Sharia Banks? - No Thanks

A recent article in the Globe and Mail indicates that the Superintendent of Financial Institutions, the organization that regulates banking in Canada, has received two applications for the establishment of banks offering services in keeping with Islamic Sharia law.

I can think of no other activities that should be kept farther apart in a secular society than religion and banking. Yet, as the article mentions, the applications are receiving attention, both pro and con, from authorities.

The following from the Banker's Academy gives a concise description of Sharia banking.

The basic principle of Islamic banking follows the laws of Sharia, known as Fiqh al-Muamalat (Islamic rules on transaction). The term “Islamic banking” is synonymous with “full-reserve banking” and “Sharia-compliant banking.” The most prominent feature of these laws is usury – the prohibition of paying or collecting interest on funds. The Islamic terminology for this is riba or ribaa. The Sharia also forbids engagement in investments that include financial unknowns such as buying and selling futures, as well as businesses that are haraam – dealing in products that are contrary to Islamic law and values such as alcohol, pork, gossip or pornography. These principles apply to all individuals, companies and governments.

The most prominent feature of these laws is usury – the prohibition of paying or collecting interest on funds. The Islamic terminology for this is riba or ribaa. The Sharia also forbids engagement in investments that include financial unknowns such as buying and selling futures, as well as businesses that are haraam – dealing in products that are contrary to Islamic law and values such as alcohol, pork, gossip or pornography. These principles apply to all individuals, companies and governments.

Banks that comply with Islamic law are forbidden to charge interest or late payment fees, which is also considered a type of riba. To minimize risk, banks will often require a large down payment on goods and property, or insist upon large collateral. It is lawful for the Bank to charge a higher price for a good if payments are deferred or collected at a later date since it is considered a trade for goods rather than collecting interest. Sharia-complaint banking products include Mudharabah (profit sharing), Wadiah (safekeeping), Musharakah (joint venture), Murabahah (cost plus) and Ijarah (leasing). Another way that banks work within Islamic laws while trying to turn a profit is by buying an item that the customer wants, and then selling the item to the customer at a higher price.

The Mudharabah is a partnership between an entrepreneur and the bank. The bank is known as the rabal-maal and the entrepreneur as the mudarib. The bank provides all of the necessary capital to start a business and the entrepreneur does the work of managing the business. Profits are split at an agreed ratio until the initial funds of the rabal-maal are paid off. The rabal-maal is also compensated with additional funds based on the profits of the business in terms previously agreed on. In the event that the business folds, the rabal-maal shoulders the cost and the mudarib is not compensated.

Musharakah is similar to Mudharabah, in which an entrepreneur seeks funds for a business venture and pays the bank back with a ratio of profits. However, there are often more than two parties who contribute funds and become partners who can influence the business depending on the amount of money invested. The entrepreneur also contributes funds and shares in the risk. Any loss is proportional to the amount of capital invested in the business.

Wadiah is a system in which a person deposits money into a bank and receives a “gift” from the bank. The bank is the keeper of the funds and will refund the entire amount at the demand of the depositor. The bank rewards the amount of time the depositor keeps the money in the bank with a hibah or gift, which is not guaranteed. The hibah is similar to interest, but lawful according the Islamic law.

Murabaha governs the issuing of home loans or any other type of goods needed by a borrower. An Islamic bank does not lend money to a borrower to buy properties; rather, the bank will purchase the property at the borrower’s request at a freely disclosed price, and mark up the price for the borrower to pay back, therefore making a profit from the investment. The borrower is named on the title and allowed to utilize the property immediately and pays the bank back in installments.

Another type of loan is the Ijara, in which the bank buys the home or item and leases the property to the borrower while retaining ownership of the property. The borrower can either use the property for a pre-determined period of time, or pay off the purchase price and buy out the Bank to attain full ownership of the property.

It seems conscientious Muslim bankers will go to considerable trouble applying Arabic euphemisms to what would be called "interest" in any other culture. It also seems that, as there are no universal standards for these activities, it would not be difficult to interpret them locally in favour of the banking institution thereby "ripping off" the pious believer. I suspect Muslim bankers are no less reluctant to make money than the Christian variety.

