Sunday, July 18, 2010
Can Malaysia's Islamic gold dinar thwart capitalism?
Muslim advocates of the dinar believe it will stop the excesses of capitalism, but it is just another avenue for exploitation Imagine a world trading solely in gold and silver coins. Imagine the size of your wallet. Yet this is the ideal world envisaged by some of Malaysia's activists championing the Islamic gold dinar and silver dirham as a new form of legal tender to replace paper money – a utopia that could see the light of day as early as the middle of next month.
This is when one such group, Muamalah Council, plans to implement the dinar system in Malaysia's northern state of Kelantan. If information on its website is to be believed, the council has the blessing of the state's Islamist government, Parti Islam SeMalaysia (Pas), to kickstart the dinar in three moves. First, the state will pay a quarter of its public servants' salaries using the dinar. Second, all state companies will accept dinar payments. Lastly, some 600 commercial enterprises will also embrace this currency.
Inspired by selective religious sources and backed by historical precedents within the annals of Islamic history, the gold dinar system is touted by certain fiercely proud Muslims as the Islamic answer to thwart capitalism's woes. The idea was first mooted by Malaysia's former prime minister, Mahathir Mohamad, in the aftermath of the 1997 Asian financial crisis. He argued that the coins would never hang their possessor out to dry in the same way that paper money had. As precious metals with intrinsic value, gold and silver are more resistant to market fluctuations and devaluation compared to the US dollar – an argument he took to the Organisation of the Islamic Conference as a tool to battle western hegemony.
Today, Islamic gold dinar advocates would cite the recent credit crunch as proof. Indeed, the rocketing price of gold – possibly transcending a record high of $2,000 an ounce – can only strengthen their pitch. While Mahathir's grand plan for Malaysia to implement the dinar system by 2003 may have been unceremoniously scrapped by his successor,
Abdullah Badawi, the idea has since gained currency beyond Malaysia's shores.
In neighbouring Indonesia, for instance, an outfit known as Wakala Induk Nusantara (WIN) had begun minting Islamic gold coins for use in Australia, Malaysia and Singapore. Its spokesman, Riki Rokhman Azis, claims that the number of dinars used in the world's most populous Muslim nation has more than doubled in 2009 to 25,000 pieces. What is perhaps more striking is the UK connection to the increasingly globalised Islamic gold dinar movement. The Indonesian grouping is adhering to a fatwa issued by the South African-based cleric Sheikh Abdalqadir as-Sufi, a Muslim convert in Cape Town formerly known as Ian Dallas of Scotland.
Then there is Dinar Exchange, the British equivalent of Indonesia's WIN. As the "official certified supplier of Islamic gold dinar and silver dirham in the United Kingdom", the company had just concluded a month-long series of roadshows in May that saw it promoting the gold dinar to Muslims in key UK cities such as London, Birmingham and Edinburgh. The group is inviting more to spread this Islamic vision as dinar agents. For a fee, of course. As the dinar movement gathers momentum, its propagators – which include some of the Muslim world's most polemical figures such as the Trinidad-born cleric Imran Hosein – would doubtless dismiss Antony Lerman's recent suggestion in the Guardian that no credible anti-capitalist doctrine exists today. To them, the Islamic gold dinar is perhaps mankind's best-formulated answer to beat capitalism's excesses.
Yet, as an anti-capitalist weapon, the Islamic gold dinar is far from mint.
It is motivated by politics more than benign religious values. The Kelantan example is instructive. Implementing the Islamic dinar serves as a political statement to Muslim voters that Malaysia's Islamist opposition party, Pas, is more Islamic (and hence more legitimate) compared with its competitor, the United Malays National Organisation. Even in its Mahathir could be read as a radical attempt at power politics. But a more serious flaw lies in its contradiction. At the heart of the dinar system can still be found the same capitalistic spirit of commodification. It lacks the egalitarian spirit embodied in socialism's virtue of the common good. Its advocates say that the poor could never be taken advantage of because the coins they own have intrinsic value. But Britain's recent gold-rush dilemma suggests that the poor do not always get their money's worth – even when trading gold.
Like paper money, gold is also vulnerable to the manipulations of valuers, our gatekeepers of wealth. And let's be honest, how many of the poor have stacks of gold already in their possession? Gold is a precious metal precisely because it is so rare. On a wider scale, who is to prevent gold-rich nations from banding together as a cartel to fix prices at exorbitant amounts in the same way that the oil-producing nations of OPEC did?
Or multimillion corporations from exploiting poor but gold-rich nations? This is best exemplified in the case of Pacific Rim, a Vancouver-based firm that has filed an appeal via the Central American Free Trade Agreement (Cafta) to bypass local legislation so they can mine for gold in El Salvador despite local objections. In a world mired by climate change troubles, one also needs to mind the environmental cost of gold mining – an operation that involves huge amounts of water and toxic chemicals.
The Islamic gold dinar could not thwart capitalism's excesses. It is only providing one more avenue for exploitation. For this reason alone, it will not have my buy-in. By Nazry Bahrawi for The Guardian