Malaysia: Big Momma takes on Governor Zeti


July 31, 2015

Malaysia: Big Momma takes on Governor Zeti

by John Berthelsen@www.asiasentinel.com

http://www.asiasentinel.com/politics/malaysian-pm-wife-seeks-central-bank-governor-ouster/

Two powerful women take center stage in spreading scandal as government clings to power

Rosmah and Najib nowRosmah Mansor and The “Boss”

Prime Minister Najib Razak’s controversial wife, Rosmah Mansor, is trying to drive another powerful woman, internationally respected Bank Negara Governor Zeti Akhtar Aziz, out of the central bank,  according to knowledgeable sources in Kuala Lumpur.

Rosmah is said to be enraged over leaks of her personal financial details. She also fears that Zeti has detailed information on the 1Malaysia Development Bhd. scandal that could bring down the government and the prime minister. Insiders say Rosmah, a lightning rod for criticism over her lavish spending, is the field marshal directing the defense of her beleaguered husband’s government.

“My own view is that Najib will fight to the political death because of the wife,” a longtime academician and political analyst told Asia Sentinel. “She is much stronger than Najib and will not accept any retirement package. She is powerful in her own right.”

The year-long scandal has paralyzed Malaysian politics and played a major role in weakening the economy as Najib twists and turns to keep his enemies at bay. Earlier this week, Najib sacked several members of his cabinet for apparent disloyalty; he has also moved against critical news outlets.

Independent authority

Driving Zeti out won’t be easy. The Central Bank Act of 2009 – ironically passed that year at Zeti’s request after Najib became Prime Minister – insulates the central bank from political influence.

The Governor can only be appointed or fired by the Malaysian King, a rotating monarchy that passes among nine sultans. The current King is from Kedah, the home state of Mahathir Mohamad, Najib’s most implacable enemy. The King reportedly has told Mahathir he is staying out of the matter so that the law can take its course.

Rosmah is said to have targeted Zeti after the Sarawak Report published details on July 9 about the deposit of RM2 million [US$523,400] into her account in Affin Bank, after which Rosmah demanded that Zeti find out who leaked the information within 72 hours or resign. When Zeti apparently declined, she came under attack from blogs said to be linked to Rosmah.

Blogs in the fray 

One of the blogs, “Fromtheeleventh,” alleged that the police Special Branch intelligence unit is investigating Zeti and three other Bank Negara officials for sedition and carrying out a parallel investigation into Selangor state water contracts involving Zeti’s husband, Tawfiq Ayman, and their son Alif.

The blog also alleged that Tawfiq is being investigated for allegedly illegal commissions paid in a bank deal in which third parties benefited from insider information, supposedly which could have been provided by the central bank.

“By virtue of the close relationship between husband and wife, Ayman has access to confidential information that has been used for his benefit in his business dealings,” the blog said, indicating that “new information” had been supplied to investigators.

“The husband is a little shaky,” said a Malaysian businessman, “but Zeti has always acted quite properly.” Another extremely well-informed source told Asia Sentinel, “I would totally believe that Rosmah would try to push Zeti out if she felt threatened.

Bank Negara does have lots of smoking guns on all the dodgy bank transfer documentation, both involving Rosmah and also Najib, 1MDB etc. Zeti isn’t an angel and there could be dirt on her somewhere that could be used, though she’s not been associated with any major personal scandals that I can recall.  It’s more that she’s gone along with wonky stuff as required by politics and maybe got rewarded for her compliance.”

But, he said, “I do believe she still thinks of herself as a professional central banker, so she might actually draw the line here. My impression is that Bank Negara is the most likely of all the investigative entities to really be able to pin something on Najib and Co.”   

Long career

ZetiGovernor Zeti

Zeti has been with the bank for 36 years, becoming governor in 2000.  She was named one of the world’s best central bank chiefs by Global Finance Magazine in 2009 and several times since, and a Bloomberg columnist picked her as one of his favorites to head the International Monetary Fund after Dominique Strauss-Kahn was arrested on sexual assault charges in 2011.

According to one political analyst, Rosmah is believed to have been behind the dramatic ouster of cabinet members earlier this week, including attorney general Gani Patail and Deputy Prime Minister Muhyiddin Yassin, replacing him with uber-loyalist Ahmad Zahid Hamidi, the home minister. To replace fired cabinet members, who were involved in an investigation of 1MDB, Najib appointed members of a parliamentary committee probing 1MDB. Critics say that committee was designed to nullify the cabinet-level investigation, which is now presumably neutralized.

