By Dr Syed Husin Ali
PETALING JAYA — Malaysia's deputy prime minister and finance minister of Malaysia, Anwar Ibrahim, was removed from his posts on September 2. A day later he was sacked as deputy president of United Malays National Organisation (UMNO), the leading party in the government coalition.
Prime Minister Dr Mahathir Mohamad took over as finance minister. Mahathir has concentrated government power, and control of the ruling party, in his hands. He has a strong hold on the cabinet, the courts and the media. His dictatorial power is stronger now than ever before.
Sixteen years ago — six years after his release from a 22-month detention without trial under the Internal Security Act, and enjoying great popularity as president of the Islamic Youth Association — Mahathir, then already PM and UMNO president, enticed Anwar to join UMNO.
Anwar quickly rose in the political hierarchy with Mahathir's support. In most people's minds, Anwar was to be Mahathir's successor. While, it became clear there were differences in approach and style between the two leaders, they continued to support of each other and it appeared impossible to separate them.
By 1997, however, the differences had developed into conflicts. A few days before the UMNO assembly that year, Mahathir confirmed the existence of a poison-pen letter alleging that Anwar was involved in an affair with someone's wife and homosexual activities with a driver.
Many believed this disclosure was Mahathir's way of weakening Anwar's chances of gaining the UMNO presidency. Not long afterwards, Mahathir and the police dismissed the letter as false.
Differences
With the depreciation of the Malaysian currency and fall in the value of shares on the local stock market, beginning in July 1997, the differences became clearer.
Mahathir blamed foreign financial speculators for the economic crisis and rejected pressure to imitate Thailand and Indonesia's acceptance of loans from the International Monetary Fund and the World Bank. He correctly branded both institutions as instruments of "neo-colonialism" and "new capitalism". He advocated control over international financial speculation.
Mahathir's position was viewed by sections of the western ruling elite as an attack on liberalisation and the free market. A section of the western press began to attack him. This ignored the truth that it was Mahathir who was responsible for opening Malaysia to the global free market.
Mahathir's support for such policies helped corporate figures close to him amass wealth. In fact, Malaysia, through its Central Bank, was involved in speculation over the pound sterling in 1992-3. It is believed the bank incurred a loss of around US$6 billion. Perhaps Mahathir was infuriated that at the same time Soros made enormous profits?
Although Anwar did not openly oppose Mahathir's stand, in many speeches and interviews outside and inside the country, he frequently referred to weaknesses in the leadership and administration. He often alluded to corruption, cronyism and nepotism. Mahathir regarded this as a direct attack on him.
As finance minister, Anwar appeared to be more open to IMF and World Bank prescriptions for overcoming the crisis. However, he never went on record stating that Malaysia should accept an IMF bail-out.
Anwar's relationship with the highest officials of the IMF and World Bank appeared to be more than cordial. This became clearer after Anwar became chairperson of the Development Committee of the IMF.
Anwar became a darling of the western media. Some members of the US ruling class were also seen to favour Anwar more than Mahathir. His close relationship with some high US officials at the time when Mahathir was attacking "neo-colonialism" did not go down well with the PM.
Allegations
Things came to a head during the UMNO general assembly in June. Just before the assembly started, a book entitled Fifty Proofs: Why Anwar Cannot Be Prime Minister was published. Copies of the book found their way into some delegates' conference bags.
Anwar's supporters charged that this could not have happened without the blessing of top party leaders. The secretary general of UMNO dismissed the complaint by saying that only one bag contained the book.
The book listed 50 allegations against Anwar — including involvement in sex scandals, being an agent of a foreign government and receiving money from a foreign intelligence agency. The book contained the poison-pen letter of a year earlier and appeared to have been put together in a great hurry.
Accusations of corruption, cronyism and nepotism were hurled at the UMNO leadership by the head of the UMNO youth wing, Zahid Hamidi. Mahathir interpreted this as an attack on him in order to oust him, and believed that Anwar was behind the charges.
