MERAIH REZEKI LEWAT INFAQ & SEDEKAH DENGAN IKHLAS DAN JUJUR

March 28, 2011 5 comments

MERAIH REZEKI
LEWAT INFAQ & SEDEKAH
DENGAN IKHLAS DAN JUJUR

HALAL

“Tidak akan berkurang harta yang disedekahkan ………
Kecuali ia bertambah …… bertambah ……. “ (HR. at-Thurmidzi).

“Siapa yang memberti pinjaman kepada Allah
Dengan pinjaman yang baik, maka Allah akan melipat gandakan
Balasannya dan baginya pahala yang mulia.” (QS. Al-Hadid 57 : 11 ).

“ ……. dan janganlah kamu takut kepada kemiskinan karena membelanjakan
Harta di jalan Allah.” (QS. Al-Baqarah 2 : 245 ).

“Kamu tidak akan memperoleh kebajikan (yang sempurna) sehingga kamu
Menafkahkan sebagian harta yang kamu cintai …..” (QS. Al-Imran 3 : 92).

“Ingatlah, kamu ini orang-orang yang diajak untuk menafkahkan (hartamu)
Pada jalan Allah, maka diantara kamu ada orang yang kikir, dan siapa yang kikir
Sesungguhnya dia hanyalah kikir terhadap dirinya sendiri. Dan Allah lah Yang Maha Kaya
Sedangkan kamulah orang-orang yang membutuhkan (Nya) ….”
(QS. Muhammad : 38 ).

“dan Allah senantiasa memberi pertolongan kepada hamba Nya
Selama ia menolong saudaranya.” (HR. Muslim).

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Permasalahan Pajak Ganda Murabahah

September 5, 2010 Leave a comment

Permasalahan pajak ganda yang dikenakan kepada bank-bank Syariah dengan skim murabahahnya sebenarnya issue yang sudah lama. Rumor ini muncul sejak tahun 1997, dan saat ini kembali ramai diperdebatkan lantaran pajak yang harus dibayarkan kepada Ditjen Pajak jauh lebih besar dari pendapatan yang diterima oleh bank-bank syariah dengan transaksi murabahahnya.

Pada prinsipnya Murabahah itu jual beli, ketika ada permintaan dari nasabah, bank terlebih dahulu membeli pesanan sesuai permintaan nasabah, lalu bank menjualnya kembali kepada pemesan dengan harga aslinya lalu ditambah dengan margin keuntungan yang telah disepakati oleh pemesan.

Karena transaksi jual beli itu terjadinya dua kali, maka terjadi dua kali peralihan kepemilikan sehingga PPN-nya dikenakan dua kali juga. Menurut UU No. 18 Tahun 2000 (tentang Perubahan Kedua Atas Undang-Undang Nomor 8 Tahun 1983 tentang Pajak Pertambahan Nilai Barang dan Jasa dan Pajak Penjualan Atas Barang Mewah, utamanya Pasal 1A ayat (1), huruf a dan b,) berarti juga terbebani dua kali pembayaran pajak.

bagaimana pajak ganda itu diterapkan? Ilustrasi mudahnya begini; Misalkan saja, ada nasabah datang ke bank bermaksud ingin membeli motor seharga 15 juta di dealer A, lalu bank menuliskan transaksi akad tersebut dengan meminta margin (keuntungan) 5%. Jadi harganya 15.750.000. lalu bank membeli motor tersebut di dealer A dan menyerahkan kepada nasabah.

Nah pada saat bank membeli motor dari dealer A seharga 15 juta, bank sebenarnya sudah dikenai pajak, dimana harga yang Rp. 15 juta itu sudah termasuk pajak PPN 10%. – Ceritanya menjadi lain jika membelinya langsung dari pabriknya. kemudian pada saat menjual kembali kepada pemesan seharga Rp. 15.750.000, bank dikenai pajak lagi. Katakanlah pajak PPN yang dikenakan sebesar 10%. Sehingga bank harus membayar pajaknya sebesar: 15.750.000 X 10% /100 = 1.575.000,- (ini yang menjadi sumber kerugian bank)

Dengan ilustrasi diatas, dapat dikatakan dalam setiap melakukan transaksi murabahahnya, bank syariah akan selalu mengalami kerugian karena harus membayar pajak yang lebih besar dari keuntungan yang diperolehnya. pengambilan margin yang hanya sebesar 5 persen dari transaksi murabahah ini sebelumnya sudah dipertimbangkan oleh bank-bank syariah, sebab jika bank- syariah mengambil keuntungan yang lebih besar dari setiap transaksi murabahahnya, katakanlah lebih besar dari PPN 10% dengan alasan supaya menutupi kerugian pembayaran pajaknya, tentunya bank syariah akan kalah bersaing dengan bank-bank lain seperti bank konvensional yang memberikan kredit pembiayaan lebih kecil karena bank konvensional tidak dikenai pajak ganda. Lantaran mengambil margin yang lebih besar dari bank konvensional, para nasabah pun pastinya akan memilih bank yang memberikan pembayaran cicilan lebih murah dari bank syariah.

Jika merujuk kepada UU Nomor 42/2009 mengenai PPN, aturan PPN murabahah sejatinya sudah dihapuskan, aturan ini baru efektif April 2010 nanti. Hanya saja, penghapusan ini hanya bersifat kasuistis. Artinya, bank syariah dengan transaksi murabahahnya, masih harus berkewajiban membayar tagihan pajak tahun-tahun sebelumnya.

Itulah alasan mengapa sekarang ini bank-bank syariah menjadi bank yang memiliki tunggakan besar pajaknya. Sebagai contoh BNI, lantaran terkena pajak ganda, Bank dengan plat merah ini masuk dalam daftar penunggang pajak yang dirilis Ditjen Pajak. Pajak yang dimaksud adalah murni dari transaksi murabahah UUS BNI pada tahun 2007. Besarannya sekitar 128,2 milyar, dengan rincian PPn murabahah Rp. 108,2 milyar dan saksi administrasi Rp. 20 milyar. Padahal laba UUS BNI syariah pada tahun 2007 hanya 19,7 milyar. Jika dihitung dari sejak UUS BNI berdiri pada ahun 2000 hingga tahun 2009, maka total pajak murabahahnya adalah Rp 393 milyar.(Republika, 5 Februari 2010)

Menurut Ahmad Baiquni (mengutip dari sini) mengapa pemerintah ngotot menarik pajak berganda ini karena melihat nilai pembiayaan murabahah yang lumayan. Tengok saja, dari total pembiayaan perbankan syariah sebesar Rp 60 triliun, sekitar 57% atau Rp 34,2 triliun merupakan pembiayaan akad murabahah. “Jadi, ada potensi pajak Rp 3,42 triliun.

Jika bank-bank syariah tetap harus membayar tunggakan pajaknya pada tahun-tahun sebelumnya, hal ini akan berakibat meruginya bank-bank syariah, selain itu juga akan berdampak menurunya nilai asset yang dimiliki. Sebab dari nilai transaksi yang dilakukan oleh bank-bank syariah, sekitar 80 persen diantaranya adalah transaksi murabahah. Menurunnya nilai asset, akan berdampak pada menurunya jumlah tranksaksi pembiayaan, menurunya jumlah transaksi pembiayaan akan menurunya keuntungan/profit yang diperoleh. Hal ini akan menghambat perkembangan bank syariah di Indonesia.

Selain itu, penghapusan pajak yang belum sepenuhnya clear, membuat enggannya minat investor untuk masuk ke domain perbankan syariah. Seperti misalnya; Kuwait Finance House dan Qatar Islamic Bank yang mau menanamkan modalnya untuk Bank syariah setelah dihapuskannya pajak berganda itu di Indonesia.

Oleh karena itu, agar tetap eksis dan berkembangnya bank-bank syariah di Indonesia, mari Qt dukung penghapusan pajak ganda murabahah dari tahun-tahun sebelumnya.
Wallahu’alam
Sumber Referensi :
Koran Republika 5 Februari 2010.

Bank syariah tuntut netralisasi pajak ganda
Asosiasi Perbankan Syariah Indonesia (Asbisindo) mengajukan netralisasi untuk menuntaskan pajak ganda murabahah (jual beli) yang bisa menjadikan bank syariah merugi.Ketua Asbisindo A Riawan Amin menjelaskan pihaknya telah melayangkan surat ke Departemen Keuangan untuk membahas pemutihan pajak pertambahan nilai yang disampaikan sejak bulan lalu.
Selama ini, katanya, transaksi di perbankan syariah 80% masih menggunakan akad murabahah sehingga kalau harus dikejar pajak ganda ke belakang, maka akan menghambat bisnis bank syariah.”Sekarang amendemen UU Pajak Pertambahan Nilai (PPN) sudah dilakukan tetapi temyata belum mengubah paradigma seluruhnya di Dirjen Pajak. Untuk itu, Asbisindo melakukan netralisasi pajak karena akan membuat modal bank tergerus,” jelasnya dalam Temu Pers Asbisindo, kemarin.
Riawan menyatakan jika pajak ganda yang diperdebatkan sejak 1997 itu harus dibayarkan maka secara ti-
dak langsung juga akan membuat cacat program Bank Indonesia dalam mengembangkan perbankan syariah karena kinerja keuangan bank syariah ke belakang akan terkoreksi.
“Kalau memang amendemen UU PPN sebuah pengakuan bahwa murabahah termasuk produk keuangan yang bebas pajak, harus dibebaskan.”Riawan menambahkan komitmen pemerintah untuk mengembangkan perbankan syariah sebagai agenda nasional, harusnya dilakukan dengan tuntas setelah diterbitkan UU Perbankan Syariah dan amandemen UU PPN harusnya bisa sampai penghapusan pajak ganda seluruhnya.
“Kalau penghapusan pajak ganda murabahah temyata hanya untuk mengundang asing datang, sedangkan bank lokal masih dikenakan beban pajak itu sama saja menyulitkan.”Sementara itu, Direktur UKM dan Syariah BNI Achmad Baiquni menjelaskan selama ini unit usaha BNI Syariah masih terbebani dengan persoalan pajak ganda murabahah mencapai Rpl28,2 miliar terdiri dari tagihan pajak pertambahan nilai RplO8,2 miliar dan sanksi administrasi Rp20 miliar.
“BNI bersepakat dengan kalangan bank syariah lainnya khusus untuk murabahah tidak akan membayar pajak pertambahan nilai itu, agar bisa dihapuskan. Tapi temyata setelah amandemen UU PPN tetap saja ada penagihan pajak lama,” kata dia.
Keadilan
Baiquni menyatakan pihaknya menuntut keadilan Direktorat Jenderal Pajak dalam menghitung objek pajak berganda transaksi murabahah perbankan syariah, karena semua bank dalam industri tersebut memakai sistem serupa.Namun, di sisi lain jika perhitungan itu diterapkan membuat industri perbankan gulung tikar karena akan membayar pajak pertambahan nilai yang mencapai Rp3 triliun dalam 1 tahun.
Dia mengatakan semua perbankan syariah memakai transaksi murabahah dalam melakukan skema pembiayaan, sehingga jika dinilai ada pe-nunggakan pajak berganda semua industri terkena.Pekan lalu, Dirjen Pajak mengumumkan bahwa BNI bersama Bukopin masuk dalam 100 besar perusahaan penunggak pajak. Kasus kedua perusahaan itu disebabkan oleh transaksi murabahah yang dikenai pajak berganda.
Sumber : Bisnis Indonesia

FRIDAY, 29 FEBRUARY 2008 07:23
HAPUS PAJAK GANDA PERBANKAN SYARIAH

Mimbar Jumat – Artikel Jumat

SALAH satu permasalahan pada industri perbankan syariah adalah persoalan pajak ganda (double taxation). Pajak ganda yang dimaksud adalah pengenaan pajak dua kali atas transaksi pada produk perbankan syariah terutama pada skim murabahah. WASPADA Online

Oleh Mustafa Kamal Rokan

SALAH satu permasalahan pada industri perbankan syariah adalah persoalan pajak ganda (double taxation). Pajak ganda yang dimaksud adalah pengenaan pajak dua kali atas transaksi pada produk perbankan syariah terutama pada skim murabahah. Pengenaan pajak ini tentunya tidak menguntungkan bagi perkembangan industri bisnis syariah terutama pada perbankan syariah.

Sebab akan menyebabkan biaya mahal dalam industri syariah. Untuk itu, mendesak dihapuskannya pajak ganda tersebut. Saat ini, salah satu skim terlaris dari produk perbankan syariah adalah skim murabahah dan bai’ bithaman ajal. Adapun mekanisme pada skim ini adalah bank membeli barang atau produk yang menjadi permintaan nasabah, kemudian bank menjual kembali barang tersebut kepada nasabah dengan tambahan harga, (harga asal ditambah profit margin) dan selanjutnya nasabah membayar dengan angsuran kepada pihak bank.

Karenanya, dalam skim ini berarti terjadi dua (2) kali transaksi jual beli, yakni pembelian barang oleh pihak bank, dan penjualan barang pihak bank kepada nasabah. Disebabkan dua kali transaksi jual beli berarti telah terjadi dua kali peralihan kepemilikan, karenanya dikenakan pajak dua kali (pajak ganda).

Berdasarkan Undang-undang No. 18 Tahun 2000 tentang perubahan kedua atas Undang-undang No. 8 Tahun 1983 tentang Pajak Pertambahan Nilai Barang dan Jasa dan pajak Penjualan Atas Barang Mewah. Tentunya regulasi ini menjadikan perbankan syariah sangat terbebani. Padahal data menunjukkan skim murabahah adalah produk yang sangat diminati dan menjadi andalan perbankan syariah saat ini. Dari data terlihat transaksi perbankan syariah tidak kurang dari Rp21,920 triliun dengan komposisi terbesarnya adalah murabahah yakni Rp13,340 triliun atau sebayak 60,86 persen (Republika, 4/2).

Urgensi penghapusan
Paling tidak ada dua alasan mendesak pentingnya dihapus pajak ganda (double taxation) tersebut.
Pertama, pajak ganda ini menjadi penghambat perkembangan perbankan syariah, padahal saat ini sedang dilakukan pencapaian target aset perbankan syariah menjadi dua persen. Jika kita melihat data pada skim pembiayaan terjadi penurunan, tahun 2007 tercatat laju pertumbuhan bank syariah mencapai 30,1 persen, lebih rendah dibanding pembiayaan tahun 2006 yang mencapai 34,2 persen. Data ini menunjukkan penurunan dari tahun sebelumnya.

Kedua, penghapusan pajak ganda menjadi sangat penting terkait dengan kepentingan masuknya investasi asing di Indonesia. Adanya pajak ganda akan menyebabkan industri perbankan dan keuangan syariah Indonesia menjadi kurang menarik dikembangkan. Dampaknya, motivasi para investor untuk masuk dan mengembangkan industri syariah di Indonesia pun menjadi surut. Dengan adanya penghapusan pajak ganda akan memicu perkembangan industri syariah tidak hanya di perbankan syariah namun juga pada industri lainya seperti asuransi dan pasar modal syariah.Sesungguhnya pemberlakuan hanya satu kali pajak dalam pembiayaan syariah telah dilakukan oleh banyak negara lain. Saat ini negara yang memiliki industri keuangan dan perbankan syariah telah menghapuskan pajak ganda dalam transaksi pembiayaan syariah diantaranya, Amerika Serikat melalui Office of the Comptroller of the Currency (OOC) yang mengeluarkan dua interpretative letters yang berisi tentang transaksi murabahah dan ijarah.

Demikian juga Inggris telah menghapus pajak ganda dengan diintroduksinya Finance Act 2003 oleh badan independen yang menentukan regulasi keuangan Inggris (FSA, Financial Services Authority). Singapura menghapus pajak ganda sejak Maret 2005 melalui Monetery Authority of Singapore. Sedangkan Malaysia telah menghapus pajak gandanya hampir satu dekade yang lalu yakni saat perkembangan awal industri syariah di negara tersebut. Malaysia menghapus pajak ganda dengan Amandement Real Property Gains Tax Act 1976 dengan tambahan pengaturan baru pada schedule 2 paragrap 3 (g) yang menyebutkan gain yang diperoleh bank penjualan aset kepada nasabah atas prinsip syariah dikecualikan dari pajak.

Untuk menghapus pajak ganda di Indonesia, paling tidak ada dua upaya dapat dilakukan, yakni melakukan perubahan (amandemen) regulasi yang menyangkut pajak, atau dengan melakukan penambahan klausula tentang penghapusan pajak ganda pada regulasi yang menyangkut industri bisnis syariah.

Pertama, secara ideal, penghapusan ini dengan melakukan amandemen regulasi yang menyangkut pajak yakni UU No. 18 Tahun 2000 tentang perubahan kedua atas Undang-undang No.8 Tahun 1983 tentang Pajak Pertambahan Nilai Barang dan Jasa dan pajak Penjualan Atas Barang Mewah. Sebenarnya, jika kita cermat, saat ini telah ada Peraturan Pemerintah No. 144 tahun 2000 yang mengatur jasa perbankan mendapatkan dispensai untuk tidak terkena wajib pajak PPN.

Kedua, dengan memanfaatkan momentum yang ada, yakni saat ini RUU Perbankan Syariah dan RUU Surat Berharga Syariah Negara (SBSN) sedang dibahas, perlu memasukkan klausula yang menyangkut penghapusan pajak ganda pada kedua RUU tersebut. Adapun pasal yang menyangkut penghapusan pajak ganda pada RUU tersebut akan menjadi lex specialis (pengecualian hukum) terhadap UU Pajak Pertambahan Nilai (PPN). Sebab selama ini aturan yang mengatur perbankan syariah hanya berupa aturan tentang perbankan nasional (UU No.10 Tahun 1998), belum ada regulasi yang mengatur perpajakan bagi perbankan syariah sehingga transaksi syariah terkena pajak ganda. Mempertahankan pajak berganda akan menghambat perkembangan industri syariah ke depan, untuk itulah diperlukan political will dari pengambil kebijakan dan upaya sinkronisasi perundang-undangam secara menyeluruh dalam rangka membangun ekonomi syariah dan sistem perekonomian Indonesia yang kuat. Semoga.

Penulis adalah Dosen Hukum Bisnis Fak. Syariah IAIN SU & Graha Kirana.

‘Pajak murabahah perlu dihapus’

Ditulis oleh Bisnis Indonesia
Monday, 22 January 2007
JAKARTA: Kalangan pelaku bisnis bank syariah Indonesia mengharapkan RUU Perbankan Syariah yang saat ini digarap DPR bisa menyelesaikan persoalan pajak untuk murabahah perbankan syariah.
Hingga saat ini belum ada ketentuan yang pasti mengenai pajak murabahah (jual beli) pada perbankan syariah di Indonesia.
Di satu sisi terdapat bank syariah yang terkena pajak ganda pada kegiatan murabahah, sementara di sisi lain terdapat pula bank yang hanya dikenakan satu kali pajak.
Direktur Treasury, Marketing, dan Sariah Bank Tabungan Negara (BTN) Iqbal Latanro menyatakan selesainya RUU yang saat ini sedang dibahas oleh DPR diharapkan bisa memberi kejelasan terkait dengan pajak murabahah perbankan syariah di Indonesia.
“Hal yang prinsip adalah selesainya pembahasan RUU Perbankan Syariah yang saat ini dibahas oleh DPR bisa menjawab persoalan pajak perbankan syariah yang hingga saat ini belum ada kepastian. Sebab saat ini ada bank yang dikenakan pajak ganda untuk murabahah sedangkan yang lain ada yang dikenakan satu kali pajak,” kata dia kepada Bisnis, kemarin.
Dia lebih lanjut menyatakan, ketidakjelasan mengenai pajak tersebut turut menyumbang terhadap minimnya perkembangan perbankan syariah yang saat ini di bawah 5%.
“Ke depan diharapkan pajak untuk murabahah hanya satu kali saja dikenakan untuk perbankan syariah,” lanjut dia.
Alasan satu kali pengenaan pajak untuk murabahah, karena perbankan syariah tidak bisa dikategorikan dalam perusahaan dagang yang melakukan proses jual beli.
Hal ini seperti yang diungkapkan oleh Senior Vice President & Syariah Banking Group Head Bank Niaga Ari Purwandono. Dia menyatakan, perbankan syariah perlu dikenakan pajak murabahah sekali saja.
“Sebab kami berkeyakinan bahwa perbankan syariah bukan jual beli seperti trading company. Kalau perusahaan dagang kan ada jual beli dan ada value added. Sementara perbankan syariah kan konsepnya kan intermediari, dan bukan jual beli,” kata dia pekan lalu. (m04)
Bisnis Indonesia, 22/1/2007

IAEI Dukung Sikap Penolakan Pajak Murabahah
THURSDAY, 04 FEBRUARY 2010 08:29 BAHRUL
Agustianto
Jakarta, (04/02). Kekesalan para pelaku bisnis perbankan syariah terhadap pajak berganda pada transaksi Murabahah, mendapat dukungan dari Ikatan Ahli Ekonomi Islam Indonesia (IAEI). Melalui Sekretaris Jenderal IAEI, Agustianto, mengatakan, perlu sebuah kajian yang adil terhadap peraturan tersebut, sehingga bank syariah tak merasa dirugikan.
Terlebih kata dia, pemerintah harus melihat dimana pun negara yang melaksanakan sistem keuangan syariah tak memasukkan pajak berganda tersebut dalam operasional perbankan syariah.

“Maka dari itu perlu dipahami oleh pemerintah dan jangan seenaknya sendiri dalam membuat peraturan,”kata Agustianto saat ditemui di kantor IAEI Setiabudi, Jakarta Pusat Rabu (3/2).

Menurut Agustianto, memang benar jika pajak berganda Murabahah tidak dihapus yang terjadi adalah banyak bank syariah yang menunggak pajak dan itu jumlahnya sangat besar sekali.

Untuk menjembatani persoalan silang pendapat antara pelaku perbankan syariah dan pemerintah, Sekjen IAEI bersedia untuk memediasi serta mengkaji mengenai regulasi Undang-Undang Pajak tersebut.

“Sebab apa? Jika hal ini dipaksakan akan menganggu perkembangan bank syariah kedepan,”ujar Agustianto. (Agus Y http://www.pkesinteraktif.com)
5 Investor Bank Syariah Mundur Gara-gara Kasus Pajak Ganda
Selasa, 23 Februari 2010 20.30 WIB
Oleh: Iin Caratri
(Managementfile – Tax) – Asosiasi Bank Syariah Indonesia (Asbisindo) mengharapkan kasus tunggakan pajak yang melilit bank-bank syariah dapat dihapuskan melalui Dewan Perwakilan Rakyat (DPR).

Kasus pajak tersebut telah menganggu minat investor asing untuk menempatkan dananya di bank-bank yang terlilit utang pajak hingga Rp 400 miliar.

Hal tersebut disampaikan Ketua Asbisindo Riawan Amin usai Panja RDP dengan Komisi XI di Gedung DPR-RI, Jakarta, Selasa (23/02/2010).

“Kasus pajak ini sangat menganggu karena setidak-tidaknya ada lima investor yang berminat menempatkan dananya. Namun karena adanya ketidakpastian hukum pajak ganda murabahah. Mereka enggan masuk karena takut dibebankan tunggakan pajak,” ujar.

Untuk itu, lanjut Riawan melalui DPR Asbisindo meminta agar masalah pajak berganda yang dibebankan kepada bank-bank syariah dapat terselesaikan.

“Ya, kita inginnya dihapus saja. Mudah-mudahan DPR bisa menindaklanjuti,” tegasnya.

Ditempat yang sama Ketua Panja Perpajakan Komisi XI Melchias Markus Mekeng mengatakan akan mencari celah untuk menyelesaikan kasus pajak bank-bank syariah.

“Kita berencana membentuk Panja Khusus untuk masalah Asbisindo ini. Bagaimanapun akan kita dukung penghapusan pajak tersebut,” ungkap Melky panggilan akrab Melchias.

Melky menegaskan, konsep bank konvensional sangat berbeda dengan bank syariah dimana transaksi murabahah (jual beli) tidak seharusnya dikenakan pajak pertambahan nilai (PPn).

“Kalau dikenakan, buku mereka akan selalu buruk karena akan ada tunggakan pajak,” kata Melky.

Mengenai skema penghapusan pajak tersebut, Melky mengatakan masih akan dibahas lebih lanjut. Pasalnya Menteri Keuangan dapat menghapuskan pajak jika nilai tunggakannya dibawah Rp 10 miliar.

“Jika diatas Rp 10 miliar maka harus melalui DPR. Kita akan membicarakan dengan Kementrian Keuangan lebih lanjutnya,” pungkas Melky.

(ic/IC/dtc)

Tunggakan Pajak BNI Hasil Transaksi Syariah Murabahah
sumber : Antara 2/Feb/2010 14:36

Jakarta (ANTARA) – Direktur Bank BNI Ahmad Baiquni mengatakan hasil publikasi Direktorat Jenderal (Ditjen) Pajak bahwa BNI termasuk salah satu penunggak pajak terbesar adalah penerapan pajak ganda transaksi “murabahah” (perjanjian jual-beli antara bank dengan nasabah) perbankan syariah.
“Tunggakan pajak senilai Rp128 miliar dan semunya dari transaksi `murabahah` pada 2007 senilai Rp108 miliar dan ditambah Rp20 miliar merupakan sanksi administrasi,” kata Baiquni, saat acara “media gathering” di Jakarta, Selasa.
Menurut Baiquni, pihaknya tidak akan membayar pajak ganda ini karena masih akan diperjuangkan berbagai kalangan pelaku bank syariah (Asosiasi Bank Syariah Indonesia/ASBISINDO).
“Jika dibayar, maka potensi pajak PPN (pajak pertambahan nilai) dari transaksi perbankan syariah Bank BNI mencapai Rp397 miliar,” katanya.
Direktur UKM (Usaha Kecil Menengah) dan Perbankan Syariah Bank BNI ini menegaskan bahwa pihaknya dapat margin dari nasabah hanya 5 persen, sedangkan untuk bayar PPN 10 persen. “Jadi ini bukan proyek untung, tapi proyek rugi,” jelasnya.
Baiquni juga mengatakan bahwa BNI akan melakukan “spin off” unit usaha syariah (UUS) dengan setor modal Rp1 triliun. “Jika termasuk untuk bayar pajak, maka setoran modal tersebut hampir setengahnya untuk bayar pajak,” tambahnya.
Ketua Umum ASBISINDO Riawan Amin mengatakan bahwa permasalahan pajak ganda pada transaksi “murabahah” pada sistem perbankan syariah ini merupakan faktor penghambat utama saat ini.
“Memang amandemen pajak ganda memang disetujui dan berlaku per April 2010, namun untuk warisan pajak sebelumnya yang masih dikejar terus masih menjadi masalah,” katanya.
Amin berharap masalah warisan pajak ganda dihilangkan, sehingga tidak menjadi beban perkembangan perbankan syariah di Indonesia.
Ia juga mengungkapkan bahwa masalah pajak ganda ini menjadi fokus utama calon investor yang ingin masuk ke Indonesia.
“Di Indonesia yang mayoritas muslim justru menerapkan pajak ganda, sedangkan di negara lain yang muslimnya minoritas seperti Singapura, Inggris justru tidak ada pajak ganda,” tegas Amin.
Netralisasi PPN Transaksi Murabahah Diantara “Madu dan Racun”
Bagikan
31 Maret 2010 jam 11:29

Implementasi netralisasi Pajak Pertambahan Nilai (PPN) atas transaksi murabahah diyakini memiliki dampak yang beragam, bagi perbankan syariah baru yang beroperasi dibulan April akan merasa lega, karena mereka dikenakan PPN atas transaksi murabahah tersebut. tapi sebaliknya bagi perbankan syariah yang beroperasi sebelum peraturan tersebut keluar tetap akan ditagih pajak oleh Direktorat Perpajakan. Fenomena ini menjadikan “madu dan racun” bagi perbankan syariah.

Pengamat ekonomi syariah, Adiwarman A Karim dalam pandangannya mengatakan, bahwa perkembangan regulasi tersebut positif bagi perkembangan industri perbankan syariah. Sebab, netralisasi memungkinkan industri tak lagi mendapat ‘ganjalan’ atas penerapan kewajiban yang tak lebih bersifat sebagai pajak ganda (double tax).

Meski demikian, ungkap President KBC, penerapan netralisasi PPN atas transaksi murabahah tak serta merta langsung menghilangkan ganjalan yang dirasakan industri. Aturan Undang-Undang PPN dan PPn BM yang mengatur masalah tersebut, hanya mencakup netralisasi pajak per 1 April 2010 dan seterusnya.

