**Constitutional Changes and Prospects for Shariah Banking in Pakistan**

By M.M. Ali

Pakistan’s Supreme Court has required the government of Pervez Musharraf to hold elections by October 2002, and Musharraf has pledged to respect the court’s orders. Before the national polls are conducted, however, Musharraf has proposed a number of constitutional changes. Significant among them are: a lowering of the voting age to 18; reducing the term of central and state assemblies from five years to four; creation of a National Security Council of political, administrative and military representatives to aid and advise the government; increasing the number of Senate seats to 100; doubling the number of women’s seats; granting authority to the president to appoint and/or dismiss the prime minister; and requiring an undergraduate degree to run for elected office at the state or federal level.

The Supreme Court had authorized the Musharraf government, if needed, to make constitutional changes without altering the basic structure of the government. While there has been little or no disagreement on the issues of voting age, Senate size or women’s representation, the country’s three major political parties—the Muslim League, the People’s Party and the Jamaat-e-Islami—have come out in opposition to the entire proposed package. The debate on the other proposed constitutional changes is on. It is clear that General Musharraf, who was elected to a 5-year presidential term in a “referendum” early this year, wishes to see in place a political system that suits his style of governance.

The proposed National Security Council (NSC) seems to have been based on the Turkish model. Pakistan has been under military rule for more than half of its 54-year existence. Bringing the defense chiefs (army, navy and air force) into the government via an NSC, it is argued, will largely reduce, or even eliminate, the possibility of future military intervention. On the other side, people strongly oppose the introduction of the defense forces into a democratic political administration, fearing that an NSC would enjoy a built-in veto over political decisions made by elected bodies. Pakistanis taking the middle ground have suggested the judiciary also should be adequately represented on the NSC, and that the leader of the opposition in the National Assembly should also be a part of the new body.

The most controversial proposal has been the requirement of an undergraduate degree in order to run for provincial and central assembly seats. Virtually no known democracy functioning in the world today has such a requirement. In Pakistan, where the literacy rate is below 35 percent and the number of those obtaining higher (university) education is very small compared to the size of the population (140 million), such a stipulation appears to be unrealistic at best.

Perhaps the idea is to keep out the feudal chiefs and landlords who have dominated the country’s political life. In the subcontinent, as in so many other parts of the world, political leadership has come mostly from the moneyed feudal gentry who did not have to obtain a university education in order to make a decent living. The same requirement was to be applied to officers of political parties. Indications are that this proposal may be rescinded.

Musharraf wishes a political system that suits his style of governance.

The proposed presidential authority to appoint and/or dismiss an elected prime minister could once again cause political turmoil and tensions. This clause, adopted as the 8th amendment to the constitution, and frequently used by the late Gen. Zia ul-Haq, was removed during the regimes of Benazir Bhutto and Mian Nawaz Sharif. Newspaper commentators have reminded the government of this past history and advised Musharraf to drop the proposal.

Whenever the constitution of a country is changed to suit a regime or an individual, such changes tend to be very short-lived. In Pakistan, both military regimes as well as elected governments have been guilty in this regard. Gen. Ayub Khan’s Basic Democracy, Zia’s presidential prerogatives, Bhutto’s revision of the 8th amendment and Sharif’s restrictions on the parliamentarian’s crossing of the floor all died a natural death when the regimes changed.

There have been times, too, when such actions, regardless of the language in which they were clothed, have precipitated serious crises and a regime’s demise. No one, however, seems willing to learn from the past.

By the first week of October, when elections are to be held, some proposals may have been dropped, some softened in thrust, and the rest possibly adopted through presidential orders or ordinances. Pakistan’s future will be determined by which proposals are dropped and which ones adopted. The country’s new administration will have to live with the amendments, however, because they already will be in place before the new assemblies are elected.

Islamic Banking in Pakistan

On June 24, the Supreme Court of Pakistan remanded the case of shariah (interest-free) banking in Pakistan for the Shariah Court’s reconsideration and resubmission. As reconstituted under the Musharraf regime, the Supreme Court has neither favored nor rejected the Shariah Court’s plea. Areas where the Shariah Court has to review its plea have been identified, however. No restrictions have been placed on introducing new elements (arguments) into the case, nor has a time limit for resubmission of the case been suggested.

In view of Pakistan’s economy, and the tying of its banking system with the Western system in which “interest” is central, the government had argued that what is prohibited by the Holy Qur’an is the exploitative aspect of lending, wherein the principal is “doubled” or “multiplied” to the distress and cost of the borrower. The Qur’anic term, it was pointed out, was riba—which translated into “usury,” not “interest.”

The government further argued that, while there are shariah categories for which strict punishments are prescribed for violations, riba has no such punitive prescription here on earth—the thrust being that it is prohibited, but that its violation will not result in punishment by the state authority. Instead, violators (including the state managers) will be answerable in the hereafter.

The logical conclusion of this argument reflects the former simplistic view that certain shariah laws are prescribed only in an Islamic state, and that such a state does not exist anywhere today. There are Muslim countries, but not, in the strict sense of the term, Islamic states.

The counter argument is that Muslim countries need to make a good-faith effort to introduce elements of shariah into their internal finance and banking sectors. Several modern financial and management instruments have been recommended and are being partially used in several areas of the world to meet the Islamic requirements.

Pakistan’s financial system, and especially its banking structure, are heavily tied to Western markets. While it may be able to make certain internal adjustments to adhere to Islamic principles, it would be an impossible task at this time to convert to an “interest-free” system in dealing with the outside world—particularly in handling its external debts.

The Supreme Court has done well to withhold final judgment and call upon the appellants to review their original opinions and appeal the case all over again. This will enable both sides to develop a practical and feasible arrangement for meeting Islamic requirements and also be applicable to present day circumstances. There is no doubt that a more profound approach is needed to move the economies and finance of Muslim countries into the 21st century.

Prof. M.M. Ali, a specialist on South Asia based in the Washington, DC area, is a consultant with the United Nations Development Program.