Sunday, May 25, 2008

Q&A: The dollar crisis, rising oil & commodity prices

The following is a translation from an Arabic Q&A.

بسم الله الرحمن الرحيم

The dollar crisis continues to persist and it its slide down is markedly visible. This has been followed by a surge in crude oil, gold and other minerals & metals prices thereby resulting in steep rise in foodstuff prices. This multi-faceted crisis is unprecedented both in terms of its intensity as well as persistence…

Is this crisis really a result of economic problems, or is it the US policies that are spurring & aggravating it?

I request you to please clarify this, may Allah reward you for it.


Indeed this crisis has a genuine economic aspect as well, but the interference of political hands has compounded & aggravated the problem to such proportions that we see.

To fully clarify the picture, we shall explain how the crisis developed, how the political hands interfered with it and how the rise in the prices of crude oil, gold and metals affected the crisis, and finally we shall see how it developed into a food crisis.

First of all: Indeed there is a genuine crisis in the US economy which has affected the strength & influence of the US dollar, consequently the US economy has been hit by the currently widespread slowdown. The current crisis has grown to such proportions due to the following factors:

The US Trade Deficit:
The United States imports more goods & services than it exports and its consumers have a great appetite for imports. For instance, the US imported goods & services worth US$ 1,625 billion in 2003, while its exports during that year were worth US$ 1,203 billion, which leaves a deficit of US$ 449 billion and has since risen to a gigantic figure of US$ 816 billion! This difference between the imports & exports was adjusted by printed currency (US dollars) or by US government bonds. This, by its nature leads to a downturn in US Dollars though it may not be officially acknowledged.

Certainly, the US has never before experienced a trade deficit of such colossal proportions; on the contrary, it has been witnessing trade surplus and that too for many a decades, especially after World War II. Gradually, this trade surplus began to taper off over the years thanks to stiff competition from European as well as Asian countries that produce the goods at lower costs. This resulted in even higher imports of goods & services from such countries. This coincided with a huge military expenditure in the Vietnam War resulting in steeply risen balance of payment. In 1971, the US was forced to abandon supporting its dollar with gold, this was the first tremor. In the 80’s when global trade grew and industrial plants shifted from America to those countries that offered cheaper labour, economic shortfall began to show its ugly face. Also the continued imports from the countries that produced cheaper goods like Mexico, China & Malaysia led to further widening of the trade-deficit.

Thus the deficits in the trade & payment balance sowed doubts and distrust about the US economy among the investors and later this led to a slump in the value of the US dollar.

The US Treasury department statistics showed a rise in the indebtedness of the government (the Federal administration as well as the local administrations) from US$ 4.3 trillion (US$ 4,300,000,000,000) in 1990 to a staggering US$ 8.4 trillion in 2003, further rising to about US$ 8.9 trillion in 2007. This general debt is the size of 64% of the Gross Domestic Product. Thus the US can be grouped alongside those countries that suffer most from their debts. This debt is not confined to the US governments alone but comprises firms and individuals in its web. Individual debts alone in the US have recently reached a staggering figure of US$ 6.60 trillion, while the corporate debts, ranked first have reached US$ 18.40 trillion. Thus the total debts stand at US$ 34 trillion which is three times the GDP. This, in itself is a grave economic crisis.

The Rise of the Euro:
Ever since the advent of the Euro, it became the second alternative global reserve currency after the US dollar. This was due to the fact that Euro inherited this distinguished position from the Deutsche Mark, but it even surpassed it and this adversely affected the dollar. Thus the Euro enjoys even more trust than its German predecessor with its value constantly on the rise affecting the demand for the US currency and taking its shine. Hence several investors were encouraged by this fall of dollar’s value into switching their investments from the US currency to the stronger Euro.

In addition to these, the US economy suffers from several factors foremost of them being inflation crossing 4%, unemployment in excess of 5%, an industry in disarray, poverty, poor education services, and the like…

All these factors have contributed to the dollar losing its face & value.
The dollar’s fall has forced several central banks across the globe to reduce their stocks of the US currency.

Paul Michael, a currency strategist at the HSBC says: “The central banks have for quite some time realised that they are no longer keen to boost their dollar stocks. As a result, most central banks around the world have reduced the dollar part of their assets form 73 to 64%”.
This is the real picture of the crisis confronting the US dollar.

Secondly: It is in these circumstances that the US political interference came about in order to exploit the crisis in order to serve its own interests and thus turn the crisis from being a local crisis to a global one… this is how it came about:

1. Any decrease in the value of an exporting country’s currency increases its exports because the costs of the goods becomes relatively cheaper for the importing country due to the fact that the importer pays a lower price for the goods considering that the currency of the exporting country has fallen. For instance, when an importer pays US$ 1000.00 as cost of the goods and presuming that this equals €1000.00. Now if the US dollar loses say 10% of it value, the importer will only need to pay €900.00 instead of €1000.00 on the earlier rates. Therefore the importers prefer to import goods from such countries that have lower value currencies.
It is another matter that all this is fine so long as the currency depreciation is within 5% and is still acceptable if the currency has lost up to 10% value. But if the depreciation exceeds 10%, the industrial plants that manufacture the goods suffer due to the resulting inflation, in other words, the cost of the goods increases in such countries that have lost the currency values because the purchasing power of that currency is impaired. This inflation results in higher cost of the industrial plants and thereby an increase in the prices of its goods follows. This means that the cost of the goods does not remain US$ 1000.00, but it increase. Thus if a currency loses its value beyond an acceptable limit, the cost of production increases resulting in reduced exports due to the resulting inflation. In the case of America, the loss of the dollar’s value has crossed an acceptable limit, for instance, the Euro is trading at around US$ 1.60 as compared to US$ 0.80 in 2000. Which means that the value of the US dollar has breached critical economic limits and has lost over five times….

As a result of this depression, the US exports have only grown by a meagre amount meaning that though the trade deficit has marginally been reduced, it remains and haunts the economy.
Yet in spite of these, the US has not taken any steps to correct the trade deficit, it has not opened up its oil reserve stocks for usage to bring down the cost of production for the industrial plants which would result in increased exports. In fact the Bush administration has refused to open up the oil reserves for usage in order to reduce the fuel costs which have been shooting up drastically. In other words, the US has not tried to solve the deficit problem from an economic perspective.

Similarly, it has not addressed the issue of the debt, on the other hand it has in fact it has worked to increase it further as a result of its aggression against Afghanistan and Iraq which have cost it over 2 trillion dollars! In addition the Bush administration has given loans to the wealthy US capitalists in the range of about a trillion dollars by way of tax subsidies. This is motivated by electoral & political considerations… leaving the debt as it was, or even worse.

Thus the fall of dollar has persisted and the US has taken no economic steps to rectify the situation. It then exploited this low-cost dollar to politically blackmail countries that have huge dollar reserves such as China which has dollar reserves in the range of a thousand billion dollars causing it to lose colossal sums, then it exploited India, European countries and the oil countries forcing them float their currencies and buy dollars. This increased the demand for dollars and marginally contained the US deficits.

2. Then came the collapse of the shares of US real estate mortgage firms which enabled America to transfer its crisis to the global level!

America gave loans on soft interests to housing companies, especially the real estate mortgage firms that sell houses on mortgage until the installments are paid for. Thus liquidity was available to these companies in a big way, motivating them to go soft on conditions of sale and on easier terms and even reduced rates because liquidity was no problem for these companies thanks to the cheaper state loans. The Americans went in for buying houses in a big way because cash was available to them from US banks that gave loans on easy terms. In fact the banks gave loans even to extent of the full value of the mortgage unlike the European banks that give loans only up to 60% of the mortgage value. All this was because the US government was giving cheaper credits to real estate companies, causing them to register considerable profits.

Now because of globalisation and susceptibility of one company buying out another whenever it sees a profit opportunity, the multinational companies, specialised banks and central banks as well as individuals bought shares of US real estate companies with the aim of taking profits… this caused the real estate companies to register consistent boom in the stock exchanges across the globe and especially in the US and eventually the real estate shares became the preferred form of investment at the cost of other sectors including modern technologies that were exposed to losses. Earlier, the investment of choice were the information technology and communication firms, but now the Americans, both individuals and companies preferred to buy real estate as long-term investment or for speculative trading. The real estate facilities were now so easily and widely available that banks even gave to loans to those individuals who were not in a position to pay their debts due to their reduced incomes.

This situation persisted and caused no severe problems till the current year until the burden of the loans became untenable for the government. The US then stopped the soft-loans to the mortgage & real estate sector banks; it even demanded repayment of the earlier loans which were now due. These real estate companies and mortgage banks in turn asked their customers to repay. But since unemployment, inflation and economic stagnation was rampant in the US, the house owners could neither repay the loan mortgages on the house cost nor the bank loans… real estate prices collapsed as a result of this payment default and the individuals who were in a position to repay their loans also defaulted. Thus, a house whose price was US$ 500,000 lost over half of its value and was available for US$200,000, yet as was reported in the press, no one was willing to buy even at this price. Over 2 million American owners were left encumbered with life-long financial liabilities. Consequently, due to loans default at such an enormous scale, the lending banks’ shares fell on the stock markets and mortgage companies collapsed under tremendous losses estimated to be in the range of US$ 2,000 million! This led to several real estate companies announcing their bankruptcy.

As a result of this, an enormous portion of the debts became unrecoverable bad debt.
The big banks were at last exposed to a severe jolt in the American mortgage sector, ‘Market’ magazine published by the German-Arab Chamber of Commerce & Industry in Berlin, pointed that the American ‘CitiGroup’ that opened the new year with losses incurred in the last quarter of the previous year to the tune of US$ 9.83 billion (equivalent to € 6.60 billion at the then prevalent rates). This loss to the ‘CitiGroup’ in the mortgage sector has now reached a staggering US$ 18.10 billion.

The same losses were suffered by other banking institutions; the American ‘Merryll Lynch’ announced a write-off of US$ 14.10 billion from its assets, meaning that it ran a loss of US$ 9.80 billion in the last quarter of 2007-the biggest loss in its history.
The Swiss giant ‘UBS’ was also similarly placed; it received billions of dollars from the Singapore Sovereign Fund, the ‘GIC’ to enable it to avoid going bankrupt.

This is how the shares of real estate mortgage firms collapsed in the stock markets and as a result the shares of banking institutions followed in several countries across the world that were linked to the real estate investments or directly involved in the US real estate market. This did not strictly remain confined to the specific sector, but spread to even such sectors that do not deal in real estate, but because of the effects of globalisation, and overlapping of economic sectors over each other, no sector was totally insusceptible.

