Exclusive: Islamic Finance or Financing Islamism?
Author: Alex Alexiev
Source: The Family Security Foundation, Inc.
Date: October 24, 2007
Western financial institutions have plunged into the rapidly growing phenomenon of Islamic finance as a way of grabbing their share of the huge amount of petrodollars floating around in the Middle East. But what exactly is Islamic finance? FSM Contributing Editor Alex Alexiev’s alarming report exposes what it is, how it came about, who promotes it, and what its objectives and implications are.
Islamic Finance or Financing Islamism?
By Alex Alexiev
Beginning in the 1970s, a little-noticed phenomenon called Islamic, or Sharia, finance made an appearance first in the Muslim world and eventually in the West. In the past few years, as oil prices climbed to unprecedented levels, generating huge pools of liquidity in the Middle East, Sharia finance has skyrocketed commensurately and is now the fastest growing segment of international finance with some 400 banks participating in it and close to a billion dollars under management, growing at 15% or more annually. Western financial institutions and even governments have eagerly jumped in the fray and most large Western banks today offer some Islamic financial products.
Despite its rapid growth, Sharia finance remains largely a mystery to the public at large and even to financially-literate people. This is because despite some extravagant claims made on its behalf by its promoters and practitioners, there is precious little public information on what Sharia finance actually is, how it came about, who promotes it and what are its objectives and implications.
Advocates of Sharia finance claim that it is a faith-ordained, morally-superior, ethical and lucrative alternative to conventional finance. And it is all of these things, it is said, because it adheres strictly to the prescriptions of Islamic sacred law or Sharia, which governs each and every aspect of a Muslim’s life. Indeed, the sole criterion of whether or not a given financial transaction is Islamic is its full compliance with Sharia law as certified by established Sharia scholars. Yet neither the proponents of Sharia finance nor its Western practitioners disclose much about Sharia, except that it prohibits interest, speculation, and a few other unlawful (haram) activities and mandates alms giving.
This is not a coincidence but a deliberate policy by the practitioners of Islamic finance for the simple reason that revealing the philosophy and detailed prescriptions of the obscurantist medieval doctrine called Sharia to potential investors and the wider audience beyond would almost certainly cause a backlash against the whole concept of Islamic finance and put its very legitimacy in question. This is potentially a huge problem for Western institutions offering Islamic financing because their failure to disclose what Sharia really advocates borders on willful if not fraudulent misrepresentation.
So what exactly is Sharia law and what does it mean for Western institutions that are eagerly embracing it?
Far from being “God’s sacred law,” Sharia is mostly a post-Koranic, man-made medieval doctrine that is reactionary to the core and completely at odds with modern norms of human rights, political freedoms and international relations. Moreover, it has been of little use to Muslims as a code of jurisprudence historically and is much less so in today’s modern world. It mandates, for instance, the killing of homosexuals, apostates from Islam and those guilty of adultery – all postulates that are not found in the Koran. It openly discriminates against women and infidels, considers slavery legitimate, and posits offensive military Jihad against the non-Muslims as a religious obligation. Western advocates of Sharia finance should also be interested in Sharia tenets that permit Muslims to lie to the infidels and to bribe them to convert to Islam. It is because of its extremist nature that Sharia has become the rallying cry and core ideology of radical Islam today.
There clearly are many people and institutions involved in this phenomenon, especially among its Western practitioners, that are motivated solely by the promise of quick profits offered by the sea of petro-dollar liquidity sloshing around the Middle East at present.However, for those who invented the concept and are busily promoting it around the world, Islamic finance has very little to do with finance and everything to do with Islam. And not just any kind of Islam, but the most radical, fascist-like interpretation of the Islamic religion that has increasingly become the dominant idiom in the Muslim world. Whether it is called Islamism, Islamofascism, radical Islam or whatever, it is a hateful, millenarian ideology much like Nazism and communism that ultimately hopes to destroy Western civilization by whatever means necessary.
