks. High unemployment among unskilled, illegal and/or foreign workers
is largely to blame, according to the authorities. Migrant remittances
provide the country's second largest source of foreign earnings after
petroleum exports. There are reckoned to be 600,000 Ecuadorans in New
York, as well as 100,000 each in Los Angeles and Chicago, and 60,000
in Washington DC.
There
are around one million Haitians and Haitian-Americans in the USA. In
2000 they remitted $699 million to the Caribbean country, but after
September 11 there are real fears that this lifeline will be much reduced.
The recession in the USA was also expected to impact the country negatively,
not least because of the large number of assembly plants that employ
over 20,000 workers. Uncertainty in the USA and Haiti could lead to
lower levels of investment in property.
In
the immediate aftermath of the attack lines of communication between
New York and the Caribbean were badly disrupted. A fifth of the telecommunications
capacity run by Cable and Wireless was lost during the attack. Many
Caribbean nationals worked in the World Trade Center complex, as white-collar
professionals, but also security guards, clerks, restaurant staff and
janitors. The Caribbean Tourism Organization also anticipates heavy
losses
The
flow of Non Resident Indian deposits fell sharply after September 11
but after two weeks levels recovered. Indian banking authorities explained
that the fall was the result of several important correspondent banks
- including American Express Bank and Chase Manhattan - being located
in the World Trade Center. There was a slowdown of NRI remittances as
a result of the Gulf War ten years earlier.
In
Caribbean, tense wait after US terror attacks, Zadie Neufville Inter
Press Service 13.9.01; Haitians fear fall in living standards amid US
woes, Ives Marie Chanel Inter Press Service 21.9.01; India: NRI deposits
likely to fall, Business Line 21.9.01; Ecuador: Caen remesas de emigrantes
tras atentados en EEUU, Kintto Noticias en Espanol 28.9.01; India: NRI
deposits picking up, C.J. Punnathara, Business Line 29.9.01
-
US
Mexican Stripped of Victory in Mexican Mayoral Election
The
only one of three US-Mexicans who ran for mayor in Mexico in July was
stripped of his victory by the election authorities for failing to meet
the residence requirements. This was a blow to President Fox. But government
plans to channel investment from Mexicans abroad into development projects
continue apace. Fox discussed possible new arrangements for migration
and citizenship with President Bush.
In
July's local elections, three US citizens born in Mexico took advantage
of changes in the law to run for office in Mexico (see Traces #14).
One succeeded and two lost in the polls. But Andres Bermudez Viramontes,
the US-resident Mexican who was elected to mayor of Jerez, Zacatecas,
in July's elections, was stripped of victory by federal officials on
the grounds of his failure to meet the residency requirements. The electoral
commission ruled that he had not been a legal resident of Jerez for
a full year prior to the poll. Bermudez had promised to invest in the
city and bring jobs there, and President Fox had hailed him as a model
of what could be achieved. But the PRI, which had held the city until
his election, accused Bermudez of being a trafficker in migrants and
a smuggler. The PRI made the complaint to the electoral commission that
led to his dismissal. The man known as 'The Tomato King' threatened
to go to Mexico City and protest to the president in person. In the
meantime he has returned to California, saying that he may never return
and advising other expatriates to forget Mexico. Bermudez had celebrated
his victory with a cavalcade through his hometown in Santa Ana and destinations
in Southern California, and had been greeted with popular acclaim as
a local hero.
About
half of all Zacatecans have migrated to the USA. Zacatecas prides itself
in pioneering alternative development programmes to halt emigration,
employing overseas funds and know-how to do so. Bermudez argued that
the long-established system of hometown associations financing community
projects in infrastructure has its limitations. There are 50 such groups
in Zacatecas alone, with 20,000 members drawn from the more than 600,000
Zacatecans in the USA. But as well as roads and sewage systems, the
state needs entrepreneurial projects, in Bermudez's view. At present,
according to the Los Angeles Times, 95 per cent of the dollars sent
to Zacatecas are spent on food, clothing or basic items instead of development.
The InterAmerican Development Bank has started a $2-million pilot project,
made up of 60 small, local schemes in Zacatecas, Guanajuato and Puebla
states. Migrants will be invited to invest in these projects, which
might include food processing plants or canneries for the states' significant
farming industry.
