Foreign Policy: Balancing US-China Interest in the Trump–Xi era


December 11, 2017

Foreign Policy: Balancing  US-China Interest  in the Trump–Xi era

by David M Lampton, Johns Hopkins University

http://www.eastasiaforum.org

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The Asian Statesman,HE President President Xi Jinping–Economic Diplomacy

From 1945 to 2016 the United States used its economic, military and ideological power to build institutions, alliances and regimes that contributed to global economic growth and the avoidance of great power war. In doing so, it fostered the rise of a new constellation of powers, China notable among them, with which it must now deal. If the United States wants to see its interests met, Washington must win Beijing’s cooperation rather than try to compel it.

 

On entering office, US President Donald Trump put several contentious issues with China on the backburner in the hope of achieving his primary goal — North Korea’s denuclearisation. When that failed, the front burner of US–China relations became crowded with previously repressed issues.

Several of these — US freedom of navigation operations in the South China Sea, talk of steel and aluminium tariffs, weapons sales to Taiwan, threats to tighten technology and investment flows as well as secondary sanctions on Chinese entities — threaten to become serious problems if not managed in a more careful manner than the Trump administration is currently demonstrating.

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From Pivot to Asia to Divert from Asia–America First

So what might the United States usefully do? There are three issues on which Washington should focus: fostering an economic balance of power in Asia that promotes regional stability, achieving more reciprocity in US–China relations and addressing the North Korean nuclear and missile problem.

A central part of Xi Jinping’s geo-economic vision is the expansion of regional links and the promotion of urbanisation and growth on China’s periphery to make China the central node in this growing region. For Beijing, this means north–south connectivity — namely supply chains that originate in China and extend to the Indian Ocean, South China Sea, Andaman Sea, Bay of Bengal and beyond.

Unless Washington wants Asia to become a unipolar sphere of Chinese influence, it should become more involved in the construction of regional infrastructure to foster linkages that are not just north–south but also east–west from India to Vietnam through Myanmar, Thailand and Cambodia and on to Japan and the wider Pacific.

Turning to reciprocity, when China joined the WTO in 2001 its overseas trade and financial involvements grew enormously. So too did its global trade surplus and bilateral trade surplus with the United States. Beijing soon had the technology, capital and capacity to seize the opportunities of openness abroad without providing reciprocal domestic access to the United States and others.

From 2008 onwards, the pace of domestic economic, financial and foreign trade liberalisation slowed. China’s world trade partners came to realise that as China leapt outward to seize opportunities, it did not reciprocally open itself in areas where foreigners enjoyed comparative advantages. Consequently, the issues of ‘reciprocity’ and ‘fairness’ have moved to front and centre in US–China relations. US companies are now asking themselves why Chinese entrepreneurs should be able to freely acquire US service and technology firms when these areas in China are closed to foreigners.

While US feelings of resentment mount, finding ways to enhance reciprocity with Beijing that do not injure US workers or other bystanders is hard. Limiting Chinese investment into US employment-generating firms diminishes US job opportunities. On the other hand, ignoring the problem invites extremist proposals at home as well as contempt in Beijing.

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Finally, the issue of North Korea. Trump thought his predecessors had been right in pressing Beijing to put more pressure on North Korea and in their assessment that Beijing had sufficient means to do so. Where they had gone wrong, Trump believed, was in not making it worth Beijing’s while to apply the necessary pressure.

So President Trump suggested that Washington would give Beijing concessions in other areas — trade and Taiwan among them — in exchange for pressure on North Korea. Of all the reasons that this approach has not worked out (including the viability of some of Trump’s promised consessions) the most dominant is that Pyongyang resists following any external advice that it fears would be lethal to the regime.

Consequently, the Trump administration is left with the same stark choices as its predecessors, except that Trump has staked even more on the issue and North Korea is further down its deliverable nuclear weapons path.

It is time for Washington (in close consultation with its South Korean and Japanese allies) to acknowledge that North Korea has a modest nuclear deterrent, and that as a result the United States should shift its aim from denuclearisation to deterring the use and further proliferation of these capabilities.

The US–China relationship is fraught with problems and will be for the foreseeable future. The United States is no longer positioned to compel cooperation from China. Any policy changes from Beijing must be negotiated, and within this negotiation Washington must seek a balance of power and interests.

David M Lampton is Professor and Director of China Studies in the School of Advanced International Studies, Johns Hopkins University. His most recent book is Following the Leader: Ruling China, from Deng Xiaoping to Xi Jinping.

This article appeared in the most recent edition of East Asia Forum Quarterly, ‘China’s Influence’.

 

The Straits Times’ Asian of the Year-2017


December 8, 2017

The Straits Times’ Asian of the Year

The Global Statesman: President Xi Jinping

http://www.straitstimes.com/asia/east-asia/the-global-statesman

 

From supporting free trade and endorsing a climate change accord to building US ties and consolidating power at home, Chinese President Xi Jinping has tried to bring stability to a world fraught with uncertainty.

