Clinton moderates statement on settlements

MARRAKESH, Morocco: Facing Arab criticism, US Secretary of State Hillary Rodham Clinton on Monday moderated her praise for Israel’s offer to restrain — but not stop — building settlements in Palestinian areas.

While Israel was moving in the right direction, she said, its offer “falls far short” of US expectations. Clinton said her praise of Israel’s offer to restrict Jewish settlement activity had been intended as “positive reinforcement.”

Her remarks Saturday had drawn widespread criticism from Arab states, which saw it as an about-face of the US position on settlements.

During a photo-taking session with her Moroccan counterpart, Clinton was asked about the Arab reaction, and she responded by reading a written statement designed to counter skepticism about the Obama administration’s views on settlements.

“Successive American administrations of both parties have opposed Israel’s settlement policy,” she said. “That is absolutely a fact, and the Obama administration’s position on settlements is clear, unequivocal and it has not changed. As the president has said on many occasions, the United States does not accept the legitimacy of continued Israeli settlements.”

She added, however, that Israel deserved praise for moving in the right direction. “I will offer positive reinforcement to either of the parties when I believe they are taking steps that support the objective of reaching a two-state solution,” she said. Clinton is flying to the south-central Moroccan city of Ouarzazate for an audience with King Mohammed VI. Later she will return to Marrakesh for talks with Arab foreign ministers.

She also is expected to meet separately with Saudi Foreign Minister Prince Saud Al-Faisal, who has rejected US appeals for improved Arab relations with Israel as a way to help restart Middle East peace talks, saying the Jewish state is not interested in a deal.

Arab League Secretary-General Amr Moussa said earlier on Monday he feared Obama’s drive to restart Israeli-Palestinian peace talks could be heading for failure over the settlement issue.

Moussa said Arab states shared the Palestinian position that resuming negotiations was futile without a freeze on settlement expansion. “I am telling you that all of us, including Saudi Arabia, including Egypt, are deeply disappointed ... with the results, with the fact that Israel can get away with anything without any firm stand that this cannot be done,” Moussa told reporters.
Source: Arab News

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Islamic Business Wins Academic Following

By HILLARY BRENHOUSE
Published: November 2, 2009

At semiannual meetings of the International Monetary Fund and the World Bank in Istanbul last month, talk was largely dominated, inevitably, by the economic crisis and its aftermath. But suitably enough, given the location, another topic also came to the fore: the role of Islamic finance, a fast-developing sector of the global banking industry that has remained remarkably resilient through the slowdown.

With the value of assets in Islamic banks now close to $1 trillion and the industry growing at an estimated annual rate of 15 to 20 percent, business students are increasingly eager to cash in. Universities are increasingly offering new postgraduate programs in Islamic finance to help them do it.

Islamic financial products comply with Koranic prohibitions against charging interest and investing in morally dubious industries, such as alcohol and pornography, and lending is based on profit-sharing. At a time when Western banking and financial models have been thoroughly discredited, Islamic finance is enjoying an enviable reputation as a more reliable way to invest. HSBC in the United Kingdom is one of many Western institutions that now offer, among other products, Shariah-compliant mortgages and bank accounts.

“There is a substantial shortage of people familiar with Islamic financial principals in Western banks,” said Philip Molyneux, head of the business school at Bangor University in Wales, which introduced M.A. and M.S. programs in Islamic banking and finance last year. “And they’re all realizing that the Muslim population is a client base that it would be in their interest to cater to.”

The British government has said it is committed to turning London into a robust Islamic financial center and a paper published by the Treasury in December called for the pool of people with the necessary training to be expanded “to keep up with the rapid growth of the market.” British business schools have moved fast to meet the challenge.

Bangor University introduced its one-year degree courses in Islamic finance after receiving a flood of inquiry from prospective students. Participants finish the programs by submitting a dissertation on a topic related to Islamic banking — for instance the market in Islamic bonds, known as sukuk. Enrollment has risen for this academic year to 29 students from just over half that number last year. Ten of this year’s students are employees of the Faisal Islamic Bank in Sudan, sent to Bangor to gain academic accreditation and improve their English.

According to Mr. Molyneux, about a third of this year’s M.A and M.S. classes has a background in Koranic study and is interested in becoming Shariah scholars. “Every bank, insurance company and investment firm that offers Islamic products has to have a Shariah board that screens their business and decides whether it’s compliant with Islamic principles or not,” he said. “Finding people who can interpret the religious tracts and understand the financial technicalities isn’t easy.”

