Islamic Finance as a Mechanism for Bolstering Food Security in the Middle East: Food Security Waqf

Author:Hdeel Abdelhady
Position:Attorney and Principal, MassPoint Legal and Strategy Advisory PLLC, Washington, D.C.
Pages:29-35
 
CONTENT
292012–2013
ISLAMIC FINANCE AS A MECHANISM FOR
BOLSTERING FOOD SECURITY IN THE MIDDLE EAST:
FOOD SECURITY WAQF
by Hdeel Abdelhady, Esq.*
INTRODUCTION
This article proposes the establishment of a multilateral
food security waqf, a type of Islamic trust or endowment,
as a vehicle of investment in the future food security of
the Middle East. Sections II through IV briefly discuss global
food insecurity, Middle East food insecurity, and the need for
a regional food security strategy for the Middle East. Sections
V through VIII discuss contemporary Islamic Finance generally,
the essential objectives of Shari’ah, historical waqf practice,
Islamic perspectives on agriculture, and the proposed food secu-
rity waqf. This article focuses on the rationale and objectives of
waqf-based and other agricultural investment frameworks that
are currently under development by the author, for application
by governments, institutions, and private entities. The structures
under development combine the waqf (as a foundational frame-
work to allocate funding and other assets) with Islamic financ-
ing structures, Islamic and conventional asset management
approaches, Shari’ah and civil law-based legal frameworks, and
effective governance and operational models to achieve mea-
sureable impact, in a manner that equitably and rationally dis-
tributes rights and responsibilities among parties across the food
supply chain, from government consumers to small farmers.
While this article focuses on the use of the waqf structure to
advance food security, its premises and objectives have broader
application. As discussed below, the waqf structure has been
used successfully in the past to promote public objectives, such
as education, aid to the poor, healthcare, public access to water,
and food aid. While the use of the waqf has declined in modern
times, its history suggests strongly that the structure was and can
again be a powerful vehicle through which resources are orga-
nized and allocated to advance development objectives.
I. GLOBAL FOOD INSECURITY: A SNAPSHOT
Food insecurity is a global threat.1 The nature of food and
the means of its production make food insecurity a uniquely
complex problem, with social, political, economic, and ethical
dimensions. Serious efforts to promote food security and sus-
tainability must respond to the complexities of the challenge.
According to the Food and Agricultural Organization of
the United Nations (“FAO”), “in order to feed a population of
more than 9 billion [the projected world population in 2050] and
free the world from hunger, global food production must nearly
double by 2050.”2 Competition for food and for the means of
food production is increasing, without commensurate rises in
supply.3 Owing to population growth, increased food purchasing
power and demand in emerging economies, climate change, land
degradation, price volatility, and other factors, the global food
supply-demand imbalance is expected to widen.4 The world’s
governments have taken note. Acting independently and multi-
laterally, they have devoted resources to assess the food inse-
curity threat, and have taken steps to mitigate the risk.5 As yet,
however, no comprehensive solutions are on the horizon.
II. FOOD INSECURITY IN THE MIDDLE EAST
The Middle East is particularly susceptible to food insecu-
rity.6 While the region does not face any foreseeable near-term
threat of famine or widespread malnutrition,7 the Middle East
presently lacks the means to produce adequate food supplies
due to water scarcity, insufficient arable land, and man-made
hurdles.8 These hurdles include land and crop misallocations,
under-utilization of food production means, inadequate invest-
ment in agriculture, poor stock management, sub-optimal distri-
bution networks, and other factors.9
According to the World Bank, as of 2008, the Middle East
imported fifty percent of its food.10 “High food prices and inter-
national market volatility mean domestic agriculture has taken
on strategic importance in all the food producing countries in the
region.11 Non-food producing countries, such as member states
of the Gulf Cooperation Council (“GCC”), are looking at ways
of securing land in third party countries to produce part of their
food needs.”12
By 2030, the combined Muslim population in the Middle
East is expected to grow to 439,453,000.13 Today, the Muslim
population is estimated at 321,869,000.14 This projection, a
36.5% net increase in population in less than twenty years, is
staggering. The consequences of such population growth for
food security in the Middle East will be profound.
At the country level, Middle Eastern countries have
attempted to address food insecurity risks through food subsi-
dies, export bans, price ceilings, and other policy measures, as
well as by acquiring rights to farmland overseas.15 For instance,
food exporting countries like Egypt, Yemen, and Djibouti
*Attorney and Principal, MassPoint Legal and Strategy Advisory PLLC, Wash-
ington, D.C.; Professorial Lecturer in Law, The George Washington University
Law School, Washington, D.C.; Senior Advisor to the Islamic Finance Commit-
tee, American Bar Association Section of International Law; Juris Doctor, The
George Washington University Law School, Washington, D.C.; Bachelor of Arts,
Political Science, History (Middle East and Africa) University of Pittsburgh,
Pittsburgh, Pennsylvania.
