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EDITORIAL

Islamic Finance Growing in Bangladesh Despite Structural Issues

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The Bangladeshi Islamic finance industry is likely to continue growing over the medium term, driven by rising public demand, new branch openings, and supportive government policies, says Fitch Ratings. Many conventional banks are focusing on Islamic products, either by opening new Islamic branches or windows or by converting into full-fledged Islamic banks. Islamic capital markets remain nascent, but the government started issuing domestic sovereign Sukuk in 2020, with its fourth auction in April 2022. This supports fiscal funding diversification and enables Islamic banks and takaful firms to invest their liquidity. Structural issues include underdeveloped regulations and a weak banking sector.

More lax prudential requirements have supported Islamic banking growth and motivated conventional banks to provide Islamic products. The regulator, Bangladesh Bank, has set the statutory liquidity ratio limit for Islamic banks (5.5%) much lower than for conventional banks (13%). Islamic banks also benefit from higher prudential limits, such as an advance-deposit ratio of 92% in contrast to 87% for conventional banks. We estimate the Bangladeshi Islamic finance industry to be over USD58 billion at end-1H22.

Bangladesh’s positive economic growth prospects (real GDP growth 2023F: 5%), due to rising private consumption, exports of ready-made garments, government spending, and investment, should support Islamic and conventional banking performance over the medium term.

The Islamic finance industry faces long-standing challenges, including Islamic banks’ limited branches and digital banking networks in rural areas – where 61% of the Bangladeshi population resided in 2021, according to the World Bank. The Islamic finance regulatory framework is underdeveloped, with a lack of Sukuk investment options and Islamic derivatives or hedging instruments, low awareness of Islamic products, lack of standardization, inadequate fintech usage, lack of incentives for Sukuk issuers, and under-skilled human capital.

Part of the Islamic liquidity-management infrastructure exists for Islamic banks, who can deploy and receive interbank placements from both Islamic banks and conventional banks, and invest in short-term government Sukuk in the form of Bangladesh Government Islamic Investment Bonds. However, no Islamic repurchase agreement or Islamic lender-of-last-resort facilities exists with the central bank. Potential remains to expand the range of Islamic liquidity-management products.

The Bangladeshi financial sector is also underdeveloped in general. The banking sector’s asset quality, capitalization, governance, and regulatory quality are weak, especially for public-sector banks. Banking penetration remains very low. About 47% of Bangladesh’s adult population didn’t have a bank account in 2021, and 8% of adults cited religious reasons for not having them, according to the World Bank. Insurance and takaful penetration was also very low at 0.5% in 2021. While a challenge, it underpins the high long-term growth potential for Islamic finance in Bangladesh, which has the fourth-largest Muslim population in the world.

Islamic banking has a domestic market share of 28.5% of total industry loans and advances at end-1H22 (June 2021: 28%). Islamic banks’ global market share was 2.7% – higher than Indonesia (1.9%), Pakistan (1.3%), Egypt (1.3%), and Jordan (0.9%), based on Islamic Financial Services Board’s latest available data. The outstanding Sukuk volume was about USD 1.7 billion. The takaful segment’s end-2020 domestic market share of 14.4% placed it seventh-largest globally, ahead of Oman (13.9%), Pakistan (12.6%), Bahrain (12%), and the UAE (10.2%).

Several initiatives could support Islamic finance development. In August 2022, the Bangladesh Securities and Exchange Commission released regulations on forming a Shariah Advisory Council, which should help in the push for standardization and support of Sukuk issuance. In September 2022, Bangladesh Bank issued a policy on green bond financing for banks and financial institutions, which covers Islamic securities. Standards issued by Accounting and Auditing Organization for Islamic Financial Institutions are partially adopted in Bangladesh.


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EDITORIAL

Who Stands for the Palestinians?

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Since Israel’s airstrike in Rafah on the night of 26th May 2024, the evidence of an egregious civilian toll has mounted. At least 45 people are now believed to have been killed – and while Israel claimed that the attack was aimed at a “Hamas compound”, witnesses, aid organizations and video evidence all suggest that a refugee encampment bore the brunt of the attack.

On Monday morning, the Israeli Defense Force (IDF) said that the attack was against “legitimate targets”. Now, in the face of a chorus of international condemnation and with an emergency session of the UN Security Council scheduled for Tuesday, Benjamin Netanyahu has accepted that “something unfortunately went tragically wrong” despite what he claimed were “our best efforts not to hurt them”. But he also insisted that there would be no change in policy. “I will keep fighting until the flag of victory is raised,” he said. “I don’t intend to end the war before every goal has been achieved.”