Next academic year, responding to high demand, the school intends to introduce an M.B.A. in Islamic finance. “I suspect that there will be quite a bit of migration from the M.A. and M.S. to the more management-oriented M.B.A.,” Mr. Molyneux said. “The commercial sector is much more attracted to the M.B.A. than it is to the other degrees, which it often views — rightly or wrongly — as being too academic.”

Thom Polson, a 28-year-old Seattle native, enrolled in the M.A. program at Bangor after completing a postgraduate degree at the Institute of Islamic Banking and Insurance in London. His interest in the sector began when, traveling extensively through the Middle East, he could see that “Islamic banking was growing almost as fast as the skyscrapers.”

“I saw for the first time economic success working hand in hand with law and religion,” Mr. Polson said. “And it fit with the way I think about community.” Upon graduation, he plans to move to Switzerland and work in Islamic wealth management. His aim is to contribute to the conversion of “the huge amount of capital that is already there from the Muslim world to Shariah-compliant accounts,” he said.

City University’s Cass Business School, based in London’s financial district, was the first Western institution to offer an M.B.A. with a specialization in Islamic finance. Introduced in 2007, the two-year executive M.B.A. program is delivered at the Dubai International Financial Center. “It was a natural thing for us to hold the program in Dubai,” said Roy Batchelor, director of the executive M.B.A. program. “Students come from all over the Gulf region, and most of them are already professionals working in banking and finance.” Online learning is complemented by lectures, held four days a month by local Islamic finance specialists and Cass professors who fly in for the purpose.

The executive M.B.A. in Islamic finance follows the same track as the M.B.A. offered by Cass in Britain but includes several Islamic finance-specific courses. This option is not yet available at home, but things may be about to change. “We’re beginning to think that some modules should be offered at Cass in London as well because we keep receiving inquiries from U.K.-based students and financial institutions,” said Humayon Dar, an Islamic economist and Shariah adviser responsible for initiating the degree in Dubai.

The International Capital Market Association Center, at Reading University, runs a similar program. Its M.S. in investment banking and Islamic finance is taught jointly with the International Center for Education in Islamic Finance in Kuala Lumpur, where participating students spend their third semester, with an option of interning at an Islamic bank. Durham University, Newcastle University and the British Institute of Technology and E-commerce — the last of which offers an M.B.A. that includes a comprehensive, compulsory Islamic finance module — have also jumped at the trend.

Outside Britain, Reims Management School in France introduced a three-week elective course in Islamic finance, taught as part of its Master in Management program, last June. Home to the largest Muslim population in Europe, France is well positioned to tap into the interest the sector is generating. The Reims course will be offered during two sessions this school year to accommodate demand; last year, 30 out of 80 applicants had to be turned away.

Islamic finance postgraduate programs and courses have been slower to take off in the United States and Canada. An oft-cited reason is a scarcity of faculty who have the background and training that would qualify them to teach such programs. “It’s a fairly technical niche,” said Ibrahim Warde, author of a soon-to-be-updated reference book, “Islamic Finance and the Global Economy.” Professors of Islamic finance require knowledge of the religious and political-economic components, besides financial and legal ones.

Such is the challenge before the University of Toronto, where Walid Hejazi, an associate professor at the Rotman School of Management, has been in slow-moving discussions with the heads of the M.B.A. program to introduce an Islamic finance elective. But talks may accelerate if Islamic banks begin to set up shop in Canada. Canadian Business magazine reported in July that the federal Department of Finance was handling applications from institutions hoping to open Islamic units. The government has declined to elaborate.

One in-demand class on the industry is offered by Mr. Warde at Tufts University’s Fletcher School of Law and Diplomacy, in Massachusetts. “Some of our students do go to work in the Islamic world, but the majority end up at Western banks that have Islamic operations,” Mr. Warde said. “So there is a growing Islamic financial sector in the U.S., but it’s still much smaller than that of the U.K..”

The Fletcher School offers cross-registration with Harvard — which does not yet run a class of its own — and Mr. Warde’s course is popular with Harvard business, law and divinity students hoping to improve their job prospects. Harvard’s Islamic Finance Project, I.F.P., meanwhile, coordinates seminars, research workshops and a biannual forum.

“It would be only natural for U.S. academic institutions to begin to explore this sector to maintain our country’s competitive edge and national graduate skill base,” said S. Nazim Ali, director of the I.F.P.. “The perception that this is just a Muslim field of study is entirely incorrect and something we are very keen to demystify.”

