EUROPE: EUROPEAN UNION

The European Union is an economical and political union that covers a large portion of the European continent. Actually contains 27 sovereign member states: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg ,Republic of Malta, Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden United Kingdom. And It represents 30% of the world’s GDP, and has 23 official languages.
The European Union is founded upon numerous treaties but the European Coal and Steel Community in the Treaty of Paris (1951) was the beginning of this integration followed by the Treaty of Rome in which the European Economic Community (EEC) and Euratom where created (1957). In 1969 Heads of State or Government meet in The Hague to discuss completion of single market, greater integration and enlargement of the European Community. They agree to phase in economic and monetary union (EMU) by 1980, to speed up integration and cooperation on political matters, finally in 1992 the Maastricht Treaty on European Union was signed, founded "on the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law“
It objectives are the development of a common market where people, goods, services and capital can moved freely and also a customs union between its member states in which is apply a common external tariff on all goods entering the market.

There is a current discussion around the existence of the co-determinism principle in Germany. Select, define and explain 3 arguments in favor and 3 against such principle.

Co-determination is a practice whereby the employees have a role in management of a company. It began in Germany and at first there was only worker participation in management in the coal and steel industries. But in 1974, a general law was passed mandating that worker representatives hold seats on the boards of all companies employing over 500 people. 1

There are different points of view relating this matter, there are arguments in favor and against.

IN FAVOR:

1. On the assumption that the primary goal of employers is to maximise profits in the interests of shareholders, codetermination can reorient the company's goals in the interests of workers. A better balance may be struck so that the company interests are not so one sided. For unions, codetermination is part of democratising the economy. It is also a way for workers to better the terms and conditions of their contracts in an orderly and regulated way.

2. It can be an instrument for long term increase in productivity of the company. Some economists dispute this on the basis that the losses in efficiency in production outweigh any gains in productivity.

3.It can also foster innovation in the company, through the participation of all the member of the company

AGAINST:

1. Trade unions have long been calling for the clarification of supervisory duties and for the introduction of minority rights so that a disinterested majority is not able to allow management free run to do as it pleases. “Law on the Improvement of the Supervision and Transparency of Companies” 2

2. Many scholars have said that if the interest of the shareholder is to get profit, the principle of determinism is against that notion. The employees will make decisions according to their own benefit.

3. there is also an argument that although the co determinism principle try to give equity to all the members of the company the shareholder are going to have always one extra vote, making the decision making process unequal.

1. http://en.wikipedia.org/wiki/Co-determination
2. http://www.boeckler.de/pdf/p_arbp_033.pdf

http://en.wikipedia.org/wiki/Codetermination_in_Germany

MIDDLE EAST: ISLAMIC BANKING

IMAGE SOURCE:robertbonnett.com

1. Explain what Islamic Banking is and its background.
Islamic banking is banking based on Islamic law (Shariah). It follows the Islamic rules and practices on transactions which come from the Quran and the Sunnah, and other secondary sources of Islamic law such as opinions collectively agreed among Shariah scholars (ijma’), analogy (qiyas) and personal reasoning (ijtihad). 1

2. What are the key principles of Islamic banking?
Islamic Banking is based on the principles of trade, partnership, sharing of gains and losses, and prohibition of out of control risk. It prohibits:
· Interest-based banking
· Gharar –unclear contracts
· Maysir–speculation
· Financing of haram transactions (alcohol, gambling, pork, etc.)2

3. Islamic law forbids institutions from charging interests on loans. How do they make profits when lending money?

Banks can profit from the buying and selling of approved goods and services. The principal means of Islamic finance are based on trading, and it is essential that risk be involved in any trading activity, so banks and financial institutions will trade in sharia-compliant investments with the money deposited by customers, sharing the risks, and the profits between them.
Although they cannot charge interest, the banks can profit from helping customers to purchase a property using ijara (leasing) or murabaha (sale on agreed upon profit) scheme. With an ijara scheme the bank makes money by charging the customer rent; with a murabaha scheme, a price is agreed at the outset which is more than the market value. This profit is deemed to be a reward for the risk that is assumed by the bank.


4. Explain the concept of ethical investments under Islamic law. Who is to determine whether an activity is allowed or not?
There are firm laws governing the types of business the banks can trade with. There should be absolutely no investment in unsuitable businesses, including those involved with armaments, pork, tobacco, drugs, alcohol or pornography.

IMAGE SOURCE:worldpoliticsreview.com

5. How does Islamic banking influence the economy in the Middle East?

The steady expansion of Islamic banks has been the hallmark of the Middle East financial landscape in the 1980s and 1990s. With a network that spans more than 60 countries and an asset base of more than $200 billion, Islamic banks are now playing an increasingly significant role in their respective markets. To this end, Islamic banks are rapidly gaining market shares in their domestic economies and their presence in highly sophisticated markets exemplifies the empirical success of the viability of eliminating fixed interest payments from financial transactions. Indeed, consolidation among banks, rising competition and continuous innovation
to provide financial services, all contribute to a growing interest in a detailed
critical evaluation of Islamic banks.
Islamic banks have the flexibility of becoming shareholders and creditors of firms, as well as the advantage of providing investment-banking services3 all this sums to attrack foreing direct investment to Middle East and foster its economy.

6. Based on your research and knowledge about this topic, what is the future of Islamic Banking in terms of global expansion and growth?
Even though the Islamic banking industry is relatively new compared to the conventional banking, Introduced 30 years ago, it was operating in a limited number of Muslim countries. Three decades ago, Islamic banking was targeting and planning to serve only Muslim clients keen to deal only on Shariah compliant base.
After this research I must say that the future of Islamic Banking is really promising,
Peolple perceived a banking concept based on transparency, win-win relationship and Ethical banking values and services, making them worth trustful.

