Exclusive: Sharia-Compliant Finance: How Not to Solve the Financial Crisis

by CHRISTOPHER HOLTON October 15, 2008
Over the past several weeks, political and financial analysts alike have offered many ideas on how to deal with the effects of the subprime mortgage debacle and the ongoing global financial crisis.
 
One of the most recent suggestions came from the Jihadist community. Actually, it was not as much a “suggestion” as it was a threat. As reported on the Family Security Matters blog on Sunday, October 12th, a leading Jihadist suggested that capitalism be replaced by an “Islamic economic system.”
 
The threat came from Sheikh Yusuf al-Qaradawi, one of the world’s most prominent scholars in the Jihadists’ threat doctrine: sharia.
 
Often referred to in the West as “Islamic Law,” sharia goes way beyond any other legal system. Sharia applies to every aspect of every Muslim’s life, from what a Muslim is allowed to wear to economics. In fact, “Islamic economics” and “Islamic finance” are actually just euphemisms for sharia-compliant finance, since financial transactions referred to under such names are distinguishable only in that they must be in line with sharia principles and practices.
 
One of the principles and practices of sharia-compliant finance that everyone in the West should be very wary of is something called zakat, which refers to the charitable contributions that must be made to approved charities in the name of fulfilling the obligatory tithing of faithful Muslims. In fact, under sharia-compliant finance 1/40, or 2.5%, of assets must be diverted to charities selected by sharia scholars, like Sheikh Qaradawi.
 
Sheikh Qaradawi is widely regarded as one of the premier sharia authorities in the field of economics. When Qaradawi called for replacing capitalism with an Islamic economic system, it was not a crackpot sermon in some remote mosque in the desert. An analysis of Qaradawi’s curriculum vitae reveals that he is very influential indeed (here is a partial listing of Sheikh Qaradawi’s credentials):
 
• Chairman of International Association of Muslim Scholars
 
• Chairman of European Council on Fatwas and Research
 
• Grand Mufti of the United Arab Emirates (UAE)
 
• President of Union of Good (a Saudi umbrella group of 56 Muslim charities accused of funding HAMAS.)
 
• Founder and President of IslamOnline.com
 
• Chairman of the Board of Trustees of Islamic American University
 
• Trustee, Muslim American Society (MAS)
 
• Trustee, Islamic Circle of North America (ICNA)
 
In terms of his credentials in the world of finance, Sheikh Qaradawi is the sharia advisory board chairman to several banks, including no fewer than three government-tied banks in the Gulf region: Qatar Islamic Bank, Qatar International Islamic Bank and First Islamic Investment Bank of Bahrain.
 
Now, as Paul Harvey would say, you should know the “rest of the story.”
 
Sheikh Qaradawi has some other “credentials” that Americans should be aware of, particularly since surprisingly many on Wall Street and in Washington are flat out embracing the Islamic economic system that Qaradawi wants to see in place of capitalism.
 
• Since 1999, Qaradawi has been forbidden from entering the United States and was banned from the United Kingdom earlier this year due to his ties to terrorism.
 
• Qaradawi was formerly chairman of the sharia advisory board of Bank Al-Taqwa, a Nassau, Bahamas-registered Islamic bank which was declared a terrorist entity by both the U.S. Treasury Department and the United Nations in 2001, when it was shut down.
 
Bank Al-Taqwa was really just a shell company whose primary purpose was to launder money for terrorists. Between 1988 and 2001, Bank Al-Taqwa transferred tens of millions of dollars to HAMAS, Al Qaeda, the PLO, Algerian Armed Islamic Group (GIA), the Taliban, Egyptian Gama’a al Islamiya and the Tunisian An-Nahda.
 
One of the fundraising vehicles for this operation was located in the United States.
 
Bait u Mal al Islami (BMI), a sharia-compliant investment company based in Seacaucus, NJ, which promoted itself as an Islamic alternative to conventional investments and solicited funds for real estate development, was called by US federal prosecutors as the “US banker for the Muslim Brotherhood.”  In testimony before a US Senate committee, former White House counterterrorism advisor Richard Clarke said that BMI’s financial services were little more than a cover “to conceal terrorist support,” and that its investor list “read like a who’s who of designated terrorists and Islamic extremists.”
 
BMI worked closely with the Bank Al-Taqwa network in transferring millions of dollars to terrorist groups, while receiving large amounts from well-known investors suspected of funding terrorism. These included the HAMAS leader, Mousa Abu Marzouk, who made a number of investments with BMI. Tellingly, BMI continued to work with Marzouk even after he was designated a terrorist by the United States government in 1995.
 
• Qaradawi has also issued fatwas and expressed opinions advocating jihad and supporting suicide bombing and terrorism. Here is a small sampling:
 
O Allah make me live as a terrorist, die as a terrorist, and be raised up with the terrorists.
 
I support the resistance and the jihad. I support HAMAS, the Islamic Jihad, and Hezbollah. I oppose the peace that Israel and America wish to dictate. This peace is an illusion. I support the martyrdom operations.
 
We must plant the love of death and the love of martyrdom in the Islamic nation.
 
The abduction and killings of Americans in Iraq is a religious obligation so as to cause them to leave Iraq immediately.
 
What does all of this have to do with the Islamic economic system that Qaradawi referred to in the recent news report, as well as “Islamic finance” being promoted by Wall Street? 
 
Perhaps another quote from Qaradawi sums it up best. In a 2006 interview with BBC, Qaradawi was asked about Islamic finance and this was his answer:
 
I like to call it jihad with money, because God has ordered us to fight enemies with our lives and our money.
 
Under sharia, there are eight approved forms of charity to which Muslims are expected to tithe through the system of zakat. Of those eight categories, four can be interpreted as supportive of violent jihad.
 
It is no wonder that the three largest Muslim charities (Holy Land Foundation, Benevolence International Foundation and Global Relief Foundation) in the United States were shut down due to ties to terrorism.
 
No one in the West knows for sure how widespread the use of Muslim charities for terrorism funding is, however, the US Treasury Department has so far designated no fewer than 27 Muslim charities in the US and worldwide as terrorism entities, due to their funding of terrorist groups like Al Qaeda, HAMAS and others.
 
Given the terrorist ties, background and philosophy of sharia authorities such as Sheikh Qaradawi, it is obvious that Wall Street and Washington ought to reject the insidious, seditious financial system known as sharia-compliant finance.
 
FamilySecurityMatters.org Contributing Editor Christopher Holton is a Vice President with the Center for Security Policy. He can be reached at Holton@centerforsecuritypolicy.org. The information contained this article was derived from Sharia Law and Financial Jihad: How Should America Respond?, a special report co-sponsored by the Center for Security Policy and the McCormick Foundation.

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