THE NEW ISLAMIC DINAR
Muslims world-wide are being encouraged to convert their paper currencies into a new one hundred percent gold Islamic Dinar. In an internet article about the new coin, Jay Taylor writes: "Pakistan, a Muslim country, recently exploded an atomic bomb. Frightening as the atomic bomb is, another kind of bomb, namely the Islamic Dinar could pose an even greater threat to our existing financial system. Almost nobody has yet caught on to this very recent development.
Taylor reports that the Islamic Dinar is now being privately used in more than 22 countries and is currently being minted in four countries, including South Africa. The State Government of Kelanton, the Northeast Sultanate of Malaysia has officially adopted the Islamic Dinar, so the new gold coin can be expected to circulate "through the hands of hundreds of thousands of people there."
Apart from its savings worth and perhaps growing trade worth, the gold dinar meets a religious need in Islam called Zakat, which dictates that Muslims must give at least 20 percent of their income to the poor; giving tangible merchandise or "honest money of actual substance", therefore not paper money.
The new Islamic Dinar represents a renewal of a centuries old coin. Its weight (4.3 grams) and its role are set by the Sharia---i.e. the Islamic Law . There is also a silver Islamic Dirham coin of 3.0 grams. Seven dinars can be traded for ten dirhams. Taylor reports that an Islamic Agency has been set up in the tax haven city of Dinai.
The goal is to open 10,000 accounts within the first year of operation in Dubai. The scope for growth out of modest beginnings is tremendous. There are 1,100 million Muslims in the 51 member countries covered by the Islamic Development Bank. "If even a small percentage of Muslims begin to demand Islamic Dinars as their medium of exchange instead of paper, it could have a dramatic effect on the price of gold," writes Taylor.
According to Taylor the organisation may soon be trading Islamic Dinars on the Internet through an organisation located at www.e- gold.com; although I saw no sign of that when I visited this site. You can read the full text of Jay Taylor's article at http://www.gold-eagle.com/editorials_98/taylor112598.html.
Since reading Taylor, I have searched through for information on the Islamic Dinar; to discover that the people of faith behind this new venture have been doing a lot of thinking and research, and they have come up with a vision for "a world of Islamic trading" that we would do well to take note of.
There is a book by a radical Muslim, Umar Ibrahim Vadillo, called The Return of the Gold Dinar, at http://users.netmatters.co.uk/ murabitun/Return/Noframes. The first few sentences read quite impressively: "According to Islamic Law, when you buy this book it belongs to you. You can quote, reproduce, store in a retrieval system, or transmit this book, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of anybody. You can lend, re-sell, hire-out, or otherwise circulate this book, without anybody's prior consent, in the new form that you want. Anything else is the creation of usurious monopoly, but you are not allowed, nevertheless, to falsify the authorship of the book."
In a foreword to the book Shaykh Abdalqadir As-Sufi, of Achnagairn, Scotland, writes, "The end to the enslavement of the Muslim masses does not require a jihad in the traditional sense but a struggle to obey Allah, restore Zakat, the fallen pillar of Islam--- an empowered tax collection not a charity gift---and abolish usury. It is this author's achievement to indicate the necessary method for such a programme."
Clearly the primary goal of Vadillo and company is not to mint gold coins for cash but to, in Vadillo's words, "establish a successful network of trading throughout the world, on the basis of traditional Islamic practice, which does not involve any form of interest-debt, control of products by speculative future and stock markets, or the mediation of any bank."
The Islamic model being promoted is linked to a group called Murabitun. The model aims for "a free-market-without-usury". It "returns life to impoverished workers by rooting out the parasite of the banks, which live off the workers' work." Rather grandly, "The Murabitun have raised the flag of Islam over the disaster of the usurious world."
I will go on to describe the alternative trading model being promoted, but first let me share something of Vadillo's critique of the prevailing Islamic banking system.
ISLAMIC BANKS ARE DISMISSED AS QUASI-ISLAMIC INSTITUTIONS
Since Vadillo is obviously the main thinker behind the new 100 percent gold Islamic Dinar, what he has to say about Islamic banking is going to be significant as well as interesting. In a 3 000 word essay Vadillo dismisses the Islamic banking system as usurious---in fact, nothing more than "a typically degenerate and belated product of the so-called 'Islamic states'". So-called because the system is part of the "western constitutional model", which is "profoundly contrary to Islam".
The western model, which Vadillo says has arisen out of the French Revolution, is unacceptable to Islam because it is based on "the establishment of artificial and unnatural boundaries, the creation of a repressive ministerial bureaucracy, the exacting of taxes, the imposition of artificially legalised money and the legalisation of usury through the banking system".
