To counteract the effects of the Asian economic
crisis that continue to afflict Malaysia, Prime Minister Mahathir
Mohamed instituted anti-free market currency controls and jailed
U.S. friend and pro-market reformer Anwar Ibrahim, his former
deputy prime minister and minister of finance. To protest these
actions, President Bill Clinton should have sought a change in
venue for the upcoming Asia-Pacific Economic Cooperation (APEC)
forum Leaders' Meeting to be held in Kuala Lumpur, Malaysia's
capital. The next-best option would have been to boycott the
meeting. But now that President Clinton is planning to attend the
APEC meeting on November 17 and 18, he should be prepared to speak
out strongly against Mahathir's actions, enunciate a set of
economic reform principles based on democratic and free-market
values, and present a coherent policy approach to guide the U.S.
relationship with Malaysia in the future.
Malaysia, which had opposed the creation
of APEC and sought to form another trade bloc that excludes the
United States, is an unlikely host for the APEC meeting. APEC was
created to promote the expansion of free trade and the creation of
a free-trade area in the region by the year 2020. But the currency
controls Mahathir introduced in September are a setback to APEC's
goal of economic liberalization. In addition, Mahathir will use the
APEC meeting to denounce Western values and undermine the
leadership role of the United States. The onus of leadership on
President Clinton will be to stress that, although the United
States values cooperation with Malaysia, it will continue to press
for sound economic policies that promote free trade and open
markets. He must speak out forcefully against Mahathir's actions
and call on him to forge a path toward greater economic and
political freedoms in Malaysia.
Areas of Cooperation
Although frictions in the U.S.-Malaysia relationship
always have existed, particularly on trade and cultural issues,
notable areas of cooperation have been present as well. Malaysia
has been a quiet but growing partner of the United States in the
preservation of peace and stability in Southeast Asia. And
cooperation continues--despite the current chill in relations--on
such matters as fighting terrorism and narcotics trafficking. In
addition, economically, Malaysia was the 11th largest trading
partner of the United States in 1997, with almost $28 billion in
two-way trade. Malaysian imports of U.S. goods provided jobs for
over 150,000 Americans in that year alone.
President Clinton can strengthen this
valuable relationship by emphasizing that Malaysia must undergo
fundamental economic reform to clean up its wobbly banking sector
and consolidate and restructure its debt-ridden conglomerates,
which prospered over the years from Malaysia's climate of cronyism
and corruption. Other reforms, such as creation of an independent
judiciary and the implementation of a genuine rule of law, also
must occur for the restructuring to be successful.
But
the path will not be easy. The Clinton Administration, which failed
to issue a prompt and forceful response to Anwar's politically
motivated arrest and trial and to Mahathir's anti-market
initiatives, has failed to generate a cohesive U.S.-Malaysia policy
and has placed the leadership role of the United States in APEC at
risk. Mahathir's policies and Anwar's jailing inspired a mass
movement of Malaysians who seek increased social and political
freedoms. Demonstrations reportedly are taking place throughout
that country, leading to the arrest of hundreds. Clearly, the
pressures on Mahathir to reform are growing. To regain a position
of leadership for the United States at the APEC forum, President
Clinton must take a stronger, more public position than he has in
the past, one that advances U.S. interests and helps Malaysia to
institute democratic and free-market reforms. Specifically, at the
APEC forum, President Clinton should:
-
Criticize Malaysia's adoption
of counter-productive economic policies. He should stress
that Mahathir's anti-market policies are more likely to deepen
Malaysia's economic problems than to solve them. He should point
out that there is no substitute for difficult reforms that would
prevent Malaysia from being out-competed in the future by its
reformed neighbors, such as stricter regulation, greater
transparency and consolidation, and the creation of an independent
judiciary.
-
Express concern about the
treatment of U.S. friend Anwar. President Clinton
should
protest Anwar's brutal treatment while in custody and insist that
his trial be fair. To symbolize the depth of U.S. concern, Clinton
or Secretary of State Madeleine Albright should seek to meet with
Anwar and his wife.
-
Link U.S. interests with the
goals of Malaysia's emerging democratic forces. The
President should call for greater democratic reform in Malaysia and
identify the United States with those who seek political
liberalization. As he did in China in June 1998, President Clinton
should speak out in support of tolerance and individual
liberties.
-
Seek continued strategic
cooperation with a Malaysia that is strengthened by economic and
political reforms. The maintenance of deterrence and the
preservation of peace and stability in Southeast Asia are common
goals of the United States and Malaysia. Thus, the United States
welcomes the continuation of military cooperation with Malaysia and
believes that a Malaysia strengthened by economic and political
reforms would be a worthy partner of the United States in the
region.
Because Malaysia is one of Americ's
largest trading partners, President Clinton should encourage
Mahathir to implement reforms that will strengthen the long-term
health of Malaysia's economy and create the basis for a freer
society. He should stress that the United States values the quiet
improvement of strategic relations with Malaysia that occurred over
the last decade, but that Mahathir's actions place that
relationship at risk. By reform, President Clinton can promote the
economic and political reforms that will help Malaysia emerge from
the economic crisis stronger and more competitive.
John T. Dori is
a Research Associate in The Asian Studies Center of The Heritage
Foundation.