The Global Financial Crisis Reinforces Calls For An Islamic Economy

Professor Vladimir Chukov

Although the first symptoms to overcome the acute financial crisis that engulfed the developed economies in the Muslim world, increased forecast that is the end of capitalism “.  Politicians, financiers and theologians increasingly active launch of the opinion that a matter of time western economy finally yielded to a new economic model.

Liberalism will have the same fate as that of Marxism. After a compromise was found Marxism total liberal hegemony, dominates the entire world. Liberalism has lost its moral stand.  Current economic earthquake is only a “financial bubble of the overall crisis.  The place of liberalism will be occupied by “Islam as a factor of development, consolidation and resistance.” 

Group of theologians from university Al Ahzar in Egypt are proponents of similar ideas.  Naturally, they tend to theorize more than personified future Islamic paradigm.  Expert theologians called to convene a meeting of specialists Global Congress of Islamic economics.  According to them it is high time to define the stages of institutionalization of shariatskiya business model to give a true alternative to the current crisis.

Member of the Association “Islamic studies” Dr Sheikh Abdel Fatah claimed that functioning economic models have failed because “based on interest and sale of virtual goods, the price the buyer can not cover.” According to Islamic investment are always liquid, unlike Western “He still reinsure with the argument that if during the past days had Islamic financial institutions were also affected by the crisis, it’s happened, since they only formally identified as Islamic.  Financier believes that in practice they operate with real instruments typical of Sharia.

Another economist, theologian, Sheik Youssef Badri, ensure that Islamic finance has been very accurate in their predictions.  Years ago, they analyzed the largest recession in the U.S. than 20 years of last century and predicted that after 90 years, capitalism will collapse. ”  Adopting the current crisis as “the beginning of the end”, Badri noted that the process has even begun two years earlier.  At the same time the expert makes sharp criticism against the “oil states”.  The latter have been warned that using too many “traditional” and not Islamic, financial rules.  Thus they have become the victim of a bank shot.

Specialist in economics Mahdud Zauaui the pages of Saudi website, Al mufakirat al-Islam raises the question: “When will come the Islamic alternative?” He remains cautious in its forecast.  The researcher describes the ideal Islamic version, in which state coercion is eliminated on human labor, characteristic of communist economic paradigm.  Zauaui noted that economic communism removes personal initiative and thus maintain low labor productivity.  At the same time, adepts of the economy off shariatskata total withdrawal of the state, because then “the greed of the business will rob labor of the producers.” He calls for a model, whose prototype was the Bank of the poor “Bangladeshi finasist of Younes Mahmoud, received the Nobel Peace Prize in 2006

The latter was rated so highly by the committee in Oslo for providing, for years, a low-interest loans to their poorer compatriots.  Thanks to this economist from Bangladesh has created and supported many small business owners, ensuring their integrity existence.  Questions that did not meet Zauaui, gave Mahmoud has been able to refinance its bank capital only through interest from loans or just had correspondent accounts at institutions with many more working capital.  The latter are usually outside the Islamic economic zone.  Sometimes there are significant dividends received from deposits made.

On the other hand it is good to consider why the banker from Bangladesh has been awarded the most prestigious award for his contribution to peace and not in the field of economics.  His work deserves admiration for his generous sponsorship through which he has saved thousands of his starving countrymen.  It can however be argued that creates Mahmoud stranger to global finance to date, economic model.

 Advertised by business experts Islamic alternative is a hybrid of socialliberalizam and social conservatism.  In the first case the state is obliged to provide tools for broad social support, and in the second – this should make the representatives of the class of rich businessmen.  Example in this regard has already been cited Bangladeshi banker.  Shariatskite economists ignore the final parameters of the relationship between state and market.  They reject 100% st state intervention, but at the same time and against its total withdrawal.  In fact, they call for the creation of a social market economy, which is constitutionally secured in many Western countries.

trnstd source : orientbg

Effect of economic turmoil on Islamic banking x-rayed

Legislation, governance and the effect of the economic crisis on Islamic banking and finance were the focus of a conference that was held last January 2010. The global economic turmoil was a test for both conventional and Shariah-compliant systems, said Hamad Al-Monawir, Assistant Undersecretary for Planning in a speech delivered on behalf of the Deputy Prime Minister for Economic Affairs, Minister for Development Affairs and Minister for Housing Affairs Sheikh Ahmad Al-Fahad Al-Sabah. The speech was delivered at the opening of the two-day conference that dwelled on the effects of the economic crisis on Islamic financing. The event was widely attended by banking and financial experts and representatives of Islamic banks and finance institutions.

 

Undoubtedly, just like everything else was affected by the economic turmoil, so was Islamic financing, Al-Monawir said while delivering the speech. He went on to add, “During last year’s conference on Islamic financing, the economic crisis had already started and had affected all financial systems worldwide. Islamic financing was not as largely affected by the crisis.” He said that the crisis did not differentiate between Sharia-complaint and conventional financing. Islamic and non-Islamic finances have undergone real tests of how strong the system was with regard to handling a crisis of such proportion, he said.

 

A major discovery that surfaced as a result of the economic crisis, he observed, was how feeble the arbitration systems were used in various financial companies. The crisis was largely linked to asset management, demands and the concepts of risk management, which contributed to the growth of the crisis, he added. The blame, he said, lies with the system, laws and legislation that were unable to restrain the crisis and contributed toward spreading it.

 

Talking to the Kuwait Times on the sidelines of the event, Emad Yousef Al-Monayea, Chairman and Managing Director of Liquidity House, a KFH subsidiary, said that one of the major elements that has enabled Islamic banking to resist the economic crisis were the assets that back the structures developed in Islamic banking. “Most of these structures have to be backed by these assets; these assets have to be actual, should have a value and have to have some kind of marketable features into them. This is one of the major elements that maintains Islamic banking,” Al-Monayea said.

 

The close control and the strong monitoring that the Central Bank of Kuwait was applying attributed to the lesser impact of the economic crisis on Islamic banking and on the majority of the banks overall, he added. According to Al-Monayea, although there are some positive signals at present the crisis has not fully subsided. “When we speak about international markets, the signs of recovery have started. Now, there are good investment opportunities for the people who have the capability and the liquidity, he said. Sheikh Ahmad Al-Yasin Al-Sabah cautioned the uptake of risky investments. In his words, good management and the following of Islamic teachings have made up the success formula of Islamic banking.

 

Source : kuwaittimes