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The research of Islam makes first timid steps in restoration of former traditions, while Muslim theology actually remains a terra incognita. The activities of the Russian Islamic University and its just received license for theological studies reassure to some extent, but it is a long-term perspective. Thus, the main actors in the state-Islamic relations in Tatarstan have been designed, and they have mainly determined their positions, world outlook and the sphere of their political activities. But these actors have not yet formed the valuable political principles, which might be used by them as the guiding principles in activities of these actors. Therefore their political behavior does not let them reduce various political actions to the separate actions within the system, which in this case is called the confessional policy.
"Politeks: politicheskaya ekspertiza ", St-P., 2010, T.6, N 2, p. 58-72.
Renat Bekkin,
expert in Islam
THE ISLAMIC FINANCING METHODS
IN AZERBAIJAN
The idea of national statehood in Azerbaijan by historic traditions is closely connected not with Islam and religious values but with secularism and anti-clericalism. Therefore it is not a surprise that one of the key partners of contemporary Azerbaijan is not Iran but Turkey, which rigidly sticks to the principles of secularism. In other words, the national nearness between Turks and Azerbaijanis turned out to be more important than common religious belonging: as is known, in Iran like in Azerbaijan the majority of the population consists of Shiites.
Implementing in the consecutive order the principles of secularism, the Azerbaijani officials automatically appear against any projects at the state level, if the word "Islamic" is mentioned, even when it concerns such phenomenon as Islamic finances and Islamic banks, in particular.
All initiatives aimed at making amendments in the banking national legislation to eliminate hindrances to creation and functioning of Islamic banks run across incomprehension of regulating organs usually citing article 7 of the constitution of Azerbaijan, which stipulates that Azerbaijan is the democratic, legal, secular and Unitarian republic, while its article 18 proclaims separation of religion from the state and legal equality of all confessions.
The Islamic Bank of Development and other members of IBD group repeatedly applied to the government of Azerbaijan with the request to give support to the process of reformation of the banking and tax legislation for the purpose of eliminating obstacles to development of Islamic banks; however, the Central Bank usually demonstrates its reserved position concerning Islamic banking affairs. In Azerbaijan there is no legal and normative basis for development of this banking sector, according to E. Rustamov, the chairman of the Central Bank. As he thinks, the perspectives of inculcation of Islamic banking in the country will be regarded within the framework of the general strategy of the banking system's development and will be appraised from the point of view of a probable benefit to the economy of Azerbaijan given by the Islamic banks.
The other criterion taken into account by the Central Bank is as follows: the mentality of Azerbaijanis. Should the principles of Islamic financing coincide with national mentality, it might be possible seriously to think about development of the Islamic banking affaires, to the mind of the chairman of the Central Bank. According to him, the
Azerbaijani mentality combines modernism, European thinking and national originality; at the same time, any probable model should be tested.
Except subjective reasons on the way of development of Islamic methods of financing in Azerbaijan, there exist also objective obstacles. The banking sector of Azerbaijan is characterized primarily by the inadequate development of capital markets, a weak transparency of the banks and gradual and small alleviation of dominance in markets on the part of state banks. In terms of capitalization, the banks of Azerbaijan are inferior to the banking systems of Russia, Ukraine and Kazakhstan.
Taking into account the above said, one should not be surprised that the sole Islamic bank in Azerbaijan is not marked by Transparency and openness. According to all official documents, "Kausar Bank" is a typical traditional bank. It should be said that information on "Kausar Bank" as well as on businessmen trying to arrange their business in accordance with shariat is disseminated mainly by word of mouth and not by means of advertising.
The documents of "Kausar Bank" actually do not contain Arabic terms to indicate the financial methods, which correspond to shariat. And what is more, in the official information on the bank disseminated in Azerbaijan the part devoted to its Islamic feature is reduced to a minimum. For instance, the booklet in English characterizes activities of the bank as "Islamic banking", while in the booklet printed in the Azerbaijani language the term "Faizsiz qazanc" is used, which means in English "Non-interest banking".
