The year is just two weeks old, but the Associated Press already has produced a strong contender for the most one-sided story of 2009. The news giant’s entry in this dubious competition is a sugary January 13 piece that extols the alleged virtues of Islamic finance while utterly ignoring the cultural, legal, and security concerns posed by the adoption of such mechanisms in the West:
Big financial institutions have been battered by mortgages gone bad. But a tiny Michigan bank is getting attention in the industry by turning a profit on loans without even charging interest.
Its specialty: financial products that comply with Islamic law. That means no collecting interest, no short selling, and no contracts that are considered exceedingly risky.
It also rules out some of the activity that got Western finance in trouble — subprime mortgages, credit default swaps, and the like.
“When you look at the economic crisis we’re in, if you were to follow Islamic or Shari’a financing, you couldn’t have this crisis,” said John Sickler, corporate director for the bank, University Islamic Financial Corp. in Ann Arbor.
- Religious advisors charged with overseeing an Islamic bank possess sole authority to determine which investments and financial instruments are permissible, or halal.
- These same Shari’a advisors distribute the zakat, charitable donations necessary to “purify” profits. It has not been uncommon for such funds to end up supporting terrorist organizations, meaning that Western banks could be held liable in the event of an attack.
- Though now-infamous financial contracts like credit default swaps may be baroque, so too are some Shari’a-compliant contracts, as clever engineering is often required to circumvent the ban on interest.
- Islamic banking was invented in the last century as a tool to advance the Islamist agenda. As such, Frank Gaffney has warned that it represents the “leading edge of the spear for those seeking to insinuate Shari’a into Western societies.”
With Islamic finance gaining ground in the United States and across Europe, now would be a good time for media outlets like the AP to put aside the puff pieces and rediscover the lost art of investigative journalism. They might just find that Shari’a threatens their freedoms, too.