30 SUSTAINABLE DEVELOPMENT LAW & POLICY
impose ad hoc export restrictions in response to global price
rises.16 The governments of the Middle East, as in the cases of
Egypt, Morocco, Tunisia, Djibouti, and Yemen, employ govern-
ment subsidies as a primary means of facilitating domestic food
affordability.17
Arab countries, and particularly GCC states, which lack
the arable land and water resources necessary to produce food
sustainably, also pursued other avenues such as acquisition of
long-term agricultural land rights overseas.18 Between 2006 and
2009, Arab governments, government-owned companies, and
private entities (primarily in the GCC states) were particularly
active in acquiring agricultural land overseas.19 According to
one compilation, forty-nine agricultural land deals and land-
related investments were initiated or concluded between 2006
and 2009.20 Of those, twenty-one (45%) involved Arab countries
(most by governments with limited private companies) as inves-
tors.21 The countries involved in these transactions were Saudi
Arabia (five), the United Arab Emirates (four), Qatar (three),
Bahrain (three), Kuwait (two), Libya (two), Jordan (one), and
Egypt (one).22 The majority of these investments were made
in Africa and Asia, and eleven of the twenty-one were made in
majority Muslim countries.23 This data is illustrative, and reflects
only a fraction of overseas agricultural land investments that are
understood to have been made by Arab and non-Arab countries
and private parties in recent years.24
While the logic of these land acquisitions is clear, their
sustainability is not. Acquisitions of overseas land and land-
use rights by Arab countries and other parties have not been
without controversy.25 These transactions are very likely to
pose significant legal and political risks, an expectation that
is borne out by the inhospitable reception they have received
both inside and outside their host countries.26 They have been
characterized as “land grabs”—modern scrambles for resources
reminiscent of nineteenth-century colonization.27 The terms of
these land acquisitions and their details are often, if not always,
undisclosed.28 This opacity has fueled suspicion that the deals
are opportunistic usurpations of scarce resources by relatively
wealthy countries at the expense of relatively poor countries and
their small farmers.29 The lack of transparency and controversy
surrounding agricultural land acquisitions raises questions not
only about their nature, but about their long-term viability as a
means of securing food supplies.
As a practical matter, the acquisition of agricultural land to
produce food exclusively for the benefit of acquirer countries is
legally and politically risky. It is not difficult to envision scenar-
ios in which yields generated on overseas land would be wholly
or partially expropriated, subjected to export bans, or otherwise
intercepted, particularly in events of local or global food short-
age and political or social unrest. Think tanks and other organi-
zations have called for the regulation of overseas investments in
agricultural lands.30 For example, the International Food Policy
Research Institute has suggested that investors should refrain
from exporting crop yields in the case of food shortage in a host
country.31 Such concerns, and the political and legal risks asso-
ciated with overseas land acquisitions, will likely increase over
time, as global competition for food increases, exacerbated by
demographic and environmental strains.32
The governments and companies that invest in agricultural
lands overseas can, and likely have, put into place agreements
to achieve optimal commercial and legal conditions. But under
extraordinary circumstances, these agreements will be insuffi-
cient to overcome the very real risks stemming from political
and social tensions that surround food, agricultural land, and the
reality or perception of exploitation associated with overseas
agricultural land investments. In worst-case scenarios, Arab gov-
ernments and other investors in overseas agricultural land might
find themselves with recourse only to international tribunals and
money damages, and without access to the very crop yields for
which they bargained.33 Money damages would hardly be com-
pensatory in such cases, as these investments are not made for
profit, but for specific performance—i.e., the enforcement by
host governments of investors’ rights to produce on agricultural
lands and repatriate agricultural yields.
More immediately, overseas land acquisitions by some Arab
countries are detrimentally impacting the food (and water) secu-
rity of other Arab countries. For example, Arab countries includ-
ing Saudi Arabia, Qatar, Kuwait, and the United Arab Emirates,
are believed to have acquired agricultural land or land use rights
in the Sudan (prior to the establishment of South Sudan as an
independent nation).34 These acquisitions (and those by non-
Arab countries and private parties) in the Sudan and other Nile
Basin countries directly threaten Egypt’s “ability to put bread
on the table because all of Egypt’s grain is either imported or
produced with water from the Nile River, which flows north
through Ethiopia and Sudan before reaching Egypt.”35 In addi-
tion to being flawed in a practical sense, these Nile River-related
land (and water) acquisitions present risks and interesting legal
questions, such as whether state parties to an agreement for the
use of a common and vital resource like the Nile River may con-
tract out access to the resource to third parties for profit, to the
detriment of other state parties to the same agreement. Indeed,
such scenarios should prompt examinations of the nature and
limits of relevant legal concepts, such as sovereignty over natural
resources, particularly where a third-party state benefits from a
shared natural resource at the expense of one or more states with
direct and assertable rights of access.
As an important matter of national policy (if not national
security), Arab governments must pursue food security solu-
tions that are economically, politically, socially, and ethically
sustainable. Measures taken by Arab countries thus far fail to
address food insecurity comprehensively or at its root. At the
regional level, Arab governments have yet to take coordinated
steps to combat food insecurity. This likely is a symptom of a
more general reality, which is that Arab countries, for a variety
of reasons, trade more with countries outside, rather than within,
their region.