During the assembly, Mahathir disclosed several lists of people who had been awarded special shares, privatised projects and transport permits. The lists showed many prominent corporate figures close to Mahathir and his children benefited. But it also showed that Zahid and some Anwar family members and close associates enjoyed similar privileges. This blunted their attack on Mahathir.
50 Proofs damaged Anwar's reputation as a religious person and strengthened Mahathir's position. After making a long and convincing speech at the end of the assembly, it was clear Mahathir had won the day.
Not long after the assembly, Mahathir announced the formation of a National Economic Action Council, to be chaired by him. Daim Zainuddin, the finance minister Anwar succeeded, was named chief executive.
NEAC (or more accurately, Daim) was to take over the main functions of planning and implementing measures to overcome the economic crisis. The majority of NEAC membership was composed of ministers, corporate representatives and administrators.
Daim was brought back into the cabinet to enhance his powers and soon announced a National Economic Recovery Plan. Although Anwar continued to be finance minister, he was deprived of the power to deal with key financial and economic matters.
Big corporations saw their huge foreign debts increase by 50% following the fall in the value of currency against the US dollar. Listed companies suffered heavy losses as a result of the drop in the share market by more than 70%.
Among these companies were those owned by cronies of the UMNO leadership. Public money was to be used bail them out. There was opposition to this.
Mahathir immediately acted against the media. Senior editors of two influential Malay newspapers, Utusan Malaysia and Berita Harian, and a senior program officer at TV3 (a private television channel) were forced to resign. They were considered strong supporters of Anwar.
A few weeks later, the Central Bank governor and his deputy also sent in their resignation. They were opposed to Mahathir's assertion that interest rates should be lowered and that there must be control over foreign exchange.
On September 1, Mahathir announced "shocking measures", which included: fixing the exchange rate of the ringgit at RM3.8 to the US dollar; allowing a maximum of RM10,000 to be taken in and out of the country; and declaring that ringgits held overseas would be regarded as worthless after a month.
On September 2, the prime minister's department issued a statement announcing that Anwar had been stripped of all his government positions. On September 3, Anwar was stripped of his party position and expelled from UMNO.
No choice
The main reason for these events is that Mahathir and his associates feared Anwar would challenge for, and possibly win, the leadership of UMNO at the next party general assembly.
Furthermore, a handful of businesspeople who had become very wealthy with the help of Mahathir wanted him to continue in power to protect their interests and rescue their ailing companies. They wanted to be sure that, if anything happened to Mahathir, who is 73 and has heart problems, he would be succeeded by someone considered reliable.
Anwar was suspect because he has promised to take stern action against corruption and has also surrounded himself with a new set of ambitious young businessmen who seem in a great hurry to replace the established cronies surrounding Mahathir.
After his sacking, Anwar announced his intention to form a reform movement and organised large demonstrations. The meaning of the "reform" he intends has not been spelt out.
Nevertheless, public sympathy for him is widespread and seems to be increasing, especially among the youth, the poorer classes, professionals and public servants.
Anwar has stated categorically that he will neither form a new political party nor join any existing ones. He seems to be toying with the idea that he will be reinstated in the party.
A number of UMNO sections within his home state of Penang have, while upholding Mahathir's leadership, appealed for Anwar's reinstatement to all his former positions. However, this will be impossible as long as Mahathir remains in power. Mahathir already has most UMNO leaders in his pocket.
There seems little positive to choose from between Mahathir and Anwar. Progressives can easily be attracted to Mahathir's pronouncements against "neo-colonialism" and the fear of foreign capital dominating the country. At the same time, he cannot be trusted because he has turned into a dictator, violating fundamental practices of democracy and basic human rights.
On the other hand Anwar may attract a lot of people because of his populism and stated concern for civil society and human rights. But there are strong reservations caused by his leanings towards the west, foreign capital and the IMF.
Certainly, a third alternative in Malaysia is necessary.
[Dr Syed Husin Ali is president of the Malaysian People's Party.]