WikiLeaks: ISLAMIC FINANCE KEY TO ENSURING LONDON AS TOP FINANCIAL CENTER

INDIA AND ISLAMIC BANKING

 

WHILE SHORT-SIGHTED COMMUNAL BRAHMINS BLOCKING ALL ATTEMPTS TO INTRODUCE ISLAMIC BANKING INTO INDIA, NOTWITHSTANDING ITS MANY ADVANTAGES TO THE PEOPLE AS WELL AS TO THE INDIAN ECONOMY; IT IS AN EYE OPENER TO GET THE NEWS THROUGH WIKILEAKS AS TO WHY UK IS OPENING ITS ARMS FOR ISLAMIC BANKING SYSTEM.

NOTHING IS LOST AND PRIME MINISTER MANMOHAN SINGH AND FINANCE MINISTER PRANAB MUKHERJEE SHOULD SHED THEIR COMMUNAL BLINDERS AND OPEN THEIR MIND TO SEE THAT INDIA'S INDIAN MUSLIM SHOULD GET THEIR WISHES TRANSLATED INTO GOVERNMENT ACTION AS WELL AS TO GET A BOOST TO INDIA'S INVESTMENT CLIMATE. TIME FOR FURTHER LIBERALIZATION AND GLOBALIZATION!!!

GHULAM MUHAMMED, MUMBAI

---------- Forwarded message ----------
Date: Mon, Feb 7, 2011 at 12:06 PM

Subject: WikiLeaks: ISLAMIC FINANCE KEY TO ENSURING LONDON AS TOP FINANCIAL CENTER

http://213.251.145.96/cable/2009/01/09LONDON24.html

Created: 2009-01-05 17:05

UNCLASSIFIED//FOR OFFICIAL USE ONLY

Embassy London

SENSITIVE

SIPDIS

 

SUBJECT: ISLAMIC FINANCE KEY TO ENSURING LONDON AS TOP FINANCIAL

CENTER

¶1. (SBU) Summary: The British government is promoting the growth of the Islamic finance industry in the UK, although HMT has decided against issuing a sovereign Islamic finance bond, a sukuk, in the current economic climate.  HMG is courting Islamic finance, and eliminating barriers to its growth, to ensure London preserves its standing as a top financial center, despite the financial crisis. Islamic financiers, pleased with HMG's efforts, are also pressing to advance their presence in the UK.  End Summary

Pursuit of Islamic Finance ---------------------------------

¶2. (SBU) HM Treasury's policy objectives, released in December 2008, are to establish and maintain London as the gateway for international Islamic finance and to ensure that no person in the UK is denied access to competitively priced financial products on account of their faith.  Islamic finance describes financial transactions in accordance with Islamic law (Shari'a).  The key principles: prohibit the payment or receipt of interest; prohibit uncertainty or speculation; prohibit financing economic sectors considered to be socially detrimental; share profits and losses; and underpin financial transactions with identifiable and tangible underlying assets.  HMG perceives supporting Islamic finance as a way to differentiate London from New York and advance London's image as the world financial center.  London, being closer to the Middle East, has both a physical and time zone advantage over Wall Street, as well as necessary Islamic finance back office skills already present, which HMG is looking to exploit.

¶3. (SBU) The Bank of England first identified the potential for Islamic financial instruments in the UK in 2000.  Since then, the Financial Services Authority (FSA), the key regulator of financial services in the UK, and HMT have introduced legislative changes to eliminate unfavorable tax treatment of Islamic financing structures and create a "level playing field".  London also hosted the First Annual World Islamic Banking Conference European Summit in July 2008, and the government-sponsored organization UK Trade and Investment (UKTI) served as the conference's strategic partner and provided a specific UK pavilion.  The UK now has the only stand-alone Islamic financial institution in the EU, the Islamic Bank of Britain. According to government figures, the UK has the highest value of Shari'a compliant assets (over BPS 18 billion worth) of any non-Muslim country and the eighth largest amount in the world.  It is difficult to determine the exact size of the global market but the amount of assets under Islamic management worldwide has grown from $150 billion in the mid-1990s to around $700 billion in 2007, according to an HMT source.  Prospects for growth from a Standard and Poor forecast assesses the industry to potentially contain up to $4 trillion of assets.  Other estimates put growth figures even higher, since Muslims account for 20 percent of the world population.  Presently only about 1percent of global financial assets are controlled under finance compliant with Islamic law.

