China Vs America

China in October 2009 celebrated the 60th anniversary of its revolution where it gained independence from Japan and defeated the nationalists to establish the Socialist people’s republic of China. Since the beginning of the 21st century many analysts have viewed the rise of China as America’s biggest challenge and some thinkers foresee China as the world’s power in the distant future. The rapid rise of China on the political map in the last 20 years has shocked many, bewildered others and for some marks the shift of global power from West to East. China has never been a world power and its recent history consists of a brutal occupation by Japan, whose memory defined post WW2 China. The 60th anniversary for the world’s largest populated nation marks a unique reality in its history as for the first time it is counted as a world power.

Obama’s recent visit to the South East Asian region took him to South Korea, Japan, Singapore and China, this was his first visit to the region since he won the US presidential election. However from the beginning the visit to China represented the most important aspect of his trip.

China’s development began in 1978 and has been due to military considerations dominating the development of science and technology. This can be traced back to the Mao era. Mao stated his objective of forming a ‘militarization’ complex above all other needs. This ‘militarization’ formed the basis of Deng Xao Ping policy. Deng’s aim was to diversify the economy in order for China’s industrial base to contribute not just to national defence but also economic growth and civilian prosperity. Deng’s famous 16 character guidance in early 1980’s made this clear ‘integrating military and civilian production; but making sure to balance the military requirements; maintaining military capability; using the civilian economy to serve military modernization.’[1] Prior to this the Soviet-style centrally planned economy, was utilized but achieved limited results. Deng then utilized a more market-oriented economy, particularly in the Special Economic Zones (SEZ) located in the Guangdong, Fujian, and Hainan. The results were spectacular. China radically changed its economy moving from producing low quality simple exports to sophisticated high technology goods. The country has changed from an inward backward economy to a global exporting machine, Chinese exports have grown tenfold. (1990 – 2003 was $436 billion.)[2] Today Chinese exports exceed $1 trillion and are the largest in the world after the US and Germany.

Since 1978, China has been reforming its economy from a Soviet-style centrally planned economy to a more market-oriented economy but within the political framework, provided by the Communist Party of China. This system has been called "Socialism with Chinese characteristics" and is one type of mixed economy. These reforms started since 1978 has helped lift millions of people out of poverty, bringing the poverty rate down from 53% of population in 1981 to 8% by 2001.

The execution of China’s foreign policy represents an important evolution from Beijing’s narrow and reactive approach to global affairs in the past. China is abandoning its long-held victim mentality of 150 years of shame and humiliation and adopting instead a great power mentality (daguo xintai). The natural extension of this is the increasing role of China in global issues. This has been driven by leading members of the Communist party who were not born during the Chinese revolution and hence do not view the world from the perspective of China’s history. Leaders, such as the current Hu Jintao, who was born only a few years before the revolution, was China’s first leader to not have taken part in the infamous long march, which defeated the nationalists and brought the communists to power in 1949. It is such leaders who believe in the abandonment of China’s victim mentality and the adoption of a great power mentality, it is such leaders who are increasingly seeing China more akin to the world’s major powers.

US - Sino relations

US policy makers spelled out their strategy for China initially in the Defence Planning Guidance (DPG) for fiscal years 1994-99, the first formal statement of US strategic goals in the post-Soviet era "we [must] endeavour to prevent any hostile power from dominating a region whose resources would, under consolidated control, be sufficient to generate global power."[3] By the time George W Bush came to office only China possessed the economic and military capacity to challenge the United States as an aspiring superpower. The US developed a policy of containment rather than outright competition with China which would expend US resources, to restrain China within its borders ensuring no-one shares the region with her. This policy of containment was spelt out by Condoleezza Rice while serving as a foreign-policy adviser to George W Bush, then governor of the state of Texas, during the 2000 presidential campaign in a Foreign Affairs article she stated “China is a great power with unresolved vital interests, particularly concerning Taiwan, China also resents the role of the United States in the Asia-Pacific region." For these reasons, she stated, "China is not a ‘status quo' power but one that would like to alter Asia's balance of power in its own favour. That alone makes it a strategic competitor, not the 'strategic partner' the Clinton administration once called it. The United States must deepen its cooperation with Japan and South Korea and maintain its commitment to a robust military presence in the region". Washington should also "pay closer attention to India's role in the regional balance, and bring that country into an anti-Chinese alliance system.”[4]

A decade on however both the US and China have to a large extent become interdependent upon each other. Whilst the US dominated all regions of the world at the turn of the century, Afghanistan and Iraq as well as the global financial crisis has resulted in the US being unable to dominate such regions and its relationship with China. Sino-US interdependency can be seen from the following:

- The US the words largest consumer, imports the vast majority of the goods that come of China’s production lines.

- As a result of this America has a trade deficit of $268 billion with China, as a result US dollars end up in China, which today is over $1 trillion.

- Such huge reserves have resulted in China purchasing US treasury bonds, which funds America’s massive trade deficit.

- In turn this is resulted in the expansion of China’s manufacturing base, China’s need for a larger share of the world’s oil and mineral resources.

- This has also led to the loss of jobs in America’s manufacturing sector to superior Chinese craftsmanship.

US policy towards China has appeared to be contradictory at times because one faction, led by the right and the corporate world view China form a commercial aspect, they see China’s huge population as a money making opportunity and for these reasons have lobbied for the US government to force open China’s domestic market and essentially bring China into the global free market. The left on the other hand have for long viewed China as a threat and continue to attack it’s human rights record, internet censorship and China’s right to Taiwan. From a commercial aspect companies such as google.com, yahoo and Microsoft and a number of US banks have benefit from developments in Sino-US commercial relations.

