The death of neoliberalism and the crisis in western politics


August 25, 2016

The death of neoliberalism and the crisis in western politics

By Marton Jacques

In the early 1980s the author was one of the first to herald the emerging dominance of neoliberalism in the west. Here he argues that this doctrine is now faltering. But what happens next?

 

Donald Trump seeks a return to 1950s America, well before the age of neoliberalism. Photograph: H. Armstrong Roberts/Retrofile/Getty Images

The western financial crisis of 2007-8 was the worst since 1931, yet its immediate repercussions were surprisingly modest. The crisis challenged the foundation stones of the long-dominant neoliberal ideology but it seemed to emerge largely unscathed. The banks were bailed out; hardly any bankers on either side of the Atlantic were prosecuted for their crimes; and the price of their behaviour was duly paid by the taxpayer. Subsequent economic policy, especially in the Anglo-Saxon world, has relied overwhelmingly on monetary policy, especially quantitative easing. It has failed. The western economy has stagnated and is now approaching its lost decade, with no end in sight.

After almost nine years, we are finally beginning to reap the political whirlwind of the financial crisis. But how did neoliberalism manage to survive virtually unscathed for so long? Although it failed the test of the real world, bequeathing the worst economic disaster for seven decades, politically and intellectually it remained the only show in town. Parties of the right, centre and left had all bought into its philosophy, New Labour a classic in point. They knew no other way of thinking or doing: it had become the common sense. It was, as Antonio Gramsci put it, hegemonic. But that hegemony cannot and will not survive the test of the real world.

But the causes of this political crisis, glaringly evident on both sides of the Atlantic, are much deeper than simply the financial crisis and the virtually stillborn recovery of the last decade. They go to the heart of the neoliberal project that dates from the late 70s and the political rise of Reagan and Thatcher, and embraced at its core the idea of a global free market in goods, services and capital. The depression-era system of bank regulation was dismantled, in the US in the 1990s and in Britain in 1986, thereby creating the conditions for the 2008 crisis. Equality was scorned, the idea of trickle-down economics lauded, government condemned as a fetter on the market and duly downsized, immigration encouraged, regulation cut to a minimum, taxes reduced and a blind eye turned to corporate evasion.

The first inkling of the wider political consequences was evident in the turn in public opinion against the banks, bankers and business leaders. For decades, they could do no wrong: they were feted as the role models of our age, the default troubleshooters of choice in education, health and seemingly everything else. Now, though, their star was in steep descent, along with that of the political class. The effect of the financial crisis was to undermine faith and trust in the competence of the governing elites. It marked the beginnings of a wider political crisis.

It should be noted that, by historical standards, the neoliberal era has not had a particularly good track record. The most dynamic period of postwar western growth was that between the end of the war and the early 70s, the era of welfare capitalism and Keynesianism, when the growth rate was double that of the neoliberal period from 1980 to the present.

Ronald Reagan and Margaret Thatcher, pictured in 1984, ushered in the era of neoliberalism.
Ronald Reagan and Margaret Thatcher, pictured in 1984, ushered in the era of neoliberalism. Photograph: Bettmann Archive

But by far the most disastrous feature of the neoliberal period has been the huge growth in inequality. Until very recently, this had been virtually ignored. With extraordinary speed, however, it has emerged as one of, if not the most important political issue on both sides of the Atlantic, most dramatically in the US. It is, bar none, the issue that is driving the political discontent that is now engulfing the west. Given the statistical evidence, it is puzzling, shocking even, that it has been disregarded for so long; the explanation can only lie in the sheer extent of the hegemony of neoliberalism and its values.

But now reality has upset the doctrinal apple cart. In the period 1948-1972, every section of the American population experienced very similar and sizable increases in their standard of living; between 1972-2013, the bottom 10% experienced falling real income while the top 10% did far better than everyone else. In the US, the median real income for full-time male workers is now lower than it was four decades ago: the income of the bottom 90% of the population hasstagnated for over 30 years.

A not so dissimilar picture is true of the UK. And the problem has grown more serious since the financial crisis. On average, between 65-70% of households in 25 high-income economies experienced stagnant or falling real incomes between 2005 and 2014.

The reasons are not difficult to explain. The hyper-globalisation era has been systematically stacked in favour of capital against labour: international trading agreements, drawn up in great secrecy, with business on the inside and the unions and citizens excluded, the Trans-Pacific Partnership (TPP) and theTransatlantic Trade and Investment Partnership (TTIP) being but the latest examples; the politico-legal attack on the unions; the encouragement of large-scale immigration in both the US and Europe that helped to undermine the bargaining power of the domestic workforce; and the failure to retrain displaced workers in any meaningful way.

As Thomas Piketty has shown, in the absence of countervailing pressures, capitalism naturally gravitates towards increasing inequality. In the period between 1945 and the late 70s, Cold War competition was arguably the biggest such constraint. Since the collapse of the Soviet Union, there have been none. As the popular backlash grows increasingly irresistible, however, such a winner-takes-all regime becomes politically unsustainable.

Large sections of the population in both the US and the UK are now in revolt against their lot, as graphically illustrated by the support for Trump and Sanders in the US and the Brexit vote in the UK. This popular revolt is often described, in a somewhat denigratory and dismissive fashion, as populism. Or, as Francis Fukuyama writes in a recent excellent essay in Foreign Affairs: “‘Populism’ is the label that political elites attach to policies supported by ordinary citizens that they don’t like.” Populism is a movement against the status quo. It represents the beginnings of something new, though it is generally much clearer about what it is against than what it is for. It can be progressive or reactionary, but more usually both.

