by Andris Bjornson / April 1, 2010

Goat*Net: Bleating Edge WiFi Mesh Networking from Inveneo
“The WiFi hackers at Inveneo, famous for their long-distance network in Haiti, are piloting a new Internet connectivity solution that they hope will bring Internet access to currently unreachable corners of rural Africa. Deploying collar-mounted wireless transceivers on a herd’s worth of goats, they’ve created a mobile, self-healing, self-configuring network they’ve dubbed the Goat*Net.

Rural WiFi challenge
Rural Africa suffers from two distinct disadvantages that hinder the easy and affordable provision of Internet access – long distances between users and no electrical infrastructure. One possible solution to these challenges often employed by Inveneo is long-distance WiFi. Even WiFi has its limits, though. On a recent trip to Ethiopa, Inveneo found rugged terrain and highly mobile populations would make a standard WiFi deployment difficult or impossible. Transient herdsmen rarely stop at one location for an extended period of time and often wander in and out of coverage areas of traditional networking solutions.

The challenge became how to give these herdsmen access to the same benefits of information and communication technologies (ICT) as Africa’s more stationary populations. While conducting a site survey of the environment and ICT needs of Afar goat herders in the Ethiopian Danakil Desert, Inveneo Project Engineer Andris Bjornson was hard pressed to come up with a traditional WiFi solution that worked: “The rolling hills and many tall trees were making it difficult to find lines of sight that would make the network feasible.”

One hot afternoon while pausing for a mishkaki snack, Andris had an intriguing thought – why not build a mobile WiFi mesh network using goats? This was the start of Goat*Net. A mesh network is different from more traditional networks because each mesh node acts as an independent router. A mesh network continuously reconfigures or “heals” itself – finding ways around broken or blocked paths. Inveneo paired Ubiquiti PicoStations mounted on the collars of goats with stationary Ubiquiti Airmax sector antennas to form a grazing, wandering, self-healing mobile network. As goats wander from ridgetops to valleys, the network continually adapts routing to find the best paths back to the stationary antennas and eventually to the Internet.

Goat*Net Mesh Topology
Currently, the PicoStations are powered by long-life rechargeable batteries, but Inveneo is investigating a biogas power solution, enabling the devices to be powered by waste methane produced by the goats. Goat*Net has had a huge impact on the lives of Afar goat herders, bringing the community into the modern world. As one was quoted as saying: “Goat*Net has brought real change to our community. We can now get CBOT spot prices for nyama choma.”

Inveneo is excited to push this new technology even further as part of its Goat Ahead ProgramTM to bring technology to ewe. According to Inveneo CIO Mark Summer: “We’ve already been able to do so much with just 50 goats in a network, but that’s just a start. We have plans to scale up to a full 1 kilogoat next year. As wireless radios shrink further and prices come down, the dream of a full megagoat network could be realized within 5 to 10 years.”

Inveneo’s long-distance WiFi network in Port-au-Prince, Haiti

How to Deploy Long-Distance WiFi in Haiti / 2 February 2010

As you can see from the network diagram above, Inveneo’s long-distance WiFi links connecting NetHope member organizations is starting to be far-reaching. Inveneo engineers Mark Summer and Andris Bjornson have been able to bring high-speed Internet access – critical communication capacity – to eleven relief agency locations with minimal equipment and installation time. Our long-distance WiFi network has made huge improvements in connectivity for NetHope member organizations. Some had no connectivity before. Others had limited connectivity, like a 160 kbit connection that jumped to 1.6 Mbit. That’s like going from 3 dialup connections to a cable or DSL connection. These leaps in access have immediate impact when 20-100 people are sharing bandwidth at each location. International staff are able to make high-quality Skype video calls when before even voice calls were next to impossible, cutting resupply and rebuilding times by weeks or months.

How to deploy long-distance WiFi links in Haiti
Inveneo has created a methodology for deploying long-distance wireless networks from our many years of work in Africa. So while Port-au-Prince presents it own set of logistical and communication challenges, we were able to install and manage a high-functioning network relatively quickly using these basic steps:

Step 1: WiFi Network Design
WiFi, like most radio technologies, works on the principle ofline-of-sight – you have to see it to beam to it. So the very first step in building a long-distance wireless network is to make sure your nodes are visible to each other. We usually achieve this by conducting a site visit – we or an Inveneo Certified ICT Partner physically visits each site that will host a node and captures its GPS coordinates. In Port-au-Prince, where transportation is difficult, we try to get as much information in advance as possible, starting with GPS locations. This isn’t always easy. Many agencies don’t have GPS devices, and those that do don’t always use them correctly. We’ve been given coordinates that are miles off the actual location, a real issue when street signs are missing, landmarks are destroyed and the city has a dusk curfew. This is where OpenStreetMap is a godsend – volunteers are mapping locations with great accuracy and posting them online, which we can use in our planning (read more here). Once we have the locations, we use Radio Mobile and Google Earth to design the network. Both use terrain data from the Space Shuttle to model the surface of the earth. With these tools, we find the correct angles, both azimuth (side to side) and elevation (up and down) that each antenna will need to achieve the highest gain (signal strength) between nodes.

Step 2: Location Capacity Survey
Now that we know where to place each node location, we try to make sure the site can support the required equipment: we confirm the site is physically secure, the building structurally sound, that there is a physical location for the equipment and constant, clean electrical power, that we can get roof access and that we can work with the organization’s IT staff as needed. These might seem frivolous questions unless you’ve arrived at an African school after a several hour overland drive to find the headmaster expecting you to install computers in an empty room that doesn’t have desks, doors or window panes. In Haiti, we added the roof access question after Andris found himself climbing a rickety, bent ladder, with the real threat of a fall that might have sent him to already overburdened local medical facilities.

Step 3: WiFi Hub Antenna Pointing
From the design plan made up of the node locations, we first set up an antenna from our live network pointing in the direction of the new node. In Haiti, a Garmin GPSMAP 76CSx is our location notepad – giving a good indication of direction, automatically compensating for magnetic declination (9.5 degrees in Haiti), and producing a compass bearing for use in the actual azimuth aiming of the dish. For elevation, usually less than 8 degrees or so, we use a bubble level to get the dish positioned properly and then (very technically) “bump” the dish to ensure accuracy. Again, this dish is beaming WiFi into the wild at this point, without a receiving antenna set up (yet). So the next step is to install an antenna at the other end of the link, at the site that needs connectivity.

Step 4: Installation Trip Preparation
As any good engineer will tell you, detailed preparation makes all the difference in a deployment. So the night before we visit a hub location to install a node we make a complete packing list for each day’s loadout.. This includes the number of antennas, radios, switches, VOIP ATAs, etc. Each piece of gear goes in a large Ziplock with all the other parts it takes to make it work – switches get packed with their power adapters, ATAs, phones, and patch cables go together and WiFi radio antennas get packed with their Power Over Ethernet (PoE) injectors along with the antenna mount bracket. All this gear travels in extremely durable Pelican cases. We always take one large Pelican case that serves as a toolkit, large first aid kit, and consumable supply depot for equipment like electrical tape, duct tape, cable ties, and RJ45 connectors.

Step 5: Node Antenna Setup
Once on site, antenna setup goes fastest with at least two people – one as antenna jockey on the roof, the other as networking guru patching into the existing network or making one on the fly. In Haiti, it has tended to be Andris on the roof and Mark in the server room. After Andris has climbed onto the roof, he hoists up the antenna equipment, and quickly reels off CAT5e cable for Mark. Running the cable from the roof to the server room (or WiFi hotspot location) is done first because it is one of the most time-consuming aspects of the implementation. Now Andris sets up his antenna mount – we’re using speaker stands weighted with rubble and sandbags, and attaches aUbiquiti Rocket M5 antenna and Rocket Dish for long links or a BulletM5 antenna and 25dBi grid dish for short-to-medium links. Both of these antennas are point-to-point, transmitting 802.11n in the 5 GHz band, which is less cluttered than the 2.4 GHz band, regularly full of standard 802.11b/g WiFi traffic. And when we are patient with the aiming tools (GPS, compass, and level), the antennas can be aligned before we even need to use the radio software to align them. When finished, we usually see a -65 dBm signal level with each link.

Step 6: Disseminating Internet Access
While Andris is on the roof, Mark runs the CAT5e cable into the building and attaches it to the PoE injectors. PoE injectors send power over the 4 unused wires in the ethernet cables, so we can energize the Ubiquiti antennas without running a second cable. He then connects to the existing network through a Cisco switch. When there isn’t an existing network, we use either theUbiquiti Nano2 or the Ubiquiti Pico2 as a local access point. This is often the case in Port-au-Prince, where the existing infrastructure is often unusable, usually because the building is damaged or unsafe. Then a Nano2 provides great directional wireless access, say for an outdoor office and a Pico2 gives good indoor omni-directional coverage.

Step 7: Network Management
Putting up the network infrastructure might be hard, but managing the network once it is up is equally challenging. Each computer at every location requires its own unique IP address, and every computer wants to communicate with remote servers outside of Haiti at the same time. Yet there is only so much bandwidth at any one node and at the uplink point. With eleven nodes and counting, we’re very lucky that the OpenNMS community, developers of the first enterprise grade network management platform, have taken on Inveneo’s network in Haiti to help us manage user needs.OpenNMS Group has even given us a free commercial support account. Using OpenNMS, we’ve been able to monitor network usage and then use other tools for traffic shaping, making sure that each user, at each node, has equal amount of bandwidth for his or her communication needs.


Earthship n. 1. passive solar home made of natural and recycled materials 2. thermal mass construction for temperature stabilization. 3. renewable energy & integrated water systems make the Earthship an off-grid home with little to no utility bills.

Biotecture n. 1. the profession of designing buildings and environments with consideration for their sustainability. 2. A combination of biology and architecture.

Solving Haiti’s Housing Problems with Old Tires, Bottles / July 20, 2010

Made from used tires, discarded bottles, cardboard, Styrofoam and other waste materials, Mr. Reynolds designs and builds these homes to be essentially energy self-sufficient. Earthships use solar energy and wind to generate their own power and heat; homes are designed to collect usable water from rain and snow and are built with greenhouses where resident can grown their own food. Mr. Reynolds has built more than 1,000 of the environmentally-friendly structures, including a community of them outside Taos, N.M., through his company, Earthship Biotecture. Now he’s bringing earthships to Haiti.

Earlier this month, Mr. Reynolds and two builders, along with a cameraman, went to Haiti intending to survey the area to see how they could help. “There was nothing but tents, nothing but cleanup,” Mr. Reynolds says of what he saw in Port-au-Prince. Instead of just surveying the city, Mr. Reynolds and his team ended up building. A non-governmental organization called Grassroots United, which had contacted Mr. Reynolds before he arrived, met his group at the airport and told him that they had some land upon which he could build. Anticipating his arrival, the organization had gotten Haitian children to collect tires and plastic bottles from the tent camps.

Mr. Reynolds himself had one arm in a cast because of rotator cuff surgery, and the two builders with him both got sick from the water and heat. “The three of us were worthless, pretty much,” he says. But 40 locals, ranging in age from four to 50, built an earthship in just four days under his guidance. “They had nothing to do. They were all eager to learn, and it turns out all the skills we could do, they could do.”

The earthship, just 120 square feet, is made of 120 tires packed with dirt–such tires are the main building blocks of any earthship. Designed to be earthquake- and hurricane-resistant, the Haiti earthship is not completely finished. Mr. Reynolds plans to return in October to add plaster to the exterior and a screened-in veranda with flush toilets, as well as outfit it for solar energy and water collection. He hopes the home will be used as a prototype for more in Haiti, an example of what’s possible. Earthships could be a boon for a place like Haiti, says Mr. Reynolds, where even the capital city has little infrastructure like sewage or electricity. “The most substantial thing I saw down there was a plywood shack,” he says.

The Haiti home isn’t the first that Mr. Reynolds has built in an area hit by disaster. Following the 2004 tsunami, he says, an architect from the Andaman Islands in the Indian Ocean found his website and asked him if he could help rebuild. There, Mr. Reynolds and his team erected a building made from automobile tires and bottles during a two-week visit. “On our last day there, the monsoons came, and we saw it catching water,” Mr. Reynolds says. Though he hasn’t been back to visit, he hears that the locals now use the structure like a well. The Andaman Islands Earthship was too complex for the locals to replicate themselves, Mr. Reynolds says, but he has since perfected his model for disaster relief to help locals in devastated areas rebuild themselves.

When he returns to Haiti in October, he plans to find a site where he can build a small village of earthships. “It doesn’t have to be in the city because there is nothing in the city anyway,” he says of the lack of infrastructure. “These buildings would provide their own power, their own water, their own sewage (systems).” Most important, Mr. Reynolds says, is a sense of empowerment instilled in those who helped. “They built the building!” he says. “The real thing that shows it’s possible for them to do it is that they did it.”

Castles Made of Trash
by Dennis Nishi / June 16, 2009

Architect Michael Reynolds has built more than 1,000 homes from materials including used car tires and glass-bottle bottoms. He calls his self-sufficient designs “earthships” because they require little heating or cooling and generate their own electricity and water. His company, Earthship Biotecture of Taos, N.M., designs and builds sustainable homes world-wide.

Q: I hear you were a maverick even in architecture school.
A: I discovered early on that architecture needs to embody the needs of people. Most architects have impractical ideas that are wasteful. That’s why I’ve drifted away from what you know as architecture. The University of Cincinnati had a co-op program where you could work for three months and go to school for three months. It took me six years of working in a lot of architectural offices around the country to discover that I didn’t want to do architecture the way it was being done.

Q: Where did you get the idea to use trash?
A: Walter Cronkite did a piece on clear-cutting timber in the Northwest. Even in 1969, he predicted massive deforestation would result in wood scarcity and would affect our oxygen levels, things that have become big issues today. Charles Kuralt did another piece on beer cans being thrown all over the streets and highways. So I started playing with beer cans and trying to make them into building blocks. It was a way to kill two birds with one stone.

Q: How did you go from cans to car tires?
A: I later decided to try a different material and thought of the mountains of discarded tires that can be found everywhere. Pack them with dirt and they will store energy. Plus they’re strong and resilient, so I built an entire house out of them. I went on to add photovoltaic panels, windmills, water collection and onsite sewage treatment.

Q: It didn’t sound like you got many takers in the beginning.
A: We did sell houses here and there. I wasn’t trying to build a big corporation and, of course, our overhead was low. I just needed to get the idea out there. I was also a licensed contractor so I could work on other projects.

Q: Who were your early adopters?
A: When I started, it was young hipsters who were not afraid of trying something new. As recycling and conservation became more mainstream, it became a wider variety of people … from all walks of life.

Q: You relinquished your state architecture license in 2000. What led to this?
A: Some of the houses were too hot, went over budget and some roofs leaked. The customers complained and the investigators who were sent saw that I wasn’t following any of the rules. In the end, I was told if I relinquished my license, I could do more as a private citizen than under the cloak of an architect. Otherwise, they could fine me forever for violating codes. [He got back his national architecture license.]

Q: That’s when you took your fight to the state legislature?
A: I wrote a bill [that] makes it easier to build experimental homes [without the need for an architecture license]. It took three and a half years to get it through. Governor Bill Richardson signed it into law in 2007.

Q: And you went overseas with your ideas?
A: For awhile, … I went wherever there was a desire to use my ideas. After the earthquake and tsunami in 2004, an architect [from the Andaman Islands in the Indian Ocean] that lived right in the middle of the disaster saw our Web site and asked us to come.

Q: What did you see in the Andaman Islands?
A: Their whole community was just wiped out. We paid the local kids to bring us bottles, and we built a house out of them that collects its own water. We gave the plans to the engineers.

Q: What’s next?
A: We’re launching a village project called Eve: Earthship Village Ecology in Taos. The focus is complete independence. We’re specifically working on food production in the home, and we’ve dedicated 50% of the floor space to gardens.

Q: How efficient are your earthships?
A: We’re building homes today that don’t draw from the grid and have a $100 per year total utility bill. And they have flat screen TVs, broadband Internet and all the other comforts. The reason why more people are not doing it is because it takes forever for somebody doing a radical green project to get a permit.

Michael Reynolds
email : biotecture [at] earthship [dot] com

Green Building Construction Materials

House as Assemblage of by-products:
A sustainable home must make use of indigenous materials, those occurring naturally in the local area. For thousands and thousands of years, housing was built from found materials such as rock, earth, reeds and logs. Today, there are mountains of by-products of our civilization that are already made and delivered to all areas. These are the natural resources of the modern humanity.

An Earthship must make use of these materials via techniques available to the common person. These materials and the techniques for using them must be accessible to the common person in terms of price and skill required to use them. The less energy required to turn a found object into a usable building material the better. This concept is also called embodied-energy.

The Primary Building Block: Rammed-Earth encased in Steel Belted Rubber:
The major structural building component of the Earthship is recycled automobile tires filled with compacted earth to form a rammed earth brick encased in steel belted rubber. This brick and the resulting bearing walls it forms is virtually indestructible.

Aluminum Cans and Glass/Plastic Bottles:
These ‘little bricks’ are a great, simple way to build interior, non-structural walls. Aluminum can walls actually make very strong walls. The ‘little bricks’ create a cement-matrix that is very strong and very easy to build. Bottle can create beautiful colored walls that light shines through.

The Nature of the Materials
In keeping with the design and performance requirements of a Earthship Biotecture, the nature of the building matierials for an Earthship must have certain characteristics established. These characteristics must align with, rather than deteriorate, the environment of the planet. The requirements and characteristics below describe the nature of the ideal ‘building block’ for constructing the ideal building for residential and commercial applications. Many conventional materials satisfy one or two of these characteristics but no conventional materials satisfies all of them. Therefore, we must ‘invent’ or ‘create’ a new material or building block for the primary structure of the Earthship.

Materials are found all over the planet. Shipping materials for long distances is not sustainable and uses excessive amounts of energy. In order for the Earthship to be easily accessible to the common person and to maintain a low impact on the planetary energy situation, a “building block” found all over the globe would be required.

Able to be fashioned with little or no energy: If a building material was found that was indigenous to many parts of the planet but it required massive amounts of energy to fashion into a usable form, then it would not be sustainable and not considered. The major building materials for an earthships must require little or no manufactured energy to fashion into use. This keeps them easily available to common people and at the same time would allow the large scale production of Earthships to maintain a relatively low impact on the planet.

Since there are so many of us, if we are to survive without literally consuming the planet, everything we use must be chosen with consideration to the impact of large scale application. We must explore building materials and methods that are not dependent on manufactured energy and that have the potential to contribute to the general well-being of the planet rather than exploit it.

Thermal Mass:
The materials that surround the spaces of an Earthship must be dense and massive in order to store the temperatures required to provide a habitable environment for humans and plants. The Earthship itself must be a ‘battery’ for storing temperature. Making buildings out of heavy dense mass is as important as making airplanes light. Obviously a heavy airplane takes more fuel to fly. Obviously a light house takes more fuel to heat and cool.

We have built out of wood for centuries. Wood is organic and biodegradable. It goes away. So we have developed various poisonous chemical products to paint on it and make it last. This, plus the fact that wood is light and porous, makes it a very unsatisfactory building material. This is not to mention the fact that trees are our source of oxygen. For building housing that will last without chemicals, we should look around for materials that have durability as an inherent quality rather than trying to paint on durability. Wood is definitely a good material for cabinet doors and ceilings where mass is not a factor and where it protected so it will not rot, but the basic massive structure of buildings should be a natural resource that is inherently massive and durable by its own nature.

Earthquakes are an issue in many parts of the world. Any method of building must relate to this potential threat. Since earthquakes involve a horizontal movement or shaking of the structure, this suggests a material with resilience or capacity to move with this shaking. Brittle materials like concrete, break, crack and fracture. The ideal structural material for dealing with this kind of situation would have a ‘rubbery’ or resilient quality to it. This kind of material would allow movement without failure.

Low specific skill requirements:
If the materials for easily obtainable housing are to be truly accessibly to the common person they must, by their very nature, be easy to learn how to assemble. The nature of the materials for building an earthship must allow for assembling skills to be learned and mastered in a matter of hours, not year. These skills must be basic enough that specific talent is not required to learn them.

Low tech use/application: some systems of building today are simple if one has the appropriate high-tech expensive energy dependeant device or equipment. This, of course, limits the application of these methods to the professionals who have invested in the technology to enable them to use such methods. Becuase of the expense and energy required to get set up for these systems the common person is left totally dependent on those professionals for accessibility to these particular housing systems. Therefore the common person must go through the medium of money (bank loans, interest approvals, etc.) to gain access to a housing system that usually dictates performance and appearance.

If high-tech systems and skills are between the common person and their ability to obtain a home, we are setting ourselves up to place the very nature of our housing in the hans of economics rather than in the hands of the people. This situation has resulted in in human, energy-hog housing blocks and developments that make investors some quick money and leave the planet and the people with something that requires constant input of money and energy to operate. Earthship technology is the technology of natural phenomenon like the physics of the sun, the earth and people themselves.

by Michael Haederle / August 14, 2008

The speed limit posted on the rutted dirt road that winds through the Greater World subdivision is 20 mph, but Michael Reynolds is easily doing twice that as he rides his knobby-tired Yamaha TT500 bike to the job site, his white mane flowing in the slipstream. He pulls up next to a strange-looking structure with curving walls and a row of big, south-facing windows and leads me in the door. The rooms are set side by side, with glass-covered front walls opening onto a corridor running the length of the building. The result is a double greenhouse that captures sunlight pouring in through the windows. Although the June sun is already glaring over the vast mesa outside Taos, N.M., the smooth, mud-plastered walls inside the half-finished building are cool to the touch. “It makes the space that you hang out in 65 to 75 degrees year-round, with no fuel,” Reynolds says. That’s how it’s supposed to be in an Earthship, the self-sustaining dwelling Reynolds has been refining over the past 35 years. “This is our latest model,” Reynolds says. “It’ll probably work better than anything we’ve done.” Earthships have earned the 63-year-old renegade architect some attention over the years, much of it from cable television shows marveling at their novel construction. Reynolds builds exterior and interior walls from discarded tires, “steel-belted, rubber-encased bricks” packed tightly with soil. This creates mass that absorbs heat from the sun in the winter but keeps a cool, steady temperature in the summer. Multi-hued glass bottles used as building blocks in bathroom walls admit a jewellike pattern of light, while a honeycomb of aluminum cans and plastic bottles bulks up exterior walls that are later covered with stucco.

Earthships use photovoltaic cells that produce enough electricity to run lights, computers and flat-screen TVs; their roofs funnel rainwater into underground cisterns. “Gray water” from sinks and showers first irrigates vegetables, flowers and small trees in the greenhouse and then flushes toilets. Northern New Mexico’s high desert receives about 12 inches of precipitation a year, with temperatures that can top 100 degrees in the summer and plunge to 35 degrees below zero in the winter, yet Earthships are surprisingly comfortable, year-round. Reynolds has long preached that we need to go “off the grid,” eliminating our reliance on the fragile web of utility and sewage systems that knits together modern civilization. Now, as global climate change and energy scarcity loom, people are starting to pay attention.

Garbage Warrior, a documentary from British filmmaker Oliver Hodge that follows Reynolds on his quest to transform the way we live, is being shown at film festivals and in theaters around the world. Thanks to the publicity and Reynolds’ self-published books, people have been calling Earthship Biotecture, Reynolds’ design-build firm, to book $200-an-hour phone consults about building their own Earthships. “We’re swamped,” he says. He has built demonstration models in rural Bolivia and the tsunami-ravaged Andaman Islands, as well as in Holland, France and the United Kingdom. Reynolds will spend the summer launching an Earthship resort on the Caribbean island of Bonaire; in the fall, he’ll teach at an architecture school in Bergen, Norway.
“We’ve been doing this for 35 years,” Reynolds says. “All of a sudden, the world has realized they need it. The good thing is we’ve had 35 years to rehearse. To be honest, we’re pretty fucking good at it.”

If he sounds cocky, Reynolds has needed self-confidence to hew to his singular vision. In the past 10 years, he has been sued by disgruntled homeowners, accused by local government of building illegal subdivisions and forced by the state of New Mexico to relinquish his architect’s license. (He remains licensed in Colorado and Arizona.) He even donned a jacket and tie to wage a three-year fight to get the New Mexico Legislature to pass a law allowing people to test off-the-grid housing. But in a sign of changing times, he’s won county approval for Greater World, the most populated of the three Earthship subdivisions he’s built around Taos and has even been appointed to the Taos County Planning Commission. Those subdivisions include roughly 100 homes that cater to an eclectic mix of hippies, teachers, artists, architects, hospital workers and retirees. Greater World, which sits on a 650-acre tract a mile west of the scenic Rio Grande Gorge Bridge, has become a popular attraction for tourists, who stop by to see the nearly 60 Earthships dotting the landscape. That may explain why the state recently earmarked $300,000 to build a new visitor center there.

Reynolds grew up in Louisville, Ky., and after graduating from the University of Cincinnati’s architecture school in 1969, he moved to Taos, then an end-of-the-road haven for artists and hippies. Troubled by the accumulating debris of consumer culture — tires, bottles and cans, plastics — Reynolds decided to incorporate it into his construction. He bought 20 acres of cheap land in the early 1970s and started building experimental structures, including a meditation pyramid made of beer cans and a geodesic dome; he lived in them himself to see how well they worked. Like other builders in the Southwest who weathered the energy crisis of the Ford-Carter years, he copied the ancient Anasazi Indians and started orienting his houses south-by-southeast to capture solar energy. The idea of using earth-filled tires to store energy and maintain a steady temperature came later. Reynolds built his first Earthship in 1987 (at a dirt-cheap $17 per square foot). He still lives in it with his astrologer wife, Chris. A growing number of ecologically minded followers were inspired by his vision, and Reynolds soon wrote Earthship Vol. 1, the first in a series of how-to books to enable people to build their own homes.

The Earthship concept gained an early ally in the late actor Dennis Weaver (of Gunsmoke fame), who had Reynolds build a 10,000-square-foot home outside Ridgeway, Colo., and talked up Earthships on The Tonight Show. Reynolds meanwhile started several Earthship subdivisions around Taos. STAR (Social Transformation Alternative Republic) was set on 1,100 acres just west of Tres Orejas, an extinct volcano. He carved out building sites on a steep mountain slope near the mouth of Taos Canyon that he christened REACH (Rural Earthship Alternative Community Habitat), and Weaver commissioned him to build a second Earthship there. Pat Habicht remembers the heady days in the early 1990s when it seemed Reynolds could do no wrong. She lived for 10 years in one of the first Earthships, perched on Blueberry Hill west of the Taos Plaza; she later sold it to move into a retirement community. “The great thing about Mike is that he was the first person here to make people seriously think about what the options are,” she says. “He’s concerned with the whole world and not just a few houses that one person can build.” Habicht adds that Earthship living was a memorable experience. “I miss that feeling of being looked after by the Earth. They really do work.”

But even as his concept was catching on, Reynolds was heading for a fall. In building his Earthship subdivisions, he says he relied on informal agreements with county zoning officials and the state Construction Industries Division, neither of which objected to what he was doing because they understood that Earthships were still experimental. But then a new Taos County planner took office and in 1997 declared Reynolds’ subdivisions illegal — after all, they had no utility infrastructure. Several people for whom Reynolds had built homes sued or filed complaints with the state, alleging that their Earthships leaked or were too cold. There were also allegations of cost overruns. It was the prelude to years of conflict. Where Reynolds had once been hailed as a visionary, now “I was a crook,” he says. Responding to various complaints, the New Mexico Board of Examiners for Architects filed formal charges against him in 2000, and later that year he agreed to relinquish his architect’s license.

Meanwhile, in 1998, Reynolds was sued by Earthship owner Suzanne Martin, who alleged he had violated the state’s Unfair Trade Practices Act and breached their contract. Martin’s attorney, Lorenzo Atencio, says the construction on Martin’s two homes was shoddy. “The roof leaked,” he says. “The water storage system was not working properly. The wiring was exposed and unsightly.” And, Atencio says, the solar composting toilets Reynolds was using in those days didn’t work properly. A judge ruled in Martin’s favor in 2003. Reynolds appealed the decision, but the case was settled when Reynolds agreed to buy the Earthships back from Martin, Atencio says. Court records show all claims were dismissed in 2004. Reynolds, who represented himself in court, is bitter about the whole thing. “They took my license,” he says. “I got sued and lost a half-million dollars.” The way he sees it, his legal problems resulted from the trial-and-error nature of his ongoing experimentation. Reynolds is always tinkering, trying new ideas and discarding the ones that don’t work. At the same time, he has an obvious disdain for rules and regulations, which, in his view, hinder him from refining his designs in time to avert global catastrophe. Might some see that approach as reckless? “Hell yes, I’m reckless,” he declares. “How are you going to get through a jungle without swinging a machete?”

Sobered by the experience but unbowed, Reynolds says the ordeal taught him how little he needed to get by. “That stretch of hard times lightened my pack,” he says, “and I’ll never fill it up again.”
Although Reynolds is well known among alternative housing enthusiasts, he is far from a household name within the U.S. architectural establishment. “I think he’s making a big impact on a global level,” says his friend Marilyn Crenshaw, a Santa Cruz, Calif.-based residential and commercial architect. “I don’t think he’s making a big impact in the U.S. I wish he would because what he has to share is great.” His genius resides in his ability to integrate thermal mass, solar power, rainwater catchment, photovoltaic and other technologies into a working whole. “Michael is an amazing systems designer,” she says. But Reynolds doesn’t dress or act the part of the serious architect and so isn’t always taken seriously, Crenshaw says. “He’s an innovator — people resist change,” she says. Crenshaw predicts that in an era of global warming and skyrocketing energy prices, “They’re all going to call him a rebel until the day they’re begging for it.”

Reynolds has lectured at various U.S. architecture schools through the years, and architecture students from Reynolds’ alma mater, the University of Cincinnati, have come to Taos to study with him. His work has also been written about in a number of textbooks and earlier this year was included in a Canadian Centre for Architecture exhibit on designs responding to the energy shortages of the 1970s. He has been invited to participate in a design project at the Bergen School of Architecture in Norway this fall.

From a distance, the Earthships at Greater World look like they’re afloat in a sea of sagebrush. Their windows glint in the sun, their roofs sloping back to humps that blend into the terrain. Reynolds shows the energy of a man 20 years younger as he walks briskly from room to room at the newest Earthship, nicknamed the Corner Cottage, inspecting the progress that has been made. Bearded, with wary green eyes, he delivers a rapid-fire monologue peppered with apocalyptic analogies. (In a scene from Garbage Warrior, he likens modern society to a herd of buffalo about to plunge off a 1,000-foot cliff.) He sometimes stays up at night worrying about how easily the systems that support our civilization could be disrupted by natural disasters or man-made catastrophes. Events like Hurricane Katrina and the 2004 Indian Ocean tsunami underscore his concerns. “I don’t trust that the power and water and sewage is going to be available in the future,” he says.

At the Corner Cottage, half a dozen workmen with ponytails and dreadlocks pause at their work as Reynolds discusses with them what they would tackle next. The loss of his New Mexico architect’s license hasn’t hindered him much: There is no requirement that an architect be used to design residential housing as long as the plans are reviewed and stamped by an engineer or architect. He retains his general contractor’s license, and several members of his crew have architecture degrees.
Not that they need much direction. They have built most of the homes at Greater World (a total of 130 are planned), and many live here. They have mastered the art of pounding soil into tires with hand sledges and building walls from bottles and gobs of cement. They know how to craft ceilings with 12-inch vigas — peeled pine trunks harvested from nearby mountains — and how to trowel a smooth mud plaster flecked with bits of straw. Most of them are young enough to be his sons, but Reynolds regards them as his friends.

Just down the road, the sprawling 6,000-square-foot showpiece home he’s dubbed The Phoenix features a two-story greenhouse big enough to house a small fishpond, a gazebo and some citrus trees. Reynolds rents this place to overnight guests, who come from as far away as Japan to experience Earthship living for themselves. The Phoenix has been advertised for sale on the Internet for $1.5 million, which Reynolds admits is pricey, but he says this project is intentionally over the top, calculated to get wealthy and influential people interested. Meanwhile, he and his crew are building the prototype for an affordable three-bedroom, two-bath house that would suit the finances of ordinary homebuyers.

The Phoenix needs landscaping at the moment. There’s an unfinished bottle-and-cement wall meant to serve as an enclosure for goats and sheep, and piles of construction debris dot the periphery of the building site, parched in the desert sun. Inside, though, it’s a semitropical arboretum. The air is fragrant with the scent of growing things — bananas, grapes, corn, lemons, tangerines, oranges, tomatoes, amaranth, coconut palm and eggplant. All told, about 2,200 square feet of the structure are devoted to food production. “A family of four could live here, period, with nothing from the outside world,” Reynolds says as we stand in the greenhouse. In the kitchen, a super-insulated refrigerator runs on current from the photovoltaic system. The compressor is located on the top of the unit instead of the bottom so rising heat won’t work against the cooling system. The stove runs on bottled propane —Reynolds’ one concession to outside energy sources. He estimates that a standard 500-gallon propane tank will last for about three years, totaling $50 a year in energy costs.

Behind the living space is a long, narrow corridor, one wall of which is the towering stack of tires that give the building its thermal mass (there’s another three feet of compacted earth behind the tires, a barrier of rigid insulation and then several feet of mounded soil moved in with a backhoe). Transom openings in the rear of the rooms vent into this hallway, which has two vertical shafts leading up to large, movable skylights. With the tug of a rope, the counterweight-loaded covers can be raised, allowing warm air to escape. Outside, I follow Reynolds as he climbs onto the slope leading up to the building’s roof. Reynolds shows a V-shaped membrane that collects rainwater running off green sheet metal and directs it into twin drains leading to buried 3,000-gallon cisterns. He opens a cabinet housing the deep-cycle batteries that store power from the photovoltaic cells and another containing storage for biodiesel containers. “What we’re doing now is putting a small biodiesel plant, about the size of a washer, in each home,” he says. With five-gallon cans of cooking grease obtained from local restaurants, occupants can produce 25 gallons of bio-diesel a week and use it to supplement the rooftop solar collector that heats hot water for the kitchen and bath.

Reynolds calls my attention to a multicolored decoration along the roofline made from enameled sheet metal. The panels were harvested from washers, dryers and dishwashers at the local dump, he says. His workers have even salvaged heavy-duty trampoline springs to operate the skylights. “The dump is a gold mine; it really is,” he says. “We’re using products that our neighborhood produces, and they don’t require any fuel.” A large Earthship like this one might use 1,000 tires, Reynolds says, each of which takes seven gallons of oil to produce. A growing number of the roughly 290 million scrap tires generated in the U.S. each year are burned for fuel or ground up for road base and other uses, but about 27 million still wind up in dumps. “I’ve got a mountain of tires,” Reynolds says. “There are more tires than there are trees.” He acknowledges that an Earthship still requires new building materials, including lumber, glass, insulation, wire, cement and steel. But by comparison with conventional construction, he estimates, “I’d say we’ve reduced the materials to the tune of 50 percent.”

The Earthships at Greater World run the gamut from lovingly tended to rough and half finished. That partly reflects the limited finances of some of the DIY owners but also something of the founder’s outlook. Pat Habicht, who did the finish work on her Earthship, says that for Reynolds, who favors function over form, aesthetics are strictly of secondary interest. “He doesn’t care what the hell it looks like,” she says, laughing. Reynolds believes it’s unconscionable for an architect to focus on how a building looks with little or no regard to what effect it will have on the environment. “They’re still allowing architects to make these little monuments to themselves that cost $60 million,” he snorts. “That’s a big part of the reason I’ve called this Biotecture. I don’t think architecture is capable of coming around fast enough. I don’t want to be labeled that.”

Kirsten Jacobsen, Earthship Biotecture’s educational director, was a college student in San Francisco when she came out to Taos 14 years ago to do a research project on Reynolds. “I thought it was great that people living in houses like these were making an impact just by getting up and reading a book,” she says. She wound up becoming part of his tribe, spending the next four years on a construction crew. She moved on to help run the Greater World visitor center, and now she serves as Reynolds’ right hand and air-traffic controller, keeping track of his commitments from the Earthship Biotecture office, a ramshackle structure with a dome on top. Jacobsen tells me it took her eight years to build her own 1,300-square-foot home in Greater World. While people simply live in a conventional house, she says, Earthship owners have to live with their houses. Jacobsen says maintaining the heating, cooling and water systems in her two-bedroom home doesn’t require much time; it’s mostly a matter of raising and lowering the shades and opening and closing the skylights. She estimates that she spends an hour every few months cleaning out water filters. “In the U.S., these ideas exist on the fringe of ‘green buildings,’” she says. “We’re not saying this is for everyone. We’re just saying this is a direction you ought to investigate.”

Tony Marvin, a longtime Taos resident who has renovated old adobe houses in town, bought a two-bedroom, 1,700-square-foot Earthship in Greater World two and a half years ago with his girlfriend. “It’s absolutely a stunning home,” he says. “There was actually nothing this beautiful at this price in Taos — not even close.” There was “a learning curve” in mastering the building’s water and electrical systems, Marvin says, but they work well. “One of the happiest days of my life was when I went to the gas utility and the electrical utility and said, ‘I want my accounts disconnected,’” he says. Serenity and self-sufficiency may be his goal, but Reynolds these days seems to be in perpetual motion, juggling international phone calls and supervising construction projects while finding time to draft floor plans and add to his collection of writings. His cluttered office at Greater World is strewn with blueprints and site renderings, the walls covered with large calendars mapping out his travel for the next six months.

He acknowledges the house-afire urgency, recounting a recent phone consult with a couple so worried about climate change that they told him, “We just need to get in a house that’s going to take care of us — now.” Reynolds warns there isn’t much time. “I knew that things were going down the tubes, and it was going to take a long time for people to get desperate enough to make these changes,” he says. “We extended ourselves out there for a long time, and nobody cared. Now that they see the icebergs melting, everybody cares.”


Somali sea gangs lure investors at pirate lair
BY Mohamed Ahmed / Dec 1, 2009

In Somalia’s main pirate lair of Haradheere, the sea gangs have set up a cooperative to fund their hijackings offshore, a sort of stock exchange meets criminal syndicate. Heavily armed pirates from the lawless Horn of Africa nation have terrorized shipping lanes in the Indian Ocean and strategic Gulf of Aden, which links Europe to Asia through the Red Sea. The gangs have made tens of millions of dollars from ransoms and a deployment by foreign navies in the area has only appeared to drive the attackers to hunt further from shore. It is a lucrative business that has drawn financiers from the Somali diaspora and other nations — and now the gangs in Haradheere have set up an exchange to manage their investments.

One wealthy former pirate named Mohammed took Reuters around the small facility and said it had proved to be an important way for the pirates to win support from the local community for their operations, despite the dangers involved. “Four months ago, during the monsoon rains, we decided to set up this stock exchange. We started with 15 ‘maritime companies’ and now we are hosting 72. Ten of them have so far been successful at hijacking,” Mohammed said. “The shares are open to all and everybody can take part, whether personally at sea or on land by providing cash, weapons or useful materials … we’ve made piracy a community activity.”

Haradheere, 400 km (250 miles) northeast of Mogadishu, used to be a small fishing village. Now it is a bustling town where luxury 4×4 cars owned by the pirates and those who bankroll them create honking traffic jams along its pot-holed, dusty streets. Somalia’s Western-backed government of President Sheikh Sharif Ahmed is pinned down battling hard-line Islamist rebels, and controls little more than a few streets of the capital. The administration has no influence in Haradheere — where a senior local official said piracy paid for almost everything. “Piracy-related business has become the main profitable economic activity in our area and as locals we depend on their output,” said Mohamed Adam, the town’s deputy security officer. “The district gets a percentage of every ransom from ships that have been released, and that goes on public infrastructure, including our hospital and our public schools.”

In a drought-ravaged country that provides almost no employment opportunities for fit young men, many are been drawn to the allure of the riches they see being earned at sea. Abdirahman Ali was a secondary school student in Mogadishu until three months ago when his family fled the fighting there. Given the choice of moving with his parents to Lego, their ancestral home in Middle Shabelle where strict Islamist rebels have banned most entertainment including watching sport, or joining the pirates, he opted to head for Haradheere. Now he guards a Thai fishing boat held just offshore. “First I decided to leave the country and migrate, but then I remembered my late colleagues who died at sea while trying to migrate to Italy,” he told Reuters. “So I chose this option, instead of dying in the desert or from mortars in Mogadishu.”

Haradheere’s “stock exchange” is open 24 hours a day and serves as a bustling focal point for the town. As well as investors, sobbing wives and mothers often turn up there seeking news of male relatives missing in action. Every week, Mohammed said, gang members and equipment were lost to the sea. But he said the pirates were not deterred. “Ransoms have even increased in recent months from between $2-3 million to $4 million because of the increased number of shareholders and the risks,” he said. “Let the anti-piracy navies continue their search for us. We have no worries because our motto for the job is ‘do or die’.” Piracy investor Sahra Ibrahim, a 22-year-old divorcee, was lined up with others waiting for her cut of a ransom pay-out after one of the gangs freed a Spanish tuna fishing vessel. “I am waiting for my share after I contributed a rocket-propelled grenade for the operation,” she said, adding that she got the weapon from her ex-husband in alimony. “I am really happy and lucky. I have made $75,000 in only 38 days since I joined the ‘company’.”


A basic piracy operation requires a minimum eight to twelve militia prepared to stay at sea for extended periods of time, in the hopes of hijacking a passing vessel. Each team requires a minimum of two attack skiffs, weapons, equipment, provisions, fuel and preferably a supply boat. The costs of the operation are usually borne by investors, some of whom may also be pirates.

To be eligible for employment as a pirate, a volunteer should already possess a firearm for use in the operation. For this ‘contribution’, he receives a ‘class A’ share of any profit. Pirates who provide a skiff or a heavier firearm, like an RPG or a general purpose machine gun, may be entitled to an additional A-share. The first pirate to board a vessel may also be entitled to an extra A-share.

At least 12 other volunteers are recruited as militiamen to provide protection on land of a ship is hijacked, In addition, each member of the pirate team may bring a partner or relative to be part of this land-based force. Militiamen must possess their own weapon, and receive a ‘class B’ share — usually a fixed amount equivalent to approximately US$15,000.

If a ship is successfully hijacked and brought to anchor, the pirates and the militiamen require food, drink, qaad, fresh clothes, cell phones, air time, etc. The captured crew must also be cared for. In most cases, these services are provided by one or more suppliers, who advance the costs in anticipation of reimbursement, with a significant margin of profit, when ransom is eventually paid.

When ransom is received, fixed costs are the first to be paid out. These are typically:
• Reimbursement of supplier(s)
• Financier(s) and/or investor(s): 30% of the ransom
• Local elders: 5 to 10 %of the ransom (anchoring rights)
• Class B shares (approx. $15,000 each): militiamen, interpreters etc.

The remaining sum — the profit — is divided between class-A shareholders.


BY Ryan Hagen / April 20, 2009

The crew of the Maersk Alabama, having survived an attack by pirates in Somalia last week, has returned home for a much-deserved rest. But with tensions ratcheting up between the U.S. and the rag-tag confederation of Somali pirates, it’s worth looking to the past for clues on how to tame the outlaw seas. Peter Leeson, an economist at George Mason University (and an occasional Freakonomics guest blogger), offers a brisk and fascinating look at old-school piracy in his new book The Invisible Hook: The Hidden Economics of Pirates. Leeson agreed to sit down and answer some important piratical questions for us:

Q: The Invisible Hook is more than just a clever title. How is it different from Adam Smith’s invisible hand?
A: In Adam Smith, the idea is that each individual pursuing his own self-interest is led, as if by an invisible hand, to promote the interest of society. The idea of the invisible hook is that pirates, though they’re criminals, are still driven by their self-interest. So they were driven to build systems of government and social structures that allowed them to better pursue their criminal ends. They’re connected, but the big difference is that, for Adam Smith, self-interest results in cooperation that generates wealth and makes other people better off. For pirates, self-interest results in cooperation that destroys wealth by allowing pirates to plunder more effectively.

Q: In the book, you write that pirates had set up their own early versions of constitutional democracy, complete with separation of powers, decades before the American Revolution. Was that only possible because they were outlaws, operating entirely outside the control of any government?
A: That’s right. The pirates of the 18th century set up quite a thoroughgoing system of democracy. The reason that the criminality is driving these structures is because they can’t rely on the state to provide those structures for them. So pirates, more than anyone else, needed to figure out some system of law and order to make it possible for them to remain together long enough to be successful at stealing.

Q: So did these participatory, democratic systems give merchant sailors an incentive to join pirate crews, because it meant they were freer among pirates than on their own ships?
A: The sailors had more freedom and better pay as pirates than as merchantmen. But perhaps the most important thing was freedom from the arbitrariness of captains and the malicious abuses of power that merchant captains were known to inflict on their crews. In a pirate democracy, a crew could, and routinely did, depose their captain if he was abusing his power or was incompetent.

Q: You write that pirates weren’t necessarily the bloodthirsty fiends we imagine them to have been. How does the invisible hook explain their behavior?
A: The basic idea is, once we recognize pirates as economic actors, businessmen really, it becomes clear as to why they wouldn’t want to brutalize everyone they overtook. In order to encourage merchantmen to surrender, they needed to communicate the idea that, if you surrender to us, you’ll be treated well. That’s the incentive pirates give for sailors to surrender peacefully. If they wantonly abused their prisoners, as they’re often portrayed as having done, that would have actually undermined the incentive of merchant crews to surrender, which would have caused pirates to incur greater costs. They would have had to battle it out more often, because the merchants would have expected to be tortured indiscriminately if they were captured.

So instead, what we often see in the historical record is pirates displaying quite remarkable feats of generosity. The other side of that, of course, is that if you resisted, they had to unleash, you know, a hellish fury on you. That’s where most of the stories of pirate atrocities come from. That’s not to say that no pirate ever indulged his sadistic impulses. But I speculate that the pirate population had no higher proportion of sadists than legitimate society did. And those sadists among the pirates tended to reserve their sadistic actions for times when it would profit them.

Q: So they never made anyone walk the plank?
A: There was no walking the plank. There’s no historical foundation for that in 17th- or 18th-century piracy.

Q: You write about piracy as a brand. It’s quite a successful one, having lasted for hundreds of years after the pirates themselves were exterminated. What was the key to that success?
A: There was a very particular type of reputation that pirates wanted to cultivate. It was a very delicate line to walk. They didn’t want to have a reputation for wanton brutality or complete madness. They wanted to be perceived as hair-trigger men, men on the edge, who if you pushed, if you resisted, they would snap and do something horrible to you. That way, the captives they took had an incentive to be very careful to comply with all of the pirates’ demands. At the same time, they wanted a reputation as being very brutal, as meting out these brutal, horrible tortures to captives who didn’t comply with their demands. Stories about those horrible tortures were relayed not only by word of mouth, but by early 18th-century newspapers. When a former prisoner was released, he would oftentimes go to the media and provide an account of his capture. So when colonials read these accounts in the media, that helped institutionalize the idea of pirates as these men on the edge. That worked marvelously for pirates. It was a form of advertising performed by legitimate members of society that again helped pirates reduce their costs.

Q: What kinds of lessons can we draw from The Invisible Hook in dealing with modern pirates?
A: We have to recognize that pirates are rational economic actors and that piracy is an occupational choice. If we think of them as irrational, or as pursuing other ends, we’re liable to come up with solutions to the pirate problem that are ineffective. Since we know that pirates respond to costs and benefits, we should think of solutions that alter those costs and benefits to shape the incentives for pirates and to deter them from going into a life of piracy.

Peter Leeson
email : pleeson [at] gmu [dot] edu






“We don’t consider ourselves sea bandits. We consider sea bandits
those who illegally fish in our seas and dump waste in our seas and
carry weapons in our seas. We are simply patrolling our seas. Think of
us like a coast guard.”

Somalia’s pirates flourish in a lawless nation
BY Jeffrey Gettleman / October 31, 2008

Boosaaso, Somalia: This may be one of the most dangerous towns in
Somalia, a place where you can get kidnapped faster than you can wipe
the sweat off your brow. But it is also one of the most prosperous.
Money changers walk around with thick wads of hundred-dollar bills.
Palatial new houses are rising up next to tin-roofed shanties. Men in
jail reminisce, with a twinkle in their eyes, about their days living
like kings. This is the story of Somalia’s booming, not-so-underground
pirate economy. The country is in chaos, countless children are
starving and people are killing one another in the streets of
Mogadishu, the capital, for a handful of grain. But one particular
line of work – piracy – seems to be benefiting quite openly from all
this lawlessness and desperation. This year, Somali officials say,
pirate profits are on track to reach a record $50 million, all of it
tax free.

“These guys are making a killing,” said Mohamud Muse Hirsi, the top
Somali official in Boosaaso, who himself is widely suspected of
working with the pirates, though he vigorously denies it. More than 75
vessels have been attacked this year, far more than any other year in
recent memory. About a dozen have been set upon in the past month
alone, including a Ukrainian freighter packed with tanks, antiaircraft
guns and other heavy weaponry, which was brazenly seized in September.
The pirates use fast-moving skiffs to pull alongside their prey and
scamper on board with ladders or sometimes even rusty grappling hooks.
Once on deck, they hold the crew at gunpoint until a ransom is paid,
usually $1 million to $2 million. Negotiations for the Ukrainian
freighter are still going on, and it is likely that because of all the
publicity, the price for the ship could top $5 million. In Somalia, it
seems, crime does pay. Actually, it is one of the few industries that

“All you need is three guys and a little boat, and the next day you’re
millionaires,” said Abdullahi Omar Qawden, a former captain in
Somalia’s long-defunct navy. People in Garoowe, a town south of
Boosaaso, describe a certain high-rolling pirate swagger. Flush with
cash, the pirates drive the biggest cars, run many of the town’s
businesses – like hotels – and throw the best parties, residents say.
Fatuma Abdul Kadir said she went to a pirate wedding in July that
lasted two days, with nonstop dancing and goat meat, and a band flown
in from neighboring Djibouti. “It was wonderful,” said Fatuma, 21.
“I’m now dating a pirate.”

