Muslims Trading with Other Countries?

Question:
My question is regarding trade. As far as I know, in Islam it is allowed to do trade with Christians, Jews (Book Holders) Today most of the Muslim countries do their businesses with Japan, Korea and those countries which are neither Jewish or Christian. Is this right? Secondly, the goods that Muslim country buy from these countries is sold in local markets. Are Muslim masses allowed to buy these goods?

Answer:
All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah, and that Muhammad sallallaahu `alayhi wa sallam (may Allaah exalt his mention) is His slave and Messenger.

In principle, it is permissible for a Muslim to buy from Jews, Christians, polytheists, and all other non-Muslims or to sell them goods within the limits of the Shari’ah.

However, any involvement in Riba (interest and/or usury), selling pork and the like are forbidden. Therefore, there is no harm to purchase their food, drinks, garments, means of transport, etc. as long as they do not contain any prohibition of the Islamic Shari’ah.

Allaah Knows best.


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What the Holy Quran Says About Interest Takers

Interest called Riba’, is prohibited and haram money. Allah SWT has prohibited it and any business that involves giving or taking of interest is also haram. Allah has mentioned about interest and its takers at many places in the Quran and has warned them for their act:

“Allah destroys interest and gives increase for charities. And Allah does not like every sinning disbeliever.” [Al-Quran, surah Al-Baqarah, verse 276]

Allah had ordered us to stop the transactions in interest and give charity. When dealt in interest, people strive to earn the most from investing the minimum amount. This causes the imbalance of money supply in the markets. Thus the money circulation stops to only one corner of the society with those who can pay interest and those who know all the tactics to take an interest at every little transaction. We see this happening in society today. There is no money circulation on the society where interest prevails.

But when charity is given, this money is utilized only by those who are poor earners. There is a large number of people who earn less than one dollar daily, so when the charity is paid, money goes down instead of going up, making a complete opposite money circle than is seen in the interest-based society. Money goes down and the level of people’s life standard goes up and equality grows in society. This leads to a balanced economic society and also the expropriation of other’s rights becomes rather impossible. this is just one logic to shun the use of interest there are many others. Allah says in the Quran (which means):

“O you who have believed, fear Allah and give up what remains [due to you] of interest, if you should be believers.” [Al-Quran, surah Al-Baqarah, verse 278]

This verse is a clear cut message of Allah to those who are Muslims. They cannot deal in interest if they want to be believers.

We should fear Allah and we should fear that torment and that humiliation which could be faced if we do not take care of the money we earn.

This is a very serious problem in our society today because there is no business deal which does not involve interest to be paid or to be taken. Similarly, people in their daily lives, get loans for any purpose, these small or large loans also involve a small or huge amount of interest. Once taken, the borrower will have to pay the interest amount or it will be multiplied with each default. This is how one class of people make all the money and expropriates the rights of others.

In Quran, Allah says that when usury is paid, it does not do any good to society or it does not do any good to that person even, rather it only increases the money of those who already have more than enough by expropriating the rights of others. But if zakat is paid, it does not only earn the pleasure of Allah but also beneficial for the society at large. All the debates on economic realities and political system related to economic justice and all can be thrown to dust bin only by following Quran and Sunnah and by adhering to what Allah has told us to do.


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Controversies Over the Definition of Riba (Interest/Usury)

Controversies over the definition of “riba = الربا” continue among Islamic scholars. Riba is usually translated as “interest” or “usury” into English. A party of the scholars defines “riba” as “usury”, concluding that only usurious amount of interest is called “riba”. Other parties make other definitions, all of which somewhat agree that riba is “the unreciprocated increment in borrowing or lending money”, although they may stipulate other conditions to call it “riba”.

Making the definition of riba accurately is vital because it is strictly prohibited by God and God threatens the dealers of riba severely:

Which means: “Those who consume interest behave no differently than they who the Devil has confounded with his touch. That is because they say, “trade is equivalent to (gaining) interest.” God has made trade lawful and prohibited interest. So, whoever has received an admonition from his Master and desists from (dealing with) interest, what was received in the past belongs to them. God undertakes their affair (about the past interest income), but whoever resumes (dealing with interest) is a resident of the Fire. Therein they will abide as immortal. God causes the (economy practicing) interest to depress and causes (economy practicing) the zakat/the alms to be a means of manifold increase. God does not love any of the sinners who are obstinate about ignoring (the verses). Those who believe and do righteous deeds, keep up the prayer and give the zakat deserve the reward in the presence of their Master. They neither fear nor grieve. Oh, you who believe! Protect yourselves by being mindful of God. Give up what is left of interest receivables if you really trust Him. If you do not give it up, then take notice that you are in a war against God and against His Book. If you turn around, you are entitled (only) to your principals. This way, neither you do wrong nor you are done wrong.” [Al-Quran, surah al-Baqarah, verse 275-279].

