In the heyday of Islam, esham attested as a fiscal instrument to raise funds from the public. The Ottoman Empire developed esham for facing a crisis after the war defeat. Esham became the milestone for the presence of the world's first Islamic securitization. In Islamic modern ages, sukuk grows as one of the blooming Islamic financial instruments globally and has become a new investment alternative that promises a return that is safe, competitive, and sharia compliant. Historians mentioned that esham is actually the origin of sukuk. The sukuk that is known today is actually a form of modern esham and cash waqf. In Indonesia, cash waqf that is placed on a sukuk becomes a new fiscal instrument. Through cash waqf-linked sukuk (CWLS), the public can contribute to national development as well as do waqf for social projects, and the fund will be returned at the maturity date. Overall, this chapter provides an overview of these three Islamic fiscal instrument securitizations as alternative sustainable financing to face the challenges in public economics in the globalization era.
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Pandemic has further confirmed the magnitude of the challenges of the public economy in the era of globalization. Pandemic has brought many states into recession. The human and economic costs as the impact of the virus are already overwhelming and could escalate further. This situation raises more awareness about the importance of fiscal sustainability to strengthen the public economy. Absolutely, tax policy can rescue governments in dealing with the pandemic. However, further broader and stronger steps are needed to be adapted to the evolving health and economic challenges. Public finances and economics not only need to be restored but also need to be ensured to reach sustainability. OECD (2020) warned that all options should be explored, including revamping old tools and introducing new ones.
Regarding the efforts to realize fiscal sustainability, Islamic economics and finance have the opportunity to contribute. One of the Islamic financial instruments that play a role in dealing with the crisis caused by the current pandemic is sukuk (Fitch Ratings, 2020; Amiri, 2021; Musari, 2021a, 2021b; Bin-Nashwan & Muneeza, 2021), either as a single instrument as well as those integrated with Islamic social finance (Ascarya, 2020; IsDB, 2020; Musari, 2020b, 2020c, 2021b, 2021d). In the past, in Islamic history, when the Ottoman Empire faced crises caused by the tragic defeat from Russia, the financial instruments that play a role in overcoming the crisis was esham (Çizakça, 1996, 2010, 2011, 2012, 2013a, 2014a, 2016a, 2016b, 2018, 2021a; Ágoston & Masters, 2009; Balla & Johnson, 2009; Birdal, 2010; Yıldız, 2017; Özbek, 2018; Dolgun, Mirakhor & Ng, 2019; Musari, 2021a, 2021b).
In May 2020, in a personal communication, Çizakça mentioned, “…..Mehmet Genç who discovered esham in the Ottoman archives.” In İslâm Ansiklopedisi, Genç (1995) narrated, “….. maliye terimi olarak ilk defa, 1775 yılında uygulamaya konularak 1860’lı yıllara kadar mahiyetini değiştirmeden devam eden belirli bir iç borçlanma sistemini ifade eder….. Osmanlı devlet borçları tarihinin önemli bir safhasını teşkil eden esham sisteminin….. (…..as a fiscal term, it refers to a certain internal borrowing system that was put into practice in 1775 and continued until the 1860s without changing its nature... esham system, which constitutes an important phase of the Ottoman State debt history…..).”
Previously, Cezar (1986) described esham with, “.....Bu uygulama temelde bir iç borçlanma ameliyesinden başka bir şey değüdi. Fakat, mahiyeti ve özellikleri itibariyle üginç ve orjinal bir iç borçlanma örneği ve deneyimi idi..... (.....this practice was basically nothing more than a domestic borrowing operation. However, it was a strange and original example and experience of domestic borrowing in terms of its nature and characteristics.....).”