Obviously, Islamic economy is not presented effectively. Existing models of Islamic banks and Shari`ah-compliant financial products have actually played some role, which is not bad, but there is much more they can contribute.

Global economy is plagued with multiple ailments, some of which are technical and some in the underlying philosophy itself. And Islamic economy is well positioned to remove all such ailments.

In the global economic mentality, laissez faire et laissez passer (“let do and let pass”) constitutes the key maxim in business. It implies removal of all restrictions on trade and freedom from state intervention, placing the individual in the center of the whole economic structure.

By contrast, Islamic Shari`ah derives its reference from Allah, the Legislator, based on the concept of trusteeship. Allah says, {And spend of that whereof He (i.e., Allah) has made you trustees}. As a trustee or agent, man does not have absolute freedom, but should rather act within the framework of seeking good and warding off evil.

In the aftermath of 1929’s Great Depression, restrictions were imposed to regulate economy. With the advent of Thatcherism and Reaganism, economic deregulation and promotion of “individual initiative” started, inspired by the pioneering economic philosopher Adam Smith’s theory of the “invisible hand of the market”, which states that the marketplace has a self-regulating nature, by virtue of an invisible and benevolent hand.

All that entire system has now turned out to be a total failure. On the other hand, Islamic economy does encourage self-initiative and self-freedom, but within limits and guidelines that adjust the course of economy.

In terms of practical application, we find that only 5 percent of the global economy is based on real investment, while the remaining is mere venturing, prediction, and unreal wealth.

On the contrary, Islamic economy adopts the principle of exchanging wealth within society at large and not monopolizing it by the wealthy. Allah says, {That you exchange among yourselves}. Exchange is to be only of real wealth. In an authentic hadith, the Prophet (Peace and Blessings of Allah be upon him) said, “Sell the less quality dates for (a sum of) dirhams, and then buy with the dirhams good dates”. Money is just a medium. We have principles of exchange, or circulation as Ibn `Ashur puts it, and transparency.

Huge profits have been made there from usury, while it is utterly prohibited in Islam to exchange money for money. Even in the West itself, there are voices that argue against usury. Islam warns against the devastating consequences of usury: {But if you do not do (i.e., give up usury), then let it be a war (against you) from Allah and His Messenger}.

By the same token, Westerners practice factoring, while Islam bans selling a debt for another, according to a hadith narrated by Al-Bazzar.

In the Name of Allah, the Most-Gracious, the Most-Merciful

Sheikh Abdullah Bin Bayyah, Head of the Shari`ah supervisory board at Saudi Arabia’s Allied Cooperative Insurance Group (ACIG), ascribed Muslims’ weak response to Islamic financial instruments to inadequate marketing and lack of effective trust-building promotional strategies. In an interview with Alriyadh newspaper, Bin Bayyah clarified that insurance in general is associated to traditional financial institutions, which creates more suspicion and reluctance among investors and clients.

The prominent scholar warned Muslim governments and institutions against hasty adoption of real estate mortgage, which can immerse them in an economic recession like that currently suffered by the Western World. He called for enforcing Shar`i limits and guidelines to ensure validity of mortgage transactions, by possession of the mortgaged object, guaranteed delivery, and ascertainment of the mortgagee’s rights and safety from injury, as per the noble Qur’anic verse: {Then let there be a pledge taken (in mortgage)}.

Transactions & Loans

Banks and financial institutions can bolster customer trust by carefully designing their financial instruments and products and by having a Shari`ah advisory board with credible figures to help the client make sure that his property and transactions are Shari`ah-compliant. They also need to make all their rules and dealings as clear as possible, to avoid uncertainty and deception, which have done harm to many Muslims.

Coop Insurance

Commending the recent measures taken by Saudi Arabian government on cooperative (or Takaful) insurance, Sheikh Bin Bayyah said they will be facilitative and helpful for Muslims, provided that the applicable mechanisms are plainly stated, involving no obscurity or uncertainty, and serving the best interest of Muslims and clients. Religion advocates everything that results in benefit for Muslims, within the framework of Shari`ah as explained by scholars and specialists, he pointed out.

Bin Bayyah said that coop insurance, which has been substantiated into a Shari`ah-compliant economic model by Saudi Arabia’s Council of Senior Scholars, is free from any Shar`i violations. Coop insurance, he expounded, is an insurance bought jointly by several persons to cover any future losses incurred by any of the policyholders. The main purpose is to cooperate and minimize liability. Reviewing advantages of coop insurance, Sheikh Bin Bayyah noted that it can take various forms, such as founding a speculation company that trades on corporate assets, so that any loss incurred by one of them is covered by all shareholders.

