Sunday, September 18, 2011

Sharia Banking:"There's big business in fooling God"

God and financial loopholes -- what of it?
For some religions, there's big business in fooling God

Macleans Magazine

Wally: Do you mean you knew what was happening to us all the time?Supreme Being: Well, of course. I am the Supreme Being, I'm not entirely dim ...
-- Terry Gilliam's 1981 film Time Bandits

When I was in graduate school, I spent some time as a teaching assistant for the department's big Introduction to Philosophy course, which served first-year students a tasting menu of questions in logic, metaphysics, and ethics. The most fun to teach were the various proofs for the existence of God. One year, a student submitted a paper where, on the title page, "God" was written as "G-d." When the professor asked for an explanation, the student said he was Jewish, and Jews were not permitted to write out the full name of God. The professor pursed his lips for a moment, looked at the student, and said: "You know, you're not fooling God."

For those of us most familiar with the Christian approach to religion, writing "G-d" to get around a prohibition against writing God's name amounts to little more than impious cheating. Ours is an omniscient God, after all: he knows what is in our hearts and in our minds, and he can't be fooled by legalistic hairsplitting.

Turns out that for some religions, fooling God is not only considered fair play, it is also big business. Consider the controversial bit of religious sea-lawyering known as "Islamic finance" or "Islamic economics": a basket of financial instruments designed to get around the Quranic rule that forbids Muslims from charging or paying interest. Given that interest is the cornerstone of our financial markets, it is pretty much impossible to turn your nose up at interest and participate in the modern economy.

That is why the past few years have seen tremendous growth in sharia-compliant financial instruments, such as interest-free mortgages and savings accounts where the bank rewards the depositor with occasional "gifts of appreciation" for the use of his money.Let's be honest. Islamic finance isn't fooling anyone, least of all God.

Everyone involved understands that the various gifts and deferred payments are just bearded forms of interest, but the proper question is not whether God is fooled, but whether anyone should care.Someone who cares a great deal is the Scourge of Islam, Daniel Pipes, better known as the director of the pro-Israel think tank the Middle East Forum. In a recent article in the National Post about the rise of Islamic finance, Pipes warns that there is nothing "Islamic" about the barely disguised interest payments, and that behind its economic triviality lurks a great political danger.

Drawing on the book Islam and Mammon, by the Muslim scholar Timur Kuran, Pipes argues that Islamic finance was created for political motives, designed to strengthen the Muslim identity by minimizing their interactions with non-Muslims.He concludes that by enabling the economic activities of Muslims and allowing them to "modernize without Westernizing," Islamic economics serves as a source of global instability.

Pipes suggests that it would be much better if Muslims were really forbidden from paying interest or any of its facsimiles, because they would then be relegated "to the fringes of the international economy."This is insane, not to mention a bit obtuse. For starters, not every religion places so much value on correct belief or thought. Observing the faith is in some cases more about following a strict set of rules or codes, cleaving as close as possible to their letter and worrying less about their spirit. Among the big three monotheisms arising from the Mideast, Judaism and Islam are more concerned with rules than Christianity is.

That is why, to Christian eyes, Jews and Muslims seem to expend a great deal of effort trying to fool God.One example is the Orthodox Jewish practice of installing eruvin around neighbourhoods -- symbolic fences made of rope or string slung from lampposts and street signs. It is a way of getting around the rule against carrying things from one domain to another on the Sabbath.

The presence of the eruv around a neighbourhood allows residents to treat the whole area as a single dwelling, which lets them carry stuff outside on the Sabbath without breaking Torah law. Is God fooled? To ask the question is to miss the point.If anything, we should be celebrating the rise of Islamic economics, since if its goal was to keep Muslims isolated from the corrupting influences of the West it has been a huge failure. As a major survey in the Financial Times last spring pointed out, Islamic finance is now a trillion-dollar business, and most large Western banks -- including HSBC, Barclays, and Citibank -- are racing to re-craft all of their products along Islamic lines.

To see this as a source of instability and political danger is sheer paranoia. Far from ghettoizing Muslims, sharia-compliant finance is drawing them deeper into the network of global institutions, helping them to integrate into the modern world without having to assimilate to Western values. Sure, Islamic finance appears to many -- me included -- as little more than an exercise in trying to fool God. But if helping Muslims fool their God is part of the price we have to pay for global economic and political stability, it's the bargain of the century.

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