Vatican Paper Supports Islamic Finance - How should We Regard This Position?

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How should we regard the openness of the Vatican to Islamic finance?

brusselsjournal.com/node/3819

Vatican Paper Supports Islamic Finance. France Wants Its Share of Sharia Banking

Thu, 2009-03-12 10:52

In yet another act of conciliation on the part of Western religions towards Islam, the Vatican newspaper Osservatore Romano has voiced its approval of Islamic finance. The Vatican paper wrote that banks should look at the rules of Islamic finance to restore confidence amongst their clients at a time of global economic crisis. “The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service,” the Osservatore Romano said. “Western banks could use tools such as the Islamic bonds, known as sukuk, as collateral”. Sukuk may be used to fund the “‘car industry or the next Olympic Games in London,” the article says.

*Related to this news is the U.S. Government bailout of AIG, which is controversial not just on a financial level, IMO.

How do we reconcile the Vatican position with arguments by those concerned that it would promote shariah law?*

foxnews.com/story/0,2933,471004,00.html

December 22, 2008

AIG Bailout Promotes Shariah Law, Lawsuit Claims

In September 2008, the U.S. Treasury and Federal Reserve took a nearly 80-percent stake in AIG when it injected $150 billion to help prop up the troubled company. Then in December, AIG announced that it would offer Shariah-compliant homeowner insurance policies, known as takaful, to U.S. customers through one of its subsidiaries. To be Shariah compliant, companies cannot earn interest and must agree to send a percentage of their revenue to Islamic charitable groups.

Following the AIG announcement, Kevin Murray, an Iraq war veteran, filed a lawsuit against the Federal Reserve, claiming that the Government subsidy conveys a message of promotion of shariah-based Islam, "…a message of endorsement and promotion of Shariah-based Islam … and [a] message of disfavor of and hostility toward Christianity and Judaism.”

Following is recent news on development on lawsuit against Federal Reserve and U.S. Treasury

thomasmore.org/qry/page.taf?id=19

June 08, 2010

Taxpayer Monies Used to Promote Islamic Jihad - Judge Asked to Decide Against AIG Bailout

Note from the OP: I am not sure where to classify this thread, as it could be under Catholic News, Secular News, or War on Terror, or even in the Non-Catholic section, depending on one’s take. The forum administrator can decide …
 
A little history is in order here. Catholicism has taught against usury since before Muhammed was in diapers. The Church has gone curiously silent on the issue for hundreds of years now, probably because bishops simply haven’t ever figured out how to respond to the problem of inflation (which didn’t exist back when the economy was mostly barter based 1,500+ years ago.).

The fact that the Vatican may approve of SOME Islamic attempts to build in protections against usury should not alarm anyone. What SHOULD alarm people are the kinds of usurers out there charging 18%+ on credit cards and even more on payday loans.
 
“To be Shariah compliant, companies cannot earn interest and must agree to send a percentage of their revenue to Islamic charitable groups.” If they can’t earn interest, how are there any revenues to be shared?

In any case, I’d rather send my revenues to help women who’ve been abused by Islamic Law.
Or maybe here.
 
First off, it’s the opinion of a newspaper. LO is not some sort of Magisterial organ, etc. Take it as an opinion found in any other newspaper of a big city. The other day it said the “Blues Brothers” is a Catholic classic (I like that movie and it does have some Catholic elements, but I wouldn’t go that far, lol)

That being said, just laws are just laws, no matter who makes them. A just and reasonable principle shouldn’t be rejected because it is embraced by Muslims.
 
JimG said:
“To be Shariah compliant, companies cannot earn interest and must agree to send a percentage of their revenue to Islamic charitable groups.” If they can’t earn interest, how are there any revenues to be shared?

In any case, I’d rather send my revenues to help women who’ve been abused by Islamic Law.
Or maybe here.
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They can make a profit, but not through usury.

So, lets say I want a new boat.

I can go to Bank of America, borrow the money, and I’m paying interest on that from day 1. Miss a payment and I pay more. The longer it takes to repay, the more money it costs me and the more the bamk makes.

If I borrow the money from an Islamic bank, they buy the boat for me. They now own the boat. I agree to buy the boat from them, at 10% more than the cost to them. That’s their profit. I start making repayments. The quicker I repay the better, but if |I miss a payment, theres no extra charge. Because Im paying back a fixed agreed sum.
 
So you don’t get title to the boat until it’s paid off? Same thing for a home loan?

It sounds sort of circuitous to me. What if I want to borrow operating capital to start a new business? Do they do the start up and own the business for me? And if I don’t repay, they still own the business?
 
