Alleged Money Scam Roils Islamic Center Charges, Countercharges at Mosque

Alleged Money Scam Roils Islamic Center
Charges, Countercharges at Mosque

By Del Quentin Wilber and Michelle Boorstein
Washington Post Staff Writers
Tuesday, March 31, 2009;

In the Islamic Center of Washington, beneath the 160-foot minaret that towers over Embassy Row, a tale of intrigue has simmered for years. It is marked by bitter recriminations between two men who are credited with rehabilitating its reputation as a prominent symbol of Islam in the United States.

The center's business manager has been accused of stealing $430,000 from the mosque in a complicated check scam. The key witness against him is the center's director and imam, a Saudi who says he noticed the crime when he spotted too many checks being written to a gardener.

The Iranian-born business manager has a different story. He says the imam told him to take the money. About half was used to pay off debts and living expenses of two women who were close to the imam, and the rest was used to pay informants for tips about the mosque's security, he said.

It was enough to confound a jury, which deadlocked 9 to 3 after the business manager's three-week trial last May.

Now prosecutors are attempting to retry him, and the manager is firing back. He has accused the imam of committing perjury and obstructing justice. A federal judge is expected to rule in coming weeks on whether to drop the charges or prevent the imam from testifying.

Muslim community leaders say the controversy has remained mostly out of the public eye because the center, built in the 1940s by ambassadors of majority-Muslim nations, is not a typical mosque. The center enjoyed a relatively peaceful existence until the 1979 Iranian revolution, when it underwent an acidic struggle for control between the mosque's board and a dissident group of worshipers, mostly Iranians opposed to the shah of Iran.

There were protests, arrests and other clashes. The board, composed of ambassadors from Muslim nations, locked down the mosque for a time.

In 1984, hoping to put the disputes in the past, the board hired Abdullah Khouj, a professor teaching in his native Saudi Arabia, to be its director and acting imam.

That same year, the board also hired Farzad Darui, who was born in Iran but became a U.S. citizen, as its director of security. Khouj later promoted Darui to be the mosque's manager.

Khouj did not respond to interview requests made at the mosque and by telephone. Darui declined to comment.

Trial testimony and interviews with worshipers indicated that the men were dedicated to improving the mosque, which today is mostly a gathering place for the diplomatic community. It was this mosque that President George W. Bush chose to visit the day after the Sept. 11, 2001, attacks. Its Northwest Washington location, far from the large Muslim population clusters in the suburbs, draws a largely transient base of worshipers that includes commuters, students, travelers and a steady flow of taxi drivers.

Several worshipers who were approached at the mosque said they were surprised by the charges and countercharges, because the two men seemed to genuinely like and respect each other.

Both men echoed those sentiments on the witness stand.

"I trusted him like my own brother," Khouj testified.

"I considered Dr. Khouj a very close friend," Darui testified.

Federal prosecutors say Darui was anything but a friend to Khouj.

They allege that from 2000 through 2006, Darui stole $430,000 from the mosque's "special account," which was funded by the Saudi government to pay mosque expenses. Prosecutors said the theft was devastating: The center had to slash jobs and stop some philanthropic activity because Khouj thought the mosque simply couldn't meet its bills.

"This is a case about fraud, it's about theft, it's about a man who took money that did not belong to him," prosecutor Tejpal Chawla told jurors during Darui's trial.

Prosecutors say Darui took advantage of Khouj's trust and tricked him into signing checks for expenses such as electricity or insurance. After Khouj signed the checks, prosecutors say, Darui altered the payee information, inserting the names of one of his companies, Blue Line Travel or Zaal Inc.

The manager also cashed extra paychecks to staff members, prosecutors say.

Khouj testified that he noticed something was wrong in 2006 when he spotted extra checks being written to a gardener. Later, he testified, he was floored when he saw the bank statements showing unauthorized payments to Darui's firms.

"My feet were frozen," Khouj recalled during trial. "I could not even move. . . . Usually I lead the noon prayer. I couldn't even lead the prayer."

Normally, the FBI would examine the original checks to see whether they had been altered, but the checks had vanished. Without the originals, federal authorities had to use copies of invoices and copies of checks kept by the Saudi Embassy to introduce as evidence.

The lack of forensic evidence also forced prosecutors to rely on Khouj, who came under attack from Darui's legal team.

Darui's attorneys contend that someone doctored the photocopied records to make the manager look guilty. They also say all the checks -- more than 200 of them -- had been authorized by Khouj to finance the housing of the two women or mosque security expenses. Calling the women "mistresses" in court papers, Darui's attorneys say Khouj, who has a wife in Saudi Arabia, married both of the women.

At trial, Darui testified that he did not report the arrangement because he thought the money was Khouj's to spend and did not want to harm the mosque's image. He testified that he and Khouj created fake invoices in case anyone asked about the unusual expenses.

Khouj acknowledged giving the women money from his personal accounts but said he viewed it as an act of charity.

At a recent hearing, one of Darui's attorneys, Victoria Toensing, said Khouj lied about a variety of things, including a claim that he donated his salary to the center over a two-year period.

She also said it was difficult to believe that Khouj caught on to the alleged scam only in 2006 after he noticed an extra monthly check for the gardener. He had signed 58 such "extra" checks over the years, she said.

Federal prosecutors countered that they believe Khouj was truthful on the stand and that inconsistencies in testimony are common in trials.

They urged Chief U.S. District Judge Royce C. Lamberth to let a new jury sort it all out.
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The Islamic Center of Washington

It is a mosque and Islamic cultural center in Washington D.C. It is located on Embassy Row just east of the bridge over Rock Creek. When it opened in 1957 it was the largest Muslim place of worship in the Western Hemisphere. Some 6,000 people attend prayers there each Friday.

The idea for the center was originally conceived in 1944 when the Turkish ambassador died and there was no mosque in which to hold his funeral. The Washington diplomatic community played a leading role in the effort to have a mosque constructed. Support came from the Muslim American community and most of the Islamic nations of the world, who donated money, decorations, and craftsmen to the project.

The site was purchased in 1946 and the corner stone was laid in 1949. The building was designed by Italian architect Mario Rossi and was dedicated on June 28, 1957 with President Eisenhower in attendance. The Islamic Center continues to be controlled by a board of governors made up of various ambassadors. Around the building are the flags of the Islamic nations of the world.

The mosque has been visited by many high profile dignitaries, including several presidents. The highest profile visit was by George W. Bush on September 17, 2001 only days after the September 11th attacks. On national television Bush quoted from the Koran and worked to assure Americans that vast majority of Muslims are peaceful.

As well as a mosque, the center contains classrooms where courses on Islam and the Arabic language are taught and a library.
Visitor Information for the Islamic Center of Washington
Location: 2551 Massachusetts Ave., Washington, DC
Phone: 202-332-8343
Hours: Mon-Sat 10:00am- 5:00pm, Sun 10:00am- 2:00pm
Services: Friday Prayer begins at 1:30pm. Classes on Islam, the Quran and the Arabic language are held on Saturdays and Sundays.

Xinjiang: China's 'other Tibet' - from AlJazeera English

Xinjiang: China's 'other Tibet'
By Lydia Wilson and Poppy Toland in Xinjiang, western China

While reports of unrest in Tibet frequently grab headlines around the world, little attention is given to what several human rights groups have dubbed China's "other Tibet".
China's frontier to Central Asia, the vast western region of Xinjiang has in recent years seen escalating ethnic tensions and the imposition of a heavy military presence to suppress what Beijing says is a growing terrorist threat.
Covering an area more than three times the size of France, Xinjiang has long been an important crossroads of trade and culture.
For centuries its oasis towns were essential stopping points along the legendary Silk Road – a history that has left Xinjiang with a unique cultural legacy.
The region's indigenous population are the Uighurs - Muslims who are ethnically, linguistically and culturally Turkic, and worlds apart from their Han rulers, the ethnicity which dominates the rest of China.
"Before, looking for work was easy, but now they all want Han people, they don't want us"
After a chequered history with the Chinese Empire, Xinjiang's present incarnation as an officially "autonomous region" within the People's Republic of China began in 1949.
From Beijing's point of view, Xinjiang has always been a part of China.
But while the region has a history of domination at the hands of the Chinese, Beijing's claim overlooks long gaps where the region merged with Central Asian and Turkic states.
To this day, most Uighurs feel more culturally aligned with the Turkic peoples to the west, rather than Beijing to the east.
Conversely, and almost without exception, Han Chinese feel China's control of the region is perfectly legitimate.
"I've talked to a lot of people in China about it and they just don't question it," says Michael Dillon, author of Xinjiang: China's Muslim Far Northwest.
"It's always presented as Zhongguo Xinjiang [Chinese Xinjiang] like Tibet is Zhongguo Xizang [Chinese Tibet] and so the assumption is that it's always been part of China."
The region is of value to China due to "a very complicated mixture of political, economic and psychological reasons," says Dillon.
Among these, he says, are Xinjiang's bountiful natural resources and raw materials, and its strategic position buffering China from Russia.
But he adds, there is also the idea that "if Beijing doesn’t retain Xinjiang, it's a question of losing face, because Xinjiang is part of the motherland."
On top of that, Xinjiang also boasts something clearly lacking in the rest of China - space.
Accounting for one sixth of China's total area, Xinjiang not only produces 30 per cent of China’s cotton, but between the 1960s and mid-1990s it was also used as the test site for China's nuclear weapons.
Perhaps most unpopular with the Uighurs though is the use of their land to resettle huge numbers of Han from the overpopulated east of China.
Settlers rising
The numbers of ethnic Han settlers in Xinjiang has risen from well under half a million in 1953 to 7.5 million by 2000, and is rising fast.
According to the latest available figures, Han settlers make up around 42 per cent of Xinjiang's total population of 18 million, dictating a life that is culturally alien to the native Uighurs.
"There are more and more Han arriving here all the time," explains Tursuntay, a 45-year old Uighur man from the Xiniang border city of Ily.
"When I was young there were very few – this place belonged to us."
Hislat, a 22-year old Uighur woman from Urumqi, the Han-dominated capital of Xinjiang, is also feeling the squeeze.
"Before, looking for work was easy, but now they all want Han people, they don't want us," she says.
"It's really difficult, but there's nothing we can do about it."
Arienne Dwyer, Assistant Professor of Linguistic Anthropology at the University of Kansas believes the situation in Xinjiang has got worse over the last decade.
"In the eighties and early nineties we saw quite a lot of Uighurs, particularly intellectuals and those in the northern area, who felt that the Chinese project in Xinjiang, though very far from perfect, was OK," she says.
"One thing that people of any ethnic group in Xinjiang would agree on with the central government is that economic development is a good thing. This is one change that has continued and has been a positive force all around."

