KUALA LUMPUR – Experts warn that escalating hostilities between Israel and Iran could have severe consequences for Malaysia and its Asean neighbours.
Following Iran’s recent launch of hypersonic ballistic missiles against Israel, reports indicate that Israel may retaliate by targeting key oil industry infrastructure in Iran.
According to Azmi Hassan, a geostrategist and senior fellow at the Nusantara Strategic Research Academy, such an attack would be a situation the US is keen to avoid, as it could severely disrupt global energy supply chains.
“Such an attack would not only affect the oil market but also the Red Sea, which serves as a vital supply chain connecting Europe and Asia.
“As it stands, with the Houthis in Yemen joining the conflict, the utilisation of the Red Sea shipping routes has dropped to almost 30%.
“If the situation deteriorates further, it will not only affect Malaysia and Asean but the global economy as a whole,” Azmi told Scoop.
Despite the hopes of global superpowers for an end to the conflict, Azmi fears that the situation could worsen as Israeli Prime Minister Benjamin Netanyahu remains determined to pursue his adversaries.
Moreover, with the US planning additional sanctions against Israel’s enemies, Azmi noted that Iran is looking to circumvent economic blockades by aligning with international organisations such as BRICS.
“The US is contemplating further sanctions on Iran, which is why they joined BRICS.
“Malaysia, on the other hand, joined the bloc to amplify its voice on the international stage.
“It will be interesting to see how BRICS will react to the Middle East conflict.
“So far, they have not responded as a collective group, though individual member states have voiced their opinions,” Azmi added.
Global Asia Consulting’s senior consultant, Samirul Ariff Othman, echoed these concerns, stating that a full-scale war between Iran and Israel could place Malaysia in a precarious geopolitical position, as the country balances its historical support for the Palestinian cause with the need to maintain strategic ties with global powers such as the US.
Economically, however, Samirul, a former senior researcher at the Malaysian Institute for Economic Research, suggested that in the short term, Malaysia could benefit from fluctuations in oil prices, given its status as an oil-exporting nation.
“But long-term volatility could harm Malaysia’s broader economic interests.
“Malaysia is deeply integrated into global value chains, particularly in sectors like electronics and automotive, where stable international trade routes are essential,” Samirul said when contacted.
On the investment front, Samirul also warned that Malaysia’s strong stance could deter Western funds, despite potentially bolstering ties with Arab nations.
“One example of this is the recent US sanctions on Malaysian firms, likely due to Malaysia’s sharp criticism of Israel.
“The core issue is how Malaysia can maintain its strategic ambiguity.
“As a small, open economy heavily reliant on global trade, Malaysia’s best approach is to tone down its rhetoric on Israel and Palestine, focusing more on economic diplomacy.
“Strategic ambiguity allows Malaysia to advocate for Palestinian rights without jeopardising its economic future,” Samirul explained.
On the issue of defence, Andrin Raj, Southeast Asia Regional Director for the International Association for Counterterrorism and Security Professionals (IACSP), suggested that the conflict in the Middle East would have limited direct impact on Malaysia and Asean.
However, Andrin cautioned that Malaysia’s ongoing support for Hamas could have significant repercussions, particularly given that the group has been designated a terrorist organisation by several countries.
“The conflict in the Middle East will not have a direct impact on the entirety of Asean, though there will be concerns from Malaysia, Indonesia, and Brunei as members of the Organisation of Islamic Cooperation (OIC).
“Supporting the OIC’s policies has been a consistent aspect of their international relations,” Andrin added.
Another issue to consider, Andrin said, is the potential influx of refugees from Israel’s multi-front conflict in Gaza, Lebanon, Yemen, and Iran.
“Malaysia, Brunei, and Indonesia could see an influx of refugees from war-torn countries, which could impact their local economies.
“Given that these refugees come from fellow Muslim nations, these three countries may feel obligated to take them in.
“However, Malaysia may be more cautious when it comes to accepting refugees from Iran, in order to avoid tensions with its Sunni-majority population,” Andrin concluded. – October 8, 2024