Alongside a compelling amalgam of incentives and intimidation,
building Malaysia Incorporated also required selective ideological
recourse to tradition, in order to reinforce party guidance and the
rule of the man of prowess rather than the rule of law. Mahathir
required Malay loyalty to be transferred from the sultans to the
state, while Islam was syncretically blended with the requirements of
the latest development policy. Such ideological guidance suited the
new affluent and urbanized Malay middle class, the creation of which
has been the most significant social achievement of the Mahathir era.
Elite demands for musyawarah (deliberation) and muafakat (consensus)
evoke a positive response from this psychologically and economically
dependent class. Significantly, the Malay nouveaux riches "do not
have the same reasons for contributing to politics or speaking out
because they would rather not change the system as long as they are
the beneficiaries." It is "snob appeal that motivates the middle
class" and reinforces a traditional pattern of deference. As another
government critic has observed, the Malay middle class "doesn't care"
about political liberalization; "as long as they live comfortably
people are happy."

The state-controlled media reinforce this predilection and the
government designs elaborate mass mobilization campaigns like Semarak
and Malaysia Boleh (Malaysia Can Do) to enhance "social cohesion."
The assertion of "Asian values" in the course of the 1990s offered a
further source of organic bonding and an additional prophylactic to
counter the new external threat posed by "intolerant" Western
democrats. Indeed, by 1996 Anwar could detect an "Asian Renaissance"
in progress, one that provided a veneer of shared, if ill-defined,
Asianness that glossed over both internal and regional differences.

Nevertheless, while Mahathir continues to promote distinctive Asian
values, he excoriates Islam and Malay conservatism if either
interferes with his latest growth plan. And while he seeks to build a
new Malay identity, it is not entirely clear whether it includes or
excludes those descendants of nineteenth-century migrants from
southern India and China, who are not indigenous bumiputeras.

A related ambivalence governed the attempt to impose Asian values in
the regional economic and security arena in the course of the 1990s.
To counter what he considered a crude Western plot to reassert
colonialism through the "fanatical" advocacy of human rights,
Mahathir promoted a pan-Asian policy. Regionally, this took the form
of an expanding Association of Southeast Asian Nations (ASEAN), good
interpersonal relations among the leaders of its member states, and
non-interference in their internal affairs. For Mahathir, events like
the financial meltdown and the recent UN-sponsored intervention in
East Timor only underline the need for Asian cohesion against
Caucasian "belligerency."

Yet behind the rhetorical assertiveness, it was difficult to detect
what precisely post-meltdown Asian polities had in common. Indeed,
the inability to move beyond the increasingly otiose formula of
non-interference, to which Mahathir is addicted, has left ASEAN
impotent and embarrassed in the face of mounting regional ethnic and
religious tension. The bankruptcy in Mahathir's Asian bonding
strategy became apparent when both Presidents Habibie of Indonesia
and Estrada of the Philippines criticized theremoval of Anwar, while
Thailand argued for a policy of "constructive engagement" toward
regional problems.

And, curiously, given their shared preference for non-interference,
the political elites of both Singapore and Malaysia seem unable to
refrain from picking at the scab that formed after Singapore's
expulsion from the Malaysian Federation in 1965. In 1997 Lee Kuan
Yew's insensitive description of "crime infested" Johore inflamed
Malay sensitivities. Subsequently, the ill-timed publication of Lee's
memoirs, which once more dwelt on the separation, exacerbated
tensions, while the propensity of Singapore banks to speculate on the
ringgit hastened Mahathir's decision to impose currency controls and
suspend trade in Malaysian shares on the Singapore stock market in
September 1998. As the financial crisis deepened, bilateral ties
frayed over a range of seemingly innocuous issues, from the provision
of water supply and the infraction of air space to the Singapore
government's construction of a new customs post. Bilateral tension
reflects both Singapore's anxiety over the fact that the largely
Chinese island rests in what Lee considers a "sea of Malay people",
and Mahathir's worries that Singapore's rulers treat Malaysians like
"country bumpkins." Whatever else this increasingly fractious
relationship entails, it belies a harmonious consolidation of shared
values.

