The UK announcement last month that it is going to issue a 200 million sterling pound Islamic bonds, or sukuk, looks initially insignificant given its size. Only earlier this month the Jeddah-based Islamic Development Bank (IDB) announced it is going to launch in Dubai a $10 billion sukuk. The overall Islamic finance industry is estimated to be in the range of a whopping sum of $1.6 trillion.

What British Prime Minister David Cameron announced still carries some significance. That significance does not stem only from what he said that the UK becomes the first Western sovereign to issue sukuk. In fact, almost a decade ago the German state of Saxony-Anhalt issued a $123 million Islamic bonds, or sukuk, but the UK is different in the sense that it carries more weight in the world than one state in Germany.

More interesting is that London’s decision to issue sukuk opens the way for the Islamic finance industry to contribute something and add value to the ongoing search for solutions to current economic problems facing the world.

Cameron’s announcement comes as putting an official blessing to an Islamic finance industry that is already active in the UK in particular. Chancellor of Exchequer George Osborne, who welcomed the meeting of the World Muslim Forum and the sukuk issue, singled out some of the cases where the Islamic finance helped in funding some of Britain’s prestigious projects.

They range from the Athletes Village for the Olympic Games hosted by London, to a power station in Battersea area through a 400 million pound provided by Malaysian sukuk, to 1.5 billion sterling undertaken by Dubai sukuk to help finance London Gateway, the first UM deep sea container port.

That is a clear addition to efforts to upgrade and renovate decaying infrastructure, which is sending a strong message that the 2.7 million Muslim community has something to offer to the society than merely helping each other getting some interest free loans to carry out their own businesses.

In fact some scholars argue that sukuk could be considered as one of the tools that should help in addressing some of the woes inflicted on capitalist societies as clearly exemplified in what happened to Greece, Spain, Ireland and to some extent Italy. Researchers go back to days of the Ottoman Empire, which is believed to have been the first to issue a sukuk back in 1775, when it borrowed an amount of money against future customs’ income.

And that is the basic rule to borrow against some kind of a secure stream of income and the loan is secured through a tangible asset. In that sense money ceases to be a commodity in itself and used as it ought to be — only as a medium.

If such a concept is to flourish, it will have a great impact on one of the practices that have afflicted the current financial environment: Speculation. That speculation on currency movement for instance started to be a science on its own and it developed getting into all sorts of commodities and future transaction that have opened the way for the less understood derivatives.

The most sensitive oil industry could not be spared from speculation. And that was made possible because there is a virtual oil trading market where millions of oil barrels worth billions of dollars are bought and sold around the world without even one actual barrel being at hand.

Cameron’s announcement that London Stock Exchange is creating an Islamic market index is a step in the right direction and as such a move that will help in getting Islamic finance in the main stream of the industry, which will help in looking at it in a more professional and business prism devoid of political affiliations.

It is interesting to note that in Malaysia, the biggest sukuk market in the work, the bulk of dealings are attributed to non-Muslims, who apparently found that this tool is more attractive.

Opening up a mature market like London for such activity along Islamic guidelines will add to the current debate on dialogue between different cultures and civilizations. Such a step will add something tangible and concrete to such a dialogue away from abstracts of history and theology. In today’s world where crises are grasping every corner of it, it will be more helpful to open up for any addition and contribution.

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