“Dengan demikian, artinya industri masih harus menyelesaikan kewajiban pajak sebelum UU tersebut diberlakukan. Terlebih sebelum netralisasi diberlakukan, mengutip data Direktorat Jenderal Pajak baru-baru ini, jumlah tunggakan PPN Syariah mencapai Rp400 miliar,”ujar Adiwarman A Karim.

Kemudian Adiwarman menjelaskan, ada indikasi positif dari penerapan kebijakan netralisasi PPN ini adalah banyaknya pendirian bank-bank umum syariah baik melalui akuisisi maupun spin off berbarengan dengan diberlakukannya netralisasi PPN atas transaksi murabahah di sektor perbankan syariah. Ini bukan suatu kebetulan, tapi merupakan peluang yang sengaja dimanfaatkan kalangan investor dalam menyasar pasar perbankan syariah.

“Kita ketahui, ada beberapa bank yang siap beroperasi berbarengan dengan penerapan kebijakan tersebut. Sebut misalnya PT Bank Victori Syariah yang siap beroperasi 1 April, PT BCA Syariah pada 7 April. Beberapa lagi segera beroperasi seperti PT BNI Syariah,”paparnya.

Diakui olehnya, ada hal yang sulit untuk menyalahkan Direktorat Jenderal Pajak Departemen Keuangan terkait penerapan PPN murabahah ini. Sebab, mereka pun melakukannya berdasarkan dasar dan ketentuan perundang-undangan yang jelas.

Aturan tersebut termuat pada Peraturan Bank Indonesia (PBI), dimana dalam PBI ini, transaksi murabahah didefinisikan sebagai jual beli yang menjadi objek pajak. Aturan kedua termuat pada Pedoman Akuntansi Syariah (PAS), dimana transaksi murabahah jadi bagian dari objek pajak.

Sebelum tahun 2003, atau sebelum adanya kedua ketentuan ini, hampir tidak ada perdebatan terkait kewajiban PPN atas transaksi murabahah. Baru setelah ada kedua aturan tersebut, yang diterbitkan sekitar Maret 2003, muncul perdebatan soal PPN atas transaksi murabahah.

“Karena demikian aturannya, maka mereka tentu saja mau tidak mau tetap harus masuk, menagih kewajiban perpajakan PPN atas transaksi murabahah. Meski sebetulnya, Direktorat Jenderal Pajak juga memahami bahwa ini bukan merupakan objek pajak karena substansinya sama dengan transaksi pada perbankan konvensional,”paparnya.

Sumber: pkesinteraktif.com

COMMODITY MURABAHAH PRODUCT (CMP) DALAM PERSPEKTIF HUKUM EKONOMI ISLAM

September 5, 2010 Leave a comment

4.1. Commodity Murabahah Product Dalam Perpektif hokum ekonomi islam
Berdasarkan uraian pada bab-bab sebelumnya, maka dalam bab ini akan disajikan pembahasan dan hasil analisis terhadap CMP dan hal hal yang terkait dengannya.
4.1.1. Akad Yang Digunakan Dalam CMP
Dalam CMP terdapat kombinasi beberapa akad yang digunakan antara lain akad wakalah, bai’ musawamah, dan bai’ murabahah seperti gambar dibawah;

Gambar 4.1
Skema CMP untuk deposito
Dari gambar tersebut jika seorang nasabah membuka rekening deposito yang menggunakan sistem CMP setidaknya melakukan tiga akad kombinasi sebagai berikut;
1) Akad jual beli yang dilakukan oleh bank kepada broker.
Jual beli ini lebih cenderung pada jual beli tawar menawar atau musawamah kalau dilihat dari segi harga asalnya . Bank disini mewakili nasabahnya untuk membeli suatu komoditas. Pada dasarnya bank tersebut tidaklah membeli komoditas dari broker akan tetapi bank menyuruh kepada broker untuk membelikan suatu komoditas di bursa berjangka. Karena hanya broker yang bisa melakukan transaksi di bursa. Bisa dikatakan bank juga mewakilkan kepada broker. Sistem jual beli di bursa adalah tidak sesuai dengan syariah, karena jual beli yang dilakukan bank kepada broker sejatinya adalah jual beli futures sebagaimana yang akan dijelaskan nanti diakhir pembahasan.
2) Jual-beli murabahah
Yaitu jual beli dengan dasar harga beli di tambah dengan ongkos dan laba yang di inginkan. Komoditi yang di beli nasabah dari bursa dijual kepada bank dengan dengan sistem jual beli murabahah dimana yang akan dibayar secara tangguh (deffered) kepada nasabah sesuai kesepakatan. Atau nasabah mewakilkan kepada bank untuk menjualkannya kembali kepada broker B dengan system murabahah. Disini berarti kedudukan bank sebagai agent untuk kedua kalinya. Dan bank hanya mendapatkan fee dari transaksi ini. Dalam islam jual beli dengan cara murabahah dibolehkan oleh syariah.
3) Adanya akad wakalah
Akad ini bisa terjadi pada dua kondisi, pertama ketika nasabah menabung dibank. Yaitu mewakilkan bank untuk membeli komoditi seharga uang yng ditabungkan kebank. Kedua ketika nasabah menunjuk Bank sebagai wakilnya untuk menjual kembali komoditi tersebut. Dalam Hukum Islam wakalah adalah akad yang sah, yang dapat di lakukan dengan upah atau komisi atau free of charge/gratis.
4) Wa’ad
Disamping hal diatas ada klausul yang perlu diketahui bahwa dalam akad kombinasi ini ada janji sepihak. Yaitu perjanjian sepihak (wa’ad) untuk membeli komoditi dari nasabah, yang masih dalam perdebatan, apakah janji tersebut dapat di paksa untuk di patuhi atau tidak. Kalau kedua belah pihak membuat perjanjian bersama untuk transaksi jual beli yang akan dilakukan kemudian, Imam Shafi’i mengatakan kalau transaksi tersebut tidak sah. Namun demikian kalau hanya salah satu pihak berjanji untuk membeli komoditi tersebut, hal ini tidak akan terlalu berpengaruh banyak. Sebagian daripada para Ulama mengatakan kalau janji sepihak tidak dapat di paksa untuk di implementasikan, sementara itu para Ulama kontemporer -yang pro konsep ini- merasa demi kepentingan kelancaran transaksi komersil pada saat ini, maka janji sepihak haruslah mengikat
4.2. Mekanisme Commodity Murabahah Porduct (CMP)
Pembahasan pada bab kali ini difokuskan pertama pada pemahaman alur pada produk ini, kedua analisa pemenuhan rukun dan syarat-syarat akad yang digunkan. ketiga membahas mengenai motif dari transaksi ini, dan terakhir pada konsep tawarruq baik dari yang pro dan kotra, dan sesuai dengan tujuan awal penulisan karya ilmiah ini akan difokuskan pada tentang mafsadah yang ditimbulkan konsep ini secara umum
4.2.1. Prosedur atau alur transaksi CMP untuk deposito jangka pendek
Produk ini adalah deposito jangka pendek dengan margin tetap. dan Inti dari transaksi yang diusung adalah murabahah untuk mengklaim margin tetapnya (fixed return). Sebelum menguraikan masalah yang terkandung dalam produk ini, penulis akan menjelaskan bagaimana alur transaksi ini sehingga dapat ditetapkan bahwa deposito dengan margin tetap ini sesuai dengan syariah.
Dalam konsep dan prakteknya terdapat 2 skema yang sedikit berbeda. Konsep pertama bank menjadi agent ketika membeli dan menjual dan konsep kedua bank hanya menjadi wakil untuk membeli saja. Dibawah ini adalah ketika bank pada posisi pertama

Gambar 4.3
Alur penentuan margin tetap (fixed return)

Dari gambar diatas dapat dijelaskan sebagai berikut.
1. Pertama-tama adalah Nasabah datang ke bank untuk membuka rekening deposito jangka pendek sebesar Rp.1.000.000 dengan returnnya 3% dalam jangka waktu 3 bulan misalnya. Pertanyaan muncul disini adalah bagaimana bisa menentukan deposito dengan harga 3%?. Jawabannya adalah karena produk ini berbasis murabahah. Hal ini dapat dilihat pada gambar diatas. Hubungan antara nasabah dan bank adalah pada transaksi pertama bank sebagai agent, kemudian bank sebagai pembeli komoditas. Konsekuensi dari wakalah ini adalah bank melakukan jual beli harus disandarkan kepada nasabah baik menggunakan atas nama nasabah ataupun atas nama bank.
2. Dari gambar diatas pada proses 2 setelah kesepakatan antara bank dan nasabah terjadi maka bank memerintahkan broker untuk membeli sejumlah komoditas dengan dana Rp.1.000.000,- tunai .
3. Kemudian brokrer melaksanakan perintah bank tersebut. Sehingga broker mendapatkan surat bukti transaksi (warrant) yang kemudian diberikan kepada bank. Kemudian bank memberitahukan kepada nasabah kalau komoditasnya telah dibeli. Dengan demikian nasabah telah memiliki komoditas tersebut. Setelah itu nasabah memerintahkan bank untukk menjual kembali dengan cost plus margin (murabahah).
4. Setelah itu komoditas yang dibeli menjadi milik nasabah, kemudian menjual komoditas tersebut pada harga Rp.1000.000 +3% Rp.1000.000,-= Rp1.030.000 (murabahah) dengan mewakilkan kepada bank untuk menjualnya kepada broker B. Sehingga nasabah dapat margin sebesar 3% dari dana yang didepositokannya. Disinilah asal 3% diperoleh dan menjadi fixed return. Disini bank pada posisi sebagai agent lagi bukan principle. Jika bank sebagai pembeli maka bank akan membelinya seharga diatas Rp.1030.000,-. Kemudian bank menjual ke broker dengan harga asal yaitu Rp. 1000.000.
Dari semua alur diatas ada beberapa hal yang menjadi kritikan atas praktek ini baik dari sisi subtansi dan motivasinya.
4.2.1.1 Penentuan margin tetap.
Misal, diatas seorang nasabah menabung sebesar Rp.1.000.000 dengan returnnya 3% dalam jangka waktu 3 bulan. Margin ini ditentukan didepan ketika akad pembukaan rekening baru. Kalau melihat dari alur diatas ini memang masuk akal dari mana hasil 3% itu diperoleh. Dan sekilas tidak ada salahnya atau transaksi ini sesuai dengan syariah, karena ini adalah jual beli dengan keuntungan (murabahah).
Dalam transaksi komersial memang ada dua karateristik yaitu natural certain contracts (NCC) dan natural uncertain contracts (NUC) . Dimana pembeda dari kedua karateristik adalah dari segi hasilnya. NCC keuntungan ditentukan dimuka sedang NUC keuntungan tidak bisa ditentukan. Salah satu dari kontrak NCC adalah jual beli murabahah dimana keuntungan di tentukan dimuka. Dan darisini kita sering terjebab oleh karenanya, perlu diingat bahwa keuntungan dapat ditetapkan ketika akad jual atau beli itu terjadi. Sedang dalam transaksi CMP ini return ditentukan oleh bank –disini posisi bank bukan sebagai penjual melainkan sebagai agent- dengan persetujuan nasabah. Artinya transaksi jual beli disini belum terjadi namun masih akan terjadi nanti. Jadi masih ada potensi kegagalan dalan jual beli yang akan dilakukan.
Transaksi jual beli yang menghasilkan keuntungan dapat dilihat dalam gambar diatas adalah setelah proses yang ke 6 (enam) -jika bank tetap sebagai agent- artinya keuntungan itu didapat diwaktu yang yang akan datang setelah melakukan beberapa transaksi.
Transaksi ini tidak ada bedanya dengan praktek riba yang ada sekarang dibank-bank konvensional, bedanya hanya Cuma memakai embel-embel syariah. Karena bagaimana mungkin bank atau nasabah dapat menentukan returnnya secara fixed dimuka sedang transaksi jual belinya belum terjadi. Lebih lagi, kalau kita lihat nasabah lebih mirip disebut sebagai pedagang karena akan melakukan beli suatu komoditas dan akan menjual suatu komoditas. Ingat orang berdagang adalah orang yang melakukan jual beli, keuntungan yang mereka dapat tidak menentu tergantung kondisi pasar saat itu. Jadi, dalam berdagang keuntungan tidak bisa ditentukan diawal hal ini bertentangan dengan kaidah al-khoroj bi dhoman (hasil usaha muncul bersama dengan biaya) dan al ghunmu bil ghurmi (keuntungan muncul bersama resiko). Dengan penentuan diawal dan adanya kepastian menjadikan ini nantinya masuk dalam kategori riba nasi’ah . Jual beli yang dilakukan oleh bank belum tentu, bisa untung dan juga bisa rugi. Jadi keuntungannya belum bisa ditentukan walaupun dia melakukan jual murabahah karena pada kesepakatan murabahah belum terjadi pembelian. Tetapnya keuntungan baru bisa dikatakan fixed ketika telah terjadi. Hal ini sangat berbeda ketika murabahah sebagai produk pembiayaan
4.2.1.2 Masalah pihak ketiga yang membeli.
Masalah pihak ketiga dipertanyakan ketika bank disini sekali lagi sebagai wakil nasabah untuk menjual komoditasnya. Dalam konsepnya bahwa terjadinya murabahah yaitu ketika nasabah menjual komoditas yang dia beli itu dengan harga plus kepada broker B. Disini apabila broker B itu tidak dapat dipastikan dan tidak dapat ditemukan sampai batas waktunya. maka transaksi ini menjadi simpanan yang memberikan keuntungan tetap (fixed return) sebesar 3 % selama 3 bulan (atau 1% sebulan dan 12% setahun). Keuntungan tetap ini sama halnya riba bank yang dilarang.
Jikalau ternyata broker tidak diketemukan sampai batas waktunya maka bank yang akan membeli jual beli ini bisa masuk kategori jual beli terpaksa. Karena bank terpaksa membeli komoditas tersebut untuk memenuhi janji dia memberikan prosentase yang telah di sepakati. Menurut ulama syafi’iyah dan hanabilah jual beli ini tidak sah karena tidak ada keridhaan dalam akad .
4.2.1.3 Bentuk simpanan nasabah.
Apabila berbentuk dana pihak ketiga, maka penghimpunan dana yang didasarkan transaksi Murabahah tidak ada dasar fatwanya. Dalam Fatwa No. 1, 2 dan 3/DSN-MUI/II/2000 disebutkan bahwa penghimpunan dana dalam bentuk giro, tabungan dan deposito didasarkan pada transaksi Wadiah atau Mudharabah; belum ada fatwa yang membolehkan akad deposito memakai akad murabahah. Meskipun beberapa waktu yang lalu DSN telah membolehkan transksi CMP untuk deposito.
Dalam konsep murabahah diatas keuntungan yang didapat nasabah adalah pasti. Dan transaksi yang terjadi adalah satu kali dalam jangka waktu yang telah ditentukan. Simpanan dalam berbagai bentuknya ini memiliki konsekuensi hukum tersendiri atas tasharruf (tindakan hukum) pada dana tersebut. Untuk tabungan wadi’ah ada yang bisa dipakai oleh bank tanpa ada imbalan kepada nasabah tapi boleh mengasih bonus kepadanya (wadi’ah yad dhomanah). ada yang tidak bisa dimanfaatkan (wadi’ah amanah), dan untuk deposito dana yang terkumpul dapat dipakai dengan bagi untung dan rugi (mudharabah dan musyarkah) .
Dalam konsep CMP, jual beli yang terjadi hanya sekali dalam tempo waktu tertentu. Kebalikan dari pertanyaan sebelumnya adalah bagaimana jika jual beli itu terjadi dalam waktu beberapa hari saja berarti dana yang disimpan dibank dalam bentuk deposito itu menganggur. Kalau dana tersebut dipakai lagi oleh bank untuk melakukan jual beli keuntungan sudah pasti dinikmati oleh bank. Dan mungkin inilah yang dicari oleh bank karena dengan demikian dia mendapatkan dana segar dan likuid sangat murah. Jika hal ini tidak seizin pemiliknya makan jual beli ini termasuk jual beli fudhuli. Menurut ulama malikiyah dan hanfiyah jual beli ini ditangguhkan sampai ada izin dari pemiliknya. Sedang hanabilah dan syafi’iyah jual beli ini tidak sah .
Alasan lain kenapa keuntungan yang tetap ini bisa dilakukan karena transaksi yang dilakukan bank adalah dinamik sehingga penentuan margin bisa dilakukan. Jika alasannya seperti ini maka hal ini memperkuat bahwa ketidakpastian untuk mendapatkan keuntungan sangat tinggi.
Praktek deposito jangka pendek atau commodity murabahah deposit ini mirip (similiar) dengan certificate of depsosit konvensional . Artinya bahwa produk ini bisa diperjualbelikan antar nasabah (bank/institusi). Jadi produk ini bisa termasuk kategori produk derivatif yang dikeluarkan oleh bank. Dengan adanya produk ini kemungkinan melakukan spekulasi akan bertambah besar bagi institusi keuangan syariah. Lalu apa bedanya dengan pola transaksi konvensional saat ini.
4.2.1.4 Antara Murabahah, ba’i dain bi dain atau offseting?
Kalau lebih kita cermati lagi dan kita kaitkan dengan jual beli sebelumnya, yaitu jual beli yang dilakukan oleh bank kepada broker. Jual beli di bursa bukanlah jual beli, akan tetapi itu hanya janji untuk melakukan jual beli yang tercatat . Jual belinya belum terjadi. Jadi jual beli murabahah ini sejatinya menjual janji untuk melakukan jual dan beli komoditas dimasa yang akan datang. Berarti menjual sesuatu yang belum dimiliki dan belum berada ditangannya.
لا تبع ما ليس عندك (رواه الخمسة عن حكيم بن حزام)
“Janganlah kamu menjual sesuatu yang tidak ada padamu” (H.R.Abu Daud dari Hakim bin Hizam)

Memang secara konsep murabahah dibolehkan oleh syariah. Namun dalam praktek objeknya bukan harta yang dimaksudkan oleh syariah. Dalam konsepnya objek transaksi dianggap given (dianggap telah memenuhi syarat dan rukunnya). Padahal kalau dilihat dari alur proses transaksi dibursa berjangka objek transaksinya tidak ada. Jual beli ini lebih cocok disebut dengan jual beli ad-dain bi ad-dain yang dijual dengan murabahah.
Karena transaksi ini bersumber dari bursa, transaksi murabahah ini sama dengan ofsetting atau pembalikan akad yang tadi pada posisi long berubah pada posisi short dan sebaliknya -tentang offsetting telah dijelaskan diawal pada bab 3 pembicaraan tentang futures-. Pertanyaannya disini adalah kemana nilai nilai moral yang didengung-dengungkan sebagai pembeda antara konsep konvensional dengan syariah di sematkan? Sedang tujuan syariah adalah menjadikan manusia menuju falah.
Dari konsep ini terkesan memperturutkan hawa nafsu yaitu mendapatkan keuntungan dengan cara apapun (hilah) walaupun itu sebenarnya riba yang dilarang. Abdullah saeed dalam bukunya menyoal bank syariah kritik atas kaum neo-revivalis telah membahas dengan panjang bagaimana bahaya riba jika tidak memperhatikan aspek moral dan etika, karena mementingkan hilah untuk mencapai tujuannya.
4.2.1.5 Tawarruq
Transaksi seperti diatas dikenal dengan nama Tawarruq -sebagaimana yang diakui oleh para pelakunya-, yaitu transaksi jual beli yang dilakukan dengan tujuan bukan untuk pemanfaatan barang, tapi untuk menghasilkan uang tunai bagi pembeli (dalam hal ini bank). DSN belum menetapkan fatwa tentang Tawarruq. Ulama kontemporer yang tergabung dalam islamic fiqh academy telah melarang transaksi ini yaitu pada konferensi tahunannya yang ke 17 2003. Untuk lebih jelasnya masalah ini akan dijelaskan pada sub bab tersendiri.
4.2.2. Implementasi Rukun Dan Syarat Pada CMP Untuk Deposito
Dari data-data yang diperoleh ternyata dalam konsep CMP ini terdiri dari beberapa akad baik akad utama dan akad bawaan. Akad utamanya adalah sebagaimana namanya commodity murabahah yaitu akad jual beli murabahah, akad utama lainnya adalah jual beli musawamah dan terakhir akad bawaan yaitu wakalah. Akad-akad ini tidak bisa dipisah-pisahkan dalam analisis, kesemuanya saling berhubungan. Jadi tidak bisa dilihat secara parsial. Untuk itu sebagaimana analasis alur dan prosedur diatas kita dapat menyajikan dalam tabel berikut yang saling berkaitan;

Rukun Syarat Implementasi Kesesuaian antara syarat dan rukun dengan konsep CMP
T TT
Yang mewakilkan (muwakkil) Pemilik pekerjaan/barang yang akan diwakilkan Nasabah sebagai orang yan memiliki pekerjaan yaitu membeli komoditas dan bank dijadikan wakilnya untuk membeli. 
Baligh /bisa membedakan suatu pilihan abik dan benar (mumayyiz) Deposito diperuntukan buat korporate dan institusi keuangan lainnya. Jadi secara umum nasabah sudah dewasa dan mumayyiz 
Yang mewakili (wakil) Berakal Yang menjadi wakil adalah bank. Jadi bank sebagai badan i’tibari dianggap berakal. Karena yang menjadi karyawan adalah orang-orang yang berakal sehat 
Dewasa/baligh Sebagai badan i’tibari maka di anggap dwasa dan baligh karena personil yang ada didalamnya sudah pasti dewasa dan baligh. 
Sesuatu yang diwakilkan (muwakkil fiih) Tidak termasuk hal hal yang mubah Pekerjaan yang diwakilkan kepada bank adalah jual beli dan bukan hal hal yang mubah 
Pekerjaan yang diwakilkan itu harus milik orang yang mewakilkan Pekerjaan beli ini milik nasabah. Bisa dilihat dari dana untuk membeli adlah milik nasabah. 
Pekerjaan yang diwakilkan harus diketahui dari beberapa sisi, untuk menghindari kecurangan dan spekulatif Dalam konsep ini pekerjaan yng diwakilkan dirinci secara detail harga, barang yang di beli dan waktunya. 
Pekerjaan yang dilakukan bukan berupa permohonan pinjaman utang dari orang lain Transaksi yang diwakilkan kepada bank adalah transaksi jual beli 
Pekerjaan itu menurut syara’ bisa diganti oleh orang lain Transaksi jual beli termasuk transaksi yang diperbolehkan diganti oleh orang lain 
Shighoh Ucapan atau fungsi yang dapat menggantinya seperti lewat utusan atau dengan tulisan,saerah terima yakni dengan mengambil dan memberi tanpa kata-kata Ketika nasabah datang kebank untuk menabung sighoh awal berupa ucapan kemudian diikat dengan tulisan/ surat perjanjian yang ditandatangani oleh keduanya 
ijab sesuai dengan qabul langsung atau ditangguhkan Ijab qabul dalam hal ini bank dan nasabah melalui surat perjanjian yang ditandatangani oleh keduanya 
Ijab dan qabul terjadi dalam satu majelis. Ijab qobul antara kedua dilakukan diatas surat persetujuan yang ditandatangani oleh keduanya. Ini menunjukan berada dalam satu majelis. 
Kedua belah pihak wakil dan muwakkil sama sama mendengar perkataan masing masing. Kesepakatan antara kedua belah pihak dapat diketahui melalui surat perjanjian yang ditandatangani. 
Keterangan:
T = Terpenuhi
TT = Tidak terpenuhi
Sumber diolah
Tabel 4.1
Akad wakalah (akad ketika nasabah menjadi nasabah bank)

Berdasarkan tabel diatas dapat disimpulkan bahwa rukun dan syarat yang harus dipenuhi telah dipenuhi semua artinya secara teknis akad ini sah.
Rukun Syarat Implementasi Kesesuaian antara syarat dan rukun dengan konsep CMP
T TT
Adanya Shighoh Ucapan atau fungsi yang dapat menggantinya seperti lewat utusan atau dengan tulisan,saerah terima yakni dengan mengambil dan memberi tanpa kata-kata Dalam bursa selain ucapan juga diikat dengan tulisan untuk memperkuat perjanjian yang ada dan untuk mengantisipasi perselisihan. Dan tercatat secara elektronik. Keduanya dapat mengetahuinya secara on-line 
ijab sesuai dengan qabul dalam hal ukuran, sifat, jenis uang, langsung atau ditangguhkan Dalam bursa semua keterangan baik harga, ukuran, jenis barang, tenggang waktu penyerahan ditulis secara jelas dan dipublikasikan. 
Ijab dan qabul terjadi dalam satu majelis. Artinya keduabelah pihak yang melakukan jual beli hadir dan membicarakan topik yang sama Transaksi antara pembeli dan penjual tidak bertemu dalam majelis, dan tidak pernah tahu siapa lawan jual/belinya dalam transaksi. 
Kedua belah pihak penjual dan pembeli sama sama mendengar perkataan masing masing. Keduanya belah pihak mengetahui keinginan penjual atau pembeli karna terlisting dalam daftar dan terpublikasikan. 
Antara ijab dan qabul tidak ada tenggang waktu yang mengesankan penolakan Kesepakatan antara penjual dan pembeli tidak ada tenggang waktu. Ketika penutupan bursa tidak ada pembeli atau penjual akan terlikuidasi secara otomatis oleh lembaga kliring

Adanya muta’aqidain (pelaku akad) Mumayyiz Orang yang bisa melakukan transaksi dengan dalam bursa adalah orang yang sudah muamyiz. Kalau belum harus mendapatkan izin dari walinya 
Dewasa Orang yang bisa melakukan transaksi dengan bursa adalah orang yang sudah dewasa. Kalau belum harus mendapatkan izin dari walinya


Dilakukan atas dasar kemauan sendiri Antara penjual dan pembeli tidak ada paksaan untuk melakukan jual beli 
Adanya Ma’qud alaih (barang dan harga) Objek dan harganya suci Objek transaksi dalam bursa tidak ada. Yang ada adalah underlying asset sebagai acuan penentuan harga dan spesifikasi lainnya. 
Dapat dimanfaatkan secara syara’ Barang dan harga tidak bisa dimanfaatkan secara syara’ karena keduanya tidak pernah menagalami perpindahan kepemilikan dan tidak pernah ada 
Barang yang dijual itu milik penjual ketika dijual Barang yang dijual milik penjual dan kadang penjual tidak memilikinya 
Dapat diserah terimakan Barang harga tidak pernah ada serah terima. Kalau ada hanya -2% saja. 
Barang dan harga harus diketahui dengan jelas untuk mencegah terjadinya perselisihan Dalam perjanjian tertulis jelas spesifikasi harga dan barang. 
Akadnya tidak dibatasi dengan waktu Dalam jual beli dibursa tidak ada batasan waktu yang ada batasan kapan akad akan dilaksanakan. 
Keterangan:
T = Terpenuhi
TT = Tidak terpenuhi
Sumber diolah
Tabel 4.1
Implementasi akad jual beli musawamah (jual beli antara bank dan broker)

Berdasarkan tabel diatas terdapat syarat-syarat yang tidak terpenuhi baik pada siga, pelaku akad, dan objek akadnya. Pada sighah syarat yang tidak terpenuhi adalah syarat ijab dan qabul terjadi dalam satu majelis. Artinya keduabelah pihak yang melakukan jual beli hadir dan membicarakan topik yang sama. Transaksi ini terjadi dibursa berjangka dimana pembeli dan penjual tidak pernah tahu siapa lawan transaksinya. Mereka hanya melihat list pada papan elektronik.
Kemudian pada rukun muta’aqidain tidak terdapat masalah pada syarat yang harus dipenuhi oleh kedua belah pihak yang berakad. Untuk ma’qud ‘alaih terdapat 4 syarat yang tidak terpenuhi yaitu pertama objek dan harganya suci, dalam bursa tidak ada objek yang ada hanya underlying asset saja, dan harga berdasarkan mata uang yang tidak pernah ada. Syarat kedua yang tidak terpenuhi adalah dapat dimanfaatkan secara syara’. Secara teknis dilapangan barang dan harga tidak dapat dimanfaatkan menurut syara’ karena keduanya tersebut tidak pernah ada dan tidak pernah ada perpindahan kepemilikan untuk dimnafaatkan oleh keduanya.
Syarat ketiga adalah barang yang dijual adalah milik penjual. Dalam bursa komoditas ada dalam suatu tempat dan tidak pernah pindah -terutama emas dilondon- penjual lebih banyak tidak memiliki barang karena yang mengeluarkan barga jual adalah lembaga kliring bukan penjual. Posisi jual atau beli bisa dilakukan oleh siapa saja walaupun tidak punya barangnya. Terakhir syarat yang tidak terpenuhi adalah dapat diserahterimakan baik barang atau harganya. Menurut survey hanya sekitar 2% terjadi serah terima barang. Kebanyakan adalah penyelesaian tunai layaknya judi (zero sum game). Dan tujuan utama transaksi ini bukan penyerahan barang dan harga, jadi secara umum tidak ada penyerahan barang dan harga.

