France seeks to woo Islamic investments

Aims to turn Paris into EU capital of Islamic finance
.........
PARIS : As France debates whether to ban the burqa, the government is leading a drive to attract billions in investment from Muslim countries by turning Paris into the European capital of Islamic finance.
The French parliament this month has approved changes to legislation to allow Islamic "sukuk" bonds to be issued and the Qatar Islamic Bank has applied to be the first such bank to open in France.
Home to Europe's biggest Muslim minority, France is hoping to unseat London as the European hub for Islamic banking, offering products that comply with Sharia law and meet the needs of big investors mostly from Gulf countries.
But the drive is raising hackles, with some opposition politicians accusing the government of undermining France's much prized secularism to accommodate wealthy interests.
"When rich Muslims are concerned, we welcome them. But when they are poor, we put them on planes and deport them. This is all very upsetting," said Socialist deputy Henri Emmanuelli.
After failing to garner enough votes to derail the bill, the Socialist opposition is challenging the legality of the new legislation on Islamic finance before the Constitutional Council.
"We must not allow principles of Sharia law, or the ethics of the Quran to be introduced into French law," said Emmanuelli.
Under Sharia law, making money from money such as charging interest is not permitted and investment in companies involved in alcohol, gambling and tobacco is strictly off limits.
"Sukuk" bonds
Much of the debate has focused on opening up the French market to "sukuk" bonds, which are asset-based and do not pay interest. Investors receive coupons corresponding to part of the profits earned by the asset underpinning the bond.
Economists argue that money raised through Islamic finance could help spur France's nascent recovery with tools that are seen as financially sounder than the high-risk derivatives that led to the 2008 global meltdown.
Elyes Jouini, an author of a report presented to the government last year, estimates that France could tap into 120 billion euros in capital from Islamic finance by making adjustments to its tax and banking laws.
Only €7 billion of those would be raised domestically among France's five million Muslims.
"There are extremely important financial reserves in Gulf countries and southeast Asia and these countries are ready to invest anywhere but they have specific rules in terms of ethics and in terms of the choice of investment," said Jouini.
"If France wants to attract this capital to its economy, it must offer the possibility for these investors to do so according to the rules of Islamic finance," he said.
Fear of the unknown
Finance Minister Christine Lagarde and Central Bank governor Christian Noyer are to address a major conference in Paris this week that could yield some announcements on promoting Islamic finance in the French economy.
France's far-right National Front has denounced Islamic finance as a "community-based peril" resulting from immigration.
Jouini said opposition to the changes stems from "fear of the unknown."
"The term Islamic is confused with Islamist, the term Sharia raises fears because some think of women forced to cover themselves, the word fatwa raises fears because some think of Salman Rushdie, but a fatwa is nothing more than a decree," said Jouini.
"Islamic finance draws from the ethical principles of Muslim law but it obviously obeys Republican laws. It is not outside the boundaries of legality or civil society," he said.
The drive to open up to Islamic finance came as a parliament task force was looking at measures to ban the wearing of the full Islamic veil in France, reviving controversy over Islam's place there.

West slams "provocative" Iran tests before talks

Iran test fires long-range missiles on second day of war games
.........
TEHRAN: Western powers on Monday called Iran's latest missile test firings "provocative" as the White House urged Tehran to agree to immediate, unfettered access to its newly disclosed nuclear fuel plant at this week's talks with world powers.
The statements came after Iran test-fired two different long-range missiles on its second day of war games.
The first test-firing involved the Shahab-3, which Iran says could hit arch-foe Israel and U.S. military bases in the region. It was shown in footage broadcast by state-owned Press TV channel being launched in desert terrain.
The second missile was Iran's two-stage long-range Sejil. It was the first such firing during military maneuvers by the Revolutionary Guards, according to Fars news agency.
The state TV reported earlier that Tehran has test-fired medium-range missiles, a day after the Revolutionary Guards launched short-range missiles as part of several days of war games.
Iran conducts war games or tests weapons to show its resolve to counter any attack by Israel or the United States.
Western countries suspect Iran of seeking nuclear weapons, which Tehran denies. Iran and world powers meet in Geneva on Thursday to discuss Tehran's disputed atomic program.
The five U.N. Security Council permanent members -- the United States, Russia, China, Britain and France -- plus Germany are due to take part in the talks with Iran's top nuclear negotiator Saeed Jalili on Oct. 1.
West angered
The U.S. joined France and other Western powers in criticism of Iran's latest missile tests as Russia appealed for the world not to "succumb to emotions."
"Obviously these were pre-planned military exercises," White House spokesman Robert Gibbs told reporters when asked about the missile tests.
"I would lump any of these into the provocative nature in which Iran has operated on the world stage for a number of years."
"They can agree to immediate unfettered access (of the nuclear fuel facility)," Gibbs said when asked what Washington wants from the much-anticipated talks.
"That would be the least that they could do."
Meanwhile the French foreign ministry said: "We call on Iran to choose the path of cooperation rather than confrontation, by immediately ceasing these deeply destabilizing activities."
"These tests are a provocation, especially since we have made repeated offers of dialogue," foreign ministry spokeswoman Christine Fages told journalists.
Paris said the tests would heighten concern after it was revealed last week that Iran was building a second uranium enrichment plant.
British Foreign Secretary David Miliband called the tests "reprehensible" but said they should not distract attention from the talks.
"It is obviously reprehensible as such but it mustn't distract us from the big question of this week, which is how will Iran respond at the meeting with the international community on Thursday?" he told Sky News television.
Germany said the tests were "troubling" ahead of the talks.
"Tehran is testing missiles despite the fact that it wants to talk about regional peace and stability. Ahead of the upcoming talks, this is not a signal that will build trust," foreign ministry spokesman Jens Ploetner said.
EU foreign policy chief Javier Solana, the chief Western nuclear negotiator, expressed concern and said Tehran had produced "a new context" for the talks, although he said the time was not right to discuss further sanctions.
Russia, which has long resisted U.S.-led moves to tighten the screws on Tehran through international sanctions, said the world should not "succumb to emotions" in dealing with the Islamic republic.
"Now is not the time to succumb to emotions, it is necessary to calm down and above all to start up an effective negotiation process," a foreign ministry source was quoted as saying by Interfax.