10-5-2024 (KUALA LUMPUR) The Malaysian government has firmly asserted its stance on the issue of sanctions, declaring that it will only recognize those imposed by the United Nations Security Council and not by individual nations. This position was articulated by Home Minister Saifuddin Nasution Ismail on the 9th of May, following allegations by a senior US official that Iran has relied on Malaysian service providers to facilitate the sale of US-sanctioned oil in the region.
During a press conference, Datuk Seri Saifuddin stated, “I emphasised that we will only recognise sanctions if they are imposed by the United Nations Security Council. The delegation from the US respected our stance.” These remarks followed a meeting with Brian Nelson, the US Treasury Department’s top sanctions official, who was visiting Kuala Lumpur.
The United States has imposed a series of sanctions on Iran and its proxies, including measures targeting the sale of Iranian oil, with the aim of curtailing financial flows that Washington claims are fueling instability in the Middle East. In addressing the local media after the meeting, Mr. Nelson alluded to the Washington claims against Malaysian service providers, stating, “I would only say we have seen and we’ve promulgated some sort of guidance to the (Malaysian) marine sector about the type of services that they are engaging in.”
He further elaborated, “These are ship-to-ship transfers, particularly at night, which we see from time to time. They are really designed to obfuscate the origin of the commodity, in this case, Iranian oil.” Mr. Nelson emphasized that Iran’s ability to move its oil is contingent on the cooperation of parties such as port administrators and tugboat operators.
A recent Reuters report cited an unnamed senior US Treasury official who claimed that there has been an uptick in money moving to Iran and its proxies, including Hamas, through the Malaysian financial system. In response, Mr. Saifuddin underlined Malaysia’s commitment to combating terrorism financing and tackling illicit financing activities and money laundering.
The minister acknowledged concerns raised by US officials regarding potential money laundering activities involving certain individuals and organizations in Malaysia with alleged ties to Iran and its proxies like Hamas. However, he stressed the need for verification of these claims.
Malaysian government spokesman Fahmi Fadzil had previously asserted the country’s position, stating, “We want to assert that Malaysia, as a sovereign nation, we comply with UN sanctions. But when it comes to unilaterally applied sanctions, then I think we have to assess this situation.”
Geoffrey Williams, an economics professor at the Malaysia University of Science and Technology, provided a nuanced perspective, stating, “Malaysian businesses can do business with anyone unless there are UN sanctions regulations to stop it, but the US cannot stop Malaysian companies doing business with others. However, if Malaysian companies are involved in activities that the US does not like, then the Americans can stop doing business with them.”
The issue has garnered attention due to Malaysian Prime Minister Anwar Ibrahim’s vocal support for Hamas amid the ongoing conflict in Gaza, even at the risk of potential US sanctions against those who support the group, which Washington has designated as a terrorist organization.
In a related development, Mr. Nelson, who earlier visited Singapore, highlighted the impact of sanctions imposed in 2023 against four Malaysian firms accused of assisting Iran’s drone production. He also underscored the issue of the illicit sale of Iranian oil in the region, stating, “Malaysia clearly doesn’t want its financial institutions and its shipping industry to be abused by rogue nations and outside actors. We don’t want that because of the central importance of Malaysia, both as a trading nation and as a financial centre, and given America’s significant business presence here.”
Halmie Azrie Abdul Halim, a senior analyst at political risk consultancy Vriens and Partners, characterized the US delegation’s trip to Malaysia as an “intimidation tactic” due to Datuk Seri Anwar’s pro-Palestine stance. However, he acknowledged that “the US would also not want to lose the support of Malaysia, which is one of its key Asean partners, as the country will assume the role of Asean chair next year.”
The bilateral trade between Malaysia and the United States stands at a substantial US$78.3 billion (S$106 billion) in 2022, underscoring the economic significance of their relationship and the potential implications of any diplomatic tensions.
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