It was not just that the shares of the real estate sector firms collapsed by on the American Wall Street, this phenomenon was repeated across the world; the Frankfurt exchange index fell by 7.10%, in Paris, the index lost 6.80%, the London index fell by 5.40%, in Madrid by 7.50%, Tokyo lost 3.80%, Shanghai 5.10%, Sao Paolo index fell by 6.00%, Riyadh index lost 9.80%, Dubai index fell by 9.40%, Beirut by 3.00% and Cairo lost 4.20%.

Owing to the enormity of the losses suffered, it was decided by the French President Nicholas Sarkozy and British Prime Minister Gordon Brown in their 27th March, 2008 meeting that they will urge the banks to immediately disclose the extent of bad debts with them. In January last, Brown had said that Britain faces a tough test with the global economy in difficult and dangerous times due to the credit crisis precipitated by US loans default. This statement came after the 5th largest British real estate mortgage bank; the ‘Northern Rock’ was exposed to huge losses due to the US real estate crisis.

This is how the United States passed its local crisis to the global level to such an extent that the European central banks pumped in a whopping US$ 150 billion in the last year to support real estate mortgage companies so that the resulting crisis does not adversely affect the global stock exchanges including the European exchanges due to the global reach of multi national companies that affects every country because of the maze created in the aftermath of a globalised world. Thus America exposed Europe and then supported its own real estate companies through such means.

In conclusion, the American crisis had several political & economic ramifications; the US, passing through real crises leading to the devaluation of its currency, indulged in manipulative politics (or conspired) to involve the entire world to be sunk in by a crisis that was essentially an American crisis especially after globalisation and opening up of stock exchanges in the name of ‘market economy’ and extending the reach of multinational firms to the whole world. In this environment, most countries’ stock exchanges are open to each other and affected by them.
The dollar devalued owing to America’s economic woes was thus exploited by it to reduce its trade deficit and to politically blackmail especially those countries that maintain huge dollar reserves. In the process, it also managed to convert what was essentially a US real estate mortgage firms’ crisis into a global crisis; it is another matter that America itself is not insulated from this.

Yet in spite of all these political maneuverings, the US economy has not returned to growth cycle, it is just that its’ collapse has ceased for the time being. Were it not for globalisation, open-market economy and the capitalist economic order being prevalent and dominant over the world economy, and importantly if the countries were not relying on the US dollar as the reserve currency, the American economy could not have stood on its own and sustained until now.
Thirdly: As for the rising prices of such minerals as oil, gold, iron etc., it must be observed that it followed the real estate mortgage crisis and the resulting stock & derivatives market crisis when the stock indices collapsed. In the aftermath of these crises, the investors’ confidence took a beating in such investment instruments that do not carry any intrinsic value, like bonds, shares and equity stock markets. Therefore they moved away from such investments and preferred such investment avenues that have an intrinsic value like gold and other important metals thereby creating demand for such commodities and consequently a huge upsurge in their prices; thus gold prices have already reached US% 1,000 per ounce and as the current indicators point, it is poised to even reach US$ 1,500.00 an ounce.

Indeed the United States is itself among those worst affected by the gold price upsurge. If this upward trend in gold prices persists, the value of the dollar will not be worth the paper it is printed on! Therefore, the US is expected to take steps to curb gold prices, indeed there are already pointers to that; the International Monetary Fund (IMF) has decided to sell 403 tons of gold due to its own budget deficit. However, the IMF has said that this quantity will be sold in phases over a long term. This declaration by the IMF will go a long way in curbing the (speculation) in gold prices. It is probable that this gold will be sold to central banks which may cause the central banks to increase their profit margins and thereby it may also result in increased exchange rates. Again, the IMF on 9th April, 2008 stated, that the financial crisis will cost a trillion US dollars. Such statements more than being honest reflections of the situation are designed to be speculative aimed at changing the course of economy and finance. As the English newspaper ‘Telegraph’ said in its commentary, the IMF is the last resort to emerge out of the current financial crisis, thus this statement of the IMF amounts to preparing grounds for it.
Thus the fall in dollar prices and investors’ lack of confidence in the primary US markets has pushed many of them not to invest in banknote credit instruments. A logical assessment of this reveals that the current banknote credit instruments are not fully backed in any perceptible way. In other words, in the current atmosphere, the confidence crisis will quickly spill over to other currencies. Therefore, certain central banks, like the Central Bank of China have begun to buy gold and this has pushed gold prices t its highest levels. The same applies to the price rise in other metals like silver and platinum. Further, due to increased demands of copper, zinc, aluminum and nickel from India and China, their prices have also risen. This increased demand from India and China is due to their rapid economic growth. This has been the case of the Chinese demand for the last 12 years while in the case of India, it has been there for 4 years. China has invested US$ 1 trillion in its infrastructure development and will spend another US$ 50 billion every year for the coming 15 years. On its part, India has begun its infrastructure development plan six years back. In the beginning, the investments on this plan were meager, but in the last 4 years investments have reached US$ 50 billion and it has plans to invest between US$ 30 to 40 billion annually for the next ten years. However, India does not have sufficient mineral reserves to support this investment plan; moreover, the rise in petrol prices has meant an increase in its production costs and as a result of this, there is an overall price increase.

Indeed the cause of oil price increase is related to the sinking dollar prices and the higher purchasing power for oil of countries like those in the European Union, China and India and this is driving the demand for oil. However, the chief cause for oil price upsurge is the speculative trading, and it is the American speculation that has led to it. This was meant to put together the dollars in circulation from those who want to buy oil in order to enable the US to avoid a total collapse of its currency. This is reason behind uncertain information (rather misinformation) regarding American oil reserve figures that the US puts out periodically.

Speculations play a key role in price rise; for instance, take the speculative trading in futures contracts or the speculative trading in minerals, especially gold. A higher gold price pushes such countries as China, Russia and other Asian countries to buy gold as a means of getting rid of their enormous dollar reserves. These countries no longer trust the US currency, because any decrease in its value results in severe losses to them. Similarly, China bought iron and other metals required for its industry and this pushed the iron and other metals’ prices up. Also Germany bought huge quantities of scrap iron and this caused the price surge, in fact it multiplied because a big portion of it is exported to China.

It has been known for a long time that crude oil prices increase whenever there is a surge in the value of dollar. These two are inversely linked to each other. The current condition is no different, on 17th April, 2008, the crossed the barrier of US$ 115.00 per barrel and the upswing continued with the prices crossing US$ 120.00 per barrel today on 5th May, 2008.
The oil prices have increased more than four folds since the year 2002 due to an increase in demand not just in China and other growing economies. In fact, the projections indicate that oil prices will reach US$ 130.00 per barrel by December next.

Fourth: As for the global food crisis, it has exacerbated the economic crisis arising out of the US home mortgage crisis. Another crisis has emerged which is far more severe and threatens global food security in various parts of the globe where food prices ranging from bread to even milk have shot up.

This crisis became evident recently after the increase in prices of wheat, maize and other basic food stuffs in the last few years. This worrisome trend has emerged in the past few months.
On 12th May, 2008, the British magazine ‘Economist’ published a report which said that the pulses prices increased in an unprecedented manner unheard of since the “Economist Index’ for food stuffs was instituted in 1945 and according to the magazine, this increase has been 75%. The Chicago Chamber of Commerce, whose food pulses price index is the world’s leading indicator of pulses reports a 90% increase in wheat prices, 80% in soya beans and 20% in maize prices and are still on the rise even today.

The major reasons behind the foodstuffs price rise and consequently the emergence of the food crisis:

Increase in oil prices and sliding dollar prices:

1. Certainly, the increase in oil prices has led to an increase in the prices of products required for agriculture like seeds, fertilisers, insecticides & pesticides, agricultural implements and transportation. An increase in cost of production and transport influences increase in the prices of foodstuff especially wheat and maize. For instance in the Philippines, the rice prices have risen by 70% during the last year.

On the other hand, the foodstuff prices are mostly assessed US dollars, and when the dollar loses its value, it is but natural that foodstuff prices will automatically shoot upwards.
Gratsiano observes: “loss of confidence in the dollar has pushed the investment funds to look for higher returns in the basic goods…first of all in metals and then in foodstuffs”. A number of speculators have in the past years switched their investments to the commodity markets in search of higher returns than they would earn in shares and bonds markets.

2. Climatic Conditions: Climatic conditions such as floods, droughts and cyclones affect agricultural production. For instance, Australia, one of the largest exporters of food pulses is currently facing unprecedented levels of droughts in its history. Such conditions have been compounded by an economic boom in countries such as China, India and Brazil and this has resulted in accentuated levels of meat consumption.

It is a known fact that to produce a piece of meat containing 100 calories, 700 calories of vegetation has to be fed to animals. Out of 2.13 billion tons of food grains only 1.01 tons is earmarked for human consumption. These figures are released by the Food & Agriculture Organisation (FAO) of the UN. Consequently, as the global economy grows, cattle livestock also grow proportionately.

3. Bio-fuels from food grains:
Jean Zeigler, UN’s Special Rapporteur on the ‘Right to Food’ observed in a statement over the German Radio that intensive bio-fuel production now represents ‘crime against humanity’ because it pushes food grain prices across the world.

Bio-fuels depend on agriculture production, and during the recent years many of the industrialised countries have exploited agriculture produce and agricultural land for the production of bio fuels in order to reduce their dependence on petro oil whose prices are touching record-high levels. This is leading to increased demand for bio fuel and thereby for food grains.
Therefore in certain countries such as the United States and Brazil, agricultural land is being converted for production of maize and soy bean required for producing ethanol from them. Since 2001, the quantity of maize used in production of ethanol in the US has increased 300%. Further, the US is attempting to produce 35 billion gallons (133 billion liters) per annum of ethanol by the year 2017. The US Congress in its ‘Energy Document’ for 2005 has decided to increase maize-extracted ethanol production from 4 billion gallons in 2006 to 7.5 billion gallons in 2012.

In March 2007, the US President George Bush met his Brazilian counterpart Luiz Inacio Lula da Silva to sign the ‘Ethanol Convention’ between the two countries for cooperation among them to develop research and development on the next generation bio fuels. They also agreed on forming a trade union for bio fuel especially in the Central Asian countries. This ‘Ethanol Convention’ between the two presidents marks the beginning of a growing phenomenon of producing food grains for extraction of bio fuels. In the grasslands and forests of Brazil, Argentina, Colombia, Ecuador and Uruguay, the land is being set aside for production of sugarcane plantation, palm oil and soy beans for extraction of bio fuels. In Brazil alone, soy bean production has occupied some 21 million hectares of forest lands, 14.0 million hectares in Argentina. It does appear that this phenomenon will subside so long as the food grains prices continue to surge upwards. In the year 2008, it is expected that out of 2.13 billion tons of food grains, 100 million tons will be used to extract bio fuels, in other words, this 100 million tons will used for feeding cars instead of human beings!

