The trust deficit
The mistrust that pervades Middle Eastern societies is hard to miss. As controlled experiments confirm, Arabs have substantially less trust in strangers, foreign or domestic, than, say, Europeans. This hampers progress on many fronts, from business development to government reforms.
Low-trust societies participate disproportionately less in international commerce and attract less investment. And, indeed, according to the World Values Survey and related research, trust among individuals in the Middle East is low enough to limit commercial transactions to people who know one another either personally or through mutual acquaintances. Because of their lack of trust, Arabs will often pass up potentially lucrative opportunities to gain through exchange.
Likewise, in their dealings with public institutions, Arabs tend to seek the intermediation of an individual with whom they have some sort of personal connection. Among the consequences are inequalities in what people can expect from such institutions. That undermines their effectiveness.
Clearly, there is a need to address the Middle East′s trust deficit. A first step towards doing so is to understand its causes.
One potentially important clue lies in the difference between perceptions of Muslims and Christians. To be sure, there are no official data quantifying the deficit; in most parts of the Middle East, too few Christians are left to make meaningful statistical comparisons. But casual evidence suggests that the region′s shoppers, merchants and investors generally consider local Christians to be more trustworthy than local Muslims. ″It has always been that way,″ they say. My work with the economic historian Jared Rubin exploring Istanbul′s seventeenth- and eighteenth-century Islamic court records may offer insights into why.
At that time, Istanbul was a cosmopolitan city; around 35% of its local residents were Christian and 6% were Jewish. According to Islamic law (Sharia), Muslims had to do business according to Islamic rules and if they wanted to adjudicate a conflict, they had to use an Islamic court. For their part, Christians and Jews could do business under their own rules, though they were free also to follow Islamic rules and to use Islamic courts, if they so desired. But, of course, if they were involved in a case against a Muslim, that had to be handled in an Islamic court.
When a Muslim and a non-Muslim faced each other in a trial, the Muslim enjoyed significant advantages. Firstly, the judges′ training predisposed them to give the benefit of any doubt to a fellow Muslim. Secondly, the court staff was entirely Muslim, which meant that testimony was viewed solely from a Muslim perspective. Thirdly, whereas Muslims could testify against anyone, Christians and Jews could testify only against another non-Muslim.
Benefit of the doubt
But these advantages had a downside. Because the legal system made it easier for Muslims to breach contracts with impunity, they were more often tempted to default on their debts and to renege on their obligations as business partners and sellers. Meanwhile, non-Muslims, whose obligations were enforced more vigorously, gained a reputation for trustworthiness. To reflect differences in perceived risk, lenders, who were predominantly Muslim, charged about two percentage points less for credit to Christian and Jewish borrowers than to Muslims (15% annually, as opposed to 17%).
So it seems that perceptions of trustworthiness in the Arab world are rooted, at least partly, in the uneven enforcement of commitments under Islamic law. The sectarian differences in legal enforcement did not last. In the mid-nineteenth century, Islamic courts gave way to what were essentially secular courts, at least with respect to commerce and finance. The enforcement of commitments then became more balanced.
The share of non-Muslims in the Middle East′s Muslim-majority countries has since diminished significantly, through emigration and population exchanges. As a result, few Middle Eastern Muslims have personal experience doing business with non-Muslims.
Yet old impressions of Muslims being less trustworthy have endured, passed down through families and networks. Old habits of breaching contracts opportunistically have also survived in places, reinforcing the inherited stereotypes. The tendency to limit transactions to friends and acquaintances is a natural response in a low-trust environment.
Old habits die hard
It is ironic that these damaging stereotypes emerged from a legal system explicitly intended to give the militarily and politically dominant Muslims an edge in their social and economic relations with Christians and Jews. Beyond raising the costs of economic transactions among Muslims at the time, rules meant to limit religious freedom – the denial of ″choice of law″ to Muslims and restrictions on non-Muslim judicial testimony – helped to create a culture of mistrust that now limits progress in various areas. Islamic law thus weakened the Muslim communities it was meant to protect.
At a time when various political movements are seeking to re-impose Sharia, it is more important than ever to recognise the long-term damage caused by doing so already.
What the Middle East needs today is not Islamic law, but wide-ranging efforts to rebuild trust among and within communities and in private organisations and government. Reviving Islamic law would only deepen a trust deficit that is a key source of the Middle East′s current economic underdevelopment and political failures.
© Project Syndicate 2016
Timur Kuran is Professor of Economics and Political Science at Duke University and the author of The Long Divergence: How Islamic Law Held Back the Middle East.