www.stand4islam.blogspot.com: Dubai's Economy is not Islamic

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In recent times a plethora of misconceptions, misrepresentation and myths have been forged about Islam
and Muslims. Many western influentials from politicians, policymakers to judges have taken it upon
themselves to undermine the Islamic beliefs, values and rules so to make it palatable to their
egotistic minds and the secular liberal thoughts.

This blog is dedicated:-

1. To argue the point for Islam in its belief and systems and to refute the misconceptions.
2. To expose the weakness and contradictions of all forms of secularism.

26 Feb 2009

Dubai's Economy is not Islamic

Dubai symbolized the economic boom of the 21st Century. With its vast lavish construction projects and world-class sporting events, it quickly became the prime destination for some of the world’s largest and leading financial and service corporations. The increased attention it received world-wide made Dubai emerge as a world business-hub. With an economy to the tune of $46 billion, the Gulf emirate attracted world-wide attention with its rising property sector, all of this was achieved in two decades, before which there existed only barren dessert land. Impressed by Dubai’s success, many analysts emphasized that diversification-drive away from relying solely on oil revenues has placed it upon a path of development, one which represents a new formula for economic development for the Middle East and a distinctly Islamic approach to economic development.

Dubai past and present

The UAE has been blessed with a vast resource of oil, the revenues of which have allowed Dubai to turn into a modern city out of what was once a small fishing village. The aspirations of the ruling sheikhs led to the orientation of the economy towards tourism and service sectors. Dubai made its bid for fame by housing, banks, retail, media, shipping and logistics enterprises and by billing itself as a safe haven in a volatile region for investors. This has allowed Dubai to become a hub of tourism in not only the Middle East but also for the world. It strived to become a financial centre to rival the likes of London and New York with its lead in Islamic finance.

Due to this, Dubai was unique amongst the Muslim world in that it has witnessed phenomenal development over last 20 years. It has become a modern city with mind-blowing amounts of wealth on display in the form of sky-scraping buildings and uniquely lavish developments. It is a city that not only popular as a tourist destination for large numbers of Muslims, but one that is equally, if not more attractive to people from all over the world. Dubai offers a Western lifestyle with an Eastern flavour for all. The native population is a minority with 85% of Dubai’s population being composed of expatriates. For many, this would be considered a success story as Dubai has attracted the world to its tiny emirate, but in this apparent success lays the myth of economic development, which has now brought the desert empire to its knees.

Bubble Economy

The driving engine for Dubai was never sustainable. Dubai’s growth was initially through its oil wealth. This wealth was used to develop Dubai to attract foreign investment and soon enough, foreign companies and foreign workers arrived looking for an opportunity in Dubai. Its position as a trading hub meant many companies relocated its staff to work from Dubai which is fundamentally what brought Dubai its wealth.

This was never sustainable. The skilled workers that were developing the service sector were mostly from overseas, with only a small percentage of Dubai’s population today considered to be native Arabs. It's growth has been a direct result of it becoming an essentially tax-free zone for foreign nationals and companies. These companies, whilst providing jobs and income to people in the country, are not transferring any technical skills to the people. Its property market boom was due in large part to speculation that the prices would continue to rise.

Dubai has merely exploited limited natural resources and has been importing talent from abroad with little skills and knowledge-transfer to drive its economy. Dubai was always nothing more than a mirage in the desert; it's growth and survival was dependent upon the talent and expertise of foreign entities. It could only offer specialist services such as banking and finance as a means to guarantee it's future, along with tourism. As these sectors rely heavily on the goodwill and confidence of foreigners, if in any way this sentiment was affected, Dubai’s desert empire would crumble.

This is exactly what happened with the Global credit crunch. In order for financial companies to shore up their losses they have withdrawn their money from expensive and lavish projects. Service companies which relied on loans are now seeing this dry up as one bank after another either collapses or requires government bailouts. One expert from Nomura investment Bank encapsulated the situation in Dubai: “Lenders blinded by rising oil prices and borrowers spellbound by easy returns have helped build a mountain of private sector debt in parts of the region that has generated an illusion of excess and abundance.” As Dubai was built upon foreign money, it now awakes to find that this has dried up, so in essence Dubai’s source of growth has been cut, causing the breakneck building-boom to come to a crashing halt. The lending bonanza has evaporated and the government continues to ponder wider steps to rescue banks, including asking it's neighbouring emirate, Abu Dhabi, for financial assistance.

Shares in the region have lost around $1 trillion since the beginning of the year as investors fled. The UAE Finance Ministry announced in January 2009 that it would inject 70 billion Dirhams ($19 billion) into the banking system, and is already looking at printing even more money.
Dubai does not produce any manufactured products that the people in the city buy. It is a city that is not self-sufficient, as it neither has the infrastructure nor the natural resources in place to develop the products it consumes. Dubai was, by all means, a bubble waiting to burst.