4. Administrative & Political failures:
As regard to wheat and other strategic grains production, the EU produces some 122 million tons, China produces 106 million tons, India, 75 million tons, America produces 56 million tons and Russia produces 48 million tons of grains. The US exports 32 million tons, Canada exports 15 million tons and the EU and Argentina export 10 million tons each.

As for the Arabian countries, they all import wheat except Syria. The leading importer is Egypt, the land of Nile. It is the largest wheat importer in the world with wheat imports of 7 million tons while Algeria, that used to present itself as the land of the Atlas Mountains and farmlands during the French period, imports 5 million tons. The land of Tigris & Euphrates, Iraq imports 3 million tons, Morocco also imports 3 million tons, Yemen imports close to 3 millions as well while Tunisia imports 1 million and Jordan 500,000 tons of wheat.

During this period of a lower dollar and higher oil prices, the import cost of wheat is likely to go higher and higher, which will greatly encumber the budget of importing countries even if wheat and other food grains are made available to them at subsidised rates.
This is despite the fertile lands & water resources available to these Arab countries! Is it not surprising or even shocking that the land of Nile delta (Egypt), the land of the two rivers (Iraq), and the land of the Atlas Mountains (Algeria) happen to be the largest importer of wheat in the world!!!.

Perhaps this is what becomes evident from the recent report of the World Bank on water resources in the Middle East and Northern Africa. This explains how the wicked politics shapes the Arab world! The report concluded that in order to provide water, it is imperative to develop agriculture policies in such a way so as to reduce dependence on water consumption. The World Bank has advised to grow tomatoes, water melons etc.. Instead of wheat! As per the recommendations of Francisco Montovani, the water resources expert at the World Bank, it is not related to technological processes to be decided upon by engineers; rather it is through deeper policies!

It is known that several countries have capacity to grow wheat, but colonialist policies followed by the International Monetary Fund prevent this. The IMF recommends growing of tobacco & cotton to those countries that follow its recommendations and gives them loans and other assistance to grow such crops, while it refuses loans and other assistance for growing wheat. This is evidently meant to feed the industrial plants of the rich nations with these raw materials.
Indeed Allah (swt) has bestowed the Muslim countries with bounties of fertile lands and abundance of water resources, and if these are properly harnessed, Muslims can lead affluent lives. But this requires a rightful system from the One who has wisdom, i.e. the system of Islam, the Khilafah Rashidah which will fill the world with justice and well being. It is hoped that this will soon materialise with the command of Allah (swt).

1st Jumadah al Oolah, 1429 A.H
5th May, 2008 C.E.

Arabic Source

Friday, May 23, 2008

Film Review: "Khuda Kae Liyai"

Taken from:

It’s on the screens, papers and magazines, and chit chats, of a common man. It’s not about, the crises in middle east, or the carnage in Iraq, the thing everyone has been talking about is, the movie "Khuda Kae liya". As a layman, with sufficient schooling background in English. The appropriate translation of this phrase would have either been "For God's Sake" or "For the Sake of God", the former may imply a strong definitive remark with an exclamation mark, and the latter may be taken on a slightly softer tone, for giving a significant recommendation.

Perhaps the makers of the film knew well, and the official English name stand as, ‘In the name of God’. Translate in to Arabic - you don’t need to be an Imam of a mufti for that - "Bismillah".

But this time, it’s not about a recitation from the Quran, or the ‘dua’ before having meal. It’s about the movie, being hailed as the philosopher's stone for revival of cinema in Pakistan. So what is it all about? To answer that, I visited the cinema in Fortress stadium a while ago.

From its official synopsis given on the website: "The film is about the difficult situation in which Pakistanis in particular and the Muslims in general are caught up since 9/11. There is a war going on between the fundamentalists and the liberal Muslims."

It must have taken a Cyclope's wisdom, to blind oneself into reducing that the War Of terror, unleashed by the imperial powers after 9/11, to a war between fundamentalists and the liberal Muslims. The images from Abu Gharib, didn’t really showed that as such. Perhaps they were faked? I am sure the makers of khuda kae liyai are well skilled, to determine that.

Two countries, Iraq and Afghanistan, have been occupied, and the subsequent massacre which continues to date has caused millions of innocent lives. A tragedy that puts humanity to shame, and the silence of the Ummah and its armies in question; but Shoaib likes to think the other way, for it has resulted according to him "in Great suffering for a forward looking Muslim."
The movie claims, that "It helps the Muslim youth find a direction... the right direction, which we all are looking towards." And the pundits of enlighten moderation have been boasting, that to make this movie a success it should be shown to every school and college students. (Little surprise, that they would certainly never say that, regarding teaching of Sura Tauba.)

To know what that direction is, the movie if filled with both subtle and overt signboards, pointing towards a direction.

One of the lead role, played by Fawad Khan, is about a person, well versed in music, who attends the lectures of a religious person. Fawad is convinced to give up music, and as the chain of events is shown, He ensures paintings in his house are taken off the wall, goes out to throw some paint on billboards depicting women, and tells the ladies in the house to observe Hijab. He would then move on to Wazirstan, agree to a force marriage to a western born girl, who’s father did not wanted her daughter to marry a non-muslim and so had brought her to Waziristan, and then go for Jihad.

Here stands, a classical example of propaganda tactic, painting the weak and the definitive injunctions altogether, with the same brush, undermining the essentials, to the level of nonessentials, in effect making both pointless.

From Islamic perspective, ensuring that females in a family, observe Hijab, is binding upon the men. And using women beauty for commercial purposes to allure customers violates the ethics of Islam. How that may be stopped is a matter related to the State, which is supposed to ensure marketing trends are in line with the ethics of Islam. Also a Muslim girl, is not allowed to marry a nonmuslim. However the movie seems to have highlighted these points in a well crafted context, arousing deliberate sympathies for the opponents of these points.

The movie, entertained a fully packed hall; However it was now time for the interval, I along with a friend went to the nearest mosque for Asar prayers, only to find it locked. Fortunately, some servants of a local restaurant nearby had made some meager arrangements for the prayers in the open. Enlighten Moderation, I reminded myself, as I headed back for the second half of the movie.

The debate on music has already been much done. And I would skip that. However an interesting reference in the movie is when, Naseer uddin shah, playing the role of typical Tableghi, makes comparison between the Miracle of Quran to the Prophet(saw) and a bogus claim of Musical Melody, being made use of by Prophet Daoud to praise God.

In the magnified, debate that goes on in the court, the lead actor, Fawad, is made to conclude - realizing his mistakes- that He was a good person before, and did not lied or drink. However the good thing now was that he had now started praying.

The debates aside, I'd request viewers of the movie, to stop, and think for a while.

Not lying, not drinking, and praying regularly, is what a Muslim must do. However is that all Islam demands from a Muslim? What about standing up to liberate the occupied lands of Muslims, about defending the oppressed brothers in the dungeons of Bagharam and Guantanamo bay, or releasing the sisters who are jailed naked in Russian jails in Chechnya? What of the necessity of Muslims to be united under the Shade of an Islamic state, so that these oppressed lands can truly be liberated?

Qur'an 4:75 "And what reason do you have not to fight in the cause of Allah, to rescue the helpless oppressed old men, women, and children who are crying: "Our Lord! Deliver us from this town whose people are oppressors; send us a protector by Your grace and send us a helper from Your presence?"

Are angels going to come down to do all this?

In "In the name of God", the makers of the movie, want to tell you: don’t think about it!, An ideal Muslim youth, should be happy and satisfied with a life, that makes him a person that doesn’t lies, doest drinks and prays regularly - fullstop.

Moreover, the film reaffirms, the western media proporganda, that the Talibans were against education of women. An allegation, which had no bases in reality. Mahan Hussain Mirza, as part of the offical delgation led By Dr. Israr Ahmad in April 2001 visited Afghanistan, and writes, in 'Quranic Horizons Magzine', that he came across in Kandahr a clinic run by Dr. Laila Siddique, a woman; and while travelling from kabul, passed by a school district that had a univeristy where a thousand women were studying to be doctors.

Had the makers of the movie, any shred of sincerity, and appropriate understanding of Islam and the current situation, they could well have done a job worth commending, if in the name of God, was to be truly worth its name. A movie on the life of Junaid Jamshed, or the Gallant warriors, who continue to fight the occupiers with whatever little resources they have, or the youth who truly and sincerely strives today to resume the Islamic way of life, and unify the Muslim lands by reviving an Islamic State would have been befitting for the need of our time.
Sadly, and not surprisingly at all, the Makers of the film want you to think about what Bush, his henchman, and there think tanks want you to think about; that those who stand up against tyrannical occupiers are all fundamentalists and extremists, and hiphops are what the youth should be aiming for.

But then again, there is a perspective to all this, that needs to be mentioned. The fact that the Movie, had to be designed to look "Islamic" and has been hailed in as a sign of revival of Cinema in Pakistan, goes to show the ever growing interest in the masses in general and the youth in particular to know Islam. Without an iota of doubt, if Revival of Muslims of this region, and the Ummah at large, has to come, then truly it can only be from Islam alone enroute the revival of an Islamic State.


Big oil speculators ensure that a barrel of oil crosses the $135 mark

On 22/5/2008 a barrel of oil briefly broke the $135 mark and prompted many analysts to forecast $200 for a barrel of crude by the end of the year. The high price of oil is despite the fact that more and more oil reserves are either being discovered or being improved to boost productivity. For instance during 2007, 250 million barrels of oil were found in Uganda, 8 billion barrels discovered in Brazil and technology improvement has meant that extraction of oil from Canada’s tar sands — deposits that could rival the Middle East—is commercially lucrative. Furthermore, many respectable institutions are predicting that the recession in the US and the high price of oil will dampen overall world demand for crude in 2008. These tell tale signs indicate that speculation is the main factor behind the price of crude. Big oil speculators are intentionally inflating the price of oil to strengthen the sagging value of the dollar. The fact that oil is traded in dollars is assisting the US to keep its economy afloat.


Wednesday, May 21, 2008

New Books from Revival Publications

The following books have been recently published by Revival Publications and are now available to purchase:

The Islamic Way of Thinking [English]
By Hasan Abdullah

Islam is a unique ideology based upon a unique Aqeedah (belief), which serves as the foundation for a unique system of rules. The distinct nature of Islam would lead someone to ask whether or not Islam came to also shape the thinking process, which is a process common to all human beings.

Thinking is universal, like the processes of eating and walking. However, because human beings adopt different Aqaid (beliefs) and the adoption of any Aqeedah builds a person intellectually in a specific format. Then the Aqeedah serves as the intellectual framework that defines the outlook towards life as well as the reference and foundation upon which the person builds all other thoughts. Thus, the Aqeedah by its nature mandates a distinct way of thinking. Once the Islamic Aqeedah is adopted in a correct intellectual manner based upon sound intellectual thinking and not based on imitation of ancestors, blind faith, instinctive emotions, or benefit will undoubtedly change the individual into an intellectual ideological person. Then the individual will start to think in a distinct method with a distinct style and inclination. And this distinct thinking will manifest in a distinct pattern of behaviour.

