2023 should be a year of great political and economic shifts, which many experts consider the most significant since the end of the World War II. As the order established after the bloodiest confrontation between the world’s largest countries becomes more and more contradictory, many countries are trying to find compromises in relations with their neighbors. The next issue of The Economist magazine examines the reasons and prospects for such cooperation, called “non-alignment”.
To understand what non-alignment is, experts have identified a narrow group of several economies of major countries of the world, including Argentina, Brazil, Colombia, Algeria, Chile, Malaysia, Mexico, Nigeria, Philippines, Singapore, Indonesia, Vietnam, India, UAE, Saudi Arabia, Egypt and Qatar, which have not joined any the world alliance. They differ in terms of wealth and political structure. These countries, which include large India and small Qatar, currently account for 35% of the world’s population, and their share of global GDP has grown from 11% in 1992 to 18% in 2023, which is even more than all EU countries. According to experts, the strategy of economic and political neutrality established by them will determine the global order for many years.
In the 20th century, the concept of non-alignment had different interpretations. At the Bandung Conference in Indonesia in 1955 and the Belgrade Conference in Yugoslavia in 1961, the heads of these States presented a “third world”, different from the West and Of the Soviet Union. By the late 1960s, these countries had largely shifted their focus to the economic gap between the “global South” (a commonly used term for third world countries) and the industrialized North. Almost all countries in Africa, Asia and Latin America have become part of the “non-Aligned movement”, but currently States that do not belong to any particular alliance are no longer identified as a collective organization, but are considered only by the quality and efficiency of their economies.
Among the countries that supported the concept of non–alignment, two of the most populous countries in the world – India and Indonesia. If we talk about the level of well-being, there is a big gap. In Saudi Arabia, GDP per capita is more than $27,000, which corresponds to the level of some European countries, while in In Pakistan, it is only $1,600.
Islamic finance is the basis for the prospective crypto-future
Globalization has led the trade model of these countries to a multipolar system. 43% of all trade accounts for the Western block, 19% for the China-Russian alliance and 30% for countries outside these two camps. Over the past two decades, these countries have maintained ties with both the West and the by China and Russia. It is important to note that many countries trying to support the concept of non—alignment are countries with a predominant Muslim population. This means that in conditions of economic instability and changing poles of influence, their economies and financial institutions will more actively introduce and spread relations with neighbors based on the norms of Islamic finance.
According to the Secretariat of Islamic Finance, the global Islamic finance market was estimated at about $1.3 trillion at the end of last year. The total value of Shariah-compliant assets has increased by 150% since 2006. Malaysia, which dominates the global sukuk issuance market, is more than 60% Muslim, and Islamic banking assets account for about a quarter of the country’s total assets. Analytical data also show that about 22% of depositors of the largest European banks in 2022 began to use Islamic financial products.
The use of blockchain for the issuance of sukuk bonds
The introduction of Islamic finance systems in other countries continues. In 2021, the central bank of Ethiopia conducted an experiment by allowing interest-free banking. Interest is prohibited by Shariah law, so this step was regarded as a step towards expanding financial services for the country’s large and often poor Muslim minority. In Kenya, where the Muslim population is much smaller than in Ethiopia, there are three Islamic banks, as well as an Islamic insurance company. Five more traditional banks offer products that comply with Shariah law. Kenya is also a member of the Islamic Financial Services Council based in Malaysia.
Islamic contracts are quite complex for traditional financial systems and require particularly strict control, but industry leaders claim that there is an unsatisfied demand among the Muslim population of the continent. Evidence suggests that some African Muslims shy away from traditional finance for religious reasons. Another interesting fact is that Islamic finance may well gain a foothold in European countries. Last year, the volume of sales of sukuk bonds in the UK amounted to 200 million pounds, and the issue of sukuk worth $ 1 billion attracted orders worth $4.7 billion, almost two-thirds of which came from non-muslim investors.
Since 2018, Islamic banking has been growing by an average of 25% per year and is also causing an increase in interest in digital financial instruments based on the norms of Islam and Shariah. This means that the global economic and political shifts, with the story of which we started this article, will be more actively used to overcome the negative consequences that we have witnessed in the last few years.
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