312012–2013
III. THE CASE FOR A REGIONAL FOOD
SECURITY STRATEGY
“There is no way around the reality that MENA
[Middle East and North Africa] countries will need to
buy a significant- and increasing- share of their food on
international markets… the key is to manage this expo-
sure in new and innovative ways to reduce the potential
for food prices shocks without going bankrupt in the
process.
WORLD BANK, APRIL 200936
The quoted statement describes key challenges of food inse-
curity in the Middle East. However, the gravity of the long-term
food insecurity threat to the region requires much more than
management of exposure to international markets. As the global
food supply-demand imbalance widens over time, the difficul-
ties and risks associated with food security will intensify in the
Middle East unless effective coordinated action is taken now.
The political, social, cultural, and historical ties that bind
Middle Eastern countries favor the pursuit of a regional food
security strategy, as do the geographic, demographic, and eco-
nomic differences between them. As recent political uprisings
have shown, major events in even one Arab country have the
potential, if not the likelihood, to produce similar or follow-on
events in others.37 The consequences of food insecurity, if it
intensifies in the region or any of its major countries, will have
regional impact: whether in the form of economic migration,
spillover social and political unrest, or the need for food and
other aid from neighboring states.38
Bolstering regional food production and supply in a coor-
dinated fashion also would serve as a defensive measure, to the
extent that Middle Eastern countries limit the need to compete
for food in the global marketplace. Beyond politics and market
exposure, the Middle East, for the sake of its development, has a
fundamental interest in creating conditions in which its inhabit-
ants live in an environment conducive to progress in all spheres.39
Other than the related issue of access to water, no single issue
is more essential to the creation and long-term maintenance of
such conditions than is food security.
The GCC states, while comparatively cash rich, desperately
lack the arable land, water resources, human resources, and depth
of agricultural experience necessary to produce food sustain-
ably and at appreciable levels.40 By comparison, the relatively
cash poor countries of the region, including Egypt, the Sudan,
Algeria, Morocco, and the countries of the Levant, individually
and together possess the agricultural land, climate conditions,
human resources, and agricultural experience to produce food
in appreciable quantities, and in any case at higher than pres-
ent output levels.41 But this latter group of countries has yet
to realize its agricultural production potential for a number of
reasons.42
As a region, the Middle East has not explored its potential
to sustainably bolster food security by marshaling its combined
monetary, natural, and human resources for the long-term benefit
of its inhabitants. It is in the region’s best interest to identify
and pursue strategies to bolster food security, through increased
regional production and other means, in ways that are not only
economically, legally, and environmentally sustainable, but also
are politically, socially, and ethically sound. The food security
waqf proposed in this article would serve as a vehicle through
which the region’s collective resources can be allocated and
deployed to advance sustainable regional food security.
IV. ISLAMIC ECONOMICS AND FINANCE
The principles and objectives of Shari’ah, which favor
real economic activity, profit and loss sharing (rather than risk
remoteness), and the creation and multiplication of wealth, its
productive use, and its allocation for the common good, are
uniquely suited to food security and development generally.43
As used today, Islamic modes of finance and investment have
proven effective and attractive in the commercial realm.44 Yet in
contemporary practice, Islamic Finance has not been used mean-
ingfully and consistently for development finance and social
investment. As an industry and discipline, Islamic Finance has
an interest in expanding its scope and impact, substantively and
geographically.
Islamic Finance is a burgeoning financial services segment
that is expected to continue to grow in volume and expand geo-
graphically.45 Current accepted estimates indicate that the size of
the Islamic Finance industry is $1.4 trillion, with the potential to
reach $4 trillion within five years, assuming continued growth
at current rates.46 Regardless of its exact size or value (however
measured), it is widely accepted that the industry has grown tre-
mendously in the past thirty years, and that demand will support
its continued rapid growth.47
Arab jurisdictions, such as Bahrain, Dubai, and Qatar, have
invested significantly to position themselves as centers of Islamic
Finance.48 Saudi Arabia, which offers relatively vast domestic
retail and commercial opportunities, through private efforts and
more recently with government support, is in the early stages of
building its Islamic Finance industry.49 Egypt, the most populous
Arab country, has only recently taken steps to promote Islamic
Finance, even though the first Islamic bank was established in
Egypt nearly forty years ago.50 Outside of the Middle East, non-
majority Muslim jurisdictions, most notably London and Hong
Kong, have invested political, economic, and regulatory capital
to position themselves as global Islamic Finance hubs.51
Notwithstanding the impressive growth and burgeon-
ing popularity of Islamic Finance, common perceptions of its
essence are limited, due in no small part to the fact that Islamic
Finance is often framed in the one-dimensional, negative terms
of what it prohibits—e.g., riba (a broad concept often described
as interest)—and not in terms of what it permits and encourages,
which broadly is the creation and multiplication of wealth, its
productive use, and its allocation and distribution for the public
interest.