On the other hand those who view China’s rise as a threat have pushed for the US administration to develop an anti-Chinese ring around China to contain it. The US has upgraded security relations with Japan and has supported Japanese calls for nuclear development, this would mean abandoning the decades old constitutional defensive policy; for the US this would act as a military counter weight on China’s Eastern flank. On the Western flank India has been wooed with economic deals, the transfer of nuclear technology and ambitions of permanent Security Council status. The US in a similar manner has normalised relations with Vietnam burying its historical conflict and forming bilateral partnerships with it. The US has successfully manoeuvred the Vietnamese to increase interaction with it, breaking the age old Chinese links to the pacific region. Vietnam continues to have a territorial dispute on its northern border with China. The US has also used its conflict with North Korea to contain China. The US has been considerably silent to the nuclear progress in Pyongyang compared to Iran, whilst China has been pursuing six party talks trying to ensure its back door is not set on fire. The statements from such meetings have been contradictory where China has been remarking pessimistic talks with distance on issues to the US remarking successful negotiations. This gives a suitable justification for sustained and substantial US presence in South Korea. The US has also announced in September 2009 a shift in policy towards Myanmar (Burma), it plans to move beyond the current sanctions regime to include direct engagement with the military government. Myanmar is playing a central role in China’s overseas energy strategy and through direct engagement the US is attempting to minimise the expansion of a Chinese sphere of influence in Asia.

A False Dawn

In China’s 5000 year history it has never been a superpower and has never influenced international politics. Even when it adopted Communism it never carried this beyond its borders and never influenced any of the regions of the world. Much of China’s 5000 year history is composed of internal wars and struggles in order to unify the homeland. China’s foreign policy is centred on domestic economic development and procuring all the necessary raw materials to achieve such aims. China has challenged America’s containment policy by attempting to weaken the nations the US is attempting to use to contain China. This is through using its economic trump card and developing bilateral ties to loosen US relations with the likes of Australia, India, Japan and South Korea.

Due to this reality China has focussed on its region and has no ambitions beyond this area. Until China changes its regional ambitions to global ones it will never become a world power. With such a narrow view China will politically never be able to challenge the US. China’s foray into Africa is not a challenge to the US but an attempt to secure a stable supply of oil, which China’s will only become even more dependent upon. It is here China faces its most crucial issue that will affect its future status.

China’s faces a number of issues which need solutions and without an ideology it will be unable to solve them in any consistent manner. Without an ideology China will face a constant set of problems which will be the result of not solving other issues. Chinese economic development is leading it to consume most of the worlds key minerals, it will need to develop coherent relations with the nations that have such minerals otherwise it will find itself accumulated with the problem of not being able to access such resources which will impact its development. Without an ideology China is already facing domestic issues of integration in Tibet and XinJiang, however without an ideology how do you integrate and what do you integrate people into?

China domestically is ruled by Communism, this is why it still has a one party system, but economically it is moving more and more towards the free market. At the same time China is nationalist led which has led to calls for separation by some regions which the US has consistently supported. Until China does not decide what its national identity is, the nation will continue to be pulled in different directions and China will never be able to pose a threat to the world’s superpower.

Conclusions

China currently posses an economic challenge to the US, for these reasons they are engaged in a number of trade disputes. The US has placed restrictions on Chinese tyre imports, and currently China is on the receiving end of a number of World Trade Organisation (WTO) cases into anti-competitive practices.

For the US China posses a threat in South East Asia and hence the US wants to restrict potential Chinese political ambitions but at the same time wants to benefit from the 1.4 billion domestic market.

China’s development model shows that it is possible for any nation to develop with some direction which large portions of any nation take as their view towards the world. However development fundamentally is the ability to posses a world view which can act as a basis for all aspects of a nation be it economic, judicial, foreign relations, energy, integration, governance and male-female relations. In this way the solutions to such issues come from the same basis (world view) and each sector moves in the same direction creating progress. Without such an ideology a nation will see some progress but will inevitably face issues it is unable to tackle.




[1] Scobell A, 2003, China’s use of military force, Cambridge university press

[2] Hassan R, (2005) ‘China: pretender or contender,’ new civilisation magazine, http://www.newcivilsation.com/

[3] L C, Douglas and Young, Thomas-Durell, (Sep 2005) ‘US Department Of Defense Strategic Planning: The Missing Nexus,’ http://www.strategicstudiesinstitute.army.mil/pdffiles/pub329.pdf

[4] Condoleezza Rice, Campaign 2000: Promoting the National Interest, Foreign Affairs, January/February 2000, http://www.foreignaffairs.org/20000101faessay5/condoleezza-rice/campaign-2000-promoting-the-national-interest.html

Understanding the EU project

When Czech president Vaclav Klaus signed the Lisbon treaty on Tuesday 3rd November he concluded a project that has been 58 years in the making. Since the end of WW2 Europe through various agreements, treaties and political manoeuvring has attempted to unify as a block in order to maintain influence in the world.

The Lisbon Treaty is Europe's effort to create a decision-making structure that will turn the EU’s disjointed political reality into a coherent whole. The European Union is not Europe’s first attempt at unification, Charlemagne the 8th century leader of the Frankish empire first attempted to unify Europe through conquering large swathes of European territory. Napoleon then attempted the feat in the 19th century only to be defeated in 1815 at the battle of waterloo. Hitler also attempted to conquer Europe and bring the continent under Nazi rule, this was halted due to WW2.

The Soviet Union and the US emerged the world’s powers after WW2, replacing Britain and France who were devastated when the war ended. France perceived the US and particularly the US dominance of European foreign and defence policies through NATO, as a threat that could make Paris irrelevant. At the time, the French saw their country as a key world power that did not need hefty alliances, and that needed to stand apart from the US. In 1950 French Foreign Minister Robert Schuman proposed a community to integrate the coal and steel industries of Europe - two elements necessary to make weapons for war. France, Italy, Belgium, Netherlands, West Germany and Luxembourg signed the Treaty of Paris (1951) creating the European Coal and Steel Community, the origins of the European Union. Whilst the European Coal and Steel Community (ECSC) was modest in its scale it set the precedent that Europeans have followed ever since – establishing supranational institutions in the sphere of trade and then spreading over into the ream of security and politics.

During the détente between the Soviet Union and the US, European nations individually posed little challenge to the two world powers. As a unified bloc however Europe had the prospects of challenging the supremacy of the USSR and the US. Such realities were the impetus for further European political coherence and during the 1970’s the European Union was enlarged and Denmark, Ireland and the United Kingdom became members – the first of many enlargements. In 1993 and 2004 a number of former Soviet republics joined the EU making the EU a union of 27 member states.