Rosmah is also supposedly furious over the role former Premier Mahathir Mohamad has played in undermining Najib. “She thinks Mahathir and gang are behind the campaign to pull down 1MDB and the Sarawak Report,” said a well-informed academic.

More evidence?

If the gossip mills in Kuala Lumpur are right, and Rosmah is indeed trying get Zeti sacked, the most likely reason – beyond personal pique – is  that the Bank Negara Governor is in possession of a report forwarded to her on March 13 by the Monetary Authority of Singapore that is said to contain damaging information about accounts related to 1MDB. So far Zeti has refused to talk about the contents of the report, although she said it would be forwarded to other enforcement agencies looking into the scandal. According to Sarawak Report, the account contains merely paper assets whose true value can’t be determined.

Zeti is feeling her way cautiously through the politically fraught scandal, which involves questions over not just massive debts of RM42 billion [US$11.8 billion] but that as much as US$680 billion allegedly was diverted from companies linked to 1MDB into Najib’s personal account, supposedly to be used illegally to fund the ruling national coalition’s successful 2013 general election campaign. 

“Disclosures will stop all investigations if we talk about it,” Zeti told local media. Although she has been criticized by opposition figures and Mahathir for the central bank’s tardiness in moving ahead on the investigation, Zeti is generally regarded as having played a neutral role.

Over recent weeks, Najib has suspended the publishing license for three months of The Edge Financial Daily and its sister publications, which played a major role in exposing 1MDB irregularities. He has also blocked access to the UK-based site Sarawak Report, written by persistent critic Clare Rewcastle Brown. He has blocked several opposition members and activists from leaving the country and the Inspector General of Police has threatened charges against organizers of a planned rally this weekend. 

That led the Malaysian branch of Transparency International to charge that there is deep concern over whether the 1MDB investigation can ever be completed. Gani Patail, the ousted attorney general, was said by insiders to be about to charge the Prime Minister with corruption when he was booted out.

 

From Malaysia back to Greece: No Free Lunch


July 30, 2015

Foreign Affairs

From Malaysia back to Greece: The Europe we don’t want

by Serge Halimi

The Eurozone and the International Monetary Fund have crushed the hopes of a youthful movement that sought to transform a nation and rouse a continent. Beyond the shock that events in Greece have given supporters of the European project, there are other noteworthy features. The EU is becoming increasingly authoritarian, as Germany imposes its wishes and obsessions unchecked. Though founded on a promise of peace, the EU seems incapable of drawing lessons from history, even when recent and violent; what matters most to it is sanctioning bad debtors, and the headstrong. This amnesiac authoritarianism is a challenge to those who saw the EU as the place to experiment with going beyond the framework of the nation-state, and achieving democratic renewal.

Alexis and AngelaNo Free Lunch for Greece

At the outset, European integration lavished material advantages on its citizens, against a backdrop of the East-West confrontation. In the immediate post-war period, the project was driven forward by the US, which sought a market for its goods and a buffer against Soviet expansion. The US recognised that if the “free world” wanted to compete effectively with the “democratic” republics of the Warsaw Pact, it had to win hearts and minds, which meant demonstrating its goodwill through social policies. Since this strategic lifeline disappeared, Europe has behaved like the board of directors of a bank.

Some participants in the cold war, such as NATO, survived the fall of the Berlin Wall by inventing new monsters to destroy on other continents. The EU’s institutions have also redefined their enemy. The peace and stability they claim as their objective now demand peoples be politically neutralised, and their remaining tools of national sovereignty destroyed. This means integration at the pace of a forced march, the burial of political questions in a one-size-fits-all treaty, a federal project. This venture is not new, but the Greek case illustrates the brutality with which it is now being pursued.

“How many divisions does the pope have?” was reportedly Joseph Stalin’s dismissive response to a French leader who urged him to deal tactfully with the Vatican. The states in the Eurozone now seem to be applying the same approach to Greece; reckoning that the government they find so exasperating would be unable to defend itself, they have destabilised it through enforced bank closures and import suspensions. Relations between members of the same union, who belong to the same institutions, return representatives to the same parliament and use the same currency, should preclude such machinations. Yet the Eurozone countries, with Germany at their head, safe in the knowledge of their superiority, imposed a diktat on a weakened Greece which everyone acknowledges will worsen most of its problems. This whole episode exposes just how deep the cracks in the EU go (1).

