Consternation in the newspapers today over proposals by the British government to legitimise "Islamic Bonds" or "Sukuk", and more importantly sell a portion of our national debt in such a way that it complies with the dictates of Sharia law. This is not technically "news" in that the Government was talking about it a year ago, and the FT was writing about if four months ago.
I think this is actually quite a good idea. Why? Because when you sell debt you must promise to pay the buyer a regular fee for their service (the coupon). Sharia-compliant bonds by definition offer a lesser return to investors than a regular gilt in return for ideological compliance. So that means we - as a nation - can borrow money for less.
Now as to whether that money would be well spent, or just pissed up the wall - that's another matter entirely. The reason this policy is suddenly important is because the UK Government will need to borrow more money to cover the last ten years of reckless central spending. and Sharia-compliant gilts would be a way of tapping into a deep well of Middle-Eastern money.
I've previously discussed the related subject of Islamic Banking. Christian societies have historically expressed similar concerns over lending money with interest (usury) and developed very similar financial structures such as the Contractum Trinius to balance doctrinal obligations against financial realities. It has been said that the Devil has all the best tunes. The oft-forgotten corollary is that God has all the best accountants.
