Global Trends by Martin Khor

Monday, 31 December 2018

2018 saw the end of an era

It was a landmark year that ends today, both nationally with the collapse of the old regime, and globally with the crumbling of the post-1945 world liberal order.


What a year it’s been, for Malaysians and the world!  Truly a historic landmark 2018.  And the new year promises to be even more eventful.

Three things catapulted Malaysia to the top of the global news.  First, the continuing drama of 1MDB (1Malaysia Development Bhd).  With one new revelation after another, the country had the awful reputation of having the greatest con-men perpetrating the greatest financial fraud of recent times.

Second, against all odds, the 61 year old Umno-led regime was overthrown and Tun Dr Mahathir Mohamad re-emerged as prime minister through tumultuous elections.  Within weeks, Datuk Seri Anwar Ibrahim was pardoned and released, then went on to win a Parliamentary seat.

Third, Malaysia was held up as a rare example of how citizens outraged by corrupt leaders in an authoritarian state could effect a change through the vote without bloodshed.

History shows that after an uprising or overthrow of a dictator, there often is chaos, violence, a reinstatement of the old regime or a long period of anarchy as warlords or competing ideologies fight it out.

Malaysia’s political transition has in comparison been smooth and non-violent, which holds a democratic promise for our region.  The prosecution of the old corrupt leaders and other crooks has proceeded with vigour.  The malpractices in the Finance Ministry and agencies like Tabung Haji and Felda are being exposed.   These have been among the notable achievements.   

But the general euphoria from May 9 general election has dissipated as the realities of the old society are increasingly clashing with the promises of a new Malaysia.  This shows that May 9 was only the tip, and the rest of the iceberg has to be reshaped in terms of new policies and democratic practices, if we are to achieve long-lasting and positive structural change.

Two other major challenges have emerged as the year ends.  First, Pakatan Harapan has to work through the differences between their parties and leaders, as well as within each party.  This is extremely complex as it involves strong personalities, as well as what each party means by policy reform.

Second, there are clear signs of a weakening domestic economy, in line with unfavourable global trends.  These include a sharp fall in the oil price (which disturbs the government budget projections), the low prices of palm oil and rubber (causing more hardship for smallholders), the rising cost of living, and uncertainties regarding the ringgit’s level, capital flows and the stock market.

The work is thus cut out for the Harapan government in the new year.  It will need to deal with multiple immediate problems, even crises, while simultaneously moving forward with righting the wrongs of the old regime, and coming up with new policy measures to build a new society.

We the citizens can only hope and pray that the seeds planted in 2018 will grow into green healthy plants in 2019.

At global level, 2018 was also a landmark year, but not for the better.

United States President, Donald Trump, plunged ahead with his “America First” strategy.  Hopes that the weight of high office would move him more to the centre were dashed when he upgraded ultra right persons to his inner circle, while a string of less ultra officials left one by one.

By year end, Trump was in position to do as he pleased, and what seemed to give him most pleasure is to disrupt the US and global establishment.   He got the US to recognise Jerusalem as Israel’s capital and moved the US embassy there.  He pulled the US out from the nuclear deal with Iran.   He announced pulling out of a nuclear arms treaty with Russia.     

Trump raised the stakes in the US trade war with China.  The 90-day truce declared by the two Presidents in early December may be a temporary lull.  But the Trump team has decided on much more than just a fight to reduce the US trade deficit with China.

It wants to stop China’s progress as a leading global industrial power.  China may agree increase imports from the US, but not its plan to be a world economic leader. 

But Trump’s fight goes beyond China.  He has slapped on higher duties on some products from Europe, Canada, Japan, Mexico and others and promises more to come.

His unilateral measures undermines the once iron-clad rules of the World Trade Organisation, which he openly threatens to paralyse.

But these are not simply the acts of a crazy President, which can be overturned by a saner successor. 

It became clearer in 2018 that the global liberal order, established in 1945 to prevent another world war and to stabilise the global economy, is coming under serious attack.

Not so much from those we would expect, the people in less developed countries that have been left out of the general progress.  But by citizens of the developed countries themselves.

Many ordinary citizens have borne the brunt of the ill effects of globalisation, as factories and jobs moved to low-wage countries and as immigrants moved in, especially in the European Union but also the US.

The inequalities of globalisation, with the bottom half increasingly angry while the top 20% enjoyed life as the global elite, formed the basis of rebellion against the free flow of goods, capital and labour. 

It was the basis for Trump’s electoral support, and for Brexit, the riots in Paris, the loss of support for German leader Angela Merkel and the upsurge of so-called “populism”.

This is why 2018 will probably be seen as a landmark year, for the growth of the rebellion within the West itself of the global order its post-World War Two leaders created.   What 2019 will bring on this front remains to be seen.