When Syriza won January’s election, it was right on almost every single count. Right to link the collapse of the Greek economy to the austerity programme administered for five years by both socialists and the right. Right to argue that no state with a crumbling manufacturing sector would be able to rebuild itself if it had to devote increasing sums to paying off its creditors. Right to point out that in a democracy sovereignty belongs to the people and that if a policy is imposed on them despite what they decide, it constitutes an act of dispossession.

Can’t pay, won’t pay

Syriza appeared to have an unbeatable hand, but success depends on who you are playing with. In the EU, Syriza’s aces were turned against it; Syriza was compared to southern Marxists, so out of touch with reality that they dared question the economic assumptions that underlie German ideology (see Germany’s iron cage). The weapons of “reason” and conviction are useless in such circumstances. What’s the good of pleading your case in front of a firing squad? During the months of “negotiations”, the Greek finance minister Yanis Varoufakis noticed his European counterparts stared at him as though they were thinking: “You’re right in what you are saying, but we are going to crush you anyway” (2) (see The defeat of Europe).

However, the success (for now) of Germany’s plan to relegate Greece to the status of a Eurozone protectorate is also the result of failed gambles by Greece’s leftwing majority, in the over-optimistic hope of changing Europe (3). The gamble that the leaders of France and Italy would help Greece overcome the German right’s monetarist taboos. The gamble that other European peoples, overwhelmed by austerity policies, would pressure their governments into a Keynesian reorientation (Greece thought it was the torchbearer for this). The gamble that this change would be conceivable within the eurozone; noexit scenario had been envisaged or prepared. And the gamble that intermittent hints of a “Russian option” would, for geopolitical reasons, contain Germany’s temptation to punish Greece and encourage the US to stay Germany’s hand. At no point did any of these gambles seem likely to pay off. It’s not possible to hold off a tank with violets and a catapult.

Greece’s leaders, guilty only of being too innocent, thought that creditors would heed the democratic will of the Greeks, especially the young. The legislative election of 25 January and the referendum of 5 July, however, provoked dumbfounded outrage among the Germans and their allies. They had only one remaining aim: to punish the rebels, and anyone who might be inspired by their bravery. Capitulation was no longer enough; there had to be apologies (Greece has admitted that its economic choices caused a breakdown in confidence with its partners) and even reparations: public assets, capable of being privatised, to a value equal to 25% of Greek GDP are to be pledged to the creditors. Everyone claims to be relieved: Greece will pay.

“Germany will pay” was the phrase French finance minister Louis Klotz whispered to President Clemenceau at the end of the first world war. It became the watchword of French savers who had lent to the Treasury during the conflict. They had not forgotten that in 1870 France paid the whole of the tribute demanded by Bismarck, though the sum was higher than Germany’s costs. This precedent inspired French Prime Minister Raymond Poincaré when, frustrated at not receiving the reparations stipulated in the Treaty of Versailles (4), he decided to occupy the Ruhr in 1923.

John  Maynard KeynesJohn Maynard Keynes

John Maynard Keynes had already grasped the vanity of such a policy of humiliation and seizure of securities: Germany did not pay because it could not pay, and the same goes for Greece now. Only through time, with a positive balance of payments, could Germany have paid off its massive debt. France refused to allow its rival’s economic rebirth, which would have enabled it to pay, but also to finance an army, risking the possibility of a third bloody conflict. The economic success of the Greek left would hardly have had such dramatic repercussions for Europeans, but it would have scotched eurozone leaders’ justifications for austerity.

A ‘totally non-viable debt’

After a year, Poincaré had to raise taxes by 20% to fund his occupation, a cruel paradox for a rightwing leader opposed to taxation who had insisted Germany would pay. He lost the next election and his successor evacuated the Ruhr. No one has yet imagined such consequences in any of the countries that have crushed Greece to make it settle a debt that even the IMF admits is “totally non-viable”. Yet the Eurozone countries’ fixation on punishment has already obliged them to commit three times the sum (around €86bn) required had funds been released five months earlier; in the meantime the Greek economy had collapsed through lack of liquidity (5). So the price of German finance minister Wolfgang Schäuble’s inflexibility will be almost as high as Poincaré’s. But Greece’s humiliation will serve as an example for other potential offenders. (Spain, Italy, France?) It will be a reminder of the “Juncker theorem” formulated by the European Commission president, Jean-Claude Juncker, four days after the Greek left’s electoral victory: “There can be no democratic choice that is counter to European treaties” (6).