This is too much for many Somali men to resist, and criminals from all
across this bullet-pocked land are now flocking to Boosaaso and other
notorious pirate dens along the craggy Somali shore. They have turned
these waters into the most dangerous shipping lanes in the world. With
the situation clearly out of control, warships from the United States,
Russia, NATO, the European Union and India are steaming into Somalia’s
waters as part of a reinvigorated, worldwide effort to crush the
pirates. But it will not be easy. The pirates are sea savvy. They are
fearless. They are rich and getting richer, with the latest high-tech
gadgetry like handheld GPS units. And they are united. The immutable
clan lines that have pitted Somalis against one another for decades
are not a problem here. Several captured pirates interviewed in
Boosaaso’s main jail said that they had recently crossed clan lines to
open new, lucrative, multiclan franchises. “We work together,” said
Jama Abdullahi, a jailed pirate. “Good for business, you know?”

The pirates are also sprinkled across thousands of square miles of
water, from the Gulf of Aden, at the narrow doorway to the Red Sea, to
the Kenyan border along the Indian Ocean. Even if the naval ships
manage to catch pirates in the act, it is not clear what they can do.
In September, a Danish warship captured 10 men suspected of being
pirates cruising around the Gulf of Aden with rocket-propelled
grenades and a long ladder. But after holding the suspects for nearly
a week, the Danes concluded that they did not have jurisdiction to
prosecute, so they dumped the pirates on a beach, minus their guns.
Nobody, it seems, has a clear plan for how to tame Somalia’s unruly
seas. Several fishermen along the Gulf of Aden talked about seeing
barrels of toxic waste bobbing in the middle of the ocean. They spoke
of clouds of dead fish floating nearby and rogue fishing trawlers
sucking up not just fish and lobsters but also the coral and the
plants that sustain them. It was abuses like these, several men said,
that turned them from fishermen into pirates. Nor is it even clear
whether Somali authorities universally want the piracy to stop. While
many pirates have been arrested, several fishermen, Western
researchers and more than a half-dozen pirates in jail spoke of
nefarious relationships among fishing companies, private security
contractors and Somali government officials, especially those working
for the semiautonomous regional government of Puntland.

“Believe me, a lot of our money has gone straight into the
government’s pockets,” said Farah Ismail Eid, a pirate who was
captured in nearby Berbera and sentenced to 15 years in jail. His
pirate team, he said, typically divided up the loot this way: 20
percent for their bosses, 20 percent for future missions (to cover
essentials like guns, fuel and cigarettes), 30 percent for the gunmen
on the ship and 30 percent for government officials. Abdi Waheed
Johar, the director general of the fisheries and ports ministry of
Puntland, openly acknowledged in an interview this spring that “there
are government people working with the pirates.” But, he was quick to
add, “It’s just not us.”

What is happening off Somalia’s shores is basically an extension of
the corrupt, violent free-for-all that has raged on land for 17 years
since the central government imploded in 1991. The vast majority of
Somalis lose out. Young thugs who are willing to serve as muscle get a
job, albeit a low-paying one, that significantly reduces their life
expectancy. And a select few warlords, who have sat down and figured
out how to profit off the anarchy, make a fortune. Take Boosaaso, once
a thriving port town on the Gulf of Aden. Piracy is killing off the
remains of the local fishing industry because export companies are
staying away. It has spawned a kidnapping business on shore, which in
turn has scared away many humanitarian agencies and the food, medicine
and other forms of desperately needed assistance they bring. Reporting
in Boosaaso two weeks ago required no fewer than 10 hired gunmen
provided by the Puntland government to discourage any would-be

Few large cargo ships come here anymore, depriving legitimate
government operations of much-needed port taxes. Just about the only
ships willing to risk the voyage are small, wooden, putt-putt
freighters from India, essentially floating jalopies from another era.
“We can’t survive off this,” said Bile Qabowsade, a Puntland official.
The shipping problems have contributed to food shortages, skyrocketing
inflation and less work for the sinewy stevedores who trudge out to
Boosaaso’s beach every morning and stare in vain at the bright
horizon, their bare feet planted in the hot sand, hoping a ship will
materialize so they will be able to make a few pennies hauling 100-
pound sacks of sugar on their backs.

And yet, suspiciously, there has been a lot of new construction in
Boosaaso. There is an emerging section of town called New Boosaaso
with huge homes rising above the bubble-shaped huts of refugees and
the iron-sided shacks that many fishermen call home. These new houses
cost several hundred thousand dollars. Many are painted in garish
colors and protected by high walls. Even so, Boosaaso is still a
crumbling, broke, rough-and-tumble place, decaying after years of
neglect like so much of war-ravaged Somalia. It is also dangerous in
countless ways. On Wednesday, suicide bombers blew up two government
offices, most likely the work of Islamist radicals trying to turn
Somalia into an Islamist state. Of course, no Somali government
official would openly admit that New Boosaaso’s minicastles were built
with pirate proceeds. But many people, including United Nations
officials and Western diplomats, suspect that is the case.

Several jailed pirates have accused Muse, a former warlord who is now
Puntland’s president, of being paid off. Officials in neighboring
Somaliland, a breakaway region of northwestern Somalia, said they
recently organized an antipiracy sting operation and arrested Muse’s
nephew, who was carrying $22,000 in cash. “Top Puntland officials
benefit from piracy, even if they might not be instigating it,” said
Roger Middleton, a researcher at the Royal Institute of International
Affairs in London. Actually, he added, “all significant political
actors in Somalia are likely benefiting from piracy.” But Muse said he
did not know anything about this. “We are the leaders of this
country,” he said. “Everybody we suspect, we fire from work.”

He said that Puntland was taking aggressive action against the
pirates. And Boosaaso’s main jail may be proof of that. The other day,
a dozen pirates were hanging out in the yard under a basketball hoop.
And that was just the beginning. “Pirates, pirates, pirates,” said
Gure Ahmed, a Canadian-Somali inmate of the jail, charged with murder.
“This jail is full of pirates. This whole city is pirates.” In other
well-known pirate dens, like Garoowe, Eyl, Hobyo and Xarardheere,
pirates have become local celebrities. Said Farah, 32, a shopkeeper in
Garoowe, said the pirates seemed to have money to burn. “If they see a
good car that a guy is driving,” he said, “they say, ‘How much? If
it’s 30 grand, take 40 and give me the key.’ ”

Every time a seized ship tosses its anchor, it means a pirate shopping
spree. Sheep, goats, water, fuel, rice, spaghetti, milk and cigarettes
– the pirates buy all of this, in large quantities, from small towns
up and down the Somali coast. Somalia’s seafaring thieves are not like
the Barbary pirates, who terrorized European coastal towns hundreds of
years ago and often turned their hostages into galley slaves chained
to the oars. Somali pirates are known as relatively decent hosts,
usually not beating their hostages and keeping them well-fed until
payday comes. “They are normal people,” said Said. “Just very, very

Somali Pirates Tell Their Side: They Want Only Money
BY Jeffrey Gettleman / October 1, 2008

Nairobi, Kenya — The Somali pirates who hijacked a Ukrainian freighter
loaded with tanks, artillery, grenade launchers and ammunition said in
an interview on Tuesday that they had no idea the ship was carrying
arms when they seized it on the high seas. “We just saw a big ship,”
the pirates’ spokesman, Sugule Ali, said in a telephone interview. “So
we stopped it.” The pirates quickly learned, though, that their booty
was an estimated $30 million worth of heavy weaponry, heading for
Kenya or Sudan, depending on whom you ask.

In a 45-minute interview, Mr. Sugule spoke on everything from what the
pirates wanted (“just money”) to why they were doing this (“to stop
illegal fishing and dumping in our waters”) to what they had to eat on
board (rice, meat, bread, spaghetti, “you know, normal human-being
food”). He said that so far, in the eyes of the world, the pirates had
been misunderstood. “We don’t consider ourselves sea bandits,” he
said. “We consider sea bandits those who illegally fish in our seas
and dump waste in our seas and carry weapons in our seas. We are
simply patrolling our seas. Think of us like a coast guard.”

The pirates who answered the phone call on Tuesday morning said they
were speaking by satellite phone from the bridge of the Faina, the
Ukrainian cargo ship that was hijacked about 200 miles off the coast
of Somalia on Thursday. Several pirates talked but said that only Mr.
Sugule was authorized to be quoted. Mr. Sugule acknowledged that they
were now surrounded by American warships, but he did not sound afraid.
“You only die once,” Mr. Sugule said.

He said that all was peaceful on the ship, despite unconfirmed reports
from maritime organizations in Kenya that three pirates were killed in
a shootout among themselves on Sunday or Monday night. He insisted
that the pirates were not interested in the weapons and had no plans
to sell them to Islamist insurgents battling Somalia’s weak
transitional government. “Somalia has suffered from many years of
destruction because of all these weapons,” he said. “We don’t want
that suffering and chaos to continue. We are not going to offload the
weapons. We just want the money.” He said the pirates were asking for
$20 million in cash; “we don’t use any other system than cash.” But he
added that they were willing to bargain. “That’s deal-making,” he

Piracy in Somalia is a highly organized, lucrative, ransom-driven
business. Just this year, pirates hijacked more than 25 ships, and in
many cases, they were paid million-dollar ransoms to release them. The
juicy payoffs have attracted gunmen from across Somalia, and the
pirates are thought to number in the thousands. The piracy industry
started about 10 to 15 years ago, Somali officials said, as a response
to illegal fishing. Somalia’s central government imploded in 1991,
casting the country into chaos. With no patrols along the shoreline,
Somalia’s tuna-rich waters were soon plundered by commercial fishing
fleets from around the world. Somali fishermen armed themselves and
turned into vigilantes by confronting illegal fishing boats and
demanding that they pay a tax. “From there, they got greedy,” said
Mohamed Osman Aden, a Somali diplomat in Kenya. “They starting
attacking everyone.”

By the early 2000s, many of the fishermen had traded in their nets for
machine guns and were hijacking any vessel they could catch: sailboat,
oil tanker, United Nations-chartered food ship. “It’s true that the
pirates started to defend the fishing business,” Mr. Mohamed said.
“And illegal fishing is a real problem for us. But this does not
justify these boys to now act like guardians. They are criminals. The
world must help us crack down on them.” The United States and several
European countries, in particular France, have been talking about ways
to patrol the waters together. The United Nations is even considering
something like a maritime peacekeeping force. Because of all the
hijackings, the waters off Somalia’s coast are considered the most
dangerous shipping lanes in the world.

On Tuesday, several American warships — around five, according to one
Western diplomat — had the hijacked freighter cornered along the
craggy Somali coastline. The American ships allowed the pirates to
bring food and water on board, but not to take weapons off. A Russian
frigate is also on its way to the area. Lt. Nathan Christensen, a Navy
spokesman, said on Tuesday that he had heard the unconfirmed reports
about the pirate-on-pirate shootout, but that the Navy had no more
information. “To be honest, we’re not seeing a whole lot of activity”
on the ship, he said.

In Washington, Geoff Morrell, the Pentagon press secretary, declined
to discuss any possible American military operations to capture the
ship. “Our concern is right now making sure that there’s a peaceful
resolution to this, that this cargo does not end up in the hands of
anyone who would use it in a way that would be destabilizing to the
region,” Mr. Morrell told reporters at the Pentagon. He said the
United States government was not involved in any negotiations with the
pirates. He also said he had no information about reports that the
pirates had exchanged gunfire among themselves.

Kenyan officials continued to maintain that the weapons aboard were
part of a legitimate arms deal for the Kenyan military, even though
several Western diplomats, Somali officials and the pirates themselves
said the arms were part of a secret deal to funnel weapons to southern
Sudan. Somali officials are urging the Western navies to storm the
ship and arrest the pirates because they say that paying ransoms only
fuels the problem. Western diplomats, however, have said that such a
commando operation would be very difficult because the ship is full of
explosives and the pirates could use the 20 crew members as human

Mr. Sugule said his men were treating the crew members well. (The
pirates would not let the crew members speak on the phone, saying it
was against their rules.) “Killing is not in our plans,” he said. “We
only want money so we can protect ourselves from hunger.” When asked
why the pirates needed $20 million to protect themselves from hunger,
Mr. Sugule laughed and said, “Because we have a lot of men.”

“The pirates adopt names like the National Volunteer Coast Guard,
which is used by a group that intercepts small boats and fishing
vessels in southern Somalia. Another of the four main piracy groups
along the coast calls itself the Somali Marines. Organized like a
military unit, with admirals, vice admirals and the like, the group
operates around Mogadishu.”

Q. & A. With a Pirate: “We Just Want the Money”
BY Jeffrey Gettleman / September 30, 2008

Somali pirates in small boats hijacked the Faina, a Belize-flagged
cargo ship owned and operated by Kaalbye Shipping Ukraine, on Sept.
25. Sugule Ali, the spokesman for the Somali pirates holding hostage
the Faina, a Ukrainian freighter loaded with weapons, spoke to me by
satellite telephone today from the bridge of the seized ship. In the
holds of the Faina, which the pirates seized on Thursday, are 33
Russian-built battle tanks and crates of grenade launchers, anti-
aircraft guns, ammunition and other explosives. American officials
fear that the weapons could fall into the hands of radical Islamist
insurgents who are battling Somalia’s weak government. My questions
were translated into Somali, and Mr. Ali’s responses into English, by
a translator employed by The New York Times.

Q. Tell us how you discovered the weapons on board.
A. As soon as we get on a ship, we normally do what is called a
control. We search everything. That’s how we found the weapons. Tanks,
anti-aircraft, artillery. That’s all we will say right now.

Q. Were you surprised?
A. No, we weren’t surprised. We know everything goes through the sea.
We see people who dump waste in our waters. We see people who
illegally fish in our waters. We see people doing all sorts of things
in our waters.

Q. Are you going to sell the weapons to insurgents?
A. No. We don’t want these weapons to go to anyone in Somalia. Somalia
has suffered from many years of destruction because of all these
weapons. We don’t want that suffering and chaos to continue. We are
not going to offload the weapons. We just want the money.

Q. How much?
A. $20 million, in cash. We don’t use any other system than cash.

Q. Will you negotiate?
A. That’s deal making. Common sense says human beings can make deals.

Q. Right now, the American Navy has you surrounded. Are you scared?
A. No, we’re not scared. We are prepared. We are not afraid because we
know you only die once.

Q. Will you kill the hostages if attacked?
A. Killing is not in our plans. We don’t want to do anything more than
the hijacking.

Q. What will you do with the money?
A. We will protect ourselves from hunger.

Q. That’s a lot of money to protect yourselves from hunger.
A. Yes, because we have a lot of men and it will be divided amongst
all of us.

Q. [There are 20 crew members, most of them Ukrainian, being held
hostage.] How are you interacting with the hostages? Eating with them?
Playing cards?
A. We interact with each other in an honorable manner. We are all
human beings. We talk to one another, and because we are in the same
place, we eat together.

Q. What if you were told you could leave peacefully, without arrest,
though without any ransom money. Would you do it?
A. [With a laugh] We’re not afraid of arrest or death or any of these
things. For us, hunger is our enemy.

Q. Have the pirates been misunderstood?
A. We don’t consider ourselves sea bandits [”sea bandit” is one way
Somalis translate the English word pirate]. We consider sea bandits
those who illegally fish in our seas and dump waste in our seas and
carry weapons in our seas. We are simply patrolling our seas. Think of
us like a coast guard.

Q. Why did you want to become a pirate?
A. We are patrolling our seas. This is a normal thing for people to do
in their regions.

Q. Isn’t what you are doing a crime? Holding people at gunpoint?
A. If you hold hostage innocent people, that’s a crime. If you hold
hostage people who are doing illegal activities, like waste dumping or
fishing, that is not a crime.

Q. What has this Ukrainian ship done that was a crime?
A. To go through our waters carrying all these weapons without

Q. What is the name of your group? How many ships have you hijacked
A. I won’t say how many ships we have hijacked. I won’t talk about
that. Our name is the Central Region Coast Guard.

“Our crew, who had been well trained and prepared, used water cannon, self-made incendiary bombs [Molotov cocktails or petrol bombs], beer bottles and anything else that could be used to battle with them. Thirty minutes later, the pirates gestured to us for a ceasefire. Then the helicopter from the joint fleet came to help us.”

Somali pirates in stare-down with global powers
BY Elizabeth A. Kennedy / Oct 15, 2008

Nairobi, Kenya — With a Russian frigate closing in and a half-dozen
U.S. warships within shouting distance, the pirates holding a tanker
off Somalia’s coast might appear to have no other choice than to wave
the white flag. But that’s not how it works in Somalia, a failed state
where a quarter of children die before they turn 5, where anybody with
a gun controls the streets and where every public institution has
crumbled. The 11-day standoff aboard the Ukrainian MV Faina begs the
question: How can a bunch of criminals from one of the poorest and
most wretched countries on Earth face off with some of the world’s
richest and well-armed superpowers?

“They have enough guns to fight for another 20 years,” Ted Dagne, a
Somalia analyst in Washington, told The Associated Press. “And there
is no way to win a battle when the other side is in a suicidal mind
set.” In Somalia, pirates are better-funded, better-organized and
better-armed than one might imagine in a country that has been in
tatters for nearly two decades. They have the support of their
communities and rogue members of the government — some pirates even
promise to put ransom money toward building roads and schools. With
most attacks ending with million-dollar payouts, piracy is considered
the biggest economy in Somalia. Pirates rarely hurt their hostages,
instead holding out for a huge payday. The strategy works well: A
report Thursday by a London-based think tank said pirates have raked
in up to $30 million in ransoms this year alone. “If we are attacked
we will defend ourselves until every last one of us dies,” Sugule Ali,
a spokesman for the pirates aboard the Faina, said in an interview
over satellite telephone from the ship, which is carrying 33 battle
tanks, military weapons and 21 Ukrainian and Latvian and Russian
hostages. One Russian has reportedly died, apparently of illness. The
pirates are demanding $20 million ransom, and say they will not lower
the price. “We only need money and if we are paid, then everything
will be OK,” he said. “No one can tell us what to do.”

Ali’s bold words come even though his dozens of fighters are
surrounded by U.S. warships and American helicopters buzz overhead.
Moscow has sent a frigate, which should arrive within days. Jennifer
Cooke of the Center for Strategic and International Studies in
Washington said hostage-taking is the key to the pirates’ success
against any military muscle looming from the U.S. and Russia. “Once
you have a crew at gunpoint, you can hold six U.S. naval warships at
bay and they don’t have a whole lot of options except to wait it out,”
Cooke said. The pirates have specifically warned against the type of
raids carried out twice this year by French commandos to recover
hijacked vessels. The French used night vision goggles and helicopters
in operations that killed or captured several pirates, who are now
standing trial in Paris. But the hostages are not the bandits’ only
card to play. Often dressed in military fatigues, pirates travel in
open skiffs with outboard engines, working with larger mother ships
that tow them far out to sea. They use satellite navigational and
communications equipment and an intimate knowledge of local waters,
clambering aboard commercial vessels with ladders and grappling hooks.

They are typically armed with automatic weapons, anti-tank rocket
launchers and grenades — weaponry that is readily available throughout
Somalia, where a bustling arms market operates in the center of the
capital. They also have the support of their communities and some
members of local administrations, particularly in Puntland, a
semiautonomous region in northeast Somalia that is a hotbed for
piracy, officials and pirates have told the AP. Abdulqadir Muse Yusuf,
a deputy minister of ports in Puntland, acknowledged there were
widespread signs that Puntland officials, lawmakers and government
officials are “involved or benefiting from piracy” and said
investigations were ongoing. He would not elaborate. Piracy has
transformed the region around the town of Eyl, near where many
hijacked ships are anchored brought while pirates negotiate ransoms.
“Pirates buy new luxury cars and marry two, three, or even four
women,” said Mohamed, an Eyl resident who refused to give his full
name for fear of reprisals from the pirates. “They build new homes —
the demand for construction material is way up.” He said most of the
well-known pirates promise to build roads and schools in addition to
homes for themselves. But for now, Mohamed says he has only seen
inflation skyrocket as the money pours in. “One cup of tea is about
$1,” he said. Before the piracy skyrocketed, tea cost a few cents.

Piracy in Somalia is nothing new, as bandits have stalked the seas for
years. But this year’s surge in attacks — nearly 30 so far — has
prompted an unprecedented international response. The Faina has been
the highest-profile attack because of its dangerous cargo. The U.S.
fears the arms could end up in the hands of al-Qaida-linked militants
in a country seen as a key battleground on terror. The United States
has been leading international patrols to combat piracy along
Somalia’s unruly 1,880-mile coast, the longest in Africa and near key
shipping routes. In June, the U.N. Security Council passed a
resolution that would allow countries to chase and arrest pirates
after attacks increased this year. But still, the attacks continue.
Dagne, an analyst in Washington, said that unless the roots of the
problem are solved — poverty, disease, violence — piracy will only
flourish. “You have a population that is frustrated, alienated, angry
and hopeless,” Dagne said. “This generation of Somalis grew up
surrounded by abject poverty and violence.”

Pirates die strangely after taking Iranian ship
BY Andrew Donaldson / Sep 28, 2008

A tense standoff has developed in waters off Somalia over an Iranian
merchant ship laden with a mysterious cargo that was hijacked by
pirates. Somali pirates suffered skin burns, lost hair and fell
gravely ill “within days” of boarding the MV Iran Deyanat. Some of
them died. Andrew Mwangura, the director of the East African
Seafarers’ Assistance Programme, told the Sunday Times: “We don’t
know exactly how many, but the information that I am getting is that
some of them had died. There is something very wrong about that ship.”

The vessel’s declared cargo consists of “minerals” and “industrial
products”. But officials involved in negotiations over the ship are
convinced that it was sailing for Eritrea to deliver small arms and
chemical weapons to Somalia’s Islamist rebels. The drama over the Iran
Deyanat comes as speculation grew this week about whether the South
African Navy would send a vessel to join the growing multinational
force in the region. A naval spokesman, Lieutenant-Commander Greyling
van den Berg, told the Sunday Times that the navy had not been ordered
by the government to become involved in “the Somali pirate issue”.

About 22000 ships a year pass through the Suez Canal and the Gulf of
Aden, where regional instability and “no-questions-asked” ransom
payments have led to a dramatic rise in attacks on vessels by heavily
armed Somali raiders in speedboats. The Iran Deyanat was sailing in
those waters on August 21, past the Horn of Africa and about 80
nautical miles southeast of Yemen, when it was boarded by about 40
pirates armed with AK-47s and rocket-propelled grenades. They were
alleged members of a crime syndicate said to be based at Eyl, a small
fishing village in northern Somalia.

The ship is owned and operated by the Islamic Republic of Iran
Shipping Lines, or IRISL, a state-owned company run by the Iranian
military. According to the US Treasury Department, the IRISL regularly
falsifies shipping documents to hide the identity of end users, uses
generic terms to describe shipments and operates under various covers
to circumvent United Nations sanctions. The ship set sail from
Nanjing, China, at the end of July. According to its manifest, it was
heading for Rotterdam where it would unload 42500 tons of iron ore and
“industrial products” purchased by a German client. At Eyl, the ship
was secured by more pirates — about 50 on board, and another 50 on

But within days those who had boarded the ship developed mysterious
health trouble. This was also confirmed by Hassan Allore Osman,
minister of minerals and oil in Puntland, an autonomous region of
Somalia. He headed a delegation sent to Eyl when news of the toxic
cargo and illnesses surfaced. He told one news publication, The Long
War Journal, that during the six days he had negotiated with the
pirates, a number of them had become sick and died. “That ship is
unusual,” he was quoted as saying. “It is not carrying a normal

The pirates did reveal that they had tried to inspect the ship’s cargo
containers when some of them fell sick — but the containers were
locked. Osman’s delegation spoke to the ship’s captain and its
engineer by cellphone, demanding to know more about the cargo.
Initially it was claimed the cargo contained “crude oil”; later it was
said to be “minerals”. And Mwangura has added: “Our sources say it
contains chemicals, dangerous chemicals.” But IRISL has denied that —
and threatened legal action against Mwangura. The company has
reportedly paid the pirates 200000 — the first of several “ransom
instalments”, but that, too, has been denied.

‘Toxic waste’ behind Somali piracy
BY Najad Abdullahi / October 11, 2008 / 12:21 Mecca time

Somali pirates have accused European firms of dumping toxic waste off
the Somali coast and are demanding an $8m ransom for the return of a
Ukranian ship they captured, saying the money will go towards cleaning
up the waste. The ransom demand is a means of “reacting to the toxic
waste that has been continually dumped on the shores of our country
for nearly 20 years”, Januna Ali Jama, a spokesman for the pirates,
based in the semi-autonomous region of Puntland, said. “The Somali
coastline has been destroyed, and we believe this money is nothing
compared to the devastation that we have seen on the seas.”

The pirates are holding the MV Faina, a Ukrainian ship carrying tanks
and military hardware, off Somalia’s northern coast. According to the
International Maritime Bureau, 61 attacks by pirates have been
reported since the start of the year. While money is the primary
objective of the hijackings, claims of the continued environmental
destruction off Somalia’s coast have been largely ignored by the
regions’s maritime authorities.

Dumping allegations
Ahmedou Ould-Abdallah, the UN envoy for Somalia confirmed to Al
Jazeera the world body has “reliable information” that European and
Asian companies are dumping toxic waste, including nuclear waste, off
the Somali coastline. “I must stress however, that no government has
endorsed this act, and that private companies and individuals acting
alone are responsible,” he said. Allegations of the dumping of toxic
waste, as well as illegal fishing, have circulated since the early
1990s. But evidence of such practices literally appeared on the
beaches of northern Somalia when the tsunami of 2004 hit the country.

The UN Environment Programme (UNEP) reported the tsunami had
washed up rusting containers of toxic waste on the shores of Puntland.
Nick Nuttall, a UNEP spokesman, told Al Jazeera that when the barrels
were smashed open by the force of the waves, the containers exposed
a “frightening activity” that has been going on for more than decade.
“Somalia has been used as a dumping ground for hazardous waste
starting in the early 1990s, and continuing through the civil war
there,” he said. “European companies found it to be very cheap to get
rid of the waste, costing as little as $2.50 a tonne, where waste
disposal costs in Europe are something like $1000 a tonne. “And the
waste is many different kinds. There is uranium radioactive waste.
There is lead, and heavy metals like cadmium and mercury. There is
also industrial waste, and there are hospital wastes, chemical wastes
– you name it.”

Nuttall also said that since the containers came ashore, hundreds of
residents have fallen ill, suffering from mouth and abdominal
bleeding, skin infections and other ailments. “We [the UNEP] had
planned to do a proper, in-depth scientific assessment on the
magnitude of the problem. But because of the high levels of insecurity
onshore and off the Somali coast, we are unable to carry out an
accurate assessment of the extent of the problem,” he said. However,
Ould-Abdallah claims the practice still continues. “What is most
alarming here is that nuclear waste is being dumped. Radioactive
uranium waste that is potentially killing Somalis and completely
destroying the ocean,” he said.

Toxic waste
Ould-Abdallah declined to name which companies are involved in waste
dumping, citing legal reasons. But he did say the practice helps fuel
the 18-year-old civil war in Somalia as companies are paying Somali
government ministers to dump their waste, or to secure licences and
contracts. “There is no government control … and there are few
people with high moral ground … [and] yes, people in high positions
are being paid off, but because of the fragility of the TFG
[Transitional Federal Government], some of these companies now no
longer ask the authorities – they simply dump their waste and leave.”

Ould-Abdallah said there are ethical questions to be considered
because the companies are negotiating contracts with a government that
is largely divided along tribal lines. “How can you negotiate these
dealings with a country at war and with a government struggling to
remain relevant?” In 1992, a contract to secure the dumping of toxic
waste was made by Swiss and Italian shipping firms Achair Partners and
Progresso, with Nur Elmi Osman, a former official appointed to the
government of Ali Mahdi Mohamed, one of many militia leaders involved
in the ousting of Mohamed Siad Barre, Somalia’s former president. At
the request of the Swiss and Italian governments, UNEP investigated
the matter. Both firms had denied entering into any agreement with
militia leaders at the beginning of the Somali civil war. Osman also
denied signing any contract.

‘Mafia involvement’
However, Mustafa Tolba, the former UNEP executive director, told Al
Jazeera that he discovered the firms were set up as fictitious
companies by larger industrial firms to dispose of hazardous waste.
“At the time, it felt like we were dealing with the Mafia, or some
sort of organised crime group, possibly working with these industrial
firms,” he said. “It was very shady, and quite underground, and I
would agree with Ould-Abdallah’s claims that it is still going on…
Unfortunately the war has not allowed environmental groups to
investigate this fully.”

The Italian mafia controls an estimated 30 per cent of Italy’s waste
disposal companies, including those that deal with toxic waste. In
1998, Famiglia Cristiana, an Italian weekly magazine, claimed that
although most of the waste-dumping took place after the start of the
civil war in 1991, the activity actually began as early as 1989 under
the Barre government. Beyond the ethical question of trying to secure
a hazardous waste agreement in an unstable country like Somalia, the
alleged attempt by Swiss and Italian firms to dump waste in Somalia
would violate international treaties to which both countries are

Legal ramifications
Switzerland and Italy signed and ratified the Basel Convention on the
Control of Transboundary Movements of Hazardous Wastes and their
Disposal, which came into force in 1992. EU member states, as well as
168 other countries have also signed the agreement. The convention
prohibits waste trade between countries that have signed the
convention, as well as countries that have not signed the accord
unless a bilateral agreement had been negotiated. It is also prohibits
the shipping of hazardous waste to a war zone. Abdi Ismail Samatar,
professor of Geography at the University of Minnesota, told Al Jazeera
that because an international coalition of warships has been deployed
to the Gulf of Aden, the alleged dumping of waste must have been

Environmental damage
“If these acts are continuing, then surely they must have been seen by
someone involved in maritime operations,” he said. “Is the cargo aimed
at a certain destination more important than monitoring illegal
activities in the region? Piracy is not the only problem for Somalia,
and I think it’s irresponsible on the part of the authorities to
overlook this issue.” Mohammed Gure, chairman of the Somalia Concern
Group, said that the social and environmental consequences will be
felt for decades. “The Somali coastline used to sustain hundreds of
thousands of people, as a source of food and livelihoods. Now much of
it is almost destroyed, primarily at the hands of these so-called
ministers that have sold their nation to fill their own pockets.” Ould-
Abdallah said piracy will not prevent waste dumping. “The intentions
of these pirates are not concerned with protecting their environment,”
he said. “What is ultimately needed is a functioning, effective
government that will get its act together and take control of its

‘We consider ourselves heroes’ – a Somali pirate speaks
Asad ‘Booyah’ Abdulahi, 42, describes himself as a pirate boss,
capturing ships in the Gulf of Aden and Indian Ocean.
Interview by Xan Rice and Abdiqani Hassan / November 22 2008

“I am 42 years old and have nine children. I am a boss with boats
operating in the Gulf of Aden and the Indian Ocean. I finished high
school and wanted to go to university but there was no money. So I
became a fisherman in Eyl in Puntland like my father, even though I
still dreamed of working for a company. That never happened as the
Somali government was destroyed [in 1991] and the country became

At sea foreign fishing vessels often confronted us. Some had no
licence, others had permission from the Puntland authorities but did
not want us there to compete. They would destroy our boats and force
us to flee for our lives. I started to hijack these fishing boats in
1998. I did not have any special training but was not afraid. For our
first captured ship we got $300,000. With the money we bought AK-47s
and small speedboats. I don’t know exactly how many ships I have
captured since then but I think it is about 60. Sometimes when we are
going to hijack a ship we face rough winds, and some of us get sick
and some die.

We give priority to ships from Europe because we get bigger ransoms.
To get their attention we shoot near the ship. If it does not stop we
use a rope ladder to get on board. We count the crew and find out
their nationalities. After checking the cargo we ask the captain to
phone the owner and say that have seized the ship and will keep it
until the ransom is paid. We make friends with the hostages, telling
them that we only want money, not to kill them. Sometimes we even eat
rice, fish, pasta with them. When the money is delivered to our ship
we count the dollars and let the hostages go.

Then our friends come to welcome us back in Eyl and we go to Garowe in
Land Cruisers. We split the money. For example, if we get $1.8m, we
would send $380,000 to the investment man who gives us cash to fund
the missions, and then divide the rest between us. Our community
thinks we are pirates getting illegal money. But we consider ourselves
heroes running away from poverty. We don’t see the hijacking as a
criminal act but as a road tax because we have no central government
to control our sea. With foreign warships now on patrol we have
difficulties. But we are getting new boats and weapons. We will not
stop until we have a central government that can control our sea.”

Somali pirates strike again / November 19, 2008 / 09:02 Mecca time

Somali pirates have struck again in the Gulf of Aden, hijacking
another ship a day after seizing a Saudi oil supertanker with a cargo
worth $100m. The Delight, a Hong Kong-registered vessel carrying
33,000 tonnes of wheat, was sailing to Iran with 25 crew members when
it was seized, Chinese state news agency Xinhua said. A spokesman for
the US Navy’s Fifth Fleet in the Gulf confirmed on Tuesday that the
Delight had been hijacked. A Hong Kong government spokesman said
“this could be a serious matter for us. We will deal with it”.

Saudi tanker anchored
News of the latest hijack came as the hijackers of the Saudi Sirius
Star – the biggest vessel ever hijacked – anchored the vessel off
Somalia. The vessel was seized in the Indian ocean off East Africa on
Sunday in the boldest attack by pirates operating from lawless
Somalia. “We can confirm the ship is anchoring off the Somali coast at
Haradheere,” Lieutenant Nathan Christensen, a spokesman for the US
Fifth Fleet, said on Tuesday. Haradheere is situated roughly in the
centre of Somalia’s coastline.

The supertanker had been heading for the US via the Cape of Good Hope
at the southern tip of Africa, instead of heading through the Gulf of
Aden and the Suez Canal. The hijacking occurred despite an
international naval response, including from the Nato alliance and
European Union, to protect one of the world’s busiest shipping areas.
US, French and Russian warships are also off the Somali coast. The
pirates have driven up insurance costs, forced some ships to go round
South Africa instead of through the Suez Canal and secured millions of
dollars in ransoms. Last week, the European Union, in its first-ever
naval mission, launched a security operation off the coast of Somalia
to combat growing piracy and protect ships carrying aid agency

Outrageous act
Prince Saud al-Faisal, Saudi Arabia’s foreign minister called the
hijacking of the Sirius Star an outrageous act and promised to back an
EU-led initiative to step up security in shipping lanes off Africa’s
east coast. “This outrageous act by the pirates, I think, will only
reinforce the resolve of the countries of the Red Sea and
internationally to fight piracy,” he told reporters in Athens. The
vessel owned by Saudi oil giant Aramco was fully loaded when it was
attacked on Sunday more than 450 nautical miles southeast of Mombasa.
The standoff comes as another ship is seized off the coast of Somalia.
According to the International Maritime Bureau (IMB), a Thai fishing
boat with 16 crew members has been hijacked. Noel Choong, head of the
IMB piracy reporting centre, based in Kuala Lumpur, said the ship was
seized in the Gulf of Aden on Monday. Eight ships have now been
hijacked in the past two weeks.

‘Hitting the jackpot’
Andrew Mwangura, co-ordinator of the East African Seafarers’
Association, said: “The world has never seen anything like this …
The Somali pirates have hit the jackpot.” The association, based in
the Kenyan port city of Mombasa, has been monitoring piracy for years.
Mwangura said he thought a hijacked Nigerian tug was a “mother-ship”
for the November 15 seizure. “The supertanker was fully loaded, so it
was probably low in the water and not that difficult to board,” he
said, adding that the pirates probably used a ladder or hooked a rope
to the side.

Pirates are well organised in the Horn of Africa, where Somalia’s
northeastern tip juts into the Indian Ocean. Somalia has had no
effective government since the 1991 overthrow of Mohamed Siad Barre,
the former president, touched off a bloody power struggle that has
defied numerous attempts to restore stability. This year, Somali
pirates have attacked 90 ships, more than double the number in 2007,
according to the International Maritime Bureau, and are still holding
16 ships and more than 250 sailors.

CURRENTLY HELD FOR RANSOM,2933,454124,00.html
Somali Pirates Keep Hundreds of Hostages in Pirate City of Eyl
Heres a list of ten of the biggest vessels still in pirates’ hands.

1. Sirius Star / Hijacked November 17
Cargo: 2 million barrels of oil, value $100 million
Crew: 25 men

2. MV Karagol / Hijacked November 12
Cargo: 4,000 tons of chemicals
Crew: 14 Turks

3. MV Stolt Strength / Hijacked November 10
Cargo: Phosphoric acid
Crew: 23 Filipinos

4. CEC Future / Hijacked November 7
Cargo: Unknown
Crew: 11 Russians, one Georgian, one Lithuanian

5. MV Yasa Neslihan / Hijacked October 29
Cargo: Iron ore
Crew: 20 Turks

6. MT African Sanderling / Hijacked October 15
Cargo: Unknown
Crew: 21 Filipinos

7. MV Faina / Hijacked September 25
Cargo: 33 T-72 Russian battle tanks
Crew: 17 Ukrainians, 2 Latvians, one Russian

8. MV Captain Stefanos / Hijacked September 21
Cargo: Unknown
Crew: 17 Filipinos, two other nationals

9. Centauri / Hijacked September 18
Cargo: 17,000 tons of salt
Crew: 25 Filipinos

10. MV Great Creation / Hijacked September 17
Cargo: Chemical fertilizer
Crew: 24 Chinese, one Sri Lankan

Somali pirates transform villages into boomtowns
BY Mohamed Olad Hassan and Elizabeth Kennedy / 11.19.08

MOGADISHU, Somalia (AP) — Somalia’s increasingly brazen pirates are
building sprawling stone houses, cruising in luxury cars, marrying
beautiful women — even hiring caterers to prepare Western-style food
for their hostages. And in an impoverished country where every public
institution has crumbled, they have become heroes in the steamy
coastal dens they operate from because they are the only real business
in town. “The pirates depend on us, and we benefit from them,” said
Sahra Sheik Dahir, a shop owner in Harardhere, the nearest village to
where a hijacked Saudi Arabian supertanker carrying $100 million in
crude was anchored Wednesday.

These boomtowns are all the more shocking in light of Somalia’s
violence and poverty: Radical Islamists control most of the country’s
south, meting out lashings and stonings for accused criminals. There
has been no effective central government in nearly 20 years, plunging
this arid African country into chaos. Life expectancy is just 46
years; a quarter of children die before they reach 5. But in northern
coastal towns like Harardhere, Eyl and Bossaso, the pirate economy is
thriving thanks to the money pouring in from pirate ransoms that have
reached $30 million this year alone. “There are more shops and
business is booming because of the piracy,” said Sugule Dahir, who
runs a clothing shop in Eyl. “Internet cafes and telephone shops have
opened, and people are just happier than before.”

In Harardhere, residents came out in droves to celebrate as the
looming oil ship came into focus this week off the country’s lawless
coast. Businessmen gathered cigarettes, food and cold bottles of
orange soda, setting up kiosks for the pirates who come to shore to
resupply almost daily. Dahir said she even started a layaway plan for
them. “They always take things without paying and we put them into the
book of debts,” she told The Associated Press in a telephone
interview. “Later, when they get the ransom money, they pay us a lot.”
Residents make sure the pirates are well-stocked in khat, a popular
narcotic leaf, and aren’t afraid to gouge a bit when it comes to the
pirates’ deep pockets. “I can buy a packet of cigarettes for about $1
but I will charge the pirate $1.30,” said Abdulqadir Omar, an Eyl
resident. While pirate villages used to have houses made of corrugated
iron sheets, now, there are stately looking homes made of sturdy,
white stones. “Regardless of how the money is coming in, legally or
illegally, I can say it has started a life in our town,” said Shamso
Moalim, a 36-year-old mother of five in Harardhere. “Our children are
not worrying about food now, and they go to Islamic schools in the
morning and play soccer in the afternoon. They are happy.”

The attackers generally treat their hostages well in anticipation of a
big payday, hiring caterers on shore to cook spaghetti, grilled fish
and roasted meat that will appeal to Western palates. And when the
payday comes, the money sometimes literally falls from the sky.
Pirates say the ransom arrives in burlap sacks, sometimes dropped from
buzzing helicopters, or in waterproof suitcases loaded onto skiffs in
the roiling, shark-infested sea. “The oldest man on the ship always
takes the responsibility of collecting the money, because we see it as
very risky, and he gets some extra payment for his service later,”
Aden Yusuf, a pirate in Eyl, told AP over VHF radio.

The pirates use money-counting machines — the same technology seen
at foreign exchange bureaus worldwide — to ensure the cash is real. All
payments are done in cash because Somalia has no functioning banking
system. “Getting this equipment is easy for us, we have business
connections with people in Dubai, Nairobi, Djibouti and other areas,”
Yusuf said. “So we send them money and they send us what we want.”

Despite a beefed-up international presence, the pirates continue to
seize ships, moving further out to sea and demanding ever-larger
ransoms. The pirates operate mostly from the semiautonomous Puntland
region, where local lawmakers have been accused of helping them and
taking a cut of the ransoms. For the most part, however, the regional
officials say they have no power to stop piracy. Meanwhile, towns that
once were eroded by years of poverty and chaos are now bustling with
restaurants, Land Cruisers and Internet cafes. Residents also use
their gains to buy generators — allowing full days of electricity,
once an unimaginable luxury in Somalia.

“Pirate Jama Shino in the Somali town of Garowe, threw the most lavish
wedding party for his second marriage and invited hundreds of people
from the local authorities and among citizens,” Hussameddin wrote.
“The bride and the young women who attended the party, said: “Marrying
a pirate is every Somali girl’s dream. He has power, money, immunity,
the weapons to defend the tribe and funds to give to the militias in
civil war,” – from an op-ed in the Egyptian paper, Al Ahram.

Somali pirates living the high life
BY Robyn Hunter / 2008/10/28

“No information today. No comment,” a Somali pirate shouts over the
sound of breaking waves, before abruptly ending the satellite
telephone call. He sounds uptight – anxious to see if a multi-million
dollar ransom demand will be met. He is on board the hijacked
Ukrainian vessel, MV Faina – the ship laden with 33 Russian battle
tanks that has highlighted the problem of piracy off the Somali coast
since it was captured almost a month ago. But who are these modern-day
pirates? According to residents in the Somali region of Puntland where
most of the pirates come from, they live a lavish life.

“They have money; they have power and they are getting stronger by the
day,” says Abdi Farah Juha who lives in the regional capital, Garowe.
“They wed the most beautiful girls; they are building big houses; they
have new cars; new guns,” he says. “Piracy in many ways is socially
acceptable. They have become fashionable.” Most of them are aged
between 20 and 35 years – in it for the money. And the rewards they
receive are rich in a country where almost half the population need
food aid after 17 years of non-stop conflict.

Most vessels captured in the busy shipping lanes of the Gulf of Aden
fetch on average a ransom of $2m. This is why their hostages are well
looked after. The BBC’s reporter in Puntland, Ahmed Mohamed Ali, says
it also explains the tight operation the pirates run. They are never
seen fighting because the promise of money keeps them together.
Wounded pirates are seldom seen and our reporter says he has never
heard of residents along Puntland’s coast finding a body washed
ashore. Given Somalia’s history of clan warfare, this is quite a feat.
It probably explains why a report of a deadly shoot-out amongst the
pirates onboard the MV Faina was denied by the vessel’s hijackers.
Pirate spokesman Sugule Ali told the BBC Somali Service at the time:
“Everybody is happy. We were firing guns to celebrate Eid.”

Brains, muscle and geeks
The MV Faina was initially attacked by a gang of 62 men. BBC Somalia
analyst Mohamed Mohamed says such pirate gangs are usually made up
of three different types:
* Ex-fishermen, who are considered the brains of the operation
because they know the sea
* Ex-militiamen, who are considered the muscle – having fought for
various Somali clan warlords
* The technical experts, who are the computer geeks and know how
to operate the hi-tech equipment needed to operate as a pirate –
satellite phones, GPS and military hardware.

The three groups share the ever-increasing illicit profits – ransoms
paid in cash by the shipping companies. A report by UK think-tank
Chatham House says piracy off the coast of Somalia has cost up to $30m
(£17m) in ransoms so far this year. The study also notes that the
pirates are becoming more aggressive and assertive – something the
initial $22m ransom demanded for MV Faina proves. The asking price has
apparently since fallen to $8m.

Calling the shots
Yemen, across the Gulf of Aden, is reportedly where the pirates get
most of their weapons from. A significant number are also bought
directly from the Somali capital, Mogadishu. Observers say Mogadishu
weapon dealers receive deposits for orders via a “hawala” company – an
informal money transfer system based on honour. Militiamen then drive
the arms north to the pirates in Puntland, where they are paid the
balance on delivery. It has been reported in the past that wealthy
businessmen in Dubai were financing the pirates. But the BBC’s Somali
Service says these days it is the businessmen asking the pirates for

Such success is a great attraction for Puntland’s youngsters, who have
little hope of alternative careers in the war-torn country. Once a
pirate makes his fortune, he tends to take on a second and third wife
– often very young women from poor nomadic clans, who are renowned
for their beauty. But not everyone is smitten by Somalia’s new elite.
“This piracy has a negative impact on several aspects of our life in
Garowe,” resident Mohamed Hassan laments.

He cites an escalating lack of security because “hundreds of armed
men” are coming to join the pirates. They have made life more
expensive for ordinary people because they “pump huge amounts of US
dollars” into the local economy which results in fluctuations in the
exchange rate, he says. Their lifestyle also makes some unhappy. “They
promote the use of drugs – chewing khat [a stimulant which keeps one
alert] and smoking hashish – and alcohol,” Mr Hassan says.

The trappings of success may be new, but piracy has been a problem in
Somali waters for at least 10 years – when Somali fishermen began
losing their livelihoods. Their traditional fishing methods were no
match for the illegal trawlers that were raiding their waters. Piracy
initially started along Somalia’s southern coast but began shifting
north in 2007 – and as a result, the pirate gangs in the Gulf of Aden
are now multi-clan operations. But Garowe resident Abdulkadil Mohamed
says, they do not see themselves as pirates. “Illegal fishing is the
root cause of the piracy problem,” he says. “They call themselves

‘Pirates Are Stronger Than Us’ – Eyl Mayor / 23 August 2008
“The mayor of a small coastal town in northeastern Somalia has
declared that local authorities are unable to stop pirates. Abdullahi
Said O’Yusuf, the mayor of Eyl in Puntland region, confirmed Radio
Garowe during a Saturday interview that four hijacked ships are being
held hostage near the town’s shores. “They are stronger than us,”
Mayor O’Yusuf said, while speaking of the pirates. He condemned
continued attacks on foreign ships traveling across the Indian Ocean,
while underlining that local authorities “cannot do anything” to stop
piracy. The Associated Press has reported that four ships – with
owners in Malaysia, Iran, Japan and Germany – and a total crew of 96
people are being held hostage by Somali pirates. Mayor O’Yusuf said
the pirates who hijacked the ships “are the same ones who received
ransom payments before,” referring to previous pirate attacks in the
region. According to the Mayor, pirates use ransom payments to “buy
houses in big cities” in different parts of the country.”

“Eyl is a town in the northern Puntland region of Somalia. The
prominent clans in the Eyl district are the Majeerteen and Leelkase
sub-clans of the Darod. Eyl is near the Hafun peninsula, the location
of most of Somalia’s casualties from the 2004 Indian Ocean Tsunami. As
of 2008 Eyl has become a pirate haven, with more than a dozen ships
being held captive by pirate crews. The Puntland government has
acknowledged that they are relatively powerless to stop pirate
activities. French commandos decided a hostage rescue in Eyl was too
dangerous, and carried out a rescue of two French sailors before they
could be taken there.”

Life in Somalia’s pirate town
BY Mary Harper / 18 September 2008

Whenever word comes out that pirates have taken yet another ship in
the Somali region of Puntland, extraordinary things start to happen.
There is a great rush to the port of Eyl, where most of the hijacked
vessels are kept by the well-armed pirate gangs. People put on ties
and smart clothes. They arrive in land cruisers with their laptops,
one saying he is the pirates’ accountant, another that he is their
chief negotiator.

With yet more foreign vessels seized off the coast of Somalia this
week, it could be said that hijackings in the region have become
epidemic. Insurance premiums for ships sailing through the busy Gulf
of Aden have increased tenfold over the past year because of the
pirates, most of whom come from the semi-autonomous region of
Puntland. In Eyl, there is a lot of money to be made, and everybody is
anxious for a cut.

Entire industry
The going rate for ransom payments is between $300,000 and $1.5m
(£168,000-£838,000). A recent visitor to the town explained how, even
though the number of pirates who actually take part in a hijacking is
relatively small, the whole modern industry of piracy involves many
more people. “The number of people who make the first attack is small,
normally from seven to 10,” he said. “They go out in powerful
speedboats armed with heavy weapons. But once they seize the ship,
about 50 pirates stay on board the vessel. And about 50 more wait on
shore in case anything goes wrong.”

Given all the other people involved in the piracy industry, including
those who feed the hostages, it has become a mainstay of the Puntland
economy. Eyl has become a town tailor-made for pirates – and their
hostages. Special restaurants have even been set up to prepare food
for the crews of the hijacked ships. As the pirates want ransom
payments, they try to look after their hostages. When commandos from
France freed two French sailors seized by pirates off the Somali coast
in September, President Nicolas Sarkozy said he had given the go-ahead
for the operation when it was clear the pirates were headed for Eyl –
it would have been too dangerous to try to free them from there.

The town is a safe-haven where very little is done to stop the pirates
– leading to the suggestion that some, at least, in the Puntland
administration and beyond have links with them. Many of them come
from the same clan – the Majarteen clan of the president of Somalia’s
transitional federal government, Abdullahi Yusuf.

Money to spend
The coastal region of Puntland is booming. Fancy houses are being
built, expensive cars are being bought – all of this in a country that
has not had a functioning central government for nearly 20 years.
Observers say pirates made about $30m from ransom payments last
year – far more than the annual budget of Puntland, which is about
$20m. When the president of Puntland, Adde Musa, was asked about
the reported wealth of pirates and their associates, he said: “It’s more
than true”.