Rukun Syarat Implementasi Kesesuaian antara syarat dan rukun dengan konsep CMP
T BT
Adanya Shighoh Ucapan atau fungsi yang dapat menggantinya seperti lewat utusan atau dengan tulisan,saerah terima yakni dengan mengambil dan memberi tanpa kata-kata Dalam perjanjian dengan bank selain ucapan juga di ikat dengan tulisan untuk memperkuat perjanjian yang ada dan untuk mengantisipasi perselisihan. 
ijab sesuai dengan qabul dalam hal ukuran, sifat, jenis uang, langsung atau ditangguhkan Secara teknis semua persyaratan ini terpenuhi karena dalam perbankan semuanya ditulis dengan detail. Dan dalam bursa ketika akad jenis, waktu, ukuran, harga disebutkan dengan jelas. 
Ijab dan qabul terjadi dalam satu majelis. Artinya keduabelah pihak yang melakukan jual beli hadir dan membicarakan topik yang sama Nasabah mendatangi bank dan melakukan aqad dalam satu majelis. 
Kedua belah pihak penjual dan pembeli sama sama mendengar perkataan masing masing. Shighoh dalam perbankan dalam bentuk tulisan /surat perjanjian dimana antara nasabah dan bank saking mengetahui dengan membacanya 
Antara ijab dan qabul tidak ada tenggang waktu yang mengesankan penolakan Pihak bank dan nasabah yang melakukan ijab dan qabul melalui penandatanganan surat perjanjian yang telah disetujui keduanya. Dalam ini berarti keduabelah pihak saling setuju dan tidak ada unsur penolakan. 
Adanya muta’aqidain (pelaku akad) Mumayyiz Syarat umum dari bank nasabah yang dapat transaksi dengan bank adalah sudah dewasa. Jika belum harus ada izin /perwakilan dari walinya 
Dewasa Syarat umum dari bank nasabah yang dapat transaksi dengan bank adalah sudah dewasa. Jika belum harus ada izin /perwakilan dari walinya 
Dilakukan atas dasar kemauan sendiri Nasabah yang datang kebank tidak ada paksaan harus menabung kebank 
Adanya Ma’qud alaih (barang dan harga) Objek dan harganya suci Objeknya adalah komoditas yang telah dibeli di bursa sebelumnya 
Dapat dimanfaatkan secara syara’ Tidak dapat dimanfatkan secara syara’ karena barang belum diterima oleh naasbah 
Barang yang dijual itu milik penjual ketika dijual Barang yang dijual belum dimiliki 
Dapat diserahterimakan Barang tidak dapat diserahterimakan karena barangnya tidak dimiliki dan berada jauh dari jangkuannya 
Barang dan harga harus diketahui dengan jelas untuk mencegah terjadinya perselisihan Barang secara spesifikasi tertulis dapat di ketahui dan harga juga dapat di ketahui harga asal dan tambahan marginnya 
Akadnya tidak dibatasi dengan waktu Akad tidak dibatasi oleh waktu dalam kepemilikan barang yang dijual 
Syarat tambahan Mengetahui harga pertama pembelian barang Bank mengetahui harga awal barang 
Mengetahui keuntungan Jika bank yang membeli bank mengetahui keuntungan. Dan jika bank sebagai agent maka kemungkinan besar pembeli tidak mengetahui.. 
Modal hendaklah dari komoditi yang memiliki kesamaan dan jenis (bisa ditakar, ditimbang, atau dihitung) Modal yang diapakai tidak memiliki jenis kesamaan karena transaksi ini antara barang dan uang 
Sistem murabahah dalam harta riba hendaknya tidak dinisbatkan riba tersebut terhadap harga pertama Secara sistem bebas dari riba karena harga+margin diketahui dan ditentukan diawal serta tidak mengalami perubahan selama transaksi. Dan harga dinisbatkan pada barang 
Transaksi pertama haruslah sah Transaksi pertama tidak sah karena termasuk jual beli kali bil kali atau bai’ dain bi dain. 
Keterangan:
T = Terpenuhi
TT = Tidak terpenuhi
Sumber diolah
Tabel 4.2
Implementasi akad murabahah

Jual beli murabahah ini adalah lanjutan dari jual beli pertama yang dilakukan bank dengan broker. Melihat tabel diatas maka dapat disimpulkan bahwa kontrak ini tidak dapat dikatakan sah karena dalam beberapa syaratnya tidak terpenuhi dengan sempurna baik dari sisi shighoh, ma’qud ’alaih dan syarat tambahan khusus untuk murabahah.
Dalam transaksi murabahah ini syarat yang tidak terpenuhi dari sisi ma’qud alaihnya adalah sama dengan jual beli sebelumnya, yaitu pada objek dan harga tidak suci, tidak dapat dimanfaatkan secara syara’, tidak dapat diserahterimakan, barang yang dijual tidak dimiliki oleh penjual. Khusus untuk syarat tambahan tentang murabahah ada satu syarat yang tidak terpenuhi hal ini terjadi karena akibat dari transaksi sebelumnya. Syarat tersebut yaitu transaksi sebelumnya harus sah, sedang dalam transaksi murabahah ini transaksi sebelumnya tidak sah karena transaksi pertama termasuk transaksi bai’ dain bi dain atau bai’ kali bi kali yang dilarang oleh syariat.
Melihat dari ketiga akad diatas, dapat disimpulkan bahwa konsep dan mekanisme transaksi ini secara keseluruhan tidak sah dan dilarang oleh syariat. Karena terdapat syarat-syarat yang tidak terpenuhi pada akad-akad utamanya yaitu pada akad bai’ musawamah dan bai’ murabahah.
4.1.2. Motif Atau Tujuan Adanya Transaksi CMP
Telah dijelaskan diatas bahwa awal munculnya produk ini adalah kurangnya alat likuiditas bank syariah dan keuangan syariah. Kemudain berkembang tidak hanya untuk likuiditas saja tetapi juga untuk pembiyaan dan deposito jangka pendek. Tujuan utama dari semuanya ini adalah untuk mendapatkan dana segar yang likuid tetapi juga menguntungkan bagi orang yang berkepentingan.
Khusus untuk deposito jangka pendek tujuan utamanya adalah bagaimana bank mendapat dana segar dan murah sedang nasabah mendapatkan hasil yang tetap dari dana yang dipinjamkan kepada bank. Konsep ini sebenarnya sama dengan bunga (fixed return) namun untuk menghindari agar tidak dikatakan riab memakai hilah yaitu dperantarai jual beli murabahah. Jadi tujuan bank dari awal berniat untuk mendapatkan uang tunai, dengan membayar sejumlah dana yang lebih di kemudian hari dengan hilah melalui akad, penunjukan wakil dan MoU yang seakan-akan transaksi ini diperbolehkan oleh syariah. Jadi pada intinya motif transaksi ini sama saja dengan konvensional.

Aktiva Pasiva
Kas Kewajiban:
DPK

Piutang Pembiayaan Modal

Gambar 4.2
Posisi produk CMP dilihat dari neraca bank

Dari gambar tersebut dapat dilihat pembahasan CMP untuk deposito margin tetap masuk dalam kategori pasiva, dalam manajemen bank masuk dalam kategori manajemen dana bank syariah. Berdasarkan gambar tersebut tujuan adanya produk ini adalah menjaring dana masyarakat untuk menabung kebank syariah lebih banyak. Feature yang ditawarkan adalah margin tetap atau fixed return yang dijamin oleh bank.
Telah disebutkan diatas bahwa kalau dilihat waktu penetapan margin tidak ada bedanya dengan riba. Namun alasan ini berbeda dengan riba adalah karena adanya hilah yang memungkinkan bebas dari riba karena prosedurnya dibuat sedemikian rupa. Untuk transaksi menggunakan hilah, para ulama berpendapat sah-sah saja, sepanjang tidak merusak fundamental, dasar dari pada prinsip prinsip syariah, atau merusak manfaatnya. Namun, masalah yang terpenting adalah niat, setiap perbuatan terjadi pada dasarnya karena adanya niat, dan setiap orang akan mendapat pahala berdasarkan niat dalam melakukan segala sesuatu.
Ketika niat seseorang baik, perbuatannya dapat di terima, apa bila niatnya salah, perbuatannya dapat di katakan salah. Para ulama membuat sebuah kaidah ;
“Yang menjadi patokan dalam setiap transaksi adalah makna makna (yang dikandung) dan tujuan-tujuan(nya) bukan pada bentuk formal atau lafal-lafalnya”

Kaitannya dengan ini Ibnu Qoyyim Al-Jauziyyah sebagaimana yang dikutip oleh Haroen Nasrun menyatakan ;
“siapa yang meneliti (memahami) secara mendalam sumber-sumber syara’ akan jelas baginya bahwa asy-syari’ membatalkan lafal-lafal yang dituju oleh pelaku (suatu akad) bukan hakikat makna sebenarnya……..dan barang siapa yang tidak memperhatikantujuan-tujuan yang terkandung bebragai akad dan memberlakukan (menjalankan) akad sesuai dengan bentuk formalnya akan berakibat kepada membiarkan (tidak melaknat) orang orang yang memeras anggur ((untuk dijadikan khamar) dan membiarkan setiap orang untuk melakukannya, sekalipun tujuannya jelas unutk membuat khamr….. Bahwa tujuan tujuan dan keyakinan-keyakinan bisa menjadi patokan dalam berbagai bentuk tindakan hukum dan ungkapan-ungkapan, sebagaimana halnya berlaku dalam persoalan yang brkaitan dengan amalan-amalan taqarrub dan ibadah (kepada Allah). Tujuan, niat, dan keyakinan membuat sesuatu menjadi halal, haram, sahih, fasid, taat, maksiat, sebagaimana juga tujuan dalam ibdaha menjadikannya wajib, dianjurkan (sunat), diharamkan, sahih atau fasid.

Memang niat tidak dapat dilihat oleh mata tapi niat bisa diketahui jika hal tersebut sudah menjadi sebuah trend atau menjadi sebuah motif bersama sehingga kecenderungan bersama ini menunjukan niatnya. Dalam masalah bursa berjangka ini tidak bisa hanya dilihat dari individu saja dalam meilhat apa motif dan tujuannya tetapi melihatnya harus secara makro.
Dari awal sudah jelas bahwa niat bank syariah melirik produk ini dengan yang tidak jauh berbedda dengan produk konvensional. Dengan menghalalkan berbagai cara atau hilah agar tujuan mereka tercapai. Seandainya produk CMP ini objeknya diubah kepasar spot sudah tidak menarik lagi bagi para pelaku tranasksi ini, karena tidak likuid lagi.
Telah disebutkan diatas bahwa praktek commodity murabahah deposit saat ini similiar (mirip/ menyerupai) dengan certificate of deposit yang berarti dapat diperjualbelikan kembali. Karena produk ini dikatakan mirip dengan produk konvensional maka bisa dipastikan tujuan adanya produk ini juga dipakai untuk melakukan spekulasi. Dimana spekulasi saat ini lebih banyak mengandung aspek gharar (ketidakjelasan). Dengan adanya produk ini akan menambah konsentrasi uang pda sektor moneter.
4.2.3. Akad Tawarruq Dalam Implementasi Kekinian
Sampai saat ini para ulama masih berdebat mengenai transaksi tawarruq ini antara boleh dan tidak transaksi ini. Alasan utama yang membolehkan adalah terkait masalah illat. Jika illat yang mengharamkannya telah dihilangkan dengan cara hilah maka transaksi itu boleh sedang yang kontra lebih pada niat dan maslahah mafsadahnya yang ditimbulkan dari transaksi itu .
Islamic Fiqh Academy, yang beranggotakan negara negara Islam yang tergabung dalam OKI pada konferensi tahunan nya sesi ke 15 di kota Mekkah, telah mengeluarkan resolusi yang mendukung di perbolehkannya transaksi tawarruq, dengan syarat, pembeli tidak menjual kembali barang yang telah di belinya kepada penjual pertama dengan harga yang lebih rendah, langsung atau tidak langsung, yang kalau terjadi, hal itu masuk dalam katagori transaksi yang mengandung riba. Namun secara umum Islamic Fiqh Academy Jeddah, pada sesi ke 17 konferensi tahunan, memandang bahwa Tawarruq yang dipraktikkan oleh Lembaga Keuangan Syariah selama ini hukumnya illegal atau dilarang .
Struktur tawarruq yang di adopsi oleh Lembaga Keuangan Syariah (LKS) saat ini strukturnya berbeda dengan tawarruq klasik atau tawarruq fighi. Struktur tawarruq yang sudah di modifikasi oleh bank-bank syariah memiliki variasi dan tujuan yang berbeda antara satu Bank syariah dengan bank-bank syariah yang lainnya, yang di kenal dengan nama tawarruq munazam atau regulated tawarruq atau organized tawarruq . Perbendaan tawarruq fiqhi atau klasik dan tawwaruq munazam dapat diringkas sebagai berikut:
Tawarruq Munazam Tawarruq Fighi
Di lakukan oleh 4 Pihak Di lakukan oleh 3 pihak
Ada perjanjian di muka untuk membeli komoditi Tidak ada perjanjian untuk membeli
Tidak ada perjanjian untuk membeli dari Nasabah (Mutawarriq) Hanya ada 2 dasar jual beli
Melibatkan perjanjian bersama/MoU yang harus sesuai dengan prosedur. Tidak ada MoU
Adanya penunjukan Bank sebagai wakil dari nasabah untuk menjual komoditi kepada pihak lain nya. Nasabah menjual sendiri komoditi nya.
Tidak terjadinya pemindahan fisik dari komoditi, hanya sebatas penanda tanganan akad jual beli. Pemindahan komoditi secara fisik terjadi , setiap kali terjadi nya akad jual-beli.

Tabel. 4.4
Perbendaan antara tawarruq fiqhi dan tawarruq munazam

Para ulama yang mengizinkan implementasi dari tawarruq munazam ini berpendapat bahwa jika setiap langkah dari prosedur yang di lalui dalam processnya sesuai dengan prinsip syariah. maka tidak ada alasan untuk tidak mengatakan bahwa semua prosedurnya adalah sah. Para ulama yang mendukung tawarruq munazam berpendapat bahwa transaksinya sangat serupa dengan tawarruq fighi, hanya lebih well oranized (teratur) agar lebih lancar dan cepat prosesnya .
Sedang argumentasi dari para ulama yang kontra pada tawarruq Munazam yaitu : Jika si penjual, menjual barangnya dengan harga yang lebih mahal dari harga pasar kepada mutawarriq, sebagai akibat dari pembayaran yang tertunda/dengan cicilan. Dengan begitu artinya tawarruq munazam adalah indikasi dari kerjasama antara Bank dan nasabahnya yang bertujuan untuk menyediakan dana segar terhadap kewajiban kredit nasbahahnya atau banknya. Sehingga prinsip objektifitas dari niat -tentang niat telah dijelaskan pada pembahasan motif- dalam konteks ini sangatlah relevan. Kedua masalah hilah yang dipakai menurut ulama yang kontra melihat adanya persamaan hilah atau rekayasa untuk melakukan hal hal yang di larang, yang indikasi ke arah untuk mendapatkan riba yang permanent sifatnya. Melalui beberapa process, Bank Syariah hanya berperan sebagai perantara yang tidak sungguh sungguh tertarik dengan jual beli komoditi atau memasuki pasar komoditi international. Begitu juga nasabahnya, tidak berniat untuk memiliki komoditi tersebut atau pada kasus kasus tertentu tidak tahu manahu tentang adanya process jual beli komoditi. Karena tujuan utamanya hanyalah untuk mendapatkan uang tunai segera dari bank (nasabah jika berbentuk deposito-pen), dengan berhutang yang akan di bayar dengan cicilan. Oleh karena itu, sebagian dari Ulama mengangap transaksi ini adalah transaksi Ribawi
Dalam kaitannya dua pendapat diatas point utamanya adalah illat dan hilah. Dimana untuk menghilangkan riba atau sebab-sebab yang mengharamkan transaksi yang mengandung riba ulama yang pro tawarruq menggunakan hilah. Namun yang kontra tidak hanya berhenti pada hilah saja mereka lebih mengedepankan hikmah dibalik trasaksi terselubung tersebut. Mereka lebih melihat moralitas para pelakunya bukan pada formalitas transaksinya. Menurut penulis dalam menetapkan sebuah hukum illat saja tidak cukup namun juga perlu melihat hikmahnya. Hal ini perlu karena kaitannya dengan hiyal yang digunakan untuk melegalkan sebuah transaksi muamalah. Jadi, dalam masalah riba dalam hukum islam hanya sebatas legalitas semata yang terkait bentuk luarnya atau formalitasnya saja, tidak ada tempat bagi moral untuk berbicara . Seharusnya hukum fiqh dapat menjalankan fungsinya sebagai pengontrol formal legal hukum dan juga pengontrol moral etika masyarakat.
Kembali pada masalah tawarruq munazam, dari hasil penelitian para Ulama, tawarruq munazam telah melanggar beberapa larangan yang di sebutkan dalam hadist ;
5. Secara explicit sama dengan formasi dalam inah , karena komoditinya kembali kepada penjual asalnya .
6. Dimana pada transaksi ini jual beli untuk mendapatkan keuntungan melalui pinjaman. Jadi tujuan dari pada tawarruq munazam ini adalah pertukaran antara uang tunai dengan hutang yang lebih besar nilainya. Itu sebabnya tawarruq munazam tidak dapat memenuhi qualifikasi sebagai pembiayaan alternatif dari pada pembiayaan konvensional yang berbasis interest (bunga/riba).
7. Satu hal yang juga banyak di kritik oleh para ulama yang tidak setuju dengan implementasi dari transaksi tawarruq munazam ini adalah: komoditi yang di beli di pasar international adalah sebuah refleksi dari transaksi ribawi, yaitu riba al fadl, yang dilarang.
8. Dan terakhir Islamic Figh Academy Jeddah, pada konferensi tahunannya yang ke 17, tidak memberi izin atas praktek tawarruq munazam yang berlaku di beberapa Bank Syariah pada saat ini, di karenakan praktek ini hanyalah sebatas di atas kertas untuk mendapatkan uang tunai.
4.2.4. Kenapa Para Ulama Dahulu Tidak Berkata Tidak Pada Tawarruq?
Pertanyaan ini juga sempat menghantui penulis. Untuk menjawab pertanyaan tersebut yang perlu diingat adalah masalah ini termasuk masalah ijtihadi yang bisa berubah sesuai dengan perubahan tempat, situasi, waktu, dan karena perubahan social. Bisa berubahnya hukum ijtihadi itu adalah berdasarkan kaidah hukum islam yang telah disepakati oleh semua fuqaha (ahli fiqh) dan ushuliyin (ahli ushul fiqh) menyebutkan bahwa ;
تَغَيُّرُالأَحْكَامِ بِتَغَيُّرِ الأَزْمِنَةِ وَ الأَمْكِنَةِ وَ الأَحْوَالِ
“Hukum hukum itu bisa berubah sesuai dengan perubahan zaman, tempat dan keadaan”
الحُكْمُ يَدُوْرُ مَعَ العِلَّةِ وُجُوْدًا وَعَدَمًا
“Hukum berputar bersama illatnya (penyebab adanya hukum) baik ada dan tiadanya hukum”

M. Nejatulah Sidqi memberikan jawaban yang bagus sekali mengenai pertanyaan diatas. Pertama fuqaha pada masa itu berbeda keadaannya dan alat analisis ekonomi makro yang dibutuhkan untuk menemukan mafsadah dari efek tawrruq tidak ada pada waktu itu. Kedua Pengaruh mafsadah dari tawarruq pada ekonomi secara keseluruhan pada saat sekarang ini tidak ditemui pada waktu itu. Sebagaimana manfaat pada kasus individu tertentu mudah untuk ditemukan.
Beliau beralasan bahwa secara ekonomi utang pada saat itu tidak berperan sebesar pada saat ini. Uang pada waktu itu tidak berdasarkan pada utang. Tidak ada bahkan walupun sedikit yang menyerupai pasar utang seperti saat ini. Para pedagang spekulasi saat itu fokus pada harga riil barang dan jasa daripada intrumrnt utang. Fluktuasi ekonomi orisil terjadi pada saat kekeringan, kelaparan, gagal panen atau perubahan populasi besar besaran daripada di sektor keuangan, pembiayaan utang bisnis sebagai pilihan kedua dll.
4.2.5. Commodity Murabahah; Maslahah Atau Mafsadah?
Diatas telah dijelaskan bahwa akad yang dipakai dalam konsep commodity murabahah adalah akad tawarruq. Sebagaimana penulis ungkapkan sebelumnya bahwa untuk melihat apakah produk ini sesuai dengan syariah atau tidak tidak hanya dilihat dari skema atau alur transaskinya akan tetapi juga harus dilihat dari aspek ekonominya juga. Dari penelusuran literatur yang penulis dapatkan bahwa secara umum konsep ini memberikan mafsadah yang lebih besar daripada maslahahnya.
Esensi dari konsep CMP adalah menggunakan akad tawarruq dan tujuan utama dari konsep ini adalah bagaimana mendapatkan likuiditas baik dari segi nasabah bank atau dari segi bank itu sendiri. Penulis sependapat dengan M. Nejatullah Sidqi bahwa konsep tawarruq ini lebih besar mafasdahnya daripada maslahahanya jika dilhat dari segi kepentingan umum. Dibawah ini adalah mafsadah yang telah dirangkum oleh Sidqi :
1) Tawarruq menyebabkan pembentukan utang yang mana volumenya cenderung mengalami peningkatan.
2) Hasil pertukaran (exchange) uang sekarang dengan uang dikemudian hari adalah tidak fair dari segi sudut pandang resiko dan termasuk ketidakpastian.
3) Hal ini menyebabkan perkembangbiakan utang secara terus menerus, menuju arah perjudian seperti transaksi spekulasi
4) Hal ini menyebabkan keuangan berdasarkan utang (debt finance) yang terus menerus, meningkatkan ketidak stabilan dalam ekonomy. Dalam debt-based economy, suplay uang dihubungkan kepada utang yang mana tendency kedepannya adalah peningkatan (expantion) lonjakan inflasi.
5) Ini menghasilkan ketidakadilan dalam distribusi pendapatan dan kesejahteraan. Dan menghasilkan keuangan berdasarkan utang yang terus menerus, dalam ketidakefesienan alokasi sumber daya.
6) Dengan pengkonsolidasian pembiayaan berbasis utang (debt financing) berkontribusi untuk meningkatkan tingkatan (level) kekhawatiran dan kerusakan (destruction) lingkungan.
Jika dilihat dari sudut pandang perbankan, mafsadah yang ditimbulkan adalah sebagai berikut:
1. Awal mula munculnya bank islam (syariah) adalah untuk menghilangkan riba dengan jargonnya profit and loss sharing. Sampai saat ini jargon tersebut belum terealisasi. Karena komposisi pembiayaan yang besar dipakai adalah murabahah. Dengan adanya CMP deposito jangka pendek yang terikat pada pasar derivatif akan semakin menjauhkan bank dari konsep awalnya. Pada akhirnya paradigma berpikirnya bank syariah sama saja dengan paradigma bank konvensional.
2. Bungkus-bungkus syariah yang mengerucut kepada pengembangan konsep Tawarruq/Tawriq dalam bentuk commodity murabahah itu sebenarnya cuma menguntungkan segelintir pihak karena meniadakan fungsi yang paling digembar-gemborkan di perbankan syariah yaitu sebagai ‘the true financial intermediary between financial sector and the real sector’. Dan hanya produk ini berkutat pada sektor keuangan saja
3. Sebagaimana diawal dijelaskan produk ini lebih difokuskan kepada korporate dan institusi -contoh nyatanya adalah bank HSBC syariah ketika mengeluarkan produk ini yang menjadi nasabahnya adalah bank Danamon syariah-. Artinya hal ini dana bank syariah akan menambah konsentrasi dananya pada sektor keuangan seperti halnya konvensional. Dan yang menikmati hanyalah segelintir orang saja. Moralitas –ta’awun- dalam ekonomi tidak terealisasi yang ada moralitas profit
4. Jika Bank-bank syariah lebih banyak yang melakukan transaksi commodity murabahah untuk menarik tabungan/deposito murabahah dari nasabah lokal dan kemudian pembelian komoditasnya keluar negeri –kelondon- maka yang terjadi adalah cash outflow besar-besaran dari lokal ke luar negeri sedang dalam negeri ini butuh dana yang besar untuk membiayai pembangunan sektor riilnya. Hal ini akan menambah kesengsaraan rakyat Indonesia. Dan menghilangkan fungsi bank syariah hadir di Indonesia sebagai penyambung sektor keuangan dengan sektor riil.
5. Praktek yang diterapakan saat ini adalah deposito jenis certificate of deposit (CD) artinya deposito ini dapat diperjualbelikan kembali. Jadi tidak ada bedanya dengan konvensional yang sudah ada. CD ini termasuk produk derifativ yang dipakai bentuk. Artinya produk ini pada akhirnaya akan mengarah pada kegiatan spekulasi yang penuih dengan aspek gharar.
6. Produk ini akan menambah gap (ketimpangan) antara sektor riil dan moneter (keuangan) lebih besar lagi. Dimana ketimpangan sektor riil dan keuangan saat ini rasionya sudah mencapai 6:500 . Semakin besar ketimpangan ini menunjukan semakin tinggi tingkat kemiskinan dan pengangguran di dunia riil.
Dari uraian diatas dapat penulis menyimpulkan bahwa mafsadah yang ditimbulkan lebih besar dari pada maslahah yang didapat. Mengingat dalam salah satu sumber hukum yaitu saddu dzari’ah (tidakan preventif) dimana kita harus melakukan tindakan pencegahan sebelum terjadi marabahaya dan kaidah fiqhiyah dibawah ini;
دَرْءُ المَفَاسَدِ مُقَدَّمٌ عَلَى جَلْبِ المَصَالِحِ
”Menghindari kerusakan/resiko itu lebih didahulukan atas menarik kemanfaatan ”
الضَّرَارُ يُزَالُ
”Marabahaya itu dihilangkan ”

Maka demi menghindari mafsadah yang lebih besar lagi, praktek transaksi ini dilarang karena tidak sesuai dengan tujuan syariah islam (maqasid syariah) yaitu menjaga harta. Harta disini tidak sebatas harta pribadi tetapi juga dalam arti harta sebuah negara.

A Shari‘ah Analysis of Issues in Islamic Leasing

September 5, 2010 Leave a comment

Mohammad Hashim Kamali

International Islamic University Malaysia (IIUM)

Kuala Lumpur, Malaysia

Abstract: This essay is presented in two parts and several sections.
The first part provides a fairly detailed examination of the fiqh rules
pertaining to the contract of ijarah. It begins with the definition of
ijarah and reviews the leading schools of Islamic law on the basic
conditions and requirements of this contract. This is followed by a
review of the two varieties of ijarah known to the market, namely
operational lease, and financial lease. The discussion proceeds with a
review of contractual options (khiyarat) and their relevance to ijarah,
liability for loss and insertion of penalty clauses in the ijarah, and then
the fiqh rules pertaining to the termination of this contract.

The second part of this essay deals with the sukuk (bonds) in
general and the Islamic bonds in particular. It also discusses potential
benefits of Islamic bonds and their effects on economic development
and examines experts’ opinions on issues of concern to Islamic bonds
that have drawn the attention of commentators. A brief review of some
recent issuances of Islamic bonds is followed by a discussion of hybrid
assets in the sukuk.