One bed is too narrow to accommodate 19 different dreams. It was an almost imperial undertaking to impose the same currency on Austria and Cyprus, Luxembourg and Spain, on peoples who do not have a shared history, political culture or standard of living, the same alliances or languages. How can a state conceive an economic and social policy that is open to debate and democratic negotiation if all the mechanisms of monetary regulation are outside its control? How can peoples who may not even know each other accept a degree of solidarity comparable to the inhabitants of Florida and those of Montana? The whole thing rested on a hypothesis: that federalism at an accelerated pace would bring European peoples together. Yet 15 years after the creation of the euro, animosity has never been greater. So much so that, when Tsipras announced his referendum, he used language like a declaration of war — “a [Eurozone] proposition in the form of an ultimatum addressed to Greek democracy” — and accused some “partners” of seeking to “humiliate an entire people”. The Greeks massively backed their government and the Germans rallied behind the quite opposite demands of their government. Could their destinies be any more closely linked without risking domestic violence?

But the hostility is no longer just between Greece and Germany. “We do not want to be a German colony,” insisted Pablo Iglesias, leader of Podemos in Spain. Italy’s Prime Minister Matteo Renzi — whose reticence throughout has been noteworthy — let slip: “I say to Germany: that’s enough. Humiliating a European partner is unthinkable.” According to German sociologist Wolfgang Streeck, “in Mediterranean countries, and to some extent in France, Germany is more hated than at any time since 1945. … Economic and monetary union, which was supposed to consolidate European unity once and for all, now stands a good chance of shattering it” (7).

‘You’ve done too little, too slowly’

The Greeks are attracting hostility, too. Junker is said to have told Tsipras: “If the Eurogzone functioned like a parliamentary democracy, you would already be out, because that is what nearly all your partners want” (8). Using a well-known conservative mechanism, now deployed at nation-state level, poor states have been encouraged in their mutual suspicion that others, like the proverbial “welfare chiselers” of Ronald Reagan’s speeches, are living at their expense. The Estonian education minister castigated Greece: “You’ve done too little, too slowly, and much less than Estonia. We have suffered much more than Greece. But we didn’t stop to complain; we just got on with it” (9). The Slovaks were aggrieved at the level of pensions in Greece, which should be “finally declared bankrupt in order to clear the atmosphere,” as the Czech Finance Minister kindly suggested (10).

Pierre Moscovici, the French Socialist and EU Commissioner for Economic and Financial Affairs, eagerly repeated an anecdote to any listening journalist: “At a Eurogroup meeting, a Lithuanian socialist minister told Varoufakis, ‘It’s very nice that you want to raise the minimum wage by 40%, but your minimum wage is already twice ours. And you want to raise it with money you owe us, with debt.’ And that’s a pretty strong argument” (11). A strong argument indeed, especially coming from Moscovici whose party had announced only a year earlier: “We want a Europe which protects its workers. A Europe of social progress, not social roll-back.”

At a European Council meeting on 7 July, several EU leaders conveyed their exasperation to Tsipras: “We can’t take any more. Greece is all we’ve talked about for months. A decision needs to be taken. If you’re incapable of taking it, it will be taken for you” (12). Is that not already a rough and ready brand of federalism? “We must go forward,” Hollande concluded from this. In which direction? The same as always: “economic governance”, “a eurozone budget”, “convergence with Germany”. In Europe, when a medicine severely damages the economic or democratic health of a patient, the dose is doubled. Therefore, since, according Hollande, “the eurozone has been able to reaffirm its cohesion with Greece, the circumstances are leading us to speed up” (13).

To left wing activists and trade unionists, stopping and thinking seems a better option. Even for those who fear that an exit from the euro would encourage the break-up of the European project and the revival of nationalisms, the Greek crisis demonstrates that a single currency stands against popular sovereignty. Far from containing the far right, such an obvious realisation encourages it, since the far right mocks its enemies’ lectures on democracy. How can anyone imagine that the single currency could one day accommodate a progressive social policy, having seen the plans that the Eurozone states gave Tsipras to force this left wing Prime Minister to implement rigid neoliberalism?

Once Greece raised big, universal questions. Now it has revealed the true face of the Europe we no longer want.

Serge Halimi is President of Le Monde diplomatique.

