by Dr. Stanley Kalpage
Tan Seri Dr. Mahathir Mohamad,fourth prime minister of Malaysia, has always been candid and combative. As a mercurial 43 year-old he was expelled from the ruling party, the United Malay National Organisation (UMNO) after attacking the government for failing, as he saw it, to provide for the indigenous Malay. His expulsion came shortly after the 1969 general elections (in which he lost his seat) because of his open criticism of the then Malay leadership.

Later, in his book 'The Malay Dilemma', Mahathir repeated the charge with a swipe at the Malays themselves for being fatalistic. The book sought to determine the causes of the 13 May 1969 riots in Kuala Lumpur and to explain why the Malays were economically backward.

Spokesman for Asia
Prime Minister Mahathir Mohamad has vigorously upheld Asian and Malaysian values and decried what he see as hypocrisy on decadence in the West. Mahathir confront issue head on and usually comes out the better for it. Often he has taken on the mantle of spokesman for the New Asia seeking a better balance with the west. "We must be able to stand up alongside other nations as an equal," he says. "For me that is important."

After 17 years of Mahathir's premiership, the Malays and Malaysia's other ethnic groups are enjoying the greatest period of prosperity since the days of the Malacca Sultanate. Much of Mahathir's success is due to his pragmatic approach. He may scold the West but he has thrown the door open to foreign investment. He has always been ready to criticise his own people. In fact the relations among the three main ethnic groups - Malay, Chinese and Indian - once bitter, are now more relaxed. Mahathir was not the man who founded Malaysia but he was certainly the leader who built it.

A dream shattered
With Mahathir Mohamad at the helm, Malaysia has moved beyond the narrow focus of exports of tin, rubber, pepper and tea. With the help of large amounts of foreign investment, the country now boasts of major oil refineries, a thriving palm oil industry, an automobile plant and a high-tech.. manufacuring complex.

Kuala Lumpur with a population of 2 million, is a glittering metropolis with sky scrapers, luxury five star hotels and posh shopping malls. Gleaming new cars crowd the streets. A rush of construction has transformed the once relatively unimpressive capital city. The Petronas Towers, modernistic twin sky scrapers that loom over the city, are said to be the world's tallest structures. KL's international airport, opened in time for the 1998 Commonwealth Games, is one of Asia's biggest airfields.

In the past year, the Asian economic crisis has affected Malaysia and curtailed consumption throughout the country, weakened the country's currency, the ringgit, and at the same time strengthened the buying power of the dollar.

After more than a decade of sky-high growth, the Malaysian economy is now in deep recession. In the second quarter of 1998 the economy has contracted 6.8 percent as compared to 2.8 percent in the first quarter with the drop felt across all sectors from agriculture to mining to manufacture.

Mahathir's finance minister and chosen successor, Datuk Seri Anwar Ibrahim, was sacked from office on 2 September. According to Anwar: "Malaysia is wrestling with a bitter challenge. The miracle economy which was a source of pride is now more of a mirage, like a beautiful dream. Now it is shocked by the bitter bite of reality."

Controls
Things began to change around one year ago. Then Anwar, recognised as Mahathir's successor, was being widely praised for so expertly holding the reins of the country during Mahathir's two-month break abroad. But when he returned. Mahathir found that the country's currency and stock market had been battered. Heated debates were raging over the implementation of Islamic laws. And Anwar Ibrahim was the target of a nasty smear campaign that, among other things, accused him of sexual indiscretions.

In his 40th National Day speech on 31 August 1997, Mahathir, in characteristic style, pulled no punches. He castigated the "ferocious beasts" he said were responsible for the economic turmoil, notably American financier George Soros. The prime minister even lashed out at the IMF, saying it aimed to subvert Malaysia's economy.

In June this year, Mahathir sowed his displeasure with Anwar by appointing a long-time confidant, Tun Daim Zainuddin, Anwar's predecessor as finance minister, to the newly created post of economic development minister, in a move perceived as undercutting Anwar's powers as finance minister.

