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Thursday, Oct 02 , 2014 ( Thul-Hijjah, 1435)

Updated:10:00 PM GMT

Islamists Woo Investors With Free Economy

OnIslam & News Agencies
Islamists  econommy
Islamists pledge free trade, more manufacturing investment and crackdown on corruption
Islamists, economy

CAIRO – Coming to power after decades of repressions under dictatorial governments kept economics and religion apart, Islamist parties are assuring foreigners with pledges for free trade, more manufacturing investment and crackdown on corruption.

"We want to attract as much foreign investment as possible...and this needs a big role for the private sector," Hassan Malek, an Egyptian businessman and a top financier of the Muslim Brotherhood, told Reuters.

Malek, who has business in textiles and furniture, was jailed by Hosni Mubarak's government in 2006 and released after the former president resigned.

In most of North Africa, political change triggered by the Arab Spring uprisings is set to give Islamist parties major influence on economic policy for the first time.

The Islamist Ennahda party will dominate Tunisia's coalition government after last month's elections.

Islamist groups are expected to do well in Morocco's parliamentary polls this Friday, and in a series of Egyptian elections starting late this month.

Libyan elections are due next June and the country's interim leader, Mustafa Abdel Jalil, has already urged the country to "purify" its financial laws along Islamic lines.

Even in the Gulf, where the Arab Spring has not ousted governments, there are some signs of greater Islamic influence on policy.

Oman announced in May that it would introduce Islamic banking after resisting this for years.

In February, Qatar asked conventional banks to close down their Islamic operations to prevent any overlap of business with full-fledged Islamic banks.

But the rise of Islamists has worried local and foreign businessmen, who are worried that Islamist parties could disrupt financial markets and trade with religiously inspired regulations.

Amine Tourki, who owns a travel agency Tunisia, believes that the rise of Ennahda party could cripple the tourism sector.

"The tourists still have doubts, especially the French. They are afraid that the hotels are going to be controlled by Islamists," he said, adding that hotels in the south were empty even though it was the tourism season in the Sahara.

A foreign businessman operating in Libya said the country's new leaders would face a tricky task satisfying popular desire for economic change while accommodating the business community.

Liberal Economy

Knowing the need to economic growth to cut unemployment and pay for social spending, Islamist parties are working to assure investors.

"If you look at the parties in North Africa, none of them are against the free market, private property or private business," said Florence Eid, chief executive of research and advisory firm Arabia Monitor.

"These are not parties which are going to devastate the economy."

Ennahda, for example, says it wants to improve Tunisia's infrastructure to attract foreign investment, and work towards a regional common market.

Morocco's Justice and Development Party (PJD), which looks likely to win the most seats in Friday's polls and may govern in a coalition, aims to streamline rules and involve the private sector more in development projects.

The experience of Iran, where the Islamic revolution of 1979 led to the nationalization of industries and an inefficient, heavily regulated economy, is one reason for businessmen's misgivings in the wake of the Arab Spring.

But for North African parties and governments, a more relevant model is Turkey, which has enjoyed spectacular economic growth since the religiously conservative AK Party took power a decade ago, and is expanding its economic and diplomatic influence in the region through trade and investment.

Officials of both Tunisia's Ennahda and Morocco's PJD say they have been influenced by the AK Party.

"You have an Islamist government in Turkey but no one talks about the Islamisation of economic policies there," said a senior World Bank official in the region, declining to be named because of the sensitivity of the issue.

The growth of Islamic finance, which prohibits the use of interest and pure monetary speculation, is likely to be the most visible result of Islamist parties' influence in North Africa.

Previous governments limited or discouraged it; now Islamic banks from the Gulf are keen to move in.

But in all the countries, Islamic finance is expected to coexist with conventional banking, as it does in the Gulf, rather than replace it.

In Libya, Jalil's call to "purify" finance was seen by most analysts as a remark made for effect at an emotional moment, not a policy declaration that the country's next government will follow.

Libya wants to develop ties with the Western nations which aided the opposition to oust Muammar Gaddafi’s regime, and has pledged to respect their business interests.

In fact, Islamic banking may benefit North African countries by giving them access to the Gulf's big pool of Islamic investment funds, at a time when the European debt crisis is ravaging the conventional financial system in the West and causing European banks to cut back their overseas lending.

Days after Tunisia's elections, Ennahda leader Rachid Ghannouchi went out of his way to reassure the financial industry that it would not be disrupted, meeting executives of the national stock market to tell them he wanted more company listings to help diversify the economy.

Ghannouchi has also said he wants to follow through on the previous government's intention to make the dinar currency convertible -- a reform which, if it went ahead, would be a dramatic gesture of liberal economic policy.
Related Links:
Egypt Brothers Eye Islamic Finance Economy
New Egypt Eyes to Be Islamic Finance Hub
Islamists Assure Tunisians on Democracy
Don't Fear Us, Tunisia Islamists Tell West
Libya's Rulers Assure West on Shari`ah

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