(1) See Frédéric Lordon, La Malfaçon: Monnaie européenne et souveraineté démocratique (Production Defects: the European Currency and Democratic Sovereignty), Les Liens qui Libèrent, Paris, 2014.

(2) New Statesman, London, 13 July 2015.

(3) See Serge Halimi, “A modest and crazy dream”, Le Monde diplomatique, English edition, February 2015.

(4) See Serge Halimi, “A Versailles, la guerre a perdu la paix” (At Versailles, the war lost the peace), Manuel d’histoire critique, Editions Le Monde diplomatique, 2014.

(5) “Europe reaches rescue deal for Greece”, The Wall Street Journal, New York, 14 July 2015.

(6) Le Figaro, Paris, 29 January 2015.

(7) Wolfgang Streeck, “Germany can’t solve this alone,” Le Monde diplomatique, English edition, May 2015.

(8) Libération, Paris, 11-12 July 2015.

(9) The Wall Street Journal, 13 July 2015.

(10) Le Figaro, 3 July 2015.

(11) France Inter, 1 March 2015.

(12) Reported in Le Figaro, 9 July 2015.

(13) Le Journal du dimanche, Paris, 19 July 2015.

 

Malaysia: Rafidah defends Free Media with gusto


July 26, 2015

COMMENT: Since her retirement as Wanita UMNO Chief andDin Merican2 Ministry of Trade and Industry (MITI) Minister, Tan Sri Rafidah Aziz seldom speaks to the media.  But when she does, the only man in Mahathir’s Cabinet, puts the present members of the Najib’s Cabinet to shame.

These ministers are not interested in speaking up on an issue of  utmost importance to democratic politics in our country, that is a free press which acts as the Fourth Estate giving voice to the concerns of Malaysians. They are scared of losing their jobs and perks that go with that. Taking a principled stand on what is right is too risky. They also fail to understand the concept of cabinet collective responsibility which states:

The Cabinet is responsible for the performance of the government. Each Minister acts jointly with and on behalf of Cabinet colleagues in their capacity as Ministers. Not only does this ensure collective responsibility, but it also enhances collective adherence to all decisions made in Cabinet. Cabinet decisions reflect collective conclusions and are binding on all Ministers as government policy. If a Minister is unable to publicly support a Cabinet decision, the proper course is to resign from Cabinet. All Ministers are required to give their support in public debate to collective decisions of the Cabinet and the government. (ww.premiers.qld.gov.au)

Because our Ministers ape the Prime Minister, our system has become a 1 man rule in practice.  So Prime Minister Najib can do as he pleases and does not have to be accountable for his actions. The civil service and government agencies like the Police, MACC, Bank Negara  Malaysia, Attorney-General and the Auditor-General protect him. This is the sorry state of Malaysia today–a failed state when institutions of governance are dysfunctional and kleptocracy takes over.

The 1MDB scandal is a case in point. Any attempt to get at the facts on the 1MDB RM42 billion debt by the Malaysian media will suffer the same fate as The Edge Magazine and The Edge Financial Daily.–Din Merican

Malaysia :Rafidah defends Free Media with gusto

by Malaysiakini

http://www.malaysiakini.com

Former MITI Minister Rafidah Aziz, often described as Malaysia’s own ‘Iron Lady’, has criticised Putrajaya’s move to ban the media saying it merely gives people more reason to be upset with the government.
Rafidah

Her remarks came after the government suspended The Edge Weekly and The Edge Financial Daily over reports about alleged misappropriation of funds in the Finance Ministry-owned 1MDB.”We can ban some publications, it does not solve anything, really. If at all, it’s making many more people upset and worse still, there is now another grouse against the government, for nothing.

“And social media communication will still continue and now there’s a new topic to discuss and condemn. Don’t tell me we now must shut down the Internet?” she said in a Facebook posting.Rafidah, known for her outspokenness, described the ban as a “knee-jerk reaction” and a diversion from resolving the problems at hand.

“Maybe we should delete the word ‘ban’ from our political vocabulary and adopt approaches that reflect clear-mindedness and rational thinking,” she said.

Rafidah said while there were limits to freedom of speech, the media should not be unduly penalised for reporting matters that were deemed unsavoury by the government.

Gov’t fails to explain

She added that the authorities should instead explain issues, including 1MDB, in a coherent manner. “Those responsible must begin to give to the public the facts and communicate coherently and clearly, and to say things as they are, regarding 1MDB or other issues of public concern,” she said.