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Chinese President Xi Jinping, 64, who has just been given The Straits Times’ Asian of the Year award, started 2017 with a bang. He spoke in support of free trade and globalisation at the World Economic Forum (WEF) in Davos in January that had many in the international audience cheering.

He told the world that China would not boost its trade competitiveness by devaluing its currency – as then US President-elect Donald Trump had charged during his campaign for the White House – and vowed to open up his country’s markets further.

Coming as the United States signalled a turn inwards with Mr Trump’s America First policy, the words of the leader of the world’s second-largest economy and its key engine of growth were heartening.

 

ASEAN needs to move to minilateralism


December 6, 2017

ASEAN needs to move to minilateralism

by Richard Javad Heydarian*

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RSIS Commentary is a platform to provide timely and where appropriate, policy-relevant commentary and analysis of topical and contemporary issues. The authors’ views are their own and do not represent the official position of the S. Rajaratnam School of International Studies, NTU. These commentaries may be reproduced electronically or in print  with prior permission from RSIS and due recognition to the author(s) and RSIS. Please email your feedback to Mr Yang Razali Kassim, Editor RSIS Commentary at RSIS Publications@ntu.edu.sg.

Synopsis

To save the principle of ASEAN centrality, the regional body should transcend its consensus-based decision-making and embrace minilateral arrangements on divisive issues.

For four decades, ASEAN commendably established the foundations of a nascent security community in Southeast Asia, where the threat of war among neighbouring states has teetered on the verge of impossibility. In the past two decades, the regional body has tirelessly sought to create a broadly peaceful, rules-based and inclusive regional security architecture.

The regional body is increasingly suffering from a ‘middle institutional trap’. The type of decision-making arrangements that enabled it to reach its current stage of institutional maturity are insufficient to meet its newer challenges. In particular, the rise of China and its growing assertiveness are not only disturbing the regional security architecture but also undermining ASEAN’s internal cohesion and its quest for centrality in East Asian affairs.

Limitations of ASEAN Way

The ‘ASEAN way’, where consensus and consultation undergird decision-making regimes, is no longer up to the task. The regional body’s unanimity-based decision-making mechanism has unwittingly handed a de facto veto power to weaker links that are under the influence of external powers.

Moving forward, the body has two choices. It can modify its institutional configuration by adopting an ‘ASEAN–X’ or ‘qualified majority’ voting modality on politico-security affairs, or it can fall into irrelevance.

This is poignantly evidenced by the South China Sea disputes. After it failed to embrace wholesale institutional innovation, the only way forward is a constructive form of ‘ASEAN minilateralism’, where like-minded and influential countries in the region coordinate their diplomatic and strategic calculations vis-a-vis South China Sea disputes.

End of ASEAN Centrality?

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In 2016, the leaders of ASEAN displayed encouraging unity — or at least a semblance of it — during the Sunnylands Summit with former US President Barack Obama. At the end of the meeting, the two sides released a joint statement that called for shared ‘commitment to peaceful resolution of disputes, including full respect for legal and diplomatic processes, without resorting to threat or use of force, in accordance with universally recognised principles of international law and the 1982 United Nations Convention of the Law of the Sea’.

So both sides agreed that not only should the United Nations Convention on the Law of the Sea (UNCLOS) be a basis for resolution of disputes, but also mentioned ‘legal processes’, which could be interpreted as an implicit statement of support for the Philippines’ decision to resort to compulsory arbitration against China in accordance with Article 287, Annex VII of UNCLOS.

Both sides also emphasised the necessity of ‘non-militarisation and self-restraint’. This was particularly salient given China’s worrying deployment of surface-to-air missile systems, high-frequency radars and fighter jets to contested land features in the Paracel Islands as well as newly built facilities across artificial islands in the Spratlys.

But as the Philippines’ arbitration case reached its final stages, ASEAN suddenly began to lose steam. Things came to a head during the special foreign ministers meeting between ASEAN and China in Kunming when the Southeast Asian countries failed to release a joint statement, which forced frustrated officials in the Malaysian Foreign Minister’s Office (which initiated the high-level meeting) to release a draft joint statement.

A Minilateralist Solution

It did not take long for some ASEAN countries to shut down any hope of ASEAN centrality on the South China Sea disputes. Cambodian Prime Minister Hun Sen openly criticised the Philippines’ compulsory arbitration against China, dismissing it as a provocative act that is ‘not about laws’ and instead a ‘political conspiracy between some countries and the court’.

More disappointing, when it became clear that the Philippines scored a clean sweep victory against China (with the court nullifying China’s historic rights doctrine and much of its nine-dashed line) most ASEAN countries immediately called for patience and calm rather than compliance by claimant states to a binding decision.

 

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In a strange twist of events, the Philippine government under President Rodrigo Duterte has soft-pedalled on the issue, refusing to raise it in multilateral fora. During its 2017 chairmanship of ASEAN, the Philippines oversaw a joint statement that was ironically even less critical of China than in previous years.

