Saturday, May 18, 2024

The Rise of the Islamic Economy

ResearchIn-Depth AnalysisThe Rise of the Islamic Economy

Part 1: For-Profit Islam

A panel on the Islamic economy at the 2022 ISNA Conference

In a large conference center near Chicago’s O’Hare International Airport, at the beginning of September, the Islamic Society of North America held its 59th annual conference, the “largest networking event for the Muslim community in the country.”

Alongside various booths advising American Muslims on starting businesses and showcasing the latest Muslim startups, the ISNA conference featured a panel on the growing phenomenon of the “Islamic economy,” with an accompanying description of the event stating that, “The Muslim startup landscape has changed dramatically in the last two decades. Today, the global Islamic economy is represented by $2 trillion of consumer spending.”

Distinct discussion of a discernible Islamic economy is a relatively new phenomenon.

In 2010, the official magazine of the very same Islamic Society of North America featured an article by the academic M.A. Muqtedar Khan, who argued that, at the time, “there is no Islamic economy” and all previous claims of such an industry are “more like wishful thinking than an analysis based on empirical evidence.”

A true Islamic economy, he argued, would disregard an overriding obsession with “interest-free [financial] practices” and instead focus on “the significance of charity, welfare, wealth redistribution and the prevention of income inequalities and wealth disparities.” Muslims, he concluded, should “work toward the economic development and betterment of Muslim societies in real life.”

A 2 Trillion Dollar Industry?

Given the change of rhetoric and behavior within ISNA, perhaps this advice struck a chord.

A new generation of American Muslim entrepreneurship appears the corollary of both Western Islamist discussions about the financial future of American Islam as well as efforts overseas, especially in Turkey and United Arab Emirates, to define businesses run by Muslims not just as Muslim-run businesses, but intrinsically Islamic businesses, which aim to impose Islamic piety and charity while also producing prosperity.

One key guiding idea behind the Islamic economy is that it pursues both innovation and technology, while also adhering to and ensuring the proliferation of acceptable Islamic behavior.

An Emirati report, published in collaboration with Thomson Reuters in 2019, for instance, explains that some Islamic economy corporations have “adopted blockchain technology for payments, to confirm halal compliance.” New products and services produced by the Islamic economy include “smart technologies … incorporated into clothing such as the smart hijab” (one such product is a Bluetooth-equipped garment that allows wearers to “[listen] to high quality Quran/audio” and make phone calls) as well as “GPS systems that show the closest prayer spaces.”

These companies are underpinned by “Islamic finance based on ethical, shariah-based principles,” such as “Blossom Finance … with its blockchain solution to help SMEs raise sukuk finance [sharia-complaint loans and bonds].”

This industry, its proponents claim, is the “fastest growing segment of the world’s economy.” The Emirati report estimates that the:

global Muslim spend across lifestyle sectors was US$2.1 trillion in 2017, while the Islamic finance sector has US$2.4 trillion in total assets. Food and beverage leads Muslim spend by category at US$1.3 trillion, followed by clothing and apparel at US$270 billion, media and entertainment at US$209 billion, travel at US$177 billion, and spending on pharmaceuticals and cosmetics at US$87 billion and US$61 billion respectively.

Such rhetoric does not come with qualifiers as to who exactly counts as Muslim, or what makes a Muslim-run company “Islamic.”

Notwithstanding, there is evidently a global effort underway, and it has state backing. Countries such as the UAE, Saudi Arabia and Turkey are busy establishing thinktanks and government departments dedicated to the advancing these new Islamic industries.

But while the backing for the Islamic economy may come from the East, the main concentration of innovation is appearing in the West.

American Muslim Entrepreneurship

USHUB, a new Muslim video streaming service.

This year, a variety of new Islamic startups were noticeably present at ISNA’s conference, competing to present their wares. USHUB, for instance, is an Islamic streaming service that offers comedy shows, movies, clerical discussions along with both Islamist and progressivist-themed documentaries. USHUB promises to “center and support Muslim creators and filmmakers” and provide “inclusion” and community.”

USHUB is just one member of a large array of Muslim businesses and financial platforms that has sprung up over the past few years.

Perhaps the most prominent example of the new Islamic economy in the United States is LaunchGood, a crowdfunding platform used by nonprofits, Islamic clerics and community groups. Established in Detroit in 2013, the online fundraising organization seeks to “inspire & empower Muslims globally.” It was also present at the ISNA conference, with its founder speaking on the Islamic economy panel.

