Syllabus for IslamPolicy.

com - Shariah Compliant Finance: Paradigm Shift or Neo-Imperialism – Class

to start February 20, 2011 Insha’Allah – register now at IslamPolicy.com

The following is a list of the topics and readings that insha’Allah will serve as the basis for a ten week course
covering the contemporary Shariah Compliant Banking Industry and critically analyzing its present state,
ultimately questioning if, in fact, it presently embodies the Islamic Economic ideology and represents a break
away from a modern finance that fails a majority. Drawing from an array of sources, lecturing and through
question and answer participants will gain a dynamic understanding of the industry itself and the social,
religious, political and historical forces that pull on the industry today. Students are asked to engage in as
many of the readings as possible each week. Page numbers can be found in bold at the end of the citation and
the books represent a body of work that heavily influences content of the lectures. Students are encouraged to
read all the selections before each lecture and to continue reading the material after the class has been
completed. Classes will be held every other week and will be recorded and posted on islampolicy.com for those
that miss the live sessions. All materials, all e-books, pdf’s and reading material will be provided to registrants
free of charge. It is necessary that interested participants send an email immediately so that they can join the
online group and receive the course-pack including every reference below. Participants will be asked to
produce some form of multimedia (articles, videos, audios, graphic design, etcetera)as a final project in order
to better promote the ideas and concepts covered in the course as an assignment, but ultimately we seek to
engage in this most important topic in a way that promotes depth of comprehension, stimulates conversation,
motivates others to enhance, improve and alter the present industry and that challenges Muslims to utilize
Islamic principles and concepts in working for justice and peace. We hope you may join us; for more
information or to register for the course go to Islampolicy.com or email islampolicy@gmail.com

WEEK #1 - Sunday February 20, 2011 - Introduction:

The first session will introduce the background of the topic by discussing the present growth of the shariah-
compliant finance industry and the role of trade and finance in Islam both historically and during the
contemporary Islamic Awakening. We will cover the syllabus, explain the technological options for students
and how to obtain the coursework, and the readings will be introduced along with an outline of the overall
intentions of the social science courses offered by Islam Policy.
Readings:

• On Crafting Islamic Policy: The Methodology of Islamic Social Sciences. Younus Abdullah Muhammad
(2010), islampolicy.com

• The Islamic Awakening. Shaikh Muhammad bin Salih al-Uthmayin. Kalamullah.com 2007. (p.29-78)

• Methodology of Economics: Secular versus Islamic. Addas, Waleed A.J.. International Islamic
University Malaysia, 2008.

• Islamic Finance: A Therapy for Healing the Global Financial Crisis. Kartika Dewi, Miranti and Ferdian,
Ilham Reza. International Islamic University in Malaysia, 2009.

• Islamic Economics as a Social Science: Some Methodological Issues. Mannan, M.A. Journal of
Residual Islamic Economics (Vol.1, No.1 pp.41-50)

• Principles of Islamic Economics. Choudhury, Masudal Alam. Middle East Studies, Vol.19, No.1 Jan.
1983). Pp. 93-103.

• The Venture of Islam: Conscience and History in a World Civilization: The Classical Age of Islam (.
Hodgson, Marshall G.S., University of Chicago Press, 1974. map of trade routes and Introduction
only.
 • Meccan Trade and the Rise of Islam. Crone, Patricia. Georgia Press, 2004. (Introduction)

WEEK #2 Sunday March 6, 2011 Week 2: Products and Discussion of the General Industry:
During this session we will discuss the history, present condition and future projections for the Shariah
Compliant Finance Industry along with the names and structures of the most common products offered by so-
called Islamic Banks. This session is an effort to briefly identify key terms and products in order to analyze
structures. The Readings cover the basics of the industry and create a leeway for participant inquiry into the
abundant and growing body of research in the field. As stated by World Bank analysis, research and
background is a key component of this new yet constantly changing field.