The Edge, which had obtained leaked information belonging to PetroSaudi International, alleged that US$1.83 billion in funds was siphoned away from 1MDB.

The information included email communication between PetroSaudi and 1MDB about their joint venture activities. This is amid a special task force investigation into allegations that RM2.6 billion was deposited into the private bank accounts of Prime Minister Najib Abdul Razak.

While refusing to comment on his banks accounts, Najib has denied taking any government funds for personal gain.

Anwar Ibrahim: A Lone Voice from Prison delivers a Message of Hope


July 25, 2015

MALAYSIA: A Lone Voice from Prison delivers a Message of Hope

Anwar --The Prisoner

Anwar Ibrahim

by http://www.themalaymailonline.com

http://www.themalaymailonline.com/malaysia/article/malaysia-ready-for-change-imprisoned-anwar-writes-in-wsj-amid-1mdb-scandal

With the Najib Administration facing even more pressure now to explain the 1Malaysia Development Berhad (1MDB) scandal, Dato’ Seri Anwar Ibrahim has seized the opportunity to rally his supporters, saying although tough times are expected ahead for Malaysians, the country’s growing opposition cannot be silenced.

Anwar, who was given the opportunity to pen an Op-Ed for the Wall Street Journal (WSJ), the international daily now facing the possibility of lawsuit by Malaysia’s Prime Minister Datuk Seri Najib Razak, said Malaysia is ready for the change long-trumpeted by the federal opposition, one that he claimed would see a return to the underpinnings of the Federal Constitution.

The PKR de facto leader, now five months into his five-year jail sentence for sodomy, also said a “brighter future” is possible with good governance and the rule of law.

“We believe in the dismantling of Malaysia’s system of race-based privileges that has devolved into nothing more than rent-seeking for the privileged few. We believe that corruption is a slow bleed that robs future generations of the education and business opportunities that will make them prosper,” he wrote in the piece.

Anwar, who was the Deputy Prime Minister from 1993 to 1998, said his decision to stay in the country to face prosecution had not been easy and had put a “tremendous burden” on his family but insisted that he had done so because he believes the country is ready for change.

“Malaysia is ready for change.This is why, rather than flee my country, I chose to stay and continue the fight for peaceful, democratic reform from my prison cell,” he said.

He also said in four decades in public service, this was the first time racial and religious sensitivities have become so inflamed, and at the same time so poorly managed by the country’s political leadership.

He said the “real danger ahead” is that Malaysia could devolve into a failed state after several decades of economic mismanagement, opaque governance and overspending.

“The irresponsible manner in which the current leadership is handling religious issues to curry favor from the extreme right is fueling sectarianism.Increased political repression may drive some to give up on the political system altogether and consider extralegal means to cause change, thus creating a tragic, vicious cycle,” Anwar added.

The only way out of this “mess”, he said, was to uphold the Malaysian Constitution, to ensure better checks and balance in the administration, keep the elections free and fair; and a media that is not afraid to challenge authority.

The Najib government is currently under pressure to explain the 1MDB scandal, following the series of exposes by media outfits claiming to be in possession of documents that show impropriety in the state investor’s allegedly opaque deals.

In its July 2 exposé, WSJ, citing documents from Malaysian investigators currently probing 1MDB’s financials, said a money trail showed that US$700 million (RM2.6 billion) had been funnelled into what is believed to be Najib’s accounts.

ASEAN and the Lessons of Greece


July 25, 2015

ASEAN and the Lessons of Greece

by Dr. Munir Majid

http://www.thestar.com.my

“Thank God we don’t have a Common Currency and never should have.”

There are therefore nascent possibilities and challenges which should concentrate ASEAN minds as they consider the Greek drama in the EU’s eurozone beyond “Thank God, we do not have a single currency, and never should have.” We cannot be immunised from the unintended and unanticipated consequences of community-building. We have to have the institutions and imagination to manage them.–Dr. Munir Majid

Dr Munir MajidEUROPE has been glued to the Grexit television screen for the longest time. Going on and on for at least five years, each episode of whether Greece will remain in the eurozone or not has run longer than the longest Tamil movie of yore (although we have our own MIC version, with 1MDB trying to play catch-up).

What are the lessons for ASEAN of the EU’s Greek tragedy? No doubt the first thing that will trip out is: Thank God we do not have a common currency. However, this is only the tip of the iceberg. Beneath the surface there are deep issues involved, so many currents, cross-currents and counter-currents in the management of regional integration.

