Kuala Lumpur Summit highlights fissures in Muslim international politics

The Kuala Lumpur Summit was designed by the leaders of Malaysia, Turkey and Pakistan to proactively address the challenges facing the Muslim world. Instead, the last-minute withdrawal of Pakistani Prime Minister Imran Khan, under pressure from his ally Saudi Arabia, highlighted the fissures in Muslim international politics.

Amidst the distraction of the politics surrounding Pakistan’s withdrawal, the heads of state of Malaysia, Turkey, Iran and Qatar discussed ways to counteract global trends in Islamophobia and their mutual interest in developing financial mechanisms between Muslim nations that circumvent the global dominance of the U.S. dollar.

“Trade in national currencies has gained urgency amid talks of trade wars,” Turkish President Recep Tayyip Erdoğan said at a roundtable on economic development challenges at he summit last week. “We should first of all put the issue of Islamic finance on our agenda.”

Iranian President Hassan Rouhani also used the summit to call for deepening financial and trade cooperation between Muslim countries to counteract the threat of U.S. sanctions, which are a chief concern for both Iran and Turkey.

“Iran has long sought to break the American dominance of the international financial system. The key to that dominance is the dollar. The dollar is also key to the enforcement of U.S. sanctions, given the ubiquity of the dollar in international trade,” Jonathan Schanzer, senior vice president of the Foundation for Defense of Democracies, told Ahval. “It is therefore no surprise that Iran is looking for ways to circumvent the dollar.”

Turkey, Iran, and Russia agreed in September to conduct trade between each other in their national currencies, not the dollar.

“Now that Turkey may be subject to U.S. sanctions, it is somewhat natural for the Erdoğan government to be looking for workarounds,” Schanzer said. “But this is a dangerous game that Erdoğan is playing. He is signalling to the international financial community that Turkey is looking to bend or break the rules of the system. Qatar, Malaysia and Indonesia are doing the same.”

“I have suggested that we re-visit the idea of trading using the gold dinar and barter trade among us,” the host, Prime Minister Mahathir Mohamad, said at the summit, referring to the Islamic medieval gold coin. “We are seriously looking into this and we hope that we will be able to find a mechanism to put it into effect.”

Many of the Muslim-majority states absent from the Kuala Lumpur Summit receive significant security and development aid packages from the United States, including Saudi Arabia, Pakistan and Egypt.

There are conflicting reports over which Muslim-majority states were invited to attend. Malaysia said it delivered invitations to more than 50 Muslim nations, including to Saudi Arabia. Other reports suggest Malaysia refused to invite Saudi Arabia and its allies in the Gulf. The guest states that did attend – Iran, Qatar, and Turkey – are Saudi Arabia’s primary regional adversaries.

Mahathir told reporters that Saudi Arabia’s King Salman Abdulaziz Al-Saud called him last week to decline Malaysia's invitation to the summit. Mahathir said the king expressed disappointment that the summit was arranged outside the auspices of the Organisation of Islamic Cooperation (OIC). Critics say the 57-country intergovernmental organisation, founded in 1969, is now primarily a tool of Saudi foreign policy.

Pulling out of the summit after a visit to Riyadh earlier in the week, Khan demonstrated Pakistan’s reliance on its Saudi benefactors.

Although Riyadh denies the claim, Erdoğan told reporters in Malaysia that the Saudis threatened to withdraw their money from the Pakistani central bank and deport the 4-million Pakistanis working in Saudi Arabia. Facing serious economic difficulties, Erdoğan said Pakistan had to obey Riyadh.

The Pakistani prime minister initially promoted the idea of a summit with Malaysia’s Mahathir and Turkey’s Erdoğan after the trio discussed the situation of Muslims in Kashmir on the sidelines of the UN General Assembly in September.

Pakistan, Turkey, Malaysia and Iran have been the chief critics of New Delhi for its unilateral moves in Kashmir, while the OIC has softened its approach to the issue as Saudi Arabia and the UAE are attracted to India’s growing economic clout in the region.

At the summit, Erdoğan criticised the OIC saying: “The biggest problem of platforms that bring together the Islamic world under a single roof is the issue of implementation.”

The president blamed the OIC’s inaction for the lack of progress on the Palestinian cause, the exploitation of Muslim countries’ natural resources, and deepening sectarian divides. He said that with the right leadership, the Muslim world had the potential to overcome these challenges.

Highlighting the divides between the leading Muslim administrations on numerous fronts, the summit failed to build a unified response to the major challenges facing the world’s Muslims.

Obscured by high-profile international politics though, the handful of states in attendance did build consensus on their desire, shared by Russia and several other leading world economies, to develop financial mechanisms that free their bilateral economic relationships from the U.S. dominance of the international financial system.

“It will be interesting to see how the banking community reacts to such calls,” Schanzer said. “The reputational impact [on states looking to circumvent the dollar], stemming from a fear of risk, could be significant if such calls continue.”


© Ahval English

The views expressed in this column are the author’s and do not necessarily reflect those of Ahval.