This 149 page book addresses the different types of thinking that currently exist within the Muslim Ummah and addresses important subjects such as:
• The Islamic Method of Acquiring Knowledge
• How Muslims Study Islam Today – Scholastic, Emotional & Sufi Methods
• Characteristics of the Current Islamic Thought – Superficial, Scientific, Emotional, Logical, Metaphysics, etc.
• The Impact of Neglecting the Islamic Method of Thinking
• Factors Resulting in the Divergence from the Islamic Way of Thinking
• Greek & Eastern Philosophies
• The Western Intellectual Invasion
• Characteristics of the Islamic Way of Thinking

Price: £4 GBP, postage/courier rates will apply.

Riyasat-e-Islami (The Islamic State) [Urdu]
By Sheikh Taqiuddin An-Nabhani

If the Muslim Ummah, had in the past, lived in a country which did not stretch beyond the Arabian Peninsula, and which at that time numbered only a few million, and despite that when she embraced Islam and carried its Message she represented a world superpower in the face of the two major camps at the time, whereupon she struck them both simultaneously, conquered their lands and spread Islam over almost the whole of the inhabited parts of the world at that time, then what are we to say about the Ummah today; numbering more than one billion, spread over countries that are geographically linked together; if she were a single state, stretching from Spain in the East to China in the West and from Turkey in the north to Malaysia in the south, occupying the best part of the world in terms of resources and strategic points, and carrying a single correct ideology to the world? She would undoubtedly constitute a front which would be stronger in every respect than the leading superpowers put together.

This 263 page book about the Islamic State is not meant to narrate its history but to explain how the Messenger of Allah established the Islamic State, and to show how the disbelieving colonialists destroyed it. It demonstrates how Muslims should re-establish their State so that the light that guided the world in the darkest of ages returns to enlighten humanity once again.

Price: £4 GBP, postage/courier rates will apply.

How to Purchase through Paypal

Please send an email to with your name, full address, book title, quantity required and a contact number. Revival Publications will then send you a payment request form from Paypal which you need to complete. Upon receiving payment, your book/s will be dispatched. Paypal accepts payments through any major Card.
Please note: Purchasing in bulk decreases the courier charges which are normally high for a single book so it is better to buy a few together with your friends/family. The books will be delivered within 3-5 days of receiving the payment.

Tuesday, May 20, 2008

The Quran and the basic rights of humanity

The following is the transcript of a talk delivered recently to a group of lawyers and intellectuals.

وَكَذَلِكَ جَعَلْنَاكُمْ أُمَّةً وَسَطًا لِتَكُونُوا شُهَدَاءَ عَلَى النَّاسِ وَيَكُونَ الرَّسُولُ عَلَيْكُمْ شَهِيدًا

“We have made you an Ummah in equilibrium that you may be witness over the affairs of mankind, and the Messenger is a witness over you.” [Qur’an, 2:143]

Allah (swt) in this verse emphasizes to us our role as witnesses over mankind, the meaning of witness here is not just to witness the problems that face humanity as onlookers without doing anything – rather being witnesses here means being responsible for humanity

When we survey the problems that humanity is facing today, we see:
· The current food crisis where according to the President of the World Bank, Robert Zoellick: "In Bangladesh a two-kilogramme bag of consumes about half the daily income of a poor family".
· The economic situation where the rich get richer and the poor get poorer, where 3 billion live on less than $2 a day and 1.3 billion on less than $1 a day.
· We have increasing levels of crime - where alcoholism, drug abuse have become a norm, where women are exploited as objects of desire rather than honoured
· The strong oppress the weak, where the third world countries are strangled by IMF and World Bank loans, where wars are fought for the sake of increasing the balance sheets of the Big Corporate powers like the Oil and Defence companies in America.
· We see innocent people being killed on a mass scale – such as in Afghanistan, Iraq – where over 1 million people have died according to their own statistics since the current occupation of Iraq, the turmoil in Rwanda, etc

We need to feel the responsibility – as we have the guidance from Allah (swt) which has been revealed to resolve the problems of humanity and bring them under justice, peace and tranquility. Allah (swt) says:

وَمَا أَرْسَلْنَاكَ إِلَّا رَحْمَةً لِلْعَالَمِينَ
“And We have sent you (O Muhammad SAW) not but as a mercy for the 'Alamîn.” [TMQ 21:107]

Bi’isnillah, today I want to discuss how the Quran has been revealed not only as a theoretical book guidance highlighting the rights of humanity that should be secured – rather it has been revealed as a source for us to establish a system to ensure that we rule and govern by its laws and values to bring people from darkness to light, from injustice into the justice of the system of Islam

Before elaborating upon the system of Islam and how it protects the rights of human beings I want to clarify something regarding the terminology of ‘human rights’.

The term ‘Human rights’ today is an idiomatic term which carries a specific meaning, although it is claimed that it is Universal, the meaning of human rights as defined in the ‘Universal declaration of Human rights’ by the United nations in 1948 as well as in other international agreements – is linked fundamentally to the idea of freedom which emanates from secular liberal philosophy. As the famous French philosopher Jean Jacques Rousseau said, “Man is born free but is in chains everywhere”.

The concept of freedom is intellectually false and is by no means a universal truth. In reality we are all slaves, either to our own desires, man made laws or to Allah (swt). In Islam we are rationally convinced that Allah (swt) exists and that the Quran is the word of Allah (swt). Thus we are not free to be rebellious to our parents, nor treat women as objects as they are today where the pornography industry generates $8 billion every year in the US, a figure greater than the whole of the so-called “legitimate film and music industries” combined. Nor are we allowed to trade in intoxicants that have ruined the lives of millions around the world through alcoholism and drug addition. Issues which are perfectly fine according to the secular concept of human rights.

In Islam, we are not slaves to what man made, rather we are slaves to what made man, Allah (swt). We look to the creator of the Universe, Allah (swt) to define for us the rights of humanity and to determine for us the difference between good and bad, what should be legal and what should be illegal. Allah (swt) says in the Quran:

وَعَسَى أَنْ تَكْرَهُوا شَيْئًا وَهُوَ خَيْرٌ لَكُمْ وَعَسَى أَنْ تُحِبُّوا شَيْئًا وَهُوَ شَرٌّ لَكُمْ وَاللَّهُ يَعْلَمُ وَأَنْتُمْ لَا تَعْلَمُونَ
“But it may happen that you hate a thing which is good for you, and it may happen that you love a thing which is bad for you. Allah knows and you know not.” [TMQ Al-Baqara: 216]

Therefore in my view, we should use the term basic rights as it conveys the meaning we intent without having the same ideological baggage.

The rights that should be secured

When we discuss these rights, we have to discuss the method securing them practically otherwise they remain as theoretical in the pages of books and the minds of men without having any affect in reality. Islam is not a religion like Christianity or any other – it is not just a set of vague rules and a moral code, it is an ideology with a complete system of life to solve the problems of humanity. Allah (swt) says:

[وَأَنْ احْكُمْ بَيْنَهُمْ بِمَا أَنزَلَ اللَّهُ وَلاَ تَتَّبِعْ أَهْوَاءَهُمْ وَاحْذَرْهُمْ أَنْ يَفْتِنُوكَ عَنْ بَعْضِ مَا أَنزَلَ اللَّهُ إِلَيْكَ]

“Judge between them by that which Allah has revealed and follow not their desires and beware of them lest they seduce you from some part of that which Allah has revealed to you..” [TMQ 5:49]

The system of Islam was established by the Prophet (saw) upon his migration to Madina. When he entered Madina, he entered it as its ruler. His Sunnah or example provides for us further details on how the basic rights of people were secured by the Islamic state which was known as Dar al-Hijra (land of migration) and Al-Khilafah after the death of the Prophet (saw).

Oppression and tyranny according to Islam exists when the laws of Allah (swt) are not established. Allah (swt) says:

وَمَنْ لَمْ يَحْكُمْ بِمَا أَنْزَلَ اللَّهُ فَأُولَئِكَ هُمُ الظَّالِمُونَ
“Those who do not judge by whatever Allah has revealed are oppressors”. [TMQ 5: 44]

There are many rights established in the Quran and the Sunnah of the Prophet, I will touch upon some of the key rights.

1) Securing the basic needs of human beings

The Capitalist system which is dominant the world over today although paying lip service to caring about human lives and poverty in reality focuses the economy on production and not distribution of wealth.

The Capitalist economic thought based on the works of Adam Smith views it as a problem of unlimited needs and limited resources – so they believe their must be a focus on production – this is why they law so much emphasis on the GDP (Gross Domestic Product) or GNP (Gross National Product), such that the BJP launched the ‘India is shining’ campaign despite 2 thirds of the country being in poverty. They basically believe in what is known as trickle down economics, that we need to increase the size of the cake and somehow it will trickle down into everyone’s stomachs. This is obviously a fallacy, what if people can’t find work and don’t have jobs to earn income to access the resources? This is why there is huge poverty in the west where 35 million people in America are below the poverty line and 12.5 million people (nearly 1 in 4) are in the UK.

Islam views the economic problem in a radically different way than Capitalism. Islam focuses on the distribution of wealth not just the production. There are enough resources in the world to provide the basic needs for over 60 billion people according to some statistics. The problem of poverty will not be solved by producing more and more for the rich to consume rather it will be solved by ensuring that basic needs of every individual are satisfied completely. There is enough wealth in the bank accounts of the elite, such as Bill Gates, Ambani’s and Mittal’s of this world to resolve poverty. The problem today is the rich get richer and poor get poorer.

Allah (swt) emphasizes that the wealth should not circulate amongst the few, He (swt) says referring to wealth:

كَيْ لَا يَكُونَ دُولَةً بَيْنَ الْأَغْنِيَاءِ مِنْكُمْ
“That it does not become a commodity between the rich among you.” [TMQ Al-Hashr: 7]

وَأَطْعِمُوا الْبَائِسَ الْفَقِيرَ
“Then eat thereof and feed therewith the poor who have a very hard time.” [TMQ Al-Hajj: 28]

It is the responsibility of the state to guarantee housing, clothing and food for every single citizen of the Islamic state if they are unable to achieve these for themselves and if their family are unable to provide for them. The Prophet (saw) said:

"The Son of Adam has no better right than that he would have a house wherein he may live, a piece of clothing whereby he may hide his nakedness and a piece of bread and some water." [Tirmidhi]

Islam wages a war on poverty not a fake war on terror like we have today. Imam Ali ibn Abi Talib (ra) said: “If poverty was a man, I would kill him”. The leader of the Islamic state is obliged to work to eliminate poverty.

