In "U.S. companies and Islamic law," Rachel Ehrenfeld and Alyssa A. Lappen call for the U.S. government to outlaw the Dow Jones Islamic Markets index. No joke.
Ronald Radosh claimed one of the bad "isolationist" ideas was that "war means militarism and repression at home." He’s wrong. If neoconservatives want to repress a stock index of all things, free speech is not far behind. President Bush just blasted criticism of how the Iraq War began as "deeply irresponsible" and "illegitimate."
Dow Jones Indexes recently licensed its Islamic Market Turkey Index to Family Finans House, Turkey’s largest noninterest banking house, to be the basis for an Exchange Traded Fund on the Istanbul Stock Exchange. The Turkish market is up 20% this year. The U.S. market is up 2%.
The Turkish index is part of a Dow Jones family of about 31 Islamic indexes composed of about 1,200 Shari’ah compliant stocks globally. These companies do not produce alcohol or pork-related products, conventional banking services, entertainment, tobacco, defense and weapons.
In America, there are similar mutual funds called "socially-conscious" funds that preclude investing in certain types of businesses. What is so special about Muslim preferences? They’re Muslim, that’s what.
According to Ehrenfeld and Lappen, Islam isn’t kosher: "In their urgent desire to find new markets, Americans have opened the door to Islamist expansionism." These products "are catering exclusively to Muslims," and "only advance the Islamic impetus to impose sharia-governed banking on the West." They say "there is no reason for American banks, businesses and investment firms to introduce Islam or any other religion into the U.S. capital markets." Since sharia, they say, "is the same Islamic ideology that is used by Islamic terrorists, its acceptance in any civil forum is not a good thing."
They do not even bother to qualify their statements with radical Muslim or Islamo-fascist Muslim, just any Muslim will do. The number of American Muslims might be 2 million or more. If they want to follow or buy these Islamic stocks, they don’t count. Dow Jones doesn’t count either, nor do all other investors, domestic or foreign, who might like to invest in Islamic securities. (Diversification pays.) The people in Muslim lands don’t count who might benefit if the companies issuing these stocks trade in a worldwide market and obtain capital at a lower cost. Americans and others don’t count who might do business with these companies that are based in Muslim lands. The companies, they don’t count either. Freedom doesn’t count. Free trade doesn’t count. The profit motive doesn’t count, and satisfying customers doesn’t count because "there is no reason" for these indexes. Nothing counts except to keep America pure and untainted by "Islamic ideology." Islam isn’t kosher.
The authors seriously claim that Islamic indexes introduce religion into the capital market. Such indexes are treyf. To win the war on terror, we must not allow preferences to influence loans or investments. Freedom does not count. This is not repression?
The neoconservative Committee on the Present Danger (CPD) that sponsored this paper is allied to the neoconservative Foundation for the Defense of Democracies (FDD). The President of CPD, Clifford D. May, is also President of the Foundation for the Defense of Democracies (FDD). Five of the top six officials at FDD (Steve Forbes, Jack Kemp, Jeanne Kirkpatrick, Newt Gingrich, and R. James Woolsey) also are on CPD.
It’s legitimate for high-level financial backing for the FDD to stem from, among others, such Jewish figures as Dalck Feith (father of Douglas), Leonard Abramson, members of the Bronfman family, Bernard Marcus, and Michael Steinhardt. Mr. May says that the founders of the FDD helped secure funding for the CPD by getting their friends to contribute. It is all right for AIPAC to influence American politics. But it is not all right for Dow Jones to compute and publish stock indexes. Is this fair?
Religion can be introduced into American politics, but American business must not introduce Islam into capital markets. What’s logically next? The U.S. must ban American Depository Receipts (ADRs) of foreign stocks from selected countries that do not toe the American line. Then the bans can be extended to American companies doing business in disapproved countries. The Congress can then introduce sanctions against Americans doing business with anyone who does business with anyone in a Muslim country. Why not ban movies like The Thief of Baghdad, Flame of Araby, and Casablanca? Why not ban Persian rugs and carpets? None of this is repression.
We are instructed not to support sharia because that is the "same Islamic ideology" that the terrorists use. Hitler was Roman Catholic. Therefore, shun all Roman Catholics.
Ehrenfeld and Lappen applaud Ontario’s Premier Dalton McGuinty who wants Ontario to outlaw arbitration according to sharia in the Muslim Community by the Islamic Institute of Civil Justice in civil cases. The Islamic Institute of Civil Justice offers binding arbitration for those who voluntarily choose to use the service, and the parties "are free to use the laws that they wish to rely upon." When it comes to anything Islam, Ehrenfeld and Lappen do not favor freedom.
A colleague at Harvard Business School, Benjamin C. Esty, has a case study called "The International Investor: Islamic Finance and the Equate Project." He also has a note explaining Islamic Finance. Why? He writes: "With more than a billion Muslims living primarily in regions with enormous infrastructure needs (the Middle East, Asia, and Africa), there is a growing need to understand Islamic culture, traditions, and financial systems." Instead of a clash of civilizations, which is not inevitable and far from desirable, mutual understanding and trade that benefits all are the remedy for suspicion and warfare.
