Malaysian Prime Minister Najib Razak began a three-day visit to Washington on Tuesday with a White House visit aimed at bolstering bilateral ties with the Trump administration.
US Department of Justice-led court cases into the US dealings of the 1Malaysia Development Berhad (1MDB) state fund created and until recently overseen by Najib had threatened to cast a cloud over the meeting, but the two leaders focused on areas in which they could agree.
Prior to the meeting, Najib’s first to the White House since assuming the premiership in 2009, the Malaysian leader said he would press for bilateral trade negotiations in response to Trump’s withdrawal from the Trans-Pacific Partnership (TPP), a once US-led multilateral trade pact that would have included Malaysia and several other Pacific Rim nations.
The two sides started talks towards a possible bilateral trade pact in 2006, but halted those negotiations after Malaysia decided to join TPP. Malaysia has run an uninterrupted trade surplus with the US since 1990.
Trump has been a vocal critic of free trade agreements he claims work to America’s detriment and has vowed to reverse the trend of countries, Malaysia among them, that run large trade deficits with the US. In March, the US listed Malaysia on a list of 16 global “trade cheat” countries that faced potential punitive bilateral measures.
At the White House, Najib announced his government’s intention to purchase over 30 US-made Boeing 737 MAX jets and 787 Dreamliners, a deal the premier said would be worth more than US$10 billion over five years. The Malaysian national carrier had previously considered purchasing Airbus’ SE wide-body fleet. Najib also said his national flag carrier would buy a number of General Electric-produced engines.
Najib also pledged to use funds from Malaysia’s Employees Provident Fund, a state pension fund, to invest US$3 billion to US$4 billion in US infrastructure development programs, one of Trump’s pet projects. Despite criticism from protectionist detractors, Trump’s White House is now better positioned to argue that engaging Malaysia will yield future economic fruits and a more equitable relationship.
Sections of the influential US media, however, took a less sympathetic view. The Wall Street Journal, the first international media outlet to report on the fraudulent financial dealings of the 1MDB fund, chastised Trump for hosting Najib, who it characterized as an unaccountable authoritarian leader in a scathing editorial.
But Najib also sounded the right notes on security affairs. Trump credited Najib with clamping down on Malaysia-North Korea business ties, casting a positive light on the Malaysian premier as the US bid to build a global consensus on isolating Pyongyang. The two sides have engaged for decades in a limited trade in consumer goods, vehicles, refined oil, natural rubber and palm oil.
Two-way trade between Malaysia and North Korea was just US$4 million in 2016, according to Malaysian official figures, though illicit business activities obviously don’t show up on the national accounts. It is widely believed that much of North Korea’s global trade runs through a complex system of intermediaries in China.
Pyongyang has also been suspected of operating shell companies out of Kuala Lumpur to facilitate its trade. Neighboring Thailand is also known to have hosted such shell companies. Oddly, or perhaps reciprocally, Malaysia had previously been the only nation whose citizens were permitted to travel to North Korea without a visa.
Those bilateral relations were upended earlier this year after the lethal poisoning of North Korean leader Kim Jung-un’s estranged brother Kim Jong-nam with a toxic VX nerve agent in Kuala Lumpur’s airport, in what was assumed a Pyongyang-ordered assassination. Najib’s government has not severed diplomatic ties with North Korea over the incident, but ties are now severely strained.
Najib’s political proponents argue that meeting Trump gave him a much-needed nod of high-level international approval, one that will help the Malaysian leader to burnish his image and reaffirm his legitimacy ahead of a general election which must be held by August 2018.
Najib and Trump are on familiar terms, with the Malaysian prime minister’s office describing the two leaders as “golfing buddies.” Malaysia’s delegation reportedly lodged at the lavish Trump International Hotel on Pennsylvania Avenue in Washington, with some US media reports speculating that Najib’s choice of accommodation aimed to flatter or curry favor with America’s business-minded leader.
China’s growing influence in Southeast Asia and Beijing’s deepening ties with the Najib administration were likely a factor in Trump’s decision to embrace the controversial premier amid the regulatory scrutiny and legal uncertainty of the ongoing DoJ probe. US-Malaysia relations saw an upswing under former US President Barack Obama but notably fell off after the 1MDB investigation was launched.
Najib has since leaned heavily on China, Malaysia’s largest trade partner and foreign investor, to secure a range of economic and investment agreements, including the first major defense deal between the two countries involving the purchase of four Chinese-made naval vessels.
Trump’s administration now seems to acknowledge that the deepening of Sino-Malaysian ties has come at the expense of America’s strategic interests.
A senior US official quoted by Reuters said the Trump administration recognizes the need to prioritize relations with Southeast Asian countries to counter the “huge gains” China has made across the region in recent years, including during the long tumult and uncertainty of last year’s US presidential campaign.
While the DoJ investigation into 1MDB put Trump in a “weird situation,” there was a “recognition under this administration that we can’t continue to cede our relations in all these countries because of whatever the issue of the day is,” the anonymous US official said.
Najib’s visit, the second by a Southeast Asian leader since Trump’s inauguration, betrays the initial gloomy forecast of US-Malaysia relations that many analysts foresaw in Trump’s ‘America First’ nationalistic rhetoric. At the same time, Malaysia and other regional countries still crave greater clarity over Trump’s policy direction and strategic orientation.
Trump recently hinted at withdrawing from the US-Korea Free Trade Agreement, and has persistently floated the idea of imposing tariffs or trade restrictions on China over the alleged theft of intellectual property. His administration also took the provocative step of threatening to block China from the international dollar system if it fails to enforce United Nations sanctions on North Korea.
Asian economies and regional leaders are undoubtedly worried about the knock-on effects of a possible trade war between the US and China, which could batter trade-reliant economies like Malaysia and Singapore given the interconnected nature of regional and global supply chains. With such uncertainties, Najib’s deferential approach to Trump was rational realist diplomacy.