LaunchGood boasts – and there is little reason to doubt it – of having raised $350 million from over a million donors, funding almost 50,000 charitable campaigns and community projects.

And yet LaunchGood is “not a charity,” warns Muslim commentator Ahmed Shaikh, but a “commercial enterprise.” As much as 8% of the monies raised for funded projects on LaunchGood, Shaikh notes, goes as profit to the platform itself.

As noted in a recent study of the economics of American Islam, published by the Middle East Forum, Western Islamic institutions have, in recent years, become wealthy and self-sufficient – no longer reliant on foreign patrons and Islamist governments.

Institutions such as LaunchGood are evidence of this success. These new for-profit institutions are busy building Western Muslim wealth through projects that declare strong Islamic tenets while pursuing prosperity. Per Muqtedar Khan’s advice, they aim to reward not just private investors but also advance philanthropy and “social justice” – carried out by nonprofit Islamic industries on which so many Muslims (and Islamists) have long relied to advance religious and political ideas.

There are two leading components to this new Western Islamic entrepreneurship: a financial and logistical support structure, such as Launchgood; and a new wave of Muslim startups, many closely based on their non-Muslim Silicon Valley counterparts, such as USHUB.

Other financing, support and infrastructure initiatives include the British firm, ProductiveMuslim, which mixes self-help and “productivity training” guides with Islamic ideas about balancing the dunya (temporal world) with the akhirah (hereafter).

And there is DeenDevelopers – a collection of “techies and creatives” who seek to solve “societal problems” through “hackathons” and other technological ideas and networking efforts. Some of its efforts appear to focus on providing various software tools for traditional Islamic institutions better to encourage Muslim piety.

More tangible forms of the support underbelly are found among the hundreds of new Western Islamic financial institutions – an enormous supply of crowdfunding and investment platforms, venture capital firms, a growing variety of Western Islamic banks, as well as various Islamic “fintech” firms. These companies have moved beyond the fixation with usury bemoaned by Khan, and instead concentrate on providing the capital and other financial services for the new Islamic economy.

Examples include Zoya, a “halal investing co-pilot” that helps its customers build a “shariah compliant investment portfolio.” Or there is Wahed, a New York-based “online ethical investment platform” and reportedly the “first exchange-traded fund in the United States … compliant with Sharia law.”

This support sector partly serves to underpin the second major component of this new Western Islamic industry: a new generation of Muslim startups, which build and sell Islamic alternatives for a wide variety of products and services.

Salam Sisters, for instance, sells hijab-wearing dolls and storybooks, aiming to celebrate “achievements of real Muslim women” such as Ilhan Omar.

Muzz, meanwhile, is a dating app designed to draw Muslims away from mainstream dating applications, ostensibly “full of sin.” (Muzz drew its ideas openly from the non-Muslim competition, including dating app Tinder, ultimately leading to a trademark lawsuit, which Muzz lost).

In fact, hundreds of similar startups have been set up over the past decade, including firms focused on “sharia-compliant” cryptocurrency and blockchain, “modest” fashion, “halal-friendly” travel, among others.

LaunchGood and their partners call on Muslims across the West to “help [these] rising stars of the Ummah achieve their potential.”

Naturally, this growing industry has also attracted some seedy elements. Today, for instance, Western Muslim YouTube users are regularly peppered with YouTube advertisements offering halal get-rich-quick schemes by dubious American Muslim “influencers” such as Othman Tmoulik of Unstoppable Entrepreneurs, who mixes claims of Islamic piety with promises of an “exploding RISK-FREE Online Business Opportunity” but only “if you are a Muslim man, ready to invest in yourself … Mashallah.”

Othman Tmoulik advertises across YouTube, selling get-rich-quick schemes for pious Muslim men.

The Islamic economy is held up as a means to strengthen and unite Muslims globally, something that Islamists, whether through violence or the ballot box, have otherwise thus far failed to do. Undoubtedly, some of its advocates are opportunists who are utilizing Islam as a marketing tool, but others appear deeply committed to building the Islamic economy globally.

This fast-growing idea is not necessarily destined to be a tool for extremists, but it cannot have escaped Islamists’ minds that these industries offer new and powerful opportunities to spread and impose their own dogmas.

Part 2: Defining the Islamic Economy

The term “Islamic economy” is vague enough a term to mean rather different things to different people. For financial analysts around the world, the phrase is often employed to represent little else than the aggregate of Islamic countries’ economic output or just the activities of Muslim-run businesses.

