The Middle East, the root of the Western Civilizations, a place of Culture and Traditions.
(Middle East map available at Microsoft's Enciclopedia Mi primera Encarta)
There are many important things concerning the “Middle East” that are important in order to understand better the relationships among its people, its countries and with the rest of the world.
Different from other subdivisions in the world, as East Asia, the Middle East does not represent a specific part of a continent, but it is the designation that militarily the United Kingdom started using during the Second World War, to define what their Near East within a Geopolitical context was. That’s why as Middle East we find a mix of three continents, the Arabian Peninsula in Asia, Egypt in Africa and Cyprus and Turkey in Europe, recognizing that Turkey is considered as an Asian country too.
Sometimes, the Middle East is also defined as the Arab World, but in a way that is not a good definition since Israel is not necessarily Arab and it is in the region, and there are other countries that consider themselves Arabs and geographically are not located in the designated area. That and other definitions have lead to a “Greater Middle East”, a wider geographical area covering more countries in the north of Africa (Morocco, Sudan…) and going east in Asia (Pakistan, Georgia...).
One of the greatest influences in the Middle East and a way to understand better all the dynamics in the region is the religion. The three greatest monotheist religions were born there and have actually the same roots, but through the centuries they took separate ways. We start with the Judaism, then the Christians and finally the Islam, all of them spread around the world, but while the Christians play a bigger role in Europe and then with the colonization in America, the Middle East remain mostly Islamic and with a tiny part of Judaism in Israel.
And for example Jerusalem the capital city of Israel, is important for the three religions. It is somehow the “Promised Land” for the Israelis and they have the Western Wall, considered a part of Salomon’s and Herodes’ Temples. The Christians have there the Church of the Holy Sepulchre and other major places where Jesus spent his last days, and the Muslims have different Mosques as Al-Aqsa, from where Mohamed went to Heaven.
("Israel, Jerusalem, Western Wall crowded with worshippers at night" by Gil Azouri. // "Ceiling of the Katholikon (main prayer hall) in the Church of the Holy Sepulchre. Jerusalem, Israel, 2008" by Uyen Le.) 
("An aerial view shows Jerusalem's Al-Aqsa" by Gali Tibbon. All three images were taken from Getty Images)
All these religions influence all its followers at different points of their lives, but Christians mostly seem to detach religion from business, while the other two still have the religion more present in every aspect of their lives, specially the Muslims, and that has somehow put them in a different position in the way they relate themselves with the rest of the world. And cultures as our, because of lack of knowledge of their culture and traditions or because a lack of comprehension, miss many opportunities of creating better relationships with the Arab world.
Considering the fact that the Muslims have to follow in every single activity they do the Sharia, a set of rules and norms according to the Koran, they had the need to create their own economic institutions and agreements. So even tough, the World Bank or the International Monetary Fund reach the region and have different projects going on in the region, there are institutions as the Arab Monetary Fund and the Arab Cooperation Council, among many others.
Some of these institutions, as the Council of Arab Economic Unity, seek to integrate better the Arab countries and give them tools to answer better the globalization and the international networks in today’s world without leaving behind the Sharia. Of its goals one of the most important was the Greater Arab Free Trade Area.
These initiatives are very important because they want to promote other regional products besides oil, be more competitive internationally and participate more in meetings as the ones from the World Trade Organization, where just a couple of Arab countries are members.
Opposing to the GAFTA, there is the Middle East Free Trade Area, an idea coming from the USA and that wants to include Israel and not only consider free trade, but bilateral investment treaties, gain more memberships to the WTO… But it is not a very welcome initiative, basically Israel and some countries that receive international aid from the US or are important partners in other aspects, are the ones saying yes to the idea.
And in other topics as children rights, women rights… the region still moves according to the religion.
Finances are an essential part of business and play a huge role in today’s world. But the finances we may know are not accepted by the Arab world, so in order to have a system that complies all its needs the Islamic Finances were created.
Mohammed El Qorchi in his article “The expansion of Islamic Finances” highlights the fast spread of the Islamic financial institutions passing from one bank in 1975 in Dubai to more than 300 institutions in over 75 countries.
The idea of the Islamic financial institutions is to follow the Sharia or Islamic law that defines how Muslims should act in their life.
Some of the main rules for finances are:
Not pay nor receive interests- There must be a match of risk and reward, the institutions share with all its investors and borrowers profits and losses.
- Every financial operation must come from a real economic activity, which means it is forbidden to make money from money; there must be a service or product transaction.
- Some businesses and investment in those are forbidden, such as alcohol, gambling, tobacco.
- There is no uncertainty or speculation in their financial system. It creates further problems and conflicts between the people.
- It is important to do charity and not to take advantage of the weaker people.
A lot of Muslims, who have gained money through the oil business or in other industries, feel happy to be able to invest their money properly and most of the banks also look forward to assure a more equitable distribution of wealth, administrating like that charity for its costumers and helping Muslims living in not so ideal conditions.
For these investors it was also important to diversify their access to capital in different countries and sectors, but assuring the respect of the Sharia.
In the article “Islamic Finances” it was also mentioned that right now, the Islamic finances are not only for Muslims but a considerable number of non-Muslims are taking part of the system.
Right now besides the Arab World, Great Britain, Germany and the USA are allowing Islamic Institutions.
The article also explains the expansion of the Islamic finances due to the excess liquidity, specially coming from oil and trade, and second as a way to gain a more important role in today’s world and strengthen their institutions in general.
It is also very interesting to see the different products offer within the Islamic Finances covering all the markets, the Banking, the Insurance, Trade, Investments, Construction… and how each transaction complies a different and special set of rules.
Nonetheless, as a new system it still has a lot of challenges. The first one is that it is not a standardized system, it changes from institution to institution, from country to country and the way each bank views it role related to the global financial system and the interpretations of the Sharia change in every institution.
That leads to a huge lack of information, because the databases are kept just for the institutions and the methods for collecting the information are very different as well.
That’s why institutions as the Islamic Development Bank and the Accounting and Auditing Organization of Islamic Financial Institutions are developing different norms and standards, auditing governance and ethics.
And in the way each bank has a Sharia board that are the ones who make sure every single transaction in the Bank is according to the Sharia, as the interpreters of law, there is the intention to create an Islamic Financial Services Board that creates the main standards for the Islamic Finances in overall.
Like that it would be easier for the institutions to integrated themselves and provide a connected service around the world.
Still despite the limitations and challenges the Islamic Finances may face at the moment, they have a bright future, because they are finally addressing the needs of its population and are becoming attractive as well for other societies outside the Muslim World.
References:
1. El Qorchi, M. 2005. Las finanzas islámicas en expansión. Finanzas y Desarrollo, 42(4): 46-49
2. Monger, R. & Rawashdeh, M. 2008. Islamic Finance Enters the Mainstream. Management Accounting Quarterly, 9(3): 1-6
3. Ossa, I. & Piña, M.F. & Suarez, M.N. 2009. Presentation "A different Look at the Middle East" part of the subject Organizations and Cultures at the University EAFIT
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