Why Islamic finance could be our best “soft” foreign policy tool

With global Islamic investments expected to hit over £1.3 trillion next year, and Islamic finance accounting for only 1 per cent of all global finance the UK Government is right to identify Islamic finance as a key growth area.

I broadly welcomed the announcement from the Prime Minister at the opening of the World Islamic Economic Forum that a new Islamic Index will be created on the London Stock Exchange and that there are real plans afoot for the UK Government to issue a £200m Islamic bond, or sukuk. With global Islamic investments expected to hit over £1.3 trillion next year, the fact that 25 per cent of the world’s population is Muslim and yet with Islamic finance accounting for only 1 per cent of all global finance the UK Government is right to identify Islamic finance as a key growth area.

With growth of over 150 per cent in Islamic finance in the last seven years alone, this is trajectory the UK is right to be grasping. But among all the arguments around increasing the competiveness of London as a financial sector was a wider point missed?

As well as economic competiveness, Islamic finance offers a unique opportunity for broader relationship building between the West and the Islamic world, and in particular the Middle East, which could have important foreign policy outcomes. In an age of fiscal restraint, defence retrenchment and conflict weariness in the West, the PM's announcement offers the chance to build a new type of multi-lateral alliance between regions, driven not by traditional diplomatic tools but by business and global investors, overseen by government.

This new type of alliance is likely to be less constrained by traditional short-term political considerations. Given on-going disagreement with the west over how to respond to issues across the Middle East, Islamic finance offers a new focus around which both politicians and the international business community can rally around. Outstanding political questions remain, particularly around the viability and taxpayer risk of the sukuk which need to be ironed out with strong political will. I urge the UK Government to stick to the task. Political history teaches us that commerce leads to peace and stability.

In addition for the UK, the setting up of London as an Islamic finance centre allows the UK to begin to invest in the region, complementing the last few decades of, particularly Gulf sponsored, investment in the UK. It also enables the UK Government to focus on investing in, and building up, assets which suit the UK’s broader foreign and defence policy in the region such as around security, energy, technology and defence co-operation. The challenge for Islamic finance is to truly compete on an international scale, recognising the need for greater innovation and creativity to distinguish it from conventional banking and enable the sector to solve problems that cannot be addressed by current banking arrangements. In the process, we open up the possibility of a whole new range of bi-lateral and multi-lateral arrangements as well as building much needed understanding between the two regions.

This new economically-driven foreign and defence policy is already occurring through the development of military partnerships between the UK and the countries of the Gulf Co-operation Council (where UK exports now amount to £17bn per year). A recognition that the Islamic world is a growing economic region as well as a centre of trade and finance as well as an entry point to a whole new set of markets must continue to guide UK foreign policy. And the specific role of Islamic finance should be properly considered as an important tool in this armoury.

Mohammed Al Ardhi is the Vice Chairman of The National Bank of Oman, which is at the heart of Islamic Finance in Oman and received the “Banker of the Year” award from the Banking Magazine for the development of Islamic Finance across the Gulf Region. Al Ardhi is also the former Chief of the Omani Air Force and a member of the International Advisory Board of the Brookings Institute.

Speakers at the World Islamic Economic Forum, which took place in London this week. Photograph: Getty Images.
Photo: Getty
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Rising crime and fewer police show the most damaging impacts of austerity

We need to protect those who protect us.

Today’s revelation that police-recorded crime has risen by 10 per cent across England and Wales shows one of the most damaging impacts of austerity. Behind the cold figures are countless stories of personal misery; 723 homicides, 466,018 crimes with violence resulting in injury, and 205,869 domestic burglaries to take just a few examples.

It is crucial that politicians of all parties seek to address this rising level of violence and offer solutions to halt the increase in violent crime. I challenge any Tory to defend the idea that their constituents are best served by a continued squeeze on police budgets, when the number of officers is already at the lowest level for more than 30 years.

This week saw the launch Chris Bryant's Protect The Protectors Private Member’s Bill, which aims to secure greater protections for emergency service workers. It carries on where my attempts in the last parliament left off, and could not come at a more important time. Cuts to the number of police officers on our streets have not only left our communities less safe, but officers themselves are now more vulnerable as well.

As an MP I work closely with the local neighbourhood policing teams in my constituency of Halifax. There is some outstanding work going on to address the underlying causes of crime, to tackle antisocial behaviour, and to build trust and engagement across communities. I am always amazed that neighbourhood police officers seem to know the name of every kid in their patch. However cuts to West Yorkshire Police, which have totalled more than £160m since 2010, have meant that the number of neighbourhood officers in my district has been cut by half in the last year, as the budget squeeze continues and more resources are drawn into counter-terrorism and other specialisms .

Overall, West Yorkshire Police have seen a loss of around 1,200 officers. West Yorkshire Police Federation chairman Nick Smart is clear about the result: "To say it’s had no effect on frontline policing is just a nonsense.” Yet for years the Conservatives have argued just this, with the Prime Minister recently telling MPs that crime was at a record low, and ministers frequently arguing that the changing nature of crime means that the number of officers is a poor measure of police effectiveness. These figures today completely debunk that myth.

Constituents are also increasingly coming to me with concerns that crimes are not investigated once they are reported. Where the police simply do not have the resources to follow-up and attend or investigate crimes, communities lose faith and the criminals grow in confidence.

A frequently overlooked part of this discussion is that the demands on police have increased hugely, often in some unexpected ways. A clear example of this is that cuts in our mental health services have resulted in police officers having to deal with mental health issues in the custody suite. While on shift with the police last year, I saw how an average night included a series of people detained under the Mental Health Act. Due to a lack of specialist beds, vulnerable patients were held in a police cell, or even in the back of a police car, for their own safety. We should all be concerned that the police are becoming a catch-all for the state’s failures.

While the politically charged campaign to restore police numbers is ongoing, Protect The Protectors is seeking to build cross-party support for measures that would offer greater protections to officers immediately. In February, the Police Federation of England and Wales released the results of its latest welfare survey data which suggest that there were more than two million unarmed physical assaults on officers over a 12-month period, and a further 302,842 assaults using a deadly weapon.

This is partly due to an increase in single crewing, which sees officers sent out on their own into often hostile circumstances. Morale in the police has suffered hugely in recent years and almost every front-line officer will be able to recall a time when they were recently assaulted.

If we want to tackle this undeniable rise in violent crime, then a large part of the solution is protecting those who protect us; strengthening the law to keep them from harm where possible, restoring morale by removing the pay cap, and most importantly, increasing their numbers.

Holly Lynch is the MP for Halifax. The Protect the Protectors bill will get its second reading on the Friday 20th October. 

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