IMF: Islamic Banks are More Resilient to Crisis?

Islamic Banks: More Resilient to Crisis?

Available at: http://www.imf.org/external/pubs/ft/survey/so/2010/RES100410A.htm

* Islamic banks fared differently from conventional banks during global crisis
* Weaknesses in risk management hurt Islamic bank profitability in 2009
* Crisis revealed important regulatory and supervisory challenges

A new IMF study compares the performance of Islamic banks and conventional banks during the recent financial crisis, and finds that Islamic banks, on average, showed stronger resilience during the global financial crisis.

But the study also finds that Islamic banks faced larger losses than their conventional peers when the crisis hit the real economy.

In “The Effects of the Global Crisis on Islamic and Conventional Banks: A Comparative Study,” economists Jemma Dridi of the IMF’s Middle East and Central Asia Department and Maher Hasan of the IMF’s Monetary and Capital Market Department look at the effects of the crisis on bank profitability, credit, and asset growth in countries where both types of banks have a significant market share. The new working paper adds an empirical dimension to the debate on the relationship between Islamic banking and financial stability, a topic that has generated renewed interest since the global crisis.

Too big to ignore

Islamic finance is one of the fastest growing segments of the global financial industry. In some countries, it has become systemically important and, in many others, it is too big to be ignored. It is estimated that the size of the Islamic banking industry at the global level was close to $820 billion at end-2008. The largest Islamic banks are located in the countries of the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates).

While Islamic banks play roles similar to conventional banks, fundamental differences exist between the two models. The main difference between Islamic and conventional banks is that the former operate in accordance with the rules of Shariah, the legal code of Islam. The central concept in Islamic banking and finance is justice, which is achieved mainly through the sharing of risk. Stakeholders are supposed to share profits and losses, and charging interest is prohibited.

There are also differences in terms of financial intermediation, the paper notes. While conventional intermediation is largely debt based, and allows for risk transfer, Islamic intermediation, by contrast, is asset based, and centers on risk sharing. One key difference between conventional banks and Islamic banks is that the latter’s model does not allow investing in or financing the kind of instruments that have adversely affected their conventional competitors and triggered the global financial crisis. These include toxic assets, derivatives, and conventional financial institution securities.

Crisis impact

To control for varying conditions across financial systems, the paper looks at the actual performance of Islamic banks and conventional banks in countries where both have significant market shares (see Chart 1). It uses bank-level data covering 2007−10 for about 120 Islamic banks and conventional banks in eight countries—Bahrain, Jordan, Kuwait, Malaysia, Qatar, Saudi Arabia, Turkey, and the United Arab Emirates. These countries host most of the world’s Islamic banks (more than 80 percent of the industry, excluding Iran) but also have large conventional banking sectors. The key variables used to assess the impact are the changes in profitability, bank lending, bank assets, and external bank ratings.

The analysis suggests that Islamic banks fared differently from conventional banks during the global financial crisis. Factors related to the Islamic banking business model helped contain the adverse impact on their profitability in 2008 (see Chart 2). In particular, smaller investment portfolios, lower leverage, and adherence to Shariah principles—which precluded Islamic banks from financing or investing in the kind of instruments that have adversely affected their conventional competitors—helped contain the impact of the crisis on Islamic banks in that year.

The following year, however, weaknesses in risk management practices in some Islamic banks led to a larger decline in profitability compared to that seen in conventional banks (see Chart 3). The weak 2009 performance in some countries was associated with sectoral and name concentration—that is, too great a degree of exposure to any one sector or borrower. In some cases, the problem was made worse by exemptions from concentration limits, highlighting the importance of having a neutral regulatory framework for both types of banks.

Despite the higher profitability of Islamic banks during the pre-global crisis period (2005–07), their average profitability for 2008–09 was similar to that of conventional banks, indicating better cumulative profitability and suggesting that higher pre-crisis profitability was not driven by a strategy of greater risk taking. The analysis also shows that large Islamic banks fared better than small ones, perhaps as a result of better diversification, economies of scale, and stronger reputation. Development of the industry might therefore be achieved, the paper suggests, through establishing large, well-managed Islamic banks that can compete with existing banks.