Brexit is a classic example of such populism. It has overturned a fundamental cornerstone of UK policy since the early 1970s. Though ostensibly about Europe, it was in fact about much more: a cri de coeur from those who feel they have lost out and been left behind, whose living standards have stagnated or worse since the 1980s, who feel dislocated by large-scale immigration over which they have no control and who face an increasingly insecure and casualised labour market. Their revolt has paralysed the governing elite, already claimed one prime minister (David Cameron), and left the latest one fumbling around in the dark looking for divine inspiration (Theresa May).

The wave of populism marks the return of class as a central agency in politics, both in the UK and the US. This is particularly remarkable in the US. For many decades, the idea of the “working class” was marginal to American political discourse. Most Americans described themselves as middle class, a reflection of the aspirational pulse at the heart of American society. According to a Gallup poll, in 2000 only 33% of Americans called themselves working class; by 2015 the figure was 48%, almost half the population.

Brexit, too, was primarily a working-class revolt. Hitherto, on both sides of the Atlantic, the agency of class has been in retreat in the face of the emergence of a new range of identities and issues from gender and race to sexual orientation and the environment. The return of class, because of its sheer reach, has the potential, like no other issue, to redefine the political landscape.

The re-emergence of class should not be confused with the labour movement. They are not synonymous: this is obvious in the US and increasingly the case in the UK. Indeed, over the last half-century, there has been a growing separation between the two in Britain. The re-emergence of the working class as a political voice in Britain, most notably in the Brexit vote, can best be described as an inchoate expression of resentment and protest, with only a very weak sense of belonging to the labour movement.

Indeed, Ukip has been as important – in the form of immigration and Europe – in shaping its current attitudes as the Labour party. In the United States, both Trump and Sanders have given expression to the working-class revolt, the latter almost as much as the former. The working class belongs to no one: its orientation, far from predetermined, as the left liked to think, is a function of politics.

The neoliberal era is being undermined from two directions. First, if its record of economic growth has never been particularly strong, it is now dismal. Europe is barely larger than it was on the eve of the financial crisis in 2007; the United States has done better but even its growth has been anaemic. Economists such as Larry Summers believe that the prospect for the future is most likely one of secular stagnation.

Worse, because the recovery has been so weak and fragile, there is a widespread belief that another financial crisis may well beckon. In other words, the neoliberal era has delivered the west back into the kind of crisis-ridden world that we last experienced in the 1930s. With this background, it is hardly surprising that a majority in the west now believe their children will be worse off than they were. Second, those who have lost out in the neoliberal era are no longer prepared to acquiesce in their fate – they are increasingly in open revolt. We are witnessing the end of the neoliberal era. It is not dead, but it is in its early death throes, just as the social-democratic era was during the 1970s.

Image result for Jeffrey D. Sachs

The Earth Institute@Columbia University’s Jeffery Sachs

A sure sign of the declining influence of neoliberalism is the rising chorus of intellectual voices raised against it. From the mid-70s through the 80s, the economic debate was increasingly dominated by monetarists and free marketeers. But since the western financial crisis, the centre of gravity of the intellectual debate has shifted profoundly. This is most obvious in the United States, with economists such as Joseph Stiglitz, Paul Krugman, Dani Rodrik and Jeffrey Sachs becoming increasingly influential. Thomas Piketty’s Capital in the Twenty-First Century has been a massive seller. His work and that of Tony Atkinson and Angus Deaton have pushed the question of the inequality to the top of the political agenda. In the UK, Ha-Joon Chang, for long isolated within the economics profession, has gained a following far greater than those who think economics is a branch of mathematics.

 Meanwhile, some of those who were previously strong advocates of a neoliberal approach, such as Larry Summers and the Financial Times’s Martin Wolf, have become extremely critical. The wind is in the sails of the critics of neoliberalism; the neoliberals and monetarists are in retreat. In the UK, the media and political worlds are well behind the curve. Few recognise that we are at the end of an era. Old attitudes and assumptions still predominate, whether on the BBC’s Today programme, in the rightwing press or the parliamentary Labour party.

Following Ed Miliband’s resignation as Labour leader, virtually no one foresaw the triumph of Jeremy Corbyn in the subsequent leadership election. The assumption had been more of the same, a Blairite or a halfway house like Miliband, certainly not anyone like Corbyn. But the zeitgeist had changed. The membership, especially the young who had joined the party on an unprecedented scale, wanted a complete break with New Labour. One of the reasons why the left has failed to emerge as the leader of the new mood of working-class disillusionment is that most social democratic parties became, in varying degrees, disciples of neoliberalism and uber-globalisation. The most extreme forms of this phenomenon were New Labour and the Democrats, who in the late 90s and 00s became its advance guard, personified by Tony Blair and Bill Clinton, triangulation and the third way.

But as David Marquand observed in a review for the New Statesman, what is the point of a social democratic party if it doesn’t represent the less fortunate, the underprivileged and the losers? New Labour deserted those who needed them, who historically they were supposed to represent. Is it surprising that large sections have now deserted the party who deserted them? Blair, in his reincarnation as a money-obsessed consultant to a shady bunch of presidents and dictators, is a fitting testament to the demise of New Labour.

‘Virtually no one foresaw the triumph of Jeremy Corbyn’, pictured at a rally in north London last week.

