Officials in the Russian republic of Tatarstan are hoping that Islamic finance can help them attract direct investment from Muslim nations around the world. Last week a summit on Islamic finance in Kazan, Tatarstan's capital, welcomed delegates from many nations, including Malaysia, Saudi Arabia, Turkey, Azerbaijan and the UAE.Since the crisis, Muslim countries have accumulated "substantial liquidity" which seeks investment opportunities in new markets, said Anatoly Aksakov, a State Duma deputy who also heads the Russian Association of Regional Banks.
"We are talking about tens of billions of dollars -- assets that Islamic investors are seeking to diversify to escape dependence on U.S. dollar denominated instruments, which have become risky due to the high level of U.S. debt," Aksakov told The Moscow News on the periphery of the conference.
Tatarstan's connections with the Islamic world could help it weather global economic turbulence, says Rustam Minnikhanov, the republic's president. "We are proud that we have historical and spiritual interaction with the Islamic world," Minnikhanov told the conference last week.
Aksakov thought that Islamic finance would be a good fit with most Russian legislation. "Perhaps we will need to adjust the law in some specific cases," said Aksakov.
But given that the world has yet to fully recover from the financial crisis, Islamic finance has quite an appeal here -- especially if you consider the dangers of irresponsible, Western-style lending.
"Look what can happen if you ignore the Sharia principles in banking," said Abdurrahman Atran, a Saudi who heads the World Assembly of Islamic Youth, told the conference.