Old Friends, Old Foes and Old Wounds

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Malaysia’s new leader may not be in power for long.

Ninety-two-year-old Mahathir Mohamad first led Malaysia from 1981 to 2003 and always cast himself as a temporary premier if he won Wednesday’s election, ready to stand aside when jailed politician Anwar Ibrahim - his friend turned mortal enemy turned ally - is released.

Mahathir now says the king has agreed to pardon Anwar, though he’s also dancing a little around the exact role Anwar might take.

The biggest question is whether the new leader will use whatever time he has in office to reopen a probe into notorious state fund 1MDB. The U.S. claims billions was siphoned from it, and ousted premier Najib Razak faced allegations some of that ended up his personal accounts before an election in 2013. While Naijb was cleared of wrongdoing, Mahathir repeatedly called Najib a “thief” on the campaign trail.

Mahathir may decide too much time has passed to restart the 1MDB saga. There was little sign it was the key issue for voters heavily focused on living costs. But his hatred of former protege Najib runs deep and has lasted for years. Their election fight was very personal. So might be the aftermath.

Old Friends, Old Foes and Old Wounds

Global Headlines

Rome falls | First came Brexit, then President Donald Trump. Now the rebellion by angry voters has landed its biggest blow on continental Europe. Italy’s two populist parties, Five Star and the League, are negotiating a governing alliance this weekend after an establishment rearguard action finally foundered. Markets so far have been relatively sanguine. But Italy’s finances remain vulnerable to any turbulence.

New sanction pressure | The Trump administration sanctioned nine Iranian citizens and companies yesterday for allegedly operating a currency exchange network that — with the help of Iran’s central bank — transferred millions of U.S. dollars to Iran’s Islamic Revolutionary Guards, the Treasury said. For an in-depth look by Golnar Motevalli at how the U.S. withdrawal from the nuclear deal could play into the hands of hardliners, click here.

Port politics | A $10 billion sea terminal project on a remote stretch of Myanmar’s coastline is raising questions over who really benefits from China’s grand Belt and Road strategy, Jason Koutsoukis writes. A similar development in Sri Lanka saw the government hand over control to the Chinese after it failed to make interest payments and some officials in Myanmar are concerned they could face the same fate.

The dealmaker’s big test | So far, Trump hasn’t followed through on boasts he could do better than the deals of his predecessors, Toluse Olorunnipa reports. He’s gambling he can change that at a historic June 12 summit with Kim Jong Un in Singapore, and deliver a diplomatic coup Barack Obama never got close to: a pact to dismantle North Korea’s nuclear weapons program.

May’s delays | The British prime minister has made procrastination a key survival tactic as she tries to navigate the cross currents of Brexit, Robert Hutton reports. For months, some ministers have been expecting one of the constant squalls to sink her, but Theresa May keeps on gritting it out.

What to Watch

  • Trump will give his drug pricing speech later today, here are four things to look for.

​​​And finally... Chancellor Angela Merkel traveled to Aachen, southern Germany, on her day off yesterday to award Emmanuel Macron a medal for his work bringing Europe together. The French president's response? A lecture on Germany’s "perpetual fetish about budget and trade surpluses’’ and another call for a euro-zone budget which is bound to annoy her party. Europe’s essential relationship is well beyond the honeymoon phase.

Old Friends, Old Foes and Old Wounds

To contact the author of this story: Rosalind Mathieson in Singapore at rmathieson3@bloomberg.net.

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