Sunday, July 03, 2005

Al-Sanhuri on reviving Islamic Jurisprudence, and prelude on Rashid Rida's analysis of Riba in contemporary transactions

I picked up a copy of Al-Sanhuri's memoires (published by his daughter and son-in-law) in Cairo last week. Apparently, an earlier version of those memoires were published in 1988, but not widely circulated. I picked up my copy at Madbuli's, and it was published by Dar Al-Shuruq, Madinat Nasr, Cairo, 2005 (

Journal entry #160, pages 150-1, marked: Paris - 24 February, 1924 is entitled 'Ihya' Al-Fiqh Al-'Islami. The point made by Sanhuri is the exact antithesis of the current form-based approach in Islamic finance, and indeed in all aspects of adherence to classical jurisitic opinions on various subjects. The following is a translation of Al-Sanhuri's recipe for a viable and contemporary Islamic jurisprudence:

I think that the foundation upon which revival of Islamic Shari`a may be built has to proceed as follows:

(1) Distinguishing pure religious doctrinal belief (تمييز الاعتقاد الديني المحض) from Shari`a as a law organizing and regulating (لتنظيم) relations among human beings (Fiqh, or the science of detailed rules, الفقه أو علم الفروع or branches of knowledge).

(2) Within the domain of fiqh, the part dealing with law (separated from the part dealing with creed and acts of ritual worship) should be considered, and from it inferred general principles of Islamic Shari`a (القواعد العامة للشريعة الإسلامية), which principles -- by virtue of their generality -- can be validly applied in every time and place. Those principles are considered (أصولا للشريعة الإسلامية) foundations of Islamic Shari`a .

(3) Those foundations are immutable (by virtue of being principles and foundations), but the applications differ (first) across time, and (second) across nations and communities. Thus, there must be foundations of Islamic Shari`a that are unchanging, and details of Islamic Shari`a that change with time and place. It is thus meangingful to assert that the foundations are the same, but the details are decided in particular centuries and particular lands/countries. That is the meaning that should be given to the different Juristic Schools/Guilds (مذاهب) in Islamic Shari`a, such as the School of Imam Abu Hanifa. Thus, this school/madhhab must be understood as an application ot the foundations of Islamic Shari`a for the time and region in which it was applied, and that it is a manifestation of Islamic Shari`a only within those [spacio-temporal] constraints. Thus, it should [only] be said that the details that were accepted in this specific time and that specific region were such and such. This does not imply tha tthose details must be accepted in all times and all regions. Rather, every region in every time must infer their own detailed jurisprudence based on the specific circumstances thereof. This does not mean that we ignore or drop the detailed rulings developed with admirable rigor in other times and regions. Instead, the past must be connected to the present in a manner that does not prevent contemporary progress, while maintaining a connection to the past, to avoid negating the universal unity of Islamic Shari`a.

This is the principal foundation upon which I beliee a valid revival of Islamic Shari`a can be effected, and every one of hte three points listed above requires further careful investigation.

I add here that we should not limit revival of Islamic Jurisprudence as a law governing contemporary Muslims, but as one for non-Muslims as well. This does not mean forcing non-Muslims to accept principles that are not accepted by their beliefs and various religions -- which should be fully respected. Rather, it means that the movement to revive Islamic Shari`a must be built on foundational principles that do not contradict those other religious beliefs. This, in turn, requires accepting two principles:

1- There should be collaboration in this reform movement between Muslims and other oriental (شرقيين) non-Muslims, including legal scholars and social scientists.

2- A foundational principle -- that has not been sufficiently considered heretofore -- must be established clearly: That Islamic Shari`a is complementary to other legal systems (الشرائع الأخرى) wherever they are not in contradiction, and Islamic Shari`a abrogates the parts of other legal systems that lead to contradiction. Excluding those contradictory parts, those other legal systems must be deemed an established part of Islamic Shari`a. Based on this foundation, it is possible to accept many of the principles of other legal systems that are appropriate for contemporary application.

Of course, that was the foundational thought that drove Sanhuri later to codify civil laws for various Arab countries (starting with Egypt) based on the French civil code, and abrogating clauses that were in contradiction with the principles of Islamic Shari`a. Unfortunately, the poisonous takfiri thought of Mawdudi, Qutb, and others in the mid-Twentieth Century led to claims that the legal systems in Muslim countries are not Islamic, and demanding the establishment of an Islamic state that would apply Islamic Shari`a, etc. It is out of this latter development that the mockery of Islamic thought that is "Islamic Economics", and the usuristic activities in the name of Islam that is "Islamic banking" arose: driven by individuals who failed to understand the principles of Islamic Shari`a.

To return to the manifestation in the areas of "Islamic economics" and "Islamic finance", I plan to write my next blog entry on another book that I picked up last week in Cairo: Al-Riba wa al-Mu`amalat fi Al-Islam, (Riba and Transactions in Islam) by M. Rashid Rida, published by Dar ibn-Zaydun, Beirut, in collaboration with Dar Al-Kulliyat Al-Azhariyyah, Cairo, 1986. The book contains an interesting long prologue followed by a solicited fatwa by an unnamed Indian jurist, aiming primarily to conclude that interest stipulated as a condition at inception of loans (as opposed to being added on for further deferment of an existing debt) is not the riba that is mentioned in the Qur'an, but one based on a weak Hadith (every loan that brings a benefit to the lender is riba; كل قرض جر نفعا فهو ربا), or an invalid analogy to the riba that is forbidden in the Qur'an. Rashid Rida debates the different forms of riba, and distinguishes between the definitively forbidden riba in Qur'an (for which extremely strong condemnation was given), and other forms that were forbidden to prevent the worse type of riba, or via analogies that can change with time and place (which links it back to the Sanhuri methodology explained in this blog entry). On the main point of the fatwa on which he was asked, Rida simply said that the Indian jurist (who argued that stipulated interest in a loan is not the forbidden riba based on Qur'an and Hadith, and the ruling based on analogy can be changed or overruled based on benefit) is entitled to his analysis and conclusion (اجتهاد) on this matter wherein earlier jurists had differed (p.84). Moreover, Rida seemed to agree that at the very least, the simpler forms of riba cannot be equated to the kind considered a great sin (من الكبائر) and condemend so severely in the Qur'an.

