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  • Technorati: graph / links

    Sharia banking: a sinister plot?

    by Rumbold on 11th February, 2009 at 5:47 pm    


    It was recently revealed that the UK now has a larger Sharia banking sector than Pakistan and many other Muslim countries:

    “There are now five “fully Sharia-compliant” banks in the UK while another 17 leading institutions including Barclays, RBS and Lloyds Banking Group have set up special branches or subsidiary firms for Muslim clients.

    The $18billion (£12bn) in assets of Britain’s Islamic banks dwarf those of some states where Islam is the main religion, including Pakistan, Bangladesh, Turkey and Egypt.”

    For most people, this shouldn’t be especially alarming. London is a centre of global finance, and Britain has a growing Muslim population. Moreover, many of the Muslim countries used for comparison are poor. If consenting adults wish to place their money with a legal institution, it is unclear why that should be controversial. There are legitimate criticisms to be made of Sharia finance (namely whether it only upholds the letter and not the spirit of Islam), but it is nothing more than a system which is structured slightly differently. One columnist disagreed (I won’t name her, but see if you can guess who before clicking on the link):

    “They don’t understand that the spread of sharia banking in Britain and America is a significant part of the attempt to Islamise Britain and America. Acceptance of sharia finance furthers the Islamist objective of gradually legitimising Islamic sharia law more generally in the west.

    The point which is being missed is that all who use it must conform to the dictates of sharia law. Sharia financial institutions may not be making this clear now – they don’t want to frighten people away – but at some point that IOU of sharia-compliance will be called in. This is how sharia-compliance will be spread to both the Muslim and non-Muslim population.

    Any Western institution that endorses sharia-compliant products therefore effectively endorses the extremist ideology behind it of conquering the west for Islam, whether it knows it or not.”

    So next time you go to withdraw some money, don’t be surprised if you are asked to prostrate yourself before the cash machine, before handing over the jizya. “Would you like a receipt for that submission to Islam?”

      |   Trackback link   |   Add to del.icio.us   |   Share on Facebook   |   Filed in: Current affairs, Economics, Religion

    25 Comments below   |   Add your own

    1. halima — on 11th February, 2009 at 6:20 pm  

      Hey Rumbold

      interesting post .. i was thinking about Sharia and Islamic banking a few days ago .. Apparently they were less vulnerable to the world economic downturn - mainly because they didn’t invest in collateral and toxic investments , high risk turns etc. I wonder if the Economist or the FT ran any articles on this .

      Do you or any one else have any views?

    2. Imran Khan — on 11th February, 2009 at 6:43 pm  

      Halima - The FT did and many countries are looking at Islamic Banking. This is why melanie is off and running early to whip up the masses to make sure they think of Muslims as bad bad people!

      It is an absolute joke this women gets so much coverage and her article is a disgrace but no one will say anything to her.

      Anyway one thing is clear now taht she isn’t talking any more about extremism in Islam - her call is to block Islam which is similar to call that started back in the 1920’s against another faith.

      Phillips is using the disgusting portrayals against Jews and turning them on Muslims. How they can’t be trusted with financial systems and if they get control they’ll control the whole world.

      In the rest of the world when this happens against Jews its called anti-semitism and Phillips writes an article about economic systems and religous guidelines and its called comment - go figure!

      If a Muslims journalist wrote what she did and substituted the word Muslim for any other faith their would be an outcry led by Phillips herself.

      The portrayal is a disgrace but no one will say anything.

    3. Refresh — on 11th February, 2009 at 6:48 pm  

      Halima, El Cid is your man.

      I did mention a long time ago that Christian organisations in the US had done serious research, to see if the Islamic model was more compatible with their beliefs than the existing capitalist stucture. And then suddenly it was the 911 era.


      ‘prostrate yourself before the cash machine’

      Nice touch.

      Although I think we have been doing that for some years, metaphorically speaking.

    4. Rumbold — on 11th February, 2009 at 7:32 pm  

      Heh Refresh.


      Nesrine Malik (who I linked to) also knows a lot about it. She is a specialist in the area.

      I suspect that Sharia banks aren’t as badly hit for a number of reasons (inculding perhaps more of an aversion to risk-taking), but also because of the secrecy surrounding a number of the institutions. If, for example, you have a bank owned by a Gulf royal family which has lost £2 billion, they are unlikely to tell anyone this (as they are they required to do so), because they would lose face. Because many of the royal families have deep reserves of money, then can afford to cover one-off losses and not risk collapse.