2) The protection of innocent human life

Islam protects innocent human life, it is known as one of the Maqasid (objectives) of the Shariah. Allah (swt) says:

مَنْ قَتَلَ نَفْسًا بِغَيْرِ نَفْسٍ أَوْ فَسَادٍ فِي الْأَرْضِ فَكَأَنَّمَا قَتَلَ النَّاسَ جَمِيعًا وَمَنْ أَحْيَاهَا فَكَأَنَّمَا أَحْيَا النَّاسَ جَمِيعًا
“If anyone killed a person not in retaliation of murder, or (and) to spread mischief in the land - it would be as if he killed all mankind, and if anyone saved a life, it would be as if he saved the life of all mankind…” [TMQ Al-Maida: 32]

Islam doesn’t permit launching wars for the sake of corporate interests of oil and defence companies, as the Western colonial powers do. And they have the cheek to call us Muslims, terrorists!

The foreign policy of the West is based on colonialism: they are driven by corporate interests and material benefit .
o 1 million innocent deaths due to the current Iraqi occupation
o The bombing of innocent men, women and children in Afghanistan
o Millions of murdered American Red Indians
o 140,000 people killed in Hiroshima and 80,000 in Nagasaki by dropping of atomic bombs by America
o Economic colonization - Over 60 million preventable deaths is Africa due to unjust trade laws and economic policies in the past decade?
o British, French and Dutch colonialism – people still remember and hate these colonialists

وَإِذَا قِيلَ لَهُمْ لَا تُفْسِدُوا فِي الْأَرْضِ قَالُوا إِنَّمَا نَحْنُ مُصْلِحُونَ
“And when it is said to them: "Make not mischief on the earth," they say: "We are only peacemakers." [TMQ Al-Baqarah: 11]

Yes Islam like any ideology has rules of warfare but contrary to what the media attempts to propagate Islam prohibits the killing of innocent civilians, this has been mentioned in many of the books of hadith such as Bukhari, Musnad of Ahmad and Abu Dawud. For example, Abu Dawud narrated from Anas that the Messenger of Allah (SAW) said: “Go forth in the name of Allah, with Allah and in the creed (millah) of the Messenger of Allah. Do not kill a perishing (fani) old man (shaykh), a child or a woman and do not betray.”

Islam even gave rights to prisoners of war, such that many of them used to embrace Islam after witnessing its justice. Islam made torture of prisoners haram (forbidden). In contrast we see how the Americans treat the Muslims in Guantanamo bay and Abu Ghraib.

The Islamic system has placed harsh punishment to protect the lives of people. Allah (swt) told us that there is life for us in the punishment for murder, meaning it acts as a deterrent. He (swt) says:

وَلَكُمْ فِي الْقِصَاصِ حَيَاةٌ يَا أُولِي الْأَلْبَابِ
“Verily there is life for you in retaliation, O men of understanding.” [TMQ Al-Baqarah: 179]

The lives of all innocent people must be protected by the Islamic state. When the Prophet (saw) was the ruler of Madina, a Muslim who had killed a Jew was brought to the Messenger of Allah (saw), so he killed him and said: “We are the worthiest in fulfilling our oath.”

3) Justice for all regardless of race, language or religion

The Capitalist system claims to provide justice for all, in reality we can see that there is institutionalized racism in the system even in America where the rights of the black community are repeatedly violated. In India, the so-called largest democracy in the world, we all know about the atrocities committed in Gujarat, event after the recent Tahelka expose – there has been no justice.

Some may think these are exceptions to the norm and that happens in any system. This is false, as in Capitalism the system is endemically corrupt this is due to the criterion of benefit and self interest (expediency). The foundation of Capitalist society is secularism, the detachment of religion from life’s affairs – they believe in utilitarianism that human beings should determine good and bad based on their desires. A founding philosopher of Secular Liberal thought, Jeremy Bentham said:

“Nature has placed mankind under the governance of two sovereign masters, pain and pleasure. It is for them alone to point out what we ought to do…” [Bentham J., Introduction to the Principles of Morals and Legislation]

Then it is no wonder that politics in Capitalism is synonymous with lying, cheating, corruption and scandals. Clinton’s lying under oath, or the Worldcom or Enron scandals in America were no surprise as its clear that people follow their own interests even if it violates the law. It is lethal cocktail of freedom and the criterion of benefit that had created a perverse society where in the US, a rape occurs every minute, and in the UK, one-third of women have been sexually abused by the age of 18 according to their own statistics.

The criterion for our personal behavior in Islam is not personal benefit, rather it following the commands and prohibitions of Allah (swt), the halal and the haram. Therefore in an Islamic state, the rulers, judges and officials are obliged to look after the affairs of the people and this is a religious duty linked to their worship of Allah (swt).

يَا أَيُّهَا الَّذِينَ آَمَنُوا كُونُوا قَوَّامِينَ لِلَّهِ شُهَدَاءَ بِالْقِسْطِ وَلَا يَجْرِمَنَّكُمْ شَنَآَنُ قَوْمٍ عَلَى أَلَّا تَعْدِلُوا اعْدِلُوا هُوَ أَقْرَبُ لِلتَّقْوَى وَاتَّقُوا اللَّهَ إِنَّ اللَّهَ خَبِيرٌ بِمَا تَعْمَلُونَ
“O you who believe! And let not the hatred of others to you to make you swerve to wrong and depart from justice. Be just, that is next to piety and fear Allah, for Allah is well acquainted with all that you do.” [TMQ Al-Maida: 8]

Non-Muslims are treated equally as Muslims under the system of Islam. The Messenger of Allah (saw) said: “He who hurts a dhimmi (non-Muslim citizen) hurts me, and he who hurts me annoys Allah.” [Reported by al-Tabarani in Al-awsat on good authority]

Even the ruler is not above the law

Narrated ‘Aisha: The people of Quraish worried about the lady from Bani Makhzum who had committed theft. They asked, “Who will intercede for her with Allah's Apostle?” Some said, “No one dare to do so except Usama bin Zaid the beloved one to Allah's Apostle.” When Usama spoke about that to Allah’s Apostle Allah’s Apostle said: “Do you try to intercede for somebody in a case connected with Allah’s Prescribed Punishments?” Then he got up and delivered a sermon saying, “What destroyed the nations preceding you, was that if a noble amongst them stole, they would forgive him, and if a poor person amongst them stole, they would inflict Allah's Legal punishment on him. By Allah, if Fatima, the daughter of Muhammad stole, I would cut off her hand.” [Sahih Bukhari, Volume 4, Book 56, Number 681]

The Qadi Shurayh said: When Ali was setting out to Siffin, he found that he was missing a coat of armour of his. When the war was over and he returned to Kufah, he came across the armour in the hands of a Jew. He said to the Jew, “The armour is mine; I have not sold it or given it away.” The Jew said, “It is my armour and it is in my hand.” He said, “Let us go to the Qadi.” Ali went first, sat beside Shurayh and said, “If it was not because my opponent is a Jew, I would have sat beside him in the gathering, but I heard the Prophet (saw) saying, “Humiliate them, since Allah has humiliated them.” Shurayh said, “Speak Amir al-Muminin.” He said, “Yes. This armour which this Jews has is my armour; I did not sell it and I did not give it away.” Shurayh said, “What do you say Jew?” He said, “It is my armour and it is in my possession.” Shurayh said, “Do you have any evidence Amir al-Muminin?” He said, “Yes. Qanbar and al-Hasan will witness that the armour is mine.” Shurayh said, “A son’s witness it not acceptable on behalf of his father.” Ali said, “A man from the Garden, and his testimony is not acceptable? I heard the Prophet (saw) saying, ‘Al-Hasan and al-Hussein are the two lords of the youth of the people of the Garden.’” The Jew said, “The Amir al-Muminin brought me before his Qadi, and his Qadi gave judgement against him. I witness that this is the truth, and I witness that there is no god but Allah and I witness that Muhammad is the messenger of Allah, and that the armour is your armour.” [Jalal ad-Din as-Suyuti, ‘History of the Khalifahs who took the right way,’ translation of ‘Tarikh al-Khulafa,’ Ta Ha Publishers, p. 139]

Non-Muslims can practice their religion in an Islamic state and in their personal matters such as foodstuffs, worships, marriage, inheritance, etc they are left to follow their religion. As Allah (swt) told us:

لَا إِكْرَاهَ فِي الدِّينِ
“There is no compulsion in religion.” [TMQ Al-Baqarah: 256]


There are many other rights that I didn’t address such as how Islam protects the private property and the honour of people, how Islam gave political rights to people to account the rulers, I have just given a taste of the subject as time doesn’t permit to elaborate in detail.

Even many non-Muslims who wrote about the history of Islam bear testimony to the justice of the Islamic system: For example the British author H.G.Wells wrote in his book The Outline of History that “Islam has created a society more free from widespread cruelty and social oppression than any other society had ever been in the world before.”

Unfortunately today – we see that the system of Islam not implemented by any country, some implement part of Islam.

The West fears that system returning, they sense that increasingly the Muslims are looking towards establishing the Khilafah. For example in a University of Maryland survey of over 4000 Muslims conducted between 2006 and 2007 of 1000 Moroccans, 1000 Egyptians, over 1000 Pakistanis, and over 100- Indonesians-reveal that 65.2% of those interviewed-almost 2/3, hardly a "fringe minority"-desired this outcome (i.e., "To unify all Islamic countries into a single Islamic state or Caliphate"), 65.5% of this Muslim sample approved the proposition "To require a strict application of Shari'a law in every Islamic country."

The are many quotations from Western political leaders that demonstrate that they are worried about the return of a Khilafah, as they see it as a feasible reality. The CIA have already published a report on their website talking about possible scenarios by the year 2020, they mention one of the main ones being the re-establishment of the Caliphate.
That system will return – it is our duty to work for it in the way the Prophet (saw) worked for it – through non-violent intellectual and political struggle, so that the rights the Quran gives humanity are established. Allah (swt) has promised to us that this system will return, He (swt) says in the Quran:

وَعَدَ اللَّهُ الَّذِينَ آَمَنُوا مِنْكُمْ وَعَمِلُوا الصَّالِحَاتِ لَيَسْتَخْلِفَنَّهُمْ فِي الْأَرْضِ كَمَا اسْتَخْلَفَ الَّذِينَ مِنْ قَبْلِهِمْ وَلَيُمَكِّنَنَّ لَهُمْ دِينَهُمُ الَّذِي ارْتَضَى لَهُمْ وَلَيُبَدِّلَنَّهُمْ مِنْ بَعْدِ خَوْفِهِمْ أَمْنًا يَعْبُدُونَنِي لَا يُشْرِكُونَ بِي شَيْئًا وَمَنْ كَفَرَ بَعْدَ ذَلِكَ فَأُولَئِكَ هُمُ الْفَاسِقُونَ
“Allâh has promised those among you who believe, and do righteous good deeds, that He will certainly grant them succession to (the present rulers) in the earth, as He granted it to those before them, and that He will grant them the authority to practise their religion, that which He has chosen for them (i.e. Islâm). And He will surely give them in exchange a safe security after their fear (provided) they (believers) worship Me and do not associate anything (in worship) with Me. But whoever disbelieved after this, they are the Fâsiqûn (rebellious, disobedient to Allâh).” [TMQ An-Nur: 55]

10th May 2008 / 5th Jummada Awwal 1429 AH

Saturday, May 17, 2008

Q&A: Ayah 3:104 relating to a distinct group?