“The development of the Islamic Finance (IF) industry is closely linked to the research pursued in its field. As
soon as new theories are generated by researchers, the industry picks them up and implements them. And as
soon as the industry encounters new problems, they turn to the researchers to find a way to overcome them. A
closer look at the relationship between research and the industry makes several trends apparent.” (LINK)
Readings:

• An Introduction to Islamic Finance. Mufti Muhammad Taqi Usmani

• Islamic Finance: Law, Economics, and Practice. El-Gamal, Mahmoud. Cambridge Press, 2006. (pp.1-
45)

• Islamic Critique and Alternative to Financial Engineering Issues. Choundhury, Masudal Alam. Journal
of King Abdulaziz University. Vol. 22, No. 2 (2009). Pp. 205-44.

• An Economic Explanation of the Prohibition of Gharar in Classical Islamic Jurisprudence. May 2, 2001
– paper prepared for 4th International Conference on Islamic Economics

• Islamic Banks and Investment Financing. Rajesh K. Aggarwal and Tarik Yousef. Journal of Money,
Credit and Banking, Vol. 32, No. 1 (Feb., 2000), pp. 93-120

• Islamic Economics: The Emergence of a New Paradigm: Presley, John and Sessions, John. The
Economic Journal, 104 (May, 1994) pp. 584-596.

• Islamic Economics and the Islamic Subeconomy. Kuran, Timur. Journal of Economic Perspectives.
Vol.9, Number 4. (Fall 1995). Pp. 155-73.

• Islamic Banking – Interest Free of Interest Based? Chong, Ben Soon and Liu, Ming-Hua. Nyang
Business School, October 2007.

• Islamic Banking. Delwin A. Roy. Middle Eastern Studies, Vol. 27, No. 3 (Jul., 1991), pp. 427-456.

• Islamic Finance and Economics as Reflected in Research and Publications. Ali, S. Nazim. Harvard Law
School. 2010.

• Islamic vs. Conventional Banking: Business Model, Efficiency, and Stability. Beck, Thorsten, Asli-
Demirgue-Kunt, and Merrouche, Ourada. The Word Bank: Policy Research Working Paper 5446, 2010.

• Islamic Alternatives to Purely Capitalist Modes of Finance: A Story of the Malaysian Banks from 1999
to 2006. Gindi, Tamer and Said, Mona. Review of Radical Political Economics 2009 41: 516.

WEEK #3 Sunday March 20, 2011 - Murabaha as Interest Free or Free Interest?
Murabaha contracts represent between 60-90 percent of the contracts of the shariah-compliant finance industry.
During this session Readings will cover the fatawa that have authorized these “mark-up” sales and the
equivalency they represent with ribaa or fixed interest contracts will be revealed. Thereafter, we will discuss
the implications this reality has on preventing Shariah-compliant finance from presenting a paradigmatic
challenge to the dominant order.
Readings:
• A Comparative Study of Islamic Banking Practices. Harun, Sudin. Journal of King AbdulAziz
University. Islamic Economics, Vol. 10 pp.23-50. (p29, sec 4 especially)

• Murabaha Financing Versus Lending on Interest: A Thin Line Making a Big Difference in the
Understanding of Ribaa. Irfan, Qazi. Islamabad, Pakistan, hazariba.com. July 22, 2008.

• Shariah Opinions (Fatwa) on Murabaha. Al-Baraka Banking Group, Department of Research and
Development. 2008.

WEEK #4 - Sunday April 3, 2011 - Privilege and Power in the Middle East, the Remnants of Colonialism:
In this session we will analyze the post-colonial structures of the Middle East and Muslim world generally
alongside the changing forces and constant resistance to change there in the modern era. We will understand
both the authoritarian regimes and networks of privilege and power and the influence that has on wealth and its
distribution in society.
Readings:

• Forces of Fortune: The Rise of the New Muslim Middle Class and What It Will Mean for Our World.
Nasr, Vali. Council of Foreign Relations, 2009. Audio CD
( http://avaxhome.ws/ebooks/audiobook/ForcesFortune.html).

