Three for Chapter 11

threeforchapter111

by Alyssa A. Lappen
FrontPage Magazine | Dec. 15, 2008

As North America headed into the 2008 Winter Solstice, economists darkly predicted that U.S. unemployment would rise from a current 6.7 percent to 8.1 percent by December 2009. On average, 54 economists surveyed expected the nation to lose more than 160,000 “non-farm” jobs monthly by then. Even economists, notorious for making inaccurate predictions, clearly saw financial conditions spinning out of control, driven by subprime mortgages, failing banks – and desperate U.S. automakers.

What to do? As automakers pushed for a $14 billion bailout, the latest Congressional proposal snagged on excessive labor costs. President Bush apparently succumbed to scare tactics claiming that a single car maker “shut down” could cost up to 3.3 million jobs. Last Friday, December 12, Bush proposed redirecting some of the Treasury Department’s $700 billion financial Troubled Asset Relief Program (TARP) to General Motors, Ford and Chrysler, calling it “irresponsible” to allow them to fail.

Not everyone agrees with climbing on the bailout bandwagon. “Let market forces play out,” advises associate dean at Dartmouth’s Tuck School of Business, Matthew J. Slaughter. “The way to solve that problem is not to lend more money to GM,” agrees investment activist William Ackman. New York Times business reporter Micheline Maynard reminds, “Bankruptcy does not mean liquidation.”

Filing for Chapter 11 bankruptcy may be complex, even messy, but reorganizing a company is not a prescription for failure. No industry ever walked from owing $100 billion to total shutdown in one step. Rather, reorganization offers troubled companies the best possible opportunity to reshape and rejuvenate themselves. Six major airlines—including United, Delta, Northwest, and Continental—all filed for Chapter 11 and emerged with real hopes for profit. Such large and small steel companies as National Steel, Bethlehem Steel, Wheeling-Pittsburgh, Kaiser, Bayou, Weirton Steel, and many others have leveraged Chapter 11 to emerge as stand-alone companies—or to sell a leaner version of themselves to competitors.

The same is possible for Detroit: If GM, Ford, and Chrysler went belly-up, George Mason University economics chairman Don Boudreaux forecasts, jobs would not evaporate in disproportionate numbers. Bankruptcy would not cause their factories, machines, markets, worker skills, contracts for raw materials—or even consumer demand—to “disappear.” Reorganization, Bourdreaux says, is the best way to discover demand—and if it is found wanting, auto industry productivity is usable elsewhere, he notes. A bailout would only waste that productivity, pouring it inefficiently into broken companies, impeding their recovery, and saddling taxpayers with huge subsidies. There are also other side effects. Unless big, unprofitable companies seek Chapter 11, he warns, eventually all U.S. companies will stream into Washington for their “special subsidy” and “blank check.”

For instance, auto parts manufacturers are hurting, too. Since October 2000, U.S. auto parts suppliers lost 323,000 jobs, 38 percent of their total. By the end of 2010, one forecaster expects up to 25 percent of auto parts suppliers to file for Chapter 11, and shave another 100,000 jobs from their payrolls. But no one stopped buying U.S. auto parts—and auto parts makers aren’t lining up in Washington for handouts. Yet.

There are a number of advantages to a timely reorganization for the auto industry. In Chapter 11, (not Chapter 7 liquidation), GM:

* Could reorganize and negotiate with creditors to settle its debts;
* Could compete with foreign car makers, which garnered more than 30 percent of the 7.8 million retail auto sales in 2006, up from 25 percent in 1985 (the year U.S. sales peaked at 11 million); and
* Could escrow funds to back GM warranties, reassuring consumers.

There are two other significant reasons to consider a bailout:

* GM stockholders have little to lose. Shares, which traded down to $1.70 in the last 12 months, even at their $3.94 close on December 12, have lost roughly 90 percent of their value since January; and
* Reorganization money is available from surpluses within General Motors itself. GM’s pension for 400,000 retirees is overfunded by $18.8 billion, and its salaried workers’ plan is overfunded by $500 million. A $500 million shortfall for hourly workers could perhaps be funded by other GM pension surpluses.

Despite the advantages, General Motors Corp. CEO Richard Wagoner says he’s loathe to frighten potential buyers with a Chapter 11 filing. Yet as Chrysler’s chance of filing bankruptcy has risen, so has its market share, from 8.7 percent in July to 11.5 percent in November.

Wagoner may be bluffing. It seems he has plans for the inevitable. According to the Wall Street Journal, GM hired bankruptcy maven Harvey Miller of Weil Gotshal & Manges, restructuring veteran Jay Alix, William Repko of Evercore Partners, Arthur Newman of Blackstone Group, and Martin Bienenstock at Dewey & LeBoeuf LLP. Miller worked on Lehman Brothers, Bethlehem Steel Corp., and Marvel Entertainment Group bankruptcies, while Bienenstock worked on Enron.

Even some auto workers are fed up enough to cry uncle. One GM line manager opposed a government bailout in his November 13 call to NPR’s OnPoint. Although edited out of the MP3 file posted online, the manager supported Chapter 11 filings. Another caller from Avon, Connecticut, quipped that auto manufacturers had raised a gun to Treasury Secretary Henry Paulson’s head and proven their poor financial management skills.

Detroit, dig in, and clean up your own mess. Taxpayers are tapped out.

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Alyssa A. Lappen is a former Senior Fellow of the American Center for Democracy, former Senior Editor of Institutional Investor, Working Woman and Corporate Finance, and former Associate Editor of Forbes. Her website is www.AlyssaaLappen.org.


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Hugging Shari’a finance at the Fed

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How tough is Obama’s new economic tough guy?

by Alyssa A. Lappen
Frontpage Magazine | Dec. 10, 2008

The first market day after President-elect Obama announced plans to appoint Federal Reserve Bank of New York president Timothy Geithner as Secretary of the U.S. Treasury, U.S. equities rose 6.5%. Pundits praised his experience handling crises and understanding of the troubled economy. But possibly, the market hoopla was premature, or even unwarranted. Some analysts seek his retirement.

As turmoil built, Geithner criticized Wall Street’s self-regulatory system, negative incentives and market forces, sought tighter supervision and berated insufficient “derivative securities” regulation and “credit-default” swaps allowing investors to “insure” against loses—only to fail. The Treasury Department’s former attache to the International Monetary Fund had overseen U.S. responses to the 1990s Mexican, Indonesian and Korean bailouts. But at the Fed, Geithner did not use regulatory powers to check abuses, or advocate for more regulation, impartial supervision or new laws. He even concluded that markets were improving—and after Bear Stearns’ collapse confessed, nobody “understands [the causes] yet.”