In the Name of Allah, the Most-Gracious, the Most-Merciful

All praise is due to Allah, and peace and blessings be upon our master, Muhammad, and upon his family and Companions.

Ladies and Gentlemen,

Here comes Islamic Shari`ah to mediate between the West and the Islamic World in the field of business. Mathematics, with Al-Khwarizmi, and Islamic (or let’s call it “Greek-Islamic”) philosophy, with Averroes, have for so long been mediating between the two worlds across the Mediterranean See.

Averroes is still alive in his masterpiece, which is considered a comparative study of Islamic Shari`ah, especially the chapters on financial transactions. Identifying five kinds of Shar`i problems that can affect contracts, he made an exquisite codification based on the texts of the Qur’an and Sunnah, juristic reasoning, practical experience, and consideration of the public interest.

Introduction to Islamic Shari`ah

I find it relevant to start with an introduction to Islamic Shari`ah. It can be defined as a “set of rules, criteria, principles, and detailed rulings that cover ethics, behavior, and transactions in all their dimensions”. It combines faith and worship with good practices, thus placing values at the center of transactional rules and cooperation at the center of human relations.

That is why Islamic Fiqh is based on both divine texts and teachings (the Qur’an and Sunnah) and human effort over centuries to interpret such texts via the best methodologies of reasoning. It is not a hermeneutical approach to holy books using linguistic analysis, but rather an employment of Aristotelian (sometimes sophisticated) methods, such as deduction, induction, analogy, syllogism, and all other reasoning techniques.

In the 8th century, Fiqh scholars integrated Greek heritage with Fundamentals of Fiqh, combining together philosophical dialectics and consideration of the general interest, customs and traditions, and geographic factors. This Fiqhi effort resulted in excellent legal writings and encyclopedic schools of thought, all stemming from religious and moral principles and values while taking into account necessities of life and people’s needs.

With its clear principles, well-organized rules, openness, and flexibility, Islamic Shari`ah provides a good substitute for manmade economy, as they both integrate.

These are the underlying grounds of Shar`i supervision, which can be divided into three stages or levels: pre-supervision, formative supervision, and post-supervision.

Supervision serves to:

1. Ensure compliance by banks and financial institutions with Shar`i rulings, depending on the choices adopted by such institutions,

2. Boost client trust by showing that transactions are Shari`ah-compliant, and

3. Provide alternative financial vehicles and create new financial products.

The role of a Shari`ah supervisory board is to approve the institution’s rules and regulations and co-shape its policies. It is not an optional extra; Islamic institutions must rely on some Shar`i resource, whether supervisory or advisory, to ensure compliance with Shari`ah.

It is worth mentioning that pre-supervision is crucial. At the phase of establishment of an institution, a Shari`ah board is necessary not only to help “Islamize” the institution, but also to attract more potential financers. So, founders usually seek notable jurists and financial advisors to put their names on the memorandum of association (you can find the same figure working for several banks and institutions at the same time).

First, founders develop a draft blueprint of the institution’s structure and business activities, which may be derived from existing (and sometimes traditional, non-Islamic) institutions. Then, they discuss it with the supervisory board to decide what is acceptable and what is not and what conditions need to be added.

This way, the supervisory or fatwa board (or whatever name it is given) goes hand in hand with the institution and gives it an accreditation certificate, which is renewed annually with a report submitted to the board of directors by the end of the fiscal year. This report is necessary to ensure that the institution is on the right track and abides by Shari`ah. It is like the report of the auditing institution on the Treasury.

Supervisory Boards

1. The fatwa and Shar`i supervision board gives fatwa and answers inquiries from all parts of the institution; examines different business activities for compliance with Shari`ah; and considers contracts, investment operations, and financial products to be adopted by the institution.

2. In modern management, internal Shar`i supervision is a comprehensive supervisory system developed by the institution in line with the criteria and regulations approved by the Shari`ah board. It is distinguished from Shar`i review, which is one component of internal Shar`i supervision and is an administrative department or division within the organizational structure.

Internal Shari`ah supervision is a body affiliated to the bank’s management and entrusted with the application and follow-up of the fatwa board’s directives and decisions as well as examination of contracts, agreements, and dealings made with clients, using a guide or manual developed in coordination with other relevant departments and endorsed by the Shari`ah board.