Now that they are making so much money, these 21st Century pirates
can afford increasingly sophisticated weapons and speedboats. This
means that unless more is done to stop them, they will continue to
plunder the busy shipping lanes through the Gulf of Aden. They even
target ships carrying aid to feed their compatriots – up to a third of the
population. Warships from France, Canada and Malaysia, among others,
now patrol the Somali coast to try and fend off pirate attacks.

An official at the International Maritime Organisation explained how
the well-armed pirates are becoming increasingly bold. More than 30%
of the world’s oil is transported through the Gulf of Aden. “It is
only a matter of time before something horrible happens,” said the
official. “If the pirates strike a hole in the tanker, and there’s an
oil spill, there could be a huge environmental disaster”.

It is likely that piracy will continue to be a problem off the coast
of Somalia as long as the violence and chaos continues on land.
Conflict can be very good for certain types of business, and piracy is
certainly one of them. Weapons are easy to obtain and there is no
functioning authority to stop them, either on land or at sea.


“We want pre-emptive action against the mother ships before the
pirates carry out a hijacking,” said Captain Pottengal Mukundan,
director of the London-based International Maritime Bureau, which
monitors international piracy, referring to the ships pirates use as
bases from which to launch attacks. “The positions of the mother ships
are generally known. What we would like to see is the naval vessels
going to interdict them, searching them and removing any arms on
board. That would at least force the pirates to go back to Somalia to
pick up more arms before they could come back again,” he told Reuters
in an interview.

But the laws governing what navies can do to take on the pirates are
complex. Only if pirates are caught in the act of piracy — actually
boarding a ship and seizing it — can a naval ship intervene with the
full force of international law. Arriving 30 minutes after a vessel
has been boarded, when there is a degree of uncertainty over whether
those on board are pirates or not, is often too late, experts say.
Denmark recently had to return some suspected pirates to Somalia
because it couldn’t prove they were pirates after they were seized.

Mr. Mukundan said there were currently about four ‘mother ships’ —
seized dhows or other larger fishing boats anchored near international
waters — being used by pirates. The pirates live on the mother ships,
storing arms, fuel and other supplies on board, and then target ships,
which can include fuel tankers, by catching up to them in high-speed
boats and boarding them with rope ladders while heavily armed. Mr.
Mukundan acknowledged the legalities of taking on ‘mother ships’ were
tricky, but said it could be done if governments gave their naval
forces instructions to do it.”


“Piracy is an international crime consisting of illegal acts of
violence, detention, or depredation committed for private ends by the
crew or passengers of a private ship or aircraft in or over
international waters against another ship or aircraft or persons and
property on board. (Depredation is the act of plundering, robbing, or

In international law piracy is a crime that can be committed only
on or over international waters (including the high seas, exclusive
economic zone, and the contiguous zone), in international airspace,
and in other places beyond the territorial jurisdiction of any nation.
The same acts committed in the internal waters, territorial sea,
archipelagic waters, or national airspace of a nation do not
constitute piracy in international law but are, instead, crimes within
the jurisdiction and sovereignty of the littoral nation.

Sea robbery is a term used to describe attacks upon commercial
vessels in ports and territorial waters. Such attacks are, according
to international law, not true acts of piracy but rather armed
robberies. They are criminal assaults on vessels and vessel crews,
just as may occur to truck drivers within a port area. Such attacks
pose a serious threat to trade. The methods of these attacks have
varied from direct force using heavy weapons to subterfuge in which
the criminals have identified themselves on VHF radio as the national
coast guard.

These maritime criminals are inclined to operate in waters where
government presence is weak, often lacking in both technical resources
and the political will to deal effectively with such attacks.
International law permits any warship or government vessel to repress
an attack in international waters. In a state’s territorial waters,
such attacks constitute an act of armed robbery and must be dealt with
under the laws of the relevant coastal state. These laws seldom, if
ever, permit a vessel or warship from another country to intervene.
The most effective countermeasure strategy is to prevent criminals
initial access to ports and vessels, and to demonstrate a consistent
ability to respond rapidly and effectively to notification of such a
security breach.

Acts of piracy can only be committed by private ships or private
aircraft. A warship or other public vessel or a military or other
state aircraft cannot be treated as a pirate unless it is taken over
and operated by pirates or unless the crew mutinies and employs it for
piratical purposes. By committing an act of piracy, the pirate ship or
aircraft, and the pirates themselves, lose the protection of the
nation whose flag they are otherwise entitled to fly.

To constitute the crime of piracy, the illegal acts must be
committed for private ends. Consequently, an attack upon a merchant
ship at sea for the purpose of achieving some criminal end, e.g.,
robbery, is an act of piracy as that term is currently defined in
international law. Conversely, acts otherwise constituting piracy done
for purely political motives, as in the case of insurgents not
recognized as belligerents, are not piratical.

International law has long recognized a general duty of all
nations to cooperate in the repression of piracy. This traditional
obligation is included in the 1958 Geneva Convention on the High Seas
and the 1982 LOS Convention, both of which provide: “[A]ll States
shall cooperate to the fullest possible extent in the repression of
piracy on the high seas or in any other place outside the jurisdiction
of any State.””


Lucrative Piracy Business Thrives Off Somali Coast / November 18,

The seizure Monday of a supertanker carrying $100 million of crude oil
off the coast of Somalia is one of many ship hijackings by pirates of
late. A cargo ship flying a Hong Kong flag also was taken over in the
Gulf of Aden on Tuesday — the seventh hijacking in the area in 12
days, according to The Associated Press. The magnitude of recent
piracy attacks is rising, and an interactive map maintained by the
International Chamber of Commerce shows where these attacks are
taking place. Many are focused around the eastern Horn of Africa, but
piracy in the waters around Indonesia also has been frequent. J. Peter
Pham, director of the Nelson Institute for International and Public
Affairs at James Madison University, says the recent spikes in piracy are
“a crime of both opportunity and expediency.”

“Somalia has lacked a government, effectively, since 1991 and the
current interim government — the 14th of its kind in a decade and a
half — is tottering on its last legs, so there is very little control
to prevent lawlessness,” he says. “There is also the fact that
increasingly commerce is moving in this direction — the demand for oil
and other resources. Roughly 11 percent of the world’s petroleum flows
through these waters.” For Somalis, Pham says, “this is really the
best thing they have going for them economically. Piracy and ransom
this year will exceed more than $50 million — it’s Somalia’s largest

“The ship owners and insurers have found that it’s more cost-effective
to pay ransoms. They are currently averaging slightly over $1 million
per vessel, and that’s cheaper than buying a new ship,” Pham says.
“The Saudi tanker that was seized [Monday] was just launched six
months ago and cost $150 million to build and the cargo on board is
worth $100 million, so I suspect the ship owners will be willing to
pay some fraction of that to get it back.” Pham says that most tankers
of that size are not armed, or if they are, they have small side arms.
The pirates come in fast speed boats, circle the vessel and threaten
to blow it out of the water with rocket-propelled grenades or shoulder-
launched missiles. “Faced with that prospect, most captains — to save
the life of their crew and save the vessels — will surrender control
of the vessel to the pirates,” Pham says.

The world’s most utterly failed state / Oct 2nd 2008

Tipped off by friends in ports from Odessa to Mombasa, Somali pirates
captured a Ukrainian freighter, the MV Faina, in the Gulf of Aden and
steered it to Somalia’s coast. At first they demanded $20m for the
release of ship and crew. The captain died, apparently of
“hypertension”, and several pirates may have then killed each other
after a quarrel. This recent incident was only the latest in a long
list of similar outrages and highlights the growing menace caused by
the total failure of the state of Somalia, the ultimate cause of the
virus of piracy in the region.

The ship was carrying 33 T-72 Russian tanks, anti-aircraft guns and
grenade launchers. Lighter weapons may have been offloaded on the
Somali shore before an American warship arrived on the scene. Kenya
claimed ownership of the cargo but the manifest suggests its
destination was south Sudan, with Kenya’s co- operation in its
delivery to be rewarded in the future with cheap south Sudanese oil.
At midweek, a Russian warship was steaming to the scene to take
responsibility for its citizens on the ship.

The attack was only one of at least 60 off Somalia this year. Foreign
navies can intercept vessels captured by pirates, but the desolation
and length of Somalia’s coastline give them little chance of stamping
out piracy without much larger and better co-ordinated forces. In
cahoots with gangs in Yemen, Somali pirates look set to go on hitting
vessels heading into or out of the Red Sea or passing through the Gulf
of Aden: about 10% of the world’s shipping.

It is big business. The pirates are increasingly sophisticated,
handsomely bankrolled by Somalis in Dubai and elsewhere. They are not
yet directly tied up with the Islamist insurgents in Somalia, though
they may yet have to pay cash to whoever controls their coastal havens
in return for uninterrupted business, thus assisting the purchase of
weapons and fuelling the violence. The nabbed ships are mostly
anchored off the village of Eyl in Puntland in the north-east or the
pirate town of Haradheere farther south (see map) until a ransom is
paid, which is usually within a month of capture. The average ransom
has tripled since 2007, as has the number of ships taken. Some $100m
may have been paid to pirates this year. By comparison, the United
Nations Development Programme’s annual budget for Somalia is $14m.

Piracy is a symptom of the power vacuum inside Somalia. The country’s
“transitional federal government”, headed by a warlord president,
Abdullahi Yusuf, and a bookish prime minister, Nur Hussein, is
powerless to stop its citizens raising the Jolly Roger, just as it
cannot halt the resurgent jihadists, some with al-Qaeda connections,
who have taken control of much of southern Somalia, including the port
town of Kismayo. Hundreds of thousands have fled street fighting in
the north of Mogadishu to camps outside the city; some head south to
refugee camps in Kenya. About 9,000 civilians have been killed in the
insurgency in the past year, according to human-rights groups.

The UN’s envoy to Somalia, Ahmedou Ould Abdullah, a former foreign
minister of Mauritania, is overseeing peace talks in nearby Djibouti
between the transitional government and the moderate wing of the
Alliance for the Reliberation of Somalia (ARS), an Islamist group
headed by a former teacher, Sharif Ahmed. The aim is to create a
genuine government of national unity before elections next year.

A condition of any agreement is the withdrawal of the 7,000-odd
Ethiopian troops now in Somalia. Mr Ould Abdullah wants to replace
them and a separate 2,200-strong African Union force of Ugandan and
Burundian troops with 8,000 UN peacekeepers. Ethiopia, which is losing
men and money, would be happy with that, if the peacekeepers were
somehow shoehorned in without the jihadists taking advantage of a
hiatus. America agrees, but only if the deployment of blue helmets is
matched by an effort to build a new Somali national army. Mr Ould
Abdullah is also keen for the International Criminal Court in The
Hague to indict some of the worst warlords, to show they cannot murder
their opponents with impunity. But it is unlikely, in present
circumstances, that UN peacekeepers will ever arrive. If the UN cannot
produce half its promised force for Darfur, despite a detailed plan
for one, Somalia stands little chance of getting any blue helmets at

Feuding among Somali leaders makes matters worse. “Somalia is a victim
of its political, business and military elite,” says Mr Ould Abdullah.
“They’ve taken the country hostage.” A slender hope, backed by Britain
and some other EU countries, is that ordinary Somalis will eventually
force their leaders to put national interest above self-interest and
sign the proposed agreement in Djibouti. In any event, says another
diplomat, “There is no Plan B.”

As the peace talks limp on, the insurgency is getting stronger. It is
led by the Shabab (Youth), the armed wing of the Islamic Courts Union,
which ran Somalia with some success for a few months in 2006 until it
was smashed, at the end of that year, by the invading Ethiopians, with
American backing. The Shabab has since reconstituted itself, making
ground with tactics copied from Iraq: roadside bombings, the kidnap
and murder of foreigners, local aid-workers and peace campaigners, and
grenade attacks on video shacks showing films or football.

My enemy’s enemy is my friend
Its fighters come under the leadership of a wily red-bearded 70-year-
old jihadist, Hassan Dahir Aweys, and a former deputy commander of the
Islamic Courts, Mukhtar Robow. They are backed by Eritrea, which has
offered sanctuary to the radical rump of the ARS in its capital,
Asmara. Eritrea’s interest is not to help Somalia but to hurt its
bitter enemy, Ethiopia. The Shabab is also backed by fighters from the
Hawiye clan and by hungry young freelance gunmen who represent
Somalia’s huge lost generation. Half the population, 10m-odd before
the exodus, was born after Siad Barre’s regime fell in 1991. Since
then, it is guessed, only 10% have had even rudimentary education;
health care barely exists.

Few foreign governments have shown much interest in trying to end
Somalia’s woes. Diplomats charged with trying to do so are frustrated
and depressed. Meanwhile the suffering is mounting. The UN reckons
3.2m Somalis now survive on food aid. The piracy means that warships
have to escort ships bringing food. If fighting intensifies, that will
be harder—and manipulating food aid could become a weapon, as it was
during fighting in 1991 and 1992, when 300,000 Somalis starved to

BY Hari Jagannathan Balasubramanian / October 06, 2008

…as I now read Richard Dowden’s Africa: Altered States, Ordinary
Miracles, the political outline is becoming clear: one man rule from
1969-1991; then civil war; a failed American rescue attempt; and then
no government; and more recently, Ethiopia meddling in its affairs.
The excerpts I’ll present here, though, are images of a modernizing
Somalia, of how in the absence of a government, a free market thrived
in the 90s and filled the void.

“In 1999 I went back to Somalia to see what had happened.
Considering there was no state and civil war sputtered on, life was
not as bad as I had expected. In some ways it was a lot better. Those
few aid agencies that stayed on were no longer run by expatriate
overlords but staffed by Somalis. Not many foreign aid workers wanted
to be there. Somalis had also managed to get the economy going –
without a single cent from the World Bank or IMF. The new economy was
largely built around a worldwide telephone banking system – a truly
free market system and , at the time, by far the world’s cheapest and
most efficient. Several Somalis who had worked in telecoms in America
bought dishes and telephone equipment and set up phone booths in small
towns. From here, for a dollar a minute, people could call cousins and
aunts and uncles all over the world.”

And how the cell phone is the perfect device for the wandering Somali
herder wanting to learn market prices:

“Somali herders move around in a yearly pattern. In the dry
season, towards the end of the year, they go down to the coast as they
have done for centuries to sell some of their animals to traders who
take them across the Red Sea to the markets of Saudi Arabia. I have
watched them at the port of Berbera, herds of camels and sheep driven
to holding areas where herders have to buy fodder for them and pay for
water at the trough markets. These herdsmen are at a big disadvantage
while they wait to sell their animals. But the mobile phone has
rescued them. They can call up traders in Jeddah directly to find out
the market price of animals there. They now know when to come down
out of the mountains and sell. A week later I watch a herdsman on the
outskirts of Berbera driving his herd towards the port with herding
stick in one hand and in the other a mobile phone – perfect technology
for the nomad.”’

Telecoms thriving in lawless Somalia
BY Joseph Winter / 2004/11/19

Rising from the ruins of the Mogadishu skyline are signs of one of
Somalia’s few success stories in the anarchy of recent years. A host
of mobile phone masts testifies to the telecommunications revolution
which has taken place despite the absence of any functioning national
government since 1991. Three phone companies are engaged in fierce
competition for both mobile and landline customers, while new internet
cafes are being set up across the city and the entire country. It
takes just three days for a landline to be installed – compared with
waiting-lists of many years in neighbouring Kenya, where there is a
stable, democratic government. And once installed, local calls are
free for a monthly fee of just $10. International calls cost 50 US
cents a minute, while surfing the web is charged at 50 US cents an
hour – “the cheapest rate in Africa” according to the manager of one
internet cafe. But how do you establish a phone company in a country
where there is no government?

No monopoly
In some respects, it is actually easier. There is no need to get a
licence and there is no state-run monopoly which prevents new
competitors being established. And of course there is no-one to demand
any taxes, which is one reason why prices are so low. “The government
post and telecoms company used to have a monopoly but after the
regime was toppled, we were free to set up our own business,” says
Abdullahi Mohammed Hussein, products and services manager of
Telcom Somalia, which was set up in 1994 when Mogadishu was still
a war-zone. “We saw a huge gap in the market, as all previous services
had been destroyed. There was a massive demand.” The main airport
and port were destroyed in the fighting but businessmen have built
small airstrips and use natural harbours, so the phone companies are
still able to import their equipment. Despite the absence of law and
order and a functional court system, bills are paid and contracts are
enforced by relying on Somalia’s traditional clan system, Mr Abdullahi

Mobile target
But in a country divided into hundreds of fiefdoms run by rival
warlords, security is a major concern. While Telcom Somalia has some
25,000 mobile customers – and a similar number have land lines – you
very rarely see anyone walking along the streets of Mogadishu chatting
on their phone, in case this attracts the attention of a hungry
gunman. The phone companies themselves say they are not targeted by
the militiamen, even if thieves occasionally steal some of their
wires. Mahdi Mohammed Elmi has been managing the Wireless African
Broadband Telecoms internet cafe in the heart of Mogadishu, surrounded
by the bustling and chaotic Bakara market, for almost two years. “I
have never had a problem with security,” he says and points out that
they have just a single security guard at the front door. Mr Abdullahi
says the warlords realise that if they cause trouble for the phone
companies, the phones will stop working again, which nobody wants. “We
need good relations with all the faction leaders. We don’t interfere
with them and they don’t interfere with us. They want political power
and we leave them alone,” he says.

Selling goats on the net
While the three phone companies – Telcom, Nationlink and Hormuud – are
engaged in bitter competition for phone customers, they have co-
operated to set up the Global Internet Company to provide the internet
infrastructure. Manager Abdulkadir Hassan Ahmed says that within 1.5km
of central Mogadishu, customers – mostly internet cafes – can enjoy
service at 150Mb/second through a Long Reach Ethernet. Elsewhere, they
can have a wireless connection at 11Mb/s. He says his company is able
to work anywhere in Somalia, whichever faction is in charge locally.
“Even small, remote villages are connected to the internet, as long as
they have a phone line,” he says. The internet sector in Somalia has
two main advantages over many of its Africa neighbours. There is a
huge diaspora around the world – between one and three million people,
compared with an estimated seven million people in Somalia – who
remain in contact with their friends and relatives back home. E-mail
is the cheapest way of staying in touch and many Somalis can read and
write their own language, instead of relying on English or French,
which restricts internet users to a smaller number of well educated
people. Just two days after it was opened, the Orbit internet cafe in
south Mogadishu’s km5 was already pretty busy, with people checking
their e-mail accounts, a livestock exporter sending out his invoices
and two nurses doing medical research.

Video calling
And Somalia’s telecoms revolution is far from over. “We are planning
to introduce 3G technology, including live video calling and mobile
internet, next year,” says Mr Abdullahi. But despite their success,
the telecoms companies say that like the population at large, they are
desperate to have a government. “We are very interested in paying
taxes,” says Mr Abdullahi – not a sentiment which often passes the
lips of a high-flying businessman. And Mr Abdulkadir at the Global
Internet Company fully agrees. “We badly need a government,” he says.
“Everything starts with security – the situation across the country.
“All the infrastructure of the country has collapsed – education,
health and roads. We need to send our staff abroad for any training.”
Another problem for companies engaged in the global telecoms business
is paying their foreign partners. At present, they use Somalia’s
traditional “Hawala” money transfer companies to get money to Dubai,
the Middle East’s trading and financial hub. With a government would
come a central bank, which would make such transactions far easier.
Taxes would mean higher prices but Mr Abdullahi says that Somalia’s
previous governments have kept taxes low and hopes this will continue
under the regime due to start work in the coming months. Somalia’s
telecoms companies are looking forward to an even brighter future with
the support of a functioning government – as long as it does not
impose punitive tax rates or state control in a sector which obviously
needs very little help to thrive.

Ayn Rand Comes to Somalia
In the absence of government bureaucracy and foreign aid, business is
starting to boom in Mogadishu.
BY Peter Maass / The Atlantic Monthly / May 2001

The headquarters of Telecom Somalia is filled with the sights and
sounds of Mogadishu-style success. Customers pour through the
entrance, funneling past machine-gun positions that flank the front
doors. After a pat-down by security guards, who take temporary
possession of any guns and knives, they enter the lobby and line up at
the appropriate counters to pay their bills or order new service.
Clocks on a wall display the time in New York, Paris, London, Sydney,
and Karachi—reminders of an outside world that has pretty much left
Somalia for dead. Computer keyboards clatter as workers punch in
information. Customers chat and argue with one another in a gregarious
manner that makes the lobby feel like a town square—all the more so if
a goat that’s being herded down the street happens to stray inside.

Telecom Somalia is the largest company in Mogadishu. It has 700
employees, and it offers some of the best and cheapest phone service
in Africa. It also provides a clue to the possible resuscitation of
the world’s most famous failed state. In 1995, when the international
community decided to wash its hands of Somalia and the last United
Nations peacekeepers left the country, Mogadishu was a Hobbesian
horror show. It remains a miserable and unstable place, a city where
taxi drivers ruin their own vehicles, denting the body work and
smashing the windows, so that thieves will not bother to steal them.
But it is less dismal than it used to be, and better times may be on
the way, owing to a new generation of businessmen who are determined
to bring the lawless capital back to life.

Prime among the city’s entrepreneurial leaders is Abdulaziz Sheikh,
the chief executive of Telecom Somalia. When I visited him last
summer, in a small office on the fourth floor of the company’s
headquarters, he was being blasted by a hurricane-force air-
conditioner that nearly drowned out the constantly ringing phones on
his desk. “You need to be here twenty-four hours a day,” he said,
explaining that he lives as well as works on the premises. Sheikh had
the running-on-fumes look of a campaign chairman in a never-ending
race, but at least he appeared to be winning. Anyone can walk into the
lobby of his building, plunk down a $100 deposit, and leave with a
late-model Nokia that works throughout the city, in valleys as well as
on hilltops, at all hours. Caller ID, call waiting, conference
calling, and call forwarding are available. There are two other
cellular-phone firms in town, and the three recently entered into a
joint venture and created the first local Internet-service provider.
Not all battles here are resolved by murder.

Mogadishu also has new radio and television stations (one night I
watched the Somali equivalent of Larry King Live, in which the
moderator and his guest, one of the city’s leading Islamic clerics,
fielded questions from callers), along with computer schools and an
airport that serves several airlines (although these fly the sorts of
airplanes that Americans see only in museums). The city’s Bekara
market offers everything from toilet paper, Maalox, and Colgate
toothpaste to Viagra, sarongs, blank passports (stolen from the
Foreign Ministry a decade ago), and assault rifles. The international
delivery company DHL has an office in Mogadishu, where its methods can
be unorthodox: if a client has an urgent package that cannot wait for
a scheduled flight out of the country, the company will dispatch it on
one of the many planes that arrive illegally from Kenya every day
bearing khat, a narcotic leaf that is chewed like tobacco but has the
effect of cocaine.

Mogadishu has the closest thing to an Ayn Rand-style economy that the
world has ever seen—no bureaucracy or regulation at all. The city has
had no government since 1991, when the much despised President
Mohammed Siad Barre was overthrown; his regime was replaced not by
another one but by civil war. The northern regions of Somaliland and
Puntland have stabilized under autonomous governments, but southern
Somalia, with Mogadishu at its core, has remained a Mad Max zone
carved up by warlords for whom fighting seems as necessary as oxygen.
The prospect of stability is a curious miracle, not simply because the
kind of business development that is happening tends to require the
presence of a government, but because the very absence of a
government may have helped to nurture an African oddity—a lean
and efficient business sector that does not feed at a public trough
controlled by corrupt officials.

Similarly, the lack of large-scale (and often corrupting) foreign aid
might have benefits as well as drawbacks. Somali investors are making
things happen, not waiting for them to happen. For example, on the
outskirts of town, on a plot of land the size of several football
fields and surrounded by twenty-foot-high walls, workers recently
completed a $2 million bottling plant. Everyone refers to it as “the
Pepsi factory,” even though Pepsi is not involved. The project’s
investors say the plant will become a Pepsi factory: they figure that
if they begin producing soft drinks, Pepsi or some other international
company will want to get in on the market.

Many of the larger companies in Mogadishu, including the bottling
plant, have issued shares, although there is of course no stock
exchange or financial authority of any sort in the city. Everything is
based on trust, and so far it has worked, owing to Somalia’s tightly
woven clan networks: everyone knows everyone else, so it’s less likely
that an unknown con man will pull off a scam. In view of Somalia’s
history, this ad hoc stock market is not as implausible as it may
sound. Until a century ago, when Italy and Britain divided what is
present-day Somalia into colonial fiefdoms, Somalis got along quite
well without a state, relying on systems that still exist: informal
codes of honor and a means of resolving disputes, even violent ones,
through mediation by clan elders.

Of course, the lack of a government poses problems, especially with
respect to the warlords. Sheikh and his fellow businessmen have kept
them at bay by paying them protection money and by forming their own
militias. Those manning the machine guns outside Telecom Somalia are
employees of the company, and when the firm’s linemen go out to lay
new cables (they used to string overhead lines, but those got shot up
by stray gunfire), they, too, are protected by company gunmen. All of
this is costly, so the business leaders have taken steps to bring
about a new government—one that will keep its hands out of their
pockets and focus on providing security and public services. The
process began two years ago, when Sheikh and other entrepreneurs got
fed up with the blight of checkpoints, at which everyone was required
to pay small tributes to armed teenagers affiliated with various
warlords. The businessmen decided collectively to fund a militia to
get rid of the checkpoints, resulting in an armed force that is
overseen by the city’s Islamic clerics. Having succeeded in its main
mission, the militia now serves as an informal sort of police force,
patrolling the streets in an effort to stop petty crime.

With the checkpoints gone and the warlords weakened by the loss of a
key source of income, the business elite is bankrolling a transitional
government that was appointed at a peace conference last August. The
government does not yet control much more than the heavily guarded
buildings that are its temporary headquarters, but it has begun
deploying its own policemen in some parts of the city. The businessmen
are pooling their company security forces to bolster the government
and are trying to lure the warlords’ gunmen to its side with cash
incentives. In February one of the leading warlords, Mohamed Qanyareh,
agreed to support the government in exchange for ministerial posts for
himself and his allies.

If the business community succeeds in returning Mogadishu to something
resembling normalcy, it will have shown that a failed state, or at
least its capital city, can get back on its feet without much help
from the outside world. This would constitute not an argument against
outside intervention but, rather, a lesson that intervention doesn’t
have to be of the UN-led, billion-dollar variety. Before leaving the
city I met with Hussein Abdullahi, a well-educated businessman who
fled Mogadishu in 1991 and wound up in Toronto, driving a taxi. Three
years ago, during a return visit, he was struck by the fact that his
Somali friends were living better at home than he was in Canada, at
the bottom of the immigrant ladder. He decided to move back and now
manages a thriving pasta factory, a bread factory, and a medical
clinic. Sipping an ice-cold Coke in his office, Abdullahi offered to
share a secret that, he promised, could make me rich. A chubby man
with a beatific smile, he leaned forward conspiratorially. “Everything
is possible in Mogadishu now, everything,” he said. “If you have the
money and the knowledge, you can do whatever you want. It is virgin
here.” Perhaps so, but only in the way of scorched earth.

BY Tatiana Nenova and Tim Harford / 11/1/2004

Telecommunications: networks link up
Many local companies have teamed up with international giants such as
Sprint (U.S.) and Telenor (Norway), providing mobile phones and
building new landlines. Vigorous competition has pushed prices well
below typical levels in Africa, and Somalia now has 112,000 fixed
lines and 50,000 mobile subscribers, up from 17,000 lines before 1991.
Yet not all is well. Calling every phone subscriber in Hargeisa, in
the Northwest, would require connections from four telephone firms.
But firms in Mogadishu have now agreed on interconnection standards,
and those in Hargeisa appear to be following suit. The negotiations
were brokered by the Somali Telecom Association, set up with the help
of the United Nations and International Telecommunication Union (ITU)
and head-quartered in Dubai.[1]

Electricity: simple solutions yield results
Entrepreneurs have worked around Somalia’s lack of a functioning
electricity grid, payment systems, and metering. They have divided
cities into manageable quarters and provide electricity locally using
secondhand generators bought in Dubai. They offer households a menu of
choices (daytime, evening, or 24-hour service) and charge per

Water: access but not cheap or safe
Public water provision is limited to urban areas, but a private system
extends to all parts of the country as entrepreneurs build cement
catchments, drill private boreholes, or ship water from public systems
in the cities. Prices naturally rise in times of drought.
Traditionally, destitute families have not had to pay for water, while
the slightly better-off borrow funds from relatives. Nevertheless,
after several years of drought the United Nations estimates that many
families in the Eastern Sanaag have debts of US$50–100 for water.
Moreover, access to safe water is low even by African standards
because neither regulators nor the market have been able to persuade
merchants to purify their water.

Air travel: outsourcing safety
In 1989 the national carrier (partly owned by Alitalia) operated just
one airplane and one international route.[2] Today the sector boasts
about 15 firms, more than 60 aircraft, 6 international destinations,
more domestic routes, and many more flights. But safety is a concern.
Airports lack trained air traffic controllers, fire services, runway
lights, and a sealed perimeter against stray animals, and checks on
aircraft and crew are inadequate. The makeshift solution:
international outsourcing. Somali carriers lease planes, often with
crews from Eastern Europe (the largest, Daallo Airlines, leases a
Boeing from the United Kingdom, to boost customer confidence). And
they operate out of Djibouti, Dubai, and Nairobi, using the facilities
there to check aircraft safety.

Private courts: quick but limited
A recent effort to endow Mogadishu with a functioning court collapsed
when the court tried to levy taxes and take over the privately run
port of El Ma’an. In any case Somalia lacks contract law, company law,
the concept of limited liability, and other key pillars of commercial
law. In some cases Somalis have used offshore registration of
businesses to import legal concepts and services. More commonly,
disputes are settled at the clan level, by traditional systems run by
elders and with the clan collecting damages. Such measures are free—
and fast by international standards. In a case involving the
oppression of minority shareholders in a large livestock company, out-
of-court talks were preferred, the company continued to operate
successfully, and the dispute was settled amicably. But clan-based
systems deal poorly with disputes outside the clan. In a dispute
involving the telecommunications company Aerolite, the interclan
committee of elders awarded the plaintiff from a weaker clan an
unfairly small settlement, and since it was not enforced, he received

Currency: perfect competition for dollars [2001]
Sharp inflation in 1994–96 and 2000–01 destroyed confidence in three
local currencies. U.S. dollars are harder to forge, do not need to be
carried around in large fragile bundles, and, most important, retain
their value. The feeble capabilities of the central bank have allowed
free entry into the currency exchange business, which is as close to
perfectly competitive as is ever likely to be possible.

International fund transfers: hawala system
The hawala system, a trust-based money transfer system used in many
Muslim countries, moves US$0.5–1 billion into Somalia every year. A
person in New York wishing to send money to his family in Tog-waajale
gives the hawala agent in New York the sum in cash, paying a 5 percent
commission. The agent deposits the cash in a local bank account to be
transferred to the company bank account in Djibouti or Dubai, then
alerts the clearinghouse in Hargeisa, which passes details on to Tog-
waajale. When the recipient shows up, the local agent quizzes him
about his clan lineage using questions provided by the relative
overseas as security against fraud. The transaction is usually
completed within 24 hours. Hawala networks are unregulated and do not
always keep records of transactions, but they are coming under
pressure from efforts to combat money laundering.[3]

Savings accounts and traveler’s checks
Somalia has adopted the widespread African institution of rotating
credit associations, which rely on clan links for enforcement and
provide a safe haven for savings. More innovative is the system of
traveler’s checks for the pilgrimage to Mecca, or hajj. Nobody would
accept Somali checks, so Somali firms set up accounts in Saudi banks
and write checks to pilgrims that can be cashed in any branch.

Gaps in private sector provision
In some areas the private sector has made little progress. The Somali
road system, for example, is limited and in poor condition. For a
private supplier to build a road and collect fees to cover the costs
is apparently too hard, partly because of prohibitive transaction
costs and partly because fee-paying users are not the only ones who
benefit from roads. Primary education is another disappointing story.
Some 71 percent of primary schools are privately owned (typically by
parents or communities), but enrollment is just 17 percent. By
contrast, it is 82 percent in West Africa, where countries are richer
and more stable and the government is much more heavily involved in
the economy. Ideally, benevolent government would sort out both
problems. But government that is merely stronger might not help. Where
municipal governments along the Berbera–Hargeisa road have the power
to collect tolls, they do not spend them on maintenance. The failings
of the education system are partly because half of Somalis are nomads.
It is not clear that government would do much better, especially since
the private schools are locally acknowledged to be superior to those
run by local government. Rather than try to create a government system
from scratch, a better policy would be to improve the network of
higher-quality private schools.

The achievements of the Somali private sector form a surprisingly long
list. Where the private sector has failed—the list is long here too—
there is a clear role for government interventions. But most such
interventions appear to be failing. Government schools are of lower
quality than private schools. Subsidized power is being supplied not
to the rural areas that need it but to urban areas, hurting a well-
functioning private industry. Road tolls are not spent on roads.
Judges seem more interested in grabbing power than in developing laws
and courts. A more productive role for government would be to build on
the strengths of the private sector. Given Somali reliance on clan and
reputation, any measures allowing these mechanisms to function more
broadly would be welcome; credit and land registries would be a good
start. And since Somali businesses rely heavily on institutions
outside the economy, international and domestic policies supporting
such connections would help. For governments and aid agencies, the
capability of some business sectors to cope under the most difficult
conditions should give hope and guidance in other reconstruction
efforts. It may take less encouragement than is commonly thought for
stripped-down systems of finance, electricity, and telecommunications
to grow.

1. “Somalia Telecoms Boom without Government,” Somaliland Times, July
22, 2004.
2. United States Institute for Peace, Removing Barricades in Somalia:
Prospects for Peace(Washington, D.C., 1998).
3. Abdusalam Omer, “Supporting System and Procedures for the Effective
Regulation and Monitoring of Somali Remittance Companies
(Hawala)” (United Nations Development Programme, Nairobi, 2003).

Somaliland’s addict economy
BY Tristan McConnell / July 17, 2009

Somalia’s economy is dominated by trade in khat, a narcotic banned in the U.S. and much of Europe. Eye-popping, head-buzzing khat is loved by Somali men who chew the leaves for their stimulant effect. While most of war-torn Somalia’s economy is moribund, khat does a bustling trade estimated at well over $50 million annually. Doctors warn, however, that the drug is not only a drain on limited Somali resources but is also destroying lives.

Hargeisa is the capital of Somaliland, the northern territory nominally independent from Somalia which maintains peace and economic activity, especially the khat trade. Lounging on a rug on the second floor of an ostentatious glass and stone mansion overlooking Hargeisa, Mohamed Yusuf Moge, aptly known as “The Fat Mohamed,” lit up another cigarette. In front of him was a pile of leafless khat twigs. His eyes were wide and red-rimmed, a symptom of the leaves that have been chewed. “We bring in 80-tons of khat every day,” he said. “We have many vehicles and two airplanes for transporting our produce. We control the market: We are the De Beers of the khat industry!”

“We” is “571 Allah Amin,” a family business started 15 years ago that has grown to become Somaliland’s biggest khat importer. Moge is 571’s country rep. Although he would not reveal how much the company makes, it is estimated that its revenue is $320,000 a day. Downtown at the company depot, the second of the day’s trucks arrives from the highland farms of neighboring Ethiopia mid-morning. Thursday is the busiest day of the week because, as one man explained, Friday is the Muslim day of rest so everyone can sleep off their khat hangover.

As the khat truck pulled in, barrow boys and vendors crowded round the tailgate to unload the 70 kg sacks of khat wrapped in hay to keep it fresh. Inside are small bundles of shoots that are bought wholesale for $1 and sold retail for $1.50. “Business is good!” shouted Omar Hersi Warfa, 571’s depot manager, over the clamor. “We are working hard and people are chewing!” Khat vendor Shamis Abdullahi Nur, 50, squatting on the ground nearby, agreed. “Business is very good because of our security and peace,” she said as she directed a sack of khat to be loaded into the back of a beat-up station wagon for the drive across town to her stall. Others pushed smaller consignments away in wheelbarrows. “I’ve been selling khat for over 30 years and now is the best time. There was a time of war, a time when I was a refugee, but now you can see I am sitting here eating my mango,” she said with a sticky, happy smile

Street prices are highest in the early afternoon because this is gayiil time when most men chew the khat and shoot the breeze. They can be found sitting on carpets in shady spots close to khat kiosks, with an ashtray, a flask of sweet tea and a jug of water at their feet. Women often sell khat but are not invited to chew. But increasingly men are also chewing in the morning, the evening and throughout the night. The stoned man in a cotton wrap tottering in a daze along a crumbling potholed road with a fistful of green stems is a common sight. Some warn the national habit does psychological damage. In the mental wing of Hargeisa’s main hospital, a staff member walked past the patients, many of whom were chained to a bed or a post or sat staring vacantly on the floor. “The majority of the men here are affected by chewing khat, most are schizophrenic,” said Faisal Ibrahim.

Dr. Yassin Arab Abdi, the hospital’s chief doctor, said: “Chewing is part of it although there are many reasons for mental illness. Before they used to chew at a certain time for a few hours now there are four sessions 24-hours a day. These people are addicts.” Back at the khat mansion, “Fat Mohamed” Moge and his colleagues, however, extolled the virtues of the drug. “Khat plays a great role in our society. If there’s conflict people have to sit down, chew, talk about it,” Moge said. “It is not like a drug which destroys the mind. It is a stimulant. If you chew khat in the right manner it doesn’t affect you.” But, he admitted, “There are some guys who are addicted, this is because they are jobless and have nothing to do.”

Unfortunately this description applies to many Somali men. The last national government — a military dictatorship — collapsed in 1991. Since then the unrecognized state of Somaliland has declared itself independent while Somalia has descended deeper into war and chaos. Isolation on the one hand and war on the other have left the formal economy shattered with many surviving on remittances sent from relatives abroad. Yet it is not unusual for men to spend $5 or $10 a day on khat, making the habit a huge drain on very limited resources. The government’s entire annual budget is less than $50 million, around $14 a head for each of Somaliland’s 3.5 million citizens. Such is the love of khat that to outlaw it would be political suicide. Nevertheless a senior Somaliland politician, Musa Behe of the opposition Kulmiye party, said, “The Somali man works less because he chews khat. We won’t ban it but we need to raise awareness of the harm khat does.”

Profile : Somalia

Somalia has been without an effective central government since
President Siad Barre was overthrown in 1991. The self-proclaimed state
of Somaliland and the region of Puntland run their own affairs.
* Population: 8.7 million (UN, 2007)
* Capital: Mogadishu
* Area: 637,657sq km (246,201 sq miles)
* Major languages: Somali, Arabic, Italian, English
* Major religion: Islam
* Life expectancy: 47 years (men), 49 years (women)
* Monetary unit: 1 Somali shilling = 100 cents
* Main exports: Livestock, bananas, hides, fish
* GNI per capita: n/a

President: Abdullahi Yusuf Ahmed
Abdullahi Yusuf Ahmed, a former leader of the semi-autonomous Somali
region of Puntland, was chosen by Somalia’s interim parliament as
president of the Transitional Federal Government in October 2004. The
election took place in Kenya because the Somali capital was regarded
as being too dangerous. A former army officer and faction leader, Mr
Yusuf led a guerrilla movement in the 1970s aimed at ousting the
Somali dictator Siad Barre. In the 1990s he emerged as the pre-eminent
leader of his native Puntland region; he declared the territory
autonomous in 1998. He is said to have an authoritarian approach to

Somalia’s disintegration is reflected in its media, which is
undeveloped, fragmented and often partisan. Broadcasters and
journalists operate in an atmosphere which is hostile to free
expression, and often dangerous. In spite of this, diverse and more
professional media outlets have emerged in recent years – in
particular, FM radio stations with no explicit factional links. The TV
and press sectors are weak and radio is the dominant medium. There are
around 20 radio stations, but no national, domestic broadcaster. Many
listeners tune to Somali-language media based abroad, in particular
the BBC Somali service. In secessionist Somaliland and Puntland the
authorities maintain a tight hold on broadcasting.




“Due to its unrecognized status, The Republic of Somaliland has no
official contacts with any other nation. The current foreign policy of
Somaliland is to try to secure international recognition as a
sovereign, stable country, so that international aid can be more
readily secured. Somaliland was independent for a 3 day period in
1960, between the end of British colonial rule and its union with the
former Italian colony of Somalia which status then continued until the
unilateral declaration reestablishing its independence in 1991.
Somaliland’s claims to sovereignty rests on its former independent
status. In addition, the fact that the rest of Somalia is in a state
of chaos while Somaliland is under stable government also lends
credence to its claim. The attitude of the United Nations and the
African Union on the preservation of existing national borders has so
far prevented recognition of Somaliland, despite the examples of the
former status of British Somaliland, and the fact that Eritrea
successfully broke away from Ethiopia and became a recognized country.
An African Union fact-finding mission that visited Somaliland in early
2005 recently published a report that recommended favorable
consideration for recognizing Somaliland’s independence.”

“The population of Somaliland is estimated at around 3.5 million. The
average population growth rate is 3.1%. Population density is
estimated at approximately 25 persons per sq. kilometre. Fifty-five
percent of the population is either nomadic or semi-nomadic, while 45%
live in urban centres or rural towns. The average life expectancy for
the male is 50 and for females it is 55.

The Republic of Somaliland known as the Somaliland Protectorate under
the British rule from 1884 until June, 26th 1960 when Somaliland got
its independence from Britain. On July 1st 1960 it joined the former
Italian Somalia to form the Somali Republic. The union did not work
according to the aspirations of the people, and the strain led to a
civil war from 1980s onwards and eventually to the collapse of the
Somali Republic. After the collapse of the Somali Republic, the people
of Somaliland held a congress in which it was decided to withdraw from
the Union with Somalia and to reinstate Somaliland’s sovereignty.

The country has a republican form of government. The legislative
assembly is composed of two chambers – an elected elder’s chamber, and
a house of representatives. An elected President and an elected Vice-
president head the government. The President nominates the cabinet
which is approved by the legislature. There is an independent

One of the provisions of the National Constitution of the Republic of
Somaliland is the establishment of a Bank to carry out Central Banking
functions. The bank of Somaliland (Baanka Somaliland) was thus
inaugurated in 1994 together with appropriate Banking Laws, to insure
that Banking regulations are carried out to the letter. Board of
Directors has accordingly been appointed together with a Governor of
the Bank, Vice-governor, and a Director General. In addition, the Bank
of Somaliland besides its functions as Central Bank, runs the
activities of Commercial sector.

The Bank’s main objectives are detailed in Article 3 of the
Constitutive Law of Somaliland Bank as follows: Fostering Monetary
stability maintaining the internal and external values of the
Somaliland Currency and promoting credit and exchange conditions
conductive to the balanced growth of the economy of the Republic and
within the limits of its powers, it shall contribute to the financial
and economic policies of the state.”





“Our foreign service hang-ups about recognition are getting in the way
of us… to build adequately on the efforts of the Government of
Somaliland to create a modern, democratic state. In effect, we are
putting the interests of the warmongers in the south ahead of those of
the peace-builders in the north.”

Democracy comes of age in Somaliland
BY Stefan Simanowitz / Contemporary Review / Dec 2005

The rising sun reveals two long lines of people snaking towards a
small concrete polling station in Gabiley, a town in rural Somaliland.
Many of them have walked considerable distances and queued all night
in order to vote in these, the first parliamentary elections held in
the territory for nearly forty years. But although voters across the
country have turned out in force, and although the election is deemed
free and fair by international observers, the result will not be
officially recognised beyond its territorial borders. Indeed, in the
eyes of the international community, Somaliland is a country that does
not exist.

Since its unilateral proclamation of independence in 1991, Somaliland,
an area the size of England and Wales in the north of Somalia, has
struggled to gain international recognition. Whilst neighbouring
Somalia has all but ceased to function as an administrative, judicial
and territorial entity, Somaliland has taken important steps towards
creating a stable working democracy in one of the poorest and most
dangerous regions of the world. A new constitution was adopted in 2001
following a referendum. In 2002 local elections passed off peacefully,
and in 2003 free and fair presidential elections took place. Having
thus laid the foundations of a functioning democracy, the
parliamentary elections of 29th September 2005 were seen as the final
step in the democratisation process and an important milestone in the
transition from a traditional clan-based, single-party-dominated
political structure to a stable multi-party democracy. Many
Somalilanders also regarded them as the final prerequisite for
international recognition.

However, despite the fact that Somaliland may fulfil the requirements
necessary for recognition as a sovereign state, the question of
recognition will be determined by a number of external geo-political
factors. These factors include the African Union’s position on the
sanctity of colonial borders and Somaliland’s role in the so-called
‘war on terror’.

Somaliland was a British Protectorate for over eighty years during the
colonial period. In 1960, it gained independence but formed a hasty
union with the former Italian Somaliland to create the Somali
Republic. In 1969 Mohamed Siad Barre’s military coup brought Somalia’s
flirtation with democracy to an end and planted the seeds of a
secessionist struggle in Somaliland. This struggle culminated in a
brutal three-year civil war in which 50,000 people were killed and
half a million refugees fled. Between 1988 and 1991, Barre’s forces
massacred civilians, laid over two million mines and reduced cities to

In 1991, the overthrow of Barre’s regime plunged Somalia into a state
of anarchy from which it is yet to emerge. Somaliland, however, was
quick to declare independence and, over the years, it has managed to
establish itself as a model of stability, good governance and economic
discipline. Rival militias have been demobilised, mines have been
cleared and refugees have been repatriated. The war-ravaged
infrastructure has been rebuilt and Somaliland now boasts modern
airports, hospitals, ports, power plants and universities. There is a
free press and the central bank manages an official currency with
relatively stable exchange rates. An unarmed police force and
independent judiciary maintain order.

What is most remarkable about this progress is that it has been
achieved with virtually no external help. Whilst economic development
has been heavily supported by Somalilanders in the Diaspora, lack of
international recognition has meant that Somaliland does not qualify
for bilateral aid or support from international financial
institutions. This international isolation has not, however, resulted
in isolationism. Lack of access to external aid has forced this
country of 3.5-million people to become more self-reliant than many
other African states. This self-reliance is reflected in what is
perhaps the most significant of Somaliland’s achievements: its system
of government.

Rather than having a Western democratic model of governance imposed
on them from outside, Somaliland has managed to fuse Western-style
institutions of government with its own traditional forms of social
and political organisation. Its bi-cameral parliament reflects this
fusion of traditional and modern, with the Senate consisting of
traditional elders, and the House of Representatives consisting of
elected representatives.

However, with its history of ‘tribalism’ and internecine fighting, the
key challenge for Somaliland’s new parliament is to try and replace
clan-based politics with party politics. For its first twelve years,
Somaliland had no political parties but instead followed more
traditional clan-based forms of political organisation. Political
parties were introduced during the presidential elections and it was
hoped that the recent parliamentary elections would help to usher in a
representative system without allowing representation to be overtly
clan-based. Clearly, if clan loyalties were to take precedence over
party loyalties, parliament would be seriously weakened. The
traditional clan-based political system had resulted in an under-
representation of some clans and it was hoped that having just three
non-clan-based parties would reduce the extent to which clan
allegiance affected the selection of candidates and the way in which
people voted. A limited number of political parties would force
alliances between clans to develop thereby increasing integration and

In the traditional clan system it is the male elders who make
decisions, and during the nomination process, many candidates were
indeed selected by elders along clan lines. The male-dominated nature
of the selection process was reflected in the fact that only seven of
the 246 candidates were female. There was also evidence that political
parties often chose candidates based on their perceived popularity and
support base. Whilst the absence of voter registration makes it hard
to analyse voter patterns, it would seem from the results that there
is some evidence that regional voting patterns reflect clan
preferences. There is also evidence however, that alliances were
sought between subgroups of different major clans across regions under
the different party umbrellas. This would indicate that, although
tribalism inevitably played some part in the election, it has been

The election itself was very tightly fought. At one stage it seemed
inevitable that the president’s Democratic United National Party
(UDUB) would lose to the Solidarity Party (Kulmiye). However, UDUB was
able to use its powerbase as the governing party to maintain its
percentage of the popular vote, while Kulmiye lost considerable ground
to the Justice and Welfare Party (UCID). The close nature of the
result means that parliament will not be dominated by clan or party,
but will require much greater consensus-building coalitions. It will
nevertheless be interesting to see how party loyalties will be
negotiated against clan interests in the new parliament.

Election Day
Lack of international recognition meant that Somaliland was not able
to access forms of governance support commonly received by post-
conflict areas such as Iraq and Afghanistan. Nevertheless, the
elections were well organised and successfully conducted with over
800,000 voters turning out to the country’s 985 polling stations to
elect 82 members of parliament. This represents a turnout of over 90
per cent.

Like all elections in infant democracies there were some inevitable
teething problems of a practical, administrative and logistical
nature. The absence of a census and voter register meant that a
decision was made to allow voters to vote in any of Somaliland’s six
regions: the only requirements for voting being that voters were 16
years of age and spoke Somali. Inevitably, this led to widespread
attempts at underage and multiple voting. Due to the tradition of
women decorating their hands with henna it was decided that invisible
ink (and black lamps) should be used instead of indelible ink. This
generally proved an effective barrier to multiple voting; however
punishment for those caught varied. In some polling stations those
attempting to vote more than once were merely turned away, often only
to rejoin the queues. In other polling stations people had their shoes
and belts taken away and were made to sit outside the polling station
awaiting detention by the police. Whilst the fact that 30 per cent of
the population are nomadic makes census taking and voter registration
more difficult, there is confidence that both will be in place before
the local elections in 2007.

With illiteracy rates as high as 80 per cent and with many people
having had little or no experience of voting, substantial voter
education was attempted prior to the elections. In addition, ballot
papers had symbols beside the name of each candidate to make it easier
for those that could not read. On the day however, many voters, not
even knowing which way up to hold the ballot paper, chose to announce
their choice to the local chairperson, who marked the paper for them.
Whilst this compromised the secrecy of the voting process, it did not
seem to bother voters who were generally eager to talk about whom they
had voted for.

