Although the desire to establish an Islamic economy in Pakistan is nearly as old as the country itself, scholars are still struggling to define an Islamic economic system, says a report released in Washington.

The 132-page report, comprising essays by half a dozen Islamic scholars and economist including State Bank governor Ishrat Husain, points out that 'there exists little consensus' on what 'an Islamic economy' would actually look like.

Senator Khurshid Ahmad, whose essay is included in the report, argues that the phrase signifies an approach as much as any well-defined set of financial, theological, or legal norms and practices.

Mr. Ahmad insists that private property and enterprise, self-interest, market mechanisms, and competition are as integral to Islamic economics as to free-market capitalism.

Islamic economics does not challenge the right of capital to enjoy a just return. An Islamic economic system needs be neither autarkic nor isolationist, and Islamists do not call for a withdrawal from the international economic order, he says.

The authors point out that almost any definition of Islamic economics includes a prohibition on riba and an emphasis on zakat. Yet in an Islamic economy, conventional banking systems can exist side-by-side with Islamic banking, and frequently do.

'Indeed, large western banks, including Citigroup and HSBC, offer Islamic financial products, the report says.

Omar Noman, one of the authors and a senior official with the UN Development Programme, says that an estimated 200 institutions in 60 countries offer an interest-free alternative to conventional banking.

In reality, however, the return these institutions provide through a variety of imaginative equity-based non-interest instruments tends to mirror the prevailing interest rate in the economy, the report says.

Governor State Bank Ishrat Husain says the fears generally expressed about the Islamization of the country's economy, are absurd, and serve merely to underscore the cliches and stereotypes of Pakistan and Islam widely held in the West.

'Most of the assumptions and premises on which the hypotheses about the Islamic economic system have been constructed are seriously flawed.' 'Pakistan is and will remain a responsible member of the international community,' says Governor Husain in his opening essay.

After briefly surveying Pakistan's economic record since 1947, with an emphasis on the years since 1999, when General Pervez Musharraf seized power in a military coup, Mr. Husain concludes that Pakistan is far removed from the day when it will be ready to adopt a full-fledged Islamic economic system.

Islamic economics, according to him, represents nothing more than an attempt to promote 'a balance between market, family, society and the state.' Islamization, if fully practised, will address those income distribution and poverty alleviation issues where capitalism has fallen short.

This in turn would serve to 'eliminate the sources of instability, violence and propensity towards terrorism arising from a sense of deprivation.' The world, in short, would be a far happier place were the Muslim world to adopt an Islamic economic model, he argues.

Rather than imposing a possibly alien economic system on Pakistan, the global economy must be reformed so as to accept 'a diversity of cultural regimes and market economies as a permanent reality,' says Prof. Khurshid Ahmad.

Former World Bank officer Shahid Javed Burki, who also served as Pakistan's finance minister for a brief time in the 1990s, says that in Pakistan pragmatism has usually prevailed over piety and efforts to Islamize the banking system have been largely cosmetic, rather than replace conventional institutions, he says, Pakistan is likely to move towards a system of parallel banking and financial institutions that provide greater choice to the Muslim consumer.

He also judges that notwithstanding the recent electoral successes of the MMA, most Pakistani savers and investors have no overwhelming desire to move towards an Islamized economy.

'The Islamic economic system in Pakistan is still underdeveloped and will remain that way for a long time to come.' Long time Pakistani civil servant and World Bank official Parvez Hasan looks at issues of poverty and social justice in Pakistan, arguing that ethics cannot be separated from economics. Pakistan has done a very poor job of poverty alleviation, Mr. Hasan maintains.***** Today 45 million Pakistanis, a figure larger than West Pakistan's entire population at the time of its birth 57 years ago live in poverty, he points out.******

The Council on Foreign Relations' Isobel Coleman examines the impact of Islamization on women. This is not merely an ideological question of inequality, she argues. Gender discrimination retards development and exacts a large toll on both present and future generations, she says.

Even if Islamization per se does not mandate gender discrimination, she writes, Islamization tends to reinforce conservative ideas regarding the role that women should play in society. At a minimum, this slows down policies and programmes designed to bring women more into the public sphere, and thereby exacts an economic cost.'

The 'central issue' in Pakistani politics over the years, argues Vali Nasr of the Naval Postgraduate School, Monterey, has been the expansion of state power and the resistance these efforts have provoked.

In Pakistan, he argues, successive governments have manipulated Islamic symbols not only to shore up state legitimacy, but also to cast their re-distributive policies in a favourable political light. This, in turn, has encouraged the political opposition to mobilize along religious lines as well.

Another author, Charles Kennedy, reviews the efforts of Islamic legal experts to secure a judicial ruling that riba is repugnant to Islam, and therefore, that all federal and provincial laws that provide for riba must be brought into conformity with Islamic law.

His analysis underscores the essentially political rather than legal character of this question. Even Zia ul-Haq, who professed to want to govern Pakistan according to Islamic precepts, and who in 1979 publicly pledged to eliminate riba from Pakistan within three years, nonetheless opted for 'prudential, incremental' changes that did not seriously challenge the operations or the corporate interests of domestic banks or Pakistan-based affiliates of multinational banks, argues Mr. Kennedy.