LEADERS of Malaysia, Turkey and Iran spoke at the inaugural session of the four-day summit on Dec 19, last year, themed ‘The Role of Development in Achieving National Sovereignty’ that was aimed at finding new solutions to problems facing the Muslim world and improving the wellbeing of the Muslims.
Foremost among the summit objectives was the proposal for Muslim countries to have a unified currency that would help reduce their dependency on the US dollar in international trade and finance. The dollarisation of global economy has granted power to the US to impose illegitimate demands, including punitive sanctions and tariffs on other nations, such as China and Iran.
Tun Dr Mahathir Mohamad, a long-time proponent of a gold-backed currency, said that the use of gold dinar and barter trade will be revisited and considered among Muslim leaders. He first mooted the idea some three decades ago at the height of the Asian Financial Crisis and again reaffirmed it at the KL Summit to agree on a common currency for trade among Muslim nations.
He explained that gold has a certain value for all countries. If one uses gold as a standard, one can call one’s currency by whatever name, but it must relate to the value of gold in that country.
Iran President Hassan Rouhani called for an end to the domination of the US dollar with the suggestion of a single cryptocurrency that can be used among Muslim countries, adding that Muslim nations can create special mechanisms for banking and financial cooperation to minimise their reliance on the US.
Many commentators, including the American economist Jeffrey Sachs have long predicted the demise of the US dollar as the US share of the global economy has fallen to 15 per cent in 2019 from 21.6 per cent in 1980, based on estimates from the International Monetary Fund.
In comparison, China’s economy now accounts for 19 per cent of the world economy, while the European Union, 16 per cent. Sachs predicted a shift from a dollar-based settlements system to a multi-currency settlement system involving the yuan and euro.
An agreement on a unified currency will undoubtedly be the most important outcome, if it does materialise, of the KL Summit.
If Turkey, Malaysia, Iran, Indonesia and Qatar take this initiative, it may well be taken up for consideration by the OIC (Organization of Islamic Cooperation) summit. This ‘start small’ approach, as Dr Mahathir put it, seems the right approach as it would be rather unwieldy to start at the wider OIC level that has 57 member states.
Opposition is expected, just as Dr Mahathir confirmed that when Malaysia mooted the idea of a common currency for Islamic nations a long time ago, the big powers stood in its way.
This is because when their currencies are used by others, it gave them added power. Then clearly if there are follow-up measures on the part of the summit participants, they must be resolute and able to withstand politically motivated opposition.
A unified currency for the Muslim world will naturally strengthen its economic resilience and standing in the world community, and ultimately help fighting poverty and degradation among Muslims.
These are indeed conducive also to the higher purposes (maqasid) of shariah, not only in respect of the protection of property (hifz al-mal) but also the protection of life (hifz al-nafs), and dignity (‘ird) of individual Muslims and the Muslim community worldwide.
The KL Summit can be seen as a true reflection of maqasid al-shariah and of Islamic awakening on the part of its participants, and it merits therefore to be rigorously pursued.
Furthermore, the KL Summit was born out of a trilateral talk among Dr Mahathir, Imran Khan and President Reccep Tayyip Erdogan last September on the sidelines of the 2019 UN General Assembly session in New York.
While absent from the KL Summit, Imran Khan came on an official visit to Malaysia (Feb 3-4) to strengthen cooperation between Pakistan and Malaysia. It is reasonable to assume perhaps that Pakistan will be supportive of the unified currency proposal. No follow-up measures have yet been announced on this matter.
Since the summit participants have already made known their support for the proposal, it is now a question perhaps of determining a mechanism for its realisation.
It is proposed therefore that the summit participants set up a working group to make suitable proposals in a set period of time, say six months or a year, to show the way forward. Malaysia being the host country should perhaps start the ball rolling.
The writer is founding CEO of International Institute of Advanced Islamic Studies (IAIS) Malaysia
The views expressed in this article are the author’s own and do not necessarily reflect those of the New Straits Times