Source of stability

Islamic banks contributed to financial and economic stability during the crisis, given that their credit and asset growth was at least twice as high as that of conventional banks. The paper attributes this growth to their higher solvency and to the fact that many Islamic banks lent a larger part of their portfolio to the consumer sector, which was less affected by the crisis than other sectors in the countries studied. These findings were corroborated by external rating agencies’ reassessment of Islamic banks’ risk, which was generally found to be more favorable than—or similar to—that of conventional banks.

In view of their robust growth during the crisis, Islamic banks will likely take a growing market share in the future—but this implies greater supervisory responsibility, the authors note.

Challenges revealed

While the global crisis gave Islamic banks an opportunity to prove their resilience, it also brought to light some important challenges. Going forward, the authors say, the industry will need to focus on the following priorities:

• building a well-functioning infrastructure for liquidity management;

• ensuring that the supervisory and legal infrastructure, including for bank resolution, remains relevant in the rapidly changing Islamic financial landscape;

• aligning reform efforts with the global financial regulatory reform agenda; and

• harmonizing regulations and products to foster the efficient and sustainable growth of the Islamic banking industry.

To address these challenges, Islamic banks and supervisors will have to work together to develop the needed human capital, since expertise in Islamic finance has not kept pace with the industry’s growth, the authors say.

Best Regards
ZULKIFLI HASAN

  • Dubai International Financial Centre

    Stricter Rules on Shari’ah Governance for IFIs in Malaysia

    BNM mulls 5 Shariah advisors for Islamic banks

    By Habhajan Singh Available at: http://islamicfinanceasia.blogspot.com/2010/10/bnm-mulls-5-shariah-advisors-islamic.html

    Bank Negara Malaysia (BNM) is mulling at pushing up the number of Shariah comittee members to five from the present three and getting directors more involved in Islamic governance under its wide-ranging proposals on Shariah governance for Islamic banks.

    At present, Islamic banks operating on the local turf like Maybank Islamic Bank Bhd, CIMB Islamic Bank Bhd and Kuwait Finance House Malaysia Bhd, are required to have at least three members in their in-house Shariah committee. Each member is not allowed to sit on the Shariah committee board of another Islamic bank, but may sit on the Shariah committee of a takaful operator.

    A member of the Shariah Advisory Council (SAC), the Shariah mother-board at the central bank level currently headed by Dr Mohd Daud Bakar, is also not allowed to sit on Shariah committee at the bank level. The measures are partly built in as a firewall to ensure proper governance on the Shariah front.

    The central bank is also recommending Islamic financial institutions (IFIs) operating in Malaysia to appoint their respective chairman of Shariah committees onto the board as independent directors. It is understood the Shariah governance recomnmendations drafted by the central bank have been circulated to IFIs for their feedback.

    “So far, feedback has been mixed. Some banks may be a little behind the curve on some of the proposals,” said one Islamic finance expert with knowledge of the proposals.

    In its latest recommendation, it is understood that BNM is also compelling Islamic banks to ensure that at least three of the five Shariah committee members have Shariah background. It is understood that the requirement is to ensure members are able to fulfil the board’s role, as spelt out in the Islamic Banking Act 1983 and Takaful Act 1984, which is to ensure that all aspects of their bank’s business operations are in accordance with the Shariah principles.

    “At the moment, there is no specific requirement. However, in practice, BNM approval is required for the appointment of each and every Shariah committee member. So, invariably, they will ensure that the board is appropriately manned,” said one industry executive.

    These proposed changes will mark yet another milestone in the regulation regime in place to govern IFIs which come under the jurisdictions of BNM, especially after the introduction of the Central Bank of Malaysia Act 2009.

    In a report on Nov 23, 2009, The Malaysian Reserve noted that an analysis of the new ground rules for the central bank showed a strong Islamic finance flavour running through the 68-page document, especially in empowering of the SAC, designated to be the “authority for the ascertainment of Islamic law for the purpose of Islamic financial business”. On the proposal for Shariah committee chairman to sit on the bank’s board, an industry expert told The Malaysian Reserve that it may raise some issues.

