A Small Lesson from the Arab Uprising

“We will leave when he leaves” he says, “Birruh, Biddam nufdeeka ya bilaad”( with our spirit and blood, we sacrifice them for our country) they say; these are signature statements protesters in Egypt are carrying, chanting with every fibre of their conviction and determination to bring about change they have been longing for over thirty years.

It started like a joke and gibberish in the streets of Cairo, everyone contemplating what if they had staged a massive protest against their own government demanding the president, Hossin Mubarak, who has ruled the country for over thirty years to stand down.

When we first heard about it, we harked back the French revolution but I underestimated that possibility for some reasons. One thing that we were for sure was that if this was to happen then it will take them to Tahrir Square in Cairo.

We all know that this was where moderate women in Egypt throw their veils away in expressing their freedom of choice hence the name Tahrir- meaning “freedom”.

Although Mubarak seem to be adamant but the message has reached his voicemail and he is yet to retrieve the message and act upon it if he has not yet done so. Until then, he will try to manoeuvre his capabilities and abilities in order to cling to power. He has been trying to create another dynasty in Egypt where he would ultimately impose himself as a King followed by his descendants. This is evidenced by his willing to hand over his power to his son if any kind of resentment to do so is felt. Those who are in opposition to this move are likely to end up in maximum prisons or killed as they are considered disparaging.

The problem is not only an Egyptian problem but all Arab rulers and in some cases, African leaders, who take their own people for granted. Arabs have a reputation of limitless love and affection towards their leaders as long as they remain shepherds to them. They always talk good about them in the open and praise them a lot. In Saudi Arabia every taxi driver highly praises the ruler for giving them peace and drives the enemy away even if there has never been an enemy. It is one of the Islamic tenets that a Muslim obeys a ruler and Arabs play by the same rule originated from the verse in the Holy Quran.

One might now see that times are different and this was centuries ago when leaders had one thing in mind, emancipating their nations from the economic and social bondage by leading them to a self reliant nation that do not go about asking for economic aid from other super nations. These were leaders who went to war with an enemy in order to protect and preserve the values that are distinct, unique and separate them from the rest.

One thing that’s noticed and conspicuous in all Arab leaders, is that spirit of having to ring fence their mantle with security wings separate and distinct from their armies. In Saudi Arabia King Abdullah has a special elite army called “Harasil Wattany” headed by his own son, a force that deals with internal issues as well as eliminating and silencing the King’s enemies. Mubarak’s presidential guard in Egypt, Gadaffi’s one hundred strong contingent of super trained loyal women body guards and the former Baath Elite for the fallen leader Saddam Hussein in Iraq, a style emulated by all the dictators who wish to cling to power for the rest of their lives. In smaller countries in Africa, we have non state agencies disguised as young democrats, youth wings, youth morales who suppress the very need of the people and carry the force of the party and true nature of the leader in power. Using these wings, the despots are able to blackmail, incapacitate and disenfranchise other political leaders through trumped up cases of treason and corruption, silencing them as long as they clearly pose a threat to their power. This is so because there is always this misconception that leaders are representatives of God the almighty and leadership comes from God alone, you are only chosen by Him and no person can try to take that away unless it’s from God himself. They therefore measure up themselves to Angels and agents of God on earth.

Mubarak’s call to stand down was mocked by his response to fire the entire cabinet and lay all the blames directed to him on them for failing the country. He also sought to appoint the vice president of the country, a move seen as desperate measure, too little to late. This is a sense of purity that it is impossible for him to make a mistake when at the end of the day he is guided by God himself; therefore this mistake might be the people he appointed to work with him hence firing them.

Surprisingly, their behaviour is just so human and these forces they create to protect them is just the manifestation of that. Leaders today have a reputation of looting their own states and help to enrich those super nations by entrusting them with their wealth.

 They tend to betray their cohorts and friends who worked side by side with them during the struggle or campaigning even taking a step further of disengaging a vice president duly elected by the same people who put them to power. Retirement is always the term they hate to hear with impunity.

