For the past three years, every political pundit in Malaysia has been asked a simple question: when will Najib be replaced?
A year ago Mahathir Mohammad, Malaysia’s fourth and longest-serving prime minister, in power from 1981 to 2003, was gung-ho about his ability to get rid of Najib. After all, it is on the public record that Mahathir was largely responsible for the political demise of Malaysia’s first and fifth prime ministers, Tunku Abdul Rahman and Abdullah Badawi. There was no reason to think that he could not secure the trifecta, so to speak.
Yet today, the general consensus in the ruling United Malays National Organisation (UMNO) is that Najib is quite secure despite the scandal surrounding the USD$700 million ‘political donation’ from Saudi Arabia and other shenanigans related to 1MDB, a company with quasi-status as a sovereign wealth fund and that's under investigation by Singapore, US and Swiss authorities. Mahathir and his gang are lying low, and Mahathir’s son, the chief minister of Kedah state, is under siege from Najib.
According to The Wall Street Journal, The Financial Times, The Economist and the like, Najib is 'disastrous’ for Malaysia. The Western media cannot comprehend how Najib can stay in power when it is ‘clear’ that ‘corruption’ has taken place, with huge and unexplained sums of money ending up in Najib’s personal bank account in Malaysia. The story is even more compelling when you take into account the dramatic sacking of the deputy prime minister, another senior minister from Sabah, and the attorney-general. The first two were known to be critics of Najib’s role in 1MDB. The attorney-general was replaced when he tried to charge Najib for corruption.
The first thing the new deputy prime minister did was to pledge his loyalty to Najib and the new attorney-general has cleared Najib of any legal wrong doing in the ‘political donation’ case. It appears it is not illegal in Malaysia to receive millions of dollars in political donations from a foreign power. Najib has said he did not benefit personally, but used some of the money from the royal family in Saudi Arabia to campaign in the 2013 Malaysian general election and returned the rest.
What many foreigners and analysts fail to appreciate is the enormous power concentrated in the hands of the prime minister.
In theory, the PM rules through a coalition government. In practice, he exercise his powers like a feudal king. He holds what are, arguably, the three most powerful offices in Malaysia; in addition to prime minister he is also finance minister and chairman of the National Security Council (NSC). He controls tenders and contracts worth billions of dollars and, through the NSC, can shut the country down by declaring an emergency. On top of government contracts, he can appoint anyone he likes to thousands of board positions in government-linked companies (GLCs). It is generally accepted these GLCs occupy the commanding heights of the Malaysian economy. Many of these board positions come with generous perks and allowances paid for very little work, other than attending board meetings.
The truth is the only people who can get rid of Najib are the UMNO ‘warlords’, the UMNO divisional chiefs, members of UMNO Supreme Council (UMNO MT), and elected representatives. There are less than 200 people in this group and most of them back Najib. They are aware of Najib’s shenanigans but there is nothing Najib has done that Mahathir, his predecessor had not done. In fact, an authoritative study of Mahathir’s financial misadventures suggests that Mahathir lost more than USD$40 billion during his reign. So what if the Swiss investigating 1MDB say USD$4 billion has been misappropriated? That's merely 10% of what Mahathir lost!
Many of the warlords support Najib for practical reasons. They are on the Najib gravy train of contracts and well-paid positions on GLCs. There are, however, three scenarios that could cause the warlords to rock the boat. These would be if:
- It seems likely Najib will lose the next general election (due in 2018).
- The Malaysian economy dives.
- There is an arrest warrant issued for Najib.
From my vantage point in Kuala Lumpur, the second of these is the most probable.
Najib is unlikely to lose the next general elections as long as he can keep the East Malaysian states of Sabah and Sarawak on his side. Sarawak is due to hold a state election in April and I predict a massive victory for Najib’s Barisan National coalition. Without Sabah and Sarawak, the Barisan National government would have lost power in the 2008 general elections. In the 2013 vote it was again the East Malaysians who delivered the winning majority to BN. At present there are no indications that East Malaysia will abandon Najib or the BN, not yet anyway.
The third scenario is unlikely given international investigations are highly complex and subject to multiple jurisdictions with multiple interpretations of what is and isn’t a crime. As long as he is PM, Malaysia will refuse to cooperate with any investigations implicating Najib, thus delaying the entire process, at least until the next general election in 2018.
There is a 50/50 chance a slumping economy will end Najib’s reign. A good indicator of a country’s economy is its exchange rate. Since the middle of last year, the Malaysian ringgit has fallen by about 24% against the US dollar that dominates international trade. Malaysian businessmen are having a hard time trying to import goods and services. The drop in the price of oil has forced Najib to revise his budget and Petronas, the biggest single contributor to the Malaysian treasury, has announced it will slash USD$11.41 billion in capital and operating expenses over the next four years. If the ringgit hits RM5 to 1USD, or seems well on the way there, I predict a palace coup against Najib. Not only would the UMNO warlords politically knife Najib, Malaysian business tycoons, always an influential bloc, would join in.
Foreigners, international media and those Malaysians waiting for ‘good governance issues’ to get Najib out are living in fairy land. Like most states in the region, ultimately in Malaysia you can’t beat bread and butter politics; most Malaysians are focused on the economy and the cost of living. They don’t spend too much time worrying about corruption.
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