‘Virtually no one foresaw the triumph of Jeremy Corbyn’, pictured at rally in north London last week. Photograph: Daniel Leal-Olivas/AFP/Getty Images

The rival contenders – Burnham, Cooper and Kendall – represented continuity. They were swept away by Corbyn (pic above), who won nearly 60% of the votes. New Labour was over, as dead as Monty Python’s parrot. Few grasped the meaning of what had happened. A Guardian leader welcomed the surge in membership and then, lo and behold, urged support for Yvette Cooper, the very antithesis of the reason for the enthusiasm. The PLP refused to accept the result and ever since has tried with might and main to remove Corbyn.

Just as the Labour party took far too long to come to terms with the rise of Thatcherism and the birth of a new era at the end of the 70s, now it could not grasp that the Thatcherite paradigm, which they eventually came to embrace in the form of New Labour, had finally run its course. Labour, like everyone else, is obliged to think anew. The membership in their antipathy to New Labour turned to someone who had never accepted the latter, who was the polar opposite in almost every respect of Blair, and embodying an authenticity and decency which Blair patently did not.

Labour may be in intensive care, but the condition of the Conservatives is not a great deal better.

Corbyn is not a product of the new times, he is a throwback to the late 70s and early 80s. That is both his strength and also his weakness. He is uncontaminated by the New Labour legacy because he has never accepted it. But nor, it would seem, does he understand the nature of the new era. The danger is that he is possessed of feet of clay in what is a highly fluid and unpredictable political environment, devoid of any certainties of almost any kind, in which Labour finds itself dangerously divided and weakened.

Labour may be in intensive care, but the condition of the Conservatives is not a great deal better. David Cameron was guilty of a huge and irresponsible miscalculation over Brexit. He was forced to resign in the most ignominious of circumstances. The party is hopelessly divided. It has no idea in which direction to move after Brexit. The Brexiters painted an optimistic picture of turning away from the declining European market and embracing the expanding markets of the world, albeit barely mentioning by name which countries it had in mind. It looks as if the new prime minister may have an anachronistic hostility towards China and a willingness to undo the good work of George Osborne. If the government turns its back on China, by far the fastest growing market in the world, where are they going to turn?

Brexit has left the country fragmented and deeply divided, with the very real prospect that Scotland might choose independence. Meanwhile, the Conservatives seem to have little understanding that the neoliberal era is in its death throes.

‘Put America first’: Donald Trump in Cleveland last month. Photograph: Joe Raedle/Getty Images

Dramatic as events have been in the UK, they cannot compare with those in the United States. Almost from nowhere, Donald Trump rose to capture the Republican nomination and confound virtually all the pundits and not least his own party. His message was straightforwardly anti-globalisation. He believes that the interests of the working class have been sacrificed in favour of the big corporations that have been encouraged to invest around the world and thereby deprive American workers of their jobs. Further, he argues that large-scale immigration has weakened the bargaining power of American workers and served to lower their wages.

He proposes that US corporations should be required to invest their cash reserves in the US. He believes that the North American Free Trade Agreement (Nafta) has had the effect of exporting American jobs to Mexico. On similar grounds, he is opposed to the TPP and the TTIP. And he also accuses China of stealing American jobs, threatening to impose a 45% tariff on Chinese imports.

To globalisation Trump counterposes economic nationalism: “Put America first”. His appeal, above all, is to the white working class who, until Trump’s (and Bernie Sander’s) arrival on the political scene, had been ignored and largely unrepresented since the 1980s. Given that their wages have been falling for most of the last 40 years, it is extraordinary how their interests have been neglected by the political class. Increasingly, they have voted Republican, but the Republicans have long been captured by the super-rich and Wall Street, whose interests, as hyper-globalisers, have run directly counter to those of the white working class. With the arrival of Trump they finally found a representative: they won Trump the Republican nomination.

The economic nationalist argument has also been vigorously pursued by Bernie Sanders, who ran Hillary Clinton extremely close for the Democratic nomination and would probably have won but for more than 700 so-called super-delegates, who were effectively chosen by the Democratic machine and overwhelmingly supported Clinton. As in the case of the Republicans, the Democrats have long supported a neoliberal, pro-globalisation strategy, notwithstanding the concerns of its trade union base. Both the Republicans and the Democrats now find themselves deeply polarised between the pro- and anti-globalisers, an entirely new development not witnessed since the shift towards neoliberalism under Reagan almost 40 years ago.

Another plank of Trump’s nationalist appeal – “Make America great again” – is his position on foreign policy. He believes that America’s pursuit of great power status has squandered the nation’s resources. He argues that the country’s alliance system is unfair, with America bearing most of the cost and its allies contributing far too little. He points to Japan and South Korea, and Nato’s European members as prime examples.He seeks to rebalance these relationships and, failing that, to exit from them.

As a country in decline, he argues that America can no longer afford to carry this kind of financial burden. Rather than putting the world to rights, he believes the money should be invested at home, pointing to the dilapidated state of America’s infrastructure. Trump’s position represents a major critique of America as the world’s hegemon. His arguments mark a radical break with the neoliberal, hyper-globalisation ideology that has reigned since the early 1980s and with the foreign policy orthodoxy of most of the postwar period. These arguments must be taken seriously. They should not be lightly dismissed just because of their authorship. But Trump is no man of the left. He is a populist of the right. He has launched a racist and xenophobic attack on Muslims and on Mexicans. Trump’s appeal is to a white working class that feels it has been cheated by the big corporations, undermined by Hispanic immigration, and often resentful towards African-Americans who for long too many have viewed as their inferior.

A Trump America would mark a descent into authoritarianism characterised by abuse, scapegoating, discrimination, racism, arbitrariness and violence; America would become a deeply polarised and divided society. His threat to impose 45% tariffs on China, if implemented, would certainly provoke retaliation by the Chinese and herald the beginnings of a new era of protectionism.

