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Pak Supreme Court declares bank interest un-Islamic |
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Pakistan’s Supreme Court declared interest “un-Islamic” and directed the government to introduce an interest-free economy in two years. The Court’s Shariat appellate bench, the final authority in the context of Islamic laws, in a judgement said `riba’ (interest) is against the sayings of Prophet Muhammad, Quran and Sunnah and hence, “un-Islamic” the official APP News Agency said. The four-member bench also directed the government to introduce an interest free economy by the Year 2001. The verdict was passed on an appeal filed by the previous Nawaz Sharif government against judgement of the federal Shariat court in November 1991 when it had declared `riba’ as un-Islamic for the first time while ordering that it should be made effective from July, 1, 1992. Incidentally, the judgement had been passed during the first tenure of Sharif and the government, realizing practical difficulties in implementing the verdict, went for appeal before the Supreme Court despite strong Opposition from the religious groups. But the appeal was never heard.
Legal sources said the government and banks have a month to ask the Supreme Court to review the decision. The government may have to ask for a review because several issues needed clarifications, including the timeframe question, because laws would have to be amended. Economic analysts say the decision is likely to set back efforts to revitalize the ailing economy. The judgement has opened a Pandora’s box at a time when country was already passing through a political crisis and the economy is under severe strain. Analysts said the court’s timeframe for the transition to an Islamic financial and economic system from the present western economic model was unrealistic. “Pakistan, which owes $32 billion in foreign debt, is not in a position to dictate its terms to international donors,” a banking analyst at a foreign brokerage said. Multilateral donors have their own charters and will not be dictated by our (Pakistan) terms, he said.
The institution of an interest free economic system in Pakistan will isolate the country from the global economy and make investors wary of putting money in Pakistani projects, ventures and institutions. Moreover, if it hopes to obtain further credit, which it must, Islamabad has to repay its debts to the International Monetary Fund and the World Bank together with interest, which would appear to run counter to the court directive. At a time when Pakistan needs significant financial help from the international system to save itself from bankruptcy, the adoption of a rigidly religious approach can only spell economic suicide. As such, General Musharraf has little choice but to ignore the direction of the federal shariat court.
The problem about an interest-free system as advocated by the Quran is that it is practical only in a society which observes all the scriptural tenets. In this context, it will prove difficult if not impossible to implement only one aspect of the Islamic system as regards interest. The Islamic system prescribes severe penalties for non-payment of taxes and non repayment of bank loans. In Pakistan people frequently fail to pay taxes or repay bank loans, but the government is not in a position to implement these provisions, Further, in Islamic society there are no large-scale international monetary transactions on credit. An attempt to promote such an interest-free regime in total isolation of global realities fails to recognise the compulsions of living within a latter international framework.
Campaign against corruption
Meanwhile in its continued campaign against corruption, the Musharraf regime has suspended 800 government officials. They include more than 600 from Income Tax and customs and 200 from other federal and provincial departments. Top politicians of various political parties and senior bureaucrats have also been nabbed on graft charges. They include former Chief Minister of NFWP and a senior functionary of Nawaz Sharif’s party, Mehtab Abbasi. Gen. Musharraf has inducted 30 of its finest officials with a track record of impeccable integrity to man investigating units which will dig out evidence of corruption against politicians, bureaucrats and technocrats.
Political observers in New Delhi wonder whether despite his tough talking, Gen. Musharraf will succeed in his campaign fore eradication of corruption. Gen. Musharraf is no thinking General. He is a thoroughbred commando, a sound tactician but poor strategist. Those who have known him say he is not bright, knows little about world politics and will have to be guided by his advisors who are tainted with the excesses of previous military regimes. Jane’s Foreign Report says Musharraf was a lead player in former military dictator, Gen. Zia ul-Haq’s dirty tricks department - both ISI and Special Services Group. Some people say Pakistan requires a break from democracy to sort itself out. There is need for fundamental reforms to root out corruption, recover the loot and revoke the feudal system. Of the $ 4 billion bad bank loans, Musharraf has recovered just one per cent. He can forget the rest. Implementation of land, tax and electoral reforms is a must. In short, a new constitution alone might rescue Pakistan from its troubled and turbulent history. This could take five, not just three years. But Gen. Musharraf is unwilling to set out a time-table for return to democracy.
Pakistan’s elite is exhausted, even disgusted by the frequent changeover of regimes. Pakistanis are now blaming the US for the Talibanisation of Pakistan. It is not clear which direction Musharraf will steer his boat, now that he has plugged the leak. The fear is towards greater Talibanisation. Pakistan does not need a Franco or a Pinochet. The army’s track record belies the high expectation from it. Both civil and military rulers have looked for salvation outside Pakistan - the US and Saudi Arabia. The US has a Hobson’s choice: between a nuclear armed, military-ruled Pakistan or any nuclear democracy.
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