Malaysian Reactions and the Political Calculus of Prime Minister Najib’s White House Visit


October 19, 2017

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Number 401 | October 18, 2017

ANALYSIS

Malaysian Reactions and the Political Calculus of Prime Minister Najib’s White House Visit

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On September 12, 2017, Malaysian Prime Minister Najib Razak met with US President Donald Trump in the White House as part of his three-day visit to the United States. Within Malaysia, reactions to the meeting – in terms of both optics and substance – are bitterly divided; falling mostly along political lines. Notwithstanding the domestic reactions, Trump’s invitation to the controversial Malaysian prime minister and the deliberate shirking of the 1 Malaysia Development Berhad (1MDB) issue during the visit leave Najib in a position of perceived strength as he looks to extend his tenure as Prime Minister.

Meeting Hailed as a Milestone by Some, a Disgrace by Others

The Trump-Najib meeting went smoothly in diplomatic terms, with both leaders treating each other warmly and discussing agreeable agenda items. In the public meeting Trump extolled Malaysia’s role in investing in the United States, countering ISIS, and limiting its ties with North Korea. The Malaysian prime minister in turn offered “a strong value proposition” to the United States in terms of helping boost the US economy and being a loyal partner in eradicating terrorism. A joint statement addressed enhancing US-Malaysia defense ties, Malaysia’s progress to obtain visa free status to the United States, the situation in the South China Sea, the Rohingya crisis, and protecting human rights. If there were any private disagreements, they were not leaked.

For Najib’s domestic supporters and prominent government lawmakers, the meeting with Trump was seen as an unprecedented success and a legitimization of Najib as Malaysia’s elected leader. The optics couldn’t be better. The invitation to visit the White House was the first since former Prime Minister Abdullah Badawi visited in 2004 and comes in the first year of the Trump presidency. Additionally, Najib’s visit was the second by an ASEAN leader, after Vietnamese Prime Minister Nguyen Xuan Phuc, and ahead of Prime Minister Lee Hsein Loong of Singapore – traditionally America’s most trusted Southeast Asian partner.

Substantively, Najib’s supporters saw the meeting and its deliverables as recognition of Malaysia as a key strategic partner and successful economy. In public remarks during the meeting in the Cabinet Room between the Malaysian delegation and Trump administration officials, Trump praised Najib’s domestic counterterrorism efforts against ISIS, highlighted Najib’s reluctance to do business with North Korea any longer, and hailed Malaysia as a big investor in the United States. Malaysia’s mainstream and government-affiliated media emphasized this, crediting Najib with expanding Malaysia’s international profile and role. Najib also scored a PR win with the US-Malaysia joint statement that condemned the violence against ethnic Rohingyas in Myanmar, touting it as a promise kept to Malaysians to raise the issue with the United States.

Image result for Trump and Najib at The White HouseGua Tolong Lu, Lu Tolong Gua (You help me, I help you)

This rosy picture of Najib’s visit, however, did not reflect the opinions of all Malaysians. Many – especially opposition supporters – while acknowledging the importance of their leader meeting the US president, focused on Najib’s personal and political gains, rather than gains for Malaysia. To them, optics surrounding the meeting were questionable. First, Najib and his entourage were alleged to have stayed at the Trump International Hotel, giving the impression that Najib sought to curry favor with Trump. Given media attention on possible conflicts of interest on the part of the US President, the decision to have a presence at the Trump hotel seemed like a calculated risk Najib was willing to take. Second, the glaring absence of a joint press conference during Najib’s visit to the White House reinforced the view among Najib’s opponents that he was skirting controversial questions – namely the 1MDB scandal and political repression in Malaysia.

Image result for Malaysia buys BoeingMany Malaysians were dismayed by the commercial “value proposition” offered by Najib to the United States.

 

In terms of deliverables, many Malaysians were dismayed by the commercial “value proposition” offered by Najib to the United States. Najib had announced that Malaysia Airlines, whose majority stake is owned by state sovereign wealth fund Khazanah Nasional, will purchase high-capacity, long-distance Boeing aircraft worth $3 billion, with the possibility of more purchases in the future. Additionally, Najib stated that Malaysia’s retirement fund, the Employers Provident Fund (EPF), intended to invest $3-4 billion in Trump’s initiative to redevelop American infrastructure. Malaysians were indignant at possible diversion of funds to the US instead of fixing deteriorating infrastructure back home. And with the rising cost of living being a sore point for many people, the political opposition ridiculed Najib as being aloof and for selling Malaysia’s assets for his personal benefit. Najib’s fiercest critic, former Prime Minister Mahathir laughed at the idea of a developing country helping a developed country and opined that this was another illustration of Najib giving money to obtain political support.