Trump may well lose the presidential election just as Sanders failed in his bid for the Democrat nomination. But this does not mean that the forces opposed to hyper-globalisation – unrestricted immigration, TPP and TTIP, the free movement of capital and much else – will have lost the argument and are set to decline. In little more than 12 months, Trump and Sanders have transformed the nature and terms of the argument. Far from being on the wane, the arguments of the critics of hyper-globalisation are steadily gaining ground. Roughly two-thirds of Americans agree that “we should not think so much in international terms but concentrate more on our own national problems”. And, above all else, what will continue to drive opposition to the hyper-globalisers is inequality.

 https://www.theguardian.com/commentisfree/2016/aug/21/death-of-neoliberalism-crisis-in-western-politics

This is why Lee Hsien Loong is so respected!


August 24, 2016

This is why Lee Hsien Loong is so respected–We in Malaysia can learn from LHL’s Leadership style (Din Merican): Singapore first before self

by Wan Wei

I’m proud of my Prime Minister! And how many citizens of the world can say that of their Prime Minister?–Wan Wei

This is why Lee Hsien Loong is so respected!

lhl

Wow, I was watching the live streaming of the National Day Rally 2016 from Helsinki, and my heart skipped a beat at this moment, when our Prime Minister basically paused awkwardly and felt ill.

Loong created by SE Wong

So today I just want to write a brief note about why Lee Hsien Loong (LHL), the Prime Minister of Singapore, is so respected in and outside of his own country.

It is because as the head of the little red dot, he really does put Singapore’s interest before his own.

Tonight GBA’s event is testimony of that– he could have chosen not to continue the speech. But knowing that this event would probably appear on the global press the next day (well, it IS a big deal that Singapore’s prime minister sort of “collapsed” briefly during its own National Day Rally), he had to and wanted to finish the speech.

And he did! 

The position of Prime Minister of Singapore–in spite of its perceived huge pay cheque– is hardly enviable. For one, Prime Minister LHL probably has to worry about the issues of this small country all the time– will we survive another 50 years? Will we be the next targets of terrorism? etc. It doesn’t take much for Singapore to suddenly perish as a country–after all, small cities have risen and vanished in the past.

Then anti-government folks always complain about lack of freedom of expression, lack of support for local arts/sports/entrepreneurship, lack of human rights in Singapore. Oh yes, and huge income gap of course. Then it is always the Prime Minister’s fault and of course the 69.9% (including me since I vote for PAP) who are blamed.

I don’t think the “Singapore system” will ever change in the next 20 years, but apparently for most Singaporeans, it works fine. And to head this system as Prime Minister with no doubt, with compassion and with the utmost mental strength is absolutely admirable.:)

Oh yes and as a sidenote, haha, LHL actually is a great photographer and coder as well. I’m proud of my Prime Minister! And how many citizens of the world can say that of their Prime Minister?

Is the Malaysia project a non-starter?


August 23, 2016

Is the Malaysia project a non-starter?

by Dr. KJ John

http://www.malaysiakini.com

In the Seven (7) Habits series, Stephen Covey’s central thesis is that we must grow or develop habits for growth and development in meaningful and significant ways. He argues that all human or organic systems must first grow from total dependence (and appreciate all its full meanings) to independence or human freedoms, and then, finally and fully appreciate interdependence with others of like-heart and mind. This is also the Hearts and Mind agenda of our NGO.

Full understanding and appreciation of real and true meaning of interdependence must belong to every one of the stakeholders and partners in a shared and common enterprise. It must become a shared vision for posterity; and never to be compromised.

Whether it is the UN or the EU, or even federated states like the US or Malaysia, or our simple OHMSI Sdn Bhd; interdependence properly understood and stewarded defines real and true meanings of the so-called freedom we ‘pretend to enjoy’, it then becomes real ‘merdeka’.

Covey’s 7-Habits

Habit 1: Be Proactive
Habit 2: Begin with the End in Mind
Habit 3: Put First Things First
Habit 4: Think Win-Win
Habit 5: Seek First to Understand, Then to Be Understood
Habit 6: Synergise
Habit 7: Sharpen the Saw”

– Stephen R Covey, ‘The 7 Habits of Highly Effective People’

Malaysia-Land of Beauty

I will try to evaluate our Malaysia project, not simply from a historical perspective, but more importantly from a worldview perspective and see what Covey might be saying to us. Such a perspective puts a very high premium on human values for growth within the ethics and culture of lived life; in seeking to move organic systems from the full dependence towards voluntary and volitional inter-dependence.

The Malaysia project

Malaysia came into existence on September 16, 2016. But, that fact is not clearly taught in history. Not many of us today can change that false reality interpreted today. Before that date we had four independent states called Federation of Malaya, Singapore, and the North Borneo States of Sarawak and Sabah; each with their own unique story about the movement from dependence towards independence and now interdependence.

Rightly or wrongly, for reasons of their own, in August 1965 Singapore chose to leave Malaysia by mutual agreement and consent between the leaderships of Malaysia and the island state. I am not sure if and whether Sarawak and Sabah or the United Kingdom had any direct say in this matter.

Therefore, after a short marriage of two years, Singapore exercised their ‘move from total dependence from the United Kingdom towards independence from the new Malaysia’. They wanted to learn and grow the experience and freedom with true independence.

Sarawak and Sabah may have had views about such a move by Singapore, but I do not know those facts, but they too surely want to experience movement from full dependence towards true independence. And their growth experiences will be surely very different.