As an interesting aside - only 1.71 million out of the total of 176.88 million Muslims in Indonesia use Sharia banks in making transactions and investment, while most of the rest still use conventional banks. Apologists claim that this is a result of the Islamic banks having to develop in compliance with secular banking laws. Nonetheless, it is obvious that the vast majority of Muslim's, more than 99%, in the country with the highest Muslim population in the world find the conventional banks perfectly satisfactory for their financial transactions. It is reasonable to assume that a similar outcome would be the result of establishing Islamic banks in Canada as far as the regular customers are concerned. However, financial institutions, including currently existing Canadian banks, are a different story.

We can be sure that with the potential for incredible profits from the ability to invest in and otherwise deal with Muslim countries, both established and developing, Canadian financial institutions will try very hard to find a way to make the Sharia rules conform to Canadian law including lobbying Ottawa to modify the law. However, they will be treading on very dangerous territory for two reasons.

It is the stated objective of Muslim fundamentalists to establish a world-wide caliphate or Muslim theocracy if not by the sword, then by less violent means. Read, for instance, the plan of the Muslim Brotherhood, the oldest organization of its kind. They are willing to be patient and work within the system, but they mean what they say.

"Perhaps the next conquest [of Europe], Allah willing, will be by means of preaching and ideology. The conquest need not necessarily be by the sword […] Europe will see that it suffers from materialistic culture, and will seek an alternative […] It will find no lifesaver but the message of Islam […] Allah willing, Islam will return to Europe and the Europeans will convert to Islam. Then they themselves will be able to be the ones to disseminate Islam in the world" - Sheik Yousef Al-Qaradawi, a leading Sunni cleric, spiritual leader of the Muslim Brotherhood, and instigator and financier of terrorism in Europe and the Middle East.

Recall, if you will, the failed 2003 attempt to introduce Sharia law into Canada through Family Law supposedly under the guise of "multiculturalism." According to Tarek Fatah, a secular Muslim and founder of the Muslim Canadian Congress:

This is one more ploy to prey on the fears and insecurities of Muslim Canadians. Invoking Islam to make a fortune is only one part of the agenda. The other is to try one more time to make ‘Sharia’ part of the Canadian lexicon. Only this time, it has the backing of corporate lawyers and senior bankers who see big money at the end of the line. The whole concept is a fraud that will further marginalise an already marginalised community.”

Fatah, incidentally, was recently forced to resign from the organization he founded because of death threats resulting from his liberal views.

Secondly, Islamic around the world are also suspected of carrying out financial transactions for al-Qaeda and other internationally operating terrorist networks. Since September 11, 2001, Islamic banks have been frequent targets of secret-service investigations. Sums running into the millions have been seized, and accounts and funds frozen - reason enough to disallow the establishment of Islamic banks in Canada.

Finally, and this is purely a personal opinion, it has been my observation that Muslims, unlike immigrants from non-Islamic countries, do not assimilate well to Canadian culture but remain alienated and distant, choosing to remain within their own circle centred around the mosque. A recent survey of immigrant groups conducted in London, England supports this contention. They appear to be Muslims first and Canadians second. Granted, I am describing the first generation of immigrants. Future generations may be more amenable to mixing with the general population. Nonetheless, it is the responsibility of the immigrant to adapt to Canada, not the other way around. They must understand that Canada is a secular country. To change Canadian banking law for religious reasons is a subversion of Canada's well established and recognized gulf between church and state and must be seen as such. Sharia banking must be discouraged.

Public Funding of Faith Based Schools

With the provincial election just a few weeks away, the question of public funding of faith based schools is again a major issue. John Tory, leader of the opposition Progressive Conservative Party has promised, if elected, to initiate such a plan - a rather obvious effort to attract the vote of Ontario's large and diverse group of ethnic minorities. He is supported by lobbying groups, principally Jewish and Muslim some of which, surprisingly, are working in coalition.

