(I typed out a post before, but seem to have lost it. Hopefully this isn't a repeat post)
Roy Harper apparently wrote this song in 1989 in the wake of the angry response to Salman Rushdie's Satanic Verses. He explains his own reasons here:
http://www.royharper.co.uk/blog/?p=127
It's essentially a lengthy diatribe on religious misinformation. I don't think these broader views justify misrepresentation of Islam, but people may find it interesting to read.

It's interesting to note that this song has been picked up and used by British National Party types for their own purposes; see, for example
http://wiganpatriot.blogspot.com/2010/01/black-cloud-of-islam-roy-harper.html
I guess this explains why we need a "folk against fascism" campaign. Roy Harper, whatever his intentions, plays into the hands of extremists when he spreads misinformation and uses inflamatory language like this.

A lesson to us all, I guess: Use your brain before you open your mouth.

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-Joe Offer-