Let My Hedge Fund Thrive, Inshallah

While today in Iraq Muqtada al-Sadr may be perhaps on of the most popular Shia political figures, if not the most powerful, his pedigree makes his leadership all the more interesting. His father in law, Muhammad Baqir al-Sadr, who was a scholar and devoted to Khomeni's Islamic Revolution in neighboring Iran, actually wrote the book on Islamic economics.

Entitled, "Iqtisaduna," or, "Our Economics," al-Sadr critiqued both capitalism and socialism, claiming that Sharia law doesn't jibe with the western liberal ideals of private property. Instead, public and private property come from Allah. He wrote extended critiques of Marxism, and his economic worldview envisioned a system that was not only in line with the teaching of the Koran, but also reconciled the inherent contradictions of capitalism.

At the same time, there are nearly a billion Muslims today across the world, and the free-market system is making attempts to appeal to would-be investors. A recent front page piece by Joanna Slater in the Wall Street Journal investigates the 'Rent-a-Sheik' issue and asks, "Could a hedge fund be Islamic-friendly?"

Sharia law prohibits interest, as it exploits the borrower. Where are Muslims to invest, then? Der Spiegel tracked a new set of "Sharia compliant" mutual funds setup by Deutsche Bank late last year. Reportedly, DB is joining UBS, HSBC and Citigroup, who all have already made the same kind of venture.

Seeing that economies across the Middle East, mainly due to increased oil revenues, have been growing at more than 10% on average, Western bankers clearly see a demand. But how severe will the shifting be from emerging Muslim societies who face an opportunity to put their money to work and, at the same time, vow to act in accordance with a religious edict?

(An advertisement for Islamic banking in Kabul, Afghanistan.)