Over a period of nearly 60 years the European Union has become an integrated whole through unifying its markets, through a single currency and now through the Lisbon treaty which will streamline decision making and empower Europe to emerge as a continental entity. Whilst many ridicule the concept of a pan continental Khilafah, in over half a century European states have managed to attain a level of integration which places it as a force across the world. There is however a number of obstacles that will always keep the EU disjointed these can be summarised as the following:-

- The European Union has today expanded well beyond its original founder states. Consensus on how far enlargement should go and how deep integration should be continues to plague the union. Member states are reluctant to relinquish their sovereignty to bureaucrats in Brussels or leave key decision making to the two nations that dominate the EU – Germany and France. A union based upon a confederation makes the EU a mere customs union – so whilst from an economic perspective the EU acts as one block, political sovereignty means the union will always remain disjointed. The Lisbon treaty is in fact an attempt to overcome such differences by replacing unanimous voting with qualified majority voting (QMV), this practically means most EU issues can no longer be vetoed by a single nation.

- The US has worked to actively weaken the EU. The US has managed to maintain NATO as the worlds default security organisation, European attempts at creating an alternative security force has met numerous challenges by the US. The Balkan conflict clearly showed the US had superiority over NATO. Without the ability to construct its own security the EU will always be reliant upon the US, the very nation the EU was created to challenge. A leaked version of the Pentagon's 1994-1999 Defense Planning Guidance report advises that the United States "must seek to prevent the emergence of European-only security arrangements which would undermine NATO ... Therefore, it is of fundamental importance to preserve NATO as the primary instrument of Western defense and security, as well as the channel for U.S. influence and participation in European security affairs." EU enlargement into central and Eastern Europe has brought US influence into the union as many former Soviet republics have been brought under the NATO umbrella and hence the US is already providing their security.

- The British view of Europe will always ensure the union remains fragmented. Britain views the EU through the lens of achieving its own interests. It joined the EU only when the détente was agreed between the USSR and the US in order to challenge the two giants. Britain refuses to melt into the EU like Luxemburg and at the same time Britain has ambitions to play a leading role in Europe. As this is currently not possible Britain essentially has one leg in the EU and one in America. Thus, when its interests are parallel to the US, Britain sides with it and hence weakens the EU. This suits the US who does not want Europe to compete with her as a unified block.

- France, Germany and Britain have dominated European history, whilst they colonised the world much of central and Eastern Europe was on the receiving end of colonial expansion. As a result whilst Europe went through the enlightenment and as a continent challenged the Christian church, Europe’s common history ends here. All European states have differing identities and this continued obstacle means the powerful nations within the EU are pulling the union in a direction different to the other member states.

- Fundamentally a union of smaller states into a larger political union is a weak method of amalgamation. It lacks the characteristics found in full unification where a people become one nation. A union as a method of binding peoples and nations is always prone to political differences as it continues to recognise the sovereignty of constituent nations, this leaves it open to penetration from the outside.

Islam and unification

Islam has a very specific method of binding different peoples and nations. Islam has a number of rules which outline clearly the method of enlargement, integration annexation and unification. Primarily this is through establishing the Khilafah which is one state for all the citizens under its authority.

The Islamic way of ruling is to establish equality between the subjects in all the regions of the State. Islam grants non-Muslims who hold citizenship, the full rights and duties that Muslims have. They enjoy the same fairness as Muslims and are subject to the same accountability as them.

Furthermore, every single citizen, regardless of his or her creed, enjoys rights that even a Muslim living abroad who holds no citizenship does not enjoy. Islam considers every single region as an indivisible part of the State and its citizens enjoy the same rights as those in the central region. It also makes the ruling, its system of governance and its legislation the same for all citizens. In this way over a generation different peoples will become a homogenous entity and this gives it strength, makes the nation move in one direction – which leads to progress.

Muhammed (saw) established Islam in Madina and he ruled over a people where the Ummah was a minority. Treaties were signed with the surrounding Jewish tribes and the rights between the Muslims and non-Muslims were clearly defined in the Ash-Shifah document, which was in effect a constitution. When Muhammed (saw) passed away the whole Arabian Peninsula was under Islamic authority and the Sahabah then expanded the Islamic lands to North Africa, the Sub-continent and Central Asia. By ensuring no region had separate legislative, political and economic rules, this created a sense of unity and resulted in the conquered to fully embrace Islam, make it their own and then carry the call to the surrounding lands. Muhammed bin Qasim embraced Islam when under Umar (ra) Iraq came under Islam, Muhammed bin Qasim then carried this call to the subcontinent. In a similar manner it was under Mu’awiyah that the Berbers of Egypt embraced Islam, the Berber turned Muslim Tariq bin Ziyad then took Islam to Spain.

After the Abbasids the weakness that overtook the Ummah in understanding the deen resulted in some regions’ becoming semi - autonomous, some of the conquered territories such as Eastern Europe were never fully absorbed and on some occasions the Islam method was not fully adhered too. This is why there is a vast difference today in the Islamic orientation of the lands that came under Islamic authority in the earlier period to those lands that the latter Uthmani Khilafah conquered.

Conclusions

The EU will inevitably be disjointed as the major powers such as France and Britain view Europe form the perspective of achieving their own national interests. Germany on the other hand weakens its prospects by viewing the world from a European perspective, this in effect contains the economic giant.

Europe continues to be dominated by two differing spectrums of thought on the future direction of the union: there are the Eurosceptics such as the UK and Denmark who view the EU with suspicion due to the larger nations who dominate it, for them is it worth giving up national sovereignty in return for being led by Brussels, but at the same time want to benefit from the Customs union and trade opportunities a united EU brings. Then there are those who want to see a strong, united and integrated political union such as France and Germany, which can manoeuvre at a global level and protect their national interests in a world with rising global powers such as China and India. National interests will always halt progress in the EU.

The Khilafah offers a unified approach to global affairs through the Islamic methods of a unitary state, with one ruler, one foreign policy, one economy, one adoption globally and the absence of customs and tariffs domestically. A nation or people wishing to join the Khilafah are welcomed, they would come under the authority of the Khaleefah who would have to provide their security in return for their loyalty. They become subjects of the state like any other citizen irrespective of their beliefs.