The Islamic Finance industry, its stakeholders and propo-
nents (including governments) have an interest in demonstrat-
ing the potential real economy impact of Islamic Finance. The
32 SUSTAINABLE DEVELOPMENT LAW & POLICY
development and social finance spheres, the objectives of which
are compatible with Shari’ah objectives, provide a platform for
such a demonstration.52 Further, governments that have invested
in Islamic Finance have an interest in its promotion beyond their
borders and the commercial spaces that contemporary Islamic
Finance has thus far occupied. The association of Islamic invest-
ment and financial mechanisms with endeavors of global signifi-
cance, such as food security and development generally, would
provide a platform for the expansion of Islamic Finance from
a niche financial services segment to a discipline having wide
applicability and potential impact beyond the commercial realm.
V. PROMOTING ETHICALLY SUSTAINABLE FOOD
SECURITY INVESTMENT: Maqid AL-SHARIAH
The need for enhanced ethics in the pursuit of food secu-
rity investment is clear. Ethics, as much as monetary, land, and
human resources, will be essential to the long-term success
of food security strategies, particularly those that span mul-
tiple countries.53 The infusion of and adherence to maqid
al-Shari’ah, or the goals and objectives of Islamic Law, in the
pursuit of food security is one effective way to fill the ethics
deficit, particularly in the Middle East.54 A brief look at the core
objectives of Shari’ah demonstrates this.
Leading classical scholars of Fiqh (fuqaha) and ul al-Fiqh
(ulliyyn) delineated five “essential” objectives advanced by
Islamic Law that are accorded the highest weight among the
objectives of Islamic Law (maqid al-Shari’ah).55 In order of
importance, the five essentials are the preservation of: (1) the
religion of Islam; (2) human life; (3) progeny; (4) the faculty
of reason; and, (5) material wealth.56 According to modern
scholars, these five “essential” objectives of Islamic law were
established by Imam al Ghazali of the Shafi‘te School, and later
adopted by classical scholars of the Malki and Hanafi Schools of
Islamic law.57
In contextualizing the five “essentials” of maqid al-
Shari’ah, classical scholar Izz al-Din ibn Abd al-Salam’s com-
mentary is helpful. He is reported to have written that “all legal
rulings in the areas of jurisprudence are contained within” the
following Qur’anic verse: “Behold, God enjoins justice and the
doing of good, and generosity towards [one’s] fellow-men, and
He forbids all that is shameful and that runs counter to reason, as
well as envy; [and] He exhorts you [repeatedly] so that you might
bear [all this] in mind.” (QURAN 16:90).58 The point, essentially,
is that in Islam, as enjoined by the Qur’an and illustrated by
the Hadith and Shari’ah interpretations, service of humankind,
consistently with Islamic law, is an act of worship.59 In other
words, it is fundamentally Islamic—an act of “preserving the
religion”—to utilize and protect worldly resources, includ-
ing human life, progeny, the faculty of reason, and wealth.60
Classical scholar Sayf al-Din al Amidi, in his defense of giving
the highest priority to the preservation of religion, offered this
formulation:
[w]hatever is intended to preserve the root of religion
should be given priority over all else, since [the Islamic]
religion’s aim and ultimate outcome is the attainment
of eternal happiness in the presence of the Lord of the
worlds. All other objectives, including the preservation
of human life, the faculty of reason, material wealth
and anything else, are in the service of this overriding
interest. As God Almighty declares, ‘I have not created
the invisible beings and men to any end other than that
they may [know and] worship Me.’ (Qur’an 51:56).”61
Classical scholar Ibn Abd al-Salam explained that Islamic
law provides an equally potent summation of maqid al-
Shari’ah and that Islamic legal rulings have one central purpose,
which is to promote human well-being. Specifically, he stated:
All divine commands and prohibitions are founded
upon the [pursuit of] benefit for human beings both in
this world and in the next. God Himself has no need of
anyone’s worship. He is not benefited by the obedience
of the obedient, nor is he harmed by the disobedience
of the disobedient.62
In other words, the promotion of human well-being is not
only encouraged, but required. This includes the creation, pro-
tection, and deployment of wealth in the service of individuals,
families, and society at large. Intrinsically, the objectives of
Shari’ah, and therefore Shari’ah-compliant finance, are compat-
ible with the objectives of development finance and social invest-
ment, which, in principle, advance the well-being of mankind.
“In the Islamic system there is no such thing as a [charitable]
dedication ‘solely to the worship of God.63 It is appropriate then
that Islamic Finance, which is Shari’ah-based, be employed to
advance the public interest.64
VI. FOOD SECURITY WAQF
This article proposes the establishment of a multilateral
food security waqf as a mechanism for investment in the future
food security of the Middle East.65 As envisioned, the food secu-
rity waqf would serve as a vehicle for allocating and organizing
capital and other resources for investment in agriculture and the
financing of essential activities such as research, technological
innovation and transfer, agricultural production capacity build-
ing, and income-generation. Importantly, the food security waqf
envisioned would directly or indirectly facilitate much needed
access to finance, including by small farmers, small and medium
enterprises, and other parties across the food supply chain.