Now that Tunisia has managed to get rid of Ben Ali and Egypt is on it, other countries are rumoured to follow suit, Yemeni and Jordan are next but where is this wind heading to? King Abdullah of Jordan recently sacked and replaced his Prime Minster while the President of Yemen stated in Parliament that he will not seek re-election in 2013 and promised his people that he will not allow his son to takeover, hence no resetting of time and the clock. These are very interesting times indeed for the Arab world, and as our adage goes “moto umapita komwe thengo latsala”, so your guess is as good as ours. As for the Arab leaders, there is a possibility that all of them will end up seeking asylum in Saudi Arabia, not because they are Muslims, rather, because their behaviour is somehow acceptable in that land.

LESSON

What lesson do we really learn from these events as they unfold? People may seem to be sleeping or slumber but they should not be deemed to be ignorant and cowards to stand up for their rights. Allegiance comes with a price and if Rulers eliminate these and tend not to give allegiances they get its true meaning then events like those in Egypt become inevitable. It is important to bear in mind that the army cannot turn their guns against their own people because they are just part of the same citizens of the country. It is their families that make up this group of protesters therefore they cannot harm them. Their job is to protect the country from an intruding enemy not an enemy of the leader within. The Special Forces power is measured with the power that the leader has, if his power is diffused at a certain point, his orders carry no more than an empty weight. He cannot mobilise them against people who are not on a compromise position. It just doesn’t work.

In the words of American President that leaders should ensure that power is by all means attained by consent from the people they rule. Unfortunately, there has been a shift from this trend of attaining power by consent in the last century, most countries cry foul of having the General Elections rigged and the electorate having to experience both death and bodily harm if they did not give their consent to the seating president. This is institutional kind of attaining power without the consent of the people. Even where this has given the opposition a constitutional power to challenge the results of the elections, the courts have not shown an interest to either declare the election null and void or demanding the seating president to reconsider the outcome.

Ironically, Democracy nowadays is Communism in disguise, you cannot tell the difference between Zimbabwe and North Korea although the former is a democratic country where the president rules by consent after serving a term. People from these countries have but same kind of forced allegiance towards their leaders and their human rights are almost usurped from them. The only media that’s allowed to air the views of the people is that of the government and that’s descriptively the essence of communism. At times the ruling party is in control and determines the need of the Country rather a government which comprises the legislature, executive and the judiciary. Although the separation of power has for a long time now not made any sense at all as it leaves a lot to be desired, the president and the cabinet is an executive arm, the legislature with majority of representatives from the ruling party and the judiciary appointed by the president himself. It therefore leaves so much room for the seating president to have control over every business in government.

Dictators Take Note

The fallen President of Tunisia, Ben Ali, who fled to Saudi Arabia indeed might still be living in the lap of luxury, but make no mistakes Tunisia's former President Zine al-Abidine Ben Ali and his family are prisoners. They are friendless, homeless and humiliated.

They are prisoners because they have no country to attach themselves too, they have no freedom to walk in the streets with their heads up and they cannot even run their day to day business, most importantly they have lost everything. They will spend their lives looking above their shoulders and on the run from very same people they mistreated. They are worse off than a prisoner charged, stood trial and currently serving his jail sentence. The latter gets to seeing people left behind and those loved ones.

Indeed it does not matter whether they are now housed in a palace or castle but they are like a bird in a gilded cage and the truth is Ben Ali and his equally odious and corrupt family have nowhere else to hide.

Most dictators fantasise their relationship with countries in the West and how close they can get to the West in desperate times but they forget that that no matter how close you think you are to the West, in times of trouble they will drop you faster than a burning coal. The United States has proven this so many times that they are fickle friends; they have their own problems to focus on rather helping people who take advantage of the people who put them to power.

Ben Ali had that predicament, scrambled to board a plane to escape what some may consider a well deserved lynching; the truth is he had no idea where he was going.

Mubarak is just joggling his chances too, the West led by the United States of America has already expressed their disapproval and therefore not ready to take him.


Ben Ali tried to contact and half a dozen other countries but the truth is no one wanted the 74-year-old.

A desperate man finally found a bolthole in the Red Sea port city of Jeddah in Saudi Arabia arriving around midnight after close ally President Nicholas Sarkozy rejected a request for his plane to land on French soil.

It just tells us that dictators towards the end of this century will have their own country ruled by another oppressor.