For politicians and businessmen in countries such as the United Arab Emirates and Malaysia, meanwhile, the Islamic economy appears a more explicit global project to encourage Muslim entrepreneurs and financiers around the world to develop the next generation of business and technology – providing homegrown Muslim competition to Western industries.

Plenty of Muslims in the West have signed on to this effort, with a considerable array of startups established across Europe and America over the past few years. However, Islamists around the globe have also latched onto this second definition, but are taking it to new extremes.

Radical Islamic forces have long considered a concerted Islamic economic effort to be an important component of Islamist ideology, and key to the spread and imposition of Islam.

During the 1980s, Alex Alexiev notes, the Islamist regimes of Iran, Pakistan and Sudan, as part of their much-studied programs of “Islamization,” generated “a veritable explosion of Islamic banks and affiliated institutions across the Muslim world.”

In Saudi Arabia, institutions such as the Islamic Development Bank were long used as vehicles for the financing of Islamism across the globe.

In Bangladesh, analysts claimed in 2016 that 15 banks were under the control of Jamaat-e-Islami, a violent South Asian movement founded by Islamist ideologue Abul Ala Mawdudi and which was responsible for acts of genocide during Bangladesh’s 1971 Liberation War. Abul Barkat, a professor of economics at the Dhaka University, accused the movement of creating a “state within a state” and an “economy within an economy.”

Meanwhile, for modern authoritarian Islamist leaders such as Türkiye’s President Erdoğan, Islamic finance has long been a key component of his own party’s ideological platform. Citing Islamic proscriptions on usury as justification, Erdoğan has (disastrously) attempted to reduce interest rates and implement other curious economic measures – only, as a result, to exacerbate inflation.

It is perhaps of little surprise, then, that Türkiye has also been keenly involved in the efforts to build the new global Islamic economy, including in the West.

Indeed, Türkiye considers itself a leading voice of the movement, establishing initiatives such as the “UK-Turkey FinTech for Islamic finance project,” which highlights the growing importance of “Islamic fintech” in both Türkiye and the UK, and encourages the growth of “sharia compliant” banking in London.

President Erdoğan addressing a Turkish regime conference on the Islamic economy

The Erdoğan regime has also established academic departments and chairs in Türkiye devoted to the advancement of the Islamic economy.

Türkiye has also sponsored conferences to which advocates of the global economy from around the world are invited. “Islamic economics,” Erdoğan has told these conferences, is the key to rescuing the world from “crisis.”

The Islamic economy, various Islamists argue, and Erdoğan seems to believe, is not just another component of global industry, but an opportunity to replace other economic systems entirely – including capitalism or communism – with a set of Islamic economic ideas derived from divine law.

The academic Hans Visser – reviewing Islamic thinkers’ writings and commentary on the idea of an Islamic economy – concludes that many Islamists regard the Islamic economy as “one means for the umma, the global community of Muslims, to reassert itself.”

Islamist ideologues in the 19th and 20th centuries, Visser argues, were frustrated over the fact that modern Islamic economic power was a “shadow of its former self,” in contrast to the powerful, wealthy Islamic empires and caliphates of centuries past.

The basis for the Islamist-imagined modern Islamic economy, Visser and others reckon, can be found in the writings of key Islamist thinkers such as Abul Ala Mawdudi, Sayyid Qutb, among others, who emphasized the importance of establishing a separate Islamic economy as a key component of revived Islamic global power.

However, they offered little detail about how such systems would actually function, and did little to fix or explain the dearth of Quranic advice on the subject.

Alex Alexiev writes that Mawdudi and Qutb “knew very little about economics, but saw clearly its utility in mobilizing support for the cause of Islamism. … And so through the writings of Mawdudi, Qutb, and a few others the concept of Islamic economics became firmly established in Islamist discourse despite the obvious fact that there was no substance to it and that Islamic economics made no more sense logically than Christian physics or Buddhist biology.”

Notwithstanding their lack of clear ideas, the aim of these proponents of the Islamic economy, says Mehmet Asutay – an academic at Durham University and a speaker at Turkish conferences on the Islamic economy – is “completing the [Islamic] identity in every aspect of life.”

Such rhetoric around the Islamic economy is similar to that expressed by advocates of the “Islamization of Knowledge,” a key Islamist idea in the latter half of 20th century – adopted by many Western Islamist educators in Muslim schools across North America. The Islamization of Knowledge holds that Islamic teachings can be extended to every aspect of educational curricula, even the most secular of subjects.

