Islamic Finance or Financing Islamism?

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1 FACTBOX:Key Facts About Islamic finance,

2 Finance Minister Gordon Brown Speaks at the Islamic Finance and Trade Conference,  Speech available at the British embassy website in Washington D.C.,

3 The term Western as used in this paper does not connote a  geographically-defined category,  but the much broader  community of  countries and nations that embrace the basic western values of political pluralism and democracy, free market capitalism, separation of church and state and essential human rights.

4 Remarkably this is the case not only with most academic writing purporting to explain what Islamic finance is, but also with literature emanating from Western government agencies and international financial institutions. See, for instance, Clement M. Henry and Rodney Wilson eds., “The Politics of Islamic Finance,” Edinburgh University Press, 2004; Mahmoud Amin El-Gamal, ”Overview of Islamic finance,” Occasional Paper #4, Office of International Affairs, Department of Treasury, World Bank, August 2006; Zamir Iqbal, “Islamic Capital Markets: Prospects and Challenges,” Available in PDF form from the World Bank website.

5 Nasser M. Suleiman, Corporate Governance in Islamic Banking, available at

6 A.L. Janahi, Islamic Banking, Concept, Practice and Future, Bahrain Islamic Bank, Manama, 1995. P.42

7 Ibid. p.29

8 Sura 45:18 – “And now we have set you on the right path, follow it.”

9 Bassam Tibi, The Challenge of Fundamentalism: Political Islam and the New World Disorder, University of California Press, 2002, p. 168.

10 The founders of the four schools (Hanafi, Maliki, Shafii and Hanbali) are Abu Hanifa (699-767), Malik ibn Anas (713-795), Muhammad ibn Idris Al-Shafii (767-821) and Ahmad ibn Hanbal (781-858).The “Golden Age” of Islam under Muhammad and the ‘rightly-guided’ Caliphs lasted from 622 (the year of the Hijra) to 661; the Umayyad Empire from 661 to 750 and Abbasid rule from 750 to 1030.

11 The leading shariah jurists of these schools lived under the Umayyad and Abbasid empires that are universally acknowledged by Muslim historians to have transformed the early Islamic rule of the “rightly guided caliphs” into an oppressive and corrupt hereditary tyranny and it is highly unlikely that they were not influenced in their interpretations by the political interests of the corrupt and all-powerful Caliph and the ruling aristocracy for whom the clerics usually worked. Here is how Sayyid Qutb, the radical Islamist ideologue, describes the Umayyad period in his “Social Justice in Islam” (Islamic Publications International, 2000), p.231:

“From Umayyad times all restrictions on the public treasury were removed, and it became a legitimate source of plunder for the kings, their courtiers and their sycophants. The bases of Islamic justice were destroyed, and the treasury became the perquisite of the ruling class, a source of profit for their followers, and a source of income to their hangers-on. The Caliphate became a monarchy, and a tyrannical monarchy at that, as the Messenger once said that it would in a sudden access of profound spiritual insight.”

12 Abdullahi Ahmed An-Naim, “Toward an Islamic Reformation,” Syracuse University Press, 1990, p.58

13 See, for instance, the discussion of naskh in An-Naim’s Toward an Islamic Reformation, op.cit. pp.57-68

14 The Reliance of the Traveler is one of the few shariah compilations that is both authoritative (and certified as such by both Al-Azhar and radical Islamist scholars like Taha Jabir al-Alwani, president of the International Institute of Islamic Thought and the Fiqh Council of North America) and available in a good English translation.

15 These and many other shariah tenets from Reliance of the Traveller are exhaustively documented in

16 For the disastrous practical effects of shariah imposition on human rights and political freedoms today see Paul Marshall ed.  “Radical Islam Rules: The Worldwide Spread of Extreme Sharia Law,” Rowman and Littlefield Publishers., 2005

17 It is interesting to note that Suleiman II, the Ottoman Sultan, during whose reign kanun was firmly established, was known to the Europeans as Suleiman the Magnificent, but to his Ottoman subjects as Suleiman Kanuni (the Lawgiver).

18 Far from being an original Islamic concept, the prohibition of usury was a standard feature in virtually all civilizations and religions preceding Islam, including ancient Greece, Judaism, Hinduism, Buddhism, Christianity and Rome. See Wayne  A.M. Visser and Alastair McIntosh, “A Short Review of the Historical Critique of Usury,” in Accounting, Business and Financial History, 8:2, Routledge, London, July 1998, pp. 175-189.

19 Timur Kuran, “Islam and Mammon: The Economic Predicaments of Islamism,” Princeton University Press, 2004. p. 14. Also see Prof. Kuran’s earlier study “The Economic Impact of Islamic Fundamentalism,’ in Martyn E. Marty and R. Scott Appleby eds., Fundamentalisms and the State, The University of Chicago Press, 1993, pp. 302-341.

20 Sevket Pamuk, A Monetary History of the Ottoman Empire,” Cambridge Studies in Islamic Civilization,

Cambridge 2001, p. 81

21 This controversy took place in the 16th century and was resolved in favor of the cash vakifs when a majority of the Ottoman ulema found interest lending beneficial to the community and the highest religious authority of the land, the sheikhulislam Ebusuud Efendi opined that the abolition of interest lending by the vakifs would lead to their collapse and harm the Muslim community. See Pamuk, op.cit. p. 82 and J.E.Mandaville, “Usurious Piety: The Cash Waqf Controversy in the Ottoman Empire,” International Journal of Middle East Studies, #10/1979, pp. 289-308.

22 The best discussion of Mawdudi’s contribution to Islamic Economics is in Kuran, op.cit. especially Chapter 4, The Genesis of Islamic Economics.

23 Kuran, Islam and Mammon, p. 90.

24 Qutb’s economic ideas are developed in his book “Social Justice in Islam,” especially Chapter 6, Economic Theory of Islam, pp. 127-167. Also see S.A. Ahmad, Economics of Islam, Lahore, 1958.

25 Ibid. p. 306

26 Saudi oil revenues are reported to have jumped from $1.2 bln in 1970  to $95 bln in 1980. William B. Quandt, Saudi Arabia in the 1980s: Foreign Policy, Security and Oil, Brookings Institution Press, 1981, p. 161.

27 This was not a totally new development and many of the Wahhabi front organizations serving Saudi interests, like the Muslim World League (MWL) and the World Assembly of Muslim Youth (WAMY), as well as Saudisponsored Western outposts of radical Islam such as the Muslim Student Association (MSA) in the United States and its counterparts in Germany and Great Britain preceded this drive by a decade.

28 See Alex Alexiev: Wahhabism:State-Sponsored Extremism Worldwide, testimony to the US Senate Subcommittee on Terrorism, Technology and Homeland Security, June 26, 2003, available online at https://kyl.senate,gov/legis_center/subdocs/sc062603_alexiev.pdf.

29 Ibid. The original source is the Saudi English language government newspaper Ain Al-Yaqeen, March 1, 2002.

30 “Islamic Finance Gears Up,” in Finance and Development, Vol. 42, #4, December 2005, IMF, and Arab News, June 20, 2007

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