However, what has followed says Dwyer are increasingly Han-focused policies where cultural activities are more tightly constrained and there is a stronger effort to bring ethnic minorities, particularly on the periphery such as Xinjiang, "into the Chinese fold".
This cultural tightening accelerated rapidly after the late 1990s and was characterised by increased police action, suppression of unrest and changes in language policy, increasing the use of Mandarin in schools at the expense of the Uighur language.
"From the point of view of the government, this is because Uighur pupils and university students don't have the adequate Chinese language skills to be competitive in the market economy," says Dwyer.
"But from the point of view of the Uighurs, this is a bold-faced attempt to be assimilated and it has not been viewed favourably."
Disillusioned
This is causing many Uighurs to feel disillusioned, angry and afraid of losing their distinctive culture says Dwyer, and as a result many, especially Uighur youths, are becoming more religious than their parents and there is a growing trend to study Arabic.
Dwyer does not believe claims from some Chinese officials that there is any connection with a radical Islamist movement.
Instead she sees such moves as "a statement of Uighur identity, to say 'we are fundamentally different from the Han Chinese'".
For Urumqi resident Hislat, religion is the root of her dissimilarities with the Han.
"We are very different from Han people," she says.
"They don't believe in anything, they have no religion. We only eat Halal foods, but they don't worry about that, they can eat anything. Also they don't pray, they don't know how. They don't believe."
Although assertive about their identities as Uighurs and as Muslims, Hislat says she and her peers are in no fear of being radicalised.
Their culture and traditions are important to them, but they are living in a Han-dominated city and their lifestyles are accordingly secular.
They love American pop-stars, playing on the internet, going to discos and are prepared to be pragmatic with prayers in order to fit in with their work or study schedules.
But in the border cities Kashgar, Aksu and Ily, the atmosphere is different, with a much stronger military presence and more attempts by the government to control political activity and the Imams in the mosques.
Beijing says the security presence is needed to meet the challenge of separatist movements and conflicts which have plagued Xinjiang since its annexation.
These activities peaked in the 1990s, the time that the Soviet Union was breaking up.
At the time "the old Muslim states of Central Asia, like Kazakhstan, Kyrgyzstan and Uzbekistan were all becoming independent states," says author Michael Dillon, "and there was a strong feeling among certain parts of the Uighur population that they ought to have their own Uighuristan or Eastern Turkistan.’
More recently that sentiment in Xinjiang has subsided - or been suppressed.
Whether that is as a result of government measures, or a lack of reporting in the Chinese media is difficult to tell.
According to Dillon, it is a result of China's clever use of economic and diplomatic measures to dissuade its Central Asian neighbours from helping Xinjiang gain independence.
"I think this is one of the reasons that things have quietened down," he says. "The Uighurs have got no real external support."

Islamic laws of finance a cushion in hard times - An Excerpt

Islamic laws of finance a cushion in hard times
ShareThis
By Stephen Magagnini
smagagnini@sacbee.com
Published: Monday, Mar. 30, 2009 - 12:00 am | Page 1A

The recession gripping the nation has taken less of a toll on American Muslims who follow age-old Islamic laws against paying – or charging – interest.

They've also been shielded by socially responsible retirement plans because Shariah– Islamic law – forbids investments in banks and mortgages as well as tobacco, alcohol, gambling, pornography or weapons.

"If everybody was Shariah-compliant, there would be no recession," said Farouk Fakira, a Yemeni immigrant who moderated a discussion on Islamic finance at Sacramento's Masjid Annur last week.

Fakira, 57, rents a home – like hundreds of other local Muslims – because "interest is pretty much forbidden. If you're making money off of money, the only person who benefits is you."

Shariah – 1,400 years of Islamic legal knowledge based on the words of the Prophet Muhammad – guides Muslims in daily life, said Imam Muhammed Abdul Azeez of Sacramento Area League of Associated Muslims, or SALAM.

Shariah prohibits usury, which often took advantage of a desperate person who needed to feed or protect his family, Azeez said. "There's an element of exploitation here."

The bottom line for many Muslims is, "if I don't have the money to buy something, that means I can't afford it," said Deya Dean Elghassein, who's Palestinian American.

His family helped him buy his home in Folsom with cash. "I do use credit cards, but they have to be paid off in full at the end of the month," he said. He wouldn't invest in Costco because it sells pork and alcohol, but he and others shop there "out of necessity."

About 20 percent of the Sacramento area's 50,000 American Muslims closely follow Islamic rules of finance – especially the prohibition against interest – said Irfan Haq, an economist who's president of the Council of Sacramento Valley Islamic Organizations , an umbrella organization representing 10 mosques.

"Muslims in general have been much less affected by the recession because they're very cautious and conservative in matters of finance and take a longer-term view of life," Haq said. "They want to invest their funds in a way that pleases God so they can sleep peacefully – they care about the afterlife."

Along with avoiding interest, another tenet of Islamic finance is not to invest in enterprises that violate Shariah: alcohol, gambling, banking and weapons. Azeez counsels his Muslim flock not to buy businesses that sell alcohol because "you cannot be in the business of spreading sin: Drunk driving kills."

Mohammed Memon, a Pakistani American project manager for Oracle in Rocklin, has a 401(k) through Amana Mutual Funds – a Shariah-compliant fund based in Bellingham, Wash.

"They're relatively better than other funds; I'm down 15 to 20 percent while many of my friends are down over 50 percent," said Memon, 38.

Amana's income and growth funds avoid bonds and interest-paying securities.

"We screen about 5,500 stocks a month for our 75,000 shareholders, and 2,200 to 2,400 pass," said portfolio manager Nick Kaiser. "The growth fund's biggest holding is Apple Computer. We buy technology, health care stocks and stocks with low debt. The income fund focuses on drug companies, energy stocks, mining."

Shariah also prohibits gharar – the Arabic word for uncertainty or risk – and maysir – gambling – which includes real estate speculation.

Metwalli Amer, founder of SALAM, said he knows Muslims who speculated in real estate and lost their shirts.

Amer, 75, said Islamic finance is about living within your means and helping the needy. "If Muslims had followed that, we'd be much better off," said Amer, an Egyptian immigrant.

But he said the majority of Muslims he knows "became greedy."

Islam doesn't prohibit wealth as long as you give back, he said. "The Quran promotes going into business and trading ventures that share the profits and loss."

Amer said one Sacramento Muslim who was able to become a millionaire while adhering to Islamic financial principles is Kais Menoufy.

Menoufy left Egypt in 1976 and landed in California in 1985 after becoming vice president of a computer science company in Europe and saving his money by sleeping on floors.

"When I started my own company in Sacramento nine years ago, I rented an apartment for $800 a month in the Arden area and again was sleeping on a mattress on the floor," said Menoufy, 62.

By plowing the profits back into his business, Menoufy said he built Delegata Technology Consulting & Systems Integration into a multimillion-dollar company with about 100 employees. "You spend as much as you can make," said Menoufy.

He recently bought a home along the Garden Highway for cash.

While Islamic scholars generally say interest-based financial transactions are prohibited, sometimes American Muslims have no choice, said Azeez of SALAM. "Every day I get a question about interest and student loans – I tell them getting your education is an absolute necessity."

If a student can't get an interest-free federal loan, "get yourself a loan with an interest rate as close to inflation as possible – they cancel each other out," Azeez said.

Some scholars say the financial relationship between consumers and banks is OK if there's no exploitation.

Akhtar Khan, who has a doctorate in economics, bought his home with a conventional mortgage out of necessity, he said, but hopes to pay it off as soon as possible.

Muslims are allowed to buy a home directly from the owner with owner financing, some scholars believe.

Mohammed Memon bought his home from the builder. "No banks are involved – there can't be a third-party contract."

Hamza El-Nakhal, a retired microbiologist from Egypt, said he came to the United States with $10 in his pocket 40 years ago.

He got a bank loan to buy property here. "Many scholars say that if it's necessary to buy your home and take out a loan to survive in a foreign country, it's OK," said El-Nakhal, who is on the board of the Islamic Center of Davis. "There were no Islamic lending institutions when I bought. Now there is."

The Shariah-compliant Lariba Bank of Southern California, founded in 1987, lends money without interest – instead, it goes into partnership with its clients and then charges rent on the property.

Here's how Lariba works: If you borrow $80,000 from Lariba on a $100,000 home, you send a monthly payment to Lariba that has two components. The first is a portion of the money you owe Lariba. The second component is a rental payment that declines each month as you build up equity.

The first month, you pay 80 percent of the monthly rent to Lariba. Every month, you pay off a portion of the loan without interest, and then pay a smaller percentage of the rent based on your share of the principal.

"The approach is one of investment as opposed to just lending money," said Lariba's president Mike Abdelaaty.

Rather than checking to see if a client has the ability to pay back a loan, he said, "we use the rental value of the property in measuring whether it's a good investment."

