The Jakarta Post has an interesting and revealing article this morning.
It seems that Syafii Antonio, the CEO of a major Shariah-Compliant institution, is proposing “shariah-compliant currency swaps.” This suggestion is as laughable as it is hypocritical. If a “currency trade swap” looks and sounds like a derivative to you, you’re not alone. It IS a derivative, that financial instrument that Warren Buffett himself claimed not to understand and to which he referred as “financial weapons of mass destruction.”
Derivatives are defined as financial contracts or financial instruments whose values are derived from something else.
Based on this definition, the only way to make such devices shariah-compliant is to bend the rules beyond all recognition, since there are supposedly shariah prohibitions against risk and financial products not based on an underlying real asset.
This of course is no problem for the shariah-compliant crowd.
They have already created the con-job known as shariah-compliant mortgages, which are billed as “interest-free” at the same time that the borrower is encouraged to take the mortgage interest deduction from his federal income tax.
Then there is the whole issue of sukuk, or “Islamic bonds,” a title which reminds us of “sports truck” and “moderate Taliban.” There is a great debate within the Jihadist world as to whether sukuk can be shariah-compliant. (The answer will almost certainly be “yes” for reasons which should become clear in the remaining paragraphs of this posting…
The reason Syafii Antonio wants to have shariah-compliant trade swaps in the first place is so that the shariah financial system can “go global” “under shariah law.” This falls in line perfectly with the goals set the last time a bunch of shariah promoters got together in Jakarta at the World Islamic Economic Forum. At that time, they openly referred to Shariah-Compliant Finance as “missionary work:”
Given this goal, it seems plain under shariah that bending the rules for the greater good would be permitted.
The goal, of course, is spreading shariah globally. THAT is what Shariah-Compliant Finance is REALLY all about. And they will make up the rules as they go along to achieve that goal.
As Antonio so boldly states in the Jakarta Post article: “This is a matter of political will. If the government has the political will then Sharia banking here can grow much faster.”