Hadhrat Mirza Tahir Ahmad, Khalifatul Masih IV. (r.a.) replied this question as follows:

Answer – This is a short question which requires a very long answer and I doubt if we have sufficient time in this forum as I cannot devote the entire time to one single question. Although I cannot be exhaustive, I will attempt to give a satisfactory, but brief answer.

The question relates not only to an individual’s requirements – the question of interest and its forbiddance in Islam is a much wider issue of a much greater impact in kind as well. All those financial systems that are run on usury and interest are called capitalist systems. They all have an inherent weaknesses – not only one, but many inherent weaknesses which always ultimately make the people living in those areas suffer from the consequences whether they themselves directly participate in the system or not. I can’t speak at length on this issue but I can give you a single example to illustrate my point.

A society that can borrow money on interest is given permission to spend its future in the present time. What happens is that if I for example, need some money to spend on a luxurious car, a good hotel, a house or some other article of luxury and the rate of my earnings is too low but my impatience without limit and I can’t wait until I have earned enough to fulfill my desire, the system based on usury, or the interest system an opportunity to borrow money from the banks. Apparently, what I am doing is that I am borrowing from my own future, so I become poorer with the passage of time and sometimes it becomes almost impossible for me to service the debts which I have got myself burdened with. Now this is not just an individual problem. From then on, it becomes a national problem and continues to become more complex.

Industry flourishes on this system is in fact, catering for the requirements of the day or the year and expands itself on a requirement that it is not natural but artificially boosted. After a while, buying power becomes reduced more and more until it reaches a point of stalemate. The buying power of the country as a whole becomes very little and the servicing of debt itself becomes a huge problem for the country to overcome. Industry suffers heavily and so does trade. The result is that at such times, economic crises appear.

Now, those countries that have enough venues of foreign trade to support themselves in time of crisis can see themselves through a while. But when a larger number of advanced countries reach a crisis at the same time, then it is impossible to support such a false economy. The financial crisis that recently occurred in England was in fact predicted by me in my lecture some years ago at the Queen Elizabeth II Hall when I clearly stated that their system of interest was going to land them in much deeper trouble than they believed. That is exactly what happened and the problem will expand further.

Because of the political changes in Eastern Europe, the crisis in Western Europe has been delayed for a while for certain reasons that I do not wish to enlarge upon here. But it will come. Foreign markets will remain limited. Their buying powers are also reducing. Blood is being sucked out of Africa so rapidly now that they are suffering from anaemia – and pernicious anaemia for that matter.

If the race in Europe for acquiring more foreign markets is realised, say, in five years or so, then you will realise how intense the problem will be and how threatening it will become. Germany itself is passing through a phase of rebuilding its economy and absorbing the large number of Germans from the East. Among them is available excellent know-how and expertise which has been paid very little in the past. They are now a part of the West Germany economy and stand on an equal footing and so the level of production, after an initial shock, will rise so rapidly that the rest of Europe will find itself shuddering at the prospect of the boosted German economy. Then the race for foreign markets will really begin in earnest.

Also, Russia will not remain the Russia of today which is still suffering from the aftermath of the destruction of the communist system. Russia is regrouping itself. Its economy will start breathing again. The state of Russia today reminds us of the great work of Milton, Paradise Regained, in which the armies of Satan regroup themselves after the initial shock to re-capture paradise again. So, don’t consider Russia out of the competition.

The USSR is a huge country, or a number of countries grouped together, whose economy is potentially stronger than that of many Europeans countries. Once they have had the breathing time to regroup themselves and to change their system to a capitalist one then a course of events similar to that of Germany would follow. So now, imagine the situation of Europe with lessening buying power, increasing economic problems and increasing competition. Such crisis always lead to war and this is a fundamental principle that can never be negated.

That is why in prohibiting usury or interest the Holy Quran says that if you do not desist from usury, then be ready to go to war with Allah and His Prophet, which means that the divine system would be at odds with you and you are bound to enter a situation of war. So this is the shortest possible answer that I could give but there is far more to be said.

NOTE BY THE EDITOR: The attentive reader will note that this ‘question – answer’ sessian dates back many years. Note the second to last paragraph, where today’s economic crises was foretold!

Source: http://www.alislam.org/library/links/00000059.html