But that's enough of a teaser on Rashid Rida's at the end of this long blog entry. In the next blog entry, I plan to offer summary/selected translations from the original fatwa and Rida's comments thereupon, and in the following blog entry I would like to discuss how current "Islamic banking" (based on murabaha, tawarruq, or what have you) is no protection from the worst type of riba -- since the person can always be charged compounded interest for further deferment through artificial commodity sales as is commonly done by those "Islamic banks".


Blogger dezhen said...

asalam alaykum,

i just found your blog randomly while searching for information on rashad rida. I just wanted to say that i find what i have read so far fascinating.

I have only heard of Mohammed Hashim Kamali before doing serious work on islamic economics (futures and shares) in English.

Im only a beginner in the Usul things, but would welcome more relating to interest - especially the work from Rashad Rida (and your own analysis f coutrse).

A Shaykh i have here mentioned that there is doubt if the interest banks etc. charge today is the same as the riba mentioned in Quran, so it is interesting to find deeper work relating to this.

6:25 PM  
Blogger Rafiq Adams said...

Salaams, Dr. Gamal,

I really appreciate your thoughts on the Islamic banking and revival of Islam issue.

I am a lawyer who recently relocated to the middle east from America. I just recently completed a course in Islamic Banking to learn more about it. I see great potential in an alternative Islamic system that would eliminate predatory lending so prevalent in the present system.

At the same time, I am troubled by the similarity in substance of the mudaraba and murabaha transactions to traditional riba based systems in terms of the net price and burden of goods sold.

What I mean is that even though the Islamic system currently in place does not technically lend money but rather buys and resells good on installment, the profit rate is essentially the same as the interest rate and the total payments are about the same.

The problem I have with this is that i believe the proper approach to Islamic banking should be concerned with form and substance. In other words, it is not enough not to technically lend money, but it is also important not to charge in net price, what is clearly an excessive amount, even taking into account the longer repayment period, or installment markup, which is allowed in sharia.

It would seem to me that in an Islamic system houses and other commondities should be significantly less expensive since the net price, including adjustments for payment period, would not exceed twice the cost or market value of the good. I am not an expert on economics, but one of the problems of riba is that with compound interest, you wind up paying six or seven times the value of a commodity, ie house, car, when in reality its value is only a fraction of that amount. The rest is interest, but it is also, riba al fadhl in a substantive sense, sense you are exchanging goods of greater value, total payments (valued in goods and services) for a good of lesser value.

This may sound confusing due to my limited grasp of all concepts but I just feel there is something wrong in terms of the pricing of goods substantially the same as goods and services priced with compound interests rates.

The way Islamic banking would compete substantively and ethically with traditional lending, would be to emphasis the non predatory nature of the products and services particuarly with regard to the the pricing scheme. The pricing scheme to not make itself identical to compound interest and finance charges but instead should have a reasonable markup for installment signifcantly less than current alternatives. Thus, people dealing with the Islamic system would have the added incentive of freeing up their more income and capital for other productive activity or products and services. The trade off for the Islamic banks is better competition with traditional banks, more customers, offsetting the lower unit markup for installment loans, and stimulating more sales of goods and services.

I am a relative novice to Islamic banking so I would welcome your comments.

Once again,

Its nice to see the new generation of Muslims looking at the revival of Islam in the modern context without sacrificing generally accepted canons of Islamic law.

1:52 PM  
Blogger Mahmoud El-Gamal said...

On what is and what is not riba, I found re-reading that old fatwa sent to Rashid Rida, and his reflection upon it, fascinating. There is so much useful information in that book, that I've been putting off posting a summary. I'll try to do it in parts, so that each part is manageable.

On predatory lending: actually what goes under the name of "Islamic banking" is more vulnerable to abuse, especially in countries lacking a "truth in lending" legal framework, similar to Reg Z in the U.S.

As Rafiq Al-Misri pointed out in one of his recent papers, once you call the interest "profit", there can be no ceiling put on the "profit rate", as we would put on interest rates.

In my own analysis, I concluded that riba is profiting from the extension of credit itself. So, I would think that the profit in a credit-sale murabaha would have to be broken into two components: profit on the cash sale + cost of capital, on which no markup should be added. In fact, Islamic banks as financial intermediaries mimicking the behavior of conventional banks do not strive to make a profit on tradig automobiles, homes, etc., but rather aim to make a profit through the difference between their cost of capital (interest paid to depositors, on commercial paper, etc.) and the interest they charge their customers in the name of profit or rent. That being their source of profit, I would argue, makes them precisely as ribawi as conventional banks.

8:38 PM  
Blogger heraish said...

assalmu alikum,

Could you post a brief biography of al-sanhuri. I am particularly interested in his educational background. I am in the process of getting a copy of his book.

Did he have any formal or informal training in the traditional Islamic Sciences?

10:01 AM  

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