Worst of all, since Nov. 2003, Geithner let dangerous new Islamic and shari’a-based securities, markets and financial institutions gain business currency—despite the Fed’s role in U.S. monetary policy, currency distribution, government securities markets, legal supervision, regulatory enforcement, bank and capital markets investigation, foreign accounts and a payments mechanism handling over $4 trillion daily in funds and securities transfers. Not to mention Fed officials’ admitted lack of understanding.

On July 1, 2004, eight months after Geithner assumed command, the New York Fed hosted Asim Ghanfoor (sic), AG Group founder and managing director, to address its Seventh Annual Global Economic Forum on “ABCs of Islamic Financing” and Islam’s increasing global financial role. A month later, Senators Charles Grassley and John Kyl identified Ghafoor as a representative of Boston’s terror-funding Boston’s Care International, the Global Relief Foundation (GRF) and the Al Harimain Islamic Foundation, which the U.S. Treasury specially designated a terrorist organization in September 2004 and again in June 2008.

In fairness, the New York Fed began authorizing obscure shari’a banking institutions, structured shari’a issues, and opaque trading of the cottage industry’s myriad novel securities long before Geithner arrived. “Islamic bankers have been quite ingenious in developing financial transactions that suit their needs,” New York Fed first vice president Ernest T. Patrikis told an Islamic Finance conference in May 1996. “We bank supervisors, too, can be ingenious and will want to work with any of you should you decide that you want to engage in Islamic banking” in the U.S.

The dangers of Islamic finance should have been apparent. From 1996 on, all 12 Federal Reserve banks received, and were charged to enforce many Treasury Department Office of Foreign Assets Control circulars designating Islamic groups and banks as terrorist-financing institutions, organizations and individuals. In 1998, OFAC warned the Fed against transactions with Osama bin Laden and his affiliates, in 1999 froze Taliban assets, in 2002 reminded banks to check customers against known terrorist lists and in 2003 warned against trading with any unnamed counter-party.

Meanwhile, had the Fed only noticed, there were warning signs elsewhere too. In 1999, Saudi scholar Mohammad Nejatullah Siddiqi proposed at Harvard that banning interest would “cure the ills of contemporary finance,” “create a safer, saner financial world,” incorporate the “institution of waqf [Islamic trust]” in economics and create “morally inspired” behavior. In 2001, Siddiqi openly labeled shari’a finance a revolution-driver—an “universal endeavor” to replace “excesses of capitalism.”

Alarm bells should have gone off at a New York Fed event on Nov. 21, 2002, furthermore, where shari’a banking proponent Wafiq Fannoun described Islam [not only] as “Peace through submission to Allah (God),” however, “revelation-based [the Qur’an, Hadith] … complete way of life” — that is, a system of religious law proscribed by the U.S. Constitution from inclusion in secular legislation or regulatory systems. Equally at odds with Constitutional law and Western capitalism are other Islamic notions he described—namely that Allah is both creator and “owner” of all material things, and that “individuals” may not possess “natural resources important to society.” as “alternative financing for Muslims” and others recognizing individual ownership rights.

True enough, most of that happened before Geithner ran the New York Fed. But after Geithner took the helm in November 2003, the bank missed several still more critical red flags on Islamic banking.

First came Basel II Capital Accord, supposedly designed to strengthen the “regulatory capital framework” for big international banks. Authorities increasingly expected to trust banks to internally assess their own credit and operational risks. However, in July 2004 Switzerland’s Bank for International Settlements (BIS) reported, 53% of Middle Eastern bank supervisory staffs lacked the necessary training to meet Basel II’s December 2007 deadline. Middle Eastern banks originated and still predominate in Islamic banking. Nevertheless, by 2007, they still needed historical data to fashion reliable risk models but instead counted on “heavy” collateral and “exceptional” economic conditions to eliminate risks.

Islamic institutions had manufactured “special purpose entities” (SPEs)—renamed, “special-purpose vehicles (SPVs)”—such as coincidentally helped destroy Enron. These legal devices restructured “interest-bearing debt, collecting interest [as] rent or [a] price mark-up,” Rice University Islamic economics chairman Mahmoud el-Gamal warned in May 2007. “Interest-based” Islamic finance equaled “shari’a arbitrage,” concerned only “religious identity” and merely employed Western securitization methods to transform liquid, traceable cash flows from interest-bearing debt into illiquid, opaque assets.

Shari’a banking, though, had far fewer regulatory and accounting protections than sub-prime mortgages—and like “portfolio insurance” in 1987, mortgage-backed bonds in 1994, and sub-prime mortgages in 2008, could also cause huge market declines. Islamic banking purveyors admitted shari’a regulations could “override commercial decisions;” didn’t “standardize” documentation; and used complex “inter-creditor agreements” and “off-balance sheet financing.”

Even hosting hosting Islamic financier Asim Ghafoor, a representative to three terror-funding organizations, on July 1, 2004 apparently gave no one inside Geithner’s Fed reason to pause from its rush to further accommodate shari’a banking.

In March 2005, New York Fed general counsel Thomas C. Baxter Jr. asserted the Constitutional “wall of separation between church and state” Thomas Jefferson had described was “not absolute.” Chief Justice Warren Burger had in 1984 suggested that the Constitution “affirmatively mandates accommodation, not merely tolerance, of all religions,” Baxter told an Islamic financial industry “Legal Issues” seminar. “[S]ecular law should … accommodate differing religious practices,” he indicated, apparently even if that meant specially excepting Islamic banking from secular laws and regulations.

In April 2005, New York Fed executive vice president William Rutledge admitted that the bank was “in no position to take a stance on shari’a interpretation.” He also claimed the bank would hold Islamic finance to “the same high licensing and supervision standards” as conventional banks.

Despite the New York Fed’s role as a legal supervisor of Islamic banking, neither Rutledge nor Geithner noticed, however, that shari’a banking, a 20th century “tradition” invented by the Muslim Brotherhood, can’t be severed from Islamic law—statutes that Mohammed initiated, which caliphs, scholars and jurists developed over the last 1,400 years. They hold that shari’a grants Muslims (the ummah) supremacy over all others—along with all land and property to hold in trust for Allah. Thus as Fannoun effectively told the Fed in Nov. 2002, land or property, once conquered or acquired by Muslims (or for Allah), can’t generally revert to their original owners. Shari’a commands Muslims to wage jihad warfare until they subdue all “infidels” under universal Muslim rule, as Ibn Khaldun avowed in the Muqaddimah (trans., Franz Rosenthal, Princeton Univ. Press, 9th printing, 1989, p. 183).

Confiscating possessions from non-believers exacts “revenge,” wrote jurist Abul Hasan al Mawardi (d. 1058). Qur’an 57:2 argued, “To Him belongs all dominions of the heavens and earth.” Qur’an 59:7 echoed, “That which Allah giveth as spoil [war booty] unto his Messenger…,” Allah authorized 2nd Islamic Caliph, Umar Ibn Khattab, to confiscate property by force, fulfilling an Islamic trust, or ruling under Allah’s law. It was thereby just to take anything from nonbelievers, (The Laws of Islamic Governance, Taha Publishing, 1996, pp. 207-251) including all territories Islam ever controlled.

