11 January 2011 Interview with Professor Vali Nasr, Tufts University By Mary E. Stonaker

1. During your lecture today, you focused mainly on Dubai and Turkey, in addition to Iran, as being economic examples for the Muslim world to follow. Can you provide an example of a Muslim nation which, in your opinion, is on the verge of the transition into a market economy?

Indonesia would be a good case. It began the process of reform during the Suharto period. It has accelerated significantly since the fall of the Suharto and it is increasingly opening up to the global economy, restructuring to base its economy in market forces.

2. You spoke of the importance of rooting communities in market forces, by encouraging export creation, to discourage the instability caused by insurgency and jihad. How does Islamic Finance play a role in this global integration of Muslim communities? Do all Muslim nations automatically use Islamic Finance as a default and how would that help/hinder the global integration of all Muslim nations into the global economic community?

Islamic Finance is important because it is a point of engagement with the global economy by the Muslim world. The demanding growth of Islamic Finance shows that Muslims would like to engage the global economy, that they would like to participate and that they have financial demands of their own. Contrary to the false image of Muslims collectively and constantly pursuing jihad, they are engaging the global economy everywhere possible. That Muslims are participating in global finance and buying Islamic bonds is proof that they are embracing capitalism. The growth of Islamic Finance as a global sector has not happened because of government promotion – it is driven by a thirst to be interacting with western economies.

3. When looking at Iraq and Afghanistan, how would you suggest the governments begin to encourage development in their fledgling economies to support the growth of the ‘right middle class’, the wealth-producing bourgeoisie? What infrastructure (such as schools and hospitals) needs be developed before we can begin talking about developing the right middle class in countries such as Iraq and Afghanistan? Generally, at what point does a government need to allow development to occur without government subsidies?

The growth of viable market economies requires security and the presence of necessary basic infrastructure. These are countries in which you have wars raging – security issues are the priority before we can talk about economic reform. You have to address the basic issues before you can address the secondary, more complex issues.

4. What role do/should Muslim religious authorities play in encouraging globalization and a larger middle class? Can/should clerics begin discussing economics in their sermons?

No, I don’t think it’s their domain. It’s the other way around. Once you have economic reforms and new modes of economic behavior, people will try to find their own way of addressing faith and economic activity. They will put pressure on clerics to adopt ideas. When you have an open economic marketplace, you are more likely to have an open-thought market. My whole point is that the process of change is not driven by clerics, but by businesspeople.

5. Dubai was an example for globalization and consumption in the Muslim world which has fostered the rise of the middle class. Yet, you said the majority of the Gulf would most likely not encourage open market functions to build this bourgeoisie. Is this due to the low level of oil (natural resources) that Dubai possesses today in contrast with their neighbours?

Dubai is an exception. What Dubai has done, other Emirates are emulating. It needed an airport and an airline, a developed financial sector and sophisticated IT networks because it needed to find a way to make money in order to attract global money. Citizens may not be participating. Dubai created a virtual world in which Muslims could participate in the market economy. It tried to reinvent itself because it didn’t have oil to sustain itself and in the process Dubai created this world.

6. Could you explain more about the genesis of middle classes in North Africa? You briefly mentioned Morocco as possessing a bourgeoisie (or as on its way).

No country, most countries don’t have zero middle class because no middle class is completely closed. In Northern Africa, Morocco began the process of economic reform though it doesn’t have the foreign direct investment (FDI) environment to produce things that could be sold in Europe. However, it has begun the process which is quite a lengthy process. In Turkey it took 20 years. Evident in 2002, the political impact manifested itself only after two decades of market reform activity. Some countries have only begun, some have gone further. The size of the middle class and lower class varies depending on how much progress has been made to open domestic markets.

It is important to realize that businessmen and economic success will stabilize the Middle East for all classes.

The views expressed in this interview represent those of the Prof. Vali Nasr and not necessarily those of the Middle East Institute.

Mary E. Stonaker writes for the Middle East Institute.