Every so often I run across an article that touches on something that I think deserves far more attention than it receives, not just in the specific instance but more generally, and today I’ve run across two. This article in the Financial Times (hat tip: Lounsbury) touches on two such issues:
Iran’s new central bank governor, appointed on Tuesday, aroused fears among bankers about government interference by mentioning a plan to eliminate interest rates on loans as a way to encourage “real and genuine” banking services.
Tahmasb Mazaheri, a former finance minister seen as close to Ayatollah Ali Khamenei, supreme leader, vowed to bring practices into line with laws against usury.
Mr Mazaheri is sympathetic to the populist policies of Mahmoud Ahmadi-Nejad, Iran’s president, who has promised widely affordable “profit rates” – as interest rates are referred to in Iran’s Islamic banking system.
Former economic officials warned of the potentially disastrous consequences. “There is no doubt that the government won’t be successful, but such a measure can disrupt the whole economy,” said Mohammad Tabibian, a prominent reform-minded economist.
The government worried bankers and economists when it formed a committee last month to study “revision of banking regulations”. The agenda of the 10-member committee, led by Parviz Davoudi, first vice-president, is unclear.
Mr Ahmadi-Nejad has urged banks to give cheap loans to those on low incomes. The president clashed with Ebrahim Sheibani, the last central bank governor, over rates. He said banks’ profit on loans must be cut to less than the inflation rate – which officially stands at 14 per cent and unofficially may exceed 20 per cent. In May, he imposed rate cuts, from 14 to 12 per cent at state-owned banks, and from 17 to 13 per cent at private-sector banks.
The first subject this article touches on that I think deserves much more attention than it receives is usury. Usury is lending money at interest. All successful modern economies are based on usury which is condemned by Islam and used to be condemned by Judaism and Christianity, too. However, every successful religion has a practical streak and Judaism and Christianity abandoned their distaste for usury long ago in a flurry of reinterpretation of Scripture. Islam is currently holding fast but, well, where there’s a will there’s a way and Islam, too, has found ways of lending at interest that satisfies at least some of its moral theologians. As a digression when anyone ever says Islam this or Islam that my eyes glaze over. Religion as it is practiced is a different creature than religion in its pure, distilled theoretical form. Where there’s a will, there’s a way.
The second subject is economic theory under Iran’s mullahs. Pegging the rate of interest, er, profit rate below the inflation rate sounds like a good way to either dry up liquidity or drive your banks out of business. Complete idiocy. To the best of my knowledge there are only two places where these theories of economics have been tried—Iran and Afghanistan—and they’ve been disasters both places. They can’t say they haven’t been warned, including by the informed among their own people.
The other article is this one from the Times of London:
Almost half of Britain’s mosques are under the control of a hardline Islamic sect whose leading preacher loathes Western values and has called on Muslims to “shed blood” for Allah, an investigation by The Times has found.
Riyadh ul Haq, who supports armed jihad and preaches contempt for Jews, Christians and Hindus, is in line to become the spiritual leader of the Deobandi sect in Britain. The ultra-conservative movement, which gave birth to the Taleban in Afghanistan, now runs more than 600 of Britain’s 1,350 mosques, according to a police report seen by The Times.
The Times investigation casts serious doubts on government statements that foreign preachers are to blame for spreading the creed of radical Islam in Britain’s mosques and its policy of enouraging the recruitment of more “home-grown” preachers.
The subject this article touches on that I think doesn’t receive enough attention is the Deobandi sect of Islam. I hear all sorts of complaints about Wahhabism and Salafism (with varying levels of informedness) but not that much about the Deobandi sect. The last thing I am is an expert in this area but I can’t help but think that Binladenism (for lack of a better word for the current variety of violent radical Islamist thought) is some sort of cross-pollenization between Salafism and Deobandi.