Apparently, Fed officials also neglected to investigate the alliances and beliefs of shari’a advisors and their affiliates in the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and Islamic Financial Services Board (IFSB) standards agencies.

The shari’a-based Islamic Development Bank established the AAOIFI in 1990 to set Islamic finance standards. Its trustees include executives of Kuwait Finance House, Saudi Arabia’s Dallah al Baraka Group and al-Rajhi Banking & Investment Corporation—all implicated in al-Qaeda and other terror-funding—and Sudanese (and until recently Iranian) officials, both U.S. Treasury-sanctioned countries.

Former Malaysian Prime Minister Mohamed Mahathir in 2002 christened IFSB “a universal Islamic banking system” and “a jihad worth pursuing….” Its board members include the terror-funding Iranian, Sudanese and Syrian central banks and Palestinian Monetary Authority.

Yusuf Qaradawi, an U.S.-designated foreign terrorist barred entry since 1999 for example, supports wife-beating, suicide bombings, murder of American military forces and female suicide “martyr operations.” A large shareholder of Al Taqwa Bank, Qaradawi also chairs the recently designated terrorist-funding Union of Good “charity,” Qatar National Bank, its al-Islami subsidiary, Qatar Islamic Bank, and Qatar International Islamic Bank—and follows AAOIFI standards he helped create.

Similarly, Dow Jones Islamic Market Indexes (DJIM) shari’a board uses “stringent and published” methods to determine “compliance of index-eligible companies.” But its industry screens, financial ratios and biographies omit advisors’ affiliations or beliefs. Dow Jones Citigroup Sukuk Index (DJCSI’s shari’a board certifies Islamic asset-backed bonds if structures meet “AAOIFI standards” and shari’a principles, but don’t mention AAOIFI history or governance.

Until July 2008, shari’a banks, the Dow Jones Islamic Index board and an North American Islamic Trust (NAIT) fund also employed a 20-year veteran of Pakistan’s Shari’a Supreme Court, former judge Taqi Usmani, who taught at the Taliban spawning ground, Jamia Darul Uloom Karachi, headed the AAOIFI religious board, endorsed suicide bombing, and in 2007 advised U.K. Muslims to impose shari’a when their numbers suffice.

Shari’a finance advisor Muslim Brother Yusuf Talal DeLorenzo advised Pakistan’s tyrannical Zia ul-Haq from 1981 to 1984, and ran the Virginia Islamic Saudi Academy educational program cited in 2008 for using hateful Islamic texts. Trained at Karachi’s terror-espousing Jamia Al Alomia Al Islamia, he served the Muslim Brotherhood International Institute of Islamic Thought (IIIT) and from 1989, was secretary to the MB’s Fiqh Council of North America.

Perhaps Treasury Secretary-designate Geithner seriously meant to keep Rutledge’s promise to grant Islamic financiers no special favors. But allowing shari’a finance to exist at all is itself a special favor.

Moreover, on November 23, 2008 Geithner, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke agreed to add another $20 billion taxpayer-gilded bailout to Citibank’s previous $25 billion bailout—and offer $306 billion in new loans to cover Citi’s losses on soured real estate debts and securities.

Only three days earlier Citigroup uber-shareolder Prince Alwaleed bin Talal, a godfather of Islamic finance, had announced plans to up his stake in America’s largest (failing and “underpriced”) bank from 4% to 5%. On March 20, 2006, the Saudi Kingdom Holding Co. CEO was “honored for humanitarian contribution to Islam” at a “glittering gala to celebrate excellence in Islamic Finance” that also featured terror-financier and Dallah al-Baraka founder and president Saleh Abdullah Kamel.


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Fidelity Magellan Fund, 1995

By Robert F. Bruner

Darden Case No. UVA-F-1126
University of Virginia (UVA) – Darden School of Business (c) 1995
Oct. 21, 2008

Abstract:
This case reviews the financial performance of the Fidelity Magellan Fund up to mid-1995. In essence, the Magellan Fund has managed to “beat the market” over time under three different fund managers despite its enormous size ($51 billion at the date of the case). The tasks for the student are to assess the adequacy of this performance, evaluate its likely sources, and opine on its sustainability. The case affords the opportunity to consider the appropriateness of various possible benchmarks in a risk-return framework and to assess the reasonableness of the efficient-markets hypothesis. The case can be used in an introductory finance course to present general information about equity markets and the behavior of large, sophisticated money managers.

NOTE:
4 Alyssa A. Lappen, “Fidelity Grapples with Gigantism,” Institutional Investor (September 1995): 90.

Number of Pages in PDF File: 17

Keywords: market efficiency, portfolio management, return on investment, risk analysis, securities
SSRN Working Paper Series


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RECOMMENDED READING: “Jihad Economics and Islamic Banking”

By GlobalMB on August 5, 2008 Recommended Reading

In an article on “financial jihad”, authors Rachel Ehrenfeld and Alyssa A. Lappen provide some useful information about the role of the Islamic Development Bank (IDB), known to have funded many global Muslim Brotherhood-related projects:

In 1969, the Saudis convened Arab and Muslim states to unify the “struggle for Islam,” and have ever since been the Organization of the Islamic Conference’s (OIC’s) major sponsor. The 56 OIC members include Iran, Sudan, and Syria. The Jidda-based, “pending the liberation of Jerusalem,” OIC’s charter mandates and coordinates “support [of]the struggle of the Palestinian people, . . . recovering their rights and liberating their occupied territories.” The OIC charter includes all the MB principles. Its first international undertaking in 1973 was to establish the Islamic Development Bank (IDB) “in accordance with the principles of the shariah,”as prescribed by the MB—and to launch the fast-growing petrodollar-based Islamic financing market. The IDB, more a development than commercial bank, was established largely “to promote Islamic banking worldwide.” “[A]n Islamic organization must serve God… and ultimately sustain …the growth and advancement of the Islamic way of life,” writes Nasser M. Suleiman in “Corporate Governance in Islamic Banking.” And the IDB has done just that. Between 1975 to 2005, the IDB approved over $50 billion in funding to Muslim countries, ostensibly to develop their economic and educational infrastructures, but effected little regional economic impact. Its educational efforts, however, paid huge yields—via the rapid and significant spread of radical Islam worldwide. Moreover, in 2001 alone, the IDB transferred $538 million23 raised publicly by Saudi and Gulf royal telethons to support the Palestinian intifada and families of Palestinian suicide bombers. The IDB has also channeled UN funds to Hamas, as documented by bank records discovered in the West Bank and Gaza. Yet, the IDB received UN observer status in 2007. According to a 1991 U.S. Library of Congress report on Sudan, the IDB also supported Faisal Islamic Bank, established in 1977 under Sudan’s Faisal Islamic Bank Act by Saudi prince Muhammad ibn Faisal Al Saud and managed by local Muslim Brotherhood members and their party, the National Islamic Front. Soon other political groups and parties formed their own Islamic banks. Together, Sudanese Islamic banks then acquired 20 percent of the country’s deposits “providing the financial basis to turn Sudan into an Islamic state in 1983, and promoting the Islamic governmental policies to date.” Sudan Islamized its banking in 1989. However, Pakistan was the first country to officially Islamize its banking practices, in 1979.

