1MDB fund probe may trigger mass protests in Malaysia

Subject The political and economic consequences of the 1Malaysia Development Berhad fund controversy. Significance Police raided 1Malaysia Development Berhad (1MDB)'s offices yesterday under a wider investigation into allegations of mismanagement of the state-owned investment fund. Meanwhile, today the auditor general submitted a provisional report on the fund to the Public Accounts Committee.The 1MDB case is dominating Malaysian political and economic life, and undermining Prime Minister Najib Razak's political position. Further allegations against 1MDB, or popular perceptions that the government is insufficiently investigating criticisms of the fund, could trigger mass protests. Impacts Snap elections are unlikely. The 1MDB controversy will continue to erode investors' confidence in Malaysia. A future 1MDB default is possible without further credit support, posing risks for financial institutions linked to the fund.

Subject Malaysia's political outlook following the Bersih 4 protests. Significance Former Prime Minister Mahathir Mohamad is to be officially questioned about his presence at the 'Bersih 4' mass protests organised by the Coalition for Clean and Fair Elections (Bersih) on August 29 and 30, local press reports said today. By allowing the rallies to proceed peacefully, Prime Minister Najib Razak had sought to extend the political respite brought by his July 28 cabinet reshuffle. His position nationally and within the governing United Malays National Organisation (UMNO) is under threat amid political difficulties relating to the 1Malaysia Development Berhad (1MDB) national investment fund. Impacts The Malaysian parliamentary opposition's weakness means civil society will provide most opposition to the government for now. The Bersih movement's mostly urban support limits its challenge to the government, which enjoys strong rural support. Public doubts about the effectiveness of Malaysian anti-corruption frameworks will stunt their development.


Subject The political crises facing the government. Significance Prime Minister Najib Razak faces his worst array of political crises to date. These include alleged mismanagement of one of Malaysia's sovereign wealth funds, controversial tightening of security legislation and the potentially inflationary implementation of a goods and services tax. Personal criticism by former Prime Minister Mahathir Mohamad compounds these difficulties, although the leadership of Najib's United Malays National Organisation (UMNO) has rallied around him. Impacts If Najib's political position worsens, pressure will grow within UMNO to replace him. By-elections in May will be bellwethers for public perceptions of the opposition and governing coalition's popularity. The 'hudud' controversy could split the opposition coalition during parliament's next session.


Significance Rifts within the political elite are deepening, evidenced by the departure of former Prime Minister Jean Ravelonarivo -- and his cabinet -- last month. However, the installation of a new administration does not portend stability. Impacts The central bank's decision to cut its benchmark interest rate to 8.3% from 8.7% will facilitate borrowing by firms and households. This is unlikely to boost GDP growth given the countervailing effects of political volatility and low commodity prices. The UN secretary general's appeal (on an official trip earlier this month) for the government to tackle graft is unlikely to be heeded. If Madagascar experiences another coup, the Southern African Development Community bloc will likely expel it -- again.


Subject Political outlook for Malaysia's prime minister. Significance This year's United Malays National Organisation (UMNO) general assembly, which concluded on December 12, emphasised unity in the face of some party fragmentation. Party leader and Malaysian Prime Minister Najib Razak used the meeting again to reject criticisms surrounding his government over the 1Malaysia Development Berhad (1MDB) state investment fund and political contributions. Despite infighting, the party assembly and some recent parliamentary victories imply Najib is consolidating his political position. Impacts Some UMNO critics of Najib may defect, but with a weak opposition coalition, defectors' influence would be limited. New security council legislation will alienate parts of Malaysian civil society. The government will face international pressure not to 'abuse' this legislation.


Significance The issue of media independence has become a fraught one under Prime Minister Shinzo Abe's administration, with perceptions rising among journalists and the public that the government is subjecting the media to political pressure. Critics of the administration speak of censorship and threats to freedom of expression. Japan's ranking in the World Press Freedom Index has fallen from 22nd in 2011-12, before Abe took office, to 61st in 2015. Impacts The government seems likely to try to marginalise the criticisms of constitutional scholars, like it marginalises its other critics. International media as well as domestic journalists are likely to feel some pressure from the authorities. In the near term, the issue is unlikely to destabilise the government, or derail passage of security legislation.


