Recent Crisis in Arab World

• Starting December 2010, huge protests were witnessed in Arab world such as
  • Tunisia, Egypt, Yemen, Bahrain, Libya,
  • Oman, Morocco, Jordan, Algeria, Syria and even Saudi Arabia.
• The scale of the events that unfolded since December separates them from the earlier protest demonstrations.

Reasons

• Absence of
  • democratic rights,
  • political reforms,
  • economic hardships and
  • Imperialist intervention,
• Water, energy and population trends spell more trouble for governments in the Middle East and North Africa.
• Economic want and inequality, political repression incited the Egyptian and Tunisian revolutions.
• The converging effects of population growth, climate change, and energy depletion are setting the stage for a looming triple crisis.
• The demands raised by the protesters in all these countries can be clubbed together under three broad characteristics:
  • the democratic aspirations of the people
  • their economic grievances and
  • anti- imperialism.
• The global economic crisis triggered the current wave of protests,
• These protests showed that an alternative to dictatorships is not religious fundamentalism, but a secular, democratic system.

Inflation

• Rise in general level of prices of goods and services in an economy over a period of time.
• When the general price level rises, each unit of currency buys fewer goods and services.
• Reflects erosion in the purchasing power of money

Positive effects of inflation

• Ensuring central banks can adjust nominal interest rates (intended to mitigate recessions),
• Encouraging investment in non-monetary capital projects.

Negative effects of inflation

Decrease in the real value of money and other monetary items over time,

• Uncertainty over future inflation may discourage investment and savings,
• High inflation may lead to shortages of goods if consumers begin hoarding out of concern that prices will increase in the future.
• High or unpredictable inflation rates are regarded as harmful to an overall economy.
• They add inefficiencies in the market,
• They make it difficult for companies to budget or plan long-term.
• Inflation can impose hidden tax increases, as inflated earnings push taxpayers into higher income tax rates unless the tax brackets are indexed to inflation.
• With high inflation, purchasing power is redistributed from those on-fixed nominal incomes, such as some pensioners towards those with variable incomes whose earnings may better keep pace with the inflation.
• This redistribution of purchasing power will also occur between international trading partners.
• Where fixed exchange rates are imposed, higher inflation in one economy than another will cause the first economy's exports to become more expensive and affect the balance of trade.
• The effect of inflation and economic growth is manifested in Investment, Interest rates, Exchange rates, Unemployment and Stocks.

Global warming and its mitigation measures

CLIMATE CHANGE:

• Means any change in climate over time.
• Defined as a combined and long term effect of rising global temperature.
• Recent climate change has a great impact on
  • Air, water and oceanic circulations.
  • Sea level and rainfall patterns over time and space around the world.
• Global warming is the main cause of climate change.

GLOBAL WARMING

• Means the rise of global surface temperature.

Main causes behind the global warming

• Emission and concentration of
  • carbon dioxide (CO,)
  • methane, Nitrus Oxide (N₂O) and CFCs gases in the air.

Brief list of works of UN & international conferences/convention on climate change/environmental change/ global warming

• United Nations Conference on the Human Environment: 5-16 June 1972; Stockholm
• United Nations Conference on the Environment and Development; 3-14 June 1992; Rio de Janeiro.
• The World Summit on Sustainable Development; 26 August -4 September 2002, Johannesburg
• United Nations Framework on Climate Change 1992
• IKX'- Inter Governmental Panel on Climate Change-1998
• KYOTO Protocol To The United Nations Framework Convention On Climate Change -1997
• UN Millennium Declaration -2000 X. Millennium Development Goals- Ensure environmental sustainability United Nations Conference on Climate Change; 3-14 December 2007; Uali, Indonesia

Signs or Evidences or Observation of Climate Change

• Global temperature has increased 0.6°C since 1900.
• Sea level is rising about 1 cm per decade.
• Arctic sea ice thickness has decreased 40 % in the last 40 years.
• Major glaciers throughout the world are melting.
• Autumn and spring is expanding and winter is squising.
• Drought has increased in frequency and intensity.
• Irregular rainfall has increased.
• Cyclone, El Nino and natural disasters become more frequent and intense.
• Crop damaging has increased by disasters.

Probable consequences of climate change in Bangladesh

According to UNDP, Bangladesh is the most vulnerable country to climate change. It is estimated that about 17% of total surface area will be down into water by 2040 because of sea level rise.

Temperature Increase: The observed data form 1970 to 2000 indicates that the earth surface temperature is gradually increasing. Therefore, autumn is starting in late and the spring is coming in earlier. On the other hand, the duration of winter is decreasing Bangladesh. These are affecting food production system.

Sea-level rise: Many research proved that the rate of sea-level rise is gradually increased during last two decades. The ice melting of the Arctic, Himalayan, and Siberian etc. is increasing sea level. According to UNDP sea level rise may affect over 70 million people in Bangladesh.