It is highly unlikely that ASEAN will ever find a consensus or adopt a robust statement on South China Sea disputes. The much-vaunted code of conduct (COC) framework looks like a repackaged Declaration on the Conduct of Parties in the South China Sea, since dispute settlement mechanisms or any reference to relevant UNCLOS provisions (and Philippine arbitration) are excluded.

COC: New Hope or Mirage?

Looking at the outline of the COC framework, the ‘objectives’ of the document are ‘to establish a rules-based framework containing a set of norms to guide the conduct of parties and promote maritime cooperation in the South China Sea’. The operative term is ‘norms’, which denotes the absence of a legally binding nature. In the section on ‘principles’, this is quite clear: the document states that the final COC will not be ‘an instrument to settle territorial disputes or maritime delimitation issues’.

Key ASEAN countries like the Philippines, Vietnam, Singapore, Malaysia and Indonesia can bilaterally and individually release statements that communicate their disappointment with China’s activities in the area and relay their willingness to step up their ‘minilateral’ cooperation in the South China Sea.

ASEAN claimant states can also negotiate a parallel legally binding COC grounded in international law that can then serve as a framework for maritime delimitation. It can be more substantive and maximalist. It should call for an immediate freeze on reclamation activities, construction of military facilities, deployment of military assets and expansive illegal fishing in the area.

If ASEAN cannot embrace this minilateral approach, it runs the risk of complete irrelevance in shaping and managing potentially the most combustible conflict in the 21st century.

*Richard Javad Heydarian is a Manila-based academic, columnist and author who contributed this to RSIS Commentary. The article is partly based on a conference organised by Stratbase-ADR Institute (July 2016), and a joint workshop of the S.Rajaratnam School of International Studies (RSIS) of Nanyang Technological  University, Australian National University, and Stanford University at the Asia-Pacific Centre For Security Studies (APCSS) in October 2017.

 

https://www.rsis.edu.sg/wp-content/uploads/2017/11/CO17210.pdf

http://www.eastasiaforum.org/2017/12/05/asean-needs-to-move-to-minilateralism/

Fact-checking critics of Chinese aid


November 29, 2017

Fact-checking critics of Chinese aid

by Alvin Camba, John Hopkins University

http://www.eastasiaforum.org

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Pundits and journalists have often argued that Chinese loans are expensive and harmful to recipient countries. But they fundamentally misunderstand how Chinese aid and investment works across different countries.

Criticisms of Chinese aid suffer from four crucial problems. First, Chinese interest rates have been higher than comparable loans from other OECD Development Assistance Committee (DAC) countries because China lends to states with low investment grades. Interest rates vary across different donors but loan parameters depend on the recipient country’s investment grade and the donor state’s funding program. Put simply, DAC interest rates could have also been higher had these states funded similar projects.

Second, DAC countries follow one set of criteria for loans while China follows another. For the DAC, a loan becomes a concessional project when interest rates and the grace period are about 25 per cent cheaper than a comparable market loan. Although China’s concessional loans operate according to some DAC criteria, China’s Export–Import Bank often subsidises the interest of the project. As a result, the interest is charged to the Chinese government’s external assistance budget. In this loan agreement, the recipient country pays for the actual price of the project instead of the interest on the loan, departing from the DAC’s model. In other words, some of China’s loans are cheaper than the DAC alternatives.

Third, because the World Bank and other DAC countries have moved away from funding large-scale infrastructure while Japan has been wary of funding energy-intensive schemes, there are no other external funders willing to finance such projects in developing countries. China was the only willing financier of some crucial infrastructure projects in many sub-Saharan African and Latin American states. Those arguing that Chinese interest rates have often been higher fail to acknowledge that unless a similar offer was put forward by alternative funders, ‘base’ market rates cannot be used for comparison. It is misleading to compare Japanese, Chinese and World Bank loans directly because the funding parameters of these projects were calculated under vastly different conditions.

And last, for all the criticisms that China gets, Western countries have been equally guilty of sending developmental aid and investment when these actions suit their national interest. The United States sends aid to states with questionable human rights records, including Saudi Arabia, Israel and Pakistan. Similarly, when they need to acquire strategic resources or cheap labour, the French and British invest in the Western Sahara and former colonies despite their questionable human rights and governance records. Indeed, the West remains the biggest source of debt, aid and investment for African countries.

Despite all this, China has been disproportionally painted as a ‘bad investor’ by major Western newspapers while drawing the public’s attention away from the involvement of Western companies.

Rather than a downward impact on GDP per capita or nominal growth rates, China’s rise in the global economy has pushed more countries from the periphery into the semi-periphery. Chinese companies invest in developing countries that are ignored by other major investors and target key sectors that have been overlooked by Western aid. China’s participation often increases competition among investors for key development projects, allowing recipient countries to bargain more effectively for better returns.

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This is not to say that China is the saviour of the developing world. Chinese aid brings potential negative implications, but it is important for recipient governments and their constituents to recognise the evidence-based dangers rather than popular arguments with minimal empirics.

While pundits often misunderstand aspects of China’s economic engagements, academics and researchers have long recognised and debated three main dangers of China’s aid and investment.