Shadow of Terror
The shadow that hung over the elections and continues to darken
Somaliland’s future is that cast by the threat of terrorism. On 25th
September the atmosphere in Hargeisa, Somaliland’s impoverished but
relaxed capital, changed. With the elections only days away, several
suspected Islamic militants were arrested following a shoot-out with
police. The following day a cache of arms, including heavy anti-tank
weapons, was discovered in the city. According to the Interior
Minister, one of the men arrested was a senior al-Qaeda operative
allegedly in the region to organise attacks on local leaders and
foreigners. This incident heightened fears of violence especially as
it coincided with the arrival of 76 international election observers
including potentially high-profile targets such as parliamentarians
from South Africa and Europe as well as a former US Ambassador. It
also provided a stark reminder of Somaliland’s precarious position in
the global war on terror.

Whilst Somaliland has managed to avoid the violent lawlessness and
extremism of Somalia, the discovery of Islamic militants in Hargeisa
does not come as a great surprise. Over the last two years, extremists
have murdered four foreign aid workers in Somaliland. Last month four
men were sentenced to death for murdering a British couple in 2003 in
a school they had built. Although the predominantly Sufi form of Islam
practised in Somaliland does not lend itself to extremism, concerns
have been raised by the presence of an increasing number of radical
clerics as well as the porous nature of the border with Somalia.
Mogadishu has become something of a haven for al-Qaeda-affiliated
fighters and Somalia was used as a transit point for the terrorists
who carried out the 1998 attacks on the US embassies in Kenya and
Tanzania, as well as the 2002 suicide bombing in Mombasa.

Whilst the threat of terrorism is clearly a problem for Somaliland, it
also presents an opportunity. Ironically, the discovery of al-Qaeda
operatives in the territory might do more to make Western governments
take notice of Somaliland than the free and fair conduct of their
elections. Somaliland is strategically positioned on the Gulf of Aden
and is also home to what could be an important navel base in Berbera.
Currently the only location in Africa where the US has a military base
is neighbouring Djibouti, and Somaliland is seen by the Americans as a
potentially important ally against the spread of extremism.

Somaliland is conscious that too close a relationship with the
Americans might not be popular with its population, but it also
recognises the advantages that collaboration with the US could bring
in terms of finance, security and long-term stability. By promoting
itself as a non-threatening strategic partner in the ‘war on terror’,
Somaliland could fast-track its entry into the international

Recognition and beyond
Even if the US were to support Somaliland’s right to self-
determination, it is unlikely that they or any other country will
recognise Somaliland without the approval of the Organisation of
African Unity. One of the OAU’s central principles is that African
colonial borders should not be redrawn. This is based on a well-
grounded fear that recognition of ‘separatist’ states could cause the
continent to descend into chaos. However, there is a strong argument
that by breaking a union that it had entered into as an independent
state, Somaliland would be reverting to, rather than redrawing its
colonial borders. It is also worth noting that despite its reluctance
to acknowledge secessionist states, the OAU has recently recognised
the newly formed nations of Eritrea and Western Sahara. It is also
important to note that thirty new countries have been internationally
recognised since 1990, although most of these emerged from the
dissolution of the USSR and Yugoslavia.

Despite OAU intransigence, Somalilanders remain optimistic about the
possibility of recognition and the benefits it will bring. As well as
giving Somaliland access to bilateral aid, recognition would finally
give access to the mining and oil companies eager to exploit
Somaliland’s proven natural resources. Large-scale extraction of oil,
coal, gemstones and minerals could transform this country where 43 per
cent of the population are living in extreme poverty. Whilst
international recognition is not a panacea that will lift Somaliland
out of poverty or eradicate its problems with health, education, food
insecurity, water supply, and HIV/AIDS, it would undoubtedly speed

Although there is still a distance to travel, Somaliland’s
accomplishments are impressive. It has created effective institutions
of state and attained a level of political maturity well beyond its
years. Somaliland provides a useful model of democracy that offers
lessons to us all. It reminds us that democracy is not a static,
prescriptive system but a living idea that is constantly adapting and
taking new forms. In Hargeisa, reminders of how far this small nation
has come are all around. When the rains come, a mass grave beside the
river is exposed. Bones protrude from the red earth, some still tied
at the wrist. Beside the airport road, a rusting Russian tank is
plastered with election posters: a reminder of Somaliland’s war-
ravaged past and a symbol of hope for a democratic future.

{Stefan Simanowitz is a writer and researcher. He was part of the
International Election Observer mission to Somaliland in September


“Following the pattern of the Booroma National Charter, which
formalized the birth of Somaliland during 1993, a new entity – the
Puntland State of Somalia – was established in July 1998 out of a long
Constitutional process that lasted more than two months. The
institutional recognition of the role played by the traditional
leadership in Puntland in the seven-year period of peaceful self-
government in a stateless situation, has come only at the end of this
process. However, the mediation role of the elders has not been so
successful in other regions of Somalia for several reasons. Generally
speaking, outside the Majeerteen context, Somali society lacks a
stable hierarchy of paramount chiefs, and it follows that mediation
can achieve only a local dimension. Nevertheless, in the northwestern
regions (Somaliland) a regionalist feeling has widely spread in the
last thirty years. In this part of Somalia, after the collapse of the
State, the elders have collectively expressed this feeling better than
the SNM, frequently paralyzed by leadership competition.

The local concept of State sovereignty does not naturally match with
the rigid concept of State territory. Instead, it should expand in the
‘official’ territory of other countries in a flexible way and wherever
members of its community are found. This is exactly one of the options
offered to end the conflict and to reconstruct Somalia by the LSE
consultant to the European Union during 1995. Today, is effectively
put into effect in all Somali regions without respect of internal and
external borders. From another point of view, it is a slide back to a
legal status of the community group, confirmed by a citizenship which
corresponds to kinship. These are new elements of extreme importance
to those who are directly or indirectly committed to developing
alternative solutions in the African context, split up between State
sovereignty and ethnic allegiance. What is advancing in Somalia is a
more flexible and a more restricted idea of what the State is and
means in Africa (and elsewhere).”


Badhan, Somaliland, August 18, 2007 – The semi-autonomous regional
state of Puntland (Majeerteenya) declared this week that the recent
formation of `Makhir state’ by eastern Sanag residents is `a load of
hoo ha and a dream’. In a press statement, The Puntland Minister of
Information, Mr Abdirahman Banga in recent press statement strongly
condemned last week’s declaration of a new state in eastern Sanag. Mr
Banga said that the people behind the declaration of Makhir State are
dreaming because it doesn’t exist.

The minister stressed that this area is 100% in the hands and control
of Puntland, though the area recently saw bloody clashes between
forces loyal to Puntland and Somaliland. Soon after the minister’s
statement, the self-appointed President of `Makhir’ state, Mr Jibril
Ali Salad, who used to be a Somaliland parliamentarian, spoke to the
local media in response to the minister’s statements. Mr Salad said,
“Puntland has no business to talk about our new state, and they are
powerless to stop us, and do not have the ability to even come here”.

“Makhir state is acknowledged by its people as a fully-fledged state
independent of Puntland and Somaliland,” added Jibril Ali Salad.
Makhir state was established last week in the Badhan district of
eastern Sanag and its president is Jibril Ali Salad, who up to early
this year was a member of Somaliland’s parliament House of
Representatives. Somaliland’s government has not made any comment
regarding this newly-established enclave inside its border.

Environmental Protection Corps in Maakhir State of Somalia

The roots of the destructive nature of the charcoal trade in Sanaag
region was due to lack of rules and regulations stemmed from the
collapse of the central Somali Government. This finally came to an end
since the declaration of Maakhir State. The Environmental Protection
Corps (EPC) of Maakhir State is growing in numbers and contributing to
a larger slowdown of charcoal trade and illegal gaming of wild

The authority in Maakhir State has banned charcoal trade because of
the environmental destruction and desertification that it does to the
fragile Somali environment. Traders drastically cut entire swaths of
forests, and as a result the trade was flourishing due to the high
demand for charcoal in the Arab Gulf States and other countries in
Asia. These are the reasons why the Environment Protection Corps are
confronting the charcoal profiteers and their militia that have been
menacing the Gebi Valley and Sool Plateau.

It is important to highlight that the newly established Maakhir
Authority did not receive any international aid for this effort. This
largely local effort has made an immediate impact on preserving and
protecting the environment in the Gebi Valley and Sool Plateau. As
indicated by the President of Maakhir Jibril Salad in last Thursday’s
press release; ” Maakhir Administration used traditional conflict
resolution methods to stop the traders and their militia, however
these militia are heavily equipped with automatic firearms who would
not cooperate, but the most effective and successful method for
limiting the harmful distress of our environment was creating and
using the EPC forces.”

The EPC in Maakhir apprehended more than 80 criminals over the past 4
months and jailed them in the district of Dhahar. The administration
constructed a new program of materials, structures, and training to
educate militia while they are held in jail. Jama Dahir Kodah, one of
the program directors of the EPC, told the media that their next
sustainable occurring project is to implement a plantation program in
the region.

The EPC is divided into three forces in the following areas of Maakhir
State and the main base is in city of Dhahar, the capital city of
Boharo region, the new region in Sanaag that Maakhir created:
1) The first battalion is responsible for the protection in vast areas
which stretches from Baragaha-Qol in Southern Sanaag to Eilbuh in
Central Sanaag.
2) The Second Battalion is responsible for an area which stretches
from Dhahar to Western Part of Bari region of Somalia near Boosaaso.
3) The Third and most important battalion have bases along the highway
that links Maakhir to Puntland and does stop and search in suspected




African Union replaces dictators’ club
BY Paul Reynolds / 8 July, 2002

A new wind of change is blowing through Africa. The move from OAU
(Organisation of African Unity) to AU (African Union) is supposed to
be more than the dropping of one letter. It is supposed to represent a
shift from a “dictators’ club” to a people-based grouping. Everything
of course depends on implementation. And given the sad record – and
current problems, such as AIDS – there must be doubts about how much
can be achieved. AIDS alone is reducing life in some countries,
especially in southern Africa, to nothing more than an existence. Life
expectancies are being cut to levels unknown since the 19th Century.
The OAU was set up to develop Africa after colonialism – and to help
liberate Southern Africa from white rule.

The African Union reflects the developments in many parts of Africa in
recent years, as democracy has started to take hold and a new emphasis
has emerged which concentrates less on the battles of the past and
more on the need to improve the lives of ordinary people. The key
shift is that the principle of state sovereignty has been abandoned.

It was the central belief of the OAU that nobody should interfere in
anyone else’s business. That was especially convenient for dictators.
Now the AU has as one of its aims the promotion of “democratic
principles and institutions, popular participation and good
governance.” It will have the right to initiate a so-called “peer
review” of a country’s record, intervene if there is genocide and war
crimes and impose sanctions. Everything of course depends on

High hopes
Nobody is mourning the end of the OAU. Yet when it was founded in
Addis Ababa in 1963, Africa was full of pride and hope. Its leaders
were giants of their day. Africa was coming out of colonial rule and
many had led their nations to independence. It was a time to be bold.
One of the key figures was Dr Kwame Nkrumah, President of Ghana which
became independent (and dropped its colonial name the Gold Coast) in
1957. He believed that the African continent should be “united.” But
defining that unity was the problem. The OAU solved the problem by
praising unity in its language, but avoiding it in its practice. The
differences across the continent were just too many and the principle
which the OAU adopted, of non-interference and non-intervention,
simply meant that member states turned a blind eye to their

When one of the founding members, Emperor Haile Selassie of Ethiopia
gave a speech to the OAU, he was praised in its formal thanks for his
“wisdom.” When the man who overthrew him in 1974 (and later murdered
him and buried him under a latrine), Colonel Mengistu Haile Mariam,
subsequently welcomed delegates back to Addis Ababa, he was thanked
for his “warm and generous hospitality.” Colonel Mengistu went on to
declare his “red terror” in which tens of thousands of opponents were
slaughtered by his neighbourhood committees. It was one of the
tragedies of the OAU that all that happened in the city where it was
founded. There were coups all over the place – including Nigeria
(which had been the jewel in the British colonial crown in Africa and
the hope for parliamentary democracy), Libya (which brought Colonel
Gaddafi to power) and Uganda (in which Idi Amin rose to fame). Kwame
Nkrumah was overthrown in a coup himself. It symbolised the problems
Africa was having in developing stable government. The OAU could say
little and did nothing.

Even after the recent elections in Zimbabwe, it was still bringing
forth its usual kind of statement when it objected to possible
American sanctions: “We are dismayed by this report, which amounts to
interference in the internal affairs of a member state.” It was more
successful over the years in trying to mediate in conflicts between
states. It helped mediate a border dispute between Algeria and Morocco
and between Somalia, Ethiopia and Kenya. One of the ironies was that
the OAU insisted on preserving the borders drawn by the colonial
rulers which often reflected spheres of influence rather than natural
divisions. The view at the time was also that Africa needed time to
settle down. And after all, it was achieving good economic growth of
about 5% a year in the 1960s. And the crisis in Southern Africa, where
white rule was being confronted, was regarded as more of a priority
for the OAU.

Faith lost
But Africa began to fail. Economic growth gave way to debt repayments;
the pioneering efforts to improve public health were swamped by AIDS,
wars were unending and famine stalked the land. The people lost faith
in governments and governments lost interest in the people. According
to Bernard Otabil of West Africa magazine: “The people did not feel
that the OAU satisfied their aspirations. It did not involve people on
the ground. It was top heavy.” The Secretary General of the OAU, Amara
Essy, who has helped to bring the new African Union about, was
scathing about the old grouping: “The OAU is the most difficult
organisation I have ever seen”, he told New African magazine. Mr
Otabil believes that the African Union is on the right course because
it is less grandiose and hopes to be more community based. It is also
offering an economic dimension and seeks African integration into the
world economy. One of the main tasks for the AU will be to push
forward with Nepad, the New Partnership for Africa’s Development. This
offers a bargain with the West – you give us aid and we will put our
house in order. It is a long way from 1963.

African Union supports Somali split
BY Jean-Jacques Cornish / Feb 10 2006

Hopes of recognition for Somaliland’s 15-year independence have been
raised by the favourable report of an African Union mission that
visited the territory last year. The report, a copy of which the Mail
& Guardian has obtained, comes at a time when signs of a new
flexibility in African thinking on boundary issues are emerging. It
suggests that official African aid be tapped by this country of
3,5million people that was effectively destroyed by the Somali
dictator Siad Barre. With the fall of Barre in 1991, the former
British colony broke its union with southern neighbour, the former
Italian colony of Somalia. Since Barre’s departure, Somalia has been
without an effective government.

But Somaliland has pulled itself up by its bootstraps. It has had a
referendum to adopt a democratic Constitution and has organised
presidential and parliamentary elections. Independent international
observers have endorsed all of these. The Organisation of African
Unity refused to recognise Somaliland’s independence, citing the maxim
that there would be chaos if colonial boundaries were not observed in
post-independence Africa.

Unions between Senegal and Gambia, and Egypt and Sudan, among
others, have been broken without affecting the recognition of these
countries. The AU mission accepts this, stating in its report that
Somaliland’s “case should not be linked to the notion of ‘opening a
Pandora’s box’. As such, the AU should find a special method for
dealing with this outstanding case. “The lack of recognition ties the
hands of the authorities and people of Somaliland, as they cannot
effectively and sustainably transact with the outside to pursue the
reconstruction and development goals.

“Furthermore, given the acute humanitarian situation prevailing in
Somaliland, the AU should mobilise financial resources to help
alleviate the plight of the affected communities, especially those
catering for the internally displaced persons and the returnees.
Finally, given also the high potential for conflict between Mogadishu
and Hargeisa, the AU should take steps to discuss critical issues in
the relations between the two towns. That initiative should be taken
at the earliest possible opportunity.”

Iqbal Jhazbhay, an Africa analyst at the University of South Africa,
says the report illustrates a new mood in the AU, an organisation
Somaliland has officially applied to join. “The AU-sponsored peace
deal in Sudan allows for a referendum, five years from now, on whether
the south wants to go it alone. This could not have happened if it
were business as usual. The AU now goes for results, and takes account
of subjective facts and practical realities,” says Jhazbhay. “The AU
clearly recognises the stability created in Somaliland and the
infrastructural development. It is determined to bring peace to the
horn. It is looking at post-conflict reconstruction and it has the
capacity to handle these issues.”


Community Wi-Fi network even uses satellite dishes
BY Fernando Cassia / 10 October 2007

Among the most popular attractions of this year’s CAFECONF Linux conference down in Argentina, the “Buenos Aires Libre” group, is promoting its hobbyist, city-wide “community network”. While other groups here were handing out leaflets or showing software on a PC screen – or in the case of La Intella, a dual-core notebook – the folks from Buenos Aires Libre caught everyone’s attention because they had hacked open hardware on display, including open boxes, cables, and a Linksys WRT54G housed in a waterproof case with a large omni antenna. I used the opportunity to have a chat with Martin Seeber who was there promoting the effort and who runs one of the main nodes. I also had a little chat with some of his peers and needless to say I learned a lot.

Unlike other Wi-Fi “projects” and “communities” like the (in)famous FON which mixes business objectives with grassroots participation, this one isn’t about providing hotspots for public internet use, and it isn’t commercial at all. B.A. Libre – BAL hereinafter – aims to run a network with its own backbone, capable of routing traffic between nodes even if the Internet goes down, it doesn’t rely on the public internet for transportation. The project was kick-started by a handful users a long six years ago and after several iterations and change of structure and leadership, now seems to show steady progress.

The BAL network spine uses point-to-point links and directional antennas along with inexpensive consumer Wi-Fi APs or in some instances full PCs in waterproof enclosures- loaded with their own customized Linux software, dubbed Obelisco – Spanish for ‘obelisk’ the city’s landmark.

Three years ago, at the time the local local loop monopoly covering the northern half of this country decided to charge for DSL traffic above a certain quota – a decision it later dropped – the company suddenly found itself uncomfortably in the public spotlight, and facing the heat of the angry users and ISPs who demanded local loop unbundling. One exec at the behemoth telco lost his composure and reportedly exclaimed at a congress hearing on the subject: “If you want traffic to be free on the network, then build your own”. Well, ironically, that’s precisely what these folks have been doing: building their own backbone.

Interesting facts
For their backbone, they choose to use an “extended star” or tree topology, avoiding the use of Mesh technology because of performance problems, as the number of hops increases. This BAL network backbone currently uses 802.11b/g equipment on the 2.4GHz band. It also doesn’t use WEP, WPA, or any other encryption, just MAC address filtering, so if you want to connect to a given node you must first register on the BAL system as a project member, and then ask the target node for permission so he can add your equipments’ MAC address to the nodes’ white list. Users concerned about the safety of their data are encouraged to run OpenVPN to create tunnels in such instance. Some nodes, not all, also sport an omni-directional secondary antenna so that nearby clients all around can connect as well.

I asked them if they had any run-ins with the airwaves watchdog and their response was an emphatic no. There’s a regulation making selling VOIP or telephony services using Wi-Fi equipment strictly and specifically forbidden by the airwaves watchdog, but it’s aimed at ISPs. First BAL is a non-profit endeavour, a community network, and it doesn’t aim to provide any specific services, just inter-connect computers. Thus the local regulating authority gives them no hassle at all because such non-profit usage falls within the ‘private use’ considerations of the local regulations.

On the software/organisation aspect, they have done a quite impressive job. The Wiki shows a lot of work, and there’s even an on-line map built using Google Maps satellite images and showcasing all nodes and clients, and which are currently active. The registration/membership system is also well done. Dubbed the “BA Libre Location System” or BALLS for short, the project’s web map lists 259 “points of interest”, that is, either nodes or users who have decided to take part in this project in the whole capital city and its metro area of influence, with 13 on-line nodes and APs in BA city at the time of this writing. There is also a Wiki, an IRC channel and mailing lists.

Annoying landlord? Hack a satellite dish!
When I saw the pictures and the kind of relatively huge equipment some had installed – think a mid tower to mini-tower waterproof metal box hooked to a building’s TV antenna tower- or huge directional parabolic grid antennas, one question kept circling my mind: “What if the landlord of building’s superintendent doesn’t allow me to install such a large antenna?”. I asked the guy next to me in the BAL booth. He thought for a second and replied with a smile: “Well, as far as testing goes… you can always mod a satellite dish, and replace the LNB with a biquad. very few people, if any, will notice”.

He told me one of the nodes even installed one. And yes indeed, there’s even a picture of such a mod on their Wiki, and although I wouldn’t call it unnoticeable, it proves that nothing can stop this pack of motivated geeks from reaching their common goal.



free book about designing, implementing, and maintaining low-cost wireless networks


“Slow scan televison is a way of sending video over a voice bandwidth channel–this can make it practical to send video over thousands of miles via ionospheric propagation. Modern computers have this once rare and expensive mode readily available to the average ham.”


The best way to understand slow scan TV is to imagine it as colour fax pictures but sent over the radio rather than the phone. The pictures are transmitted via tones (1200-2300 HRZ) over the air. There are several simple ways to get setup for slow scan TV, the simplest of which use your computer and software with a hardware interface. There are interface circuits which work excellent and cost less than $20 to build or nil if from your junk box.

My experience with slow scan has been great fun. I’ve exchanged picture QSLs with different people in many different countries throughout the world. The quality of the pictures is somewhat dependent upon the computer, (monitor & graphics card), and somewhat on the software, hardware. The better systems support Hicolour which gives typical picture resolutions of 320 x 240 in 32 thousand colours. These pictures are almost photographic quality and are very impressive to say the least. Once you’ve tried it your hooked. Imagine being able to swap mug shots with other Amateurs. See who you’re talking to. Send diagrams and schematics over the air. It’s great. Listen to HF on 14.230 and 14.233 almost anytime to hear the action.

“If your interested at all, take the time to build up the simply 741 op-amp circuit described in the JVFAX info and run the JVFAX70 software available right here (above, 736K). This system works great and is simple to setup and use. The interface circuit is made up of only a 741 op-amp, couple caps, and a couple resistors. The interface circuit plugs into a serial port (com port) of any IBM compatible type computer, 386 or up recommended. One connection from the interface to the speaker output and your copying pictures. See articles for details on connections for transmit and more info on the different systems being used. There’s even software available to copy and send SSTV using your sound card.”

Rob Aarssen
email: raarssen [at] kent [dot] net



Experience Behind the Iron Curtan
“Before the downfall of the Soviet Union, there were a number of pirate TV operations scattered around Eastern Europe. Many were guerrilla style hit-and-run operations that would rig up a low-tech transmitter with a junked VCR, set to go on the air during the official government newscast, overriding the signal for several blocks. When the authorities found the transmitter, often on the roof of an apartment house or in an vacant building, they would find home-built equipment that had been abandoned, rigged to a timer switch. Much of the programming was very short (since the authorities would be searching for the source within minutes) and usually consisted of recordings from foreign broadcasters like Voice of America and Radio Free Europe, with still photos for visuals. One brave pirate in Moscow would show a tape of the official government news broadcast, with someone else’s voice dubbed onto the soundtrack, reading uncensored news peppered with dirty jokes.

In 1985, some very brave astronomers from Poland’s University of Torun used home-made equipment to superimpose pro-Solidarity slogans over the images of the state-run TV network. [1] You can imagine how the viewing public (as well as the authorities) must have felt when, during the official government news broadcast, the words “SOLIDARITY TORUN: ENOUGH OF PRICE HIKES, LIES AND REPRESSION” flashed on the screen.

In 1977, back when the UK used analogue television, someone identified as “Vrillion” of the “Ashtar Galactic Command” over-rode the audio channel of England’s Southern Television for 6 minutes.”

Free-To-Air Satellite TV
In many rural parts of the USA, a big thing is “Free-To-Air” (FTA) TV dishes. These are common in the UK and parts of Europe, but are only starting to pick up in the USA. You’ll need an unobstructed view of the Southern sky, room for a dish (with a directional motor so you can watch more than one satellite) and a receiver box. A decent set-up will set you back about $200-300 plus installation, but there’s no monthly fees. You won’t get Dish Network or DishTV (and if you do without subscribing, they’ll sue you for Theft of Services), but there’s lots of TV and radio channels to be had, as well as network TV station feeds. Depending on where you are, you can also watch foreign broadcasts. The forum at DSSRookie is a good place to start, as well as the FTA forum at (No hacking questions permitted!). You can also check out the website for White Springs TV, an FTA service.

WARNING: There have been reports of crooked dealers selling counterfeit versions of the popular Pansat brand receiver boxes. Make sure you by from a recommended dealer.

A “peoples network” consisting of a Free-To-Air satellite channel feeding low-power stations and FTA dishes may be pricey, but can be done. There are a number of religious and ethnic services, as well as a few “family entertainment” services, already on satellite. There are also a number of FTA services that are run by expatriate citizens of other countries, such as “Tapesh TV” and “Simay Azadi” which are based in the USA but serve viewers in Iran, often broadcasting news and information that may be censored by the viewer’s government. To contradict Gil Scott-Heron; The revolution might very well be televised, but it probably won’t be on cable.

Original Guerrilla Television
There are a number of outlaw radio projects going on around the country. Less frequent, but just as feasible, is a people’s television network. Presently there are three basic types of TV systems: Broadcast, which is the sending of signals directly from a station’s transmitter to home receiver sets; Cable, where the cable company employees extremely sensitive antenna to pick up broadcast transmissions and relay them and/or they originate and send them; and thirdly, Closed Circuit TV, such as the surveillance cameras in supermarkets, banks and apartment house lobbies.

The third system as used by the police is of little concern, unless we are interested in not being photographed. The cameras can be temporarily knocked out of commission by flashing a bright light (flashbulb, cigarette lighter, etc.) directly in front of its lens. For our own purposes, closed-circuit TV can be employed for broadcasting rallies, rock concerts or teach-ins to other locations. The equipment is not that expensive to rent and easy to operate. Just contact the largest television or electronics store in your area and ask about it. There are also closed-circuit and cable systems that work in harmony to broadcast special shows to campuses and other institutions. Many new systems are being developed and will be in operation soon.

Cable systems as such are in use only in a relatively few areas. They can be tapped either at the source or at any point along the cable by an engineer freak who knows what to do. The source is the best spot, since all the amplification and distribution equipment of the system is available at that point. Tapping along the cable itself can be a lot hairier, but more frustrating for the company when they try to trace you down.

Standard broadcasting that is received on almost all living room sets works on an RF (radio frequency) signal sent out on various frequencies which correspond to the channels on the tuner. In no area of the country are all these channels used. This raises important political questions as to why people do not have the right to broadcast on unused channels. By getting hold of a TV camera (Sony and Panasonic are the best for the price) that has an RF output, you can send pictures to a TV set simply by placing the camera cable on or near the antenna of the receiver set. When the set is operating on the same channel as the camera, it will show what the camera sees. Used video tape recorders such as the Sony CV series that record and play back audio and video information are becoming more available. These too can be easily adapted to send RF signals the same as a live camera.

Whether or not the program to be broadcasted is live or on tape, there are three steps to be taken in order to establish a people’s TV network. First, you must convert the video and audio signals to an RF frequency modulated (FM) signal corresponding to the desired broadcast channel. We suggest for political and technical reasons that you pick one of the unused channels in your area to begin experimenting. The commercial stations have an extremely powerful signal and can usually override your small output. Given time and experience you might want to go into direct competition with the big boys on their own channel. It is entirely possible, say in a 10 to 20 block radius, to interrupt a presidential press-conference with more important news. Electronic companies, such as Jerrold Electronics Corp., 4th and Walnut Sts., Philadelphia, Pa., make equipment that can RF both video and audio information onto specific channels. The device you’d be interested in is called a cable driver or RF modulator.

When the signal is in the RF state, it is already possible to broadcast very short distances. The second step is to amplify the signal so it will reach as far as possible. A linear amplifier of the proper frequency is required for this job. The stronger the amplifier the farther and more powerful the signal. A 10-watt job will cover approximately 5 miles (line of sight) in area. Linear amplifiers are not that easily available, but they can be constructed with some electrical engineering knowledge.

The third step is the antenna, which if the whole system is to be mobile to avoid detection, is going to involve some experimentation and possible camouflage. Two things to keep in mind about an antenna are that it should be what is technically referred to as a “di-pole” antenna (see diagram) and since TV signals travel on line of sight, it is important to place the antenna as high as possible. Although it hasn’t been done in practice, it certainly is possible to reflect pirate signals off an make equipment that can RF both video and audio existing antenna of a commercial network. This requires a full knowledge of broadcasting; however, any amateur can rig up an antenna, attach it to a helium balloon and get it plenty high. For most, the roof of a tall building will suffice. If you’re really uptight about your operation, the antenna can be hidden with a fake cardboard chimney.

We realize becoming TV guerrillas is not everyone’s trip, but a small band with a few grand can indeed pull it off. There are a lot of technical freaks hanging around recording studios, guitar shops, hi-fi stores and engineering schools that can be turned on to the project. By showing them the guidelines laid out here, they can help you assemble and build various components that are difficult to purchase (i.e., the linear amplifier). Naturally, by building some of the components, the cost of the operation is kept way down. Equipment can be purchased in selective electronics stores. You’ll need a camera, VTR, RF modulator, linear amplifier and antenna. Also a generator, voltage regulator and an alternator if you want the station to be mobile. One of the best sources of information on both television and radio broadcasting is the Radio Amateur’s Handbook published by the American Radio Relay League, Newington, Conn. 06611 and available for $4.50. The handbook gives a complete course in electronics and the latest information on all techniques and equipment related to broadcasting. Back issues have easy to read do-it-yourself TV transmitter diagrams and instructions. Also available is a publication called Radical Software, put out by Raindance Corp., 24 E. 22nd St., New York, N.Y., with the latest info on all types of alternative communications.


“Since the haphazard inception of this page, I have received well over 1000 emails from various folks in all corners of the earth, asking questions, seeking information or advice and offering tidbits of useful knowledge that all contribute to the success of this page. At it’s peak there were more than 10,000 hits per day. I was completely surprised at the substantial interest for Do-It-Yourself antennas that was present in the network community. Thanks to you all.

I did not devise the term “Cantenna”, but to the best of my knowledge, I did build the first one using the popular brand potato crisp can. I’ve adopted the use of the word simply because it’s appropriate. Thank you to the many folks who simultaneously discovered this word.

These antennas were the design of two Japanese people, Hidetsugu Yagi and Shintaro Uda, and are sometimes referred to as Yagi-Uda antennas. They were originally used for radio, long before modern computers. The CQ Amateur Radio Hall of Fame, is pretty cool, and is a good research starting point. This article from Alternative Wireless has some good things to say.

Interference, Health and Security Concerns
I’d like to say a little bit about Electromagnetic Waves. I’m sure you are eager to build an antenna or two for your 802.11b wireless network. Before you do anything else, it is important to think carefully about all the possible consequences of what you are doing. Simply put, you are going to be sending electromagnetic waves through the air. This can cause much distress to folks who are not expecting it, and when they get upset, they will call the FCC. So, you may want be knowledgeable about what you are doing before you do it. A few terms you should be familiar with are Radio Frequency Interference, Electro Magnetic Interference and Bandwidth Saturation.

It has been mentioned in this article that it is not legal to attach a non FCC-approved antenna to a wireless device. I suggest you read the FCC rules and regulations before doing anything. Seattle Wireless has a good collection. The antenna design I illustrate below is extremely experimental. I have heard that it’s use could cause interference in near-band frequencies that are commonly used in things such as portable wireless (not cellular) phones that people may have in their homes near you. There are all kinds of wireless devices out there that operate around the same band as 802.11b, and these are potentially disrupted by use of the equipment described here.

You may consider purchasing an SWR meter and you may exercise much care, consideration and caution for others if and when you decide you need an RF amplifier for use with your antenna. For most applications you will not need one. I have also heard that if your antenna is too efficient, that you may even damage your 802.11b device with too much current/feedback. If you do not know what you are doing, study until you are confident that you will not break people, places or things when you start experimenting. I am providing this information for the sake of information and I am not liable for any damages, injuries or other accidental or intentional harm caused by the use of it. Play nice. We are all in this together.

As if this was not yet enough to keep you from messing around with fast flying electrons, I have received many emails from folks who are very involved with HAM radio and other professions and hobbies that involve work with high frequency microwave radiation. They warn that 2.4 GHz just happens to also be the resonant frequency of plain old water. This is why a microwave oven works. The energy of an 802.11b device is the same kind of energy that cooks your food, but on a much smaller scale. This is important considering that we as humans are 98% made of water. I have been warned that exposure to even as little as a 1/4 watt amplified with a 14db antenna, such as described here, could lead to severe vision problems and possibly other health issues.

I like the idea of using wireless to do cool stuff. It’s really nifty. It’s not very secure though. Nothing really is “secure”. But wireless is even less so, because it is wireless. It does not require some guy breaking in to your home/business and tapping a physical connection for them to see the data you are sending. It’s flowing freely through the air, like the sound from you stereo speakers. If someone was standing outside your house, and you were rockin’ out with your stereo up loud, they could hear it as well.”


How To Build A Tin Can Waveguide WiFi Antenna
for 802.11(b or g) Wireless Networks or other 2.4GHz Applications
10 Euro Dish with Biquad Feeder
DirecPC Wi-Fi Dish w/BiQuad Feed

“The following information will be available through June 30, 2009”

How-To: Build a WiFi biquad dish antenna
by Eliot Phillips / Nov 15th 2005

Wireless enthusiasts have been repurposing satellite dishes for a couple years now. This summer the longest link ever was established over 125 miles using old 12 foot and 10 foot satellite dishes. A dish that big is usually overkill for most people and modern mini-dishes work just as well. The dish helps focus the radio waves onto a directional antenna feed. We’re building a biquad antenna feed because it offers very good performance and is pretty forgiving when it comes to assembly errors. Follow along as we assemble the feed, attach it to a DirecTV dish and test out its performance. Why? With just a handful of cheap parts, a salvaged DirecTV dish and a little soldering, we were able to detect access points from over 8 miles away. Using consumer WiFi gear we picked up over 18 APs in an area with only 1 house per square mile.

Building the antenna
Biquad antennas can be built from common materials, which is nice because you don’t have to scrounge around for the perfectly-sized soup can. We did have to buy some specialized parts before getting started though. The most important part here is the small silver panel mount N-connector in the center of the picture; the entire antenna will be built on this. We purchased it from S.M. Electronics, part# 1113-000-N331-011. The “N-connector” is standard across the majority of commercial antennas and you can connect them to your wireless devices using “pigtails.” The longer pigtail in the picture is a RP-TNC to N-Male pigtail that we’ll use to connect our antenna to a Linksys WRT54G access point. The short pigtail is a RP-MMCX to N-Male pigtail so we can connect to our Senao 2511CD PLUS EXT2 WiFi card which is pictured. We also purchased 10 feet of WBC 400 coax cable so we wouldn’t have to sit with the dish in our lap. We got our surplus DirecTV dish from Freecycle. We’ll cover the reason for the mini butane torch later.

Trevor Marshall built one of the first biquad WiFi antennas found on the internet. We followed the slightly more thorough instructions found at Here are the raw materials we started with: The wire is standard solid-core 3-conductor wire used for most house wiring. We didn’t have any copper printed circuit board material laying around so we used this thin sheet of copper and supported it using the 1/4-inch thick black plastic pictured.

The first step in building the element was stripping and cutting a 244mm length of wire. We marked the wire every 31mm with a permanent marker and began bending the wire into a double diamond shape. We tried to make the length of each leg 30.5mm. The easiest way to make really sharp bends in the solid copper wire is to use two pairs of pliers. With the pliers held perpendicular to each other bend the wire against one of the sets of jaws. Next we cut out a 110mm square of black plastic to use as a base for the reflector. We drilled a hole in the center to clear our connector. We then soldered a piece of copper wire to the center pin of our N-connector.

Next we soldered a piece of of wire to the outside of the connector. We ran into some trouble here. Our cheapy iron was not capable of getting the connector’s base hot enough to make a good solder joint. We bought a butane torch and used that to heat up the surfaces. This worked pretty well except it desoldered our center pin. We recommend you solder the outside piece of wire first before doing the center one. After the connector had cooled it was attached to the black plastic base using epoxy. The thin copper sheet was attached to the front with epoxy and trimmed to fit.

We let the epoxy cure for a while before proceeding. The next step was to solder our bow tie shaped element to the vertical wires. The element was supported by two pieces of scrap copper trimmed to 15mm to ensure proper positioning. Then the extra wire was trimmed off and the outside wire was soldered to the ground plane to complete the antenna. To make mounting to the dish easy we modified the original feedhorn. After removing the housing, internal components and shortening the feedhorn looked like this.

The antenna is attached by inserting the N-connector into the tube and then connecting the coax cable. Since the satellite dish has an off-center feed it looks like it is pointed at the ground when it is level with the horizon. Even though there are no angle markings for setting the dish at 0 degrees inclination we can still ensure that the dish is pointing at the horizon by setting the dish angle to 45 degrees and mounting it on a tube with a 45 degree angle.

Test results
The Engadget Corn Belt Testing Facility has broadband access provided by a local WISP. So we knew if we plugged in our antenna we were sure to pick up something in the area. We pointed the dish at the closest grain elevator, where the WISP mounts their antennas. We connected the dish feed to our Senao card and started up Kismet.

We expected to get one AP, but five is even better. Looking through the info strings we were able to determine where the APs were since the WISP had named them according to the town they are in. The AP on channel 5 is the one we pointed at in town A, 2.4 miles away. The AP on channel 6 is located in town B, 8.2 miles away. The two APs on channel 1 are a bridge between town A and town C which is located 2.6 miles directly behind the dish.

Our next test was to hook our WRT54G up to the dish and point it at a hill 1 mile away. We drove to the top of the hill and used an omnidirectional mini whip antenna with our Senao card to detect it. Our router was picked up easily. The found 14 other WISP APs including town D, 7.8 miles away. The WISP is definitely using some high powered equipment if we’re just picking this up with an omnidirectional antenna. For a final test we put the dish on the roof rack and parked on top of the hill to see if we could pick up any more APs. Our final count is 18 APs, 17 of those belonging to the WISP. This was a pretty fun project and shows that you can build decent wireless solutions using consumer gear.

For the curious: The WISP gives its subscribers a patch antenna with a built in power-over-ethernet access point. Once the antenna is mounted to the roof they run a single ethernet cable into the house which means they don’t have to worry about signal loss from coax. These client boxes are manufactured by Tranzeo.

Trevor Marshall
email : trevor [at] trevormarshall [dot] com / tm [at] well [dot] com

Andrew S. Clapp
email : clapp [at] aeonic [dot] com

Use a Surplus Primestar Dish as an IEEE 802.11 Wireless Networking Antenna

Primestar was recently purchased by Direct TV who is phasing out all the Primestar equipment. This means that the dishes are being trashed, and are available for other uses such as the one I describe here. It is easy to make a surplus Primestar dish into a highly directional antenna for the very popular IEEE 802.11 wireless networking. The resulting antenna has about 22 db of gain, and is fed with 50 ohm coaxial cable. Usually LMR400 or 9913 low loss cable is used if the source is more than a few feet from the antenna. The range using two of these antennas with a line of sight path is around 10 miles at full bandwidth. I must stress the line of sight part though. Leaves really attenuate the signal.

Things You Will Need:
1. A Primestar dish. (You may use any old dish, but if it is bigger than the Primestar the gain will be higher, and it may not be within the Federal Communications Commission rules for use within the United States. In fact I have come to find out that there seem to be several different dishes that Primestar used, and I am only sure that the one I used, pictured above, used with the ordinary Wavelan or Airport transceiver card is within the effective radiated power limits given by the FCC.)
2. A juice can (about 4 inches in diameter and at least 8 inches long).
3. A chassis mount N connector.
4. You will also need a “pigtail” connector which has the proprietary Lucent connector (for the PCMCIA card) on one end and an N connector on the other. The pigtail can be obtained from a number of online stores for $35 to $40.

Use the Feed Can By Itself
You can use the feed can by itself as a cheap antenna. It works as well as the commercially available “range extender” antenna, but only in one direction, and it is so easy to construct!

IEEE 802.11a
This antenna modification is for the IEEE 802.11b networking protocol that operates at 2.4 GHz. It can be scaled easily to the 5 GHz frequency used by IEEE 802.11a by simply scaling the dimensions on the feed can and the excitation antenna to 2.4/5 = 48% of the dimensions shown above.
“Dean Eckstrom at Cornell University put the entire access point at the focus of the dish.”

A Brief History, by Aleiha

Parabolic cookers have been used for centuries now. The idea to concentrate light using curved mirrors was developed by the Greeks, Aztecs, Incas, Romans and Chinese. The Incas used bronze and gold for their mirrors and they built structures that were several stories high. This technology seems to have appeared around the same time for each of the civilizations. It is thought that Archimedes harnessed the technologyW to defend Syracuse from invading Roman fleets in 212 BC.

My Parabolic Solar Cooker
At first, I was open to anything to construct the solar cooker. I was thinking about constructing my paraboloid out of cobb and then sticking small pieces of glass into it as I’ve seen others do. However, it takes a lot of time to collect the cobb materials and build a paraboloid out of it, let alone one whose focus was accurate. A donated dish was viable, but would not have the heat capacity I was going for, so I set out to find another dish. While rummaging around Arcata Scrap and Salvage one day, I came across an old mesh satellite dish and I knew I had found my cooker. My mentor Bart Orlando and I hauled it to the Bike Library where my cooker began to take shape.

Location and Help
Most of the construction and testing took place at the Arcata Bike Library with the help of Bart Orlando. However, I did most of the cutting of the sheet metal at the HSU sculpture lab. We also used the pedal-powered tools there to construct the mount hot plate grill.

Materials Used
* Satellite dish (6 ft. in diameter)
* Sheet aluminum
* Conduit piping
* A bike rim
* Aluminum rivets and washers
* Nuts & bolts

The basic idea was to use a satellite dish and rivet sheet aluminum to it. This is because a satellite dish is already a paraboloid shape with a fairly exact focus. The sheet aluminum was to be cut into triangular pieces and then drilled in 3-5 places for the rivets. They would conform to the shape of the paraboloid and not lessen the integrity of the focal point. We wanted the aluminum to be as exact as possible to ensure that it would reflect enough light to fry some potatoes. I wanted to do more than boil water with my cooker.

The hot plate grill was to be constructed out of conduit and bike rims. We would flatten the ends of the conduit for easier attachment to the center pipe and rims, and then bolt it all together. We decided that a gimble would be the best for this project, so that we could move the pan (or pot) in any direction necessary to receive optimal sunlight. This is a more difficult design, but it gives the dish more freedom and a higher heating capacity.

We began the project by testing a dish that Bart had at the Bike Library. It was slightly oblong and wasn’t concave much, so we decided to test how accurate the focus was. I taped a few pieces of mylar on it and Bart and I took it out into the sun. It turned out that the dish had many foci because of its’ oblong shape. I had to set out to find another dish if I wanted to be able to fry food with it. The one we had just wasn’t going to cut it. That’s when I made a trip to Arcata Scrap and Salvage and found the perfect dish for my project.
can you see the light reflecting on my hand?

Final Construction
We started by disassembling the focal point of the dish. There was an awkward pole sticking out of the center which was not appropriate for the design we were going for. We got a grinder out and sawed through the metal so that we could manipulate the pipe into a hot plate grill. Since the pole was bent near the base, we figured that it might not work for our design specifics. Luckily, we found that we could remove the pole by loosening a bolt at the base, and that allowed for it to slide right out. We were able to locate a longer pole later on, but at the time, we were planning on using the one that came with the dish. We also had to remove a bunch of miscellaneous pipes and widgets sticking out the back side of the dish. They were things that helped keep the dish balanced in place but were not needed in our design. After that, the dish was ready to for transformation.
Sawing off the old mount pole.

The Hot Plate Grill
The next step was to construct a hot plate grill. The original focal point was somewhere between 27-31″ but we forgot exactly. In order to make the mount, we needed to know how long to make it, so I decided to find the theoretical focus by using the formula: x2 = 4 * p * y. It worked out to be 29 3/4″. We decided that it would be best if we used conduit to form a “v” shape and then fit in a few bike rims for the hot plate. We had to flatten the ends of the conduit and make sure that they were the right angle for the focus. This was done using a clamp and we were able to bend both pieces of conduit at the same time. The conduit pipes were a little too long so we had to shorten them using a Sawz-All at the Bike Library. After the sizing, it was time to drill some holes using a pedal powered drill press. We discovered that the center pipe we wanted to use was slightly shorter than we wanted, but being that we were in such a resourceful area, we rummaged around and found a pipe that was the perfect size and width. The next step was to drill holes in the flattened sides of the conduit and our newly-found pipe and fit the pieces together. They fit quite nicely. We had to make sure that both the conduit pipes were bent at the same angle or else the structure would be unstable. The next step was to drill holes in the bike rim so that we could bolt it to the mount structure we just created. We drilled the holes using a drill press at the HSU sculpture lab and it was ready to be bolted together.

The Mirror Finish
Bart had acquired a bunch of sheet metal that he had wanted to use on a previous project, but decided that my dish could use them. There wasn’t quite enough cut pieces to cover the entire surface area of the dish and I had to take some scrap sheet aluminum to the HSU sculpture lab to cut them into triangular shapes. After they had been cut, they needed to be prepared for riveting. It took about a half an hour to drill holes in all of the pieces and they were quickly ready to be fastened to the dish. While putting the pieces in place, we noticed that the holes we had drilled did not always match the pattern of the mesh, and there were areas where the mesh was covered with pieces of solid metal. These areas had to be dealt with differently. In some areas, we were able to drill holes through the metal for the rivets, and in others, we devised a way of using a thin wire to attach the pieces. I used a paperclip I found on the ground and stuck it through the hole and then through the mesh slightly above the triangle. Using pliers, I twisted the ends of the paperclip to form a tight grasp on the metal; it worked quite well. I was also able to get rivets with a larger gripping range and that helped with the thicker areas. After the pieces were all riveted into place, we noticed that there was a gap – there wasn’t quite enough sheet metal to cover the whole dish. I drilled some more holes in the scrap pieces I had and was able to fasten them to the dish. There’s still a little gap, but that really won’t matter since the dish is so big, and most of it is coated anyway. The last step was to buff the aluminum to a sweet finish.

The Final Product
Now the dish is ready for cookin’. It could use a little shining up with some Citra-Sol or something of that nature, but even without a shine job, the focus gets pretty hot. In terms of setting the dish up, all we need is to lean it up on something. There’s a mount on the back of it with the capability of being staked in the ground. For that, I would have to find a long piece of pipe about 3 1/2″ in diameter and at least 1/4″ thick.

My solar cooker is spectacular for cooking veggie burgers and beans. At 1:00 pm, the dish heats up to 400 oF. Around 2:00-3:00 pm, the dish heats up to 350 oF. I’ve found that the cooker doesn’t burn food too easily. When I’ve forgotten abut something that’s cooking, the sun moves in the sky. That automatically reduces the heat at the focus. Things have gotten caramelized, but it’s hard to burn something.

Everything else we had lying around at the bike library and was free (i.e. nuts & bolts, bike rims, pipes, tools). Bart gave me sheet metal that he was going to use for a different dish so that I could make mine.

The first time you construct a solar cooker, you learn a lot in terms of what methods and materials to incorporate in construction. The next cooker I make will probably be a lot easier since I’ve already been through it. Next time, I would like to use a lighter aluminum for the mirror finish. The dish is relatively light for it’s size, but it’s certainly difficult to handle on your own. I would also consider a dish without reinforcing structures. They got in the way when I was riveting, and as unable to attach the aluminum in some areas. In order to be exact, the mirror finish needs to coat the entire surface area of the dish. This increases the heat capacity. But considering my dish’s size, I don’t think that it will have a hard time reaching high temperatures. And it hasn’t. I’ve been cooking lunch with it for the past few days now, without a shine job on the sheet aluminum.

This project was the coolest thing I’ve done all year. Cooking food with my solar cooker is the best feeling in the world. It’s cool to see something that I created work so well. The thing that I would like to add is a mount pole for the back of the dish. I am able to lean it up against a chair and stuff like that, but if i have to put it up at a hard angle, I might have a little more trouble. So that’s something I’ll have to think about, but for now, I’m having a blast in the afternoons cooking gardenburgers and fried potatoes.

Things to Keep in Mind/Common Errors to Avoid
* Watch out for stray rays of light that come off your cooker. They could possibly start a fire if you aren’t careful. It isn’t much of a worry if your dish is more concave, but the flatter the dish is, the more likely that you will have stray rays of light.
* Wear sunglasses when cooking because it gets really bright and hard for your eyes to handle.
* Use a cast-iron or some other type of black cooking pot/pan. Any other color might reflect the light and that’s not what you want. The black absorbs the light and brings the temperature up in the pot/pan.

Intelsat to turn off LTTE beam – Tigers’ satellite piracy bared
BY Walter Jayawardhana

US: The Washington-based Intelsat gave a firm assurance yesterday that it would take all possible steps to stop the Liberation Tigers of Tamil Eelam (LTTE) from illegally broadcasting its propaganda over their satellites. “Intelsat does not tolerate terrorists operating illegally on it satellites. Since we first learned of the LTTE’s signal piracy, we have been actively pursuing a number of technical alternatives to halt the transmissions. We are clear in our resolve to ending this terrorist organisation’s unauthorised use of our satellite,” Intelsat, the world’s largest provider of fixed satellite services, said in a statement.

The announcement came after Intelsat officials and technical experts met Sri Lanka’s Ambassador to the United States Bernard Goonetilleke on Tuesday to discuss the steps Intelsat was taking to address the unauthorised use of one of its satellites by the LTTE. “We have been actively pursuing avenues to terminate the illegal usage of our satellite,” Intelsat spokesman Nick Mitsis said.

In a telephone interview, Intelsat’s Executive Vice President and General Counsel Phillip Spector told this correspondent that his corporation would do “every possible thing to turn off the LTTE (sponsored national Television of Tamil Eelam and Voice of the Tigers radio programme) as soon as possible” from their satellite. Spector maintained the position of the corporation that the LTTE was pirating an empty transponder frequency of their Satellite 12 for the broadcasts. He said it was actually stealing the space of the satellite and called it piracy.