Rainfall Variation: The annual rainfall of the country is about 2300 mm. But, due to climate change the variation of rainfall is increasing among the regions and among season. It is found that annual rainfall of north west part is 1200 mm while 5000 mm is in the east and northeast part. this extreme nature of rainfall affects on agriculture and livelihood systems.

Natural Disasters: Climate change has increased in frequency and intensity of natural disasters like cyclones, storms, surges, floods, drought and riverbank erosion have increased. The UN WFP estimated that in 2008 total 57 countries of the world affected severely. The geographical setting of Bangladesh makes the country vulnerable to natural disasters.

Agricultural production and food security: Climate change has affected on agricultural production and food security through extreme change of temperature, rainfall, and water supply in many areas. A study showed that 27% of Aux Crops, 61% of Wheat, and 55% of irrigation crops negatively affected by the impact of climate change.

Water security: Rise of sea level is a cause of water salinity in many regions which is affecting on drinking water crisis and agricultural production. On the other hand, rise of sea level will create problem in urban drainages.

Threats to islands: Climate change is bringing severe threats to small islands like Maldives, Fiji, Papua and Mauritius etc. A study showed that a sea level rise of 0.5 of meter over the last 100 years has already eroded 250 square kilometres of Kutubdia, 227 square kilometres of Bliola and 180 square kilometres of Sandip islands.

Ecosystems and biodiversity: Climate change has already affected ecological systems throughout the world. The natural calamities and extreme weather is destroying ecosystem and biodiversity. Like the SIDR of 2007 greatly affected the Sundarbans ecosystem and biodiversity.

Human health: Human health is highly affected by the climate change because it has increased natural disaster, extreme weather and food crisis. So, the consequence of climate change has increased diarrhoea and malnutrition etc. Already these problems have increased in Bangladesh, Bhutan, India, Maldives, Myanmar and Nepal. Floods result in spread out of water-borne diseases.

Livelihood of the poor people: Poor people are more vulnerable to natural disasters because they live in disaster prone areas. On the other hand, they live in poor housing and depend on agriculture. So, climate change affect on their agriculture and livelihood condition.

Kazi Nazrul Islam: National Poet

Kazi Nazrul Islam (24 May 1899-29 August 1976), sobriquet Bidrohi Kobi (Rebel Poet), was a Bengali poet, musician and revolutionary who pioneered poetic works espousing intense spiritual rebellion against fascism and oppression. His poetry and nationalist activism earned him the popular title of Bidrohi Kobi (Rebel Poet). Accomplishing a large body of acclaimed works through his life, Nazrul is officially recognised as the national poet of Bangladesh and commemorated in India.

Born into a Muslim quazi (justice) family in India, Nazrul received religious education and worked as a muezzin at a local mosque. He learned of poetry, drama, and literature while working with theatrical groups. After serving in the British Indian Army, Nazrul established himself as a journalist in Kolkata (then Calcutta). He assailed the British Raj in India and preached revolution through his poetic works, such as "Bidrohi" ("The Rebel") and "Bhangar Gaan" ("The Song of Destruction"), as well as his publication "Dhumketu" ("The Comet"). His impassioned activism in the Indian independence movement often led to his imprisonment by British authorities. While in prison, Nazrul wrote the "Rajbandir Jabanbandi" ("Deposition of a Political Prisoner"). Exploring the life and conditions of the downtrodden masses of India, Nazrul worked for their emancipation.

Nazrul reached the peak of fame with the publication of "Bidrohi" in 1922, which remains his most famous work, winning admiration of India's literary classes by his description of the rebel whose impact is fierce and ruthless.

Nazrul's writings explore themes such as love, freedom, and revolution; he opposed all bigotry, including religious and gender. Throughout his career, Nazrul wrote short stories, novels, and essays but is best known for his poems, in which he pioneered new forms such as Bengali ghazals. Nazrul wrote and composed music for his nearly 4,000 songs (including gramophone records), collectively known as Nazrul geeti (Nazrul songs), which are widely popular today. At the age of 43 (in 1942) he began suffering from an unknown disease, losing his voice and memory. It is often said, the reason was slow poisoning by British Government. It caused Nazrul's health to decline steadily and forced him to live in isolation for many years.

Invited by the Government of Bangladesh, Nazrul and his family moved to Dhaka in 1972, where he died four years later.

Islamic Banking System and its role in global financial market

Islamic Banking System

• The Islamic banking system is an important component of Islamic finance.
• Islamic finance has unique features because its foundation is laid on the principles and rules of Islamic law (shariah).
• Shariah states that everything is owned by Allah and man has only been permitted to use it. Accordingly, the use of funds is governed by several regulations.