¶4. (SBU) HMG, to overcome barriers to the growth of Islamic finance in the UK, is reforming taxation and regulatory codes; forming a set of commonly accepted standards for products and practices; raising awareness of the existence and availability of Islamic products; and ensuring a steady flow of personnel skilled in Islamic finance.  The UK Islamic financial market is mainly aimed at British and international Muslims, but Islamic financial instruments are available to everyone.  Products include the sukuk, an alternative investment bond; takaful, a Shari'a compliant mutual insurance arrangement, which was just launched in Britain for automobiles, a global first; and murabaha, a purchase and resale contract that functions similar to a mortgage. 

¶5. (SBU) HMT decided in November, as announced in its 2008 Pre-Budget report, to not issue a sovereign sukuk because it currently "would not offer value for the money."  Nonetheless, HMG pledged to keep the situation under review and wrote the UK government "remained committed to promoting the UK as a center for global and Islamic finance."  The government plans to introduce new legislation into the 2009 Finance Bill to provide further tax relief.  In a recent paper, HMG reiterated it would continue to examine the feasibility of issuing sovereign wholesale and retail Islamic finance products.

Muslim Investor Preference for the UK -------------------------------------

¶6. (SBU) For investments in Islamic finance made outside the Middle East, the UK is the preferred locale, according to conversations at closed roundtables hosted by the Centre for the Study of Financial Innovation (CSFI).  The underwriting director at a London-based Shari'a-compliant insurance group stated many investors feel London is already the center of Islamic finance.  Additionally, experts from outside the UK, who come to London to sit on boards composed of  LONDON 00000024  002 OF 002   Shari'a scholars for UK-based Islamic finance businesses, are well connected to London, where many already have homes.  There is a concept of 'London-Istan,' a CSFI director told us.  Investors see the UK as the best place to start expansion into Europe because of the higher degree of openness, the support the UK government and FSA offer, and the belief that UK business models and products could be replicated throughout the EU.

¶7. (SBU) Clive Briault, the FSA's former Managing Director of Retail Markets, recently stated "English law is already the preferred jurisdiction for Islamic transactions."  A strategic director for an Islamic finance company claimed at a closed conference sponsored by CSFI that the UK's large Muslim population offers an additional appeal for setting up shop in Britain, as Islam is the country's fastest growing religion.  Most experts attending the conference agreed that since UK Muslims are engaged with their religion, Islamic finance products offer an additional way for them to further connect.

The Effect of the Financial Crisis ----------------------------------

¶8. (SBU) The financial crisis has heightened HMG's desire to court Islamic finance, but to date, the government has only done so largely through public rhetoric, rather than deeds.  "In these times, it is more important than ever that we make the most of growing sectors like Islamic finance," the Chief Executive of UKTI, Andrew Cahn, stated in a November.  UKTI has supported moves of the Association of Corporate Treasurers (ACT) to educate UK companies on the Islamic finance sector and its opportunities for growth during the financial crisis.  ACT Chief Executive Richard Raeburn noted that the reduction in funding options and the more expensive rates in conventional markets made seeking alternative funding an increasing trend.  "The credit crunch has made an understanding of the [Islamic financial] market essential," he said.  HMT asserted in a December government paper that the financial instability in the global economy must not deter the government from its long-term objective for Islamic finance, and HMG will continue to support the development of Islamic finance in the UK.