Anwar Ibrahim's slogan: 'Reformasy'
Anwar did not publicly disagree with his leader but chose to remain silent. At last year's UMNO Assembly, Mahathir and Anwar even reiterated their support for each other. But Anwar was known to hold divergent views on how to handle the economist crisis.

Anwar wanted to adopt the tight monetary policies and austerity measures prescribed by the International Monetary Fund (IMF). Mahathir, on the other hand, felt that the way out was to generate growth by a looser monetary policy, lowering interest rates and expanding the money supply.

Furthermore, Anwar considered the economic problem to be only one of a host of challenges that Malaysia was facing. He viewed the economic turmoil as being an inability to face the challenges of a new era - the era of globalisation and of the information explosion. Anwar believed that the time to launch a new reformation had arrived.

The cry heard outside Anwar's home, where he has holed himself after being ousted, is 'reformasy', the rallying cry of the Indonesians who deposed Suharto. But comparisons with Indonesia are at best superficial. And Mahahir is a master politician who is still very popular. Unlike in Indonesia when Suharto was deposed, the media in Malaysia are still tightly controlled.

Mahathir's solution
On 2 September 1998, Anwar Ibrahim became the third deputy prime minister to walk out of Mahathir's cabinet. Mahathir fired him without any explanation. Just one day before the sacking Mahathir had described his deputy as being "good". Actually, although Anwar's sacking shocked his supporters. Mahathir had been biding his time to remove his deputy.

Now that he is firmly in control of economic policy, Mahathir has decided to go his own way by unveiling new measures that go against IMF strictures and conventional free-market economic theory. He has instituted currency controls to curb capital flows, insulate the economy from foreign speculators, and stabilise the ringgit. He feels that interest rates can then be lowered without triggering a devaluation.

With his characteristic determination, Mahathir has set his country on a collision course with foreign investors and the IMF. Instead, he is banking on a home-grown economic solution, the National Economic Recovery Plan (NERP).

Foreign investors are furious and predict dire consequences but, if everything goes according to Mahathir's plan, some economists predict that Malaysia could have a GDP growth rate of 3 - 5 percent in 1999. Ironically, despite his tirades against foreign investors, Mahathir has appointed a US - based investment bank, Salomon Smith Barney, as special adviser to the government on the country's financial system.

Struggles ahead
Although Anwar is no longer a member of the cabinet or of UMNO, the political tussle between Mahathir and Anwar continues. Mahathir is an experienced and deft politician. He has weathered many apolitical storm in the past. Those who have opposed Mahathir in the past like Tengku Razaleigh Hamzah and Datuk Musa bin Hitam have been virtually cast into the political wilderness.

Anwar has been accused of sexual impropriety, jeopardising national security, bribery, interferring with police investigations, tampering with evidence, abuse of power and sedition. No formal charges have yet been laid but some of his associates have been arrested.

Anwar derives his support from the youth, university students, intellectuals and professionals who believe in a globalised economy. He is ambitious and knows that he cannot win power by isolating himself from the powerful UMNO. He alleges the charges against him were all part of a high-level conspiracy on the part of Mahathir's inner circle. But Mahathir astutely emphasises that his decision to fire Anwar was based on "moral" grounds rather than being politically motivated.

Mahathir retains the support of UMNO religious leaders who have come out strongly in his favour. They say that those who knew of the closer relationship between Mahathir and Anwar would find it difficult to believe that Mahathir conspired against his anointed successor. And Mahathir says he is convinced that the sex allegations against Anwar are true and that Anwar is therefore not fit to lead a country like Malaysia.

In the meanwhile, Mahathir says that he will now have to defer his retirement so that he could give the country the benefit of his experience for the resolution of the economic crisis. Serious cracks have begun to appear in UMNO, divided as it is with quite a measure of support for Anwar especially among those who have opposed Mahathir in the past. There is a perception of impending political turbulence. The run up to the general elections scheduled for 1999 should prove to be most interesting.