The Organisation of Islamic conferences (OIC), Arab league and every other attempt at unifying the Ummah, where, all in origin colonial projects which protects the individual and territorial integrity of the 52 or so nations the departing colonialists created. Some have viewed such useless organisations as the first step to ultimate reunification for the Ummah. Islam has clearly designated the Khilafah as the method of unifying the Ummah, anything else is destined to fail, a deviation from Islam and will turn the global Ummah into another EU – disjointed and unable to progress.

NEW BOOK: Constructing an Industrialised Muslim World

Iran made history in February 2009 when it launched into orbit the Muslim world's first domestically constructed satellite. What made this development even more stunning is the fact that under sanctions and with a belligerent US continually spreading propaganda against Iran, it has managed to indigenously develop a space based programme.

Iran has managed to develop advanced ballistic missiles and now satellites and is the only Muslim country to have launched these with little external help.

Industrialisation can be defined as when an economy is geared around manufacturing and this then acts as a stimulus to other sectors of the economy. An example of this was the British Empire which made manufacturing central to its economy. The manufacturing of ships, ammunitions and mining propelled Britain into a global superpower with the ability to rapidly mobilise for war and allowed it to colonise the world. In times of peace such industries were used for civilian purposes.

This is the fundamental reason for any nation wanting to industrialise, having an independent manufacturing base makes a nation self-sufficient and become capable of opposing the leading states. By not industrialising a nation will not be politically and economically independent, it will be reliant on other nations for its defence and it will always be dependent on the will of other states, like the Islamic world is today.

If we look across the Muslim world there has in fact been some technological and military developments even though these nations have not industrialised. However the overall economic and industrial standing of the Muslim world is very far from where it can be and should be. The Muslim world today lags far behind the industrial nations of the world. Whilst the West went through industrialisation 150 years ago the Muslim world has remained largely unindustrialised and in many cases reliant on the developed world.

Many commentators and analysts across the world have portrayed the Muslim world to lack the necessary ingredients to develop. They cite the education systems across the Muslim world as still residing in the medieval era. They have argued that the Muslim world lacks the rationality that the West has taken towards enquiry and science as necessary prerequisites. Many liberal thinkers have even argued Islam is the obstacle holding the Muslim world back and that only through a reformation can salvation occur.

At the same time the Muslim rulers managed the economies of the Muslim world with little direction, they have relied upon short term policies and on the very few occasions due to impending war's have funded elements of industry, but even this was driven largely for nationalist reasons rather than for the long term benefit of the Ummah. The Muslim rulers in the Middle East have constantly argued they cannot regain Palestine due to the military might of Israel, Yasser Arafat argued on many occasions at Palestinian refugee camps that Israel's possession of nuclear weapons meant negotiations were the only means to tackle the Palestinian issue. Pervez Musharraf argued he had no choice but to support the US in its efforts in Afghanistan as Pakistan had no political power or a military deterrent, large enough and hence was too weak in the face of US demands.

The aim of the book is to asses the current status of the economies and position of the industries in the Muslim world. The claims by the Muslim rulers will be assessed as well as many of the assertions Western analysts have made about the prospects of industrialisation in the Muslim world. The reality and prospects of the Muslim world will be shown alongside the myths that unfortunately have become accepted as truths amongst Muslims. A general blueprint will then be outlined showing how the Khilafah could industrialise the Muslim lands and change the status of the Muslim world from its current malaise to one of a superpower.

.

Download here

UPDATE: Global Economic Crisis – The Mirage of Economic Recovery

On the 60th anniversary of the Great depression the US Commerce Department Bureau of Economic Analysis released advance estimates that the US economy (GDP) had grown after four consecutive quarters of decline. If correct the US economy has posted economic growth for the first time in a year. America joins Japan, China, Germany and France as the world’s leading economies that appear to have emerged from recession and averted economic collapse. Some are arguing that this signals the end of the ‘great recession’ and a return to economic growth.

In order to asses this one would need to look at the factors that caused the recession and then analyse if they still are present or have they been replaced by economic conditions that will bring new and sustainable growth.

The growth in Western economies in the last decade was driven by the real estate bubble which stimulated the remainder of the economies of the West. The bubble reached exceedingly colossal proportions because banks were able to create various financial products from debt which were then sold to other banks based upon the assumption that the housing bubble will continue to expand.

The collapse of the worlds largest Sub prime company – New Century Inc in April 2007, the collapse of Northern Rock in February 2008 and then AIG, Lehman brothers and a whole host of other banks brought to the forefront that the boom of the last decade was unsustainable and built upon the wild assumption that real estate prices will continue to rise. The subsequent collapse in housing prices exposed gaping holes in lending practices of the worlds largest banks, many banks were forced to write off billion in debt, as they on mass were being defaulted upon. As banks collect customer deposits and lend to new business and projects all of this came to a grinding halt and because of this a crisis that was inherently financial, shifted to the real economy, hence production fell, many companies collapsed and unemployment increased. Hence the economies of the West were driven by real estate which had now run out of steam.

To avert catastrophe Western governments intervened on colossal scale to save their economies from collapsing. The idea being, whilst many would not be able to spend and hence stimulate economic activity, the state would provide the necessary money to stimulate the economy and this would bring back confidence and kick start the economy. Western governments took three key approaches to the crisis: nationalisation, stimulus packages and the printing of money.

Analysing the Economic Recovery

Many economists and policy makers are arguing that the world’s premier economies have shown economic growth between April and June 2009 and this marks the end of the great recession.
Germany lost 6.7% of national income over the course of the recession. Germany is the manufacturing heart of Europe. It relies upon exports to fuel growth. So its biggest problem has been the huge fall in global trade, which the World Trade Organisation predicts will have contracted by 10% this year. However populist polices by Chancellor Angela Merkel and the agreement to supply Russia with German automobiles shows that growth in the German economy at best based upon temporary factors and not underlying economic fundamentals. In February 2009, the country approved a 50 billion euro (£44bn) stimulus plan, Germany also launched a car scrappage scheme in February 2009 where drivers receive a cash incentive to scrap their old car and buy a new one - to boost the ailing car industry. The scheme has been widely deemed a success, with more than 1.7 million applications. The peak-to-trough decline (the beginning of the first quarter of decline to the last) for France was s 3.5%. The French government announced a 26 billion euro (£23.5 billion) initiative designed to revitalise the economy. France and Germany have come out of the recession because their financial sectors, account for a smaller proportion of their economies.