The waqf structure (rather than a conventional conduit, such
as a fund or corporation) is proposed primarily to mitigate the
political and legal risks (real and perceived) that tend to deter
investment in the region, particularly on a multilateral basis and
for regional benefit.66 Waqf assets, relative to assets associated
with conventional investment vehicles, have enjoyed relative
freedom from governmental interference, due both to the general
respect accorded to awqaf and the relative vigilance of the public
and waqf custodians against undue interference.67
Therefore, for the purposes of diminishing legal and
political risk in the context of multilateral Middle East invest-
ment, the waqf structure (properly crafted and with strong
legal frameworks to diminish the likelihood of government
332012–2013
interference) provides an attractive alternative to conventional
investment modalities. Further, the waqf structure is proven as
an effective and administratively convenient mode of investment
and finance, particularly for large-scale projects. As discussed
below, awqaf have been used successfully (by Muslims and non-
Muslims) to promote the public interest and facilitate investment
throughout culturally and geographically diverse countries. The
potential of the waqf as a modern development and investment
tool is borne out by history and should neither be overlooked nor
underestimated.
AGRICULTURE: ISLAMIC PERSPECTIVE AND EARLY PRACTICE
The promotion of food security is compatible with Shari’ah
objectives and the distribution of agricultural resources in early
Muslim communities. Reverence for agricultural endeavor and
ethical practices in agricultural production and distribution are
well-documented, and a few examples from Hadith are sufficient
to briefly make the point.68
According to a narration of Anas bin Malik, the Prophet
Mohammed said: “There is none amongst the Muslims who
plants a tree or sows seeds, and then a bird, or a person or an ani-
mal eats from it, but is regarded as a charitable gift from him.”69
The Prophet Mohammed was equitable in contracting for food
and the means of food production.70 Various ahadith indicate
also that while the Prophet was believed to have preferred the
giving of land outright71, he approved share-cropping provided
that such arrangements were not speculative and yields were
divided equitably.72
As narrated by Abdullah bin Omar: the Prophet concluded
a contract with the people of Khaibar to utilize the land on the
condition that half the products of fruits or vegetation would be
their share.”73 The Prophet is also said to have prohibited specu-
lative sharecropping arrangements, such as agreements giving
parties rights to yields from specific tracts of agricultural land
or specific produce from sharecropped land. Rather, the Prophet
required that parties agree to apportion the total agricultural
produce, whether in percentages or by other measures.74 This
approach, which diminished speculation and more equitably
distributed risk and reward, is consistent with the principles of
Islamic Finance, which requires risk-sharing and the avoidance
of gharar (undue speculation).75
These ahadith illustrate two important Islamic principles:
first, the productive cultivation of land is encouraged and
rewarded76; and second, the equitable use and distribution of
agricultural products and the means of their production are con-
sistent with the teachings of Islam.
BASIC ELEMENTS OF WAQF AND CONSEQUENCES OF
ESTABLISHMENT77
The waqf is a kind of trust or endowment through which
assets are allocated and preserved for a designated period of
time or in perpetuity for specified beneficiaries for charitable,
social welfare, development, or intra-family wealth distribution
purposes.78 Stated more succinctly, waqf is the “[bequeathing]
of property and dedicating the fruit.”79 Analogous to the waqf
in non-Islamic law is the Anglo-American common law trust,
which is considered by some to be “among the most important
creations of the [common] law of equity… [and has] for hun-
dreds of years…played a vital role in organizing transactions of
both a personal and a commercial character.”80
The essential legal requirements for the establishment of a
valid waqf are straightforward and well-established. The donor
of assets (waqif) must have legal and mental capacity.81 The
waqif must have the right to legally transfer the assets and the
nature of the assets must not be repugnant to Shari’ah.82 The
pledge to transfer waqf assets must be outright, without condi-
tion or contingency.83 The permissible purposes for which the
waqf is established (e.g., charitable or interfamily wealth trans-
fer) must be clearly stated.84 The primary beneficiaries of the
waqf (which may include the waqif) must be identified.85 A waqf
nazir (trustee or administrator) must be designated.86 And the
terms of the waqf, according to the majority of scholars, must be
in writing.87
Upon a valid declaration of waqf (i.e., an informed state-
ment, freely made, of intention to commit certain assets to
waqf), the declaration, and therefore the waqf established by
it, becomes irrevocable.88 After establishment, a waqf enjoys
independent legal personality under Islamic law and may, inter
alia, enter into transactions, acquire assets, and engage in other
activities permitted under Shari’ah and other applicable law.89
HISTORICAL USES OF WAQF
The efficacy and legal legitimacy of the waqf structure are
well-established. Awqaf have been used as vehicles for charity,
the promotion of social welfare, the provision of public utilities,
the building of rural and urban infrastructure, the provision of
education, the building and maintenance of mosques, the pro-
vision of community medical services, and to advance other
projects of public value.90 Waqf capital has also been a source of
commercial credit.91
An early example of waqf is the endowment of the Ruma
Well as a public utility.92 It is reported that, upon arriving in
Madina, the Prophet realized that the Ruma Well was one of
the few sources of potable water for the city. “He asked: ‘[w]
ho will purchase…[the Ruma Well] [and] equally share the
water drawn therefrom with his fellow Muslims.93 The Ruma
Well was purchased and bequeathed as waqf property, to pro-
vide drinking water for the people of Madina.94 The Prophet is
said to have advised Omar Ibn al-Khattab, a companion of the