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China has asked for political returns in exchange for debt forgiveness. Apart from territorial expansion, China has been interested in acquiring ports located in the participant states of the Belt and Road Initiative, including in Sri Lanka, Djibouti and Malaysia. China’s territorial interests and port acquisitions have and will continue to elicit responses from competing states.

Another danger of Chinese investments and deals lies in the multiple actors involved in the process. China is not a monolithic actor, but comprises multiple state departments, state-owned enterprises, private corporations and citizens. While Chinese foreign direct investment has funded key strategic infrastructure, it has also spurred de-industrialisation and environmental degradation. Chinese aid and investors can be good or bad depending on the type of Chinese actor and the recipient governments’ response.

Finally, Xi’s China presents host states with a greater risk of falling into a debt trap. In previous cases when developing countries could no longer repay loans, China has allowed debt forgiveness and loan restructuring or has asked for specific and negotiable political or economic returns. Ironically, this is distinct from the policies of the World Bank and Western countries that put much of the developing world in a vicious debt trap in the 1980s. But with China’s economic slowdown, changes of leadership and geopolitical ambitions, China may not be as forgiving in the future.

Alvin Camba is a doctoral candidate at the Department of Sociology, Johns Hopkins University. He also writes at the Alitaptap Collective.

 

Trump, Xi and the siren song of nationalism


November 28, 2017

Trump, Xi and the siren song of nationalism

A new generation of world leaders is embracing nationalist themes

by Gideon Rachman@www.ft.com

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I will not dignify any event that disrespects our soldiers. . . or our national anthem.” So said Mike Pence, the US Vice-*resident, after walking out of a football match  — when some players had “taken a knee” during the playing of the “Star Spangled Banner”. The Trump administration’s row with high-profile athletes might seem like an “only in America” moment. But similar arguments about national anthems are taking place in China, India and Europe.

These anthem rows are a symptom of a global ideological struggle between nationalist and internationalists. In the US, China and India, the militant defence of national hymns is justified by the new nationalists as simple, healthy patriotism. But a shrill focus on national anthems also has a disturbing side — since it often goes hand in hand with illiberalism at home, and aggression overseas.

Earlier this month, China’s National People’s Congress passed a law, making “insulting” the country’s national anthem an offence, punishable by up to three years in prison. The move is part of a growing vogue for displays of patriotism in China, as part of what President Xi Jinping calls the “great rejuvenation” of his people. It also reflects rising tensions between the government of mainland China and semi-autonomous Hong Kong. At recent football matches in Hong Kong, the Chinese anthem has been booed by anti-Beijing protesters.

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The Indian version of this dispute was triggered by a supreme court ruling last year, directing that the national anthem be played before any film shown in a public theater. Supporters of the ruling argue that the anthem is an important glue in a multi-religious country that speaks hundreds of languages. Indian liberals worry that it reflects a rise in intolerant nationalism under Prime Minister, Narendra Modi — which is making life tougher for religious minorities and critics of the government. They also point to incidents of vigilantism in which cinema-goers, who failed to rise for the anthem, have been attacked.

A different kind of anthem controversy took place in France, when Emmanuel Macron celebrated his election victory, last May. The background music when the new president strode on stage was not the Marseillaise but Beethoven’s “Ode to Joy” — the EU’s anthem. This was a deliberate rebuke to his defeated opponents in the nationalist and anti-EU, National Front.

The fact that Mr Macron and Mr Trump have taken very different positions in the anthem rows is significant. For the US and French presidents are currently the two most important spokesmen for rival visions of international politics.

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In his speech at the UN in September, Mr Trump made the case for an international order based around “strong sovereign nations” — a phrase that he used repeatedly. The US president has also often attacked “globalism”, defined by his campaign as — “An economic and political ideology which puts allegiance to international institutions ahead of the nation state.”Ten days after Mr Trump’s speech, Mr Macron offered a very different worldview. In a lecture in Paris, he said that — “We can no longer turn inwards within national borders; this would be a collective disaster.” The French president saw his enemies as “nationalism, identitarianism, protectionism, isolationism.”

It would be easy to assume that Mr Macron’s internationalist message has more global support. But the Trumpian vision also has international adherents — from a network of politicians and intellectuals that can be termed the “nationalist international”.

Mr Trump’s nationalism is fired by a sense that America is in decline and can only recover, by getting tough with the outside world. Mr Xi’s nationalism is fuelled by a sense that China is on the rise, and can finally avenge historic humiliations. Those two rival visions could easily lead to US-China clashes in the Korean Peninsula, the South China Sea or at the World Trade Organisation.--Gideon Rachman@www.ft.com

In a recent article , Eric Li, a Shanghai-based commentator, argued that Xi’s China and Trump’s America, “have more in common than it appears”. Both leaders emphasise national sovereignty and are intent on pushing back against an “overly aggressive, one-size fits all universal order”. Mr Li argues that Mr Xi and Mr Trump have many potential soulmates in the anti-globalist camp — including leaders such as Vladimir Putin in Russia, Rodrigo Duterte in the Philippines, Viktor Orban in Hungary, Mr Modi and Abdel Fattah al-Sisi in Egypt, as well as Britain’s Brexiters. It is quite a list — underlining the extent to which nationalism is resurgent. The new nationalists argue that “strong sovereign nations” should be the basis of a stable, international order that rolls backs the excesses of a utopian and elitist “globalism”.

