Can following Islamic economic principles make us immune from the effects of current and future crises?
Can following Islamic economic principles make us immune from the effects of current and future crises?
The International Monetary Fund (IMF) has predicted a difficult 2023 as it slashed growth forecasts and forecasted economic contraction in many countries. Which will mean an unwanted global crisis. Many Islamic countries will be trapped in this crisis.
That is why Islamic countries need to build their economic capabilities. Building the capacity to meet food and energy needs without dependence on other parties is very important for Islamic countries. This is because food and energy security are pillars of national resilience and defense as well as pillars of development in other sectors. The inability of a country to achieve food and energy independence is a form of weakness of that country. Dependence on other countries will lead to disruption of resilience and security. Therefore food and energy imports are not a wise choice for a country that wants to grow strong. It is fitting for Muslims to measure their capabilities while trying to initiate energy and food independence.
Naturally, Muslim countries are rich and have sufficient energy and food availability. Oil reserves (proven oil reserves) in all Islamic countries are 998 billion barrels. Total crude oil production in 2019 was around 12 billion barrels per year. In 2020 this production fell due to the Covid-19 pandemic as the world’s consumption fell. The largest oil-producing countries are Saudi Arabia, Iran, Iraq, Kuwait and the United Arab Emirates.
Their gas reserves are 117 trillion cubic meters. Annual production is 1.3 trillion cubic meters or the equivalent of 8.8 billion barrels. Currently, nearly half of oil and gas production, which together is around 20.8 billion barrels, is exported to the US, European Union or China. Total energy consumption in Muslim countries is equivalent to 10.4 billion barrels of oil per year.
For food, staple food grain production is 425 million tons a year. The problem is many of these grains are exported to developed countries because the fields have been contracted to foreign businessmen.
The meat production is estimated at 36.8 million tons. The largest meat-producing Muslim countries are Turkey, Pakistan, Indonesia, Iran and Egypt. If this is divided by the population, you will get a figure of 21 kg of meat per person per year or 58 grams per person per day. This is a small number for daily nutritional composition. However, Muslim countries have varied availability of meat, namely fish, poultry or vegetable protein substitutes for meat such as tofu and tempeh. Based on this, the Islamic world does not need other countries for energy and food. It is not fitting for Muslim countries to have the phenomenon of poverty, acute hunger or malnutrition.
Building a Global Market in the Islamic World
Indeed, Islam has a unique way of turning a country into an independent and anti-crisis state. Implementation of Islam in totality will make the country self-sufficient. From the characteristics of Islamic economic politics that humanize humans, ownership arrangements, and crisis-resistant currency to a market based on the real sector.
First, the characteristic of Islamic economic politics is it humanizes humans. Islamic Economic Politics is a guarantee of the fulfilment of all primary needs (clothing, food and shelter) for everyone as well as the fulfilment of their secondary and tertiary needs according to their level of ability as individuals who live in a certain society that has a distinctive lifestyle.
To realize this, the State can take a series of policies to fulfil domestic needs. Export is not the main goal if the needs of the domestic community have not been met. For the availability of energy and food to be available in sufficient quantities, the State can carry out the extensification and intensification of food and energy. Develop expert human resources, and support technological research and development of the food industry so that all related needs can be met without depending on imports. Starting from fertilizers, medicines and other farming production facilities. To ensure that injustice does not occur in the market, the State exists to create justice, from ensuring that there is no bottleneck in the economic supply chain due to the behavior of individuals who like to hoard food; to supervising the process of formation of prices according to market mechanisms; to the potential for tyranny against traders in the market due to thuggery and unscrupulous persons.
Second: Ownership settings. In Islam, the concept of ownership is divided into three, namely: (1) private property, (2) public property, and (3) state-owned. Energy is included in the category of public property. The food business is included in the individual category. Regarding individual ownership, the State only ensures that there is no market distortion and that the State punishes fraudulent, unjust and hoarding of food products. There is no special treatment for certain individuals in the food business. With that, the exclusivity of the food market in Islam can be prevented. The market in the Islamic world is an inclusive market that provides equal rights for all citizens to do business in a way that is permitted by sharia.
As for energy, Islam views the law of origin belongs to the people. Energy products by themselves are not goods that may be traded. The community must enjoy energy at a low price. The implementation of Islam by itself rejects all forms of corporate control of the energy sector. The Khilafah State will never allow private companies to control energy, let alone foreign private companies. If the Khilafah is established, then all private ownership of the energy sector will soon be taken over by the State. In addition to existing energy sources, the State seeks to develop technology to intensify and extensify energy; it also strives to produce new and renewable energy sources.
Third: A crisis-resistant currency. One of the culprits of the world crisis is paper currency that is not based on gold and silver. As a result, the world is very prone to experiencing a weakening of the exchange rate, the value of money continues to weaken from time to time, and the world experiences non-stop inflation. In Islam, the currency must be gold and silver standard. Currency with a silver-gold standard has a stable exchange rate and is resistant to inflation.
Fourth: Real sector-based market. Islamic economics is an economy based on the real sector. Islam does not recognize the non-real sector as in the capitalist economic system. Islam views economic activity only in the real sector, such as agriculture, industry, trade and services. It is from this sector that economic activity is encouraged to develop forward.
Wallahu’alam Bisshawab
