Given the rash of sukuk (Islamic bond) defaults which occurred in 2009, it is no surprise that an insurance entity backing sukuk would crop up and one has: The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), a division of the Islamic Development Bank (IDB), will soon be tasked with providing insurance on sukuk.

Again, the fact that IDB is involved with insuring sukuk is also not a surprise because it has become apparent that sukuk are the vehicle of choice for pushing Shariah-compliant finance on the world. In 2008, when we began posting on SFW, we came across sukuk stories only occasionally. Today, the news alerts dealing with Islamic finance and Shariah-compliant finance are dominated by numerous articles on sukuk issues. Clearly, sukuk are being used more than any other mechanism to promote and expand Shariah finance and, in turn, Shariah itself. Because the mission of the Saudi- Wahhabi- dominated IDB was dawah to begin with (that is, Islamic missionary operations), it makes all the sense in the world that IDB would be pulling out all the stops to promote the single most effective financial tool the Jihadists have at their disposal: sukuk.

The Saudi interest in promoting sukuk also explains to a great extent how sukuk were able to overcome a negative fatwa issued a few years ago by Pakistani Mufti Taqi Usmani, who declared most sukuk to be haram–NOT Shariah-compliant. Saudi money has a powerful way of changing hearts, minds and beliefs.

This is all very bad news for those of us who know that there is much to be worried about from Shariah-compliant finance. The market for sukuk is indeed growing by leaps and bounds and, with Saudi petrodollars propping them up, it’s just a matter of time before the oil-rich Muslim world insist that nations everywhere issue sukuk in place of conventional bonds.



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