Religion and Development

Stephen DeAngelis

September 8, 2009

In a post entitled Morocco’s Example, I noted that Morocco has made noticeable progress under the leadership of its 45-year-old king, Mohammed VI, even though corruption, nepotism, and petty jealousies can be found. Another impediment to development in Morocco is religious radicalism [“Islamic Radicalism Slows Moroccan Reforms,” by Steven Erlanger and Souad Mekhennet, New York Times, 26 August 2009]. Erlanger and Mekhennet report that “Morocco has long been viewed as a rare liberalizing, modernizing Islamic state, open to the West and a potential bridge to a calmer Middle East that can live in peace with Israel.” This perception of Morocco has led to significant foreign direct investment in the country and given the world hope that the Islamic world could find a peaceful path it could follow into the globalized world. Islamic radicals, Erlanger and Mekhennet report, are now throwing a wrench into the gears of Morocco’s modernization efforts.

“Under pressure from Islamic radicalism, King Mohammed VI has slowed the pace of change. Power remains concentrated in the monarchy; democracy seems more demonstrative than real. While insisting that the king is committed to deeper reforms, senior officials speak instead of keeping a proper balance between freedom and social cohesion. Many discuss the threat of extremism in neighboring Algeria.”

Political leaders in Morocco are certainly justified in being worried about security. Security and development go hand-in-hand. Erlanger and Mekhennet note that “there has been a major and continuing crackdown on those suspected of being extremists” in Morocco, although they worry the government may have gone too far in some cases. In an interview the reporters conducted with Yassine Mansouri, Morocco’s chief of intelligence, Mansouri claimed that Morocco is threatened by two extremes — the conservative Wahhabism spread by Saudi Arabia and the Shiism spread by Iran.

“‘We consider them both aggressive,’ Mr. Mansouri said. ‘Radical Islam has the wind in its sail, and it remains a threat.’ Al Qaeda in the Islamic Maghreb, especially active in Algeria, remains a major problem for Morocco, Mr. Mansouri said. Officials say it is appealing to the young and has recreated a training route to Afghanistan through Pakistan, and it just sponsored a suicide bombing in Mauritania. Foreign Minister Taïeb Fassi Fihri said: ‘We know where the risks to our stability are. We know kids are listening to this Islamic song, so we have to act quickly.’ King Mohammed, who celebrated his 10th year on the throne this year, has vowed to help the poor and wipe out the slums, called ‘bidonvilles,’ where radicalism is bred. … The king sees himself as a modernizer and reformer, having invested heavily in economic development, loosened restraints on the news media, given more rights to women and shed light on some of the worst human-rights abuses of the past. These are remarkable steps in a region dominated by uncompromising examples of state control, like Algeria, Tunisia, Libya and Egypt. Because the king, a descendant of the Prophet Muhammad, is also revered as the ‘Commander of the Faithful,’ challenges to Moroccan Islam are taken very seriously. In March, the king cut diplomatic ties to Iran, accusing Tehran of ‘intolerable interference in internal affairs’ by trying to spread Shiism in Morocco and recruiting Moroccans in Europe, especially in Belgium, to participate in acts of terrorism, Mr. Mansouri said.”

Erlanger and Mekhennet report that the crackdown on Islamic radicalism is welcomed by most, “but Morocco’s response has also been to slam the brakes on reform, even of the corrupt judiciary and of laws governing women’s rights, in order not to inflame conservative and traditional views of Islam, especially in the countryside and among the poor, where extremists fish.” As I have discussed in other posts dealing with development and Enterra Solutions’ Development-in-a-Box™ offering, sustainable development can only be achieved when a holistic approach is taken. That means that a country can’t concentrate on security at the expense of good governance. Neither can it attract foreign direct investment without also investing in human capital. Although the Moroccan King appears genuine in his commitment to reform and development, he is having a difficult time dismembering the apparatchiki that have assembled around the monarchy over past centuries. As a result, critics “see the king and his friends as a closed, anti-democratic ‘monarchy of pals.'” Morocco, of course, is not alone in struggling with a desire to move boldly into the future while preserving the faith that made them a historically important culture. That same tension can be found in every Islamic country around the world. The good news is that there is evidence that moderates are starting to gain ground [“The battle for a religion’s heart,” The Economist, 8 August 2009 print issue].

“Which trend will prevail among the world’s 1.4 billion Muslims—violent confrontation or peaceful coexistence? Will Islam aspire to political power, or will more mystical or pietistic versions of the religion win out? People whose job is to wrestle with those questions, be they theologians or strategists, always keep a close eye on Egypt: the home of Sunni Islam’s greatest university, al-Azhar, and the country where political Islam, in many different forms, was incubated. And the good news, from Islam-watchers in Egypt, is that the appeal of the most violent kind of Islamist radicalism has been waning for some time. That decline is also noticeable in many neighbouring countries—and indeed in most Muslim places, apart from bloodstained peripheries like Pakistan’s Swat Valley. It is not just Osama bin Laden who has been holed up in remote exile. His ideology of global jihad has also retreated. Stung by public disgust with nihilist terror, and seeing the radicals’ failure to consolidate tangible gains, some prominent preachers of endless jihad have repented their ways. … Clerics from the broader ideological mainstream of Islam, where most Muslims put themselves, are condemning nihilist extremism with greater boldness. Also, at the opposite end of the spectrum, there are Muslim doubters, revisionists and reformers, who have had to mute their voices for fear of being branded apostates. Some of them are again speaking out, though it still takes a lot of courage.”

