TOKYO – In all conflict situations, every party must be prepared to compromise and make sacrifices in order to find a win-win solution, Malaysian Prime Minister Mahathir Mohamad said here on Thursday (May 30).

Rather than escalating conflict through an aggressive arms race or a trade war, Tun Dr Mahathir told the 25th Nikkei Future of Asia conference that negotiation or arbitration, through the court of law, will be the “civilised” way of seeking solutions.

“When one party says, unless you follow me I am not going to agree, then of course there will be no solution,” he said. “If we cannot decide on the sacrifices by ourselves, then we should go to a court of law, let the court decide, and respect its decision.”

He cited Malaysia’s disputes with Singapore as an example. “These islands are definitely Malaysia’s, nobody can dispute that,” he quipped. “But the court says they are Singapore’s and so we accede to the decision of the court. That is the way of civilised people.”

He was referring to the long-running dispute between the two countries over Pedra Branca, an outlying island off eastern Singapore. The matter was eventually settled after the International Court of Justice in The Hague ruled in favour of Singapore in 2008.

Dr Mahathir’s keynote speech and dialogue session with Nikkei senior editor Sonoko Watanabe opened the two-day conference with the theme “Seeking A New Global Order – Overcoming The Chaos”.

The Straits Times is a media partner of the forum.

The Malaysian leader cited the South China Sea, much of which is claimed by Beijing, as a major regional flashpoint and that the military build-up in the waterway is a cause of concern.

“Sending battleships into the area and carrying out exercises may result in strong confrontation. China will react by growing their military capability,” he said. “When you threaten countries, the reaction will be to improve defence and attack capabilities which greatly gives way to tension. Some slight incident may lead to war,” he said.

Dr Mahathir said that the old international world order – by which a single civilisation takes the lead to create global rules and norms – is anachronistic. In this regard, he praised China for being inclusive in its ambitious Belt and Road infrastructure initiative, noting that Beijing takes on board the voices of all stakeholders including small countries.

The Trans-Pacific Partnership (TPP) trade deal, in comparison, was “cooked up” in Washington, he charged, with countries told to accept the terms. Malaysia is party to the revised TPP agreement, but it has yet to ratify the deal. Dr Mahathir said his administration will relook its terms.

He added that the US has to get used to the reality of a more competitive China, which has caught up and arguably surpassed America in areas such as scientific research and technology.

“If you want to be in a situation that you are always ahead – and if you are not ahead then we will ban you, send warships – that is not competition. That is threatening people,” he said.

Washington recently blacklisted Chinese tech giant Huawei over security concerns.

When asked about Malaysia’s concerns over Huawei, Dr Mahathir drew laughter from the audience when he said, wryly: “We are too small to have any impact on a huge company like Huawei, whose research is far bigger than the whole of Malaysia’s research capability so we try to make use of their technology as much as possible.”

He added: “Yes, there may be some spying but what’s there to spy in Malaysia? We are an open book, everybody knows, if any country wants to invade Malaysia they can walk through and we will not resist because it’s a waste of time.”

On a more serious note, he proposed the formation of a regional East Asian currency – which is not used locally in countries like the euro but for the settlement of the import and export of goods – as a way to replace the existing currency trading regime that is based on the US dollar.

This “special currency” should be based on gold, and can be used to evaluate import and export of goods among East Asian countries.

“We can make settlements using that currency,” he said. “That currency must be pegged to the local currency as the exchange rate, which can be related to each country’s performance.”

“That way we know how much we have to pay in the special currency of East Asia,” he added.

His suggestion came a day after the US added Malaysia to its watch list of trading partners for currency manipulation. China, Germany, Ireland, Italy, Japan, Singapore, South Korea and Vietnam are also on the list.

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