I. Introductory Remarks

This essay is presented in two parts, one of which provides an exposition of the fiqh
rules pertaining to ijarah, and the other addresses market developments and Shari‘ah-
related issues in ijarah bonds. The discussion starts with a review of the concept and
definition of ijarah, its basic requirements and conditions of validity according to the
leading schools of fiqh. This is followed by a brief discussion of the two forms of ijarah,
namely operational lease and financial lease, drawing attention to the fact that financial
leasing and securitization of ijarah do not find a precedent in the works of fiqh. The
succeeding sections expound the fiqh rules pertaining to contractual stipulations, and the
relevance of options (khiyarat) to ijarah, liability for loss, penalty for default, and the
termination of ijarah.

(*) It is a revised and improved version of the paper presented at the International Islamic Leasing Conference
in Kuwait, April 24-25, 2005.

(1) See for details Ibn Rushd, Bidayat al-Mujtahid wa Nihayat al-Muqtasid, Lahore: Faran Academy, n.d, II,
166; Wahbah al-Zuhayli, Al-Fiqh al-Islami wa Adillatuh, 3rd edn. Damascus: Dar al-Fikr, 1409/1989,
IV, 130; Abd al-Wahhab Abu Sulayman, ‘Aqd al-Ijarah 19-21 (n.6); ‘Ali al-Khafif, 485 (see note 2).

(2) Muwaffaq al-Din Ibn Qudamah, al-Mughni, n.8 below, VI, 12: Abu Sulayman (next note 6) ‘Aqd al-
Ijarah, 18, Ali al-Khafif, Ahkam al-Mu‘malat al-Shar‘iyah, Bahrain, Bank al-Baraka, n.d., 485;
‘Abdullah ‘Alawi Haji Hasan, Sales and Contracts in Early Islamic Commercial Law, Islamabad:
Islamic Research Institute, 1984, 155.

The second part on developments in the sukuk market introduces the sukuk and then
provides a more detailed discussion of ijarah bonds. The discussion highlights the
potential benefits of Islamic bonds in reference to mobilization of funds that can
stimulate economic development and serve therefore the maslahah (welfare, interest) of
the people. The discussion proceeds with a review of expert opinion including some fiqh
academy resolutions on issues of concern to Islamic bonds and commentators response
to some of those issues. This is followed by a brief review of some recent bonds issues,
the development of hybrid assets in sukuk, and a conclusion.

II. The Contract of Ijarah

Ijarah derives from the root word ajara – to recompense, compensate or give a
consideration and return. Ajr refers to a worker’s wage, and ujrah to rental payment. In
its juristic usage, ijarah primarily refers to both a rental as well as a hire contract that
engages the services of persons. In its current usage ijarah also occurs in two types,
namely operational lease and financial lease, the latter is known as ijarah wa iqtina‘.

Ijarah is validated by the Qur’an, Sunnah, and general consensus (ijma‘). Several
verses are found in the Qur’an (al-Kahf,77:al-Qasas, 26: al-Talaq, 65-6) on the worker’s
entitlement to a wage where references are also made to the practices of previous
Prophets on ijarah, thus indicating that ijarah represents an instance of continuity in the
Qur’an of the laws of previous nations. References also occur in hadith to ijarah and the
employer-employee relations, including, for example, the instruction, in symbolic terms,
to the employer to “pay the employee his wages before the sweat of his brow dries up”.
Whereas the Qur’an and Sunnah only refer to ijarah as an employment contract, the
companions of the Prophet practiced ijarah, in the sense of employment as well as
rental of real property. The validity of ijarah is thus upheld by conclusive ijma‘ of the
companions, as well as general custom (‘urf) among Muslims that prevails to this day(
F1F).

The fiqh texts provide elaborate details on ijarah which stop short nevertheless of
offering a blueprint for the modern applications of this contract, especially as a mode of
contemporary finance. This essay explores aspects of fiqh on ijarah that are of relevance
also to contemporary applications of this contract.

Scholars of the four schools of Islamic law have differed somewhat on the precise
definition of ijarah. All the madhahib are in agreement however, that ijarah is a
contract of the sale of known and specified benefits or services in return for
compensation(
F2F). Minor variations that occur in the definition of ijarah may be
summarized as follows: Whereas the Maliki and Hanbali definitions of ijarah qualify
benefits and services into lawful benefits and services (manfa’ah mubahah) that would
preclude unlawful objects and activities, other schools subsume this qualification under
the conditions and requirements of ijarah. Another stipulation of the Hanbali definition is

(3) Cf. Abd al-Rahman al-Jaziri, Kitab al-Fiqh ‘ala al-Madhahib al-Arba‘ah, Cairo, Al-Maktabah al-
Tawfiqiyah, n.d. III, 86-90.

(4) Cf. Al-Jaziri, Kitab al-Fiqh ‘ala al-Madhahib al-Arbacah, n.3, III, 97.

(5) Id., III, 104.

(6) Mansur Ibn Yunus al-Buhuti, Kashaf al-Qina‘an Matn al-Iqna‘, ed. Mustafa Hilal, Riyadh: Maktabat al-
Nasr al-Hadithah, n.d. III, 561; ‘Abd al-Wahhab Abu Sulayman, ‘Aqd al-ijarah Masdar min Masadir
al-Tamwil al-Islamiyah, Jeddah, Islamic Research and Training Institute, 1413/1992, 27.

(7) Ali al-Khafif, Ahkam Mu‘amalat al-Shar‘iyah, n.2, 487.

To say that ijarah is the sale of benefits differentiates it from sale proper, gift and
charity (bay’, hibah, sadaqah) which consist of the transfer of the capital asset as a
whole and not only of its benefits. Ijarah is thus a sale of benefits, or usufruct, usually
of durable goods. Reference is also made in the precise determination of what may or
may not be suitable for ijarah to the prevailing custom, which is also applicable to the
mode of payment, whether of wages or rental, as to how they are paid. Consideration in
ijarah is normally payable toward the end of a specified period, be it a week, month or
year, as the benefit of ijarah usually materializes over a period of time. Yet Custom
may change this and determine that the benefit of ijarah be paid for in advance.(
F4F)
Custom also determines the manner how the usufruct is derived in ijarah. A tenant is
thus expected to live in the rented place and use it for familiar purposes of living and
not outside the customary expectations of proper usage for that purpose(
F5F).

Since ijarah is a variety of sale, it is lawful in everything that can lawfully be
bought and sold, and the rules of Shari‘ah pertaining to sale are also generally
applicable to ijarah. The fuqaha‘ have, however, singled out basically two things,
namely the human being, and the waqf property which cannot be sold but can be made
the valid subject matter of ijarah.(
F6F) Furthermore, since ijarah is a variety of sale,
anything that can be paid as a price (thaman) in sale can also be given as consideration
in ijarah.

Most of the rules relating to the contract of sale, such as those pertaining to sanity,
adolescence and consent of the contracting parties without which no contract can come
into existence also apply to ijarah. Other rules of sale that apply to ijarah include
options (khiyarat) such as khiyar al-ru‘yah (option of viewing), khiyar al-‘ayb and
khiyar al-shar‘i (option of defect, and option of condition), revocation (faskh), and
iqalah (termination by mutual agreement), but not pre-emption (shuf‘ah). The Shafi’is
also disallow khiyar al-shari in ijarah. In a defective ijarah (ijarah fasidah) the fair rent
or wage (ajr al-mithl) but not the one specified in contract would be applicable. Since
ijarah transfers the ownership of usufruct from the lessor to the lessee, the former must
not only own the assets involved but also be able to transfer the ownership of its
benefits to the lessee(
F7F). It is also a requirement of a valid ijarah that the capital asset

(8) Muwaffaq al-Din Ibn Qudamah al-Maqdisi, al-Mughni, Beirut: Dar al-Kitab al-Jadid, 1403/1983, VI,
12. Mohammad Abu Zahrah, al-Milkiyah wa Nazariyat al-‘Aqd fi’l Shari‘ah, Cairo: Dar al-Fikr, n.d.,
272; Shams al-Din al-Ramli, Nihayat al-Muhtaj (see n.22), IV, 6.

(9) Fakh al-Din ‘Uthman al-Zayla‘i, Tabyin al-Haqa’iq Sharh Kanz al-Daqa’iq, 2nd edn. Beirut: Dar al-
Ma‘rifah, V, 106: al-Jaziri, Kitab al-Fiqh, n.3, III, 93; Abu Sulayman, ‘Aqd al-Ijarah n. 6, p.30.

Other conditions required in a valid ijarah are that the two sides of the exchange
must both be known and specified in such a way that eliminates the possibility of
disagreement and dispute; that the usufruct in question has a financial or market value;
and also that it does not involve indulgence in haram activities and substances(
F8).
Objects such as a dead carcass, pork, wine, and prohibited activities such as usury,
prostitution and gambling may not be the subject either of sale or ijarah.

Moreover, ijarah like sale involves exchange of values on both sides. The usufruct
in ijarah may thus be sold for money, another object of value, or indeed another
usufruct such as rental of a house in exchange for the rental of another house. This is the
majority position although the Hanafis have held that the counter values of ijarah
should not be of the same genus. The reason given that the benefits of ijarah are non-
existent on both sides at the time of contract, and since ijarah is a form of sale, if both
the counter values are of the same genus, it would resemble deferred sale (bay‘ bi‘l-
nasi‘ah) on both sides, which is not permissible(
F9F). Deferment is allowed according to
the majority of jurists of one of the counter values in sale, such as in salam or bay’ bi-
thaman ajil (BBA) but not of both sides of the bargain.

Leasing is used as a mode of financing by Islamic financial institutions with the
purpose of enabling customers to use durable goods and equipment such as ships,
aircraft, heavy machines and plants in productive enterprises without having to buy
them. In a simple ijarah that does not involve securitization of the ijarah receivables,
the customer or the lessee, pays a certain amount in cash as rental of the leased asset
over a period of time. Since the Islamic bank or financial institution acquires the desired
asset only when a client requests it and commits himself to enter into a lease contract
with the bank, the bank can make a profit by setting the rent at a level that covers, over
the lease period, the purchase price as well as a return in line with the current rate of
mark-up murabahah. The lease is usually for a time long enough to cover the life of the
asset. The banks are usually not interested in the asset itself and the contract generally
provides for sale or gift of the asset to the lessee at the end of the contract period. This is
ijarah-wa-iqtina‘, or a lease ending up with the lessee owning the asset. This form of
ijarah is widely practiced as it is akin to murabahah and suits the banks’ role as
financial intermediaries.

The Syariah Advisory Council (SAC) of the Securities Commission of Malaysia
has noted that financial leasing is not a new contract but an extension of the contract of
ijarah and a mechanism that develops the same concept into a mode of financing.
Moreover, the sale of usufruct which is a feature of financial lease is lawful and Islamic
jurisprudence recognises it as mal. The SAC thus noted that “financial lease without a

(10) Securities Commission of Malaysia, Resolutions of the Securities Commission, Syariah Advisory
Council, Kuala Lumpur, 2002, 69.

(11) Cf., Muhammad Taqi Uthmani, no. 14, Introduction to Islamic Finance, 172.

penalty clause does not contradict Syariah”(
F10F). The SAC further noted that in their
calculation of the rental, the leasing companies take a similar approach, which is based
on the value of the asset, rate of charge or return, and the period of financing, The main
difference being that an operational lease does not offer an option to the lessee to buy
the leased asset.

Notwithstanding its general acceptance in Islamic banks, some aspects of financial
leasing are not fully Shari‘ah compliant and need to be reviewed and rectified. One of
these is concerned with assignment of lease without the transfer of ownership. The
lessor can sell the leased property to a third party in which case the relation of lessor
and lessee shall be established between the new owner and the lessee. However,
assignment of the lease itself for a monetary consideration without assigning ownership
of the leased asset is not valid. The difference being that in the latter case the ownership
of the asset is not transferred to the assignee, but he becomes entitled to receive rent of
the asset only. This kind of assignment is acceptable in Shari‘ah only where no
monetary consideration is involved. For example, a lessor can assign his right to claim
rent from the lessee to his brother or friend as a gift. Similarly, he can assign this right
to any one of his creditors to set off his debt out of the rent receivables. But if the lessor
wishes to sell this right for a price, he would be indulging in the sale of money (the
amount of rentals) for money which would be tantamount to riba(
F11F).

Unlike sale which under the scholastic fiqh cannot be effected for a future date,
ijarah for a future date is permissible. The lease period, and also the lessor’s entitlement
to rent, however, commence form the date on which the leased asset is delivered to the
lessee, regardless as to whether the lessee has started using it or not. This enables both
the lessor and lessee to make preparation plans ahead over a longer period of time. The
rent or any part thereof may be payable in advance before delivery of the asset to the
lessee, but the amount so collected by the lessor remains with him as payment on
account that is adjustable against the actual rent. Jointly owned property by two or more
persons can be leased out and the rent is distributed among them in proportion to their
respective share in the property. A joint owner of a property may also lease out his part
to his partner but not to an outsider without an agreement with his partner/s first. The
lessee may not use the leased asset for purposes other than those specified in the lease
agreement. If no such purpose has been specified in the lease agreement, the asset may
be used for any purpose that is deemed customary and normal.

III. Two Modes of Lease Financing

The fiqh discourse does not envisage ijarah as a mode of financing, but a transaction
for the transfer of usufruct from person to person for an agreed consideration and period.
Yet as earlier noted, in financial leasing, ijarah is basically used as a substitute to long
term lending on the basis of interest. The lessee thus acquires the equipment he needs
without borrowing on interest but resorts to leasing as an alternative. Leasing companies

(12) Cf. Husayn Hamid Hassan, al-Istithmar al-Islami wa Turuq Tamwiliah, Bank Dubai al-Islami, (in-
house publication) 1997, 60. In Malaysia this variation has been further extended in the form of what is
known as ijarah thumma al-bay‘ (ijarah then sale) which means that two separate contracts are
concluded, namely ijarah and sale: upon expiry of the lease period the lessee enters into a second
contract to purchase the leased asset from the lessor.

(13) Cf. Muhammad Nejatullah Siddiqi, Riba (Interest) and Rationale of its Prohibition. Jeddah: IRTI,
Islamic Development Bank, 2004, 62; Mohammad Muzzafar, “Ijarah: Financing on the Basis of Hire-
Purchase and Leasing” Encyclopedia of Islamic Banking, 137; Liaqat Ali Khan Niazi, Islamic Law of
Contract, Lahore, 298; Derek Weist “Issues in Islamic Leasing” London: New Horizon, June 1997, 7.

and Islamic banks often lease objects such as plants and machinery to business firms and
entrepreneurs who may be unable to buy them for their production purposes(
F12F).

In a financial lease, Islamic banks and institutions are usually not interested in the
asset itself, yet the option remains open for them to retain ownership of the item, sell or
lease it to another client. Financial leasing has become popular due to tax advantages as
the rental can be offset against corporate tax by the lessee, including zakah. Since the
client renting the equipment is not its owner, any wealth assessment for zakah will not
include the item in question.

The critics say that financial leasing basically boils down to a form of disguised
security agreement since it transfers to the lessee all the risks associated with ownership.
The long-term and binding nature of financial lease add to the weight of that problem.
Even when the leased object is eventually made into a free gift or given at a nominal
price, it does not address the issue that the residual value is predetermined and built into
the lease payments which may prove to be unjust. For the lessee loses the asset as well
as the extra payments he may have made in the event he dies or is unable to continue the
lease payments. To address this problem, it is suggested that the lease agreement should
not bind the lessee to acquire ownership of the asset as this would tie up one agreement
with another and make the one a pre-condition of the other. However, the lessor is at
liberty to sign another contract with the lessee at the end of the lease period, just as he
may also make a unilateral promise to sell, or make a gift of the leased asset to the
lessee at the end of the lease period. In this way the lessee would still have the option
whether or not he wishes to acquire ownership of the leased asset(
F13F).

In some cases the lease commences on the very day the lessee receives the price
irrespective of whether he has taken delivery of the asset. The lessee’s liability for rent
thus begins prior to taking delivery of the leased asset. This contravenes one of
requirements of ijarah as it amounts to charging rent on the money given to the
customer, and it is tantamount to interest. If the supplier has delayed delivery after
receiving the price, the lessee should not be liable for the rent of the period of delay.

Furthermore, when the lessee himself has been entrusted with the purchase of the
leased asset, two separate relations come into play between the institution and the client
one after the other. In the first instance, the client is an agent (wakil) of the institution to
purchase the asset on the latter’s behalf. The lessor-lessee relationship has not yet come
into operation at this stage. The second stage begins from the date when the client takes
delivery from the supplier. It is only then that the lessor-lessee relation begins within the
context of ijarah. During the first stage, the client cannot be held liable for the

(14) Cf. Muhammad Taqi Uthmani, Introduction to Islamic Finance, Karachi, Pakistan, Idaratul-Ma‘arif,
1999, 165.

(15) al-Khafif, Ahkam Mu‘amalat al-Shar‘iyah , n.2, 491.

obligations of the lessee as he only acts as a trustee and agent. But when he takes
delivery of the assets, he also acquires the role of the lessee(
F14F).

IV. Liability for Loss

Since the lessor, in a financial lease, bears ownership responsibilities, in the event
the asset is destroyed during the lease period, he alone stands to suffer the loss.
Similarly if the leased asset loses its utility and function without the lessee’s fault or
negligence, the lessor’s entitlement to rent discontinues. This may also be said to be one
of the differences between ijarah and conventional leasing, as the latter entitles the
lessor to receive rent even if the lessee could not obtain any benefit from the leased
asset.

Long term leases with fixed rent may be liable to market fluctuations of rent and
inflation which may present loss-incurring factors for the lessor. To prevent excessive
uncertainty in this regard, the lessor may insert a condition in the lease that the rent may
be reviewed or made renewable on new terms at specified intervals. This would be
tantamount to what is now known as floating ijarah, as opposed to fixed rate ijarah.

If the lessee contravenes any of the terms of the agreement, he may be held liable
for compensation of the loss caused, but he cannot be compelled to pay the rent of the
remaining period. The lease asset normally reverts to the lessor when the lease is
terminated. Should there be no contravention on the part of the lessee, the lease cannot
be terminated without mutual consent. Hence any stipulation which gives the lessor
unrestricted power to terminate the lease would be contrary to Shari‘ah. Similarly, any
clause which obligates the lessee to payment of rent for the remaining of the lease
period would be ultra vires the Shari‘ah.

If the leased asset has totally lost its utility and function, accidentally destroyed, or
its usufruct value substantially reduced and no restoration or repair is feasible, the lease
terminates as of the day of the loss of its utility. However, in modern practice, the leased
assets are usually insured against such contingencies, in which case, it may be
unnecessary to insert additional stipulations in the lease contract.

The lessee’s control over the leased article is in the nature of a trust (amanah) which
means he is not liable for loss and damage that occurs through normal use of the leased
object. But he is liable to pay compensation when he violates the terms of the trust and
uses the leased article contrary to what is normal and customary, or when proved
deliberately negligent and abusive(
F15F).

Financial lease agreements often stipulate a penalty if the lessee defaults on
payment. Uthmani observed that a penalty of this kind is not valid in an Islamic lease.
The reason given is that the rent after it becomes due is a debt payable by the lessee and
a monetary charge on it is tantamount to riba. A stipulation may, however, be inserted
in the ijarah agreement making late payment by the lessee over a period of time liable

(16) Uthmani, Introduction to Islamic Finance, n. 14, 171-72; see also Ali Arsalan Tariq Managing
Financial Risks of Sukuk Structures, unpublished Master of Science Dissertation at Loughborough
University, UK, 2004.

(17) SAC 20th Meeting, 14 July, 1999, see Securities Commission of Malaysia, n. 10, 102.

(18) Securities Commission of Malaysia, n. 10, 103.

to a certain amount of charity. This may provide a deterrent to late payment even though
it does not compensate the lessor for his opportunity cost over the period of default(
F16F).

The SAC of the Securities Commission of Malaysia, has held that late payment in
an operating or a financial lease may be subject to a one per cent penalty, which may
not, however, be compounded. In holding this position the SAC actually followed an
earlier resolution of its sister organization, namely the Shari‘ah Advisory Council of the
Central Bank (Bank Negara) of Malaysia, which had also approved imposition of a flat
one per cent penalty per annum(
F17F).

In a subsequent resolution of the SAC (8 November 2000) the issue of default on
payment was addressed more widely, that is, with reference to all Islamic financing
transactions, under the rubric of substitution of compensation (ta‘wid). Thus it was held
that imposing ta‘wid is permissible 1) for arrears of due payments, 2) for failure to pay
after the due date, 3) for early settlement before due date in Islamic financing products
that are based on contracts of exchange (‘uqud mu‘awadat) including Islamic debt
securities. Ta‘wid can be imposed after it is found that deliberate delay in payment
(mumatalah) is present on the part of the payee to settle the payment of principal or
profit. The rate of ta‘wid on late payment of profit is one per cent per annum of the
arrears which may not be compounded. Where the ta‘wid rate on payment of the
principal is based on the prevailing market rate in the Islamic inter bank money market;
it too may not be compounded.

The SAC resolution added that “the imposition of ta‘wid, or shart jaza’i” is penalty
agreed upon by the ‘aqd parties as compensation that can rightfully be claimed by the
creditor, when the debtor fails or is late in meeting his obligation to pay back the loan.
Payment by way of ta‘wid may not in any case exceed the total amount of the
outstanding balance(
F18F). The Shari‘ah evidence cited for this resolution refers to two
hadiths, and a ruling of qiyas (analogy) as follows:

• Procrastination by the affluent is injustice (matl al-ghani zulm).

• Harm may neither be inflicted nor reciprocated (la darar wa la dirara fi‘l-Islam).

This last hadith is moreover supported by the legal maxim that “harm must be
eliminated (al-darar yuzal)”.

Qiyas: delay in due payment is seen to be analogous to ghasb (usurpation) and the
usurper may, in the Shafi‘i and Hanbali schools, be held liable to compensate the owner
for his loss. The ‘illah or effective cause that is in common between ghasb and
mumatalah is “obstructing the use of property and exploiting it in a tyrannical way”.

The Fiqh Academy of the Organisation of Islamic Conference, in its resolution 66
(1992) authorised imposition of liquidated damages and penalty in istisna‘

(19) Majma‘ al-Fiqh li Rabitah al-‘Alam al Islami. Qararat Majma‘ al-Fiqh al-Islami, Jeddah, 1975.

(20) al-Bukhari, Fath al-Bari Sharh Sahih al-Bukhari, Kitab al-Shurut (Book of Conditions), vol. V, 354.

(21) Mustafa al-Zarqa, al-Madkhal al-Fiqhi al-‘Amm: al-Fiqh al-Islami fi Thawbihi al-Jadid, Damascus: Dar
al-Fikr, 1968, III, 386.

(22) Shams al-Din al-Ramli, Nihayat al-Muhtaj ila Sharh al-Minhaj, Cairo, 1386/1967 IV, 6; Abu
Sulayman, ‘Aqd, al-Ijarah, n.6, 40.

(23) Cf., al-Khafif, Ahkam, n.2, 490-91.

V. Options and Stipulations (Khiyarat)

Each of the parties in an operational lease has the right to insert stipulations in the
contract such as the option of condition (khiyar al-shart) according to which the option
stipulator can duly exercise it and dissolve the lease. This kind of option is limited to
three days according to the majority view. The Shafi‘is validate insertion of khiyar al-
shart in sale but not in ijarah(
F22F). The parties to an operational lease or a financial lease
and their representatives may thus, according to the majority, but not the Shafi‘is,
choose to insert stipulations that reflect new market realities and such other matters as
timing of fulfillment of their contractual obligations. Similarly both the lessor and lessee,
or their agents, have the right to stipulate the option of viewing (khiyar al-ru’yah) which
would entitle them to dissolve their contract after seeing the leased object, if they have
not seen it at the time of contract. Furthermore, under the option of defect (khiyar al-
‘ayb), if the lessee finds any defect in the leased object, he is entitled to dissolve the
contract provided the defect in question is such as to obstruct normal enjoyment of the
leased article.

The lessee himself or anyone else with his permission may utilise the leased article
with or without payment. If the leased asset is likely to be differently used by different
users, the lessee may not sub-lease the leased asset without the permission of lessor. If
the sub-lease rental is equal or less than the original rent, and the asset is used for
similar purposes, all the leading madhahib agree on the permissibility of sub-leasing.
However, opinions vary in the event where the sub-lease rental is higher than the
original rent. Whereas the Shafi‘i and Hanbali schools allow this, Imam Abu Hanifah
has held that the surplus should be given in charity, but allows it if the sub-lessee has
enhanced the assets in some way(
F23F). Notwithstanding the pious caliber of Abu

(24) Ibn Qudamah, al-Mughni, n.8, VI, 20; Abu Sulayman, ‘Aqd al-Ijarah, n.6, 75.

(25) Ibn Rushd, Bidayat al-Mujtahid, n.1, II, 288; Ali al-Khafif, Ahkam al-Mu‘amalat al-Milkiyah, n.2, 502;
Abu Sulayman, ‘Aqd al-Ijarah, n.6, 76.

(26) Al-Khafif, Ahkam, n.2, 503-504.

VI. Revocation (Faskh) of Ijarah

Since the principal purpose of ijarah is to enable the lessee to enjoy the usufruct of
the leased object, the majority of schools, excepting the Hanafis, allow revocation
(faskh) of ijarah in basically one situation only, which is when the leased article loses
its utility and benefit. The majority consequently do not allow revocation of ijarah on
grounds of any personal disability that befalls the lessor or the lessee. Hence a lease
contract may not be revoked on any other ground(
F24F).

The Hanafis also permit revocation of ijarah on ground of disabilities affecting the
parties even when the leased item remains intact. Revocation is thus allowed of the
lease, for example, of a shop if prior to taking occupancy, the lessee loses all his
merchandise. Similarly, when someone hires a chef for an event which is, however,
unexpectedly postponed or cancelled, the hire contract may be revoked. Disagreement
among the schools has also arisen over the dissolution of ijarah in the event of death of
one of the contracting parties. The majority of schools maintain that ijarah remains
intact even after the death of one of the contracting parties and hold that their legal heirs
would inherit the contract. The latter would consequently step into the shoes of their
deceased relative and would consequently be bound to honor the contract. The Hanafis
maintain, on the other hand, that the contract is dissolved upon the death of one of the
contracting parties. This is because usufruct according to the Hanafis is a manfa‘ah
(benefit) which is not mal and therefore not inheritable. Transfer of ownership by way
of sale, gift and inheritance also does not vitiate the ijarah, which according to the
majority including the Hanafis survives the transfer and the new owner must observe it
until the end of its period(
F25F).

Ijarah basically expires when its period of validity comes to an end unless it be for
a reason that necessitates its extension beyond the due date. Thus when the hire period
of an animal or a vehicle comes to end during the continuation of a journey they have
been hired for, the ijarah continues until the time the carrier reaches destination.

As already noted ijarah that is subject to option of stipulation, option of defect or
option of viewing comes to an end with the due exercise of these options(
F26F).

VII. Islamic Bonds or Sukuk

Sakk (p1. sukuk) in Arabic lexicology derives from the idea of striking one’s seal on
a document signifying a covenant or conveyance of rights and obligations. The word is
also used for minting coins. In its present usage, sukuk refer to certificates or financial
securities that represent a proportional or undivided interest in an asset, or pool of assets,
and the claim embodied in sukuk is not simply claim to a cash flow but an ownership

(27) Exposure Draft of AAOIFI Shari‘ah Standard No. 18, November 2002, p.4.

(28) Cf., Tariq “Managing Financial Risks of Sukuk,” no. 16, 22.

(29) The salam sukuk of Bahrain are monthly issues and are non-tradable. So far over 40 issues of these salam
sukuk have been issued and each oversubscribed.

(30) Monzer Kahf, “The Use of Assets Ijarah Bond for Bridging the Budget Gap.” Islamic Economic Studies,
vol. 4, n.2, May 1997, 82.

The Accounting and Auditing Organisation for Islamic Financial Institutions
(AAOIFI) released in November 2002 a document on Shari‘ah standards concerning
sukuk. The document provides that “Investment sukuk are certificates of equal value
representing, after closing subscription, receipt of the value of the certificates and
putting them to use as planned, common title to shares and rights to tangible assets,
usufructs and services, or equity of a given project of a special investment activity”(
F27F).

Zero-coupon sukuk, as they are known, are debt financing but non-tradable sukuk
which are created where the assets to be mobilized do not exist yet. The purpose would
be to create more assets on the balance sheet of a company. However, certificates of this
nature would not readily be tradable because of Shari‘ah restrictions on sale of debts
(except for Malaysia and Indonesia). The primary asset pools to be generated would
partake of istisna‘ and instalment purchase/sale contracts that create debt-bearing
obligations. The certificates on these debts are known as fixed rate zero coupon sukuk
and they are generally deemed to be Shari‘ah compliant(
F28F).

