Tom Pepinsky

Category: Current Affairs

  • Is Malaysia an Islamic State?

    There is something of a political dust-up happening in Malaysia right now. At issue is whether Malaysia is an Islamic state.

    On one side we have Mahathir Mohamad, former prime minister, who declared years ago that Malaysia is an Islamic state. On the other we have critics who say no, Islam is the state religion but Malaysia is nevertheless a secular state. Against that perspective we have people like cabinet minister Nazri Aziz who say that Malaysia is not a secular state, meaning that it is something else, and implying (but not stating like Mahathir) that it is indeed an Islamic state. Then we have former PM Abdullah Badawi who is on the record that Malaysia is a negara Islam, which can be translated either as “Islamic state” or “state with Muslims in it.”

    This is another teachable moment. It goes to the heart of what it means to be an Islamic state, and more generally, what it means for politics and Islam to mix.

    “Islamic state” could mean many things, but there are two basic ways to interpret this term.

    1. A state where where the ultimate source of legal and political authority is Islam: the Qur’an, the Hadith, fiqh, etc.
    2. A state where Islam has a legal status which is distinct from other religions.

    If a state that has a Muslim majority does not fulfill either of those requirements, it could be either a secular state (like Mali until recently) or it could be something else, a state which is neither secular nor Islamic, just religious in some explicit way (see Chapter XI of the Indonesian constitution).

    So, now that we’ve cleared some conceptual brush, what do the facts say? Legal and political authority in Malaysia comes from the Malaysian constitution—you can read it here. The ultimate source of political authority in Malaysia is not Islam, it is the constitution. Article 3(1) stipulates “Islam is the religion of the Federation,” but this very fact confirms that Islam’s status as the official religion derives from the constitution, not the other way around. Malaysia is by this standard not a secular state, nor is it a religious state in the sense that Indonesia is. Malaysia is an Islamic state in the second sense, in that the Malaysian constitution confers a particular legal status on Islam which is distinct from other religions. That can change only through an amendment to the Malaysian constitution.

    Malaysia is a constitutional monarchy where Islam is the official religion. It is neither a secular state nor a state where law is ultimately derived from Islam. It matters not what some prime minister said about this issue (sorry, Mahathir), nor whether or not he said it while holding office or not.

    So actually—and it surprises me to say this—Nazri Aziz is the closest to being correct. So why can’t he say it? Why can’t he say “Malaysia is an Islamic state, and by that I mean that our constitution makes Islam the official religion, not that Islam is the source of all political authority here in Malaysia.” I suspect that the answer is, he and his fellow travelers fear that if they say directly that Islam is not the source of worldly authority, they will be accused of being insufficiently pious or religious by the very groups who do believe that Islam must be the source of all worldly authority. A common dilemma for UMNO politicians who want to use Islam, but not get swept away by it.

  • The ECB's Bold Move and Real Support for the Euro

    The ECB’s recent announcement that it would provide unlimited support for the sovereign bonds of struggling Euro economies through Outright Monetary Transactions (OMTs) is a big deal. A really big deal. Let me illustrate by borrowing the words of a European colleague—a macroeconomist himself—as we walked into the office this morning. (He will remain nameless.)

    Imagine that you woke up this morning and learned that the Fed had announced that it would buy an unlimited amount of bonds issued by the state of California. In return, it gained the ability to dictate to California’s state government, more or less, how it could run its public finances, its pension system, and so on.

    That’s what is at stake with yesterday’s announcement. It has the potential to be the largest transfer of sovereignty from European national governments to the EU bureaucracy that we have seen in 20 years. My colleague spoke of this ominously—“you’re really starting to mess with democracy now”—and this means a lot coming from a Belgian!

    I say potentially because it’s not yet clear that the OMTs will be effective, because the ECB still faces a credibility problem: unlimited bond purchases will be effective in the event that bond markets believe that both national governments and the ECB are committed to doing whatever it takes to implement the fiscal compact. There are multiple equilibria in this scenario, one in which the ECB starts managing national budgets, and another in which the ECB spends a ton of money for naught.

    I sense that the ECB is pretty darn committed, and I sense that national governments are similarly committed. But what about ordinary people? Over the past year I have spoken about this with friends, colleagues, and acquaintances from Germany, Belgium, the Netherlands, France, Italy, Spain, and Portugal. (I have had no conversations with Greek colleagues about this, a point to which I will return below.) What I hear from the Spanish and Portuguese is that there is simply no choice: their countries must remain in the Euro. Full stop. There is no choice.

    But Europeans do have a choice. With characteristic dry wit, my Belgian macroeconomist colleague put it like this:

    They always ask “do you want to stay in the Euro?” Well of course they do. But they need to ask “do you want to stay in the Euro and have a recession for twenty years?” Because that’s what they are facing.

    I’m pretty sure he’s exaggerating for effect, but not too much, and the point still stands. The statistic that I would like to know is the real support for the Euro in the PIIGS when individuals are forced to recognize the costs associated with remaining in the Euro. Ideally, we’d have some sort of survey item where respondents are asked how many years of economic contraction, price adjustment, and structural reform they would be willing to accept in exchange for staying in the Euro, and then we would examine the distribution of responses to that question. An answer of 0 years would indicate that the respondent does not support the Euro at all, 1 year would indicate very weak support, 5 years would indicate pretty strong support, 100 years would indicate nearly unconditional support.

    Is there any research out there that gets at this? If not, anyone want to work on it with me? I am serious, but I need colleagues from the PIIGS to do it.

    A small addendum on Greece. I have not spoken about the Euro crisis with any Greek colleagues or friends. But I am struck by how in conversations with Spanish and Portuguese friends, there is a nearly unanimous sentiment that whatever their economic troubles, they are of a different dimension than the Greeks’ troubles. For them, Greece is the real European basketcase, while Spain and Portugal simply have big problems and a long road of recovery ahead. I mention this not because I believe that it is true or false, but simply because it speaks of the ways in which Europeans themselves conceive of the Euro’s troubles. Greek readers, I’d love to hear your reactions.