Sunday July 5, 2009

Enlarging the common ground

By PAUL GABRIEL

Penning their thoughts on paper and speaking long-distance, President Barack Obama and Prime Minister Datuk Seri Najib Tun Razak are giving it their best personal touches to keep the US-Malaysia relationship vibrant.

UNITED States Ambassador James Keith is just back in Malaysia after spending some time visiting family members in California and Florida. Before reporting back for duty here last week, the ambassador had to go through a routine – get to Washington and update himself on a “checklist” and on what needed to be done.

Keith, who was posted here in July 2007, met groups of American businessmen and answered their enquiries about Malaysia. He also took note of some of the points they raised.

»Malaysia has taken some bold steps, which we applaud, in terms of liberalising its economy... JAMES KEITH

“For a US Ambassador, it is almost impossible to come back from home leave without going to Washington first,” says a senior US embassy official here.

On the occasion of the US’ Fourth of July Independence Day celebrations yesterday, Keith spoke to Sunday Star about President Barack Obama’s priorities, efforts by the US to resuscitate the global economy, trade and security issues, why the US-Malaysia FTA has yet to be realised after three years of talks, the benefits of continued close co-operation between both countries, and the likelihood of a visit to Malaysia by President Obama.

(Lyndon B. Johnson is the first and only US President to have visited Malaysia, back in 1966.)

> What is the change you feel as an ambassador representing the Obama Administration?

We have a different set of circumstances to work with at a different time. If you go back all the way to the beginning of the previous administration, the American people were at a very different place, the sense of insecurity and shock following (the) Sept 11 (terror attacks). The American people have had time to work their way through that and I think President Obama’s election represents many things, one of them being their sense of confidence in engaging with the rest of the world.

> Has there been enough done by your new administration to steer away from typical US stereotyping and anti-American bias around the world?

Good question. There’s a lot embedded in it (smiles). If people saw us just trying to work on anti-Americanism around the world, we wouldn’t have much success. But what we can do, and what we’re doing, is working to enlarge the common ground between ourselves and other countries including Malaysia. It’s the substance that matters. This isn’t about packaging, spinning or public relations. This is about the work we have to do together, whether we have common objectives and common values.

> The President is said to be single-handedly transforming America’s image around the world with key foreign, economic and social policy changes. Yet there are those who charge that it is just a triumph of style over substance.

Like every other country in the world, we should be judged by what we do, not only by what we say. What we say is important … I think words do matter. We’re working hard on bridging cultural, religious, social and economic divides, and identifying common strategic and security-related objectives. So first of all, we have to get the words right because if we don’t agree with each other on the rhetorical level, then it’s going to be hard getting the substance right. Take the Middle East, for example. The President came in and was very clear about his firm commitment that he would achieve some tangible objectives. Now that was the right rhetoric and people wanted to hear that.

With Malaysia, we’re working together on anti-piracy issues in the Gulf of Aden and Malaysia is making a very important contribution there. We’ve matched both our words and our action.

> There are favourable reports coming out of New York even today about the resilience of the US economy but are these “green shoots” of recovery for real?

You’re right to be a bit sceptical and careful about the good news. I’m not an economist but what we’re told by the Chairman of the Fed (Federal Reserve, Ben Bernanke), economic leaders and the administration is that there is now more mixed news. It looked bad in the beginning, now it’s more mixed and I would say the mixed is changing from mostly bad with some good to more good than bad. I think there is a sense that we’re starting to hit bottom and then by the third and fourth quarter of the year we’ll see real positive momentum. But a relatively weak and time-consuming recovery is in the cards, by all predictions. So it is going to take us a long time to work our way out of this.

> As many as 15 million Americans are jobless and the weak consumer market means Malaysia will not be able to export more goods over. Are we dealing with a case of too much savings and not enough spending in the US?

Yes, we were criticised in the past for spending too much and not saving enough, and now we’re being criticised for the reverse. It is certainly true that consumer spending is down and the savings rate is up in the US. Many people believed that the previous situation was unsustainable and there really has to be more of a shared burden in terms of the engine of global growth. One hopes that China and India and the rest of Asia will become stronger consumer markets to help drive global growth.

> From Washington’s point of view, is it going to be a long haul ahead? Are you cautioning Malaysians against being too hasty in thinking that the global recession has bottomed?

I wouldn’t presume to take the voice away from the Prime Minister and Malaysian Government. But I do think it is prudent for all of us to be patient about the recovery. It is going to take time. As you suggested about the US, even though we are starting to see some positive news in the manufacturing and housing side, unemployment continues to be an issue for us and our Central Banker (Bernanke) has warned that he expects unemployment to be an area of concern for our government for some time to come. And that suggests that the American contribution to global growth will continue to be less than before. It will take some time for it to return to anything like the previous scale.

Malaysia has taken some bold steps, which we applaud, in terms of liberalising its economy. The good news is that we are all pretty much on the same page; there is no great clash of conceptual approaches.

> Can you recap the main actions taken by the US to lay the foundation for economic recovery?

If you go back to the London Summit (in April this year, where world leaders from G20 countries met against the backdrop of the worst international banking crisis in generations), you get a very good sense of what we’ve done aligning all of our financial policies. Looking at the kinds of regulatory changes that might be necessary to ensure, as Malaysia has already done, that other countries including the US are shoring up their financial systems and minimising opportunities for the types of threats that have come out in the US and European systems. We want strong financial systems that allow for the consistent flow of credit, for sufficient liquidity. We have to look at that and we’re talking to each other. And we’ll talk again at the next G20 meet in September which the US will host in Pittsburg. One of the main things that America can do to assist in the global economic recovery is to get its own house in order. We’ll get back on track, it’s just a question of how much time.