The following is the translation of a Q&A by Sheikh Ata Abu Rashta (May Allah protect him). Please note that most of it relates to Arabic linguistics which is difficult to translate, some of the points may also be difficult to understand without knowledge of the Arabic language.

بسم الله الرحمن الرحيم

Question: While studying the tafseer of the following ayah, I fail to understand that this points to a distinct group?

} ولتكن منكم أمة يدعون إلى الخير ويأمرون بالمعروف وينهون عن المنكر وأولئك هم المفلحون {
“Let there arise out of you a group of people inviting to all that is good (Islâm), enjoining Al-Ma'rûf (i.e. Islâmic Monotheism and all that Islâm orders one to do) and forbidding Al-Munkar (polytheism and disbelief and all that Islâm has forbidden). And it is they who are the successful.” [TMQ 003:104]

I considered the above ayah with this saying of Allah (swt):
} ويأمرون بالمعروف وينهون عن المنكر{

Indeed this work of enjoining the ma’roof and forbidding the munkar is required of every Muslim; it may be undertaken by individuals just as it may be undertaken by groups. Why then do we say that it necessitates forming a specific structured group or party from among the Muslims to carry out this work (enjoining the ma’roof and forbidding the munkar)?

Further, this categorisation and illustration at times overlaps over each other, haven’t the Arabs used linguistic tools to clearly distinguish between illustrative & selective forms in their language? I request to clarify this matter, may Allah reward you well.


Indeed the word (Min) has various meanings, some of these are:

For categorisation, like in the ayah [ منهم من كلم الله],it means ‘some of them’, or
[ لن تنالوا البر حتى تنفقوا مما تحبون ], it means some of what you like most.

For illustration, like in the ayah: {فاجتنبوا الرجس من الأوثان}

{يحلون فيها من أساور من ذهب}.

Often there is ambiguity between these two aspects i.e. the illustrative and selective aspects of its meaning, but the context of the narrative and the indications thereof clarify the purported meaning.

Now, we consider the ayah:
]ولتكن منكم أمة يدعون إلى الخير ويأمرون بالمعروف وينهون عن المنكر وأولئك هم المفلحون[
“Let there arise out of you a group of people inviting to all that is good (Islâm), enjoining Al-Ma'rûf (i.e. Islâmic Monotheism and all that Islâm orders one to do) and forbidding Al-Munkar (polytheism and disbelief and all that Islâm has forbidden). And it is they who are the successful.” [TMQ 003:104]

First of all: from the context of the ayah, what precedes it and what follows the word, in the preceding and following ayaat:
Consider these ayaat:

} واعتصموا بحبل الله جميعاً ... ولتكن منكم أمة ... ولا تكونوا كالذين تفرقوا واختلفوا...[
The word with which the address began in the previous ayah, (and hold fast), it is addressed to every one, in the next ayah too it is addressed to everyone, but it the ayah under consideration, the address is singular or specific (ولتكن) and not inclusive as in (ولتكونوا).

Linguistically, if the contexts are thus disparate, where a word once implies plural, then singular and again plural, this would mean that the beginning of the address in its singular form is the intended meaning as against the preceding and following forms.

Now the address in the preceding ayah began in the collective form asking all Muslims to hold fast together, and in the following ayah again it is addressed to all Muslims asking them not to disintegrate, but in between these two, it begins the address to Muslims in singular form, i.e. not all Muslims.

It cannot be said, since (ولتكن) is for the ummah, why we hold the view that (ولتكن) is singular; and that ummah is plural and not individual?

The answer to this would be that we are discussing from a literal point of view which is used to begin the address, and what follows the word, does not affect it, for instance: in an ayah:
﴿ هذا فوجٌ... ﴾ (this army),

The army comprises more than one person, but it does not mean that the word ‘fauj’ is plural, it remains singular though it may imply a group. Similarly, my address to you: “Allah has blessed you to be an eminent scholar”. Here, the word ‘antum’ meaning you is plural though what follows it (eminent scholar) implies singular.

Thus the word (ولتكن) is a singular and hence the ayah:

﴿ ولتكن منكم أمة ...﴾
“Let there arise out of you a group of people [TMQ 003:104]

Also implies singular and not the whole, which would be:
(كونوا أمة)
be a group,

Even its gender will not affect it being singular, since the gender is meant to relate to the word ummah. Thus (ولتكن) it remains singular and not plural as in (ولتكونوا)
We are discussing the literal aspect which is the arrangement of the dialogue. The subject here is the difference in the context of speech with reference to the first three words with which the address begins in each of the three ayaat:

( واعتصموا , ولتكن , ولا تكونوا )

To clearly understand the context of speech, consider the saying of Allah (swt):

} ليس البر أن تولوا وجوهكم قبل المشرق والمغرب ولكن البر من آمن بالله واليوم الآخر ... إلى قوله تعالى والموفون بعهدهم إذا عاهدوا والصابرين في البأساء والضراء وحين البأس...{
“It is not Al-Birr (piety, righteousness, and every act of obedience to Allâh) that you turn your faces towards the east and (or) the west (in prayers); but Al-Birr is (the quality of) the one who believes in Allâh, the Last Day, the Angels, the Book, the Prophets; and gives wealth in spite of love for it, to the kinsfolk, to the orphans, and to Al-Masâkîn (the needy), and to the wayfarer, and to those who ask, and to set slaves free; performs As-Salât (the prayers), and gives the Zakât (obligatory charity); and who fulfil their covenant when they make it, and who are patient in extreme poverty and ailment (disease) and at the time of fighting (during the battles).” [TMQ 2:177]

You will observe that the report (لكن) here is nominative, similarly in the word (والموفون); but what follows it in (والصابرين) is subjunctive, this comes to modify the nominative (ولكنَّ) as well as the subject (والموفون). This difference in the order or arrangement of speech means that the subjunctive (والصابرين) is the intended command for them and that they have been chosen for special praise than those before them. This changed arrangement of speech implies that they are the one who are intended or chosen over those before them…This is how the eloquent Arabic language treats every instance where there is a different order or arrangement of speech is found.

Thus what is stated in this ayah with regard to the varying arrangement of speech implies that the address is intended for the middle (singular) rather than what precedes or what follows it. It is mot an address to all the ummah, but rather to a part of it, i.e. the word (min-من) with reference to it’s context is selective rather than illustrative.

Secondly: With regard to the subject of the ayah itself:

It must be noted that the work of amr bil ma’rouf & nahi ‘an il munkar (enjoining the ma’roof and forbidding the munkar) can only be undertaken by those who are capable of accomplishing it and not by everyone. Furthermore, the ayah does not only commands enjoining the ma’roof and forbidding the munkar; for it were so, it could be accomplished by everyone and the address could be general for everyone also; but the ayah also commands along with enjoining the ma’roof and forbidding the munkar, the task of inviting to the khair in addition to enjoining the ma’roof and forbidding the munkar.

The word khair in this ayah implies Islam, because it is not simply khair (nakirah), but with (i.e. the ال), which is comprises Islam in its entirety, which encompasses the ‘ibadaat, the transactions (معاملات), as well as judicial processes (العقوبات والحدود) and the state that dispenses the hudood & punishments. Islam in its entirety includes the state i.e. the Khaleefah in order to implement the commands, and since it is clearly not possible to establish the Khilafah through individual actions, but it can only be established by collective effort. The ayah would therefore enjoin the establishment of a structured group among the ummah, a group that calls for comprehensive Islam by establishing a state, enjoining the ma’roof and desisting munkar.

It is pertinent to mention that the comprehensive Islamic commands cannot be implemented except through a state, because in Islam there are such commands that are undertaken by individuals like the salah and fasting, and then there are those that require the existence of an imam or Khaleefah like the hudood. Therefore the call towards the entire Islam implies establishing the Khilafah and this requires collective effort through a structured group and not individual effort.

It can not be argued that the call to establish the state is not the same as the work to establish the state, indeed the work to establish the state requires a structured group, nut the call to establish the state does not necessarily require a group, it can be undertaken by individuals.

This argument is not correct because the call to establish the state is integral to the work of establishing the state. The Da’wah in Islam is not merely an ideological aspect unconnected to the work. Indeed the da’wah to establish the state mandates the work to establish such a state and is not alien to it. This is how the Prophet (saw) worked, he (saw) called for it, he (saw) worked for it, he (saw) sought assistance (nusrah) for its establishment, and he (saw) accomplished it. In emulating the Prophet (saw), we also call for it and work for it on the same pattern until we succeed in establishing the state by the will of Allah (swt).

Thus the subject of the ayah, i.e. the call towards the entire Islam renders the address of the ayah outside the purview of individual Muslims not part of a structured group, because the work to establish the state can not be accomplished by individuals (not part of group), but it is only their call to work as part of such a group of Muslims that is capable to undertake such a task. Thus the word (من) is selective and not illustrative.

Thirdly: From a linguistic perspective:

Indeed the linguistic scholars have cited certain matters as benchmark to discern the word (من) either as illustrative or otherwise, they have pointed 3 indications for (من) to be illustrative and not selective, these are:

The first indication for (من) to be illustrative is that it should apply to the information (خبر) that follows it rather than that before it, for instance:

]واجتنبوا الرجس من الأوثان[
“So shun the abomination (worshipping) of idol,” [TMQ al-Hajj: 030]
Here the awthan (idols) applies to the rijs (filth), and the ayah says that the idols are filth.

]أساور من ذهب[
“bracelets of gold” [TMQ al-Kahf: 031]
Here the word dhahab (gold) applies to the asaawir (bracelets) and the ayah says: the bracelets are gold.

But these indications are neither found nor applicable to the ayah under discussion (ولتكن منكم أمة). Here what follows the word (مِن) is the pronoun for address (ضميــر) which is "you" (كُمْ), and what precedes it is from the derivatives of (كان) which is (ولتكن). Here the address (kum) does not apply to the previous (kana), rather it applies to it as its noun, i.e. “So that you become the ummah” (لتكن أنتم أمةً). Thus the word (مِن) is not illustrative.
These were the first indicators.

