Pakistan: Islamisation of economy

Dr Tanzilur Rahman ... decided to use his new position of authority to permanently damage Pakistan's economy by implementing his own vision of Islamic law and economics. 

Ahmadiyya Times | News Watch | Int'l Desk
Source/Credit: The Friday Times | Analysis
By Yasser Latif Hamdani | June 24, 2011

Economic elites have been willing to give Islamists space in society and influence over non-economic matters, provided they keep themselves out of economic matters

The Islamisation process in Pakistan has been debated in detail in our national press, but what most commentators fail to take into account are the social and material conditions surrounding the push for Islamisation especially in the early 1980s. It is the view of this author that Islamisation in Pakistan has been a cynical response by the economic elites of Pakistan to both the forces of socialism and Islamism. In the process the economic elites have been willing to give Islamists a space in the society and influence over non-economic matters provided they keep themselves out of economic matters. This strategy however has only found limited success and a full blow back of this became evident when the entire banking sector was under the Sword of Damocles throughout the 1990s when an ill-advised and ill-conceived judgment of the Federal Shariat Court threatened to bring it down to its knees.


As the Islamic world came into contact with western capitalism through colonialism the initial Islamic response was couched in modernist terms. Islamic modernists like Iqbal did not view interest-based economics as a threat to Islam or in violation of Islamic injunctions against Riba. This much is clear from his piece "Ilmul Iqtasad" which was an overview of the modern economic system. The Islamic modernist element was ascendant during the movement for Pakistan and therefore for many years subsequent to the creation of the country no real intellectual movement was seen towards an interest free economy. The notion that modern interest banking was equivalent to Riba found its origins in revivalist Islamic thought championed by Maulana Maududi and Syed Qutb. The idea was wholly misconceived: There are certain fundamental questions that need to be considered when we extend religious logic - and flawed reasoning at that - to issues of economic importance. For example how is western interest-based banking, which developed only 400 years ago, equivalent of Riba that was forbidden by the Holy Prophet (PBUH)? There was no conception in Islam of a banking system where loanable funds were themselves a product. In modern banking, the whole idea of interest is distinguishable from Riba on the grounds that interest is merely a price charged for loanable funds which makes the whole issue a legitimate transaction. Yet modern Islamic thought - instead of updating its world view through ijtehad - has now increasingly come to accept modern interest-based banking as Riba.

When General Zia overthrew the "Islamic Socialist" government of Zulfikar Ali Bhutto, he needed the metaphorical burqah of Islamisation to legitimise his illegal coup. The material subtext to the coup was this: Bhutto represented paradoxically the forces of feudalism and socialist populism. By carrying out a premature policy of nationalisation, Bhutto had alienated the capitalist classes in Pakistan.The coup against Bhutto was engineered therefore by the urban capitalist class which while disdainful of General Zia's Islamisation saw in Bhutto's flirtation with socialism a greater threat to their economic interests. General Zia on his part ensured that while he pursued his policy of social conservatism and bigoted anti-minority and anti-women Islamisation, the economic dimension of this Islamisation remained strictly out of the sphere of Mullah influence.

This he achieved by creating a parallel Federal Shariat Court which while vested with extraordinary jurisdiction over many matters Islamic nevertheless could not rule on issues pertaining to Muslim personal law, constitution and fiscal matters for a period of 3 years. This period was increased to 10 years by General Zia through a presidential order presumably to slow down activist Islamists like Dr Tanzilur Rahman - a member of the Council of Islamic Ideology and truly the brainchild behind economic Islamisation of Pakistan. Dr Tanzilur Rahman, Zia's handpicked member of the Council of Islamic Ideology, had proposed substantial steps for a Riba free economy in Pakistan. Zia for the time introduced cosmetic changes which did not abolish Riba but merely gave it a facade of Islamisation with nothing concrete. Yet the constitutional changes Zia made - such as the inclusion of Objectives Resolution as a substantive part of the Pakistani constitution - were later used by Islamists in their quest for dominance in the economic field.

It was in 1990 that the Islamists began to mount a fresh offensive in the economic sphere. At the time the Pakistan government failed to extend the expiration date on FSC exclusion from fiscal matters. By this time Dr Tanzilur Rahman had become the chief justice of FSC and he decided to use his new position of authority to permanently damage Pakistan's economy by implementing his own vision of Islamic law and economics. Consequently Shariat Petitions were filed and on 14 November 1991, the FSC ruled in Mahmoodur Rehman Faisal Case that modern interest banking constituted "ar-Riba" and was therefore completely forbidden. Against this 67 appeals were filed before the Supreme Court of Pakistan by the federal government and other financial institutions. The Supreme Court for six years kept these appeals pending and both the Nawaz Sharif and Benazir Bhutto governments were all too happy to keep them in cold storage - thereby delaying the abolition of interest-based banking in Pakistan.

It was not until Sajjad Ali Shah, the chief justice of the Supreme Court of Pakistan, fell out with Nawaz Sharif that the Shariat Appellate Bench actually began to hear these appeals as a way to pressurise Nawaz Sharif's pro-business and economically liberal government. It is instructive to consider Nawaz Sharif's response. He sought to become the Ameerul Momineen by introducing the 15th Amendment to the Constitution of Pakistan. Nawaz Sharif was saddling himself with a divine authority that would make him tower above the courts. In 1999, in its judgment in the Aslam Khaki case, the Shariat Appellate Bench of the Supreme Court upheld the judgment of the Federal Shariat Court and laid down directions for abolition of interest-based banking by the year 2000. By this time General Musharraf had taken over. Lo and behold, in the UBL v Farooq Brothers case, the Shariat Appellate bench revisited its judgment and overturned it as being ill-conceived. Thus banking in Pakistan lived to fight another day.

The moral of the story here is that ultimately practical realities of the modern world will triumph over fundamentalist and rigid interpretations of religion. In the process though the religious devout, whose feelings we respect - will continue to hold back the march of material progress of this country and in the process hurt the economic interests of the vast majority of its people. It is time for Pakistanis to call a spade and spade and take back precious ground that has been conceded to the Islamic fundamentalists in politics, economics and most importantly religion.

Yasser Latif Hamdani lives in Lahore



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