The monthly rent is fixed over the term of the loan, which is competitive with other banks, said Yahya Abdur Rahman, Lariba's founder. "We've never kicked anybody out of their homes. We give them a three-month grace period, and then we tell them, 'Maybe your home is too big for you and you need to move to an apartment.' " If the house is sold, 100 percent of the profit goes to the customer, he said.

Other religions, including Judaism and Catholicism, also had prohibitions against usury, said Rahman, whose more than 3,000 clients span all faiths.

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When the Islamic Bank of Asia was established in Singapore in 2007 with Lee Hsien Yang,the brother of Singapore Prime Minister as one of its directors, several comments were received in the USA Today online report. These include the following :

Comments: (4)

shamrocker (1 friends, send message) wrote: 5/8/2007 4:08:35 AM
I'm sure there are fees and such since no business could survive without some type of profit. However, the lack of 'interest' (no pun intended), can only be beneficial to the customers since interest is just another word for "loan sharking". This sort of banking intrigues me... I'm a bit interested in learning more about this system. Do you have to be muslim?

babysue (0 friends, send message) wrote: 5/7/2007 3:43:50 PM
It's just another branch of organized crime. Where there is big money involved, there the mob will set up housekeeping!

Obummer (0 friends, send message) wrote: 5/7/2007 1:26:21 PM
How does it work?
Simple. Osama deposits millions and the 'bank' buys guns and missles from the North Koreans and keeps the change. Everybody is happy.

Sounds more like an International money laundry to me.

Only small time depositors will be required to send their children to be bombers. The rich don't deal with this stuff since they can buy their way into Alla Land pre-stocked with the virgins and all that. Kinda like Never-Land with a twist.

5of5 (0 friends, send message) wrote: 5/7/2007 10:02:57 AM
Hmmmm...since they won't be dealing with interest, I suppose that 'fees' will be the way the bank becomes profitable. It could work several ways.
You may borrow $100,000 (equivalent) and every month you will pay a 5% 'fee' on the remaining balance, but it WILL NOT BE INTEREST, since that is a Zionist thing.
Or, perhaps...oh..your checking balance fell below the require $2500 minimum, so you must pay an account maintenace fee of $500 per month.
All kidding aside, I look forward to hearing how this model will actually work.
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Understanding Islamic Finance
Published on:
Monday, April 06, 2009
Written by:
Syed Imad-ud-Din Asad

Islam is second largest religion in the world today, and smart investors and financial professionals will strive to understand and embrace the intricacies of Islamic finance. Syed Imad-ud-Din Asad specializes in Islamic law and finance, and he explains Islamic finance in the article below from JD Supra.
The Quran and the Sunnah are the principal sources of Islamic law. Islamic finance signifies financial services, mechanisms, practices, transactions, and instruments that comply with provisions given in these fundamental Islamic texts. Thus, Islamic finance not only includes banking, but also capital formation, capital markets and all types of financial intermediation.
While some of these norms are shared by Islamic and western financial systems, certain norms are exclusive to Islam.In fact, some Islamic financial restrictions are severe enough to render certain western financial practices and transactions absolutely void. This assertion of religious law in commercial sphere reaffirms the claim that Islam is an all encompassing system, not just a set of prayers, acts of worship, and declarations regarding God's existence and omnipotence.
Coming back to the topic, derived from the Quran and the Sunnah, some of the main features of Islamic finance, in brief are:
1. Riba is prohibited in the strongest terms. Riba literally means "an excess", and most of the present-day Islamic scholars agree that it includes both usury and interest. The prohibition of riba is generally considered to be the most important of all Islamic financial principles.
2. Gharar, which signifies ambiguity, uncertainty, or lack of specificity in the terms of a financial contract, is forbidden.
3. As riba is prohibited, suppliers of capital become investors instead of creditors.
4. Investment can only be made in permitted commodities and activities. For instance, one cannot deal in the import and export of alcohol. Similarly, it is not allowed to invest in a casino.
5. Market prices must be determined by the forces of demand and supply. In other words, Islam envisages a free market.
6. Information must be easily and equally accessible to all investors.
Based on the above-mentioned principles, there is a variety of Islamic financial instruments and transactions in vogue. Some of them are briefly explained below:
1. Musharaka: It is a business structure in which the investor not only makes a financial contribution to the enterprise, but may also participate in managing the venture. Profits are shared between the parties according to a pre-determined ratio and losses are borne by them in proportion to their capital contributions. In terms of classification, this is an equity-based transaction.
2. Mudaraba: In this arrangement, the investor provides the requisite financial resources, butdoes not participate in managing the enterprise. It is a form of partnership in which one partyprovides the funds while the other provides expertise and management. Profits are divided among the parties according to a mutually agreed ratio. Financial losses are borne by the investor alone. This is also an equity-based transaction.
3. Murabaha: In this transaction, the finance provider, instead of advancing a loan to the partywishing to purchase goods or equipment, purchases those items and sells them to that party at cost plus a declared profit.
4. Tawarruq: In it the finance provider buys an asset and immediately sells it to the client on a deferred payment basis. The client then sells the same to a third party for immediate delivery and payment. Consequently, the client receives a cash amount and has a deferred payment obligation for the marked-up price to the finance provider. The asset is typically a metal like copper or platinum.
5. Ijarah: It is the leasing or hiring of a physical asset, and it is one of the fastest growing activities of Islamic financial institutions.
6. Takaful: It is a form of insurance. It is an arrangement by a group of people to shield each other from loss or damage through the setting up of a defined pool of resources. Any member of the group who suffers such a loss is compensated in the form of monetary help from the common fund. In other words, it is a mutual self-help scheme between those who wish to support each other in difficult times.
7. Sukuk: Also called "Islamic bond", it signifies, speaking more accurately, an Islamic investment certificate. It is an asset-based investment as the investor owns an undivided interest in an underlying tangible asset that is proportionate to investment. The sukuk certificate is a proof of this ownership interest. The certificate holder is not only entitled to all the benefits that it entails including a share in the revenues generated by that asset, but is also entitled to share in the proceeds of the realization of the sukuk asset. Sukuk structures employ techniques that are well developed in conventional markets for structured finance, and have become a significant mechanism for raising finance in the international markets by institutions, corporations, and sovereign and state entities.
It must be mentioned that some of the prevalent transactions and instruments are not considered to be in conformity with Islamic law by all Muslim scholars. Those opposing these practices do so by pointing out the hidden or concealed elements of riba and gharar in them. For example, actual administrative fee is one thing and interest in the name of administrative fee is another. However, to most of the scholars, venture capital finance is closest to the actual Islamic finance. Thus, musharaka and mudaraba structures are favored by the majority.
In fact, every financial institution dealing in Islamic finance has a committee of Muslim scholars, called "shariah committee", that determines whether a product or practice complies with Islamic law. As there is no set of binding uniform rules, shariah committees, at times, give conflicting rulings. There can also be a difference between two countries or regions. For instance, in Malaysia, Islamic financial restrictions are interpreted more liberally than in the Gulf
Another shortcoming confronting Islamic finance is the shortage of qualified professionals. There are not many people who are equally skilled in conventional finance and Islamic law. A person well acquainted with conventional finance can easily understand any Islamic financial product; however, one cannot develop or market such a product without knowing the rules and logic unique to Islam.
To summarize, lack of uniformity in laws and procedures, and deficiency of skilled professionals are among the main hurdles faced by Islamic finance. However, the industry is growing — the Arab oil money being one of the main driving forces. This is evident not only from the number of banks and institutions established specifically for practicing shariah compliant finance, but also from the increasing number of western or conventional financial institutions engaging in
Islamic finance operations.
This article was oiginally posted on JD Supra.
Syed Imad-ud-Din Asad specializes in Islamic law, Islamic finance, corporations, securities law, and energy law.




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USURY - THE BIBLE VERSION :


No Usury to God�s People

Exodus 22:25 says, "If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury."

Leviticus 25:35-38 is more specific. It states that we are to relieve our poor brethren, taking no usury or increase from them. Verse 37: "Thou shalt not give him thy money upon usury, nor lend him thy victuals for increase." Why? Verses 38-39, because God brought Israel out of Egyptian slavery. Therefore, we are not to put our brothers into slavery to us. There is to be no increase at all when we loan to our brethren.

You May Lend With Usury to Strangers

However, Deuteronomy 23:19-20 adds another dimension: "Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of anything that is lent upon usury. Unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury; that the LORD thy God may bless thee in all that thou settest thy hand to in the land whither thou goest to possess it."

Who is your stranger? Who is your brother? In the physical nation of Israel, the Israelites were brothers and Gentiles were strangers. Today, it applies in the spiritual sense: fellow believers are brethren and non-believers are strangers.

Lending can be a blessing, Deuteronomy 28:12, and borrowing a curse, Deuteronomy 28:43-44. Those who are blessed of God will be lending interest-free to their brethren, and even at times with usury to strangers.

Proverbs 28:8, "He that by usury and unjust gain increaseth his substance, he shall gather it for him that will pity the poor." Even though some pray and fast, and seem to be following God, they exact all their labor, Isaiah 58:3.

Because people have transgressed God�s laws, the land shall be utterly emptied and spoiled, "as with the lender, so with the borrower; as with the taker of usury, so with the giver of usury to him" Isaiah 24:1-6.

Usury creates ill feeling: "I have neither lent on usury, nor men have lent to me on usury; yet every one of them doth curse me" Jeremiah 15:10.

A mark of a just man is one that "hath not oppressed any, but hath restored to the debtor his pledge, hath spoiled none by violence, hath given his bread to the hungry, and hath covered the naked with a garment; He that hath not given forth upon usury, neither hath taken any increase, that hath withdrawn his hand from iniquity, hath executed true judgment between man and man" Ezekiel 18:7, 8, and also 16-17.

