Amid Asian Crisis, Mahathir Holds On
International Herald Tribune
June 18, 1998
Michael Richardson 

East Asia's upheaval has already toppled governments in Thailand, South Korea and Indonesia, and the question now being asked with increasing frequency in Malaysia is whether Prime Minister Mahathir bin Mohamad will also have to take responsibility for a looming recession and hand over power.

The political future of Mr. Mahathir, who has been prime minister for 17 years and is now the region's longest-serving head of government, will be in the spotlight Thursday when the country's main political party, the United Malays National Organization, which he heads, opens its annual general assembly.

Although he is 73, Mr. Mahathir shows no sign of being prepared to step down. Indeed, he said recently that he would not leave power while the economy was in trouble. Few analysts expect any serious move to push him out during the four-day meeting of the party, known as UMNO.

"The economic situation in Malaysia is hardly as serious as in Indonesia, while politics in Malaysia are seen as more democratic," said Jomo Sundran, a Malaysian economist. "Dr. Mahathir is in a much stronger position than Suharto was, and he's unlikely to quit."

Unlike Mr. Suharto, who was anointed as president every five years by an electoral college he controlled, the Malaysian leader is chosen in sometimes hotly contested party elections after winning a seat in Parliament in general elections.

Still, Indonesia's political revolution, and moves there to root out the corruption and cronyism associated with Mr. Suharto's rule, are having an impact on Malaysia. Critics there blame ties between the government and favored business groups for much of the rising tide of bad debt that threatens to ruin companies and the banks that loaned them money, turning unemployment into a major problem.

In Malaysia, "business looks after politics and politics looks after business," said a foreign analyst. "It is not in such an outrageous form as it was in Indonesia where it was so closely identified with the Suharto family and their friends, but the net effect is that resources are being taken from viable companies to bail out less viable ones."

As the pain from growing economic troubles spreads in Malaysia, criticism of Mr. Mahatir has increased, not just among his political opponents but in the ranks of professionals, white-collar workers and the urban middle class, who have thrived during the years of his leadership.

"What happened in Indonesia has encouraged the growing trend of private criticism of Mr. Mahatir," said Michael Liefer, a professor of international relations at the London School of Economics, who was in Malaysia recently. "There's a feeling that his idiosyncratic style of rule is not necessarily helping Malaysia to address the fundamental problems of its economic adversity."

Mr. Mahathir has blamed currency speculators and the lack of international controls on the movement of capital for Malaysia's economic difficulties. His often strident, nationalistic rhetoric tends to frighten foreign businessmen and investors away just when they are most urgently needed.

In contrast, Malaysia's deputy prime minister and finance minister, Anwar Ibrahim, who is Mr. Mahathir's designated successor, has embraced the need for reform. The two men have also differed over economic policy, including whether or not to assist distressed Malaysian companies with close links to the government.

Mr. Anwar told The Star newspaper last week that Malaysia should learn a lesson from the events in Indonesia and press ahead with political reforms.

"It is a fact that some of the problems we are facing are caused by the international monetary system and market forces which are unjust and do not give equal opportunity to smaller nations and developing countries," he said. "However, weaknesses in internal policies also contribute to some of the problems and this is a fact that we have to accept. If we are unwilling to accept this, then we may have to face the Indonesian situation where the people demanded changes. Therefore, we have to make changes before it is too late."

Mr. Anwar said that UMNO — the dominant party in the governing National Front coalition of 13 parties — could not protect the people's interests if government administration was not transparent and only certain groups were allowed to monopolize business opportunities.

Analysts said that some supporters of Mr. Anwar, who is UMNO's deputy president, wanted to exploit growing public discontent over worsening economic conditions and months of water shortages in parts of the greater Kuala Lumpur area to advance the case for reform and Mr. Mahathir's replacement by Mr. Anwar.

Yet Mr. Anwar, who is 50, seems prepared to wait, perhaps because he knows that any move now to topple Mr. Mahathir would be unlikely to succeed and could backfire. Elections for UMNO party positions, which traditionally determine who becomes Malaysia's prime minister and deputy prime minister, are not due until next year.

Malaysia has so far looked relatively healthy compared to Indonesia, Thailand or South Korea, and unlike those countries did not seek help from the International Monetary Fund.

But economists say Malaysia is on the verge of recession after its gross domestic product shrank for the first time in 13 years, by 1.8 percent in the first quarter. Most analysts expect the economy to shrink by at least 3 percent in 1998.

Malaysia's opposition parties seem in no position to mount a serious challenge to the government, while there is little evidence of the kind of student activism that provided the cutting edge of reform in Indonesia.

The political opposition is divided and controls only 25 seats in the 192-member lower house of the Parliament. General elections are not due until 2000.

Still, the government is showing signs of nervousness about the potential for unrest. Since late May, the police have banned or broken up five public meetings called to express public grievances over the water shortages and other issues.

Copyright © 2006 the International Herald Tribune