Previous posts have discussed the role of the IDB in funding a project of a Ukrainian Brotherhood organization and sponsoring a philanthropic conference held by ana organizaton with Brotherhood ties. Another post noted that IDB representatives were in attendance at a Saudi charity seminar attended by Wael Julaidan, possibly the known founder and financier of Al Qaeda,

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Schumer Steps Forward

Editorial of The New York Sun | July 28, 2008

Senator Schumer’s decision Friday to add his name to those of Senators Specter and Lieberman among the backers of the Free Speech Protection Act of 2008 increases the likelihood that the measure will make its way into law in the scramble after Congress returns from summer recess but before it breaks again for the elections. It will be an uphill battle, but count us among those hoping for a success. The law seeks to counter “libel tourism,” the practice of suing American writers in foreign jurisdictions, where the libel laws are friendlier to plaintiffs. The Free Speech Protection Act would prohibit American courts from enforcing such foreign judgments, and it would allow their victims to countersue in American courts.

To understand what’s at stake, look at the case of Rachel Ehrenfeld, in whose honor it has been nicknamed “Rachel’s Law.” In 2003, Ms. Ehrenfeld, an expert on terrorism who has served as an adviser to the Department of Defense, published “Funding Evil,” a study of how terrorist networks are financed. A Saudi billionaire sued her for libel in Britain, where the burden of proof for such lawsuits is lower than in America. Though only 23 copies of her book had been sold in Britain, its court found against Ms. Ehrenfeld, ordering her to have her book pulped and to pay hundreds of thousands of dollars in damages.

The judgment of the British court cannot be enforced in America. But the cost and burden to Ms. Ehrenfeld of defending the suit sent a message to any writer, or any publisher, contemplating a book on the subject of Islamist terror. “In effect,” wrote a senior fellow at the Ethics and Public Policy Center, Stanley Kurtz, “the Internet-driven internationalization of publishing is nullifying America’s First Amendment protections.”

As the capital of America’s publishing industry, New York is especially vulnerable to this threat. That’s why the State Legislature unanimously passed, and on April 30 Governor Paterson signed, a state version of Rachel’s Law. “New Yorkers must be able to speak out on issues of public concern without living in fear that they will be sued outside the United States, under legal standards inconsistent with our First Amendment rights,” Mr. Paterson said at the time.

The federal law as drafted won’t end all threats of foreign hassling of American-based journalists. We think of Mark Steyn, whose column regularly appears in these pages. Mr. Steyn spent the last year defending himself against charges brought by the Canadian Islamic Congress that an excerpt from his bestselling book “America Alone” suddenly constituted, when it was published in Maclean’s magazine, an incitement to hatred of Muslims. He was not sued in a regular court, with its legal protections and rules of evidence. Instead, he was hauled up before the Canadian Human Rights Commission, an unaccountable tribunal with sweeping powers to stamp out any speech it considers offensive.

After coming in for unprecedented public criticism over the Steyn case, the commission eventually dismissed the charges against him, though a case before the British Columbia Human Rights Tribunal is still pending. The Ehrenfeld and Steyn cases are but two examples in a trend that prompted the New Criterion magazine, along with the Foundation for Defense of Democracies, to host in April a conference on “Free Speech in the Age of Jihad.” The proceedings have just been issued as a pamphlet, underscoring that across the Western world, legal and quasi-legal mechanisms are being used to try to block open criticism of Islam or of prominent Muslims.

The “findings” contained in Rachel’s Law make an articulate case for the need to pass it. “Free speech, the free exchange of information, and the free expression of ideas and opinions are essential to the functioning of representative democracy in the United States,” it says. “The free expression and publication by journalists, academics, commentators, experts, and others of the information they uncover and develop through research and study is essential to the formation of sound public policy and thus to the security of the people of the United States.” Senator Schumer, along with Senators Specter and Lieberman and their colleagues in the House backing similar legislation, including Reps. Peter King and Anthony Weiner, are taking an important step in leading the effort to pass this law.
____________________________________________

See also: The Guardian, “A National Disgrace.”

Contact the Senate Judiciary Committee.


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Jihad Economics and Islamic Banking

Right Side Publications – 27 July 2008 – Dr. Rachel Ehrenfeld and Alyssa A. Lappen

[From Armed Groups: Studies in National Security, Counterterrorism, and Counterinsurgency; Edited by Jeffrey Norwitz; U.S. Naval War College , June 2008, chapter 28.]

The United States and the West cannot win the war against radical Islam merely with the most sophisticated military strategies. Winning requires understanding the role of shari’a and the Muslim Brotherhood in developing a global ideological and political movement supported by a parallel “Islamic” financial system to exploit and undermine Western economies and markets.

This movement is the foundation and the major funding source for the political, economic, and military initiatives of the global Islamic movement.1 Shari’a finance is a new weapon in the arsenal of what might be termed fifth-generation warfare (5GW).2 The perpetrators include both states and organizations, advancing a global totalitarian ideology disguised as a religion. The end goal is to impose that ideology worldwide, making the Islamic “nation,” or ummah, supreme.3

Rising oil prices and the West’s dependency on Middle East oil, combined with willful blindness and political correctness, provide a surge of petrodollars, making financial and economic jihad so much easier to carry out. Moreover, according to shari’a, Muslims hold all property in trust for Allah.4 Therefore, under the shari’a, all current and historic Muslim acquisitions everywhere, including the United States , belong to the ummah, in trust for Allah.

Shari’a is the crucial source and ultimate authority dictating the actions of practicing individuals and radical Muslim states and movements alike. Failing to understand the political use of shari’a hampers the U.S. ability to mount effective policies, plans, and strategies to successfully counter this fast-growing totalitarian threat.

This ignorance is illustrated by the statements of Massachusetts representative Barney Frank and Utah senator Bob Bennett. Responding to opponents of Bourse Dubai’s then-proposed acquisition of 20 percent of NASDAQ in September 2007, Frank quipped, “In the ports deal, the concern was smuggling something or someone dangerous. . . . What are we talking about here”–smuggling someone onto a stock exchange? 5 Similarly, Bennett said, “ Dubai is making a purchase on the open market of an asset that’s for sale. What’s wrong with that?”