Sukuk may be divided into two types: sukuk that yield pre-determined returns, and
sukuk based on profit and loss sharing. sukuk al-ijarah are a prime example of
certificates that yield pre-determined returns. So far sukuk al-ijarah has been the
dominant type of sukuk issued, although salam sukuk has also been used for similar
purposes and it is being actively promoted by the government of Bahrain(
F29F). Part of the
motivation to promote these new tools has been to replace the commodity murabahah
transactions so commonly used by Islamic banks to generate liquidity. Ijarah bonds are
“securities of equal denomination for each issue, representing physical durable assets
that are tied to an ijarah contract as defined by Shari‘ah”(
F30F).

Ijarah bonds represent leased assets without actually relating the bond holders to
any corporate body or institution. For instance, an aircraft leased to an airline company
can be represented in bonds and owned by a thousand different bond holders, each of
them individually and independently collecting their periodic rent from the airline
company without having to associate with other bondholders. They are, in other words,

(31) Cf., Nathif J. Adam and Abdul Kader Thomas, Islamic Bond, Your Guide to Issuing, Structuring and
Investing in Sukuk. London: Euromoney Books, 2004, 117; Tariq, “Managing Financial Risks.” n.16, 21.

not owners of a share in a company that owns the leased airline, but simply a sharing
owner of one thousandth of the aircraft itself. The bondholders receive steady income
that is even more risk averse than common stock, due to the fixed and predetermined
nature of their rental cash flow.

Ijarah bonds are nevertheless exposed to risks arising from general market
conditions, price movements of real assets, the ability of the lessee to pay the rental
installments, maintenance and insurance costs. This might mean that the expected return
on some forms of ijarah bonds may not be precisely predetermined and fixed. The fixed
rental may thus represent a maximum that is subject to certain deductions. Pure ijarah
sukuk are usually issued on the basis of stand-alone assets identified on the balance
sheet. The assets can be parcels of land to be leased, equipment such as aircraft and
ships. The rental rates on these sukuk can be both fixed and floating depending on the
particular originator and contract(
F31F).

There is scope, of course, for introducing mudarabah and musharakah bonds
although these are more likely to be designated as notes since the returns will be
variable rather than fixed-unlike the ijarah and salam certificates which are pre-
determined. Mudarabah and musharakah bonds have, in fact, been introduced by many
countries as well as the IDB.

Securitization is commonly used as a risk management tool as well as an instrument
of monetization of illiquid and untapped assets. It helps to decrease funding risks by
diversifying the sources of funds. Securitization can generate gains for both financial
institutions and investors. The investors are enabled to make their investment decisions
almost independently of the credit standing of the originator and focus instead on the
degree of protection provided by the SPV (special purpose vehicle) to meet the
investment target.

Ijarah-based securitization starts with the identification of a suitable underlying
asset, which must be capable of both sale and leasing. The process normally starts with
the lessor/originator selling the leased asset to the SPV. The latter then enters into a
lease contract with the originator. The lease contract creates income in the form of
rental payments in favor of the SPV. The SPV then issues sukuk al-ijarah that are
supposed to represent an undivided proportionate ownership in favor of its holders over
the leased asset. At the end of the lease period, which also signifies maturity of the
sukuk, the issuer will redeem the sukuk from the holders, effectively by buying back the
underlying assets.

Securitization of ijarah gained momentum in the last few years with the issuance
initially of the Malaysian Global Sukuk of USD600 million in June 2002. This was
followed with the USD700 million State of Qatar Islamic Sukuk in 2003, and the
USD250 million Bahrain Monetary Agency’s Ijarah sukuk in early 2004. Saudi Arabia,
Pakistan and the IDB etc., have added to the list. In June 2004 the Department of Civil
Aviation of UAE mandated the Dubai Islamic Bank to issue USD750 million sukuk al-

(32) The Asia Wall Street Journal, December 22, 2004, M1.

(33) Cf., Tariq, “Managing Financial Risks of Sukuk,” n. 16, 29.

(34) See newspaper articles on Euromoney Asian Islamic Banking and Finance Summit by B.K. Sidhu
“Systematic Standard Needed,” and “Have Innovative Products. Players Urged” by Hamish Hamid, The
Star, Kuala Lumpur 22 September 2004, quoting Khalid Yusuf, Dubai Internatinal Financial Centre,
Islamic Finance Director, and Iqbal Khan, Dubai based Amanah Finance CEO, 22 September 2004, p.5;
see also The Asian Wall Street Journal, December 22, 2004, Money and Investing M1.

(35) Id., p.6 report by C.S. Tan “Zeti: Set up efforts for progressive Islamic financial system.”

ijarah to raise funding for the expansion of Dubai International Airport. Indonesia is
reported to be issuing “part of its planned USD2 billion in overseas bonds in 2005 in the
Islamic format”(
F32F). All the issues introduced so far were highly successful and well
received in the Middle East, Europe and beyond. Yet the relatively low number of
issues has been a restrictive factor on overall liquidity in the market, and the situation is
not helped by the fact that investors were inclined to hold on to their investments(
F33F).

The successful reception of ijarah bonds and its world-wide Shari‘ah compliance
endorsement is partly due to the fact that they avoid the somewhat controversial bay‘ al-
dayn mode of asset securitization. A distinction of note to be drawn is between lease-
based securitization, and debt-based securitization, which makes the former acceptable
generally whereas reservations tend to persist in the Middle East and Gulf regions over
the acceptance in Shari‘ah of the latter, although it is accepted in Southeast Asian
countries that adhere to the Shafi‘i madhhab.

In a 2004 Euromoney Islamic Banking and Finance Summit held in Kuala Lumpur(
F34F),
commentators confirmed that murabahah and bay‘ bi-thamam ‘ajil continued to be in
focus but that sukuk, although limited in supply and institution bound, is the most
sought after product. The overall size of Islamic finance worldwide was estimated at
USD250 billion and according to a subsequent Asian Wall Street Journal estimate, 270
billion comprising murabahah transactions in short-term market operations, equity-
based real estate and hedge funds, retail finance products like mortgages, car financing
etc, adding, however, that Islamic bonds were yet to be fully developed. It was further
noted that only 20 per cent of Muslim population in GCC countries buy Islamic
products. The focus in the future should be on real estate investment trust (REIT) and
real estate investment funds which have wider retail appeal and distribution. In her
keynote address, Dr. Zeti Aziz, Governor of Central Bank Malaysia called for exploring
the prospects of “creation of an Islamic Universal Bond. Interested countries and
selected institutions could sell their assets to a special purpose vehicle, which, in turn,
would lease back the assets to the countries. Proceeds could then be transferred to the
participating countries for the general purposes of economic development”(
F35F).

In February 1988, the Fiqh Academy of the Organisation of Islamic Conference
considered, at the request of delegates from Jordan, Pakistan and Malaysia, the question
of Islamic investment certificates at their fourth annual plenary session held in Jeddah.
The Academy held that the Shari‘ah encourages documentation of contracts as
stipulated in sura 2:282 of the Qur’an:

“When you deal with each other in transactions involving future
obligations over a fixed period of time, reduce them to writing… It is more
just in the sight of God, more suitable as evidence and more convenient to
prevent doubts among yourselves.”

(36) Quoted in Adam and Abdul Kader, Islamic Bonds, n.31, 4-5.

(37) Cf., Javed Hussain and Sharifa Marafi, “The Role of Islamic Finance for industrial projects in the State
of Kuwait.” Conference paper presented at the Fifth International Conference on Islamic Economics
and Finance, Bahrain, 7-9 October 2003, Vol. II of conference papers, 682; Tariq “Managing Financial
Risks,” n.16, 41.

The Fiqh Academy thus held in its decision number (5), 1988:

“Any collection of assets can be represented in a written note or bond,
and the bond or note can be sold at the market price provided that the
composition of the group of assets, represented by the security, consists of
a majority of physical assets and financial rights, with only a minority
being cash and interpersonal debts”(
F36F).

Some of the salient features, and maslahah-oriented benefits, of ijarah and
ijarah bonds may be summarized as follows:

a) As already noted, ijarah bonds do not represent debt; they represent undivided
ownership in the leased asset. They are as such participatory trust certificates that
resemble equities. Since the sukuk are neither debt nor monetary instruments, Islamic
legal difficulties that accrue the sale of debts or money do not arise in this case. The
sukuk would, however, lose their Shari‘ah compliance without a share in ownership of
the asset.

b) The determining factor of the cost of ijarah financing is the benchmark rate used
by the lessor to assess his required return. The market reference used is the London
Inter-Bank Offer Rate (LIBOR) over which a competitive premium is added. The
Shari‘ah compliance of this has often been questioned especially with reference to the
floating rate return distributed to the certificate holders. One could assume that the
interest rate on loans of the same maturity is used as a benchmark rate. However, it
could be different for at least two reasons. First, being asset-backed, ijarah may be
considered less risky than a term loan of the same maturity, and as such, a lower
benchmark rate would be in order. Second, the lessor, as owner of the asset, may be
willing, under the same circumstances, to pass on a part of these benefits to the lessee in
the form of lower lease payment(
F37F). Having said this, it should be noted that in the case
of ijarah bonds, LIBOR serves only as a market reference for the returns whereas the
intrinsic value of return arises from the rentals pertaining to the leasing arrangements
with the originator and SPV.

c) The fact that the lessor remains legal owner of the leased assets places him in a
secure position without any need for collaterals. This is a significant advantage
especially in countries where the law relating to collaterals may have loopholes which
hinder bank lending. But the main criticism of collateral-based lending at a fixed
predetermined rate of interest is that it is inherently conservative. It favors the rich and
those who are already in business, and is only indirectly concerned with the success of
the venture it finances. Conventional financing appears to be collaterally overstretched
and more of the same can only make it more selective and difficult for those who do not
qualify. In contrast, since leasing companies are not deposit takers, they tend to be less

(38) Cf., Ibrahim Warde, “Islamic Finance: A Quarter-Century Assessment,” in Proceedings of the Fourth
Harvard University Forum on Islamic Finance, September 30–October 1, 2000, 194; Mohammad
Muzaffar, “Ijarah: Financing on the Basis of Hire Purchase and Leasing,” Encyclopedia of Islamic
Banking and Insurance, 143.

(39) Cf., Nafel as-Hathal, “Innovation in Ijarah Financing”, Conference paper presented at Labuan
International Summit on Islamic Financial & Investment Instruments, 16-18 January, 1997, 4.

(40) Cf., Tariq, “Managing Financial Risks,” n.16, 50.

(41) Cf., Adam and AbdulKader, Islamic Bonds, n.31, 27.

tightly regulated than banks and finance companies(
F38F). Leasing offers the advantage of
not requiring collateral and thus of simpler repossession procedures since ownership of
the asset lies with the lessor. The lessor is only exposed to a low level credit risk from
the lessee as the lease transaction is, by definition, asset-backed.

d) Since the lessor purchases the required equipment often at the request of the
lessee and obtains it directly from the supplier, the possibility of misuse of funds and
assets is minimized. Leasing is thus not only asset-backed but also purpose-driven and
can contribute to long term economically beneficial investment.

e) Relatively simple documentation keeps transaction costs down, allowing leasing
companies to achieve high leasing volume more efficiently. Lower costs are also to
some extent a corollary of the fact that leasing is backed by its own assets, which make
it independent of collateral taking procedures(
F39F).

f) Ijarah is also a flexible facility since the lease payments can be short-term or
long-term. Financing and pricing can be on a fixed or floating basis, unlike fixed-term
or fixed-date trading contracts such as murabahah and istisna‘. A rent might fluctuate in
line with changes in the markets. However, the price of a sold item may not be adjusted
upwards or downwards once the sale is complete, even if the payment of price is
deferred. It is partly due to the flexibility of ijarah that this facility has experienced a
rapid growth.

Until a few years ago, floating rate ijarah was not seen to be Shari‘ah compliant as
it was thought that the originator could only guarantee rents or returns on fixed return
underlying assets. But fixed rate sukuk face many market risks. To match the market
requirement of sukuk to be a floating rate on one hand, and the Shari‘ah requirement of
rents to be fixed rate on the other, a solution was found, which was to base the ijarah
bonds on a master ijarah agreement with several subordinate ijarah agreements. In the
subordinate ijarah contract the rents were revised semi annually in accordance with the
market benchmark. This method ensured that the rent was fixed for six months and
floating at the same time. Major ijarah bond issues in the Middle East, Gulf and
Malaysia are based on this variant. This method abated, partially at least, the market
risks concerning the fixed rate ijarah bonds(
F40F).

g) Another reason for the rapid growth of ijarah-based financing is its close
similarity with conventional leasing, hence resulting in the enforceability of the
conventional lease contracts in the Gulf region and Southeast Asia. The question of
enforcement is likely to be problematic with regard to other interest-based financial
contracts in the courts of some Gulf countries(
F41F).

(42) Upon closing the deal, the IDB issue had an asset base comprising 65.8 per cent Sukuk al-ijarah,
murabahah receivables represented 30.73 percent and sukuk al-istisna‘, 3.4 per cent.

Sukuk certificates also serve to replicate the functions of conventional bonds in
respect of resource mobilization and liquidity management as well as providing stable
sources of income for investors. However, sukuk differ from conventional bonds in that
sukuk do not proceed on interest rates.

Investing in sukuk also facilitate the funding of trade and production of tangible
assets. Sukuk are as such linked with real sector activities and are not likely to create
short-term speculative movement of funds and potential financial crises. Moreover, in
their capacity as owners, ijarah sukuk holders are entitled to information on the use of
their investment, nature of the underlying assets and information that would otherwise
be redundant in conventional bonds. This is likely to encourage greater market
discipline.

VIII. Hybrid Islamic Bonds

The underlying pool of assets in sukuk can comprise of istisna‘ and murabahah
receivables as well as ijarah. Having a mixed portfolio of assets of different classes may
indeed allow for greater mobilization of funds. For without pooling together murabahah
and istisna‘ with ijarah, the former two would normally be inaccessible to securitization
on their own.

In July 2004, the Islamic Development Bank issued a USD400 million hybrid sukuk
for the global market under a new name, sukuk al-istithmar. This was the first instance
of Islamic securitization that comprised a plurality of instruments in its underlying pool
of assets. Previous issues of global sukuk had relied on revenue from leases of real
estate assets mainly in the form of ijarah bonds.

The IDB Sukuk consisted of real ijarah-based, and also debt-based assets
(murabahah and istisna‘). Yet the asset portfolio was so structured so as to be
dominated by the ijarah-based portion which represented 66 percent of the total. It was
also considered that ijarah assets should always constitute more than 50 per cent of the
portfolio. Due to the fact that the IDB portfolio comprises murabahah and istisna‘
receivables, the return on these certificates could only be pre-determined and fixed (at
3.625% per annum) payable at six monthly intervals until August 2008 when they will
be redeemed in full(42F).

In juridical terms, the IDB experiment may be said to represent an instance of the
fiqhi concept of talfiq, or patching up, which pieces together different rules, and in the
present case, financial instruments, in order to arrive at a desirable solutions, which in
the present case means a unified marketable formula. The three components of the IDB
sukuk al-istithmar, namely ijarah, murabahah and istithmar are all sub-varieties of sale
and also belong to the general category of contracts of exchange (‘uqud al-mu‘awadah)
that involve exchange of values. The three differ, however, in respect of their own
requirements and conditions. Whereas murabahah belongs to the category of fiduciary
contracts (‘uqud al-amanah), ijarah and istisna‘ do not fall under that category.
Furthermore, ijarah is sale of usufruct (manafi‘) while the other two contracts involve

The present writer is not aware whether anyone involved in structuring the IDB
sukuk al-istithmar had actually mentioned talfiq as a framework and formula, but it
seems that the idea fits in.

Talfiq can be an innovative instrument, or one that can be squarely placed under
rubric of imitation and taqlid, depending on its component segments and its outcome.
Talfiq has in the past been used as a formula by which to patch together a whole or a
part of the ruling of one madhhab with another, or the opinion of one individual jurist
with another within or outside the existing madhahib in order to reach an appropriate
ruling or a way out of rigidity that may have been caused by adherence to the ruling of a
single madhhab. The IDB experiment could be said to manifest a kind of piecing
together of different contracts into a single product. Talfiq has in this instance been used
as a tool of modern financial engineering in reference to Islamic bonds.

Lastly, mixed asset bonds could be used as a means by which to reduce over-
reliance on debt-based murabahah and BBA bonds that claim the lion share of the
Southeast Asian Islamic bonds market. The latter can try perhaps to combine
murabahah and BBA contracts with ijarah and other asset-backed contracts when such
might present a feasible alternative. The Middle East and Gulf markets will most likely,
on the other hand, follow the IDB formula on a wider scale and in this way the existing
gulf between the Middle East and Southeast Asian approaches on the application of bay‘
al-dayn to Islamic bonds can be gradually reduced.

Conclusion

The basic advantages of ijarah and how it can be used to avoid some of the
controversial features of bay‘ al-‘inah and bay‘ al-dayn have generated much interest in
ijarah-based financing and sukuk in recent years. Ijarah can also be used as an incentive
to economic development as it is usually long term and offers potential for stimulating
productive industries. The fact that ijarah is not dependent on collaterals also means
that it has greater in-built stability to contain inflationary pressures in the economy.

As a method of financing, ijarah is still in its early stages of development and there
is much scope in Malaysia, the Middle East, and Asia to further expand its applications
for project financing. It seems that only a handful of Muslim countries have hitherto
utilized ijarah bonds and the dominant majority of Muslim countries have not yet begun
utilizing ijarah bonds for mobilization of assets in secondary markets. This is reflected
in the recent suggestion by the Governor of the Central Bank of Malaysia for
introduction of an Islamic universal bond, preferably ijarah-based, with the
participation of developing countries the revenue from which could be used for project
financing in the participating countries. Ijarah can also be utilized as a substitute to the
somewhat excessively utilized bay‘ al-mu‘ajjal and murabahah in the Islamic bonds
market.

(43) Further details on the permissibility or otherwise of traded options from the Shari‘ah perspective can be
found in M.H. Kamali, Islamic Commercial Law: An Analysis of Futures and Options, Cambridge.
Islamic Texts Society, 2001: Idem “Islamic Commercial Law: An Analysis of Options” The American J.
of Islamic Social Sciences. Vol. 14, no. 3, pp. 17-37.

Our analysis of the Shari‘ah-related issues pertaining to ijarah-based financing also
suggests that there are basically no major departures from Shari‘ah principles in the
contemporary applications of this contract. Some of the issues to which attention has been
drawn in this essay have featured in the existing literature on ijarah and the quest
continues for better solutions. With regard to financial leasing, the main critique is that the
ijarah certificates should represent a portion of the bearer’s ownership in the leased assets
and not a mere sale of the right to charge rent. This is not also an insurmountable issue.

Issues pertaining to compensation, or imposition of penalty for default, also call for
attention but this too is a matter of correct observance of Shari‘ah provisions and
insertion of suitable clauses in the lease contract so as to curb unfair practices that
burden the lessee with unwarranted demands. Another issue raised is over the obligatory
manner of committing the lessee to acquire ownership of the leased asset at the end of
the contract period. This practice is inconsistent, as explained earlier, with the
requirements of Islamic law. For stipulation of such terms in the original lease not only
amounts to combining two contracts in one (known as al-safqah fi safqatayn), but can
also lead to injustice. There is no objection to drawing a basic memorandum of
understanding, or exchange of promises, between the parties that would help secure the
desired purposes of the parties, provided it does not bind the lessee to acquire ownership.
The lessor may also make a unilateral commitment to offer the lessee an option to buy
the leased assets at the end. For those who accept the legality of traded options from the
Islamic perspective, one may suggest perhaps that the lessor may offer a put option to
the lessee to sell the leased assets to the latter at the end of the contract period. The
option so provided would only commit the lessor but would not bind the lessee to
exercise the option.(
F43F) Since a traded option is a separate contract in any case, this
would overcome the issue of combining two bargains into one. One may also suggest
that the lessor should in such a case absorb the costs of the put option and offer it in the
form, as it is, of a unilateral commitment upon himself.

References

Arabic

Abu Sulayman, ‘Abd al-Wahhab, ‘Aqd al-ijarah Masdar min Masadir al-Tamwil al-Islamiyah,
Jeddah, Islamic Research and Training Institute, 1413/1992.

Abu Zahrah, Mohammad, al-Milkiyah wa Nazariyat al-‘Aqd fi‘l Shari‘ah, Cairo: Dar al-Fikr, n.d.

al-Buhuti, Mansur Ibn Yunus, Kashaf al-Qina‘an Matn al-Iqna‘, ed. Mustafa Hilal, Riyadh:
Maktabat al-Nasr al-Hadithah, n.d. III.

al-Bukhari, Fath al-Bari Sharh Sahih al-Bukhari, Kitab al-Shurut (Book of Conditions), vol. V.

Hassan, Husayn Hamid, al-Istithmar al-Islami wa Turuq Tamwilih, Bank Dubai al-Islami, (in-
house publication) 1997.

Ibn Qudamah, al-Maqdisi, Muwaffaq al-Din, al-Mughni, Beirut: Dar al-Kitab al-Jadid,
1403/1983, VI.

Ibn Rushd, Bidayat al-Mujtahid wa Nihayat al-Muqtasid, Lahore: Faran Academy, n.d, II.

al-Jaziri, ‘Abd al-Rahman, Kitab al-Fiqh ‘ala al-Madhahib al-Arba‘ah, Cairo, Al-Maktabah al-
Tawfiqiyyah, n.d. III, 86-90.

al-Khafif, ‘Ali, Ahkam al-Mu’amalat al-Shar‘iyah, Bahrain, Bank al-Baraka, n.d.

Majma‘ al-Fiqh li Rabitah al- ‘Alam al-Islami. Qararat Majma‘ al-Fiqh al-Islami, Jeddah.

al-Ramli, Shams, al-Din, Nihayat al-Muhtaj ila Shsrh al-Minhaj, Cairo, 1386/1967 IV, 6.

al-Zarqa, Mustafa, al-Madkhal al-Fiqhi al-‘Aamm: al-Fiqh al-Islami fi Thawbihi al-Jadid,
Damascus: Dar al-Fikr, 1968, III.

al-Zayla‘i, Fakhr al-Din ‘Uthman, Tabyin al-Haqa’iq Sharh Kanz al-Daqa’iq, 2nd edn. Beirut:
Dar al-Ma’rifah, V.

al-Zuhayli, Wahbah, Al-Fiqh al-Islami wa Adillatuh, 3rd edn. Damascus: Dar al-Fikr, 1409/1989, IV.

English

Adam, Nathif J. and Abdul Kader Thomas, Islamic Bond, Your Guide to Issuing, Structuring
and Investing in Sukuk. London: Euromoney Books, 2004.

Euromoney Asian Islamic Banking and Finance Summit by B.K. Sidhu “Systematic Standard
Needed,” and “Have Innovative Products. Players Urged” by Hamish Hamid, The Star,
Kuala Lumpur 22 September 2004.

Exposure Draft of AAOIFI Shari‘ah Standard No. 18, November 2002, p.4.

Hasan, ‘Abdullah ‘Alawi Haji, Sales and Contracts in Early Islamic Commercial Law,
Islamabad: Islamic Research Institute, 1984, 155.

al-Hathal, Nafel, “Innovation in Ijarah Financing”, Conference paper presented at Labuan
International Summit on Islamic Financial & Investment Instruments, 16-18 January,
1997, 4.

Hussain, Javed and Sharifa Marafi, “The Role of Islamic Finance for industrial projects in the
State of Kuwait”. Conference paper presented at the Fifth International Conference on
Islamic Economics and Finance, Bahrain, 7-9 October 2003, Vol. II of conference papers.

Kahf, Monzer, “The Use of Assets Ijarah Bond for Bridging the Budget Gap”. Islamic Economic
Studies vol. 4, n.2, May 1997.

Kamali, M.H., “Islamic Commercial Law: An Analysis of Options”, The American J. of Islamic
Social Sciences, vol. 14, no. 3, pp. 17-37, 1997.

Kamali, M.H., Islamic Commercial Law: An Analysis of Futures and Options, Cambridge.
Islamic Texts Society, 2001:

Muzzafar, Mohammad, “Ijarah: Financing on the Basis of Hire-Purchase and Leasing”
Encyclopedia of Islamic Banking and Insurance, London, Institute of Islamic and
Insurance, 199, pp 137-144.

Niazi, Liaqat Ali Khan, Islamic Law of Contract, Lahore.

Securities Commission of Malaysia, Resolutions of the Securities Commission, Syariah
Advisory Council, Kuala Lumpur, 2002.

Siddiqi, Muhammad Nejatullah, Riba (Interest) and Rationale of its Prohibition. Jeddah: IRTI,
Islamic Development Bank, 2004.

Tariq, Ali Arsalan, Managing Financial Risks of Sukuk Structures, (unpublished) Master of
Science dissertation at Loughborough University, UK, 2004.

The Asia Wall Street Journal, December 22, 2004, M1.

The Asian Wall Street Journal, December 22, 2004.

Uthmani, Muhammad Taqi, Introduction to Islamic Finance, Karachi, Pakistan, Idaratul
Ma‘arif, 1999.

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Fourth Harvard University Forum on Islamic Finance, September 30 – October 1, 2000.

Weist, Derek “Issues in Islamic Leasing” London: New Horizon, June 1997.

Public Finance and Expenditure Management Law

August 22, 2010 Leave a comment

Chapter one
General provisions

Article one. The basis
This law has been enacted in consideration of Article 75, paragraph 4 of the Constitution of Afghanistan for organization of financial affairs, Management of financial affairs, protection of public assets, preparation of budget, and [management of] public expenditure of the state administrations inside and outside Afghanistan.

Article 2: Expressions [Definitions]

The following definitions in this law shall have the meanings set forth below:
1. “Appropriation” means the authority granted to the Ministry of Finance, in accordance with the annual budget procedures, for issuance of an allotment form.

2. “Annual Budget Procedures” means the document that contains all appropriations and sources of expenditures of the State for a fiscal year;

3. “Allotment form” means an official form issued by the Ministry of Finance authorizing state administrations to make expenditures of the amount approved in accordance with appropriations.

4. “Budget Committee” means a committee to assess and review the budget of the fiscal year chaired by the Minister of Finance and comprised of Minister of Economy, Minister of Foreign Affairs, and one other person appointed by the president.

5. “Consolidated Fund” means all funds received by the State;

6. “Special funds” means any funds granted to the State subject to conditions on how they may be collected or spent pursuant to financial Laws or other Laws for a specific objective.

7. “Fiscal year” means the period from 1 Hamal of a year to the end of Hoot [March 21 to March 20];
8. “Liquidity borrowing” means the contracting of short terms loans for a period of up to 3 months to finance temporary shortfalls in budget liquidity resulting from fluctuations of [unbalanced movements in] revenues and expenditures during the execution of the budget;

9. “Official bank account” means the opening of a bank account by the Ministry of Finance for maintaining [and depositing] government money in Da Afghanistan Bank.

10. “Program” means a collection of consolidated activities of a Ministry or other administration or institution of the State which has been arranged according to a pre-prepared plan, for public services.

11. “State grant” means a financial assistance provided by the state to a natural or legal person, in accordance with law;

12. ”Treasury Single Accounts” means the official bank accounts in the Da Afghanistan Bank or any other financial institution designated and controlled by the Ministry of Finance to centralize public money and other receipts held in trust and to manage authorized payments.

13. “State administrations” means all administrations which are established within the framework of the Executive, the Legislative or the Judiciary inside or outside Afghanistan, in accordance with law.
13. “Person” means a natural or legal person [or both];

Article 3. Revenues and expenditures of state administrations

[All] revenues and expenditures of state administrations shall be presented on a gross basis.

Article 4. Ministry of Finance Responsibilities and Authorities

The Ministry of Finance of the Islamic Republic of Afghanistan is responsible for implementing the provisions of this law, and shall have the following duties and authorities:
1. Setting the financial and public expenditure policy of Afghanistan.
2. To report to the government and the National Assembly on the implementation of the provisions of this law.
3. To propose the adoption of regulations to the government.
4. To adopt procedures (tarzulamal) and rules (layeha), for [ensuring] better implementation of this law.

