Selling England by the (Sharia) Pound

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    New sharia row over Chancellor's plans for 'Islamic bonds'
    By SIMON WALTERS - More by this author »
    Last updated at 17:59pm on 17th February 2008
    Comments (70)

    A new sharia law controversy erupted last night over Government plans to issue special "Islamic bonds" to pay for Gordon Brown's public-spending programme by raising money from the Middle East.
    Britain is to become the first Western nation to issue bonds approved by Muslim clerics in line with sharia law, which bans conventional loans involving interest payments as "sinful".

    The scheme would mark one of the most significant economic advances of sharia law in the non-Muslim world.

    It will lead to the ownership of Government buildings and other assets currently belonging to British taxpayers being switched wholesale to wealthy Middle-Eastern businessmen and banks.

    The Government sees sharia-compliant bonds as a way of tapping Middle-East money and building bridges with the Muslim community.

    But critics say the scheme would waste money and could undermine Britain's financial and legal systems.

    Senior Conservative MP Edward Leigh, chairman of the Commons Public Accounts Committee, said: "I am concerned about the signal this would send – it could be the thin end of the wedge.

    "British Common Law must be supreme and should apply to everyone."

    A spokesman for the National Secular Society said: "There are lots of different ways to arrange financing.

    "Constructing financial instruments to be sharia-compliant seems to me to involve a lot of unnecessary complication, which will serve only to make a lot of lawyers very rich."

    The attempt to embrace Islamic financing would also appear to be at odds with Mr Brown's promise to promote Britishness and British values and institutions.

    The Treasury has already faced heavy criticism for removing Britannia from 50p coins.

    Other Western nations have been reluctant to issue Islamic bonds.

    In the United States the bonds are banned partly as a result of claims that the money could be linked to terrorism.

    The Treasury proposal follows the heated debate over the Archbishop of Canterbury Dr Rowan Williams's claim that the spread of elements of sharia law in parts of Britain was "inevitable".

    Downing Street distanced Gordon Brown from Dr Williams's comments.

    A spokesman said: "The Prime Minister is very clear that British laws must be based on British values and that religious law, while respecting other cultures, should be subservient to British criminal and civil law."

    However, The Mail on Sunday has established that Chancellor Alistair Darling is ready to give the go-ahead to sharia-compliant bonds – known as "sukuk", an early Arabic form of cheque.

    Treasury officials have been working behind the scenes for months on the plan.

    The deadline for responses to Mr Darling's consultation document setting out how the bonds will work expires on Thursday.

    The Islamic bonds proposal was devised by Mr Brown's former Treasury adviser Ed Balls, now Schools Secretary and the Premier's most powerful Cabinet ally.

    He claims it is a vital way of improving relations with Muslims in Britain as well as helping the UK to obtain vast sums from Middle-East banks in oil-rich nations such as Dubai and Qatar.

    Sharia-compliant bonds have been issued by the governments of Pakistan and Malaysia and private banks but never by a Western government.

    Treasury officials say the aim is to attract big investors as well as making it easier for British Muslims to invest in National Savings products at banks and post offices.

    The Government has already backed Islamic car loans and mortgages.

    Sharia-compliant bonds were designed to get round the ban on paying interest – "riba" in Islamic law.

    The Koran says it is sinful to make money from money.

    Unlike a conventional bond which is debt-based, a "sukuk" is asset-based. Instead of receiving interest, bond holders receive "rent" on the asset, thereby complying with sharia law.

    The Treasury consultation document says Government assets such as "buildings or a piece of infrastructure" would be switched to a "special-purpose vehicle" set up to administer the bond.

    This would be carried out by a contract known as an "ijara".

    The asset would then be leased back by the Government, generating rental payments for the Islamic bond holders.

    When the "sukuk" matured, the Government would guarantee to buy back the asset, allowing the bond-holders to get their redemption payments.

    "Sukuk are akin to Islamic investment certificates," the document says.

    "They are designed to be in compliance with sharia law, the divine law in Islam which is based on the Quran."

    Concerned: Senior Tory MP Edward Leigh warned today, 'This could be the thin end of the wedge'
    Islamic bonds are slightly more expensive than Western-style bonds, mainly because they require extensive legal and religious advice.

    The Treasury initiative has been given added impetus by the worldwide credit squeeze, which is making it harder for all governments to raise money.

    The Government says the bonds will also help London retain its position ahead of New York and Frankfurt as the world's leading financial centre.