> On the telephone conversation between President Obama and Prime Minister Najib, there seems to be a nice momentum building with both our new administrations committed to stepping things up.

Yes, I would agree. Secretary Clinton and Foreign Minister (Datuk Anifah Aman) had a very good meeting in Washington (in May). The Prime Minister and the President have exchanged letters on several occasions already and this most recent phone call (by President Obama) added even more momentum to the positive trajectory of US-Malaysia relations. The President has said that he welcomed Prime Minister Najib’s desire to improve and accelerate co-operation in US-Malaysia relations. We’ll look for many opportunities to do that.

> How does the US view measures put in place by the Najib Administration to tackle the economic crisis, to continue reforms and consolidation to address structural issues?

First of all, we started out in the global economic crisis recognising that we had a fair amount to learn from Malaysia, in particular from your Central Bank (Bank Negara), because of the crisis that Malaysia went through in 1997-98. We had a good conversation with your financial leaders who have global stature, and with good reason, because Malaysia has been able to face the present crisis with a very strong financial system. Looking at the steps that the Prime Minister has taken since he assumed office, I think it is very positive and clearly moving in the right direction.

Malaysia’s steps, based on its own reasons and interests, to liberalise its economy in a very deliberate and step-by-step approach is something that we applaud and hope will continue. The first steps, in the services sector and 20-odd sub-sectors, were a good beginning and a signal of where the (Najib) Administration seemed to want to go. I think this week’s announcements are quite substantive and will make a difference over time in Malaysia’s performance, its competition with its peers and ability to attract foreign direct investments.

> There is a freer climate of investment now, with foreign entrepreneurs no longer having to adhere to bumiputra equity participation. As the US Ambassador, how do you plan to help bring in investments from your big enterprises?

We have companies both large and small, and small and medium-scale enterprises make up the bulk of our economy. We have had large and small-scale companies involved in Malaysia for decades. They have contributed significantly to Malaysia’s success and want to continue to make that contribution. And we’ll look for every opportunity to expand it.

As Ambassador, it’s my job to facilitate and ensure that doors are open and that people notice that they are open. We are very interested in the insurance industry here, and also other aspects of the financial sector. American firms will continue to exploit these opportunities.

We can compete with anyone as long as it’s an open, transparent and level playing field. The embassy will continue to look for opportunities to facilitate trade missions and generate interest in the US. Even through the crisis, we’ve had two alternative energy companies in Malaysia involved in the production of solar panels which have been very successful.

> On the services sector, why has no American university spread its wings here? Your universities are focusing on the Middle East.

We have had discussions with the Higher Education Ministry on the possibility of advancing opportunities for American educational institutions.

It’s a tough time, of course. It’s a sector in the US which is under tremendous pressure right now. In general, Americans tend to be farther away than some of our competitors in the region and we have competed on quality, not on cost. We still believe an American education represents one of the finest. So we have to look at the economics of the issue and see what can be done.

I do think that the opportunities that come with educational investment, in particular educational institutions being established here in Malaysia, are tremendous. We’re still benefiting from the 1980s when Malaysia was the No.1 source of foreign students to the US. That greater understanding, the willingness to get past the superficial level and really dig into what America and the American people really stand for, is invaluable to us.

> We have been doing business for many years and you are our largest trading partner, so why are we still struggling with a bilateral trade agreement?

On the American side, it’s quite clear that we have a very identifiable approach to these kinds of trade negotiations. We undertake only ambitious negotiations for free trade agreements. We don’t engage in political or feel-good kind of symbolic trade negotiations. Our practice is to use these trade negotiations not as a means of enhancing the overall relationship but really in a very hard-nosed way to try to deal with what often are difficult issues which involve the fundamentals of both countries’ economies. So the reason it has been difficult is because there are established interests; and change is hard.

Only Malaysia and America can decide whether the kinds of give-and-take opportunities that exist in a free trade negotiation make sense.

> In Cairo last month, President Obama quoted from the Holy Quran, visited a mosque and gave a hallmark speech to reach out to Muslims. What was the impact here in Malaysia?

I can’t speak for Malaysians and I would hesitate to characterise the Malaysian response. But it does seem to me, as an American, that around the world including here in Malaysia, there has been an appreciation of President Obama’s sincerity as he has reached out to the Muslim world and his understanding of the complexity of those relationships. President Obama has a style that applies not only in the Cairo speech and interaction with the Muslim world. In his engagement with governments around the world, he wants us to proceed on the basis of what he said in Turkey about mutual interest and mutual respect.

> Are you optimistic of a meeting between President Obama and Prime Minister Najib in the near future?

There will certainly be an opportunity when the President is in Singapore for the Apec meet (in November). In addition to Secretary Clinton attending the Asean Regional Forum (in Thailand) later this month, the Apec process will produce encounters. So we’ll have lots of opportunities for engagement. There is certainly an opportunity for the President and Prime Minister to get together in Singapore, depending on their schedules.

> Will President Obama come to Malaysia?

Speaking personally, my sense is that the President will do everything he can during his four years in office to get to Malaysia. He’s recognised the importance of Asia as a priority in our foreign policy. He sent the Secretary of State on her first trip overseas not only to North-East Asia but also South-East Asia. And he has some personal ties with the region; he understands the culture and background. I’m confident that he’ll want to come here.

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