The question now is whether the expressions of dismay from even Israel’s closest allies, including the US, will translate into meaningful pressure on Netanyahu to change course.

Even though, not much is expected from the US, the ongoing Israeli military operations in Gaza, have cast a harsh light on the international response, particularly that of the Arab governments. Their reaction, or lack thereof, reveals a stark and disturbing hypocrisy when contrasted with their military engagements in other regional conflicts.

A Record of Intervention

The historical record of Arab military intervention in the region is extensive. During the Gulf War, known as Desert Storm, Arab nations rallied under American leadership to ‘liberate’ Kuwait from Iraqi occupation. Egypt participated with 20,000 soldiers, Syria with 14,000, Morocco with 13,000, Kuwait with 9,000, Oman with 6,300, the UAE with 4,300, and Qatar with 2,600 soldiers. This coalition demonstrated a robust and coordinated military effort driven by international and regional political imperatives.

Similarly, during NATO’s intervention in Libya, dubbed Odyssey Dawn, Qatar and the UAE committed significant military resources, including warplanes and elite forces, to the campaign. They not only fought on the ground but also financed the operation, with the Gulf States reportedly covering the cost of every missile and bomb dropped on Libya -a price tag of a million dollars per strike. This resulted in the destruction of Libya, widespread displacement of its people, and plundering of its wealth.

In *Decisive Storm* against Yemen, under American-British direction, Saudi Arabia led with 100 fighter planes and 150,000 soldiers, supported by the UAE with 30 planes, Kuwait with 15, Bahrain with 15, Qatar with 10, Jordan with 6, Morocco with 6, and Sudan with 5 planes, backed by thousands of troops. Egypt also played a role, participating in the operations and showcasing its military readiness.

Moreover, in the conflict against Syria, Arab states, again under American influence, formed operations rooms in Jordan and Turkey to facilitate the entry, arming, and financing of 60,000 fighters, supported by Saudi Arabia, Qatar, the UAE, Jordan, and Bahrain. This intervention further destabilized Syria, contributing to a prolonged and devastating civil war.

 A Deafening Silence on Gaza

In stark contrast to these interventions, the Arab governments’ response to the Israeli attacks on Gaza has been notably passive. The same countries that were willing to mobilize vast military resources to engage in conflicts in Iraq, Libya, Yemen, and Syria, now stand by and watch as the Israeli Defense Forces (IDF) massacre and inflict massive casualties and destruction on the Palestinian population.

When Gaza is under siege, and civilians are massacred, these governments, bound by geopolitical alliances and dependencies, particularly on the United States, find themselves paralyzed. They are unable even to open a crossing to provide essential food and medicine, awaiting a ‘green light’ from their Western allies. This inaction exposes a shameful double standard and a betrayal of the Palestinian cause.

The Media’s Complicity

The role of the media in this dynamic hypocrisy cannot be ignored. A media apparatus that is often fully funded and controlled by these very governments perpetuates a narrative that justifies these wars. They frame interventions in Iraq as ‘liberation’, in Libya as ‘protection of civilians’, in Yemen as ‘restoring legitimacy’, and in Syria as ‘democracy’. Yet, when it comes to Palestine, the silence is deafening, and the coverage is minimal, allowing the atrocities to continue unchecked.

A Call for Genuine Solidarity

The hypocrisy of Arab governments stands in sharp relief when their willingness to destroy other Arab nations is juxtaposed with their inaction on Palestine. The world is watching, and the question remains: who will stand for the Palestinians?

It is incumbent upon the global community, especially the citizens of these Arab nations, to hold their governments accountable. True solidarity with Palestine requires more than words; it demands action. This means breaking the silence, providing humanitarian aid, and exerting political pressure to bring an end to the occupation and the ongoing violence.

The time has come for a genuine, unwavering commitment to justice for the Palestinian people. The world must wake up and act, ensuring that the sacrifices and suffering of the Palestinians are not in vain.

For the love of humanity and justice, let us spread awareness and demand accountability. The world must stand up for the Palestinians now, before more innocent lives are lost.


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EDITORIAL

We are not Yet Winning, but they are Losing

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Israeli forces have launched their assault against 1.4 million starving Palestinians sheltering in Rafah. Regime spokespeople continue to claim its attacks are “targeted” — a grotesque lie that, after the indiscriminate massacre of some 40,000 civilians, has become impossible to sustain.

