Mus­lim na­tions can ease West’s cri­sis

Weekend Argus (Saturday Edition) - - COMMENT -

A BAD sit­u­a­tion may some­times have good ef­fects, and what is re­quired now is to draw lessons from this global eco­nomic cri­sis.

Sci­ence main­tains there is no such thing as “ab­so­lute truth”, but the global fi­nan­cial cri­sis is ev­i­dence that there is no ab­so­lute free mar­ket.

It is im­por­tant to look for pos­i­tive points to find a way out of the fi­nan­cial cri­sis. De­spite the gloom of the global econ­omy and the pes­simistic at­mos­phere en­velop­ing the en­tire world, all coun­tries, are work­ing hard to con­tain or ease the cri­sis.

There are re­gions in Europe and Asia, in­clud­ing the Gulf Arab re­gion, emerg­ing as hubs of huge in­vest­ments, which will bring about huge sta­bil­ity to the world’s fi­nan­cial sys­tem. This shift is im­por­tant for re­struc­tur­ing in­ter­na­tional re­la­tions in the post-global credit cri­sis stage.

For ex­am­ple, the US and Western coun­tries are study­ing the salient fea­tures of Is­lamic Bank­ing and the Is­lamic Fi­nance sys­tem to as­cer­tain how far it could be use­ful in fight­ing the global credit cri­sis. The Is­lamic fi­nance sys­tem, which in­tro­duces greater dis­ci­pline into the econ­omy and links credit ex­pan­sion to the growth of the real econ­omy, is ca­pa­ble of eas­ing fi­nan­cial crises.

The sec­ond pos­i­tive re­sult of the fi­nan­cial cri­sis re­volves around re­draft­ing laws and rules that reg­u­late global fi­nan­cial in­sti­tu­tions, es­pe­cially the In­ter­na­tional Mone­tary Fund, the World Bank, and the World Trade Or­gan­i­sa­tion whose mem­ber­ship could not have been pos­si­ble with­out a green light from Wall Street. The pre­vi­ous rules gov­ern­ing eco­nomic re­la­tions were ap­pro­pri­ate for the post-World War II era and dur­ing the Cold War, but are no longer suit- able for the glob­al­i­sa­tion age and the emer­gence of new eco­nomic pow­ers.

For ex­am­ple, in the Per­sian Gulf States, for­eign cur­rency re­serves reached $3 tril­lion (R30.7 tril­lion) at a time when the US bud­get deficit amounted to $1 tril­lion. In China, for­eign cur­rency re­serves reached $1.9 tril­lion. In ad­di­tion, progress has been achieved in Europe through the Euro.

The third pos­i­tive point is re­lated to the change in the world in­vest­ment map and the op­por­tu­ni­ties and chal­lenges pro­vided by emerg­ing in­vest­ments hubs, which of­fer guar­an­tees and op­por­tu­ni­ties for global cap­i­tal­ism. This will of­fer Gulf Co-op­er­a­tion Coun­tries like the UAE, Qatar, Bahrain, Kuwait, Saudi Ara­bia and Oman and other Arab coun­tries like Libya, rare op­por­tu­ni­ties.

Fi­nally, the next global fi­nan­cial sys­tem will be strictly reg­u­lated and su­per­vised by ap­ply­ing the mea­sures of con­trol, trans­parency and global gov­er­nance. This in turn would al­low new in­sti­tu­tions to emerge and take over, which lays the foun­da­tion for a new shar­ing sys­tem in in­ter­na­tional fi­nance and eco­nomic pol­icy.

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