Tuesday, December 30, 2014

Q&A: Loans from Foreign Countries


Question:
Assalamu Alaikum dear Sheikh, may Allah سبحانه وتعالى honor you with Islam, and may He سبحانه وتعالى honor Islam with you. I pray to Allah سبحانه وتعالى to be one of those who grant you Baya'a for the Khilafah upon the method of Prophethood, for He سبحانه وتعالى is capable for everything... I have a question about the matter of borrowing from foreign countries and international financial institutions, where it is mentioned in the book The Funds in the Khilafah State that it is prohibited by the Shariah because borrowing from them cannot happen except via usurious interest and conditions... The question is: When can the borrowing be permitted, and what are the conditions which makes it prohibited? Is there a difference if these countries are in treaty or in warship??? May Allah سبحانه وتعالى aid you in what there is good for Islam and the Muslims in the life and Afterlife. Assalamu alaikum wa Rahmatuh Allahi wa Barakatuh.
From Ahmad Sa Saad

Answer:
Wa Alaikum Assalam wa Rahmatuh Allahi wa Baraktuh
It seems that you are confused about what was mentioned in the book, The Funds in the Khilafah State. "As for borrowing from foreign countries or international financial institutions, it is not allowed by Shar'a because such loans would not be except with bank interest or with imposed conditions." As if you assumed that the statement alludes that there can be conditions to make it permitted to borrow from foreign countries and international financial institutions, so you asked about these conditions. However, this is not the case, but it rather means that borrowing from foreign countries and international financial institutions is not allowed for two reasons: "it has usurious interest and it involves conditions", and if the borrowing will take this form, then it is not allowed. The book clarifies this matter in the rest of the paragraph, as it is mentioned:

"Bank interest is prohibited by Shar'a, whether from individuals or countries, as the imposition of conditions gives the lending countries and institutions control over Muslims and makes the will of Muslims and their disposition subject to the will of the lending countries and institutions, a matter which is prohibited by Shar'a. The international loans were among the most dangerous afflictions and among the causes for imposing the authority of the Kuffar upon the Islamic lands; and how often has the Ummah suffered from the calamities of these loans? Therefore, the Khalifah is not allowed to resort to international loans to cover the expenditure on these areas."

Upon that, borrowing from foreign countries according to what was explained above is not allowed. As for the rest of the questions with regards to the foreign country being in a state of treaty or warship, the case is then the following:

According to the current procedures for international loans, loaning is not without Shariah violations: "usurious interest and conditions against the Shariah". Accordingly, it is not allowed to borrow from foreign countries, whether these countries are in warship or treaty according to the current international contracts.

Your brother
Ata Bin Khalil Abu Al-Rashtah
05 Safar, 1436 AH
27/11/2014 CE
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