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U.S. Government Embraces Islamic Banking
No short-term gain is worth the long-term danger presented by these murky, Islamist-backed financial mechanisms.
The role of religion in secular and global institutions presents unique concerns that should be scrutinized since true checks and balances are not possible where deference to religious heads is unavoidable. In the case of SCF, only Sharia scholars can decide whether a financial product is permissible (halal) or not. They are thus the only individuals who can theorize as to why or how a product can become “halal.” This removes the ability of all practitioners who are not part of the SSB from engaging in product development beyond doing what they are told to find and prevent any illegality. If questions of fraud, breach of duty, negligence, criminal liability, etc. arise over any transactions, these same individuals will nevertheless remain liable.
Consider the current global crisis related to subprime mortgages as a point of comparison. Who did what and how is on everyone’s mind. Was the cause naïve consumers or predatory lending? Financial products are complicated as it is without throwing the element of religion into it. Moreover, Secretary of the Treasury Paulson does not have the answers, though he is in charge with no apparent oversight.
In its worst-case scenario, SSBs act just as unilaterally, can go back on previous decisions, or contradict the decisions of other SSBs. Who is right and who decides? What administrative body or court in the U.S. is in a position to question a Sharia-based product? Even if transactions state New York as the jurisdiction for dispute resolution, the courts must invariably rely on Sharia-based decisions from foreign courts for theories and interpretation. If a U.S. court offers a decision based on its own theory, who will make the decision binding since Sharia is divine, i.e., not to be superceded by secular law?
Besides religion, subversive political goals are another unique element inherent in SCF that subprime avoided. Renat Bekkin, international law lecturer at the Moscow State Institute of International Relations (MGIMO-University) and proponent of SCF in Russia, stated in an interview to New Horizon, the oldest Islamic banking magazine in the UK, that not all Muslims in Russia favor SCF because they see it as form over substance, like creating Islamic whiskey.
For some other Muslims, Bekkin argues, “practicing all principles of Islam, including in the financial sphere, is essential.”
This latter group concerns critics of SCF because they are part and parcel of the global Islamist movement. Advocates of Islamism define Islam as a complete sociopolitical system that should govern one’s personal and private life. This is a 20th-century phenomenon fueled internationally by oil profit in the Middle East. First articulated by non-scholars like Syed Qutb, Abul Ala Mawdudi, and Hasan al-Banna, this totalitarian ideology has evolved into the separatist Salafi movement, which encourages segregating Muslims from non-Muslims through violent jihad and non-violent means.
The Coalition to Stop Sharia believes SCF is one such non-violent strategy since the Islamist movement advocates replacing capitalism and democracy with Islamic law, or Sharia. While many progressive Muslims argue and reinterpret Sharia in ways compatible with universal human rights and democracy, their position remains theoretical. In practice, Sharia remains an archaic understanding of human relations as evidenced by Saudi Arabia, Iran, Pakistan (in partial codification), etc.
In this context, practitioners of SCF who are Muslim and non-Muslim and who reside in democratic nations like the United States put themselves in the position of unintentionally aiding and abetting seditious activity by promoting particular SCF institutions, individuals, or transactions that are potentially Islamist. How we are to know what is and is not is beyond the scope of the U.S. government or the U.S. banks that seek to profit from SCF.
Further, by not alerting consumers and clients of the “dark side” of SCF, these same practitioners are potentially failing a duty of care by not providing material information from which a consumer can make what a court would consider a well-informed decision.
Thus, it is a mistake for the U.S. Treasury to host a seminar to “inform” the public of SCF, without including the criticism. Jumping into a new, little-understood industry like SCF, with the same zeal for profit evident in subprime lending, could lead to new problems in the future. By addressing the Coalition’s concerns, the government could create the appropriate regulation, oversight, and transparency mechanisms to counter the possible threat Islamists present to the SCF industry. Or simply realize that the short-term gains are not worth the long-term dangers Islamism’s mission against the West presents.
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Supna Zaidi is assistant director of Islamist Watch, a project of the Middle East Forum. She can be reached at zaidi@meforum.org.
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19 Comments
1. Typewriter King:I like the article, but part of your criticism is deceptive in that you raise an alarm about the government deferring regulation to a non-government authority, when is fairly common practice for the government to defer to private authority boards. Our movies are regulated by the Motion Picture Association of America, with similar boards governing the rating systems for other forms of entertainment. Universities are accredited by non-governmental agencies. Moody’s, Standard & Poor, and other agencies rate our debt instruments, and so on.
