Muslim nations can ease West’s crisis

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.