Feature of Islamic banking

• The most essential feature of Islamic banking is the prohibition of interest (riba).
• Islamic banks neither charge nor pay interest in a conventional way where the payment of interest is set in advance and viewed as the predetermined price of credit or the reward for money deposited.
• Islamic law accepts the capital reward for loan providers only on a profit and loss-sharing basis, working on the principle of variable return connected to the actual productivity and performances of the financed project.
• Another important aspect of Islamic banking is its entrepreneurial feature. The system is focused not "only on financial expansion but also on physical expansion of economic production and services." In practice, Islamic banks have concentrated on investment activities such as equity financing, trade financing and real estate investments.
• Islamic banks are profit-driven institutions just like conventional banks, but they manage all their activities in accordance with shariah.

Short history of Islamic banking

• Early experiments in this sector were undertaken in 1963 in Egypt and Malaysia.
• Without any references to Islamic principles (for fear of political repercussions), Ahmad El Najjar established the first Egyptian savings bank based on no-interest and profit-sharing principles.
• Muslim Pilgrims Savings Corporation was the first Islamic financial institution in Malaysia. It was set up to help people save for performing hajj. Today, Malaysia is the biggest issuer of Sukuk (Islamic bonds) worldwide and one of the main promoters of regimentations and innovation in the Islamic banking system.
• The first genuine Islamic banks were not launched at the national level. Instead, during the 1970s, a number of these banks were established on a more local level in the Middle East and North Africa.
• The very first Islamic bank was Nasser Social Bank, which started to operate in Cairo in 1972.
• It was followed by Dubai Islamic Bank in 1975, and Faisal Islamic Banks was established in 1977 in Sudan and Egypt.
• The second step in the evolution of the Islamic banking system was to take the system to an international level by creating the first Islamic international financial institution, the Islamic Development Bank, in 1973.
• The third step came with the transformation of entire national banking systems into shariah-compliant systems. This is currently the case in Iran, Pakistan and Sudan.

Islamic Banking System in global financial market

• Islamic banks operate mainly in Muslim countries, but currently they are also operating outside these countries. For instance, the United Kingdom has become the most important location for Islamic financial activity outside the Muslim world.
• Today, approximately 53 countries have Islamic banking institutions, and at least 70 countries have some sort of Islamic financial services.
• Almost without exception, the major multinational banks presently offer a broad range of shariah-compliant financial products and services. The largest Islamic banks are located in Gulf Cooperation Council countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates).
• The size of Islamic banks around the world was estimated to be close to $850 billion at the end of 2008 and is expected to grow by around 15 percent annually.
  While Islamic banking remains the main component of the Islamic financial system, the other elements, such as Takaful (Islamic insurance companies), mutual funds and Sukuk (Islamic bonds and financial certificates), have witnessed strong global growth, too.
• According to a reliable estimate, the Islamic financial industry now amounts to over $1 trillion. It is estimated that the system could double in size within a decade if the past performances are continued in the future.

Returns in Islamic Banking System

• In the decade prior to the financial crisis, the shariah-compliant financial system had quite exceptional returns.
• Assets doubled almost every two years, and net income doubled every year. There were some institutions with a posted return on equity of more than 30 percent and in some cases even more than 40 percent. They were also able to earn an average return on assets reaching 10 percent.

Islamic Banking System and global financial crisis

• Even if these figures are not exceptional compared to those posted by conventional financial institutions between the years 2000 and 2007, they are quite remarkable if we consider the timeframe and the dynamics of the Islamic financial system's evolution.
• The first stage of the global financial crisis, during 2007 and 2008, favored the Islamic banking system compared with the conventional system.
• According to a recent IMF study, Islamic banks performed better than conventional ones in 2008 in terms of profitability, credit and asset growth.
• The Islamic banks' profitability crunch was less than 10 percent, whereas the conventional banks' profitability slumped more than 35 percent in 2008 compared with 2007.
• The IMF study reported that Islamic banks have maintained stronger credit growth compared to conventional banks in almost all countries and in all years, suggesting that the system has great potential for further market-share expansion and a possible contribution to market stability through the available credit.
• The same trend was maintained on the assets side, which was less affected by deleveraging and grew on average more than twice that of conventional banks during the period of 2007 to 2009.
• While conventional finance is largely debt-based and allows for risk transfer, Islamic financial intermediation is asset-based and focuses on risk sharing.
• Prohibition on excessive leverage and on risk transfer according to shariah principles made the system more resilient, less exposed and thus protected from the impact of toxic assets and derivatives' effects that triggered the global financial crisis.
• The Islamic banking system's features make its activities more closely related to the real economy.
• This reduces its contribution to excesses and bubbles, but it also makes it more exposed and vulnerable to the second wave of financial crisis: the real economic downturn.
• Islamic banks lent a large part of their funds to the consumer sector and invested in assets that proved in time to be illiquid, sharing the losses of their activity with the stakeholders. According to the IMF study, Islamic banks' larger decline in profitability in 2009 was due to weaknesses in risk-management practices, mainly associated with high degree of concentration on, or greater exposure to, one sector and/or borrower.