Subject Japan's participation in UN peacekeeping operations. Significance Prime Minister Shinzo Abe’s administration will withdraw Japan's Ground Self Defence Force (GSDF) mission from the UN peacekeeping operation (UNPKO) in South Sudan in May. The decision follows accusations that the government covered up evidence of the dangers the troops were facing, and raises potential questions about Japan’s commitment to its policy of a ‘proactive contribution to peace’. Impacts The announcement of withdrawal will reduce the political impact if there are casualties. Defence Minister Tomomi Inada will probably survive accusations of a cover-up, with ministry officials taking the blame. Japan will contribute personnel to UNPKOs again in future, to gain experience and earn goodwill internationally. There will be minimal implications for Japan's other security cooperation efforts, which focus on deterring China and North Korea.


Subject The political impact of the 'Panamagate' scandal. Significance A five-member Supreme Court bench on April 20 ordered the constitution of a Joint Investigation Team (JIT) to probe the legitimacy of the offshore assets (mostly in the United Kingdom and Qatar) of Prime Minister Nawaz Sharif and his family. In coming months, the Court bench will monitor and oversee the investigation in which both civilian law enforcement and military intelligence will participate. Impacts The government will avoid challenging the military’s foreign policy this year. The scandal will increase pressure on the political elite to ensure public probity. A military coup is highly improbable at present.


Subject Composition and agenda of a likely unity government. Significance De facto opposition leader Benny Gantz on March 26 agreed to enter a coalition with incumbent Prime Minister Binyamin Netanyahu. The government, terms for which have yet to be finalised, would end the political deadlock that three back-to-back elections failed to break. Although the prospective coalition will enjoy a Knesset majority of at least 75 seats, it will also cover a wide and awkward ideological spectrum. Impacts Netanyahu will remain the dominant figure on the political scene for another 18 months, if not beyond. Equal division of portfolios between Blue and White and religious-right parties will mean a more moderate government than the previous one. Gantz’s decision has split his party and leaves the centre-left weaker and more divided than ever. The new coalition will address issues that have been put on hold during the extended interregnum and restore normal government functioning.


Significance On October 23, President Reuven Rivlin passed on the task of forming the government to Benny Gantz, leader of the centrist Blue and White alliance, after incumbent Prime Minister Binyamin Netanyahu failed. Neither the centre-left bloc nor the bloc of religious and right-wing parties (led by Netanyahu's Likud) has a majority without Yisrael Beiteinu, but so far Gantz and Netanyahu have failed to find an acceptable compromise despite pressure from Lieberman and Rivlin to form a unity administration. Meanwhile, Netanyahu himself faces an impending indictment on corruption charges. Impacts Consecutive rounds of elections will create a strain on the public finances. Netanyahu will refuse any power rotation deal where he is not given the premiership first. Another election, especially if coupled with an indictment, will accelerate a trend of public fatigue with Netanyahu.


Res Publica ◽  
1987 ◽  
Vol 29 (1) ◽  
pp. 53-58
Author(s):  
Louis Tobback

Who makes decisions concerning defence policy in Belgium? Not the public opinion, because otherwise there would be no Cruise missiles.Not the Parliament, because the parliamentarians only ratify international treaties. Not the Minister of Foreign Affairs, because the Minister of Defence makes decisions without contacting Foreign Affairs. Even the Government as a whole and the Prime Minister do not much take care about the defence policy. The so-called experts concerning defence policy are the militaries, the diplomats and the NATO-bureaucrats.Yet, the political problems with respect to the Atlantic Alliance and the division of the European continent, wilt constrain the politicians to reconsider the basic options of the policy.


Sign in / Sign up

Export Citation Format

Share Document