I support islamic finance…they are following God’s law about usury.
 
Islamic finance is more in line with Catholic teachings concerning the sin of usury than our current system, in fact it is almost identical to the financial system practiced in Christendom prior to the 1500’s.
 
JimG said:
So you don’t get title to the boat until it’s paid off? Same thing for a home loan?

It sounds sort of circuitous to me. What if I want to borrow operating capital to start a new business? Do they do the start up and own the business for me? And if I don’t repay, they still own the business?
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They become partners, if your business fails the loan obligation ends you are not required to pay back the money, once you repay the loan you own the whole business so they are only partners as long as it takes you to pay them back their money. As partners naturally they are entitled to a share of the profits just like any shareholder and that’s how they make money from the arrangement.

Same with houses you become join owners at the same time you or whoever uses the property pays rent that rent is then spilt between the two owners which is you and the bank. So you pay rent and pay of the loan but as you pay of the loan you own more of the property and so pay less rent.

It is a much fairer and transparent system than the usurious system we have at the moment where the one lending the money takes a far less share of the risks than the person lending the money. Under our current system your business fails the bank still expects the money back, you cant pay your mortgage the bank takes your house, that doesn’t happen under Islamic banking, the bank becomes your partner and shares the risk with you.
 
So, interest is not OK, but profit sharing (and loss sharing) is OK. It’s ok to buy stocks, thereby owning part of the company and sharing in the profits, but not bonds, because then I am collecting interest?

And if I just want to have a savings account, it’s not OK for my bank to pay me a market rate of interest?

And it’s not ok for a government to issue bonds?
 
JimG said:
So, interest is not OK, but profit sharing (and loss sharing) is OK. It’s ok to buy stocks, thereby owning part of the company and sharing in the profits, but not bonds, because then I am collecting interest?

And if I just want to have a savings account, it’s not OK for my bank to pay me a market rate of interest?

And it’s not ok for a government to issue bonds?
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Yes I believe that is correct, the government for example would have to seek investment for some specific activity that would potentially turn a profit and actually have some value rather than just borrow money to say give it to someone else and then make the tax payer pay it back plus interest.
 
Interesting. But I don’t think I’ll be withdrawing all my savings and putting it in the stock market. And if governments had to have a profit making venture in mind, I’m not sure that any governmental services could be provided. I suppose we would have to privatize all that.

In any case, if there were some evidence that this system has benefited Islamic society, I would be more impressed.
 
JimG said:
Interesting. But I don’t think I’ll be withdrawing all my savings and putting it in the stock market. And if governments had to have a profit making venture in mind, I’m not sure that any governmental services could be provided. I suppose we would have to privatize all that.

In any case, if there were some evidence that this system has benefited Islamic society, I would be more impressed.
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Government services are supposed to be funded by the taxes of the people not by selling a part of the nations sovereignty in return for a loan and condemning the nations children to a terrible burden of debt which they will be forced to struggle under through no fault of their own and which is clearly an injustice against future generations.
 
That’s interesting that responders to this thread are analyzing how sharia finance would affect the individual’s bottom line.

I am uncertain, however, if sharia finance would be good for us in the long term, as a society and as a culture. It just worries me, looking at developments in Europe and what is now starting in the U.S.

Islamic finance is an Islamic project, “which has come on the scene through considerable blackmail and power to condition, and affirms that the solution is that of God expressed in the Koran and in sharia. ” I borrow this phrase from this article, elucidating the Europe’s experience on the subject of Islamic finance:
aina.org/news/20070202082815.htm
There is no question in my mind that our beautiful Catholic Church is indeed a trailblazer with its teachings on economics, social organization and the state’s role.

It is remarkable that Pope Leo XIII in 1891 with his encyclical Rerum Novarum laid foundations on social justice, which are still meaningful to this present age.

Pope Benedict XVI said that The Church has to play her part through rational argument and she has to reawaken the spiritual energy without which justice cannot prevail and prosper.

The Church has always been against both unbridled capitalism and oppressive socialism, consistent with its critiques of ideologies both of right and the left.

The author of the article provided above lays out that the Catholic Church, with its principles – expressed in the Gospel and Christian tradition – that are to be constantly rethought and which proposes a reform of Western society, competes with secularism and radical Islam.

To the credit of our Church, he concludes with:

“It should be said however that the Catholic project is the only complete one. The secularist project does away with faith; the Islamic project does away with modernity, rationality and common sense; the Catholic project examines everything to retain what is good in the West and in the world. This project is more difficult, because it requires continuous discernment, not only on the part of religious authorities but also and above all on the part of each Christian in faithfulness to authority. It is difficult, but also more beautiful, because it is a humanistic project centered around the human person.”
 
