Islam Isnít Kosher
by Michael S. Rozeff
"U.S. companies and Islamic law," Rachel Ehrenfeld and Alyssa A. Lappen
call for the U.S. government to outlaw the Dow Jones Islamic Markets
index. No joke.
Ronald Radosh claimed one of the bad "isolationist" ideas was that "war
means militarism and repression at home." Heís wrong. If
neoconservatives want to repress a stock index of all things, free
speech is not far behind. President Bush just blasted criticism of how
the Iraq War began as "deeply irresponsible" and "illegitimate."
Jones Indexes recently licensed its Islamic Market Turkey Index to
Family Finans House, Turkeyís largest noninterest banking house, to be
the basis for an Exchange Traded Fund on the Istanbul Stock Exchange.
The Turkish market is up 20% this year. The U.S. market is up 2%.
Turkish index is part of a Dow Jones family of about 31 Islamic indexes
composed of about 1,200 Shariíah compliant stocks globally. These
companies do not produce alcohol or pork-related products, conventional
banking services, entertainment, tobacco, defense and weapons.
America, there are similar mutual funds called "socially-conscious"
funds that preclude investing in certain types of businesses. What is so
special about Muslim preferences? Theyíre Muslim, thatís what.
According to Ehrenfeld and Lappen, Islam isnít kosher: "In their urgent
desire to find new markets, Americans have opened the door to Islamist
expansionism." These products "are catering exclusively to Muslims," and
"only advance the Islamic impetus to impose sharia-governed banking on
the West." They say "there is no reason for American banks, businesses
and investment firms to introduce Islam or any other religion into the
U.S. capital markets." Since sharia, they say, "is the same Islamic
ideology that is used by Islamic terrorists, its acceptance in any civil
forum is not a good thing."
do not even bother to qualify their statements with radical Muslim or
Islamo-fascist Muslim, just any Muslim will do. The number of American
Muslims might be 2 million or more. If they want to follow or buy these
Islamic stocks, they donít count. Dow Jones doesnít count either, nor do
all other investors, domestic or foreign, who might like to invest in
Islamic securities. (Diversification pays.) The people in Muslim lands
donít count who might benefit if the companies issuing these stocks
trade in a worldwide market and obtain capital at a lower cost.
Americans and others donít count who might do business with these
companies that are based in Muslim lands. The companies, they donít
count either. Freedom doesnít count. Free trade doesnít count. The
profit motive doesnít count, and satisfying customers doesnít count
because "there is no reason" for these indexes. Nothing counts except to
keep America pure and untainted by "Islamic ideology." Islam isnít
authors seriously claim that Islamic indexes introduce religion into the
capital market. Such indexes are treyf. To win the war on terror, we
must not allow preferences to influence loans or investments. Freedom
does not count. This is not repression?
neoconservative Committee on the Present Danger (CPD) that sponsored
this paper is allied to the neoconservative Foundation for the Defense
of Democracies (FDD). The President of CPD, Clifford D. May, is also
President of the Foundation for the Defense of Democracies (FDD). Five
of the top six officials at FDD (Steve Forbes, Jack Kemp, Jeanne
Kirkpatrick, Newt Gingrich, and R. James Woolsey) also are on CPD.
legitimate for high-level financial backing for the FDD to stem from,
among others, such Jewish figures as Dalck Feith (father of Douglas),
Leonard Abramson, members of the Bronfman family, Bernard Marcus, and
Michael Steinhardt. Mr. May says that the founders of the FDD helped
secure funding for the CPD by getting their friends to contribute. It is
all right for AIPAC to influence American politics. But it is not all
right for Dow Jones to compute and publish stock indexes. Is this fair?
Religion can be introduced into American politics, but American business
must not introduce Islam into capital markets. Whatís logically next?
The U.S. must ban American Depository Receipts (ADRs) of foreign stocks
from selected countries that do not toe the American line. Then the bans
can be extended to American companies doing business in disapproved
countries. The Congress can then introduce sanctions against Americans
doing business with anyone who does business with anyone in a Muslim
country. Why not ban movies like The Thief of Baghdad, Flame of Araby,
and Casablanca? Why not ban Persian rugs and carpets? None of this is
are instructed not to support sharia because that is the "same Islamic
ideology" that the terrorists use. Hitler was Roman Catholic. Therefore,
shun all Roman Catholics.
Ehrenfeld and Lappen applaud Ontarioís Premier Dalton McGuinty who wants
Ontario to outlaw arbitration according to sharia in the Muslim
Community by the Islamic Institute of Civil Justice in civil cases. The
Islamic Institute of Civil Justice offers binding arbitration for those
who voluntarily choose to use the service, and the parties "are free to
use the laws that they wish to rely upon." When it comes to anything
Islam, Ehrenfeld and Lappen do not favor freedom.
colleague at Harvard Business School, Benjamin C. Esty, has a case study
called "The International Investor: Islamic Finance and the Equate
Project." He also has a note explaining Islamic Finance. Why? He writes:
"With more than a billion Muslims living primarily in regions with
enormous infrastructure needs (the Middle East, Asia, and Africa), there
is a growing need to understand Islamic culture, traditions, and
financial systems." Instead of a clash of civilizations, which is not
inevitable and far from desirable, mutual understanding and trade that
benefits all are the remedy for suspicion and warfare.
an earlier article, Financial Jihad, Ehrenfeld and Lappen speak of "the
Islamic impetus to impose Sharia-governed banking on the West." They do
not say how the Islamic system is enforced on Americans. They canít,
because whoever uses it does so voluntarily.