The White House will not entertain any dictators who cling to power, it does not want to be seen as aiding and abetting their heinous crime they commit on their own people.

We remind dictators that just as the late Mohammad Reza Shah Pahlavi discovered when he went in to exile after his repressive regime in Iran was overthrown in the Islamic Revolution of 1979. The former Shah spent his exile in Egypt, totally isolated and shunned by the very same leaders in the West who had once supported him.

The Saudi government seem to be still very soft just as they accepted and give freedom among other dictators Idi Amin Dada of Uganda when he fled the country.

 

A CASE FOR ISLAMIC BANK IN MALAWI

A story published by Nyasatimes and other media houses regarding the rejection of Islamic Banking in Malawi cannot go without one having to throw some comments and explore as to whether the decision made by the Reserve Bank of Malawi is one that holds water or indeed satisfy the justification of the rejection.  The Reserve Bank Director is reported to have said that the central bank will not allow Islamic banking “because of Sharia law elements”. He said that the country’s banking act and the constitution does not allow Sharia law.

Given the times we live in, it is not surprising that an effort to establish a financial institution run on Sharia or Islamic principles should arouse anxiety, not curiosity.

But first I would like to deal with the decision made by RBM which is based on the presence Sharia element and the restrictions the Laws of Malawi imposes for not allowing that as well the contradiction Islamic banking poses with the Constitution of Malawi which does not allow Sharia law.

It is important to note that Islamic Banking and finance run in accordance with Islamic principles as well as the law of the land. As such it could neither be seen to be at odds with the secular principles enshrined in the Constitution nor as a means to support or promote a particular religion, as we may rightly suspect it here in the decision.

Not only that but looking at the requirements RBM imposes when establishing a bank in Malawi I do not find such a barrier to substantiate the decision. RBM requires that licensing procedures for establishing a new bank, the initial step is for the prospective investor to contact the Reserve Bank and provide a synopsis of the nature of business to be conducted. When the Reserve Bank has determined that the proposal has potential and is compatible with the interest of the national economy and public interest, the prospective applicant is provided with a set of application forms. If the Reserve Bank determines at the outset that the proposal is incompatible, the prospective applicant is advised accordingly. Applications for a licence to conduct banking business are made to the Minister of Finance through the Reserve Bank, which has the prerogative to conduct the necessary evaluation and assessment of the application before making recommendations to the Minister. A licensing fee of US$1,250 or the Kwacha equivalent thereof is payable. Before granting a licence the following factors are considered:  the validity and accuracy of the documents and information submitted; the financial condition and history of the applicant; the reputation of the executive officers as well as their competence and expertise in conducting the proposed business; the capacity of the applicant to maintain an adequate capital base at all times; the nature, scope and legality of these proposed business operations with regard to soundness, solvency and liquidity; the ability of the proposed business to meet the needs and convenience of the communities and sectors within which it will operate; the impact of the proposed bank’s business operations on prospective depositors, creditors, the national economy and the general public; the ability of the proposed bank to hire at least two persons as executive officers; the capacity of the proposed bank to commence its business operations within 12 months from the day an operating licence is granted; the adequacy of the capital base and earning prospects resulting from the intended business; the structure of its organisation and the capacity of the applicant to comply with all conditions of the licence, provisions of the Act and any other Act relevant to its business.

Secondly, the term "banking", as defined in the Banking Act Cap 44:01, has three essential features: (1) acceptance of deposits from the public; (2) the use of money so accepted for lending or investment, and (3) liberty to the depositor to withdraw the money.

The definition does not require a banking company either to pay interest on deposits or charge interest on lending nor the requirements beg the need to comply with that.

We are aware that since the events that took place on September 11 in the United States of America and the July bombing in London in the United Kingdom, many smaller countries are still being haunted by the warning issued by these two superpowers to those who may be seen to be facilitating the so called terrorism. Unfortunately, atrocities are being committed on ordinary people in the name of the jihadists who profess political Islam. It is probably this which raises concerns in many quarters about giving grounds to Sharia rules in any aspect of life.

