This piece comes from Islamic Revival.Dubai- The Economic Mirage
from Islamic Revival by Islamic Revival
Dubai once symbolized the economic boom of the 21st Century. It was viewed favourably by major Western companies that established offices in the country attracting a large number of foreign workers from Europe, Asia, and elsewhere. With an economy to the tune of $46 billion, the Gulf emirate attracted world-wide attention with its rising property sector.
Today, however, is a different story. The economic situation has deteriorated to the point that expatriates are leaving the country as fast as possible. As reported in the New York Times, debt-ridden foreigners are fleeing Dubai, abandoning their cars at the airport with â€œmaxed-out credit cards inside and notes of apology taped to the windshield.â€
Dubai: Growth and Collapse
To understand the collapse of the Dubai economy, one must look at what was driving it. Dubaiâ€™s economy was initially a mixture of trading and oil. Since the 1940s, the city was known as a trading-hub for gold in the Middle East and South Asia. Oil was also a significant component of the economy (e.g. in 1975 oil accounted for 54%). In its drive to copy the Capitalist approach to economy, Dubai expanded heavily into financial services and real estate.
In 2000, Dubai launched the Dubai Financial Market, which sells foreign and local securities (e.g. bonds, stocks). In 2006, Dubaiâ€™s ruler made it legal for foreigners to own property in the emirate.Foreign investors became keen to invest in Dubai, as it was seen as an â€œemerging marketâ€ â€“ similar to India or China â€“ that would take a larger share of the worldâ€™s wealth. This resulted in tremendous expansion of the non-oil sectors of the economy. For example, real estate and construction account for between 30% and 50% of Dubaiâ€™s economy, while oil accounts for only 3%.The fall of Dubaiâ€™s economy began with the flight of capital.
Foreign investors were pulling out their investments for two reasons. Firstly, they knew that emerging markets would be the first to be impacted by the recession. Secondly, they needed the capital to cover their own exposure to the crisis.
Repeat of the Asian Financial Crisis
A decade ago, another region of the Muslim world attempted to organise its economies on the Capitalist model. In the early 1990s, Malaysia, Indonesia, and other South-East Asian countries had high growth rates of 8-12%, which attracted almost half of the total capital-inflow to developing countries. However in 1997, these so-called â€œAsian Economic Miraclesâ€ collapsed when foreign investors withdrew their funds. The financial collapse left the region in ruin with millions left in poverty.
Root Problem: Agent Rulers and Capitalist Solutions
As it has been proven time and time again, the rulers of the Muslim countries are agents of the West. These rulers and the elite in the Muslims countries have given political allegiance to the Western colonial powers, such as America and Britain, and have forcefully imposed the Capitalist system upon the Ummah. They have tied their economic interests to Western financial institutions and corporations making us dependent on the economies of the Capitalist nations.The rulers and the elite try to emulate their Western colonial masters when it comes to issues of economic development.
For example, Sheikh Mohammed Bin Rashid al Maktoum, the agent-ruler of Dubai said in 2007, â€œThe services sector was the driving force behind Dubai’s economic growth, contributing 74% of GNP, mirroring the economies of the developed world.â€ When faced by an economic challenge, they run to their Western colonial masters for advice and solutions. For example, UAEâ€™s Central Bank unveiled a $10 billion bailout package to address Dubaiâ€™s problems â€“ mimicking America, Canada, and Europe.
Islam: Do Not Imitate Other Nations
Rasulâ€™Allah (saw) has clearly forbidden us from following the ways of other nations:
â€œYou would tread the same path as was trodden by those before you inch by inch and step by step so much so that if they had entered into the hole of the lizard, you would follow them in this also. We said: Allah’s Messenger, do you mean Jews and Christians (by your words) “those before you”? He said: Who else (than those two religious groups)?â€ [Muslim]
As a result, if we attempt to imitate the Capitalist nations we will fail to achieve prosperity in this life and face humiliation in the next life because of our disobedience to the Messenger of Allah (saw). As we witness the spectacular collapse of the Capitalist financial system â€“ in Dubai or in America itself â€“ we should take the time to realize that it is only through Allahâ€™s (swt) assistance that we can achieve economic success.
Intellectual Decline: The Key Obstacle to Progress
The greatest resource that the Muslim Ummah has is not its scientific discoveries, its vast number of doctors and engineers, massive oil & mineral reserves; or even its enormous population. The greatest fortune this Ummah has is the Islamic thoughts, which emanate from the Islamic Aqeedah. Material wealth, scientific discoveries, and industrial inventions are of much lower importance than the Islamic thoughts.
In fact, any material and scientific progress depends on the Ummah embracing the Islamic thoughts and implementing them in society.The Islamic thoughts are not restricted to matters of ibadat. They encompass all issues that a human being will face in this life.