The leadership of "Kausar Bank" is not in a hurry to advertise its services not only for political reasons. The information on the bank is disseminated mainly via the system of social ties. As a consequence of this reserved policy carried out by the leadership of the bank it is possible to mention that many Muslims in Baku simply do not know
that the Islamic bank was functioning in the country for more than five years.
"Kausar Bank" is one of the first commercial banks in Azerbaijan. It received its license in time of the Soviet Union in 1998 and up to September 2001 was known as "Universal Bank". On 21 October 2002, the National Bank of Azerbaijan gave "Kausar Bank" a new license for carrying out its banking activities of all types. The same year, "Kausar Bank" started the process of clearing its former credit and deposits port-folios from riba and also ceased its participation in all transactions including money-lending. All interest liabilities of clients to the bank were sold to a specialized company.
"Kausar Bank" is recognized by the world Islamic banking community as an Islamic bank. The bank is a member of the General Council for Islamic Banks and Financial Institutions and of the Organization for Accounting and Audit for Islamic Financial Institutions. At the same time, it is early to say that "Kausar Bank" provides the complete line of Islamic banking products. At present, "Kausar Bank" proposes for its clients only four Islamic banking products: 1) opening and processing of investment accounts on the basis of mudarab mechanism; 2) credit arrangements for business according to musharak mechanism; 3) credit arrangements for physical and legal entities by means of purchase and sale of the bank's accepted bills; 4) financing purchase of automobiles, household technique etc. by means of mechanism idzhara va iktina.
Due to existing in Azerbaijan legislative limitations for banking trade activities, murabakh mechanism may not be used by "Kausar Bank". The lack of adequate financial resources also hinders "Kausar Bank" to extend its activities.
"Kausar Bank" has no chance to apply some Islamic agreements and realizes its potential in financing halal sectors of national economy.
As an example one may cite the project of $ 100 million for construction of four high buildings in Baku, where "Kausar Bank" took part in its financing.
In 2004, "Kausar Bank" signed the agreement with the Islamic Corporation for Development (ICD) of the private sector (established in 1999 as an affiliated structure of IMF). Under this agreement, the ICD assumed obligation to give financial support to implementation of a rather great part of the project. The same year, the agreement was concluded on purchase by ICD of a part of stocks of "Kausar Bank". For a long time the project could not be implemented, since the main condition of the constructors was the complete financial support to the construction. Further, the project was essentially amended. For instance, the construction of the skyscraper of 45 stories was changed building four houses of 24 stories. Afterwards, the decision was taken to create a complex of two 39 - stories buildings of 170 thousand sq. meters. It was possible to get $ 300 million, provided by Korean traditional banks, for the sake of implementation of the project. In sum, the participation of "Kausar Bank" in this project was reduced to a minimum, and the request to get $ 5 million from ICD was dropped. The floor-space of the skyscrapers was projected to sale for officers and apartments. The managing company "Baku Pride" was founded by the Korean party with minimal participation of an Azerbaijani partner close to the leadership of "Kausar Bank".
It seems that up to present the Islamic financial institutions in Azerbaijan may realize their potential in the best way exactly by means of making investments in business, which does not contradict shariat, and not by extension of their products' line. It is proved by creation of the Caspian International Investment Company (CIIC), which started its activities on 13 June 2008. Its establishment was the outcome of the agreement on creation of the investment company working on the basis
of Islamic principles; it was signed in 2006 at the international investment conference, organized by Islamic Bank of Development in Baku.
The owners of CIIC are the Islamic Corporation for Development of Private Sector (75%) and the belonged to the state Azerbaijani Investment Company (25%). The main task of the new company is the attraction of foreign investments to Azerbaijan and the participation in the world market. As projected, for the next two years the capital of CIIC will be raised almost 23 times up to $ 70 million.
At present, CIIC takes part in financing two investment projects, and the company's analysts study over ten perspective proposals. The priority directions of the activities of the company are as follows: agriculture, pharmaceutics, construction materials' production, the services' sector. All investments of CIIC may be made only in the spheres allowed by shariat, including purchase of the stocks in other companies and by becoming their stockholders.