InSearchofGrace said:
That’s interesting that responders to this thread are analyzing how sharia finance would affect the individual’s bottom line.

I am uncertain, however, if sharia finance would be good for us in the long term, as a society and as a culture. It just worries me, looking at developments in Europe and what is now starting in the U.S.

Islamic finance is an Islamic project, “which has come on the scene through considerable blackmail and power to condition, and affirms that the solution is that of God expressed in the Koran and in sharia. ” I borrow this phrase from this article, elucidating the Europe’s experience on the subject of Islamic finance:
aina.org/news/20070202082815.htm
There is no question in my mind that our beautiful Catholic Church is indeed a trailblazer with its teachings on economics, social organization and the state’s role.

It is remarkable that Pope Leo XIII in 1891 with his encyclical Rerum Novarum laid foundations on social justice, which are still meaningful to this present age.

Pope Benedict XVI said that The Church has to play her part through rational argument and she has to reawaken the spiritual energy without which justice cannot prevail and prosper.

The Church has always been against both unbridled capitalism and oppressive socialism, consistent with its critiques of ideologies both of right and the left.

The author of the article provided above lays out that the Catholic Church, with its principles – expressed in the Gospel and Christian tradition – that are to be constantly rethought and which proposes a reform of Western society, competes with secularism and radical Islam.

To the credit of our Church, he concludes with:

“It should be said however that the Catholic project is the only complete one. The secularist project does away with faith; the Islamic project does away with modernity, rationality and common sense; the Catholic project examines everything to retain what is good in the West and in the world. This project is more difficult, because it requires continuous discernment, not only on the part of religious authorities but also and above all on the part of each Christian in faithfulness to authority. It is difficult, but also more beautiful, because it is a humanistic project centered around the human person.”
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An interesting link; thank you. This part got my attention:
"In making room for Islamic finance, we should not forget that it is part of this project for the Islamization of Europe and of the world. It seeks to save the West from the moral decadence in which it has fallen, through the application of the Koran’s divine law. But that also means that such application also includes particulars such as stoning, cutting the hands of thieves, polygamy, the obligation for women to find at least 4 male witnesses in case she has to defend herself against accusations of adultery. . ."I’m not familiar with the particulars of Islamic finance, but just having finished the book “Infidel” by Aayan Hirsi Ali, I am unimpressed with the societal benefits of any part of Islamic law.
 
What we really need is Catholic finance and Catholic banks.
 
JimG said:
An interesting link; thank you. This part got my attention …
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You’re welcome, JimG.

I follow Aayan Hirsi Ali as well but I have yet to read her full story. She is a brave one and I am glad she is no longer in Denmark.

As to the topic of this thread, it seems to me that in financial negotiations, whoever defines terminology has the advantage. And whoever opens his wallet usually defines terms.

This caveat bothers me when AIG started to offer sharia-compliant products and services:

To be Shariah compliant, companies cannot earn interest and must agree to send a percentage of their revenue to Islamic charitable groups.

It would be great if this percentage of revenue could go to organizations of oppressed Muslim women, as you mentioned. But that would be against the Islamic agenda … There would be real danger that it would be treated like zakat, the third pillar of Islam, almsgiving for the relief of the poor. In this case, the poor and the needy would be the jihadists and their families …
 
Yes, the Catholic Church has long condemned usury. But modern Muslims are already probing us and note how the Church has been involved with interest charging funds…

Point is that our current economic system is one based on credit. Until the current economic model implodes…Americans are already wanting to go back to a less materialistic lifestyle, the economic system remains.

Not only are we Americans dealing with the imposition of Islam in our country through a most painful means, which should bring about due cause why this imposition, in particular after 9/11.

And then we have the socialist/marxist movement already at work among the cream of the crop, our young since the late 60’s…big, bad America. Look at Cuba how everyone is cared for. Also look at the doctors who want to leave.

Alot is coming that will be way beyond human means.

Whenever you hear someone at the Vatican speak, you have to check out the source. It could be very well that person’s opinion, and this sounds like someone who has an ax to grind. Why would the Church suddenly deny its teachings in favor of Islam? They have already tried to take over the Vatican twice, and there are those who intend to do it ‘right’ next time.

The only solution to the world problems is to learn the fullness of your Catholic faith, hold on to it, proclaim it seeking Christ in your own life, and let God be God…it is getting like that…‘look up and see that your Redemption is at hand!’
 
This is just the Vatican newspaper voicing this opinion. Not the actual Vatican right.
 
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