Lenders Rip Off Small Iraqi Businesses

In light of the current economic situation in Iraq, ethics sometimes are disregarded, and what is forbidden by religion is allowed in commercial transactions. Thus, in Iraq’s wholesale market, moneylenders freely exploit borrowers.

Loan sharks say many things to justify their practices. One told Al-Monitor on condition of anonymity that his activity allows merchants to conduct their business more easily with "low" interest rates, and he does not believe his activity constitutes an act of riba.

“I invest these amounts in trade activities. I know where they are used and in which field they will be spent,” he added. “In fact, I simply set my profits in advance. I charge $400 per month for every $10,000 I lend to merchants, and this is a fair deal for all.”

Some merchants invoke religious fatwas issued by unknown sources that allow for borrowing money and paying the amount back in a different currency. This loophole makes the loan "permissible."

Majida al-Tamimi, a member of the Parliamentary Finance Committee, commented on this type of maneuvering. She told Al-Monitor, “Borrowing money in a given currency and paying back the loan in another currency is certainly a circumvention of Sharia.”

Tamimi is a member of one of the most radical Shiite parties in the Iraqi parliament, the Sadrist movement, and is known for uncovering government corruption. She told Al-Monitor she was unaware of a dramatic spread of usury in Iraqi society and said the finance committee has not discussed the matter. However, she acknowledged that a lack of liquidity may have pushed many Iraqis to turn to loan sharks.

5 Responses to Lenders Rip Off Small Iraqi Businesses