¶9. (SBU) At separate Islamic finance events in the last months, the question was raised whether the credit crunch would have happened under an Islamic system.  Experts argued that in a purely Shari'a compliant system, the financial crisis would not have occurred. Mohammed Amin, director of PricewaterhouseCooper's UK Islamic finance division, pointed out that Islamic practices based on Western products inherently could possess the same faults.  However, in his opinion, some basic principles innate to Islamic finance should make a preventable difference, such as lending to only those who can afford it; using the right 'just' price instead of the market price; and following standards against complicated contracts and speculative activity. Comment 

¶10. (SBU) Comment:  Islamic finance is a small but growing sector, which the UK is actively pursuing, to preserve and increase London's credentials as the seat of global finance.  Should London successfully position itself as a leading Islamic finance center, it could gain an edge on New York, when the global financial markets recover.  With the UK's fast-growing Muslim minority, HMG also recognizes the potential political and electoral advantage of courting Islamic finance.
TUTTLE

Egypt - U.S. intelligence collaboration with Omar Suleiman “most successful” - By Richard Smallteacher, Wikileaks staff

http://wikileaks.ch/U-S-intelligence-collaboration.html

Egypt - U.S. intelligence collaboration with Omar Suleiman “most successful”

By Richard Smallteacher, Wikileaks staff 1 February 2011

 

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New cables released by Wikileaks reveal that the U.S. government has been quietly anticipating as well as cultivating Omar Suleiman, the Egyptian spy chief, as the top candidate to take over the country should anything happen to President Hosni Mubarak. On Saturday, this expectation was proved correct when Mubarak named Suleiman to the post of vice-president making him the first in line to assume power.

An intelligence official who trained at the U.S. Special Warfare School at Fort Bragg, Suleiman became head of the spy agency in 1993 which brought him into close contact with the Central Intelligence Agency. Recently he took up a more public role as chief Egyptian interlocuter with Israel to discuss the peace process with Hamas and Fatah, the rival Palestinian factions.

In recent years most political analysts have assumed that the heir apparent was Gamal Mubarak, the president’s younger son, but the U.S. embassy in Cairo came to a different conclusion more than five years ago. On 15 June 2005, a memo (05CAIRO4534) written for Timothy Pounds, the director for Syria, Lebanon, Egypt, and North Africa at U.S. National Security Council, noted: 

“(A)ll agreed that the most likely candidate to be appointed to the post (of vice-president) was General Omar Soliman, Director of the Egyptian General Intelligence Service (EGIS).” (State department officials use a different spelling of Suleiman’s name)

Almost a year later, another diplomatic memo (06CAIRO2933) written on 14 May 2006 made it clear that the U.S. government was working closely with Suleiman on key regional matters such as figuring out how best to marginalize Hamas in Palestine: “(O)ur intelligence collaboration with Omar Soliman, who is expected in Washington next week, is now probably the most successful element of the relationship.”

The diplomatic memo, which was written by Francis J. Ricciardone, Jr. (the U.S. ambassador to Egypt) to brief Robert Zoellick (then Deputy Secretary of State) who was visiting Cairo at the time, notes that “Omar Soliman also told us he would be glad to see you (Zoellick), if schedules permit - he will be working the Israeli and PA delegations in Sharm” – referring to a meeting being held in the Egytian resort town of Sharm-el-Sheikh.

In another diplomatic cable, Suleiman is reported to have told the U.S. ambassador, “Egypt is America’s partner” noting that “Egypt will continue to provide the USG (U.S. government) with its knowledge and expertise on the critical regional issues, such as Lebanon and Iraq. The Israeli-Palestinian conflict remains the core issue.”

The following year the ambassador sent yet another memo (07CAIRO1417) to Washington in which he described Egypt as a “dictatorship” suffering from “paranoia” noting that political analysts were hard pressed to predict the future.

“Presidential succession is the elephant in the room of Egyptian politics,” Ricciardone wrote. Discounting the possibility of Mubarak being succeeded by his younger son because of Gamal’s failure to complete his military service, the ambassador once again pointed to Suleiman as the most likely successor as a "rock-solid" loyalist to Mubarak.

“(I)n the past two years, Soliman has stepped out of the shadows, and allowed himself to be photographed, and his meetings with foreign leaders reported. Many of our contacts believe that Soliman, because of his military background, would at the least have to figure in any succession scenario for Gamal, possibly as a transitional figure,” Ricciardone wrote.

The memo notes however that “an alleged personal friend of Soliman tells us that Soliman "detests" the idea of Gamal as president.”

