By HAKAN KALAYCI
As world markets suffer under the weight of the ongoing global financial crisis, the Vatican has put forward a new suggestion, arguing that the principles of Islamic finance may represent a possible cure for ailing markets.
The Vatican’s official newspaper, L’Osservatore Romano, recently published an article titled “Islamic finance proposals and ideas for the West in crisis,” prepared by Italian economists Loretta Napoleoni and Claudia Segre, in which it was suggested that the basic rules of Islamic finance could relieve suffering markets and particularly international financial systems. Noting that Islam prohibits “riba,” Arabic for the usurious loaning of money, the article argued that “sukuk bonds,” securities that comply with Islamic law, may be an alternative to interest. The article stressed that sukuk bonds are always real investments and never speculative.
The article said that in this atmosphere of crisis banks should take Muslims as an example and that the Islamic finance system may pave the way for the establishment of new rules in the Western world. The Vatican has suggested that the current capitalist system has failed. Pope Benedict XVI recently harshly criticized the capitalist system and the greediness of bank owners in the West. In the meantime, the Vatican itself has been badly affected by the crisis. It had recorded an 18 billion euro budget surplus in 2007, but this number had declined to 6 billion euros by the end of 2008 and is expected to fall further in 2009.
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