Chapter two
Obligations

Article 5. Obligations of the Authorities for State Administrations
(1) The authorities for state administrations which public money is spent under their supervision and control shall have the following duties and authorities:
1. To report to the government and National Assembly through the Ministry of Finance
2. To prepare documents and register assets and [prepare] control plans consistent with the directives of the Ministry of Finance.
3. To insure the realistic-ness of the estimates of revenues and expenditure of the state.
4. To ensure that the allocations of financial resources in the annual budget is consistent with the approved programs.
5. To ensure that the authorities for Financial affairs will conduct the responsibilities set out in this law
6. To ensure compliance with all reporting responsibilities under this Law
7. To organize and implement a regular debt collection plan for funds due to the State.

(2) The authorities for state administrations shall be responsible to the president and the National Assembly concerning the actions of the relevant employees taken for implementing the provisions of this law to manage the public money under their control.
Article6. Obligations of the responsible authorities for financial affairs

The responsible authorities for financial affairs of state administrations shall have the following obligations:

1. To prepare, arrange and submit the draft budget to the Ministry of Finance.
2. To submit report of financial affairs in accordance wit this law, and the related regulations and Rules
3. To ensure that this Law is applied concerning expenditure commitments within the established budget allotments, regulation of the financial system and efficient controls on the executions within the relevant administration.

Article 7. Treasury Responsibilities

In order to carry out the relevant affairs, the Treasury of the Ministry of Finance shall have the following responsibilities and authorities:
1. Efficient management of the State’s financial resources through a centralization of budgetary revenues, efficient financial planning and timely management of budget expenditure.
2. Managing the Consolidated Fund;
3. Implementing and managing the treasury bank accounts and payment procedures, which include the Treasury Single Account and official bank accounts through defining the Treasury Single Account structure of accounts and sub accounts, and ensuring necessary cooperation for activating treasury accounts including opening and closing bank accounts.
4. Implementing financial plans;
5. Managing cash assets;
6. Implementing the budget and performing expenditure controls in accordance with revenue and expenditure plans and providing information pertaining to funds, assets [and] commitments, appropriations and allotments in accordance with the provisions of this law and other Treasury instructions.
7. Maintaining the Treasury General Ledger and recording transactions therein according to budget classification and accounting rules compliant with internationally accepted standards and principles;
8. Providing regular reports on the implementation of the State’s budget and other financial matters for the Ministry of Finance
9. Upon the confirmation of the Ministry of Finance, issuing necessary instructions covering the relevant affairs.
10. Performing management for the debts of the state
11. Compilation of the annual accounts of the financial operations of state including appropriation accounts and financial statements
12. Managing and controlling the affairs related to payment of expenditures and other treasury related responsibilities in the Mustufiats of centre and provinces
13. Performing other responsibilities delegated to them in accordance with provisions of this law.
Chapter three
Public Money or assets

Article 8. Public financial assets
Public money means money or other financial assets in the custody or under the control of the state, or money or assets in the possession or under the control of any person acting for or on behalf of the State in receipt of the custody or control of the money.

Article 9. Received funds and revenues
Funds and revenues [Receipts] that become public assets upon receipt are:
1. Taxes imposed by the State in accordance with the provisions of law;
2. User fees imposed and collected by State administrations in accordance with the provisions of law;
3. Interest received by state administrations
4. Dividends or other payments from enterprises owned by the State;
5. Proceeds received by State administrations from the sale or leasing of any property owned by the State;
6. Proceeds received from leasing or selling any rights controlled by the State administrations, including radio frequency [spectrum] rights, natural resource exploration or exploitation rights, and intellectual property rights;
7. Royalties received by the State;
8. Fines, compensation of damages, confiscation and expropriation of property, charges from civil actions, and insurance proceeds paid to the State;
9. Grants and revenues received by the State;
10. Debts due to the State;
11. Money transfers corresponding to credits taken by the State in accordance with legal provisions; and

12. Receipt from the issuance of national and international securities [documents of credit].

Article 10 Prohibitions on Receipt of Public Money

1. No person employed by the State or other persons on behalf of the state shall receive public money or assets or other revenues from state owned property unless authorized by Law and by written instructions of the Ministry of Finance.

2. No person may possess or receive public money or assets, including state owned property, while purporting to be acting in any official capacity or while conveying the impression that their actions are authorized by law unless the person has the legal power to do so.

Article 11. Deposit of revenues to bank
1. All revenues of the State shall be deposited into a designated official bank account.

2. Public assets, including any funds that become public money upon receipt, must be deposited into a designated official bank account promptly.

Article 12. Payment and Expenditure of Public assets and Tax [Expenditures]
1. Payments or commitments to pay public money may only be made in conformity with the provisions of this Law.
2. Public assets cannot be spent unless authorized in accordance with the provisions of this law.
3. Expenditure or commitments to expenditure of pubic money by the state administrations shall only occur when the Ministry of Finance has confirmed and issued in writing an expenditure authorization through the allotment form for the fiscal year.
Chapter four
Official Bank Accounts

Article 13. Opening bank accounts
1. The Ministry of Finance shall open one or more official bank accounts for deposits of public money.

2. A bank account for the receipt, custody, payment or transmission of public money may be opened in accordance with the Law.

3. Public money shall be held in trust bank accounts for the State and treated as if it is trust money held in bank until it is used by the State.

Article14. Immunity of Public Money and Bank Accounts

1. Public money and bank accounts cannot be seized or expropriated by court [order] in a preventative way.
2. Any payment of public money must be done only upon a conclusive order by an authorized court.
3. A payment order by court shall be paid by the state administrations from the allotments available in the budget of the fiscal year in priority to other payments.

Article 15. Investment of Public Money

1. The Ministry of Finance may authorize the investment of public money in financial deposits and the liquidation of such investments in accordance with the provisions of law.
2. All revenues from investments made pursuant to paragraph one of this Article shall be included in the Consolidated Fund [of Afghanistan].

Article 16 special funds [waja khas] Accounts

1. The Ministry of Finance shall establish separate ledger accounts for recording special funds.

2. Rules attaching conditions to the expenditure of special funds may be established by Law or shall be designated through a Procedure by the Ministry of Finance where no Law establishes such rules.

3. Revenues derived from the investment of special [funds] shall be treated as special funds, [and] shall be subject to the same rules that apply to the original special funds.

4. Receipts derived from fees, fines, compensation of damages and charges related to decisions of courts shall not to be treated as special funds.
Chapter five
Borrowings and lending by the state

Article 17. Borrowings

1. Borrowing of money by the State shall be authorized by Law and approved by the Wolosi Jirga.

2. The State may only issue to a lender evidence of a debt to be repaid by the State where the State has received funds or assets equal to [the market value of the evidence of] the debt.

3. The Minister of Finance shall [be authorized] on behalf of the state for borrowing or lending of the State.

4. The Ministry of Finance shall maintain original documents referred to in paragraph 3 of this Article, including guarantees and contingent liabilities.

Article 18. Liquidity borrowing
The annual budget procedures shall provide the authority for and conditions of any liquidity borrowing.

Article 19. Long term commitments
Where an administration of the State enters into a contract providing for payments to be made by such administration after the end of the fiscal year, the contract will be valid [only] upon confirmation of the Ministry of Finance.

Article 20: guarantee of a loan
1. The Ministry of Finance may issue a loan guarantee document only in the following cases:
a. Where authorized by Law, for the amount specified [in the Law], [ and]
b. Where a non-expended amount is available within the appropriations.

2. No guarantee shall be valid unless made in accordance with paragraph One.

3. When the preparation of guarantee documents requires expenditures on the part of the state, such expenditures shall also be considered to be part of the principal debt.

Article21. Loans by the State

1) The Ministry of Finance may make a loan to any administration, tassady or company provided that:
a. It is provided for in an Annual Budget procedures;
b. Evidence of indebtedness and a promise to repay by the borrower to the State shall provide the State with rights to require repayment of the loan prior to maturity in the event of default of any payment of amounts due under the loan; [and]

c. The Ministry of Finance is provided with a valid security for the full repayment of the loan or enjoys a right of possession of all assets of the borrower in the event of a delay in the payment.
1) The terms of granting [a loan] may only be changed:
(a) By Law; [or]
(b) When the debt or part of the debt is deemed to be unrecoverable in accordance with justifiable reasons.

Article 22. Salaries
1- The Ministry of Finance is responsible for issuing allotments for [making payments for] wages of civil and military employees of the state;
2- The State may as an employer withhold equitable and appropriate taxes on the wages of [its] civil and military employees, as required by Law.
3. The Ministry of Finance may make payments or transfer the salary of an employee to his/her bank account, upon verification of his/her identity, in accordance with the specified tables submitted by the state administrations.

Article 23. Assistance of the state to municipalities
1. Municipalities may receive assistance [transfers] from the government budget if a justifiable need exists. The government shall establish the financial resources [available] therefor during the budget preparation [process].

2. Proposals for receiving assistance referenced in paragraph one of this Article shall be submitted to the Ministry of Finance, similar to the [budget] proposals of other administrations, during the budget preparation [process] in order to be considered as part of the state budget.

Article 24. Revenues and expenditure of municipalities
1. The amount and the manner for collecting the revenues of municipalities shall be determined and specified by law.
2. Expenditure by municipalities must not exceed the total of assistance by the state and revenues collected pursuant to paragraph one of this Article.
3. Borrowings by municipalities from the state and the manner for collecting and guaranteeing it shall be subject to the provisions of this law.

Article25. Reporting
Municipalities shall provide budget execution reports at least every six-months to the Ministry of Finance through the appropriate Mustufiat.

Article 26. Execution of orders
Municipalities shall comply with directives issued by the appropriate Mustufiat for collection of revenues and processing expenditures.

Chapter six
Budget Preparation and Approval

Article 27. Preparation of budget
The preparation of the budget shall be based on multi-year national development and security programs, and economic framework, and shall cover budget related issues for at least 2 coming years.

Article 28. Estimating and determining the revenues and expenditure

On the basis of the national economic framework and Development Framework, the Government shall estimate and determine the amount of revenues available in and the overall [ceiling for] expenditures of the state for the next fiscal year.

Article29. Procedures for Preparation and Submission of Budget Proposals

1. The Ministry of Finance, each year, shall issue to state administrations a procedures for preparation and requesting of budget and appropriations for the fiscal year.

2. State administrations shall be responsible for the preparation of the budget submissions in accordance with the instructions of paragraph one of this article, by the time specified, and for official submission of the [completed] requests to the Ministry of Finance

3. The budget of the judiciary shall be prepared by the Supreme Court in consultation with the Government, and shall be presented to the National Assembly as part of the budget for the fiscal year.

4. The Ministry of Finance shall, in consultation with the state administrations confirm that the estimates for the budget of a fiscal year and the relevant requests for legal [sic] appropriations are valid and in accordance with the provisions of law.

5. State administrations shall submit finalized budget submissions to the Ministry of Finance.

Article 30. Contents of the Budget
The budget for a fiscal year, which the Ministry of Finance shall prepare after consideration of the appropriation requests submitted by state administrations and after consultations with such administrations, shall include:
(1) Budget overview information;
(2) A revenue and expenditure plan;
(3) Assets and expenditure commitments information.
(4) draft Annual Budget Procedures

Article 31. Overview information
The overview information for the budget of a fiscal year shall include:
1. An overview of the domestic and international economic environment (in which the budget was prepared) and recommendations for short and medium term fiscal strategy;

2. The objectives and priorities of the budget including important revenue and expenditure estimates
3. The National Development Budget plan;
4. Identification of significant proposals concerning adopted new spendings and savings from cancelled or reduced programs

5. The estimated budget deficit or surplus of the previous fiscal year to be transferred forward to the new fiscal year;
6. The budget deficit presented according to international standard methodologies as established by the International Monetary Fund;
7. Details of how a budget deficit is to be financed or any budget surplus is to be invested; [and]
8. Other information considered necessary by the Ministry of Finance.

Article 32. The revenues and expenditure plan
The revenues and expenditure plan will include:
1. Estimated total revenues and expenditures of the State, and the resulting balances for the fiscal year and at least the two following fiscal years;
2. Estimated special funds that will be received in the fiscal year;
3. Revenues and expenditure of local administrations;
4. Appropriations for each central unit [headquarters] of administrations in the fiscal year;
5. Appropriations of special funds in the fiscal year;
6. Appropriations for state grants;
7. Conditions attached to any appropriation;
8. Appropriations for payments of interest or amounts in the nature of interest on debts of the State and for repayment of debt principal;
9. An appropriation not exceeding 3% of total program expenditures for contingencies;

10. The estimated number of permanent and temporary State employees to be paid from appropriations in the fiscal year;

11. Estimates of anticipated expenditures for future fiscal year towards the cost of acquisitions that will commence in the new fiscal year;

12. Details of all projected user fee for the fiscal year;

13. Estimated cost in terms of forgone receipts of tax concessions provided in the tax Law or other tax laws;

14. Other information considered necessary by the Ministry of Finance.

Article 33. Information concerning assets and liabilities
The assets and liabilities information shall include:
(1) Details of the State’s investment strategy for public money to be invested in the fiscal year;
(2) Details of any existing loans issued by the State and any loans the State intends to make during the new fiscal year;
(3) Details of any existing borrowings issued by the State and any borrowings the State intends to make during the new fiscal year;
(4) Details of any changes made under the provisions of this law to loans in the previous fiscal year;
(5) a limit on total guarantees and borrowings of the state;
(6) Details of the estimated amount of contingent liabilities of the State that will rise to actual liabilities during the fiscal year;
(7) liabilities arising from government pensions or similar arrangements; [and]
(8) Other information considered necessary by the Ministry of Finance.

Article 34 preparation of financial statistics
The financial statistics such as revenues, expenditures and financing in the annual budget documentation shall be set out, organized and published by the International Monetary Fund, in consistency with the Government Finance Statistics classification.

Article 35. Appropriations adopted in the annual budget procedures
1. The Annual Budget procedures shall contain for each appropriation:

(1) The purpose of the appropriation; [and]
(2) The amount of the appropriation provided by category as prescribed by the Ministry of Finance;

2. In the case of appropriations for the Ministry of Finance, The Annual Budget Procedures shall contain the following information:

(1) appropriations for granting loans;
(2) making payment of amounts due with respect to debt of the State;
(3) Other payments the Ministry of Finance is required to make by this Law or by decision of the government.

Article 36: funding of appropriations
The proposed appropriations are to be funded, in accordance with the provisions of this law, from:
1) Revenues Estimated to be available in the Consolidated Fund of Da Afghanistan
Bank;
2) Expected revenues of grants irrevocably committed by foreign governments or international organizations;
3) borrowings needed to finance the budget;

4) amounts in the Treasury Single Account made available from improved cash management of public money

Article 37. Compliance with Annual Budget Procedures
State administration shall be obliged to take action in accordance with annual budget procedures prepared under this law and adopted by the parliament (Wolosi Jirga). In case of contradiction with other laws, the provisions of the Procedures shall prevail.

Chapter seven
Execution of appropriations

Article 38. Appropriations

1. Following receipt of budgetary submissions, the Ministry of Finance shall inform each state administration about the approved appropriations.

2. After consideration of the appropriation proposed by the Ministry of Finance, a state administration shall take action as follows:
(1) TO accept [have no objections to] the proposed appropriations; [or]
(2) To object to the proposed appropriations, indicating the reasons for the objection.

3. The Ministry of Finance shall review and find a proper solution to the objections referred to in paragraph 2 of this Article. In case the Ministry of Finance is unable to resolve the objections, the administration shall deliver to the Ministry of Finance the objections at least 48 hours prior to the [meeting of the] Budget Committee to consider the objections.

4. The Ministry of Finance shall submit the proposed budget, and appropriations for consideration by the Budget Committee, in accordance with this law.

5. The Ministry of Finance shall submit to the Budget Committee any objections referenced in paragraph 3 and the responses of the Ministry to the objections.

Article 39. Deliberations on the budget
1. The budget Committee may request the authorities for relevant state administrations to provide further explanations during consideration of the proposed budget.

2. After consideration of any explanations provided pursuant to article 38, the Budget Committee shall prepare and present an agreed budget and the proposed appropriations for consideration by the government.

3. The government shall forward through the Meshrano Jirga (upper chamber of Parliament) along its advisory comments to the Wolosi Jirga (lower chamber of Parliament), the budget referred to in paragraph 2 of this article, along with a summary its views not less than 45 days preceding the fiscal year.

Article 40. Financing Un-consolidated Budget

The Ministry of Finance under the directives of the President of the State shall prepare an unconsolidated budget from the following sources:
1. Monetary amounts provided by international organizations or foreign governments; [and]
2. Estimates of any aid-in-kind and funds provided by international organizations or foreign governments;
that do not form part of the Consolidated Fund of Afghanistan.

Article 41. Temporary appropriations
1. If the budget is not approved before the commencement of the fiscal year, the budget of the previous year shall be applied as follows prior to the approval of a new budget:
(1) An appropriation made for expenditures for one month; [and]
(2) Any appropriation made does not exceed 1/12 of the appropriation for the previous fiscal year.

2. All appropriations included in paragraph 1 lapse after the approval of the government fiscal year budget. Expenditures arising from temporary appropriation before the approval of government budget are charged to appropriations of the new fiscal year.

Article 42. Revision of Appropriations

1. The Ministry of Finance may revise The Annual Budget Procedures and its relevant procedures if:

1) the revenues or expenditures of the State for the fiscal year will be less or greater than those anticipated in the budget [or ]

2) Repealing or amending laws will have the effect of increasing or reducing revenues of the State for the fiscal year.

2. The preparation and approval of a revised budget and appropriations shall be carried out with respect to the provisions of this Law.

Article 43. Amendments of appropriations
1. Where a Law is proposed to be enacted that would require additional expenditures in the current fiscal year, any appropriation of the amount required to make the expenditures shall be based on a decision of the parliament (Wolosi Jirga) that the amount of funds necessary are available from the following sources:

(1) increases in net Estimated revenue compared to previous estimates
(2) new borrowings; [or]
(3) Currently allotted public money that will become un- allotted money following the cancellation of part of an existing allotment.
2. The new allotment referred to in paragraph one shall be valid only when the new allotment is approved and cancellation has occurred for the previously approved allotment.
Article 44: lapse of allotments

All appropriations for a fiscal year shall lapse after the end of that fiscal year, unless provided otherwise by law.

Article 45. Fees

All fees imposed in respect of bank accounts or investments of the State shall be paid from appropriations for the Ministry of Finance.

Article 46. Adjusting appropriation for contingent expenditures
In the event of urgent and unforeseen requirements, the Ministry of Finance may propose to the President to change the purpose of part of a contingent expenditure appropriation of [a state administration to a purpose of a program of] the requesting state administration.

Article 47. Adjustments to approved appropriations
1. Where requested by a state administration, the Ministry of Finance , in consultation with the Budget Committee , may authorize the adjustment of the approved appropriations for that Ministry provided the adjustment does not exceed 5% of the registered funds.
2. Where an appropriation relates to a function of a state administration that is transferred to a different administration, the Ministry of Finance may transfer the appropriation or part of the appropriation from the first administration to the second administration.
3. Where an administration acquires assets or services from another administration, the amount paid for the acquisition shall be treated as expenditure by the acquiring administration.

4. Where the State includes an amount in public money upon receipt to which the State had no beneficial right, the state shall repay such amounts. In such cases, an appropriation shall be created for the Ministry of Finance for the amount to be repaid.

Article 48. Expenditure of appropriations
1. The Ministry of Finance shall, subject to availability of assets, issue an expenditure allotment notice to authorize state administrations to spend or to commit to spend appropriations or part of appropriations.

2. The allotment notice shall specify the authorization for and the time period for expenditure.

3. No money shall be released from the Consolidated Fund in Da Afghanistan Bank for expenditure unless such expenditure thereof is authorized by an allotment notice.

4. An authorization may not be issued for the expenditure of public money that has not been made available for expenditure in an appropriation.
5. The procedures to be complied with for the making of payments authorized by an allotment form shall be prepared by the Ministry of Finance and announced to state administrations

.
Article 49. Revocation or Amendment of Allotments and expenditure
The Ministry of Finance may revoke or amend an allotment form when:

(1) Expenditures have been made in an incorrect or unjustifiable manner.
(2) Required for the continuation of expenditures throughout the fiscal year.

The Ministry of Finance shall immediately inform the government in writing of such a matter.

Article 50. Carry Over of Appropriations

The Ministry of Finance may at the proposal of a state administration made at least 30 days before the end of the fiscal year carry over the amount not expended from an appropriation to the following fiscal year.

Article 51. Refunds of Expenditures

Where the Ministry of Finance receives a repayment of an amount that was paid for a specific purpose in an allotment to a state administration, the ministry shall credit an equal amount to the expenditure account of the state administration for the same purpose as the original amount.

Chapter eight
Accounting and control of the budget

Article 52. Publication of the Budget
The Ministry of Finance shall publish the annual budget and the relevant allotments and explanatory documents upon approval.

Article 53. Classification of budget records
1) The Ministry of Finance shall establish classification systems for budget and accounting records in observance of the following:

(1) To facilitate the control of expenditures by state administrations; [and]
(2) To explain and analyze budgetary expenditure by organization, function, and economic category according to the Government Financial Statistics cash basis classification requirements as set out by the International Monetary Fund.

2) To achieve the objectives of paragraph one, the Ministry of Finance shall maintain, records of:

a. Government income receipts;
b. Appropriations and adjustments to appropriations of state administrations
c. Documents for Actual expenditures made and outstanding liabilities.

d. Appropriations made available to state administrations for expenditure by means of allotment form;

3) State administrations shall maintain accounting records in accordance with Ministry of Finance instructions and provide copies thereof to the Ministry of Finance when requested, except in cases where the law provides for the confidentiality of such records.

Article 54. Progress Reports on the Budget

1. After the approval of budget, The Ministry of Finance shall submit quarterly progress reports to the government and the President, and publish that.

2. Progress reports required under paragraph one shall include revenue and expenditure report and assets and liabilities information referred to in this law.

3. Where progress reports do not contain all the information required by this law, explaining the reasons therefor shall be necessary.

Article 55. Final Report on the Budget

1. The Ministry of Finance shall publish the following information upon submission to the President and the government:
(1) Final budget reconciliation report on the budget for previous fiscal year. This shall be submitted no later than the end of the month of Sonbola ( the second quarter of the year); [and]
(2) A set of financial statements compiled according to the international accounting principles that have been audited as required by article 59.
2. the final budget reconciliation report referred to in paragraph one shall cover the following issues:

a. Budget overview information;
b. A revenue and expenditure report; [and]

c. Assets and liabilities information.

Article 56. Budget overview information
The budget overview information will include:

(1) Tasks accomplished and the main plan for the new fiscal year;
(2) An overview of important actual revenues and expenditures;
(3) Details of how a budget deficit was financed or how a surplus was invested; and
(4) Other information considered necessary by the Ministry of Finance.

Article 57. Revenue and expenditure report
The revenue and expenditure report shall include:
(1) Actual revenues compared with projected revenues;

(2) Actual special funds received during the fiscal year;
(3) Actual expenditures from special funds appropriations;

(4) Actual number of permanent and temporary State employees paid from appropriations in the fiscal year;

(5) Actual payments of interest or amounts in the nature of interest on debt owed by the State and [for] repayment of debt principal;

(6) Actual expenditures in respect of each appropriation category compared with the budget appropriation for that category, the actual expenditure for that category in the previous fiscal year, and details of additional appropriations under this law;
(7) Details of all recipients of public grants and the amount they received;

(8) Details of the contingency expenditures;

(9) Details of [all] adjustments made to appropriations in the fiscal year;
(10) Actual user fee receipts for the fiscal year; [and]
(11) Other information considered necessary by the Ministry of Finance.

Article 58. The assets and liabilities information.
The assets and liabilities information will include:
(1) [details of] investments of public money” made during the fiscal year;
(2) [Details of] any changes made to loans during the previous fiscal year;
(3) [Details of] any loans made by the State during the fiscal year;
(4) [Details of] any borrowings by the State during the fiscal year;
(5) [Details of] differences in the amount of guarantees planned to be made and loans to be incurred during the fiscal year and guarantees actually made and loans actually incurred;
(6) [Details of] difference between the estimated amount of expected liabilities of the State that gave rise to actual liabilities during the fiscal year and amount of contingent liabilities that actually gave rise to liabilities;
(7) A full accounting of assets held by the State at the end of the fiscal year; [and]
(8) Other information considered necessary by the Ministry of Finance.

Article 59 Independent Audit

1. The independent auditors shall have the right to acquire all information and explanations deemed necessary for auditing.
2. The administration for audit and control shall prepare an independent audit report with in six months from the end of a fiscal year and submit it to the government.

The independent audit report shall include:
(a) Certification of the appropriation accounts; and
(b) Recommendations for fines to be applied consistent with this Law.
3. The government shall submit the report referred to in paragraph 2 of this article to the first meeting of the National Assembly. The report shall be made publicly available upon submission to the National Assembly.
Article 60. Reporting to the national assembly
The government shall report to the National Assembly on decisions taken pursuant to the audit and control report.

Article 61. Audit Powers of the Ministry of Finance

1. The Ministry of Finance shall establish an internal audit administration and appoint auditors to audit the financial and accounting affairs of all State administrations.

2. The auditors referenced in paragraph one may require the relevant administrations to provide all information needed for auditing financial affairs.

Chapter nine
Final Provisions

Article 62. The responsibilities of the authorities and employees of state administrations
Authorities and other employees of state administrations shall be responsible for the control and effective use of allotted funds in the relevant administrations in accordance with the provisions of this Law and relevant procedures established by this Law.

Article 63 oversight of budget and the Treasury
The Ministry of Finance shall be responsible for the organization, management and implementation of the budget, and shall also be responsible for the oversight of the Treasury in accordance with this Law.

Article 64 exceptions
“State owned companies and enterprises are not subject to this law, and their affairs shall be regulated under their related Laws.

Article 65.Entry into Force
This law shall be enforced from the date of signature and shall be published in the official Gazette and with its entry into force the budget Law dated 30/8/1362, published in official gazette # 544, and other contrary provisions shall be null and void.

Bosnian Islam since 1990: Cultural Identity or Political Ideology?

August 22, 2010 Leave a comment

Paper presented for the Annual Convention of the Association for the Study of Nationalities, Columbia University, New-York, April 15-17, 1999. French version published as « L’islam bosniaque, entre identité culturelle et idéologie politique », in : Xavier Bougarel / Nathalie Clayer (dir.), Le nouvel Islam balkanique. Les usulmans, acteurs du post-communisme, Paris: Maisonneuve & Larose, 2001, pp. 79-132. Bosnian version published as « Bosanski islam od 1990 : kulturni identitet ili politicka ideologija », n° 107 à 109, August and September 1999.

Xavier BOUGAREL

It is a delicate exercise to analyze the role of Islam in Bosnia-Herzegovina during the recent war. There are two main reasons for this. The first one is that Islam, and religion in general, played only a secondary role in the Yugoslav crisis: religious symbols were primarily used as substitutes for national ones, and religious institutions were largely instrumentalized by political elites, who must be the first to be blamed for the crisis. An analysis of Islam in Bosnia-Herzegovina during the war should therefore not be taken as an analysis of the war itself.

The second reason is more closely linked to Islam in Bosnia-Herzegovina itself. During the war, two conflicting representations of Bosnian Islam have appeared: one presented it as a model of tolerance and modernity, and the other as a bunch of fundamentalists and mujahideens. Some have maintained that the « Islamic Declaration » written by the Bosnian President Alija Izetbegovic was no more than a summary of the main principles of Islamic faith, while others have asserted that it was a kind of Islamic « Mein Kampf ». Yet, as opposite as they may seem, these two approachs share a common basis: each treats Bosnian Islam as a stable and homogeneous whole, and Alija Izetbegovic as its sole legitimate representative.