Asked whether al-Qaeda could use the same satellite for the purpose of an attack against the United States, Spector said it was only a hypothetical situation. But when pressed for an answer, Spector said it was technically possible. Spector said no customer is authorised to sell their frequency to anybody else and maintained it was an empty space the LTTE was using. Spector denied earlier published newspaper reports that Intelsat has done business with Hezbollah, another terrorist group, and insisted “Not in my time”.

While refusing to give a date for turning off the LTTE, the Intelsat lawyer said “if you understand the satellite technology it is quite a complex task and it will be done as soon as possible”. Intelsat said: “Intelsat, the leading provider of global satellite communications, today issued a statement with regard to the unauthorised use of one of its satellites by the Liberation Tigers of Tamil Eelam (LTTE). The US State Department lists the LTTE as a foreign terrorist organisation. The Sri Lanka Embassy and Intelsat agree that these illegal transmissions by the LTTE are a violation of Sri Lankan and US laws. Following the discussion, Ambassador Goonetilleke said: “I am satisfied that Intelsat is taking these unauthorised transmissions very seriously, and believe it would do all that it can to stop the terrorist transmissions. I am confident that Intelsat will continue to cooperate with Sri Lankan authorities in this matter.” The issue was also taken up by Sri Lanka at a meeting of the International Telecommunications Satellite Organisation in Paris last month, Sri Lankan officials said.

Behind Falun Gong’s satellite hack – cult hijacks satellite signal –
by John C. Tanner / Telecom Asia / August, 2002

The Chinese government is furious over a rare but successful case of satellite signal hijacking in which TV signals from the Sinosat-1 satellite were temporarily overridden and replaced with programming promoting the outlawed Falun Gong cult. According to an official Sinosat statement released 8 July, a series of signal hijacks occurred between 23 June and 30 June, attacking Sinosat’s 2A and 3A transponders, which provide TV signals to rural villages in China via an earth station in Yungang, which reported that all of state TV broadcaster CCTV’s nine channels, as well as 10 provincial channels, had been hijacked by “unidentified signals … of similar frequency spectrum with that of the CCTV programs”. Minutes after monitor screens went black, Sinosat says, “Falun Gong propaganda materials appeared on screen; and … the word `Falun Gong’ in Chinese flashed again on the screen”. The Chinese government–which outlawed the Falun Gong as an “evil cult” in 1999, and also puts a premium on strict media control–has predictably condemned the hijackings, and has vowed to hunt down and punish those responsible. One obstacle Chinese officials face in that regard is whether the hijackers are even within China’s legal jurisdiction. The Ministry of information Industry has accused–but not publicly identified–overseas parties of helping to plan the interruption.

Hijacking Sinosat signals from outside the country is possible since Sinosat’s footprint extends well outside China’s borders, to include the Indo-Chinese peninsula, Indonesia and the Philippines. Satellite experts say that overriding a satellite signal requires a satellite dish transceiver a minimum of three meters wide and with a transmission power well beyond the capabilities of off-the-shelf consumer gear. Hijackers would either have to commandeer an earth station facility or get hold of an industrial-grade dish that can be moved around and hidden. This is why jamming satellite signals is often the province of military organizations and disgruntled earth station employees rather than independent groups.

However, it wouldn’t be the first time Falun Gong members have interrupted regular TV programming in China. In April, Chinese officials arrested nine Falun Gong members for hacking into a Chinese cable TV system on 5 March in the northeastern city of Changchun, where they allegedly cut off TV signals and used home-made broadcasting equipment to air their own programs. And that was one of seven reported cable-TV hacks during the first half of this year, according to the group’s Falun Dafa Information Center, which confirmed the activity in a 28 June editorial–five days after the first satellite signal hijacking was reported.

Satellite hack raises security questions
BY Corey Grice / March 3, 1999

Britain’s Ministry of Defense is denying that the nation’s military satellites were hacked, but the reported disruption raises questions about the security of all satellite-based communications services. Control of one of the satellites in Britain’s Skynet system, which delivers communications services to the nation’s Royal Air Force and other armed forces units, was reportedly seized by hackers over the weekend. The British government was then the subject of an alleged blackmail threat following the attack.

But the government is denying that the James Bond-like incident ever occurred. “The satellite system has not been hacked into and the satellite has not changed course,” said a spokeswoman for Britain’s Ministry of Defense, who declined to give her name. “And, the security levels make it extremely difficult, if not impossible, to hack into the system.” Industry experts said hacking into a satellite system is difficult, and commercial satellites are relatively safe from meddlers. Yet as the communications industry begins to rely more heavily upon satellites, the cause for concern over hackers is no longer limited to Webmasters.

Commercial satellite launches are on the rise and the number of “birds” in the sky continues to grow. There are about 330 commercial satellites in orbit today, according to the Satellite Industry Association, a commercial trade group. Companies such as Iridium, a satellite mobile phone provider which owns a 66-satellite network, and Teledesic, a satellite data provider, have hinged their whole business success on their galactic machinery. Meanwhile, direct broadcast satellite operators, such as DirecTV and EchoStar Communications, have grown in popularity in recent years and, as a result, have cut into the cable television market.

This increasing use of satellites raises security and reliability questions should computer hackers turn their attention to the heavens. Although not the work of hackers, nearly 40 million paging customers were without service last year when PanAmSat’s Galaxy IV satellite broke down–a reminder of what could happen when a communications satellite fails. “[Hacking is] a concern and companies are taking steps to prevent that,” said Clayton Mowry, executive director of the Satellite Industry Association. “But it’s not like you’d use a backyard dish to do this.” Industry experts said satellite companies use encryption to protect their data and company control centers, used to monitor satellites and maintain their correct position in space, are typically secure facilities with surveillance cameras, alarms, and other security measures. “You’d need the encryption keys, or access to a control center, or both,” Mowry said. “I don’t know of any cases where satellites have been commandeered.”

How to hack
Analysts said there are several ways satellite systems can be disrupted. With sufficient power from a satellite dish on the ground, an orbiting satellite’s signal can be blocked. “One way is simply brute force, by sending a signal up to a given satellite and jamming it,” said Steve Blum, president of Tellus Venture Associates, a satellite consulting firm. “That’s nothing new. That’s as old as radio itself.”

Experts said that occasionally happens by accident, but jamming a satellite is easy to trace and communications services, such as TV signals, are rarely disrupted as programmers and providers usually have backup capacity on other satellites. The computer systems used to monitor and control the satellites also pose a potential weak link; although most are housed in secure facilities, in theory they could be infiltrated, Blum said.

But industry sources said many of the potential pitfalls are not unique to satellites. Smaller radio stations have been known to have their signals blocked by more powerful transmitters. And hackers could just as easily attempt to break into the computer systems of a cable operator in an attempt to shut down services to a certain neighborhood. “The guys that designed these systems all have military histories,” Blum said. “You’re dealing with companies that are very much knowledgeable about security.”



Every time a thruster is fired, propellant is used. Once the supply of propellant is exhausted, the satellite cannot be maintained at proper position and attitude, and the satellite must be retired. Propellant capacity is the primary factor which determines the useful life of a communications satellite. It is easy to understand that a primary goal of every satellite owner is the conservation of propellant. Many computer studies have been done to determine the optimum trade-off between satellite stability and propellant usage. These studies have shown that a substantial majority of the propellant is used for just one stationkeeping function: keeping the satellite from drifting along its north-south axis. Kent Carson, director of advanced programs for Comsat Systems Division, has stated that between 80% and 90% of the propellant is used for this function alone. [1]

Economics Of Inclined Orbits
From the point of view of a satellite owner, the economics of this situation are compelling. On one hand, the revenue derived from leasing transponder time on an inclined-orbit satellite is considerably less than the revenue which could be realized from a truly geostationary satellite. On the other hand, propellent usage is cut dramatically, thereby extending the useful life of the satellite, often by several years. The potential revenue to be derived from this extended life more than offsets the revenue lost through reduced transponder pricing. It comes as no surprise, then, that many satellite owners have allowed their geostationary satellites to drift into inclined orbits.

With vintage satellites still in orbit, sales are grounded
Their longevity surprises manufacturers but is bad for business. Upon retirement, they join the mass of space junk.
BY Peter Pae / December 01, 2008

If only cars could last so long. This month, a satellite resembling a shiny spinning drum and orbiting 21,156 miles above Earth celebrated its 41st birthday, astounding engineers and scientists, some of them the children of those who built it.

For years, the satellite has served as an emergency communications link for rescue operations, including the 1985 Mexico City earthquake and the 1980 Mt. St. Helens volcanic eruption. It was supposed to live for only three years when it was launched in 1967. That’s when Lyndon B. Johnson was president and bell-bottom pants were the rage. But the spacecraft, known as ATS 3, isn’t alone. Many satellites are operating well past their life expectancy, so much so that manufacturers are hurting from lack of demand for new, replacement satellites.

And those who are buying are asking for guarantees that the new satellites, which can cost as much as $300 million each, will last two to three times as long as the early birds. “It’s a mixed blessing,” said John S. Edwards, a space industry analyst for Forecast International. “It says great things about your product, but the satellite-making business is floundering because there are hardly any sales.”

Engineers at Boeing Co.’s sprawling satellite-making plant in El Segundo know about the sales drought only too well. Of the 245 Boeing satellites that have been launched into service, 166 have exceeded their design life. That’s more than two-thirds of the spacecraft built at the facility since the 1960s. A third of all satellites have lasted at least twice as long as expected. That has been the bane of the sales department. With the telecom bust early this decade and consolidation in the satellite services industry, Boeing has sold only one commercial satellite this year. In the late-1990s boom years, it was tallying a dozen orders annually.

Some satellites are living longer because the initial estimates of their longevity were conservative, but many have operated well beyond even the wildest expectations. “In designing them, we had to take into account all the worst-case scenarios,” said Art Rosales, Boeing’s director of commercial and civil satellite services and a 29-year veteran of the satellite business. Because most satellites can’t be repaired once they’re in space, every contingency was considered. “The worst cases didn’t happen, and that has translated to longer life,” he said.

BY Gary Bourgois (flash [at] lopez.marquette.mi [dot] us) with numerous contributions by others

40. What Is An Inclined Orbit Satellite And How Can I Receive Them?
Inclined orbit birds are satellites that “wobble” north and south of the
vary in the vertical plane, as explained in the previous paragraph. At
the end of a satellite’s life, when station keeping fuel is running low
if a replacement satellite is not ready, there is the option to “go
inclined”. One method used is called the “Comsat Maneuver”, which puts
the bird into an elongated figure 8 pattern. On C band this method can
get 6 months or more of life out of a near dead satellite (Usually the
electronics are fine, it is just the low amount of Hydrazine fuel that
marks the EOL or End Of Life of a satellite. On C band a slightly
inclined satellite will appear to have a weaker signal during parts of the
day when it is off axis. Many of us remember that this was done with the
old Telstar 301, causing some of the Wild and Network feeds to be less than
perfect. However, it is better than no satellite at all, which is the
case when a launched bird BLOWS UP like Telstar 402 did in late 1994, meaning
that 302 will go inclined while waiting for T-402R. In addition to these
situations, there are birds that are kept in inclined orbits for YEARS.
Several Intelsats are this way, as are a couple of SBS birds, such as
SBS3. ON KU band, because of narrower beamwidth, an inclined bird can
only be viewed during an hour or so a day on a standard satellite system,
when its wobble places it directly over the equator. The Robert Smathers
SSSSC Chart lists the times of day you can pick up these inclined birds.
Some, like SBS3 have a continuous ID slate so you can find them.
Professional Downlinkers often have DUAL AXIS tracking systems which allow
for adjustment in the vertical as well as horizontal plane. In 1995, NBC
will move its feeds off K2 and onto an inclined SBS bird. All NBC affiliates
will be outfitted with costly auto tracking systems. The good news is that
it is now possible for the HOME BACKYARD TVRO OWNER to install his own
system to track these inclined orbit birds. The key component of this
setup is a “vertical kit” which consists of a heavy steel “hinge” which
will allow your dish to move up and down. The cost for this kit is around
$70, and if you are a bit of a tinkerer, it is well worth the money. To this
kit, you simply add a positioner arm (you can do like I did and scrounge one
for very little money) and you will need a means of providing the 24 volt
DC current with switchable polarity. This can be accomplished by using
an old manual type dish positioner to control the vertical tracking. These
can be had free or very cheap. Such a system is NOT automatic, you need
to use your eyeballs and your IRD’s signal readout to peak the signal and
you need to adjust the tracking every 10 minutes or so. If you are chasing
newsfeeds, this won’t be too much bother. If you really get into tracking
inclined birds, there are computerized tracking systems, and even a few
IRD’s that have the ability to track them automatically. It depends on
your own tastes, desires, and level of technical expertise. The vertical
kit I purchased was from Global Communications (See Dealer list at end of
this article) Since he is a TVRO dish design engineer, he can quickly
determine if your system will adapt to this type of system. Hint: if you
have an AJAK H/H drive, the answer is YES! During the Olympics it was fun
to be able to watch the feeds LIVE and not have to wait for the USA delay
broadcasts. Many of these feeds were on an inclined Intelsat. Besides
NBC, activity on inclined birds is fairly sparse, mostly special feeds.
Thus the option of being able to track these satellites is not for everyone
but the option is certainly there for folks who do.

39. How Long Does A Satellite “Last” And Why Do They Get Regularly Replaced?
The average lifespan for a communications satellite is about 10 years. While
the electronics inside the satellite can last many many years, the
determining factor is the “station keeping fuel”. Satellites only “appear to
be stationary because of their location in the Clarke Belt, in reality they
are whirring about the planet, and their orbits become eccentric if left
alone. So each satellite has small rockets on board to regularly adjust
the orbit of the bird. After 10 years this fuel runs out, and the satellite
can no longer be adjusted with respect to its position. This causes the
satellite to start to appear to “wobble” up and down in the orbital plane,
and eventually become unusable. Before this happens, a replacement bird
is launched, and the old satellite is unceremoniously “kicked” up into a
higher “parking” orbit. While it is a nice thought that some day a
space salvage company could go up there and refuel all those old birds,
it is unlikely, and the rapid changes in technology make the older low
power satellites nothing more than curious antiques.

New Inclined Orbit Satellite Tracking Algorithm

C-COM has developed a proprietary inclined orbit satellite tracking algorithm which will provide C-COM customers the ability to use inclined orbit satellites for their space segment needs. Inclined orbit satellites are end of life satellites that may have an additional useful life span from 6 month to a few years, however they are no longer in their prescribed controlled orbit due to lack of fuel.

From the point of view of a satellite owner, the economics of this situation are compelling. On one hand, the revenue derived from leasing transponder time on an inclined-orbit satellite is considerably less than the revenue which could be realized from a truly geostationary satellite. On the other hand, propellent usage is cut dramatically, thereby extending the useful life of the satellite, often by several years. The potential revenue to be derived from this extended life more than offsets the revenue lost through reduced transponder pricing. It comes as no surprise, then, that many satellite owners have allowed their geostationary satellites to drift into inclined irbits.

An inclined-orbit satellite poses a problem for the end user: the earth station antenna must track the satellite. For this purpose, the antenna must be equipped with a dual-axis steerable mount and a tracking controller. A dual-axis steerable mount is a motorized mount which can be moved independently about two axes: east-west and up-down. Those moves are program-controlled. This type of controller mathematically calculates the pointing angles to the satellite and moves the antenna accordingly. Calculations are based on program data entered into the controller.

This type of controller is capable of moving the antenna continuously, rather than in a series of steps. This technique is advantageous in low-signal situations where any change in AGC voltage would result in degraded signal quality. With this feature enabled, the iNetVu controller will ensure that the mobile antenna maintains its maximum peaked signal on the configured inclined orbit satellite irrespective of their inclination angle. They have decided to develop this proprietary inclined orbit application for iNetVu controllers based on demand from the customers. This added feature will provide existing and future customers with the ability to use any inclined orbit satellite, should there be one available to them, and take advantage of the lower cost space segment offered over these satellites.



Don Kessler
email : djk1940 [at] charter [dot] net

BY Donald J. Kessler / March 8, 2009

The “Kessler Syndrome” is an orbital debris term that has become popular outside the professional orbital debris community without ever having a strict definition. The purpose of this writing is to clarify the intended definition, to put the implications into perspective after 30 years of research by the international scientific community, and to discuss what it may mean to future space operations.

Historical Background
As far as I am aware, the term originated with a colleague, John Gabbard, who worked for NORAD. NORAD maintained a catalogue of man-made objects in orbit, but did not maintain a breakup record of events in orbit. John unofficially kept a record of major satellite breakup events, which later proved very useful in understanding the sources of smaller orbital debris. John is known for his description of these events with a graph we now call a “Gabbard Plot”.

When I met John in 1978, I had just published the Journal of Geophysical Research (JGR) paper, “Collision Frequency of Artificial Satellites: The Creation of a Debris Belt”. This paper predicted that around the year 2000 the population of catalogued debris in orbit around the Earth would become so dense that catalogued objects would begin breaking up as a result of random collisions with other catalogued objects and become an important source of future debris. These finding were important for three reasons:
1. At the time, it was generally assumed that there were very few objects in orbit that were too small to catalogue, although there was no definition as to what limiting size was in the catalogue. The paper illustrated that even if this assumption were correct, future collisions between catalogued objects would produce a large amount of small debris fragments. This small debris population would be more hazardous to other spacecraft than the natural meteoroid environment immediately after the first collision.
2. Each collision would also produce several hundred objects large enough to catalogue, increasing the rate that future collision breakups would occur….resulting in an exponential growth in the collision rate and debris population.
3. The only way to prevent this exponential growth was to reduce the number of rocket bodies and non-operational spacecraft left in orbit after their useful lifetime.

It was the second prediction that caught John Gabbard’s attention. While talking to a reporter shortly after the publication of the JGR paper, John used the phrase “Kessler Syndrome” to summarize my prediction of a future cascading of collisions in orbit. The reporter published the phrase. Perhaps it was a 1982 Popular Science article that made the term more popular, since the Aviation and Space Writers Association gave the author, Jim Schefter, the 1982 National Journalism Award for the article. However, regardless of the source, the label stuck, becoming part of the storyline in some science fiction, and a three-word summary describing orbital debris issues.

However, not all who have used the phrase have referred to it in the context of its original meaning. It was never intended to mean that the cascading would occur over a period of time as short as days or months. Nor was it a prediction that the current environment was above some critical threshold…although the concept of a critical threshold was an important possibility that was studied in detail more than 10 years later. The “Kessler Syndrome” was meant to describe the phenomenon that random collisions between objects large enough to catalogue would produce a hazard to spacecraft from small debris that is greater than the natural meteoroid environment. In addition, because the random collision frequency is non-linear with debris accumulation rates, the phenomenon will eventually become the most important long-term source of debris, unless the accumulation rate of larger, non-operational objects (e.g., non-operational payloads and upper stage rocket bodies) in Earth orbit were significantly reduced. Based on past accumulation rates, the 1978 publication predicted that random collision would become an important debris source around the year 2000, with the rate of random collisions increasing rapidly after that, if the accumulation rate were not reduced to near zero.

Findings Since 1978
Combined with the discovery that 42% of the catalogued objects were the results of only 19 explosions in orbit of U.S. upper stage rockets and that NORAD was not tracking “all man-made objects” as generally believed, NASA took these findings and predictions seriously. Beginning in October of 1979, I was given funds to begin research for data to more accurately define the current and future debris hazard, and understand techniques to limit the future growth in the debris population. With these funds, we accomplished our objectives with a combination of modeling, measurements that sampled the environment, ground tests to simulate space collisions, and coordination with the space community to determine cost-effective techniques to minimize future growth of the debris population.

We sampled the small debris environment by developing and using ground telescopes and powerful, shorter wavelength radars. We also analyzed recovered spacecraft surfaces for impacts using scanning electronic microscopes, which allowed us to determine the chemistry of the objects causing those impacts. Together with the Air Force, we conducted hypervelocity ground simulation of collisions and examined ground explosion data to more accurately predict the amount of small debris generated. We also developed much more elaborate computer models which we used to test our assumptions and ground data against the data we obtained by sampling the environment. We used these computer models to test the effectiveness of various techniques to minimize future growth in the debris population. These efforts were lead by a team of scientists in what is now known as the NASA Orbital Debris Program Office. Other international governmental agencies participated in this research, forming an international organization now known as the Inter-Agency Space Debris Coordination Committee (IADC). The following conclusions were reached as a result of this research:
1. The hazard from the debris that was too small to catalogue had already exceeded the hazard from the natural meteoroid environment. The sources of that debris included not only explosions, but paint flecks from spacecraft surfaces, exhaust from solid rocket upper stages, and leaks of coolant from nuclear reactors.
2. Better data and more accurate modeling by NASA and the international community support the conclusion that the long-term threat to the environment is collision cascading, as predicted in 1978.
3. Modeling results supported by data from USAF tests, as well as by a number of independent scientists, have concluded that the current debris environment is “unstable”, or above a critical threshold, such that any attempt to achieve a growth-free small debris environment by eliminating sources of past debris will likely fail because fragments from future collisions will be generated faster than atmospheric drag will remove them.
4. Although the rate of growth in the catalogued population has been reduced as a result of new operational procedures that minimize the possibility of explosions in orbits and leaving non-operational upper stages and payload in orbit for periods longer than 25 years, the catalogued population continues to increase, but at a lower rate than it was increasing prior to the 1978 paper.

Significance of the “Kessler Syndrome” Today
On February 10, 2009 the Iridium 33 and Cosmos 2251 satellites collided with a velocity of ll.6 km/sec, at an altitude of 790 km. The collision was catastrophic, likely producing hundreds of fragments large enough to catastrophically breakup other satellites, and tens of thousands of fragments large enough to damage other satellites. This is the first clear example of what was predicted in 1978. Although there have been three other random collisions between catalogued objects since 1991, none of those were catastrophic.

Although all existing data and analysis support the major conclusions presented in the 1978 JGR paper, there are minor differences. The most obvious is the difference between the predicted growth rate in the catalogue population of 510 objects per year compared with the actual growth rate, which was less. There were a number of conditions that contributed to the lower rate: 1. The success of the orbital debris program in establishing international agreements that reduced the number of accidental explosions in orbit. These explosions had been a major source of catalogued debris. 2. An abnormally high solar activity increased the upper atmospheric density and caused more satellites to reenter. 3. The declining economy and eventual fall of the USSR significantly reduced the number of Soviet launches. As a result of these conditions, the actual average growth rate over the last 50 years was about 300 objects per year. This rate would have been lower, had it not been for the Chinese anti-satellite test in 2007, which produced over 2000 fragments large enough to catalogue. A rate of 300 objects per year is close to the lower assumed rate in the 1978 JGR paper. This average growth rate would predict the first collision between catalogued objects to have occurred around the year 2000, and it was assumed to be a catastrophic collision.

The lower growth rate of 320 objects per year in the 1978 paper predicted two collisions by 2009, both catastrophic. Although the actual number of collisions is too few to be statistically meaningful, they may indicate that the actual collision rate could be higher than predicted, but fewer are catastrophic. This higher collision rate would be consistent with the uncertainty in spacecraft area subject to collisions, as was noted in 1978. In 1991 and 2000 publications, the collision area was shown to be about 2.5 times greater than adopted in 1978. The 2000 publication also concluded that not all cataloged fragments were massive enough to cause a catastrophic collision…this would be especially true if the colliding fragment hit an antenna, stabilizer boom, or solar panel, or if the target were the empty tank of an upper stage. The presences of antennae, solar wings, and stabilizer booms were ignored in 1978, and obviously hitting one of these areas will only transfer a fraction of the impact energy to the entire spacecraft structure, reducing the likelihood of a catastrophic breakup. Also an impact into the empty fuel tank of an upper rocket stage may not transfer all the impact energy to the rocket body structure….again not causing a catastrophic breakup. We may have been lucky that only one of the four collisions since 1991 was catastrophic…or it may be that only one out of four of the collisions between catalogued objects will be catastrophic. The 1978 prediction of collision frequency becomes more consistent with the actual collision frequency by simply assuming that the area used in 1978 is the average catastrophic collision area, which was the intent of the paper. However, a more accurate understanding of both the non-catastrophic and catastrophic collision frequency is achieved by using data generated since 1978 in more accurate models currently used by the Orbital Debris Program Office.

Despite the absence of random catastrophic collisions, the predicted fluxes of smaller debris in 1990 and beyond in the JGR paper are not too different from what has been measured as a result of the orbital debris program. Accidental explosions and a few intentional collisions almost certainly contributed to the similarity…. and possibly some non-catastrophic collisions involving an un-catalogued object also contributed. However, the major contributors were a number of small debris sources that were discovered since 1978. Even though these sources have produced a debris environment in the past that is about the same as predicted from collisions, past debris sources are fundamentally different from future random collisions between catalogued objects. The past sources produce debris at a rate that is proportional to the number of objects in orbit, while the future frequency of collisions will produce debris at a rate that is proportional to the square of the number of objects in orbit. For example, if one were to double the number of upper stages and payloads in orbit, each having a probability that they would explode, then the rate that debris is generated by explosions would also double. However the rate that debris is generated by collisions between these objects would increase by a factor of four.

The 1978 prediction of a catastrophic collision between catalogued objects of 0.013 per year was based on a catalogue containing 3866 objects; today, the catalogue contains about 13,000 objects, or more than 3 times as many objects. This gives a collision rate that is more than 10 times what it was just over 30 years ago, or 0.13 per year….which is the same as one catastrophic collision between cataloged objects every 8 years….with the time between collisions rapidly becoming shorter as the catalog continues to grow. The larger fragments from either explosions or collisions will further accelerate the rate of collisions.

Most of the collisions in the 1978 paper were predicted to take place between 800 km and 1000 km altitude. That is even truer today. Not only is this region rapidly growing, certain altitudes contain a high concentrations of satellites, and the inclinations of their orbits are near polar, both conditions increasing the probability that they will collide, and do so with collision velocities that average more than 10 km/sec. We are entering a new era of debris control….an era that will be dominated by a slowly increasing number of random catastrophic collisions. These collisions will continue in the 800 km to 1000 km altitude regions, but will eventually spread to other regions. The control of future debris requires, at a minimum, that we not leave future payloads and rocket bodies in orbit after their useful life and might require that we plan launches to return some objects already in orbit.

These control measures will significantly increase the cost of debris control measures; but if we do not do them, we will increase the cost of future space activities even more. We might be tempted to put increasing amounts of shielding on all spacecraft to protect them and increase their life, or we might just accept shorter lifetimes for all spacecraft. However, neither option is acceptable: More shielding not only increases cost, but it also increases both the frequency of catastrophic collisions and the amount of debris generated when such a collision occurs. Accepting a shorter lifetime also increases cost, because it means that satellites must be replaced more often….with the failed satellites again increasing the catastrophic collision rate and producing larger amounts of debris.
Aggressive space activities without adequate safeguards could significantly shorten the time between collisions and produce an intolerable hazard to future spacecraft. Some of the most environmentally dangerous activities in space include large constellations such as those initially proposed by the Strategic Defense Initiative in the mid-1980s, large structures such as those considered in the late-1970s for building solar power stations in Earth orbit, and anti-satellite warfare using systems tested by the USSR, the U.S., and China over the past 30 years. Such aggressive activities could set up a situation where a single satellite failure could lead to cascading failures of many satellites in a period of time much shorter than years.

As is true for many environmental problems, the control of the orbital debris environment may initially be expensive, but failure to control leads to disaster in the long-term. Catastrophic collisions between catalogued objects in low Earth orbit are now an important environmental issue that will dominate the debris hazard to future spacecraft.


Satellites are usually insured against many different kinds of failure, beginning with their delivery to the launch pad, their ascent into orbit, and their in-orbit operation. For years, Joseph Allen and Daniel Wilkinson at NOAA’s Space Environment Center kept a master file of reported satellite anomalies from commercial and military sources. The collection included well over 9000 incidents reported up until the 1990’s. This voluntary flow of information dried-up rather suddenly in 1998 as one satellite owner after another stopped providing these reports.

The 23rd Cycle – Satellite Insurance
“Like any insurance policy the average home owner tries to get, you have to deal with a broker and negotiate a package of coverages. In low risk areas, you pay a low annual premium, but you can pay higher premiums if you are a poor driver, live on an earthquake fault, or own beach property subject to hurricane flooding.

In the satellite business, just about every aspect of manufacturing, launching and operating a satellite can be insured, at rates that depend on the level of riskiness. Typically for a given satellite, 10-15 large insurers (called underwriters) and 20-30 smaller ones may participate. There are about 13 international insurance underwriters that provide about 75% or so of the total annual capacity. Typically, the satellite insurance premiums are from 8-15% for risks associated with the launch itself. In-orbit policies tend to be about 1.2 to 1.5% per year for a planned 10-15 year life span once a satellite survives its shakeout period. If a satellite experiences environmental or technological problems in orbit during the initial shakeout period, the insurance premium paid by the satellite owner can jump to 3.5 – 3.7% for the duration of the satellite’s lifetime. This is the only avenue that insurers have currently agreed upon to protect themselves against the possibility of a complete satellite failure. Once an insurance policy is negotiated, the only way that an insurer can avoid paying out on the full cost of the satellite is in the event of war, a nuclear detonation, confiscation, electromagnetic interference or willful acts by the satellite owner that jeopardize the satellite.

There is no provision for ‘Acts of God’ such as solar storms or other environmental problems. Insurers assume that if a satellite is sensitive to space weather effects, this will show up in the reliability of the satellite, which would then cause the insurer to invoke the higher premium rates during the remaining life of the satellite. Insurers, currently, do not pay any attention to the solar cycle, but only assess risk based on the past history of the satellite’s technology.

As you can well imagine, the relationship between underwriters and the satellite industry is both complicated and at times volatile. Most of the time it can be characterized as cooperative because of the mutual interdependencies between underwriters and satellite owners. During bad years [like 1998 for example] underwriters can lose their hats and make hardly any profit from this calculated risk-taking. Over the long term, however, satellite insurance can be a stable source of revenue and profit, especially when the portion of their risk due to launch mishaps is factored out of the equation. As the Cox Report notes about all of this, “The satellite owner has every incentive to place the satellite in orbit and make it operational because obtaining an insurance settlement in the event of a loss does not help the owner continue to operate its telecommunications business in the future. To increase the client’s motivation to complete the project successfully, underwriters will also ask the client to retail a percentage [typically 20%] of the risk” [Cox Report, 1999]

According to Philippe-Alain Duflot, Director of the Commercial Division of AGF France,
“…the main space insurance players have built up long-term relations of trust with the main space industry players, which is to say the launch service providers, satellite manufacturers and operators. And these sustained relations are not going to be called into question on the account of a accident or series of unfortunate incidents”. Still, there are disputes that emerge which are now leading to significant changes in this relationship. Satellite owners, for instance, sometimes claim a complete loss on a satellite after it reaches orbit, even if a sizable fraction of its operating capacity remains intact after a ‘glitch’. According to Peter D. Nesgos of the New York law firm Winthrop, Stimson, Putnam and Roberts as quoted by Space News, “In more than a dozen recent cases, anomalies have occurred on satellites whose operators say they can no longer fulfill their business plans, even though part of the satellite’s capacity can still be used.”

This has caused insurance brokers to rethink how they write their policies, and for insurance underwriters to insist on provisions for partial salvage of the satellite. In 1995, the Koreasat-1 telecommunications satellite owned by Korea Telecom of South Korea triggered just such a dispute. In a more recent dispute underwriters actually sued a satellite manufacturer Spar Aerospace of Mississauga, Canada over the AMSC-1 satellite, demanding a full reimbursment of $135 million. They allege that the manufacturer ‘covered up test data that showed a Spar-built component was defective’. Some insurers are beginning to balk at vague language which seemingly gives satellite owners a blank check to force underwriters to insure just about anything the owners wish to insist on.

One obvious reason why satellite owners are openly adverse to admitting that space weather is a factor, is that it can jeopardize reliability estimates for their technology, and thus impact the negotiation between owner and underwriter. If the underwriter deems your satellite poorly designed to mitigate against radiation damage or other impulsive space weather events, they may elect to levy a higher premium rate during the in-orbit phase of the policy. They may also offer you a ‘launch plus five year’ rather than a ‘launch plus one year’ shakeout period. This issue is becoming a volatile one. A growing number of stories in the trade journals since 1997 report that insurance companies are growing increasingly vexed by what they see as a decline in manufacturing techniques and quality control. In a rush to make satellites lighter and more sophisticated, owners such as Iridium LLC are willing to loose six satellites per year. What usually isn’t mentioned is that they also request payment from their satellite insurance policy on these losses, and the underwriters then have to pay out tens of millions of dollars per satellite. In essence, the underwriter is forced to pay the owner for using risky satellite designs, even though this works against the whole idea of an underwriter charging higher rates for known risk factors. Of course, when the terms of the policy are negotiated, underwriters are fully aware of this planned risk and failure rate, but are willing to accept this risk in order to profit from the other less risky elements of the agreement. It is hard to turn-down a five year policy on a $4 billion network that will only cost them a few hundred million in eventual payouts. The fact is that insurers will insure just about anything that commercial satellite owners can put in orbit, so long as the owners are willing to pay the higher premiums. Space weather enters the equation because, at least publicly, it is a wild card that underwriters have not fully taken into consideration. They seemingly charge the same in-orbit rates (1.2 to 3.7%) regardless of which portion of the solar cycle we are in.

More and more often, satellite insurance companies are finding themselves in the position of paying-out claims, but not for the very familiar risk of launching the satellite with a particular rocket. In the past, the biggest liability was in launch vehicle failures, not in satellite technology. As more satellites have been placed in orbit successfully, a new body of insurance claims has also grown at an unexpected rate. According to Jeffrey Cassidy, senior vice president of the aerospace division of A.C.E. Insurance Company Ltd., as many as 11 satellites during 1996 have had insured losses during their first year of operation. The identities of these satellites, however, were not divulged nor even the names of their owners.

Despite the rough times that both manufacturers and insurers seem to be having, they are both grimly determined to continue their investments. Assicurazioni Generali, S.p.A of Triests, the biggest underwriter has no plans to reduce its participation in space coverage, but at the same time thinks very poorly of the satellite manufacturing process itself. Giovanni Gobbo, Assicurazioni’s space department manager, is quoted as saying “I would not buy a household appliance that had as many reliability problems as today’s satellites”. The biggest pay out in 1998 was for $254 million for 12 satellites in the Iridium program; five were destroyed at launch.

Despite all the dramatic failures, the satellite insurance companies have actually lowered their insurance rates for launches from 15-16% in 1996 to 12-13% in 1997. Meanwhile, in-orbit insurance rates, the kind affected by space weather problems, have remained at 1-2% per year of the total replacement cost. Industry insiders do not expect this pricing to remain so inexpensive. With more satellite failures expected in the next few years, these rates may increase dramatically.

The nearly $600 million in in-orbit satellite failures that insurance companies have had to pay on in 1998 alone, has prompted questions of whether spacecraft builders are cutting costs in some important way to increase profit margins especially with the number of satellite anomalies continuing to rise. Between 1995 and 1997, insurance companies paid out 38% of the $900 million in claims, just for on-orbit satellite difficulties. Since the early 1980’s, satellite failure claims have doubled in number, from $200 to $400 million annually. The satellite manufacturers argue that compared to the number of satellites launched and functioning normally, the percentage of anomalies and failures has remained nearly the same over the last two decades. Hughes Space and Communications, for example, has 67 satellites and there has been no percentage change in the failure rate. They use this to support the idea that the problems with satellite failures are inherent to the technology, not the satellite environment that changes with the solar cycle. According to Michael Houterman, president of Hughes Space and Communications International, Inc of Los Angeles, the spate of failures in the HS-601 satellites is a result of ‘design defects’ not of production-schedule pressure or poor workmanship: “Most of our quality problems can be traced back to component design defects. We need, and are working toward, more discipline in our design process so that we can ensure higher rates [of reliability]”.

Satellite analyst Timothy Logue at the Washington law firm of Coudert Brothers begs to differ: “The commercial satellite manufacturing industry went to a better, faster, cheaper approach, and it looks like reliability has suffered a bit, at least in the short term”. Curiously absent from virtually every communications satellite report of a problem, is the simple acknowledgment that space is not a benign environment for satellites. The bottom line in all of this is that communications technology has expanded its beachhead in near-earth space to include thousands of satellites. These complex systems seem to be remarkably robust, although for many of them that may be in the wrong place at the wrong time, their failure in orbit can be tied to solar storm events. The data, however, is sparse and circumstantial because we can never retrieve the satellites to determine what actually affected them. Satellite manufacturers often look for technological problems to explain why satellites fail, while scientists look at the spacecraft’s environment in space to find triggering events. What seems to be frustrating to the satellite manufacturing industry is that, when in-orbit malfunctions occur, each one seems to be unique. The manufacturers can find no obvious pattern to them. Like a tornado entering a trailer park, when space weather effects present themselves in complex ways across a trillion cubic miles of space, some satellites can be affected while others remain intact.

For years, Joseph Allen and Daniel Wilkinson at NOAA’s Space Environment Center kept a master file of reported satellite anomalies from commercial and military sources. The collection included well over 9000 incidents reported up until the 1990’s. This voluntary flow of information dried-up rather suddenly in 1998 as one satellite owner after another stopped providing these reports. From now on, access to information about satellite problems during Cycle 23 would be nearly impossible to obtain for scientific research. More than ever, examples of satellite problems would have to come from the occasional reports in the open trade literature, and these would only cover the most severe, and infrequent, full outages. There would be no easy record of the far more numerous daily and weekly mishaps, which had been the pattern implied by the frequency of these anomalies in the past.

2004 – Commercial Satellite Bus Reliability’ – Frost & Sullivan has analyzed the on-orbit performance of the major commercially available satellite buses and considered the strengths and weaknesses of their manufacturers in order to determine which satellite bus (or platform) is more reliable. Based on both Frost & Sullivan and Airclaims data, this study highlights reliability records, anomaly trends, and the impact of these factors on the insurance industry and hence, the satellite industry overall….In terms of satellite insurance claims, the period from 1998 through 2001 was particularly bad. The unusually high number of satellite anomalies and resulting insurance claims have seriously affected both the quality and reliability of services provided by commercial satellite operators and have (along with notable launch vehicle failures) had a negative impact on investors’ perceptions of the space industry as a whole. Beyond that, such problems have resulted in billions of dollars of losses for space insurance underwriters, increasing space insurance premium rates and hence the cost of ownership for commercial communications satellites in general. Although the last two years have seen a reduction in the number of serious anomalies the affects of the 1998-2001 period remain. Insurance costs have risen considerably and attitudes towards satellites and their manufacturers have changed. Before 1998 the satellite industry and its customers were moving toward a vision of satellites as a commodity. Satellites were expected to function well and new technologies to expand their capabilities were embraced. Satellite manufacturers built new manufacturing facilities and anticipated ever-increasing orders. This vision proved faulty when the new technologies showed flaws once in service and previously reliable satellites began to develop problems as well. The large market for satellites that had motivated the more production-orientated manufacturing techniques failed to appear and the commodity model of satellite manufacturing has now generally been abandoned. [Report from Frost & Sullivan]

2000 – Insurance industry funds new research into satellite failures” – The space insurance industry and the TSUNAMI initiative has put up £120,000 into two one-year research projects examining the role of space weather in satellite failures. Scientists from Mullard Space Science Laboratory and British Antarctic Survey (BAS) will attempt to match known violent space weather events with satellite failures using data from the space and from the ground. MSSL will also develop a spacecraft ‘black box’ to measure the amount of exposure to ‘killer’ electrons from the Sun. Space weather has been blamed for satellite failures that have cost the insurance industry billions of pounds. Solar conditions drive the space weather environment near Earth. Explosions on the Sun send gigawatts of energy hurtling towards Earth via the solar wind, causing space storms around Earth. This activity increases when the solar cycle reaches its peak every 11 years. This year sees the peak, making the studies even more urgent. Both projects will help space insurers minimize losses and set premiums. T he research funds are awarded by the Tsunami consortium, a group of scientists and insurers that was formed to stimulate new research proposals to improve understanding of natural hazards specifically to meet the needs of the industry. ” [BAS Press Release]

Lloyd’s Consortium Forms New Facility for Satellite Insurance / January 20, 2006

A consortium of Lloyd’s underwriters has formed a new facility for satellite insurance that will “enable the most accurate pricing of risks the sector has ever seen,” said an announcement on the Lloyd’s Website (www.lloyd’ The consortium is adopting a new approach that will combine the market’s underwriting expertise with detailed intelligence on the reliability of satellites and their components. Liberty Syndicates formed the new venture in partnership with Sciemus, and will provide up to $400 million of insurance capacity for the sector. The facility is expected to create savings of more than $10 million a year for some satellite operators while enhancing insurers’ returns. The bulletin said the “consortium will provide a one-stop shop for coverage using data from a 40 year study carried out by the Ministry of Defense. The research will enable the consortium to individually tailor accurate prices according to the specific risk profile of each operator.”

The new approach is designed to eliminate the “fragmented” market for satellite coverage. Notably it “involves the broker agreeing to terms with a string of underwriters.” The announcement explained that the “lack of data surrounding the risks associated with satellite launches meant there was a blanket rate for coverage.” Jeffrey Wright, director of reinsurance at HSBC Insurance Brokers, one of the select few brokers with access to the capacity, observed that the approach was ground breaking. “It will revolutionize the approach and the underwriting of satellite risks. This is not about offering cheap insurance. It is about rewarding the best companies in the business with premiums, which reflect the risk. It brings accuracy and market leading technology and information to a sector which requires it.” The bulletin also explained: “Despite some high profile losses in the past, the Space industry has grown to an estimated capacity of $490 million for launch risks and $310 million for in-orbit risks for 2006. Insurance costs are often an operator’s second largest cost.”

Liberty Syndicates’ chief executive Sean Dalton commented: “This represents the largest single source of new capacity made to the industry, which hitherto has suffered from an inability to differentiate between good and bad operators. The model will enable differentiation between good and bad risks within the satellite sector, and price to reflect this. Operators will be able to see the benefit in terms of significant cost savings and certainty. “The model will also enable contract certainty and facilitate claims resolutions, an area that has caused all parties difficulties in the past due to imbalances in knowledge and desired outcomes,” he concluded.


Millions to enter banking system through mobile phone system.
BY Drew Hinshaw / May 28, 2009

Accra, Ghana — Most working people here do not exist, at least not in the records of any trustworthy bank: The taxi drivers stash their salaries beneath floor mats and the market women tie their earnings up in the waistlines of their wrapper-skirts. They are the “un-banked” — potential customers but for now invisible, lost among the 80 percent of Africans who do their banking in tin cans and fanny packs. They do not keep the sort of accounts one can present to a loan officer.

Africa’s economy of cash handovers and stowed-away savings has long been a hindrance to the continent’s economic growth, as well as a cause and excuse to deny credit to its poor. But now, at a time when 10 million Ghanaians own a phone, the world’s banks, cell phone networks and aid agencies are coming here to flip one thing into the other — to tweak a few features on a sim card, circumvent some regulations, and voila: The ordinary pre-paid cell phone becomes something not unlike a checking account — a way to text money from person to person throughout this intricate economy. “It’s the next big gold rush,” said Michael Amankwah, CEO of CoreNet, a Ghanaian ATM manufacturer whose business, the chief executive freely admits, “is going to take a big hit,” when cell phone banking takes hold. “It’s the future of transactions and payments here.”

Already, telecom companies in Kenya and South Africa are shuffling millions of dollars in rands and shillings a day, as customers text along their excess income — perhaps to help an ailing but faraway relative buy medicine, or to pay workers harvesting a distant farm. In March, the continent’s largest cell phone network, MTN, announced plans to bring their Mobile Money service to 21 nations — they’ll even throw in an MTN-branded debt card. In Cote d’Ivoire, French telecom giant Orange is hammering out a similar program, and in eight East African nations, including the Democratic Republic of the Congo, the British firm Monitise, which is not a telecoms firm, will do the same. “This is a way to include quite a number of people who are outside the reach of the financial system,” said David Andah, executive secretary of Ghana’s Microfinance Institutions Network. “I’m talking about that woman on the beach selling fish. People who are not linked up at all.”

Analysts expect similar programs to take off in most African countries within a year. They forecast that several hundred million of Africa’s least connected traders, farmers and laborers will be brought into the banking system within three to five years. For the small towns and unreachable villages that have sent generations of talented youths and natural resources to the booming cities, this is an especially big deal. The technology should ease the path of remittances home, and make it easier for agriculturalists to operate multiple, far-apart farms. Those lucky enough to procure a micro-loan will be able to receive payments without traveling for hours. Those hopeful enough to apply for a loan will be able to bring to the counter some evidence of their income, if only in text messages. And in the capitals of each new country where mobile banking takes off, governments face the enticing option of taxing millions more petty purchases a day, in all the impractical corners where bureaucrats seldom go. “As the cash-less society grows, the consequences are going to be pretty heavy,” said Ghana Manager Kofi Kufuor, of Afric Xpress, a company that helps Ghanaians pay their bills and transfer money via text messages. “This is a lot of money we are talking about.” And a lot of people: “You have 6.1 billion people on this planet, out of which only one and half, two billion have an account,” said Prateek Shrivastava, head international strategist for Monitise. “Billions are going to be interested.”

Yet, out of those billions of people — whose infinitesimal transactions were once so extraneous to the world’s financial institutions — nobody stands to benefit quite like Africa’s increasingly powerful telecom companies, the conglomerates who built this continent’s cellular towers and enable its calls. “These guys are going to be more powerful than Google, more powerful than Microsoft, within the locality in which they operate,” Amankwah said. “Already, telecoms move more money than the banks. And they have control over the channels — it’s their sim card. You’re using their network. “These guys are going to be kings.”

Mobile Plus and FE-Mobile enter the M-Banking and Remittances Phenomenon
BY Ana Escalante / August 30, 2007

Mobile banking seems to be the new way to “bank the poor.” There are a growing number of companies working with these new technologies, some of which have been featured on NextBillion in the past. Schemes vary from those operating with standard in-country banking transactions to those with foreign remittances. Mobile banking is taking off because it is convenient, fast, simple, and secure – money can be transmitted almost instantly. That, and many people in developing countries now own or have access to a phone.

Recently, NextBillion got an e-mail from Mobile Plus and FE-Mobile telling us about their new venture: enabling low-value payments and remittances through mobile phones. Mobile Plus is a small group of entrepreneurs that have built secure payment mechanisms and low value cross border mechanisms for developing countries. According to their press release:

Mobile Plus Ltd provides low-cost international call credit and remittance services using a dual purpose card. FE Mobile Ltd provides the SecureLink™ mobile security platform…Consumers will purchase pre-paid vouchers in denominations £20, £50 and £100 and transmit the voucher number to the recipient who has a choice: either to make low cost calls or to redeem the voucher (less a small fixed service charge) for cash at a local participating outlet.

Mobile Plus and FE Mobile are not the first companies to provide these types of services, but I still think the whole idea behind m-banking is very interesting. I recently blogged about a similar venture from ISI, and Rob also blogged about ARYTY earlier this year – both companies provide similar services. I think it’s excellent that these services are becoming available to the people living in the BOP, because it gives them access to financial services and the ability to receive money from relatives abroad without the costly punitive fees and charges of incumbent remittance providers.

Although there is no one “global” company for m-banking, those I have found so far cover either one country, a small group of countries or a specific region- such as the case of ARYTY, G-Cash and Smart Money in the Philippines; WIZZIT and MTN Mobile Money in South Africa; M-Pesa in Kenya; Celpay in Zambia and the Democratic Republic of Congo.





“WIZZIT is a cellphone-based banking facility whose target market is the estimated 16 million unbanked or underbanked South Africans – about 60 percent of the country’s population. Unlike its competitors (FNB and MTN), WIZZIT does not require users to have a bank account and is compatible with early generation cell phones popular in low-income communities. The facility even works with customers who use pay-as-you-go cellphones – another distinction. In addition to being able to conduct cellphone-to-cellphone transactions, WIZZIT account holders are issued Maestro debit cards that can be used at any ATM or retailer. WIZZIT charges per-transaction fees that range from 99c (USD 0.15) to R4.99 (USD 0.78) and does not charge a monthly fee nor require a minimum balance. There are no transaction limitations – the service is purely pay-as-you-go. WIZZIT employs over 800 “Wizz Kids” – typically unemployed university graduates from low-income communities – to promote the product and help unbanked customers open accounts.”


[ From the archive, originally posted to spectre Mar 30, 2007 ],,2037930,00.html
Kenya sets world first with money transfers by mobile
BY Xan Rice in Nairobi / March 20, 2007

The ping of a text message has never sounded so sweet. In what is being touted as a world first, Kenya’s biggest mobile operator is allowing subscribers to send cash to other phone users by SMS. Known as M-Pesa, or mobile money, the service is expected to revolutionise banking in a country where more than 80% of people are excluded from the formal financial sector. Apart from transferring cash – a service much in demand among urban Kenyans supporting relatives in rural areas – customers of the Safaricom network will be able to keep up to 50,000 shillings (£370) in a “virtual account” on their handsets.

Developed by Vodafone, which holds a 35% share in Safaricom, M-Pesa was formally launched in Kenya two weeks ago. More than 10,000 people have signed up for the service, with around 8m shillings transferred
so far, mostly in tiny denominations. Safaricom’s executives are confident that growth will be strong in Kenya, and later across Africa. “We are effectively giving people ATM cards without them ever having to open a real bank account,” said Michael Joseph, chief executive of Safaricom, who called the money transfer concept the “next big thing” in mobile telephony.

M-Pesa’s is simple. There is no need for a new handset or SIM card. To send money you hand over the cash to a registered agent – typically a retailer – who credits your virtual account. You then send between 100 shillings (74p) and 35,000 shillings (£259) via text message to the desired recipient – even someone on a different mobile network – who cashes it at an agent by entering a secret code and showing ID. A commission of up to 170 shillings (£1.25) is paid by the recipient but it compares favourably with fees levied by the major banks, whose services are too expensive for most of the population.