Although Senator Bennett is correct—buying portions or all of NASDAQ is legal, and NASDAQ regulations could not be changed without Securities and Exchange Commission (SEC) approval—Bourse Dubai’s shari’a influence in the heart of the U.S. markets and economy should have been of grave concern.

Shari’a is the set of Islamic laws established by Muslim jurists, based on the Qur’an and deeds of the prophet Muhammad, as recorded beginning more than 1,200 years ago. Its end goal, for all time, is establishing a world ruled entirely by Islam and the harsh shari’a laws. These laws govern every aspect of daily life and prohibit individual, political, and religious freedoms.

Financial Jihad Funding the jihad, i.e., financial jihad, or Al Jihad bi-al-Mal, is mandated by many verses in the Qur’an, such as chapter 61, verses 10.11: “you . . . should strive for the cause of Allah with your wealth and your lives,” and chapter 49, verse 15: “The [true] believers are only those who . . . strive with their wealth and their lives for the cause of Allah.” This has been reiterated throughout Islamic history and in recent times. “Financial Jihad [is] . . . more important . . . than self-sacrificing,” according to Saudi and Muslim Brotherhood (MB) spiritual leader Hamud bin Uqla al-Shuaibi.6

Qatar-based Muslim Brotherhood spiritual leader Yusuf al-Qaradawi, one of the most prominent Sunni scholars in the world today, reiterated the legal justification for “financial jihad [Al-Jihad bi-al-Mal]” in a lecture he gave on 4 May 2002 in the United Arab Emirates (UAE). According to him, “collecting money for the mujahideen (jihad fighters . . . ) was not a donation or a gift but a duty necessitated by the sacrifices they made for the Muslim nation.” 7

Historical Development The origins of the modern financial jihad infrastructure, including all Islamic economic and financial regulatory organizations like the 1991-Bahrain-registered and -based Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), date back to the 1920s and were an invention of Muslim Brotherhood founder Hassan al-Banna. He designed political, economic, and financial foundations to enable Muslims to fulfill a key form of jihad mandated by the Qur’an—financial jihad.8

He viewed finance as a critical weapon to undermine the infidels—and “work towards establishing an Islamic rule on earth.” 9 He was first to understand that to achieve world domination, Muslims needed an independent Islamic financial system to parallel and later supersede the Western economy. Al-Banna’s contemporaries and successors (such as the late Sayed Qutb and current Yusuf al-Qaradawi) set his theories and practices into motion, developing shari’a-based terminology and mechanisms to advance the financial jihad— “Islamic economics,” finance, and banking.10

Early 1930s MB attempts to establish Islamic banking in India failed. Egyptian president Gamal Abdel Nasser shut down the second attempt, in 1964, after only one year, later arresting and expelling the Muslim Brotherhood for attempts to kill him.11

But Saudi Arabia welcomed this new wave of Egyptian dissidents, as did King Saud bin Abdel Aziz earlier waves in 1954 and 1961.12 Their ideas so appealed to him and his clerics that in 1961, Saud funded the MB’s establishment of the Islamic University in Medina to proselytize its fundamentalist Islamic ideology, especially to foreign students.13 In 1962, the MB convinced the king to launch a global financial joint venture, which became the cornerstone and engine to spread Islam worldwide. This venture created charitable foundations, which the MB oversees and from which most Islamic terrorist groups benefit.14

The first were the Muslim World League (MWL) and Rabitta al-Alam al-Islami, uniting Islamic radicals from 22 nations and spinning a web of many other charities with hundreds of offices worldwide.15 In 1978, the kingdom backed another MB initiative, the International Islamic Relief Organization (IIRO), which, with all these “charities,” is implicated for funding al Qaeda, the 9/11 attacks, Hamas, and others.16 These “charities” are used to advance the Muslim Brotherhood and Saudi political agenda, namely empowering the ummah and imposing worldwide shari’a. “I don’t like this word ‘donations’,”. al-Qaradawi told BBC Panorama on 30 July 2006. “I like to call it Jihad with money, because God has ordered us to fight enemies with our lives and our money.”17

In 1969, the Saudis convened Arab and Muslim states to unify the “struggle for Islam,” and have ever since been the Organization of the Islamic Conference’s (OIC’s) major sponsor. The 56 OIC members include Iran, Sudan, and Syria. The Jidda-based, “pending the liberation of Jerusalem,” OIC’s charter mandates and coordinates “support [of] the struggle of the Palestinian people, . . . recovering their rights and liberating their occupied territories.” 18 The OIC charter includes all the MB principles. Its first international undertaking in 1973 was to establish the Islamic Development Bank (IDB) “in accordance with the principles of the shariah,”19 as prescribed by the MB—and to launch the fast-growing petrodollar-based Islamic financing market. The IDB, more a development than commercial bank, was established largely “to promote Islamic banking worldwide.” 20 “[A]n Islamic organization must serve God… and ultimately sustain …the growth and advancement of the Islamic way of life,” writes Nasser M. Suleiman in “Corporate Governance in Islamic Banking.”21

And the IDB has done just that. Between 1975 to 2005, the IDB approved over $50 billion in funding to Muslim countries,22 ostensibly to develop their economic and educational infrastructures, but effected little regional economic impact. Its educational efforts, however, paid huge yields—via the rapid and significant spread of radical Islam worldwide. Moreover, in 2001 alone, the IDB transferred $538 million23 raised publicly by Saudi and Gulf royal telethons to support the Palestinian intifada and families of Palestinian suicide bombers. The IDB has also channeled UN funds to Hamas, as documented by bank records discovered in the West Bank and Gaza. Yet, the IDB received UN observer status in 2007.24

According to a 1991 U.S. Library of Congress report on Sudan, the IDB also supported Faisal Islamic Bank, established in 1977 under Sudan’s Faisal Islamic Bank Act by Saudi prince Muhammad ibn Faisal Al Saud and managed by local Muslim Brotherhood members and their party, the National Islamic Front. Soon other political groups and parties formed their own Islamic banks. Together, Sudanese Islamic banks then acquired 20 percent of the country’s deposits “providing the financial basis to turn Sudan into an Islamic state in 1983, and promoting the Islamic governmental policies to date.”25 Sudan Islamized its banking in 1989. However, Pakistan was the first country to officially Islamize its banking practices, in 1979.