In an earlier article, Financial Jihad, Ehrenfeld and Lappen speak of "the Islamic impetus to impose Sharia-governed banking on the West." They do not say how the Islamic system is enforced on Americans. They can’t, because whoever uses it does so voluntarily.
Ehrenfeld and Lappen’s method of character assassination in this article is to link legitimate businesses to Muslims whom they then link to others whom they criticize. In other words, they use the technique of guilt by association. Dow Jones, for example, consulted with an acknowledged and respected financial expert named Yusuf Talal DeLorenzo who wrote: "It is my conviction that the Dow Jones Islamic Market Index represents a service of inestimable magnitude to investors the world over, regardless of their religious persuasions. For Muslims, however, the service is even greater for the reason that they now have access to a financial information tool that will allow them to live their religious ideals in today’s marketplace. To my way of thinking, the Dow Jones Islamic Market Index represents a triumph of religious and ethical virtues in the marketplace, and opens the way for a whole new financial sector.”
In turn, Ehrenfeld and Lappen point out that Dr. DeLorenzo is a member of the Fiqh Council of North America. I cannot verify this, although he was secretary in 1999. According to writer Steven Emerson, the Fiqh Council "harbors many terror-sympathizers." A complete evaluation of this charge is beyond the scope of this article. I wish only to point out the bias and unfairness in Ehrenfeld and Lappen’s attacks on Dr. DeLorenzo. They have not found one thing, civil or criminal, that he has ever done wrong.
Emerson writes that one of the council members (Al-Awani) is "an unindicted co-conspirator in the case against Sami al-Arian, the alleged North American leader of Palestinian Islamic Jihad." The chain runs Dow Jones to DeLorenzo to Al-Awani to Al-Arian. Al-Arian is on trial in Florida, and the jury is deliberating at this moment. No matter how this turns out, and this case itself is a celebrated one, it has nothing to do with DeLorenzo, Dow Jones, or Islamic methods of finance that have developed over hundreds of years.
By contrast, The Jewish Week, which is an independent community newspaper serving New York, wrote a laudatory article on DeLorenzo in 1999, noting that he was advising Dow Jones on "stocks that are u2018kosher’ for Muslim investors." The article pointed out that Dow Jones was also considering indexes for "Orthodox Jews and Bible Belt Christians."
Ehrenfeld and Lappen ring alarm bells because large and small U.S. financial institutions are integrating Islamic products. They view Islamic banks and products as not corresponding to U.S. banking law. In fact, because interest on debt is not allowed, the Islamic finance uses equity and profit as a substitute. Financial products are often fungible.
Why their dismay? Because Muslims are "blatantly pursuing ulterior motives." They are? All of them? Prove it. Islamic banking is financial jihad. It is? Because a Muslim once said so?
The common cloth of neoconservativism is many things. Here we see oversimplification, extremism, single-mindedness, suspicion, intolerance, and misunderstanding.
We see smearing, defamation, and vilification. A Saudi banking scholar said at a Harvard conference that Islamic finance incorporated altruism as well as self-interest, that it ameliorated the excesses of capitalism, and that it yielded a fairer distribution of benefits. Whether this statement is accurate or not, Ehrenfeld and Lappen say "it fits well with bin Laden’s statement" to the effect that "Muslim companies should become self-sufficient in producing goods equal to the products of Western companies." This they term bin Laden’s "economic warfare."
There are many interpretations of these statements, some favorable, others not. Their accuracy and utility are not the issue. The point is how these authors link a non-aggressive characterization of Islamic financial practice to a non-aggressive statement made by bin Laden in order to discredit both Islamic finance and anyone who plays any role in furthering it.
The closing line in Ehrenfeld and Lappen’s article asks "Why are Western banking and financial officials and regulators playing into bin Laden’s hands?" How do they reach this preposterous conclusion? By another neoconservative habit: the illogical leap. The more I read them, painful as it is, the more I am reaching the conclusion that neoconservatives simply can’t think straight. Or if they can, they dissemble when they argue publicly.
The illogical leap appears at convenient times after stating various facts or supposed facts. The U.S. is a superpower (fact). Therefore, the U.S. should seek global hegemony (illogical leap). Saddam Hussein has WMD (supposed fact). Therefore, the U.S. should take him out (illogical leap). Iran is seeking nuclear weapons (assume true). Therefore, the U.S. should introduce Special Forces into Iran and foment a revolution (illogical leap). Syria supports Palestinian causes and terrorists (true). Therefore, the U.S. should make war on Syria (illogical leap). Islam has its own methods of finance (true). Therefore, to fight terrorism, America should outlaw Islamic finance (illogical leap). In some of these cases, it will be found that other implicit illogical leaps are being made. For example, in some of the instances just mentioned, the illogical leap is that what benefits Israel also benefits the U.S., or crudely speaking Israel = America. This should read Israel does not equal America, and neither does neoconservatism.
Michael S. Rozeff [send him mail] is the Louis M. Jacobs Professor of Finance at University at Buffalo.