The hidden costs of China’s lifeline in the 1MDB scandal
With Malaysia facing long-term repercussions for embracing Chinese money, experts warn prime minister is turning a personal scandal into a national problem
By spending about RM16 billion ringgit (US$4 billion) on troubled Malaysian state investor 1Malaysia Development Berhad (1MDB), China has bought a lot of clout in the corridors of power in this Southeast Asian nation.
Last month’s civil suit by US authorities against personalities tied to 1MDB and their assets comes as local leaders worry the global financial scandal will have a deeper impact.
It is not just a question of whether Malaysia’s Prime Minister Najib Razak will serve out his term, or whether 1MDB’s mammoth debts will be fully repaid.
It’s not me: Malaysian PM Najib says US 1MDB lawsuit doesn’t involve him
It is also now the country’s shrinking ability to chart independent domestic and foreign policy because of the expensive deals – overt and covert – that will have to be made to resolve the scandal.
Some 1MDB critics also claim it is no coincidence the suit by the US’ Department of Justice comes at a time of growing Chinese influence in Najib’s administration.
They point to the backdrop of the South China Sea disputes, where Malaysia and other Association of Southeast Asian (Asean) countries are locked in overlapping territorial claims with Beijing, and where the United States wants to maintain its dominance.
The sale of 1MDB’s power assets and property in November and December to two separate Chinese firms last year was part of the company’s push to raise money to pay the company’s debts.