“Exercises, training, and interoperability are the new emphases, and many Southeast Asian countries – unlike most in the South Pacific – no longer need extra funding to participate in exercises.”

The importance of protecting human rights aspect in the joint statement will appear ironic to many Malaysians as the authorities have been prosecuting opposition members and dissenters and stifling civil society activism in recent years

1MDB – the Elephant in the Room    

  
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The 1MDB issue was conspicuously left out at the Trump-Najib Meeting

At the time of the meeting, the 1MDB scandal continued to dog Najib. The US Justice Department was in the midst of civil lawsuits seeking to seize US assets worth about $1.7 billion linked to 1MDB. But the subject was conspicuously left out in all official proceedings. The only response from the White House communications when quizzed by reporters after the meeting was that they weren’t aware of conversations that came up in the meeting.

To Najib, his political coalition, and supporters, this omission was strategically crucial because it lent legitimization to Najib’s position as Malaysia’s leader and it gave him a strong case to repudiate the opposition’s charge linking him to the 1MDB scandal. Najib flying in to meet Trump without being denied entry or arrested by US law enforcement – as was claimed would happen by the political opposition – was spun by Najib’s supporters as proof that the opposition’s 1MDB allegation was nothing more than a political ploy. Domestically, Najib hopes to capitalize on this by allaying suspicions supporters and political fence-sitters have about his culpability in the scandal.

About the Author

Matthew Kah Weng Wong is a former researcher at the East-West Center in Washington. He can be contacted at matthew.wongkw@gmail.com.

The East-West Center promotes better relations and understanding among the people and nations of the United States, Asia, and the Pacific through cooperative study, research, and dialogue.

Established by the US Congress in 1960, the Center serves as a resource for information and analysis on critical issues of common concern, bringing people together to exchange views, build expertise, and develop policy options.

The Asia Pacific Bulletin (APB) series is produced by the East-West Center in Washington.

APB Series Editor: Dr. Satu Limaye, Director, East-West Center in Washington
APB Series Coordinator: Peter Valente, Project Assistant, East-West Center in Washington

The views expressed in this publication are those of the authors and do not necessarily reflect the policy or position of the East-West Center or any organization with which the author is affiliated.

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China: Zero Tolerance for Academic Freedom, not unlike Malaysia


October 18, 2017

China: Zero Tolerance for Academic Freedom, not unlike Malaysia

Translated from the French by Alice Heathwood for Fast for Word.

Universities will be closely scrutinised, professors will be evaluated and the Party will punish those lacking ideological firmness. Such is the program released by Xi Jinping’s government to coincide with the Communist Party congress, where Xi is seeking to reinforce his authority as a world leader.

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Dr Bill Chou Kwok-ping, a political scientist who was last month elected vice-president of Macau’s biggest pro-democracy group is the second Macau academic to lose his job after intervening in political debates in as many months, stirring concerns about academic freedom in the former Portuguese colony.

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Efforts to control universities and disregard academic freedom are also taking place abroad. In early September, Reuters and The Guardian exposed efforts by Chinese authorities to partially restrict access to the American Political Science Review from within China. The Review, one of the most reputable journals in its field, is published by the prestigious Cambridge University Press (CUP). Ultimately the publishing house resisted the Chinese pressure, but the news has sparked upset, coming just a few weeks after another controversy that shook the foundations of academia.

The “China Quarterly” affair

In August, China scholars from around the world learnt that Beijing had demanded that Cambridge University Press withdraw 315 articles and book reviews from China Quarterly, produced by University of London’s respected School of Oriental and African Studies and published by CUP.

These articles dealt with topics considered sensitive by the Chinese government: the 1989 Tiananmen Square protests; Mao Zedong and China’s Cultural Revolution; ethnic tensions in Tibet and Xinjiang; Taiwan; and anything relating to democratic reform.

