Over the past few years, the term "political Islam" has gained currency as a way to distinguish between Islamic radicals and the more personal, purely religious Islam. There are a number of interesting articles about political Islam from all perspectives.
In general, it is good for the world to be aware that such a thing exists, that at the very least political Islam should be regarded as a political movement and not as a religious movement, and opposing political Islam is not a violation of "freedom of religion" so central to Western thought.
The problem with this formulation is that it is meaningless. While there may be various strains of political Islam that may have useful distinctions between them, in general all of Islam is political Islam, by definition.
If Islamic law itself does not distinguish between religion (deen) and politics (dawla), then any Westerner trying to draw those distinctions themselves is engaging in a sophisticated form of wishful thinking. Certainly there are Islamic points of view that do not stress the political aspects as much as the personal aspects of Islam, but deep down, every believing Muslim must ultimately desire the establishment of Islamic state.
The exception that proves the rule can be seen in the International Coalition Against Political Islam, an umbrella organization of Muslim groups opposed to political Islam. A quick look at these groups show that they are all secularist in nature and do not truly accept Islamic law as binding on them - if they did, they would have a hard time defining exactly how political Islam is not synonymous with Islam itself. (It is telling that none of these Muslim groups have Arabic names.)
The separation of church and state is a Western liberal invention, and while it is useful, it simply does not apply at all to the Muslim world. Any attempts by Westerners to look at Muslim nations through that prism are ultimately doomed.
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