Such a sweeping view does not answer to the demands of rationality. Allowing for financial services in keeping with Islamic principles, in fact, is little different from permitting autonomously-run madrasas to operate in the sphere of education. While many now fear the spread of Islamic ideas and practices, there was a time when knowledge, thought and innovative practices in diverse fields routinely travelled from Islamic lands to many parts of the world, in particular Europe. Much of modern-day mathematics and science has been the gainer on account of this. To blame Islam for the sins of today’s jihadists is silly and runs counter to the notion of pluralism.

Having said that the only conspicuous difference of Islamic Banking and Finance with those of conventional banks is the right of interest, it is prohibited in the former.

The fundamental principle of Islam is that separation between temporal and religious matters is not permitted, which implies the compliance with shariah as the basis for all aspects of life.

Riba (interest) is forbidden, hence all banking activities must avoid interest, instead the banks should earn profit (mark up) and fees on financing facilities it extends to customers. Also depositors earn a share of the Banks profit as opposed to interest.

It is not allowed to charge for the mere use of money in Islamic Financial Institutions whereas conventional financial institutions trade in money, buy them from depositors and sell them in the form of loans. Therefore most of their activities are interest based. Islamic banking shuns the very idea of interest rates and rests on profit sharing. It abhors the business of making money out of money and upholds the belief that wealth is generated through actual trade and investment.

Given the added complexity and uncertainty, it may be asked why non-Muslims would agree to use Islamic finance structures. The principal answer is that Islamic finance provides an opportunity to tap into the significant funds of Islamic investors seeking Shari’ah compliant investments.

In addition, Islamic finance can be combined with conventional funding sources and export credit agency (ECA) support. For example, Dubai’s Emirates airline recently closed an innovative transaction combining Islamic investment with ECA support.

One might wonder whether the Islamic Banking and Finance is an alternative approach to conventional banking or may be the most modern generation of banking. The answer may be that the banking business is no more than a possible means to satisfy the needs of society according to the prevailing conditions and circumstances. Those needs should always govern the means, not to be their subject. Indeed the most important function of modern banking is the art of mobilizing funds for investment. Islamic banking is a system that mobilises savings on the basis of profit/loss sharing that is considered to be fairer and more conducive to investment and development, although it is for Muslims a matter of faith.

The ultimate test of such an alternative is whether it is successful or not. It can be safely said that Islamic banking has been successful, that is why it’s not surprising to find several international banking institution establishing their own Islamic units, windows, branches or fully fledged Islamic Banks to better serve their customers. It is well known that Islamic banking products are offered by leading banks in the West.

As a lawyer, I take an agnostic approach; I feel that Islamic banking is becoming too big to be ignored. Financial centres such as Singapore, Hong Kong, Geneva, Zurich and London have either changed laws or tweaked existing regulations to accommodate Islamic finance industry that is worth $800 billion globally and is growing at 10-15% a year.

Boston Consulting Group paper said that in some of these financial centres, the focus is "on leveraging deep and long-term relationships with wealthy Muslim clients from the Middle East who are seeking Islamic private banking services". In Asia, Hong Kong's position as a gateway to China is attracting Middle Eastern institutions which want to park petro dollars in China through Sharia'h-compliant vehicles. Money markets in the West were quick to spot the opportunity. At the peak of derivatives boom, the industry body International Swaps & Derivatives Association ( ISDA )) had even structured something called an Islamic swap.

Recent developments in the UK illustrate how Islamic financing is becoming ‘mainstream’ and is recognised as an alternative method of financing to conventional bank financing. In particular, commercial banks have begun offering Shari’ah-compliant mortgages in order to attract Muslim customers, while the UK government has amended the tax laws to clarify the way in which certain Islamic structures will be treated.

In 2003, HSBC was the first mainstream UK bank to offer mortgages in the UK designed to comply with Shari’ah using the Ijara structure, shortly followed by the launch by United National Bank Limited of its first Islamic product in the UK, the UNB Islamic Mortgage, also based on the Ijara model. HSBC’s structure involves the bank purchasing a house and then leasing it out to the customer. The customers’ payments include a contribution to the purchase price, a rent for use of the property and insurance charges. At the end of the finance term, when all the payments have been made, the customer can exercise a right to have the property transferred into its name. This structure was greatly facilitated by the UK government’s decision in April 2003 to remove double stamp duty on home purchases under Shari’ah-compliant borrowings (previously stamp duty would have been charged on the purchase of the property by the Bank and then again on the purchase by the customer). The UK Islamic mortgage market is now undergoing significant growth.