The Downside

Domestically, the ambiguity in the evolution of Malaysian corporatism
has evoked a countervailing centrifugal pull both at the periphery of
the new state and within UMNO itself. The continuing appeal of the
Democratic Action Party for the Chinese population, particularly in
Penang; the Parti Bersatu Sabah of the Christian Kadazans in East
Malaysia; and the Islamic PAS in underdeveloped and Islamic northeast
Malaysia--all these reflect intractable racial and religious
cleavages. Mahathir characteristically sees these attachments as
internal threats rather than the basis for political pluralism. To
the manifestation of differences, the party-state reacts with a
familiar Asian recipe involving a combination of repression,
corruption and conciliation. This strategy is most apparent in UMNO's
dealings with PAS. Because of its potential national appeal, and its
capacity to challenge Malay unity, UMNO considers the PAS brand of
Islam its most serious political threat. Between 1969 and 1978, UMNO
contained the Islamic party within the National Front coalition, but
increasing tension over control of the state government in Kelantan,
together with the impact of Islamic fundamentalism on a new
generation of Malays, prompted PAS to leave the coalition.

For Mahathir a retreat to fundamentalism would undermine the arduous
task of nation-building. During the 1980s, therefore, he was engaged
in the tricky enterprise of defining Islamic values in a way that
both promoted social cohesion and marginalized Islamic radicalism.
The recruitment and rapid rise of Anwar Ibrahim, who emerged from a
background of Islamic student activism into the foreground of an UMNO
"vision team", facilitated this strategy. Depicting PAS as rigidly
doctrinaire enabled the UMNO leadership to undermine its national
standing. Nevertheless, PAS retained regional control of the
government of Kelantan and, after elections in 1999, has extended its
grip to neighboring Terengganu.

The underlying propensity to political fragmentation becomes
particularly acute in times of economic stress, when elite
disagreement at the center reinforces religious and ethnic tension at
the periphery. This was evident in the recession of 1986, when
members of the UMNO elite questioned opaque government-business links
and Mahathir's increasingly autocratic leadership. Elite factionalism
culminated in a challenge to Mahathir during the party general
assembly in 1987. The narrow failure of this "Team B" challenge
prompted its leader, Tunku Razaleigh Hamzah, and his supporters to
leave UMNO and form an "unholy" alliance with the other ethnic and
religious-based opposition parties. Typically, however, the coalition
found difficulty in agreeing on anything apart from distaste for
Mahathirism, and it failed to disturb UMNO's vital two-thirds
majority in parliament. By 1996 Razaleigh and his supporters had
returned, somewhat sheepishly, to the UMNO fold. With Mahathir
apparently endorsing Anwar as his heir and thereby settling the
question of succession, UMNO's continuing hold on government seemed
assured into the new Pacific Century.

Bouncing Back

The events of 1997-99 have severely dented this assurance. The summer
of 1998 saw a massive sell-off on the KL stock exchange, the collapse
of the ringgit, and Malaysian business more illiquid than Manhattan
during prohibition. The crisis questioned the continuing viability of
both Mahathir and Malaysia, Inc. in a globalized marketplace. By
early September 1998, differences between prime minister and deputy
over how to address the economic crisis exacerbated intergenerational
tension over the septuagenarian Mahathir's reluctance to relinquish
power. Anwar and his advisers saw little alternative to an IMF-style
reform of Malaysia's crony capitalism. They also considered political
reform its necessary corollary. Reformasi, they felt, offered the
opportunity to redress the "mute syndrome" that inhibited the
Malaysian governmental process. In a telling reversal of Mahathir's
favorite analogy, the poet laureate Shahnon Ahmed compared the prime
minister to a blockage in the bowels of the body politic.

In September 1998, following his breach with Mahathir, Anwar and seventeen supporters were detained. In November of that year, Anwar underwent a form of trial on a charge of "abuse of power." Found guilty by the state-appointed chief justice, he received a six-year jail sentence. The detention prompted popular demonstrations. It was not entirely clear whether Anwar's reformasi entailed Islamization or liberalization. After Anwar's imprisonment his wife, Wan Azizah, formed a new party to clarify this, Keadilan Nasional (National Justice), which attempted to transcend ethnic and religious cleavages. At the same time, however, the new party joined forces with the ethnic and religious-based opposition parties, leaving its message still somewhat ambiguous.

The factionalism that rent the UMNO elite during this period and disturbed the quiescence of the usually apathetic middle class rapidly escalated into a political challenge to Mahathir's leadership, demonstrating once again the difficulty that Southeast Asian political cultures encounter in retiring aging men of prowess. It also showed Mahathir's skill in dealing with internal and external threats--both real and imagined--his economic pragmatism, and capacity for ruthless political surgery.

While Anwar's supporters perceived that speculation and the pursuit of "pharaohnic" visions like the Multimedia Supercorridor had caused Malaysia's recession, Mahathir and his finance minister, Daim, saw little wrong with the developmental state. Instead, they maintained, Malaysia had been viciously mugged by global hedge funds.