The Belt and Road Initiative and the influence of Islamic economies

Abstract

While the name ‘Silk Road’ connotes significant Chinese influence, in fact since the eighth century the old land route ran mostly through Islamic countries and areas, from present-day Xinjiang to Istanbul, and the old sea route passed through Islamic trading principalities for centuries. Modern Islamic economies, and concepts of Islamic economics, will exert considerable impact on the Belt and Road Initiative (BRI, also known as OBOR) development programmes. Although a non-Muslim majority country, China has a longer, deeper and more influential history of cultural interaction with Islam than any other large country or major culture, save perhaps India and Indian culture. The new ‘West’ for China consists of countries with great variety of Islamic economies, and so I argue that China has certain unique advantages to engage with Islamic economies and utilise Islamic banking and finance. Using Kazakhstan, Pakistan and Iran as examples, this paper argues that variation across modern views of ‘Islamic economics’ not only results in challenges but also holds promise for BRI development strategies in countries with Muslim majorities.

Keywords:

• Islamic economics
• BRI and Silk Road
• China
• Kazakhstan
• Pakistan
• Iran
• infrastructural investment

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 The Australian Government has resisted generally participation in BRI projects. For background, see Coorey (2018) and Laurenceson and Shi (2017).

2 Khan (2015, 59–60) contrasts Indian Subcontinent Islamic Scholar Syed Abul Ala Maududi (1903–1979) – often called the father of Islamic economics – with another scholar’s views on riba/interest: ‘For Yusuf Ali the opposite of charity is usury; for Maududi the opposite is interest’.

3 Tianma Xingkong in Chinese, author’s translation.

4 Late 19th-century leader of Islamic Modernism movement who called for a unification among Muslims to counter Western influence.

5 Note that an alternative route, mentioned in Kazakhstan section, involves train-to-ferry to Baku, where a newly upgraded railroad runs to Kars (Turkey) for shipping onward (Economist 2018).

6 The WIEF was postponed after the Malaysian election in May 2018 and has not been rescheduled as of this date.

7 Please visit the AIFC website at https://www.aifc.kz/.

8 Note that El-Hawary, Grais, and Iqbal (2004, 27) note: ‘… the Malaysian Islamic Banking Act (1993) refers to banking as a “lending business” and investment accounts are considered to be liabilities’.

9 Deputy Minister Fakhrieh-Kashan has been juggling attempts for three years to arrange financing for the purchase of 100 new aircraft from Boeing and Airbus for Iran Air. When the Iran Nuclear Agreement was signed, Boeing and Airbus quickly agreed to the sale and to provide assistance with financing. The United States has forced both out of their earlier promises, and only three aircrafts were delivered. At year-end 2017, the Iranian lead economic newspaper Financial Tribune (2017) announced China would fund purchase, but back channel US pressure may make it difficult for either Boeing or Airbus to deliver. Such pressure not only keeps Iran Air’s average fleet-age at over 20 years old, but retards or even removes the possibilities of servicing incoming newer planes should Tehran attempt to build on its hub position.