CUP complied, pulling the offending articles from their Chinese site, explaining that it would rather withdraw a small number of articles of interest to a handful of academics, in order to ensure the continued availability in China of its numerous other academic and educational publications.

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Led by China Quarterly editor Tim Pringle, academics and NGOs expressed outrage that CUP would favour its own commercial interests above academic freedom, and threatened to boycott the publishing house.

Faced with protests, the Chinese government defended its actions in an editorial published in the August 20 edition of the Global Times, stating that, while it respects academic freedom in the UK, China has the right to decide what can be published within its borders.

Three days after the censorship came to lighy, CUP had a sudden change of heart, and made the 315 articles available again.

Around the same time, the US-based Association of Asian Studies (AAS) revealed it had received a similar demand but did not comply.

Ideological battle

The controversy highlights the oppressive nature of the government of the People’s Republic. Despite the undeniable international character of Chinese universities, higher education and research must tow the party line.

Deng Xiaoping’s late-1970s policies of economic reform and opening-up enabled the country to become a laboratory of ideas in the last quarter of the 20th century. But for the past decade or so, China appears to be engaged in an ideological battle against the West.

Following the 2008 Beijing Olympic Games, China overtook Japan as the world’s second largest economy, behind the US, which was itself weakened by the 2007-2008 financial crisis and the resulting severe recession.

Yet China quickly found itself facing dissatisfaction from those steamrollered by a policy of growth at all costs, in spite of the country’s economic and diplomatic successes. Many Chinese intellectuals began to think the lot of their fellow citizens should be improved with a final – political – reform.

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Led by writer, Nobel laureate and university professor Liu Xiaobo, one of the key activists of the 1989 Tiananmen Square protests, hundreds of intellectuals signed the Charter 08, a manifesto in favour of democratising the regime. For this Liu was sentenced in 2009 to an 11-year prison term. He was released in July 2017 and died a few days later.

Document #9, the “anti-subversion kit”

Xi Jinping’s rise to power in 2012-2013 signalled a new era in the curtailing of freedom of thought. Fearing any threat to the purity of their ideology, Communist Party of China (CPC) leaders released a handbook listing the subversive ideas to be eradicated, the infamous Document #9.

The following topics are now banned from public discussion: western constitutional democracy, the universal nature of human rights, the empowerment of civil society, multiple interpretations of history, and anything questioning the validity of Chinese economic reforms and socialism.

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While post-Mao China was not free of taboos, they were usually limited to the “three Ts”: Taiwan, Tiananmen and Tibet. Several things have changed since 2012. Firstly, the publication of Document #9 expanded the scope of unacceptable ideas: any subject, without exception, could now be censored.

Secondly, Chinese universities are now the reluctant front-line soldiers in this ideological battle: in 2015, the Minister for Education urged universities to ban the use of textbooks promoting Western values. Lastly, any contravening of the new norm is now subject to severe repression, and the CPC has no qualms about openly resorting to totalitarian tactics.

A violent crackdown

On top of routine intimidation, 248 human rights advocates were rounded up in a brutal mass arrest in July 2015. In the resulting atmosphere of fear, liberal intellectuals no longer think it wise to answer questions from foreign journalists; they practice broad self-censorship and, when possible, wind up living in exile abroad. For those who remain, harassment is commonplace.

These attacks against fundamental rights and specifically academic freedom are now extending beyond mainland China, starting with the special administrative regions. In 2014, several Macau professors were abruptly dismissed; in Hong Kong, the 2015 disappearances of five book-sellers and publishers is still unresolved. These cases reveal the widening cracks in the “one country, two systems” model. Yet Beijing’s influence does not stop there.

n the summer of 2014, the European Association for Chinese Studies had several pages of its program ripped out by the Confucius Institute the day before its biannual conference in Portugal.

The institute apparently objected to advertising from Taiwanese sponsors. That same year, the American Association of University Professors initiated calls for the closure of Confucius Institutes, claiming they undermine freedom of speech on US university campuses.

Last month Australia acknowledged Chinese government interference in its universities. Beijing has been carrying out unprecedented influence and control operations targeting Chinese students as well as Chinese and non-Chinese professors. In response, the Group of Eight (Go8), a coalition of the top eight universities in Australia, has called for a coordinated and measured response.