Indeed, the two ideas overlap. One leading North American business, Noor Kids, is often referred to as a member of the new “Islamic economy.” It produces “Shaykh approved” books and courses providing an “Islamic education” for young children. Some of these books, as well as Noor Kids’ partners, are the product of Islamization of Knowledge programs in the United States.

Both the Islamic economy and the Islamization of Knowledge fit neatly into Mawdudi’s pledge to “instill” in the “Muslim intelligentsia” the “fact that Islam has a code of life of its own, its own culture, its own political and economic systems and a philosophy and an educational system which are all superior to anything that Western civilization could offer.”

The new global trillion-dollar Islamic economy is quickly becoming a vehicle for these Islamist designs.

Part 3: Radicalizing the Islamic Economy

From the beginning of the modern Islamic economy movement, many of its Western advocates and entrepreneurs have been at least partly driven by political zeal.

The movement’s cheerleaders, various studies note, have been “young Muslims … driving the halal economy [Islamic economy], particularly after the events of 9/11,” who seek to “cater” to “a religious or ethical perspective of what we think is acceptable” when serving “the Muslim consumer.” It was “tragedy and subsequent discrimination” that purportedly “motivated young Muslims to ‘define themselves by their very overt, explicit Muslim identity.’”

While many of the countless Western Muslim technology startups, online dating services, “smart hijab” companies and others may be benign components of the new Islamic economy, a significant proportion appear deliberately to conflate business innovation with the advancement of Islam. The founders of the enormous fundraising platform LaunchGood are clear about their belief in the organization’s role, with Chris Abdur Rahman Blauvelt, the CEO, considering LaunchGood one of the Islamic economy’s leading institutions.

In interviews, he notes that fifty percent of Muslims around the world are under thirty, most with smart phones and access to the internet. “We’re one community … 1.8 billion Muslims” who are educated and with growing financial power. The state of the Islamic economy today, Blauvelt says, is “China in the 90s” and it’ll be “huge ten years from now.”

But Blauvelt appears to regard this economic opportunity ultimately as a means for spread and consolidation of Islamic ideas. He celebrates and promotes LaunchGood campaigns promising that the “global digital Islamic economy” will provide Islamic religious education “serving millions and potentially billions.”

This effort relies, LaunchGood officials seem to believe, on hardline Islamist clerics and charities. The course promoted by Blauvelt, for instance, is led by Yasir Qadhi, a prominent American Salafi cleric who has never truly renounced his violent anti-Semitism or calls for the killing of homosexuals.

Qadhi is just one radical cleric among hundreds to benefit from LaunchGood initiatives. Campaigns are frequently set up, for instance, to benefit Mufti Ismail Menk, a Zimbabwean cleric and open advocate for an Islamic theocracy. Menk advocates stoning women to death for fornication. His views are so unapologetically horrifying that the governments of Singapore and Denmark have banned him from entering their countries.

A Launchgood campaign for Mufti Ismail Menk, who advocates stoning women to death

Blauvelt himself venerates the singer and Islamic activist Yusuf Islam (previously known as Cat Stevens) describing him as his “hero.” Decades ago, Yusuf Islam supported the efforts to kill the author Salman Rushdie, and has called for apostates and adulterous women to be stoned to death. He has never properly disavowed these views.

Charities with accounts on LaunchGood include, among hundreds of problematic examples, groups such as Baitulmaal, a radical aid charity with a history of links to the terrorist group Hamas and its proxies; as well as CAGE, a British organization widely condemned in Britain for its support of jihadists.

CAGE’s head, Moazzam Begg, once “admitted that he was a jihadist recruiter, that he attended three al Qaeda terrorist-training camps in Afghanistan, and that he was armed and prepared to fight for the Taliban and al Qaeda against the U.S.”

That LaunchGood works with such radical partners has not gone unnoticed. Chase Bank, a few years ago, reportedly withdrew its financial services from the group.

LaunchGood is even replete with multiple campaigns for Aafia Siddiqui, the convicted Al-Qaeda operative who attempted to murder Americans and, upon her arrest, was found to be planning a “mass casualty attack.”

Notably, these are not just Islamists taking advantage of a platform. In fact, LaunchGood vets its campaigns and partners.

A Middle East Forum researcher was told “LGBT Muslims” could not be funded through the platform

And yet, when a researcher for the Middle East Forum some months ago set up an account on LaunchGood to support “LGBT Muslims,” the community was “rejected” with only the explanation: “Unable to support community page.”

Would-be mass-murderers and known terror financiers may be acceptable charitable beneficiaries for LaunchGood. Homosexuals, however, seem to be beyond the pale.

