Islamic banking crisis is not a safe alternative for the financial market. The Dubai-debt crisis, according to Islamic principles have lost the aura of invulnerability.
The hitherto unprecedented booming emirate of Dubai is likely to have heard for most of the economic miracle countries of the Gulf region. After two weeks, the request from the Government to defer payment for overdue Rates of their state-owned company Dubai World had made clear to the investors a shock, that there are serious problems, on Monday last week, broke the stock market. Shortly after its opening, she slumped in Dubai by more than seven percent, with the index in Abu Dhabi even lost more than eight percent. The largest shares lost real estate companies, telecommunications companies and energy industry. The construction company Nakheel, part of the suspension of payment pleading Dubai World, whose financial difficulties, the crisis had provoked significant, had asked stock market opening in Dubai before the suspension of transactions with its Islamic bonds.
This is the financial crisis in the United Arab Emirates arrived. Although they were already also affected by the collapse of the housing bubble a year ago, but the shocks in international financial markets now seem to cope relatively well. A special shock it must have been for many investors in the Islamic world that were in addition to conventional financial stocks Bonds also according to Islamic principles, which promotes increased in recent months as the crisis-proof alternative to Western interest-based banking business, also in free fall are and thus their aura of invincibility lost suddenly.
yet recently appeared in Islamic banking many business people as ethically acceptable and economically less dangerous variant of financial products. The '5 World Islamic Economic Forum, "was seen in the spring still significant opportunities in the crisis for alternatives to the financial markets. Various Islamic institutions had no extravagant to claim that the crisis would not have been possible, the principles of Sharia law would come into use. Even the Vatican thinks DISCOVER-th-the distinct advantage of Sharia-compliant banking. The Osservatore Romano called in March to the western banks of the Islamic institutes in- learn. "Islamic finance can contribute to new rules in the Western financial world," wrote the newspaper, which is after all the journalistic mouthpiece of the Vatican.
Only on 7 November, the Central Council of Muslims in Germany, predicted an imminent boom in banking according to Islamic law in Germany. "It will not be long. The Kuveyt Türk participation bank, which will next year take up their operations in Germany, will be only the beginning. In two to three years it will really get going, "said the Central Council for the Certification of Islamic financial products compe-tent economist Michael Gassner.
Islamic banking had also been at European investors is increasingly attractive. The center of Islamic banking activities in Europe is London, where there are now five Islamic banks and a further 20 known large banks, the Islamic departments have opened, which, with an annual growth rate of 15 percent is hardly surprising. "The entire Islamic assets in-excess of 300 institutes around the world today," more than a trillion dollars, Mohammed Kamal gave to the Bank of Malaysia. "Five times as much as five years ago, rising." Lastly, there are 1.5 billion Muslims around the world if one of them consider only two or three percent as customers, we have a big audience.
Nakheel Properties, part of the ailing state-owned Dubai World, has a number of Sukuk bonds, for which no interest is paid on the market. The next due date with a volume of 3.52 billion is 14 December. A final failure would be the biggest in the market for Islamic bonds. The expert Arabia Luis Costa from Commerzbank holds a complete national bankruptcy Dubai Although unlikely, a disaster was imminent but by Nakheel. The Swiss banking giant UBS sees, however, no major threat to the creditors. It expects prevent the United Arab Emirates a default by Nakheel will be.
Now the negotiations begin. To counter the Islamic ban on interest, investors get a Sukuk held in interest income from real assets. An asset pool will be transferred to a trust which then sells the shares. At the end of the term, the pool is then bought back again, and the investors are paid. is "The problem now is that Dubai does not have the money to buy back the portfolio," said Tomas Prüm from the law firm Linklaters. "Then you have to go sometime in the recovery of the portfolio."