The cooperation of Azerbaijan in the sphere of investments with Islamic financial structures is not limited with the projects, which get financial support of CIIC. On 25 May 2007, the Financial House of Kuwait and the Azerbaijani Investment Company (AIC) signed the memorandum on intentions. In March 2009, the Kuwait-Azerbaijani Investment Company (KAIC) with fixed capital of 410 manats ($ 500 thousand) was founded. By the end of 2010, the stockholders of intend to raise it up to $ 20 million (75% belongs to "Turkapital" - a subsidiary company of Kuwait Financial House, while 25% - AIC). The priority direction for KAIC and AIC is financial support to the projects, which do not contradict shariat, in the spheres of commercial realty, agro-industrial complex and logistics. The other significant direction of the company's activities is providing consultative services to Azerbaijani and foreign companies.
Various foundations of the countries of the Persian Gulf (the Saudi Development Foundation, the Abu-Dhabi Development Foundation and others) also carry out a rather great investment activities. However, up to present, the Islamic Bank of Development (Azerbaijan joined it in 1992) remains the biggest Islamic financial institution, which makes investments in Azerbaijan. In 2009, the IBD allocated $ 201.5 million for financial support to construction of electric station Cenub on the basis of istisna mechanism. Within the three years program of the IBD, adopted in spring of 2010, the bank plans to allocate $ 404.6 million for various infrastructural and agricultural projects in Azerbaijan. About 25% of the total amount of already made investments of the IBD in Azerbaijan were directed to financing the agrarian sector, one third - to improvement of transport infrastructure, development of small and middle business, amelioration of living conditions of forced migrants.
At the same time, the IBD is engaged in making projects for creation in Azerbaijan of an Islamic bank. Nik Zeinal, former director of regional office of Islamic Bank of Development in Almaty mentioned not once that the IBD was ready to render assistance to Azerbaijan in order to establish an Islamic bank, if the government of the country initiates this project. Akhmad Mukhammad Ali, the present resident of the IBD spoke about it in his interviews.
The lack of acceptable for Islamic banks legislation and the guarded attitude to Islamic banking affairs on the part of the regulating bodies restrain the initiative of other Azerbaijani banks in the sphere of Islamic methods of financing. For instance, in October 2007 the International Investment Bank (IIB) of Bahrein purchased 49% of stocks of Azerbaijani "Amrakhbank". As is known, the IIB gives support to development of Islamic banking affairs both in Muslim and non-Muslim countries. In a short period of time after purchase of
"Amrakhbank", the leadership of the IIB made public the plan of its transformation into a valuable Islamic bank proposing a full list of Islamic banking products. However, these intensions were not realized due to the same uncertainty of the legal status of the future Islamic bank.
To the author's mind, one should not appraise the future of the Islamic banking affairs and Islamic financing in a very pessimistic way in Azerbaijan. Taking into account the interest to Islamic financial services in the republic, given the guarded position of the authorities, it is possible to make a prognosis that the development of Islamic banking will go on according to the same scenario as in Turkey: from non-recognition as valuable banks to giving them the special status (partner banks).
"Islamskaya ekonomicheskaya model i sovremennost", M., 2010, p. 277-28.
Askar Akayev,
first president of the Kyrgyz Republic (1990-2005)
KYRGYZSTAN: DISTURBING PREMONITIONS
The people's revolt in Kyrgyzstan in April 2010 instantly liquidated the regime of Bakiyev and set a new stage in the post-Soviet history of the republic. A group of politicians headed by R. Otunbayeva in a self-styled way proclaimed itself as the Provisional government. Being aware of the danger, they, nevertheless, did not take measures to prevent bloody inter-ethnic clashes in the south of the republic. The conflict resulted in several thousand victims and caused vast material damage. The members of the provisional rule in a way of voluntarism in the state of emergency imposed to the country the referendum and hastily adopted new constitution, which proclaimed Kyrgyzstan a