Rising oil revenues encouraged MB leaders to formalize al-Banna’s vision. In 1977 and 1982, they convened in Lugano, Switzerland, to chart a master plan to co-opt Western economic “foundations, capitalism and democracy” in a treatise entitled “Towards a Worldwide Strategy for Islamic Policy,” also known as The Project. MB spiritual leader al-Qaradawi wrote the explicit document, dated 1 December 1982.26 The 12-point strategy includes diktats to establish the Islamic state and gradual, parallel work to control local power centers . . . using institutional work as means to this end. This requires “special Islamic economic, social and other institutions,” and “the necessary economic institutions to provide financial support” to spread fundamentalist Islam.27

Consequently, the IDB founded the AAOIFI in 1990. AAOIFI members include the Saudi Dallah al Baraka Group, al-Rajhi Banking & Investment Corporation, and Kuwait Finance House28—all implicated in funding al Qaeda and other MB offspring, according to Richard Clarke, the former national coordinator for security, infrastructure protection, and counter-terrorism.29 The 18 AAOIFI members also include Iran and Sudan, both on the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) sanctions list; Iran is a U.S. State Department-designated terror-sponsoring state, too. UAE banks wired most of the funding for the 9/11 attacks.30

In addition, the “de facto Islamic Central Bank,” the Islamic Financial Services Board (IFSB),31 was established in 2002 in Kuala Lumpur “to absorb the 11 September shock and reinforce the stability of Islamic finance.” Chairing the organizers’ meeting, then Malaysian Prime Minister Mohamed Mahathir stated, “A universal Islamic banking system is a jihad worth pursuing to abolish this slavery [to the West].” IFSB members include the central banks of Iran, Sudan, and Syria (all designated state sponsors of terrorism) and the Palestinian Monetary Authority (PMA), which is widely documented since its inception to be a terror funder.32

According to Dallah al Baraka Group and Islamic Chamber of Commerce and Industry (ICCI) president Saleh Kamel,33 more than 400 Islamic financial institutions34 currently operate in 75 countries.35 They now hold more than $800 billion in assets 36 growing 15 percent annually. HSBC, UBS, J.P. Morgan Chase, Deutsche Bank, Lloyds TSB, and BNP Paribas are but a few that offer Islamic banking and shari’a-based products to their Western clients—and promote them as “ethical investments.”

Billionaire Sheikh Saleh Abdullah Kamel and his family, like other wealthy Saudis, have built their terror-funding-affiliated $3.5 billion Dallah al Baraka Group to service the shari’a.37 Its business, finance, and media sectors incorporate agriculture, communication, health care, real estate, tourism, trade, transportation, and finance companies—including 10 banks and many leasing and finance firms, Arab Radio & Television and Arab Digital Distribution, and the International Information & Trading Service Co., producing the Top 1000 Saudi Companies Directory, among other publications.

Rapidly rising oil prices fill the coffers of Islamic banks, fuel the expansion of shari’a economics and financial jihad—and threaten the United States and the entire non-Muslim world, in real time. Indeed, shortly after 9/11, Osama bin Laden called on Muslims “to concentrate on hitting the U.S. economy through all possible means. . . . Look for the key pillars of the U.S. economy. Strike the key pillars of the enemy again and again and they will fall as one.” 38

The NASDAQ acquisition, purchases of over 52 percent of the London Stock Exchange (LSE) and 47.6 percent of OMX (Nordic exchange), and vigorous expansion of shari’a finance all steadily implement al-Banna.s plan to spread and ultimately impose shari’a worldwide.

Bourse Dubai in December 2006 loudly proclaimed its new conversion to “shari’a compliance and accounting practices.”39 Yet, responding to a specific inquiry on the Islamic nature of Bourse Dubai from the Partnership for New York City on 22 October 2007, Bourse Dubai denied being an Islamic exchange.40 Still unaware of the implications of importing shari’a finance, however, hoards of Westerners eagerly attend such pricey events as the October 2007 Islamic Finance Summit in New York,41 which focused on the “innovations in shari’a compliant finance.” According to an eyewitness, when one participant timidly inquired, “What is shari’a law?” a leading Islamic scholar responded from the podium: “It’s good for you.”

Lost on the attendees was the inescapable fact that shari’a calls for the supremacy of Islam, thus negating the U.S. Constitution.42

Zakat Zakat, we are told, is to help the needy. But as Janine A. Clark’s excellent 2004 study shows, zakat is used to support the middle class, to strengthen its loyalty to the rulers, and to back their radical ideology’43

Muslim Brotherhood spiritual leader Yusuf al-Qaradawi decrees, “Declaring holy war . . . is an Islamic duty, and fighting . . . is the Way of Allah for which Zakat must be spent.” In his 1999 publication, Fiqh az-Zakat, al-Qaradawi adds, “The most important form of jihad today is serious, purposefully organized work to rebuild Islamic society and state and to implement the Islamic way of life in the political, cultural and economic domains. This is certainly most deserving of Zakat.” 44 And as previously demonstrated time and again, Muslim jihadist-terror organizations are indeed prominent zakat recipients.

The use of charities to fund jihad, however, is not limited to radical Sunnis. On Jerusalem Day, 5 October 2007, Al-Manar TV broadcasted Hezbollah leader Hassan Nasrallah’s cantankerous speech giving religious, moral, and political justification in support of “the armed Palestinian resistance” and calling for financial support to the Palestinian terrorist organizations. Nasrallah “gave Khomeini’s fatwa [45] . . . allowing charity funds . . . and the tax of 1/5 (khums)[46] to be transferred to the Palestinian terrorist organizations . . . to pay for their campaign.”47

The definition of zakat in The Encyclopedia of Islam includes in “category 7” of eligible recipients “volunteers engaged in jihad,” for whom the zakat covers “living expenses and the expenses of their military service (animals, weapons).” 48

Millard Burr and Robert Collins’s compelling study Alms for Jihad documents that when zakat, which is obligatory to all Muslims, is given “in the path of Allah,” it is given to fund jihad. There are seven broad categories of eligible recipients: the poor, converts, wayfarers, those in bondage or in debt, those committed to Allah for the spread and triumph of Islam, newcomers whose faith is weak, and new converts to Islam “whose hearts have been [recently] reconciled [to truth].” Moreover, zakat may be used to support those who admin ister it.49

In a 2006 federal case, alleged al Qaeda supporters Emadeddin Z. Muntasser and Muhammed Mubayyid were charged with soliciting and spending “funds to support and promote the mujahideen and jihad, including the distribution of pro-jihad publications,” through their now-defunct “charity” and front organization, Care International. The Boston-based organization published, among other things, the English version of al Qaeda cofounder and key Muslim Brotherhood leader Abdullah Azzam’s “Join the Caravan.”

It states, “The individually obligatory nature of jihad remains in effect until the lands are purified from the pollution of the disbelievers.”50 They collected more than $1.3 million in contributions. In their defense, Muntasser and Mubayyid claimed to merely have exercised their religious freedom and obligation to give zakat as part of their constitutionally protected freedoms. Their motion for dismissal (which the court denied) cited chapter 9, verse 60, of the Qur’an, describing “those entitled to receive zakat.”