    “Some banks have state muftis chairing their Shariah committees. Now, do you want muftis to sit on the boards of Islamic banks?” he asked. Perak mufti Tan Sri Harussani Zakaria, for example, is chairman of Maybank Islamic’s Shariah committee.

    At CIMB Islamic, on the other hand, its Shariah committee is headed by Prof Dr Mohammad Hashim Kamali, who is already sitting as an independent director on the bank’s board. Mohammad Hashim is the chairman/chief executive office of Hadhari Institute For Advance Islamic Studies. On the takaful side, MAA Takaful Bhd’s Shariah committee chairman, Dr Mohd Khalil Ruslan from Universiti Malaya’s law faculty, also sits on the company’s board.

    Best Regards
    ZULKIFLI HASAN

  • With Dr. Mohamad Daud Bakar at his office in Dubai, a world-renowned Shari’ah scholar from Malaysia

    Authenticity, Innovation and Reach in Islamic Finance

    Sign posts to Islamic finance 2.0

    By Rushdi Siddiqui Available at: http://www.btimes.com.my/Current_News/BTIMES/articles/20101025000658/Article/

    IS the AIR (authenticity, innovation and reach) out of Islamic finance? It has been operating in a viral vacuum of “Islamic on Islamic” as an over the counter fragmented industry without global connectivity.

    In the inaugural article, I want to establish the “GPS sign-post” of issues on the road to IF 2.0., by way of “self-interview”, and ask questions that may not have been raised or answered.

    Question: At a macro level, what is needed beyond short term liquidity and risk management, standardisation, scholars, qualified human capital, etc?

    Answer: First, we need to scientifically establish the size and growth rate of the industry. Is it US$500 billion (RM1.5 trillion), US$750 billion (RM2.3 trillion) or US$1 trillion (RM311 trillion) as the range variance erodes the credibility.
    Is Southeast Asia growing faster than Gulf Cooperation Council (GCC)? We should not be “embarrassed” if the size number and growth rates are smaller, it’s a beginning point.

    Second, we need to establish leading and lagging economic/financial indicators for this geographically fragmented market, some will be same as “conventional”, but others will be different, i.e., more emphasis on applied over academic research. The world’s attention span is getting shorter, and we need to better capture the pulse and health of Islamic finance (IF) for the day, week, month and quarter for countries, regions, and IF world.

    Third, post crisis, deposit taking Islamic banks need to under go a stress test, as exposure to realty is greater, risk and liquidity management is not as robust, issues with deposit insurance, etc., as a confidence building measure.
    Fourth, an international Islamic dispute resolution centre, possibly housed in Malaysia much like the IFSB and newly announced International Islamic Liquidity Management (IILM), as industry embarks on 2.0. We need to preempt regulatory arbitrage and supplement the inefficient, expensive and time consuming legal process.

    Fifth, sustainability is the century’s mantra, yet, how many Islamic institutions are signatories to the Carbon, Climate or Equator Principles as part of corporate social responsibility? Are there Islamic finance award categories for “Best Sustainability Islamic Bank” or is an Islamic bank in a sustainability index? We are vicegerent (khilafah) of the Almighty here, as the planet is not “owned” by humans, rather gifted to us for safe-keeping or trust (amanah) for future generations.

    Finally, serious stakeholders have been commenting on finding alternatives to Libor as reference rate, yet, when serious attempts have been made, similar people have said it (reference rate) would be same for Islamic fixing, cause confusion, and so on. Empirical evidence shows that the delinking of Libor to, say, GCC inter-banks rates exist, hence, proposed Islamic fixing delinking to Libor has commenced.

    Q. What areas need work?
    A: There are many, but I’d like to focus today on syariah screening, funds, convergence of IF and halal industry, and venture capital (VC). The world’s first Islamic index, by an index provider, was launched in 1999, but what does it really measure? Low debt, non-financial, social ethical companies like Microsoft, Pfizer, ExxonMobil, etc, but do such companies provide a pulse for Islamic finance? Investing in them, via funds usually, provides investment flow information, and it’s usually capital flight out of Muslim country, i.e. as about 85 per cent of market capitalisation weighting of a global Islamic index is in G20 countries.