    5. Billy — on 11th February, 2009 at 7:44 pm  

      I guessed correctly the name of the columnist. It wasn’t hard though. :)

    6. MaidMarian — on 11th February, 2009 at 7:49 pm  

      Slight aside. I am not a great expert, but as I understand it, isn’t Islamic banking terribly bad value for money? Especially in terms of mortgages.

      I suppose that if people want to pay for piety that is their business, but there are questions here beyond the quality of compliance to Islam.

    7. Ms_Xtreme — on 11th February, 2009 at 7:49 pm  

      They don’t understand that the spread of sharia banking in Britain and America is a significant part of the attempt to Islamise Britain and America. Acceptance of sharia finance furthers the Islamist objective of gradually legitimising Islamic sharia law more generally in the west.

      Wow, she’s absolutely brilliant I must say. I like how the woman thinks proactively. The stability that the Shariah Banking offers an ordinary consumer must be stopped - we can’t have only half the population worrying about dwindling money in economic hard times.

      The thinking is almost as bad as the Housing Stimulus decision to plunge the American economy into more of a deficit to help those individuals who were stupid enough to fall for the lenders’ 3-5 yr home mortgage interest only loans. They ended up losing their homes, then the government decided to “make a way out” by decreasing their loan amounts using the stimulus money. How unfair to those who invested in smart mortgaging decisions.

      … tangent. Sorry.

      I think chick forgets that Muslims and Non-muslims alike have the choice NOT to invest into the Shariah Banking system. Although you’d be retarded not to given the current crisis.

    8. blah — on 11th February, 2009 at 7:56 pm  

      Its worth remind ourselves that up untill very recently Harrys Place linked to Mad Mels website while she was spewing this and similiar hate filled crap.

      Yet some people want to take them and their ramblings seriously.

      Last time I checked there David T was quoting Charles Johnson of LGF. LOL

    9. Imran Khan — on 11th February, 2009 at 8:08 pm  

      MaidMarian - “Slight aside. I am not a great expert, but as I understand it, isn’t Islamic banking terribly bad value for money? Especially in terms of mortgages.

      I suppose that if people want to pay for piety that is their business, but there are questions here beyond the quality of compliance to Islam.”

      In Shariah Banking as is written down the amount of money to be paid back for a loan must be made clear at the outset and written down in a contract. Excess is prohibited.

      Ownership of the purchase must be clear.

      How can that be bad compared to interest based transactions where if the interest rate goes up and up then you are in trouble.

      For tyhe ordinary person its important to know how much to pay back.

      Shariah Banking is part of a dasteredly Muslim plot to give people a fair deal and we don’t want that now do we!!!!!!!!!

    10. Rumbold — on 11th February, 2009 at 8:18 pm  

      MaidMarian and Imran Khan:

      I urge you both to read Nesrine’s article that I linked too.

    11. soru — on 11th February, 2009 at 8:24 pm  

      I think it’s a fundamental rules of economics that asking ‘How can that be bad?’ just means you don’t know the answer.


    12. Refresh — on 11th February, 2009 at 8:58 pm  


      Soru, that’s the Melanie Philips scare.

    13. Refresh — on 11th February, 2009 at 9:05 pm  

      ‘isn’t Islamic banking terribly bad value for money? Especially in terms of mortgages.’

      Its really about making money from money. Or not.

      Our system is collapsing simply because we no longer produce anything and relied on assets rising in value. And of course the myth that we should value the risk-takers aka the wealth creators. Greater the risk greater the reward.

      I think Dave S. once posted a link to a particularly damning lecture on how banks came about. I hope he will be around soon to re-post and of course pass comment on this topic.

    14. dave bones — on 11th February, 2009 at 10:18 pm  

      Yes. Its haram to make money from money. Islamic banking is all about how excess money is used and looked after. It doesn’t stagnate and make interest I think. It is probably the best thing about Islam. very community based ideals. I don’t know if this translates on a big scale.

    15. Refresh — on 11th February, 2009 at 10:46 pm  


      re: Melanie Philips

      Sometimes its better to let people like that run away with themselves. Give her enough rope as the saying goes.

      Have faith in the great british public, they can smell deceit a mile off.

    16. shariq — on 11th February, 2009 at 10:51 pm  

      In my honest opinion, Sharia banking is a bit of a con. For instance Sharia-compliant mortgage contracts in the UK all reference LIBOR. Miraculously, the amount which has to be repaid by the consumer mirrors how much they would have been paying if they had gone to a high street bank.