The Second indication:

The word’s (من) governed by a preposition in the present case if it is definite (معرفة مع ال) other wise, if it is indefinite (الwithout نكرة) it will be descriptive.

For instance; Take the expression (أساور من ذهب), here ‘of gold’ (من ذهب) is fit to be descriptive, which would mean that ‘these bracelets are golden’ or similar, because here the asaawir is indefinite (نكرة).

Similarly, in the ayah: (الرجس من الأوثان), the expression ‘of idols’ (من الأوثان) applies to rijs in the present case, because it is definite )ال with معرفــة). So the ayah says: “the idols are filth, and abominable matter. Thus the idols are illustrative of the state of rijs.

It can not be argued that (وثنا) is a fixed word, therefore it apt to be causative; this is not the case since it is a derivative attribute. This can not be said for two reasons:

The first: it is true that it is derivative attribute as in { فخرج منها خائفاً} , {وأرسلناك للناس رسولا}, but sometimes it figures as a fixed word [like in (بعه مداً بدرهم) (he sold the mudd for a dirham)]. Here the ( مداً) is the subject matter. Similarly in (كر زيدٌ أسداً) (Zaid attacked the lion); here (أسداً) si the subject matter…. But it is a derived form.

Similarly the causative appears as a fixed word and is dominating: like in (عشرون درهماً) (20 dirhams); or (رطلاً زيتاً),(a measure of oil)… etc.. But at times and very rarely, it also appears as a derivative; like in: (لله دره فارساً) (his achievement as horse rider, is because of Allah); or (لله دره راكباً) (his achievement as rider, is because of Allah).
This is the first thing, it is not necessarily so, that every fixed form will always be selective or descriptive of the present state/condition.

The second point which is more important is, the descriptive attribute illustrates the condition of the subject i.e. it is one of his (subject’s) conditions and does not discern him from others.

For instance: take the expression (عشرون درهماً) (20 dirhams), here the dirham is selective/discerning, because it does not describe the figure (عشرون) (20), it simply is another matter which discerns 20 from any other figure. Or take the expression (رطلاً زيتاً) (a measure of oil); here the (زيتاً) oil, is discerning the subject because zait is not a condition of the subject (ratal) but it is a different matter separate from ratal, so it discerns ratal from others.

In the ayah pertaining to the idols being filth, the word (وثناً) is to describe the state of rijs, here (وثناً) is not another command separate from& unconnected to rijs; like the dirham as distinct from the figure 20 or the zait as distinct from ratal. This was the second indication.

In the ayah, the expression preceding the word (من) & what governs it is the word (ولتكن), where the pronoun refers to the ummah, i.e. to the indefinite (نكـرة), and (منكم) does not characterise the ummah.

Again it can not be argued that since ummah is a described or attributed indefinite, it becomes definite, because the issue here is not whether ummah is definite or indefinite, what matters is the scope of (من) and its governing preposition that characterises the indefinite article (ummah) or its state if it is considered definite. Further, the word (منكــم) does not apply to ummah’s condition nor it is descriptive of it. Therefore, irrespective of whether Ummah is considered definite or indefinite, (من) & its governing preposition neither describe ummah nor do they state its condition. The issue here is the scope of (من) & its governing preposition, & that they are its state/condition if the ummah is definite or they are descriptive if ummah is indefinite, they neither define ummah nor deny it.

Along with this, since the discussion regarding the attribute which renders the indefinite as definite, is not the actual topic of discussion. But what I would say is that the attribute that renders the indefinite as definite is a specific attribute and not a general one. For instance, if I were to say: “Man who used to announce sale of his goods in the market”. Here the attribute of the man does not render the word ‘man’ to a definite article, in fact it remains indefinite because the attribute is general and applies to every one who announces sale of his goods in the market, and it is not specific to a particular person as such.

Similarly, in the above ayah, the attribute following the word ummah is general, so ummah remains an indefinite article. This is also borne out from the meaning of the ummah in the books of tafseer, where there is a great dissimilarity in its meanings… therefore what is predominantly acceptable about the word ummah is that it is indefinite as distinct from definite. Further, the illustrative indication (من) here, and it’s being definite or indefinite, rather it is its (من) scope and its governing preposition characterises it if were indefinite or describes its condition if it were definite. Further (من) and its preposition do not either characterize it or state its condition, therefore (من) is not descriptive, it is rather selective.

The Third indicator: This is the dominant indicator i.e. if all the other factors between (من) being either descriptive or selective were to be equally balanced, then this indicator if found, weighs in favour of (من) being descriptive because this indicator does not come with (من) unless it is descriptive. This indicator is: if (مــا ) or (مهـمــا) precede it, then they more dominantly render (من) as illustrative. For instance:

]ما يفتح الله للناس من رحمة فلا ممسك لها[
“Whatever of mercy (i.e. of good), Allâh may grant to mankind, none can withhold it;” [TMQ 35:002]

In this ayah, what precedes (من) is (مــا) and thus (من رحمة) is illustrative. Another example would be:

]مهما تأتنا به من آية[،
"Whatever Ayât (proofs, evidences, verses, lessons, signs, revelations, etc.) you may bring to us,” [TMQ 007:132]

In this ayah, (من) is preceded by (مهـمــا) and thus (من آيـة) is illustrative.

Here we have said ‘likely indicator’ because it is not always necessary that (من) is preceded by (مــا ) or (مهـمــا).

In the ayah under discussion, the illustrative & descriptive factors are not equally balanced, but they point to that (من) is selective as borne out by relevant evidences in the context of address, i.e. by the word with which this address began, as also by the relevant subject that calls for an action in the ayah. Further, if for argument sake, even if the two opposing factors were to be equally balanced, and (من) were to be illustrative & not selective, we would rely upon this indicator (ما , مهما), we do not find that it does not precede (منكـم) , both (ما) and (مهما), for it to become dominantly illustrative.

We repeat that this indicator is the dominant one used by the Arabs to distinguish (من) as illustrative or selective in case the other indicators are equally balanced. In case the indicators are not equally balanced, then this indicator is not relied upon as dominant.

Based on these aspects, the word (من) in the ayah:

]ولتكن منكم أمة يدعون إلى الخير ويأمرون بالمعروف وينهون عن المنكر وأولئك هم المفلحون[،
“Let there arise out of you a group of people inviting to all that is good (Islâm), enjoining Al-Ma'rûf (i.e. Islâmic Monotheism and all that Islâm orders one to do) and forbidding Al-Munkar (polytheism and disbelief and all that Islâm has forbidden). And it is they who are the successful.” [TMQ 003:104]

The word (من) is selective, which implies that some of the Muslims of the ummah (meaning, a structured group) stands up to accomplish the tasks mandated in the ayah.

3rd Rabee’ ul Awwal, 1429 A.H
8th April, 2008 C.E

Arabic Source

Thursday, May 15, 2008

The Crude facts

In May 2008 the price of oil reached an unprecedented $125 a barrel, Oil has continued to hit record levels since January 2008 as the price of Oil passed the $100 mark when a single trader in search of market fame pushed through a small trade. It has risen by 25% in the last four months and by nearly 400% in the last seven years. The importance the black stuff plays in the modern economy is so crucial that slight changes in prices can affect economies.

Oil past and present

It was British naval power that brought Oil to the international scene. In 1882, Oil had little commercial interest. The development of the internal combustion engine had not yet revolutionised world industry. It was Britain's Admiral Lord Fisher, who argued that Britain must convert its naval fleet from bulky coal-fired propulsion to the new oil fuel. With Germany on the verge of shifting the global balance of power by developing its own oil propelled ship from that point, oil conversion of the British fleet dictated national security priority to secure large oil reserves outside Britain.

WW1 brought to the international scene the importance of oil; it came to be seen globally as the key to military success. In an age of air warfare, mobile tank warfare, and naval warfare bulky coal-fired propulsion gave way to oil. Oil required only 30 minutes for ships to reach top speed compared to 4-9 hours when coal was used, battleships powered by coal emitted smoke which could be visible 10 kilometres away whilst oil had no tell-tale signs. The strategic advantage it gave was insurmountable and the British empires control of oil supplies become became even more important given the fact that Great Britain had no oil supplies at the time. It was the capturing of the rich oil fields of Baku on the Caspian Sea denying vital supplies to Germany that resulted in the end of WW1 and German surrender. William Engdahl geopolitical expert outlined the importance of oil ‘rarely discussed, however is the fact that the strategic geopolitical objectives of Britain well before 1914 included not merely the crushing defeat of Germany, but, through the conquest of war, the securing of unchallenged British control over the precious resource which by 1919, had proved itself as a strategic raw material of future economic development – petroleum. This was part of the ‘great game’ – the creation of a new global empire, whose hegemony would be unchallenged for the rest of the century, a British – led new world order.’ Britain and France concluded a secret oil bargain agreeing in effect to monopolise the whole future output of Middle Eastern oil between them.

Today oil is used for numerous everyday products across the world, most commonly for powering combustion engines such as fuel oil, diesel oil and petrol. Oil is also used as fuel for heating and lighting (e.g. kerosene lamp). The petrochemicals industry produces many by-products such as plastics and lubricants. It also manufacturers solvents (alcohols) through oil, without which there would be no chemicals industry. The free flowing hydrocarbons allow many farming implements and fertilizers.

Oil Markets explained

Crude oil, also known as petroleum, is the world's most actively traded commodity. The largest markets are in London, New York and Singapore but crude oil and refined products - such as gasoline (petrol) and heating oil - are bought and sold all over the world. Crude oil comes in many varieties and qualities, depending on its specific gravity and sulphur content which depend on where it has been pumped from.

Because there are so many different varieties and grades of crude oil, buyers and sellers have found it easier to refer to a limited number of reference, or benchmark, crude oils. Other varieties are then priced around this, according to their quality. Brent is generally accepted to be the world benchmark, although sales volumes of Brent itself are far below those of Saudi Arabian crude oils. Brent is used to price 66% of the world's internationally traded crude oil supplies.
In the Gulf, Dubai crude is used as a benchmark to price sales of other regional crudes into Asia.

In the United States, the benchmark is West Texas Intermediate (WTI). This means that crude oil sales into the US are usually priced in relation to WTI. However, crude prices on the New York Mercantile Exchange generally refer to 'light, sweet crude'. This may be any of a number of US domestic or foreign crudes but all will have a specific gravity and sulphur content within a certain range.