    According to Lipper, about 96 per cent of (560) Islamic funds are actively managed, meaning managers attempting to capture alpha, why not an Islamic fund index capturing alpha? Lipper has one for GCC, why not one for Malaysia?

    Islamic finance has neither addressed the needs of non-bankable Muslims (may be 70-85 per cent of the 1.6 billion Muslims) nor its brethren, US$640 billion (RM1.9 trillion) halal industry (HI), separated at birth 1400 years ago. Irony of the situation is the HI is looking for compliant capital, yet IF does not understand the halal model or deemed too small to finance.

    Thus, can it be said IF has been driving the halal producers to Riba- based financing?

    Finally, the chairman of Malaysia Securities Commission Tan Sri Zarinah Anwar, stated in a keynote speech in 2007, “… how can Malaysia distinguish itself in the emerging market venture capital pool? Our belief is that Islamic VC provides that distinguishing factor.” Where is Islamic VC in Malaysia today?

    Q: What are some suggestions for Malaysia?

    A: Malaysia’s holistic approach to Islamic finance over last 27 years has made it a global intellectual property leader, but the mainstream media’s attention is on size, hence, traditional bias coverage in GCC. Some of the suggestions include;
    There are five FSA approved Islamic banks in the UK, a G20 country, but not one had a Malaysian founding shareholder, and, now, the European wholesale market may have potential for comparable profits to Indonesian retail.

    Surely, the Malaysian Islamic finance thought leadership did not miss and does not continue to miss Europe?

    Almost every presentation on syariah-compliant companies on Bursa Malaysia (BM) is about applying Securities Commission (SC) screening, yet there is very little GCC syariah-compliant portfolio investing on BM. Why not apply SC screens on Global, GCC, BRIC, Technology, etc, universe of companies? The end result just may be that the top 20 companies in these regions and sectors are similar to S&P syariah or AAOIFI screening, implying the Malaysian screening is not “liberal”.

    Investors in the GCC are more interested in market share leading Islamic banks than their products, yet the major players in Malaysia are Islamic subsidiaries, CIMB and Maybank, of conventional bank holding companies. Spin-offs would not generate buzz and interest, but also contribute to build out of syariah based indexes.

    We do not have an Islamic asset management hub, and it is here Malaysia can lead without cheerleading. A rich mixture of asset managers, ETF experience, a SWF openly invests Islamically, Hajj fund, etc., and combined with order flow platform and human infrastructure could cause concern for traditional hubs of Singapore, London and Geneva.

    Q: Is Malaysia’s IF model exportable to countries?
    A: Malaysia’s model is thought through, time consuming, holistic and stakeholder oriented, and led by visionary and committed leaders like prime minister, finance minister, central bank governor and SC chairman. Countries like Kazakhstan, Kenya, Australia, France, etc., all want to be IF hubs to tap the petro-liquidity, but all seem to be in a hurry.

    Can the time frame be compressed without consequences? Maybe, but levelling the regulatory and legal playing field is only the beginning. Funds must be set aside for training (bankers and scholars), as seed money for funds (to jump start IF), marketing and PR (to address myths and misconceptions), and so on.

    The visibility to IF 2.0 may be clear with fresh AIR, but climbing the narrow and winding mountain road will have challenging speed-bumps and potholes. It will be an interesting ride to stay within guardrails and avoid the unknown over the upcoming articles!

    The writer is Global Head of Islamic Finance for Thomson Reuters and is based in New York.

    Best Regards
    ZULKIFLI HASAN

  • University of Glasgow, Scotland

    Palestine, I Hear You – A Poem

    A very inspirational and powerful poem by Lilian Rosengarten. May Allah free Palestine from the zionist.