    Global Islamic finance assets, including private equity and bonds, are now said to be worth up to £150 billion. Sukuk volumes have soared from almost nothing to £35 billion in the past ten years.

    Maurice Fitzpatrick, a senior tax partner at accountants Grant Thornton, said: "The Treasury wants to borrow money from as wide a range of sources as possible.

    "Sharia bonds might well prove to be more expensive, but we would not know for sure until it was put into practice."

    Special rules for Islamic finances have been challenged by Mahmoud El-Gamal, chairman of Islamic economics at Rice University, Houston.

    "The main beneficiaries are lawyers, multi-national banks and self-styled religious scholars retained as consultants to certify the Islamicity of re-engineered financial products," he said.

    Muslim Labour peer Lord Ahmed said: "This is a positive step for Muslims in Britain but the main reason for doing it is to attract money to the UK from Middle-East investors. Claims that it is connected to terrorist funds are absurd."
  2. wet_blobby

    wet_blobby War Hero Moderator

    Great, that means Brown will flog the Northern Rock to the ragheads and my mortgage re payments will help fund one brown you cnut. :pissedoff:
  3. My weekend newspaper hasn't got that much writing in it.

    Complying my arse - they have found a way around it by calling it something else.
  4. Change your mortage provider then.


    FFS get a grip mate
  5. AND your point is.....

    Get a grip too. if you are able to sell your oil at $100 a barrel, because the septics have Fecked up BIG TIME we will all have to fall in line or pay off our mortage, and pay off all crdit cards.. Well you smart enough to relize what you need to do. It's now called the GLOBAL VILLAGE... LIVE WITH IT
  6. wet_blobby

    wet_blobby War Hero Moderator

    Tried changing mortgages lately?
  7. Yes changed it three weeks ago no problem.

    Didn't like the way Barcleys were going, too much over seas exposure, and could see me paying for their cock ups. I changed to RSB.. NO charge and .5% less. Try RSB they are looking for new trade.. Best of luck.
  8. British Common Law is already subordinated by opt outs granted to the religious. It should also be borne in mind that a year or so ago the government granted certain Christians special rights with regard to the investments of their pensions savings, if that person strongly objected to investments based on usury. The acceptance of mainstream, Hanbalite Sharia Fiqh (jurisprudence) is in keeping with the earlier, but not widely reported opt out granted to some Christians. The fact that Britain is, according to the last Census, a majority Christian nation (despite the fact that the questions posed were leading questions) makes no difference. After all when the UN was created, religious liberty was one thing enshrined in Article 18 of the UN declaration.
  9. Britains National Debt stands at £1,300,000,000,000; £53,000 for every household, despite record levels of taxation.

    Gotta fill that Neue Arbeit hole from somewhere…
  10. Remember the old Tory voting advert with the
    labour guy doing the pound note --spend ,spend,spend thing

    Ain't changed much have they.

    :nemo: :nemo:
  11. And has none of these government dropkicks paid attention to the vast benefits that the islamic economic system has brought to the islamic world?
    A place were the donkey is still the prime form of transport and most of the natives have never seen a flushing toilet!

    A great leap forward indeed.
  12. sgtpepperband

    sgtpepperband War Hero Moderator Book Reviewer

    The most relevant statement in that article.
  13. And anyone who thinks that having the Arabs bankrolling UK Plc will not influence government policy is going to get one very rude shock.

    Coming soon, 'HMG has decided to stop serving pork products in government establishments to avoid offending muslim sensibilities'…

    Think not?
  14. When I first saw the term usury - I think in a Gerald Seymour novel - I looked it up and have been convinced, ever since, that our law should make it unacceptable for money to be loaned at very high rates of interest. If adopting Sharia principles brings this closer, I'm all for it. Just because it is espoused by a particular faith group doesn't necessarily mean it's wrong. If you look at the obscenely rich and see where the majority of their wealth has come from, I'd bet that it is by ripping off the least well off in interest payments.

    City people who have managed to pay themselves several billion in bonuses, despite the world slump, only make this more obvious.
  15. Great use of the SEBTP Album cover, btw! Those were the days......
  16. Johnny Muslim, is very cleaver in getting around the "forbidden" in the Koran, for instance if he wants to shag a Muslim devorcee he can Marry her for the night even if johnny M is married himself, not a sin however if Fatima Muslim fancies abit action this option is not open to her.

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