Shock Election in Malaysia Threatens ‘One Belt, One Road’ Deal with China

Malaysia's Mahathir expects to be sworn in shortly

Wednesday’s elections in Malaysia stunned observers by sweeping in the very first opposition party government since it became an independent country in 1957.

New prime minister Mahathir bin Mohamad, remembers 1957 quite well as he is currently 92 years old, becoming the world’s oldest serving prime minister when he assumed his duties on Friday. In addition to shaking up the Malaysian political scene, Mahathir’s victory may also jeopardize huge infrastructure deals with China that are part of Beijing’s vast “One Belt, One Road” trade initiative.

Mahathir’s own supporters seemed as astonished by his victory as the ejected ruling party and international observers. Mahathir was actually prime minister once before, enjoying a very long tenure between 1981 and 2003, but he ran this time as a “comeback kid” representing the opposition Pakatan Harapan party and running against his own protege, Najib Razak, son of the second prime minister of independent Malaysia. Najib presided over an appalling racialist authoritarian kleptocracy that seemed unlikely to ever face justice, given his Barisan Nasional coalition’s permanent grip on political power.

As the UK Guardian glumly notes, Mahathir also ran an authoritarian racialist kleptocracy during his previous two decades in office; Najib learned a great deal about suppressing dissent at Mahathir’s knee, and there is little sign that Mahathir has turned against the racial spoils system that privileges ethnic Malays over other groups of citizens.

The gist of Mahathir’s revolutionary narrative is that he drew upon his enduring popularity with rural voters, assembled a multi-ethnic coalition that did not shatter against the forbidding cliffs of Najib’s nationalist establishment the way it was supposed to, and thus established a beachhead for democratic change even though his resume makes him an unlikely champion of liberal democracy. He won by tapping into populist resentment over disastrous taxes, the declining standard of Malaysian living, and a complex financial scandal surrounding the 1MDB development fund, from which billions of dollars have gone missing.

Given his age, some assume Mahathir will soon step aside for a younger and more committed democratic revolutionary—probably Anwar Ibrahim, who was jailed by Najib but pardoned by Malaysia’s king at Mahathir’s request after the election.

To make this saga even more complicated, Anwar was Mahathir’s deputy and heir apparent during his first stint as prime minister, but there was a bitter falling-out. Anwar launched a highly successful protest movement against Mahathir, Mahathir began grumbling that Anwar lacked the moral stature to lead the nation. Anwar got thrown in jail on sodomy charges; Anwar got out of jail and became an opposition leader. He landed back in jail when his sodomy acquittal was overturned this year, and Mahathir glued his winning political coalition together with a promise to obtain a pardon for Anwar and eventually hand him the reins of power.

Pessimists predict that only widespread loathing of Najib’s government held Pakatan Harapan together, and disappointed idealists may soon discover they merely swapped out one oppressive dynasty for another. A common line among Mahathir’s critics during the campaign was that substituting him for Najib would be like trading Coca-Cola for Pepsi. As one activist put it, “Both will give you diabetes and you’ll have to amputate your leg.”

Optimists say that Mahathir’s age and convoluted history are evidence he truly cares about the future of the country and can be trusted to rise above petty corruption during his presumably brief return to office. Younger Malaysian voters seemed especially willing to believe in that scenario. When Najib proposed special tax breaks for young people, Mahathir’s campaign persuaded young people to resent the proposal as a crude attempt to buy their votes.

One of the big questions in the aftermath of this week’s electoral surprise is what Mahathir will do about several big deals with China, valued collectively at over $34 billion dollars. Najib’s critics have accused him of selling out Malaysia’s interests for Chinese cash.

At a news conference on Thursday, the new prime minister said he basically supports the One Belt, One Road project, but added, “Of course, we would not like to see too many warships in this area because warships attract other warships, and this place may become tense because of the presence of warships.”

This was a jab at China’s propensity for funding commercial port projects in developing nations that end up hosting Chinese naval bases. The enormous container port China is funding on Carey Island has raised suspicions along those lines.

Mahathir said he has written a letter to Chinese President Xi Jinping suggesting a focus on developing rail lines instead of seaports, a proposal that would reduce concerns over Chinese naval activity if accepted. However, he has also criticized a $13 billion One Belt, One Road rail project called the East Coast Rail Link as wasteful and unnecessary and has worried that Malaysia is taking on too much debt to cover its side of large infrastructure projects.

The Wall Street Journal notes widespread anticipation that Mahathir will renegotiate at least some of Malaysia’s deals with China, although so much Chinese money now courses through Malaysia’s financial veins that he will find his options limited.

“He needs to show his nationalist credentials to some degree and this is a good vehicle to do that. The challenge is that the neighborhood has changed since he was last prime minister, and China is now the big driver,” said Malaysia expert Bridget Welsh of John Cabot University.

Another controversial project is Forest City, a gigantic high-end property development worth about $100 billion that will sprawl over four islands when completed. Some Malaysians have grumbled that the development was designed to attract well-heeled Chinese customers from Singapore and denounced it as a colonization project.

Mahathir himself has expressed concerns that Forest City could be part of a program to change Malaysian politics by adjusting the ethnic composition of the electorate. Malaysians of Chinese extraction have long resented allegations they are more loyal to China than Malaysia. In fact, they resent it strongly enough to have become the largest group to emigrate from Malaysia during the Najib years.

The Chinese are taking pains to appear serenely unconcerned that Mahathir’s outlook is “anti-China” or that he will disrupt the “comprehensive strategic partnership” between the two countries. At the same time, China is hedging its bets by sending signals to Mahathir that Chinese investors are a wee bit nervous and could use some reassurance to keep the money flowing and sustain the remarkable 100 percent surge in Chinese purchases of prime Malaysian real estate over the past few years.


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