    Palestine, I Hear You – A Poem

    By Lillian Rosengarten Available at: http://palestinechronicle.com/view_article_details.php?id=16351

    Palestine! You call to me with whispers of pain.
    You speak of lost poets, children who cry for lost parents, lost teachers
    lost childhoods, dreams torn from their roots, mangled in a desert gone dry.
    In this place, water is poisoned, air putrid from the blood belly of war
    There is no escape, only sleep ravished by nightmares or death.

    I want to hear your poetry
    and tell you mine.
    I want to look into your eyes and see myself in you.
    Down! Down beneath the graves I hear your cries
    Muffled in a shroud of deception. You don’t exist.

    Israel, you are no longer my Israel.
    You punish those you call Arabs, dirty Arabs.
    Sad peoples of Palestine spit on and defiled, kept behind a wall.
    Oh ghetto of Israel, I ache for the reviled proud Palestinians, our brothers and sisters.
    But most of all I ache for you, for you know not what you do.

    – Lillian Rosengarten was the only American on board the Irene to Gaza.

    Best Regards
    ZULKIFLI HASAN

  • Masjid Al Aqsa

    Fiqh Aulawiyyat (the Science of Priority Jurisprudence): Priority of the Ijtihad over the Imitation (Taqlid)

    كتب: في فقه الأولويات دراسة جديدة في ضوء القرآن والسنة أولوية الاجتهاد على التقليد

    Available at: http://www.qaradawi.net/site/topics/article.asp?cu_no=2&item_no=2182&version=1&template_id=89&parent_id=1

    ومن هذا الباب: أولوية الاجتهاد والتجديد على التكرار والتقليد. وهذا مرتبط بفقه المقاصد الذي أشرنا إليه، وبقضية الفهم والحفظ أيضا.

    فالعلم عند السلف من علماء الأمة ليس هو مجرد معرفة الأحكام، وإن كان عن طريق تقليد الغير، وتبني قوله ولو لم تكن له حجة مقنعة، فهو يعرف الحق بالرجال، ويتبع الأشخاص لا الأدلة.

    العلم عندهم هو: العلم الاستقلالي، الذي يبتع فيه الحجة، ولا يبالي أوافق زيد أو عمر من الناس، فهو يسير مع الدليل حيثما سار، ويدور مع الحق الذي يقتنع به حيثما دار.

    استدل ابن القيم على منع التقليد بقوله تعالى: (ولا تقف ما ليس لك به علم)، قال: والتقليد ليس بعلم باتفاق أهل العلم، وذكر في “إعلام الموقعين” أكثر من ثمانين وجها في إبطال التقليد، والرد على شبهات أنصاره.

    وإذا كان الجمود على ظواهر النصوص مذموما، كما هو شأن الظاهرية القدامى والجدد، فأدخل منه في الذم: الجمود على ما قاله السابقون، دون مراعاة لتغير زماننا عن زمانهم، وحاجاتنا عن حاجاتهم، ومعارفنا عن معارفهم. وأحسب لو تأخر بهم الزمن حتى رأوا ما رأينا، وعاشوا ما عشنا ـ وهم أهل الاجتهاد والنظر ـ لغيروا كثيرا من فتاواهم واجتهاداتهم. كيف وقد غير أصحابهم من بعدهم كثيرا منها، لاختلاف العصر والزمان، رغم قرب ما بين أولئك وهؤلاء؟ بل كيف وقد غير الأئمة أنفسهم كثيرا من أقوالهم في حياتهم، تبعا لتغير اجتهاداتهم، بتأثير السن أو النضج أو الزمان أو المكان؟

    حتى إن الإمام الشافعي رضي الله عنه كان له مذهب قبل أن يستقر في مصر عرف باسم “القديم”، ومذهب بعد استقراره في مصر عرف باسم “الجديد”. وما ذاك إلا لأنه رأى ما لم يكن قد رأى، وسمع ما لم يكن قد سمع.

    والإمام أحمد قد روى عنه في القضية الواحدة عدة روايات متباينة، وما ذاك إلا لأن فتواه تختلف باختلاف الظروف والأحوال.

    (Note (s): For the benefits of my weblog readers, I list down several principles of Fiqh Aulawiyyat for references.)