Sarawak and Sabah’s self-governance experience

Have the Sarawak and Sabah governments and their political leadership learned true independence and interdependence from their many years as a one-third partner of Malaysia; even as the Malaysia Agreement gave them some clear and separate jurisdictions?

Many of these legal rights and privileges were captured within the revised Federal Constitution of Malaysia and including recognition of their 18 and 20 point submissions. Was there ever consensus on those two documents by the political leadership of Malaysia?

But why therefore, after more than 50 years within Malaysia, do they now put their foot down about Petronas’ governance and staff recruitment strength and raise issues about employment permits? As a public policy person, I am simply wondering loudly.

What have they really learnt about independence, or interdependence, or is it still merely dependence, if anything at all? Or, do these jurisdictional governance regimes feel like, we the Malayans, have thoroughly abused them altogether?

Learning from Covey

In my Pet Theory R, relationships are an important and elemental R. Therefore, building and growing our knowledge about ‘nurturing and growing mature relationships’ using the Covey’s three-step process and applying them to his seven habits for Sarawak and Sabah relationships with Malayans may be instructional:

  • Malaya was proactive in nurturing a relationship with Sarawak and Sabah; Brunei however did not respond in the same way. Why? We still grew Malaysia. Did we ask Indonesia at all?
  • Our end in mind was always National Unity and regional stability; and more recently, we have added words like integration and integrity. I call that agenda: integration with integrity.
  • What is our First Things First? Is it Malaysia, ‘Melayusia’, or ketuanan bumiputra for now or centre versus periphery in governance of lived life and stewardship of resources; including all human beings especially citizens?
  • Do we think win-win every time we have bilateral issues in our relationships concerns? Or, can we really begin to think win-win-win to endure stewardship as the third win for the sake of all human beings?
  • Do we seek to understand before we seek to be understood? I did not understand Sarawakians until I met the Kelabits earlier and now, after I spent 10 days in Baram Valley. Maximus Ongkili, Beth Baikan and Bernard Dompok taught me to learn to understand Kadazans.
  • Have we really learnt to synergise? Why then is the Malaysian Public Service still more than 80 percent made up of peninsular Malays (non-Malays are less than 10 percent I believe)? This issue is reflective of the Petronas case story. Synergy would allow for creating new values; not simply depreciating existing values.
  • Finally, from my experience on the ground, and meeting so many smart and equally ambitious Orang Ulu Sarawak and Kadazans; these questions are my Covey test for all of Malayans to sharpen our saw or ‘tools of execution and evaluation’ so that we can see and learn the real meaning of Malaysian interdependence and not allow it to become a foolhardy project.

KJ JOHN, PhD, was in public service for 32 years having served as a researcher, trainer, and policy adviser to the International Trade and Industry Ministry and the National IT Council (NITC) of the government of Malaysia. The views expressed here are his personal views and not those of any institution he is involved with. Write to him at kjjohn@ohmsi.net with any feedback or views.

Lessons out of Africa for scandal plagued Malaysia


August 23, 2o16

Lessons out of Africa for scandal plagued Malaysia

by Michael Vatikiotis

Beset by scandal, a murky Malaysia could take heed of recent political developments and a new transparency in South Africa and Mauritius.

Many Malaysians are despairing about their political system, in which institutional checks and balances against the abuse of power fail to work, and the opposition lacks the capacity to provide voters with a means of punishing the government at the ballot box.

The damning revelations about the abuse of funds in 1MDB, a development fund headed by Prime Minister Najib Tun Razak, have generated corruption allegations so big that the US Department of Justice, as well as authorities in Switzerland and Singapore, have all weighed in to investigate.  Yet, the political opposition at home in Malaysia has been unable to do what a loyal opposition does in a parliamentary democracy, which is to freely air grievances and sanction the sitting government in a no-confidence vote. Neither have any formal legal proceedings been successfully brought forward in Malaysia’s supposedly independent courts. Instead, a group of Malaysians has launched a class actions suit in the US.

The government meanwhile, has launched its own investigation, which has cleared the Prime Minister of any wrongdoing, but has refused to release details of what state auditors found.   An executive order removed a sitting Attorney General, and several senior party officials from the ruling United Malays National Organisations have been summarily sacked after expressing concern about the situation.

 UMNO is doomed 

For many Malaysians, what is emblematic about 1MDB is less the alleged corruption on a massive scale, but just how disempowered they feel as lawyers, members of parliament and ordinary citizens; there seems to be absolutely no redress to what is plainly evident to anyone outside the country – and they feel ashamed.  The government meanwhile, is prone to accusing those who dream of a more accountability of being unduly influenced by Western liberal values that have no currency in Asia or the developing world.

Recent events and political trends in southern Africa indicate such claims are nonsense and are worth examining in the light of the current situation in Malaysia.

The outcome of local elections held this month in South Africa and the conduct of political affairs in the small island neighbouring state of Mauritius suggest, that countries in the developing world afflicted by the scourge of corruption do have civilised ways of dealing with the abuse of power, which leave them economically stronger and socially more cohesive.

ANC under Zuma –rejected by voters

Local elections held in South Africa on 3 August saw the ruling African National Congress lose significantly, especially in urban areas.  For the first time since winning power after the dismantling of apartheid in 1994, the ANC’s share of the vote fell below 60 per cent.  The final tally was barely 53 per cent. Most analysts attributed the loss to dissatisfaction with ANC leaders, specifically its President Jacob Zuma, whose term in office has been dogged by accusations of corruption.