      One defence which Islamic bankers use is by using the following example. That there is no actual difference between an unmarried cohabiting couple and a married one, except for the marriage contract.

      Similarly, even though the underlying process in Islamic and conventional banking is identical, going through the procedural hoops and having it certified does make a difference.

      As Rumbold said, you guys should definitely read Nesrine’s article.

    17. Refresh — on 11th February, 2009 at 11:21 pm  

      Shariq, Nesrine’s article is a very good read. I think these commercial products need careful scrutiny. At the end of the day if the outcome doesn’t meet the intended purpose then they are unsatisfactory.

      What struck me about the article, was the need to have financial products to meet modern lifestyles. And I would suggest that given our 100-year crisis, our modern lifestyle may well be short-lived and we will need a sustainable financial system. So credit cards and loans on the end of a phone line may/should go as one example. The pushy salesman who earns more commission if he persuades you to buy your kitchen on 3-year no interest loan than give you discount for cash will go, as another.

    18. fug — on 11th February, 2009 at 11:36 pm  

      its easy to see the white establishment trying to exploit islamic principles to make fat rich arabs feel less guilty about doing stupid things with their oil wealth.

      and brown underlings eager to ‘apply’ their ‘professional’ ‘expertise’ to suckle a little on the teats of this cow

      for now.

      big up to actual islamic economics, ethical cultures of consumption and creation and practices which translate the higher objectives of the sharia, rather than some technocratic end.

    19. Don — on 12th February, 2009 at 12:01 am  

      the white establishment… fat rich arabs…brown underlings…

      You missed out the Inuit. Bastards that they are.

    20. Refresh — on 12th February, 2009 at 1:31 am  



      what have you got against the Inuit?

    21. halima — on 12th February, 2009 at 6:18 am  


      Thanks for the explanation and good to hear there is a discussion about alternative forms of banking - taking the religious principles out, i wonder how Islamic banking principles compare with other forms of ethical financing? I am sure someone has looked into this, too, but seems to me we should all be seeking ways to minimize risks in investment and if we’ve just stumbled upon the fact that the model from the last 100 years has crumbled, even more so.

      I’d also heard that the British Banks (Barclays etc) , too, recently are cashing in on women-only banking services in the Middle East - so taking banking practices at home to the clients because women in the Middle East are not as mobile in public spaces. It seems business is always ready to meet diversity half way if there is a good incentive. I like it. In Nepal, too, the major banks come to the work place of the organisation to fast track banking for these clients - these are not women of coarse, but the incentives are good enough for them to bring the bank to the work place.

      Mel, Nuff Said.

    22. AsifB — on 12th February, 2009 at 10:41 am  

      Rumbold you’re right to say most self proclaimed Islamic banking is just slightly structurally different from conventional banking.

      Aside from the vexed question of interest, much of it is less challneging on ethical grounds than long established socially responsible investment (SRI) funds or Church investment committees.

      The reason for this is not hard to find - most of the big numbers people are referring to are owned or controlled by mainstream financial institutions like Citibank or HSBC- if more of the large numbers referred to were mutually owned (like the Co-op or buildings societies, then the phenonmenon would offer more of the safety and challenge that many investors (not just Muslims) would no doubt like to recieve from their banks.

      Quote: “In the present day the influence of religion is considered to be largely limited to shaping individual opinions and moral attitudes towards
      capitalism rather than setting and managing the system itself. In this sense, talk of an Islamic economic system is analogous to talk of a Buddhist or a Socialist economic system. That is to say, it is a highly influential philosophy which shapes the ethics, opinions and behaviour of a large proportion of the world’s population, but in the main exists more as
      an alternative ideal rather than as a major driving component of the global economy.”


    23. fug — on 12th February, 2009 at 12:10 pm  


      whats innaccurate about that picture please?

    24. Bartholomew — on 12th February, 2009 at 1:50 pm  

      Mad Mel must have been reading WorldNutDaily again - there’s been a hysteria around the subject whipped up there for a while now - Ed Brayton has more here and here.

      Incidentally, Christianity was also opposed to charging interest for centuries, following Aristotle; Bertrand Russell had some fun with this, claiming that interest was forbidden because the church received most of its income from landowning - once modern capitalism got underway, Catholics and Protestants both abandoned the idea because “the old prohibitions did not suit the modern world”, and there followed “a wealth of theoretical argument to support the economically convenient opinion”.

    25. Sunny — on 13th February, 2009 at 4:51 pm  

      Hah! I knew it was Mel Phillips without even looking at the link.

      Now where’s my blue peter badge?

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