Allah (swt) revealed:
And We have revealed the Book to you as an exposition to all things, a guide, a mercy and glad tidings to Muslims.”[TMQ 16:89]
When the Muslim Ummah was a leading nation, it relied solely on Islam to deal with all the affairs of life, including economy, governance, foreign policy, etc. The majority of Muslims used wahy (revelation from Allah (swt)) to judge the challenges that faced them. As a result, the Ummah was productive in all spheres of life, including science and technology. For example, during the Mongol invasion, the Muslim Ummah came across â€œAl-Yaasiqâ€; a law-book compiled by Genghis Khan, which contained some rulings that were derived from various religions (e.g. Judaism, Christianity, Islam, etc) and his own opinions. The book became the legal code followed by the children of Genghis Khan.
However, ibn Katheer (rh) looked at the issue in light of the ayah revealed by Allah (swt):
â€œDo they then seek the judgement of (the days of) ignorance? And who is better in judgement than Allah for a people who have firm faith?â€[TMQ 5:50]
Based on this (and many other ayat and ahadith), he rejected al-Yassiq and enjoined on the Ummah to also reject it and follow the laws reveled by Allah (swt).
Unfortunately, the Ummah has lost this productive way of thinking. This process occurred over centuries, but was most pronounced during the military and intellectual invasion of Europe that has persisted since the 18th century until the present day. During this period, the Ummah became fascinated with the material success of Europe and blindly adopted the Capitalist solutions â€“ without fully realizing that these solutions were alien to Islam. Dubaiâ€™s approach to economy (e.g. adopting Capitalist solutions of the free market, riba, bailouts, etc) is just a current example of this phenomenon. With the Islamic way of thinking abandoned, we see ourselves mired in poverty â€“ despite the abundance of material resources in our lands.
However, today, with the help of Allah (swt) the Ummah is responding to the call to resuming the Islamic way of life through the re-establishment of the Khilafah Rashidah in the Muslim lands. Muslims are re-gaining their confidence and trust in Islam and openly calling for its implementation
Khilafah: Making the Islamic Aqeedah Central to Society
The path to progress begins with embracing the Islamic Aqeedah: recognizing that Allah (swt) is the sole Legislator and being confident that the Shariah is more than capable of managing the affairs of the Ummah â€“ in all spheres of life (i.e. ibadat, politics, economy, etc). Once we understand this as the way forward we must work to purge the Muslim lands of Capitalist thinking. The Capitalist solutions are man-made and they are as limited as the minds of the men who laid them down. Consequently, they will inevitably fail.
To understand how the Islamic thought process works, we can examine how Islam approaches the issue of economy in contrast to Capitalism. In Islam, the key economic problem is the distribution of wealth. This is based on understanding of why the Messenger of Allah (saw) divided the booty gained from Bani Nadheer exclusively among the Muhajireen and the poor members of the Ansar. Regarding this incident, Allah (swt) revealed:
â€œWhat Allah has bestowed on His Messenger (and taken away) from the people of the townships, belongs to Allah,- to His Messenger and to kindred and orphans, the needy and the wayfarer; In order that it may not (merely) circulate between the wealthy among you.â€[TMQ 59:7]
Based on this ayah (and other rulings in economy, such as the prohibition of riba), Allah (swt) makes it clear to us that the Khalifah must work to ensure that the wealth circulates through the whole of society. The Capitalists, on the other hand, believe that the economic problem is to maximize production. For example, we see the Capitalists measure the economy by looking at the Gross Domestic Product (GDP) and not how many people are homeless, hungry, etc. Thus, for the Ummah to progress economically we must adopt the Islamic idea that the key economic problem is distribution â€“ as this is the Haqq (Truth) â€“ and reject the idea that we must increase production at all costs â€“ as this is Batil (Falsehood).
Once the Haqq is clear from the Batil, we must work to make Islam the sole reference point in society. This means the thoughts, emotions, and systems â€“ political, education, economic, and social â€“ will be based solely on what Allah (swt) has revealed. This can only be achieved through the re-establishment of Khilafah in the Muslims lands. Muslims must work globally on the Prophetâ€™s (saw) method of intellectual and political struggle, which requires us to join a group and purge ourselves of Capitalist concepts and solution and replace them with Islamic concepts and solutions from the revelation of Allah (swt) through intense study. We must also interact with the Muslim Ummah and promote the Islamic alternative. In the Muslim lands we must also seek the nusrah (support from influential members of society) just as our Prophet (saw) did from al-Ansar (ra).
May Allah (swt) help us to establish the Khilafah Rashidah in the Muslim Lands according to the method of the Prophet (saw) and build a global economic system that will bring prosperity to all.
â€œAnd the Jews will not be pleased with you, nor the Christians until you follow their mila (way).â€[TMQ 2:120]