Malaysia, Indonesia threaten EU over palm oil ban

The European Union risks a trade war with Malaysia over its “grossly unfair” policies aimed at palm oil exports, according to nationalist Prime Minister Mahathir Mohamad said.

The European Commission said in March that palm oil cultivation resulted in excessive deforestation and its use in biofuels should be phased out by 2030.

The bloc also says it plans to phase out palm oil’s use in biofuels at the World Trade Organisation.

Under the EU’s new renewable energy rules, the European Commission has to define criteria that are meant to control the use of the most ecologically harmful biofuels.

Heavily indebted Malaysia, the world’s second-largest palm oil producer after Indonesia, relies on the versatile crop for billions of dollars in foreign exchange earnings and hundreds of thousands of jobs.

Indonesia and Malaysia, which together account for more than 80 per cent of global production, both say palm oil requires far less land to produce oil compared to crops like soy and rapeseed.

The veteran leader has said he might buy fighter jets from China instead of European arms manufacturers.

Mahathir said he could look elsewhere to upgrade Malaysia’s ageing Russian Mig-29 fighters and abandon plans to buy France’s Rafale jet or the Eurofighter Typhoon (pictured).

“If they keep on taking action against us, we will think of buying aeroplanes from China or any other country,” the returning premier told the official Bernama news agency.

The 93-year-old said the EU’s attitude towards palm oil was an attempt to protect alternatives that Europe produced itself, like rapeseed oil.

“To do that kind of thing to win a trade war is unfair,” Mahathir said.

“Trade wars are not something we like to promote but on the other hand it is grossly unfair for rich people to try and impoverish poor people.”




Indonesia has threatened to ditch the 2015 Paris climate agreement if the EU phases out palm oil as a renewable transport fuel after the commission’s classified palm oil as a risky crop that caused significant deforestation.

Luhut Pandjaitan, Indonesia’s natural resources minister, said that the EU “should not underestimate Indonesia” and pledged that the government would firmly defend its national interest.

“If the US and Brazil can leave the climate deal, we should consider that. Why not?” Pandjaitan said.

Under the Paris deal, Indonesia has committed to reducing its greenhouse emissions unconditionally by 29 per cent by 2030.


Sales at risk? The Eurofighter Typhoon. Picture credit: Wikimedia