Figures
from Mexico's central bank purported to show a 50 per cent increase
in remittances between the first half of 2000 and the first six months
of 2001, coinciding with Fox' election. In January-July 2001 the bank
said that Mexicans in the USA remitted $4.29 billion. Sources at the
bank expected the economic downturn and uncertainty following September
11 to knock off a billion dollars from the year's eventual total. In
2000 Mexico received $6.28 billion, second only to India in total receipts.
There are around a million individual transactions a month. Some experts
question why there should be such a drastic increase in the absence
of obvious developments in economies either side of the border. Perhaps
the increase is the result of Mexicans in the USA becoming richer or
having better, full-time employment, or because figures include laundered
drug money. Another view is that the bank is getting better at counting
remittances.
The
Population Council reckons that five per cent of homes in Mexico depend
on money sent by relatives from abroad. Combined remittances are the
country's third largest source of income. The Council's study showed
that the 450 of Mexico's 2,442 municipalities that register the highest
migration rates are also more economically dependent on remittances
from relatives working in the United States.
President
Fox and his administration support the idea of reducing the dependence
of Mexican municipalities on family remittances and instead channelling
the efforts and investments of hometown associations and wealthy Mexicans
abroad into more planned development projects. Fox's envoy for Mexicans
abroad, Juan Hernandez, is pursuing a strategy known as the padrino
(godfather) scheme. A padrino will invest in a specific project, and
will be specifically headhunted. The federal government has identified
90 of the poorest municipalities that have suffered from emigration
to be targeted under the development programmes. It will also offer
3-for-1 matching funds for each dollar invested from Mexicans. The first
padrino was a businessman from New Jersey, the owner of a trucking company,
who is investing in textile factories in. In another example, officials
from the state of Tonatico have proposed to the state's hometown associations
in Waukegan that they invest in a chain of inns. The association would
provide the funds and the state would supply materials and land. The
association would have to manage the inns, with no guarantee of a return.
The investments run the risk of poor management and poorly-thought out
business plans. Potential investors are also put off by worries about
corruption among officials. And among hometown associations there are
concerns that the federal and state government are only interested in
their money
State
governors have also visited the USA to promote similar schemes. The
governor of Michoacan, Lazaro Cardenas (Democratic Revolution Party)
undertook a two week tour of the United States, concentrating on the
Midwest where many thousands of Michoacans live. Like President Fox,
who also toured Chicago in July, Cardenas said he would support the
right of US-resident Mexicans to vote in Mexico's elections. The governor
is attempting to secure the right to vote in local and state elections,
independently of decisions made about federal elections, due in 2003.
The governor of Zacatecas, Ricardo Monreal, also supports voting in
local elections.
Jose
Murat, governor of Oaxaca, toured California in July, where he met with
members of the newly-formed Oaxacan Federation of Los Angeles. The Federation
was formed to unite the many small hometown associations in the Los
Angeles region. Murat agreed a 3-for-1 matching fund for migrants' donations
to the state's public project.
President
Fox visited Washington in early September to discuss, among other things,
the issue of Mexican-US migration with President Bush. The 2000 census
suggests that about half of the 8.8 million Mexicans in the USA are
undocumented, and a further million detentions and deportations are
made each year. The talks focused on how to reconcile the demand from
the US economy for Mexican workers with the state's interest in protecting
its borders and the sanctity of its immigration laws. Fox asked Congress
to regulate migration rather than try and stop it. His government has
already increased Mexico's collaboration with US authorities on human
trafficking, and has broken up smuggling networks from Asia. The Fox
administration has also stepped up its efforts to extradite suspects
in drugs cases to the USA, and made several high profile arrests in
its first seven months. The alternatives are to issue more temporary
or permanent work permits, or, less likely, to grant legal status to
millions already present in the USA through an amnesty. Washington appeared
to favour some kind of revised guestworker programme that would include
protection form Mexican workers in the country. Senate Majority Leader
Tom Daschle suggests including Guatemalans, Nicaraguans, Hondurans and
Haitians in any new progamme.
