Egyptian Television Preacher Campaigns on Behalf of Islamic Economic Ethics: “Crisis Should Be Used for the Triumph of Islam”
Bonn (November 3, 2008) – Several Islamic scholars and economic experts use the worldwide financial crisis as an occasion for a fundamental critique of Western capitalism and as the basis for an expanded campaign on behalf of an Islamic economic ethic and of investments in conformity with Sharia, declared Carsten Polanz from the Institute of Islamic Studies of the German Evangelical Alliance. According to the influential Egyptian television preacher and leading legal expert in Qatar, Yusuf al-Qaradawi, the collapse of the capitalist system based on “profiteering and paper profits” has shown that the economic philosophy of Islam has proven its worth. Al-Qaradawi, who enjoys great esteem in the entire Muslim world, as well as among the Muslim minority in Europe, summoned Muslims to profit from the crisis and, in this way, to bring about the triumph of the Islamic nation (umma), which has the spiritual and material resources at its disposal for achieving this victory.
Ethical Guidelines for Investments
Since Islamic law (Sharia) makes a claim upon the determination of the terms of the entire private and public life of the believer and of the society, those religious guidelines which have been taken either directly from the Koran or the Tradition (the acts and sayings of Muhammad) or have been derived from them by legal scholars over the course of time and in the confrontation with new developments also are valid for the believing Muslim in regard to economic life and the financial order. Thus, it is fundamentally forbidden (haram) to invest in such enterprises that make their money with arms dealing, pornography, alcohol and tobacco, gambling, or the sale of pork or such meat that has not been slaughtered ritually according to Islamic regulations.
The Prohibition on Interest, and the Third Way Between Socialism and Capitalism
In addition, the Koranic prohibition on interest is of fundamental significance for Islamic economic ethics. Thus, Sura 2:278f reads in part:
“O you who believe! Fear Allah, and give up what remains of your demand for usury, if you are indeed believers. If you do it not, take notice of war from Allah and His Messenger: but if you turn back, you shall have your capital sums: deal not unjustly, and you shall not be dealt with unjustly.”
Profits, thus, according to the exegesis by Muslim theologians, should be allowed only from commercial transactions and the rental of goods. Interest on money, by which the profit depends on the time factor alone, is in general rejected. The online journal Islamic Finance emphasizes that money must not be considered as a “self-operating means of gainful investment”, but rather as a “means for gaining prosperity for the totality of the Muslim community”. For this reason, private property, on the one hand, should be protected, but, on the other hand, possibilities for regulation should be conceded to the state in cases of the collision of individual economic freedom with the general welfare. Muslim scholars for this reason repeatedly have promoted a kind of third way between capitalism and socialism.
Search for Ways to Evade the Prohibition on Interest
On the other hand, international monetary transactions not involving interest are de facto hardly possible. For this reason, the following forms (among others) have emerged in the Islamic Finance sphere in the attempt, on the one hand, not to declare the prohibition on interest to be invalid – since this would constitute an inadmissible critique of Sharia – but to evade it in practice and to offer competitive alternatives to conventional investments:
- The so-called “murabaha”, for example, concerns a form of so-called surcharge financing. Instead of loaning money at interest, the banks buy the required goods for their customers and then sell them to those customers, who make payment by installment and whose payments include a fixed surcharge agreed upon previously.
- In the case of the so-called “musharaka”, customers and their banks together invest in a certain project and share profit and loss among themselves in accord with each party’s proportion of the capital share in the investment. Hans-Georg Ebert, professor of Islamic law in Leipzig, in Die Zeit compared the attempts made by Islamic Banking to evade the prohibition on interest with the “1000 completely legal tax tricks” known in Germany.
Increasing Demand for Investments in Conformity with Sharia
After the first bank to forego interest began its operations in the mid 1960s in Mit-Ghamr in Egypt, more than 300 banks in more than 75 countries have joined in this practice in the last forty years. The number of customers was estimated at more than a million already by the middle of the year. In the course of the worldwide financial crisis, the demand for investments in conformity with Sharia even in Western countries – above all in Great Britain – has increased enormously once again. Annual growth is estimated at 10% to 15%. German banks and insurance companies also already offer investments in conformity with Sharia in Islamic countries and plan similar offers for the coming years in Europe, too. The German Federal Bank already has proposed creating the legal and bank-specific supervisory prerequisites for Islamic banks. Banks and insurance companies that are active within the sphere of Islamic Finance, however, must have the Sharia conformity of their investments examined by a board of Islamic legal experts (a so-called Sharia Board). In view of the increasing similarities of Islamic Finance investments with conventional offers, an international Islamic adjustment organization, the Accounting and Auditing Organization for Islamic Financial Institutions, already is working on tightening the conditions for the Islamic legitimacy of investments.
In the desire to permit only investments in conformity with Sharia, or in the demand directed toward financial institutions to invest only in Islam-compatible firms and goods, the comprehensive claim of Sharia to regulate all areas of life comes to bear once more, even if, on the whole, little that is concrete in regard to the subject of economics can be taken from the Koran and the Tradition.
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