The role of religion in secular and global institutions presents unique concerns that should be scrutinized since true checks and balances are not possible where deference to religious heads is unavoidable. In the case of SCF, only Sharia scholars can decide whether a financial product is permissible (halal) or not. They are thus the only individuals who can theorize as to why or how a product can become “halal.” This removes the ability of all practitioners who are not part of the SSB from engaging in product development beyond doing what they are told to find and prevent any illegality. If questions of fraud, breach of duty, negligence, criminal liability, etc. arise over any transactions, these same individuals will nevertheless remain liable.
Consider the current global crisis related to subprime mortgages as a point of comparison. Who did what and how is on everyone’s mind. Was the cause naïve consumers or predatory lending? Financial products are complicated as it is without throwing the element of religion into it. Moreover, Secretary of the Treasury Paulson does not have the answers, though he is in charge with no apparent oversight.
In its worst-case scenario, SSBs act just as unilaterally, can go back on previous decisions, or contradict the decisions of other SSBs. Who is right and who decides? What administrative body or court in the U.S. is in a position to question a Sharia-based product? Even if transactions state New York as the jurisdiction for dispute resolution, the courts must invariably rely on Sharia-based decisions from foreign courts for theories and interpretation. If a U.S. court offers a decision based on its own theory, who will make the decision binding since Sharia is divine, i.e., not to be superceded by secular law?
Besides religion, subversive political goals are another unique element inherent in SCF that subprime avoided. Renat Bekkin, international law lecturer at the Moscow State Institute of International Relations (MGIMO-University) and proponent of SCF in Russia, stated in an interview to New Horizon, the oldest Islamic banking magazine in the UK, that not all Muslims in Russia favor SCF because they see it as form over substance, like creating Islamic whiskey.
For some other Muslims, Bekkin argues, “practicing all principles of Islam, including in the financial sphere, is essential.”
This latter group concerns critics of SCF because they are part and parcel of the global Islamist movement. Advocates of Islamism define Islam as a complete sociopolitical system that should govern one’s personal and private life. This is a 20th-century phenomenon fueled internationally by oil profit in the Middle East. First articulated by non-scholars like Syed Qutb, Abul Ala Mawdudi, and Hasan al-Banna, this totalitarian ideology has evolved into the separatist Salafi movement, which encourages segregating Muslims from non-Muslims through violent jihad and non-violent means.
The Coalition to Stop Sharia believes SCF is one such non-violent strategy since the Islamist movement advocates replacing capitalism and democracy with Islamic law, or Sharia. While many progressive Muslims argue and reinterpret Sharia in ways compatible with universal human rights and democracy, their position remains theoretical. In practice, Sharia remains an archaic understanding of human relations as evidenced by Saudi Arabia, Iran, Pakistan (in partial codification), etc.
In this context, practitioners of SCF who are Muslim and non-Muslim and who reside in democratic nations like the United States put themselves in the position of unintentionally aiding and abetting seditious activity by promoting particular SCF institutions, individuals, or transactions that are potentially Islamist. How we are to know what is and is not is beyond the scope of the U.S. government or the U.S. banks that seek to profit from SCF.
Further, by not alerting consumers and clients of the “dark side” of SCF, these same practitioners are potentially failing a duty of care by not providing material information from which a consumer can make what a court would consider a well-informed decision.
Thus, it is a mistake for the U.S. Treasury to host a seminar to “inform” the public of SCF, without including the criticism. Jumping into a new, little-understood industry like SCF, with the same zeal for profit evident in subprime lending, could lead to new problems in the future. By addressing the Coalition’s concerns, the government could create the appropriate regulation, oversight, and transparency mechanisms to counter the possible threat Islamists present to the SCF industry. Or simply realize that the short-term gains are not worth the long-term dangers Islamism’s mission against the West presents.