By: Timur Kuran

World travelers saw the Middle East as a “low trust” region well before the World Values Survey began, in 1981, to compare levels of trust across societies through scientific techniques. According to the survey and related research, trust among Middle Eastern individuals is low enough to limit commercial transactions to people who know each other either personally or through mutual acquaintances. Trust in institutions is low as well; it makes individuals personalize their interactions with government agencies, and even their dealings with private companies, by seeking the intermediation of a flesh-and-blood person with appropriate connections.

 Controlled experiments demonstrate that Arabs have substantially less trust in strangers than Europeans; as a result, they are more likely to pass up potentially lucrative opportunities to gain through exchange. Consistent with these experiments, low-trust societies participate disproportionately less in international commerce. They also attract disproportionately less investment.   

Neither these experiments nor the surveys distinguish between Muslim and Christian Middle Easterners. In most parts of the Middle East, too few Christians remain anyway for meaningful comparisons. Nevertheless, the region’s shoppers, merchants, and investors generally consider local Christians to be more trustworthy than local Muslims. Asked to explain the difference, most say something like “it has always been that way” or “Muslims no longer know their religion.” Such responses are not particularly informative.   

But clues as to why religious affiliation matters have emerged from work that I have conducted with Jared Rubin on the seventeenth- and eighteenth-century Islamic court records of Ottoman Istanbul (Economic Journal, in press). At the time Istanbul was a cosmopolitan city; around 35 percent of its local residents were Christian, and 6 percent were Jewish. According to Islamic law, or the sharia, the city’s Muslims had to do business according to Islamic rules; and if they wanted to adjudicate a conflict, they had to use Islamic courts. For their part, Christians and Jews could do business under rules of their choice, though they were free also to follow Islamic rules and to use Islamic courts as necessary.   

When Muslims and non-Muslims faced each other in an Islamic court, they did so on a playing field tilted clearly in favor of Muslims. A few procedural specifics will serve as illustrations. Whereas Muslims could testify against anyone, Christians and Jews could testify only against another non-Muslim; they were barred from testifying against a Muslim. The training of Muslim judges predisposed them to give the benefit of any doubt to fellow Muslims. And the court staff was uniformly Muslim, which meant that testimony was received solely through Muslim eyes.   

The sectarian biases of the Islamic courts got reflected in interest rates charged in Istanbul’s credit markets, where in the seventeenth and eighteenth centuries lenders were predominantly Muslim. Muslim borrowers paid about 2 percentage points more for loans than Christian or Jewish borrowers did, 17 percent per annum as opposed to 15 percent. Their surcharge represented a risk premium. Muslims paid more for credit because if they refused to repay, it was relatively harder to collect from them through the courts. Also, precisely because of the pro-Muslim judicial biases, Muslims were relatively more likely to default in the first place.   

The biases of the Islamic courts thus gave Istanbul residents of all faiths, including Muslims themselves, reasons to distrust Muslims. The risk premia that Muslims paid in credit markets reflects their lower trustworthiness. Likewise, non-Muslims became relatively trustworthy precisely because courts enforced their obligations more vigorously.

Perceptions of faith-based differences in trustworthiness, which shopkeepers in Beirut, Damascus, and Cairo hold even today, thus developed over many centuries during which courts enforced Muslim commitments more loosely than non-Muslim commitments. The perceptions turned into sustained stereotypes because they had a basis in reality. On average, Muslims were indeed less dependable than non-Muslims as borrowers, business partners, and sellers, because the legal system gave them greater opportunities to breach contracts with impunity.   

Beginning in the mid-nineteenth century, Islamic courts gave way to essentially secular courts almost everywhere, at least with respect to commerce and finance. The secular courts largely leveled the legal playing field between Muslims and non-Muslims. Meanwhile, the share of non-Muslims in the region’s Muslim-majority countries dwindled as a result of emigrations and population exchanges. Most living Middle Easterners have limited personal experience, if any at all, to serve as a basis for assessing the relative trustworthiness of Muslims and non-Muslims. But inherited impressions live on, as do inherited behavioral patterns. Habits picked up many centuries ago can pass through families and networks from generation to generation.           

The low-trust equilibrium of the Middle East is among the unintended consequences of legal rules meant to give the militarily and politically dominant Muslims an edge in their social and economic relations with the Christians and Jews who lived among them. By acculturating Muslims to renege on their contracts more readily, the rules created a sustained handicap. Ironically, they raised the cost of economic transactions among Muslims themselves.   

We live at a time when various political movements are struggling to reimpose the sharia. This makes it all the more important to understand the lasting harm it inadvertently brought to Muslims. Two specific Islamic restrictions on religious freedom—the denial of “choice of law” to Muslims and restrictions on non-Muslim judicial testimony—ultimately weakened the Muslim communities they were meant to advance and protect.   

The Middle East needs massive and wide-ranging efforts to rebuild trust among and within communities, trust in private organizations, and trust in government. Reviving Islamic law would only deepen a trust deficit that is a key source of the Middle East’s economic underdevelopment and weak political systems.

Timur Kuran is professor of Economics and Political Science and Gorter Family Professor in Islamic Studies at Duke University, as well as an associate scholar with the Religious Freedom Project. 

A version of this piece originally appeared on Project Syndicate on July 8, 2016. This piece was later republished in this form on July 25, 2016 for the Religious Freedom Project at Georgetown’s Berkley Center for Religion, Peace, and World Affairs.