Asian Financial crisis

A decade ago, another region of the world attempted to organise their economies on the same model of economic development and today still suffers from the repercussions. South-East Asia attracted almost half of total capital-inflow to developing countries. The economies of South-East Asia maintained high interest rates attractive to foreign investors looking for a high rate of return. As a result the region’s economies received a large inflow of hot money and experienced a dramatic run-up in asset prices. At the same time, the regional economies of Thailand, Malaysia, Indonesia, the Philippines, Singapore, and South Korea experienced high growth rates, 8-12% GDP, in the late 1980s and early 1990s. This achievement was broadly acclaimed as the 'Asian Economic Miracle' by economic institutions such as the IMF and World Bank.

But the miracle then ran out of steam as investors tried to cash in on their money. By May 1997 large sums of money were withdrawn, causing many of the regions currencies to collapse. As foreign money sustained the miracle, the departure of this outside investment left the region in ruin with millions left in poverty.

Economic development

The industrialised world all developed their manufacturing sectors and then colonised and dominated the worlds natural-resources, ensuring a regular supply of raw materials. By industrialising their economies, they fortified the domestic infrastructure and militaries to defend their countries. It was only after this process of industrialisation that they developed their service sectors. The economic models of export-driven growth, foreign direct investment (FDI) and globalization are not models where economies can become self-sufficient and independent. This was the blueprint that even the West did not follow.

Islamic Economic Development

The suggestion that Dubai offered a new model for economic development and an Islamic approach could not be further from the truth. Building an economy upon foreign wealth, external expertise and personnel is a tried-and-tested model which has a substantial track record of failure. Latin America, South East Asia and the Baltic states have all attempted this approach with catastrophic results.

The claim that Dubai offered Islamic banking does not make its development Islamic; Britain was one of the first nations in the world to offer Islamic bonds yet nobody would argue that Britain pursues an Islamic economic system. To attract foreign industry, labour and money, Dubai has had to compromise on many Islamic values to do with the mixing of the sexes and alcohol in the name of necessity. The imposition of some Islamic rules in reality is a charade.
The development of the economy has extensive rules in Islam which has been elaborated by many scholars throughout history. Islam has made the Khilafah responsible for da'wah and the defence of the Ummah and this can only be achieved through a process of industrialisation. It also obliged the Khilafah to organise the fulfilment of the basic necessities of the people which are food, clothing and accommodation. This cannot be achieved by having an economy geared around services but needs one geared around manufacturing and agriculture. This allows a nation to produce all that it needs and export any surplus. Relying and depending on imports and foreign money is not an assured path for development and survival.

[Article written by Adnan Khan]

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What they said...

“Islam represented the greatest military power on earth…It was the foremost economic power in the world…It had achieved the highest level so far in human history, in the arts and sciences of civilization...Islam in contrast created a world civilization, poly-ethnic, multiracial, international, one might even say intercontinental.”

[Bernard Lewis, Professor of Near Eastern Studies, Orientalist and Historian, 2001]

"There was once a civilization that was the greatest in the world. It was able to create a continental super-state that stretched from ocean to ocean, and from northern climes to tropics and deserts…the civilization I'm talking about was the Islamic world from the year 800 to 1600… Although we are often unaware of our indebtedness to this other civilization, its gifts are very much a part of our heritage"

[Carly Fiorina, ex-CEO of Hewlett-Packard, 2001]

"For the first three centuries of its existence (circ. A.D 650-1000) the realm of Islam was the most civilized and progressive portion of the world. Studded with splendid cities, gracious mosques and quiet universities where the wisdom of the ancient world was preserved and appreciated, the Moslem world offered a striking contrast to the Christian West, then sunk in the night of the Dark Ages."

[Lothrop Stoddard, Ph.D (Harvard), American political theorist and historian, 1932]

"Medieval Islam was technologically advanced and open to innovation. It achieved far higher literacy rates than in contemporary Europe;it assimilated the legacy of classical Greek civilization to such a degree that many classical books are now known to us only through Arabic copies. It invented windmills ,trigonometry, lateen sails and made major advances in metallurgy, mechanical and chemical engineering and irrigation methods. In the middle-ages the flow of technology was overwhelmingly from Islam to Europe rather from Europe to Islam. Only after the 1500's did the net direction of flow begin to reverse."

[Jared Diamond, UCLA sociologist and Author, 1997]

"No other society has such a record of success in uniting in an equality of status, of opportunity and endeavour so many and so varied races of mankind. The great Muslim communities of Africa, India and Indonesia, perhaps also the small community in Japan, show that Islam has still the power to reconcile apparently irreconcilable elements of race and tradition. If ever the opposition of the great societies of the East and west is to be replaced by cooperation, the mediation of Islam is an indispensable condition."

[Hamilton Alexander Rosskeen Gibb, Professor at Harvard University, 1932]

“The Muhammadan Law which is binding on all -- from the crowned head to the meanest subject is a law interwoven with a system of the wisest, the most learned and the most enlightened jurisprudence that ever existed in the world.”

[Edmund Burke, British Statesman and Philosopher, 1789]

"The Exile here is not like in our homeland. The Turks hold respectable Jews in esteem. Here and in Alexandria, Egypt, Jews are the chief officers and administrators of the customs, and the king’s revenues. No injuries are perpetuated against them in all the empire. Only this year, in consequence of the extraordinary expenditure caused by the war against Shah Tahmsap al-Sufi, were the Jews required to make advances of loans to the princes."

[David dei Rossi, Jewish Traveller 17CE, quoted by Norman A. Stillman, The Jews of Arab Lands]

"The notable religious tolerance towards Christians and Jew under Muslim rule had given way to the uncompromising zealotry of Spanish Inquisition. Jews and Muslims thus fled Spain with large numbers of Jews immigrating to the Ottoman Empire which was known for its tolerance to the Jews."

[Graham Fuller, Author and former CIA, 1995]

“If there is much misunderstanding in the West about the nature of Islam, there is also much ignorance about the debt our own culture and civilization owe to the Islamic world. It is a failure, which stems, I think, from the straightjacket of history, which we have inherited. The medieval Islamic world, from central Asia to the shores of the Atlantic, was a world where scholars and men of learning flourished. But because we have tended to see Islam as the enemy of the West, as an alien culture, society, and systems of beliefs, we have tended to ignore or erase its great relevance to our own history”

[Charles Philip Arthur George, HRH The Prince of Wales, 1993]

"...Not being subject to the Sharia, Jews and Christians were free to go to their own religious authorities for adjudication of disputes; but in many cases they went instead to the [Muslim] Qadi"

[Richard W. Bulliet, Professor of History and Author, 2004]

"Here in the land of the Turks we have nothing to complain of. We possess great fortunes; much gold and silver are in our hands. We are not oppressed by heavy taxes and our commerce is free and unhindered. Rich are the fruits of the earth. Everything is cheap and each one of us lives in freedom. Here a Jew is not compelled to wear a yellow star as a badge of shame as is the case in Germany where even wealth and great fortune is a curse for a Jew because he therewith arouses jealousy among the Christians and they devise all kinds of slander against him to rob him of his gold. Arise my brethren, gird up your loins, collect up your forces and come to us."

[In his book 'Constantinople', Philip Mansel quotes a rabbi in Turkey writing to his brethren in Europe where they were facing increasing persecution after 1453]

"Praise be to the beneficent God for his mercy towards me! Kings of the earth, to whom his [the Caliph’s] magnificence and power are known, bring gifts to him, conciliating his favour by costly presents, such as the king of the Germans, the king of the Gebalim, the king of Constantinople, and others. All their gifts pass through my hands, and I am charged with making gifts in return. (Let my lips express praise to the God in heaven who so far extends his loving kindness towards me without any merit of my own, but in the fullness of his mercies.) I always ask the ambassadors of these monarchs about our brethren the Jews, the remnant of the captivity, whether they have heard anything concerning the deliverance of those who have pined in bondage and had found no rest."

[Hasdai Ibn Shaprut (915-990 CE) Jewish physician, chief minister of Islamic Caliphate in Cordova, 'The Jewish Caravan']

"In Baghdad there are about forty thousand Jews, and they dwell in security, prosperity, and honour under the great Caliph [al-Mustanjid, 1160-70 CE], and amongst them are great sages, the Heads of the Academies engaged in the study of the Law…’"

[Benjamin of Tudela, Rabbi in Baghdad in the year 1168 CE, 'The Jew in the Medieval World']

"Those Eastern thinkers of the ninth century laid down, on the basis of their theology, the principle of the Rights of Man, in those very terms, comprehending the rights of individual liberty, and of inviolability of person and property; described the supreme power in Islam, or Califate, as based on a contract, implying conditions of capacity and performance, and subject to cancellation if the conditions under the contract were not fulfilled; elaborated a Law of War of which the humane, chivalrous prescriptions would have put to the blush certain belligerents in the Great War; expounded a doctrine of toleration of non-Moslem creeds so liberal that our West had to wait a thousand years before seeing equivalent principles adopted.

[Leon Ostorog, French Jurist]

"The debt of our science to that of the Arabs does not consist in startling discoveries or revolutionary theories; science owes a great deal more to Arab culture, it owes its existence"

[Robert Briffault, Novelist and Historian, 1928]

"The only effective link between the old and the new science is afforded by the Arabs. The dark ages come as an utter gap in the scientific history of Europe, and for more than a thousand years there was not a scientific man of note except in Arabia"

[Oliver Joseph Lodge, Writer and Professor of Physics, 1893]

“Thus, when Muslims crossed the straits of Gibraltar from North Africa in 711 and invaded the Iberian Peninsula, Jews welcomed them as liberators from Christian Persecution.”

[Zion Zohar, Jewish scholar at Florida International University, 2005]

“Throughout much of the period in question, Arabic served as the global language of scholarship, and learned men of all stripes could travel widely and hold serious and nuanced discussions in this lingua franca. Medieval Western scholars who wanted access to the latest findings also needed to master the Arabic Tongue or work from translations by those who had done so.”

[Jonathan Lyons, Author, Writer and Lecturer, 2009]