• The Modern Middle East. “Formation of the Middle East after World War I.” Khalidi, Rasheed.
Recorded Course from Columbia University in December 2009. (in student folder)

• Islamic Leviathan: Islam and the Making of State Power. Nasr, Vali. Oxford University Press, 2001.

• Networks of Privilege in the Middle East: The Politics of Economic Reform Revisited. Heydemann,
Steven. Palgrave McMillan, 2004.

• Arab Development Report 2009: Chapter 5, Wealth. United Nations Development Report.

• Upgrading Authoritarianism in the Arab World. Hydeman, Steven. The Saban Center for Middle East
Policy at the Brookings Institution. Analysis Paper #13, Oct. 2007.

• Why the Middle East Is Economically Underdeveloped: Historical Mechanisms of Institutional

Stagnation. Timur Kuran. The Journal of Economic Perspectives, Vol. 18, No. 3 (Summer, 2004), pp.
71-90.

• Arab Human Development Report 2003: Building a Knowledge Society. United Nations Development
Report.

WEEK #5 Sunday April 17, 2011 - Arab influence on Europe and “Capitalism” –
Whilst dominant thought portrays capitalism and all its “progresses as originating in Europe and especially with
Adam Smith an accurate and important distinction is made once one looks at the influence of Islam on
economic thought and practice. In this session we will debunk traditional Orientalist thought and explore the
reality that Islam brought economic advancement as well. We will also touch on the implications of this
distinction as well.
Readings:
• Capitalism in Medieval Islam. Labib, Subhi Y. The Journal of Economic History, Vol. 29, No. 1, The
Tasks of Economic History (Mar., 1969), pp. 79-96

• Charlemagne, Muhammad, and the Arab Roots of Capitalism. Heck, Gene. Walter de Gruyter GmbH &
Co., 2006.

• Contributions of Muslim Scholars to Economic Thought and Analysis. Islahi, Abdul Azim. King
Abdulaziz University, 2005.

• Islamic Institutions and Property Rights: The Case of the 'Public Good' Waqf. Shatzmiller, Maya.
Journal of the Economic and Social History of the Orient, Vol. 44, No. 1 (2001), pp.44-74.

• Crusades and Jihads: a Long-run Economic Perspective. Heston, Alan. The Annals of the American
Academy of Political and Social Science 2003 588: 112

WEEK #6 - Sunday May 1, 2011: What is neo-imperialism?

During this session we will explain the Post World War II American-led empire and the specifics of its
domination, the reality of the financialization of the global world and the role finance plays in that, alongside
the implications this macro-reality has on both preventing alternative Islamic resistance and allowing the
shariah compliant industry to represent an accessory to the continuation of that system as markets emerge in the
Muslim world.
Readings:

• The New Imperialism. A collection of Quotes and Summary of Views. (pdf)

• The Secret History of the American Empire: Economic Hit Men, Jackals, and the Truth about Global
Corruption. Perkins, John. Plume Printing, 2008. Prologue and Part 1 – Asia Chapters 1-14.
• The Accumulation of Capital. Luxemburg, Rosa. Translated by Agnes Schwarzschild. Routledge Press,
2003. (Ch. 27-31) pps. 348 -425
• Interest Rates and Foreign Capital in Egypt Under British Occupation. Hansen, Bent. The Journal of
Economic History, Vol. 43, No. 4 (Dec., 1983), pp. 867-884
• Super Imperialism. Hudson, Michael. 2nd. Edition 2003. Pluto Press Chapters 7, pp.179-279.
• Empires, Old and New: International Terrorism in the Real World. Chomsky, Noam. 2006 Edition.
Preface and Part 6 ‘The World After September 11’.
• The Mahathir Administration in Malaysia: Discipline through Islam. Mauzy, Diane K. and Miline, R. S.
Milne. Pacific Affairs, Vol. 56, No. 4 (Winter, 1983-1984), pp. 617-648
• The Ascent of Money. A Financial History of the World. Ferguson, Niall. Penguin Press, 2008. Chapter
6 – ‘From Empire to Chimerica’ and Afterword: the Descent of Money’ (pp.283-358)
• Middle East Illusions. Chomsky, Noam. Rowman & Littlefield Publishers Inc., 2003. Part II: The
Intifada, Israel, and the United States at the Turn of the Millenium pp.159-234.
• National Security Study Memorandum - NSSM 200: Implications of Worldwide Population Growth For
U.S. Security and Overseas Interests (THE KISSINGER REPORT) December 10, 1974