The people of Rafah already face a catastrophe of unspeakable proportions. They lack facilities, infrastructure and the most basic of services. Many live in tents. Insects and insect-born diseases are rampant. Food, water, medicine and fuel have run out. These acute, life threatening lacks are the direct consequence of the long-standing Israeli blockade of Gaza, a policy that took on genocidal proportions since 8 October.

How do we make sense of this slaughter? How do we explain the limp, deceitful requests from Western leaders to temper it? Why have we been unable to stop it?

Palestine is a fulcrum in the international system. It is not just a central node in the regional struggle for sovereignty and self-determination — without a free Palestine, with Israeli warplanes routinely bombing its neighbors, there can be no talk of establishing a basis for regional development or integration. Palestine is also the prism through which nearly every global contradiction comes into focus.

As Max Ajl has written, the Palestinian resistance “bring[s] the relief of the world system into clearer view: the impotence of the United Nations; the imperialist contempt for international law; the complicity of the Arab neo-colonial states with Western capitalism; the fascist racism at the heart of modern European and US capitalism, as murderers and maimers operate in Western capitals; the neo-colonial structures of the Arab and Third World; and the hollowness of Western liberal democracy and its constellation of civil society institutions.”

The dehumanization and destruction of the Palestinian people has been a repeat feature of the world system since the 1948 Nakba. In the last 20 years alone, Palestinians have suffered a never-ending stream of deadly Israeli military assaults, most of which barely break into global public consciousness: Operation Forward Shield, Operation Days of Penitence, Operation Summer Rains, the 2006 Gaza beach explosion, the 2006 Beit Hanoun shelling, Operation Autumn Clouds, the 2008 Beit Hanoun incident, Operation Hot Winter, Operation Cast Lead, the assault on the Gaza Freedom Flotilla, Operation Returning Echo, Operation Pillar of Defence, Operation Protective Edge, the killing by sniper fire of 223 Palestinians and wounding of over 9,000 as they marched, almost entirely unarmed, to the Gaza prison fence as part of the Great March of Return, Operation Breaking Dawn and now Operation Swords of Iron, this latest invasion of Gaza, accompanied by incursions in the West Bank. Each one of these operations contains oceans of human tragedy that should drown our common humanity.

Joining these operations are the daily harassment and dispossession of Palestinians in the West Bank and East Jerusalem, with the clear aim of replacing one population with another. This ceaseless oppression generates resistance — and that resistance brings the terrible rot in the imperialist system into view.

That system has been plain to see to a great number of people in the South for decades. But today, it is made additionally legible by its evident frailty. That is why the fight for Palestinian freedom is uniting so many disparate struggles all over the world, while injecting new confidence and determination into popular movements from Sana’a to Columbia University.

In the Global North, the imperial elites are rapidly losing the people. Polls show majorities in the US, UK and Germany now want to end arms sales to Israel. The average Brit, German or US American can see that in the imperialist world system, a Palestinian life is worth immeasurably less than an Israeli life. For most people, this grotesque injustice is intolerable.

In universities and cities across Europe and the US, students are now occupying institutions in protest against their complicity in the genocide. Direct action campaigns are rising and throwing sand in the wheels of the war machine. As the repression mounts, the battle against it grows stronger. The Palestinian resistance has brought the rebellion to the North.

As the movement for Palestinian liberation and global justice gathers steam, it is our task to help move it from global sympathy for the Palestinians and the oppressed into active solidarity with them. If we do, Israel and its elite backers in the political-media class of the North will no longer be able to pretend that it is a normal state, that it is the victim.

From there, we build outwards: from Palestine to the world. The imperialist system doesn’t start and end in Palestine. It runs through the cobalt mines of the Democratic Republic of Congo, the special economic zones of Honduras, the prison camp in Guantanamo Bay, and the entire planet, jolted out of climatic stability by imperialism’s relentless drive to siphon the wealth of the many into the hands of the few.

Our world is undergoing rapid and great change. This process is accompanied by tremendous imperial violence – both against the South and the opposition in the North. But these are the death cries of an expiring system. And that system can be overcome.

We can turn these violent howls into the first cries of a newly birthed world. But we can only do it if we deepen the mutinies in the North and South into a united, global anti-imperialist front. In the words of Peter Mertens, if we can “get the mutiny of the North to lend a hand to the mutiny of the South, and vice versa, we can turn the world around, in the democratic, social and ecological direction this planet needs.”


