Keeping in mind the political condition of the Sunni and Shia countries in the world today it would be very simple to suggest that Islam doesn't encourage democratic principles. We would assume that if Islam did encourage democratic values then Muslim states would be acting upon these values and basing their political systems on them. Calling Islam undemocratic simply from the state of affairs in Muslim nations is, although a logical conclusion, it is a bit unfair. Islam should be judged by the book on which it is based and from which stems the very essence of the Muslim political system. A distinction must be made between what is actually practiced and what is on paper. Whether the various sects, and nations of Islam follow the Quran is not being called into question. To analyze whether or not Islam is compatible with democracy one must quote the Quran itself, on which Islam is based.
"Those who hearken to their Lord, and establish regular Prayer; who AmrooHum (command ,authority, conduct) their affairs by Shoowra (consultation, deliberation); who spend out of what We bestow on them for Sustenance (42:38)".
A general principle is given here, very conveniently located in the chapter titled "Ash-Shoowra" or, "The Consultation." This is the principle of Shoowra. This is not the rule of one man, or one powerful group. Rather, it is act of deliberation between various parties that are interested in a certain decision. In modern times, shoowra is carried out in .
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many situations. Representative governments, referendums and elections are all example of shoowra. The people and their representatives carry out shoowra. Once the desirable outcome is established, the authority will amroohum, or issue their command.
"O ye who believe! When ye are told Tafassahoo (make room, give an opportunity, make space) in the Majalees, (Parliaments, conference rooms, decision councils, gatherings) make room: (ample) room will Allah provide for you.