And I don’t think religiosity in itself in traditionally ’secular’ enterprises is all that confusing from a legal standpoint. Our courts have a lot of experience handling Establishment Clause and Wall of Separation cases over time, and it is fairly well understood, in American Conservative circles, anyway, that an Order of Precedence exists with the Constitution as the highest law in the land, and we have an idea of where precedence ranks, and common law, state law, federal law, and so on. From there we have a framework for recognizing religious liberty without yielding to what some have come to know as Dominionism.
None of this is to deny the gathering trend of creeping sharia- I’m worried about the emergence of an Islamic arbitration system spreading in influence- but I’m not convinced Islamic banking can ethically be opposed any more than Christian bookstores.
Nov 24, 2008 - 2:40 am 2. Sara:Obama would rather go to the gym than church. He doesn’t want to risk offending the Muslims.
It was easier for the Greeks when Xerxes, son of Darius, the Great King of Persia, invaded Greece to punish the Athenians for earlier misdeeds. The Greeks knew the invasion was afoot, and so prepared.
http://www.saraforamerica.com
Nov 24, 2008 - 5:26 am 3. veracious:America, meet your new, soon to be masters. You’ve allowed your government and monied interests to transfer many trillons of dollars, to your enemies and _friends_ around the world. This wasn’t reciprocal, those dollars, representing your wealth, are now theirs.
You’ve allowed those same dollars to return and influence your government, institutions, news services and corporations, to increase the outpouring of wealth. Those foreign dollars now own large, often controlling shares of said organizations. What used to be your institutions, now make decisions in the best interests of their new owners, not we the peoples.
The new owners refused to allow USA to use its own oil or keep its own manufacturing, prefering to move these essential and profitable items to their homelands. This was done under hundreds of different disguises and proxies agents.
The outpouring of wealth is so vast that now foreigners subltely fund the President and congressional campaigns and there isn’t anything that can be done about it. As a matter of fact there isn’t even hardly a word of honest journalism regarding it; new owners hired new editors and journalists.
Now the US Treasury vault, has been thrown open to protect the financial losses in foreigner capital invested in USA. Of course there is plenty of plunder for all of those who’ve been aiding and abetting the tranfer of wealth.
Now, since a large portion of the new owners are Muslims, they will bring Sharia law, whether anyone US citizen likes it or not.
Can anyone say duh…
Nov 24, 2008 - 9:32 am 4. US Election On Best Political Blogs » Blog Archive » Pajamas Media » U.S. Government Embraces Islamic Banking:[...] Pajamas Media » U.S. Government Embraces Islamic Banking On November 6, 2008, the US Treasury Department hosted a seminar on Islamic banking to train government employees on Sharia-compliant finance (SCF). According. [...]
Nov 24, 2008 - 11:42 am 5. Robert:Kick the bums out.
Nov 24, 2008 - 2:00 pm 6. Daily Pundit » What Do You Mean, You Don’t Pay Interest?:[...] Pajamas Media » U.S. Government Embraces Islamic Banking On November 6, 2008, the U.S. Treasury Department hosted a seminar on Islamic banking to train government employees on Sharia-compliant finance (SCF). According to a press release, it was “designed to help inform the policy community about Islamic financial services, which are an increasingly important part of the global financial industry.” [...]
Nov 24, 2008 - 2:25 pm 7. locomotivebreath1901:“but I’m not convinced Islamic banking can ethically be opposed any more than Christian bookstores.”
Comparing a religious bookstore to banking regulations and financial instruments is silly.
Other world banking has far more detrimental legal and business ramifications than a religious bookstore ever will.
But I think this poster is missing the bigger point of aggressive islamization in much of the Western world.
All one has to do is look at the horrendous trouble cities like Brussels, London , Paris, etc., have with their sizable – and frequently violent – Muslim populations. Populations which refuse to integrate into European culture, demanding a separate, but equal standing with their own banks, courts, schools and customs that the Muslims then demand the host country to accommodate & conform.
Google ‘muslims sue’ and see the enormous legal effort Muslims already exert against Western laws, custom and culture.
The article hits a home run with the issue of national security.
Our efforts in the GWT are thwarted enough already with trying to close off nefarious Muslim ‘charity’ organization in the U.S. which funnel funds to terrorists.
We don’t need to be condoning & facilitating dubious banking institution on our own soil which would very likely engage in much of that same activity.
Sharia law must be stopped at every slippery slope turn, every time it raises its ugly head.
Nov 24, 2008 - 2:40 pm 8. Arius:Somehow, Islamic banking must be snuffed out before it gets traction in the US. Unfortunately the US just elected the stealth Muslim President.