In 2016, more than a quarter of the 550,000 overseas students enrolled in Australian universities came from China. They represent a significant financial boon for Australian universities, who don’t want to offend the Chinese government. The question is, can the core values of academic institutions be preserved without incurring the wrath of Party leaders?

This article was originally published in French

 

Happy 2017 Diwali to All People of Faith, Peace and Goodwill


October 18, 2017

Happy 2017 Diwali

Image result for Kamsiah Haider and Din Merican

With the Inauguration of a new President in the United States some 9 months ago, we have entered a period of global uncertainty.  Democracy promoted by  The United States since the end of the Second World War, as we taught to know it, is now dysfunctional. The America Dr. Kamsiah and I knew and admired has become  a selfish and self- centered fading power.

It is no longer the exceptional and indispensable nation. Under President Trump, America has shown worrying signs of having lost its moral high ground to preach and hector other nations on democracy, justice and human rights. At home,  it  is ideologically, religiously and racially divided. A House Divided cannot stand, nor can it lead.

New centers of global power have emerged–China, India and resurgent Russia–to  fill the gap created by  “America First”. My favorite Republican Senator from Arizona and a Vietnam War Hero, John McCain , said it most eloquently  just a couple days ago:

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Senator John McCain and Mrs Cindy McCain

“To fear the world we have organized and led for three-quarters of a century, to abandon the ideals we have advanced around the globe, to refuse the obligations of international leadership and our duty to remain ‘the last best hope of earth’ for the sake of some half-baked, spurious nationalism cooked up by people who would rather find scapegoats than solve problems is as unpatriotic as an attachment to any other tired dogma of the past that Americans consigned to the ash heap of history. We live in a land made of ideals, not blood and soil. We are the custodians of those ideals at home, and their champion abroad.”

It is an uncertain world ahead as Trump’s America looks inwards purportedly to develop its badly neglected infrastructure and the economy. The vacuum in global leadership  is waiting to be filled. The rest of us must now adapt to new players and learn to deal with an enigmatic Donald Trump. It is, therefore, appropriate for us to reflect on the challenges for humanity since these times threaten our common future. What better occasion than Diwali 2017 –The Festival of Lights.

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Dr Kamsiah Haider in Kuala Lumpur and I in Phnom Penh take this opportunity to wish you all a Happy Diwali 2017 with lots  of Peace and Happiness.

We thank you all for your friendship, support and kind cooperation. We have enjoyed engaging with you on FaceBook and this blog. We may have not agreed with you most of the time, but we pleased  that you were able to share your views and ideas with us.–Dr. Kamsiah Haider and Din Merican


October 18, 2017

Learning from Japan

by T K Chua

http://www.freemalaysiatoday.com

I recently had the opportunity to visit Japan again after 10 years. Many say that the country has lost its pre-eminence in Asia. It has been struggling with growth since its golden era in the 60s, 70s and 80s.

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But as a nation, there is still much to be learned from Japan. The highly industrialised and modernised country has very few of the unintended ills inflicting many modern societies today.

For a while, Malaysia had a policy to “look East” (essentially to Japan and Korea). But it has since petered out. In hindsight, perhaps we should have pursued this policy more diligently. At least we would not have the consequences of imitating so many good-for-nothing countries and their practices today.

I am sure many will agree with me that the Japanese are polite, civil and courteous. They take their responsibilities seriously and do their jobs diligently. Quality is assured in hotels, restaurants, toilets, transportation and the goods they sell in supermarkets, stores and other retail outlets.

Things may be expensive according to our standards, but they do not short-change their customers. During my one-week stay, I did not encounter a single gadget or device in any of their establishments that was out of order.

Contrary to expectations, Japan does not depend on foreign workers, at least in the places I visited. Workers at restaurants, hotels, transportation establishments, airports, retail outlets and tourist sites are Japanese, young and old.

Why is it that Japan is able to do this despite being the most developed and “expensive” country in Asia? I maintain that massive reliance on foreign workers in any country is a farce – it is a pretext to exploit the majority by a minority.