Contrariwise, a mark of an unjust man is one that "hath given forth upon usury, and hath taken increase: shall he then live? he shall not live; he hath done all these abominations; he shall surely die; his blood shall be upon him" Ezekiel 18:13.

In Ezekiel 22, those that have taken usury and increase (verse 12) are placed in the same category as Sabbath breakers, adulterers, those that engage in bribery, and extortion.

Jesus told the publicans to "exact no more than that which is appointed you" Luke 3:12-13.

Does God Require Interest?

The parable of the talents (Matthew 25) and pounds (Luke 19) show the Lord telling the wicked servant, who did nothing with what was given to him, "Thou oughtest therefore [at least] to have put my money to the exchangers, and then at my coming I should have received mine own with usury" Matthew 25:27, and "Wherefore then gavest not thou my money into the bank, that at my coming I might have required mine own with usury?" Luke 19:23. Modern translations render "usury" as "interest."

Does this mean that God requires interest? In the spiritual sense, yes indeed! The "talents," spiritual gifts given to us from God, are not given for nothing. He expects a return on His investment. God has chosen us and ordained us that we should go and bring forth fruit that remains and lasts, John 15:16.

Mortgage Usury Produces Bondage

Peloubet�s Bible Dictionary, article "Usury" states that the "practice of mortgaging land, sometimes at exorbitant interest grew up among the Jews during the [Babylonian] captivity in direct violation of the law [of God]."

Nehemiah 5:1-13 shows the effect of mortgage usury. Some of the Jews who returned from captivity, had mortgaged their property so that they could buy corn during a drought, and others had borrowed money to pay the King�s tribute, with their property held on mortgage. Those under the yoke of mortgage were under bondage and many had lost their property. Truly as Proverbs 22:7 says, "the borrower is servant to the lender."

Nehemiah was angry when he heard about this. He said "ye exact usury, every one of his brother" Nehemiah 5:7. Calling an assembly to stop this practice, Nehemiah demanded the restoration of foreclosed property, the 1% interest on money charged, along with the produce counted as interest. To do these things to the brethren is a great sin! There should be no increase required.

Is a Little Interest Not Usury?

There are some who say that God only condemns excessive interest. Until recently, laws of several states forbid interest rates above 12%. Anyone who charged more was guilty of "usury."

Even Adam Clarke in his famous Bible Commentary agrees with this view. In his note under Exodus 22:25 he states, "It is evident that what is here said must be understood of accumulated usury, or what we call �compound interest� only; and accordingly neshech is mentioned with and distinguished from tarbith and marbith . . . . �interest� or �simple interest� . . . . Perhaps usury may be more properly defined �unlawful interest,� receiving more for the loan of money than it is really worth and more than the law allows."

Strong�s defines tarbith as "multiplication; i.e., percentage or bonus in addition to principal; increase, unjust gain." The related word marbith can mean "increase, or "interest on capital." Tarbith and marbith do not have the bite or sting as does nashak interest. Tarbith is used along with nashak (usury) in Leviticus 25:36, Proverbs 28:8, Ezekiel 18:8, 13, 17 and 22:12, as is marbith in Leviticus 25:37. The point Clarke misses is that God condemns them both! Any interest or increase from your brother is wrong. However, as we have seen, it is permissible to charge interest to outsiders.

Lend to Your Brother

Because interest or any gain cannot be exacted from one�s brethren, the tendency might be not to lend them anything at all. God commands us to lend to our brethren when they are in need.

Deuteronomy 24:10-13 assumes we will loan [nashak] things to our brethren. When we do, we must not take as pledge anything away from them that will leave them destitute. There is also a responsibility on the borrower to give of some of his time and energy in helping the lender out of thankfulness for the loan.

Deuteronomy 15:1-18 describes the year of release. Every creditor that lends (the word is nashak, "takes usury") unto his neighbor or his brother shall release it at the end of every seven years. If the loan is to a foreigner, it may be exacted again. Verses 7-11 command us to liberally lend to our brethren sufficient for their need, not thinking that we shouldn�t give him anything because the seventh year release is near. This statute adds another dimension to the Bible�s lending law: No loan with a brother is to be for more than a seven year period. It is to be released at the end of the seventh year.

See also Nehemiah 10:31.

A System of Slavery

Debt usury is one of the vilest forms of slavery. Every one that had a creditor (nashak) joined themselves with David, I Samuel 22:1-2. The widow with the oil begged Elisha to help her pay her dead husband�s creditor lest her two sons be taken as bondmen, II Kings 4:1-7.

David prayed that the extortioner (usurer) would seize all that his wicked enemy had, Psalm 109:1-20. On the other hand, God said in a vision to David that his enemy would not exact (extract usury) upon him, Psalm 89:18-24.

The Eternal said to rebellious Judah, "Where is the bill of your mother�s divorcement, whom I have put away? or which of my creditors is it to whom I have sold you? Behold, for your iniquities have ye sold yourselves, and for your transgressions is your mother put away" Isaiah 50:1.

Debt Money the Foundation of Today�s Society

Like Israel of old, today�s Israel has likewise sold herself to her creditors. Interest and debt is the foundation of this world�s economic system, especially the Western world.

Many books and articles have been written about the Federal Reserve system, the Illuminati, the Bilderbergers, Council of Foreign Relations, Tri-Lateral Commission, Rockefeller�s and Rothschild�s, the big bankers who control most of the world through debt money. An excellent simplified short booklet is "Billions For the Bankers � Debts for the People. How Did It Happen?" by Sheldon Emry.

Article 1 of the United States Constitution states that "Congress shall have power to coin money and regulate the value thereof." Instead, since the 1913 Federal Reserve Act, Congress has abdicated this power to a private corporation of bankers, the "Federal" Reserve. No new money ever comes into the economic system without interest and debt.

Here�s how it works: If the Federal Government spends more money than it takes in, say $1,000,000, Congress authorizes the Treasury Department to print $1,000,000 in Federal Reserve notes, which are delivered to the Federal Reserve, which pays the cost of printing, perhaps only $500. The Government receives the paper money in exchange for its agreement to pay it back � with interest.

The government spends the money into circulation which eventually ends up in the hands of banks in the form of deposits. Then the banks of the Federal Reserve System can lend out another $10,000,000 to private and commercial customers with interest. They are required to keep only 10% as reserve. The Federal Reserve Board sets the interest rate charged to the citizens. Neither the chairman nor any of the Reserve Board members are elected. They are appointed by the President. This is an example of how the evil system of usury (debt money) works.

Righteous Lend � At No Interest!

Unlike the usurers who are in charge of this world�s economic system, the righteous will mercifully lend to those in need, expecting no gain or interest. Psalm 37:21, 26 (Living Bible): "Evil men borrow and �cannot pay it back�! But the good man returns what he owes with some extra besides . . . . the godly are able to be generous with their gifts and loans to others, and their children are a blessing." Psalm 112:5, "A good man shows favor, and lends."

Luke 6:27-38 outlines the basic instructions regarding lending: Give to every man that asks of you. If you lend to them of whom you hope to receive, you haven�t performed an act of mercy. As you are merciful to others, God shall be merciful to you. Matthew 5:42, "Give to him that asketh thee, and from him that would borrow of thee turn not thou away." Matthew 6:12, "And forgive us our debts, as we forgive our debtors." Luke 11:4, "And forgive us our sins; for we also forgive every one that is indebted to us." The parable of the unjust steward, Luke 16:1-12, doesn�t show that it is all right to cheat, but that we ought to be faithful in even the little things.

Let us not be like the unmerciful servant, who was forgiven by his master for a huge debt, and refused to forgive a fellowservant who owed him a small debt, Matthew 18:23-35.

Luke 7:41-43 shows that those who are forgiven the most should be the more thankful.

People in Jesus' time tried to get out of debt falsely, saying that unless they swore by the gold of the temple, they didn�t owe a debt, Matthew 23:16.

Those who have pity upon the poor are in reality lending to the Eternal. He will repay them for sure, Proverbs 19:17.

Avoid Debt, or Being Surety For Someone Else�s Debts

Proverbs 22:26-27, "Be not thou one of them that strike hands, or of them that are sureties for debts. If thou hast nothing to pay, why should he take away thy bed from under thee?" See also Proverbs 20:16, 17:18, 6:1-2, 11:15. Judah was surety for Benjamin, Genesis 43:9, 44:32. Job was so down and out that nobody would loan him anything, Job 17:3. We need God to be our surety, Psalms 119:122.

Against Man�s Law Not to Have Interest!

Suppose a Christian brother has a house that he wants to sell to another believer. Attempting to follow God�s law, he wants to sell it under a "no interest" contract. Does the U.S. Internal Revenue Service accept zero interest loans? Believe it or not, NO!

One can initiate a zero interest real estate contract, but the Internal Revenue Service will impute "unstated interest." Recently, the imputed interest rate was ten percent. That is, if you sold a $50,000 house at no stated interest rate and the buyer makes $500 per month payments, you would have to declare interest income at 10% annual rate on the unpaid principal balance.

The Internal Revenue Service under Section 483 of the tax code, says that when there is no stated interest or unreasonably low interest, then in reality there is "interest" that is unstated. Unless one charges the statutory minimum interest rate (recently, 10%) the Internal Revenue Service says you must impute interest up to the minimum. Our whole society is based upon interest. It is illegal NOT to charge interest in today�s society!

Few real estate agents have ever heard of the law forbidding true "no-interest" loans. The fact that such a law exists shows the utter degeneracy of our debt-money society.

Relieving Our Spiritual Debts

Romans 4:4, "Now to him that worketh [tries to gain salvation by works] is the reward not reckoned of grace, but of debt."

Galatians 5:3, "For I testify again to every man that is circumcised, that he is a debtor to do the whole law."

