IN DEBT BY THE STANDARDS OF RELIGION

Borrowing charges have existed for as long as mankind can remember, or at least since the days of Babylon. Public opinion towards it - like towards evil - has remained unchanged for thousands of years. Practically right until the Middle Ages usury was totally forbidden and was illegal.

With the emergence of Christianity bans on borrowing charges were based on the statutes of the Holy Scriptures, including the New Testament. Specifically, St. Luke's Gospel states: "Lend and expect nothing back, for your reward will be great." And this from one of the verses of the Qoran: "Oh ye, who believe! Fear Allah and give up what remains of your demand for usury, if ye are indeed believers…But if ye turn back (from borrowing charges), ye shall have your capital sums. Deal not unjustly, and ye shall not be dealt with unjustly."

Along with the capitalist means of production, which came into being in Europe at the start of the 17th century, there was also a lifting of the ban on collection of borrowing charges. Some time later, around the end of the 19th - beginning of the 20th century, this ban ceased to operate in the Middle East, too. And yet, this non-conformity with the provisions of the Koran led to a situation where, since the 1960s, first in Egypt and then in other parts of the East, with varying success, financial structures began to emerge which excluded borrowing charges in their activities. A decade later, a new phenomenon appeared in the world of finance - Islamic banking which now numbers, according to the Thomson Reuters agency, 532 organizations with a total capital of about 1.8 trillion dollars.

Islamic banking is an alternative to traditional banking. It amounts to a ban on borrowing charges, increased risk and ambiguity. In addition, one may not invest money and obtain income from prohibited types of activity, such as the production and sale of pork, alcohol, arms and also the industry of "base feelings" - prostitution, pornography and gambling. The Islamic financial system has the same tools as an ordinary system but it is so organized that the interest in credit arrangements is replaced by the offer of a share in a company and, consequently, its profit; i.e. the bank shares all risks with its borrower. 

Enterprising Europe has kept abreast of the fast-growing rates of this process. The first Islamic bank opened in 1978 in Luxemburg. Now, Citibank, HSBC, J.P. Morgan, Goldman Sachs, Credit Suisse and many other banking giants have Islamic "subsidiaries". In Britain 20 of its 150 banks offer financial services within the framework of Shari'ah law. Such trans-national giants as General Motors, IBM, Alcatel and Daewoo also use the services of Islamic banks. According to Ernst & Young, by 2018 the world assets of Islamic banks will amount to 3.4 trillion dollars. 

The restoration of independence in the countries of the former USSR with a primarily Muslim population also saw an increase in interest in Islamic banking. In Russia, where there are over 20 million Muslims, since the middle of the 1990s attempts were also made to introduce Islamic financial mechanisms. However, until recently, they were largely unsuccessful.

For a long period of time the main propagandist of Islamic banking in Russia was the Badr-Forte Bank, which was set up in the early 1990s. As the only Russian member of the influential International Association of Islamic Banks, it promoted Russia's financial interests in the Middle East, Malaysia, Indonesia, Pakistan, Turkey, and so on. Accordingly, the business interests of these countries in Russia were carried out through it.

However, in 2006, the Central Bank revoked its licence. Literally straightaway, it was announced that among its shareholders would be a giant of the international financial system - the Islamic Bank of Reconstruction and Development. There was much speculation - from pressure from the US State Department to the intrigues of rivals on Russia's domestic market.

The main operators in Russia now are "Islamic financial companies" whose services are similar to the banks'. For example, the Kazan finance house Amal, which provides individuals and corporate bodies with Islamic funding in the form of murabaha (form of credit sale) and ijara (leasing agreement). Two other players in this market are located in Makhachkala - Lariba Finance (since 2011) and Masraf (since 2013).

A "subsidiary" of a leading Islamic bank, Melli Iran, also operates in Russia. Islamic Window (a branch of a commercial bank operating on the principles of Islamic banking) operates in Asia-Bank, MBA-Azerbaijan and Tataroprombank. These services will soon be available at the Sberbank [Savings Bank].

The main problem in this sphere is that nowhere in Russian legal documents does it state what an "Islamic financial institution" or "a bank operating on Islamic financial principles" actually are. Experts are of the opinion that in order for Islamic financial instruments to operate appropriately, amendments need to be made to 17 federal laws: the Tax Code, the law on banking activity, the law on the securities market, and so on.

In the summer of last year, the Association of Russian Banks (ARB) proposed the adoption of a special federal law "On Islamic finances", which would regulate the activities of Muslim credit organizations in the Russian Federation, and also cover the separate licensing of such banks and the creation in the Central Bank of a central Shari'ah council which would ensure that the banks' operations complied with the principles of Islam. 

However, the ice was broken only when Russia's economy began to experience an acute shortage of financial capital because of the sanctions imposed by the West. This spring, the State Duma recalled the need to adopt amendments to the law, removing the obstacles to introducing Islamic banking into Russia. Following this, in October a working group "to study the legal, regulatory and organizational mechanisms and opportunities for providing partnership (Islamic) banking services in the Russian Federation" was set up at the Bank of Russia. The Central Bank also supported the idea of launching a pilot financial model operating on Shari'ah laws in the republics of Tatarstan and Bashkortostan, as well as regions of the North Caucasus. The Savings Bank, whose president, German Gref, was for some reason in a hurry to announce the creation of a full-fledged Islamic bank by the end of this year, also signed up to this process.

And so, literally the other day Islamic banking found itself an Orthodox associate, whose sponsors proposed joining forces to promote an interest-free financial system. It has been revealed that the Russian Orthodox Church (ROC) and the Council of Muftis of Russia have set up a joint commission to support traditi-onal, or partnership finance which will inter-act vigorously with the legislative bodies of power, line ministries and the Bank of Russia.

The co-chairs of the commission are the deputy chairman of the Council of Muftis of Russia and the Spiritual Board of Muslims of the Russian Federation, Rushan Abbyasov, and the head of Synodal Department for the Cooperation of Church and Society of the Moscow Patriarchate, Archpriest Vsevolod Chaplin.

Incidentally, when a year ago Vsevolod Chaplin proposed the setting up of a system of Orthodox banking, he alluded to the example of Islam which rejects borrowing charges but this "did not diminish its effectiveness". Somewhat bemusing are statements that: "We need a joint system to protect our national interests. We cannot rely on western systems - either on Mastercard, Swift, or anything else. We need to cleanse our financial system of western hypocrisy, double standards, pseudo-liberalism, pseudo-democracy, western financial pyramids…" This project then appears so very political and opportunistic. However, representatives of the ROC claim, debates about setting up so-called Orthodox banking have been going on for the last 20 years. Its principles are similar to Islamic - shared funding without the use of borrowing charges; rejection of speculative activity (including foreign-exchange and stock markets); a ban on investing in spheres of activity that do not comply with ethic principles; the spiritual purity of business - repeated infringement of the norms of Orthodox morality leads to a denial of services, and so on. 

According to the opinion of representatives of both religions, it is these financial relations that are traditional, and not interest-bearing (usurious) financing, which has spread all over the world relatively recently.

So, the efforts of two religions have been pooled together to form a representative body to promote financial principles and institutions based on the traditional values of the main religions. And with the emergence of such a powerful partner as the Russian Orthodox Church, the prospects for Islamic banking in Russia have become more realistic.