Shariah’s Black Box

[41] See DeLorenzo & McMillen, supra note 34, at 143-150. Since the development of SCF, the debate among Islamic, economic, and Shariah scholars continues over the propriety of this new field of Shariah scholarship. Some argue that the industry is nothing more than form over substance and an abuse of Shariah.  Others contend that SCF is a convoluted way for Shariah to effect its purposes in modern Western financial institutions. For the former, the debate is over the perversion of Shariah and its pre-modern ethic and economic principles. This group of critics would prefer that Shariah be used to modify the existing political economies to move away from interest-based debt and highly speculative and leveraged derivative transactions. For the latter group of critics, SCF is more than just an attempt to mollify the Shariah authorities; it is a “Trojan Horse” to legitimatize and to institutionalize Shariah, the purpose of which is the destruction of Western societies as such. For an example of the former group, see Haider Ala Hamoudi, Muhammad’s Social Justice or Muslim Cant?: Langdellianism and the Failures of Islamic Finance, 40 Cornell Int’l L.J. 89; El-Gamal, supra note 18.  For the latter group, see Kuran, supra note 18; Alexiev, supra note 18.

[42] Drake Bennett, The Zero Percent Solution, Boston Globe, Nov. 4, 2007, available at (last visited Jan. 25, 2008).

[43] Alexiev, supra note 18, at  [page number here] & n.1.

[44] Islamic Banking—Status of Islamic Banking, Institute of Islamic Banking and Insurance, available at (last visited Jan. 25, 2008).

[45] See Mohammed El Qorchi, Islamic Finance Gears Up, 42 Fin. & Dev., Dec. 2005, available at (last visited Jan. 25, 2008). Growth is reported to have reached 30% annually. See Karina Robinson, Islamic Finance Is Seeing Spectacular Growth, Int’l Herald Trib., Nov. 5, 2007, available at (last visited Jan. 25, 2008).

[46] Gayle Young, Fast Growing Islam Winning Converts in Western World, CNN Interactive News, (last visited Jan. 25, 2008). The Executive Vice President and General Counsel of the Federal Reserve Board of New York cited a White House report that Islam is the “fastest growing faith in the United States.” Thomas C. Baxter, Jr., Executive Vice President & Gen. Counsel, Fed. Reserve Bank of N.Y. Welcome Speech to the Seminar on Legal Issues in the Islamic Financial Services Industry (March 1, 2005), available at (last visited Jan. 25, 2008).

[47] Sukuk in Arabic is plural for bonds; sak is the singular form.

[48] Mark Bendeich, Islamic Finance: Safe Haven or Irrational Exuberance? Reuters, Dec. 10, 2007, (last visited Jan. 25, 2007). Growth in this industry is best illustrated graphically. For growth data on Shariah compliant bonds, see Appendix A. To put the Shariah compliant bond issuance in context, the total net issuances of all international bonds and notes for the third quarter of 2007 was $396 billion, which represents a significant downturn in worldwide demand for such debt instruments. See Bank for International Settlements, BIS Quarterly Review 19-21, Dec. 2007,,available at (last visited Jan. 25, 2008). That Shariah compliant bonds were showing spectacular growth in the same quarter and representing approximately 10% of worldwide demand speaks volumes for the popularity and the liquidity of this particular market segment.

[49] The principal oil-producing Muslim states are located in and around the Persian Gulf: Bahrain, Kuwait, Quatar, Oman, Saudi Arabia, the United Arab Emirates, Iraq, and Iran. These countries, sans Iraq and Iran, formed the Gulf Cooperation Council in February 1981. See Council Charter of the Secretariat General of the Cooperation Council for the Arab States of the Gulf, available at (last visited Jan. 25, 2007).

[50] For some of the promotional literature naming several of the “facilitators,” see, e.g., John Butcher, Shariah Funds Inc Introduces the First Islamic Hedge Fund Aided by Scholars, Hedge Funds Rev., available at  For specifically offices of such international law firms as Patton Boggs in Qatar, see the firm’s Internet site, (last visited [date]).  For Patton Boggs promotional material indicating the law firm is also a registered agent for lobbying on behalf of the Saudi Arabian government, see Patton Boggs LLP, Attorneys at Law, (last visited [date]).  The law firm of King and Spaulding also highlights its activities in the area on its Internet site.  See King & Spaulding, (last visited [date]); see also Brian O’Connell, Wealth Management: Gulf’s Super Rich Return Home, Meed, Dec. 21, 2007 (updated Jan. 9, 2008), available at

About David Yerushalmi

Mr. Yerushalmi is a lawyer specializing in litigation and risk analysis, especially as it relates to geo-strategic policy, national security, international business relations, securities law, disclosure and due diligence requirements for domestic and international concerns. David Yerushalmi has been involved in international legal and constitutional matters for over 25 years. David Yerushalmi is today considered an expert on Islamic law and its intersection with Islamic terrorism and national security. In this capacity, he has published widely on the subject including the principle critical scholarship on Shariah-compliant finance published in the Utah Law Review (2008, Issue 3). This work and the empirical investigation known as the Mapping Shariah project in America was the focus of a recent monograph published by the McCormack Foundation and the Center for Security Policy.