Romans 1:14-15, "I am debtor both to the Greeks, and to the Barbarians; both to the wise, and to the unwise. So, as much as in me is, I am ready to preach the gospel to you that are at Rome also."

Romans 8:12, "Therefore, brethren, we are debtors, not to the flesh, to live after the flesh." Instead, we must be led by the Spirit, verse 14.

The Macedonian and Achaian churches made "a certain contribution for the poor saints which are at Jerusalem. It hath pleased them verily; and their debtors they are. For if the Gentiles have been made partakers of their spiritual things, their duty is also to minister unto them in carnal things" Romans 15:26-27.

We have great spiritual debts that must be paid. Our sins have produced a great liability, or debt: death for all eternity. Unless the penalty is paid, our life will be forever quenched. But, praise the Almighty! The Savior died to set us free from our debt to sin. He rose that we might have a new life free of debt to sin and Satan.

God will forgive us of our debts only as we forgive our debtors, Matthew 6:12. We cannot expect the Eternal to forgive us our debts if we are guilty of usury. Psalms 15 answers the question: who shall dwell in the Lord�s holy hill? He that walks uprightly, does not backbite or do evil to his neighbor, keeps his promises even to his own hurt, puts not his money to usury, nor takes from the needy. He that does these things shall never be moved.

NOTE: We recommend that you obtain the booklet, "Billions For the Bankers: Debts For the People" by Sheldon Emry, by sending $1.50 to: America�s Promise Ministries, P.O. Box 157, Sandpoint, Idaho 83864. W

You Can Start a Restaurant in a Down Economy - An Excerpt

Tuesday, March 17, 2009
You Can Start a Restaurant in a Down Economy
Sara Wilson - Entrepreneur.com
So you're thinking about opening a restaurant. The allure of fame and fortune seduces you, your love of food drives you, and you want to heat up your life in an exciting industry. That's all fine and well--just as long as you make sure the flame isn't turned up too high. Even in a healthy economy, the restaurant failure rate tells a grim tale, but in a recession, the industry is even more unforgiving. Expensive food spoils, labor costs are high, restaurant-goers are harder to come by, restaurants close and life goes on.

But we also know we're talking to a special breed of people: entrepreneurs. Entrepreneurs have the drive to go against the grain and the nerve to try their luck in such a ruthless industry. We're not saying don't do it. We're just saying to equip yourself with the right tools or you might just find yourself at the bottom of the food chain. To help you get started, we reached out to a handful of industry experts and food entrepreneurs and compiled the perfect recipe for starting a restaurant or food business in a down economy.

Start with a Dose of Reality
Though you may be anxious to start stirring up business, you can't afford to skip this one step: building a solid foundation. "The biggest thing to avoid is 'Polaroid Syndrome'--here's me in my restaurant, here's me with my chef,'" warns Clark Wolf, founder and president of Clark Wolf Co., a food, restaurant and hospitality consulting firm. "That's not what this is. This is something very different and a lot more work."

Starting a restaurant requires in-depth knowledge about much more than just food. It's also about marketing, financing and people skills. Even if you're not single-handedly equipped with all that know-how, it's not necessarily a deal-breaker. "Take [on] a working partner, someone who's as equally involved in the business as you but brings something different to the table," advises Marilyn Schlossbach, a restaurateur and consultant who has been involved in the industry for more than 20 years.
Possessing the right knowledge is only part of the equation; having sufficient capital comprises the rest. "Historically, people have heard that undercapitalization is the No. 1 cause for failure in business," Wolf says. "It has never been truer. You really need to know not just how much money you need to open the restaurant, but also where the rest of it is coming from." Have enough capital to endure the first six months, Wolf advises, as well as an additional source of capital to get your business through several months after that.

Add a Good Concept and a Handful of the Right Ingredients
While the restaurant industry in general has taken a hit, one segment in particular seems to be faring better than the others. The fast-casual category is capturing customer dollars by offering healthier options at more affordable price points that spell value for consumers. In 2007, fast-casual chains enjoyed a 13.3 percent spike in sales growth and a 9.5 percent jump in unit growth, making it the growth vehicle for the limited-service restaurant industry, according to food-service consulting firm Technomic.

Both Schlossbach and Wolf agree that fast-casual has potential, but Wolf also believes success isn't so clearly labeled. Regardless of the segment, restaurateurs need to focus on making their customers feel better--the No. 1 reason people go to restaurants, says Wolf. Whether through good food or good service, ensure that customers will feel comfortable and safe. And take note of what customers crave. Wolf points out that people craved comfort foods, such as mashed potatoes, after the economic crash in '87 and sushi after 9/11. And now? "The icons of this economic period are 1) a really good hamburger from really good meat and bacon because it's an American birthright, and 2) we are entering the macaroni-and-cheese economy, but the cheese is much better," he says. "Both [dishes] are going to be served with farmer's market greens." Wolf recommends using in-season, local, heirloom and organic ingredients.

J. Dean Loring, 51, and Michael Gilligan, 52, seem to be right on the money. In 2007, they founded Burger Lounge, a fast-casual hamburger restaurant in La Jolla, California. They use only organic, grass-fed beef served on a proprietary bun, focus on presentation and deliver it all with an elevated level of service designed to exceed their guests' expectations. And while other restaurants are contracting or downright going out of business, Burger Lounge is expanding. It's opening a fourth location, averages sales of $1,100 per square foot and projects year-end sales of more than $5 million. "A lot of people are sitting on the sidelines and are nervous about what's going to happen," Loring says, "but we see a lot of opportunities both in real estate and in presenting a product that dovetails with people's needs now. I wouldn't say our company or product or model are recession proof, but they thrive in that market."

Pour in a Whole Lot of Love and Commitment but Cut Out Unnecessary Spending
In an economy where banks are tight on their lending and credit card companies are slashing credit lines, getting the cash you need to run your business may simply be out of your control. If that's the case, think outside the box--and more along the lines of a truck.
Street food isn't what it used to be. Fancy concoctions, fresh ingredients and unique offerings have raised street vendors to a whole new level. In fact, they've become such a part of the restaurant scene in New York City that they've merited their own awards, the Vendy Awards, which for the last four years have recognized the city's best street vendors. They're the new generation of kiosks and a temptingly low-cost way of entering the restaurant scene.

Jerome Chang and Chris Chen, 32 and 25, respectively, opened their mobile food concept, DessertTruck, in 2007 with about $100,000 in startup capital. (Chen has since left the company.) From the side window of their custom-made truck, customers can order delectable $5 desserts such as slow-baked apples and cinnamon, molten chocolate cake, and vanilla crme brle right on the street; year-end sales are projected to reach about $500,000. Chang and Chen may have gotten their business under way with a minimal investment, but don't be too reckless in cutting costs. Chang admits they selected the cheapest vendor to build the truck and now, more than a year later, they're still paying for their poor decision. "Dealing with mechanical issues is something any mobile food business faces, and it's something that will consume you if you're not prepared," says Chang, who paid $65,000 for the truck. "In our case, we went with a lower-priced vendor, and it has resulted in many more issues, most of them preventable."
In addition to maintenance problems, the design of the truck is far from user-friendly: The back door, through which Chang and his eight employees load, doesn't stay open. He's also had to fight to secure one of a limited number of street vending permits that New York City grants. Nevertheless, starting a mobile food concept allowed Chang to establish a reputation and create a healthy buzz. Indeed, surviving the hard times will enable you to get through almost anything. "The restaurant business is a business of pennies, nickels and dimes," Wolf says. "If you open now and learn how to do it successfully, you're well prepared for all times."

On the Cutting Board
Save even more money with these additional cost-cutting tips:
* Go green. Using sustainable products in everything from recycled cups to solar paneled roofs can have a big impact on your bottom line.
* Just ask. Everyone's hurting, including your landlords and suppliers. Negotiate lower prices by agreeing to pay back the favor when the economy starts to recover. "As things get better, everybody needs to be prepared to be generous with each other, and as things are tough, we need to protect each other," says Clark Wolf, president and founder of Clark Wolf Co., a food, restaurant and hospitality consulting firm. "I'm really recommending that flexibility."
* Get involved in community organizations. Marketing your business doesn't have to cost a lot. Join your local chamber of commerce to partake in community-wide marketing efforts or partner up with the local theater to offer "dinner and a movie" packages, advises Marilyn Schlossbach, a restaurateur and consultant.
* Watch costs. This can save major dough. "Make sure you spend money where people can feel it," says Wolf. "This is not a moment for chandeliers."

