Russia considering introducing Islamic banking to get around Western sanctions

Facing ever greater difficulty in raising money in the West because of sanctions and calls by its own growing Muslim population for such a step, Russian banks are now considering the introduction of Islamic banking in order to gain access to credit markets in the Muslim world. Bekhnam Gurban-zade, an advisor to the head of Sberbank, tells Novyye izvestiya that his bank is preparing a road map for the introduction of Islamic banking in Russia and the Duma is working on legislation which would allow banking on the principles of shariat law which bans interest but allow banks to become co-investors in projects. Some Muslim areas in the Russian Federation have been pushing this idea for the last seven years, but now is the first time that it appears there is support in Moscow for the idea, the paper says, although there are concerns about how such a system would work in parallel with the existing mercantilist model. But because of the size of Islamic banking abroad – one to two trillion US dollars now and slated to rise to four trillion in the coming years – financial experts in the Russian capital says that “sooner or later,” Russia will take this step in order to gain access to credit markets in Saudi Arabia, Qatar, the UAE, Iran, and eventually “even Syria.” Indeed, these experts say, the greatest obstacle to that are not financial arrangements but the name, “Islamic” banking. Russia is a secular state, and these experts say that businesses very negatively react to any religiously based banking, be it the Orthodox kind Patriarch Kirill has been talking about or Islamic banking now.

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