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Asian Business Strategy & Street Intelligence Ezine

He's no longer Finance Minister, Deputy Prime Minister, and as from late yesterday, has been kicked unceremoniously from UMNO, the ruling Malay party.

..But Anwar wont lie down this time, as he has done several times over the last few months as the pressure built up. That is despite major losses of support and a Mahathir-controlled press that is playing down the event to the extent of sychophancy. And it is not just the local press.. the neighbouring Singaporean press has been uncritical, and the international press is also showing signs of falling for the line that his dismissal is more about allegations of impropriety, corruption, and sexual deviancy than any orchestrated campaign to reduce Anwar's influence.

According to Anwar,

It is certainly a political conspiracy against me to prevent any possibility that I will challenge the PM.... ...I can't say if the PM is directing it. But they are rich people, businessmen and supreme (UMNO) council members... ..I have proof, I have tapes.." said Anwar.

Let's get rid of the spicy sexy bit first.. Whether Anwar did mince around town in wigs (heh even the Rat did that once at a fancy dress party..), (..and further more it is actually a crime to cross-dress in Malaysia), solicited prostitutes, and engaged in close encounters of the bi-kind, still remains to be proved and Anwar has denied it vehemently several times this year. What is more substantive than these unproven allegations is that all the Rat's sources have been telling us this for months. To think that Mahathir and the government didn't know or didn't read the book is just plain gilla... The timing to pursue and publicise these allegations now seems highly co-incidental. All of which suggests that the use of the personal allegations at this time is motivated by politics rather than morality.

Our regular readers know well how Asian politics, society, and even business works. Strict Laws are laid down and selectively enforced depending on the power of the miscreant. This covers religious laws as well as civil laws. Muslims are forbidden to gamble and drink, as well as to engage in sexual relations outside marriage . However, Muslims also drink openly, and a well publicised sex case involving high ranking Dato's and Datuk's a couple of years back is accepted that it will never go to court because of the relationship of the offenders with the highest level of government. The well know rule is it's OK to do anything... as long as you don't get nabbed.. And being nabbed depends on what friends you have.. The free press is stymied by self censorship and worse so any serious investigative reporting is an unpracticed art in many ASEAN countries.

Of course, while Anwar "played the game", he knew he would be protected from any of these allegations. .. But now of course he is not. His "fair weather mates" are deserting him fast as they read the writing on the wall, and the ruling elite has made it clear that you either agree with the boss's views and stay in, or you're out. Many other less commited people have taken the point, and will only know talk behind closed doors.. In a society that has learned that success comes from letting their leaders talk for them and to pragmatically adapt their beliefs to those of their leaders, Malaysia may well be a very lonely place for Anwar.

Anwar's real sin has been to question Mahathir's rhetoric that foreign devils are responsible for all of Malaysia's malaise, and also to stick to open market policies as Finance Minister. Even though Anwar himself is part of the political ruling elite in Malaysia, in the end he was out-manouvered and side lined by a more wily politician.

Mahathir is following a highly risky route in insulating Malaysia from the global free market, that does indeed have a possibility of success, especially if other Asian economies follow suit. He has masterfully convinced most of Malaysia, from UMNO power brokers to satay sellers, of the correctness of the route. Anwar was becoming more than just a thorn in his side, when the success of Mahathir's Fortress Malaysia rests on unity. Today there were were further calls from Mahathir and the government to the Malaysian people to trust the government "implicitly".

Lets look at the concise string of recent events leading up to Anwar's dismissal:

• Business-man Daim Zannudin, widely credited for solving Malaysia's last economic crisis where the stock market also took a dive, is brought in as an advisor to Mahathir's inner circle, effectively reducing substantially Anwar's policy influence as Finance Minister.
• Around 3 to 4 months ago, Mahathir makes a statement that "Anwar will be the next Prime Minister". This was a clear message to Anwar that if he didn't rock the boat there was a reward.
• At the UMNO part meeting, Anwar's backers made a poorly prepared and politically naive attack on Mahathir relating to corruption and cronyism. Out of nowhere, Mahathir triumphantly produced a list of beneficiaries of government goodwill that included the instigator of the move himself and close associates of Anwar. Mahathir tops it off with a speech attacking those "who would have us re-colonised".
• Around one month ago, two editors of the leading (and UMNO controlled) Malay language newspapers were sacked, primarily for publicizing problems at the new Kuala Lumpur International airport. Both were in Anwar's camp.
• A week ago, Malaysia's two top national bankers resigned, citing policy differences with the government. Again, they were Anwar supporters.
• Currency controls were introduced, and finally the Ringgit was pegged to the US dollar as a measure to discourage currency speculation on the Ringgit.
• Rumours circulate that Anwar was about to resign immediately followed
• Anwar dismissed as Deputy Prime Minister, Finance Minister, and finally dismissed from the party.
• Allegations of sexual misconduct and corruption were widely publicised, with suggestions from the press and Anwar himself that he was facing arrest under the Internal Security Act, and criminal charges.

Anwar has always previously had a strong image as a devout and moral Muslim. He has strong beliefs also on social change and the empowerment of the poor. In fact many Chinese business people have been wary of what changes would occur when Anwar succeded Mahathir. The allegations strike at Anwar's moral power just as he loses his political power, reducing his credibility as a reformer, and as a threat to UMNO from outside the party.

Strong government indeed....

To students of the politics of power, especially in Asia, it is a fascinating story. Malaysia has grown fast with strong, paternalistic government. Those in power "play the game". And those who have power will do all they can to keep it. The bigger picture is more unfortunate.. and that is that change under these type of governments is difficult to achieve by evolution....

The proof will be in the pudding... Anwar is at last able to express his opinions without thinking of party discipline, and outline a clear alternative path for Malaysia. Should Mahathir's "Fortress Malaysia" founder, Anwar is well placed to build a reform movement. This would have been a major threat save for two important points..

• Malaysians tend to put more credence in the opinions of those in power rather than rationally analyzing arguments on their own merit. The education system does not reward critical analysis, and trusting the government uncritically has brought many wealth and dignity in the past.

• "Mud sticks".. and Anwar loses moral authority on which to base a reform movement even if the sexual charges are not proved, especially among the Muslim rural population.