Nov 24, 2008 - 2:53 pm 9. Yaakov Watkins:This is ridiculous. For centuries, Jewish law has regulated financial dealings between Jews. We attempt to deal through religious courts rather than using civil courts. It doesn’t hurt anyone. We have agreed among ourselves to follow a slightly different set of standards. If a civil court intervenes, we have to follow the civil court. Jewish prenuptial agreements have been upheld by civil courts. (The standard prenuptial is much more supportive of women’s financial concerns than American courts.)
An American company which does business in any other country operates under a different legal system. Companies which operated in South Africa, had to find a way around American civil rights legislation. American concerns dealing in Saudi Arabia deal with these issues every day.
There are many countries around the world where American companies operate and bribery is a way of life. It gets dealt with.
As long as companies under American jurisdiction are following American law, we have no beef. If laws are being broken, then someone should blow the whistle. Until then, I have other things to worry about.
Nov 24, 2008 - 9:42 pm 10. Marie Claude:The U.S. is behind European nations like the UK and France, which are actively promoting Islamic banking.
yeah, “Societé Générale, BNP Paris-bas, Crédit Agricole, Banque Populaire, CIC”… are promoting islamic banking !!! what a BS, I thought that, so far, (at least it’s what was usually told in the good ol american MSM), that our muslims were only sucking our wealthfares, and not providing “money” !!!
our banks are mainly alimented by our population and industry savings and or state participation
how could a pigs breeder share his bank accounts with muslims ?
We all know that the city bankers of London don’t breed pigs but international money, seems also that Ben Laden has his traders there …
Nov 25, 2008 - 10:24 am 11. U.S. Government Embraces Islamic Banking: No short-term gain is worth the long-term danger presented by these murky, Islamist-backed financial mechanisms. « Count Us Out:[...] to continue reading: http://pajamasmedia.com/blog/us-government-embraces-islamic-banking/2/ [...]
Nov 26, 2008 - 4:08 am 12. Jason Sieckmann:Business as usual.
It’s all IMF and FRC douche bags that do nothing but restrict ACTUAL capitalism at every turn in favor of Mercantilist and Socialist doctrines and ‘committees;’ also called ‘Soviets,’ by the Russians when they were doing things like the NEC.
Capitalism is an organic process; and it cannot be limited to the whims of a few ‘respected’ men at large tables. It must take place between traders that respect one another; and cannot function under any supposed ‘humanitarian’ interest; as that itself is a whim of mass-minded simpletons.
We must be AGGRESSIVE with these people, and let them know that their positions are AFFORDED to them by the IGNORANCE of a broad group of MORONS amongst the regular folk.
The best way? To show them that we will NOT be taxed without CONSENT: http://mediacondom.com/?p=263
Nov 26, 2008 - 10:16 pm 13. US Gov EMBRACES ISLAMIC BANKING-Whats’ going on Here? « Centurean2’s Weblog:[...] parallel societies, particularly of the Islamic variety — until now. The U.S. treasury recently began teaching so-called “Islamic finance” to U.S. banking regulatory agencies, Congress, and other parts of [...]
Nov 28, 2008 - 4:21 am 14. Whats’ Going On…UK Goes Sharia..Now USA Going down the same Dhimmi Road? « uk1884:[...] parallel societies, particularly of the Islamic variety — until now. The U.S. treasury recently began teaching so-called “Islamic finance” to U.S. banking regulatory agencies, Congress, and other parts of [...]
Nov 28, 2008 - 4:24 am 15. Steynian 291 « Free Canuckistan!:[...] COMPLIANT– U.S. Government Embraces Islamic Banking …. [...]
Nov 28, 2008 - 8:25 am 16. WestGuard:Not one slimy tentacle of barbaric sharia law should be allowed to get a foothold in America.
Nov 28, 2008 - 9:54 pm 17. mm:Wow, it’s great to see Daniel Pipes and his staff spending time attacking free trade and capitalism. Richard Pipes will be impressed.
What’s the big deal if we have financial products that comply with religious law? Woops, I forgot. You have to belong to the right religion.
They must pay Sapna Zaidi well to put up with this kind of environment. Either that, or she has no respect for her heritage.
Dec 19, 2008 - 11:46 pm 18. sr:What a load of tosh. People who criticise viable services and products based on their origins may be why the world is in the s**ts in the first place.
Dec 25, 2008 - 2:08 pm 19. Sharia? No Thank You. - melissatx’s Diary - RedState:We need more level-headedness, not scaremongering.
[...] US and anyone practicing Sharia law or Sharia finance should be deported, including those in the US government that allow it and train for [...]
Oct 13, 2009 - 2:46 pm