WEEK #7 - Sunday May 15, 2011 – International Banks and their Influence in the Middle East:
This session will look at the influence of foreign banks on the Middle East, the role they play in preserving
Anglo-American dominance and protecting authoritarian regimes. Specifically we will look at a case study of
HSBC – originally the Hong Kong Shanghai Banking Corporation – a major player in Shariah-Compliant
Finance. We will start from the role HSBC had on enforcing Britain’s dominance during the Opium Wars with
China, when opium from the British East India Co. was forced on the Chinese population, the funneling on
proceeds form that trade through HSBC and on up into the banks influence. Students should start the week by
reading a link of the top banks of the Middle East, notice that they are mostly national and connected to the
regimes - http://findarticles.com/p/articles/mi_m2742/is_371/ai_n24994449/. You should then do some basic
research on the top ten or so firms online looking for stakeholders, history and background information. Pay
close attention to the means and mechanisms of foreign influence. Example: Samba Financial Group – wiki
history LINK HERE…

Readings:

• Neoliberalism in the Middle East and Africa: Divergent Banking Reform Trajectories, 1980s to 2000.
Boone, Catherine and Hnery, Clement. Commonwealth & Comparative Politics, Vol.42, No.3
(November 2004), pp.356–392.
• Wall Street: A History from its Beginnings to the Fall of Enron. Geistt, Charles. Oxford University
Press, 2004. pp.37-63 (pdf scanned).
• The Middle East: A Region without Regionalism or the End of Exceptionalism? Paul Aarts, Paul. Third
World Quarterly, Vol. 20, No. 5, New Regionalisms in the New Millenium (Oct.,1999), pp. 911-925
• 13 Bankers: Wall Street Takeover and Financial Meltodown. Johnson, Simon and Kwak, James.
Pantheon E-books 2009. Intro and Chapter 7 (Big Banks)
• In Support of Arab Democracy: Why and How. Council of Foreign Relations, Albright, Madeline and
Weber, Vin Eds. 2005.
• Derivatives in Islamic Finance. Jobst, Andreas J. Islamic Economic Studies, Vol. 15, No. 1)
• The Changing Middle East Market. Stewart, Charles. The Journal of Marketing, Vol. 25, No. 3 (Jan.,
1961), pp. 47-51
• Financial Derivatives and the Globalization of Risk: DiPLuma, Edward and Lee, Benjamin. Duke
UNniversity Press, 2004. Chapter 2 pp. 33-67.
• Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives. Das, Syajit.
Financial Times Press, 2009. (Chapter 1., especially p.30)
• British Policy in Mesopotamia: 1903-1014. Cohen, Stuart A. Ithaca Press, 2008. Introduction

Week #8 - Sunday May 29, 2011 - GCC Central Bank and Saudi Servitude:

The country of Saudi Arabia is believed by most Muslims to be the home of Islam, housing the Haramain
(Mosques of Mecca and Medina) and allegedly upholding shariah (law) in its totality. However, the financial
operations of the Kingdom from the Petrodollar coordination, to the implementation of interest-based banks
throughout the Kingdom and presently their strong-arming the ability to host the GCC Central Bank. This
lecture will look at Saudi Servitude and its role in dictating the direction of the Shariah Compliant field. We
will also briefly mention its primary competitors in the Muslim world, namely Dubai and Malaysia and describe
the effect the state’s unconditional legitimacy has on the condition of economic realities throughout the world.

