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Thursday, October 11, 2007

What is Islamic Finance?

This is an excerpt from a great Washington Times article posted on October 8th by Rachel Ehrenfeld & Alyssa A. Lappen.

They write a great summary of why we should be concerned about Islamic Finance, which is spreading across the world. They explore the relationships between the Islamic Development Bank ( IDB ), Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), the Islamic Financial Services Board (IFSB), Saleh Kamel, the Islamic Chamber of Commerce and Industry (ICCI), Saudi Dallah Al-Baraka Group, and the International Commission for Zakat

-Shimron

What is “Islamic” finance? Islamic, or Shariah-based finance, is the 1920s invention of Muslim Brotherhood founder Hassan al-Banna. He ordered the Muslim Brothers to create an independent Islamic financial system to supercede the Western economy, facilitating the spread of Islam worldwide. He set the theories and practices and his contemporaries and successors developed Shariah-based terminology for “Islamic economics,” finance and banking.

Attempts by Muslim Brotherhood members in the early 1930s to establish Islamic banking in India failed. Egyptian President Gamal Abdel-Nasser shut down the second attempt in 1964, after only one year, later arresting and expelling the Muslim Brothers for attempts to kill him.

Saudi Arabia welcomed them and adopted their ideas.In 1969, soon after a mentally deranged Australian Christian fundamentalist, Michael Dennis Rohan, tried to set fire to the Al Aqsa Mosque in Jerusalem, the Saudis convened the Conference for the Islamic Organizations (OIC) to unify the “struggle for Islam,” and have been its major sponsor ever since.

The 56 OIC members include Iran, Sudan and Syria.Based in Jeddah, “pending the liberation of Jerusalem,” the OIC mandates and coordinates actions to “support the Palestinian people, assist them in recovering their rights and liberating their occupied territories.” The OIC’s first international undertaking was the 1975 establishment of the Islamic Development Bank “in accordance with the principles of the Shariah,” marking the beginning of the fast-growing, petrodollar-based Islamic financing market.

From 1975 to 2005, the bank approved more than $46 billion in funding to Muslim countries. Since 2000, it has transferred hundreds of millions of dollars raised especially to support the Palestinian intifada and suicide bombers’ families ˜ and has channeled United Nations funds to Hamas.

Yet the bank received U.N. observer status in 2007.Overseeing Shariah finance are the 1991-Bahrain-registered and -based Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), which laid the groundwork for the global Islamic financial network and the “de facto Islamic Central Bank”˜ the Islamic Financial Services Board (IFSB), established in 2002 in Kuala Lumpur “to absorb the 11 September shock and reinforce the stability of Islamic finance.” Chairing the meeting, then-Malaysian Prime Minister Mohamed Mahathir stated: “A universal Islamic banking system is a jihad worth pursuing to abolish this slavery [to the West].”

According to Saleh Kamel, president of the Saudi Dallah Al-Baraka Group and the Islamic Chamber of Commerce and Industry (ICCI), more than 400 Islamic financial institutions currently operate in 75 countries. They now hold more than $800 billion in assets ˜ growing at a rate of 15 percent annually.

All investments with Islamic financial institutions are subject to the minimum zakat (Islamic charitable wealth tax). On April 30, the OIC, the organization that initiated global Muslim riots after the Danish cartoon publications, established the clerical International Commission for Zakat, replacing more than 20,000 organizations that previously collected the money. Islamic clerics’ “expert committee” in Malaysia now supervises and distributes those funds.

The new committee will shortly distribute to Muslim charities roughly $2 billion collected during Ramadan.But not all charities are equal. In 1999, Muslim Brotherhood spiritual leader Yousef al-Qaradawi decreed: “Declaring holy war [and] fighting for such purposes is the way of Allah for which zakat must be spent.”

If past zakat distribution is any indication, all Muslim jihadist-terror organizations (including Palestinian Hamas, the al-Aqsa Martyrs’ Brigades, and the many al Qaeda offspring) will benefit.

Shortly after September 11, Osama bin Laden called upon Muslims “to concentrate on hitting the U.S. economy through all possible means. Look for the key pillars of the U.S. economy. Strike the key pillars of the enemy again and again and they will fall as one.”

The Rest @ The Washington Times

Rachel Ehrenfeld is director of the American Center of Democracy and a board member at the Committee for the Present Danger. Alyssa A. Lappen is a senior fellow at the American Center of Democracy.

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