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Sukuk.me: Dubai's Enoc moves upstream with $2b Dragon bid

LONDON (Reuters) - Dubai’s Emirates National Oil Company (Enoc) has agreed to pay $1.9 billion to take control of Dragon Oil in a further push by the state-owned refiner into exploration, even as the emirate struggles under a huge debt burden.

Dragon’s committee of independent directors, formed after the bid approach was announced in June, advised investors to accept the 455 pence a share bid for the 48 percent of Dragon ENOC does not own, valuing the Turkmenistan-focussed oil explorer at 2.36 billion pounds ($3.88 billion).

Analysts said the stock was probably worth more -- Werner Riding at Ambrian said he still valued it at 500 pence a share -- but that it was the best offer investors were going to get.

“We believe that 450p/share is the minimum share price minority shareholders will accept ... and given that another bidder is not likely to emerge, the offer is likely to go through,” Taleh Musayev, oil analyst at Merrill Lynch said.

One hedge fund manager, who holds the stock, agreed: “It’s not great but it’s kind of there. I think it has a good chance of success,” he said.

Dragon said in a statement on Monday that the offer represented a 34.6 percent premium to Dragon’s closing price on the last trading day before it received the bid approach.

However, Peter Hutton, oil analyst at NCB brokers, recommended investors hold out for a higher bid and raised his price target for the stock to 805 pence.

Dragon shares traded up 8.5 percent at 445 pence by 1032 GMT.

----------Heavy debts

Enoc is a downstream-focussed company, operating service stations, fuel terminals and oil tankers in the Persian Gulf region.

Its investment in Dragon has largely been a financial one, industry sources said, and one of the key aims of the deal is to bring Dragon’s upstream oil and gas exploration and production expertise in-house, Enoc said.

Its acquisition of Dragon Oil is the first large-scale acquisition by a Dubai government entity in more than two years and comes as the emirate seeks to restructure a debt pile of about $80 billion.

Dubai, one of the UAE’s seven emirates, propelled itself into the spotlight as a tourism hub during a six-year oil-fuelled boom, but the downturn rocked its foundations based on excess lending and a transient expatriate population.

Enoc will fund the bid from its own cash and debt provided by Standard Chartered and the National Bank of Dubai, part of Emirates NBD ENBD.DU, Dragon said.

Any debts taken on to fund the acquisition need not be a drain on Dubai or Enoc for long.

Dragon had almost $900 million in cash on its balance sheet at the end of June, which some analysts believed it should have used to make acquisitions in the first half of the year when the credit crunch hit oil field prices.

Enoc could use the money to repay some debt taken out to purchase the 48 percent stake while Dragon’s strong cashflow -- the company generated $120 million in the first half -- could sustain a high level of gearing inside the company.

Dragon’s main assets are oil and gas fields in Turkmenistan, which has become a focus for international oil companies in recent years after a change in leadership led to a more open approach toward foreign investment.

Last week, Dubai raised $1.9 billion in the biggest Islamic bond sale from the Persian Gulf Arab region this year, marking the emirate’s return to the fixed-income market.

The government of Dubai launched a $6.5 billion bond plan in October, consisting of $4 billion euro medium term notes and a $2.5 billion Islamic bond, or sukuk, programme to help refinance debt and finance infrastructure development.

Dragon Oil was advised by HSBC and Davy Corporate Finance. Standard Chartered bank advised Enoc.
Source: Tehran times

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Islamic finance sector is coming into its own

The recent growth of Islamic finance has proved revolutionary for two reasons: it has provided access to new sources of capital and liquidity and, equally important, it has shown the world an approach whereby ethical values can be reconciled with financial returns.

Some sources say Islamic assets worldwide total between about US$700 billion (Dh2.57 trillion) and $1tn, up from $150bn a decade ago.

Some have argued that most Islamic banks, because they are new, have had neither the time nor the means to structure, in a Sharia-compliant manner, the sophisticated instruments that have caused the financial crisis. Others have argued that these sophisticated instruments go against the basic principles of Islamic finance altogether.

Immaturity, some say, may have prevented the Islamic finance industry from being affected by the crisis, meaning that it is now in a healthier shape and stronger position to rebound faster than its conventional peers and reap the benefits of the expected economic recovery. Unfortunately, such an interpretation does not bear much scrutiny.

If we look at the recent evolution of the sukuk, or Islamic bond, market in the Gulf and compare it with the conventional bond market, we see that the Islamic market has not taken advantage of its positioning

The volume of regional sukuk issuance in the first three quarters of this year has shrunk to $4.6bn from $8.7bn the year earlier, and from $11.4bn in 2007.