The total decline for Japan has been a whopping 8.4%. Government stimulus measures totalling $260bn (£159bn) helped to boost the economy, including cash handouts and subsidies to buy energy-efficient cars and home appliances.

If the US has come out of recession its loss in income will have been 3.7%. Third quarter GDP data reveals that August retail sales surged a seasonally adjusted 2.2% over the previous month, producing the largest monthly percent increase since January 2006, However the surge in August was driven primarily by an 11.6% increase in automobile sales, which was a direct result of Cash for Clunkers scheme. The end of this scheme saw retail sales fall 1.5% in September.

Stimulus Packages = Leg up

At the peak of the economic crisis many Western states developed Stimulus packages in order to save their economies from collapse, the most infamous being the US $1.2 trillion stimulus package in 2008. However any stimulus is a high-octane boost and a temporary measure. They are designed to kick-start stalled economies, not to fuel sustained economic growth. Hence the current growth seen in some nations are the inflated results of stimulus measures achieving their intended effect to be temporary. Government initiatives such as Car Scrappage schemes as seen in most nations, the reduction in the general sales tax in the UK and tax credits for first-time home buyers as seen in the US and France contributed to the respective 1 percent and 0.5 percent portion of the total GDP increase attributable to increased motor vehicle sales and residential investment. As these programs end, so will the contribution to the economy.

Brian Bethune, economist at IHS Global Insight said with regards to the end of the recession: “It's good to have the economy growing again, but we don't think that rate of growth is sustainable because it is distorted by all the government stimulus. The challenge here is to get organic growth - growth that isn't helped by fiscal steroids.” Unemployment is currently 9.8% in the US, that is over 15 million people.

When looking at the quality of growth much of the economic factors are temporary and not driven by any factors that can be considered sustainable. Dana Saporta, an economist at Stone & McCarthy Research in Skillman, New Jersey confirmed this: “Much of the strength in theUS economy is due to temporary factors such as fiscal stimulus initiatives like the home- buyers credit.” In fact the leg up provided by governments around the world shows the importance of government aid to the emerging economic recovery, when this is removed – which eventually governments will have to as they cannot continue with expensive stimulus plans, it is very much possible that Western economies will fall into recession again.

The stimulus packages have driven artificial growth, once Western states remove the leg up they have provided we will need to see if the free market can function on its own. With the busiest shopping season of the year approaching – Christmas, the coming quarter will provide a good gauge of ‘unstimulated’ consumer activity. However with unemployment at its highest, national production at best premature and debt still very high this quarter's turnaround is in no small part due to government stimulus measures, and is therefore most likely artificially inflated and not sustainable.

Conclusions

Whilst the US, the worlds largest economy appears to have moved out of recession its economy is dependent on consumer spending, which makes up approximately 70% of its GDP, exports make up only 11% of its economy. So sustained consumer spending will be essential for the US and consumer spending shows no signs of recovering.

The leg up provided by the Capitalist world in no way dealt with the underlying economic problems of unsustainable growth, debt driven spending, casino finance and bubble economies. What such stimulus packages have done is kept Capitalist economies afloat when unemployment, repossessions and bankruptcies have all increased. So whilst statistically Capitalist economies maybe coming out of recession the reality on the ground is much different. Socialist intervention by Capitalist governments have for the moment halted any economic collapse, however once all the temporary initiatives are removed from the free market it is highly unlikely the market will stand on its own feet. Hence the world economy in reality is in the same position it was a year ago.

Whilst the majority of Capitalist societies face the grim prospect of unemployment and repossessions, they will not be receiving any handouts to ease their situation, the recent bonuses announced by some of the worlds largest investment banks shows where the bailout packages have gone. This shows the agreements made at the G20 summits were really only for public consumption. Western governments have still not passed any legislation to stop bonuses.

The conditions in the world economy have stopped worsening, however unemployment remains high and consumer spending is still low to sustain any economic recovery. At best the current quarter growth seen in some of the world’s major economies is premature, the underlying economic fundamentals remain absent, hence economic recovery currently is in reality just a mirage.

The Struggle for Space: The Final Frontier

"It's politically sensitive, but it's going to happen. Some people don't want to hear this, and it sure isn't in vogue, but-absolutely-we're going to fight in space. We're going to fight from space and we're going to fight into space. That's why the US has development programs in directed energy and hit-to-kill mechanisms. We will engage terrestrial targets someday-ships, airplanes, land targets-from space."[1]

Space represents the 4th frontier after land, sea and air and for nearly half a century epitomized an important arena for dominance and superiority. Like the sea and air before it, space has become a critical enabling domain for global military operations.

Nearly 900 satellites orbit the earth everyday, for purposes such as weather monitoring, help in search and rescue, help in potential natural disaster detection, coordinating efforts on detecting and dealing with issues of space debris and minimizing harmful impacts on Earth and research in sciences. Many satellites also have military use, from reconnaissance to guiding weapons systems. Satellites remain the main focus of military space activities. They are widely used to provide support for military or security related activities such as verifying compliance with arms control treaties. They are also increasingly used to provide direct support for military operations. There are over 270 military satellites as well as 600 civil, commercial and multi-purpose satellites orbiting the earth and many satellites are increasingly ‘dual-use' (can be used for both military and non-military purposes).

The US has gained the most advantages through its exploitation of space. Space technology is at the higher end of the technology ladder and has a huge knock on effect to other technological developments. Other nations and potential adversaries are keenly aware of the advantages and are seeking ways to exploit these advantages for themselves.

Militarization of space

Space exploration has its origins in the military build up for WW2 and began with the development of rockets by Nazi Germany, who developed the first liquid fuel rocket with the ability to carry missiles. The Nazi defeat resulted in both USSR and the US setting up programmes under which intelligence and military services extricated Nazi scientists from Germany of particular interest to both nations were those specializing in aerodynamics and rocketry. The US were the most successful in kidnapping scientists whilst the USSR succeeding in capturing production plants and missiles.