One of the reasons that Washington has been keen to support Soliman is his opposition to the Muslim Brotherhood. A blog posting on Al Jazeera’s website by Clayton Swisher, former director of programs at the Washington-based Middle East Institute, sums up a 2005 meeting with Suleiman: “(H)is blunt words made me drop my biscuit. Suffice it to say he does not have a high opinion of Islam in politics, and is not shy about telling Western audiences the lengths he will go to allow his security services to keep the Muslim Brotherhood and their offshoots at bay.”

Swisher concludes: “President Mubarak’s appointment of Suleiman is a way of messaging assurances to a wary state of Israel and US congress. But it also speaks the unspoken to Egypt’s Islamic parties: don’t even think about it … there is little doubt in my mind why Hamas viewed Suleiman a dishonest broker and an obstacle to real reconciliation. Of course, that is probably what Egypt intended by sending him.”

David Cameron's attack on multiculturalism divides the coalition - The Guardian|The Observer

IF DAVID CAMERON IS PUSHING FOR COMMON IDENTITY FOR ALL UK CITIZENS, HE MUST BE PREPARED TO GIVE FULL VOICE TO UK MUSLIMS AND HEAD THEIR CALL WHEN THEY SAY NO TO ANY INVASION OF MUSLIM COUNTRIES BY THE BRITISH FORCES.

Ghulam Muhammed, Mumbai

http://www.guardian.co.uk/politics/2011/feb/05/david-cameron-attack-multiculturalism-coalition

David Cameron's attack on multiculturalism divides the coalition

The language of Cameron's speech resembles that of Blair in the wake of the 7/7 bombings. But the issue still threatens to divide his party as badly as it did Labour

• Jamie Doward
• The Observer, Sunday 6 February 2011
• Article history

The English Defence League demonstration in Luton yesterday. Photograph: Dan Kitwood/Getty Images

David Cameron's speech attacking multiculturalism may seem to have come out of a clear blue sky, but its genesis can be traced back to long before he became prime minister. Indeed, in its tone and content it shares many similarities with a key speech made by Tony Blair in 2005, shortly after the London bombings.

Blair argued that the roots of violent Islamism were not "superficial but deep" and could be found "in the extremist minority that now in every European city preach hatred of the west and our way of life".

Those who perpetuated such an ideology, Blair claimed, play "on our tolerance and good nature … as if it is our behaviour that should change, that if we only tried to work out and act on their grievances, we could lift this evil … This is a misunderstanding of a catastrophic order."

But even though Blair returned to this argument recurrently, the Labour government was unable to resolve its internal battles over how best to combat violent extremism. The rows engulfed the government's chief response to the threat, articulated in its "Prevent" strategy, which originally sought to counter the spread of Islamism by empowering moderate voices in the Muslim world.

The Home Office and the Department for Communities vied with each other for cash and resources as they attempted to implement the strategy. Behind the scenes, ministers clashed over who should own the policy. A number of Muslim groups flagged concerns that senior civil servants were in thrall to Islamist organisations that preached non-violence in the UK but endorsed violent extremism abroad. There were even accusations that Prevent itself had been hijacked by extremist groups.

"There was this belief that supporting and reaching out to the non-violent extremists would prevent violent extremists from committing acts of terrorism," said Haras Rafiq, a founder of the Sufi Muslim Council and a director of Centri, an anti-extremism organisation. "It is clear that Cameron now believes that approach was muddled."

Cameron's speech signalled just how muddled he felt the approach had become. In the future, he pledged, only groups that would encourage integration would receive funding. "Let's properly judge these organisations," Cameron said. "Do they believe in universal human rights – including for women and people of other faiths? Do they believe in equality of all before the law?"

These questions will become increasingly important over the next few weeks as the government redrafts the Prevent strategy. Originally due to be unveiled in January, it now looks unlikely to appear until the summer.

As with Labour, the coalition is divided. Insiders say Cameron, along with education secretary, Michael Gove, the home secretary, Theresa May, and the security minister, Dame Pauline Neville-Jones, accept there has been too much of what the prime minister calls "passive tolerance" of extremist groups in recent years, while Nick Clegg and Baroness Warsi, the Tory party chairwoman, prefer a more multicultural approach.

