Over 12,000 Egyptian pilgrims receive medical care during Hajj: Health Ministry    MSMEDA, EABA sign MoU to offer new marketing opportunities for Egyptian SMEs in Africa    SCZONE engages in inaugural New Development Bank forum    Blinken addresses Hamas ceasefire counterproposal, future governance plans for Gaza    Prime Minister reviews advances in localising e-chip, semiconductor industry    Apple, 1st brand to break $1t threshold    Egypt's President Al-Sisi, Equatorial Guinea's Vice President discuss bilateral cooperation, regional Issues    EGX closes in green notes on June 12    Egypt's Higher Education Minister pledges deeper cooperation with BRICS at Kazan Summit    European stocks gain as investors await US inflation, Fed decision    BRICS power emissions hit a record high in Q1    Matrouh receives EGP 17.3b for 23/24 development – minister    US to widen sanctions on semiconductor sales to Russia    Gaza death toll rises to 37,164, injuries hit 84,832 amid ongoing Israeli attacks    Egypt's Water Research, Space Agencies join forces to tackle water challenges    BRICS Skate Cup: Skateboarders from Egypt, 22 nations gather in Russia    Pharaohs Edge Out Burkina Faso in World Cup qualifiers Thriller    Egypt's EDA, Zambia sign collaboration pact    Madinaty Sports Club hosts successful 4th Qadya MMA Championship    Amwal Al Ghad Awards 2024 announces Entrepreneurs of the Year    Egyptian President asks Madbouly to form new government, outlines priorities    Egypt's President assigns Madbouly to form new government    Egypt and Tanzania discuss water cooperation    Grand Egyptian Museum opening: Madbouly reviews final preparations    Madinaty's inaugural Skydiving event boosts sports tourism appeal    Tunisia's President Saied reshuffles cabinet amidst political tension    Instagram Celebrates African Women in 'Made by Africa, Loved by the World' 2024 Campaign    Egypt to build 58 hospitals by '25    Swiss freeze on Russian assets dwindles to $6.36b in '23    Egyptian public, private sectors off on Apr 25 marking Sinai Liberation    Debt swaps could unlock $100b for climate action    Financial literacy becomes extremely important – EGX official    Euro area annual inflation up to 2.9% – Eurostat    BYD، Brazil's Sigma Lithium JV likely    UNESCO celebrates World Arabic Language Day    Motaz Azaiza mural in Manchester tribute to Palestinian journalists    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Islamic finance faces political hurdles in US
Published in Daily News Egypt on 03 - 01 - 2011

DUBAI: From Australia to Britain and even France, which recently banned the face-veil, Western economies are adjusting their laws to encourage growth in the Islamic finance sector they hope will attract wealthy Gulf investors.
Enthusiasm in the United States has been tempered by politics, however, which could slow the growth of Islamic finance and push business from the oil exporting Gulf elsewhere.
Islamic finance has faced scrutiny in the United States, with critics suggesting the $1 trillion industry was a front to funnel funds to terrorists or a plot by Muslims to spread a system of Islamic principles known as sharia, which includes a ban on interest.
The Center for Security Policy, a US think tank, last month issued a report titled "Sharia: The Threat to America", which said that practices promoting sharia were "incompatible with the constitution" and should be "proscribed." The report was presented on Capitol Hill and endorsed by some Republicans.
Former Speaker of the House of Representatives Newt Gingrich has also been busy on the speaking circuit, calling for a federal law to ensure sharia, and sharia-compliant finance by extension, is not recognized by any US court.
"If there's a choice, and the return and risk analysis is comparable but one place is opening their arms to Muslims while politicians in another country are making them feel unwelcome, of course Muslims will go to the jurisdiction that is more welcoming," said Jawad Ali, managing partner and deputy global head of Islamic finance at King & Spalding.
Favorable investment destination
Traditionally, the United States has been a favorable investment destination for Middle Eastern investors and Ali says there is still much to recommend it.
For one thing, the current US tax regime is conducive to the growth of sharia-compliant structured finance. And most Gulf Arab currencies are tied to the dollar, in which their oil exports are priced, which eliminates the significant currency risk involved in doing business across continents.
But the growing political rhetoric in the United States could persuade some investors to delay their decisions.
"Investors aren't running away from the United States just yet but I have seen a number of potential investors from the region reconsider sharia-compliant investments they were about to make because they're wary of the climate," one Gulf-based Islamic banker said.
Another Islamic banker said discussions with a US-based firm to raise financing through an Islamic bond, or sukuk, fell through earlier this year after the client feared controversy. The firm is considering a conventional bond instead.
Britian had its first Islamic bond launch in August, when International Innovative Technologies raised financing through a $10 million sukuk deal.
But the size of that bond still pales in comparison to General Electric's $500 million Islamic bond last year — the first sukuk ever from a major US company.
In reality, any negative rhetoric surrounding Islamic finance is unlikely to harm the Middle East economically.
US firms have been actively investing in the Middle East this year and when deals require Islamic financing, US corporations have been happy to comply.
With US and European recovery prospects uncertain, Western companies and funds are still looking to the higher returns on offer in growing emerging markets, and that includes the Gulf.
Politicization
What the negative sentiment has done is dampen some of the momentum for the growth of Islamic finance services in the United States, which is home to between 5 and 7 million Muslims.
According to a Pew Research study, 41 percent of American Muslims make over $50,000 a year. There are about 20 financial institutions that offer Islamic products, such as mortgages and private equity investments, but no fully Islamic banks.
Observant British Muslims, by comparison, are served by the Islamic Bank of Britain.
"There's a lot of people that don't know anything about Islam and Muslim countries have done very little to educate the American people," James Abourezk, a former Senator and the first Arab-American to serve in the US Senate, said.
To that end, the US Federal Reserve has launched an Islamic finance study group and is seeking consultants within the Islamic finance industry.
The US Treasury has launched the Islamic Finance 101 program to teach government agencies about sharia-compliant business. The program is run with Harvard's Islamic Finance Project, which was created in 1995 to study Islamic finance from a legal perspective and foster collaboration among scholars inside and outside the Muslim world.
But these initiatives have also been politicized.
A column in the Washington Times was accompanied by a cartoon of Supreme Court nominee Elena Kagan with a turban on her head, admonishing her for "enabling of the penetration of sharia into our capital markets" by supporting Harvard's Islamic finance project when she was dean of the law school.


Clic here to read the story from its source.