DAWN Editorials 11th November 2022

Ishrat Jamal

Interest-free economy

FINANCE MINISTER Ishaq Dar’s announcement that the ruling coalition would withdraw the legal challenge to the April judgement of the Federal Shariat Court that gave the government until the end of 2027 to eliminate interest-based banking must have come as a surprise.

Mr Dar said the government wants to eliminate riba as soon as possible. He also said that both the State Bank and the state-controlled National Bank would immediately take back the appeals against the FSC decision. But it still isn’t clear how the government plans to achieve this goal and meet the court’s deadline. Nor is it clear whether or not the private banks that have also challenged the decision, which declares interest-based banking “in all its forms and manifestations” against Islamic teachings, will withdraw their appeals.

The matter has lingered since 1991 when the FSC first declared that ‘simple interest’ charged on all kinds of financial transactions — domestic and international — to be riba, and against the injunctions of Islam, due to its far-reaching implications for the banking and financial system, and the country’s dealings with the outside world.

Islam prohibits riba out of the concern that it results in what has been described as “profiteering and money-making in a multiplication mode of economic exchange”, which doesn’t involve labour and effort by the owner of economic resources. But, as pointed out in this space previously, many scholars argue that riba shouldn’t be equated with simple interest charged on modern financial transactions, because it is based on rational, mutually agreed contracts of economic exchange, and sharing of risks, liabilities and profits.

Even if the banking system is ‘rid’ of riba, how would we know that the new system conforms to Islamic edicts?

Islamic banking has grown reasonably fast in the last two decades in Pakistan and many have shifted to it, trusting the fatwa of the so-called Sharia boards of the banks. Yet many doubt that the Islamic financial instruments being offered are actually riba-free or conform to the framework laid down by the leading schools of thought in Islam.

Conversion to a riba-free financial system, or what some describe as Islamic finance, demands thorough and extensive research to understand and define what really constitutes riba. That is important because the shift to an interest-free economy in a complex, globally integrated financial system can be extremely challenging if not impossible.

Sadly, in more than three decades, neither the FSC nor successive governments nor the banks have given any thought to comprehensively studying the issue or its implications. It is advisable that the government, the FSC and other stakeholders move cautiously on this path, instead of rushing into it for political reasons.

It doesn’t matter whether or not the government withdraws its challenge to the FSC decision. What matters is that whatever decision is taken should be done on the basis of thorough research.

Published in Dawn, November 11th, 2022

On to the finals

HISTORY is repeating itself, three decades later. It’s a Pakistan-England final at a World Cup in Australia albeit in the shortest limited-overs format of the game. Victory at the iconic Melbourne Cricket Ground on Sunday will hopefully see Babar Azam’s men emulate, in every sense, the feats of Imran Khan’s ‘cornered tigers’ who delivered Pakistan’s most glorious cricketing moment by winning the 50-over World Cup in 1992. There are so many parallels. Then, too, Pakistan had to rely on other results going their way to reach the semi-finals. Then too, they had to overcome the opposition from New Zealand in the last four. Whoever wins on Sunday will join the West Indies as the only other side to win the Twenty20 World Cup twice — Pakistan is looking to add to the title they last won in 2009 with England looking to follow up on their triumph in 2010. And it promises to be a compelling contest between two teams that bounced back from serious upsets. Pakistan suffered a stunning loss to Zimbabwe that followed a last-ball defeat to arch-rivals India. England came unstuck against Ireland. But both showed their resolve where it mattered most. Pakistan’s resurgence came with a crucial victory against South Africa which kept them alive till the final round of Group 2 matches and they went through after the Proteas were undone by the Netherlands. England advanced after seeing off Sri Lanka with just two balls to spare in their final Group 1 game.

Both teams, however, coasted through to the title clash. Pakistan tamed New Zealand by seven wickets in style before England thrashed India by 10 wickets to end hopes of a blockbuster Indo-Pak battle. A clash between Pakistan and England, however, shouldn’t be short on fireworks given the drama delivered by the two sides in the seven-game T20 series ahead of the World Cup. England shaded the series 4-3, but since then, Pakistan have received a boost. Pace spearhead Shaheen Shah Afridi, who missed the series due to injury, is back to his devastating best. The middle order, which looked suspect against England, has found its feet in Australia. Crucially, though, captain Babar and Mohammad Rizwan — Pakistan’s much-vaunted opening pair — finally got among the runs against New Zealand. England might have shown their firepower in a brutal batting display against India but Pakistan will go into the final with confidence that they can get past the finish line. They have history on their side too.

Published in Dawn, November 11th, 2022

Khokhar’s resignation

IT is the misfortune of Pakistani politics that even those who speak the loudest about their love for democracy often just pay lip service to its principles. That certainly appears to be the case with the PPP, which on Wednesday demanded Mustafa Nawaz Khokhar’s resignation from his Senate seat for expressing views that had, perhaps, caused it some embarrassment with the state. Mr Khokhar, acknowledging what had gotten him into trouble, said on Twitter that, “As a political worker, I cherish my right to express my opinions on matters of public interest”. It is to his credit as a politician and a public representative that he has been applauded across political lines for surrendering his seat than be cowed into silence. He now joins PPP stalwarts Farhatullah Babar and Aitzaz Ahsan in the wilderness — sidelined for refusing to toe the line by a party that runs like a dynasty and describes itself as the last true guardian of Pakistani democracy.

This is not to say the other parties are any better. In our country, “Political power […] is concentrated not in parties but in personalities,” a former finance minister wrote in these pages yesterday, “[…] there isn’t a party where the head is ever replaced”. These heads and their narrow interests are the reason why people like Mr Khokhar do not have a greater say in the affairs of the country, and are often put to the sword even if what they have to say is necessary and right. This culture has clipped the wings of many a leader and kept them grounded. A fledgling democracy like Pakistan’s needs more public representatives to call out the excesses of the power elites from both sides of the aisle. The health of the country’s democracy should not become a concern for a lawmaker or a political party only when they find themselves in the opposition. It is something that must be guarded jealously if the country’s political system is to mature and evolve.

Published in Dawn, November 11th, 2022