This paper aims to contradict such caricatured and simplistic representations. In Bosnia-Herzegovina, as everywhere, Islam constitutes a diverse and changing reality, includes numerous approaches, and is shaped by various actors with different aims and strategies. Similarly, it is probably not very useful to speculate whether Bosnian Muslim leaders have aimed to create a « secular » or an « Islamic » state, given that recent political developments in Turkey and Iran have compeled us to reconsider categories which, for a short time prior this, seemed to be self-evident. Moreover, we have no reason to doubt the sincerity of Dzemaludin Latic, one of the main ideologists of the Party of Democratic Action (Stranka demokratske akcije – SDA), when he writes about A. Izetbegovic : « The aspiration toward an Islamic state in Bosnia-Herzegovina was not and is not his aim – not because such a state would deprive Muslims or non-Muslims of their freedom, but because the brutal European environment surrounding this state would destroy it, even with atomic bombs if necessary. (…) Everyone who knows about Islam knows that even God does not require of us the establishment of an Islamic order here, in Europe. »

But, in writing this, does Dz. Latic tell us everything about the evolutions of Bosnian Islam, about its place in the projects and the strategies of the SDA? Definitely not. In order to better understand the role and trajectories of Islam during the war in Bosnia-Herzegovina, it is necessary to explore the ideological origins of the founders of the SDA and their place in the political and religious diversity of Bosnian Islam. We must also analyze how this ideological current managed to take over the leadership of the Muslim community, and to keep it throughout the war. It will then be easier to determine to what extent this Islamic factor may have influenced the violent reshaping of the Yugoslav space or, more narrowly, the cultural and political transformations within the Bosnian Muslim community itself.

The Role of the Pan-Islamist Current in the Creation of the SDA

The origins of the Bosnian pan-Islamist current reach back to the 1930s, with the creation of an organization called « Young Muslims » (« Mladi Muslimani »). During World War II, these « Young Muslims » supported the idea of an autonomous Bosnia-Herzegovina under German tutelage, and some of them joined the « Handzar » SS-division, created at the initiative of Jerusalem mufti Amin el-Huseini. Forbidden by the new communist authorities, the « Young Muslims » continued to work clandestinely with the aim of creating a common state for all Balkan Muslim populations, closely patterned on the Pakistani experience. In 1949, a wave of arrests broke up the organization, and the Young Muslims who were not jailed had to cease all political activity or flee abroad.

It was not until the 1970s that this pan-Islamist current was informally reconstituted. At that time, a general political liberalization and the « national affirmation » of the Bosnian Muslims allowed some former « Young Muslims » to take part in the renewal of Islamic religious institutions. Through a discussion circle led by a young imam, Hasan Cengic, they made contact with a group of pupils of the Sarajevo madrasa (Islamic secondary school). The new pan-Islamist current therefore came to consist of two distinct generations. Its central figure was Alija Izetbegovic, a former « Young Muslim » and the author of the « Islamic Declaration » which can be regarded as the informal manifesto of this renewed pan-Islamist current. In 1983, their activities were interrupted when A. Izetbegovic and twelve others were charged with of « Islamic fundamentalism » and « Muslim nationalism » and sentenced to prison. At the same time, however, this turned the main members of the pan-Islamist current into martyrs, which in turn helped them to overcome their own marginality.

Seven years later, indeed, the members of this pan-Islamist current came to play a central part in the creation of the SDA: among its fourty founding members were eight former « Young Muslims » and several others close to the pan-Islamist current or the Zagreb mosque, then the main centre of islamic contestation in Yugoslavia. The central influence of the pan-Islamist current, however, does not turn the SDA into an Islamist party. The SDA intended initially to gather the whole « historical and cultural Muslim circle » of Yugoslavia (Bosnian Muslims, Albanians, Turks, etc.), and some religious requests were included in its founding platform (e.g., the re-establishment of major religious feasts as state holidays, the return of the waqfs – religious estates – to the Islamic religious institutions, the freedom to build mosques in towns and new suburbs without mosques, the introduction of halal food in army barracks, hospitals and prisons). But the SDA pronounced itself in favour of a parlamentary democracy along the Western pattern, and concentrated its activities among the Muslims of Bosnia-Herzegovina and the Sandjak.

On the ground, there has been a great contrast between the very limited success of the SDA among Albanians and Turks, and its growing influence within the Bosnian Muslim population. This rapid growth in the SDA compelled the pan-Islamist current to integrate in the party various currents of Muslim nationalism, as well as numerous notables from the League of Communists. This was exemplified by the situation in the Bihac region, where the SDA was launched by local pan-Islamists (Mirsad Veladzic, Irfan Ljubijankic, etc.), but gained mass appeal as a party only after the rallying of Fikret Abdic, a powerful local notable involved in the « Agrokomerc affair », a financial scandal which shook the Bosnian League of Communists in 1987.

Despite this transformation of the SDA into a « catch-all party », the pan-Islamist current managed to maintain control. Except for A. Izetbegovic, who ran for the Collegial Presidency side by side with the former communists Fikret Abdic and Ejup Ganic, the pan-Islamists were seldom candidates for public offices. But they were predominant in the top ranks of the party, Omer Behmen (a former « Young Muslim » and one of the accused in the 1983 trial) being for example president of the all-powerful staff commission. In order to understand the ability of the pan-Islamist current to keep the SDA under control, however, it is not enough to know how the party apparatus functioned. The real strength of this current laid in its ability to put itself at the center of the political recompositions set into motion by the collapse of communism and the crisis of the Yugoslav federation.

In 1990, the pan-Islamist current itself had probably no more than a few hundreds members. It controled the Islamic weekly « Preporod » (« Rebirth ») since the wave of contestation which had shaken the Islamic religious institutions a year earlier, but it was still in the minority among members of the executive bodies of the Islamska zajednica (Islamic Community, the official name of the Islamic religious institutions). Similarly, it had almost no influence among the Muslim secular intelligentsia. Given this situation, the members of the pan-Islamist current were careful not to put forward their own understanding of Islam, but nevertheless made use of it as a rallying point for the support of the Muslim population This they accomplished through the use of many Islamic symbols (green flags, the use of religious greetings, etc.) at the election rallies for the SDA. This instrumentalization of Islam allowed pan-Islamist party leaders to involve the ulemas (religious leaders) in the electoral campaign, to ensure themselves the loyalty of secular notables and intellectuals in search of a new legitimacy and, in the end, to turn the nationalist mobilization of the Muslim population to their own advantage.

That this evocation of Islam was cultural rather than ideological in nature can be seen in the fact that the first internal conflict in the SDA broke out around the very definition of Muslim identity. In September 1990, Adil Zulfikarpasic, the main representative of the Muslim political emigration, together with several secular intellectuals of Sarajevo and other Bosnian towns, suggested giving up the national name « Muslim » in favor of a new one : « Bosniac » (« Bosnjak »). The members of the pan-Islamist current were, of course, hostile to such a « secularization » of Muslim national identity, and they managed to marginalize their opponents with the support of the ulemas and some of the main intellectual figures from the « national affirmation » movement of the 1970s.

Expelled from the SDA, the advocates of « neo-bosnjastvo » created a new party, the Muslim Bosniac Organization (MBO), which won only 1,1 % of the vote at the general elections of November 1990. The SDA, for its part, won 30,4 % of the vote (that is more than two thirds of the Muslim vote) and thus became the largest political party in Bosnia-Herzegovina. At the presidential election, F. Abdic won noticeably more votes (1,040,307) than A. Izetbegovic (874,213), but the latter was nevertheless made President of the Bosnian Collegial Presidency. In this way, the decision of the top ranks of the party prevailed over the choice of the voters.

The Transformations of the SDA during the War

The electoral success of the SDA can also be attributed to its informal coalition with the two other nationalist parties in Bosnia-Herzegovina, the Serbian Democratic Party (Srpska demokratska stranka – SDS) and the Croatian Democratic Community (Hrvatska demokratska zajednica – HDZ), against the « civic » parties which had grown out of the former League of Communists and its mass organizations. The SDA exerted thus only limited control over the state apparatus until the beginning of the war in April 1992. On one hand, it had to share power with the two other nationalist parties; on the other hand, the top of the main administrations and state companies were staffed with former communists close to the « civic » parties. But the SDA already began to set up its own communitarian networks: the cultural association « Preporod » (« Rebirth »), the humanitarian organization « Merhamet » (Charity ») and, most importantly, the Patriotic League, an underground organization in charge of the military defense of Bosnia-Herzegovina.

After the beginning of the war, the SDA shifted certain functions from what had become a completely disorganized state apparatus to the party’s own parallel networks. The « civic » parties succeeded in winning places in the Collegial Presidency but, at the same time, the SDA managed to circumvent and marginalize such state institutions in order to more effectively monopolize power. One of his greatest successes on this front was its gaining control of the young Bosnian armed forces. Within the army itself, some militia leaders close to the Patriotic League acted as a counterbalance to the influence of officers who had come from the Yugoslav army or the Bosnian Territorial Defense. From the outside, the SDA also took control of money collection and weapons smuggling channels, and was therefore able to influence the political orientation of the army.

Within this context, foreign policy has served a double function for the leaders of the SDA: to compensate both for the weakness of the Bosnian state within the Yugoslav space, and for the weakness of the SDA within the Bosnian state apparatus. Hence the strenuous efforts of the SDA to take over key positions of the Bosnian diplomatic apparatus, beginning with the office of Minister of Foreign affairs, which was held successively by Haris Silajdzic, Irfan Ljubijankic and Muhamed Sacirbegovic. Hence also the clear split in the diplomatic corps between some embassies in the Western countries, entrusted to members of the « civic » parties, and other embassies charged with solliciting donations from the Bosnian diaspora and the Muslim world, which were monopolized by members of the pan-Islamist current (beginning with the Bosnian embassy in Teheran, entrusted to Omer Behmen).

The reorganization of the Bosnian state apparatus, which took place after the violent secession of F. Abdic in the Bihac area in September 1993, and was marked by the nomination of H. Silajdzic as the new Prime Minister, only partially altered the way the SDA ruled the territories under its control. The arrest of some militia leaders and local bosses contributed to the restoration of state authority, but this was followed by the entrance of members of the pan-Islamist current into positions of the state, as shown by their appointment as regional ministers (Mirsad Veladzic in Bihac, Fuad Djidic in Zenica) or directors of state companies (Edhem Bicakcic in Energoinvest).

Moreover, the parallel networks set up by the pan-Islamist current did not disappear. On the contrary, they managed to take over some of the supply channels previously controled by F. Abdic, and began to organize themselves along an axis of influence running from Vienna to Visoko, a town in central Bosnia. In Vienna, the Third World Relief Agency (TWRA), led by Fatih al-Hasanein of Sudan and Hasan Cengic, gathered money collected in the Muslim world and the Bosnian diaspora, and organized the delivery of weapons to Bosnia-Herzegovina. In Visoko, the main logistical center of the Bosnian army led by Halid Cengic (Hasan’s father) dispatched financial and material aid according to political criteria. Such « ideological clientelism » can also to be found at the local level, in areas ranging from the allocation of jobs and accomodations to the provision of electricity and the distribution of humanitarian aid.

This form of rule, in which official institutions are circumvented by parallel networks from which the bulk of power is exercised, has led to a dual reality of the Bosnian state. The members of the Collegial Presidency, for example, have been reduced to a mere legitimation function, as they were denied any real influence by Alija Izetbegovic and his entourage. A Bosnjacki sabor (Bosniac assembly), made up of political and cultural representatives only from the Muslim community, was convened alongside the Bosnian Parliament. And in the Bosnian army, « Muslim brigades », directly financed by SDA’s parallel networks, have appeared alongsides regular units.

In February 1995, Collegial Presidency members close to the « civic » parties protested the existence of these « Muslim brigades ». In return, they were attacked by Alija Izetbegovic and Ejup Ganic, together with the general staff of the army, which was supposed to be subordinated to the Presidency rather than the party! Six months later, Haris Silajdzic, the main architect of the recovery of the Bosnian state, suggested during a Parliament session that donations collected by the SDA be returned to state coffers. In so doing, H. Silajdzic sealed his break with SDA leaders.

The SDA’s use of parallel networks to circumvent state processes, and its simultaneous moves to progressively monopolize the state have led to the reconstitution of a party-state system in which state and party responsabilities tend to merge. Alija Izetbegovic, for example, was at the same time President of the Collegial Presidency and President of the SDA, and made skilful use of this presidential ubiquity. The Muslim-Croat Federation, as a new coalition between nationalist parties, has exaggerated this tendency, as shown by the rise of Edhem Bicakcic, co-president of a SDA-HDZ joint commission, eclipsing Prime Minister Haris Silajdzic.

In addition to extending its control over the state, the SDA has surrounded itself with « transmission belts » intended to supervise the population. The Bosnjacki sabor is made up of representatives of the main Muslim communitarian organizations, which have been coopted in a manner similar to that which operated under the « delegation system » of Yugoslav self-management. In the assistance economy of the wartime, the humanitarian organization « Merhamet » and various organizations of refugees, veterans or martyr families linked to the SDA have played a part similar to the trade-unions in the planned economy of the communist regimes.

There are therefore blatant similarities between the political practices of the SDA and those of the League of Communists; but there are also important differences. The SDA considers itself to be the sole legitimate representative of the Muslim nation and has reduced the role of the « civic » parties within the Collegial Presidency to one of outward legitimation, but it has also never questioned the principle of multiparty pluralism. Similarly, the SDA has controled the state radio and television, but also tolerated some independent newspapers and TV stations. Above all, the party has not attempted to win the active support of the population, but merely to ensure its passive allegiance. Thus, the manner in which the SDA exerts power is less reminiscent of the former communist regimes than of the authoritarian regimes which appeared after 1990 in other former republics of Yugoslavia (Serbia, Croatia, etc.) or the Soviet Union (Bielorussia, etc.).

The reconstitution of a party-state has been accompanied by an important turn-over in the party itself. The first months of war saw the removal of numerous notables by militia leaders and criminals who, at that time, held power at the local level. Then, after Fall 1993, the SDA’s penetration into the restored state apparatus was followed by an opposite trend, that is the entrance into the SDA of officers, high civil servants and directors who were formerly active under the communist system. Indeed, the former communist executives have joined the new ruling party or have been dismissed from their jobs. In this way, the SDA has succeeded in getting the managerial staff it had lacked in November 1990, and in securing the take over of a state apparatus it had, until then, controlled only indirectly. In March 1994, the Police Minister Bakir Alispahic and the chief of military security services Fikret Muslimovic entered the Executive Committee of the party, followed by general Atif Dudakovic and Mehmet Alagic in January 1996. These promotions illustrated this process of reconversion of parts of the former military, political and managerial elites into the SDA.

Far from endangering the central position of the pan-Islamist current within the party, these internal changes in the SDA have actually worked to consolidate its influence. In the first months of the war, the ideological cohesion of this current, reinforced by long-standing personal and family ties, gave its members an important advantage over their political opponents. Later on, control of key positions in the SDA’s parallel networks enabled the pan-Islamists to retain control over the restoration of the state as well as the renewal of the party. They could also put pressure on former communist elites, who sought new career paths and new legitimacy, to eliminate more independent figures like Haris Silajdzic. Finally, during the war, the pan-Islamist current has acquired the financial power and political experience it had lacked at the founding of the SDA. But it remains necessary to explore whether the reinforcement of the power of this current means also the implementation of an Islamist political project in Bosnia-Herzegovina, and any real process of re-Islamization among the Muslim population.

The SDA and the Yugoslav Crisis

From the wider view of the Yugoslav crisis, it is most important to know which were the real political choices of the SDA, and which was the specific influence exerted on them by the pan-Islamist current. This is due to the fact that, whereas the SDS and the HDZ have not hid their nationalistic projects, the attitude of the SDA before and during the war in Bosnia-Herzegovina was much more ambiguous, and, in fact, remains a subject of controversy today.

Paradoxically, the initial commitment of the SDA to the upholding of Yugoslavia can be explained by the specific influence of the pan-Islamist current, as Yugoslavia was seen as the sine qua non condition for uniting the whole « historical and cultural Muslim circle » of the Yugoslav space. However, other reasons for this commitment can be found in a « tactical Yugoslavism », similar to the position of interwar Muslim parties, and in the then strong attachment of the Bosnian Muslims to the Yugoslav idea. Moreover, the worsening of the Yugoslav crisis very quickly led SDA leaders to focus solely on the Bosnian Muslim nation and to throw their support behind the independence of Bosnia-Herzegovina. By February 1991, the SDA had already submitted a « Declaration on the sovereignty and indivisibility of Bosnia-Herzegovina » to the Bosnian Parliament, and had clashed openly with the SDS.

In reality, save these few vaguely articulated pan-Islamist and Yugoslav aspirations, the political project of the SDA has always revolved around three main goals: the sovereignty of the Bosnian Muslim nation, the independence and territorial integrity of Bosnia-Herzegovina and the territorial autonomy of the Sandjak. Together, these three objectives comprise what could be called the « greater Muslim » project of the SDA: a state composed of Bosnia-Herzegovina and Sandjak, in which Muslims would be the majority, and the Serbs and Croats would be reduced to national minorities. Hence the SDA’s insistence during the 1991 census on the majority status of the Muslim nation, and the slogan calling the Muslims to take part to this census: « On our number depend our rights ».

Such a project is sometimes implicitly included in the speeches of SDA leaders ; it is, however, doubtful that it has significantly influenced their concrete political choices. The balance of power inside the Yugoslav space has compelled the SDA to fall back on much more limited objectives. Moreover, the party’s various goals were, in fact, contradictory: the claim for the territorial autonomy of the Sandjak contradicted the previously stated principle of inviolability of the borders of Bosnia-Herzegovina, and the insistence upon the own political sovereignty of the Bosnian Muslim nation called into question the territorial integrity of Bosnia-Herzegovina.

This tension between Muslim sovereignty and Bosnian territory represents the core of the « Muslim question » in Bosnia-Herzegovina. But, whereas the interwar Muslim parties gave up the sovereignty of the Muslim community in order to better preserve Bosnia-Herzegovina as a specific territorial entity, the SDA has tended to do the opposite. The SDA’s nationalism is thus a Muslim rather than a Bosnian one, a cultural rather than a territorial. And this reality can, to a great extent, be explained by the specific influence of the pan-Islamist current.

This primacy given by the SDA leaders to the sovereignty of the Muslim nation explains their main political choices between 1990 and 1996, as well as the main conflicts within the party. In the first months of the war, the SDA rejected the idea of a « Bosnian patriotic front » put forward by the « civic » parties, and prefered a « Croato-Muslim alliance » resting on a coalition between the SDA and the HDZ. For the SDA, to sacrifice the sovereignty of the Muslim nation for the sake of the defense of Bosnia-Herzegovina was out of question. One year later, the outbreak of fighting between Muslim and Croat forces (May 1993) and the presentation of the Owen-Stoltenberg peace plan (July) proposing the transformation of Bosnia-Herzegovina into an union of three constitutive republics, led to internal tensions in the SDA, most notably the conflict between Fikret Abdic and Alija Izetbegovic.

In this major crisis, A. Izetbegovic is deemed to be the defender of Bosnian territoral integrity, against F. Abdic who accepted the Owen-Stoltenberg plan, and thus the partition of Bosnia-Herzegovina. But the reality is different. In 1993, the military inferiority and the diplomatic isolation of the Bosnian Muslims had led both F. Abdic and A. Izetbegovic to give up the principle of the territorial integrity of Bosnia-Herzegovina. But this renouncement did not have the same meaning for the two men. For F. Abdic, it was combined with a renouncement of Muslim sovereignty, the Muslim entity being compelled to declare allegiance to the neighbouring Serbia and Croatia in order to survive. For A. Izetbegovic, in contrast, giving up the Bosnian territorial integrity was the necessary price for the constitution of a sovereign Muslim state. In the first scenario, boundaries did not matter. In the second one, they were of paramount importance (for territorial continuity and free access to the sea and to the Sava river).

When Alija Izetbegovic rejected the Owen-Stoltenberg plan, it was, therefore, not because he was hostile to the principle of partition, but because he did not accept the concrete boundaries proposed by the Owen-Stoltenberg plan. What was at stake in his conflict with Fikret Abdic was not the territorial integrity of Bosnia-Herzegovina, but the sovereignty of the Muslim nation. The proof of this assertion is the fact that on September 16, 1993, during the negotiations of the Owen-Stoltenberg plan, A. Izetbegovic signed an agreement with Momcilo Krajisnik allowing the Serb entity to secede from the future Union of republics of Bosnia-Herzegovina. Five months later, in February 1994, a group of SDA deputies proposed to the Bosnian Parliament the proclamation of a « Bosnian republic » defined as « the independent and democratic state of the Bosniac nation, with Serbs and Croats enjoying in this state a status of national minorities ».

Thus, during the fighting between Muslims and Croats, the temptation to set up a separate Muslim entity did indeed exist within the SDA, and in particular among its pan-Islamist founding members. But several major obstacles stood in the way of this project. On one hand, the local and international balances of power made it impossible to satisfy the minimal territorial demands set by the proponents of partition, which was, according to Demaludin Latic (former co-defendent in the 1983 trial and chief editor of « Ljiljan », a newspaper close to the SDA), « 45 % of the territory of Bosnia-Herzegovina plus the Sandjak » . On the other hand, every statement in favour of partition provoked sharp reactions from the « civic » parties and from within the SDA itself. The proposition made in February 1994, in particular, had to be withdrawn after it provoked a wave of internal contestation led by Rusmir Mahmutcehajic, a SDA leader, until then considered to be close to the pan-Islamist current.

Later, the creation of the Muslim-Croat Federation and the secret lifting of the arms embargo by the United States put an end to the military inferiority and the diplomatic isolation of the Muslim community. But the establishment of this Federation gave rise to new conflicts. For the « civic » parties, the Federation was only one step toward the political reintegration of Bosnia-Herzegovina : they therefore insisted on the primacy of republican institutions and on their multi-ethnic composition and orientation. For the SDA leaders, in contrast, it was an opportunity to restore the coalition with the HDZ and to identify the republican institutions solely with the Muslim nation. Similar disagreements appeared in the SDA itself, between the Prime Minister Haris Silajdzic and the executive bodies of the party. In August 1995, the « civic » parties criticized a constitutional reform reserving implicitly the Presidency of the Collegial Presidency for a Muslim. In January 1996, H. Silajdzic opposed a new transfer of competences from republican to federal institutions and resigned in protest of this decision. A few days later, he was expelled from the party and replaced by Hasan Muratovic (as republican prime minister) and Izudin Kapetanovic (as federal prime minister). Acting in this way, the SDA favored again the sovereignty of the Muslim nation at the expense of the political reintegration of Bosnia-Herzegovina.

However, the fact remains that within the Yugoslav space as in the Muslim community, the pan-Islamist current was not strong enough to impose its own conception of the political future of Bosnia-Herzegovina. Given these conditions, the SDA adopted an ambiguous stand and reiterated its commitment to an united and multi-ethnic Bosnia-Herzegovina while turning the territories held by the Bosnian army into a de facto Muslim entity. Since 1994, this ambiguity in the SDA position has been justified by the idea of a « two stage reintegration » of Bosnia-Herzegovina, the immediate consolidation of Muslim territories being said to further a long-term reintegration of Serb and Croat territories. During the election campaign of 1996, this was reflected in two largely contradictory slogans put forth by the SDA: « On our own land, in our own faith » and « For a sovereign, united and democratic Bosnia ».

In reality, this strategy of ambiguity has offered several advantages for the SDA leaders. Firstly, it has allowed them to continue presenting themselves as the defensor of Bosnia-Herzegovina, the representation that constituted one of the party’s main sources of internal and international legitimacy during the war. Secondly, it has permitted them to present the results of the war as provisory, and to reestablish its original goals into the ambiguities inherent in the Dayton agreements (December 1995). Shortly after the signing of these agreements limiting the sovereignty of the Muslim nation along with the territorial integrity of Bosnia-Herzegovina, Alija Izetbegovic declared that the SDA « has remained faithful to the idea of Bosnia, in spite of the price we payed and the risks we ran, has woke up the national consciousness of the Bosniacs and did not forget his brothers in the Sandjak ». For the SDA leaders, indeed, the institutional framework set up by the Dayton agreements represents only a step toward the realization of a nationalistic project centered on the assertion of sovereignty for the Muslim nation.

Islam in the Reconfigurations of Muslim National Identity

Between 1990 and 1996, the SDA did not succeed in uniting all the Muslim populations of the Yugoslav space, nor did it manage to ensure the sovereignty of the Muslim nation over Bosnian territory. This failure shows that the influence of the pan-Islamist current has less concerned the general reshaping of the Yugoslav space than the political recompositions happening inside the Bosnian Muslim community. Besides, the primacy given by the SDA leaders to the Muslim sovereignty itself is a choice of identity rather than strategy. This insistence on Muslim sovereignty has gone together with certain reconfigurations of Muslim national identity, in which members of the pan-Islamist current have played an active part, although the developments and consequences of these have been largely beyond their control.

Whereas the political project of the SDA remained ambiguous and inconsistent, its cultural project seems at first glance to have been much more precise. On one hand, the SDA wanted to carry on the Muslim « national affirmation » initiated in the communist period by providing the Muslim commmunity with all identity attributes of a nation (language, literature, history, etc.). On the other hand, it wanted to reassert the central place of Islam within this nascent national identity. During the first Congress of the SDA held in December 1990 in Sarajevo, the Commission for social questions chaired by Rusmir Mahmutcehajic declared that « the culture of the Bosnian Muslims is sacred in its foundations, even though some people (…) have attempted to impose a brutal ‘secularization’ on it. In fact, this secularization has consisted of a separation of the cultural superstructure from its sacred basis. Atheist ideology, elevated to the rank of a state religion and turned into a vulgar antitheism, has in this way contributed to destroying the Muslims’ awareness of their own culture, of its historical forms and achievements ».

The breakout of the war in April 1992 made the implementation of the SDA’s cultural project easier. In addition to the Muslim communitarian institutions such as the association « Preporod » or the Congress of Muslim intellectuals founded in December 1992, the Ministry of Education and Culture also contributed to the reconfiguration of Muslim national identity. The formalization of a Bosnian language was entrusted to an expert commission, the editing of Muslim literary works was undertaken in a systematic way, and new schoolbooks were introduced in 1994. Above all, the war circumstances led to a « re-Islamization through war » of the Muslim national identity. The SDA and the Islamska Zajednica put forward an interpretation of the war in religious terms : the Muslim dead are shehids (martyrs of the faith), the Serb and Croat agressions were said to constitute a « new Crusade », and the passivity of the Western countries was explained by their deep-rooted hostility towards the Muslim world. Fikret Muslimovic, then the chief of the Department for Morale at the general staff of the Bosnian Army, explained, for example, that « the commandants (…) must play an active part in the creation of a space and an environment favourable to the fulfillment of religious duties by the members of their units ». He also specified the atttitude the officers were expected to adopt towards Islam and its rituals:

« In their personal attitude, the commandant, its assistants for questions of morale and all those who have a leading function may in no circumstances contradict the traditional values of our nation, including the customs related to the religious tradition, in order that our army may resemble our nation.(…) It is desirable that the officers, and particularly those in key positions, adapt their behaviour to the religious tradition of their nation, on the occasion of demonstrations of patriotism and adherence to the objectives of the liberation struggle (official gatherings), or when homage is paid to the shehids (burial, for example). In these circumstances, when respect is expressed with a great emotion for the victims of the genocide against our nation, the officers must show that they are aware that the genocide against our nation has precisely the purpose of eliminating our religious traditions. »

Facilitated by the actions of the Serb and Croat nationalists (likening the Bosnian Muslims to « fundamentalists », systematic destruction of the mosques, etc.), the reconfigurations of Muslim national identity launched by the SDA have affected the whole Muslim population. The feeling of belonging to the Muslim nation has constantly intensified, to the detriment of local (urban or rural) identities as well as attachment to the former Yugoslav idea of « brotherhood and unity » (« bratstvo i jedinstvo »). As for Islam, it has been more and more perceived as a common and sacred heritage. But these identity reconfigurations have been accompanied by evident dilemmas and disagreements. Is Bosnian language the language solely of the Bosniacs, or of all Bosnians? Is Islam merely the substratum of the Muslim national identity, or does it transcend this identity to merge the Bosnian Muslims into the great brotherhood of the Umma (Community of the faithful)? And was the war itself a patriotic and antifascist struggle along the pattern of Tito’s partisans, or a jihad (holy war) inspired by the Iranian and Afghan examples?

The SDA leaders have been unable to give a coherent answer to these questions, and to master the consequences of the identity reconfigurations they have themselves initiated. As far as Islam is concerned, the best illustrations of these contradictions put forth by the SDA leaders are the creation of Islamic religious institutions peculiar to the Bosnian Muslim population, and the replacement of the national name « Muslim » by the name « Bosniac », both of which occured in 1993.

