Notes and Comments

I was amused to discover that in my dictionary the word ‘politics’ lay between ‘police’ and ‘pollute’, something that one could argue was a definition rather than a setting! It is certainly not beyond belief, especially when one looks at how the political machinery of government enforces its will on people. The impact of this has ramifications on the financial, social and environmental well being of society – a society that has outgrown national boundaries and now encompasses the entire globe. The end of the 20th century saw the phenomenal rise in the wealth of certain nations accompanied by an ever-increasing poverty of others: a phenomenon that has gripped many third world economies across Africa, Asia and South America, and has been slowly choking them to death. When such issues are talked about then mutterings about global- isation can often be heard, but what paved the way and created the opportunities for global corporate bulldozers to run amok north, south, east and west? It is often noted that this is a post- colonial phenomenon and its roots lie in the way that imperial powers abandoned such fledgling countries to fight for themselves in the gladiatorial arena of world trade. If that were not enough it is now also generally accepted that the measures taken by the powerful nations to assist the developing world proved counter productive – the loans made and measures taken by the World Bank and IMF to enable redevelopment were in essence the makings of a false e c o n o m y. They tied down poor nations to unbearable levels of interest repayments, which resulted in a bizarre situation that countries were ending up worse off after accepting the help from the first world! But this was not all. Realising that merely giving loans would not solve the economic woes of the Third World, countries were forced to adopt measures that they were told would help their economies and markets perform better on the international plat- form. However, the package of economic structural reforms, that was inseparable from the loans, 4 Review of Religions – June 2002 Notes & Comments POLITICAL ECONOMICS – by Fareed Ahmad, UK served to rationalise public finance, privatise state industries and attract foreign investors (i.e. ownership). One unfortunate result has been that foreign firms have established themselves there and siphoned the profits back to the developed world. This left the Third World economies with enormous loan repayments, depleted natural resources and no indigenous firms that could function and compete nationally, let alone internationally. Additionally, the Third World had to combat tariffs and overcome trade barriers and at the same time develop the infrastructure and promote literacy. This has considerably weakened, if not removed, any chance of such countries being able to tackle their biggest problem – the huge debts themselves – and this factor, which is the crux of the problem, is rarely reviewed. However, it would be wrong to place all the blame on the developed world, for the situation in the developing countries has in many cases been made worse by the people in power there as well. Their domestic pool of capital was often in government hands. Central banks were often riddled with regulations. Their economies were also the victims of cor-ruption. Sometimes the capital was wasted on buildings that no one wanted. Rather than pro-moting the domestic economy, there was a desire to acquire foreign imports: instead of fruit juice, it had to be some foreign drink. Indeed with such home-grown problems, the West may well ask the question: what have you done to help yourselves? There is some hope that the Third World has now woken up to this. Many countries have begun to realise that they cannot look to other countries for help simply because it can come and go at any time. They have to strive to live within their means and promote investment in the domestic economy. This will help to make their economies grow and hopefully reverse the flight of intellectual capital and encourage their citizens to work for their own country and economy rather work abroad. However, whilst they can seek to address internal issues, the stranglehold of the enormous debts can only be overcome with the genuine help of the developed world. In respect of this the teachings of Islam of not charging interest and of encouraging remittance of such burdensome debts as charity address both the human and economic sides of this equation. For example: 5 Notes & Comments Review of Religions – June 2002 The alms are only for the poor and the needy, and for those employed in connection therewith, and for those whose hearts are to be reconciled, and for the freeing of slaves, and for those in debt, and for the cause of Allah, and for the wayfarer – an ordinance from Allah. And Allah is All- Knowing, Wise. (Ch.9: v.60) The forgiveness of debts in such circumstances nurtures nobility and respect and the principle of not charging interest is also a factor that is slowly gaining recognition in the west as a positive economic tool. The advanced world also has its share of poverty, primarily in inner cities and in areas where earlier industries have either ceased or have moved out. In such places commercial lenders refuse to lend money for fear of the repayments not being met, but from this bleak outlook a ‘new’ methodology is emerging in the form of social investment. The economists are realising that to turn such situations around the role of interest has to be either minimised or eliminated. Thus, the investments are targeted to assist small business get off the ground and expand. As they develop they generate employment, skills and attract more investment – a result of this is that more money is circulated in the local economy allowing more people to benefit. Thus, in a nutshell, if interest is effectively removed then the problem areas are given a fighting chance to regenerate and develop, as the money circulates among those who need it most. This concept is being piloted and promoted by some western countries yet it is odd that this is not promoted on a bigger scale in the Third World as well. This is something that prompts one to think of other reasons why this may be so – for if it is evident that debt forgiveness and interest-free financing works at home then why do governments not encourage and adopt this abroad as well? Until they do, it seems that for the Third World interest remains and any money earned by those countries will continue to be used primarily for loan repayments, so that for the sake of a few dollars some can enjoy themselves whilst they live at the cost of the misery of many others as they die. 6 Notes & Comments Review of Religions – June 2002