In Islamic jurisprudence (fiqh), “riba” is defined as “the unreciprocated increment that is stipulated in a financial agreement”, or “the financial agreement in which unreciprocated increment is stipulated”. When we review the riba-relevant verses in the Qur’an and the hadiths, we see the emphasis on two issues: riba is an “economic activity”, and it is a “financial increment”.

In Al-Quran, surah an-Nisa verse 29, it is decreed (which means): “Oh you who believe, do not consume one another’s wealth through falsehood but only in trading by mutual consent.”

Trade is defined both in Islamic jurisprudence and in finance as “the exchange of distinct kinds of economic assets in order to make a profit”. It is significant that any exchange of assets which aims to make a profit must be based on trading by mutual consent.

In other words, the following rule is stipulated: the methods (such as kardh, dotation, sadaqah, etc) which do not have the characteristics of trade, i.e., which do not have both the chance of making profit and the risk of loss while exchanging two different types of economic assets, cannot be used as tools of making profit.

The income obtained out of activities having the characteristics of trade is called “profit”. Therefore, the income obtained out of a trade is “profit”, and profit has been made lawful (halal) by God.

It is clear that the activities of falsehood (ba’til =باطل) that are not within the scope of trade, such as gambling, bribery, theft, etc. are prohibited (haram). Moreover, the income obtained from those activities is also prohibited. This is because those activities sum up to zero in the economic sense; they do not have the characteristic of providing added value.

In Al-Quran, surah an-Nisa verse 29, it is declared that the false (ba’til =باطل) methods of exchanging assets are not within the purview of trade. In verse  161, attests that dealing in riba is of the false methods of exchanging assets (which means):

“They take (financial) interest when they were told not to, and consume people’s possessions by falsehood. We have prepared for the ignorers amongst them a painful torment.” [Al-Quran, surah an-Nisa verse 161]

It is evident that riba itself is not a legitimate method of exchanging assets, and the income obtained through riba is also illegitimate.

In surah al-Baqarah, verse 275, while pointing at the methods of making a profit, staying away from riba is decreed; buying and selling – which is the first step of commerce – is recommended. In this verse, while riba and sale (bai’ = بيع) are compared to each other, the emphasis is put on the aspect that both are “activities”. This makes evident that riba, on the contrary to common understanding, is not only the name of “the (unreciprocated) increment” but also the name of the “economic activity” which brings about the (unreciprocated) increment.

This is an important point to consider while defining the riba. It is apparent that this point goes unnoticed both in current Islamic fiqh and in western literature, where riba is defined in ways that focus on “the outcome” rather than “the activity”. In surah al-Baqarah, verse 275, however, riba is compared to bai’ which is a type of “activity”, and it is decreed that we must stay away from the activity of riba and use the activity of trade.

Verses point at the outcome too, which is the aspect of “being an increment” about riba. The verses, such as “do not consume riba”, “quit riba” stress the outcome of riba. Indeed, Hanafi scholars Ibn Nujaym and Ibn Humam draw attention to this aspect.

We can have an accurate definition of riba if we recognize riba as an economic activity, determine in which respects it is distinguished from legitimate economic activities, and make the definition accordingly.

The Qur’an compares riba to economic activities of sadaqah, kardh, zakat and bai’, each of which is an act of exchanging assets; and then decrees that riba is an activity distinct from these. Bai’ is an activity of exchanging two distinct kinds of economic assets in a way that the ownership is perpetually granted to the other party. Riba, however, is defined as an activity that consists of exchanging the same kind of assets (assets that are same either substantially or as of function) in different amounts.

To conclude, riba must first be defined as “both the activity of exchanging the same kind of assets in different amounts and the unreciprocated increment gained out of this activity”.

In our opinion, when we define riba this way, the current contradiction in terms shall be resolved. We also need to tell that most of the transactions of Islamic Financial Institutions and conventional Financial Institutions would be included in the purview of riba if we make the definition accordingly. This is the effective truth indeed.

As a response to other scholars who claim that riba is only the interest taken from the poor, we must remind the following verse (which means):

“Whatever you lend out with interest to gain value through other people’s possessions will not increase in God’s sight, but whatever you give as zakat by desiring God’s approval: it is they who increase (their possessions) multiple times.” [Al-Quran, surah ar-Rum, verse 39]

The expression “Whatever you lend out with interest to gain value through other people’s wealth” denotes that this money is lent to those who already have possessions. This is because nobody lends money with interest unless its repayment is guaranteed at the time of making the loaning agreement.


Taken with slight change from http://www.islamandquran.org


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