There are conservative Muslim forces, the sukuk as a non-Sharia-compliant view, because the risks are distributed differently. While Muslim financiers are generally more liberal than for example in Malaysia, their counterparts in Arab Gulf states pursue a conservative-fundamentalist line, as noted Rainer Scholz, in a background contribution to the radio recently Germany. But even in South Asian countries is increasing the influence of the conservatives. Only in 2007 was in Malaysia collapse of previously booming market of Islamic bonds overnight, because a lawyer was, 85 percent of the papers are not Sharia compliant. Investors remain as foreign investors and are thus at risk not normally involved. If the crisis in Dubai, expand, this would presumably strengthen the conservative forces of Islamic finance. Their business practices are much more reserved. Thus, as can be expected that the major projects of recent years in Dubai at such levels can be rea-functionalized, because under the rules of the stricter interpretation of Sharia nobody would want to take the risk. Win the critics, there will be the Sukuk market is no longer, but other Islamic financing structures such as Mudarabah, a kind of silent partnership, gain in importance.
The idea that Islamic banking is recession-proof, is certainly a fiction, already before the crumbling of the liquidity of Dubai was not very far. The boom in Islamic banking in the countries of the Gulf directly related to the construction boom, as noted Alfred Hackensberger a year ago in the Internet magazine Telepolis. Investment in real estate sales in the last few years always high profits and a liquid hedge funds represent the Islamic dar. "The Islamic banking, which has been in the past 18 months, hardly touched by the crisis," he quoted in his article Daniel Marx of the European Islamic Investment Bank, "could be taken in a second wave." At the moment could fall in oil prices created a liquidity problem, or It could simply drop the value of properties. Because of the boom in the construction sector could not continue inexorably.
This point now seems to be reached. And it will allow the later Hackensberger half a year would have in an article for the world expressed assertion, based on Sharia-compliant banking, real estate, where non-crisis in the U.S., finally be history. Instead of giving money to the Islamic banks had bought the house the whole or 80 percent. The customer would then have a month until the complete eradication rates paid. Excess payments would not be interest, but as compensation been considered for the increases in value, the ideal-type depiction.
"Another crucial factor in the crisis was the banking trade in non-existing assets," Hackensberger Steven Amos quoted by the Islamic Bank of Britain. "The conventional banks often did not know what they bought there, whether it is a real estate or deposits. We must however first have to deposit before we can do business. "Moreover, his bank had no money to lend to other banks and may. Loans in Milli arden height, which were not covered, investment banks like Lehman Brothers were brought down. The catch is, first, that the proscribed interest is collected only under a different name, of course, nonetheless, otherwise if the whole business for the banks so devoid of meaning. And second, such a model is based on the idea of constantly rising real estate prices - a bubble that had burst at some point simply.
more importantly the fact that the global financial and housing crisis is not simple result of some speculative bubbles and spreads eventually to the "real economy", but conversely, the consequence of a long-term structural overproduction and over-accumulation crisis of the capitalist world system. And on the other hand does not help the Sharia, because the crisis of production and capital utilization is not being solved by financialization in any form whatsoever.
Still another, at first sight rather unexpected loser there could be at the Dubai-crisis, if it expands further: the German bank. Because this has a very energetic Islamic Banking Department and with its branch in Abu Dhabi very active in this sector. Controlled by the business from there it has become one of the world's largest Emissionäre of Sukuk bonds, as their spokesman Frank Hartmann against the Nuremberg newspaper confirmed in early April. About the size he wanted, but no details . Make
same applies to the information that the German banking world as a major lender for Islamic banks is. That this is so, the spokesman confirmed, as well as the commitment of the top European location for Islamic banking in London, where the German bank even financed a research institute for Islamic banking. Were quickly at the Deutsche Bank but to insure not to be affected by the liquidity crisis at Dubai World, but refused any further comment. It will be very exciting to watch in the coming months what effect the partial collapse of the financial and real estate boom in the United Arab Emirates on Islamic banking will have a total.
Published in: Jungle World, 10 December 2009
http://jungle-world.com/artikel/2009/50/39956.html
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