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Hygiene and cleanliness are another hallmark of Japan. The Japanese do not generally provide rubbish bins in public places, yet the country is squeaky clean everywhere. They expect us to take the rubbish home or to the hotel to be disposed of accordingly. I did not see empty beer cans or uncollected rubbish anywhere, neither did I smell pungent odours in toilets or hear people talking or preaching on the religious virtues of being holy, clean and pure.

They are courteous on the roads. Accident rates are low and hardly any traffic violations like speeding are detected. So this begets a question – why are Malaysians always speeding and rushing? Why are we not richer than the Japanese if we are always in a hurry?

Safety is another plus in Japan. Snatch thefts, break-ins, robberies and muggings are almost unheard of. If we lose or leave any items behind, the chances of recovery are good. The Japanese practise honesty and good ethics, not expounding on religiosity and empty talk day and night.

We do not have to inherit all the downsides of modernisation. We do not have to look to theocracy and bigotry to protect our values and ethics. We look to practices and experiences that are successfully nurtured and inculcated in countries like Japan.

The “look East” policy was not a mistake – we look east not just for industrial and economic prowess, but more importantly for work ethics, values and quality consciousness. To me, Japan will always be the land of the rising sun, militarism and the Second World War notwithstanding.

TK Chua is an FMT reader.

The views expressed are those of the authors and do not necessarily reflect those of FMT.

 

Another Nobel Surprise for Economics


October 18, 2017

Another Nobel Surprise for Economics

by Robert J.Shiller

https://www.project-syndicate.org/commentary/richard-thaler-nobel-behavioral-economics-by-robert-j–shiller-2017-10

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University of Chicago Economist Richard Thaler wins 2017 Nobel Prize in Economics

Richard Thaler (pic above) has shown in his research how to focus economic inquiry more decisively on real and important problems. His research program has been both compassionate and grounded, and he has established a research trajectory for young scholars and social engineers that marks the beginning of a real and enduring scientific revolution.

 

NEW HAVEN – The winner of this year’s Nobel Memorial Prize in Economic Sciences, Richard Thaler of the University of Chicago, is a controversial choice. Thaler is known for his lifelong pursuit of behavioral economics (and its subfield, behavioral finance), which is the study of economics (and finance) from a psychological perspective. For some in the profession, the idea that psychological research should even be part of economics has generated hostility for years.

Not from me. I find it wonderful that the Nobel Foundation chose Thaler. The economics Nobel has already been awarded to a number of people who can be classified as behavioral economists, including George Akerlof, Robert Fogel, Daniel Kahneman, Elinor Ostrom, and me. With the addition of Thaler, we now account for approximately 6% of all Nobel economics prizes ever awarded.

But many in economics and finance still believe that the best way to describe human behavior is to eschew psychology and instead model human behavior as mathematical optimization by separate and relentlessly selfish individuals, subject to budget constraints. Of course, not all economists, or even a majority, are wedded to this view, as evidenced by the fact that both Thaler and I have been elected president, in successive years, of the American Economic Association, the main professional body for economists in the United States. But many of our colleagues unquestionably are.

I first met Thaler in 1982, when he was a professor at Cornell University. I was visiting Cornell briefly, and he and I took a long walk across the campus together, discovering along the way that we had similar ideas and research goals. For 25 years, starting in 1991, he and I co-organized a series of academic conferences on behavioral economics, under the auspices of the US National Bureau of Economic Research.

Image result for Economist Merton MillerMerton H. Miller–The Nobel Laureate in Economics, 1990

Over all those years, however, there has been antagonism – and even what appeared to be real animus – toward our research agenda. Thaler once told me that Merton Miller, who won the economics Nobel in 1990 (he died in 2000), would not even make eye contact when passing him in the hallway at the University of Chicago.

Miller explained his reasoning (if not his behavior) in a widely cited 1986 article called “Behavioral Rationality in Finance.” Miller conceded that sometimes people are victims of psychology, but he insisted that stories about such mistakes are “almost totally irrelevant” to finance. The concluding sentence of his review is widely quoted by his admirers: “That we abstract from all these stories in building our models is not because the stories are uninteresting but because they may be too interesting and thereby distract us from the pervasive market forces that should be our principal concern.”