VIDEO: http://www.videocrux.com/video/12920/Islamic-banks-show-growth-during-recession

1. http://www.bankinginfo.com.my/_system/media/downloadables/islamic_banking.pdf
2. http://www.nzibo.com/islamic.html 3.http://www.irti.org/irj/go/km/docs/documents/IDBDevelopments/Internet/English/IRTI/CM/downloads/IES_Articles/Vol%2011-1..A%20H%20Bashsir..Determinants%20of%20Profitability..dp.pdf
http://www.worldfinance.com/news/world-market/islamicfinance/article216.html
http://www.guardian.co.uk/money/2006/jun/13/accounts.islamicfinance
http://www.islamic-banking.com/islamic_banking_principle.aspx

AFRICA: BLOOD DIAMONS

Blood Diamonds, also known as “Conflict Diamonds” are stones that are produced in areas controlled by rebel forces that are opposed to internationally recognized governments. The rebels sell these diamonds, and the money is used to purchase arms or to fund their military actions. Blood Diamonds are often produced through the forced labor of men, women and children. They are also stolen during shipment or seized by attacking the mining operations of legitimate producers. These attacks can be on the scale of a large military operation. The stones are then smuggled into the international diamond trade and sold as legitimate gems. These diamonds are often the main source of funding for the rebels, however, arms merchants, smugglers and dishonest diamond traders enable their actions. Enormous amounts of money are at stake and bribes, threats, torture, and murder are modes of operation. This is why the term "blood diamonds" is used.
The flow of Conflict Diamonds has originated mainly from Sierra Leone, Angola, Democratic Republic of Congo, Liberia and Ivory Coast. The United Nations and other groups are working to block the entry of conflict diamonds into the worldwide diamond trade. Their approach has been to develop a government certification procedure known as the “Kimberly Process”. This procedure requires each nation to certify that all rough diamond exports are produced through legitimate mining and sales activity. All rough diamonds exported from these nations are to be accompanied by certificates. These certificates state that the diamonds were produced, sold and exported through legitimate channels. The certification process accounts for all rough diamonds, through every step of their movement, from mine to retail sale. Retail customers buying a cut diamond are encouraged to insist upon a sales receipt that documents that their diamond originated from a conflict free source.
Some cases of this conflict were:

Angola
Angola, colony of Portugal, gained independence on November 11, 1975. Although independent, the Popular Movement for the Liberation of Angola (MPLA), the National Union for the Total Independence of Angola (UNITA), and the National Liberation Front of Angola (FNLA) fought in civil war from 1974 to 2001. Between 1992 and 1998, in violation of the 1991 Bicesse Accords, UNITA sold diamonds to to finance its war with the government. The UN recognized the role that diamonds played in funding the UNITA rebels, and in 1998, passed United Nations Security Council Resolution 1173 and United Nations Security Council Resolution 1176, banning the purchase of conflict diamonds from Angola.

Liberia
From 1989 to 2001 Liberia was engaged in a civil war. In 2000, the UN accused Liberian president Charles G. Taylor of supporting the Revolutionary United Front (RUF) insurgency in neighboring Sierra Leone with weapons and training in exchange for diamonds. In 2001 the UN applied sanctions on the Liberian diamond trade. In August 2003 Taylor stepped down as president, and after being exiled to Nigeria, now faces trial in The Hague.
Liberia today is at peace and is attempting to construct a legitimate diamond mining industry. The UN has lifted sanctions and Liberia is now a member of the Kimberley Process

Sierra Leone
In July 1999, following over eight years of civil conflict, negotiations between the Government of Sierra Leone and the Revolutionary United Front led to the signing of the Lome Peace Agreement under which the parties agreed to the cessation of hostilities, disarmament of all combatants and the formation of a government of national unity. The United Nations and the Economic Community of West African States (ECOWAS) helped facilitate the negotiations. In resolution 1270 of 22 October 1999, the Security Council established the United Nations Mission in Sierra Leone (UNAMSIL) to help create the conditions in which the parties could implement the Agreement.

http://geology.com/articles/blood-diamonds.shtml

http://www.amnestyusa.org/business-and-human-rights/conflict-diamonds/page.do?id=1051176

http://www.un.org/peace/africa/Diamond.html

1. What is Ubuntu? How was it applied to support the merging process of the two companies? (3 examples).

The Ubuntu is a philosophical thought system which embodies the beliefs, values, and behaviors of a large majority of the South African population. Ubuntu can be defined as humaneness, a pervasive spirit of caring and community, harmony and hospitality, respect and responsiveness that individuals and groups display for one another. 3 examples of how ubuntu supports the merging process are:

1. Holding periodically company-sponsored events and ceremonies, in order to break the psychological impasse created by supervisors that discourage conversation and other forms of socializing in the work place. Ubuntu have an extremely rich repertoire of rituals and attending forms of music and singing, dance, and the eloquent verbal expressions of praise singers.

2. Time, in the ubuntu context, is reflected as a unifying and integrating construct that emphasizes interdependence, shared heritage, regularity, and congruity. Furthermore, time is not experienced only in the present; it also heals past experiences and allows for reflection.

3. In the ubuntu context, the emphasis is on social well-being rather than on technical rationality. The objective is to optimize efficiency rather than to maximize it, and that allows higher priority for peaceful and harmonious relationships. In this context, an optimized solution is one that leads to the most favored outcome by a much wider group of stakeholders in the long run. In the short run, this will yield lower efficiencies than the maximized solution.'' Attempts to maximize efficiency often incur the cost of fractured relationships, and social disruption can have unintended consequences.

Mangaliso, Mzamo. 2003. Building competitive advantage from Ubuntu. In Thomas, David Clinton, editor, Readings and cases in International Management: A cross-cultural perspective.