Singapore's Boomtown Dream Gets Hazy - An Excerpt

Singapore's Boomtown Dream Gets Hazy
By TOM WRIGHT
SINGAPORE -- On almost any major street of this affluent Southeast Asian city-state, cranes tower overhead -- a reminder of an incredible three-year building boom that now is turning into a bust.
Residential property prices rose 60% between 2005 and the middle of 2008, fueled by a massive influx of U.S., European and Asian expatriates drawn by Singapore's goal of reinventing itself as a financial and entertainment hub like Dubai or Monte Carlo.
A man puts on his safety helmet at the construction site of hotel towers of the Marina Bay Sands integrated resort in Singapore.
The global financial crisis has shattered that vision. Many of those foreign bankers and lawyers -- now without work amid Singapore's sharpest economic contraction ever -- are returning home, weighing on demand just as a slew of new luxury properties are nearing completion.
Banks, meanwhile, are reining in loans to developers. Prices of high-end apartments are forecast to fall back to 2005 levels within a year, property analysts say.
"In 35 years of my career, I've never seen anything like this," says Jerry Tan, a Singaporean broker who sold $1.5 billion of property to high-end clients in 2007 but now has time to sip wine and brood in his office.
For Singapore's trade-dependent economy, officially forecast to contract as much as 5% this year, the house-price collapse is adding to a bleak economic picture of declining exports and shrinking foreign investment.
The property sector's woes also represent a major setback to Singapore's efforts to throw off its stodgy image as a wealthy but dull trading entrepôt. A few years ago, the Urban Redevelopment Authority, Singapore's national land-use planning body, drew up blueprints for world-class casinos, theaters and residential areas. It sold land to developers for the projects and gave them time limits for completion.
Some elements of the plan are moving ahead -- notably two massive casino-leisure developments set to open in 2009 and 2010 -- but many other pieces are in jeopardy.
Those pieces include "Sentosa Cove," a luxury residential development on Sentosa Island just off Singapore's mainland. The gated community of $8 million-plus glass-and-steel modernist mansions was envisioned to put Singapore on the map much like "Palm Jumeirah," Dubai's artificial residential island.
A Malaysian company is still on track to launch portions of a $4 billion resort in early 2010 on Sentosa Island, including a casino, hotels and a Universal Studios theme park. Another casino and theater complex, under construction on Singapore's mainland by Las Vegas Sands, also is planning to open at the end of 2009.
But other projects at Sentosa Cove that were to be ready this year are delayed. City Developments Ltd., Singapore's second-largest developer, has postponed until 2011 a $390 million marina complex of exclusive apartments, shops and a five-star, 320-room Westin Hotel that was due to open this year.
Many parts of the Sentosa Cove development remain an unfinished building site. Developers that paid the government top dollar to buy land there "will find it quite challenging to sell [homes] at a profit in today's market," says Nicholas Mak, head of Singapore research at Knight Frank, a
This overview shows part of the Marina Bay Sands complex under construction against the background of some of Singapore's high-rise hotels.
Sentosa Leisure Group, a government entity that manages the resort island, is trying to be flexible with developers, says Mike Barclay, the group's chief executive, and is extending deadlines for construction. "We don't want there to be half-finished buildings around the community," he says.
The government received scant interest from private developers when it launched land sales at Sentosa Cove in 2003. Property prices were in the doldrums and the area was seen as too far away from Singapore's central shopping and financial districts.
But that changed as the economy picked up. Singapore, a major exporter of electronic goods and a global shipping hub, grew by more than 6% annually between 2004 and 2007. Eager to diversify its economy, the government offered generous tax breaks to international private banks and high-tech companies to set up shop.
Half a million foreigners moved to Singapore between 2003 and 2008, many of them wealthy. Boston Consulting Group found in a recent study that 10% of Singapore's residents have investible assets of $1 million or more, the densest concentration of millionaires in the world, and more than twice the ratio in the U.S.
Residential-property developers started a flurry of new construction. The government stoked the boom by allowing investors to make down payments of only 20%, paying the remainder upon a project's completion. In a soaring market, speculators with no intention of completing their purchases were able to sell for a profit without organizing any financing. Amid signs that a speculative bubble was building, the government banned these so-called deferred payments in late 2007. But by then, the market was already overheating.
As the only part of Singapore where foreign individuals can own land without special government clearance, Sentosa Cove became the target of bidding wars. By the market peak in mid-2007, property developers were paying 1,400 Singapore dollars (US$935) per square foot for land, more than four times prices in 2003.
Buyers who already secured property loans, like Bonnie Pun Da Roza, a Hong Kong citizen who lives with her British husband and children in one of two properties they bought in 2006, say they will sit tight and hope for an upturn. "Right now we're not too worried, but if it goes on for three years, then we will be," Ms. Da Roza says.
To be sure, the property sector is in better shape than it is in Dubai, where some half-finished construction projects have stopped. The Persian Gulf city developed 50,000 residential units in 2008, much more than the 10,000 private units completed that year in Singapore.
CapitaLand Ltd., Singapore's largest developer, which is 40%-owned by a Singapore government investment company, and large private companies like City Developments have adequate reserves to complete projects, analysts say. In March, CapitaLand raised S$1.84 billion through a rights issue.
But some smaller, private developers risk bankruptcy, analysts say. As prices crater, speculators are unable to get bank loans to cover what they owe, meaning a jump in distressed sales later is likely. Meanwhile, foreign investors who bought at the peak now face big losses if they have to sell, denting Singapore's reputation as one of the safest places in the world to park money.
Despite efforts by developers to choke new supply, there are still 35,000 private homes under construction, according to the Urban Redevelopment Authority, a potentially giant overhang. In 2008, there were 13,644 private residential-property deals in Singapore, down 64% from the previous year. About 15% of residential property could be vacant by 2010, worse than a 10% rate after the Asian financial crisis a decade ago, Credit Suisse estimates.
"I'm yet to see the light at the end of the tunnel," says Mr. Tan, the high-end broker.

Young Indians say "no thanks" to American dream - An Excerpt

Young Indians say "no thanks" to American dream
Wed Mar 25, 2009 9:33pm EDT

By Nivedita Bhattacharjee and Anurag Kotoky
BANGALORE (Reuters) - For decades, the United States beckoned as the land of opportunity for bright, young Indians, lured by the prospect of prestigious university degrees followed by jobs on Wall Street or in Silicon Valley.
Indians have since 2001 been the largest foreign student population on American campuses, comprising around 15 percent of all international students at colleges and universities in the United States, according to the U.S. Embassy in New Delhi.
But now, the economic crisis that has sent the U.S. economy into its worst recession in decades, has tarnished the sheen of the 'American Dream' for many Indians who are opting for university studies and career opportunities at home.
America's loss may be India's gain, analysts say, pointing to a 'reverse brain drain' that may see India reaping benefits for years to come as some of its smartest and most talented people put their energies into India' economy, Asia's third-largest.
"The brain drain has already begun to reverse. Now there are many magnets pulling the best talent. Before, the U.S. was where everyone wanted to go," said Vivek Wadhwa, a U.S.-based Indian academic who has written a paper on the issue. India's economy has boomed at around 9 percent growth in each of the last three years, lifting millions out of poverty and creating a generation of affluent and ambitious young Indians.
Many have pursued prestigious post-graduate degrees in the U.S. and Europe and then stayed after finding high-paying jobs.
But as the global financial crisis has kicked-in, Indians are seeing greater opportunities at home, where there are more job openings, the cost of living is lower and modern amenities such as shopping malls and condominiums offer them a comfortable life.
About 100,000 skilled Indian 'returnees' will come home from the United States in the next five years, Wadhwa estimated.
"When I joined Duke four years ago, nearly every student talked about wanting to stay and work in the U.S.," said Wadhwa, an adjunct professor at Duke University and a senior research associate at Harvard Law School.
"Now the vast majority plan to go back home. A few want to work here to pay off their loans, but they don't think they will be able to get jobs."
With U.S. unemployment at a 26 year high, prospects at home appear better for Indian graduates as firms such as Warner Bros and IBM announce they will move jobs to India and other outsourcing hubs after laying off workers in North America.
FINANCIAL AID
Rahul Dutta, 23, is a case in point. He has changed his plans to study in the United States and is now enrolled at a local university.
"My initial plan was to do my master's degree there and look for a job too, but now I realize that there are no jobs and no funding, so I took admission in a college in Delhi," said Dutta.
In Bangalore, south India's high-tech metropolis, Kripa Chettiar reached the same conclusion.
"I was looking at doing a master's in financial engineering at Columbia University," Chettiar said. "But now I am not even writing the GRE because now there's no point, as there is no financial aid available at all."
The GRE, or Graduate Record Examination, is the standard admission test for graduate university studies in the United States and several other English-speaking countries.
Garvit Bafna in Pune, a city near India's financial capital Mumbai, took the exam, but he says he will only move to America if he gets into a top-ranked university.
Even students who have passed the GRE exam are abandoning plans to study abroad due to lack of funds, said Rajiv Ganjoo, head of international education at Career Launcher, an educational service provider in India.
"It is a waiting game now," Ganjoo said. "Students are looking at the recession, at how the colleges react to it and how the government reacts to it, before taking any steps."
For students already in the United States, getting fellowships and other funding is becoming difficult, especially for foreigners as the pool of scholarship dollars has dried up due to shrinking university endowments from stock market losses.
The funding scenario is grim as compared to past years," said Cherry Harika, a 24-year-old from India's Punjab province who is studying for a masters degree at Boston University.
"My university has frozen new hiring. There are hardly any new job openings for foreigners, especially when U.S. citizens are losing their jobs."
Employer visa sponsorships are growing scarcer and President Barack Obama's administration is under pressure to restrict the number of temporary work permits issued to foreigners.
About 55,000 students in India took the GRE last year, down more than 20 percent from the year before, said Jaideep Chowdhary, who heads the GRE program at a private training institute in India.
Most students who study in the United States need to shell out around $50,000 for a two-year stay, he said.
Much of that money would come from loans which are not easy to get these days due to the credit crunch, especially for students with no reasonable assurance of a job.
By contrast, studying at the Indian Institutes of Technology in Madras, part of a highly reputed nationwide network of engineering and technology campuses, costs about $1,200 a year.
India too has taken a hit from the financial crisis which has slowed the scorching pace of growth of its IT outsourcing sector. One small advantage of the crisis for India may be the human capital benefits as the brightest stay home, said Wadhwa, who wrote a report titled "America's loss is the world's gain."
"This is an economic tragedy that significantly increases the chances the next Intel or Cisco Systems will launch outside the U.S.," Wadhwa wrote.
(Editing by Megan Goldin)