Mexico
asks emigres to lend hand, Oscar Avila Chicago Tribune 5.7.01; Oaxacan
Leader Meets in L.A. with Expatriates, Jill Leovy Los Angeles Times
8.7.01; Expatriates Wild About 'Tomato King' Mayor, Jennifer Mena Los
Angeles Times 9.7.01; 8 million votes too alluring; Mexico considers
expatriate right, Teresa Puente Chicago Tribune 13.7.01; Fox pitches
aid plan to expatriates, Alfredo Corchado The Dallas Morning News 17.7.01;
Mexico's powerful drug barons get one way ticket north of the border,
Andrea Mandel-Campbell Financial Times 24.7.01; Job Programs Aim to
Curb Migrant Flow, James F Smith Los Angeles Times 20.8.01; Five per
cent of Mexican homes depend on US remittances, EFE News Service 23.8.01;
Clubs in U.S. Spark Political Change in Mexico, Robin Shulman Los Angeles
Times 27.8.01; Mexican Expatriate Returns to U.S., Lisa J Adams, AP
Online 7.9.01; Mexican expatriate calls for protests after he was stripped
of mayorship, The Associated Press 8.9.01; Regulating Mexican Migration,
Tim Weiner The New York Times 9.9.01; Mexican Immigrants Sending More
Money Home, Chris Kraul Los Angeles Times 24.9.01
-
Protests
Against Military Sexual Slavery in USA and Asia
Organized
protests and law suits on behalf of the victims of Japanese military
sexual slavery during World War 2 continued in the USA, Philippines,
Japan and Korea. A network of transnational advocacy groups is involved
in many of the actions. But the US federal government has defended Japan
and tried to block suits by former 'comfort women'.
In
April the US Justice Department urged the dismissal of a class-action
lawsuit brought against Japan in a District Court by 15 former 'comfort
women'. The action was brought under the Alien Tort Claims Act that
allows foreign citizens the right to sue for abuses of international
law in US courts. But Justice officials argued that the court did not
have jurisdiction to try this case. Among the plaintiffs are six women
from South Korea, four from China, four from the Philippines and one
from Taiwan. A group of Chinese Americans protested in Washington in
support of the plaintiffs in July. Also in July a resolution was introduced
into the US Congress calling on Japan to issue an 'unambiguous apology'
to women forced into sexual slavery during World War II and pay reparations.
The
Justice Department also states that such suits have been inadmissible
since a 1951 treaty settling all wartime issues between the two countries.
This included compensation, although none of the funds went to 'comfort
women'. It alleges that the suit will harm relations between USA and
Japan. In a written submission the Department said it would "have
serious repercussions for our foreign policy toward Japan and other
nations". But lawyers for the plaintiffs argue that a new law passed
in October 2000 condemning international sex trafficking allows for
reparations in the case of military sexual slavery. They also point
out that military brothels were operated in Guam and the Philippines,
both at the time US territories occupied by Japan, and that therefore
sexual slavery affects the USA.
Furthermore,
Congress is also considering three bills that would allow American prisoners
of war to seek compensation from Japanese companies that mistreated
them. These suits had also been ruled inadmissible as a result of the
1951 treaty by a San Francisco District Court. Ceremonies to mark the
50th anniversary of the treaty between US and Japan were interrupted
by protestors on behalf of 'comfort women'. Demonstrators organized
a parallel conference to the official proceedings in San Francisco's
Japantown.
Japan
argues that the statute of limitations has run out on cases arising
form the Second World War, and that reparations for military sexual
slavery are being made through the Asian Women's Fund, set up by the
Japanese government in 19895. Further, Japan argues that a bilateral
treaty with South Korea in 1965 settled all claims from Koreans. But
the UN Special Rapporteur on Violence against Women and Mutsuko Miki,
argues that Japan is failing to live up to its responsibilities. In
April, the UN Commission on Human Rights urged Japan to take legal responsibility
and compensate the women. And in February, the UN War Crimes Tribunal
declared the wartime rape and enslavement of women as crimes against
humanity (see Traces # 13).
In
September the Asian Women's Fund paid out $19,300 each to 78 Dutch women
forced into military sexual slavery during the occupation of Indonesia.
The 78 women were the only survivors from around 200-300 Dutch nationals
forced to become 'comfort women' during the war. The payments arose
from an international appeal through newspaper ads for Dutch women to
come forward and apply for compensation in 1998. Some of those who applied
lived in North America, the UK, India and Australia.
