WHOEVER came up with the idea of the first-ever United States-Arab Islamic Summit, Riyadh, which started on Saturday, should be commended, not for his perspicacity, but for the sheer symbolism of the occasion.
That symbolism, alas, could be a double-edged sword. Whether the timing is a mere coincidence — two days after the Iranian presidential election and a week before the advent of Ramadan — is a moot point.
A notable absentee was Iran, whose reform-minded Hassan Rouhani, fresh from a thumping mandate after winning a landslide 57 per cent vote in Friday’s presidential election over his hard-line rival, Ebrahim Raisi, could have been the surprise package at the summit.
Alas, the art of the deal in this instance seems to have been lost in opportunity.
Perception is as important as symbolism. For the layperson in the 56 Organisation of Islamic Cooperation (OIC) countries, the spectre of Muslim “unity” brokered by a president, who only months ago seemed to revel in rampant Islamophobia, may seem surreal.
Geopolitics, foreign policy and defence priorities feature strongly in the agenda of President Donald Trump’s gruelling eight-day trip, which apart from Saudi Arabia, will also take in Israel, the Palestinian Territories, Brussels, the Vatican and Sicily.
Trade, investment and financial services, I believe, are the areas where US-OIC ties have got a more realistic chance of thriving. The two economies need each other at a time when their economic fortunes have been undermined by the quadruple effects of unfettered globalisation, the 2008 global financial crisis, the eurozone debacle and the dramatic fall in world commodity prices, including oil and gas.
A pre-condition is to reset US-Islamic relations to the period before 9/11, and for Washington to bury its ghost once and for all. This does not mean forgetting the heinous assault on the US, those who fell and were maimed. On the contrary, it would mean using the memory and lessons of 9/11 as a reinforcement of the global fight against extremism by not giving its detractors the excuse of further sowing division between the US and Muslim world. Several OIC countries are on the front line of terrorism, some on a daily basis. The world benefits when US-Islamic relations thrive.
I can think of three areas where progress could be achieved relatively quickly — Islamic finance, infrastructure financing and defence cooperation, albeit with the above caveats. Prior to 9/11, Washington took a leadership role in western engagement with the Islamic finance industry, well before the United Kingdom and Luxembourg.
The first major milestone for the provision of Islamic retail banking services in the US came in 1997 when the Office of the Comptroller of the Currency approved Islamic home finance products based on ijara (leasing) and murabaha (cost-plus financing) provided in New York by the United Bank of Kuwait and later by HSBC Amanah.
But, post-9/11 following the US’s retreat from the market due to then president George W. Bush’s so-called “financial war on terrorism” and the subsequent introduction of a spate of Patriot Act legislation which gave sweeping powers to the Department of Homeland Security and the Financial Action Task Force of the US Treasury and frightened off banks and investors from the Islamic world because of fear that their assets might get frozen for even the most frivolous reasons, the UK governments led by Tony Blair and David Cameron saw its main chance in engaging with the Islamic finance industry.
Today, that policy translates into a proactive UK Islamic banking proposition with cross-party support in the House of Commons, and which core ambition is to develop London into the international hub for Islamic trade, investment and finance.
Prior to 9/11, it was usual for US government officials to attend Islamic finance conferences. I remember John B. Taylor, then under secretary of the US Treasury, doing the rounds. Even in the aftermath of 9/11, Taylor continued his engagement in an effort to “demystify” Islamic banking by taking a “greater interest in Islamic finance because of its rapid growth and systemic importance in several Muslim partner countries of the US”.
Infrastructure and urban regeneration offers promising synergies with Islamic finance for the US, which as Trump stressed during his campaign needs in excess of US$1 trillion to rebuild its crumbling infrastructure. Some US Congressmen from New York have recently sought to explore sukuk as a potential infrastructure financing instrument — something the G20 leaders have exhorted member countries to do.
While the UK and Luxembourg remain the only two western sovereigns to issue sukuk in the international market, several US corporates have done so, including General Electric, East Cameron and Goldman Sachs, while others have regularly accessed the syndicated murabaha market. US asset managers, including Wellington Management, Citigroup, JP Morgan, Morgan Stanley, Principal International and State Street, have a long history as investment advisers to Islamic equity funds. It was Freddie Crawford at Wellington who structured the first Islamic global equity fund for National Commercial Bank in Saudi Arabia more than two decades ago.
On Saturday, Riyadh signed defence agreements worth over US$100 billion, including a US$6 billion order to assemble 150 Lockheed Blackhawk helicopters in the kingdom. National oil giant Saudi Aramco signed US$50 billion of deals with US companies aimed at diversifying the kingdom’s economy away from oil.
Riyadh in the past has signed effective defence-related offset deals with British Aerospace, Rolls Royce, Lockheed and Boeing, where British and US companies agreed to invest in other sectors to help diversify the economy. Tate & Lyle, for instance, built a sugar mill in Saudi Arabia as part of the deal with Rolls Royce.
Turco-US defence cooperation went further. Turkey manufactures F24 jet fighters under licence complete with job creation, supply chain technology and maintenance spin-offs.
It is through win-win mutual trade and investment cooperation that the US and Islamic world stand the best chance of breaking down barriers and suspicions, and ultimately eliminating the evil that is extremism.
Mushtak Parker is an independent London-based economist and writer.