Secularism, Sharia, and the Turkish Financial Markets

The financial markets in Turkey provide a laboratory to help resolve these competing views. Islamic law or Sharia contains a number of proscriptions that directly affect financial practices. The payment and receipt of interest is prohibited; so are most kinds of commercial insurance. These interpretations provided the impetus in the Islamic world for the creation of a class of banks that sought to offer Sharia compliant services. The first Islamic Banks in Turkey began operations in the 1980s. Their entry was initially tepid, in no small part because of secularist principles. Islamic financial institutions could not overtly advertise their religious orientation. The country had no “Islamic” banks, only finance houses. They were not Sharia compliant but “interest-free.” Moreover, the government left them in an uncertain regulatory status and subjected them to restrictions on growth. In this environment, the Islamic banks remained a peripheral part of the financial system. With the election of the AKP in 2002, however, the environment for Islamic banks in Turkey changed. Limitations on branch networks and capital raising were lifted. The government removed restrictions on the issuance of Sharia compliant bonds. Officials from the Islamic banks were appointed to the highest levels of government. This Article does several things. First, it examines principles of Islam that affect banking practices, with a particular emphasis on deposit insurance and credit cards. Second, the Article discusses the emergence of secularism in Turkey and the introduction of Islamic banks into the Turkish financial markets. The Article then examine their evolution, with particular emphasis on the changes implemented by the AKP. Finally, the Article examines the impact of these reforms, and what that impact says about Islamic influence in Turkey.

New Middle East Cold War: Saudi Arabia and Iran's Rivalry

The competing powers of Saudi Arabia and Iran continue to redress and reverse the strategic imbalance and direction of the Middle East’s regional politics. The 1979 Iranian Revolution catapulted these two states into an embittered rivalry. The fall of Saddam Hussein following the 2003 U.S. led invasion, the establishment of a Shi’ite Iraq and the 2011 Arab Uprisings have further inflamed tensions between Saudi Arabia and Iran. Iran and Saudi Arabia have not confronted each other militarily, but rather have divided the region into two armed camps on the basis of political and religious ideology in seeking regional allies and promulgating sectarianism as they continue to exploit the region’s weak states in a series of proxy wars ranging from conflicts in Iraq to Lebanon. The Saudi-Iranian strategic and geopolitical rivalry is further complicated by a religious and ideological rivalry, as tensions represent two opposing aspirations for Islamic leadership with two vastly differing political systems. The conflict is between Saudi Arabia, representing Sunni Islam via Wahhabism, and Iran, representing Shi’ite Islam through Khomeinism. The nature of the Saudi-Iranian rivalry has led many Middle East experts to identify their rivalry as a “New Middle East Cold War.” The Saudi-Iranian rivalry has important implications for regional stability and U.S. national security interests. Therefore, this thesis seeks to address the question: Is a cold war framework applicable when analyzing the Saudi Arabian and Iranian relationship?