November 12, 2016
Foreign Policy: Najib courts China and Abandons traditional ties with the United States and its allies
by James Chin
Najib Razak on Ego Boosting Jet setting Trip to China
Malaysia’s scandal-plagued Prime Minister is finding old friends in Beijing after wearing out his welcome in the West. James Chin looks at whether this is a path more ASEAN countries are likely to follow.
The Malaysian Prime Minister, Najib Tun Razak, last week took his third official visit to the People’s Republic of China. These sort of official trips do not normally attract much attention, but this one is generating prominent coverage in highly influential newspapers such as the New York Times, Washington Post and Financial Times.
The reasons are obvious – Najib’s arrival comes immediately after the controversial visit of Rodrigo Duterte, the new Filipino president. Duterte made a series of pronouncements in Beijing that caught the Americans off-guard, including his comments about a “separation” from the United States. Many were surprised by Duterte’s statements given that before touching down in Beijing, he was criticising China for its aggressive behaviour in the South China Sea. In fact, the Philippines took China to the International Court of Arbitration over the issue.
Malaysia and the Philippines have overlapping claims with China in the South China Sea and both countries are unhappy with China’s de facto policy of building islands for military use in the disputed waters and using Chinese coast guard vessels to harass fishermen from their countries. It’s well-known that Chinese coast guard vessels regularly sail within 50 miles of Bintulu, the gas-rich town in Malaysian Borneo. Malaysia has sent several diplomatic notes to Beijing on the matter.
Selling Malaysian Assets to cash rich China for political survival while the Malaysian Ringgit takes a beating against the Greenback (Rm4.5 to 1 Usd)
Despite this, Najib has just signed multi-billion dollar deals in Beijing, including the purchase of Chinese-made military equipment for the first time in Malaysian history. Chinese state-owned enterprises will also buy into key Malaysian assets and provide funding for new infrastructure projects such as a new railway line.
Even more surprising was his interview with Xinhua, Beijing’s official mouthpiece, in which he said he was seeking closer military ties. In an editorial in The China Daily, Najib was quoted as saying former colonial powers should not lecture nations they once exploited as colonies, a clear reference to the West.
So, the question is, are we seeing a tilt in Malaysian foreign policy to China from the previous pro-Western position? The short answer is “Yes”, as long as Najib is in power.
Malaysian insiders will tell you that this was the only position Najib could have taken in light of recent events. To understand Najib’s move, one must look towards domestic politics.
For the past four years, Najib has been mired in a massive corruption scandal called 1MDB. The story is complicated, but suffice to say that there is credible evidence that huge amounts of money, in the region of US$10 to 15 billion, was scammed off 1MDB, a sovereign wealth fund, and part of the amount, in the region of US$1 to 2 billion, allegedly ended up in Najib’s personal bank account. Earlier this year, the US Department of Justice’s Kleptocracy Asset Recovery Initiative filed court action to recover more than US$1 billion in assets tied to 1MBD. The Department named Najib’s stepson and indirectly named Najib as “Malaysian Public Official No 1” in the proceedings. Several other countries such as Singapore, Switzerland and Luxembourg are also pursuing money laundering charges related to 1MDB. The consequence of all these legal actions is that Najib is longer welcome in Western capitals and some are calling on the US administration to ‘distance’ itself from Najib. Prior to the scandal, Najib could boast that he was the only Asian leader invited to golf with Obama in Hawaii, the President’s home state.
Related to the political fallout is investment from the West. The ringgit has fallen more than any other currency in the region against the US dollar in the past three years. It is obvious that a major part of the reason for this is a lack of confidence in the Najib administration. To restore confidence in the economy and kick-start foreign direct investment, Najib can only turn to one country: China.
China has the money to invest heavily in Malaysia, but more importantly, it does not care about Najib’s alleged corruption allegations or governance issues. For the Chinese, the bigger picture is the ongoing rivalry with the US for influence in the ASEAN region. The Chinese see the US as trying to block their influence by pursuing the Trans-Pacific Partnership Agreement and pushing ASEAN to collectively confront China over the South China Sea. China has consistently refused to deal with ASEAN on the South China Sea issue, insisting that the solution lies in bilateral negotiations between the claimant countries. China also scored a victory-of-sorts when many ASEAN countries signed up for the China-founded Asian Infrastructure Investment Bank despite the US openly lobbying against it.
China’s investments, including buying 1MDB assets, will allow the controversial company to partly square its accounts and the shortfall from the missing money.
The added bonus for Najib is that he can show the domestic Malaysian audience that the “next” Superpower, China, will give him a red carpet treatment even if the West has side-lined him over the corruption allegations. Najib and the Chinese are also going to great pains to remind the international audience that it was Najib’s father, Tun Razak, Malaysia’s second prime minister, who opened-up diplomatic relations with China. Thus, according to Beijing, Razak’s son Najib, easily qualifies as China’s “old friend”. In turn, Najib has described China as a “true friend and strategic partner”.
With such “old friends” who needs the meddling West with its “lectures” on good governance, human rights and corruption?
The long-term winner in the current saga will be Beijing. As the south-east Asian region becomes more and more dependent on China for its development funds, tourism and trade, more and more ASEAN countries will start to tilt towards Beijing. This is especially true if Donald Trump becomes President on Tuesday.
Professor James Chin is Director of Asia Institute, University of Tasmania. He is also a Senior Fellow at the Jeffrey Cheah Institute in Malaysia.
This article is published in collaboration with Policy Forum — Asia and the Pacific’s leading platform for policy discussion and analysis.