Global Trends by Martin Khor

Monday 14 January 2008

Interesting start to 2008

The first fortnight of the New Year saw many interesting events, led by the Clinton-Obama primaries battle, while in Malaysia the coming elections, rising prices and the crime wave dominated the news.


The New Year has kicked off in interesting ways this last fortnight, showing signs of some of the important events and developments that will take place in 2008.

The United States’ presidential primaries took off, with first a stunning upset victory for for Barack Obama in the Democratic party’s first primary in Iowa, and the also stunning “comeback” win by Hilary Clinton the following week in New Hampshire, just when it looked her campaign was going off the rails.

With these two candidates running neck to neck, and the Democrats having the best chance to capture the Presidency, people around the world are taking greater interest on what a Hilary or a Obama presidency would mean.

If the Democrats win, it will most likely be a first -- either the first woman, or the first black, to become US President.  Bush has been such a disaster for the world, in so many ways, that there would be collective global relief to see either Hilary or Obama take over.   

In the past many would think that there would be not much difference to the world whether the US President were a Democrat or a Republican, since the basic policies of the two parties are similar.

However, the Bush presidency has been marked by such extremism, in military, security, diplomatic and environment affairs, that the next President, especially if he or she is a Democrat, can make a difference, at least in pulling the US administration back to or nearer the center of American policy.

Hilary has till now stressed that she has the advantage of “experience”, implying that her husband Bill will be there to co-steer the ship.  Obama has successfully campaigned on the basis of  “change,” implying a turnaround from the way the Republican-Democrat Washington establishment has operated.

For the next several weeks, the US primaries will continue to occupy world attention.  It is likely but by no means certain that at the end of the year a Democrat will win the ultimate prize of presidency.

This is transition year, with the Bush presidency winding down, and the new administration being hatched.  

As Bunn Nagara perceptively wrote in The Star on Sunday, Bush’s middle-east trip is part of his very-late-in-the-day attempt to be known as a “peace president”.  His effort will almost certainly fail, as it is mainly based on the Israeli position of the Israeli and would involve a sell-out by Palestinians on issues like the refugees’ right to return and on Israeli settlements in occupied territories.

“Given the narrow US agenda, Bush does not need peace to break out, just an image of having pursued it,” wrote Nagara.   And an attempt will be made to paint the “intransigent Palestinians” as the culprits of the failed “peace process.”

On the economic front, the first fortnight has seen increasingly gloomy predictions for the US and world economy.  The investment bank Goldman Sachs predicted the US economy will be in recession with a GDP fall of 1% in the second and third quarters.

A Merill Lynch report on 8 January said a US recession has already arrived.  “It is not a forecast but a present-day reality”, with the rise in unemployment to 5% in December confirming it.

The bad news induced falls in many stock markets last week.  The Kuala Lumpur stock exchange was an exception, with the composite index surging to new heights in the New Year, smashing the 1500 level at the end of last week.

This has been attributed to an inflow of foreign funds, the strengthening of the ringgit and expectations of a general election.

If a US recession takes place, can the Malaysian economy escape damage because foreign funds looking for higher profits shift to emerging countries like ours, and because of rising prices of commodities like palm oil and petroleum? While hoping for the best, we should be prepared for a worsening external environment. 

In Malaysia, the first fortnight has been most marked by the building of momentum towards a general election, now widely expected in March. Almost everything else will be subsumed under this single event.

Problems and glitches keep popping up, with the government trying to act fast to overcome them.  The Datuk Chua Soi Lek affair has already died down, while the search for the people behind the DVD plot continues, and if they are found the issue will erupt again.    

The embarrassing and puzzling shortage of cooking oil gave rise to incredulous questions as to how the major world producer of palm oil could suffer from retail shortage of cooking oil.  The situation has normalized after measures to “flood the market” with supplies.

More difficult to tackle are two major problems that will preoccupy the country throughout the year – the rising cost of food and other items; and the rising crime wave.

News that roti canai shops face a cost crisis and may stop supplying this favourite food item, if their situation does not improve, shocked Malaysians. 

The kidnapping in Kuala Lumpur last week of yet another young girl, 6-year-old Sharlinie, has again outraged Malaysians and galvanized action to find her kidnappers.

It highlighted once again the deterioration of the crime and personal security situation in the country.

The rising cost of living and the critical crime situation have deep seated causes and will require comprehensive approaches and measures to deal with them.