Voters appear to have based their decision on a clear process of legal investigation that has shown itself to be somewhat immune to political interference and whitewash.  In June, a South African court rejected President Zuma’s attempted appeal against a ruling that he should face as many as 800 charges of corruption, which include fraud and money laundering while he was in office.  In March this year, Zuma was found guilty of violating the constitution over the use of public funds to upgrade his private residence.

In the light of 1MDB, Malaysians won’t be shocked by these allegations, but what they might find surprising is that the courts in South Africa are ruling on them without fear or favour.  As a result, the party that has led the country since liberation, like UMNO in Malaysia, is no longer immune to scrutiny and the weight of public opinion.  Moreover, instead of blaming other groups or races for its loss, the ANC leadership has declared it will take collective responsibility.

New Hope for South Africa–Mmusi Maimane

More noteworthy still is how the opposition has responded in the South African context.  The winner in the August local election was the old White-dominated liberal party, the Democratic Alliance, that has strongholds in urban areas, rather like the Malaysian opposition.  The DA’s new leader, a black man from Soweto, called Mmusi Maimane, sometimes dubbed South Africa’s Obama, led the party to gain almost 30 per cent of the vote, up from less than two per cent in 1994.  Since the white population of South Africa represents only eight per cent of the total, many brown and black people must have shifted their allegiance from the ANC to the DA.

There are two lessons here for Malaysia: the first is that it is not a given that the party of liberation must rule the country forever; the second is that political affiliation need not correspond to ethnic identity.  South Africa is now the continent’s largest economy, having displaced Nigeria.  With the message delivered to the ANC at the local elections this month, many South Africans are hopeful that the country’s economic promise will no longer be squandered by leaders who use affirmative action to line the pockets of cronies and relatives.

 Mauritius: Checks and Balances are working

Meanwhile, next door in the tiny island of Mauritius, which has long had a close relationship with Malaysia, there are also signs that politicians who abuse their power are increasingly subject to the law.  In June last year, Pravind Jugnauth, the son of current Prime Minister Anerood Jugnauth (pic above), was found guilty as Minister of Technology of conflict of interest in the purchase of a health clinic.

Pravind appealed the verdict and claimed trial, a decision he won, which has enabled him to serve as Finance Minister in the cabinet.  Remarkably, given that Pravind is considered Prime Minister in waiting to take over from his father, the Deputy Public Prosecutor is appealing the court’s decision – and he has kept his job.

The political set up in Mauritius is similar to that of Malaysia — a multiracial society composed of Hindu Indians, Muslim Indians, Chinese, Creole, and a smattering of established white families governed by a parliamentary system with courts and other regulatory bodies closely modeled on British institutions.  Also like Malaysia, there has long been tension between the manner in which the courts and the media hold politicians accountable, and political efforts to manipulate them.

It would seem that in the case of Mauritius, the checks and balances are working. Former Prime Minister Navin Ramgoolam, who was accused of using the courts to try to muzzle the media, is now under police investigation after more than US$ 6 million in cash was found at his home after he lost the election in 2014. Ramgoolam claims the money was a donation from supporters for use in the election campaign.  Sound familiar?

Michael Vatikiotis is Asia Regional Director for the Centre for Humanitarian Dialogue.

http://www.newmandala.org/lessons-africa-malaysia/

 

Najib’s Mystery Millions Caught in US Seizure?


August 23, 2016

Najib’s Mystery Millions Caught in US Seizure?

by John Berthelsen

http://www.asiasentinel.com

Najib’s Mystery Millions Caught in US Seizure?

Malaysian Prime Minister Najib Razak may have lost a huge chunk of the fabled US$681 million that was allegedly steered to him from the scandal-plagued 1Malaysia Development Bhd fund, according to sources in Kuala Lumpur.  The money appears to have been used to acquire a major part of the estimated US$1 billion in assets seized by the US government in July, the sources said.

From the first, mystery has surrounded the US$681 million, which was deposited in Najib’s personal bank account in Ambank in Kuala Lumpur in early 2013, just before the general election, from the Singapore branch of Swiss Falcon Private Bank, owned by the Abu Dhabi fund Aabar, and another Swiss institution, Tanore Finance Group.

For months after the transactions were made public, Najib – who acknowledged the receipt but said the money was a “donation” – and a series of surrogates said it had come from a shifting variety of sources although the Prime Minister’s allies generally settled on a mysterious Saudi Arabian Sheikh.

In October 2013, US$620 million of the money was just as mysteriously transferred back out to Tanore Finance Group, after which it disappeared.  The other US$60 million was said to have been used to fund the Barisan Nasional’s campaign in the 2013 election, among other things.

Untitled-1

From left: Jho Low, Riza Aziz and Khadem Al Qubaisi (credit: Getty Images)

That transfer to Tanore is said to have been re-transferred into accounts held by Jho Taek Low, the young financial whiz who convinced Najib to take over a Terengganu state investment fund and turn it into 1MDB. Shortly after, Jho Low, as he calls himself, went on an amazing buying binge of apartments, houses, airplanes, jewelry, paintings and other expensive playthings.  Also, armed with a letter of guarantee from 1MDB, he attempted vainly to buy three of London’s most prestigious hotels.

These Rogues are still around

Many in Kuala Lumpur believe the acquisitions were made on behalf of Najib’s acquisitive wife, Rosmah Mansor, who has generated considerable irritation for her public flaunting of US$100,000 handbags and enormously expensive jewels. She is the mother of Riza Aziz, Najib’s stepson and the producer of The Wolf of Wall Street, which is believed to have been funded by 1MDB money, and which turned a huge profit.