Incredibly, the suspects’ attorneys also argued that such charitable giving, to support jihad and mujahideen, is rightfully tax exempt under the U.S. constitutional protection of religious freedom.51 Court records show Care International deposited checks “with handwritten notes such as ‘for jihad only,’ ‘Bosnia Jihad fund,’ and ‘Chechen Muslim Fighters’.” The U.S. Constitution provides protections for religious freedom, but most certainly was never intended to protect religiously sanctioned or encouraged war in or against America.

The First Amendment bars Congress from enacting laws “respecting an establishment of religion, or prohibiting the free exercise thereof.” However, the Constitution offers no protection to any group or religion supporting “holy war” against the United States or its citizens.

State Zakat Agencies

Saudi Arabia

In 2007, Saudi Arabia collected $18 billion in zakat52 —which includes the 20 percent flat corporation tax from foreign companies. The Saudis claim that the money collected develops their infrastructure. However, two-thirds of Saudi men are unemployed and the infrastructure is crumbling.53

Illustrating how funds are used, Saudi Arabia’s secretary-general of the official Muslim World League Koran Memorization Commission stated on Iqra TV, on 29 August 2005, “The Prophet said: ‘He who equips a fighter…it is as if he himself fought.’ You lie in your bed, safe in your own home, and donate money and Allah credits you with the rewards of a fighter. What is this? A privilege.”54

Since the 1970s, the Saudi government has spent more than $100 billion 55 to build thousands of mosques, Islamic centers, and Islamic studies programs in universities worldwide to advance the ummah’s power and undermine Western economic, political, cultural, educational, and legal structures and replace them with the shari’a.56 In the last 13 years alone, the Saudis gave at least $459 million to British universities for Islamic study centers, according to Professor Anthony Glees, of Brunel University.57

The worldwide Muslim riots following the publication of the Muhammad cartoons in Denmark’s largest daily, Jyllands-Posten, began only after Saudi Arabia recalled its ambassador to Denmark; after Sheikh Osama Khayyat, imam of the Grand Mosque in Mecca, praised on national Saudi television the Saudi government for its action; and after Sheikh Ali Al-Hudaify, imam of the Prophet’s Mosque in Medina, called “upon governments, organizations and scholars in the Islamic world to extend support for campaigns protesting the sacrilegious attacks on the Prophet.”58 Saudi-controlled OIC initiated and coordinated Muslim rioting worldwide after the Danish Muhammad cartoon publications.59

Moreover, to wield more control over Muslim communities worldwide, better orchestrate “spontaneous demonstrations,” and better allocate funds for them, the Saudi-backed OIC established the clerical International Commission for Zakat (ICZ) on 30 April 2007. Previously, there were more than 20,000 organizations that collected zakat. Now, however, the Islamic clerics’ centralized “expert committee” based in Malaysia also supervises and distributes zakat funds globally. The new committee distributed roughly $2 billion collected over Ramadan 2007 to Muslim “charities”.60

In a show of unity, the Shiite Hezbollah chief Hassan Nasrallah argued, “If there had been a Muslim to carry out Imam Khomeini’s fatwa against the renegade Salman Rushdie, this rabble who insult our Prophet Mohammed in Denmark, Norway and France would not have dared to do so.”61

The Saudi role in terror financing is no secret. Yet, the U.S. admin istration keeps telling us that the Saudis are our allies. On 10 December 2002, criticizing the Joint Inquiry Staff (JIS) report of the Senate Select Committee on Intelligence (SSCI) and the House Permanent Select Committee on Intelligence (HPSCI), Senators Jon Kyl and Pat Roberts stated, “The pervasiveness in Saudi Arabia of Wahhabism, a radical, anti-American variant of Islam, was well known before 9/11. The JIS should have inquired why the country of Saudi Arabia was given such preferential treatment by the State Department and whether the intelligence agencies were complicit in the policy.”62

In early 2008, however, U.S. government officials publicly noted that the Saudis continue the financing of radical Islamic groups.63 United Arab Emirates64 Like every Muslim country, the UAE collects mandatory Islamic charity (zakat. the Third Pillar of Islam—an annual wealth tax), of 2.5 percent to 20 percent from Muslim institutions and companies. Being non-Muslims, foreign banks and oil companies theoretically don’t pay zakat.

But foreign banks and oil companies do pay at least 20 percent of their profits in the form of a mandatory tax rather than zakat. In 2003, the UAE established an independent federal agency collecting zakat on government tax revenues from “companies listed on the Dubai Financial Market and Abu Dhabi Securities Market . . . oil-producing companies and branches of foreign banks.” In 2007 these revenues were estimated at $13.5 billion.65

Although presenting itself to the West as a moderate. ally, the UAE has consistently supported the. peaceful. and violent advancement of shari’a and terrorism worldwide. In 2006, to support suicide bombing, the UAE gave $100 million to the Palestinian Authority to build a new town named Sheikh Khalifa City, in honor of the UAE president. The city houses families of “shahids and prisoners” andprisoners.and was built on the ruins of Morag, one of the evacuated Israeli settlements in Gaza.66

On July 27, 2005, the Palestinian Information Center carried a public HAMAS statement thanking the UAE for [its] “unstinting support.” The statement said: “We highly appreciate his highness Sheikh Khalifa Bin Zayed Bin Sultan Al-Nahyan (UAE president) in particular and the UAE people and government in general for their limitless support . . . that contributed more to consolidating our people’s resoluteness in the face of the Israeli occupation.”

The HAMAS statement continued: “the sisterly UAE had . . . never hesitated in providing aid for our Mujahid people pertaining to rebuilding their houses demolished by the IOF. . . .

The UAE also spared no effort to offer financial and material aids to the Palestinian charitable societies.”67

Indeed, as documented by the Intelligence and Terrorism Information Center at the Center for Special Studies (CSS),68 Hamas charitable societies are known as integral parts of the Hamas infrastructure, and are outlawed by the United States and Israel.

Hamas also included a special tribute, promising to “never forget the generous donations of the late Sheikh Zayed Bin Sultan [al Nahayan of Abu Dhabi],”69 the current UAE president’s father. The multibillionaire was an early PLO patron and, from the 1970s until his 2004 death, contributed millions of dollars to the PLO’s terror agenda, Hamas, and Islamic Jihad.70

Sheikh Zayed Bin Sultan was the first Arab ruler to understand the strategic importance of economic jihad71 against the West. He was first to use oil as a political weapon after the 1973 Yom Kippur War.72 He was also the major sponsor of the first international Islamic bank, the Bank of Credit and Commerce International (BCCI). The bank was created to serve as .the best bridge to help the world of Islam, and the best way to fight the evil influence of the Zionists.”73 BCCI, which was shut down in July 1991 by New York City district attorney Robert Morgenthau, 74 funded and otherwise facilitated terrorist organizations and states, including the Sandinistas, Hezbollah, abu Nidal, the PLO, al Qaeda, Syria, Libya, Iran’s Islamic revolution—as well as Pakistan’s nuclear program, to create the “Islamic Bomb.”75

Immediately before the 1991 Gulf War, Sheikh Zayed branded the United States the Muslims” “number two enemy” after Israel. As of this writing, the UAE votes against the United States 70 percent of the time in the UN.76

Human Appeal International (HAI), a UAE government-run “charitable” organization, whose board includes the UAE president,77 continues to fund Hamas and other Palestinian organizations, .martyrs,. and Palestinian terrorists in Israeli prisons and their families. The HAI modus operandi includes transferring funds to the Palestinian Red Crescent, whose West Bank and Gaza branches Hamas runs. Hamas, in turn, distributes the money to Hamas “charities.”