Signs of the tension between both sides were evident last year when Warsi was due to attend the Muslim Global Peace and Unity conference in east London but pulled out under pressure from Tory party officials, who were alarmed at claims the event was to be attended by Islamist sympathisers.
Warsi was understood to be distraught at being unable to attend and used a speech last month at Leicester University – rumoured to have not been cleared by Tory party HQ – to warn that "Islamophobia has now crossed the threshold of middle-class respectability".

She said: "The drip-feeding of fear fuels a rising tide of prejudice. So when people get on the tube and see a bearded Muslim, they think 'terrorist' … when they hear 'halal', they think 'that sounds like contaminated food' … and when they walk past a woman wearing a veil, they think automatically, 'that woman's oppressed'. And what's particularly worrying is that this can lead down the slippery slope to violence."

As for the Liberal Democrats, many of their MPs and members will feel uneasy at Cameron's claim that multiculturalism has failed. The party has seen itself as distinct because of the way in which it embraces diversity. Nick Clegg was even prepared to stick his neck out in the election campaign in support of an amnesty for illegal immigrants, seeing it as an important badge of liberalism. Many Lib Dems will find being associated with Cameron's approach difficult.

Muslim groups were quick to voice fears that Cameron's speech was putting the UK on the same slippery slope, coming on the day the far-right English Defence League staged its largest ever rally in Luton.

"The prime minister chose to deliver his speech on a day when the extremists of the English Defence League will be marching on Luton to sow discord among our communities," said Farooq Murad, secretary general of the Muslim Council of Britain. "We find it very disappointing that, at a time when we should seek to stand together to fight violence and extremism, Mr Cameron omits any reference to this extremist group spreading hate and bigotry against British Muslims in towns and cities up and down this country."

But Cameron did use his speech to acknowledge the relationship between Islamophobia and the far right. "On the one hand, those on the hard right ignore this distinction between Islam and Islamist extremism and just say: 'Islam and the west are irreconcilable'," he said. "These people fuel Islamophobia. And I completely reject their argument."

Anti-fascist campaigners point out the EDL was formed in response to the rise of al-Muhajiroun, the now proscribed extremist organisation that glorified suicide bombers and influenced several British-born al-Qaida sympathisers jailed for terrorism. A mix of football hooligans, far-right supporters and disaffected white workers, the EDL lacks a common identity but is united in its target: Islam.

"The rise of the EDL can be seen as a failure by the British government to get to grips with Islamist extremism," said Maurice Cousins of the anti-far-right campaign group Nothing British.
Multiculturalism has, according to Cousins, helped Islamism flourish.

"We take the view that multiculturalism hasn't been the best way to integrate people in society," he said. "It ghettoises people into minority and majority groups with no common identity. You can argue in favour of pluralism, but multiculturalism says there's no one overriding culture and that causes divisions and makes society less cohesive."

Cameron signalled he had come down on the side of this argument. "The speech was an attempt to bring everything together," said James Brandon of Quilliam, the counter-extremism thinktank. "When they got into power, the government tried to draft anti-extremism policy in piecemeal form, but they've realised they need a bigger-picture approach to make sure every department is on the same page."

Insiders suggest it is likely Cameron's speech will trigger a further redrafting of the Prevent strategy. What eventually transpires will be radically different. "A lot of things were wrong with Prevent," Brandon said. "People were being loose with who the money was going to; they were working with the wrong people."

Having rejected the previous government's strategy, Cameron is now reverting to his default position, outlined in a speech he made in 2005 when shadow education minister. In the speech Cameron likened Islamist extremists to Nazis. "Just like the Nazis of 1930s Germany, they want to purge corrupt cosmopolitan influences," Cameron said.

Meanwhile, the EDL's website also invokes the Nazis. It carries a quote from Albert Einstein, a "refugee from Nazi Germany": "The world is a dangerous place to live in; not because of the people who are evil, but because of the people who don't do anything about it."

Indeed, at the march, several EDL members were quick to claim Cameron's speech reflected their own views. By waging war on one form of extremism, Cameron may unintentionally have given succour to another.