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.
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Donald Trump vs Barack Obama: How the inauguration speeches compared

We compared the two presidents on trade, foreign affairs and climate change – so you (really, really) don't have to.

After watching Donald Trump's inaugural address, what better way to get rid of the last few dregs of hope than by comparing what he said with Barack Obama's address from 2009? 

Both thanked the previous President, with Trump calling the Obamas "magnificent", and pledged to reform Washington, but the comparison ended there. 

Here is what each of them said: 

On American jobs

Obama:

The state of our economy calls for action, bold and swift.  And we will act, not only to create new jobs, but to lay a new foundation for growth.  We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together.  We'll restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost.  We will harness the sun and the winds and the soil to fuel our cars and run our factories.  And we will transform our schools and colleges and universities to meet the demands of a new age.

Trump:

For many decades we've enriched foreign industry at the expense of American industry, subsidized the armies of other countries while allowing for the very sad depletion of our military.

One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind.

Obama had a plan for growth. Trump just blames the rest of the world...

On global warming

Obama:

With old friends and former foes, we'll work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet.

Trump:

On the Middle East:

Obama:

To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West, know that your people will judge you on what you can build, not what you destroy. 

Trump:

We will re-enforce old alliances and form new ones and unite the civilized world against radical Islamic terrorism, which we will eradicate completely from the face of the earth.

On “greatness”

Obama:

In reaffirming the greatness of our nation we understand that greatness is never a given. It must be earned.

Trump:

America will start winning again, winning like never before.

 

On trade

Obama:

This is the journey we continue today.  We remain the most prosperous, powerful nation on Earth.  Our workers are no less productive than when this crisis began.  Our minds are no less inventive, our goods and services no less needed than they were last week, or last month, or last year.  Our capacity remains undiminished.  

Trump:

We must protect our borders from the ravages of other countries making our product, stealing our companies and destroying our jobs.

Protection will lead to great prosperity and strength. I will fight for you with every breath in my body, and I will never ever let you down.

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland