Muslim minorities in the West face many challenges. For many practising Muslims, trying to balance the requirements of their faith with the realities of Western cultures and environments is a constant negotiation. While there has been a lot written on integration, Islamophobia and socio-economic barriers, little has been written on one aspect of these challenges and that is how Muslims negotiate Islamic doctrine in the economic sphere, which is traditionally a very secular space. This book will focus on one aspect of this negotiation, namely the prohibition of ribÄ (interpreted by many as interest) in a modern economy. This stems from my own personal journey as a Muslim born and raised in Australia, seeking to navigate the economic sphere and understand the parameters of the faith. This book, therefore, explores the intersection of religion with the secular economic sphere in order to understand the diverse experiences within Muslim economic negotiation in Australia and the United Kingdom (UK). There is little debate on the prohibition of ribÄ itself; rather, the differences lie in the interpretation of ribÄ and the question of how to live in a society that is heavily reliant on interest and conventional banking, yet at the same time remain observant of the prohibition of ribÄ. This is an obstacle often faced by religious leaders1 and practising Muslims2 alike, in both Australia and the UK. Islamic banking and finance (IBF) has taken a small foothold in the Muslim communities of these two countries, creating niche markets. This book focuses on how Australian and British Muslims negotiate ribÄ in the economic sphere by addressing two central questions: First, is there consistency in Australian and British Muslim responses to the prohibition of ribÄ? And second, how have their responses affected Muslim banking practices â both conventional and Islamic â in Australia and the UK?
IBF is financial activity that is consistent with Islamic law (sharia). The term âshariaâ can be translated in several ways. Tariq Ramadan illustrates how different scholars understood the term:
Fiqh specialists often tried to reduce the notion of sharia to their field of specialisation alone that is to law only. Other scholars, and in particular those who were conversant both with law and with mysticism, recalled that the meaning of sharia is far broader than that and that the word literally refers to the notion of the path leading to the source, that it expresses the idea of the Way.3
This translation of sharia as âthe Wayâ is reiterated by John Esposito, who describes sharia as âthe divinely mandated path, the straight path of Islam, that Muslims were to follow, Godâs will or lawâ.4 In this book, I define the sharia to be the QurâÄn, the revealed text of Islam, and the Sunna5 of the Prophet Muhammad (pbuh)6 (d. 632).7 Fiqh (Islamic jurisprudence), on the other hand, is a detailed and technical discussion seeking to understand and implement the sharia that is essentially a product of human reasoning (ijtihÄd) and not a revelation from God.8 According to Abu Zahra (d. 1974), from a linguistic perspective, fiqh connotes deep insight and understanding that comes with being cognizant of the ultimate objectives stemming from the Prophetic saying: âWhoever Allah wants to bestow goodness, he gives them understanding of the religionâ.9
Fiqh covers a wide range of aspects of Muslim life, including economics and financial matters that are derived from proof and evidence found in the QurâÄn and Sunna.10 Because fiqh is based on human interpretations, Islamic law is not static. Rather, it is a dynamic set of rules, principles and parameters that have evolved over approximately 1,400 years of philosophical and legal reasoning. While some aspects of Islamic law are fixed, much of Islamic law is based on scholarly interpretation. There are four main schools of jurisprudence known as madhhabs within Sunni Islam, with varying levels of differences of opinions, between and within the different schools of thought.11 All schools, however, derive their rulings from the two primary sources of Islamic law â the QurâÄn and the Sunna. I shall now discuss these in greater detail.
The prohibition of ribÄ
The QurâÄn was revealed in seventh-century Arabia in a context that was relatively familiar with trade and commercial activity. The caravan trade between the Indian Ocean and the Mediterranean Sea would often pass through Makkah, the birthplace of Islam, and Medina, the second holiest site in Islam. There were two seasonal caravans that would often pass during the summer and winter periods, and these were communal undertakings in which various tribes took part.12Although barter trading predominated, Byzantine and Persian coins circulated through Makkah, creating a relative familiarity with transactions involving money. The QurâÄn and Prophetic traditions permitted certain modes of trade and prohibited others.
Of all the sharia injunctions associated with financial transactions, the most well-known prohibition relates to ribÄ. RibÄ is categorically prohibited in the sharia regardless of the amount.13 Linguistically, the lexical meaning of ribÄ connotes increase, increment, growth and augmentation.14 There are four sets of verses in the QurâÄn that relate to ribÄ. These are áčąura al-RĆ«m 30:39,15 al-NisÄâ 4:161,16 al-cImrÄn 3:130â3217 and al-Baqara 2:275â81,18 three of which relate specifically to the prohibition of ribÄ.19 The ribÄ that was mentioned in the QurâÄn is typically described by the early jurists (fuqahÄâ) as ribÄ al-jÄhiliyya or ribÄ during the time of pre-Islam. This form of ribÄ involved an increase from the principal and a delay in the repayment.20 Some companions such as UsÄma ibn Zayd, cAbdulla ibn MascĆ«d, cUrwa ibn Zubayr and Zayd ibn ArqÄm would go so far as to say this is the only prohibited form of ribÄ. Aáž„mad ibn កanbal commented that there is no dispute on this form of ribÄ.21
One of the most prominent áž„adÄ«th22 in the discourse on ribÄ is the âsix commodities áž„adÄ«thâ (al-aáčŁnÄf al-sitta), which comes in a variety of transmissions and is related by BukhÄri, Muslim, Aáž„mad, al-NasÄâi, AbĆ« DawĆ«d and Ibn MÄjah:
Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt, like for like, equal for equal, hand to hand. If the types of the exchanged commodities are different, then sell them as you wish if they are on-the-spot transactions.23
Another áž„adÄ«th that further illustrates the prohibition of ribÄ is narrated by Muslim on the authority of AbĆ« SacÄ«d al-Khudri:
Bilal visited the Messenger of God with some high-quality dates, and the Prophet inquired about their source. Bilal explained that he traded two volumes of lower-quality dates for one volume of higher quality. The Messenger of God said: âThis is precisely the forbidden ribÄ! Do not do this. Instead, sell the first type of dates, and use the proceeds to buy the otherâ.24 (Muslim)
These áž„adÄ«ths and others became the foundation of the doctrine of ribÄ in Islamic law. While the prohibition of ribÄ was clearly stated in the QurâÄn and in the áž„adÄ«th, what constitutes ribÄ became an issue of contention because there was no clear definition in the QurâÄn and Sunna.25 Even the second Caliph, cUmar b. KhaáčáčÄb (d. 644), lamented that the verse on ribÄ was among the last to be revealed, and the Prophet Muhammad (d. 632), died before he could explain what ribÄ was exactly:
The QurâÄnic verse regarding ribÄ was among the last part of the QurâÄn revealed, and the Prophet died before interpreting this verse. So give up ribÄ and anything that you doubt. (Aáž„mad, Ibn MÄjah, al-áčŹabarÄ«)26
After the death of the Prophet in 632, the Muslim world rapidly expanded across the three continents of Africa, Europe and Asia. Approximately 100 years after the death of Prophet Muhammad, the rightly guided Caliphs (al-khulafÄâ al-rÄshidĆ«n)27 and the Caliphs of the Umayyad Dynasty had established an empire that was geographically greater than Rome at its zenith. Over time, major international trading cities were established; for example, Baghdad was a commercial metropolis by the tenth century.28 By the fifteenth century, other cities, from Cairo to Gujerat and Melaka, became major centres of trade.29 A highly sophisticated international financial network supported international trade between Muslim communities through financiers known as the áčŁarrÄfiyya.30
In this context of growing trade and commerce, early jurists (fuqahÄâ) sought to define which transactions were permissible and which were not. They did this by attempting to understand precisely what constituted ribÄ. Some of the earliest commentary about ribÄ appears in the Muwaáčáčaâ of ImÄm MÄlik (d. 796), and it discusses ribÄ from the pre-Islamic period (jÄhiliyya):
MÄlik related to me that Zaid ibn Aslam said, âRibÄ in the jÄhiliyya (pre-Islamic period) was that a man would give a loan to a man for a set term. When the term was due, he would say, âWill you pay it off or increase me?â If the man paid, he took it. If not, he increased him in his debt and lengthened the term for himâ.31
Ibn Rushd (d. 1198) makes the point that during this period, they used to stipulate excess in loans and then delay the period of repayment. He argues that this is what the Prophet meant when he said at the farewell pilgrimage, âtake heed, verily the ribÄ of jÄhiliyya is annulled and the first claim of ribÄ I cancel is that of al- cAbbÄs ibn cabd al-Muáčáčalib (d. 653)â.32 Based on this understanding of ribÄ, jurists of the four main schools of Islamic jurisprudence33 particularly focused on the âsix...