Islamic Finance or Financing Islamism?

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31 In January 2007, UK Treasury minister Ed Balls announced a number of regulatory measures designed to facilitate Islamic finance in Great Britain. “Today I’m able to set out the next stage in our reforms to ensure the tax and regulatory system will encourage the development of Sharia compliant products…. Today is an example of public and private sectors working together to fulfil our shared ambition of creating major international markets in Islamic finance with London as their center.” The Halal Journal, Jan. 31, 2007.

32 This and other ruses widely used by today’s Islamic financiers are hardly novel and some were used by Christian businessmen during the Middle Ages to conceal interest transactions during periods when the church had prohibited them. A fairly popular one was called contractum trinius (triple contract) which consisted of three separate transactions that individually did not involve interest, but taken together amounted to just that.

33 For details see Kuran, Islam and Mammon, pp. 10-11

34 Mahmoud el-Gamal, Mutuality as an Antidote to Rent-Seeking Shariah-Arbitrage in Islamic Finance, Rice University, April 2005, Fatwa fraud is nothing particularly new and is present in even the most prestigious of Islamic institutions. Recent investigations in the Darul Uloom Islamic seminary in Deoband, India, the most prestigious institution of its kind in South Asia, revealed that “Islamic legal rulings are not only for sale in India, but can be tailor-made to suit the purchaser’s needs.”  See “Bungs for Fatwas”in

35 For instance, the sukuk bond issued by the German state of Saxony-Anhalt is openly based on the EURIBOR (European Interbank Rate) interest rate.

36 Richard Morais, “Don’t Call it Interest,” Forbes, 07.23.07 available in https://members.forbes/2007/0723/122.html.

37 Prof Mahmoud A. El-Gamal citation

38 Kuran, Islam and Mammon, p. 16 The bogus nature of Islamic financing has been subjected to a devastating critique also from the viewpoint of devout non-Islamist Muslims. The Turkish scholar Suleiman Uludag, for instance, who uses classical Islamic scholarship as a starting point of his critique has this to say: Those that insist on banning interest are ignorant of Islamic history and guilty of misinterpreting the Quran, which bans not interest but usury, or exorbitant interest. And those who appreciate the impossibility of doing business without interest and who, for this reason, tolerate various ruses are guilty, in addition, of promoting dishonesty and hypocrisy. This is a serious crime against Islam, a religion that stands for truthfulness. It is also a grave offense against God: even if interest were unlawful, it would be a lesser sin to deal in interest openly than to cloak it in practices aimed at deception. As cited in Kuran, p.16

39 According to a new McKinsey study, the petro-dollar assets of oil producers grew from $1.2-$1.3 bln in 2000 to $3.4-$3.6 bln in 2006 and are projected to reach $5.9 bln in 2012. They are already bigger than the combined assets of Asian central banks and more than twice the size of all hedge funds. At a price of $70/barrel, oil producers have $2 bln to invest per day. See “Financial Globalization’s New Power Source,” Wall Street Journal, October 4, 2007.

40 See, for instance, J. Millard Burr and Robert O. Collins, Alms for Jihad: Charity and Terrorism in the  Islamic World, Cambridge University press, 2006, Rachel Ehrenfeld, Funding Evil, Bonus Books, 2003, Johannes and Germana Dohnanyi, Schmutzige Geschaefte und Heiliger Krieg, Pendo Verlag, Zurich 2002 and Lucy Komisar, Shareholders in the Bank of Terror, date?

41 An open expression of this agenda is the following statement from the Al Islam publication of the Muslim Brotherhood in Germany: “In the long run, Muslims cannot be satisfied with the acceptance of German family, estate and trial law… Muslims should aim at an agreement between Muslims and the German state with the goal of a separate jurisdiction for Muslims.” Cited in Lorenzo Vidino, Aims and Methods of Europe’s Muslim Brotherhood, Current Trends in Islamist Ideology, Vol. 4, Nov. 2006

42 For instance, the Swiss bank UBS includes the following description of shariah on its website “The sharia is therefore an evolving body and permits Muslims to adapt the practice of the religion to the time and place they live.”

This statement, which presents sharia as a flexible legal doctrine capable of adaptation and modernization, is not just plain wrong; it appears to be deliberate disinformation about what shariah represents. See, accessed 9/24/07.

43 According to one source, these “rock star sharia scholars” may sit on 40 or 50 sharia boards each and receive $20000 -$30000 annually from each one.  Richard C. Morais, “Don’t Call It Interest.” Available at

44 “Islamic Finance Moves into the Global Bulge Bracket,” Gulf States Newsletter, Sept. 23, 2007. Available at

45Andrew Norfolk, “Our Followers Must Live in Peace Until Strong Enough to Wage Jihad,” London Times, Sept. 7, 2007.

46 See and Lt Col Jonathan D. Halevi, What drives Saudi Arabia to Persist in Terrorist Financing? Al-jihad bi-al-Mal- Financial Jihad Against the Infidels. Jerusalem Center for Public Affairs #531, June 1, 2005

47 There is at present virtually no available information on how much zakat is collected and how the funds are distributed except for figures indicating that Saudi Arabia alone generates some $9 billion of it per annum.

48 Kamel is chairman of the most influential Islamic banking institution, the General Council of Islamic Banks and Financial Institutions (GCIBFI) and president of the Islamic Chamber of Commerce and Industry (ICCI).

49 See “Plans to Establish World Fund for Zakah”, Arab News, Jeddah, Oct. 26, 2006 and “New Model for Future of Islamic Banking Planned,” Arab News, June 20, 2007.

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