Articles / Rubric: Global

Russia Should Rejoin the Muslim Markets
October 2013 | Global

In early October, Kazan hosted KazanSummit 2013,  the 5th International Economic Summit of Russia and the Organization of Islamic Cooperation (OIC). On the eve of the event, a World Economic Journal reporter met with Linar Yakupov, Chairman of the forum’s organizing committee.

How would you assess the current state of the Islamic financial market in the world and the role of the KazanSummit?
Over the past 20-30 years there has been explosive growth in Islamic finances globally. The sukuk [Islamic bonds] market’s size today is going through the roof: More and more launches of this product are happening and many countries are seeking to float them in their own markets. Islamic banks are opening around the world and the volume of funds flowing through them is growing. International insurance companies like Allianz are opening divisions that deal with Islamic insurance.

Many Western Banks – Citibank, Societe Generale, UBS, and Credit Suisse – have opened divisions that operate on the principles of Sharia law, with separate financial statements. Today there are clear Islamic financial centers: Kuala Lumpur, Dubai, and Bahrain; even London, a city with over 2 million Muslims, has become the main center of Islamic finance in the West. In addition, many institutions today are providing Islamic microfinance services.

As for Russia and the role of KazanSummit, we’re proud that that the only Islamic investment company in our country so far  – the Tatarstan International Investment Company (TIIC), founded with help from the Islamic Development Bank, the Republic of Tatarstan government, foreign investors from OIC countries – opened in our Republic as a result of the first KazanSummit in 2009. TIIC in turn established the Eurasian Leasing Company (ELC), whose charter capital was increased to $10 million this year, which will be announced during Kazan Summit 2013.

Companies from the Gulf and Malaysia are opening companies in Tatarstan that also work in the Islamic financial sphere. The KazanSummit platform is of interest because 57 countries come to meet here and most of them are already using the Islamic financial model.

 


Last year at KazanSummit 2012, one of the major themes discussed by lawmakers from more than 20 countries was: What barriers are there in OIC countries and Russia to mechanisms of the Islamic financial system? In the early years of KazanSummit, the exchange of information took place at the academic and scholarly level, but today these talks, working with Islamic investment funds in the Gulf, are happening at the level of leading Russian banks and businesses that are ready and willing to work with these instruments.

What are the hot topics to be discussed at the Summit this year?
The agenda includes all of the important questions that are relevant today to developing economic cooperation between Russia and the OIC countries. These include our trade, investment platforms, and the latest global trends in implementing “smart” city projects, in particular “Kazan Smart City,” with is of interest to the developed countries in the Muslim world. This Islamic finance conference is of increasing importance, and this year we are expecting a larger number of experts in this area and serious discussions about Islamic financial models. We are currently working with the International firm Thomson Reuters to prepare an Islamic finance roadmap.

Guests who have already confirmed their participation in KazanSummit 2013 speak volumes to the status of this event. Among them is OIC Secretary General Ekmeleddin Ihsanoglu, who met in March of this year with Tatarstan President Rustam Minnikhanov, during a working visit to Saudi Arabia. The main topics discussed at this meeting included trade development with OIC countries, the halal industry, and Islamic finance – the exact things discussed at KazanSummit. After the collapse of the Soviet Union, Russia unfortunately withdrew from many Muslim markets around the world, but we believe these are very promising markets for Russia and Tatarstan, in particular. In this regard, the discussions that are taking place, and will take place at KazanSummit, are very important.

Others who have confirmed their participation in the Summit are heads of structures within the IDB, delegations on the ministerial level from a number of foreign countries.

We hope that the participation of major international guests at KazanSummit 2013, will allow for discussion of regulatory issues in the Islamic financial system. And, of course, special thanks to the Russian Federation Council for its support in organizing KazanSummit 2013.

How is Russia currently building trade relations with countries in the Organization of Islamic Cooperation?
As I said, cooperation via developing trade relations between Russia and OIC countries is at the forefront today. And Russia, which has been an observer at the OIC since 2005, must of course be an active participant in this process, in the political climate that exists today. Being an observer gives our country huge opportunities for trade development – in 2012, trade between Russia and OIC countries was more than $80 billion. Russia’s main partners from among OIC members were Turkey and Kazakhstan, accounting for over two-thirds of all Russian trade with Islamic countries. But there is, of course, much work yet to do.

What goals does KazanSummit 2013 hope to reach?
For us, it is important to take away optimal models for interaction, and toolsets as well as specific niches that would be interesting to both the OIC and Russia within a framework of joint work. That, and increasing the potential we have today. Finally, a decision needs to be made about what our country’s position is in regards to Islamic finance. We believe these discussions should take place at KazanSummit and should be further developed on all levels, so that it becomes an important element for developing economic relations with the Muslim world.


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