Slightly confusingly, the Organisation of Petroleum Exporting Countries (OPEC) - a cartel of some of the world's leading producers - has its own reference. Known as the Opec basket price, this is an average of seven - always the same seven - crudes. Six of these are produced by Opec members while the seventh, Isthmus, is from Mexico. Opec aims to control the amount of oil it pumps into the marketplace to keep the basket price within a predetermined range. In practice, the price differences between Brent, WTI and the Opec basket are not large. Crude prices also correlate closely with each other.

Oil contracts are brought and sold on international exchanges with the largest being Nymex (New York Mercantile Exchange) in New York and the Intercontinental Exchange (ICE) Futures in London, who today control global benchmark oil prices which in turn set most of the freely traded oil cargo. They do so via oil futures contracts on two grades of crude oil - West Texas Intermediate and North Sea Brent. A third rather new oil exchange, the Dubai Mercantile Exchange (DME), trading Dubai crude, is more or less a daughter of Nymex, with Nymex president James Newsome sitting on the board of DME. All exchanges use the US dollar as the standard to price oil.

Due to the nature of oil requiring extracting and refining participants commonly use futures contracts for delivery in the following month. In this type of transaction, the buyer agrees to take delivery and the seller agrees to provide a fixed amount of oil at a pre-arranged price at a specified location. Futures contracts are traded on regulated exchanges and are settled (paid) daily, based on their current value in the marketplace. The minimum purchase is 1,000 barrels.

Oil prices

So what is it that moves oil prices up and down? Most analysts and experts continue to interpret the price of oil price movements due to fundamentals – in the oil industry the fundamentals are factors that influence the supply of, and demand for, oil. Things such as the increasing demand from China and India, as well as fears that a stand-off between the US and Iran could interrupt supplies; have a bearing on oil prices. Alternatively, financial factors may be at work, such as a hedge fund having to sell a particular oil contract so it does not end up receiving a tanker-load of oil - or a trader deciding it would be fun to be the first to trade oil above $100 a barrel. However most fundamental information is not freely available. Mark Lewis from Energy Market Consultants explained in a BBC interview “We really don't know what the fundamentals are doing at any point in time, the markets are looking for signals from the fundamentals. Some of them are irrelevant, some of them are wrong, some of them are meaningless, but they affect prices nevertheless.” Sean Cronin, editor of Argus Global Markets explained “When the New York oil price broke through $100 a barrel for the first time at the start of 2008, one of the factors cited as being behind it was the assassination of Benazir Bhutto in Pakistan on 27 December 2007, that didn't strike us as making any sense at the time.”

Hence there needs to be a distinction between the factors that raise the oil price because they affect sentiment and the ones that genuinely affect supply and demand for oil. The dotcom boom in the 1990s was over inflated, but as long as everyone believed in it, the price of internet companies continued to rise. Once speculators stopped believing in internet stocks rising, the price went down. Thus Speculators trade on rumour, not fact.

Speculation driving oil price hike

A variety of reasons have been presented for why the price of a barrel of Oil continues to rise. For the study of Oil prices many consultants are paid elaborate rates to predict trend in oil. Many politicians continue to cite China and India as the chief reasons for the current price of oil. Many analysts have cited geopolitics as the chief reason such as conflict in Nigeria, oil peak and the rise of bio fuel. Although these factors have had some bearing on Oil prices they are not the actual causes for the price of oil to reach the current historical level. Speculation by traders is at the heart of the current hike.

Today's oil prices are really determined by a process so opaque only a handful of major oil trading banks, such as Goldman Sachs or Morgan Stanley, have any idea who is buying and who is selling oil futures or derivative contracts that set physical oil prices in this strange new world of ‘paper oil.’ Today 60% of crude oil price is pure speculation driven by large trader banks and hedge funds and with the development of unregulated international derivatives trading in oil futures over the past decade, the way has opened for the present speculative bubble in oil prices.

A June 2006 US Senate Permanent Subcommittee on Investigations report on "The Role of Market Speculation in rising oil and gas prices" noted, "... there is substantial evidence supporting the conclusion that the large amount of speculation in the current market has significantly increased prices".

A common speculation strategy amid a declining US economy and a falling US dollar is for speculators and ordinary investment funds desperate for more profitable investments amid the US sub-prime disaster to take futures positions selling the dollar "short" and oil "long." This is where one borrows dollars and sells them for a short period, betting the price of the dollar will fall. Then such a trader would purchase the same dollars at the new fallen price and return the borrowed money taking the profit from the new fallen price to the original higher price. Lehman Brothers, the investment bank, has estimated that fuel is 30% overpriced because of an influx of money into the oil market from investment funds. It believes that hot money accounts for between $20 to $30 of the recent increase in oil prices and that about $40 billion has been invested in the sector so far this year — equal to all the money pumped into oil last year.

Energy Geopolitics

Although the current crisis has in large part been due to speculators moving out of the sub-prime crisis and into commodities there are however a number of Geopolitical factors and trends and we should be aware of that will shape the global situation. The age of oil, produced its own technology, its balance of power, its own economy and its pattern of society. The future of energy security will play a key role on the global balance of power.

These factors are four:

1. The Eastern threat - The Middle East is gradually shifting from being a unipolar region in which the US enjoys uncontested hegemony to a multipolar region. The US will face more competition from China and India over access to Middle East oil. Soaring global demand for oil is being led by China's continuing economic boom and, to a lesser extent, by India's rapid economic expansion. Both are now increasingly competing with the US, the European Union and Japan for the lion's share of global oil production.

This additional demand comes at a time of continuing production problems in a number of oil-producing nations. Production is down in Nigeria after continues attacks on pipelines by anti-government militants, while Iraqi exports through the north of the country have been hit by renewed cross-border raids by Turkish forces against Kurdish insurgents.

Economists warn that continuing high oil prices will impact on the global economy, hitting growth and fuelling inflation. More importantly it will impact America's ability to fuel its own economic growth and in turn become more reliant on China for cheap goods. The American economy used to be the world's powerhouse, but today it is being left behind by emerging economies. To compound its problems, The demand for greater oil is affecting America's ability to pull itself out of its downturn and is creating inflation across the Western world. If China at any time in the future should develop its political will and ambition, it is in a relatively strong economic position to substantially weaken America.

2. The Russian threat - Russia, the leading producer of natural gas and one of the leading oil producers, is the global winner. The relationship between the European Union and Russia is now dominated by Russia and will in the future make Europe dependent on Russian oil and gas. The oil shocks of the 1970s had different effects on different European countries. Britain had some North Sea oil and the prospect of more, as did Norway. Germany and France had little or no oil of their own. Differential shocks in the coming period of oil shortage will make it harder to maintain the Euro-zone.

Vladimir Putin has already used oil and gas as a diplomatic weapon against the European states, which have had to fall into line in June 2007 after making grandiose demands against Russia. Russia even made veiled threats against Britain during the famous spy poisoning case. Russia has also in the last year stopped supplying energy to its neighbours to quell dissent and ensure political allegiances.

Unlike China and India, Russia has a history of political strength and maturity, and the evidence over the last two years is that Russia has begun re-inventing itself as a regional power, after winning back Kazakhstan and Uzbekistan from the American grip and managing the stop the influence of the three revolutions in that region. America is becoming increasingly worried about the growing economic and political influence of Russia.

3. Oil and Petrodollars. One of the achievements of the US in the 1970's was to peg the price of oil to dollars. This meant that oil transactions are carried out in dollars only. This has allowed the US to maintain the dollar as the world premier currency and the currency of choice for foreign reserves.

However one of the key factors behind the rise in the price of oil is the devaluing of the dollar. Now trading countries want more dollars for oil simply because the dollar is worth less - this would have increased the price of oil regardless of the increasing demand for it.

Today the European Union led by Britain and Germany are increasingly calling for pegging oil to the Euro; thereby stabilising the price of oil, and giving a stable revenue to oil producing countries. However, this severely impacts the dollar as a currency and if this was to happen would perpetuate America's economic crisis as the dollar would devalue even more.

Although this is not yet an impending threat, if America cannot bring itself out of its severe downturn, this threat may become more real - particularly if China was to add to this growing call.

4. The importance of the Middle East. Despite current supply shortages of oil around the world and the future restrictions, the importance of the Middle East, will not lessen. In fact it will become the most crucial area in the world.

This is because 66% of the world’s oil reserves are in the Middle East. “Proved" oil reserves are those quantities of oil that geological information indicates can be with reasonable certainty recovered in the future from known reservoirs. Of the trillion barrels currently estimated, 6% are in North America, 9% in Central and Latin America, 2% in Europe, 4% in Asia Pacific, 7% in Africa, 6% in the Former Soviet Union. Today, 66% of global oil reserves are in the hands of Middle Eastern regimes: Saudi Arabia (25%), Iraq (11%), Iran (8%), UAE (9%), Kuwait (9%), and Libya (2%).

Currently of the 11 million barrels per day (mbd) the US imports 3 million barrels per day from the Middle East. But in the years to come dependence on the Middle East is projected to increase by leaps and bounds. The reason is that reserves outside of the Middle East are being depleted at a much faster rate than those in the region. The overall reserves-to-production ratio -- an indicator of how long proven reserves would last at current production rates – outside of the Middle East is about 15 years comparing to roughly 80 years in the Middle East. It is for this reason that George Bush said last April, U.S. dependence on overseas oil is a "foreign tax on the American people."

This is on of the most volatile region in the world; and its importance will only grow stronger. The US is currently very worried about political developments in this region. A return of the Khilafah as predicted by several think tanks can potentially cripple America's economy, at a time where its political leverage is at its weakest since the end of the cold war.


The Oil price crisis once again highlights that the greed of speculators knows no bounds. It was greed that drove many banks to lend sub prime loans to individuals with no ability to repay the loans. It is again greed that is driving speculators to bet on Oil prices with no intention of actually purchasing the oil in order to make profits on the price differences – whatever the affect on the world. Such speculators drove the bubble, and then moved to the sub prime bubble once it burst and now they are pouring into the last remaining sector commodities – it is for this reason food and oil prices have reached astronomical levels, well beyond the reach of those who need it most. The Western world consumes 50% of the 21st century’s most important resource; oil, it produced less then a quarter of it. It is over consumption rather then China and India that are causing the crisis. The US specifically produced only 8% of the world’s oil but consumes 25% of it.

The Oil crisis also reveals the treachery of the Muslim rulers, whilst China and Russia are manoeuvring to weaken the US Saudi Arabia increases production of oil to ease US oil prices. Without the help of the Muslim rulers the US may not even be a super power, the Muslim lands hold what’s is considered the resource of the 20th century and most likely the resource for the 21st century, they should be the worlds superpower dictating global politics and actually doing what they continuously say they do – carrying dawah to the rest of the world.

As US consumption continues to rise the competition for dwindling energy sources will intensify, this will make the Muslim lands even more important and as with Iraq occupation may well be justified for stable supplies of the black stuff.