Yet the state functionaries and bureaucrats who represent 'Islamic modernism' remain fascinated by their years of education in the West enough to support the western model. Even though "the foundations of economics are now shattered as a science and in practice in the very Europe which saw it come into existence", the 'neo- bureaucrats' still place their trust in the 'Islamic economics' that has emerged from the American and European universities to justify the Islamic banking system.
Three reasons are given why the Islamic bank is "a totally crypto-usurious institution", which "must be rejected and fought".
1. The use of credit to artificially expand the monetary resources is emphatically forbidden in the Sharia (Islamic Law). The Sharia also prohibits the commercialisation or multiplication of a debt without the means to guarantee it, as in fractional reserve banking. "Thus, the banking business as such cannot exist in Islam; the only function it could have would be to restrict itself to being an institution for transferring money, but without the capacity to expand the amount of credit," writes Vadillo.
2. The Islamic principle of co-ownership, enshrined in the Sharia, is usurped. In the Islamic model, all members in an enterprise are co-owners and enjoy the same status (the fulfilment of the contract which they have agreed to) even though they participate to different degrees (by which the profits are distributed proportionally). In the Islamic banks this principle cannot be strictly adhered to. "The structure of the Islamic banks is based not on the strictness and exactness of the Sharia, but rather on the model of the corporation in the West in which the exercise of property is not carried out by those who---nominally---are the owners but is carried out by means of a system of usurpation which we can call "by the majorities", writes Vadillo.
3. In terms of the Islamic Law forbidding usury, a loan cannot be made of a commodity whose value is changeable, yet in banking everywhere fluctuation in value is generated and this effects the individual transactions the bank makes. "Every time the bank borrows paper money for a time, it gains the devaluation suffered by this money during the time of the loan," writes Vadillo. "It is like the typical usurious trick which consisted of the loaning of wheat when it has limited value (during harvest) and stipulating that it be given back when wheat has attained a better price on the market (several months after the harvest)."
Umar Ibrahim Vadillo concludes: "The 'Islamic bank' is a Trojan horse which has been infiltrated into Dar al-Islam" Usury has corrupted the market, transforming it into a usurious system. There is no way of establishing an EQUITABLE market without going outside of the modem monetary and financial systems. All attempts to recuperate an EQUITABLE Islamic market with EQUITABLE Islamic business and transactions must be based on the Qur'anic principle of EQUITY (al- 'Adl) Qur'an 2, 282} which is also defined in the Sharia."
THE RENEWED ISLAMIC TRADING MODEL
Alongside the new gold and silver Islamic dinar and dirham, Murabitun promises the re-emergence of the once flourishing world of Islamic trading. This involves "the restoration of two of its most representative but lost institutions: the marketplace, which will replace supermarkets, and the caravans, which will replace monopolistic distribution." There will also be a return to the guilds of "independent, intelligent work teams, in which the relationship master/apprentice will replace employer/employee."
According to tradition, the Islamic Market was once placed alongside the Mosque as a "space freely accessible to everybody, with no divisions (such as shops) and where no taxes, levies or rents could be paid". And, as in a Mosque, whoever got to a market place first had a right to it until he got up and went back to his house or finished selling.
The same flexibility/fluidity, for a free flow of trade, is associated with caravans. "The caravan brought more than merchandise from one market to another, they brought the whole city that they represented. The caravan represented by its volume and the quality of their produces the reputation of the town of origin as well as their honesty and good behaviour." Towns naturally competed with each other to receive the caravans.
In his book 'The Return of the Gold Dinar', Umar Ibrahim Vadillo contrasts the open distribution system with our situation in which "all these things happen in the darkness of big warehouses where merchandise is accumulated out of the sight of the people and then is distributed to exclusive and selected places of sale" There are no traders any more. They have been replaced by exclusive selling agents. In addition the futures market allows them to hold sufficient volume to manipulate the prices even beyond their physical grip. The result is that millions of producers and millions of consumers are manipulated by the sophisticated control of monopolistic distribution networks.
The market collapsed when it became the privilege of an elite. "The fact that we are now full of supermarkets is the most clear indication that Islamic markets will come and will flourish again. It is the natural cycle. It is similar with the guilds. In the middle of a hostile environment the guilds emerge out of a strong spirit of brotherhood and they flourish. Then privileges are introduced which replace partnership, and soon apprentices are transformed into employees and unemployment becomes inevitable. We are now in that situation which is hostile to the individual. The individual is not necessary because it is possible to make more money out of money than out of genuine work."
Project Leader, Monetary Studies Programme