Supreme Shar`i Supervisory Board

This is a board created mostly by the central bank to supervise all Islamic banks countrywide, in coordination with the Shar`i supervisory boards of banks.

A new, growing type of Shar`i supervision of Islamic banks is Shar`i supervision and consultancy firms, which are independent of the financial institutions and the state banking system. A new trend that emerged only five years ago, such firms are largely concentrated in the GCC region.

It is noteworthy, in this respect, that there are juristic controversies still unresolved despite the many conferences and seminars, especially in Bahrain and Malaysia, which have introduced numerous standards. Yet, there is a unanimous agreement that Basic corporate activities must be free from the following:

1. Usury (interests from loans or deposits, or transactions in which the principal money generates extra money with no goods or services transacted in between. This includes all usurious activities exercised by traditional financial institutions, such as commercial banks and corporations),

2. Gambling,

3. Production/promotion of alcohol or drugs,

4. Serving of haram or unhealthy food such as pork,

5. Provision of unlawful services such as establishing/managing immoral places, and

6. Unreasonable risk, as in non-cooperative insurance, factoring, or trading on unpossessed assets (generally, transactions must be based on transparency and proportionate risk-sharing).

Based on the above principles, Islamic banking introduces a number of profitable products, such as Musharakah, Mudarabah, Istisna`, Ijarah, Salam, etc., and suggests untraditional financing mechanisms that, understandably complex or old-fashioned though they may seem, guarantee safety of capital. Not always does risk work, and such Islamic mechanisms are based on real economy and real cash. They are recognized by experts as necessary curbs, amid feverish issuance of uncovered securities and slack regulatory control, which takes the funds to the unknown.

Conclusion

The Islamic finance model is worth trying, and France should employ it to join the club or even take the lead. We hope for a real partnership, not just a bubble that will soon be depleted with the GCC’s oil wells or melt away with the West’s cash liquidity like the snow coating the Pyrenees melts with the summer’s sun. We want it to be a lasting partnership of technological and commercial exchange as well as cultural and human interaction across the Mediterranean Sea.

I call upon Western, and particularly French, researchers to enrich Islamic finance with studies and ideas and, together with Muslim jurists, to do their best to modernize and optimize Islamic institutions, using the best strategies in information technology, management, and accounting, to make them up-to-date institutions and investment vehicles for the good of all, while keeping their identity and distinct features.

To conclude with, Islamic economy can act as a vehicle that boosts international economy and a catalyst for rebuilding the capitalist economy, as demanded by France’s President Sarkozy. To that end, concerted efforts are required from everyone.

Sheikh Abdullah Bin Bayyah, a well-known scholar, professor at King Abdulaziz University (KAU) in Jeddah, and member of the International Islamic Fiqh Academy, stated, “The principle of blocking ways to evil requires making sure that women stick to Islamic morals and do not violate the Prophetic teachings on women’s going out to perform `Eid Prayer. But it does not mean that women refrain or be prevented from going out”.

He noted that the Prophet (peace and blessings be upon him) used to go to women in `Eid Prayer accompanied by Bilal Ibn Rabah to deliver sermons to them.

Sheikh Bin Bayyah pointed out that the rule of moderation and avoidance of excessiveness and slackness is the framework within which women can participate in public religious ceremonies while keeping away from today’s whims or showing off in clothes, adornment, or behavior.

This Prophetic teaching is observed in most Muslim countries, which reflects a bright image of Muslim celebrations of their religious feasts all over the world, the Sheikh concluded

Sheikh Abdullah bin Bayyah, Vice-Chairman of the International Union of Muslim Scholars, described the current situation in Lebanon as “very bad.” He warned that this may hinder the Lebanese from dealing with their critical challenges, whether from the Zionist enemy or domestic issues.

In an exclusive to IslamOnline.net, the prominent scholar rejected the viewpoint that Lebanon is undergoing a sectarian conflict between Sunnis and Shiites. “It is pseudo-sectarian,” he explained, “the conflict has nothing to do with sectarianism, but it is twisted to seem sectarian, which makes things even worse.”

Earlier, Bin Bayyah had supported sending a delegation of scholars to Lebanon to mediate an end to the clash, seeing high prospects of a “possible solution.” However, Bin Bayyah stated that: “Now, the region is set on fire and there seems to be a faint chance for such endeavor to go anywhere.”