Ecomists have argued that the wider the freedom of choice, the higher is the level of social welfare. A wider choice implies greater respect for human rights. When an alternative concept like Islamic banking is introduced, a new choice is open to the market, with obvious economic and social benefits. There is no question therefore that in order to exercise these choices one is just exercising his or her constitutional right which is safeguarded by our Constitution upon which any denial or deprivation of that will ultimately deprive one of his fundamental right of choice. It is therefore not true that Islamic finance will contradict the constitution.

Malawi as a former colony of the United Kingdom largely borrows its laws from this colonial master, have a lot to learn from their adjustments to allow an Islamic system of finance in the UK.

In recognition of the growing importance of Islamic methods of financing in the UK, the Finance Act 2005 introduced provisions to clarify the tax treatment for what it defines as ‘alternative finance arrangements’. The intention is to put these arrangements and the people who use them on an equal footing with conventional finance arrangements and their users. ‘Alternative finance arrangements’ are defined as those giving rise to an alternative finance return or to a profit share return. Broadly, arrangements give rise to an alternative finance return if they involve the purchase by a financial institution of an asset and its onward sale to another person, the sale price is greater than the purchase price, and the difference equates in substance to interest. At least one of the parties must be a financial institution (section 47).  Arrangements give rise to a profit share return if they involve the 2 unless otherwise specified. Deposit of money with a financial institution, which money is then used by that institution with a view to producing profit. A proportionate part of that profit is then returned to the depositor (section 49).

Where a company is a party to an arrangement giving rise to an alternative finance return or to a profit share return, the loan relationships provisions of the Finance Act 1996 (part 4, chapter 2) are to be applied to the arrangement in the manner provided.

Broadly, the purchase price is to be treated as if it were a loan and the return as if it were interest (section 50). In the case of individuals, trustees and other non-corporate persons, the alternative finance return or profit share return are to be treated as if they were interest (section 51).

Where an asset is sold by one party to another under an alternative finance arrangement, the effective return is to be excluded in determining the sale and purchase consideration for all other purposes of the tax acts or the Taxation of Chargeable Gains Act 1992 (section 53).

 A profit share return is not to be treated as a distribution under the Income and Corporation Taxes Act 1988 s 209(2)(e)(iii) (section 54).

The UK Islamic finance has continued to expand both geographically and in product richness despite the difficult conditions in the global financial markets and the regional uncertainties. Retaining ‘conventional style’ documentation and a bankable governing law together with a greater consistency in approach among the Shari’ah boards seem to be key aspects in the growth of Islamic finance.

The Islamic Financial Services Board, an association of central banks, monetary agencies and governmental organisations, was established on 3 November 2002 to develop universal Shari’ah-compliant finance standards and harmonise practices in the Islamic financial services industry.

Once viewed as the realm of a small number of specialised institutions, Islamic finance has now moved into the mainstream, with specialised regional Islamic institutions experiencing a significant growth and global banks such as HSBC, Citibank and UBS coming into the market. There has been a diversification of Islamic structured products, including real estate, aircraft financing, shipping and trade, as well as project finance.

It is therefore misleading to allege that the Constitution of Malawi does not allow the introduction of Islamic finance and banking but it encourages in doing so. It is not too late for a country like Malawi to have our own Islamic Banking and finance, it is a fact that most of our economic machineries are run by Asian community who make part of Islamic population in this country. It will be a denial of their right to prevent them to exercising this choice of investing and banking.

The conventional banking products like saving bank account, term deposits, credit cards and consumer and farm loans can be structured in a way that fulfil the requirements of the Malawi banking laws as well as Sharia'h.

 On the strength of this, it is possible to take the next step of moving toward Islamic banking within the confines of the normal laws of the land. All aspects of the Sharia are far from being violative of the spirit of modern democratic life. Indeed, in many respects, the guiding principles of Islam are meant to mould societies in the direction of equity. There is no need to be apprehensive about any of this in a country which has the largest Muslim population.