But there is something a little naive about the idea of peaceful coexistence between nationalists. Strongmen leaders may have a shared contempt for international bureaucrats and human-rights lawyers. But nationalism is often associated with disdain for the views and interests of foreigners. So, sooner or later, rival nationalisms are liable to come into conflict — and that is particularly the case with the US and China.

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The New China 7 Leadership

Mr Trump’s nationalism is fired by a sense that America is in decline and can only recover, by getting tough with the outside world. Mr Xi’s nationalism is fuelled by a sense that China is on the rise, and can finally avenge historic humiliations. Those two rival visions could easily lead to US-China clashes in the Korean Peninsula, the South China Sea or at the World Trade Organisation.

In his Sorbonne speech, Mr Macron warned that rising nationalism could “destroy the peace we so blissfully enjoy”. Sadly, it seems unlikely that anybody in Washington or Beijing was paying much attention.

gideon.rachman@ft.com

The Robert Kuok Memiors: Devils’ to Friends


November 27, 2017

Devils’ to Friends – how China’s communists won over Malaysian PM Tunku; Hussein Onn clung to race-based politics

http://www.scmp.com/week-asia/opinion/article/2121058/devils-friends-how-chinas-communists-won-over-malaysian-pm-tunku

Former Malaysian Prime Minister, Tunku Abdul Rahman. File photo

COMMUNIST DEVILS? PLEASE, PRIME MINISTER

Malaysia has had six Prime Ministers since independence. I have known all six. The first, Tunku Abdul Rahman, had tremendous rhythm. He was a well-educated man, having graduated with a law degree from Cambridge. If you talk of brains, Tunku was brilliant, and very shrewd. His mother was Thai, and he had that touch of Thai shrewdness, an ability to smell and spot whether a man was to be trusted or not. Tunku was less mindful about administrative affairs. But he had a good number two in Tun Razak, who was extremely industrious, and Tunku left most of the paperwork to Razak.

Tunku was like a strategist who saw the big picture. He knew where to move his troops, but actually going to battle and plotting the detailed campaign – that was not Tunku. He’d say, “Razak, you take over. You handle it now.” In that sense, they worked very well together. In my meetings with Tunku, he demonstrated some blind spots. He had a bee in his bonnet about communism. One day, when we had become quite close, he said to me, “Communists! In Islam, we regard them as devils! And Communist China, you cannot deal with them, otherwise you are dealing with the devil!” And he went on and on about communists, communism and Communist China. I responded, “Tunku, China only became communist because of the immense suffering of the people as a result of oppression and invasion. I think it’s a passing phase.” He interjected, “Oh, don’t you believe it! The Chinese are consorting with the devil. Their people are finished! You don’t know how lucky you Chinese are to be in Malaysia.” I replied softly, “Tunku, as Prime Minister of Malaysia, you should make friends with them.”

Tunku Abdul Rahman had a bee in his bonnet about communism.

 

Years later, when Tunku was out of office, he was invited to China. Zhao Ziyang, then Premier, entertained him in the Great Hall of the People in Beijing. Tunku travelled with a delegation of 15 Chinese businessmen who were good friends of his. On his way to China, Tunku stopped in Hong Kong and I gave them dinner. Then on his way out of China, he stopped in Hong Kong and we dined again. I asked him for his impressions. All of his old prejudices had vanished! He didn’t even want to refer to them. He just said the trip had been an eye-opener. “They are decent people, like you and me,” he said. “We could talk about anything.” From then onward, you never heard Tunku claim that the Chinese Communists were the devils incarnate.

Tun Razak. File photo

FRIENDS, NOT CRONIES

One thing I will say for Tunku: he had friends. His friends sometimes helped him, or they sent him a case of champagne or slabs of specially imported steak. He loved to grill steaks on his lawn and open champagne, wine or spirits. His favourite cognac was Hennessy VSOP. Tunku would also do favours for his friends, but he never adopted cronies.

When Tun Tan Siew Sin was Finance Minister, Tunku sent him a letter about a Penang businessman who was one of Tunku’s poker-playing buddies. It seems the man had run into tax trouble and was being investigated by the tax department, and he had turned to Tunku for help. In his letter, Tunku wrote, “You know so-and-so is my friend. I am not asking any favour of you, Siew Sin, but I am sure you can see your way to forgiving him,” or something to that effect.