In comparison, regional bond issuance has gone to $37bn this year from $15.7bn and $8.2bn in the first three quarters of 2007 and last year respectively.

It is clear that issuers have resorted to standard means of financing rather than tapping into Islamic liquidity. The largest capital market deals this year have been conventional and the issuers have been sovereign or quasi-sovereign.


There have been only few GCC sukuk issuances in the first three quarters of this year, mainly from governments or sovereign entities such as the kingdom of Bahrain, the Government of Ras al Khaimah, the Saudi Electricity Company and Abu Dhabi’s Tourism Development and Investment Company (TDIC).

In 2007, the sukuk market accounted for almost 50 per cent of the total GCC capital market.

In the first three quarters of this year, it decreased to a meagre 11 per cent.


How can we explain this reversal? The crisis has revealed a fragility which is characteristic of a young and inexperienced market, with little homogeneous regulation and few unanimously approved rules. Debates have been raging among scholars about what the right Sharia-compliant structures should be.

Criticism of mudaraba and musharaka structures by prominent Sharia scholars in February last year has been well advertised. It has shown confusion across the market and reminded the industry that compliance with Sharia law is a matter of interpretation.


The crisis has also shown that Islamic finance is not a safe haven. For the first time in the short history of Islamic finance, GCC corporate sukuk have defaulted or are threatening to default.

The Sharia-minded Saad Group in the hands of Maan al Sanea, who founded the Islamic investment bank, Awal Bank, is reported to have defaulted, inter alia, on its $650 million sukuk issued in 2007.

The fate of the Saad Group exemplifies the hardships that a number of Sharia-compliant investment companies are going through, in particular in Kuwait where they have mushroomed on in an under-banked market.


It remains to be seen how local law systems deal with Sharia-compliant instruments in bankruptcy cases and whether Islamic creditors will be preferred over conventional ones in recourse to assets, given the asset-based nature of Islamic finance.

The crisis will no doubt allow Islamic finance to strengthen and help it reach a certain level of maturity.

The solution must lie in the themes that have been adopted by the conventional banking sector: better corporate governance and more homogeneous regulation.


The industry is ripe for consolidation and the recent announcements of mergers between Barwa and Alaqaria, two Qatari property developers that are Sharia compliant, and between Amlak and Tamweel, Islamic mortgage providers in the UAE, are testament to this.

These mergers demonstrate that Islamic finance has entered into a new phase of its young history, which should be the prelude to the construction of a compelling and comprehensive alternative to the conventional financial system.


The recent success of the TDIC’s $1bn sukuk issuance in Abu Dhabi (with an order book of $7bn and pricing within the spread of TDIC bond, issued in July this year, in the secondary market) testified to the deep appetite for Islamic assets. It showed that demand for solid, rated sukuk has now clearly outstripped supply.

The shortage since the start of the year that has exacerbated the “hunger” for sukuk bodes well for the regional market, announcing a strong revival of sukuk next year.

Source: The National

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Religions Fight Climate Change

LONDON – Harnessing the power of religion in resolving environmental problems, representatives of the world’s main faiths are meeting in London Tuesday, November 3, to accelerate the fight against climate change. “It’s about religions mobilizing their followers to act against climate change,” UN Assistant Secretary General Olav Kjorven told Agence France-Presse (AFP).

"We expect to send a strong signal from religion to governments that we are extremely committed.”

Representatives from nine major faiths, including Islam, Christianity, Judaism, Hinduism, Buddhism and Sikhism, are set to meet at Windsor Castle, near London, to raise the alarm on climate change.

Themed “Faith commitment for a Living Pl”, the gathering is co-staged by the UN and Prince Philip's Alliance of Religions and Conservation (ARC).

It will unveil programs that "could motivate the largest civil society movement the world has ever seen," said Kjorven.

UN scientists warn that fossil fuel pollution would raise temperatures this century, worsen floods, droughts and hurricanes, melt polar sea ice and damage the climate system for a thousand years to come.

The Intergovernmental Panel on Climate Change (IPCC) says by 2080 up to 3.2 billion people -- one third of the pl's population -- will be short of water, up to 600 million will be short of food and up to 7 million will face coastal flooding.

Officials from around the world have been meeting over the last two years, following a "roadmap" designed to lead a December 7-18 conference in Copenhagen that will build a new pact on climate change beyond 2012.

But the negotiations are mired in discord.