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EDITORIAL

Turkey’s Bold Stand Against Israeli Aggression in Gaza: A Call for Global Solidarity

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In the wake of escalating violence and bloodshed in Gaza, Turkey has taken a resolute and commendable stance by halting all trade with Israel. This decision is not merely an economic maneuver; it is a principled stand against the gross violations of human rights and international law perpetrated by the Israeli military against the Palestinian people.

The crisis in Gaza is not new. It is a symptom of the longstanding Israeli occupation and blockade that has suffocated the Gaza Strip for years, leading to the present dire humanitarian conditions for its residents. The Gaza Strip, a small strip of land inhabited by over two million Palestinians, has been the stage for one of the most prolonged and devastating humanitarian crises of our time. For far too long, the world has turned a blind eye to the suffering of the people of Gaza, as they endure relentless attacks, blockade, and systemic oppression.

Six months since the 7 October brutal attack on Israel by Hamas and the Israeli military’s ensuing ground offensive in Gaza, One hundred and thirty four Israeli hostages are still in Hamas’ captivity, of which about 30 are believed dead, and much of Gaza has been turned into a wasteland. Satellite images suggest more than half of all buildings have been destroyed by the Israeli military offensive; the soil and groundwater have been contaminated by munitions and toxins; and, as hunger grips the coastal territory, Israel has been accused of using starvation as a weapon of war and provoking famine in the besieged strip. According to the Health Ministry in the Hamas-run territory the death toll stands at more than 33,000, mostly women and children, and more than 75,000 people have been wounded, with little to no access to medical care as most hospitals are no longer fully operational.

Turkey’s decision to halt all trade with Israel sends a powerful message to the international community: that silence and complicity in the face of Israeli atrocities are no longer acceptable. By taking concrete action to hold Israel accountable for its crimes, Turkey is standing on the right side of history and reaffirming its commitment to justice and solidarity with the Palestinian people.

Furthermore, Turkey’s stance resonates deeply with the sentiments of some Arab states in the Gulf, who have also condemned Israel’s actions and expressed solidarity with the Palestinians. The Gulf states have a vital role to play in the region, both politically and economically, and their support for the Palestinian cause carries significant weight.

However, mere condemnation is not enough. The Gulf states must follow Turkey’s lead and take tangible steps to pressure Israel to end its illegal occupation and blockade of Palestinian territories. This includes imposing sanctions, divesting from companies that profit from the occupation, and advocating for international accountability through forums like the United Nations.

Moreover, the Gulf states have a moral obligation to address the root causes of the conflict, including the ongoing dispossession of Palestinian land and the denial of Palestinian rights. This requires a concerted effort to support Palestinian statehood and self-determination, based on the principles of justice, equality, and respect for international law.

In the face of Israel’s impunity and the failure of the international community to act, it is imperative for countries like Turkey and the Gulf states to lead by example and mobilize global solidarity for the Palestinian cause. The time for empty rhetoric and diplomatic niceties is over; what is needed now is bold and decisive action to end the suffering of the Palestinian people and achieve a just and lasting peace in the Middle East. Critics may argue that Turkey’s decision will have economic repercussions, but some sacrifices are necessary in the pursuit of justice. Economic interests should never take precedence over fundamental moral principles. By prioritizing human rights over profit margins, Turkey sets a commendable example for other nations to follow.

Turkey’s stance underscores the urgent need for a just and lasting solution to the Israeli-Palestinian conflict. The status quo of occupation and oppression is unsustainable and incompatible with the principles of peace and justice. A two-state solution, based on the pre-1967 borders with East Jerusalem as the capital of Palestine, remains the most viable path towards a peaceful resolution of the conflict.

Turkey’s decision to halt all trade with Israel is a courageous and principled stand against injustice. It is a reminder that the struggle for Palestinian rights is not just a moral imperative but also a legal and political obligation for all nations committed to upholding human dignity and international law. The Gulf states must heed this call and join Turkey in taking concrete action to hold Israel accountable and support the Palestinian people in their quest for freedom and justice. Anything short of this would be a betrayal of the values and principles that we claim to uphold as members of the international community.

History will judge nations not by their economic prosperity or military might, but by their commitment to upholding the values of justice, dignity, and human rights. Turkey’s decision to halt trade with Israel is a testament to its unwavering dedication to these principles, and it deserves the support and admiration of all who cherish freedom and equality.


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