Date: Sun, 28 Jun 1998 07:05:07 -0400
Sender: Southeast Asia Discussion List <SEASIA-L@LIST.MSU.EDU>
From: Alex G Bardsley <bardsley@ACCESS.DIGEX.NET>
Subject: Fwd: MY: Power struggle looms over faltering economy (SMH)
Power struggle looms over faltering economy
By Craig Skehan, Herald Correspondent in Bangkok
27 June 1998
Subtle leadership manoeuvring in Malaysia has deteriorated into what
many within the dominant political party fear will become a
debilitating power struggle.
During a decade-long economic boom, the Prime Minister, Dr Mahathir
Mohamad, silenced critics by pointing to rapidly improving living
standards. However, with the national economy contracting in the first
three months of this year there are growing tensions over remedies,
and who is best able to implement them.
On Wednesday Dr Mahathir appointed the former finance minister, Mr
Daim Zainuddin, to an economic development portfolio in the Cabinet.
When Mr Daim was appointed to head an economic think-thank earlier
this year, it was seen as partially undermining the standing of the
Deputy Prime Minister and Minister for Finance, Mr Anwar Ibrahim.
Mr Anwar made veiled criticisms of Mahathir-backed bailouts of
politically well-connected Malaysian businessmen.
And in the wake of the forced resignation of Indonesia's President
Soeharto, Mr Anwar suggested that unless there were political and
economic reforms in Malaysia, an Indonesian-style "People's Power"
movement could develop.
The implication that there were comparable problems of nepotism and
cronyism in the two countries incensed the Mahathir camp.
Although Mr Anwar has been Dr Mahathir's anointed successor for
several years, a schism developed over the timing of a handover. Many
believe that Dr Mahathir wants to hold onto the prime ministership
well into another term in order to see an end to the country's
In a speech preceding the annual assembly of the United Malays
National Organisation (UMNO) on Thursday, youth wing leader Mr Ahmad
Zahid Hamidi attacked nepotism and cronyism within the party.
As Mr Zahid is a strong supporter of Mr Anwar, the Deputy Prime
Minister was blamed for the airing of internal dirty laundry, which
had given credence to foreign critics.
But during a speech to the assembly Mr Anwar called for UMNO unity and
expressed support for Dr Mahathir's leadership. However, this did not
wash with the Prime Minister or his key strategists, and Dr Mahathir
spent much of the week extracting political retribution and
undermining Mr Anwar's control over the economy.
The Prime Minister attacked the destruction of Malaysian companies by
high interest rates, which Mr Anwar has argued are necessary to
stabilise the ringgit.
Then on Wednesday, Dr Mahathir announced the appointment of Mr Daim as
Minister of Special Functions, with responsibility for development
By wresting authority from Mr Anwar, Dr Mahathir has effectively
offered to take responsibility if the country's economy continues to
fall deeper into recession.
But most economic analysts believe that the Malaysian economy will
sink deeper into recession for at least another six months before it
starts to bottom-out.
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