I will highlight three of the more profound: fiscal discipline; national sovereignty; and community negotiation process.

Fiscal Discipline

Fiscal discipline is actually easy to define, but so difficult to uphold when the freewheeling genie has been out of the bottle for so long with no inclination of coming back in. Under the EU’s Stability Growth Pact government deficit has to be not more than 3% of GDP and debt 60%, something characterised more in the violation than the adherence. Nothing has been done about this for years.

In the case of Greece over the last five years they were supposed to be brought down, but the numbers for the fiscal deficit went up again and the country is up to its ears in debt, coming to 200% of GDP after averaging an already unsustainable 177%.

The other side of the austerity equation is unemployment which has hit 25.6%. (Unemployment in Indonesia as a result of the 1997-98 Asian Financial Crisis was 30%; lowest European unemployment is in Germany at 4.7%).

Youth unemployment in Greece stands at 60%. The Greek economy has shrunk by 25% since the first IMF aid package in 2010. The government and people are saying they cannot take any more, but the creditors – on whom the Greeks are dependent for more bailout and interest servicing packages like an opiate – are saying not enough has been done in a sustained fashion to bring debt and the deficit down.

The Greeks have been used to many things which the creditors now insist on taking away from them. You cannot live beyond your means forever. The chicken is coming home to roost.

From the seven main points of the agreement reached on the night of July 13 for a new bailout package of 86 billion euros, it is clear Greece is now being pushed right against the wall – including what many in the country declare to be violation of its sovereignty.

Cutting pensions

While certain requirements such as cutting pension spending and increasing revenue, through seamless imposition of the top VAT rate of 23% for instance, might be considered par for the course in these bailout situations, the insistence on the transfer of up to 50 billion euros of “valuable Greek assets” to a new independently managed fund, as a form of collateral, was felt by Greeks to be rubbing their noses in the dirt.

National Sovereignty

Alexis and Angela

Sovereignty, what sovereignty? If Greece wants to remain in the euro and needs all the bailout money, including money to service existing bailout funds, has the country got any alternative?

The Greek Prime Minister may quote Paul Krugman on the pain and damage all the austerity requirements are causing the economy, or even appeal to a European sense of history by comparing them to the punitive terms of the Peace of Versailles in 1919 (which historians assert were the root cause of the Second World War as Germany struck back to wipe off the shame), but has he got any other option?

If you need the money, what can you do? South-East Asians may remember that picture in 1998 of the then IMF Managing Director Michel Camdessus standing over the cowed former Indonesian President Suharto, as he signed away Indonesian macroeconomic sovereignty. From profligacy, it might be said, to loss of an important part of national sovereignty.

In the negotiation of the new Greek bailout deal this month – which still may undergo many twists and turns – a feature has been the predominance of Germany in the EU and in the eurozone (comprising 19 of the 28 members of the EU). It is after all the largest creditor nation and economy. If pretence was set aside, it is also the most powerful country in Europe (which arrangements at the end of the Second World War were intended to avoid – but that is a different story).

Every member country has a veto of course, but in negotiating the outline and details of the rescue package for Greece, Germany has led the way all this while and its commitment is indispensable, however much the French try to give the impression of having an eminent role as well.

ASEAN EconC

So, how do we look at it all from an ASEAN perspective? The first instinct – thank God we do not have a single currency – is of course to be expected. But the thinking on what has been happening in Europe and on how relevant it is to AASEAN should not end there.

We do have big states and small states. We may say our negotiating and decision-making processes are different – and national sovereignty is untouchable. But this is too pat and shallow. The process of community-building is moving ahead. The voice of bigger countries does carry greater weight. However if it is in the service of what is good for the larger whole, there is not much to be afraid of.

The changeable predispositions of member states, however, have to be managed. Indeed, what a significant member state DOES NOT DO also affects ASEAN – as is the case now with the growing uncomfortable feeling that Indonesia under President Jokowi is not so enamoured of the regional grouping.

Indonesia therefore is critical to ASEAN. What and how it thinks, what happens in that country, have Asean impact. Thus engagement, with Indonesia particularly but also among all member countries, is most important. ASEAN needs, at this stage of its development, to have a Minister for ASEAN Affairs in each member country. The prospects and challenges need to be a focus in every national administration.

