For instance, the most popular Islamic financing transaction by far, called murabaha, involves a bank buying goods that a borrower needs to have financed, it then adds a service charge equivalent to what the interest would have been, and turns the bill over to the customer to be paid at a predetermined time in the future. Ostensibly, what makes the transaction Islamically legitimate, rather than a straight interest transaction, is the fact that the bank takes the risk of owning the goods for some period of time, even though that period could be and usually is but a second. Thus, murabaha, which makes up a very high percentage of all Islamic transactions currently is interest lending in everything but name.32
The same is true with Islamic leasing (ijara), profit and loss transactions (mudaraba and musharaka) and most of the rest as described in detail elsewhere.33 In another example, shariah requires Muslims mot only to shun any and all interest transactions but also the companies engaged in them. To the extent that there are few if any Western companies and, indeed, not many Muslim ones, that do not borrow money at interest or generate part of their revenue from interest income, it would be next to impossible to have a mutual fund that does not include such companies. Yet, numerous Islamic mutual funds do exist by simply looking the other way or, even more conveniently, by paying for a fatwa to declare them shariah- compliant – an increasingly prevalent practice.34 Other instruments and products claiming to be shariah-compliant, don’t even try to hide the fact that they’re interest based.35
What all of these ostensibly Islamic products have in common, apart from their disingenuous nature, is that they are all priced considerably higher than similar conventional ones, which may be their real attraction to Western banks. As one Islamic mortgage banker put it succinctly if cynically: “The price for getting into heaven is about 50 basis points.”36
To sum up, even a casual examination of the reality of Islamic finance today reveals it to be a bogus concept practiced by deceptive ploys and disingenuous means by practitioners that are or should be aware of that, but remain predictably silent. To those that pursue the objectives of the radical Islamist agenda, all the ruses and deceptive ploys of Islamic banking are well worth the progress they have made in promoting shariah extremism by means of Islamic finance.
There have been other Muslims and Muslim economists, however, who have seen these dishonest tactics for what they are and have denounced them in no uncertain terms. One Muslim economist, for instance, criticized Sharia finance for having “made a mockery of Islam,”37 while another has described it as “a manifestation of the Muslim community’s moral degradation,” and a third believes that it is a “serious crime against Islam.”38
The experience of Islamic banking to date shows without much doubt that there are many more in the former category than in the latter.