Mobile phone growth in Kenya, as in most of Africa, has been remarkable, even among the rural poor. In June 1999 Kenya had 15,000 mobile subscribers. Today it has nearly 8 million out of a population of 35 million, and the two operators’ networks are as extensive as the access to banks is limited. Safaricom says it is not so much competing with financial services companies as filling a void. In time, M-Pesa will allow people to borrow and repay money, and make purchases. Companies will be able to pay salaries directly into workers’ phones – something that has already attracted the interest of larger employers, such as the tea companies, whose workers often have to be paid in cash as they do not have bank accounts.

There are concerns about security, but Safaricom insists that even if someone’s phone is stolen the PIN system prevents unauthorised withdrawals. Mr Joseph said the only danger is sending cash to the wrong mobile number and the recipient redeeming it straight away. The project is being watched closely by mobile operators around the world as a way of targeting the multibillion pound international cash transfer industry long dominated by companies such as Western Union and Moneygram. Remittances sent from nearly 200 million migrant workers to developing countries totalled £102bn last year, according to the World Bank. The GSM Association, which represents more than 700 mobile operators worldwide, believes this could quadruple by 2012 if transfers by SMS become the norm. Vodafone has entered a partnership with Citigroup that would soon allow Kenyans in the UK to send money home via text message. The charge for sending £50 is expected to be about £3, less than a third of what some traditional services charge.

{The following correction appeared in the Guardian’s Corrections and clarifications column, Saturday March 31 2007 : The claim in the article above was wrong. The mobile banking system may be the first in Africa but two companies, Globe Telecom and Smart Communications, have been operating money transfers in the Philippines since around 2005.}




GCASH, Globe’s flagship M-Commerce service, was born from a simple goal of transforming a mobile phone into a wallet. With its launch in October 2004, GCASH has effectively given Globe and TM subscribers access to a cashless and cardless method of facilitating money remittance, donations, loan settlement, disbursement of salaries or commissions, and payment of bills, products and services, with just a text message. GCASH requires only a mobile phone and a one-time registration, with a minimal charge of P1.00 per GCASH transaction. GCASH dramatically expands the menu of mobile commerce transactions, and has provided the low income economic class and overseas workers access to the relevant services below:
Domestic and International Remittances : Sending of money via GCASH as supported by a wide cash-handling network, including leading local and international remittance companies backed by reputable settlement banks
Micro-Payments : Payments for purchases from the growing list of merchant partners, including essentials such as government taxes, medicines, boat fares, food, mobile prepaid credits (load), and schools and office supplies
Micro-Credit Payments : Allows disbursement of loan principals and payment of loan interest and amortization payments to lower income consumers with limited access to banks
Bills & Tuition Fee Payments : Allows payment of bills of various utility companies, internet service providers, insurance companies, as wella s schools and universities
Donations : Provides a quick and safe processing of GCASH donations to different institutions
“This video profiles the use of G-Cash in Cantilan, a Filipino farming and fishing community 5 hours away from the nearest operational airport. The video features interviews with customers (there are 8,900 in Cantilan) and agents from a few of the 60+ small businesses, including pharmacies, bakeries, restaurants, who accept G-Cash as a payment method.”


RBAP (Rural Bankers Association of the Philippines)
Globe Telecom Philippines Joins with Microfinance Providers in the Rural Bankers Association of the Philippines (RBAP) to Supply Mobile Banking Services to the Rural Poor
BY Brett Rudder / September 16, 2008

“The Rural Bankers Association of the Philippines (RBAP) and Globe Telecom Inc, the Philippines’ second largest telecommunications provider, have partnered to extend mobile banking services to rural banks, allowing their customers to conduct transactions using mobile phones. The effort brings the mobile banking service G-cash, managed by Globe Telecom’s subsidiary G-Xchange Inc, to 375 participating branch locations. Microfinance institutions under this program become “cash in” and “cash out” outlets that are accredited to convert actual money into electronic money and vice versa.

RBAP is a consortium organization of approximately 700 rural banks in the Philippines. Its Microenterprise Access to Banking Services (MABS) assists its members in increasing access to banking services for the microenterprise sector. The US Agency for International Development has supported MABS since 1998. The central bank of the Philippines Bangko Sentral ng Pilipinas (BSP) has approved G-cash and expects the market for these services to grow by at least 20 percent over the next year. RBAP reports that the gross loan portfolio of MABS microfinance institutions is equivalent to USD 41.1 million and that their savings deposits total USD 36.6 million.”


“XacBank, Mongolia’s largest microfinance institution recently launched its partnership with Kiva, the world’s first person-to-person micro-lending website. XacBank’s clients are now featured on, and individual lenders from around the world can make small loans of $25 over the Internet to micro entrepreneurs in Mongolia. These small loans help businesses such as butcher shops, furniture stores and beauty salons to succeed while enabling hardworking Mongolians to provide food and education for their families.”

Bank ATMs soon may be used for sending cash person-to-person
By Gail Liberman and Alan Lavine / 11.11.2008

If you’re without a bank account, you soon could have a low-cost way of sending cash to others — using your cell phone and a bank ATM. Amid criticism that banks aren’t doing enough to attract those who lack bank accounts, a Charlotte-based company, Privier Inc., is courting financial institutions to provide this service. Privier’s patented “ATMSend” would let the so-called un-banked transfer cash without requiring the sender or recipient to have a bank ATM card or bank account. The system would use bank ATMs that permit cash deposits, said Charles Polanco, chief executive of Privier.

Western Union Co. in Englewood, Colo., and MoneyGram International, in Minneapolis, currently dominate the money transfer business. Combined, the two companies have 22% of the market, according to a report in June by Marketdata, a Tampa, Fla. market research publisher. However, new competition is rapidly emerging from Visa, MasterCard, Wal-Mart — and the latest mobile technology allowing for financial transactions using cell phones.

Privier would equip screens of participating bank ATMs with icons reading “Send Cash” and “Pickup Cash.” A cash sender and recipient would press appropriate buttons to automatically activate the ATM for an “ATMSend” transaction, Polanco said. Each bank would determine limits regarding how much cash could be transferred. The sender first would have to register a cell phone through a participating bank either online or via telephone, entering a name, address, birth date, Social Security number and cell phone number. Privier would verify the user’s identity and check information against the Office of Foreign Assets Control list of terrorists.

At a participating bank ATM, the sender could then click “Send Cash” and enter the cell phone number. A 10-digit withdrawal number automatically would be text-messaged to the cell phone number provided. The sender could follow prompts at the ATM to enter cash into the machine and provide the recipient with the authorization code along with the amount sent. With that information, the recipient could obtain the cash at an ATM within the participating bank’s network. All funds must be picked up at once, and if funds go unclaimed, senders would be notified to pick up the funds at an ATM location after 30 days.

‘The Grameen-Obopay Bank A Billion Initiative’ / August 05, 2008

Obopay, Inc., the pioneering service provider for payments via mobile phones, and Grameen Solutions, the company globally recognized for promoting economic and social development through information and communications technology, today announced a unique, first-of-its-kind alliance to use mobile technology to deliver banking services to a billion of the world’s poorest people by 2018. The Grameen-Obopay Bank A Billion Initiative will provide access to affordable financial services, including cross-border remittances, money transfer, payments, savings and credit accounts. By empowering life and work endeavors with mobile technology that is ubiquitous even in the most impoverished and remote corners of the world, Grameen-Obopay is bringing the full power of banking to those who need it most. “I was inspired to found Obopay when I was volunteering in Africa and saw that while people in remote corners of the world often lacked access to the most basic financial services, they almost all had mobile phones,” explained Ms. Carol Realini, CEO of Obopay. “We are thrilled to embark on a partnership with Grameen Solutions, and look forward to working with them to bring truly powerful mobile banking services to people everywhere.”

With more than 3 billion connections to GSM mobile communications networks currently active globally and emerging markets responsible for 85 percent of new connections today1, mobile technology can effectively deliver financial services to billions of underserved people on every continent. Until now, even the most basic financial services have been unavailable to the world’s poor because they are physically inaccessible and/or far too expensive to be practical. Using mobile technology to deliver banking services overcomes previously limiting restrictions of space and time by using existing infrastructure to give even the most underprivileged access to financial services.

Grameen Solutions’ CEO Mr. Kazi Islam explained, “We carefully evaluated globally available mobile money service providers with a view to identifying a partner that fits with our vision and mission. Obopay is clearly that partner, and we look forward to maximizing the global potential of mobile financial services with them. By using a technology that is already pervasive — the mobile phone — we will clearly be able to have a dramatic impact on global poverty.”

Working initially in Mumbai, India and in Bangladesh, The Grameen-Obopay Bank A Billion Initiative will begin delivering services in October, 2008. Commenting on the association, Mr. Aditya Menon, Executive Director and CTO, Obopay India, said, “Obopay’s partnership with Grameen Solutions is a clear and powerful validation of Obopay’s ability to have a dramatic and transformational global impact on personal finance.” Grameen was founded by Professor Muhammad Yunus, the founding father of the microfinance movement and recipient of the 2006 Nobel Peace Prize. Prof. Yunus commented that, “Mobile based financial services will bring more power to poor people. I’m excited about the partnership that Grameen Solutions and Obopay have created.”

The Great Brazilian Sat-Hack Crackdown
BY Marcelo Soares  /  04.20.09
Brazilian satellite hackers use high-performance antennas and homebrew gear to turn U.S. Navy satellites into their personal CB radios

Campinas, Brazil — On the night of March 8, cruising 22,000 miles above the Earth, U.S. Navy communications satellite FLTSAT-8 suddenly erupted with illicit activity. Jubilant voices and anthems crowded the channel on a junkyard’s worth of homemade gear from across vast and silent stretches of the Amazon: Ronaldo, a Brazilian soccer idol, had just scored his first goal with the Corinthians. It was a party that won’t soon be forgotten. Ten days later, Brazilian Federal Police swooped in on 39 suspects in six states in the largest crackdown to date on a growing problem here: illegal hijacking of U.S. military satellite transponders. “This had been happening for more than five years,” says Celso Campos, of the Brazilian Federal Police. “Since the communication channel was open, not encrypted, lots of people used it to talk to each other.”

The practice is so entrenched, and the knowledge and tools so widely available, few believe the campaign to stamp it out will be quick or easy. Much of this country’s geography is remote, and beyond the reach of cellphone coverage, making American satellites an ideal, if illegal, communications option. The problem goes back more than a decade, to the mid-1990s, when Brazilian radio technicians discovered they could jump on the UHF frequencies dedicated to satellites in the Navy’s Fleet Satellite Communication system, or FLTSATCOM. They’ve been at it ever since. Truck drivers love the birds because they provide better range and sound than ham radios. Rogue loggers in the Amazon use the satellites to transmit coded warnings when authorities threaten to close in. Drug dealers and organized criminal factions use them to coordinate operations. Today, the satellites, which pirates called “Bolinha” or “little ball,” are a national phenomenon. “It’s impossible not to find equipment like this when we catch an organized crime gang,” says a police officer involved in last month’s action. The crackdown, called “Operation Satellite,” was Brazil’s first large-scale enforcement against the problem. Police followed coordinates provided by the U.S. Department of Defense and confirmed by Anatel, Brazil’s FCC. Among those charged were university professors, electricians, truckers and farmers, the police say. The suspects face up to four years and jail, but are more likely to be fined if convicted.

First lofted into orbit in the 1970s, the FLTSATCOM bird was at the time a major advance in military communications. Their 23 channels were used by every branch of the U.S. armed forces and the White House for encrypted data and voice, typically from portable ground units that could be quickly unpacked and put to use on the battlefield. As the original FLTSAT constellation of four satellites fell out of service, the Navy launched a more advanced UFO satellite (for Ultra High Frequency Follow-On) to replace them. Today, there are two FLTSAT and eight UFO birds in geosynchronous orbit. Navy contractors are working on a next-generation system called Mobile User Objective System beginning in September 2009.

Until then, the military is still using aging FLTSAT and UFO satellites — and so are a lot of Brazilians. While the technology on the transponders still dates from the 1970s, radio sets back on Earth have only improved and plummeted in cost — opening a cheap, efficient and illegal backdoor. To use the satellite, pirates typically take an ordinary ham radio transmitter, which operates in the 144- to 148-MHZ range, and add a frequency doubler cobbled from coils and a varactor diode. That lets the radio stretch into the lower end of FLTSATCOM’s 292- to 317-MHz uplink range. All the gear can be bought near any truck stop for less than $500. Ads on specialized websites offer to perform the conversion for less than $100. Taught the ropes, even rough electricians can make Bolinha-ware. “I saw it more than once in truck repair shops,” says amateur radio operator Adinei Brochi (PY2ADN) “Nearly illiterate men rigged a radio in less than one minute, rolling wire on a coil.”

Brochi, who assembled his first radio set from spare parts at 12, has been tracking the Brazilian satellite hacking problem for years. Brochi says the Pentagon’s concerns are obvious. “If a soldier is shot in an ambush, the first thing he will think of doing will be to send a help request over the radio,” observes Brochi. “What if he’s trying to call for help and two truckers are discussing soccer? In an emergency, that soldier won’t be able to remember quickly how to change the radio programming to look for a frequency that’s not saturated.”

When real criminals use these frequencies, it’s easy to tell they’re hiding something, but it’s nearly impossible to know what it is. In one intercepted conversation posted to YouTube, a man alerts a friend that he should watch out, because things are getting “crispy” and “strong winds” are on their way. Sometimes loggers refer to the approach of authorities by saying, “Santa Claus is coming,” says Brochi. When the user’s location is stable, the signal can be triangulated. That’s how the Defense Department got the coordinates to feed Brazilian authorities in March’s raids.

While Brazil may be the world capital of FLTSATCOM hijacking, there have been cases in other countries — even in the United States. In February of last year, FCC investigators used a mobile direction-finding vehicle to trace rogue transmissions to a Brazilian immigrant in New Jersey. When the investigators inspected his radio gear, they found a transceiver programmed to a FLTSAT frequency, connected to an antenna in the back of his house. Joaquim Barbosa was hit with a $20,000 fine. A technician with Anatel, speaking on condition of anonymity, says the chief problem with ending the satellite abuse in this country is that U.S. and Brazilian authorities simply waited too long to start. Thousands of users are believed to have the know-how to use the system. After a bust, the airwaves always go quiet for a while, but the hijackers always return.

One week after the “Operation Satellite,” Brochi met with at a gathering of amateur radio enthusiasts in a bucolic square in Campinas, about 60 miles north of Sao Paulo. Brochi switches on his UHF receiver and scans through the satellite frequencies. It’s relatively quiet now on the satellite underground, except for the static-like sound of encrypted military traffic. But eventually, a lone creaky voice cuts through. It’s a man in Porto Velho, the capital of Rondônia, a day’s drive north into the upper Amazon basin. He’s making small talk with a friend in Portuguese. The satellite pirates are creeping back on the air.

FLTSATCOM  (Fleet Satellite Communications System)



BOLINHA TECH  (poorly auto-translated from Portuguese)

“Satellites commonly known in Brazil as “Bolinha”, are geostationary American military satellites known as FleetSatCom or UHF SatCom. These satellites were developed by RCA American Communications (RCA Americom) and were launched between 1975 and 1992. From 1986, they became controlled by General Electric American Communications (GE Americom) and from 2001 by SES Americom.

Contrary to what many think, these satellites are not “abandoned”, and are still very active, with intensive use. Most official communications are made in encrypted digital modes; there is minimum official activities in analog mode (AM, FM, SSB). In August 2007, the space shuttle Endeavor used the rate of 259,700 in AM. There are British, Italian and Russian military satellites (called Gonets) also in the band.

Information on the SatCom in Wikipedia:

Recent examples of audio from such satellites can be seen on the page:

Manual of military operations of SatCom,  2004 edition

official SatCom, defined by the standard MIL-STD-188-181 / A and B:

An excellent explanation given by Mr Roland Zurmely in February 2008: “For a geostationary satellite, one of the mandatory parameters is that it is on the equator.”

“The Clarke Belt”, the only place where geostationary satellites may be, is already almost all busy! Theoretically, each satellite GSO should be a “box” of 0.1 x 0.1 degrees, and as the belt is 360 degrees, there is room for only 3600 GSO satellites! Already has more than 1500 seating! It is for this reason that many are up in Brazil, as the Clarke belt is at the equator! Old satellites MUST be removed from the belt and are normally placed in inclined orbit with respect to GSO to give the “box” to a new GSO satellite. See more here:

Many illegal users of satellites are linked to organized crime, especially drug trafficking. Some key words or subjects are used to mask orders, delivery notes or scheduling of meetings. Most of the use of these segments in the range of 250 MHz using transmission has originated in the Brazilian Amazon, or in the southern part of Colombia. However, due to the “meddling” of camioneiros [truckdrivers?], sawmills and traders common in the region, who also started to use this as “cheap” radio, organized crime is migrating most of their communications for military satellites in geostationary band of 6 GHz. The use of such satellites is illegal (Article 183 of Law 9472/97). The U.S. military held a triangulation of signals with high emission accuracy and passed the data to Brazilian authorities, which has made dozens of seizures in this direction.

In São Paulo, transmission equipment for the “Bolinha Sat” (for his great most transverters for use with VHF) were learned with almost all the great “leadership” of the CCP who were arrested in the last two years. Moreover, two radio amateurs “manufacturers” of transverters to Sat Bolinha were arrested for provide equipment and technology to the criminal faction (they knew what were doing and what to use).

By the year 2006 there were two lists of discussion in Brazil on the SatCom Yahoo groups. After an operation of seizures triggered by authorities Brazil, with support of the U.S. military intelligence, the lists were closed, and before the arrests made, many arrived to dismantle their equipment and to remove their antennas.

So if you have equipment that can send this track, taking full care! Do not fall into the “temptation” to make any contact, because the consequences can be very serious, difficult and complicated! However, listening to radio broadcasts is not a crime, and for those who have interest in only “owl” these frequencies, here are some interesting links on the SatCom:

For those who are interested in “owl” the frequencies of SatCom but have no equipment, a cheap option is mounting a converter for use in a radio or scanner for VHF. Page of Luciano Sturaro, PY2BBS has the outline of a converter for the 220 MHz band, but it works very well at 260 MHz: (projects – converter to 220 MHz)

For those who already have coverage in the range receiver with 250 to 260 MHz, here is a diagram of antenna:

I have obtained good results in the reception of signals from the satellites using a SatCom receptor IC-R10 receiver with a small Yagi for 6 elements (diagram on the link above) but if we use more than one meter of cable, the signal degrades. A solution is to use the antenna “on hand” even with the smallest possible length of cable coaxial!

To facilitate the location of the satellite with a directional antenna, leave the receiver in frequency of 244,125 MHz, where there is a beacon, or 250,550 MHz, where there is a sign of continuous telemetry.

And to optimize the reception of insensitive receptors, such as receipt of HTS extended, where the range of 260 MHz is not very sensitive or even low selectivity, may be the use of pre-low-noise amplifier (LNA). Here is the diagram of a good pre-amp for this track:

Good listening!
Adinei , PY2ADN
py2adn [arroba] [dot] br “



by Julieta Aranda and Anton Vidokle

Time banking is not barter. Barter economies have been in practice throughout history, but the idea of using time as a unit of exchange only appeared shortly after the Industrial Revolution. The origins of time-based currency can be traced both to the American anarchist Josiah Warren, who ran the Cincinnati Time Store from 1827 until 1830, and to the British industrialist and philanthropist Robert Owen, who founded the utopian “New Harmony” community. While both systems are based on the principles of mutualism and the labor theory of value, Josiah Warren’s currency was explicitly pegged to time as a measure of specific goods or labor. For example, 3 hours of carpenter’s work would be considered equivalent to 3-12 pounds of corn. Meanwhile, Robert Owen’s currency simply bore an inscription referring to a number of hours, which presumably could be exchanged for however many pounds of corn a farmer would deem adequate or labor of any kind.

There have been other examples of alternative economies in recent history, most notably the “Notgeld” emergency money that appeared in Germany after the hyperinflation of 1923. Notgeld was unofficial “money” issued by cities, boroughs, and even private companies to compensate for a shortage of official coins and bills. As long as Notgeld was accepted, no harm was done, as it was understood to be a valid certificate of debt. Notgeld was actually more stable than real money, since its denomination was often pegged to material goods, such as gold, corn, meat, and so forth. The currency itself was purposefully made to be very pretty to encourage people to save the bills. This way, the debt would never have to be paid. Notgeld was printed on all kinds of material—leather, fabric, porcelain, silk, and tin foil. Since it was not legal tender, the only people who dealt in it were those who wanted to. As a result, it had a stabilizing effect on the official currency, which was still in circulation.

The first successful contemporary time bank was started in 1991 by Paul Glover in Ithaca, New York. Following his idea, people began to exchange time, which led to the creation of a time-based currency—the “Ithaca Hours,” which even local businesses began to accept, and which still flourishes. Time banking and service exchange have since developed into a full-fledged movement, usually centered around local communities.

Time/Bank at e-flux is modeled on existing time banks. Every Time/Bank transaction will allow individuals to request, offer, and pay for services in “Hour Notes.” When a task is performed, the credit hours earned may be saved and used at a later date, given to another person, or contributed towards developing larger communal projects. For example, if you happen to be in Beijing or Hamburg and need someone to help you shop for materials or translate a press release, you would be able to draw on resources from Time/Bank without exchanging any money.

Through Time/Bank, we hope to create an immaterial currency and a parallel micro-economy for the cultural community, one that is not geographically bound, and that will create a sense of worth for many of the exchanges that already take place within our field—particularly those that do not produce commodities and often escape the structures that validate only certain forms of exchange as significant or profitable.

timebank network schematic (Mihos’ timebank network map)




‘Hours’ type: First modeled in Ithaca NY in 1991, Hours currency is based on issuing paper currency to a core group of members who agree to accept it. It is usually roughly pegged to the national money (1 Hour = $10), but cannot usually be redeemed for it. The largest and most successful system is in Ithaca NY.

Time Bank: Time Banks are like LETS systems but denominate the currency in hours of service rather than national money. Everyone in the system values their time equally, and therefore the system operates outside the sphere of the IRS. Edgar Cahn is the founder of the Time Banks movement in the USA ( However, the idea of trading time dates back for many hundreds of years in some places (most notably Bali).

“A central database is kept with everyone’s “account” information. When services are performed, the parties log it on the website and the respective accounts automatically get credited/debited. The credits (known simply as Hours) exist only in this electronic form. We may print notes someday, but strictly speaking, those aren’t necessary. (75% of all U.S. dollars exist solely in electronic form, by the way.) We need not worry about squaring everyone’s account to zero on a day-to-day basis. The system can continue indefinitely, with people vacillating from plus to minus, staying put for a while, or whatever. Hopefully no one will keep a large negative balance for a long time. If that happens, other participants can suggest ways of earning hours to that person. If that doesn’t work, people can cease performing services for them. No one is ever under any obligation to trade, for any reason. Bottom line, if something isn’t worth the price, i.e. if so and so doing 2 hours of x for you isn’t worth 2 hours of your time, then don’t have them do it. Besides mutual agreement, there are really no hard and fast rules. The point of hOURS is not to constrain anyone or be a burden in any way, but to free up possibilities and potential. The website also serves as a sort of ‘yellow pages’ in which everyone can list the goods and services they have to offer, and those which they need, which can be just about anything.

Can goods be bought and sold under the hOURS system too? Sure, just remember an Hour of money represents an hour of time. Use that to determine what a desirable price would be. If an item can be readily reconceived of as a service (the service of providing that item) use that to determine the price. Businesses can get involved as well. So why isn’t the ‘h’ capitalized you may be wondering: Because both “hours” and “ours” are good names for the program. The first is obvious, but “OURS” captures some important features of it as well. It’s literally ours, belonging to the people involved. No bank or corporation has the ability to pull funding. No absentee owners siphon off rents and dividends. A community that uses hOURS is strengthened by the increased interpersonal contacts and becomes wealthier through two mechanisms mentioned above. We need not suffer any problems that come from the so called credit crunch, nor any problems stemming from the nature of that credit, such as its control by elites.


General principles
1. Give hOURS the benefit of presumption.
hOURS is better than the main economy in the sense of being saner and having a better social impact. In terms of scale and variety of opportunity of course, it still falls way short in comparison. So people obviously still need to use the dollar economy. But let that be your rationale – that you need to, even though it will constitute the lion’s share of your economic life. The point is, don’t let force of habit or force of mindset channel you into using the dominant system. Use hOURS whenever possible.

2. The actual Hours are created by the participants.
The units of currency, Hours, do not exist in a paper form, nor are they doled out by any sort of central issuing authority. They’re created simply by two or more participants getting together and performing services. This is a democratic form of money. You can think of the system as a sort of accountant/observer. For each Hour credited to someone, another is debited. The total amount of Hours (adding up everyone’s balance) is always zero. So if you think about it, someone, in fact usually about half the participants, will be in the red. There’s nothing wrong with that, that’s how it works. If people weren’t willing to have negative balances we wouldn’t have hOURS. So please don’t have any special aversion to that. Don’t bring “dollar-think” into the system. Dollar-debt and Hours-debt are not very comparable. A negative hOURS balance isn’t even a debt at all. It just means you haven’t yet accepted back Hours that you issued. You need not earn Hours first in order to spend them. Leaving the system in the red would be very uncool, but maintaining a negative balance, even for a long time, is fine. No interest is charged.

Each Hour, the unit of currency, represents an hour of time. The price of any service is the time spent performing the service.

3. Reckon time spent from the perspective of the provider(s).
This is mentioned for the case of transactions with more than two people, where it’s not immediately obvious. But it is obvious if you think about it for a minute. Suppose someone does 6 hours of plumbing work for two hOURS participants who live together. The total transaction amount is 6. The provider gets credited 6 and each recipient debited 3. It’s not that each recipient gets debited 6 and the provider credited 12. Imagine then the provider discovered a third participant living there, could they insist on being paid 18? No, why should that matter? It makes more sense to split it three ways, each being debited 2, much as you probably would, had you hired a plumber with dollars. Similarly if two people are performing a service together, they should both be paid in full. The recipient is getting more in such a situation. e.g. the plumbing is really difficult – it takes two people an hour to do. They each get credited a full Hour, and the recipient(s) debited two.

4. Count commuting time.
If someone has to travel to come provide you a service, that’s part of their effort. That might normally be disregarded in the mainstream economy, but that doesn’t mean it’s not real. The economy sweeps a lot of stuff under the rug. That’s the main reason we have environmental destruction; the costs of it don’t show up on anyone’s balance sheet. Let’s strive for an economy that brings things into the light of day. Ivan Illich came up with the concept of shadow work, which is uncompensated labor at the service of the market economy. Examples would be commuting and shopping. They do nothing to promote subsistence and independence. But they are demanded by the market system. Their cost is borne silently by those who perform them. hOURS has a “small is beautiful” streak. It’s good to buy local in order to avoid various transportation costs. When you can choose between providers, have a tendency to go with whomever’s closer. Bringing transporatation costs into the light of day can help us come up with other ways to minimize them, say by combining trips for example. An hOURS transaction with a long commute could be scheduled for when the provider would be making the trip anyway, for other reasons. Then the cost can be split. For simple services, (that most anyone can do) like plant sitting for example, you may wish to contact people who live nearby, even if they don’t specifically offer it, rather than someone who lives further away and does offer it.

5. “Returns”/Complaints
So far there has been a strong spirit of generosity in hOURS. Between that and open communication, most everything should be able to be resolved between the parties involved. In troublesome cases, appeal to Fred for help/ideas/mediation.

6. Consent is the primary value.
As long as all parties to a transaction are happy with the outcome, everything is fine. Other concerns are secondary. Were someone to get lost for 2 hours on their way to provide a service for someone else, it’s fine if they don’t want to include that in the transaction amount. No one should say “Yeah, but we’re supposed to count commuting time.” People should do what they want. Talk it out.

7. Share your knowledge and skills.
If in the process of performing a service you can teach the recipient to do it themselves so they need not call on you again, that would be an admirable thing. hOURS isn’t a perfect economic system, just a big improvement, and a way out. One weakness could be a tendency to be “territorial”. But we can decide not to be like that.

8. No ‘faceless’ organizational members
hOURS exists in order to forge a better economy. While it’s hardly our most important goal, we can take a bite out of the alienation caused by faceless corporations. Groups and businesses are more than welcome to have an account, but they need to designate someone to be “in charge” of it and serve as a contact person. Another reason for this is that hOURS will not be caught in the middle of any group that splits up and fights over the Hours. These rules even apply to joint accounts for married couples. Note that you could have separate accounts without inhibiting any kind of sharing you may wish to do. Hours may be given as a gift. So, someone could work off their husband’s debt, for example, by earning Hours and gifting them over to him.

9. Above all, ask questions.

Exact Change (Re: It’s (Not) a Living,” Meredith Broussard, March 27, 2003)
“The surprise of seeing the local, alternative currency program I started get mentioned in your last issue was definitely of the pleasant variety. Nonetheless, I felt I should write in to clarify two things. I’m not trying to start the system anymore. (H)OURS has been up and running for nearly two years now. And, like all local currencies around the world, (H)OURS is perfectly legal. It’s not counterfeiting as we don’t issue dollars. It’s illegal to make your own coins, and if you peg your currency to the dollar, you can’t print notes with a value of less than $1. We don’t do either.” –Fred Kittelmann, via e-mail

“Fred Kittelmann has a vision to provide Philadelphia with an alternative system of trade that is socially, environmentally, and economically progressive. Last year, he started a local currency called hOURS, which stands for “helluva Organized United Reciprocation System.” Since then, over 100 people have joined, sharing their skills in a variety of areas including catering, psychotherapy, tutoring, babysitting, writing, gardening, and office assistance. Similar to Ithaca Hours, hOURS is an alternative local currency that people can use to exchange goods and services with other participants. hOURS is a “mutual credit” trading system that builds community and encourages people to share resources locally. But unlike other local currencies, hOURS is egalitarian in nature; all people’s work is valued the same – by the time spent working. hOURS is free and open to everyone.

Here’s how it works: individuals register with hOURS and list the goods or services they would like to offer, as well as goods or services that they need. Participants with common offerings/needs exchange the goods or services, paying with hOURS rather than US Currency. The provider’s account is credited with the number of actual hours they spent providing services, which they can then use to obtain services from another hOURS participant. hOURS can also be spent before they are earned, which stimulates use of the system. CASHours are used as a medium of exchange for physical goods, since they can not be directly translated into a time value. Nonprofit organizations can also participate in hOURS. Participants can donate their hOURS to local nonprofit organizations, which can use hOURS to obtain goods or services to further their missions.”

Fred Kittelmann
email : H_OURS [at] yahoo [dot] com

Why I created hOURS / by Fred Kittelmann

“The point of hOURS is to be an alternative economic system, in opposition to the competitive, monetized, capitalist, “free market” we’ve already got. hOURS is by no means intended as an ideal form of economic relations, but rather as a step along the way to unraveling all the nastiness. hOURS is of course also quite puny in scope compared to the dominant system, but others are doing similar things, and there is incredible room and potential for growth. We have to start somewhere and this is a good direction in which to proceed.

One more caveat, before I get comfortable on the soapbox. I’m amazed at how universal the appeal of hOURS has been. I’ve gotten near unanimous enthusiasm from a wide variety of folks. I don’t want to risk narrowing that appeal by emphasizing my own personal motivations, which are likely to be different from those of many of you. I would ask that you judge hOURS based on what it is: a system of reciprocation where people… Don’t judge it based on what I, think it is. In the long run that doesn’t matter.

The main means by which hOURS challenges the dominant system is by providing the opportunity to boycott the almighty dollar, indeed money in general. To replace dollars with another unit of currency, of our own creation, as other LETS’s do, would be to seriously weaken its potential. Presently, most people value money, a fictional construct, over real-life concerns such as working conditions, interpersonal relations and the environment. In conflicts between the above, people generally make decisions based on the “bottom line”. hOURS devalues money, making it less of a necessity in people’s lives. Thus it begins to tip the balance toward the “real” concerns, improving people’s quality of life.

You might ask, isn’t money good for people though? It depends on what’s meant by “people”. To think money can bring an improved standard of living is a narrow viewpoint. It helps whoever gets it, but only at the expense of others: either whoever gave it up, or in the case of more having been printed, everyone’s money becomes a little less valuable. Economic growth in general worsens the standard of living of the human race as a whole through effects like increased monetization, increased dependency on others, the destruction of non-exchange type means of providing for ourselves, and counterproductivity. Cars are a good example of the latter. If only a few people have them, the technology can enhance their quality of life by making transportation easier. But when everyone has a car it’s gridlock and no one goes anywhere. (To be fair, economic growth might not be 100% bad if the business enterprise created thereby, produces a product or service useful to the human species as a whole, and does so at a sensible level – But who has a job like that?!) hOURS is anti-growth and anti-money. By participating, people achieve a degree of autonomy from the big institutions which control the bulk of the money. If we can boycott money, we can boycott the Federal Reserve System, Wall Street, and big corporations. We won’t have to put up with any sort of moneylords, like bankers, that earn their living parasitically, presiding over transactions and skimming off the top. Even the government and professions like law and medicine would eventually be effected. Taken to its logical conclusion, a situation where everyone satisfies their material needs through hOURS rather than the current economy, such institutions lose all their power and surrender their ability to impact public policy and decide what sorts of activities people will engage in. Three cheers for that!!!

Financial empire, perhaps even hierarchy in general, is impossible under hOURS. We all have the same net worth (24/7) to spend as we see fit. The highest standards of living are possible, but fortune as a means of being able to dominate others is not. There’s little room for surplus value, or exploitation of any kind. One particular form of domination, made possible through the manipulability of an abstract concept like money, but impossible with the non-manipulability of units of time, is the wide discrepancy in how the work people do is valued. It’s not right that executives make thousands and thousands of times as much money as Wal-mart clerks do. (Especially when the latter actually do something useful by telling you what aisle such and such is in, but the former set policies that destroy the environment and make decisions like “let’s build bombs instead of bicycles”.) No wage discrepancies are legitimate. Even the neurosurgeon who saves someone’s life should not earn more than the clerk, for the former is not possible without the latter. No one can practice neurosurgery without a slew of others providing for their more mundane needs. Perhaps this is clearer if one considers a farmer rather than a clerk. If no one will grow enough food to feed others as well as themselves, we all have to be farmers. There can be no division of labor. The division of labor is a group effort in which everyone plays an equal part. Therefore everyone should be compensated equally. Neurosurgeons ought to be happy with the prestige and honor that comes with a special skill, and not feel the need to economically crush everyone else under their heel to boot. Turning back the clock a bit we can see an even better example than the farmer. What about the surgeon’s wife who cooks and cleans and so forth, whom he couldn’t do without? The dominant economy has, and continues to, define many people as not just worth less, but worthless. The homeless people on the street can’t even get that minimum wage clerk job. Full employment, according to the Federal Reserve Board, is actually 4% unemployment, a level they roughly maintain through manipulation of the money supply. True full employment would lead to a breakdown of workplace authority as the consequences of losing a job dwindle to next to nothing. hOURS rejects all that crap. In an hOURS world, everyone is welcome. Everyone is useful. And there’s no Fed to say otherwise.

Not that hOURS would be a utopia. It’s still a market type system, which has many problems. One is the matter of collective goods. Markets have no incentive to create any, and tend to destroy those inherent to the aboriginal human condition, like clean air. If pollution is a side effect of a business, no incentive to rethink things will naturally ensue, for it doesn’t show up on the bottom line, whereas dealing with it would. Exchanges are dissociated from their social context. Contrary to working by consensus, who the costs and benefits of economic activity get assigned to means everything. If making widgets in a certain way saves the company $10, but the side effect is that half the world gets cancer, it’s still rational from a business perspective; even more so if the company also makes cancer medications. By the way, it’s not necessary to believe business leaders would have to be monsters to act that way. Psychological mechanisms like denial and ego defense bypass that hurdle, allowing “the system” to operate according to its own logic. Then again, some such people really are monsters. One federal official, several years ago, lauded the destruction of the ozone layer as good for the economy because it would increase sales of sunscreen and sunglasses. And you know what, he’s right. (Bet you didn’t expect me to say that.) Here’s the critical leap to make: If the economy is a thing which makes destruction of the ozone layer ok, we need to get rid of it. We need the ozone layer. We need it bad. We don’t need the economy. (What, that’s crazy.) Here’s the critical observation to help make the leap: The word “economy” has a mystifying effect. It means both the bottom line concerns of sunscreen manufacturers (and other big businesses). And it also means the way we provide for ourselves. Having the word mean both helps narrow, private interest masquerade as the public interest. Believe it or not, we can provide for our material needs without destroying the ozone layer. One thing that makes me want to puke is all the exhortations to travel and fly, and all the corporate welfare being doled out to airlines in the wake of the terrorist attack. Believe it or not, we can provide for our material needs without flinging ourselves great distances through the air. In fact, our standard of living need not suffer at all because of it. Don’t let the two senses of the word muddle your head. In the one sense, the economy is a nasty thing that’s been kicking our asses daily. If we bring it down, how do we maintain an economy in the other sense? hOURS.

All right, returning from that slight tangent, another problem with market economies is that they radically increase the amount of competition in human relations and the general ill will that breeds. We see people getting attached to their niches in the marketplace. When people’s livelihoods become attached to their niches it generates a downright demented consequence: economic activity becomes about creating needs rather than satisfying them. The significance (size) of ones niche (economic territory) becomes more important to ones success than how well that role is fulfilled. My house has a very old furnace built so well it will probably outlast me. Good job satisfying needs, but bad for business – no repeat customers. Making crappy products designed to break down is rewarded under the market system. You get to sell replacements. This problem is also apparent in the efforts of professions to drive up the need for their services.

Though hOURS is such a market type system, there are a few reasons why it can mitigate problems like these nonetheless. 1) We don’t actually have a free market economy. We have corporate socialism, which is even worse. While a marketplace works to the advantage of the strong, (The New York Times gets more out of “the marketplace of ideas” than I do. Big business gets more out of a market economy than I do. The market is a fictitious claim of “level playing field” to help justify inequities.) on rare occasions it can fail to serve the interests of the powerful. When this happens though, the truth comes out; as such results are not allowed to stand. In other words, when Chrysler fails, it doesn’t. Add this to rampant corporate welfare and it’s clear we have a system of corporate socialism designed to serve monstrosities like Chrysler. An actual free market would be a step up. 2) Under hOURS, people won’t be motivated by scarcity. Scarcity makes people freak out. The supply of money is tightly controlled. hOURS can be generated by anyone at any time. Without the need to compete for a scarce resource, people are less driven to act unethically. With an hour being an hour, it greatly reduces people’s ability to increase the value of their wares through mean-spirited anti-social mechanisms (e.g. pillaging the water supply or other collective goods, propaganda and intellectual hocus-pocus making ones skills seem more desirable, etc.) 3) Another consequence of an hour being an hour is that people can shift market niches without a loss of value. Suppose people, under hOURS, got so good at promoting holistic health that people rarely got sick anymore. Loss of livelihood? Not so. They can earn just as many hours at their new bike building business. There will be no need to defend their original business by say, promulgating advertising to dupe people who don’t need their services into thinking they do need them, or doing a crappy job to encourage repeat business. But when someone moves from an area they have expertise to one where they don’t, isn’t this an overall loss for society as a whole? No, because that’s smaller than the overall improvement in social welfare associated with the health services being less needed. It’s just plain old moving on.

An ideal economy would have true reciprocity with concern for all. This is seen in primitive societies where mutual aid is so much the norm that saying “thank you” is frowned upon. (There’s an implication one didn’t expect the thankee to be so generous, and it makes you look like a rude miserly type who keeps careful track of debts and obligations instead of mellowing out.) hOURS clearly isn’t that, but we can use it to start cleaning up the mess. I’m optimistic about its chances for success because it’s an example of a paradigm of activism I developed called “activism from superiority”. The key feature is that “doing the right thing” is the better way to live; meaning that benefits naturally accrue to those involved, in this case the building of a supportive community, not having to pay taxes, and other advantages of relief from the crushing grip of moneylords. Such a framework is more conducive to building a mass movement than traditional efforts which need to acquire resources and work on motivations like guilt and sympathy. The “force of example” to others is stronger, and you get a sort of natural selection as the flow of resources, relatively speaking, favors those who participate over those who don’t. By utilizing the value in what people have to offer that our society considers “throwaway”, and building a community of resistance that withdraws support from the system and grows stronger because of it, we can make great change.”






June 4, 1999, Toronto.

“…those performing here tonight are artists, and you may wonder what an artist is doing getting involved in a project that has to do with the structure of money. Weren’t we all taught that Art and Commerce were polar opposites? But art has to do with symbolism — the human tendency to make one thing stand for another — and money is the most deeply symbolic thing there is. Money as such is, as Oscar Wilde said, perfectly useless. You can’t eat it, drink it, shelter yourself from the cold with it, wear it, or make love with it unless deeply disturbed. In and of itself, it has no emotions, no mind, and no conscience. It doesn’t put out flowers or have children, and it makes a lousy pet. It has meaning only when it circulates, and is exchanged for other things; and money doesn’t do that for itself. People do that, using money as a symbolic token.

We have all been brainwashed into believing that there is only one kind of money — one kind of wealth — and only one measure of human worth — how much money you have — and one kind of exchange — traditional buying and selling. And only one motive to do so — the Siamese twins of consumer greed and the profit motive. We’ve also been told all of this is controlled by a mysterious god called Global Market Forces, who is now beyond our control, but to whom we are forced to sacrifice our children. Thus if international commercial interests suck up our wealth, stomp out our magazines, trash our culture, and dictate what toxic chemicals we must eat and drink and breathe, it is the will of Global Market Forces, whose ways are dark, but who is thought to have our best interests at heart in the end.”
“This extraordinary idea was inspired by a very ordinary need for more money. Now, by advertising their talents or goods in the project’s newsletter, HOUR Town, consumers can find themselves in the money. And small businesses are reaping rewards, too, since the currency gives residents more incentive to shop locally.” –Entrepreneur Magazine, April 1996


Ithaca HOURS: Local currency ‘backed by relationships’
by Anne Ju / Ithaca Journal / October 19, 2005

As has always been the case, Ithaca HOURS aren’t backed by gold, silver or any other commodity. “Ithaca HOURS is backed by our relationships,” said Rebecca Nellenback, HOURS board member. “That’s what we want our town and our community to be.” HOURS users and those interested in joining will celebrate that fact at an annual meeting next Wednesday, from 7 to 8:30 p.m. at the Greater Ithaca Activities Center. The whole community is invited to learn about the local currency system, join at a discounted rate and, for current members, elect new board members.

It’ll also be a chance to promote the local nonprofit’s Web site,, which recently went on the upswing by hiring a Web specialist. Board of Directors President Stephen Burke said they’re in the process of getting the 800-plus member directory on the Web, in part because of the worldwide attention HOURS continues to receive.

For example, just last year a representative from Japan’s Ministry of Finance stopped in Ithaca to talk to Burke about HOURS before boarding a plane to Washington for his next pit stop — with U.S. Federal Reserve Chairman Alan Greenspan. “That’s how seriously they were considering our local currency,” Burke said. Circulating in Ithaca now is about $100,000 worth of Ithaca HOURS, which translates to 10,000 HOURS, according to Burke. In recent years, the program has grown to the point where, at some businesses, employees can be paid part of their salary in HOURS.

At ABC Cafe on Stewart Avenue, employees can opt to be compensated an HOUR in exchange for an hour of labor. An HOUR of labor ends up slightly more than an hour’s wage in regular money, explained owner Ken Hallett. It’s only about 1 percent of the payroll that chooses that option, but it’s enough so that the restaurant, just two years ago, started giving customers the option of purchasing entirely in HOURS. “I think it was once we realized there were enough outlets for using them,” Hallett said. “The idea of using local currency, and having it staying in the community, was attractive.”

Another boost for HOURS has been the availability of $2,000 to $5,000 worth of interest-free HOURS loans, which have bolstered small businesses and also infused relatively large sums of HOURS into the community at once, Burke said. In general, encouraging people to earn and spend locally is, and always has been, the goal of Ithaca HOURS, according to Burke. It creates local wealth while freeing up one’s own money for savings. “It’s definitely a community spirit thing,” said Burke, who owns Small World Music on State Street and, of course, accepts HOURS. In America, “money is so divisive,” Burke said. “We want to turn that completely on its head,” he said.

Creating Community Economics with Local Currency
by Paul Glover [Founder of Ithaca Hours]

Here in Ithaca, New York, we’ve begun to gain control of the social and environmental effects of commerce by issuing over $110,000 of our own local paper money, to thousands of residents, since 1991. Tens of thousands of purchases and many new friendships have been made with this cash, and millions of dollars value of local trading has been added to the Grassroots National Product. We printed our own money because we watched Federal dollars come to town, shake a few hands, then leave to buy rainforest lumber and fight wars. Ithaca’s HOURS, by contrast, stay in our region to help us hire each other. While dollars make us increasingly dependent on transnational corporations and bankers, HOURS reinforce community trading and expand commerce which is more accountable to our concerns for ecology and social justice.

HOUR Town’s thousand listings are a portrait of our community’s capability, bringing into the marketplace time and skills not employed by the conventional market. Residents are proud of income gained by doing work they enjoy. We encounter each other as fellow Ithacans, rather than as winners and losers scrambling for dollars.

The Success Stories of 300 participants published so far testify to the acts of generosity and community that our system prompts. We’re making a community while making a living. As we do so, we relieve the social desperation which has led to compulsive shopping and wasted resources. At the same time Ithaca’s locally-owned stores, which keep more wealth local, make sales and get spending power they otherwise would not have. And over $10,000 of local currency has been donated to over 100 community organizations so far, by the elected HOUR board of directors.

As we discover new ways to provide for each other, we replace dependence on imports. Yet our greater self-reliance, rather than isolating Ithaca, gives us more potential to reach outward with ecological export industry. We can capitalize new businesses with loans of our own cash. HOUR loans are made without interest charges. We regard Ithaca’s HOURS as real money, backed by real people, real time, real skills and tools. Dollars, by contrast, are funny money, backed no longer by gold or silver but by less than nothing- $8.4 trillion of national debt.”

Paul Glover
email : paul5glover [at] yahoo [dot] com

‘[Glover is] founder of Ithaca HOURS local currency, the Ithaca Health Alliance, Citizen Planners of Los Angeles, author of several books and urban histories; degrees in Marketing and in City Management. After 35 years of community organizing on behalf of grassroots economic development and ecological repair started a consultancy called GreenPlanners.

‘Founder, Green Jobs Philly (Philadelphia, PA. 2008) network making it easy for Philadelphians to offer and request green jobs, green services, green grants, and green loans. Editor, Green Jobs Philly NEWS.’ “A reliable treasure trove of info on what’s going on right now in Philadelphia with anything related to the sustainable economy.” –Philadelphia Daily News 1/13/09

Prepare for the Best: A guide to surviving and thriving in Philadelphia’s new green future
by Paul Glover / Jan 28, 2009

Money: Give yourselves credit
Challenges: Extreme capitalism and extreme socialism trample humanity. Lack of cash and credit kills businesses, jobs and homes. Some folks still have lots of money, but most of us have less. Dollar power dwindles because dollars are backed by less than nothing: rusting industry and $10 trillion debt. So we’ll print real money — neighborhood currencies — backed by real people.
Next steps: Mutual enterprise systems (neither Wall Street nor Red Square) celebrate the spirit of regional enterprise when it serves community and nature. They applaud innovations — public and private and personal — that meet real needs. Local trading credits based on local land, skills, time and tools refresh the economy. Poverty is lack of networks more than lack of dollars, and Philadelphia has thousands of networks — business, professional, technical, fraternal, neighborhood, church, union, electoral, senior, youth, racial, sexual, athletic, hobby, family, friends. Woven together they’re a powerful base of regional trust, trade and wealth. Take your pick of neighborhood and sector currencies. Cities may not issue them but may accept them for taxes.

Local heroes: Philadelphia’s 83 credit unions, Valley Green Bank, e3bank, Equal Dollars, barter exchanges and gift economy, Philadelphia Regional and Independent Stock Exchange, Philadelphia Fund for Ecological Living (PhilaFEL).

World champions: Ithaca HOURS, Berkshares, LETS, Time Banking, National Federation of Community Development Credit Unions, Permaculture Credit Union, Grameen Bank microlending, Kiva, Robin Hood Ventures.

Big picture: Dollars control people; local currency connects people.

Chinese Government Studies Ithaca HOURS
by Paul Glover / January 2001

Ithaca’s local paper money, the Ithaca HOUR, has brought hundreds of media, tourists, activists, academics and dignitaries to Ithaca, since 1991. Two years ago, Madame Mitterand, former First Lady of France (and international socialist) visited for a day, preparatory to her visit to the President of the World Bank. Government officials and nonprofit representatives have purchased and spent HOURS, while speaking with residents about how local currency benefits them, and our community.

Last October, HOURS were visited by a high-ranking official of the government of the People’s Republic of China. Wen Tiejun wears several tall hats. He’s Chief Economist of the People’s Bank’s think tank, Senior Consultant of the State Information Center, chief of Economic Reform and Director of Research for Rural Development. He arrived from Beijing to assess the practicality and legality of Ithaca’s local currency. His report will be delivered to the President of the People’s Bank, Dai Xianglong, who will deliver it directly to China’s Premier, Zhu Rongji. Accompanying Wen Tiejun was a professor of sociology from Hong Kong, who returns to Ithaca this November.

Their visit was particularly exciting because it reaffirmed, at the highest level, the critique of global capital which has been one of the many reasons we’ve traded our own money. Wen Tiejun said that the Chinese government has become profoundly concerned about the domination of world trade by U.S. dollars. They understand that the dollar’s value is artificially inflated by U.S. military control of oil regions, extraction of irreplaceable natural resources, and by high consumer debt. “When the bubble breaks,” he said, “there will be chaos in markets. Millions of our rural poor could starve.”

China has been vulnerable to the same banking shocks that befell Thailand, Indonesia and Korea in 1997, as a result of global currency speculation. Food riots resulted. The International Monetary Fund has been pressuring China to replace socialist safety nets with market services, especially since China joined the World Trade Organization this September. Therefore the People’s Bank has been looking for a basis for stable money in an unstable world. Wen Tiejun sees HOURS as a useful tool, since local credits based on time have value which is as steady as the clock. Dollars, on the other hand, are no longer backed by gold or silver but by less than nothing– by a $5.8 trillion national debt. There is in fact not enough gold in the world to support a medium of exchange sufficient to transact the needs of six billion humans. As well, HOURS help stimulate extra trading and job creation, meeting needs on local levels that national currency does not reach. As one World Bank analyst said, the Chinese economy “badly needs a new engine of growth and job creation for tens of millions of rural migrants and laid-off urban workers” (China Watch, 5/8/98).