Although faith based schools enjoy tax exempt status, currently only Roman Catholic separate schools are fully funded, a policy dating back to the British North America act, Canada's founding document, of 1867 to protect the Catholic community from Ontario's Protestant majority that Confederation established in Ontario. This is seen by minority religious faiths as unfair and. indeed, Canada's policy has been condemned by the U.N. Human Rights Committee as unfair as well. However, the Supreme Court has ruled that the funding of Catholic schools only does not represent a breach of equality rights under the Charter of Rights and Freedom. Therefore, Mr. Tory's proposal is not constitutionally mandated.

However, despite the Supreme Court's decision the status quo is inherently unfair. Conditions have changed since 1867 when the only religions in the country were Protestantism and Catholicism. Today, by definition, Canada is a multicultural country. Toronto has been designated, again by the U.N., as the most multicultural city in the world. Fortunately, there are two obvious directions to take to address the problem of unfairness - fund all faith based schools or fund none of them. Unfortunately, Mr. Tory has chosen the wrong direction.

While acknowledging the question of cost ($400,000,000 by Mr. Tory's own estimate) which the province can not afford and the question "Do faith based schools produce divisiveness in society? (I think they do)) there is one question that begs an answer: Should school-age children be subjected to religious instruction at all?

Psychologists and child experts have suggested that the forcing of religion on the young, impressionable and trusting mind of a school age child is akin to child abuse. In his book The God Delusion Richard Dawkins quotes psychologist Nicholas Humphrey:

"Children, I'll argue, have a human right not to have their minds crippled by exposure to other people's bad ideas - no matter who those other people are. Parents, correspondingly, have no God given licence to enculturate their children in whatever ways they personally choose: no right to limit the horizons of their children's knowledge, to bring them up in an atmosphere of dogma and superstition, or to insist they follow the straight and narrow path of their own faith"

Aptly described as a "culturally sanctioned mental disorder" religion has no place in publicly funded institutions. If it belongs anywhere, it is in the home, church, mosque or temple. The Ontario public school system offers a free education of the highest standard to all children living in the province financed by provincial taxpayers. If parents, for cultural and/or religious reasons, feel they must send their children to a faith based school, as is their right, let them pay for it.

The Scarlet Letter


This colourful graphic has been selected as the symbol of the "Out Campaign" sponsored by Richard Dawkins, author of "The God Delusion" to encourage and support those who wish to be identified publicly as atheists. That this symbol was selected for its similarity to the infamous letter worn by Hester Prynne, heroine of Nathaniel Hawthorne's famous novel, was not accidental.

Condemned to wear a bright red "A" (for adulteress) over her breast wherever she went, Hester had been convicted of adultery by Boston's Puritan leaders. Shunned and reviled by the 17th century Boston populace, she was forced to face social ostracism as a living example of the consequences of sin.

In many parts of the world, but particularly in the U.S. where, for example, the chances of a declared atheist being elected to public office are almost nil, atheists are the undeserving victims of a similar attitude or worse. That one would be reluctant to reveal one's true religious views to a neighbour or, better still, a potential employer is not difficult to understand given the dominant attitude towards non-believers. This is humiliating and morally wrong. No one should be intimidated by religion or its adherents.

Charges of similarity to the gay liberation movement are best refuted by Professor Dawkins.

"Before I go any further, I must forestall one major risk of misunderstanding. The obvious comparison with the gay community is vulnerable to going too far: to 'outing' as a transitive verb whose object might be an unfortunate individual not yet – or not ever – ready to confide in the world. Our OUT campaign will have nothing, repeat nothing to do with outing in that active sense. If a closet atheist wants to come out, that is her decision to make, and nobody else's. What we can do is provide support and encouragement to those who willingly decide to out themselves. This may seem trivial to people in parts of Europe, or in regions of the United States dominated by urban intellectuals where support and encouragement is unnecessary. It is anything but trivial to people in other areas of the United States, and even more so in parts of the Islamic world where apostasy is, by Koranic authority, punishable by death."

An organized effort is required to combat the prevalent negative and distrustful attitude toward atheists and to show that:

"We are mothers, fathers, sons, daughters, sisters, brothers and grandparents. We are human (we are primates) and we are good friends and good citizens. We are good people who have no need to cling to the supernatural."

The "Out Campaign" may be just that effort.

To access the "Out Campaign" website, click on the "scarlet letter."