Prophet at the time and later his second successor (the second of
the four Rightly Guided Caliphs), to bequeath land in Khaibar
as waqf, which he did.95 Consistent with the Prophet’s practice,
the Companions continued to establish waqf in the public inter-
est. “Since the Prophet instructed his Companions about bequest
and its benefits, they never stopped attending to it and putting
their money and property into it, so much so that. . . [a]ny of the
Prophet’s Companions who could afford it made endowments.96
Conterminously with the spread of Islam, waqf practice
expanded in scope, size and impact97 through the Ottoman
period, with the volume and quality of activity diminishing after
that point and through the present time.98 At times, awqaf were
34 SUSTAINABLE DEVELOPMENT LAW & POLICY
used so pervasively that they “contributed towards shaping the
economic, religious, political and social landscape of urban
areas in the Islamic world.”99 Thousands of awqaf were in opera-
tion in the Fatimid period (909-1171).100 And in the lifetime of
the Ottoman Empire, awqaf had grown to a “staggering size,
amounting to about one third of the Islamic Ottoman Empire and
a substantial part of Muslim lands elsewhere.”101
Waqf practice was dynamic. As the needs of society and
Islamic jurisdictions changed and evolved, so did waqf prac-
tice. “[T]he extent of endowment usages along with their legal
framework and practices . . . varied significantly throughout the
centuries in response to the fluctuating needs of society, tak-
ing on different and distinct forms around the Islamic world,
often assimilating local customs which frequently preceded
the advent of Islam or were contemporaneous with it.”102 This
is borne out by historical practice, where awqaf assets and
purposes included revenue-generating, mixed asset awqaf,103
revenue-generating agricultural land,104 the funding of large-
scale commercial property developments over large areas of
land for mosque construction,105 and the bequest of real prop-
erties sited in multiple jurisdictions for the benefit of a single
beneficiary in another jurisdiction.106 Other historical examples
of waqf practice include provisioning for asset substitution
(istibdal) to ensure the continuation and flexibility of awqaf,107
the joint establishment of waqf by spouses for themselves and
their children, the establishment of awqaf by guilds to support
guild members’ families,108 and the establishment of multi-party
awqaf to support Islam’s holiest places of worship and its most
significant institutions, such as the Two Holy Mosques, Al-Aqsa
Mosque, and Al-Azhar.109Awqaf cover the Islamic world, from
monuments such as the Indian Taj Mahal to the Bosnian Mostar
bridge . . . from the Shishli Children’s Hospital in Istanbul to the
Zubida’s Waterway in Mecca.”110 The successful use of awqaf,
across jurisdictions, for diverse purposes, and with various
assets, speaks to the flexibility, stability, and appeal of the waqf
structure.
This brief recitation of some of the historical uses and the
dynamism of the waqf structure illustrates its significance in the
development of Islamic jurisdictions. The waqf was so success-
ful in some jurisdictions that British colonial administrations
“exerted huge efforts in the nineteenth and first half of the twen-
tieth century . . . to bring these assets under state control.”111 In
hindsight, this attempt at appropriation showed how highly val-
ued these structures had become, and it reinforces the efficacy of
the public waqf as a successful vehicle of investment and asset
management for diverse purposes.
VII. ADAPTATION OF WAQF FOR FOOD SECURITY
INVESTMENT: LEGAL FRAMEWORKS AND REMOVAL
OF PUBLIC ADMINISTRATION
As discussed, the waqf structure has been used success-
fully to promote the public interest. Regional food security is
a matter of public interest of the highest order in the Middle
East and elsewhere. The causes of food insecurity are various
and numerous, but the challenges are not insurmountable. With
proper investment, resource allocation, and management, many
of these causes can be addressed, including poor agricultural
practices;112 water pollution and misuse;113 lack of effective
land use planning;114 inaccessibility of finance for small farm-
ers;115 and insufficient public investment in research, develop-
ment, and technological innovation.116 The waqf str ucture is
one avenue through which these challenges can be met, for
example, through the allocation of land for specific agricultural
purposes, the appropriation of capital and other resources for
research, development, and technological innovation (including
innovations for sustainable cultivation of dry lands), the educa-
tion and training of parties across the food supply chain (such
as stock managers and small farmers), building and improving
infrastructure to facilitate efficient delivery and storage of food
and agricultural staples, and the provision of finance to small
farmers based on profit and loss sharing through the Islamic
financing modalities.117
To accommodate multilateralism and regional food security
objectives, and to further the political stability objectives for
which the waqf structure has specifically been proposed herein,
any waqf–based structure should be adapted to suit the partici-
pating parties and the scale of objectives agreed by them. The
waqf asset composition and operating framework should incor-
porate modern asset classes and best operating practices, as well
as Shari’ah and civil law based frameworks that mitigate legal
risk and deter government or other interference. Importantly,
the waqf structure contemplated requires freedom from direct
administration or management by any general awqaf authority,
in order to promote effective waqf management and mitigate the
real or perceived political and legal risk associated with direct
government participation. The waqf-based structures under
development, for example, provide for the appointment of a waqf
nazir or waqf nuzzar (an individual, group, or entity) to admin-
ister the waqf and maximize waqf assets, subject to customized
and clearly defined performance benchmarks and governance
standards.118 This approach not only would diminish legal and
political risk, but would provide the flexibility needed to appoint
parties with the expertise necessary to effectively, efficiently,
and profitably administer the waqf, without undue interference.
