New geographies of financial power: global Islamic finance and the Gulf

Abstract

A growing body of critical scholarship has examined the recent growth of Islamic finance (IF), unpacking its ethical assertions and highlighting its close affinities with conventional financial instruments. Receiving less attention, however, is the relationship between the global expansion of IF and the emergence of new financial actors and zones of accumulation. This article situates the evolution of global Islamic circuits alongside processes of capital accumulation in the Gulf Cooperation Council (GCC), arguing that contemporary IF is deeply bound up with the internationalisation of capital groups headquartered in the GCC. This is evident in the internationalisation of GCC Islamic banks, which has given the Gulf a powerful foothold in new markets and a variety of sectors that are typically considered ‘non-financial’. Simultaneously, the expansion and geographical diversification of Islamic debt (sukuk) issuance is refashioning the Gulf’s relationships with other global spaces, a process that looks set to intensify given the widespread push to utilise IF in development financing. Seen from this perspective, the global growth of IF sits in a mutually constitutive relationship with patterns of capital accumulation in the Gulf, as well as the region’s burgeoning weight within (and new linkages to) the global economy.