    • To balance between the various masalih (plural of maslahah) or manafi‟ (plural of manfa‟ah) or the comparison of all goodness
    ( الموازنة ب نٌ المصالح أو المنافع أو الخ رٌات المشروعة بعضها وبعض );

    • To balance between the various mafasid (plural of mafsadah) or madhar (danger/harm) or the comparison of all vices.
    ( الموازنة كذلك ب نٌ المفاسد أو المضار أوالشرور الممنوعة بعضها وبعض )

    • To balance between the various masalih and mafasid or the comparison of all goodness and vice versa, when there exist conflict between them.
    (الموازنة أ ضٌاًب نٌ المصالح والمفاسد أو الخ رٌات والشرور إذا تصادمت وتعارضت بعضها ببعض ).

    • Eliminating mafsadah is prioritized over bringing maslahah;
    (إن درء المفاسد مقدم على جلب المصالح )

    • A small mafsadah is allowed to bring a great maslahah;
    (إن المفسدة الصغ رٌة تغتفر من أجل المصلجة الكب رٌة )

    • A temporary mafsadah is allowed for a lasting maslahah; and
    ( تغتفر المفسدة العارضة من أجل المصلحة الدائمة )

    • A genuine maslahah cannot be forsaken for an apparent mafsadah.
    ( لا تترك مصلحة محققة من أجل مفسدة متوهمة )

    • Putting precedence of the dharuriyah over the hajiyyah and also the tahsiniyyah.
    (تقد مٌ الضرور اٌت على الحاج اٌت، ومن باب أولى على التحس نٌات )

    • Putting precedence of the hajiyyah over the tahsiniyyah.
    (وتقد مٌ الحاج اٌت على التحس نٌات والمكملات )

    • Putting precedence of the certain maslahah over the uncertain maslahah.
    (تُقدَّم المصلحة المت قٌنة على المصلحة المظنونة أو الموهومة )

    • Putting precedence of the big maslahah over the small one.
    ( تُقدَّم المصلحة الكب رٌة على المصلحة الصغ رٌة. )

    • Putting precedence of the maslahah of the group over the individual maslahah.
    ( تُقدَّم مصلحة الجماعة على مصلحة الفرد. )

    • Putting precedence of the maslahah of the many over the maslahah of the few.
    ( تُقدَّم مصلحة الكثرة على مصلحة القِلَّة. )

    • Putting precedence of the lasting maslahah over the temporary or intermittent maslahah.
    (تُقدَّم المصلحة الدائمة على المصلحة العارضة أو المنقطعة )

    • Putting precedence of the fundamental and basic maslahah over the marginal and subsidiary maslahah.(تُقدَّم المصلحة الجوهر ةٌ والأساس ةٌ على المصلحة الشكل ةٌ والهامشةٌ )

    • Putting precedence of the potent future maslahah over the immediate weak maslahah.
    ( تُقدَّم المصلحة المستقبلةٌ القو ةٌ على المصلحة الآن ةٌ الضع فٌة. )

    • Priority of the lasting action over the temporary action
    ( أولو ةٌ العمل الدائم على العمل المنقطع );

    • Priority of the action that brings long term benefits over short term ones
    (أولو ةٌ العمل المتعدي النفع على القاصر );

    • Priority of the fundamentals over the peripherals
    (أولو ةٌ الأصول على الفروع );

    • Priority of the rights of the group over the rights of the individual.
    (أولو ةٌ حقوق الجماعة على حقوق الأفراد ).

    Best Regards
    ZULKIFLI HASAN

  • Cambridge University

    World’s Tallest Building in Jeddah

    Kingdom Holding to build world’s tallest tower

    By Reuters Available at: http://www.emirates247.com/property/real-estate/kingdom-holding-to-build-world-s-tallest-tower-2010-10-21-1.307108

    Saudi-based Kingdom Holding Company plans to build the world’s tallest tower as part of a project worth 75 billion riyals in the city of Jeddah, a newspaper report said on Thursday. Alsharq Al-Awsat newspaper, citing Kingdom’s Chairman Prince Alwaleed bin Talal, said the company will officially announce the project at a press conference in three weeks.