The government is expected to call for general elections in the first quarter of 2017, a full year before the current parliamentary session is due to close. According political analysts in Kuala Lumpur, the government, and particularly the United Malays National Organization, is attempting to thwart the opposition while it is deeply disorganized and squabbling. The opposition, however, has now been joined by the new Parti Prebumi Bersatu Malaysia, headed by ousted UMNO Vice President Muhyiddin Yassin as the secretary general, and being driven by former Prime Minister Mahathir Mohamad.

“The road is the first or second quarter of next year,” a source told Asia Sentinel. “They are raising funds already.”  Musa Hitam, a senior UMNO statesman, has also predicted an early election.

Monet’s ‘Great Saint George’—a $35 million scene of Venice.(above)

La Maison de Vincent a Arles, by Vincent Van Gogh

When it was suggested that Najib had plenty of money to fund the next election that was left over from the US$620 million that had disappeared out of the country in 2013, the source said: “That money’s all gone. It all went into buying the paintings and the apartments and the houses that Jho Low paid for. Now it’s going, going, gone…”

On July 20, US Attorney General Loretta E. Lynch announced that the US Justice Department’s Kleptocracy Unit had filed civil complaints seeking the forfeiture and recovery of more than US$1 billion in 1MDB assets, the largest such action ever brought under the kleptocracy asset recovery unit.

“Stolen money that is subsequently used to purchase interests in music companies, artwork or high-end real estate is subject to forfeiture under U.S. law,” said U.S. Attorney Eileen M. Decker, who was present at Lynch’s press conference.

These assets have been detailed in extensive stories in the Wall Street Journal and the New York Times, much of it supplied by the blog The Sarawak Report, giving the addresses of high-end real estate and hotel properties in New York and Los Angeles, a $35 million jet aircraft, works of art by Vincent Van Gogh and Claude Monet, an interest in the music publishing rights of EMI Music and the production of The Wolf of Wall Street.

Named in the Justice Department’s complaint were Jho Low, as he is known, as well as Riza Aziz and “Malaysian Official 1,” who was not identified further. But the complaint noted that shortly after a 2013 bond sale for 1MDB were diverted to the Tanore account, “US$681,000,000 was sent from the Tanore Account to a bank account belonging to MALAYSIAN OFFICIAL 1.” 

Malaysian Official 1 was named 32 times in the 136-page civil complaint.It was an unprecedented action against the head of a government that is considered a vital ally in Southeast Asia and one who as late as last January was playing golf with President Barack Obama in Hawaii.

Najib and his surrogates have for more than a month jumped through hoops to seek to deny that he was Malaysian Official 1, with one going so far as to say that Malaysian Official 1 could be the current Agong, or Malaysian king, the Sultan of Kedah. They have accused the US Justice Department of neglecting to hear the Malaysian government’s side of the story. Khairy Jamaluddin, the Youth Minister, told supporters in early August that the US officials “announced (their findings) is as though it was a conviction, as though (those named) are already guilty and to be punished. The words used showed as though Malaysia and the government are guilty.”

In the meantime, however, the US Justice Department is sequestering the assets specified in the complaint, which many observers believe were not Jho Low’s at all, but the Najib family’s as the beneficial owners.  While UMNO officials plan for a 14th Parliamentary election, opponents and political analysts are waiting for the next shoe to drop, and that would be the filing of a criminal complaint against Malaysian Official 1 and his accomplices.

If indeed the US$1 billion in assets that have been seized is the property of the Najib family, it doesn’t leave them destitute. Long before he became Prime Minister, critics accused Najib, as defense minister, of a long string of defense acquisitions that had been overpriced by client companies alleged to be directing kickbacks into the Najib coffers. In February, for instance, French prosecutors launched a formal investigation into allegations that Bernard Baiocco, the former President of Thales International, the French defense contractor, of steering bribes to Najib through his close friend, the former defense analyst Abdul Razak Baginda, suspected of being the middle man. So far the case has not moved forward publicly.

The Hyenas, Vultures and Maggots of 1MDB


August 23, 2016

The Hyenas, Vultures and Maggots of 1MDB

by Dr. M. Bakri Musa, Morgan-Hill, California

1MDB is not yet a bloated carcass (it is bloated only with debt) and already the hyenas, vultures and maggots are feasting with glee. In the wild, hyenas and vultures wait till their prey is dead, and maggots, rotting. Not these human hyenas, vultures and maggots.

Scavengers are vital in the ecosystem; they cleanse the environment of dead and decomposing bodies. In contrast, these human hyenas, vultures and maggots feasting on 1MDB are part of the rubbish. Perverse as it may seem, they have an exalted opinion of themselves. They view what they are doing–defending “Malaysian Official 1” who is related to one of the hyenas Riza Aziz–as honorable.

This 1MDB mess is humungous; it will burden Malaysians for generations. That is a grim and undeniable fact.Other facts, also undeniable, include these. One, 1MDB’s debt in excess of RM42 billion, and growing fast, exceeds the current budgetary allocation for education. No other entity, private or public, then or now could come even close. Those loans are ultimately the responsibility of taxpayers as well as those who do not pay tax. Those non-taxpayers, meaning the poor, are impacted because funds meant for them would be diverted to servicing those debts.

Two, 1MDB has gone through as many accounting firms as Britney Spears with boyfriends.  Its latest, Deloitte, has resigned, but not before making a most unusual declaration. That is, the US Department of Justice’s June 20, 2016 asset forfeiture lawsuit contained information that, if known at the time of the 2013 and 2014 audits “would have impacted the financial statements and affected the audit reports.”