U.S. to blame for much of Mexican drug violence - Reuters Report

U.S. to blame for much of Mexican drug violence
Wed Mar 25, 2009 11:19pm EDT
By Arshad Mohammed
MEXICO CITY (Reuters) - An "insatiable" appetite in the United States for illegal drugs is to blame for much of the violence ripping through Mexico, U.S. Secretary of State Hillary Clinton said on Wednesday.
Clinton acknowledged the U.S. role in Mexico's vicious drug war as she arrived in Mexico for a two-day visit where she discussed U.S. plans to ramp up security on the border with President Felipe Calderon.
A surge in drug gang killings to 6,300 last year and fears the violence could seep over the border has put Mexico's drug war high on President Barack Obama's agenda, after years of Mexico feeling that Washington was neglecting a joint problem.
"Our insatiable demand for illegal drugs fuels the drug trade. Our inability to prevent weapons from being illegally smuggled across the border to arm these criminals causes the death of police officers, soldiers and civilians," Clinton told reporters during her flight to Mexico City.
"I feel very strongly we have a co-responsibility."
Clinton said the Obama administration strongly backed Mexico in its fight with the drug cartels and vowed the United States would try to speed up the transfer of drug-fighting equipment promised under a 2007 agreement.
"We will stand shoulder-to-shoulder with you ... Our relationship is far greater than any threat," Clinton said at a news conference in Mexico City.
Crushing the drug cartels, who arm themselves with smuggled U.S. weapons and leave slain rivals, sometimes beheaded, in public streets, has become the biggest test of Calderon's presidency as the bloodshed rattles investors and tourists.
Washington on Tuesday said it plans to ramp up border security with a $184 million program to add 360 security agents to border posts and step up searches for smuggled drugs, guns and cash.
The Obama administration plans to provide more than $80 million to buy Black Hawk helicopters to go after drug traffickers, Clinton said.
A U.S. official, who spoke on condition of anonymity, said this would pay for three helicopters. The administration plans to ask the U.S. Congress for $66 million in new funds to pay for them and to find the rest from other programs, he added.
The U.S. steps to tighten border security to try to stem the flow of drugs, arms and cash won praise on Wednesday from the United Nations' top crimefighter, Antonio Maria Costa, executive director of the U.N. Office on Drugs and Crime.
But Costa said Central American states are "caught in the crossfire" of the drug war and urged wider regional cooperation to halt violence and the flow of "war-grade weapons" ending up in the hands of young urban gang members. [nN25544789]
"We are talking about an arms-trafficking situation that is as bad as the drug-trafficking situation," he told Reuters.
In Washington, Senator Joseph Lieberman said Obama's plans were not enough and he would seek $385 million more from Congress to pay for 1,600 more Customs and Border Patrol agents and bolster law enforcement centers in border areas.
CHALLENGES
Clinton will use her visit to address a trucking dispute with Mexico and long-running trade and immigration issues.
She said the trading partners were making headway on a spat which saw Mexico slam high tariffs on an estimated $2.4 billion worth of U.S. goods after the U.S. Congress ended a pilot program to let Mexican trucks operate in the United States.
"On the trucking dispute, we are working to try to resolve it. We are making progress," she said, adding that she expects Congress will be receptive to the administration's ideas.
Clinton, whose includes a stop in the northern business city of Monterrey on Thursday, said the thorny issues on the table did not mean that U.S.-Mexico relations were in trouble.
Mexico has felt slighted by a delay in the arrival of drug-fighting equipment pledged by former President George W. Bush, as U.S. officials have sought assurances that the aid would not end up in the hands of corrupt officials or police.
The U.S. Congress this month trimmed the amount of drug aid money it will set aside this fiscal year to $300 million from $400 million last year, under a pledge of $1.4 billion to Mexico and Central America over three years.
Since taking office in December 2006, Calderon has spent more than $6.4 billion on his drug war and sent 45,000 troops and federal police to trouble spots around the country.
Mexico has repeatedly said, however, that its efforts will come to nothing if the United States does not clamp down on the smuggling of U.S. guns used in 90 percent of drug crimes south of the border.
Clinton described the violence Mexico is grappling with as "horrendous" and said cartels were alarmingly well equipped.
"It's not only guns. It's night vision goggles. It's body armor. These criminals are outgunning the law enforcement officials," she said. "When you go into a gun fight, where you are trying to round up bad guys and they have ... military style equipment that is much better than yours, you start out at a disadvantage."
(Additional reporting by Catherine Bremer in Mexico and Pascal Fletcher in Miami; Editing by Anthony Boadle)

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Drug Addiction - How a Person Becomes a Drug Addict - What is Drug Addiction?

Drug Addiction: Many people have struggled with it, either in themselves or in someone they know.

But what is drug addiction? How does someone start off using drugs, only to become a full-blown drug addict?

While there are many theories regarding the exact mechanics of drug addiction, our experience has shown that addiction can be categorized into two parts - physical addiction and mental addiction.

The physical addiction occurs when the person cannot physically function in a normal manner without the drug.

The mental addiction occurs because the person cannot face the circumstances in which they find themselves, and use the drugs to obscure their present situation.
Drug Addiction Pattern

Whether talking about any drug addiction: alcohol addiction, cocaine addiction, methamphetamine addiction, or even heroin addiction, the pattern is the same:

The person tries to escape some physical or emotional pain by taking drugs. This could be a physical or emotional pain, or the discomfort of boredom, peer pressure, lack of social skills.

The person finds that the drugs offer temporary relief, so continues to abuse them. When the person uses the drugs it seems to handle their immediate problem.

With continued use of the drug, the body's ability to produce certain chemicals is diminished because these chemicals are replaced by the drug. The body uses the drug as a substitute for it's own natural chemicals.

Deprived of it's own resources (and the ability to create them the body perceives that it needs the drug to function and demands the drug, through physical cravings. The cravings are a way of making the person get more drugs to be able to function at all.

Drug cravings become so severe that the addict will do almost anything (in many cases, abandoning all previous moral teachings) to get more of the drug. People who are addicted will find themselves doing things they would never have contemplated before.
Drug Addiction - Addict in trouble

The addict commits misdeeds against family, friends, and themselves to satisfy unrelenting cravings. These misdeeds include lying, stealing, cheating, anything to get the drugs to satisfy the drug cravings.

Because of these misdeeds, the addict cannot face him or herself and dives deeper into drugs. The person is now entrapped in full blown drug addiction.

Waiting won't help a drug addict. No matter what they say, if they haven't quit using drugs by now, they won't, without help. Don't wait.


Intentions Of a Drug Addict

Why can't they just stop using drugs? Don't they know this is ruining their lives? Why can't they see what it's doing to them?

No one intends to become addicted to drugs or alcohol. Unfortunately many of us do. Drug addicts don't become addicted with the intention to destroy their lives and to cause upset to those they love. These conditions are the by-product of drug addiction. The drug addict lies to everyone, things start missing around the house, and the dishonesty conveyed is proportionate to the severity of the addiction. These things are apparent to those living with an addict.

Our experiences show that the drug addict or alcoholic is usually an intelligent and most often creative person with much hope for the future. This only adds to the calamity of their downfall. As the addict slips down the spiral, their loved ones try to deny the problem exists, sometimes for years. This is a part of the vicious cycle of drug addiction.

Nature of Drugs: The Source of Addiction

Drugs are essentially pain-killers. They cover up emotional and physical pain, providing the user with a temporary and illusionary escape from life. When a person is unable to cope with some aspect of their reality and is introduced to drugs, they feel they have perhaps solved the problem itself. The more a person uses drugs or alcohol, the more inflated the problem becomes. More problems are created by their use.

This becomes the center of their focus. Soon enough the person feels the need to use consistently, and will do anything to get high. Narconon understand the reason why someone becomes an addict. We know why it so difficult to get off drugs and stay off them. We understand the reason, and thus, we have the solution to drug addiction.

But what are drug cravings? How does someone deal with drug cravings?

What must be understood is the bio-chemical aspects of addiction and the fact that something called "metabolites" are produced after taking a drug and are stored in the body long after one has stopped using drugs. Metabolites are a powerful source and reason for cravings. They are a key in the riddle of why addicts who stop using the drug revert to using them again. These metabolites are formed and act as a substitute for natural body chemicals. As an addict's own natural chemicals deplete as a result of drug use, these metabolites begin to function as a substitute and a very poor one indeed!

Drug Addiction - Homeless addict
The body becomes by-passed in producing its own chemicals and begins to rely on these metabolites to play vital roles related to mental and physical well-being. Now, when the drug addict attempts to stop using these drugs, the body, damaged and depleted of its own natural body chemicals will demand more of the drug to produce metabolites. And hence, the person is caught in a trap in which the extreme discomfort of being without the drug, mentally and physically. The cravings seem insurmountable to the addict.

These drug cravings are so intense and uncomfortable that it induces the addict to commit acts such as stealing from one's own family in order to get the drug. The addict does things that he normally wouldn't do, were he not addicted. These misdeeds make it even more difficult for the addict to face and confront the situation. The drug addict's sense of self worth and respect are reduced to a state of complete confusion. Introversion occurs, and the addict's sense of self reduces further. This perpetuates his desire for more drugs. Physically, the person feels hopelessly drug addicted.

Faced with the penalty of extreme discomfort, stopping drug abuse seems impossible. Emotionally, the addict is ruthlessly robbed of his sense of self worth.

The drug addict is caught in a trap. It is a trap that appears inescapable unless an effective drug addiction treatment handles the condition. That means both the metabolites are flushed clean from the body and that the person's self-worth and identity is rehabilitated through effective social education.

