LONDON, 24 March 2008 — The call for the establishment of an Islamic common market by Sheikh Saud Al-Shuraim, the Imam of the Grand Mosque in Makkah who is also an academic, is the latest in a string of such suggestions over the last three decades by politicians, economists and academics, although all the socio-economic indicators suggest that such a market would be virtually impossible to implement even in the next few decades.
Although political parties have been organized under a religious banner including in the liberal democracies - The Christian Democrats in Italy and Germany and the Christian Socialists in Bavaria in Germany; PAS in Malaysia, the National Salvation Party in Turkey, and the Jamaat-e-Islami in Pakistan - no economic grouping or bloc to date has been established along a purely religious line.
Some may argue that the erstwhile European Common Market and the subsequent European Union (EU) is effectively a Christian club. Former German Chancellor Helmut Schmidt and French President Valery Giscard d’Estang are on record warning that they do not want Turkey to become a member of the EU because the EU is a Christian grouping, and Turkey of course is an overwhelmingly Muslim country.
But the general consensus in Europe is that countries such as Turkey, Bosnia-Herzegovina, Albania and the nascent Kosovo — all Muslim countries and members of the Organization of Islamic Conference (OIC) — will inevitably become EU members over time. By the end of this decade, the EU will have a combined Muslim population of over 20 million.
Idealists may have a romantic notion and indeed even an emotional attachment to the idea of a common market serving the 3-billion-strong Ummah operating under an Islamic system of economic and financial management. But the situation on the ground across the Muslim world suggests a different reality.
Aside from the sheer religious and political challenges involved in forging a common market comprising a staggering 57 sovereign nations, the economic and financial barriers to entry would be difficult to overcome.
Proponents of an Islamic common market argue that the Muslim countries control some of the major natural resources of the world - crude oil; natural gas; rubber; palm oil; phosphates; soft commodities such as cotton, coffee, tea, rice, cashew nuts, ground nuts, hazel nuts, pistachios etc. As such, they should be in a position to use this wealth to promote intra-Islamic trade and investment.
The truth is that Muslim countries do not trade with each or invest each other’s economies as they do with the industrialized or some developing countries. According to the Islamic Development Bank (IDB), although intra-Islamic exports increased from $57bn in 2001 to $135bn in 2005, this still represents a paltry 13.6 percent of the total trade of IDB member countries. Even in a post-9/11 era, the direction of trade flows and investment from Muslim countries has been disparate - yes some of the new flows have been away from the US, but most have been to the GCC and MENA countries, East Asia and the EU.
Real economics cannot be based on faith or kin sentiments. These can be utilized to cement relationships and groupings only if the necessary architecture is in place. Unfortunately, for the Muslim countries this is far from being the case.
The OIC member countries range from absolute monarchies, constitutional monarchies, quasi-democracies, pseudo-democracies to downright military-cum-industrial regimes. Their economic governance similarly ranges from quasi-free market systems to mixed economies to centrally-planned systems. How can one have a common market in which some members have a private-sector banking system and culture and others have a nationalized banking system or a seemingly ‘Islamized’ banking system?
Ideally, a common market requires a loose homogeneity of political and economic governance systems; a common socio-economic and socio-cultural value system; a common currency and monetary union; and a political will to make things happen. Even the EU does not have all the requisites in place, albeit the most important ones regarding political and economic governance systems are more-or-less there. But given the tensions over the Lisbon Treaty and the endemic corruption within the EU bureaucracy, its future as a viable economic and political bloc remains in doubt. The UK and Denmark has also opted out of the Eurozone.
Some Muslim countries have tried to go it alone in setting up a mini Islamic economic bloc amongst them. The D8 Group of countries led by Turkey, Pakistan and Malaysia tried it a few years ago when Necmettin Erbakan was prime minister of Turkey. But the experiment failed dismally, because it was ill-thought out, poorly resourced and implemented in a half-hearted way.
The classic malaise of many Muslim organizations is that there promoters love to talk up the establishment of grandiose schemes and organizations, oft evoking the Ummah card, but when it comes to putting their money where their mouths are, then they back off claiming poverty or lack of resources. They expect countries such as the GCC states, especially Saudi Arabia, and others such as Malaysia to bankroll these supposedly pan-Islamic initiatives, and are not ashamed to go cap-in-hand asking for money. Many Muslim organizations have failed to perform or deliver because of this organizational debility, which seems to be endemic in the Muslim psyche. If we consider the statistics of desperation for the Muslim world, then it becomes much more obvious the uphill task the Muslim nations would face when contemplating a common market.
Some 24 OIC countries are classified as Least Developed Countries (LDCs) under World Bank criteria. The collective GDP of the Muslim countries account for only 5 percent of that of the world.
Intra-Islamic trade accounts for a mere 6 percent of world trade. Intra-Islamic trade accounts for about 13.5 percent of the total trade of the OIC member countries. This means that the trade of OIC countries with non-OIC countries is eight times the size of intra-OIC trade.
Of the 64 low-income countries in the world, half are Muslim countries with a combined population of 845 million or 67 percent of the Muslim population. The 1.3 billion Muslim population of course account for 22 percent of the world population, but 40 percent of the world’s out-of-school children are Muslim including 8 million in Pakistan alone; 4 million in Bangladesh and 1 million in Mali.
In September 2007, Malaysian Prime Minister Abdullah Badawi strongly attacked the OIC member countries for failing to follow-up the implementation of the “The Makkah Declaration” and its 10-Year-Plan of Action adopted by The Third Extraordinary Summit of the OIC held in Makkah on Dec. 7-8, 2005, to help boost the lot of Muslim countries especially in economic development, empowerment of women, raising literacy and poverty alleviation.
Badawi regretted that “after 20 of the 120 months we have allocated ourselves, we have not been able to move significantly beyond the preparatory planning and coordination stages. Many solemn declarations gather dust on the shelves of history, because the will to implement was weak and follow through slackened. The Makkah Declaration should not become one of these.”
Economic and social development would help resolve not only the problems of poverty, illiteracy, disease and debt, but would also promote quality of life, prosperity, peace and stability, and return dignity to the Muslim world, he added.
He highlighted five core areas that needed to be addressed in the successful implementation of the Makkah Declaration: sustained political will; the reform within — in Muslim minds and hearts; the importance of developing human capital; allocation of necessary resources; and mobilization and partnership with the international community, including the developed world.
Unfortunately, there are very few signs of progress in these core areas, which, at least for the moment, seem to make the idea of an Islamic common market unsustainable.
