"The financial crisis is not in the slightest bit surprising"

“The financial crisis is not in the slightest bit surprising”

Mr Rieger, what do you say about the monumental financial crisis we are now witnessing?

have to begin by saying that the financial crisis is, for myself as a
Muslim, not in the slightest bit surprising. It is not the fault of a
few greedy managers, rather it is a systemic crisis. Today’s economic
model is based on what one might call the magical reproduction of
money, which means we produce mountains of money which no longer has
anything to back it, and at the same time we create an unbelievable,
systematically growing debt, both nationally and globally. Anyone with
just the slightest notion of interest and mathematics can calculate
that this “contra naturum” system cannot function.

What does this mean in terms of our political situation?

the silent “coup de banque” of recent decades and the shift of power
from the political into the economic realm, we now face a fundamental
question: does politics still have the power to limit unfettered
financial technique and the strength to carry out a reform? Can
national parliaments rein in the power of globally networked capital?
There is much to make us doubt it. Watching the goings-on at the mother
of all stock exchanges, Wall Street, one has to ask oneself who is
actually governing whom, the banks the people, or the people the banks?

To what extent is modern banking a moral problem?

is a moral problem in that it has subverted our moral standards. Our
European societies have been infiltrated by “rogue economics”, as the
Italian author Napoleoni calls it, with its Mafiosi structures, from
prostitution to drug dealing to internet casinos. The global
destitution and millions of dead which our mechanisms of indebtment
help to bring about are nowadays tolerated with a shrug of the
shoulders. But on the other hand, moral judgements are not enough to
understand the phenomenon entirely. In philosophical terms we are
experiencing, in the age we now live in, the merging of technique and
capital to create financial technology. In the long term this new
global system – which rules us structurally – throws into question the
very sovereignty of the human being over himself. Technik, as the
philosopher Heitegger formulated it, reduces human beings to stocks of
employees and consumers. Man’s purpose in life becomes work, instead
of, as we Muslims believe, praising the Creator and His creation. The
fact that capital can now be amassed and multiplied almost without
limit is leading the planet towards an ecological disaster.

To what extent does Islam play a role given this situation?

we have to remember that there are numerous references to economics and
commerce in the Qur’an, in Islamic Law, and in the way the Prophet
lived. Our Prophet established a mosque AND a market in Madinah, thus
laying a blueprint for spiritual and material matters. Traders,
business people and their interests have always been immensely
important to the Muslims. Market freedom and freedom of trade routes,
and the abolition of illegitimate taxes, have always been the Islamic
economic agenda. Islam does of course permit property – provided the
Zakat obligation is fulfilled – but it rejects the endless reproduction
of capital. Islam is to me nothing other than a middle-path between the
monolithic, purely materialistic teachings of communism and capitalism.

So what gives Islam its vital relevance to us now?

think that after the insanity of terrorism and the horrific cynicism of
suicide attacks, which have of course been an enormous setback to us as
Muslims, Europe is now busy discovering a different and far more
fascinating, true dimension of Islam. “Allah has permitted trade and
forbidden usury,” this is the Qur’anic Revelation which basically
clarifies our entire practical and rational stance towards the
financial crisis. Do you see how it reverses everything? On the other
side of the dividing line which today surrounds Europe, the taking of
interest is allowed while trade has decayed into monopolised
distribution. Europe was proud of its Enlightenment, but now we as
Muslims have to ask: “That is all well and good, but why was there no
Enlightenment in the economic realm?”

Nowadays, especially in
Western Europe, we are seeing states supporting the banks financially
to the extent that they themselves collapse. Why is that?

the banks are of course relevant to the system, indeed they are the
system. There is such a vast systematic dependency on the banks that
the pressure for politics to rescue the banks, cost it what it may,
amounts to a blackmail which must be fulfilled. Only with a system of
banks and the higher-level central banks is it possible to perpetually
create more and more new money out of nothing. The public has been
shocked to discover how little real capital banks actually own
themselves. Every single bank lends out several hundred times more
money that what it owns. It is this basic process in Western economics
that made the debt-based mass affluence and global expansion urge of
the West possible in the first place. It is like a pyramid scheme – it
simple has to grow and grow in order to survive as a system. We are now
watching – whether we want it politically or not – the stage-by-stage
self-dissolution of the system. To any sensible thinking person it is
of course clear: there can be no endless growth in nature.

How do you see the role of the Islamic Bank?

in general I would welcome any ethical or Muslim commercial
undertaking, we may still legitimately ask whether a bank can actually
be “Islamic” or not, or whether that would be a contradiction similar
to the idea of “Islamic whisky”. The fact is that all banks are part of
an inflationary paper money system, whether they like it or not. In
concrete terms, Islamic banks are famously criticised because some of
their financing techniques for avoiding riba are highly dubious. That
is a theme in its own right. It is also very important not just to
reduce Islamic economics to a matter of Islamic banks. The Muslims have
a lot more to offer than pseudo-Islamised copies, we have our own
financing models such as the Qirad contract, and we have our own
philosophy about the freedom of markets and the genuinity of the money
we spend there.

What role does money play in Islam?

Western world practically forces us to use certain currencies. Imam
Malik, on the other hand, stated that money is any publicly
acknowledged means of payment. This means that Islam in its basis
propagates complete freedom of choice in one’s means of payment. When
paying Zakat there is however an important limitation: Zakat cannot be
discharged with a promise of payment (dayn), such as paper money for
example. That is why, for a few decades now, leading Muslim thinkers
such as the former Malaysian Prime Minister Dr. Mahathir have been
demanding the introduction of an Islamic currency. During the Asian
financial crisis of the 1990s, Mahathir realised that the dollar is the
USA’s actual silent instrument of invasion. Mahathir became an enemy of
speculative currency models and their fatal consequences, and he also
became the first politician in the world to warn of the imminent
collapse of the currency system. If it is to be acceptable for the
payment of Zakat and for trade transactions, an Islamic currency would
must be 100% gold. The Islamic Dinar is now in use in Malaysia
alongside the national currency by all of the ethnic and religious
groups in the country.

How do you see the situation of Bosnia and the Balkans within this crisis?

few years ago when I met with Bosnia’s since-deceased President
Izetbegovic, I asked him what his motivation had been for entering
politics, to which he replied that he had never really wanted to.
Rather he had been fascinated by Islam’s economic answer to communism,
and that is what motivated him. Today, the question of whether Islam
also has an answer to unfettered capitalism is more pertinent than ever
before in the Balkans. Following the recent years of Mafiosi economics
and the general fire-sale in South-East Europe, the people there aren’t
looking for a new ideology, but they are looking for a measure and a
meaning for their lives. But then again perhaps all of us are looking
for a new definition of wealth and poverty. I believe that the
significance of the Islamic life-practice and its traditions is once
again coming to the fore, especially from an economic perspective.