Malaysia's New Mahathirism - Excerpt from Wall Street Journal

* OPINION ASIA – excerpt from Wall Street Journal
* MARCH 26, 2009

Malaysia's New Mahathirism - As Najib Razak takes power, the ruling party must not return to its old ways.
In 2001, as Mahathir Mohamed's long tenure as prime minister was in its final years, we wrote that Malaysia was "in danger of stepping back from the world of democracy and the Internet into a darker age of racial conflict and government repression." Eight years later, with the economy deteriorating and politics in turmoil, that threat looms again.
Dr. Mahathir's protege, Deputy Prime Minister Najib Razak, is set to be elected today as leader of the United Malays National Organization, the leading party in the coalition that has governed the country since independence in 1957. Next week he is expected to take over as prime minister, replacing the moderate and mostly ineffective Abdullah Ahmad Badawi. During his six years in office, Mr. Abdullah made scant progress in efforts to end political corruption, liberalize the economy and reform the judiciary. The unpopular premier led UMNO to a dismal performance in elections a year ago.
Mr. Najib's ascension to power has been marked by a government crackdown on UMNO's political opponents and on free speech. On Monday, police fired tear gas on a rally in Kedah as opposition leader Anwar Ibrahim was speaking to the crowd. Also this week, reporters from popular online media, including Malaysiakini and Malaysian Insider, were denied credentials by the party to cover the UMNO party congress taking place in Kuala Lumpur.
Most worryingly, the government this week shut down two opposition party newspapers. The ban is for three months -- long enough to get past the April 7 by-elections for three parliamentary seats that the opposition is keen to snag. It's also long enough to get past the expected verdict next month in a sensational murder trial to which the opposition links Mr. Najib; Mr. Najib vehemently denies any involvement and says he did not know the victim. As reported in a Journal news story this week, Mr. Anwar said he believes the papers were shuttered in part to keep them from repeating allegations of corruption in weapons purchases when Mr. Najib was defense minister. Mr. Najib has denied allegations of corruption.
The government's new restrictions on the press come on the heels of UMNO's moves against the opposition party in Perak, where it recently persuaded three state parliamentarians to switch alliances, thereby shifting the state government's balance of power in UMNO's favor. The sultan of Perak validated the move, the opposition contested it and a court case is under way. But a lawyer who said the sultan's decision was unconstitutional and suggested he might sue the sultan was charged with sedition last week. Six Internet users who made critical comments on the sultan's Web site were also charged with insulting the sultan under the country's new cyber law.

In Dr. Mahathir's era, the UMNO-led government could get away with such tactics. Under his watch, the country saw opposition media silenced and political dissidents jailed. But in today's Malaysia, where voters are beginning to realize the power of the ballot box, it's a risky political gambit. Mr. Anwar led his opposition coalition to victory in five of 13 states last year and since then has also won two parliamentary by-elections. So far Mr. Anwar has been unable to win enough defections from UMNO to dissolve the government and call new elections. If he succeeds -- and if he can get past his July trial for sodomy -- he could eventually win the premiership. Mr. Anwar denies the charges and says they are politically motivated, a charge the Malaysian government denies.
In the meantime, UMNO's moves against the opposition and the press suggest that rather than listening to voters, the ruling party may be growing less tolerant of dissent. Add in the ethnic tensions in Malaysia's multiracial society -- and UNMO's favored system of preferences for native Malays -- and it's a potentially combustible mix.
Malaysia can't afford political upheaval now. The country's economy is being hit hard by the global recession. GDP growth is forecast to contract this quarter after growth of just 0.1% in the fourth quarter of 2008, and unemployment is rising. Foreign investors perceive political risk in a country that still locks up its citizens under colonial-era laws like the Internal Security Act. Voters may decide to take it out on Mr. Najib, who was finance minister under Mr. Abdullah, if they don't see improvement in the economy.
Mr. Najib seems to understand that Malaysians want something new. In a speech Tuesday at the party conference, he promised to end corruption and the politics of patronage and pursue reform; he called for "renewal and regeneration" for UMNO. "Economic progress and better education have directly resulted in the birth of a class of voters who are better informed, very demanding and highly critical," he said. "If we do not heed this message, their seething anger will become hatred and in the end this may cause them to abandon us altogether."
Mr. Najib, the son of Malaysia's second prime minister, entered Parliament at the age of 22. Now 55, he has been groomed for this moment for all of his political life. If the soon-to-be PM truly wants to change his country for the better, he'll make good on his word, squelch his inner Mahathir, and lead Malaysia down the path of more transparent government and basic freedoms.
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Malaysia is a rare multiracial success. But its stability is being put to the test

A repeat legal assault on the opposition leader highlights the current volatility. The old order is desperate to hold power

By Martin Jacques - in Kuala Lumpur ( The Guardian, Friday 15 August 2008)

A feverish atmosphere now grips Malaysia. The country is awash with rumours. Until the resignation in 2003 of the previous prime minister, Dr Mahathir Mohamad - after 22 years in office - its politics was entirely predictable. Now it is becoming highly unpredictable.

Malaysia is one of the great Asian success stories. It has enjoyed a growth rate of up to 8% for much of the past 20 years, and the fruits of prosperity are everywhere to be seen, from the magnificent twin towers in Kuala Lumpur to the expressways and traffic congestion. Without doubt Malaysia is the great economic star of the Muslim world. The architect of this economic transformation was Dr Mahathir, but since he stepped down the country has been engulfed by growing doubts about his legacy and the emergence of a new set of priorities.

The turning point was the general election last March. Ever since the country gained independence from Britain in 1957 it has been ruled by the Barisan Nasional, a coalition of three racially based parties led by the United Malays National Organisation (Umno), which has dominated Malaysian politics, leaving the opposition permanently enfeebled and embattled. In March, however, the government gained only 51% of the popular vote compared with 64% at the last election in 2004.

It was its worst performance ever, and was compounded by the fact that the BN lost its two-thirds majority in parliament, by virtue of which it had previously been able to enact constitutional change. The government still enjoys a healthy majority, but the election has undermined its self-confidence, hugely enhanced that of the opposition and transformed the mood of the nation; where once politics seemed set in stone, suddenly change is in the air.

The government has become defensive and fearful, symbolised by the prime minister Abdullah Badawi, who is a weak leader in comparison with his formidable and long-serving predecessor. The government's defensiveness is illustrated by its latest legal assault against Anwar Ibrahim, the leader of the opposition coalition and a former deputy prime minister.

In 1998 he was charged with sodomy (engaging in a homosexual act, which is illegal in Malaysia) and imprisoned for 15 years, but released in 2004 after the appeal court overthrew his conviction. Fearful of his imminent return to full-scale politics after serving a period of disqualification, the government has once again charged him with sodomy ("carnal intercourse against the order of nature"). In a recent poll, two-thirds believed the charges were politically motivated. Indeed, a remarkably apologetic leader in the Umno-run New Straits Times last Saturday displayed a transparent lack of conviction in the charges. In a predominantly Muslim country, the sodomy charge is manifestly designed to discredit Anwar in the eyes of Malays, while the timing is a blatant attempt to prevent him from returning to parliament. In short, it is the unimaginative act of a government that is running scared.

The government, meanwhile, finds itself mired in another scandal - the murder of a young Mongolian translator in 2006, for which a close political adviser of Najib Tun Razak, the ambitious deputy prime minister and defence minister, is standing trial, together with two of his bodyguards. The fact that, subsequent to her murder, an attempt was made to remove all traces of her body by the use of special explosives, whose use can only be sanctioned by the highest authorities in the government, has encouraged widespread speculation that Najib and his wife were involved in the murder - which appears to have been related to a lucrative submarine deal with France.

The government has only itself to blame for this endemic mood of rumour. The media is closely controlled by the government and is widely disbelieved. As a result the vacuum of information and opinion has been filled by two websites - malaysiakini.com and malaysia-today.net - which have become highly influential, outspoken and merciless towards a government that no longer controls the information agenda in the way that it has previously, further serving to undermine its position.

The growing lack of confidence in the government is fuelled by systemic corruption, especially in Umno, and a widely held view that the benefits of the country's economic growth have not been shared equitably, with poorer Malays and the Indian minority in particular losing out badly. Indeed it was a demonstration by the Indian minority-rights organisation Hindraf last year that helped to draw the nation's attention to the plight of the Indian community and the neglect of the poor. Corruption is rife in Umno, which has become a vehicle for personal enrichment; its vice-president said last week that "it has become rampant at all levels and it is frightening if this becomes normal practice in future".

Events could move quickly. On August 26 Anwar will stand as the opposition Pakatan Rakyat candidate in his old parliamentary constituency and will undoubtedly win by a huge margin. The government, meanwhile, will attempt to stymie his rise by the use of the sodomy case. Anwar has regularly predicted that the government will fall by September 16 when, he claims, about 30 government defections will enable the opposition to form a new government.

It is unlikely to be so simple. The old order, which has ruled Malaysia for 51 years, will mount a desperate fight to ensure its own survival. Too many people have got too much to lose; a Pakatan government would threaten their reputations, careers, wealth and, in some cases perhaps, freedom. A further problem concerns the nature of the opposition. A Pakatan government would be a combination of incongruous, incoherent and uneasy bedfellows: the Islamic PAS, DAP (a predominantly Chinese party) and Anwar's Keadilan. As a consequence, the opposition's credibility as an alternative government is seriously flawed.

The greatest fear must be that as the old order weakens, underlying racial tensions will be exacerbated and exploited for nefarious purposes. Malaysia is multiracial in a way true of few societies outside Africa: with Malays accounting for around 60% of the population, the Chinese for some 25% and Indians 8%, this is a country that depends on a racial consensus for its stability. That cannot be said of any European society, Britain included.

Such racially diverse societies are extremely difficult to govern, and it is to Malaysia's enormous credit that it has combined economic growth with relative racial harmony - a feat for which it has rarely been given the credit it deserves in the west. Undoubtedly the present system of positive discrimination in favour of Malays has largely outlived its usefulness, but any reforms will be difficult and potentially fraught. Hopefully the kind of political change that Malaysia now requires can, in time, be achieved without losing its most precious achievement. But there can be no guarantees.

- Martin Jacques is a visiting research fellow at the London School of Economics Asia research centre

martinjacques1@aol.com