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MIT Economist Stephen A. Ross

 

Stephen A. Ross of MIT, another finance theorist who was a likely future Nobel laureate until he died unexpectedly in March, argued along similar lines. In his 2005 book Neoclassical Finance, he, too, eschewed psychology, preferring to build a “methodology of finance as the implication of the absence of arbitrage.” In other words, we can learn a lot about people’s behavior just from the observation that there are no ten-dollar bills lying around on public sidewalks. However psychologically bent some people are, one can bet that they will pick up the money as soon as they spot it.

Both Miller and Ross made wonderful contributions to financial theory. But their results are not the only descriptions of economic and financial forces that should interest us, and Thaler has been a major contributor to a behavioral research program that has demonstrated this.

For example, in 1981, Thaler and Santa Clara University’s Hersh Shefrin advanced an “economic theory of self-control” that describes economic phenomena in terms of people’s inability to control their impulses. Sure, people have no trouble motivating themselves to pick up a ten-dollar bill that they might find on a sidewalk. There is no self-control issue there. But they will have trouble resisting the impulse to spend it. As a result, most people save too little for their retirement years.

Economists need to know about such mistakes that people repeatedly make. During a long subsequent career, involving work with UCLA’s Shlomo Benartzi and others, Thaler has proposed mechanisms that will, as he and Harvard Law School’s Cass Sunstein put it in their book Nudge, change the “choice architecture” of these decisions. The same people, with the same self-control problems, could be enabled to make better decisions.

Improving people’s saving behavior is not a small or insignificant matter. To some extent, it is a matter of life or death, and, more pervasively, it determines whether we achieve fulfillment and satisfaction in life.

Thaler has shown in his research how to focus economic inquiry more decisively on real and important problems. His research program has been both compassionate and grounded, and he has established a research trajectory for young scholars and social engineers that marks the beginning of a real and enduring scientific revolution. I couldn’t be more pleased for him – or for the profession.

The Demise of Dollar Diplomacy


October 17, 2017

The Demise of Dollar Diplomacy

by Barry Eichengreen*

http://www.project-syndicate.org

Pundits have been saying last rites for the dollar’s global dominance since the 1960s – that is, for more than half a century now. But the pundits may finally be right, because the greenback’s dominance has been sustained by geopolitical alliances that are now fraying badly.

WASHINGTON, DC – Mark Twain never actually said “Reports of my death have been greatly exaggerated.” But the misquote is too delicious to die a natural death of its own. And nowhere is the idea behind it more relevant than in discussions of the dollar’s international role.

Pundits have been saying last rites for the dollar’s global dominance since the 1960s – that is, for more than a half-century now. The point can be shown by occurrences of the phrase “demise of the dollar” in all English-language publications catalogued by Google.

The frequency of such mentions, adjusted for the number of printed pages per year, first jumped in 1969, following the collapse of the London Gold Pool, an arrangement in which eight central banks cooperated to support the dollar’s peg to gold. Use of the phrase soared in the 1970s, following the collapse of the Bretton Woods system, of which the dollar was the linchpin, and in response to the high inflation that accompanied the presidencies of Richard Nixon, Gerald Ford, and Jimmy Carter in the 1970s.

But even that spike was dwarfed by the increase in mentions and corresponding worries about the dollar starting in 2001, reflecting the shock of the terrorist attacks that September, the mushrooming growth of the US trade deficit, and then the global financial crisis of 2008.

Yet through all of this, the dollar’s international role has endured. As my coauthors and I show in a new book, the share of dollars in the foreign-currency reserves held by central banks and governments worldwide hardly budged in the face of these events. The greenback remains the dominant currency traded in foreign-exchange markets. It is still the unit in which petroleum is priced and traded worldwide, Venezuelan leaders’ complaints about the “tyranny of the dollar” notwithstanding.

To the consternation of many currency traders, the value of the dollar fluctuates widely, as its rise, fall, and recovery in the course of the last year have shown. But this does little to erode the attractiveness of the dollar in international markets.

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America First–Then What is Future of the US Dollar in the Trumpian Era?

Central banks still hold US Treasury bonds because the market for them is the single most liquid financial market in the world. And Treasury bonds are secure: the federal government has not fallen into arrears on its debt since the disastrous War of 1812.

In addition, US diplomatic and military links encourage America’s allies to hold dollars. States with their own nuclear weapons hold fewer dollars than countries that depend on the US for their security needs. Being in a military alliance with a reserve-currency-issuing country boosts the share of the partner’s foreign-exchange reserves held in that currency by roughly 30 percentage points. The evidence thus suggests that the share of reserves held in dollars would fall appreciably in the absence of this effect.