In 1991, after the SDA failed to unite the « historical and cultural Muslim circle », the Islamska zajednica remained the only institution linking the various Muslim populations of the Yugoslav space. At the initiative of the Reis-ul-Ulema, Jakub Selimovski, the Yugoslav Islamska zajednica even undertook the project of gathering the other Balkan Muslim populations into an Union of East European Islamic Communities. But the members of the pan-Islamist current themselves put an end to these institutional links in April 1993, by organizing a « coup » against J. Selimovski and announcing the creation of an Islamska Zajednica limited to Bosnia-Herzegovina and Sandjak, led by a new Reis-ul-Ulema, Mustafa Ceric. There were two main reasons for this apparently paradoxical behavior of the Bosnian pan-Islamist current. On one hand, J. Selimovski, who opposed any form of politicization of Islam and had been elected by the religious structures of the various Yugoslav republics, was a major obstacle to the seizure of the Islamska zajednica by this pan-Islamist current. On the other hand, assertion of the national character of the Bosnian Muslims also implied the necessity for the creation of their own religious institutions : thus, the will of the pan-Islamists to « re-Islamicize » the Muslim national identity eventually led to a « nationalization » of Islam.

Similarly, in September 1990, the members of the pan-Islamist current had successfully opposed those in the SDA who advocated the replacement of the national name « Muslim » with the name « Bosniac ». Three years later, however, they accepted a resolution from the Bosnjacki sabor « to give back to our nation its historical and national name ‘Bosniac’, in order to closely link us to our country Bosnia, to its political and legal continuity, to our Bosnian language and to all the spiritual tradition of our history ». Pan-Islamists have even sometimes boasted that they were the true initiators of this change. In reality, however, the national name « Bosniac » was promoted by former communist intellectuals rallied to the SDA, and acting from within SDA-controlled cultural instititutions. The members of the pan-Islamist current were only ratifying a change which was by this time favoured by a large majority of the Bosnian Muslim elites, and was made necessary for the insertion of the Muslim community into an European political order resting on the nation-state principle. As Dzemaludin Latic lamented: « In Europe, those with no national name can also not have a state. (…) The Bosniacs will become a European nation, not only in the geographical sense, but also in the cultural sense -a large and ugly copy, with an European life-style, European disregard for God, and therefore indifference towards moral questions ».

The members of the pan-Islamist current then tried to compensate for the relinquishing of the national name « Muslim » by insisting on Islam as the central element of this new Bosniac identity. According to Reis-ul-Ulema Mustafa Ceric, « Islamic tradition is the foundation of the Bosniac national identity », for « without Islam, without Islamic civilization, we are nobody and nothing ». In the 1970s, the Muslim intellectuals close to the League of Communists had done their utmost to demonstrate that the national name « Muslim » had in reality few links to Islam; twenty years later, the members of the pan-Islamist current were attempting to achieve the opposite.

But this kind of intellectual pirouette has not resolved their contradictions, because the insistence on the national dimension of Islam has undermined its religious content. For example, the general use of the word « shehid » as a designation for those killed in the war has deprived it of its religious meaning, and is rarely accompanied by respect for the funeral rituals which should be associated to it. Similarly, the transformation of the Ajvatovica pilgrimage into a patriotic gathering has deprived it of its mystical dimension and has promoted this Bosnian « small hajj » as a sort replacement for the true hajj (pilgrimage to Mecca).

Thus, the project to re-Islamicize Muslim national identity, cherished by the members of the pan-Islamist current, eventually backfired on its authors : the more the Muslim community acquired the symbolical and institutional attributes of a nation, the more Islam was reduced to a « raw material » from which were extracted some identity markers lacking in real religious content, and the more the Islamska Zajednica lost its function of a substitute national institution which explained its renewal in the communist period.

From Authoritarian Re-Islamization to the Fragmentation of Bosnian Islam

Whereas the pan-Islamist current has reinforced its position within the SDA and the state apparatus, its desire to unite the people of the Umma has given way to narrow national concerns, and its will to re-Islamicize Bosnian Muslim national identity has led to a « nationalization » of Islam in Bosnia-Herzegovina. Does this mean that the pan-Islamism of the SDA founding members had no influence on the internal political recompositions of the Muslim community?

In truth, pan-Islamism never represented an identity project shared by the whole Bosnian Muslim community, rather it has gradually become a discriminatory ideological criterion within this community. Adnan Jahic, a leading figure of the pan-Islamist current in Tuzla, did not convey anything else when he stated in 1993 that the Muslim state he wished to establish in Bosnia-Herzegovina « will have a MUSLIM IDEOLOGY based on Islam and its juridical, moral and social principles, as well as on those elements of Western origin which do not contradict them », and that « the principle of a complete equality will be guaranteed by the law to all citizens, but the level of social success of each individual will depend not only on his own work, but also on his degree of acceptance and enforcement of the principles and spirit of the MUSLIM IDEOLOGY ».

Adnan Jahic’s words have been labelled « immature » by « Ljiljan », the weekly close to magazine close to the SDA. Nevertheless, adherence to the ideological project of the founding members of the SDA is still an important factor for promotion within the party and state apparatus, and a political or military career is unthinkable for anyone with open hostility to this project. As Alija Izetbegovic euphemistically said in 1994 : « Of course, we will not ask an officer whether he fasts or not, whether he goes to the mosque or not. We first expect him to fight properly. And let him believe what he wants to believe. But he does not have the right to blaspheme God. He has to resemble this nation. And in our nation, to blaspheme God is a completely unknown thing. »

In other words, it is possible to say that, while Muslim nationalism has substituted itself for pan-Islamism as a cultural identity, pan-Islamism has substituted itself for communism as an political ideology. At that level too, however, there are some important differences from the communist period. Firstly, adherence to pan-Islamist ideology has not been the only criterion in the selection of new elites: military prestige, financial power or some rare profesionnal skills have also played an important part in this process. Secondly, the pan-Islamist ideology remains a confidential one: it never clearly appears in public documents and speeches from the SDA, and is not intented for ordinary people.

While pan-Islamism as a political ideology represents a sign of recognition limited to elite-circles, Islam as a marker of national identity is used to control the population. This is evident in the presence of « assistants for morale and religious affairs » at every level of the military hierarchy, in the introduction of religious instruction and the opening of prayer rooms in the public educational establishments, and in various forms of pressure exerted through the distribution of humanitarian aid (wearing of the veil for women, attendance at the main prayers and religious ceremonies for men, attendance at religious instruction and choice of Muslim first names for children). This relation between an ideological discourse reserved for the elites and a cultural one aimed at the broader population holds an evident advantage for the members of the pan-Islamist current : in this way, they can conceal their own ideological project behind religious generalities, and present any criticism of this project as an attack against Islam. The apparent reinforcement of the Islamic religious institutions and the alleged re-Islamization of the Muslim population have to be understood within this context.

After its seizure by the pan-Islamist current in 1993, the Islamska zajednica began to experience rapid growth in its administrative and educational infrastructures, with the appointment of six regional muftis (Sarajevo, Mostar, Tuzla, Banja Luka, Travnik and Novi Pazar ) and the opening of seven new madrasas (Tuzla, Mostar, Cazin, Travnik, Visoko, Zagreb, Novi Pazar ). At the same time, its influence on the state apparatus has increased significantly, as is evident in the great number of imams exercising responsibilities in the areas of diplomacy, the secret services and the ideological control and training of the army. Indeed, the Islamska zajednica has a lock on several functions which cannot be carried out by the state or the party because of the officially secular character of the later two. The Islamska zajednica has therefore become a key element in the institutional and discursive dualities set up by the pan-Islamist current in order to secure its political supremacy.

This institutional reinforcement of the Islamka zajednica, however, has not corresponded to a real movement of re-Islamization in Bosnia-Herzegovina. The political influence of the Islamska zajednica, for example, was not sufficient to question the results of the authoritarian secularization accomplished during the communist period, as shown by its unability to recover the waqfs confiscated after World War II, or its recurrent conflicts of competence with the Ministry of Education and Culture about the organization of religious instruction and the upkeep of religious monuments. Similarly, the growth of its material infrastructures is not due to a renewed religious fervour of the Muslim population, but to the influx of financial aid from the Muslim world.

Above all, the attempts to initiate top-down reislamization of the Muslim population have been met with serious resistance. In 1994, the issuing by Reis-ul-Ulema Mustafa Ceric and the new appointed muftis of fatwas (religious decrees) concerning the consumption of alcohol and pork has not significantly changed the dietary habits of the Bosnian Muslims, but has given rise to strong protests. In view of the political consensus created by the war, internal conflicts in the Muslim community tend to crystallize precisely around questions related to the re-Islamization of individual behavior. During the war, polemics on mixed marriages and the celebration of Father Christmas and the (catholic) New Year caused disturbance in the public sphere. For the population and the « civic » parties, these polemics have offered a way to criticize, in veiled terms, the ideological orientation of the SDA. Conversely, they represent for this party an occasion to test the cohesion of its supporters and the loyalty of its civil servants.

The attempts at an authoritarian re-Islamization led by the SDA and the Islamska zajednica have therefore resulted in forms of resistance reminiscent of the communist period : the population has tended to leave the definition of its public identity to those in power in order to concentrate on the defense of its private practices. As for the « new converts » to the SDA, they are reminded of their former political commitments : sometimes nicknamed « lubenice » (« watermelons » : « green on the outside, red on the inside »), they are the target of various sarcastic remarks, as illustrated by this well known Bosnian joke :

« An imam enters his mosque to preach the main Friday sermon. Adressing the audience, he declares : To those in the third row and behind, I say selam alejkum, brethren ; to those in the second row, I say good morning, sirs ; and to those in the first row, I say hi, comrades ! »

Mosque attendance is thus not perceived by the population as a sign of religious fervour, but of political opportunism, and the institutional reinforcement of the Islamska zajednica is not accompanied by increased prestige, but by a loss of credibility. Therefore, all the analyses which describe re-Islamization in Bosnia-Herzegovina as an undifferenciated process or as a « spontaneous » result of the war are decidely wrong. In Bosnia-Herzegovina, re-Islamization is an authoritarian process, the origins of which are located in clearly identifiable political projects and practices, and the results of which have been a transformation of the collective identity of the Muslim community without corresponding changes in the individual behavior of its members. Within this context, the apparent reinforcement of the Islamic religious institutions and the increased visibility of Islam have concealed other phenomena working to prolong the process of secularization initiated a century ago, and leading sooner or later to a deep crisis of Islam in Bosnia-Herzegovina.

To this end, the influx of financial resources from the Muslim world provides short term reinforcement of Islamic religious institutions, but in the long term destroys their unity and their authority. Rivalries between Muslim countries or religious obediences have sharpened internal conflicts in the Islamska zajednica. They also favour the proliferation of independent Islamic cultural centers and re-Islamization movements, in this way endangering the monopoly enjoyed by the Islamska zajednica on the religious life of the Muslim community. Thus, in the end, the authoritarian re-Islamization initiated by the pan-Islamist current has led to the fragmentation of Bosnian Islam.

Moreover, the ideological instrumentalization of Islam has revealed itself to be, in the long term, incompatible with its function as a common identity marker. Indeed, as Islam has become the cultural foundation of the Muslim community, various social actors in this community have tended to instrumentalize it for their own political or cultural purposes, to work out their own interpretations and uses of the Islamic religion. Members of the pan-Islamist current are thus faced with an insoluble dilemma. Either they accept the internal diversification of Bosnian Islam, and are compelled to renounce their ability to instrumentalize it for their own ideological purposes, or they attempt to secure themselves a monopoly over the interpretation of Islam, but thereby risk plunging the Muslim community into a new major identity crisis. In either case, the whole political construction set up during the war is threatened with collapse.

Riyadh Declaration on the Counterterrorism International Conference

August 22, 2010 Leave a comment

Riyadh 25-28/12/1425 (5-8/12/2005)

The participating states at the Counter terrorism international Conference held in Riyadh, Kingdom of Saudi Arabia from 25-28 Dhul Hijjah 1425H corresponding 5-8 February 2005 which are: Federal Democratic Republic of Ethiopia, Republic of Argentina,, Hashemite Kingdom of Jordan, Kingdom of Spain, Australia, Islamic State of Afghanistan, Federal republic of Germany, State of the United Arab Emirates, Republic of Indonesia, Republic of Uzbekistan, Republic of Ukraine, Islamic republic of Iran, republic of Italy, Islamic Republic of Pakistan, Kingdom of Bahrain, Republic of Brazil, Kingdom of Belgium, Republic of Turkey, United Republic of Tanzania, Republic of Tunisia, People’s Democratic Republic of Algeria, Republic of South Africa, Kingdom of Denmark, Russian Federation, Republic of Sri Lanka, Kingdom of Saudi Arabia, Republic of Singapore, Republic of The Sudan, Syrian Arab Republic, Peoples’ Republic of China, Republic of Tajikistan, Republic of Iraq, Sultanate of Oman, Republic of France, Republic of Philippines, State of Qatar, Republic of Kazakhstan, Canada, State of Kuwait, Republic of Kenya, Republic of Lebanon, Kingdom of Malaysia, Arab republic of Egypt, Kingdom of Morocco, United kingdom, Republic of India, The Netherlands, United States of America, Empire of Japan, Republic of Yemen, Greece, as well as international, regional and specialized organizations which attended the Conference: The United Nations, Organization of the Islamic Conference, League of Arab States, African Union, European Union, The INTERPOL, Gulf Cooperation Council, Council of Arab Ministers of the Interior, Muslim World League.

Express their profound appreciation to the Kingdom of Saudi Arabia for convening and hosting this Conference held under the high patronage of His Royal Highness Prince Abdullah Bin Abdul Aziz Crown Prince and Deputy Premier and Commander of the National Guard.

Commend the spirit of cooperation that prevailed in the Conference and the unanimity of views and positions on the extent of the danger of terrorism and the need to challenge it through united, organized, and long- term international efforts that respect the principles of international law that consolidate the comprehensive and multidimensional role of the United Nations.

Call for fostering the values of understanding, tolerance, dialogue, co-existence, and the rapprochement between cultures to reject the logic of the clash of civilizations. Also, call for fighting any form of thinking that promotes hatred, incites violence, and condones terrorist crimes which can by no means be accepted by any religion or law.

Stress the fact that terrorism has no specific religion, ethnic origin, nationality, or geographic location. In this respect, it is of paramount importance to stress that any attempt to associate terrorism with any given faith will in actual fact only help the terrorists. It should be rejected wholeheartedly. Hence the need to take measures so as not to tolerate any accusations leveled against any religion and to lay the groundwork for understanding and cooperation founded on commonly shared values between countries with varying faiths.

Reiterate their commitment to resolutions issued by the United Nations in the fight against terrorism, which call upon the international community to condemn and combat terrorism by all means in accordance with the Charter of the United Nations in the view of the fact that terrorists’ acts threaten world peace and security. They also stress that the United Nations is the major forum to promote international cooperation against terrorism and that the relevant Security Council Resolutions constitute a solid and comprehensive foundation for fighting terrorism worldwide. All countries are therefore called upon to comply fully with the provisions of those resolutions.

Stress the fact that any international efforts will not be sufficient to effectively combat this terrorism phenomenon, if it were not to be conducted within the framework of joint actions and an over-all strategic vision. In this respect, they support and adopt the proposal made by HRH the Crown Prince of the Kingdom of Saudi Arabia contained in His Highness’ opening session address, which called for the establishment of an International Counterterrorism Centre staffed by experts in this field in order to share real-time information to adequately prevent attacks before they occur with the ultimate goal of eradicating terrorism.

Encourage individual efforts to expand political participation, achieve sustainable development, and promote the role of the civil institutions to help address the conditions that spawn violence and extremist thinking.

Stress the importance of the role to be played by the media, civil institutions, and educational systems in establishing strategies against terrorists’ propaganda, while setting guidelines for press reports to prevent terrorists from exploiting media outlets for their communication and recruitment.

Request the United Nations to develop international unified criteria to regulate the work of non-profit charitable and humanitarian relief organizations to ensure that they are not exploited for illegal activities.

Call for the promotion of inter-agency cooperation and coordination, on national and bilateral levels, to combat terrorism, money-laundering, weapons and explosives trafficking, and drug smuggling. Also, call for the exchange of experiences and best practices, including training, in order to ensure effectiveness in the fight against terrorism and organized crime.

Stress the need to strengthen international measures to monitor the movement of nuclear material and relevant technology, and to support the role of the United Nations in securing nuclear facilities and enacting the United Nations General Assembly Resolution No. 58/48 on measures to prevent terrorists from acquiring weapons of mass destruction.

Call for the support and assistance to developing countries in combating terrorism, namely, by providing early-warning equipment, crisis management training, and capacity-building measures among first responders.

Develop national legislation and procedures to prevent terrorists from abusing migration and asylum laws to establish safe havens or to use the territory of states as bases for recruiting, training, planning, inciting, or launching of terrorist operations against other states.

Stress the importance of utilizing the media to promote shared values, tolerance, and co-existence and to refrain from publishing material that calls for extremism and violence.

Express solidarity and support for all victims of terrorism

RIYADH-DECL.
Disk:3/ICT-2005

II. Recommendations of the Four Working Groups Adopted by the Plenary Sessions

Recommendations of the First Working Group: The Roots, Culture, and Ideology of Terrorism

1. Terrorism and extremism constitute a continuous threat to the peace, security and stability of all countries and peoples. They should be condemned and comprehensively confronted by a unified and effective global strategy; and an organized international effort underlining the leading role of the United Nations is needed.

2. No matter what pretext terrorists may use for their deeds, terrorism has no justification. Terrorism, under all circumstances, regardless of the alleged motives should be condemned unreservedly.

3. Lack of agreement on a comprehensive definition of terrorism which is acceptable to all hampers international efforts to combat terrorism. Therefore, the problem of definition should be overcome. The proposals contained in the UN High Level Panel Report on New Threats and Challenges could provide a useful basis for a speedy compromise in this field.

4. The violent nature of terrorism forces the international community to concentrate on measures to eliminate terrorist organizations and prevent terrorist acts. On the other hand, it is important to address the factors that provide a fertile ground where terrorism can flourish with a view to contribute to the elimination of terrorism.

5. Serious attempts should be made to solve regional and international conflicts peacefully, so that terrorist organisations are denied the opportunity of exploiting the suffering of peoples under unjust conditions, spreading their misguided ideology and founding a fertile ground for recruitment and for their illegal activities.

6. Terrorism violates the enjoyment of fundamental human rights. Terrorism has no particular religion, race, nationality or a specific geographic region. In this context, it should be underlined that any attempt to couple terrorism with any religion would in fact play into the hands of terrorists and should be strongly rejected. Therefore, measures should be taken to prevent intolerance against any religion and to create an atmosphere of common understanding and cooperation based on shared values among nations belonging to different faiths.

7. Guidelines and codes of conduct should be developed by the appropriate UN bodies to assist states and their law enforcement agencies in combating terrorism while observing their obligations under international law including human rights, humanitarian and refugee laws.

8. National reform efforts of countries aiming at widening political participation and pluralism, achieving sustainable development, reaching social equilibrium and promoting the role of civil society institutions should be supported so as to confront the conditions promoting violence and extremism.

9. Programs should be developed and implemented which are aimed at promoting multicultural and inter-religious dialogue. To this effect, policies and mechanisms should be set to develop educational systems and other sources of socialization in order to strengthen the values of tolerance, pluralism and human co-existence at grassroots level as well as to provide basic knowledge of civilizations and religions and to raise public and mass media awareness of the dangers of terrorism and extremism.
10. Ideas of tolerance and co-existence should be encouraged and mutual understanding on different religions be deepened through public debate and exchange of thoughts. Standards and codes of ethics should be identified to regulate publication or spreading of materials that promote hatred or inciting violence.
11. Special attention should be given to the situation of migrants. In many cases, these people represent “the Other” and are subjected to racism, xenophobia and intolerance. Addressing the fundamental rights of these persons will help bridge the cultural divide. At the same time, migrants should demonstrate willingness to integrate into their host societies.

12. The UN is the main forum for consolidating international cooperation against terrorism. Member states are called to join, ratify without reservation and implement the 12 major international conventions on combating terrorism. The states could benefit whenever appropriate from technical assistance of the UN Security Council Counter Terrorism Committee (CTC) and the Terrorism Prevention Branch of the UNODC. All states should also support the work of the 1267 Committee of the UN Security Council and its Monitoring Team.

13. The UN Security Council resolutions 1267, 1373, 1526, 1540 and 1566 constitute a solid and comprehensive basis for combating terrorism on a universal scale. These resolutions provide a clear road map for the steps that need to be taken. All countries should take necessary measures in order to fully comply with the provisions of the above mentioned Security Council resolutions.

14. The task of creating a universal legal instrument is yet to be fulfilled. The discussions in the UN on a comprehensive convention on terrorism have not moved ahead due to differences on the definition of terrorism. All states should exert further efforts in order to conclude the convention.

15. Special attention should be given to measures aimed at preventing terrorists’ access to weapon of mass destruction and their means of delivery. The earliest possible adoption within the UN of the draft international convention for the suppression of acts of nuclear terrorism would be a crucial step in this direction.

16. The idea launched by the Kingdom of Saudi Arabia to establish an international center to combat terrorism should be positively examined and supported.

Recommendations form the Second Working Group: The Relation Between Terrorism and Money Laundering, and Arms and Drug Trafficking Adopted by the Plenary Session

1 Strengthening international, regional and bilateral cooperation among states to identify, disrupt, and dismantle the financial underpinning of terrorism, as well as the activities of organized crime groups, illegal weapons, and explosives trafficking and illicit narcotics trade. Countries should endeavor to create legal frameworks that allow for flexible exchange of information in a flexible way between competent authorities, both domestically, regionally, and internationally.

2. Encouraging countries to fully implement the existing Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) international standards – in particular, the Financial Action Task Force (FATF) 40 + 9 Recommendations and the relevant United Nations Conventions and the Security Council Resolutions, as well best practices to counter money laundering and the financing of terrorism through:

- strengthening the efforts of the International Monetary Fund (IMF) and World Bank in AML/CFT.
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– encouraging the countries not subject to mutual evaluation by Financial Action Task Force (FATF), or FATF style regional bodies (FSRBs), to volunteer for assessment by the International Monetary Fund and World Bank.
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– encouraging all countries to develop Financial Intelligence Units (FIUs) that meet the criterion of Egmont Group Definition and standards, and to have these FIUs join the Egmont Group to share their experience, expertise, and operational information.

3. Asking the United Nations to work together with the FATF and FSRBs to further elaborate international standards to ensure the fulfillment of the Charitable and humanitarian role of charitable and humanitarian role of charities and non-profit organizations by regulating their operations and by preventing their use in illegal activities. The articulation of these standards should be conducted in the context of FATF and FSRBs.

4. Ensuring effective information flow among relevant law enforcement, national security and intelligence agencies with AML/CFT responsibilities. Additionally, countries should to the greatest extent possible ,ensure cooperation among agencies on bilateral, regional, and international basis.

5. Increasing national, bilateral, and regional cooperation and coordination among agencies combating terrorism, as well as money laundering, arms and explosives trafficking and drugs smuggling and supporting the sharing of expertise and experiences, for instance by training, to ensure effectiveness in the fight against terrorists and organized crime.

6. Enhancing laws on combating arms and explosives trafficking and drugs smuggling, money laundering and improving the capacities of law enforcement agencies (including judicial authorities) to implement those laws.

7. Reinvigorating international community efforts to develop and refine mechanisms that enable countries to comply fully with their obligations under UN Security Council Resolutions 1267 and 1373 to freeze without delay the assets of terrorists and those who materially support them. In particular, countries should provide accurate, reliable and complete data at their disposal of any individual name, organization, or entity as well as information on the involvement in terrorism prior to the submission of the designation to the 1267 Committee. Delisting procedures should be established.

8. Encouraging the creation of special domestic bodies that would manage seized and confiscated assets and funds derived from money laundering, terrorism financing, arms and drugs smuggling and organized crime. These funds could be used for strengthening the means allocated to the fight against these forms of crime, as well as to compensate and assist victims of terrorism.

9. Identifying individuals and entities that are suspected of financing terrorism at the national level. At the FIU level, this information could be shared freely and rapidly and in line with the Egmont principles. In the case of the discovery of relevant information, countries should respond through appropriate channels.

10. Encouraging countries to undertake a study to determine the feasibility of implementing a system for collection and analysis, by the FIUs of international wire transfers to facilitate the detection of transactions or patterns that may be indicative of money laundering or financing terrorism.

Recommendation of the Third Working Group: Experiences and Lessons Learned From Counterterrorism Adopted by the Plenary Session

1. The essential basis for success is an effective national cross-government counter-terrorism strategy, which sets out clear and measurable objectives for all relevant departments and agencies, including law enforcement, intelligence, military, interior and foreign affairs.

2. There is a requirement for effective national mechanisms for coordinating the national strategy, in particular the work of law enforcement and intelligence agencies, also in respect to regional and international cooperation.

3. Each nation is affected by the success or failure of others. It is therefore essential to have effective bilateral and multilateral mechanisms underpinned by political will for integrated law enforcement, judicial and intelligence dimensions of co-operation. These could address a range of issues, such as the legal framework for dealing with terrorist groups and their associates, extradition procedures, border controls, protecting ports and maritime transportation. Effective co-operative working is required at all stages of international counter-terrorist operations, including ad hoc multinational teams where appropriate.

4. At international level, success requires the sharing of information, techniques expertise, and equipment. There is value in the establishment of counter terrorism capacity building centres and forums with the objective of improving counter terrorism legislation, offering training and sharing equipment techniques experties for tackling evolving terrorist organizations and methods, such as the use of the internet as a tool for terrorists.

5. It is important, on voluntary basis that funds and other resources, such as high technology equipment, are made available to states needing such assistance, commensurate with the threat they face and the level of their anti-terrorist operations.

6. Counter terrorist measures must be carried out in accordance with domestic and international law, with respect for human rights, also in order not to alienate communities and cause marginalization.

7. A key part of any strategy must be to identify and address factors which can be exploited by terrorists in recruiting new members and supporters.

8. Terrorists thrive on publicity by any means. Mass media, civil society and the educational system can play a crucial role in any strategy to counter terrorist propaganda and claims to legitimacy. Developing methods for reporting on terrorism that would prevent terrorists from exploiting these reports in their communication

9. Any counter terrorism strategy must ensure utmost respect, sensitivity and material assistance for victims of terrorism.

Recommendations of the Fourth Working Group: Terrorist Organizations and Thieir Formation Adopted by the Plenary Session

1. Supporting the call of His Royal Highness Prince Abdullah Bin Abdul Aziz, Crown Prince of the Kingdom of Saudi Arabia for the creation of an international centre for combating terrorism which will undertake, among other things, to develop a mechanism for exchanging information and expertise between states in the field of combating terrorism, and for linking the national centers for combating terrorism with a database which enables the fastest updating of information possible considering that the fight against terrorism is a collective effort requiring maximum cooperation and coordination among states and full readiness to exchange security information and intelligence instantly between specialized organs through secure equipment.

2. Encouraging states to set up national centers specialized in combating terrorism, and calling on them to create similar centers on the regional level to facilitate intelligence sharing, exchange of real time operational information, developing mechanisms and technologies for data collection and analysis to thwart the preparation of terrorist operations and undermine the networks of recruitment, training, support and financing of terrorists, and coordination between relevant international bodies and other regional centers.

3. Inviting Interpol to consider how it could most effectively reinforce its extensive existing work against terrorism, and calling on all members of Interpol to contribute promptly and actively to the maintenance of an up-to-date list of wanted terrorists.

4. Encouraging states to adopt national legislation and procedures capable of preventing terrorists from utilizing asylum and immigration laws to reach safe havens or to use states’ territories as bases for recruitment, training, planning, instigation, and for the launching of terrorist operations against other states.

5. Establishing, whenever appropriate, task forces to fight terrorism in every country that would be composed of elements from law enforcement and task forces and train them to deal with terrorist networks.

6. Developing domestic laws on fighting terrorism by criminalizing all terrorist acts including financing of terrorist activities.

7. Supporting and assisting developing countries in establishing early-warning mechanisms, management of crises and improve capabilities of those dealing with crises and situations of terror.

8. Increasing interaction with the media to enhance people’s awareness as to the dangers of terrorism and so that the media would not be used or manipulated by the terrorists.

9. Strengthening relations with non-government organizations to ensure an effective contribution to information-sharing relating to the fight against terrorism.

10. Establishing an international data base for coordination in respect of stolen passports, and other travel documents, whereby it will be possible to identify the place and numbers of those passports in order to reduce the movements of the terrorists, and encourage adopting high technology-related international criteria through international cooperation and technical assistance as may be necessary to prevent forging passports and using them by terrorist groups to travel from one country to another.

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