    The skyscraper will be at the centre of the mixed-use project, which will stretch over 3.5 million square metres of land, the newspaper added. It also said Kingdom Holding plans another development in the capital city of Riyadh with an estimated investment value of 25 billion riyals. It will include a park, a hotel and other entertainment elements, as well as 10,000 residential units.

    Kingdom Holding, the investment firm of the Saudi billionaire prince, posted a 52.6 per cent rise in third-quarter earnings on Monday, driven by higher investment returns. Kingdom, 95-per cent owned by the nephew of Saudi ruler King Abdullah, has stakes in some of the world’s top companies the most valuable of which is Citigroup. The world’s tallest building at present is Dubai’s 828-metre Burj Khalifa, developed by Emaar Properties.

    `Umar ibn Khattab (Allah be well pleased with him) said:

    “As we were sitting one day before the Messenger of Allah (peace and blessings be upon him), a man suddenly appeared. He wore pure white clothes and his hair was dark black-yet there were no signs of travel on him, and none of us knew him. He came and sat down in front of the Prophet (peace and blessings be upon him), placing his knees against his, and his hands on his thighs.

    He said, “O Muhammad! Tell me about Islam.” The Messenger of Allah (peace and blessings be upon him) replied, “Islam is to bear witness that there is no god but God and that Muhammad is the Messenger of God; and to perform the prayer; pay zakat; fast Ramadan; and to perform Hajj to the House if you are able.” The man said, “You have spoken the truth,” and we were surprised that he asked and then confirmed the answer.

    Then, he asked, “Tell me about belief (iman).” The Prophet (peace and blessings be upon him) replied, “It is to believe in Allah; His Angels; His Books; His Messengers; the Last Day; and in destiny-its good and bad.”

    The man said, “You have spoken the truth. Now, tell me about spiritual excellence (ihsan).” The Prophet (peace and blessings be upon him) replied, “It is to serve Allah as though you behold Him; and if you don’t behold him, (know that) He surely sees you.”

    “Now, tell me of the Last Hour,” asked the man. The Prophet (peace and blessings be upon him) replied, “The one asked knows no more of it than the one asking.”

    “Then tell me about its signs,” said the man. The Prophet (peace and blessings be upon him) replied,

      “That slave women give birth to their mistresses; and that you see barefoot, unclothed, beginning shepherds competing in the construction of tall buildings.”

    Then the visitor left, and I waited a long time. Then the Prophet (peace and blessings be upon him) asked me, “Do you know, Umar, who the questioner was?” I replied, “Allah and His Messenger know best.” He said (Allah bless him and give him peace), “It was Jibril. He came to you to teach you your religion.”

    (Sahih Muslim and the 2nd Hadith in the acclaimed Forty Ahaadith by An-Nawawi).

    Best Regards
    ZULKIFLI HASAN

  • University of Oslo, Norway

    When will Arabs finally awaken?

    When will Arabs finally awaken?

    The recent Sirte summit was all rhetoric and little action, and it’s time for leaders to deal with reality

    By Mohammad Abdullah Al Mutawa, Special to Gulf News Available at: http://gulfnews.com/opinions/columnists/when-will-arabs-finally-awaken-1.697793

    The Sirte Arab summit was expected to be more than a public relations exercise. It was expected to rise above compliments, platitudes and the media attention. It should have tackled the most glaring problems. Regretfully, the summit was a mere traditional gathering for flowery speeches and words of praise.

    The general scene in the Arab world is depressing as Arabs are lagging behind other nations. Countries in Europe, Asia and Latin America have formed economic blocs and political alliances to cope with radical global changes and shifts while Arabs are involved in internal conflicts that threaten to widen the chasm that already exists between them.

    This deteriorating situation makes Arab people feel extremely frustrated, wondering whether Arab nations are still living in a time of tribal conflicts that prevailed in the pre-Islamic era, recalling tribal wars, such as the 40-year war of Dahis Wal Ghabraa which erupted between the two tribes of Abs and Dibyan over a horse race.