With these and other modifications, the objectives of mitigating
political and legal risks would be served, clearing the way for
the pursuit of regional food security, innovatively and effectively.
VIII. CONCLUSION
The utilization of the waqf structure to bolster food security
is legally, administratively, and politically compelling. The legal
rights and responsibilities attendant to awqaf are clear—from
the requirements of establishment, to the relinquishment of legal
title to waqf assets, to the role and duties of the waqf nazir, to
the purposes of the waqf and the identity of its beneficiaries.
Because the framework and mechanics of awqaf are established
and have, more often than not, been respected, the administrative
costs of awqaf, compared to other structures, are relatively low
as a general matter.119
352012–2013
The religious origins of the waqf and its treatment histori-
cally make it a comparatively safe vehicle for the investment of
assets, particularly in the context of multi-party agricultural
investment with significant sovereign involvement. Compared
to other legal structures (e.g., the corporation, partnership, etc.),
the waqf is less susceptible to political or other interference that
might frustrate the waqf purpose or diminish the value of waqf
assets through misappropriation or mismanagement.
Middle Eastern countries, institutions, and private parties
would serve the food security needs of their region, as well as
Islamic Finance, by adopting a waqf-based strategy for regional
food security. The waqf structure is a proven and established
structure in the Middle East, and is well-suited to garner the
political will, monetary resources, and cooperation necessary to
effectively advance food security on a multilateral basis at the
regional level.
Endnotes: Islamic Finance as a Mechanism for Bolstering Food Security in the
Middle East: Food Security Waqf
1 See Claire Schaffnit-Chatterjee, The Global Food Equation: Food Security
in an Environment of Increasing Scarcity 4, DEUTSCHE BANK RESEARCH, Septem-
ber 21, 2009.
2 Id. at 13.
3 See id. at 22, 26.
4 See id. at 11-13.
5 U.N. FOOD AND AGRICULTURE ORGANIZATION, THE STATE OF FOOD INSECURITY IN
THE WORLD: ADDRESSING FOOD INSECURITY IN PROTRACTED CRISES, 27 (2010).
6 In this article, the Middle East includes the countries that are geographi-
cally situated in the Middle East and North Africa and are member states of the
League of Arab States. See Schaffnit-Chatterjee, supra note 1, at 13, 14.
7 Notably, however, that the region’s malnutrition rates are strikingly high
relative to its income levels. See, e.g., Ruslan Yemstov, The Global Food Crisis:
Global Perspectives and Impact on MENA, Fiscal and Poverty Impact, WORLD
BANK GROUP; Clemens Brisinger et al., Economics of the Arab Awakening: From
Revolution to Transformation and Food Security, International Food Policy
Research Institute (IFPRI) Policy Brief 18, May 2011 at 2.
8 Clemens Brisinger et al., supra note 7, at 3.
9 See Yemstov, supra note 7, at 5.
10 WORLD BANK GROUP, AGRICULTURE & RURAL DEVELOPMENT IN MENA 1
(Sept. 2008).
11 Id. at 1.
12 Id. at 2.
13 PEW RESEARCH CENTER FORUM ON RELIGION AND PUBLIC LIFE, THE FUTURE OF
THE GLOBAL MUSLIM POPULATION 14 (Jan. 2011).
14 Id. at 14. The projection and current figures count only the Muslim popula-
tions of Middle Eastern states because Muslims are overwhelming majorities in
the countries surveyed. The food security waqf proposed would not be limited to
Muslim beneficiaries, but would serve food security needs of involved states and
their inhabitants and other designated beneficiaries, if any. It should be noted that
awqaf, their administrators, and beneficiaries, have and may involve non-Muslims.
For example, “[a]wqaf supported many churches and synagogues and these were
equally admissible in the Muslim courts of law.SIRAJ SAIT & HILARY LIM, LAND
LAW & ISLAM: PROPERTY & HUMAN RIGHTS IN THE MUSLIM WORLD 156-57 (2006).
15 U.N. FOOD AND AGRICULTURE ORGANIZATION, COUNTRY RESPONSES TO THE FOOD
SECURITY CRISIS: NATURE AND PRELIMINARY IMPLICATIONS OF THE POLICIES PURSUED
27-28 (2009).