Even a perfunctory look at the history of Sharia finance reveals its highly political, Islamist nature. Neither Islamic economics nor its offshoot Islamic finance existed even as concepts until invented in the middle of the 20th century by the two patron saints of radical political Islam, Abul Ala Mawdudi of Pakistan and Sayyid Qutb of Egypt. And it took decades after that before the first Islamic banks appeared in the Middle East in the mid-1970s, yet another testimony to its fabricated nature.
In strictly financial terms, Sharia finance was essentially a bogus concept from its inception, since it is virtually impossible to transact financial operations in the absence of interest and at least some speculation and uncertainty. Thus, Islamic finance is little more than a series of elaborate ploys and ruses designed to disguise the fact that it engages in both. This is not surprising, since there can no more exist Islamic finance than Christian physics or Buddhist biology.
There is nothing bogus about the objectives of Sharia finance, however. It has steadfastly pursued two main goals: aiding and abetting Islamic extremism and terrorism and legitimizing Sharia as an instrument of promoting radical Islamist ideology. From the first Islamic bank founded in 1975, the Islamic Development Bank (IDB), which transferred hundreds of millions of dollars to HAMAS to support suicide bombing, to the notorious terror financier Al-Taqwa Bank and the Islamic banks and charities run by the “Golden Chain” group of Saudi billionaires funding al Qaeda and the like, Islamic finance has served as the life-support system for radical Islam worldwide.
Efforts by Islamic finance to legitimize and gradually implement the reactionary Sharia code in the West as a way of controlling Muslim communities and separating them from mainstream society may be even more damaging in the long-term. There is no doubt that the embrace of Sharia-compliant finance by Western banks is major step in that direction. It is difficult to see, for example, how British prime-minister Gordon Brown, who wants to make London the world center of Sharia finance, can simultaneously insist that Sharia is great for London finance, but is not good for London Muslims when they next demand its implementation as family law in their communities.
Apart from its pernicious influence in legitimizing medieval obscurantism in the 21st century, Sharia finance has two additional highly troubling aspects.
All institutions offering Islamic products are required to hire Sharia advisors to certify that they are “Sharia-compliant.” For the most part, these experts, like the Muslim Brotherhood’s Sheikh Yusuf Qaradawi, are radical Islamists trained and indoctrinated in the Wahhabi or Deobandi-controlled Sharia faculties in Saudi Arabia, Pakistan and elsewhere.They are the intellectual driving force behind the hateful Wahhabi/Salafi ideology of Islamism and the leading theological enablers of extremism and terrorism. By hiring such people and paying them large fees to bless their Islamic financial offerings, Western banks become unwitting sponsors of radical Islam.
Second (and no less troubling) is the matter of zakat, or almsgiving, in Sharia finance. There is, of course, nothing objectionable to charitable giving, but in this case, as in much else to do with Sharia the devil is in the detail. And the devil has to do with who has the right to receive zakat and who distributes it.According to the Koran, there are eight categories of deserving zakat beneficiaries and four of them have been interpreted by Sharia scholars, including the influential secretary general of the Muslim International Organization for Zakat, to fall under the category of “financial jihad,” which essentially permits and legitimizes zakat distribution to extremist and terrorist organizations. Thus, the 2.5% of their revenue from Islamic finance Western banks must contribute as zakat could easily serve to fuel terrorism, while exposing them to the real risk of providing material support to terrorism.
None of these highly pertinent material facts are ever disclosed by the Western institutions seeking quick profits from the sea of petrodollar liquidity sloshing around the Middle East through Islamic finance. Whether they know it or not, these eager converts to Sharia finance end up becoming, at best, unwitting dupes, and at worst, willing fellow-travelers of the Islamists promoting it.
Editor’s note: For a more comprehensive look by Alex Alexiev into the world of Islamic finance, click here.
# # FSM Contributing Editor Alex Alexiev is co-executive producer of Islam vs. Islamists: Voices from the Muslim Center and a partner with Martyn Burke and Frank Gaffney in ABG Films Inc. read full author bio here
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Note — The opinions expressed in this column are those of the author and do not necessarily reflect the opinions, views, and/or philosophy of The Family Security Foundation, Inc.