Ehrenfeld and Lappenís method of character assassination in this article
is to link legitimate businesses to Muslims whom they then link to
others whom they criticize. In other words, they use the technique of
guilt by association. Dow Jones, for example, consulted with an
acknowledged and respected financial expert named Yusuf Talal DeLorenzo
who wrote: "It is my conviction that the Dow Jones Islamic Market Index
represents a service of inestimable magnitude to investors the world
over, regardless of their religious persuasions. For Muslims, however,
the service is even greater for the reason that they now have access to
a financial information tool that will allow them to live their
religious ideals in today's marketplace. To my way of thinking, the Dow
Jones Islamic Market Index represents a triumph of religious and ethical
virtues in the marketplace, and opens the way for a whole new financial
turn, Ehrenfeld and Lappen point out that Dr. DeLorenzo is a member of
the Fiqh Council of North America. I cannot verify this, although he was
secretary in 1999. According to writer Steven Emerson, the Fiqh Council
"harbors many terror-sympathizers." A complete evaluation of this charge
is beyond the scope of this article. I wish only to point out the bias
and unfairness in Ehrenfeld and Lappenís attacks on Dr. DeLorenzo. They
have not found one thing, civil or criminal, that he has ever done
Emerson writes that one of the council members (Al-Awani) is "an
unindicted co-conspirator in the case against Sami al-Arian, the alleged
North American leader of Palestinian Islamic Jihad." The chain runs Dow
Jones to DeLorenzo to Al-Awani to Al-Arian. Al-Arian is on trial in
Florida, and the jury is deliberating at this moment. No matter how this
turns out, and this case itself is a celebrated one, it has nothing to
do with DeLorenzo, Dow Jones, or Islamic methods of finance that have
developed over hundreds of years.
contrast, The Jewish Week, which is an independent community newspaper
serving New York, wrote a laudatory article on DeLorenzo in 1999, noting
that he was advising Dow Jones on "stocks that are Ďkosherí for Muslim
investors." The article pointed out that Dow Jones was also considering
indexes for "Orthodox Jews and Bible Belt Christians."
Ehrenfeld and Lappen ring alarm bells because large and small U.S.
financial institutions are integrating Islamic products. They view
Islamic banks and products as not corresponding to U.S. banking law. In
fact, because interest on debt is not allowed, the Islamic finance uses
equity and profit as a substitute. Financial products are often
their dismay? Because Muslims are "blatantly pursuing ulterior motives."
They are? All of them? Prove it. Islamic banking is financial jihad. It
is? Because a Muslim once said so?
common cloth of neoconservativism is many things. Here we see
oversimplification, extremism, single-mindedness, suspicion,
intolerance, and misunderstanding.
see smearing, defamation, and vilification. A Saudi banking scholar said
at a Harvard conference that Islamic finance incorporated altruism as
well as self-interest, that it ameliorated the excesses of capitalism,
and that it yielded a fairer distribution of benefits. Whether this
statement is accurate or not, Ehrenfeld and Lappen say "it fits well
with bin Ladenís statement" to the effect that "Muslim companies should
become self-sufficient in producing goods equal to the products of
Western companies." This they term bin Ladenís "economic warfare."
There are many interpretations of these statements, some favorable,
others not. Their accuracy and utility are not the issue. The point is
how these authors link a non-aggressive characterization of Islamic
financial practice to a non-aggressive statement made by bin Laden in
order to discredit both Islamic finance and anyone who plays any role in
closing line in Ehrenfeld and Lappenís article asks "Why are Western
banking and financial officials and regulators playing into bin Ladenís
hands?" How do they reach this preposterous conclusion? By another
neoconservative habit: the illogical leap. The more I read them, painful
as it is, the more I am reaching the conclusion that neoconservatives
simply canít think straight. Or if they can, they dissemble when they
illogical leap appears at convenient times after stating various facts
or supposed facts. The U.S. is a superpower (fact). Therefore, the U.S.
should seek global hegemony (illogical leap). Saddam Hussein has WMD
(supposed fact). Therefore, the U.S. should take him out (illogical
leap). Iran is seeking nuclear weapons (assume true). Therefore, the
U.S. should introduce Special Forces into Iran and foment a revolution
(illogical leap). Syria supports Palestinian causes and terrorists
(true). Therefore, the U.S. should make war on Syria (illogical leap).
Islam has its own methods of finance (true). Therefore, to fight
terrorism, America should outlaw Islamic finance (illogical leap). In
some of these cases, it will be found that other implicit illogical
leaps are being made. For example, in some of the instances just
mentioned, the illogical leap is that what benefits Israel also benefits
the U.S., or crudely speaking Israel = America. This should read Israel
does not equal America, and neither does neoconservatism.
November 22, 2005
Michael S. Rozeff [send
him mail] is the Louis M. Jacobs Professor of Finance at University
Copyright © 2005 LewRockwell.com
Michael S. Rozeff Archives