In Sudan the era of the oil boom resulted in a flood in labor remittances that circumvented official financial institutions, thereby undercutting the state’s fiscal and regulatory capacity and fueling the expansion of the informal foreign currency trade. Initially, developments in Sudan paralleled those in Egypt as the boom witnessed the rise of an Islamist-commercial class that formed as a result of its successful monopolization of informal financial markets. However, in contrast to Egypt, by 1989 Sudanese Islamists were able to take over the levers of the state via a military-coup. This development was made possible by Sudan’s weaker state capacity and the extreme weakness of its formal banking system. As a result, the financial power of the Muslim Brotherhood continued to increase in relationship to the state as they continued to profit from participation in the lucrative speculation in black market transactions and advantageous access to import licenses.

In Egypt migrant remittances and the flow of petrodollars in the era of the oil boom provided capitalization of Islamic banks and a host of Islamic investment companies that operated outside the system of state regulation. Such bankers drew on the rapidly growing wealth of those businessmen with long-standing connections in the Gulf, including, most importantly, members and sympathizers with the Muslim Brotherhood (MB). This boom in labor export and remittance flows also helped shape Egyptian national economic functions, out-migration and the burgeoning informal economy afforded the Egyptian state enough “relative autonomy” to allow it to expand the private sector and begin to decentralize the country’s economic system. It enabled the Egyptian state to relax foreign exchange regulations to stimulate a foreign capital influx. However, the unintended consequences of these policies were opening the door for Islamic financial institutions, which helped finance and popularize the middle class-based Islamic movement.

In Somalia the boom in labor remittances inflows fueled a different type of informal economy. More specifically, while the oil boom period reduced the Somali state’s ability to regulate the economy as in Egypt and Sudan, the consequences of this development differed. In Somalia informal financial networks facilitated a thriving commercial sector comprised of firms oriented around clan families. It was not religious or class affiliations, but rather ethnic mobilization and conflict that became the most salient. This difference was due to two factors: the dearth of formally organized institutions (i.e., official banks, and publicly registered enterprises); and the fact that President Siad Barre pitted one clan against another in his search for legitimacy and financed a patronage system excluding clans and constituencies that opposed his rule. Thus, with the expansion of the parallel economy, the politics of ethnicity and personalistic networks quickly eclipsed the power of the state.

Failed states, I argue in the conclusion, do not necessarily afford terrorists a conducive context for recruiting new members. This is due to four challenges that confront terrorist organizations. The first challenge is the lack of government-enforced order in failed states that is needed to provide security against local authorities. Second, is the unreliability of local allies, as in the case of Somalia, where local ties of clan and sect overlap in complicated ways. The third challenge is that the better an area is for training recruits, the more remote and sparsely populated it is, the harder it to meet basic sustenance needs. The fourth problem is the challenge of getting fiscal resources in place. Financial services in the region continue to be weak and Islamic militants have not been able to effectively use the Hawalaat to provide key financial services in weakly governed areas of the Horn of Africa.

Chapter 6 details how the collapse of the State in Somalia led to the emergence of severe inter-clan conflicts. These conflicts were rooted in wrenching political conflicts over the monopolization of labor remittances and local currencies and characterized by continued attempts to institute law and order through military and ideological means. In the wake of state collapse, remittances continue to represent the backbone of the Somali economy. These are transferred through informal banking systems and remain untaxed by local authorities. The informal economy’s efficiency in facilitating currency trade, and the extent to which ethnic and religious networks control access to the wages of expatriate Somali labor is determining the political fortunes of local elite’s and variable patterns of state building in different regions of the country. The Somali case calls into question the very principles and analysis of conventional state building and “sovereignty” of nation states in less developed societies.

Shifting to an examination of identity formation from below, Chapter 4 observes popular culture through music and opens a discussion on the nature of Iranian identity. Music is not only a cultural expression; in Iran it has also been used as a political tool and as part of resistance movements. Iranians voiced their allegiance with the revolution and their identity as Shiite Muslims through song-like protest chants and musical tracks. Protest chants and group singing heighten the meaning of words and help facilitate a sense of unity. These techniques were employed as an emotive force during the revolution and by later generations to proclaim their identity and as a form of resistance after the controversial election of 2009. The Green Movement is a pertinent example of how popular music is utilized by Iranians as a mode of expression. Consequently, popular music can be used as a tool for investigation in order to facilitate a better understanding of contemporary Iranian identity and society.