Tunku would do favours for his friends, but he never adopted cronies

Siew Sin was apoplectic. He stalked into Tun Dr Ismail’s office upstairs and threw the letter down. “See what our Prime Minister is doing to me!” Tun Dr Ismail read the letter and laughed. “Siew Sin,” he said, “there is a comic side to life”. Ismail took the letter, crumpled it into a ball and threw it into the waste-paper basket. He then said, “Siew Sin, Tunku has done his duty by his friend. Now, by ignoring Tunku, you will continue to do your duty properly.” That was as far as Tunku would go to help a friend. Cronyism is different. Cronies are lapdogs who polish a leader’s ego. In return, the leader hands out national favours to them. A nation’s assets, projects and businesses should never be for anyone to hand out, neither for a king nor a prime minister. A true leader is the chief trustee of a nation. If there is a lack of an established system to guide him, his fiduciary sense should set him on the proper course.

A leader who practices cronyism justifies his actions by saying he wants to bring up the nation quickly in his lifetime, so the end justifies the means. He abandons all the General Orders – the civil-service work manual that lays down tendering rules for state projects. Instead, he simply hands the projects to a Chinese or to a Malay crony. The arms of government-owned banks are twisted until they lend to the projects. Some of these cronies may even be fronting for crooked officials.

Tunku was unnerved by the riots of May 13. After the riots he was a different man. Razak managed to convince him and the cabinet to form the National Operations Council, a dictatorial organ of government, and Razak was appointed its director. Parliament went into deep freeze. By the time the NOC was disbanded, Razak had been installed as Prime Minister. Tunku felt bewildered. He had helped the country gain independence and had ruled as wisely as he could, yet the Malays turned against him for selling out to the Chinese. In fairness to Tunku, he had done nothing of the sort. He was a very fair man who loved the nation and its people. But he knew that, if you favour one group, you only spoil them. When the British ruled Malaya, they extended certain advantages to the Malays.

Malay Sultans along with then Malayan High Commissioner Donald MacGillivray sign an agreement creating an independent Malaysia on August 5, 1957 in the official residence of the British high commissioner of Malaya. File photo

When the Malays took power following independence on 31 August 1957, more incentives were given to them. But there was certainly no showering of favours. All of that came later, after 1969. The riots of May 13, 1969, were a great shock to the system, but not a surprise. Extremist Malays attributed the poverty of many Malays to the plundering Chinese and Indians. Leaders like Tunku Abdul Rahman, who could see both sides, were no longer able to hold back the hotheads. The more thoughtful leaders were shunted aside and the extremists hijacked power. They chanted the same slogans as the hotheads – the Malays are underprivileged; the Malays are bullied – while themselves seeking to become super-rich. When these Malays became rich, not many of them did anything for the poor Malays; the Chinese and Indians who became rich created jobs, many of them filled by Malays.

ON PRO-MALAY POLITICS

I vividly recall an incident that occurred within a few months after the May 1969 riots. I was waiting to see Tun Razak when a senior Malay civil servant whom I knew very well came along the corridor of Parliament House and buttonholed me. He asked, “What are you doing here, Robert?” I replied, “Oh, I’m seeing Tun.” He snarled, “Don’t be greedy! Leave something for us poor Malays! Don’t hog it all!” I could see that, after May 1969, the business playing field was changing. Business was no longer clean and open. Previously, the government announced open tenders to the Malaysian public and to the world. If we qualified, we would submit a tender. If we won the contract, we would work hard at it, and either fail or succeed. I think eight or nine times out of ten we succeeded.

Don’t be greedy Robert. Leave something for us poor Malays! A senior civil servant friend

But things were changing, veering more and more towards cronyism and favouritism. Hints of change were there even before the riots. I was hell-bent on helping to develop the nation: that’s why I went into shipping, into steel – anything they asked of me. Even among the Malays there were those who admitted their weaknesses and argued for harnessing the strength of the Chinese. Mind you, that may have created more problems. If they had harnessed the strength of the Chinese, the Chinese would ultimately have owned 90 or 95 per cent of the nation’s wealth. This might have been good for the Malaysian economy, but bad for the nation.

Overall, the Malay leaders have behaved reasonably in running the country. At times, they gave the Malays an advantage. Then, when they see that they have overdone it, they try to redress the problem. Their hearts are in the right place, but they just cannot see their way out of their problems. Since May 13, 1969, the Malay leadership has had one simple philosophy: the Malays need handicapping. Now, what amount of handicapping?

The 1969 riots were a pivotal moment in Malaysian history. File photo

The Government laid down a simple structure, but the structure is full of loopholes. Imagine that a hard-working, non-Malay Malaysian establishes XYZ Corporation. The Ministry of Trade and Industry rules that 30 per cent of the company’s shares must be offered to Malays. The owner says, “Well, I have been operating for six years. My par value of 1 ringgit per share is today worth 8 ringgit.” Then the Ministry says, “Can you issue it at 2 ringgit or 2.50 ringgit to the Malays?” After a bit of haggling, the non-Malay gives way. So shares are issued to the Malays, who now own 30 per cent. But every day after that, the Malays sell off their shares for profit. A number of years pass and then one day the Malay community holds a Bumiputra Congress. They go and check on all the companies. Oh, this XYZ Corporation, the Malay shareholding ratio is now down to seven per cent. That won’t do. So the Malays argue that they’ve got to redo the shareholding again. Fortunately, the ministry usually acts as a fair umpire and throws out such unscrupulous claims.

