The Risks of Sharia Finance

Jonathan Schanzer of the Jewish Policy Center has a very good piece in Frontpage about the risks of Sharia finance, especially in light of current market woes.

As Schanzer puts it:

There is also the fear that Middle Eastern investors could force U.S. companies to provide charitable donations to questionable Islamic charities. As Frank Gaffney notes, once an investment becomes subject to shari’a, at least 2.5 percent of the proceeds are donated to zakat, or charity. Of course, many corporations contribute to charities as a way to give back to the community. But most of the world’s Islamic charities are unregulated or are of unknown repute. The U.S. Treasury department continues to uncover illicit charities that provide funds to terrorist organizations worldwide. Thus, there remains a danger that the earnings of U.S.-based businesses would begin to send funds to questionable Islamic charities rather than regulated U.S. charities at home.

I recommend reading the whole thing.