In 1946, the US Army achieved radar contact with the moon, by 1954, the Navy began communications experiments using the moon as a reflector and by 1959, it established an operational communication link between Hawaii and Washington DC. In 1957, the USSR successfully launched Sputnik 1, the first artificial satellite to reach orbit, Sputnik caused fear and stirred political debate in the United States - The Space Race had begun. In 1958, President Eisenhower signed the National Aeronautics and Space Act establishing the National Aeronautics and Space Administration (NASA) incidentally Wernher von Braun the who was head of the Nazi rocket programme became NASA's first chief director of the Marshall Space Flight Center and the chief architect of the Saturn V launch vehicle hence, he is the founding father of the United States space program.

The space race reached its peak during the cold war with both the US and USSR competing and establishing various programmes to ensure space technology remained balanced towards them. Having weapons in space was first proposed by President Ronald Reagan in 1983 at the height of the cold war, he argued a defence shield using laser or particle beam technology to intercept and destroy incoming nuclear missiles, which according to him was needed by the US due to the threat posed by belligerents. The Strategic Defence Initiative or "Star Wars" as it came to be known was eventually abandoned in 1993, due to serious technical difficulties, along with its large cost of $250 billion and the collapse of the Soviet Union resulted in domestic pressure for its abandonment.

Successive governments since Reagan have long made it clear the US wishes to expand its military capabilities and have weapons in space and therefore also be dominant in this fourth military arena. This new "ultimate high ground"[2] would provide further superior military capabilities. Emerging trends are clearly aimed at making the United States the first nation to deploy space-based weapons. America's ballistic missile defense (BMD) ultimately is about space. A BMD interceptor used in an inherently offensive role capable of hitting a ballistic missile warhead hundreds of miles above Earth would be up to the easier task of hitting a satellite at the same altitude.

Weapons in Space

In August 2006, President Bush authorized a new national space policy, superseding the National Space Policy of September 1996. The policy was based on 8 principles. New policies include supporting the "peaceful use of space by all nations." However, "Consistent with this principle," claimed the policy, "peaceful purposes" would "allow U.S. defense and intelligence-related activities in pursuit of national interests." Two other key principles noted the use of force, if needed to defend US interests.[3]

The US considers space capabilities including the ground and space segments and supporting links vital to its national interests. Consistent with this policy, the new space policy ‘preserve its rights, capabilities, and freedom of action in space; dissuade or deter others from either impeding those rights or developing capabilities intended to do so; take those actions necessary to protect its space capabilities; respond to interference; and deny, if necessary, adversaries the use of space capabilities hostile to U.S. national interests.'[4]

In April 2005, "Gen. James E. Cartwright, who leads the United States Strategic Command, told the Senate Armed Services nuclear forces subcommittee that the goal of developing space weaponry was to allow the nation to deliver an attack ‘very quickly, with very short time lines on the planning and delivery, any place on the face of the earth.' The US has taken such a hard-line stance due to threats it perceives from adversaries, this has resulted in the US voting against a number of treaties, which propose the banning of weapons in space. This was confirmed in the national space policy of October 2006 which states ‘The United States will oppose the development of new legal regimes or other restrictions that seek to prohibit or limit U.S. access to or use of space. Proposed arms control agreements or restrictions must not impair the rights of the United States to conduct research, development, testing, and operations or other activities in space for U.S. national interests.'[5]

The US has continued the development of technology which would allow it to place weapons in space. In 2004, the US Air Force issued a document called ‘Transformation Flight Plan' which envisaged a whole array of space weapons both offensive and defensive. They would include anti-satellite systems and even things called "hypervelocity rod bundles" that could be hurled down on a target from space.[6]

Game of nations

In January 2007 China used a ground-based medium-range ballistic missile to destroy one of its aging weather satellites 500 miles above the earth. International criticism came from far and wide Gordon Johndroe, US National Security Council spokesman believed "China's development and testing of such weapons is inconsistent with the spirit of co-operation that both countries aspire to in the civil space area."[7] Japan, Australia and the US expressed concern as this is the first known satellite intercept test since the space race between the US and the Soviet Union.

China is considered a possible adversary of the US in the future, and may be one of the countries that could threaten US dominance in space, even though for now it has constantly opposed the use of space for military purposes. China's use of a ground-based missile was one of the first such acts since the 1980s when the Soviet Union and the US did such things. China is feared to be developing better weapons to do such things, and there was also concern that China didn't inform anyone that it was doing this. China's lack of transparency is a cause of concern for the US. China has an extensive space-based science programme and also has its own navigation, telecoms and imagery satellites. As with many countries, the ‘dual-use' Nature of satellites means it can be hard to distinguish between military and civilian activities.

As of 2005, 45 countries had launched a satellite, with Iran being the 45th. India and China's programmes are developing the quickest. India's first dedicated military satellite system for surveillance and reconnaissance was launched in 2007. Countries such as Russia, China, India, Israel, Japan and the European Space Agency( ESA) now have launch facilities, which other countries can pay to use.

Apart from China and Russia none of the other countries have the capabilities or will to even reach such a stage for decades. The evidence of actual space weapons programs by Russia and China, potential adversaries is thin and both nations have continued to consistently oppose the weaponisation of outer space in its official statements, and, along with Russia, China has led the initiative to create an international treaty banning all weapons in space.

The US looks upon all those who may potentially rival or supersede it as belligerents because Space exploration and its research has been the powerhouse for a number of developments within the military, this was summed up accurately in the first paragraph of the new national space policy ‘In this new century, those who effectively utilize space will enjoy added prosperity and security and will hold a substantial advantage over those who do not.' And the Vision for 2020, a 1996 report of the US Space Command, which coordinates the use of Army, Navy, and Air Force space forces, was set up in 1985 to help institutionalize the use of space explicitly mentions' the US wants to ‘control space to protect its economic interests and establish superiority over the world,' it also mentions "US Space Command - dominating the space dimension of military operations to protect US interests and investment. Integrating Space Forces into war fighting capabilities across the full spectrum of conflict." The report opens with the following: "Nations built navies to protect and enhance their commercial interests, by ruling the seas. Now it is time to rule space."[8]

An Alternative framework

The current debate about space is riddled with a number of problems; the major powers who have some elements of space capability are viewing the whole affair from a purely national interest perspective which implicitly means space is their right. All attempts on securing treaties have thus failed as such agreements are viewed from a national interest perspective. All attempts by the Untied Nations were always destined to fail as international law will never supersede a nation's national interest or sovereignty; hence the US has vetoed all attempts of a global agreement on space for exploration and peaceful uses only. China and Russia similar to the US put their national interests first and have only taken part in international agreements to restrict the US. The current international framework was designed and set-up to protect the interests of nations such as the US, Britain, France, China and Russia after WW2 hence space exploration for them would always be viewed from a national interest perspective which today is dominated by US hegemony.

