Uproar over issuance of Islamic bonds

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Uproar over issuance of Islamic bonds


Shylock, the infamous protagonist in William Shakespeare’s tragic play “The Merchant of Venice,” is a loan shark whose wealth comes from charging interest on borrowed money, a practice that is supposed to represent greed and evilness.

Christianity denounced usury as a violation of morality, based on the maxim “pecunia pecuniam parere non potest” - money cannot beget money - enunciated by theologian Thomas Aquinas.

The Roman Catholic Church by the 5th century also banned engagement of usury by priests, proclaiming money-lending business unproductive, unlike farming and craftsmanship.

Dante in his epic poem “Inferno” put usurers in the lowest subcircle of the seventh circle of hell, so you can get a good idea of how he felt about it.

Like prostitution, however, the money-lending business was a social necessity back at that time.

Usury remained forbidden by Islam even after medieval Christians changed their views of the business and capital gains in the wake of the Protestant Reformation, which was led by Martin Luther and John Calvin.

Riba - an increase in capital without any services - was banned by the Koran, which says “those who charge usury [interest] are in the same position as those controlled by the devil’s influence. God permits commerce, but prohibits usury.”

The business of charging interest on lending is still outlawed in Islamic communities across the world.

The modern economy, however, cannot run without capital transactions, and immense wealth from oil trade could not be stacked away in closets forever.

Muslim scholars and numerous economists were able to come up with unique techniques that allowed capital gains without violating Islamic law.

The National Assembly is in hot water over the government’s latest proposal to revise the tax code to pave the way for the country’s first issuance of Islamic bonds, sukuk. The local Christian community is campaigning to block the deal as it would amount, they argue, to a tax incentive on a certain religious sect.

As far as capital gains are concerned, however, the Christian belief really was not that different from the Islamic belief.

*The writer is a senior international affairs reporter of the JoongAng Ilbo.

By Nam Jeong-ho
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