Malaysia Headed for US Deep Freezer?

DON'T expect United States President George W Bush to invite Malaysian Prime Minister Mahathir Mohamad to Washington again.

The chief spokesman for Malaysia has not endeared himself to Washington following the US invasion of Iraq.

In fact, Dr Mahathir has emerged as one of the loudest and harshest critics of the US in the lonely war.

The Malaysian premier's recent statement in the Malaysian Parliament was, perhaps, the most scathing attack on the superpower.

He chastised the US for attacking a defenceless country and accused the superpower of practising double standards in not reining in the action of Israel against the Palestinians.

While there is merit in Dr Mahathir's thesis, the US regime under Mr Bush is not expected to take the Malaysian leader's harsh words too kindly. Mr Bush is expected to delete Dr Mahathir from his list of close friends.

The already uneasy diplomatic ties between the two countries are therefore expected to become even more chilly. This is ironic as the two governments had worked closely to help thwart terrorist activities in the aftermath of the Sept 11, 2001 terrorist attacks.

Diplomatic concerns aside, will the uneasy ties between the two governments change the complexion of Malaysia's economic landscape further down the road?

The answer is not too clear. On the one hand, it's highly unlikely that the US will impose political or economic sanctions on Malaysia as it is not alone in the anti-war chorus. Rightly or wrongly, many countries see the war as a form of imperialism despite the stated US aim of liberating the Iraqis.

Sanctions on Malaysia, or any other nation, for adopting an anti-war stand will only be seen as yet another unilateral act by Mr Bush's administration. On the other hand, there is concern that Malaysia's strong anti-war stand may be perceived as a sign of rising anti-US sentiment in the country. The sight of more anti-American demonstrations in the streets of KL may unnerve some American investors.

Such a view may not be totally warranted. While Dr Mahathir has been strident in criticising the US, he has never closed the country to American investors.

Under Dr Mahathir's administration in the last two decades, American corporations have emerged as one of the largest foreign investors in Malaysia. The two countries are also close trading partners.

While US companies have little to fear from the anti-war sentiment of Dr Mahathir or ordinary Malaysians, they will have to be more circumspect about radical Islamic factions in the country and the region.

Reports of the presence of extremist Malaysian groups in the regional terrorist network have already unnerved American businessmen. American businesses have had to channel more resources to beef up security at their plants and factories, although Malaysian security forces have been vigilant against potential troublemakers.

Partly as a result of these worries, US investments in Malaysia's manufacturing sector had fallen sharply even before the start of the Iraq war less than a fortnight ago. Applications for fresh investments by US corporations in Malaysia's manufacturing sector more than halved to US$332 million last year from US$688 million in 2001.

Extremist Islamic groups could become even more hostile towards US interests in the region following the attack on Iraq.

While Dr Mahathir may be persona non grata at the White House, Mr Bush should not ignore the Malaysian leader completely.

Dr Mahathir has a prescription to help remove the root causes of terrorism against the US: resolve the Palestinian dilemma fairly first.