Economic management

With respect to economic management, while there is no single currency, there are threats to ALL ASEAN economies of mismanagement in ONE, especially a significant economy. Contagion is always a risk. With increased intra-regional trade (although now only a quarter of the total trade), there will be knock-on effects across the region.

Importantly – let us not forget – we are talking of ASEAN as a region, one single economy, with the prospect of the most promising growth in consumer demand and economic size (coming up to 4th in the world by 2050). ASEAN is an asset class. With the herd instincts of markets, reverse flows caused by fear of contagion can quickly develop into a regional crisis.

While global arrangements such as with the IMF remain, let us also not forget we have an untested multilateral currency swap system that includes three East Asian partner countries to address potential and actual balance of payments and short-term liquidity difficulties – the Chiang Mai Initiative Multilateralisation (CMIM). The US$240bil fund is 20% Asean and 80% China, Japan and South Korea. The commitments from each country are really promissory notes, and a country in difficulty can draw up to 2.5 times its committed amount.

Will the support always be forthcoming? Will political differences not get in the way? Not to mention an assessment of whether the country facing difficulty has exercised fiscal discipline in the management of its economy. The CMIM has an institution, AMRO (ASEAN+3 Macroeconomic Research Office), to monitor and analyse regional economies in support of its decision-making process.

The central bank governors deciding on requests for support will also rely on AMRO reports and input, and there could be conditions attached to such support, whether the 6-month Breaking Line or the One-year Stability Facility. There could be expectation, frustration, anger and discord.

There are therefore nascent possibilities and challenges which should concentrate ASEAN minds as they consider the Greek drama in the EU’s eurozone beyond “Thank God, we do not have a single currency, and never should have.” We cannot be immunised from the unintended and unanticipated consequences of community-building. We have to have the institutions and imagination to manage them.

Tan Sri Dr. Munir Majid, Chairman of Bank Muamalat and Visiting Senior Fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB ASEAN Research Institute.

UMNO bribed by Najib Razak–What a Shame


July 24, 2015

Malaysia: UMNO bribed by Najib Razak–What a Shame

by Scott Ng@www.freemalaysiatoday.com

It is time for Mahathir and those wishing to depose Najib to take a step back and come up with a new plan of attack. They might have to attack the foundation of his power. As long as UMNO cannot be convinced that Najib will bring more harm than good to the party, he will remain in power, no matter how many of his alleged wrongdoings are exposed.–Scott Ng

Najib_Rasuah_300The Billion Ringgit Man

If Malaysia were a democracy worthy of the name, Prime Minister Najib Razak would have stepped down or been made to step down a long time ago. Yet he still stands, even as he is assaulted each day with questions to which he seems unable to respond. Mahathir Mohamad and his other detractors are probably at their tether’s end, wondering where else they can find the strength to push him off his perch.

Perhaps Najib himself is the wrong target for those seeking change in the system. Yes, he is the most obvious target, given the allegations about his family’s extravagant lifestyle and the various scandals surrounding his leadership. Yes, he seems incapable of issuing statements that could persuade a rational observer to take his side against his critics. Even a letter from his lawyers leaves the public in stitches, strengthening the impression that he is surrounded by incompetent and self-serving advisers.

His opponents have probably underestimated the strength of his position – not with the public, but with his party. As long as the majority of Umno leaders do not reject Najib, he cannot be toppled from his position, at least until 2018. A lot can change between now and then. His detractors may even lose their strongest champion, given Mahathir’s age, and the UMNO elections in 2018 could even mean a resurgence in his power if the party itself does not change.

Corrupt UMNO LeadersUMNO Leaders–Money Matters

Najib’s power lies with the UMNO divisions throughout the country, with the warlords, with the party’s Supreme Council, and, of course, with his Cabinet. Outside of a general election, these are the only powers that can remove him, and he is cognisant of the fact. Najib’s relationship with these parties is a symbiotic one. The warlords, the division heads, the Supreme Council members and the Cabinet ministers know that for them the benefits of keeping Najib in power outweigh the disadvantages, for the time being, at least. After all, it is not as if there is a surplus of credible, competent candidates waiting in the wings to replace him.

Checkmated Dr. MCheckmated in UMNO Chess Game

It is time for Mahathir and those wishing to depose Najib to take a step back and come up with a new plan of attack. They might have to attack the foundation of his power. As long as UMNO cannot be convinced that Najib will bring more harm than good to the party, he will remain in power, no matter how many of his alleged wrongdoings are exposed.

 

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