Islam has a completely different perspective for space exploration and a future Khilafah would pursue such a policy. Space represents an area which although no nation physically owns its use affects the whole world and needs them to come together to agree on its use and pool resources. This is similar to the use of the world's oceans and common resources such as the Suez Canal and the Silk Road in the past. In the past such common resources were usually under the authority of locals or a dominant power who would charge a tax for its use which would then be used for its maintenance and development. Hence the Uthmani's would charge a tax for large areas of the Mediterranean in order for harbours and ports to be developed to facilitate trade. Space is again such an area which transcends national boundaries and needs the world to come together similar to issues such as Aids, global warming, terrorism, conflict diamonds etc.

The coming together on resources which are needed for the masses is something which has been present in Islamic jurisprudence throughout the Islamic history. In Islam Public property is commonly where permission has been to the community to share the use of the asset. Assets which are public property are those which the Lawgiver stated that as belonging to the community as a whole, there are of three types: that which is considered a public utility, so a community would disperse in search for it if it were not available, the uncountable stores of minerals and resources by their nature, that prevent individuals from possession.

If things are left to the current paradigm of US hegemony space will go the same way as oil and gas have, where the global powers wrestle control of vital resources leading to further chaos and conflict as can be seen in Africa. The Khilafah can guarantee access to vital resources based on justice as it does not view the world through a capitalist self-interest angle but rather it views the world as something which it will be accounted about, and the actions it undertook to ensure justice prevailed.

Thus the world needs to come together on common resources and this can be achieved if all nations view them as common assets which all can freely benefit from. In regards to space, all the world needs to come together as it's beyond any one nation to develop. If any nation does try to gain a monopoly public opinion can be used to put an end to the belligerence.

In summary

- Space is a huge area that no-one can practically lay claim to
- The world needs to come together so Space assets and technology develop
- Satellites are the most important outcome of space, tsunami detection and weather research are the outcomes of satellite developments
- The militarization of space should only take place if all nations can participate, not just the major powers
- Islam has addressed issues such as common utilities and resources that practically cannot be owned individually and designated them as common utilities for use for all peoples.
- The Khilafah should work towards a Hilf al Fadoul type agreement over Space

References

[1] Commander-in-Chief of US Space Command, Joseph W. Ashy, Aviation Week and Space Technology, August 9, 1996, quoted from Master of Space by Karl Grossman, Progressive Magazine, January 2000

[2] Jonathan Power, May 9, 2001, 'Space-After Tito's fun it might be Rumsfeld's nightmare', Trans-national Foundation for Peace and Future Research, http://www.transnational.org/forum/power/2001/05.02_Rumsfeld.html

[3] Unclassified National Space Policy, Office of Science and Technology Policy, Executive Office of the US President, October 6, http://www.ostp.gov/html/US%20National%20Space%20Policy.pdf

[4] ibid

[5] Unclassified National Space Policy, Office of Science and Technology Policy, Executive Office of the US President, October 6, http://www.ostp.gov/html/US%20National%20Space%20Policy.pdf, Pg 2

[6] http://www.af.mil/library/posture/AF_TRANS_FLIGHT_PLAN-2003.pdf

[7]19th Jan 2007 ‘Concern over China's missile test' http://news.bbc.co.uk/1/hi/world/asia-pacific/6276543.stm, quoted from article in the magazine American Aviation Week and Space Technology

[8] E Howell General, (1996) ‘vision for 2020,' US space command, http://www.middlepowers.org/gsi/docs/vision_2020.pdf

Islamic Finance – A False Dawn

Open up the pages of any newspaper or Financial Magazine and you are guaranteed to find advertisements from banks announcing their latest Islamic finance products. Once perceived as a niche market, Islamic finance today is big business with both local and international banks keen to get in on the act. An increasing number of non-Muslims are adopting Islamic compliant products as awareness of the principles behind Shari’ah finance has grown. In 2008, at least $500 billion in assets around the world were managed in accordance with Shari’ah and the sector is growing at more than 10% per year.

Asif Mumtaz, regional head of HSBC Amanah, HSBC's Islamic banking arm, says: "Within this region the Islamic finance industry is evolving from a niche segment to a mainstream one. "It is our informed opinion that within the next eight to 10 years, the industry will capture half of the savings of l.6 billion Muslims worldwide."

To gain a foothold in the market many conventional banks, including HSBC have launched Islamic versions of their traditional products - including Islamic loans and credit cards. In recent weeks Standard Chartered announced the launch of its global Islamic banking brand in the Middle East, Saadiq and its first Islamic credit card, the Saadiq Gold Credit Card. It followed hot on the heels of First Gulf Bank's first Islamic credit card the Meccah Credit Card, which rewards customers with the opportunity to earn steps to travel to the Holy City of Mecca.

Islamic Finance and the West

In the West London is turning into a hub for Islamic financial activity, Gordan Brown announced changes to the tax status of Islamic finance in his 2006 budget. Then on the 23rd April The British government announced it will issue Islamic bonds, seeking to meet what it believes is a significant demand for this financial product both inside and outside the UK. The evolution of Islamic finance has resulted in Ford Motor Inc selling Aston Martin - maker of James Bond's favourite sports car for £479 million ($1.2 billion) to a leveraged buy-out (LBO) consortium organized through Islamic Finance.

Britain currently has five Islamic banks, whilst at the same time Britain’s high street Banks offer a range of products which they claim are Shari’ah compliant. The Islamic Bank of Britain offers a Shari’ah compliant current account, mortgage and personal loan. HSBC offers an Islamic current account and mortgage. A handful of other banks - including some of the biggest international names and the Middle East's biggest traditional banks - also offer financial products in the UK.