The Malays’ zeal to bridge economic gap with the Chinese bred ugly racism

It’s one thing if you change the rules once to achieve an objective agreed to by all for the sake of peace and order in the nation. But if you do it a second time, it’s robbery. Why is it not robbery just because the government commits it? And when people raise objections, it is called fomenting racial strife, punishable by three years in jail. As a Chinese who was born and grew up in Malaysia and went to school with the Malays, I was saddened to see the Malays being misled in this way. I felt that, in their haste to bridge the economic gap between the Chinese and the Malays, harmful short cuts were being taken. One of the side effects of their zeal to bridge the economic gap was that racism became increasingly ugly. I saw very clearly that the path being pursued by the new leaders after 1969 was dangerous. But hardly anyone was willing to listen to me. In most of Asia, where the societies are still quite hierarchical, very few people like to gainsay the man in charge. As in The Emperor’s New Clothes, if a ruler says, “Look at my clothes; aren’t they beautiful?” when he is in fact naked, everybody will answer, “Yes, yes sir, you are wearing the most beautiful clothes.”

THE EAR OF THE PRIME MINISTER

I made one – and only one – strong attempt to influence the course of history of Malaysia. This took place in September 1975 during the Muslim fasting month. Tun Razak, the second Prime Minister of Malaysia, was gravely ill with terminal leukaemia, for which he was receiving treatment in a London hospital. My dear friend Hussein Onn, son of Dato Onn bin Jafar, was Deputy Prime Minister, Minister of Finance and acting Prime Minister in Tun Razak’s absence. He was soon to become Malaysia’s third Prime Minister. I went to Kuala Lumpur and sent word that I wanted to have a heart-to-heart talk. On the phone Hussein said, “Why don’t you come in during lunch time. It is the fasting month. Come to my office at about half past one. There will be no one around and we can chat to our heart’s content.”

Hussein and I go back to 1932 when we were in the same class in school in Johor Bahru. Shortly afterwards, his father fell out with the then-Sultan of Johor and the family moved to the Siglap area of Singapore.

 

Malaysia’s third Prime Minister Hussein Onn. File photo

My father would often spend weekends with Dato Onn. Two or three years later, Hussein returned to Johor Bahru and we were classmates again at English College from 1935 to 1939. Hussein’s father, Dato Onn, did not have a tertiary education. But he read widely and was very well informed. He was a natural born politician, a gifted orator in Malay and in English. He was a very shrewd man with a tremendous air of fine breeding even though he was not from Malaysian royalty. When you were in his presence, you knew you were in the presence of someone great. Dato Onn would go on to found UMNO, the ruling party of Malaysia, and become one of the founders of the independent nation of Malaysia. He set a tone of racial harmony for the nation – and he practised it. Our families were close.

So, I went to call on his son, my old friend Hussein Onn in 1975. His office was in a magnificent old colonial building, part of the Selangor Secretariat Building. In front of it was the Kuala Lumpur padang, where, in the colonial days, the British used to play the gentlemen’s games of cricket and rugby. I climbed up a winding staircase and his aide showed me straight to his room. There was hardly another soul in that huge office complex. After greeting one another, I warmed up to my subject with Hussein very quickly. I said, “Hussein, I have come to discuss two things with you. One is Tun Razak’s health. The other is the future of our nation.” I said, “You know, Razak has been looking very poorly lately. We all know he has gone to London for treatment.” Hussein interrupted: “Tun doesn’t like anybody discussing his health. Do you mind if we pass on to the next subject?” I said, “Of course not.” I continued, “I had to raise the first subject because that leads to the next subject. Assuming Razak doesn’t have long to live – please don’t mind, but I have to say that – you are clearly going to become the new Prime Minister in a matter of months or weeks.”

“I’m listening,” he said. “Hussein, we go back a long way. Our fathers were the best of friends; our families have been the best of friends. In our young days, you and I always felt a strong passion for our country, which we both still feel. Whatever has happened these past years, let’s not go backwards and ask what has gone wrong and what has not been done right. Let’s look at the future. If there was damage done, we can repair it.”

Hussein listened patiently. I pressed on, “First, let me ask you a few questions, Hussein. What, in your mind, is the number of people required to run a society, a community, a nation with the land mass of Malaysia?” This was 1975, when the population was about 12.5 million. He didn’t reply. For the sake of time, I answered my own question. “Hussein, if I say 3,000, if I say 6,000, if I say 10,000, 20,000, whatever the figure, I don’t think it really matters. We are not talking in terms of hundreds of thousands or millions. To run a society or a nation requires, relatively speaking, a handful of people. So let us say six or seven or eight thousand, Hussein. And of course this covers two sectors. The public sector: government, civil service, governmental organisations, quasi-governmental bodies, executive arms, police, customs and military. The private sector: the economic engines; the engines of development, plantations, mines, industry.