The Carmas in the Malaysian Civil Service

“…these human hyenas, vultures and maggots feasting on 1MDB are part of the rubbish“–M. Bakri Musa

Along the same vein, the Auditor-General’s Report on 1MDB which the government had promised to make public is now under the Official Secrets Act. Those reports have always been public. Why keep this one secret?

Three, 1MDB has gone through as many chief executives in as many years, not the sign of a well-managed company. Four, drive by the site of the proposed Tun Razak Exchange, 1MDB’s signature development. It is empty. Last, 1MDB has yet to generate a sen of profit despite being in existence since 2009.

Meanwhile Switzerland has forced the sale of the bank involved with 1MDB and imposed an unusual and tough stipulation. Its new owner must not employ any of the existing senior managers of the sold bank. Singapore summarily closed the local branch of that bank. Its head now faces criminal charges. He was denied bail while awaiting trial, reflecting the gravity of the alleged crime. Singapore admitted to being lax in monitoring the bank’s activities with respect to 1MDB. Singapore also froze the assets of Jho Low, Najib’s financial confidant and key 1MDB player, an unprecedented as well as severe action.

There are other facts. The Attorney-General and Bank Negara have closed their investigations with no negative findings. Then there are the American DOJ’s asset forfeiture lawsuits and the class-action suit of Husam and Chang.

In America anyone can file a lawsuit. Thus you may dismiss the American lawsuits but not the actions of the Swiss and Singaporean authorities. As for the Attorney-General and Bank Negara Governor exonerating 1MDB, I let readers give that its proper weightage and relevance. Nonetheless that would still not explain 1MDB’s huge debts, changes in management and auditing firms, empty TRX lot, and the Auditor-General Report being kept secret.

For those who believe that Najib is God’s gift to Malaysians, you can’t argue with them. It would also be blasphemous to dispute Allah’s choice. For the rest of us, we need a more rational explanation, one that does not assault credibility or insult intelligence.

Back to the hyenas, they are now uncharacteristically quiet, their former flamboyance gone. Perhaps they are enjoying their morsels while they can, in their penthouses of Manhattan, mansions of Beverly Hills, and luxury yachts cruising the South China Sea. One would expect that having benefited handsomely from 1MDB they would harbor some gratitude to defend their benefactor.

The vast majority of Najib’s supporters are simple, unsophisticated Malay villagers still under the grip of feudalism. To them it is a simplistic “my leader, my race, my country, right or wrong!” Their loyalty to leaders is intense and unquestioning, up to a point. Betray that, and you pay the price. Datuk Onn was a hero for stopping Malayan Union, and Tunku Abdul Rahman for bringing merdeka. When they fell out of step with their followers, their drop from hero to villain was precipitous and merciless. Najib is nowhere near the caliber of those two giants. We must remind him and his ardent supporters of that.

Those villagers aside, only those vultures and maggots remain Najib’s supporters. The hyenas should be, but for reasons best known to themselves have chosen to remain silent. That leaves the vultures to be his noisiest and ugliest cheerleaders. Unlike the hyenas with their bounties in the millions, those vultures are satisfied with a promotion or two and a federal award (second or third class) thrown in. Satisfied because stripped of their new appointments, they would earn but a mere fraction back at their old law practices or whatever they did before prostituting themselves to Najib.

The maggots are there as long as there is a decaying carcass. A few ringgit tossed their way to fill the tanks of their used motorbikes, and they are happy parading their red shirts or polluting the social media with their inane comments. Once the carrion is gone, so will they.

Some support Najib out of inertia, buttressed by the havoc of regime change in Iraq and Libya as well as the performance of the opposition. Others reflect the forbearance of Malaysians. Najib, they rationalize, won the last election albeit without the majority of the popular votes. Nonetheless that victory was reaffirmed by the recent state elections in Sarawak as well as the two by-elections in Peninsula Malaysia.

That is a dicey defense. Winning elections is no license to steal or be corrupt. Nixon won a landslide in 1972, yet that did not stop his impeachment and subsequent resignation in disgrace for covering up the Watergate break-in.

A few would argue that Najib’s shenanigans are no different from Mahathir’s many opaque UMNO proxy companies plus London Tin, Maminco, Bank Bumiputra, and Forex debacles. To them 1MDB is merely a different crocodile, albeit much more menacing, but from the same fetid swamp. Malaysia will never progress with that attitude.

Then there is the reflected glory argument. Riza Aziz, Malaysian Official 1’s stepson, is one of the producers of the Academy Award-winning The Wolf of Wall Street. Most would miss the irony as the film is banned in Malaysia. Nonetheless Malays in particular should celebrate that achievement.

Malaysians would have, and proudly too, had the film not been tainted. Indeed, the Academy publicly demanded that Riza Aziz’s name be officially deleted. It is like winning at the Olympics, and later disqualified for doping. Instead of glory, shame.

Another aspect of Najib’s support is crude anti-American rage triggered by the DOJ’s lawsuit. That was seen as interference as well as double standards. America too is blighted with corruption, they sniff. True. But as South Korean Tongsun Park and Indonesian James Riady, as well as former Attorney-General Mitchell and President’s Counsel John Dean found out, the corrupt do get caught, convicted, and jailed. That’s the lesson Malaysians should draw from America.

As for American interference, if Najib and other corrupt Third World leaders do not want that, then next time accept only Zimbabwean dollars and use a bank in Uzbekistan. Buy properties in Bali or Cancun, not Manhattan or Beverly Hills, and bet at casinos in Macau not Las Vegas. There are no shortages of hyenas, vultures and maggots in those countries to clean up your mess.