Time for The Gold Dinar?

Tahir Mahmoud

Rajab 06, 1441 2020-03-01

Background

by Tahir Mahmoud (Background, Crescent International Vol. 49, No. 1, Rajab, 1441)

Muslims are not known for following through on resolutions they adopt at conferences. The Organization of Islamic Cooperation (OIC), that has undergone several name changes over the years, immediately springs to mind. In its more than 50 years of existence (it was created in August 1969 following an arson attack on al-Masjid al-Aqsa in Jerusalem), there is little it can show in terms of achievements. This is not surprising since it is dominated by the Saudis who are not known for prowess, big or small, in any field.

We need not detain ourselves with the Saudis. The rest of the Arab world is hardly any better. All they seem to be obsessed with is erecting ever-taller buildings as if that proves their importance or worth. They have neither designed nor built any of these buildings. Truth be told, there is little that the Arabian countries can build. Had it not been for wealth acquired from the sale of oil, these people would still be living in tents and herding camels. Some would argue that is far more noble than being slaves of the imperialists and Zionists.

Be that as it may, let us consider another summit that was not dominated or even attended by Saudi Arabia: the Islamic summit held in Kuala Lumpur from December 18-21, 2019. It was spearheaded by Malaysian Prime Minister Mahathir Mohamad and included such other powerful Muslim players as Turkey, Iran, and Qatar. The absence of Indonesia and Pakistan was felt, both pressured by Saudi Arabia not to attend. Altogether, leaders of 20 Muslim countries were present at the summit as well as hundreds of academics from 52 Muslim countries.

While the summit did not issue a formal declaration, there were 18 agreements signed between various countries. Some of the salient features of the summit were the pledge to fight Islamophobia, help alleviate poverty, increase barter trade between Muslim countries, develop science and technology and cooperate in defence production. The proposal to use gold dinar for trade was also highlighted. This was seen as a hedge against illegal sanctions that the West, especially the US, has imposed on Iran.

Malaysian Prime Minister Mahathir Mohamad praised Iran and Qatar for withstanding economic embargoes, one the victim of US sanctions, the other of Saudi Arabia. He said it was important for the Muslim world to be self-reliant to face future threats. “With the world witnessing nations making unilateral decisions to impose such punitive measures, Malaysia and other nations must always bear in mind that it can be imposed on any of us,” Mahathir said.

He went on: “I have suggested that we re-visit the idea of trading using the gold dinar and barter trade among us.” To emphasize the seriousness of the proposal, Mahathir said: “We are seriously looking into this and we hope that we will be able to find a mechanism to put it into effect.” The leaders also agreed they needed to do more business among themselves and trade in each other’s currencies.

While Muslims and the Muslim world as a whole are beset by many problems, lack of cooperation, helping each other and the vast disparities in wealth are some of the major issues affecting them. The suffering of Kashmiris and Palestinians has gone on for decades. Add to these the plight of Yemenis, Rohingyas in Myanmar and Uighurs in China. And Muslims residing in Western countries face the onslaught of Islamophobia. There are powerful forces behind such campaigns targeting Muslims. This is as true in Europe as it is in North America. India, too, has joined the anti-Muslim crusade. Muslims are literally being lynched in public. In some instances, even the police join such macabre rituals. Far from stopping attacks on innocent Muslims, the regime in India has embarked on a policy to deprive Muslims of their citizenship rights as well.

Even if we set aside the political issues for which Muslims seem to have few answers, what about trade and economic cooperation? While Muslims make up 20 percent of the global population and occupy 20 percent of the world’s landmass, trade between Muslim countries hovers around 12 percent. Unfortunately, there are not even proper statistics about trade between Muslim countries.

Muslims produce 25 percent of the world’s minerals and 40 percent of its energy resources. They export the bulk of these raw materials to non-Muslim countries—nothing wrong with that—but seem to be constrained by trading among themselves.

Following the Malaysian summit, if even some Muslim countries start to trade with each other in their own currencies and vigorously pursue the proposal to develop the gold dinar, it would lead to a radical transformation of the global trade equation.

The US is able to blackmail other countries because the dollar is serves as reserve currency for 64 percent of the central banks worldwide. Oil is also traded in dollars, hence the notion of the petro-dollar. It is gradually losing its clout with the introduction of the euro and the Chinese yuan as well as floating of the petro-yuan but the process is still very slow. The Chinese are divesting their dollar reserves (estimated at $1.6 trillion) and buying gold. The Russians are likewise acquiring gold.

Muslim countries should develop the gold dinar as soon as possible and trade with each other using this as the medium of exchange. Its added advantage is that unlike paper currency, it does not lose value.

If this is the only proposal of the Kuala Lumpur Islamic summit that comes to fruition, it would be a major achievement. There is room for guarded optimism because the majority of those involved in it are not Arabian rulers, notwithstanding the political uncertainty currently gripping Malaysia.