The Long March of Ithaca HOURS from local experiment to world standard of value will be successful if HOURS shift economic power to communities and workers, promote ecological reliance on regional resources, reinforce regional cultures, and stimulate equitable pay. In Ithaca, millions of dollars worth of HOURS have been traded by thousands of residents, including over 500 businesses (including a bank, movie theaters, bowling alley, health clubs, 55 farmer’s market vendors, doctors, lawyers, plumbers, carpenters, electricians, our hospital and our public library. HOUR grants have been made to 57 community organizations, and HOUR loans up to $30,000 value have been made interest-free.

A History of Ithaca HOURs
by Paul Glover / January 2000

HOURS were created by our community’s need and pioneer spirit. During the 1991 recession I designed prototype HOURS and began asking people to sign up to accept them. The first 30 people agreed. Had these folks said “that’s a dumb idea” or “you could get in trouble,” or had they just laughed, then maybe there’d be no HOUR money. Had there been no Farmer’s Market here, with lively vendors who saw HOURS as yet another way to barter, HOURS would have had a small food base. Catherine Martinez took the first leap of faith there, becoming the first person to accept an HOUR, for her samosa. Had the owners of two popular local movie theaters (Rich Szany & Lynn Cohen) not started taking HOURS from the beginning, at full price, then there’s have been no dramatic retail use of HOURS. Had Greg Spence Wolf not stepped in to earn HOURS cleaning these theaters, then maybe the theaters would have stopped accepting HOURS. Had the Alternatives Federal Credit Union not lent its fiscal credibility to HOURS, by accepting them for fees, acceptance of HOURS would have been slower. Michael Turback of Turback’s restaurant (the fanciest in town) accepted HOURS for full price. James Cummins of Littletree Orchards did likewise. These and dozens of other pioneers pulled lots of HOURS into circulation and spread them around.

Thousands more Ithacans have established HOURS by accepting them and spending them, and by explaining them to family and friends. Tens of thousands of conversations have defined local money and have carried it forward. History is made by public action like this, rather than by special leaders. The general public selects and rejects leaders daily, before knowing their names, without waiting to vote. History pushes individuals forward to meet human needs. That’s why credit for HOURS belongs to the community. Thus my own role, regarded as pivotal, merely was the tool of the community’s need. To emphasize this, I’ve declined to be interviewed on TV and most radio, in order to require media to showcase HOURS as a community process.

During research into our local economy in 1989, I noticed that a little county in South Dakota printed coupons for downtown merchant X-mas promotion, the first I had ever heard of local currency. Two years later, early in 1991, while drawing pictures with my girlfriend’s nieces, I sketched a cartoon “Ithaca Money” note. A few weeks later I saw a sample “Hour” note issued by British industrialist Robert Owen in 1847. This Hour was negotiable only at Owens’ company store and based, I discovered in 1993, on Josiah Warren’s “Time Store” notes of 1827.

On October 19, I bought a samosa at the Farmer’s Market with Half HOUR #751 from from Catherine Martinez– the first use of an HOUR. Neither of us knew what a Half HOUR was worth, since the $10/HOUR rate was then merely suggested. Several more Market vendors enrolled. Stacks of Ithaca Money were distributed all over town with an invitation to everyone to join the fun. Only 46 days after HOURS began, and only ten days after the Farmer’s Market closed for the season, GreenStar Co-op burned down. Local food vendors selling through GreenStar quickly organized a Mini-Market at Henry St. Johns school, and most of them decided to accept HOURS. This provided HOURS with a midwinter food base right from the beginning. Confusion arose about varied HOUR equivalencies ($5, $6, $8, $10, $12) and soon caused us to declare $10.00 as the standard. And it soon became apparent that a smaller denomination, and smaller note size, were needed. The Quarter HOUR was issued six months after we began.

Meanwhile, HOURS were being traded and discussed, and welcomed and ridiculed. A common jibe was, “printing your own money are you? Pretty good business– you must have a fat wallet!” So I showed them the disbursement sheets and explained serial numbers. Those who praised HOURS were thanked and invited to join us; those who criticized HOURS or found them threatening were invited, without resentment, to join if they came to feel differently, and many did so.

The HOUR Advisory Board incorporated as Ithaca HOURS, Inc. in 1998, and hosted the first elections for Board of Directors. Monica Hargraves, director of composting for Co-op Extension (and a former economics professor and economist with the Federal Reserve and IMF), was selected as Board chair.

Time Dollars at Work
by Edgar S. Cahn / Blueprint Magazine / April 1, 1999

Traditional entitlements are perceived as undermining the work ethic. If that is the case, is there a method of social service delivery where Americans see their role as contributors and co-producers of democracy, social justice, healthy communities, and strong families? Time Dollars, a new idea being introduced in communities around the nation and the world, do just that.

Time Dollars are private credits backed and distributed by local non-profit organizations. Time Dollars record, store, and reward transactions where neighbors help neighbors. People earn Time Dollars by using their skills and resources to help others – by providing child or elder care, transportation, cooking, home improvement. The idea is simple: One hour of service equals one Time Dollar. In turn, people spend Time Dollars to get similar help for themselves or their families when the time comes that they need it. Time Dollars can also be redeemed at clubs that gives people discounts on food or health care.

Time Dollars empower any person to convert personal time into purchasing power – stretching limited cash dollars further and matching unused capacity with unmet demand. They reinforce reciprocity and trust. They reward civic engagement and acts of decency in a way that generates social capital, one hour at a time. They are bringing people together in communities all around the nation.

There are many reasons why Time Dollars are an idea whose time has come: First, Time Dollars create the functional equivalent of an extended family in an era in which many families are too small, too fragile, or too dispersed to perform the functions we once counted on them to fulfill. Second, Time Dollars generate and reward the reciprocity and civic engagement that are the essential components of social capital. They can play a role in rebuilding the infrastructure of trust and caring that creates safe neighborhoods and healthy communities. Third, social programs – governmental, non-profit, and private sector – fail if they cannot generate sustained participation by the recipient: students, patients, beneficiaries, at-risk groups. If that participation and labor is essential, we need to define it as work and reward it accordingly. Fourth, government and human service professionals pay attention to people who bring problems, needs, and deficiencies. That inadvertently rewards dependency. We need to shift from “problem-centered” to “asset-centered” responses that enable even the most troubled to pay back by helping others and to secure rewards by using their strengths to contribute to the well-being of all. Fifth, Time Dollars can leverage the charity and pro bono work that businesses already provide by requiring recipients to pay for them in-kind – with volunteer work of their own.

Time Dollars supply a strategy for performing all of these tasks. The exchanges they generate, record, and compensate convert human capacity into the kinetic energy needed to strengthen families, rebuild community, and enhance the quality of civic life. Time Dollars are in use in more than 100 communities in 30 states and three countries (the United States, Great Britain, and Japan). Here are some snapshots of the most innovative practices:

Chicago: More than 1,000 students in 17 elementary schools have earned recycled computers loaded with software by tutoring younger students. The price: 110 Time Dollars (10 have to be earned by the parent). Older students, regardless of their own academic problems, expect and get high performance from younger students.

Washington, D.C.: For fifteen years, the pastor of a local Baptist church was relied on for guidance, comfort, or just a little conversation. However, when the Reverend – who suffers from diabetes – lost his right leg to an infection, he retired from the church. Overwhelmed by the sudden changes in his life, he lived as a recluse – refusing to leave his apartment. The local Time Dollar program helped him adjust to the seemingly insurmountable problems he faced. Once again an active member of the community, he earns Time Dollars by conducting prayer services for his fellow tenants, and he spends them to have his meals prepared by another volunteer.

Brooklyn: Seniors insured through Elderplan, a social Health Maintenance Organization, can cash in Time Dollars for a 25 percent discount on their health insurance by helping other seniors to remain self-sufficient. Seniors provide their own informal support system, including pain management seminars, telephone bingo, home repairs, shopping, rides, and peer counseling. Elderplan now offers a Time Dollar redemption catalog so members can cash in their Time Dollars for health and beauty equipment, taxi vouchers, and social events.

Baltimore: The Housing Authority has incorporated Time Dollars as part of the rent that residents have to pay through community service. Children can earn Time Dollars and pay up to 50 percent of the monthly Time Dollar rent.

Washington, D.C.: A Time Dollar Youth Court brings first offenders before a jury of their peers. Jurors earn Time Dollars as they hear cases and impose sentences that may include community service, restitution, an apology, writing an essay, and jury duty. They redeem the Time Dollars for computers recycled by other youth at three high schools. In those public housing complexes where a jury pool has been formed, a new peer culture enables one youngster to hold another accountable for their actions.

St. Louis: Grace Hill has established a network of stores where Time Dollars will purchase items such as toilet paper, tissues, shampoo, conditioner, bug spray, and detergent. There is even a resident college where Time Dollars pay the tuition.

Time Dollars are a way to compensate and reward the work that ultimately determines the future of this nation: the work that goes into building a vibrant democracy. For too long, we have taken such work for granted – treated it like pure water and clean air – as if it would always be available in abundance. Now we know that the values and virtues of civic life must be developed and carefully guarded. With Time Dollars we can create the currency for a society where reciprocal obligations are the coin of the realm.

{Edgar S. Cahn, Co-Founder and Co-Dean of Antioch School of Law and Special Counsel to Attorney General Robert Kennedy, is President of the Time Dollar Institute.}

Edgar Cahn
email : ecahn [at] udc [dot] edu

“A graduate of the Yale law school, Edgar entered the legal profession determined to use the law to achieve social justice. He started his career in government as special counsel and speechwriter for Attorney General Robert Kennedy under President John Kennedy. As part of that role, he was assigned by Kennedy to the Solicitor General’s office for the government’s amicus brief in civil rights sit-in cases. Edgar also worked to spearhead the first national campaign against hunger and malnutrition in the US, and in doing so, he authored an influential report entitled Hunger USA, which led to legislation enforcing shipments of food to severely malnourished communities on Indian reservations and in the southern United States. His work to fight hunger also involved initiating the earliest litigation to challenge the administration of the food stamp and commodities program, establishing the standing for potential recipients, and assisting in the preparation and defense of controversial documentary, “Hunger in America.”

In 1963, Edgar’s life and work seeking social justice first became known at a larger scale when the article he co-authored with his late wife, Jean Camper Cahn, titled “The War on Poverty: A Civilian Perspective” was published in the Yale Law Journal and became the blueprint for the National Legal Services program. Using their model and working closely with Sargent Shriver and the War on Poverty, Edgar and Jean co-created the National Legal Services program under the Office of Economic Opportunity in the Johnson administration.

Having left the government for work with the Field Foundation in 1968, Edgar founded the Citizens Advocate Center as watchdog on government whose primary purpose was to challenge the colonialism of the Bureau of Indian Affairs. That same year, he authored “Our Brother’s Keeper, the Indian in White America.” Leading American Indian activists did the research for the book, which was intended as a catalyst for change in national policy and which helped to spearhead the official adoption of Indian self-determination as national policy. In 1972, Edgar and his late wife created and founded the Antioch School of Law, which later became the UDC David A. Clarke School of Law and continues the tradition established in the Antioch days to emphasize social justice as a critical role for the law. As law-school deans, Edgar and Jean were the first pioneers of clinical legal education in the US, an approach which is now to be found in law schools throughout the nation.

In 1980 after a massive heart attack that nearly claimed his life, Cahn stepped outside of the law to create yet another social invention, a local, tax-exempt currency called Time Dollars, which are designed to validate and reward the work of the disenfranchised in rebuilding their communities and fighting for social justice. As a distinguished fellow at the London School of Economics, Edgar completed the work on Time Dollars that has led to Time Dollar initiatives being funded by government and major philanthropic foundations in the United States in areas as widespread as juvenile justice, community health, education, public housing, community building, wraparound services for children with emotional disorders, immigrant workers’ rights, and elder care. As the president and founder of the Time Dollar USA, Cahn’s experience with Time Dollars led him in 1995 to develop a radical new framework for social welfare and social justice that turns recipients of service into co-producers of change. He called this new approach “Co-Production.” An example of Co-Production principles at work can be seen in Washington, DC, his home city, where in 1996 he founded the Time Dollar Youth Court, whose mission is to enlist youth in changing the shape of juvenile justice in DC. Sanctioned by the DC Superior Court, the Time Dollar Youth Court is now among the largest youth courts in the nation. Its innovative design enlists more than 400 youth each year, the majority of them former delinquents, as active shapers of a new form of justice for DC youth.”

Money should work for us, not the other way around
What is money? Do we need more of it to solve some of the world’s problems? Or is money the cause of them? Ex-banker Bernard Lietaer thinks the latter is the case. And he has the solution: a new kind of money.
by Jurriaan Kamp | September 2005 issue

You have no idea what money is. Bernard Lietaer is too friendly and modest a man to say it that way, but this is the easiest possible way to sum up his message. If you did know what money was, then you—we—would see to it that we had a different monetary system. Everything revolves around money. It’s more than a cliché; it’s the daily experience of just about every world citizen not part of an indigenous tribe in the Amazon rain forest. And this daily experience involves, above all else, a continuous shortage of money. There is not enough money to send the children to school. Not enough money for hospitals, or to care for the ever-greater numbers of old people who are getting ever older. Not enough money to clean up the environment and keep it that way. There is a lot of work to do, but no money to pay for it. Who among us is not familiar with the feeling of wanting to contribute something but having “no money” to pay for that valuable contribution? The sad conclusion: If we just had more money, the world and our lives would be better. But Bernard Lietaer recommends another way around the problem: We could immerse ourselves in the meaning of money.

He sits on the edge of his chair and poses this question: “Have you ever thought about how much time you spend earning money, and managing or spending the money you’ve earned? And how often have you thought about what money actually is? We expend an enormous amount of energy—and frustration—on something we understand surprisingly little about.” What difference does it make, you might ask? Does it matter whether a fish knows it is swimming in water? Isn’t money like the weather: a given? You can’t change it. Lietaer, a business professor and former banker in Belgium, shakes his head. We are meeting on Cortes Island, off the coast of Vancouver, British Columbia, where he is attending a conference. “That is precisely the difference,” he says. “The weather, indeed, you cannot change. But money wasn’t created by God: We have forgotten that it’s a system designed by people. And I believe that this design, which dates from centuries ago, is at the root of most problems in our society. And the good news is that with a small change to the money system we can make an important contribution to the solution of a number of those problems.”

Lietaer’s proposal is to introduce—alongside the existing national currencies—complementary money systems on a large scale. Based on barter, these systems would fulfill needs and make transactions possible when “normal” money is unavailable. His idea is less revolutionary than it appears. In history, as well as in the world today, there are many successful examples of such systems—from the construction of European cathedrals in the Middle Ages and temples in Bali today to the present-day care systems for the elderly in Japan and airlines’ frequent-flyer programs. What these systems have in common is that they do not promote competition, but cooperation; they support community instead of undermining it; and they make possible important and valuable work. Lietaer says, “Complementary money systems put us in a position to be ourselves—to literally cash in on our talents. Even when there’s no official financial market for them.” According to him, the possibilities of such systems are virtually unlimited. “I’m not saying reformation of the monetary system will solve all our problems. But I know that money is one of the key functions. There is actually nothing that doesn’t have to do with money. It is an extremely vital element. I am convinced that within a generation we can realize great positive changes.”

Bernard Lietaer discovered the destructive effects of the prevailing monetary system while working in Latin America during the 1970s. “Enormous loans were being granted for senseless projects. The banks were throwing money around. I wondered if I was seeing things other people weren’t seeing.” As a professor of international finance at the University of Leuven in Belgium, he wrote a book about his experiences in which he predicted a major debt crisis. The book came out in 1979. In 1981 the crisis in South America broke loose. Lietaer’s belief that the global monetary system needed reform led him to the Belgian Central Bank, where for several years he was involved in the establishment of the “ECU,” or European Currency Unit, the precursor of the euro. He subsequently became general manager of a foreign-currency fund. His remarkable successes in that capacity attracted international attention. The influential U.S. magazine Business Week proclaimed him the world’s best currency dealer in 1991. Even more than that, Lietaer had become a genuine expert on money, privy to the deepest secrets of the financial world. He decided it was time to write new books. While teaching at the University of California in Berkeley and California’s Sonoma State University, in the 1990s, he worked on The Mystery of Money (Riemann Verlag, 2000) and The Future of Money (Random House UK, 2001). These books unravel the present concept of money and show how different approaches have different social consequences—including environmental and social sustainability.

According to economics textbooks, money is value-free. It is nothing more than a means of exchange and is regarded as having no effect on transactions. Lietaer contests that view. “Money isn’t at all value-free,” he argues. “The monetary system is programmed—albeit not deliberately—to cause certain behaviour. It promotes competition and short-term thinking; it forces economic growth; and it undervalues care, education and tasks crucial to maintaining a society. Economics theory teaches us that people compete for markets and raw materials; I think, in reality, people compete for money.” This competition is a direct consequence of the manner in which money is created. Banks put money into circulation by means of loans. For example, as soon as someone negotiates a 100,000-dollar mortgage, money is created and begins circulating in the economy. But then the bank expects the recipient of the loan to pay back a total of 200,000 dollars in repayment and interest over the next 20 years. But the bank does not create the second 100,000 dollars. The receiver of the loan must get hold of that money—the interest—one way or another, and this forces him or her to compete with others. It’s simple: Some people must lose money or go bankrupt in order to put others in the position to pay off their loans. At the same time, this collection of interest results in a concentration of wealth: Those who have money “automatically” get richer. In addition, the system forces society into an endless loop of economic growth: New money must constantly be put into circulation to pay off old loans. Lietaer says, “My conclusion is that greed and the competitive drive are not inherent human qualities. They are continuously stimulated by the kind of money we use. There is more than enough food and work for everyone. There is merely a scarcity of money.”

A monetary system driven by interest payments also blocks progress toward a sustainable economy. “The environment is a time problem,” Lietaer says. “A company like Shell undoubtedly has a better idea of the next century’s energy needs than any government. But within the current monetary system we cannot entrust Shell with the future. Shell has to make a profit today. A government bears the responsibility for the future of the society.” Business investments today are weighed against interest rates. This continually leads to short-term choices. “It is financially attractive to cut down trees, sell them and put the money in the bank,” Lietaer says. “Through interest, the money in the bank grows faster than the trees. Solar panels, by contrast, require investments that are only earned back over longer periods. The long repayment period makes these investments no match for the growth of money you can put in the bank today to earn interest. “You wouldn’t be able to build a cathedral (see box) within the existing monetary system. Those were investments over decades. And they ultimately had an extremely long-term yield: Eight hundred years later people still go to Chartres every day to see the labyrinth in the cathedral—and those people still make up the majority of the clientele of the city’s merchants.”

Businesses are trying more and more often to avoid expensive, competition-promoting money. Barter now accounts for almost 15 percent of world trade. And it’s increasing every year by 15 percent, while trade conducted with money is growing at just 5 percent annually. Barter is also the basis of the complementary money systems Lietaer advocates as a solution to the social and ecological disruption our current money system causes. The emergence of complementary money systems began 20 years ago in Canada with LETS, Local Exchange Trading Systems. Certain communities issued local currencies that people could use to exchange services. You might, say, repair your neighbour’s car and use the proceeds in local currency to pay someoneto paint your house. More than 5,000 such systems are now operating in communities of between 500 and 5,000 people worldwide. That’s just a drop in the bucket of the international monetary system. Bernard Lietaer, however, sees it differently. “Complementary monetary systems are no longer marginal solutions. It is true that they have no macroeconomic impact, but they have proven that they work and can change people’s behaviour. It’s like with the Wright Brothers when they proved airplanes could fly. They literally fell down and picked themselves back up again, and their constructions were rickety. But it worked, and so they paved the way for serious high-quality planes. This is the pioneering value of the LETS systems, too.”

The next major step for the complementary money systems will involve participation by businesses. “What else are frequent flyer miles besides a currency issued by an airline?” Lietaer asks. “Initially they were mainly meant to commit customers to a certain airline, but over time you could use them to buy groceries in the supermarket, book hotel rooms and pay your phone bill. And you can earn miles without even flying.” Greater involvement by business, Lietaer says, is crucial for a breakthrough of complementary money systems. In the United States, a system is in development in which health insurers will pay customers for healthy behaviour—for example, spending an hour in the gym. People can then use this payment to buy certain things: bicycles, organic food, preventive acupuncture treatments. “This isn’t just marginal messing around,” Lietaer says. “Everyone knows health care in the United States and other Western countries is a big problem that affects millions. Health care devours money. It is a remarkable system: It’s in the system’s interest that people get sick. After all, it can’t earn money otherwise. Healthy people are of no use to the health-care system, or more accurately, medical-care system. A complementary system can work the other way around: For instance, only a century ago in China, doctors were paid by their patients when they were not sick. And he paid them, and took care of them, when they were.”

In Japan, complementary systems have been developed for care of the elderly. People can earn credits by running errands for elderly people or helping them with housework. They can use the credits to buy extra help if they get sick, or send credits to their old mothers. “This is an example of how a complementary system can be used to solve a social problem,” Lietaer notes. “Almost 20 percent of the Japanese population is older than 65, and that percentage is rising. It is unthinkable that the care for this growing population of old people can be paid for under the current social-security system. Japan is solving this with a new complementary currency, which in addition supports the social structures in the country.” In Germany, authorities are collaborating with banks to develop a complementary money system for a million participants. In Brazil, a plan is afoot to finance education for poor families using a complementary currency. Bernard Lietaer enthusiastically offers example after example. “Money is nothing more than an agreement to use something as a means of exchange,” he says. “Money is not a thing. It is an agreement, like a marriage or a business contract. And that means you can always make a new and different agreement.” Lietaer knows money can change the world: “I choose to remain optimistic. I can see how a crisis in the dollar could cause the global economy to collapse. Don’t forget that in the last 25 years almost 90 countries have suffered severe currency crises. But I also know that together we have all the knowledge and means we need for a peaceful evolution. I want to help liberate that creativity. To design money that works for us, instead of us working for it.”

Bernard Lietaer
email : blietaer [at] earthlink [dot] net / bernard.lietaer [at] accessfoundation [dot] org

“…interviewees are Prof. Mitsuya Ichien from Kansai University (author of the most
complete surveys of the early complementary currency systems in Japan), Tsutomo Hotta
(founder of the Fureai Kippu systems), Toshiharu Kato (founder of the eco-money
systems), Eiichi Morino (founder of the WAT currency system), and several dozen local
activists of different grass-root systems in Japan…”

How Businesses Can Save Themselves from the Impact of the Banking Crisis
by Bernard Lietaer / November 4, 2008

Whatever governments do for the banks, credit will be a lot harder to obtain for businesses, for many years to come. The trickiest aspect of the current situation is the simultaneous, global nature, of the banking crisis. The world economy will predictably veer towards a simultaneous recession, which in turn will worsen the banks’ balance sheets, motivating them to further reduce credits, and so on, down a vicious spiral towards either a decade-long recession, or even a possible depression. Please, get ready now for a rough ride for an uncomfortably long time. What all this means in practice is that we have now entered the period of an unprecedented convergence of the four planetary megatrends – financial instability, climate change, unemployment and an aging society – that was described in my 2001 book, The Future of Money [1].

There actually exists a very successful precedent on what business can and should do in such an environment, even if it is surprisingly little known. In 1934, sixteen business people gathered in Zurich to create a mutual credit system among themselves, with a currency unit called the WIR, equivalent in value to the Swiss Franc. Instead of borrowing money from the banks to pay each other, businesses give credit directly to each other in that business-to-business (B2B) currency, and those credits are used to buy from other businesses in the system, or partially pay staff. The system still is operational today: last year’s volume of business in the WIR currency was about $2 billion per year and involves 60,000 members, a quarter of all Swiss companies. A remarkable quantitative study [2] proves that this system is actually the secret for the proverbial robustness of the Swiss economy. WIR expands automatically when there is a recession in Switzerland, and proportionally shrinks back again when there is an economic boom. More information on the current status of the WIR is available on the web.[3] We propose that businesses take the initiative of creating such B2B systems at whatever scale makes sense to them. The big advantage, compared to what happened in Switzerland in 1934, is today’s availability of very cost-effective information technologies that make it possible to implement this approach much more rapidly than in the 1930s.

{Bernard Lietaer has been active in the domain of money systems for a period of 30 years in an unusual variety of functions. While at the Central Bank in Belgium he co-designed and implemented the convergence mechanism (ECU) to the single European currency system. During that period, he also served as President of Belgium’s Electronic Payment System. His consulting experience in monetary issues on four continents ranges from multinational corporations to developing countries. More information on the author and some technical papers that provide the theoretical and practical backing for this proposal are available on}

1 Lietaer, Bernard: The Future of Money: Creating new Wealth, Work and a Wiser World (London: Random House/Century, 2001).
2 Stodder, James: “Reciprocal Exchange Networks: Implications for Macroeconomic Stability”. Albuquerque, New Mexico: Paper presented at the International Electronic and Electrical Engineering
(IEEE) Engineering Management Society (EMS) August 2000,
3 and

“Earthly goods and wealth belonged to the empire. Inca people gave the empire taxes in the form of goods and labor. There was apparently no Inca money as we know it, but much of the commerce was done through a barter system. When there were famines and droughts, the empire’s vast storage areas could provide for everyone.”

“According to Ferreira and Chamot “The social system of the Incas had an ancient Andean origin based on the ayllu, an extended family group with a common ancestor. The economic system was also based on ancient social structures and can be explained through several principles, namely reciprocity, redistribution, and vertical control.” These authors also add: “Redistribution , a practice employed by the state, ensured that all agricultural goods not exchanged by reciprocity were to be distributed in the different areas of the empire in the case of bad crops.”In essence, the government of the Inca functioned as a safe guard against mass starvation.”

“A brilliantly clear-sighted analysis of how on-going money innovations in dozens of countries around the world are proving that they can resolve key societal problems such as: jobless growth, community breakdown, the economic consequences of an aging society, the conflict between short-term financial thinking and long-term sustainability, and monetary instability itself. This book provides pragmatic solutions to each one of these issues. The debate it will create will be a contentious and passionate one. Lietaer starting point is that money is only an agreement within a community to use something as a medium of exchange. This agreement is being placed under an unprecedented strain, due to a wide range of factors (from the creation of cybermoney and currency speculation to social and political issues). This momentum of change could become even faster, and the effects more brutal, if the instability of the monetary system continues to spread. And the indications are that it will. The global monetary crises of the 1990s (Mexico, Russia, Asia and Brazil) proved that our money system is now sick, and that this affects everything. After all, money plays the role of modern society’s central information system – equivalent to the nervous system in our own bodies. In order to prevent a global monetary meltdown, a unique vision of sustainable abundance, and the mechanisms for achieving this, is proposed.
{London: Random House Press Release, 27/10/1999}

Creating New Wealth, Work, and a Wiser World
by Bernard Lietaer / January 2001

Your money’s value is determined by a global casino of unprecedented proportions: $2 trillion are traded per day in foreign exchange markets, 100 times more than the trading volume of all the stockmarkets of the world combined. Only 2% of these foreign exchange transactions relate to the “real” economy reflecting movements of real goods and services in the world, and 98% are purely speculative. This global casino is triggering the foreign exchange crises which shook Mexico in 1994-5, Asia in 1997 and Russia in 1998. These emergencies are the dislocation symptoms of the old Industrial Age money system. Unless some precautions are taken soon, there is at least a 50-50 chance that the next five to ten years will see a global money meltdown, the only plausible way for a global depression.

The Information Age has already spawned new kinds of currencies: frequent flyer miles are evolving toward a “corporate scrip” (a private currency issued by a corporation) for the traveling elite; a giant corporation you never heard of is issuing its own “Netmarket Cash” for Internet commerce; even Alan Greenspan, Chairman of the Federal Reserve, foresees “new private currency markets in the 21st century.” Exorbitant compensations are paid to the very few at the top: it started with movie stars and sports heroes, and has now spread to top lawyers, traders, doctors, and business leaders. In the 1960’s CEO’s salaries were only thirty times greater than those of the average worker, compared with two hundred times today. Is this the dawn of a society where “Winner-takes-all” or a short-term last gasp of the transition out of the Industrial Age?

1,900 local communities in the world, including over a hundred in the US, are now issuing their own currency, independently from the national money system. Some communities, like in Ithaca, New York, issue paper currency; others in Canada, Australia, the UK or France issue complementary electronic money. The value of barter transactions — exchanges which do not use any money as medium of exchange – totaled almost $6.5 billion in 1994 in the US and Canada, and is increasing three times faster than normal exchanges. The magazine “Barter News” covers the industry’s development and now has 30,000 subscribers. It estimates the total barter worldwide at $650 billion in 1997, and growing at an annual rate of 15%.

All of the above is part of an irreversible process of change in our money system and our societies. We are now in a transition period, an interval of great risk but also of great opportunity. The risks are not only financial, some of the emerging money technologies could create a society more repressive than anyone of us thought possible. More importantly major opportunities are also becoming available: now more than ever it has become possible to address some of the most critical issues of our times, such as enabling more meaningful work, fostering cooperation and community, even realigning long-term sustainability with financial interests. None of this is theory, real-life implementations have pragmatically demonstrated such results. Combining these innovations can make available a world of Sustainable Abundance within one generation.

Specifically in Europe, the traditional ways to handle unemployment are increasingly failing. In areas with high unemployment, people have already demonstrated that living conditions can be significantly improved by creating their own complementary currencies instead of just relying on welfare. Surprisingly, it is in fact not the first time that such solutions have been successfully implemented in the Modern world. During the 1930’s many thousands of such initiatives were operational in the US, Canada, Western Europe and other areas affected by the Depression. Complementary currencies could become a key tool to buffer a region from the shocks caused by failures and crises in the official money system. Finally, this approach is a win/win for both locally owned businesses and society at large.

The degradation of the environment due to short-term financial priorities can similarly be addressed with pragmatic money innovations. Short-term thinking is shown not to be due to human nature, but to the prevailing money system. It is also possible to reverse this process, by using a currency designed specifically for multinational trade and contracts which would make long-term thinking a spontaneous process, focusing the attention on long-term sustainable solutions without the need for regulations or taxation. Historical precedents have proven such results, some of them lasting over several centuries.”

Complimentary Currencies for Social Change
An Interview with Bernard Lietaer
by Ravi Dykema /  August 2003

What is money? And how well does it work to solve society’s ills? Bernard Lietaer, author of the upcoming book Access to Human Wealth: Money beyond Greed and Scarcity (Access Books, 2003), has made a life’s work of exploring these questions. Lietaer has been involved in the world of money systems for more than 25 years, and his experience in monetary matters ranges from multinational corporations to developing countries. He co-designed and implemented the convergence mechanism to the single European currency system (the Euro), and served as president of the Electronic Payment System in his native Belgium. He also co-founded one of the largest and most successful currency funds.

Lietaer is the author of nine books on money and finances, including The Future of Money (Random House, 2001), The Mystery of Money (Riemann Verlag, 2000) and a book for kids, called The World of Money (Arena Verlag, 2001). Formerly professor of international finance at the University of Louvain, Lietaer is currently a fellow at the Center for Sustainable Resources at the University of California, Berkeley. Beginning this fall, he will be a professor at Naropa University. Here, Lietaer shares his views on the shortcomings of our conventional currency system, the benefits of creating a complementary currency, and ways to effect lasting social change.

RD: You’re very experienced on the world stage with currencies and money-it’s the world you’ve moved in much of your life, right?
BL: Yes, both in the area of conventional money such as the Euro and more recently with less conventional money systems. Below the radar beams of official thought, there has been a resurgence all over the world for the last 15 to 20 years of what I call complementary currencies, currencies that are operating on a smaller scale than the national level, and that can solve social, environmental and education problems.

RD: People think of someone who works with currencies as being a materialist. Yet it sounds as if your interests are towards social change through complementary currencies. How did you come to be interested in this other dimension?
BL: The reason I went to the Central Bank in the first place was to check whether it was possible to improve the conventional money system from within. I had been working for a number of years in South America, and I had seen the damage that the existing money system has created on a huge scale in Latin America.

RD: You thought it was the money system and not just the governments?
BL: It’s a chicken and egg story: unstable currency equals unstable government. There is practically no way today for a developing country to have a reasonable monetary policy within the current rules of the game. Joseph Stiglitz, Nobel laureate in economics and formerly head economist at the World Bank, makes the same claims in his book Globalization and Its Discontents (Penguin, 2002). Whether you fix your currency to the dollar or let it float, you end up with an unmanageable monetary problem, like Brazil, Russia or Argentina have experienced. Eighty-seven countries have gone through a major currency crisis in the last 25 years. Their fiscal policies are imposed by an International Monetary Fund (IMF). I am afraid that if the United States had to live by the rules that are imposed on, say, Brazil, the United States of America would become a developing country in one generation. It’s the system that is currently unstable, unfair and not working. The majority of humanity has gone through a recent monetary crisis at least once already. We’re living here, in America, in an island of perceived stability. And even that is an illusion. We could have a run on the dollar under the current rules. We are dealing with an unstable system, an ailing system. Back in 1975, I had come to the conclusion that there would be a systemic series of monetary crashes, starting with Latin America. And that’s why I wrote my book on how the money system was not working and its impact on Latin American development, Europe, Latin America and the Multinationals (Praeger, 1979). I predicted that the first crash in Latin America would be in the early 1980s. It actually happened in 1981 in Mexico. Since then we have had more than 80 other countries undergoing similar monetary crises.

RD: So someone’s not connecting the dots-or are they?
BL: Let me put it this way. The powers that be have no interest in connecting the dots. If a new international monetary meeting like Breton Woods were held, the first point on the agenda would be the role of the dollar. So the United States has no interest in such a meeting. The dollar is in a very privileged position.

RD: But it would be anyway, wouldn’t it, because we’re a dominant economic player?
BL: I don’t want to spend a lot of time and energy attacking the existing system. It is an obvious fact that America is the sole super power. But when people say, “Well, there are fiscal crises in other countries because the governments are less stable,” my question is, “How long would any government last in a country if you had to repeatedly cut back on education programs, social programs, building roads and all other programs?” How could that make a stable democratic government possible? Like I said, it’s a chicken and an egg sequence. There is no way of winning in the current monetary game, particularly for the less developed countries. It’s not accidental that investments in the Third World have dropped proportionally by a third since 1975. Currently, investments happen mainly between developed countries, and that trend isn’t going to create a sustainable world anytime soon.

RD: So the Third World is just being abandoned?
BL: Yes. Entire continents. Africa for instance has been dropped off the world economic map for most practical purposes.

RD: And re-envisioning and re-engineering money itself could change this?
BL: Correct. And the good news is that such re-engineering of money has started to happen if one knows where to look.

RD: Do a lot of other people share your views?
BL: Most people haven’t looked at what’s happening in monetary innovations today. What do you think a frequent flyer mile is, but a currency issued by an airline? In Britain, you can go to J. Sainsbury, the largest supermarket chain, and use British Airway miles to buy your goods. Initially, it was only designed as a loyalty scheme for people taking planes. Today, you can earn this currency without ever taking a plane. On Visa cards you get miles. And you can use them to pay long-distance telephone calls, taxis, restaurants, hotels. First, let’s define what a currency is, because most textbooks don’t teach what money is. They only explain its functions, that is, what money does. I define money, or currency, as an agreement within a community to use something as a medium of exchange. It’s therefore not a thing, it’s only an agreement-like a marriage, like a political party, like a business deal. And most of the time, it’s done unconsciously. Nobody’s polled about whether you want to use dollars. We’re living in this money world like fish in water, taking it completely for granted. Now the point is: there are many new agreements being made within communities as to the kind of medium of exchange they are willing to accept. As I said, in Britain, you can use frequent flier miles as currency. It’s not a universal currency, it’s not legal tender, but you can go to the supermarket and buy stuff. And in the United States, it’s just a question of time before privately issued currencies will be used to make purchases. Even Alan Greenspan, the governor of the Federal Reserve and the official guardian of the conventional money system, says, “We will see a return of private currencies in the 21st century.”

RD: In other words, private currencies are coming back. How would that change the circumstances for poor people, for the Third World?
BL: I gave you that first example-a commercial loyalty currency-only because it would be familiar to most of your readers. But in addition to those commercial private currencies, there are now more than 4,000 communities around the world that have started their own currency for social purposes as well. For example, there are about 300 or 400 private currency systems in Japan to pay for any care for the elderly that isn’t covered by the national health insurance. They are called “fureai kippu” (caring relationship tickets). Here’s how they work: let’s say that on my street lives an elderly gentleman who is handicapped and cannot go shopping for himself. I do the shopping for him. I help him with food preparation. I help him with the ritual bath, which is very important in Japan. For this help, I get credits. I put those credits in a savings account, and when I’m sick, I can have other people provide such services for me. Or I can electronically send my credits to my mother, who lives on the other side of the country, and somebody takes care of her. Here is an agreement within a community to use as medium of payment something other than national currencies, to solve a social problem. And it makes it possible for hundreds of thousands of people to stay in their homes much longer than they otherwise could. Otherwise, you’d have to put most of these people into a home for seniors, which costs an arm and a leg to society, and they’re unhappy there. So nobody’s winning. In contrast, Japan has created a currency for elderly care. In the United States, Florida is the only state that has the same density of elderly people as Japan does-18 percent of the population is more than 65 years old. But Florida is a model for our collective future. Colorado will be there in 2020. Germany will be there in 2006, France in 2008, Britain in 2012. Partly because of the baby boom generation, and partly because of the fact that health care has improved and people live longer. If you put all of these elderly in homes for seniors, you’d go bankrupt. Japan has been looking for another way, and has found it by introducing a monetary innovation. Let me give you other examples, already operational here in America today. There are now several hundred “time dollar” operational systems in the United States. The unit of account is the hour. I do something for you. I have a credit for an hour, while you have a debit for an hour. If I can use my credit with someone else, this creates a currency between us. For those people who are willing to give some of their time, the money manifests automatically. It doesn’t quite work that way with dollars, does it? One of the two of us has to get dollars by competing for them somewhere outside of our community. Time dollars are helping in a lot of communities where conventional money is scarce: in ghettos, retirement communities, high unemployment zones, student communities. There are 31 states in America that are paying employees to start such time dollar systems, because it solves social problems. There are some operating in Chicago, fairly big ones in Florida. For example, in Chicago, there are entire neighborhoods that used time dollar systems to create a neighborhood watch system that got rid of drugs and gangs. It’s working, it doesn’t cost anything to the taxpayer, it doesn’t create a huge bureaucracy, and it encourages the solution of the local problems by and with the very people who know most about them.

RD: What do they use their time-dollar credits for?
BL: Well, it’s a closed circle. If I do something for you, I have a credit, which I can use with any member of the community that is part of the system. I can’t buy cars or pay my telephone bill with this system because the suppliers of such items don’t participate now in such systems; but I can obtain services-so I could have my car repaired, my house painted, my kids mentored. The inventor of the time dollar system is Edgar Cahn, who’s the author of No More Throw-Away People (Essential Works Ltd, 2000). He claims that if you can’t compete in the dollar economy, you’re thrown away. He shows how a time dollars system provides a solution to this process, because it operates in parallel with the conventional competitive economy, and it creates an environment where everybody can contribute.

RD: So you envision a world where there are a lot of these alternative currencies?
BL: I don’t call them alternative, because they aren’t intending to abolish or replace the national currency. I’m not claiming that we could or should abandon national currencies or the competitive economy. This is a complementary currency system. It facilitates exchanges additional to the normal system. It makes it possible to match unmet needs with unused resources.

RD: I can’t see how you’d be able to pay your rent with that.
BL: Well, in Ithaca, New York, there is a currency called Ithaca hours, and some people pay part of their rent with it. Not all of it: for some it is 50/50, for others it is 80/20. And the landlord or lady can go to the farmer’s market and buy his vegetables and his eggs.

RD: So the big things-transportation, housing, food-are those covered in the concept of complementary currency?
BL: It all depends on the agreement you’re making, and whom you are succeeding in including in that agreement. Let me give you a real-life example. In Curitiba, the capital city of the State of Paran in Brazil, if you bring pre-sorted garbage, you are given bus tokens. So in Curitiba, public transport is clearly part of their complementary currency system. It depends on the agreements you have with your landlord, with the transportation company, with the university, with the business community. It just depends on who wants or is willing to participate. You can’t force anybody to accept this currency. They are not what is technically called “legal tender.” I call them “common tender”: commonly accepted as payment for debts without coercion of legal means.

RD: I understand that the government wants to get its chunk out of barter transactions, just as if they were a cash transaction.
BL: Yes, and those taxes will need to be paid in “legal tender”, i.e. dollars. The tax issue has nothing to do with the currency you use in an exchange, but with the kind of transaction you’re performing. Say I’m a plumber. I come to your house and fix the plumbing. And you give me a nice cake in payment. I’m supposed to declare the value of that cake and pay taxes on it, because I’m in the plumbing business. Now say I am a professor at a university. I come to your house. I fix your faucet. You give me a $100 bill. I’m not obliged to declare it because I’m not in the plumbing business. As I said: it is not the currency used that determines whether a transaction is taxable or not, but the nature of that transaction. Interestingly, there is one complementary currency, the time-dollar system that we talked about earlier, that is officially tax-free in the United States. It’s used only to resolve social problems, and the IRS has ruled that time-dollar systems are tax-free.

RD: I think complementary currencies, barter included, should be tax-free, because they offer solutions to a social problem.
BL: Then I suggest you go and lobby for passing such a law. Currently that’s not what the law says in the United States. The use of complementary currencies is fairly recent. It took off only in the last 15 years. Even in 1990 there were less than one hundred complementary currency systems worldwide. Today there are over 4,000. It’s definitely catching on.

RD: And you would like to see it continue to expand?
BL: I think it is a useful tool to solve a number of our problems. It makes it possible to truly create a more gentle society. I spent last summer in Bali. People are remarkably artistic in that island. Their communities are unusually strong. They have festivals that are totally mind-blowing, and can last a month. They’re having a good time. It’s a comparatively non-violent society. And what I found is that it isn’t a simple coincidence that they have been using a dual currency system for many centuries. All these unusual
characteristics of Bali turn out directly to be nurtured by their dual money system. I am publishing a detailed paper on how this mechanism works in the forthcoming issue of Reflections, the journal of the Society of Organizational Learning at MIT.

RD: How does the money system lead to those outcomes?
BL: Practically all Balinese participate in a dual currency system. The first is the conventional national currency (the Indonesian Rupiah); the second is a time currency where the unit of account is a block of time of approximately three hours. This second currency is created and used within the “banjar”-this is a community entity consisting of between 50 and 500 families. It is in each banjar that the decisions are made democratically to launch any big community project. It could be to put on a festival or build a school. For each project, they always make two complementary budgets: one in the national currency, and one in time. That second currency-called “narayan banjar” (meaning work for the common good of the community)- is created by the people themselves. They don’t have to compete in the outside world to obtain that second currency, and it fosters cooperation between the members of the community. I call it a yin currency-it’s more feminine in nature. And it complements the national currency, which is a competitive currency and therefore of a yang, or masculine, nature. Here’s why it works: poor communities don’t have a lot of national currency, but they tend to have a lot of time. In rich communities, the opposite tends to be the case-people have more national currency, but less time. In either case, each banjar is capable of creating extraordinary events just by budgeting and using more of the kind of currency-national or time-in which they are rich. This balance is a key contribution to the unusually strong community spirit that prevails in Bali. And it’s not just because they’re Hindus. There are almost a billion Hindus in India, and they don’t behave that way. Here is an example of how a currency can make a difference.

RD: We have a strong emotional attachment to money, and we worry about it. So how we relate to money influences who we are and how we think of ourselves.
BL: Yes, you’re right. But it is interesting that societies that are using different kinds of currency have also very different collective emotions concerning money. The generally accepted theory-dating back to Adam Smith-is that money is value neutral. Money is supposed to be just a passive medium of exchange. It supposedly doesn’t affect the kind of transactions we make, or the kind of relations we establish while making those exchanges. But the evidence is now in: this hypothesis turns out to be incorrect. Money is not value neutral. Let’s return to the example of the fureai kippu that I was mentioning earlier, the elderly care currency in Japan. A survey among the elderly asked them what they prefer: the services provided by people who are paid in yen, the national currency; or the services provided by the people paid in fureai kippu. The universal answer: those paid in fureai kippu, “because the relationships are different.” This is one example of evidence that currency is not neutral. Another example: there is typically a reluctance among friends to pay for help provided by using national currency. If a friend is helping you move or paint and you pay him with national currency, it just doesn’t feel right. Interesting isn’t it?

RD: So people feel differently about complementary currencies than national currencies?
BL: Yes, there have been surveys in several countries that prove this to be the case. Conventional currencies are built to create competition, and complementary currencies are built to create cooperation and community, and it’s important to be aware that both can be available to make our exchanges. According to Paul Ray’s (author of The Cultural Creatives, Harmony Books, 2000) study, 83 percent of Americans believe that the top priority should be to re-build community, and yet the kind of currency we use in our transactions is precisely one that eliminates community. The word “community” comes from Latin, “cum munere.” “Munere” is “to give,” and “cum” is “among each other”-so, community means “to give among each other.” In short, it turns out that dollar exchanges tend to be incompatible with a gift economy. Complementary currencies are.

RD: Are you saying that you can’t have community if you’re using dollar exchanges?
BL: I’m saying that exclusive use of a competitive programmed currency in a community tends to be destructive for the community fabric. This isn’t theory. We’ve seen this happen at the tribe level, with the collapses of traditional societies. I’ve seen one happen myself in Peru among the Chipibo in the Amazon. That tribe had been in existence for thousands of years. When they started using the national currency among themselves, the whole community fabric collapsed in five years’ time. The same thing happened here during the 19th century in the Northwestern United States and Canada, in the traditional indigenous societies. The moment they started using white man’s currency among themselves, the community collapsed, the traditional fabric broke down.

RD: Do you think complementary currencies really can transform our planet?
BL: Yes. Bali is a perfect example that long-term use of a dual yin-yang currency system creates a different society. Thirty percent of a Balinese adult’s life happens in the space of the yin, feminine currency, which is the time currency. In contrast, we spend close to 100 percent of our time in the masculine, yang, competitive currency. That 30 percent of time spent on community activities creates another society, where everybody can become an artist, where the community fabric is stronger, where the social safety net is reliable, where abandonment is unknown. It nurtures an extraordinary feeling of trust and a higher quality of life.

RD: And you think this kind of culture and community can exist in other places, with completely different religions and cultures?
BL: The short answer is yes. We have evidence from Japan, Germany, Mexico, Brazil and the United States to show that complementary currencies make a difference in the way people relate to each other.

RD: In a really transformed world, would a community be using multiple complementary currencies as well as the national currency?
BL: Not necessarily. What has started to happen recently is an integration-many of these services that were using highly specialized complementary currencies are beginning to integrate into a single, local social-purpose currency. For example, youngsters who are taking care of the elderly in Japan using their credits in partial payment for tuition at the university, so we’re solving two problems at the same time. It provides an additional way of making things happen that otherwise is not available when national currency is scarce. Remember, complementary currencies simply enable additional matches between unmet needs and unused resources.

RD: Does the internet and electronic transfer systems offer a means for the creation of complementary currencies?
BL: I am convinced that the reason complementary currencies are developing now because of cheap computing. Do you really think American Airlines would have frequent flyer miles if they needed an army of clerks trying to keep track of your miles? I don’t think so. But today anybody with access to a PC can start a currency system. It isn’t a coincidence that about 95 percent of the social purpose complementary currencies are electronic.

RD: So can we buy an off-the-shelf program for creating a currency?
BL: Sure. There are even different freewares already available. One of them is for operating a LETS (Local Exchange Trading System). Another one that is free of charge is to start a time dollar system. We are in the process of incorporating a non-profit foundation in Boulder, the Access Foundation, whose purpose is to provide independent information on all the different complementary currency systems that are available worldwide, and on its website one will be able to download the corresponding softwares. This website ( is planned to be operational early this fall. Currently, our biggest problem with money and currencies is unconsciousness. We are not aware of what we are doing around money. We haven’t really thought about what money does to us-we believe it’s neutral, so it doesn’t matter. But it’s not neutral: it deeply shapes us and our societies. The first thing that has to happen before complementary currency systems can effect real change on a larger scale is a shift in consciousness and awareness.

RD: You mean, we need to be aware of how money works?
BL: Let me ask you this. Have you taken an inventory of the number of days you spend in life getting ready to make money? And when you have money, to manage the money or spend it? But then, think about how many hours you’ve thought about what money is. I suspect not very much. We are spending a huge amount of energy to get something about which we have surprisingly little understanding.

RD: Well, it’s like the rain. It’s something you adapt to.
BL: Yes, except that rain is not man-made. That’s precisely the difference. We’re treating money as if it is God-given, like rain or the number of planets in the solar system. But it isn’t. If you don’t like the quality of rain, there’s not much you can do about it. If you don’t like your money system, maybe you can do something about it. Assume that a Martian lands in Denver on the wrong side of the tracks. He ends up in one of the ghettos and finds that the houses are run down, the kids not taken care of, the elderly in trouble, and the trees dying. He sees all these things, and discovers that there are people and organizations absolutely equipped and ready to solve every one of those problems. So this Martian asks, “What are you waiting for?” The answer: “We’re waiting for money.” “What is money?” the Martian inquires. “It’s an agreement in a community to use something as a medium of exchange.” Don’t you think he may leave the planet believing there is no intelligent life here? The point is: if money is an agreement within the community to use something as a medium of exchange, we can create new agreements, can’t we? That is exactly what people are already doing all over the world. So why don’t we do it here? If we’re waiting for conventional currency to solve all our problems, aren’t we waiting for Godot?

