Britain is to become the first Western nation to issue bonds approved by Muslim clerics in line with sharia law, which bans conventional loans involving interest payments as "sinful". The scheme would mark one of the most significant economic advances of sharia law in the non-Muslim world.
It will lead to the ownership of Government buildings and other assets currently belonging to British taxpayers being switched wholesale to wealthy Middle-Eastern businessmen and banks. The Government sees sharia-compliant bonds as a way of tapping Middle-East money and building bridges with the Muslim community.
But critics say the scheme would waste money and could undermine Britain's financial and legal systems. […] Other Western nations have been reluctant to issue Islamic bonds. In the United States the bonds are banned partly as a result of claims that the money could be linked to terrorism. […]
However, The Mail on Sunday has established that Chancellor Alistair Darling is ready to give the go-ahead to sharia-compliant bonds – known as "sukuk", an early Arabic form of cheque. Treasury officials have been working behind the scenes for months on the plan. […] Treasury officials say the aim is to attract big investors as well as making it easier for British Muslims to invest in National Savings products at banks and post offices. The Government has already backed Islamic car loans and mortgages.
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