Palm oil wars

Malaysian Prime Minister Mahathir Mohammad is among the few leaders, along with Turkish President Erdogan, who raised the Kashmir dispute at the UN last year. The veteran leader has also been critical of India’s contentious Citizen Amendment Act which discriminates against Muslims.

India was displeased over the vocal criticism and decided to punish Malaysia with a new weapon – palm oil. Last month, India imposed curbs on refined palm oil imports and traders stopped buying oil from Malaysia, the world’s biggest producer and exporter of the commodity after Indonesia.

Malaysia’s palm oil inventories tumbled to its lowest in January this year since June 2017, a decline of twelve percent from December. Its palm oils exports to India slumped to about 40,500 tonnes from 201,450 last year over the diplomatic row. Despite the financial crunch and the boycott, Mahathir has vowed to stand by his Kashmir comments.

Mahathir is expected to step down later this year after negotiating a power-sharing agreement. His chosen successor, Anwar Ibrahim, seems to be softening the tone, saying that the Malaysian leader was quite tough and strong and may have stepped beyond diplomatic expressions in his condemnation of the Indian government. He said Mahathir has dialed back his criticism and does not refer to Kashmir as frequently as before.

This raises the question whether Malaysia has been pressurized to change its stance. Malaysia and India need to maintain good economic and trade relations without having to rely on each other’s policies. Will Malaysia remain committed to the Kashmir stance after Mahathir’s departure or will go silent to safeguard its interests remains to be seen. Given his recent statements, it seems Mahathir’s successor is unlikely to continue with his policies.

Pakistan has stepped in to prevent the fiasco and pledged support to Malaysia as a means offsetting the loss from palm oil sales. Prime Minister Imran Khan was in the country last week where he said that India threatened Malaysia and cut palm oil imports for supporting the Kashmir cause, and Pakistan will compensate for this. 

It is reported that Pakistani traders bought a record high of 135,000 tonnes palm oil last month. Last year Pakistan bought 1.1 million tonnes of palm oil from Malaysia. Pakistan’s decision to support Malaysia could increase the import bill in a struggling economy, while the demand for palm oil in the local market should be ascertained.

Pakistan needs to maintain its cordial relations with Malaysia which should not be hampered by political misconceptions. India is certainly using its economic might to force Malaysia from changing their stance on Kashmir and erase the narrative Pakistan has been trying to spread. PM Imran Khan’s next move must be a careful one. Salvaging Kashmir will be no easy feat.