16 See Yemstov, supra note 7, at 10, 13 (Showing price fluctuations and responses).
17 Yemstov, supra note 7, at 13.
18 Saudi Arabia embarked on an ambitious government-mandated and subsidized
effort to achieve self-sufficiency in key food staples and succeeded, but at a high
cost to government coffers and the country’s scarce water resources. According to
the Saudi Arabian government, the Kingdom built its first grain silos in 1978, and in
1984, became wheat self-sufficient. See Agricultural Achievements, ROYAL EMBASSY
OF SAUDI ARABIA, WASHINGTON, D.C., available at http://www.saudiembassy.net/
about/country-information/agriculture_water/Agricultural_Achievements.aspx (last
visited Dec. 19, 2012). Saudi Arabia spent between SR60 billion to 70 billion to
subsidize wheat production over the “long term” and significantly depleted water
resources in the process. Recognizing the prohibitively high cost of domestic wheat
production, the government announced that Saudi Arabia will phase out wheat
production by 2016. See Saudis to Phase Out Wheat Production, FINANCIAL TIMES,
April 11, 2008, available at http://www.ft.com/intl/cms/s/0/a686f2b0-0753-11dd-
b41e-0000779fd2ac.html#axzz2BUJ3ApgW.
19 Alexandra Spieldoch & Sophia Murphy, Agricultural Land Acquisitions:
Implications for Food Security and Poverty Alleviation, in LAND GRAB? THE
RACE FOR THE WORLDS FARMLAND 39, 42 (Michael Kugelman & Susan L. Lev-
enstien eds., 2009).
20 See Joachim von Braun & Ruth Meinzen-Dick, Land Grabbing by Foreign
Investors in Developing Countries: Risks and Opportunities, IFPRI Pol’y Brief
No. 13, Apr. 2009, at 5.
21 Id.
22 Id.
23 The Sudan (seven), Egypt (one), Turkey (one), Mali (one), and Pakistan (one). Id.
24 For example, Qatar is known to have invested in farmland in Australia. See,
e.g., Cameron Houston & Royce Millar, Qatar Land Grab Angers Bush, THE
AGE, (June 19, 2011), available at http://www.theage.com.au/victoria/qatar-
land-grab-angers-bush-20110618-1g99l.html
25 Numerous reports scrutinizing “land grabs” have been critical of the practice.
And land acquisitions have been received with hostility in various jurisdictions.
For example, the acquisition by Qatar of farmland in Australia has sparked
controversy. See id. In Madagascar, a proposed land acquisition by South Korea
triggered political unrest, leading to the eventual ouster of Madagascar’s president
and the cancellation of the transaction by his successor. Sebastien Berger, Mada-
gascar’s New Leader Cancels Korean Land Deal, THE TELEGRAPH, Mar. 18, 2009,
available at http://www.telegraph.co.uk/news/worldnews/africaandindianocean/
madagascar/5012961/Madagascars-new-leader-cancels-Korean-land-deal.html.
26 See, e.g., Houston & Millar, supra note 24.
27 See Michael Kugelmen, Introduction and Acknowledgements, in LAND
GRAB? THE RACE FOR THE WORLDS FARMLAND 1, 3 (Michael Kugelman & Susan
L. Levenstien eds., 2009).
28 See Houston & Millar, supra note 24 (Deal described as “secretive”).
29 Kugelmen, supra note 27, at 16-18.
30 See Kugelmen, supra note 27, at 18.
31 Schaffnit-Chatterjee, supra note 1, at 15.
32 See Schaffnit-Chatterjee, supra note 2, at 13.
33 Indeed, it is understood that in most cases, agreements for the outright pur-
chase or long-term lease of agricultural land overseas are made with host nation
governments without participation or input from farmers or other segments of
local populations that are dislocated or adversely impacted in other ways. See,
e.g., U.N. FOOD AND AGRICULTURE ORGANIZATION, FROM LAND GRAB TO WIN-WIN
SEIZING THE OPPORTUNITIES OF INTERNATIONAL INVESTMENTS IN AGRICULTURE, ECO-
NOMIC AND SOCIAL PERSPECTIVES POLICY BRIEF 2 (June 2009).
34 See, e.g., von Braun & Meinzen-Dick, supra note 20.
35 Lester R. Brown, When the Nile Runs Dry, N.Y. TIMES, June 1, 2011, § A, at 29
(explaining that “[t]he Nile Waters Agreement, which Egypt and Sudan signed in
1959, gave Egypt seventy-five percent of the river’s flow, Sudan twenty-five percent
and none to Ethiopia. This situation is changing abruptly as wealthy foreign govern-
ments and international agribusinesses create land acquisition deals to for large swaths
of arable land along the Upper Nile. Consequently, Egypt must deal with several
governments and commercial interests that were not party to the 1959 agreement.
However, Egypt too has acquired agricultural land and/or land-use rights in the Sudan.
As for the Sudan, there is no publicly available evidence to suggest that the state or
Sudanese farmers have realized appreciable net monetary, know-how, or other gains
from foreign acquisitions or use of Sudanese land. The adverse consequences to some
Arab countries illustrate the need for a coordinated regional food security strategy”).
continued on page 63