This under-appreciated link between geopolitical alliances and international currency choice reflects a combination of factors. Governments have reason to be confident that the reserve-currency country will make servicing debt held by its allies a high priority. In return, those allies, by holding its liabilities, can help to lower the issuer’s borrowing costs.

Here, then, and not in another imbroglio over the federal debt ceiling this coming December, is where the real threat to the dollar’s international dominance lies. As one anonymous US State Department official put it, President Donald Trump “does not seem to care about alliances and therefore does not care about diplomacy.”

South Korea and Japan are thought to hold about 80% of their international reserves in dollars. One can imagine that the financial behavior of these and other countries would change dramatically, with adverse implications for the dollar’s exchange rate and US borrowing costs, were America’s close military alliances with its allies to fray.

Nor is it hard to imagine how this fraying could come about. President Donald Trump has painted himself into a strategic corner: he needs a concession from North Korea on the nuclear-weapons issue in order to save face with his base, not to mention with the global community. And, for all of Trump’s aggressive rhetoric and posturing, the only feasible way to secure such a concession is through negotiation. Ironically, the most plausible outcome of that process is an inspections regime not unlike the one negotiated by Barack Obama’s administration with Iran.

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Visualizing the Size of the U.S. National Debt

How big is the U.S. National Debt?

The best way to understand these large numbers? We believe it is to represent them visually, by plotting the data with comparable numbers that are easier to grasp.

Today’s data visualization plots the U.S. National Debt against everything from the assets managed by the world’s largest money managers, to the annual value of gold production.

1. The U.S. national debt is larger than the 500 largest public companies in America.
The S&P 500 is a stock market index that tracks the value of the 500 largest U.S. companies by market capitalization. It includes giant companies like Apple, Exxon Mobil, Microsoft, Alphabet, Facebook, Johnson & Johnson, and many others. In summer of 2016, the value of all of these 500 companies together added to $19.1 trillion – just short of the debt total.

2. The U.S. national debt is larger than all assets managed by the world’s top seven money managers.
The world’s largest money managers – companies like Blackrock, Vanguard, or Fidelity – manage trillions of investor assets in stocks, bonds, mutual funds, ETFs, and more. However, if we take the top seven of these companies and add all of their assets under management (AUM) together, it adds up to only $18.9 trillion.

3. The U.S. national debt is 25x larger than all global oil exports in 2015.
Yes, countries such as Saudi Arabia, Kuwait, and Russia make a killing off of selling their oil around the world. However, the numbers behind these exports are paltry in comparison to the debt. For example, you’d need the Saudis to donate the next 146 years of revenue from their oil exports to fully pay down the debt.

4. The U.S. national debt is 155x larger than all gold mined globally in a year.
Gold has symbolized money and wealth for a long time – but even the world’s annual production of roughly 3,000 tonnes (96 million oz) of the yellow metal barely puts a dent in the debt total. At market prices today, you’d need to somehow mine 155 years worth of gold at today’s rate to equal the debt.

5. In fact, the national debt is larger than all of the world’s physical currency, gold, silver, and bitcoin combined.

That’s right, if you rounded up every single dollar, euro, yen, pound, yuan, and any other global physical currency note or coin in existence, it only amounts to a measly $5 trillion. Adding the world’s physical gold ($7.7 trillion), silver ($20 billion), and cryptocurrencies ($11 billion) on top of that, you get to a total of $12.73 trillion. That’s equal to about 65% of the U.S. national debt.

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To get there, Trump’s administration will have to offer something in return. The most obvious bargaining chip that could be offered to make the North Korean regime feel more secure is a reduction in US troop levels on the Korean Peninsula and in Asia in general, With that, the US security guarantee for Asia will weaken, in turn providing China an opportunity to step into the geopolitical breach.

And where China leads geopolitically, its currency, the renminbi, is likely to follow.

*Barry Eichengreen is Professor of Economics at the University of California, Berkeley, and a former senior policy adviser at the International Monetary Fund. His latest book is Hall of Mirrors:The Great Depression, the Great Recession, and the Uses – and Misuses – of History.