RD: Is this your whole campaign now? Are you through with Belgian Central Banks?
BL: I’m trying to contribute to a consciousness shift regarding money. I believe that by a small change in the money system, we can unleash huge improvements in our social system. It’s the highest leverage point for change in our society, and surprisingly few people are looking at it. If you start a new complementary currency system, it can become self-perpetuating and facilitate additional transactions forever. You know the saying, if you want to feed someone, give him a fish. If you want to really help him, teach him how to fish. This is just a fishing lesson-what you do with it is up to you. You can take big fish or small fish, or you can choose not to fish at all. You decide what issues you want to deal with in your community, and there is a currency system that can help you with it.

Cultural Sustainability in a Globalizing World: the Bali Exception
by Bernard Lietaer (Center for Sustainable Resources, University of California at Berkeley, USA) + Stephen DeMeulenaere (Rural Economic Development Consultant, Indonesia) / Draft – August 2002

Executive Summary
It is generally accepted that massive tourism and a vibrant indigenous culture are mutually exclusive. Bali has so far proven to be an exception to this rule. This article explores a hitherto overlooked socio-economic mechanism behind that exception. It is a dual complementary currency system used for  centuries by highly decentralized and democratic decision-making organizations. The reasons why such a dual currency system is so effective in mobilizing popular cultural creativity is investigated, and its potential applications in areas in the world other than Bali are described.

Defining the Problem
The process is well known, and has been observed all around the world: massive tourism and an authentic and living indigenous culture simply cannot coexist. Increasing numbers of tourists tend to ultimately destroy the exotic culture they came to experience in the first place, as the locals begin increasingly display their culture only for tourist money.  Many major tourist destinations have gone through this process: Italy and Greece during the 19th century when it became part of any gentlemen’s education to make “the tour” of the classical European civilizations (and from where the word “tourism” derives). Mexico, the Caribbean, Hawaii, Tahiti, Fiji and other Pacific Islands are well-known examples of the same process during the 20th century. Since the late 1970s, many studies have reported a systematic conflict between two desirable aims: cultural integrity and economic development through tourism. Most development plans even highlight the need for a formal trade-off in tourism between socio-cultural costs and economic benefits.[1] This built-in conflict can been summarized succinctly as “Tourism and paradise…are incompatible. For as fast as paradises seduce tourists, tourists reduce paradises…Hardly has the last paradise been discovered than everyone converges on it so fast that it quickly becomes a paradise lost.”[2]

Nevertheless, Bali seems to be an exception to this rule, where increasing numbers of tourists have not led to a corresponding destruction of Balinese culture.  This article will describe one key but generally overlooked tool that is systematically used in Bali to achieve that difference.

It is organized in seven sections as follows:
–       The Bali Exception
–       Some Insufficient Reasons proposed for this Exception
–       The Banjar as a key organization structure
–       A double currency (national currency and time currency) as the key implementation tool.
–       How the dual currency system supports cultural sustainability
–       Applicability in Other Areas than Bali
–       Conclusions

The Bali Exception
Almost everybody has heard of Bali as the “Last Paradise”, a reputation dating back to the time when Westerners first discovered it at the end of the 16th century.[3] In counterpoint, every generation during the 20th century has announced the imminent demise of the Balinese’ exceptionally rich traditional cultural heritage.

The first figures published by the Bali Tourist Bureau reported 213 visitors during the year 1924, when the local population was estimated around one million. When in the 1930s the number of visitors reached for the first time thousand per year, travel brochures entitled “Bali: the Enchanted Isle” suggested to visit Bali soon because  “in another ten years, it may be spoiled by that insidious modernism.”[4]  In the 1950s, after the Indonesian independence, the warnings would become more pressing: “This anachronistic relic of the Hindu soul is, after ten centuries, about to lose its exceptional traits. Let us hurry while there is still time, and contemplate it closely before it gives in to the contagion of modern Indonesia.”[5] In 1971 the first “Bali Tourism Development Plan” coolly predicted that by the time its project would be completed in 1985 “the cultural manifestations will probably have disappeared, but Bali can still retain its romantic image as a green and sumptuous garden.”[6] When in 1994, tourism traffic increased to over 2 million for the first time, the forewarning was repeated: “How much more tourism can the island take? …It is now clear that the unbelievably complex social and religious fabric of the Balinese is at last breaking down under the tourist onslaught.”[7] Today well over 4 million tourists[8] visit that small island of 3 million inhabitants, and are still overwhelmed by the vibrant pageantry of the thousands of religious festivals and other cultural events organized every year by the Balinese for the entertainment of the Balinese gods and themselves. Indeed, it still is true today that “at their temple feasts they combine two good purposes, namely to please their gods and amuse themselves. I would even say that these two things are identical with the Balinese.”[9] This is unlike other tourist destination sites – Hawaii, Tahiti or Fiji  – where the indigenous culture has died out to the point where traditional dances for instance, are now organized exclusively for tourists. In contrast, out of the 5,000 dance groups listed with the provincial authorities as performing in Bali, less than 200 are maintained for tourist performances, and the other 4,800 for temple time.[10]

It should be made clear from the outset that we are aware that:
–       Bali or its culture has changed under the pressures of modernization and tourism;
–       And that these millions of tourists have had negative effects on the environmental, social or cultural fabric in Bali.
Several good publications are available that are making an inventory of such damaging impacts.[11]

But what we and many other observers claim is that “tourism has not destroyed Balinese culture”[12] as it did in so many other places. Bali has been able to maintain a specifically Balinese social, cultural and religious environment against all odds; better than other major tourist destinations. In 1936, Margaret Mead in her first letter from Bali noted that “Bali seems to have learned through a couple of thousand years of foreign influences just how to use and how to ignore those influences. Accustomed to an alien aristocracy, accustomed to successive waves of Hinduism, Buddhism, and so on, they let what is alien flow over their heads.”[13] Fifty years later, this point is still valid: “Beset by invaders for millenniums, the Balinese are responding to the latest incursions as they have to past incursions, by becoming more like themselves. The fabric of Balinese society is too strong and too flexible to be rent by easy money.”[14] Another informed observer concluded that the difference is that in Bali: “The newly available consumer goods have not dethroned ceremonial expenses as a source of prestige and sign of status: the money earned from tourism feeds a competition for status that is expressed in the staging of ever more sumptuous and spectacular ceremonies – much to the delight of the tourists.”[15] This article will explore through what mechanism Bali has been able to achieve that result.

Some Insufficient Reasons
Some claim that that the Balinese exception is simply due to the fact that Balinese are somehow inherently and mysteriously different. “Bali will always be Bali. In the past, a hundred years ago, today, and even a hundred years from now…Tourism is for Bali, not Bali for tourism.”[16] Others see the religion (mainly Hinduism), the complex caste system, or racial characteristics as the explanation of that difference. Others still claim that the management of the complex irrigation systems for the rice agriculture imposes strong cooperation among all its users, thereby creating a strong social fabric at the local level.

Without denying that all these reasons can and do indeed play a role in the Bali exception, we feel that by themselves, none of them are really convincing because none of them – or even their combination – are really unique to Bali. After all, there are hundreds of millions of Hindus around the world where a similar caste system prevails; and they have not exhibited the same level of cultural resilience and creativity as the Balinese. Similarly, Bali shares with other parts of Asia a complex racial composition resulting over several millennia from successive invasions of Austronesian, Indic, Malay, Javanese and other ethnicities; as well as its irrigation and rice agriculture. Even the historical familiarity with foreign or colonial rulers, first noted by Mead, is clearly not unique to Bali.

So, is there a systemic explanation for the Bali exception? To find out, the authors made during the Summer of 2002 a series of interviews – conducted mostly in Bahasa Indonesia – with local traditional Balinese leaders. The geographical focus was on the area of and around Ubud, generally considered as the “cultural capital” of Bali, because the interface between the indigenous culture and tourism is particularly intense in that region.

On the basis of this research, we propose that the key towards Bali’s exceptional cultural resilience results from a combination of two key traditional tools generally used all over Bali: the first consists of specific local organization structures, and the second of a dual currency system systematically used by those organization structures. The organization structures are well-known from the anthropological literature: the Banjar social organization, and a less formal structure called the Sekhe (pronounced say-keuh). But the key role of the dual currency system used by both those structures has tended to be overlooked until now.  Both will be explained next.

The Banjar and the Sekhe Structures
The Banjar is the fundamental civil unit in Bali, operating in a decentralized, democratic, cooperative manner at the local level. Banjars are typically geographically bounded on one side by a major road, on two sides by secondary roads and on the end by a river, which irrigates the Banjar’s rice fields and forest which supplies food and raw materials for the many ceremonies held each year. In a small village, there is often only one Banjar; in larger towns, there may be several. In Ubud for instance, there are four Banjars in the town itself, and 9 additional ones in the immediately surrounding villages.

The Banjar structure having been amply described in the anthropological literature[17], we can be brief here. It has been succinctly defined a “residential entity whose responsibilities are at once legal, fiscal and ritual.”[18] This paper will focus particularly on its socio-economic and cultural functions.

The Banjar head, the Klian Banjar, is elected by a majority vote of the members, and “is more an agent than a ruler”[19]. He can also be dismissed at a members’ meeting by majority vote. He receives no remuneration for this function.  Each member is equal and has one vote, there is no special status granted to wealthier members of the Banjar.  Each thirty-five-day Balinese month on the average, the Kulkul bell (a wooden gong) summons the council members to the dedicated meeting place, the Bale Banjar, to decide on the next month’s activities. Special meetings can also be convened whenever necessary.

At such meetings, both new activities are proposed and on-going projects are reported on. At the same time, the contributions of time and money are decided upon for each project.  However, if a majority of members becomes opposed to a particular project for whatever reason, it is revisited at the next monthly meeting to discuss whether or not to continue with it.

In the Ubud area each Banjar has between 750 and 1200 members, who are represented at the council by the 150 to 260 male heads of each household. The four Banjar of Ubud itself have recently agreed on a single written rule book, Awig-awig, which defines the operation of the Banjar. But notwithstanding this common rule book, each Banjar tends to keep its own style and focus depending on its leadership and the socio-economic background of its members.

In the less formal structures of the Balinese countryside, the main Banjar rules are part of the adat, the traditional code of conduct. And although the overall system is very similar all over Bali, lots of small local variations in rules can be observed.

The Sekhe (literally: “to make one”) is less formal and less permanent than the Banjar. It could be defined as a “Balinese activity club”. For example, most traditional orchestras (gamelan) or dance groups take that form. Some are formally created by a Banjar council and involve members of only that specific Banjar; many result from individual initiative and include members from various neighboring Banjars. A few evolve into successful for-profit cooperative ventures (like the 200 dance groups that perform for tourists). Many in the Ubud area focus on the development of the arts (like the Sekhe initiative by a young member of the Banjar Tengah involving now 57 members from 4 different Banjars to resurrect in Ubud the almost lost tradition of bamboo gamelan). The objective of most is to have a lot of fun (like the ones created to build huge kites in the windy season, sometimes running in the yearly kite competitions)[20].   All Sekhe stand or fail on their own merits and leadership, and on their capacity to attract the enthusiasm of other participants.

What Sekhe has in common with Banjar is that they are both part of the traditional social system (‘adat’), and are widely used all over Bali: there are more than 3,000 Banjars operational in Bali, and an unrecorded multiple of that number in Sekhe. But most importantly, both use the dual currency system described next.

An Overlooked Tool: a Dual Currency System
In our meetings with the local Balinese leaders, we were repeatedly told that it is not something special about the Balinese or Hindu religion itself, but the strong system of mutual cooperation, the Banjar, that has maintained Balinese culture despite the large and increasing numbers of tourists coming to the area.

Some quotes:
– “Banjar is stronger than religion in keeping community and culture together.” Pak Agung Putra, Klian Banjar Tengah.
-“Banjar is what holds the community, each other, together.” Pak Ketut Suartana, Klian Banjar Sambahan.
– Banjar is the most fundamental organization that keeps the Balinese character intact.” Pak Wayan Suwecha, Klian Banjar Kelod.

But what holds the Banjar together?
The intriguing answer is that a key element, usually overlooked, is a dual currency system, which gives both the Banjar and the Sekhe structures an exceptionally flexible capability to mobilize local resources. The first of these two currencies is the Rupiah, the conventional national Indonesian currency. The second one is Time. A unit of Time is approximately 3 hours of work in the morning, afternoon or evening; and the kulkul gives a special summoning for people to gather when joint work is called for.

On the average, each banjar starts between seven and ten different projects every month, big and small. And for each project, the expected contributions of each family unit – in Rupiah and in time – are taken into account. In the poorer banjars, the Rupiah constraint is typically the more binding, while in the richer ones the opposite may happen.

In most cases, there is no problem finding enough people to contribute the time needed to complete an activity, and thus contributions of Time are not recorded.  In some Banjars, however, where there is a scarcity in the contribution of Time or when there are complaints from some members about the lack of contribution by others, the Klian Banjar records every contribution of Time. Those who cannot contribute their share of Time are asked to either send a substitute person, or to pay in Rupiah at an amount of between 5,000 and 10,000 Rupiah (.50 to 1.00 US Dollar) for each time block missed.  The more organized Banjars in Ubud like Banjar Sambahan make the amount of Rupiah of such substitution cost a formal decision at the initiation of each project – when it is felt that everybody’s physical presence is deemed important the substitution cost is higher than for other projects where that is less the case.

Western observers may have missed the importance of this dual currency system because they themselves come from a culture where a monopoly of national money is taken for granted. Even the remarkably insightful historical analysis of Clifford Geertz[21] seems to have missed the role of the Time currency in shaping and maintaining the local social fabric so strong in Bali in the past centuries as well.

But our interviewees themselves are quite clear about this: “Time is a form of money.” The majority even make the point that “Time is more important than Rupiah” for keeping the community strong in the banjar.

The importance of these time exchanges can also be expressed on the negative side: the main form of punishment meted out by the banjar is not a Rupiah fine, but ostracism, the exclusion from the banjar of someone who refuses three times in a row to respect the community decisions. “The Balinese still say today that to leave the Banjar council (krama) is to lie down and die.”[22] And the reason given why such ostracism is so serious is “when they have an important family ceremony, like a cremation, then nobody will give Time for helping them in the preparations.” In short, depriving someone of Time from the community is considered the ultimate retribution.

But why is such a dual currency system so important to keep community spirit and their collective cultural expressions strong?
How a Dual Currency Supports Cultural Sustainability
A Banjar leader with a more philosophical inclination described the dual currency system as being in Yin-Yang relationship, referring to the Taoist concept of complementarity.  One of these currencies, the normal Indonesian national currency in this view is of a Yang nature because it cannot be created within the community but has to be earned  by competing in the outside world. The other – Time that everybody in principle has as the same birthright – is Yin because it is generated within the community, on an egalitarian basis, and generates cooperation. It is also something that you can’t accumulate and store like conventional money: use it or lose it.

Western languages do not have words describing the Yin-Yang concept, so we will have to use the Oriental word for it. Taoism conceived all forces in complementary pairs like earth-heaven, water-fire, exhaling-inhaling, pushing-pulling, etc. Although obviously separate forces, they are really seen as parts of a single ultimate unity, and therefore necessary to each other. In the specific money and societal context of this paper, the Yin-Yang notion refers to the polarities of cooperation-competition, egalitarian-hierarchical, feminine-masculine, etc. Figure 2 provides a summary of some of these complementary aspects. It includes some of the philosophical aspects that are underlying this worldview, because they are coherent with other important aspects of the Balinese culture. For instance, to a Balinese, the Divine is not only transcendent but also immanent – present everywhere in everything – not just in the temple compound or invisible in the heavens.

This figure can be read from up to down to focus on the internal coherence of each philosophical framework; or horizontally to see the polarity between the different worldviews. What is important to realize is that from a Balinese perspective both views are equally valid, and they spontaneously developed a dual currency system that supports both worldviews.[23] This figure also highlights therefore the differences with our Modern Western culture, where a monopoly of a Yang currency and a Yang coherence has long been considered self-evident.

An interesting difference in attitude can also be observed towards the two currencies: specifically a very flexible Yin attitude prevails towards the Yin currency. If, for example, someone has a sick child that interferes with providing time, nobody will object to him or her not contributing an equal share in time commitments. What matters is the good will underlying one’s actions…

One can see why such a dual currency system within a democratic structure like the banjar provides a lot more flexibility than when on has to operate within only one currency system as is the case in most other parts of the world, including the “developed” ones. People who have a lot of conventional money tend to have little time, and people with little money tend to have more time. So the dual currency mechanism enables some automatic leveling among the social classes.

Furthermore, this dual currency system provides more flexibility in the choice of projects that get approved by the council. In poorer communities projects that require a lot of time are favored by the banjar; and in rich ones the more expensive Rupiah projects tend to pass. For example, we found one single project in a rich banjar that had a Rupiah budget of 1.2 Billion (equivalent to 1.2 million US$). But even the poorest banjar we interviewed has a large group performing at their temple a great kecak dance, which requires a lot of manpower but no expensive garments or props. In short, in both cases, a lot of local resources can get mobilized to meet whatever the community chooses to focus on. And in all cases, a mixture of Rupiah money and Time money are always involved, just the proportional mix tends to vary. This explains why, in Bali, large-scale religious or cultural events involve practically everybody, and are not limited to elitist social groups as tends to be the case elsewhere. This dual currency system may therefore be the real secret for the cultural resilience of Balinese society.

Note that this system goes also beyond cultural events. We found banjars who support their primary schools or even build themselves roads, when the central government isn’t responsive to their demands. There are of course limitations to the substitutability of the two currencies: the cement or other materials needed for such works remains part of the Rupiah budgets.

Applicability in Areas Other than Bali
Community associations that bring people together to plan, budget and implement projects in a fully democratic and participatory way are certainly not specific to Bali. What is more rare, however, is the use by such grass-root structures of a Yin complementary currency, Time, which operates in parallel to the normal cash economy.  We believe that it is the marriage of these two concepts, the highly decentralized democratic structure of the Banjar and its use of a dual complementary currency that has enabled and continues to enable the Balinese culture to withstand the external pressures that otherwise would obliterate its rich cultural heritage.

While the combination of a decentralized democratic organization structure and the use of Yin currency is rare, it is not totally unique to Bali, however. One of the authors has recently completed the first major study for the Provincial Government of East New Britain in Papua New Guinea on the contemporary uses of the traditional shell money[24]. The key conclusion was that the use of shell money, issued locally through an organization of families, also there maintains a stronger local economy, culture and society particularly in times of downturn in the national economy.

We can therefore argue that such an approach critically contributes in maintaining the local economy, culture and society particularly whenever external forces are threatening them. By making use of a Yin complementary currency in the context of a traditional society the culture is continually nurtured, even while the people pursue market-oriented activities. It helps avoiding the degradation that normally occurs once the traditional culture is abandoned, or worse, sold off for tourist consumption in the pursuit of these commercial activities.

It is intriguing that there are many places where either one of these concepts separately are currently operational – decentralized democratic organizations, or complementary currencies. It is only their combination that remains comparatively rare.

Highly decentralized cooperative and democratic institutions are very common in many countries, including many of the local NGO’s for example.

On the complementary currency side, the use of non-conventional currencies has been spreading worldwide over the past decades. There are many traditional forms of exchange functioning throughout the Third World[25], and more surprisingly in the last decade we have seen similar activities develop exponentially throughout the First World. While there were less than a hundred such modern systems operational in the world in 1990, today there are well over 4,000.[26]  For instance, Local Exchange Trading Systems (LETS), Time Dollars and Time Banks use different forms of Yin complementary currencies. In Japan the federal government has been supporting pilot projects throughout the country to facilitate the rebuilding of community and local social capital, and the caring of one for another. Several of these exchanges make use of smart cards that process the Yin-type complementary currency.

The Balinese case study reveals that the potential for local democratically representative organizations to mobilize their membership with complementary currency systems could be quite substantial. One key ingredient would be that the membership truly and democratically participates in the selection of the projects for which their time and money would be used. Otherwise, the legitimacy of the projects would quickly be questioned. The resilience of the Balinese approach derives clearly from genuine grass-root support for every activity that the community has decided upon, and the possibility to stop any project whenever a majority in the community starts questioning it.

We obviously do not claim that dual currency systems are a panacea to solve all problems, social, cultural or otherwise. But by embedding culture and society within the economy and ecology of an area, through community associations using a Yin complementary currency, we see the possibility to get one step closer to Karl Polanyi’s vision of an economy that functions in harmony with the culture, society and environment of the area.[27]  This has been picked up by contemporary economists[28] to be called the “New Traditional Economy”, which maintains culture and society while allowing people the freedom to pursue market-oriented activities.

Most existing economic theory has as hidden hypothesis that all exchanges need to be facilitated through a monopoly of a centrally controlled currency. Furthermore, it is assumed that any currency used is implicitly value-neutral: it is supposed not to affect the transactions or the relationships among the people using it. As the English put it: “A fact is a fact, and is more respectable than the Lord Mayor of London.” And the Balinese exception provides enough facts – historical and contemporary – that should force us to put a big question mark behind both those implicit assumptions of conventional economic theory.

It is a fact that many transactions and additional activities occur in Bali thanks to the existence of the complementary Time currency systematically used at the local level. This Time currency doesn’t replace the national currency, but operates as a complement to it, and makes possible a strong involvement of even the poorest communities in the rich cultural activities of the island. The Balinese themselves claim that its existence plays a key role in creating the proverbially “strong community fabric” evidenced in their island.

Nobody is saying that community currencies all by themselves are a panacea for third world poverty and cultural degradation. A complex web of interrelated but independent, decentralized but united groups holds the Balinese society together.  But at the core of this network lives the Banjar and the Sekhe, and their dual currency system.

In a large-scale survey of the American public, no less than 83% considered that the top priority in the US should be to “rebuild community”.[29] This suggests that the automatic assumption that the dollar is the only monetary tool relevant to solve all problems, especially those of a community nature, may need to be questioned, even in the US.

Finally, one of the most frequent complaints about globalization has been that it entails an erosion of cultural specificities around the world. A  dual currency system could be of interest to those who want to rebuild a sustainable social fabric or strengthen their cultural diversities in any country, independently of its degree of economic development.

[1] Two specific conferences were the landmarks of these realizations in their respective fields. The systematic conflict between socio-cultural integrity and tourism was the main conclusion from the first conference of the American Anthropological Association devoted to “Tourism and Cultural Change” in 1974. The need for trade-offs between these two variables was the main conclusion of the joint UNESCO/IBRD “Seminar on the Social and Cultural Impacts of Tourism” held in Washington in 1976. See Smith V.L. ed. Hosts and Guests: the Anthropology of Tourism (Philadelphia, University of Pennsylvania Press,  1989);  and Picard  M. Sociétés et Tourisme: Réflexions pour la Recherche et l’Action. Paris: Unesco, 1979).
[2] Iyer, Pico Video Night at Kathmandu and Other Reports from the Not-So-Far-East (New York: Knopf,  1988) pg. 30
[3] The Westerner who first discovered Bali was the Dutchman Cornelius Houtman in 1597. After a long sojourn on the island, several of his crewmembers decided to stay, establishing the reputation back in Holland that a new “paradise” had been found. “The Last Paradise” became the title of the first book in English on Bali, published in 1930 by the American journalist Hickman Powell. See Covarrubias, Miguel Island of Bali (first edition: New York: Knopff, 1937; republished 1998 in Singapore: Periplus).
[4] quoted in Picard, Michel Bali: Cultural Tourism and Touristic Culture (Singapore: Archipelago Press, 1996) pg 37.
[5] Durtain, L. Bali, la fabuleuse et la charmante (Paris: Les Oeuvres Libres, 1956) pg 21.
[6] SCETO:  Bali Tourism Study. Report to the Government of Indonesia (Paris, UNDP/IBRD, 1971) Volume 2, pg 162.
[7] Dalton B.  Bali Handbook (Chico: Moon Publications, 1990) pg 35-36.
[8] Source for data for Figure 1: Directorate General of Tourism and Bali Government Tourism Office. Disconcertingly, there are no exact statistics of the number of tourists visiting Bali, the only firm number being total foreigners arriving directly by international flights. These rose from 23,000 in 1970 to 1,468,000 in 2000. 95% of those direct arrivals report that they come for vacations, and 30% are on a repeat visit. However, this doesn’t capture foreign or Indonesian tourists arriving via Jakarta on internal Indonesian flights, the ferry arrivals or even the cruise ships mooring at Benoa or Padang.  The estimates of total tourism arrivals range therefore between 2.5 and 4 million for 1994; and between 4 and 5 million for 2000. The lower number being the official Tourism Office estimate, it is the one we have been using in our graph.
[9] de Kleen  T. Bali: its dances and customs (Sluyter’s Monthly, 2, 1921) pg 129.
[10] Picard, Michel Bali: Cultural Tourism and Touristic Culture (Singapore: Archipelago Press, 1996) pg 138.
[11] See for example for recent opinions by Balinese themselves: Ramseyer, Urs & I Gusti Raka Panji Tisna Bali Living in Two Worlds: A Critical Self-Portrait. (Basel: Schwabe Verlag, 2000); or by foreigner observers Vickers, A. Bali: A Paradise Created (Berkeley: Periplus Editions, 1989).
[12] Norohna, R. Paradise Reviewed: Tourism in Bali in Tourism: Passport to Development? Perspectives on the Social and Cultural Effects of Tourism in Developing Countries (ed. E. de Kadt. New York: Oxford University Press, 1979) pg 201. See also Cohen E. “Authenticity and Commoditization in Tourism” Annals of Tourism Research 1988, 15/3 pg 371-386; Macnaught T.J. “Mass Tourism and the Dilemmas of Modernization in Pacific Island Communities” Annals of Tourism Research 1982  9/3: pg 359-381; McTaggart W.D. “Tourism and Tradition in Bali” World Development 1980 8 pg 457- 466.
[13] Mead, M. Letters from the field 1925-1977, ed. R.N. Aschen (New York: Harper & Row, 1977) pg 161.
[14] Elegant R. “Seeking the Spirit of Bali: Despite Fast Food and Discos, the Old Ways Live” The New York Times March 8, 1987 Travel Section, pg 9.
[15] Picard, Michel Bali: Cultural Tourism and Touristic Culture (Singapore: Archipelago Press, 1996) pg 64.
[16] Declaration of the Governor of Bali, Ida Bagus Oka, excerpt from Bali: Apa Kata Mereka (Denpasar, 1991) pg. 11
[17] Geertz, C. “Form and variation in Balinese Village Structure” American Anthropologist 1959, Vol 61: pgs  991-1012. Geertz H. & Geertz C. Kinship in Bali (Chicago: University of Chicago Press, 1975). Guermonprez, J.F. “On the Elusive Balinese Village: Hierarchy and Values Versus Political Models” Review of Indonesian and Malaysian Affairs 1990, Vol 24 pg 55-89. Warren, C. Adat and Dinas: Balinese Communities in the Indonesian State (Kuala Lumpur: Oxford University Press, 1993).
[18] Picard , Michel Bali: Cultural Tourism and Touristic Culture (Singapore: Archipelago Press, 1996) pg 12
[19] Geertz C. Negara: the Theater State in Nineteenth Century Bali (Princeton: Princeton University Press, 1980) pg 49.
[20] That fun is the main objective of such competitions is illustrated by the fact that the first prize of the biggest competition in Bali – the  Kite Festival at Padanggalak – amounts to 1.5 million Rupiah; while the Rupiah cost of the kites ranged in 2002 between 5 and 30 million Rupiah. See Wahyoe Boediwardhana “Beautiful kites fluter in Bali’s skies” Jakarta Post (Thursday, August 1, 2002 pg 18)
[21] Geertz, C. Negara: the Theater State in Nineteenth Century Bali (Princeton: Princeton University Press, 1980).
[22] Geertz C. Ibid. pg. 49.
[23] For other historical examples of dual currency systems and their collective psychological impact, see Lietaer, B. Mysterium Geld (Munich: Riemann Verlag,2001) , also available in Japanese with Diamond Press.
[24] DeMeulenaere, S. Week, D. & Stevenson, I. The Standardisation and Mobilisation of the Tabu Traditional Shell Currency (Papua New Guinea: Assaí Study, July 2002) 54 pgs.
[25] For more information about Community Exchange Systems in the Global South, see
[26] A full discussion of such modern systems is available in Lietaer B. The Future of Money (London: Random House, 2001) and on
[27] Polanyi, K. The Great Transformation: the political and economic origins of our time (Boston: Beacon Press, 1944).
[28] Rosser, B. and Rosser, M.  “The New Traditional Economy: A New Perspective for Comparative Economics?” International Journal of Social Economics, 1999; and Comparative Economics in a Transforming World Economy (Chicago: Richard D. Irwin,, 1996).
[29] Ray, P. and Anderson, S. The Cultural Creatives (New York: Harmony Books, 1999). Also, The Integral Culture Survey: A Study of the Emergence of Transformational Value in America (Research Monograph sponsored by the Fetzer Institute and the Institute of Noetic Sciences, 1996).

Community Currencies: a New Tool for the 21st Century
by Bernard A. Lietaer

The three most important concerns of our contemporaries in the developed nations are remarkably convergent–unemployment, the environment, and community breakdown–and there are strong indications that these same issues will remain on top of the agenda well into the next century. Emerging technologies promise to keep unemployment a major issue, even if all Western economies get out of recession. By 2010, China will introduce as much carbon dioxide in the atmosphere as the entire world does today. And community breakdown is one of the most systemic, deep, and complex societal trends of the past 30 years, with no signs of any reversal. Precisely because we will have to live with these issues for the foreseeable future, only a long-term structural approach can successfully resolve these problems. Here I show how community currencies could contribute to tackling all three problems and also permit us to “retrofit” economic motivation to desirable human behavior.

1. Aligning Moral and Economic Incentives
There are three main ways to induce nonspontaneous behavior patterns: moral pressure, coercion, and economic incentives. For example, recycling glass bottles can be promoted by education, by regulations, or by incorporating a refundable deposit in the purchase price. A combination of all three incentives is obviously the most effective strategy. When these incentives conflict, problems will arise. For instance, when there is an economic incentive to do something a regulation or law prohibits, we need costly and permanent enforcement systems. Even in the presence of such enforcement systems we expect smuggling and many more imaginative forms of cheating to occur. More evident are cases where moral pressure is supposed to overrule economic interests. Consider, for instance, the well-known saying, “Money is like manure; it does good only if spread around.” This sentiment has been espoused in less florid language by most religions for a long time. However, this moral pressure is diametrically opposed to the concept of receiving interest on money, which provides a built-in incentive to hoard currency. Whenever there are such structural contradictions many people are unable to afford, or simply do not care enough, to follow the moral advice. It is possible, however, to design a coherent and operational currency system so that this apparent structural contradiction disappears. In other words, by questioning some traditional implicit assumptions, we can realign the moral and economic incentives so that they are in harmony.

2. Functions of Money
To understand community currencies we need to better understand what money does. We will see that a community currency should fulfill at least some of the key roles of any currency, and that a well-designed community currency can even fill some of the roles that the “normal” national currency does not. Since the breakdown in 1972 of the Bretton Woods system, the world has been living with pure fiat currency–that is, there is nothing material backing the currencies of the world. Nonetheless, money has continued to fulfill a number of different functions, only two of which are essential:
-A standard of measure. We compare the value of the proverbial apples and oranges by expressing each of them in dollars, for example.
-A medium of exchange that is more efficient than other forms– barter, for instance.

Money has sometimes played three other roles in the past, and happens to play them today as well:
– A store of value. Historically, this has only rarely been the case. For example the word capital derives from the Latin capus, capitis, which means head, and referred to heads of cattle just as is still done today in Texas or among the Tutsi in Africa: “He is worth 1,000 head.” Another example: in Egypt through the Late Classical period, and in Europe throughout the Middle Ages and until the late 18th Century, wealth was stored mainly in land and its gradual improvements.
– A tool for speculative profit. Most emphatically today when more than 95 percent of all currency transactions in the world are motivated by speculation, and less than 5 percent are for trades of goods and services. This has been systematically possible only since August 1972, when President Nixon created the floating currency nonsystem we now have.
– A tool of empire. The control by the former Soviet Union of the external trade of Comecon countries via the “convertible ruble” is a recent example.

Though we tend to take for granted that money serves all the functions we are used to–which today means all five functions for the U.S. dollar–it is important to realize that money really needs to serve only the two essential functions in order to be an efficient currency.

3. Conflicts Among the Functions of Money
In fact, the secondary functions money serves invariably end up hurting the two essential ones. Some examples follow.

Store of Value Versus Medium of Exchange
At first sight, it really is convenient to have money also play the role of store of value. However, there is a formidable hidden cost: this identity significantly exacerbates the boom-bust economic cycle.

The theory of time preference of money, which describes the rational trade-off between consumption today and saving for the future, explains this: When someone expects higher uncertainty in the future, a larger proportion of his or her wealth is logically kept as savings, and less is thus available for immediate consumption. Therefore, at the first signs of a recession, anybody who has money will logically save more and consume less, thereby exacerbating the recession for everybody else. In boom years, consumer optimism prevails, and people will tend to simultaneously dip into their savings to buy big-ticket items such as cars and houses, thereby pushing the boom into an inflationary period. While other factors also play a role in the creation of business cycles, it has been proven many times that consumer confidence significantly exacerbates the problem. Providing incentives to ensure that the medium of exchange does not also incorporate the store of value function would therefore automatically dampen this boom-bust tendency of the current system.

Speculation Versus Standard of Value
Joel Kurtzman’s ‘The Death of Money’ convincingly describes why and how the speculation on currency undermines currency’s role as a standard of value. If, for example, a German company wants to invest in a plant in India, the biggest uncertainty lies not in the risks of the business itself but in what currency to use to make cash-flow projections: rupees, dollars, or Deutsche Mark? The initial investment is in Deutsche Mark, and the proceeds will be generated in rupees, but at what exchange rate can one match the two to determine the expected rate of return? While there are some tools available to manage this risk for short-term transactions, they often are not available for the long-term risks typical in plant investments, or they are simply too expensive. The net result: fewer cross-border investments, particularly in Third World countries, thereby reducing the worldwide efficiency of resource allocation. We will never be able to determine how many investments have not occurred because of this, but all indications suggest they are quite substantial.

Tool of Empire Versus Medium of Exchange
Recent history provides a telling example of the potential conflict inherent in these two functions of money: Before the collapse of communism, there was no need for anybody to stand guard next to a plant in Poland to ensure that it would not establish closer trade relationships with the West than the Soviet Union felt comfortable with. Having the Comecon currencies convertible only in rubles was an automatic and sufficient guarantee.

4. Problems with Interest
Another feature of today’s money that we take for granted is that money produces interest. This process has become universally accepted in the West only over the past century. Indeed, for more than a thousand years all three major religions emphatically prohibited any interest on money because they considered it usury. It is only since the end of the l9th Century that the Catholic Church, for instance, “forgot” about the sin of usury.(note 2) This happened to coincide with the period when the Church itself, which for centuries used to be the largest landowner in Western Europe (that is, it was a capital user), found itself with financial assets instead of land (that is, it had become a capital supplier).

However, the problem with interest does not relate to any of these “moral” historico-religious reasons. Interest on money constitutes one of the most systematic causes of our destruction of the global environment. Consider as metaphor, for example, the life of a tree (or any other living resource): Because of interest, the net present value of any income far away in the future is negligible. So, it literally pays to cut down a tree and put the proceeds in a savings account instead of letting it grow for another decade or century. Similarly, the only types of tree worth planting commercially are the fastest-growing varieties such as pine. (Nobody plants redwoods for commercial reasons.) So even when we plant trees, we are systematically losing biodiversity.

5. Reprogramming the “Invisible Hand”
Let us assume now that we develop a currency whose sole objective is to fulfill the two main roles of money: standard of value and medium of exchange. To discourage its use as a store of value, we build in a “booster” mechanism: when someone earns the equivalent of $100 in this currency, we give him or her a purchasing power of $110 if the money is used today. It would be worth only $109 tomorrow, $ 108 the day after tomorrow, $100 on the tenth day, and $90 in twenty days, and so on.(note 3) Now, what would happen? The following patterns would become manifest: A structural incentive to separate the functions of medium of exchange and store of value would be achieved, with the advantage of reducing the boom-bust cycle. People would invest or spend this money soon, and those who receive it would in turn do the same. Therefore, additional economic activity would occur, and additional jobs would be created. Decisions would be highly decentralized, given that any recipient of the currency would become actively involved in spreading the currency and thereby activating the job creation process.

The most important structural shifts would occur in the way people would spontaneously start saving and investing. Because the booster concept discourages the use of currency as a saving device– particularly if such currencies are in widespread use– something else needs to be used to store value. The conceptual key to understanding this shift involves changing the “arrow of time” in the investment process. Under the present system, the discounted present value of any investment has to be higher than the interest rate of a risk-free government bond. This implies that anything that produces value more than twenty years in the future is basically worthless today, thus providing a systemic incentive not to care about the long-term consequences of our actions. Under the proposed system, the incentive works in the opposite way: income in the future would become more valuable than income today, thereby automatically prioritizing the long-term implications of today’s actions.

Once the basic necessities of life are covered, the logical uses of money in this new context would include investing in ways that will reduce expenses in the future (pay back mortgages, improve home insulation, improve energy efficiencies, start one’s own food gardens) and investing in anything that will keep, or increase in, value (land improvements, trees and forests, and any- thing else that grows over time). To prepare a nest egg for your grandchildren’s college, one logical step is to plant a small forest or have a “savings account” that invests in such activities. New liquid forms of savings would immediately be offered by the more agile financial institutions as soon as the demand for liquidity in the fixed assets just mentioned increased. This could stem the trend toward disintermediation, because government bonds would yield much lower returns. In general, stocks would be preferred to bonds, thereby making access to investment capital at low leverage the dominant way of financing businesses.

Consumption patterns would evolve toward products with longer lifetimes. Assume that one has $100,000 available and two types of cars are offered for sale: the usual car of today, which costs $20,000 and lasts four years, and one costing $100,000 that lasts twenty years. In today’s currency environment it is logical to buy the short-lived car because one can put the $80,000 balance in a savings account and get more value in the long run. With the proposed alternative currency it is logical to buy the long-lived car. Today nobody builds such a car because there is no demand for it. But in the future, it could spontaneously become the type of car in greatest demand. Note that the total income of the car manufacturer is the same over twenty years (assuming no inflation), but that the burden on the environment is much lower. According to the same logic, people would tend to build houses intended to last forever–and spontaneously invest in further insulation and other improvements whenever they have extra cash.

It is important to recognize that there would be no need to provide tax incentives or otherwise “educate” people to do all these things. We just reprogrammed the “invisible hand” of financial self-interest to provoke these actions. Today, many people try to convince others to act in an ecologically responsible way, but it is in the financial interest to do the opposite. With the proposed system, economic self-interest pulls automatically in the direction of ecologically sound actions. Only by such realignment of economic and moral motivations can we expect truly massive changes in behavior patterns.

6. The Validity of “Booster” Currency
The idea of a “booster” currency is just a variation of what has been variously described in the Anglo-Saxon literature as “stamp scrip” or “stamp currency” and in the German literature by “Wara” (merchandise currency) or “Frei Geld” (free money). Its theoretical concept was originally developed by Silvio Gesell about a century ago. Gesell was an Argentine businessman and economist who has been neglected by many theoretical economists because of the–at first sight–unconventional nature of his “charge” or “demurrage” concept. Gesell’s initial premise was that money as a medium of exchange should be considered a public service good (just as public transportation, for instance) and, therefore, that a small user fee should be levied on it. Instead of receiving interest for retaining such a currency, the bearer in fact pays interest. In Gesell’s time, stamps were the normal way to levy such a charge. Now, the generalized use of computers in payment and accounting systems, as well as the availability of electronic debit cards, would make this procedure much easier and convenient to implement.

Is such an unconventional concept as “charge money” a theoretically sound one? The answer is a resounding yes, and is supported by economists of no lesser stature than John Maynard Keynes. Chapter 17 of Keynes’ General Theory of Employment, Interest and Money analyzes the implications of such money, and provides a solid theoretical backing to the claims made by Gesell. Keynes specifically states: “Those reformers, who look for a remedy by creating an artificial carrying cost for money through the device of requiring legal-tender currency to be periodically stamped at a prescribed cost in order to retain its quality as money, have been on the right track, and the practical value of their proposal deserves consideration.(note 5) He concludes with the prescient statement that “the future would learn more from Gesell than from Marx.” (note 6) The second part of his statement is now accepted fact. Might he also be correct on the first part?

7. Historical Precedents
The vast majority of the books on economic and monetary theory or history never mention the possibility of such “negative interest” or “demurrage money.” Even the monumental History of Interest Rates, which covers interest from Sumer to today, does not mention it once.(note 7) Is this concept then just a theoretical idea, or is it a practical possibility? In fact, history records the remarkable ability of this concept to adapt to different cultures and circumstances–and to generate spontaneously the behaviors we are trying to promote.

Recall the biblical Joseph, who interpreted the Pharaoh’s dream and saved Egypt from “seven lean years” by stockpiling food. Why would the Egyptians have kept Joseph in such high regard for inventing stockpiling? Its use had been widespread since the beginning of the agrarian revolution several thousands of years earlier. Might there have been more to it than the Bible mentions? These stockpiles were also the basis of the Egyptian monetary system. Each farmer who contributed to the stockpile would receive a piece of pottery having an inscription of the quantity and date of delivery of his contribution, which he could then use to purchase something else. These receipts, or ostraca, have been found by the thousands and were in fact used as currency. However, what the Bible missed is the key to the system: there was a time charge on these receipts. For instance, if someone wanted to redeem an ostraca of ten bags of wheat after six months, he would only receive nine bags. This demurrage charge reflected the costs of guarding the depot and quantities lost to rodents. So we can understand that Egyptian farmers would never hoard this currency but invest in what was most handily available to them: improvements on their land and irrigation systems. This currency was used in Egypt for more than a thousand years, until the Romans forcibly replaced it with their own banking and currency system, more “modern” and having positive interest rates. Note the apparent consequences of this change: As long as negative interest currency was used, the Egyptians built monuments that would last forever and maintained their agricultural system in remarkable condition, making it the breadbasket of the Ancient World. All this quickly disappeared when the Roman currency was generalized. Since then, Egypt has remained for two thousand years a “developing” country.

The Middle Ages
What triggered the exceptional economic and spiritual prosperity in Europe, particularly from 1150 to about 1300, when the extraordinary blossoming of all the cathedrals took place? Few people are aware that this period coincides with the existence of the brakteaten monetary system, under which local lords issued silver plaques that were called back on the average every six to eight months and reissued a bit thinner, amounting to a demurrage rate of about 2-3 percent per month over this entire period. People would therefore automatically invest in anything that would last almost forever: improved land, tapestries, paintings, or cathedrals. From an economic perspective, cathedrals made sense as an investment in the future. There was fierce competition among cities to attract pilgrims from all over the Christian world, and cities competed for cathedrals, just as today they compete for Walt Disney Co. investments. The main difference, of course, is that cathedrals were also symbols of faith, masterpieces for thousands of craftsmen who chose to remain anonymous, and designed as lasting beauty. Is it a coincidence that cathedrals flourished as the most grandiose symbols of community solidarity in Western history, yet declined as soon as the brakteaten system was replaced with the king’s monopoly on the creation of currency? While the previous examples might be discounted because they seem to apply only to pre-capitalistic economies, the following examples bring us to modern times.

The 1930s in Germany
In 1930, Herr Hebecker, owner of a small bankrupt coal mine in Schwanenkirchen, Bavaria, decided in a desperate effort to pay his workers in coal instead of Reichsmark. He issued a local scrip– which he called “Wara”–redeemable in coal. On the back were small squares where stamps could be applied. A bill would remain valid only if the stamp for the current month had been applied. This negative interest charge was justified as a “storage cost.” The workers paid for their food and local services with these Wara. For example, the baker had no real choice but to accept them, and convinced his wheat suppliers to accept them in turn. The process was so successful that by 1931 this Freiwirtschaff (free economy) movement had spread through all of Germany, involving more than 2,000 corporations and a variety of commodities as backing for the Wara. But in November 1931, the German Central Bank, on the basis of its monopoly on currency creation, prohibited the entire experiment.

The 1930s in Austria
In 1932, Herr Unterguggenberger, mayor of the Austrian town of Worgl, decided to do something about the 35 percent unemployment of his constituency (typical for most of Europe at the time). He convinced the town hall to issue 14,000 Austrian shillings’ worth of “stamp scrip,” which were covered by exactly the same amount of ordinary shillings deposited in a local bank. After two years, Worgl became the first Austrian city to achieve full employment Water distribution was generalized throughout, all of the town was repaved, most houses were repaired and repainted, taxes were being paid early, and forests around the city were replanted. It is important to recognize that the major impact of this approach did not derive from the initial project launched by the city, but instead had its origin in the numerous individual initiatives taken in the process of recirculating the local currency instead of hoarding it. On the average, the velocity of circulation of the Worgl money was about fourteen times higher than the normal Austrian shillings. In other words, on the average, the same amount of money created fourteen times more jobs. More than 200 other Austrian communities decided to copy this example, but here again the Central Bank blocked the process. A legal appeal was made all the way to the Supreme Court, where it was lost.

Stamp Scrip in North America
Emergency currencies have a longer history in America than most people realize. They seem to appear with a curious regularity– the 1830s, 1890s, and 1930s–coinciding roughly with the bottom of the long-term economic cycle called the Kondratieff wave. I will concentrate on the last period because it is the best-documented example. The theoretician behind the movement in the United States in the 1930s was Irving Fisher of Yale University. He had analyzed the Worgl case in Austria and published various articles about its success. Subsequently, more than 400 cities, and thousands of communities or organizations all over the country, issued one form or other of emergency currency. Many were stamp scrip, involving the application of a stamp at prescribed intervals (monthly, for example). There was also a movement to issue this stamp script officially nationwide: Senator Bankhead of Alabama presented a bill to the Senate on February 18, 1933, and Representative Petenhill of Indiana presented a bill to the House of Representatives on February 22, 1933.

During this time Irving Fisher approached Dean Acheson, then Undersecretary of the Treasury, to obtain support from the Executive branch for the same idea. Acheson asked the opinion of one of his Harvard professors, who advised him that the system would work but that it would imply strongly decentralized decision making, which he should check out with the President. Soon thereafter, President Roosevelt prohibited any use of “emergency currency” and announced the New Deal centered around a grandiose centralized plan of large construction projects. These examples all show that the concept worked in the modern world whenever it was allowed and correctly implemented.

8. Community Currency
“If you want people to fight, throw them a bone; If you want them to cooperate, have them build a tower.”
–Saint-Exupery, Citadel

Today, local currencies are again mushrooming all over the world in an impressive diversity and increasing sophistication. As Hazel Henderson has pointed out, the key to the success of a community currency, just as for any currency, is trust. In this case it is trust in your neighbors, in the community as a whole, and in the community’s leaders. My focus here is limited to emphasizing that once you have decided to have a community currency, why not use the best design available? It is important that community currencies concentrate exclusively on the two key functions of money–standard of value and means of exchange–and therefore discourage the use of this money as a store of value or a means of speculation. The best way to ensure this, in particular for the more sophisticated electronic forms of local currency now coming online (for example, the Minneapolis Commonweal experiment), is to build in a booster or another form of the demurrage concept.

The majority of the present systems simply use a “zero interest” concept. In contrast, the majority of local currencies implemented in the 1930s explicitly built in the demurrage idea, typically through the process of requiring periodic application of stamps. Stamps are a primitive way of achieving the desired objective; today, with smart cards or electronic accounting for local exchange (LETS) systems, demurrage could be achieved much more effectively and conveniently by simply programming a small charge on outstanding balances.

This small step would have several substantial benefits:
Every participant in the local currency system will become a motivated promoter. One of the features that many organizers of LETS systems have noticed is that over time the originators tend to remain the dominant force promoting the system to new users. Some systems simply die when their original promoter is no longer available for this. Paul Glover, the founder of the Ithaca HOUR money system, mentioned that he spends a good deal of his time convincing new participants to accept the money.(note 10) This is typical, because the other members have no major incentive to actively promote new participants: they can just keep the currency until they have some use for it.

In contrast, in Worgl or in Swanenkirchen in 1930, each participant was personally motivated to convince his butcher, baker, or cousin to accept the money. One of the reasons that local currencies have multiplied in number today but have not spread as widely as in the 1930s is this structural difference in motivation for member participants. More jobs will be created. Community currencies now tend to create no more jobs in the community than normal currencies. This was not the case in Worgl, for instance, where we noticed that every shilling of Worgl money created fourteen times more jobs than a normal national Shilling.

Community spirit will be fostered. In many cases, the motivation for introducing community currencies today is often less to create jobs than to foster community spirit. Community currencies are indeed one of the most effective tools to achieve this. The word community appeared first in written English in 1283. It is etymologically derived from the Old French and Late Latin, where it referred to a group of monks who owned, operated, and lived from the fruits of their monastery. In other words, it referred to the material organization of a self-contained economic entity. Benedictus of Aniane (5th Century) felt that such a process would automatically support the sharing of the spiritual objectives of their members. Consciously promoting more frequent interactions and interdependencies with your neighbors has therefore long been successful in generating this elusive quality of community spirit. Building in the booster concept or another form of demurrage would increase the density of these interactions and therefore also spread its benefits.

Hoarding will become ill advised. Some community currencies have experienced the hoarding phenomenon. Sometimes this is even interpreted as a sign of success, because such behavior reproduces more closely the use of “normal” currency. But every time someone hoards the community currency, he or she is depriving others of its benefits. In addition, as was shown earlier in the discussion of conflict between the store-of-value and medium- of-exchange functions, there are even structural reasons why hoarding should be avoided.

Ecologically sustainable practices will occur spontaneously on a collective level. While other avenues can be used to promote sustainable behaviors, including regulations and education, why should we not use all the available tools? Reprogramming the “invisible hand” to push for ecologically sustainable behavior would be extremely helpful. These benefits will become generalized only if and when demurrage currency becomes the dominant currency. This circumstance is less farfetched than it appears, for some community currencies could play the role of prototype experiments in preparation for a new Bretton Woods agreement.

{Bernard Lietaer is currently a Research Fellow at the Center for Sustainable Resources of the University of California at Berkeley. He is working on a book about the Future of Money, about which a free online conference has coalesced at}