    Now, most Arabs have lost hope in the possibility of bringing about change, especially since the middle class, which always leads the march of change, no longer exists. As the region has evolved into an arena of political struggles between Arab countries, talk about the political unity of Arabs is illogical. The political unity of Arabs falls within the red zone — as no one is allowed to come close to such a taboo. Yet talk about economic unity is allowed as it falls within the green zone — this is what good Arab citizens believe.

    However, talk about economic unity dates back to the 1970s when Europe, led by Nato, was involved in the Cold War.

    Although Arab countries considered economic unity even before European states, the continent’s economic unity has become a reality while Arabs are still drowning in their differences.

    Though the Council of Arab Economic Unity was established in 1964, with the ultimate goal of achieving complete economic unity among its member states, it has not held any meeting for many years. Hence, the strategic dream of economic unity has not been achieved for many reasons. This led to brain drain from the Arab world to the west.

    Consequently, the Arab world has continued to suffer as its best and brightest university-educated people relocate to western Europe and the United States. Making matters worse is the fact that the brain drain is combined with rising unemployment rates among young Arabs in a nation that possesses huge economic potential in terms of a large land mass, huge natural resources and fertile agricultural lands.

    The migration of highly educated and talented Arabs is a big gain to foreign countries, and a significant loss for their home nations. Sadly, many Arab countries have sought help from international experts, who are originally Arabs but migrated from the Arab world to the West. They have dealt with these professionals as foreigners, not as Arabs.

    There is an urgent need to stop the migration of skilled Arabs by developing a system that tackles the issue of brain drain and helps bring back Arab human capital. Due to security reasons, Arab countries must not leave the door wide open for non-Arab experts and professionals, so that we avoid giving access to foreign security services into our domestic affairs.

    Deteriorating situation

    In fact, the Arab situation is deteriorating to the extent that makes most Arab citizens yearn for a bygone era. For example, deteriorating levels of security in Iraq, which has seen daily bombings and the systematic destruction of infrastructure, have forced people to flee the country.

    Iraq, which is home to rich civilisations dating back 7,000 years, has become an unbearable hell from which people escape to any other country apart from Iraq. What is going on in the country indicates that there is a planned design aimed at terrifying Arab intellectuals and middle-class people to the extent that any call for change will only bring about an Iraq-like situation marked by killings and destruction.

    This is a clear message to the people in the Arab world who thirst for change, to learn from the lessons of Iraq, whose people were eager to get rid of the dictatorship of Saddam Hussain, yet ended up being victims of daily killings and the odious sectarianism. Another sad thing is that most Arabs have lost hope and become customised to everything they see on TV screens — even the scenes of killings in Palestine, Iraq and Somalia. It seems that such scenes have become familiar to Arab viewers who have became accustomed to such issues.

    On the other hand, there is a growing interest, among Arab viewers, in satellite television channels that air either indecent material or programmes that fuel sectarian and ethnic tendencies. Many TV stations are dedicated to airing low-level video clips, songs and dances that portray women as a objects of pleasure, while other TV stations have no message, except to fuel sectarian and ethnic tendencies.

    The enemies of Arabs are extremely satisfied with the state of deterioration they have already reached, especially after their involvement in domestic sectarian and ethnic struggles. Hence, sectarian turmoil in the Arab world makes it unnecessary for the enemies of the Arabs to shoot them because they are shooting at each other. Despite this gloomy picture, we still have to dream of a real Arab summit that works for the revival of Arab renaissance

    Will Arabs awaken?

    “We claim to be Muslims yet we do not follow the teachings of Islam, we recite the Quran but we do not apply its rulings, we claim to love the Prophet Muhammad but we fail to follow his sunnah, we declare in our constitutions that Islam is our official religion, yet we never give Islam its due place in government legislation and orientation. Therefore, in order to rectify this situation, we need to begin by reforming ourselves and our societies according to God’s decree” By Sheikh Yusuf Al Qaradhawi. (1987). Islamic Awakening. Virginia: IIIT. p. 3.

    Best Regards
    ZULKIFLI HASAN

  • Oxford University