Brown Bag Lecture Series
Political Tsunamis and Financial Meltdowns: Malaysia and the World
Co-sponsor: WEAI as part of the “Global Financial Crisis” series
Thomas Pepinsky, Assistant Professor of Government and Faculty Member of the Southeast Asia Program at Cornell University, talked about the political economy of crises and transitions, using Malaysia as his case study. The 'standard story' about the relationship between economic crises and political crises is that usually one precedes the other. An economic crisis may lead to a political crisis. Likewise, many economic crises are caused by political instability. What is peculiar about the current dynamics in Malaysia is the fact that the political crisis predates the global economic turmoil. It is primarily a story of ethnic politics, although economic concerns are probably also relevant.
Similarly, the great meltdown of 2008 is unrelated to Malaysian politics. While the current crisis has led to the worst economic contraction in Malaysia since 1998, it is unrelated to policy decisions by the Malaysian government. The counter-intuitive trends of current political developments in Malaysia are shown by the fact that they do not follow patterns the 'standard story' would have predicted. These predictions would have been that an energized opposition capitalizes on economic dislocation, and that frightened incumbents would lash out against the opposition and against each other. Consequently, economic conditions would continue to deteriorate, resulting in a deep-reaching economic and political crisis.
While the opposition has indeed started to criticize the ruling coalition, the economy in Malaysia has not deteriorated, incumbent politicians have not attacked the opposition and intra-elite tensions are low. Overall, there is no deep-reaching economic and political crisis in Malaysia. These unexpected dynamics are largely a consequence of a swift intervention of the incumbent government in Malaysia's economy when the crisis hit. In addition, it was also easy for the Najib government to reject responsibility for the crisis. The global economic downturn is perceived as a problem originating in the United States and not Southeast Asia. The economic recovery that has occurred over the last few months has subsequently led to a political recovery.