Islamism is found throughout the Western Islamic economy. The Islamic Fintech Alliance, for instance, maintains a council whose members include Western Islamic economy success stories such as LaunchGood. The Alliance works with officials from the Qatari regime and describes its mission as working to: “broaden the reach of Shariah and social impact finance technology by supporting a network of innovators.” It claims to have worked with Interpal, in spite of the fact this leading British Islamist charity is a designated terrorist organization under U.S. law.

Meanwhile, organizations such as the California-based Center for Global Muslim Life appear to regard many of the “fintech” and other Muslim for-profit startups as part of the same phenomenon that explains the renewed Islamic fervor promoted by modernist Salafi-linked organizations.

Foreign Islamist interest in the Islamic economy extends to the movement’s cheerleaders in the Western world. For instance, significant numbers of Western Islamic economy advocates have visited Türkiye in recent years, with Western Muslim fundraising platform LaunchGood even teaming up with Islamic economy travel company HalalBooking and the regime-controlled Turkish Airlines to offer visits to Istanbul.

One new Islamic economy organization, Global Muslim Workation (GMW), has been “created in line with LaunchGood’s vision to Build An Inspired Future” and brings Muslims together to “make new networks, collaborate, innovate and make ground-breaking change to the Islamic economy.”

Headed by LaunchGood’s Chris Abdur Rahman Blauvelt, GMW’s inaugural conference took place in Istanbul and was jointly organized with Bilim ve Insan Vakfi, a regime-linked nonprofit reportedly headed by President Erdoğan’s son, Bilal.

A Flawed Approach

Not every facet of the new Islamic economy industry serves to advance Islamist ideas. Some, certainly, simply illustrate the efforts of Muslim businessmen working to find some prosperity for themselves and their families.

Consequently, a tension between, on the one hand, ordinary entrepreneurs and, on the other, radicals with a plan, is played out internationally. The regime in Türkiye, for instance, competes with countries such as the United Arab Emirates for influence over the global Islamic economy – even if they define the term somewhat differently.

Western Islamic economy members have courted both. The Turkish regime-linked LaunchGood, for instance, was also an early winner of an Emirati sponsored “Islamic economy” award.

Notwithstanding, the Turkish approach has significant support – from Islamist movements in the West, to financial institutions and radical groups in South Asia and the far-East.

Across the globe, radicals are working to encourage, whether through nonprofit institutions, startups or financial firms, a parallel economic system that operates not in competition with the West, but as something separate and untainted – designed ultimately to replace non-Muslim economic ideas entirely.

The approach, however, carries some very noticeable flaws.

First, the Islamic economy, as envisioned by Islamists, is noticeably missing coherent underpinning ideas about the means by which an Islamic economy can actually function – beyond simplistic fears of usury and the production of products and services exclusively for Muslims.

Türkiye’s economic crisis is, in part, evidence of this folly.

Second, the Islamic economy is held up as a means to strengthen and unite Muslims globally, something that Islamists, whether through violence or the ballot box, have otherwise thus far failed to do.

While radicals are doubtless keen to capitalize on new approaches, the embrace of economic success as a nefarious scheme is abstract and unconvincing enough to indicate, in general, that Islamists might be running out of ideas.

Third, for some Islamist-seeming advocates of the Islamic economy, it seems possible their real agenda is actually just personally self-serving, and Islam (and even Islamism) is just a marketing tool.

The recent splurge of YouTube advertisements from American Muslim “influencers” offering to teach pious Muslim men the secrets to building successful businesses and accumulating vast wealth, all for a small fee, is perhaps a good example of that.

In fact, much of the new Islamic economy seems to partake in Western free market trends far more closely than the undeveloped ideas of Islamist forefathers such as Sayyid Qutb, who, according to Alex Alexiev, had vague notions about wanting “to steer Islamic economics further in the direction of socialist, collectivist principles by urging the nationalization of natural resources and most infrastructure.”

It is certainly difficult to imagine Qutb or South Asian Islamist thinker Abul Ala Mawdudi setting up venture capital firms or investing in Muslim dating services as a sinister means to a theocratic end.

Finally, an overly prosperous Muslim middle class in the West may not be easily won over, or remain loyal, to the Islamists who regard the Islamic economy as such a means to an end.

Islamism – especially in the West – has long relied on allegations of victimhood, poverty and discrimination to cement control over Muslim communities and find willing new adherents. Success and prosperity seem unlikely to generate a new generation of radical recruits.

Sam Westrop is the director of Islamist Watch, a project of the Middle East Forum

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