What If We Get Hit By Sanctions

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OSTB : I received the following article via WhatsApp. It has two parts A and B. The writer is supposedly someone with the initials LBV. I really dont know who is LBV. Anyway here is LBV. 
There are some comments by another friend of mine who has read this article. I have indicated so. My own comments at the very end. 
 

*Malaysia: Potential US Sanctions*  -  *Part A*

The stunningly unexpected US Hamas International Financing Prevention Act, targeting countries, entities, and individuals supporting Hamas, the terrorist arm of Palestine, takes immediate effect.

The Hamas Act’s broad-sweep objective to “prevent Hamas and affiliates from accessing its international support networks,” (Section 2, Statement of Policy, US government , November 3 2023) necessarily includes in its hit-list, Malaysia, a staunchly vocal and long avowed supporter of Hamas as the governing authority of Palestine (post on Malaysia in the News: Wrong Reason Again, Oct 17 2023 refers).

The Malaysian Foreign Minister has flagged nervous anxiety over the Hamas Act that could impact Malaysia in innumerable and unpredictable ways, implicitly or explicitly, succinctly or strikingly, justly or unfairly, as sanctioned countries from Russia to Hong Kong have learnt.

As revealed by the Malaysian PM, Malaysia has been served three US “dèmarches,” a diplomatic “please explain, please re-consider” notice on its intractable Hamas stand that effectively guarantees Malaysia’s placing on the sanctions hit-list. That it was three “warning” notices, not one, not two, is very telling of Washington’s displeasure.

What bestows on the US the right to “warn” Malaysia for its strident Hamas support? Simple: the US is a top three investor and trading partner of Malaysia, rendering as well educational, security, cultural, human trafficking, health, research, cross border crime etc benefits (US State Department, April 2022). 
As much as Malaysia has the unequivocal right as a sovereign nation to exercise its foreign policy stance, and rightly so, its bold and glaring support of a Western labelled terrorist organisation is the disproportionate price and pain it has to bear. To date, there have been no consequences to Malaysia for its pro-Hamas stand, but the Hamas Act changes the complexion entirely: life in Malaysia may no longer be the same as examined in Part B.

LBV,  November 3 2023

*Malaysia: Potential US Sanctions*  -  *Part B*

Assuming Malaysia is tagged a Hamas Act offender, an unease expressed by its Foreign Minister (Part A), what repercussions are likely?

First, funds of Malaysian origin, political or humanitarian, with Hamas as the ultimate beneficiary would activate punitive measures such as restricted access to the US banking system which Malaysian banks, local and foreign, are hardwired into for Malaysia’s trade, investment, business and individual transactions in dollars.

Malaysia lives on trade with the rest of the world in dollars and seeks foreign investments in dollars to power its open economy, and therefore unfettered access to dollars is oxygen for growth and survival.

As the world’s reserve currency and the most widely transacted globally, dollar access restrictions of any kind, regardless of scope, scale, and size, would be a crushing blow to Malaysia as the fallout for the economy and financial markets - currency, stocks, bonds, securities, foreign reserves, including business and investor confidence - would be devastating at a minimum.

Second, if designated a Hamas Act offender, US visas for tourists, students and businesses, etc. would be more discriminating against Malaysians, meaning higher rejection rates, or with restrictive conditions attached. A little-known fact: a US visitor visa, generously valid for 10 years, is highly advantageous for visa and permanent residence applications to English-speaking and EU countries.

As explained in Part A, the US is Malaysia’s most significant benefactor, making it dead easy to “punish” Malaysia in many ways, overtly or covertly.

Third, the Hamas Act will likely be replicated by the EU and the UK, sworn US allies, to deny Hamas material and financial support, meaning Palestinian-leaning countries like Malaysia with trade and investment relationships with those countries risk even more restrictions plus those of the US.

Lastly, the reputational damage as a terrorist supporter if designated a Hamas Act offender is irreparable and a major roadblock to foreign investments, compounding the dwindling foreign funds in Bursa Msia, and the wider implications for the economy bereft of foreign investors, with the drowning ringgit as collateral damage.

[Digression: a weak currency signifies more problems with a country than one without. Put simply, the foreign exchange rate summarises the prospects and future of a country]

If Hamas Act penalties are imposed, how would Malaysia respond? Easy answer. As Malaysia is too deeply invested in the Palestinian cause, there is no Plan B exit, but to suffer the Hamas Act penalties, if guilty, and the damaging consequences identified above.

Still hugging ringgits or ringgit assets? Still in love with Bursa stocks? No 10-year US visa? Good luck.

LBV , November 5, 2023

Caveat: the post-Hamas Act scenarios above are for discussion purposes, tongue in cheek in parts, and not action suggestions that are left to the reader’s better imagination or judgment
 
OSTB : Additional comments by others  

i.  *Indonesian News*
Malaysia is in the Target list

Israel IDF is given the green light to target all HAMAS operatives areas, which includes both in Gaza and outside, including Turkey Iran, Qatar, and Malaysia

Malaysia is not a rich country with already RM1.5 trillions in debts. In comparison to other Middle East countries that are rich, they have the capacity to engage in wars or economic sanctions with or against Israel.

Malaysia is the only Asian country getting involved with no real beneficial reasons!🤦‍♂️

ii.  Demarche' more an expression of concern than a warning. Quite routine. Unlikely to face sanctions because of US' strategic interest in east Asia vis a vis China.

US cannot afford to alienate Malaysia. Will make some noise and express concern but nothing more. Some in Congress might push for more punitive measures but doubt it will go too far. That said, supporting and training Hamas will not endear us to the US admin
 
My Comments :  I quite agree with comment ii. above. The US has to walk a line between being a bully and chasing its allies into the hands of China. For example the extremely close Russia - China friendship is a result of bungled US foreign policy as well.
The US bungles its way around the world but nonetheless if they bungle we can get trampled to bits. 
This statement is to be noted carefully :   Malaysia is the only Asian country getting involved with no real beneficial reasons!🤦‍♂️ 
Well it is to appease the Malay vote.  To show potential Malay voters that they stand with Hamas. 
How does that benefit the whole country? None. There is no benefit for Malaysia as a whole.
The people who run the businesses, who engage in importing and (more importantly) exporting the country's output are largely non-Malay, non-Muslim and not interested in Hamas. (Or the Palestine conflict in general. It does not concern them). 
So if Malaysia were to suffer any sanctions by the US, UK or the EU it will affect the non Muslims who are more frequently  engaged in world trade. 

But what is bad for business is bad for the country. A rather lame statement which becomes profound only because there are so many who cannot understand it.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.
By Syed Akbar Ali 

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