In
July, eight Chinese women filed suit against the Japanese government
in the Tokyo District Court. They had been forced to work as prostitutes
on Hainan Island during the Japanese occupation. This was the first
of around 50 suits brought against Japan that demands compensation for
the psychological trauma suffered after the event as well as damages
for the slavery itself. The eight claim they were shunned by their families
and neighbours after the war ended and they returned home
South
Korea's parliament urged its government to campaign against Japan getting
a seat on the UN Security Council because of its attitude to the war
and its alleged distortion of history. A meeting of activists in Seoul
in July formed the Korea Women's International Network. Korean women
from 23 countries attended the event, part of annual Women's Week. Among
those attending was a representative from the Washington Coalition for
Comfort Women Issues. The conference called on the government to provide
more funding for joint projects between women in Korea and overseas,
to enable them to stay informed about events in the homeland and contribute
to Korea's economic development. The next meeting was planned for San
Francisco.
Japanese
demonstrators joined Koreans in protests outside the Japanese embassy
in Seoul for the first time since 1992 in September. They condemned
Japanese Prime Minister Junichiro Koizumi's visit to the Yasukuni war
shrine, regarded as an inflammatory act by critics of Japan's attitude
to the Second World War. South Korea's President Kim Dae-Jung also attacked
Koizumi for the visit. The Japanese protestors travelled to Korea on
a ship called Peace Boat as part of a symbolic pilgrimage to discover
the true history of the war, one that they allege does not appear in
Japanese textbooks. In a joint press conference with the Korean Council
for the Women Drafted for Military Sexual Slavery by Japan, the Peace
Boat activists proposed publishing a common history text for all Asian
countries. Peace Boat was founded in 1983 by Japanese students angry
at the government's censorship of the history of the war.
In August the Japanese embassy in Manila was picketed by Filipino protestors,
including 20 former 'comfort women' from a group know as Lila Pilipina.
The group represents 173 surviving women. It rejects the Asian Women's
Fund because payments do not involved a formal apology.
Before
an official visit to Japan, President Arroyo of the Philippines was
urged by activists and feminists to raise the issue of sexual slavery
with Tokyo. After her visit to Japan, President Arroyo said that Prime
Minister Junichiro Koizumi had apologized for the sufferings of Filipina
women forced into sexual slavery. But she received no further promises
on compensation.
In
September, surviving 'comfort women' in Indonesia protested outside
the House of Representatives demanding that the government do more to
help their cause. The petition was organized by the Communication Forum
for Sexual Abuse/Rape Victims of Dai Nippon. Jakarta received money
from Japan in 1996 as compensation, but the victims allege that they
have never received it themselves.
WWII Reparations; Asian sex slaves hope new law will aid in fight for
redress, Bob Egelko The San Francisco Chronicle 1.7.01; Seoul Women's
Confab Initiates Korean Women's International, Korea Times 6.7.01; Japanese
pay-outs for Dutch 'comfort women' of WWII, Agence France Presse 13.7.01;
Former Chinese sex slaves sue Japanese government, Deutsche Presse-Agentur
16.7.01; Chinese American Group to march in support of 'comfort women',
Nelson Chuang and Maubo Chang Central News Agency 21.7.01; Lawmaker
asks Congress to call for formal Japanese apology for WWII-era sex slaves,
Kate Beddall Agence France Presse 25.7.01; South Korea leader joins
attack on Koizumi war shrine visit, Agence France Presse 15.8.01; Former
Philippine sex slaves demand compensation bill become law, Agence France
Presse 16.8.01; Strains surround US-Japan treaty 50 years later, demands
for redress mar celebration, San Jose Mercury News 5.9.01; Japanese
Civic Group Joins Comfort Women in Blaming, Korea Times 6.9.01; Japanese
join weekly anti-Japan protest in Seoul, Yoo Soh-jung The Korea Herald
6.9.01; Koizumi apologized for comfort women: Philippine president,
Agence France Presse 15.9.01; Gloria fails to get cash aid for 'sex
slaves', Stella O Gonzales Philippine Daily Inquirer 15.9.01; Comfort
women demand government attention, Jakarta Post 29.9.01
-