Rich and poor countries are squabbling over how to apportion curbs in carbon emissions, finance a switch to lower-pollution technology and shore up defences against climate change.

Successive rounds have given birth to a baffling draft text of hundreds of pages, swathed in brackets denoting discord.

"The problem is deeper than economics and money,” Victoria Finlay, ARC’s director of communication, said.

“It's much more about the moral idea of 'Nature is God's Nature, so we have to be kind to it'."

Powerful Force

Faith leaders hope that the meeting will accelerate the fight against climate change.

"Global warming and its impacts cannot be looked at just as a material problem,” said Stuart Scott, the head of Interfaith Declaration on Climate Change.

“The root causes are spiritual."

Eighty-five percent of humanity follow a religion, a figure that shows the power of faith to move billions.

In addition, faith-based groups own nearly eight percent of habitable land on Earth, operate dozens of media groups and more than half the world's schools, and control seven percent of financial investments worth trillions, according to ARC.

Muslim leaders are leading the fight against climate change.

"We don't want to distance ourselves from governments, we are all in the same boat," said Mahmoud Akef.

"If we devastate the pl, we'll have no place else to live."

In July, some 200 Muslim leaders gathered in Istanbul to forge a seven-year climate change action plan.

One of the measures adopted was the creation of a "Muslim eco-label" for goods and services ranging from printings of the Qur’an to hajj.

For Peter Newell, a professor at the University of East Anglia in England, religion has the traction to haul a truly global movement.

"It would be a huge mobilising force if people started to frame the issue of climate change in religious terms."

Source: IslamOnline

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Obama Lost Settlements Battle: Experts

WASHINGTON – The Obama administration has lost face after backtracking on its demands for a full freeze of Jewish settlement building in the occupied Palestinian territories and needs a new approach to revive the staled peace talks, analysts agree. "Israeli Premier Benjamin Netanyahu has produced nothing short of a masterful performance," Aaron David Miller, an analyst with the Woodrow Wilson International Center for Scholars in Washington, told Agence France-Presse (AFP) on Tuesday, November 3.

"He's outmaneuvered us. He's ingratiated himself to the American Jewish community and the administration."

Obama has personally and repeatedly called for a total freeze of settlement construction to help re-launch the peace talks between Israel and the Palestinians.

Hawkish Netanyahu snubbed the calls and defiantly insisted for months he would never order a construction freeze.

Eventually, the Obama administration caved in and seems to have abandoned its earlier stance on liking the settlement freeze with the talks re-launch.

Secretary of State Hillary Clinton earlier this week asserted that Palestinian President Mahmoud Abbas should resume peace talks describing demands for a settlement freeze in advance as an unaccepted "pre-condition".

"He's put Abbas on the defensive and he's said 'no' to the great power, without cost and without consequences," Miller said about Netanyahu.

The international community considers all Israeli settlements on occupied Palestinian land illegal.

Under the internationally-backed roadmap, Israel must freeze all settlement activities and vacate all settlements constructed after March 2001.

There are more than 164 Jewish settlements in the West Bank, eating up more than 40 percent of the occupied territory.

New Approach

Analysts believe the Obama administration needs a fresh approach to restart the Middle East peace talks. "They need to do some fundamental rethinking about what their overall objective is and how they are going to achieve it," said Miller, who advised six secretaries of state on Arab-Israeli negotiations.

Amjad Atallah, a former legal adviser to the Palestinian Authority, agrees.

He noted that the US was pursuing "a business-as-usual negotiating strategy" that can only ultimately lead to a worsening situation and even violence.

"They thought once it got into permanent status negotiations, things would go relatively quickly," he told AFP.

"What they didn't count on was the Israeli government's intransigence."

Atallah said the American U-turn on the settlement issue has only weakened Abbas further and made him more reluctant than ever to resume talks with Israel.

"They (Palestinians) argue that if the US was not prepared to back up what it said on settlements, why would it be prepared to back up what it might say on borders?"

The American U-turn on the settlement issues has sparked Arab anger.

"I am telling you that all of us, including Saudi Arabia, including Egypt, are deeply disappointed," Arab League Secretary General Amr Moussa said ahead of a meeting with Clinton Monday.

America's top diplomat tried to reassure Arab countries.

"The Obama administration's position on settlements is clear and unequivocal," she told a meeting with Arab foreign ministers.

"It has not changed. The US does not accept the legitimacy of continuing Israeli settlements."

Atallah said the US needs to devise a diplomatic strategy that matches the "high-minded principled recognition" that the Arab-Israeli conflict threatens its

Source: IslamOnline

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