As an outsider, it’s not my place to tell followers of Islam how they should reform their faith. As someone interested in development and desiring to see people freed from poverty, however, I feel qualified to share my views on how that can best be accomplished. To that end, I know that the Islamic moderates have a better chance of bringing about significant and lasting economic progress than those on the fringes of the religion. That’s not just true about Islam, but about every faith. The characteristics that brought Islam to the pinnacle of culture, education, and science in centuries past remain within the faith. Islam is like other religions — a faith many voices. Among the “many voices,” however, few have been raised in defense of a broad debate about Islam’s future. The few who have raised their voices have often been treated harshly. The Economist believes that before a real debate about the future of Islam can take place among the faithful there needs to be strong voices raised in defense of open religious dialog. What is needed, the magazine says, is “Islam’s Voltaire” [“Where freedom is still at stake,” 8 August 2009 print issue]. The article concludes:

“There is an opportunity here for somebody. It turns out the French thinker Voltaire probably never uttered the words so often ascribed to him: ‘I do not agree with what you have to say, but I’ll defend to the death your right to say it.’ So the way is clear. Let some Western Muslim sage be the first philosopher to make that pronouncement, and mean it.”

One of the characteristics of Islam that is often pointed out as a hindrance to progress is its prohibition on lending money (more specifically, on charging interest for lending money). The idea behind the prohibition is to protect the poor from getting cheated by moneylenders. The unintended consequence of this ideal has been to hamper investment. The global economy is based on credit and such prohibitions make it difficult to finance development in Muslim countries or to provide the poor with the financial tools they need to improve themselves. Fortunately, there have been some clever people who have found work-arounds to the challenge. More of that kind of thinking is needed to bridge the gap between the Islamic world and the rest of the globe. To that end, Adnan Yousif, the chairman of the Union of Arab Banks, has a vision of creating a global Islamic bank [“Godly but ambitious,” The Economist, 20 June 2009 print issue].

“Mr Yousif’s ambitions date to the founding of modern Islamic finance. During the 1970s oil boom the Gulf’s Muslim elite needed to put their new-found wealth somewhere, and American government bonds seemed the safest option. Yet Islam prohibits the charging of interest. So some sheikhs bought bonds but let their Western banks keep the interest, in the casual manner of a customer leaving change on a restaurant table. To Mr Yousif, then a young banker at American Express in his native Bahrain, this made no sense. … In 1980 he moved to Arab Banking Corporation, a Bahraini bank, and set up an Islamic-finance division. It was little more than a few desks in a bare room where white-robed bankers created investments that generated profits in forms other than interest. The bank’s bosses thought it would be, at best, a niche business with little chance of competing against Western-style finance. But over the next two decades Islamic banking prospered, driven by a revival of faith following the Iranian revolution in 1979. By the turn of the century there were more than 200 Islamic banks and Mr Yousif was leading from the front. He turned his bank’s Islamic-finance division into a stand-alone institution, then became chief executive of Bahrain Islamic Bank in 2002. Two years later, now head of the Al Baraka Group, another Bahraini bank, he oversaw its initial public offering (IPO), the largest thus far by an Islamic bank. Along the way, interest-avoidance schemes became ever more sophisticated. Today $700 billion of global assets are said to comply with sharia law. Even so, traditional finance houses rather than Islamic institutions continue to handle most Gulf oil money and other Muslim wealth. … Mr Yousif is now attempting to create—a sharia-compliant investment bank with global reach and ready access to capital. It will be called Istikhlaf, Arabic for ‘doing God’s work’. Others in the industry have welcomed the move. ‘Islamic banking cannot be taken seriously until we have some global Islamic banks,’ says Simon Eedle, managing director of Islamic banking at Calyon, a French investment bank.”

Finance, of course, is just one aspect of Islam. When the principal voices of Islam encourage their adherents to recapture a vision that embraces education, literature, art, mathematics, and science, the Muslim world will be back on the road that made past Muslim empires beacons of culture and learning. Those encouraging isolation from the rest of world are more interested in holding on to personal power than they are in the welfare of the faithful. The Arab world, in particular, needs jobs and lots of them. The best hope for creating those jobs comes through an embrace of globalization. The signals coming out of the Muslim world remained mixed; but there appear to be more positive signs than negative ones — especially in more progressive Muslim countries. Muslims have demonstrated in the past that their culture is capable of producing greatness that rivals any other culture and the world needs as many great thinkers and innovators as it can produce. Reform is likely to take time; but time is the enemy in a fast-paced age. Christianity had the luxury of reforming in age that moved at a much slower pace. Muslims don’t have that luxury. New York Times‘ columnist Nicholas Kristof believes the fires of reform have already been lit [“Islam, Virgins and Grapes,” 23 April 2009].

“If the Islamic world is going to enjoy a revival, if fundamentalists are to be tamed, if women are to be employed more productively, then moderate interpretations of the Koran will have to gain ascendancy. There are signs of that, including a brand of ‘feminist Islam’ that cites verses and traditions suggesting that the Prophet Muhammad favored women’s rights. … If the great intellectual fires are reawakening within Islam, after centuries of torpor, then that will be the best weapon yet against extremism.”

Islam, of course, is not alone in facing the issues of fundamentalism and violence. Many people fear change preferring to cling to old perceptions rather than stepping boldly into the unknown. Fundamentalism and violence, however, are more often about clinging to power than fearing the unknown. Change is an immutable fact of life. We’re in this journey together and we can’t afford to have the Muslim part of the world become isolated from the rest of the world. We need all the ideas, resources, and energy we can muster to face the challenges presented by the changing world. Like it or not, we have a shared future on the planet. As readers of this blog know, my company does a lot of business in the Muslim world and it maintains an office in the Kurdistan region of Iraq. I continue to be optimistic about the future of Iraq, particularly about the Kurdistan region. For more on my thoughts about investing in Iraq, read an article entitled Investing in Iraq found in the current edition of World Trade magazine.