The Toronto, Canada, Orient Research Center reports that the UAE compensation. plan for the Palestinian intifada in 2001 included $3,000 for every Palestinian shahid, $2,000 for his family, $1,500 for those detained by Israel, and $1,200 for each orphan. In addition, the families of terrorists whose homes Israel demolished each received $10,000. Also in 2001, the UAE held two telethons to support the “martyrs’” families. One entitled “We Are All Palestinians” raised 135 million dirham, or $36.8 million, and another called “For Your Sake Palestine” raised 350 million dirham, or $95.3 million.

On 15 February 2005, the Hamas Web site reported on funds transferred from HAI to two West Bank Hamas front organizations, IQRA and Rifdah, outlawed in Israel.78 On 22 March 2005, the Palestinian newspaper Al-Ayyam reported that in 2004 the UAE Red Crescent donated $2 million to Hamas “charities” for 3,158 terrorists. orphans.79

A detailed 25 March 2005 report, in the Palestinian daily Al Hayat al-Jadeeda, noted that the UAE Friends Society transferred $475,000, through the UAE Red Crescent, to West Bank “charitable” organizations in Hebron, Jenin, Nablus, and Tulkarem to distribute to families of “martyrs,” orphans, imprisoned Palestinians, and others.

And in July 2005, Osama Zaki Muhammad Bashiti of Gaza’s Khan Younis was arrested while returning from the UAE80 for often transferring as much as $200,000 at a time to the Gaza branch of Hamas.

Continuing UAE support for Hamas follows the agenda of the late Sheikh Zayed. His Zayed Center for International Coordination and Followup, founded in 1999 as the official Arab League think tank,81 was shuttered under international pressure in 2003. It championed Holocaust deniers like Thierry Meyssan82 and Roger Garaudy83 and provided a platform for anti-Western, anti-Christian, and anti-Jewish extremists like Saudi economist Dr. Yussuf Abdallah Al Zamel, who blamed the Iraq war on “radical Zionist and right-wing Christian” influence.

In October 2000, shortly after the beginning of the last Palestinian intifada against Israel, Qatar-based Muslim Brotherhood spiritual leader Yusuf al-Qaradawi established the “Union of Good,”84 operated through the London-based Muslim organization Interpal. The Union of Good is an umbrella organization composed of 50 Islamic “charities,” including Hamas- and Hezbollah-affiliated organizations. It was supposed to raise funds for only 101 days, but its initial success led the founders, mostly Hamas members, to maintain its operations to date. Millions of dollars generated in Europe and elsewhere through the Union of Good-participating Muslim “charities” fuel all Palestinian terror organizations. Interpal was designated as a terrorist organization by the United States in August 2003, but remains free to operate in the United Kingdom and elsewhere.

Al-Qaradawi, who established and leads the Department of Islamic Law (shari’a) at the University of Qatar and the Institute for Sunnah Research there, is also on the board of directors of the Al-Taqwa Bank, designated by the United States as a terrorist-funding organization in November 2001. In August 2004, al-Qaradawi issued a fatwa saying, “All the Americans in Iraq are soldiers, there is no difference between enlisted soldiers and civilians, and they must be fought because American citizens came to Iraq to serve the occupation. The kidnapping and killing of Americans in Iraq is a [Muslim religious] obligation to force them to leave the country immediately.”85

UAE foreign minister Sheikh Abdullah bin Zayed al-Nahayan stated that the emirates were and remain a. strong ally of the U.S. in combating terrorism.; continuing UAE support of Hamas and other Islamic terrorist organizations proves otherwise. This raises legitimate concerns for the West about trusting UAE banks, shari’a finance institutions, or government tax or zakat collection agencies. Furthermore, it raises alarms about giving the UAE legal control or influence over Western investment houses, banks, or markets.86 The same applies to every other Islamic financial institution or state.

Bourse Dubai began operating as the world’s first fully shari’a-compliant stock exchange in December 2006.87 shari’a compliance requires companies traded to also be shari’a-compliant and establishes a special tax on all the others to. Purify them. The Islamic “purity” (tazkiya) of Bourse Dubai was approved by the shari’a Board of the AAOIFI.88 The AAOIFI laid the groundwork for the global Islamic financial network and regulates all Islamic financial organizations and products, including Bourse Dubai. How the West Can Win The adversary’s skill at manipulating media and public opinion cannot be underestimated. The propaganda offensive is so successful that even Colonel Thomas X. Hammes’ description of what led to the Second Intifada is a rehash of the Saudi-sponsored Palestinian fabrication and propaganda. Ham mes claims that the Palestinian Authority named the new intifada “the al Asa Intifada” to suggest that the Palestinian violent reaction was a direct result of then Liked party leader Ariel Sharon’s visit to the al-Asa Mosque. Moreover, Hammes’ speculation that Sharon knowingly sparked Palestinian violence using his own fourth-generation warfare strategy suggests a deliberate disregard for thousands of dead Israelis and Palestinians in the resulting mayhem.

The fact of the matter is, Sharon never entered the al-Asa Mosque but rather visited the Jewish holy site of the Temple Mount. Moreover, careful study of the Palestinian modus operandi makes it clear that naming violent outbreaks is done in an opportunistic fashion and this one was preplanned. Mad Al-Hifalutin, then Palestinian Authority communications minister, stated on several occasions: “The PA had begun to prepare for the outbreak of the current Intifada since the return from the Camp David negotiations, by request of President Yasser Arafat.”89

The United States is now drawing new military and defense doctrines to win the fourth-generation warfare. In addition to improving technologies, the focus seems to be on the development of lighter and more flexible armies, and a greater understanding of the individual characteristics of our enemies. Writing about strategies needed to win the next war, Colonel Thomas X. Hammes states that the “most powerful [U.S.] message” to the world is that “we treasure the individual.”90

But a measure of the enemy’s success is our reluctance to identify the shari’a for what it is. Its adherents value only the ummah, and they enslave the individual to achieve their goal—global domination. As long as the enemy—shari’a—has not been acknowledged and understood, we stand no chance. Exposing shari’a and all its adherents, be they states, organizations, or individuals, is crucial to our ability to defend ourselves. It will also enable us to undermine sharia’s global structure, turning its adherents against it, the way we did with communism.

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