• The Prize. Yergin, Daniel. Simon and Schuster, 1991. Chapters 29-31
• America’s Kingdom: Saudi Arabia and the World Oil Frontier, 1945-1970. Robert Vitalis. University of
Pennsylvania, 2007.
• Sleeping With The Devil. Baer, Robert. Random House, 2003. Part 1 Speak no Evil.
• Contesting the Saudi State Islamic Voices from a New Generation. Al-Rasheed, Madawi. University of
London, 2006. Pp.42,-174 Chapter 2 – Re-enchanting Politics: Sahwis from Contestation to Co-
optation.
 • The J Curve: A New Way to Understand Why Nations Rise and Fall. Bremmer, Ian. Simon and
Schuster, 2009. Introduction, Saudi Arabia pp. 103-125.
• Petrodollar Warfare: Oil, Iraq and the Future of the Dollar. Clark, William. New Society Publishers,
2005 , Chapters 1 and 2 pp. 7-68.

Week #9 - Sunday June 12, 2011 - Islamic Revival – the Challenge and Last Line of Defense:
This section addresses the role of Islamic Revival, the continuing struggle to separate from colonialism and
imperialism and analyzes finance as a means of challenging the dominant status quo covered so far in the
course. Participants will analyze the renaissance of the Islamic world in contemporary context and recognize
how the shariah compliant industry can either promote or prevent real change.

• Treatise on Maqaasid al Shariah. Ibn Ashur, Muhammad al Tahir. Translated by the Institute of Islamic
Thought, Part 1 and Chapters 35, 36, 37 pp. 3-70 and 270-307
• The Fall and Rise of the Islamic State. Feldman, Noah. Princeton University Press, 2008. PART III.
The Rise of the New Islamic State and Conclusion pp. 103-153
• Islamic Revival and Modernity: The Contemporary Movements and the Historical Paradigms.Lapidus,
Ira M.. Journal of the Economic and Social History of the Orient, Vol. 40, No. 4. (1997), pp. 444-460.
• Islam: Historical, Cultural and Political Perspectives. Waardenberg, Jack. Walter de Greuter, 2002.
Chapter 19 – pp387-401
• The Absence of Middle Eastern Great Powers: Political "Backwardness" in Historical Perspective.
Lustick, Ian S. International Organization, Vol. 51, No. 4 (Autumn, 1997), pp. 653-683.
• The Sword of the Sultan: Ottoman Arms Imports, 1854-1914. Grant, Jonathan. The Journal of Military
History, Vol. 66, No. 1 (Jan., 2002), pp. 9-36 .

Week #10 - Sunday June 26, 2011 - Growth and Development and Possibilities for Altered Courses:
Having identified the issues that affect the Shariah Compliant Industry, we will now identify the potential
Islamic Economics has for transforming banking, finance, and development globally. In what should be a
course in and of itself, this session will cover the reality that we all can contribute to spreading an understanding
of a world built on the just principles included in the principles of true Islamic Finance.

• The Universal Paradigm and the Islamic World System: Economy, Society, Ethics and Science.
Choudhury, Masudul Alam. World Scientific Publishing, 2008. Pp.1-99 – should finish if possible***
• Wealth and Economy in Islam. Qaradawi, Yusef. Islamic Inc. 1998.
• Non-Interest Resource Mobilization for Public Capital Projects: The Use of Islamic Endogenous Loans.
Shakespeare, Rodney.
• Creating a World without Poverty: Social Business and the Future of Capitalism. Yunus, Muhammad
pp. 3-43 and most importantly Part 3 165-251.
• Parallels Between Islamic and Ethical Banking. Wilson, Rodney.Centre for Middle Eastern and Islamic
Studies, University of Durham.
• The Quran and Poverty Alleviation: A Theoretical Model for Charity Based Islamic Microfinance
Institutions. Ahmad Kaleem and Saima Ahmed. Nonprofit and Voluntary Sector Quarterly 2010 39:
409.
• Financing social infrastructure and addressing poverty through wakf endowments: experience from
Kenya and Tanzania. Yahya, Saad S. Environment and Urbanization 2008 20: 427
• Islamic Banking Principles Applied to Microfinance Case Study: Hodeidah Microfinance Programme,
Yemen. United Nations Special Unit on Microfinance. January, 2002.