Robert Kuok. File photo

“The leaders of these two sectors are the people I am referring to, Hussein. If we are talking of a few thousand, does it matter to the masses whether it becomes a case of racially proportionate representation, where we must have for every ten such leaders five or six Malays, three Chinese, and one or two Indians?” I continued, “Must it be so? My reasoning mind tells me that it is not important. What is important is the objective of building up a very strong, very modern nation. And for that we need talented leaders, great leadership from these thousands of people. If you share my view that racial representation is unimportant and unnecessary to the nation, then let’s look at defining the qualifications for those leaders.

“Number one, for every man or woman, the first qualification is integrity. The person must be so clean, upright and honest that there must never be a whiff of corruption or scandal. People do stray, and, when that happens, they must be eliminated, but on the day of selection they must be people of the highest integrity. Second, there must be ability; and with it comes capability. He or she must be a very able and capable person. The third criterion is that they must be hard-working men or women, people who are willing to work long hours every day, week after week, month after month, year after year. That is the only way you can build up a nation.”

I went on, “I can’t think of any other important qualifications. So your job as prime minister, Hussein – I am now assuming you will become the Prime Minister – your job will then be from time to time to remove the square pegs from the round holes, and to look for square holes for square pegs and round holes for round pegs. Even candidates who fulfil those three qualifications can be slotted into the wrong jobs. So you’ve got to pull them out and re-slot them until the nation is humming beautifully.”

The best brains come in all shades and colours, all religions, all faiths. “We do not have all the expertise required to build up the nation,” I added. “But with hard work and a goal of developing the nation, we can afford to employ the best people in the world. The best brains will come, in all shades and colours, all religions, all faiths. They may be the whitest of the white, the brownest of the brown or the blackest of the black. I am sure it doesn’t matter. But Hussein, the foreigners must never settle in the driving seats. The days of colonialism are over. They were in the driving seats and they drove our country helter-skelter. We Malaysians must remain in the driving seats and the foreign experts will sit next to us. If they say, ‘Sir, Madame, I think we should turn right at the next turning,’ it’s up to us to heed their advice, or to do something else. We are running the show, but we need expertise.
You’re going to be the leader of a nation, and you have three sons, Hussein … your eldest son will grow up very spoiled

“You’re going to be the leader of a nation, and you have three sons, Hussein. The first-born is Malay, the second-born is Chinese, the third-born is Indian. What we have been witnessing is that the first-born is more favoured than the second or third. Hussein, if you do that in a family, your eldest son will grow up very spoiled. As soon as he attains manhood, he will be in the nightclubs every night because Papa is doting on him. The second and third sons, feeling the discrimination, will grow up hard as nails. Year by year, they will become harder and harder, like steel, so that in the end they are going to succeed even more and the eldest will fail even more.”

I implored him, “Please, Hussein, use the best brains, the people with their hearts in the right place, Malaysians of total integrity and strong ability, hard-working and persevering people. Use them regardless of race, colour or creed. The other way, Hussein, the way your people are going – excessive handicapping of bumiputras, showering love on your first son – your first born is going to grow up with an attitude of entitlement.” I concluded, “That is my simple formula for the future of our country. Hussein, can you please adopt it and try?” Hussein had listened very intently to me, hardly interrupting. He may have coughed once or twice. I remember we were seated deep in a quiet room, two metres apart, so my voice came across well. He heard every word, sound and nuance. He sat quietly for a few minutes. Then he spoke, “No, Robert. I cannot do it. The Malays are now in a state of mind such that they will not accept it.”

He clearly spelt out to me that, even with his very broad-minded views, it was going to be Malay rule. He was saying that he could not sell my formula to his people. The meeting ended on a very cordial note and I left him. I felt disappointed, but there was nothing more that I could do. Hussein was an honest man of very high integrity. Before going to see him, I had weighed his strength of character, his shrewdness and skill. We had been in the same class, sharing the same teachers. I knew Hussein was going to be the Malaysian Prime Minister whom I was closest to in my lifetime. I think Hussein understood my message, but he knew that the process had gone too far. I had seen a picture developing all along of a train moving in the wrong direction. During Hussein’s administration, he was only partially successful in stemming the tide. The train of the nation had been put on the wrong track. Hussein wasn’t strong enough to lift up the train and set it down on the right track.

The train of the nation had been put on the wrong track. The capitalist world is a very hostile world. When I was building up the Kuok Group, I felt as if I was almost growing scales, talons and sharp fangs. I felt I was capable of taking on any adversary. Capitalism is a ruthless animal. For every successful businessman, there are at least 10,000 bleached skeletons of those who have failed. It’s a very sad commentary on capitalism, but that is capitalism and real capitalism, not crony capitalism. Yet, I’ve always believed that the rules of capitalism, if properly observed, are the way forward in life. I know that, having been successful, I will be accused of having an ‘alright Jack’ mentality. But I am just stating facts: capitalism is a wonderful creature – just don’t abuse its principles and unwritten laws.

Robert Kuok, A Memoir will be available in Hong Kong exclusively at Bookazine and in Singapore at all major bookshops from November 25. It will be released in Malaysia on December 1 and in Indonesia on January 1, 2018