Whilst Islamic finance and Economics has been welcomed with open arms by some, there are some who are sceptical. Islamic finance is sparking a heated debate in France, a strictly secular European heavyweight, though economists contend it would be in the country’s interest to tap into the booming global industry. The French parliament in September approved a number of adjustments to its banking laws to allow sukuk (Islamic bonds) to be issued for the first time. This was at the same time as the Qatar Islamic Bank applied for license to operate in France as the first Islamic bank. However Socialist MP Henri Emmanuelli told Agence France Presse (AFP) that "We must not allow principles of Shari`ah law, or the ethics of the Qur`an to be introduced into French law." This has led to France's highest constitutional authority on October 14th to strike down some of the provisions the French Parliament passed.

Islamic banking: The basics

The main difference according to the industry between a banks' conventional and Islamic products is the absence of interest. Under Shari’ah law interest, whether nominal or excessive, simple or compound, fixed or variable is forbidden. Shari’ah based products also favour asset-based transactions.

Explaining the principles behind it Dr Taha El Tayeb, head of products development and Sharia structuring at Mashreqbank's Islamic banking division Badr Al-Islami says: "Islamic finance and Sharia law would always recommend people to go for asset-based transactions. If you need to buy a car for instance, instead of borrowing money from a bank - that bank should take the risk, buy the car and sell it to you at a profit rate." he also adds: "The intent of Islamic banking is very much that you are in a socially responsible banking community. Islamic banking moves away from pure speculation and more into activities that will help to grow the industry and the infrastructure-based economy. Every transaction is tied to an asset, which is a real world economy asset." There are three main Islamic financial instruments which are used to structure Islamic loans.

Ijara works as a leasing agreement whereby the bank buys an item - such as a house or a car - for a customer then leases it back to them until they have paid off the full amount and take over ownership of the item. "When a customer is planning to buy something we at Amlak buy that property then we give it to the customer on a lease period of 15 to 20 years then the ownership passes to the client. There is no interest charged but there is profit based on the fact that when you own a property you have the right to rent it out for however much you want." Says Khalid Zainal, Director of Sales and Marketing of Amlak Finance

Murabaha works by the bank supplying specific goods for resale to the customer at a profit rate. The customer pays the bank back in monthly instalments - the rate of which are fixed. Commodity Murabaha is designed for customers who want a fixed rate cash loan and involves the purchase and sale of commodities on the London Metal Exchange.

The third Islamic banking instrument, Musharaka, which is a joint venture whereby the customer and bank contribute to the funding of a venture and agree to share the returns - as well as the risks - in proportions agreed in advance.

Islamic credit cards look set for major growth with increasing demand from customers prompting banks such as Standard Chartered and First Gulf Bank to launch their own Sharia compliant products. However Islamic credit cards are still to hit the western high street. Islamic credit cards work in much the same way as conventional cards but in place of interest banks will charge customers annual or quarterly fees. Standard Chartered's latest offering, the Saadiq Visa Gold Credit Card, for example operates on the Urjah concept, which is based on a fixed fee structure.
Customers are given a grace period to pay the monthly outstanding balance on the card to avoid paying a fee, and a fixed monthly maintenance fee is charged for usage of the card's service account.

Islamic Economics

The global financial crisis has highlighted some fundamental problems with free market economies. The market as the ideal method to distribute wealth has been discredited, economic growth in free market economies has proven to be unsustainable and the financial markets, for long the showpiece of free market success has proven to be no different to a casino.

In order to stimulate many of the broken economies of the West and overcome many of the structural flaws that cause economic crisis, many free market governments have turned to Islamic finance due to the phenomenal growth it has shown in the last decade. However this deflects attention from the real problems the West faces.

Whilst there is much the West can learn from the Islamic economy – such as the stability Islam brings by being based upon the real economy, the rapid distribution of wealth through a non-interest based economy and the stability Islam’s provided by Islam’s trade rules and the removal of gambling and speculation. Such economic concepts are in reality a few aspects of the Islamic economy, which itself are built upon a fundamental alternative view towards wealth, production, the macroeconomy and property. The mere adoption of some aspects of Islam will not solve the economic problems of the West and even the Muslim world.

Free market economies need a complete overhaul as no amount of regulation will ever curb the motive to make money at any cost. For this reason boom and bust has been a feature of free market economies for over 200 years and will continue to do so.

Conclusions

The Islamic economic system is an integrated system with different aspects of Islamic economics all feeding into each other. The rules of Riba are built upon Islam’s view of wealth, the Islamic rules of trade are built upon Islam’s view towards ownership, Islamic taxation is built upon Islam’s views towards wealth distribution and Islamic finance is built upon Islam’s view towards investment and currency. Taking a part of Islam without its framework will only create contradictions in an economy. Attempts by the West to plug its problems through aspects of Islam are attempts at giving the free market a leg up.

The Ummah should not feel happy when a few elements of Islamic economics are made available. This is an implicit acceptance that Islam can not stand on its own feet. There is a much bigger issue and that is why are the Gulf states and the Far East who are the leaders in Islamic finance not comprehensively implement Islam and make it available in the Muslim world. Such an approach would completely revitalise the economies of the Muslim world and project a positive image of an economic alternative. Islam is a complete system, all of it should be applied

BOOK: Islam in the 21st Century

Since the events of 9/11 and 7/7, Islam and Muslims have increasingly been on the receiving end of a barrage of criticism. Many of the Islamic thoughts and practices have come under unprecedented attack under the banner of Freedom. The caricatures of Prophet Muhammad (saw) and the banning of the Hijab in France are just two examples of the attempts of western secular countries to actively malign Islam. This attack on Islam and Muslims is however not restricted to certain Islamic thoughts and practices. Rather the whole concept of Shari'ah, the Islamic legal System, is ferociously attacked. The media portrayal of life under Shari'ah where beating of women, beheadings and lashings are everyday occurrences, are now all too familiar images.

This booklet will explore and contrast some of the problems of the 21st century and compare the manner in which secularism and Islam attempt to solve them. It looks at how the Shari'ah texts are capable of dealing with any issue, be they social, economic or international. The book also scrutinises the applicability of the shari'ah in the 21st century through looking at a variety of 21st century issues. A comparison will be made between the Shari'ah approach to tackling issues and the secular methodology and its effects.

Download here