Bonds to fit sharia law backed by Chancellor
By Katy Hastings
Last Updated: 11:41pm GMT 17/02/2008
The row over sharia law was reignited on Sunday with the emergence of plans for the Chancellor to approve "Islamic bonds" which would raise money for public spending from the Middle East.
Britain would be the first Western nation to issue the bonds, which meet Islamic rules by avoiding interest payments, classed as "sinful".
The move could lead to wealthy Middle Eastern businessmen and banks taking ownership of Government buildings and other British assets.
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The Treasury said last April that it was interested in exploring the possibility of borrowing funds through bonds compliant with Islamic law, known as sukuk.
A consultation exercise on the issue, launched in November, ends on Thursday.
MPs are expected to be updated on progress in the Budget next month.
But treasury officials have reportedly been working on the proposal for months. The Chancellor, Alistair Darling, is said to be ready to approve the proposal.
A Treasury spokesman said: "We want the City of London to be one of the gateways globally for Islamic financial products and we want it to be competitive on all products you can imagine, so we should be competitive on Islamic finance as well as any other."
Critics have hit out at the move saying it would undermine Britain's financial systems.
The senior Conservative MP Edward Leigh, chairman of the Commons public accounts committee, said: "I am concerned about the signal this would send - it could be the thin end of the wedge.
"British common law must be supreme and should apply to everyone."
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