A pre-paid electronic "Touch and Go" card offers the best way to
negotiate the toll booths along the north-south superhighway that
traverses the Malay Peninsula from Johore to the Thai border. By an
unintended irony, the title of the card captures the current
condition of the Malaysian polity. On the one hand, Malaysia has
emerged from the Asian financial meltdown relatively unscathed
economically. On the other, a series of political scandals and a
bitterly contested election campaign in November 1999 have rocked the
United Malay National Organization (UMNO), the ruling party that has
overseen the development of this multi-ethnic state--composed of 62
percent Malays, 30 percent Chinese and 9 percent Indians, the beliefs
of whom traverse the spectrum of spiritual possibility from animism
to Islam.

Almost daily revelations of alleged corruption and sexual misdeeds
involving former Deputy Prime Minister Anwar Ibrahim, his adopted
brother and his chauffeur have disturbed the quiescence of the
recently urbanized Malay middle class, whose undivided loyalty has
until now underwritten UMNO rule. This arriviste class, itself the
product of state policy, had previously left the demands of
modernization to UMNO's guidance. Revelations about buggery in the
upmarket Kuala Lumpur (KL) suburb of Bangsar, and allegations of
attempts to poison, both literally and metaphorically, the still
popular Anwar have, however, tended to disturb middle-class faith in
party guidance. At the same time as the state-controlled media revel
in the gory details of Anwar's alleged private life, the government
bans Austin Powers: The Spy Who Shagged Me in deference to Islamic
sensibilities.

The contradictory demands of tradition and modernity, dramatized by
the Anwar case, are daily apparent on the streets of the nation's
capital, Kuala Lumpur, where professional Malay women seek to marry
their mobile phones to their elegantly cut baju kurang, Raybans and
matching head scarves. Glass and chrome temples to Mammon sit
uneasily beside the sinuous lines of the city's oldest mosque, the
Masjid Jamek, and the Courts of Justice, built at the turn of the
century. Symbolizing the perceived need to build a dynamic, Asian
modernity, the eighty-two stories of the Gothamesque Petronas Towers
dominate the until recently sleepy colonial capital. From the towers
a state-of-the-art, rapid transport system crosses the city.
Ultimately it will join the recently opened KL International Airport,
an air conditioned symphony of chrome, glass and marble, with
boutiques dedicated to Ferregamo and Bally.

The transformation of Kuala Lumpur and the modernization of Malaysia
are the realization of one man's vision--that of the country's
longest serving prime minister, Dr. Mahathir Mohamad. Unfortunately,
the economic meltdown of the late 1990s required the more grandiose
elements of his vision to be put on hold, as the incomplete concrete
pillars of the KL rapid transport system bear silent witness.
Elsewhere along the north-south highway the costs of short-term loans
funding long-term investment is evident. To the north, the empty
hotels that line the beaches of Batu Ferenghi on Penang Island
illustrate the capricious nature of international tourism. Elegant
hotels like the Bayview and the Rasa Sayang, which in the heyday of
the Asian miracle catered to discerning Germans and Swedes, are now
reduced to hosting pasty-faced, package holiday Brits with a penchant
for warm beer and "curry half and half" (half rice, half french
fries). Meanwhile further down the coast, Malacca, the pre-colonial
center of the Malay world, gradually decays into the sludge of the
straits named in its honor. When buildings are not being constructed
in Malaysia, they are falling down. The Mah Kota complex on the
outskirts of Malacca is a case in point. The hotel is a postmodern
pink palace surrounded by recently built streets of empty boutiques
catering to tourists who never came. An unfinished aquarium
surrounded by rotting corrugated iron advertising seaworld in faded
lettering indicates where the miracle died and rotted beneath the
tropical rain.

Mahathir sought to address the malaise that gripped his tiger economy
by imposing currency controls in 1998. With characteristic
insouciance he has also forged ahead with plans to build an
"intelligent city" of the future. It will run from the Petronas
Towers in downtown Kuala Lumpur to a building site in the jungle,
forty kilometers to the south. The building site houses a partially
completed paperless administrative center, Putrajaya, and a
yet-to-be-built multimedia supercorridor called Cyberjaya. Mahathir
intends this $10 billion exercise in Ozymandian hubris to cap his
vision of Malaysia transformed.

In order to fund this silicon kampung, however, Mahathir must attract
multinational investment in the shape of Sun Microsystems, Microsoft,
Intel, Nokia and British Telecom, whose CEOs turned up for the
multimedia equivalent of a rumble in the jungle in July 1999. As they
approached the Cyberjaya site they were greeted by a curious
monochromatic image on a billboard depicting rioters demolishing a
car. Above the image a message warned: "Foreign Influence is a threat
to National Security."

This capacity to reject foreign influence yet promote foreign direct
investment suggests that modernization, Malaysian style, represents
an Asian version of doublethink (memorably defined by George Orwell
as "the capacity of holding two contradictory views in one's mind
simultaneously and accepting both of them"). The impressive postwar
growth of Malaysia depended upon its membership in the Western
alliance during the Cold War, its openness to the post-Bretton Woods
liberal trade order in the Asia-Pacific, and its export-oriented
economic strategy. Yet throughout the 1980s Mahathir and his ruling
UMNO railed against Western liberalism, launched a Buy British Last
campaign, and instituted a Look East economic policy. At regional
forums like Asia-Pacific Economic Cooperation (APEC), Malaysia
continues to promote a Japan-led East Asian Economic Caucus.

Mahathir's illiberal "heresy" (as he himself termed it) in suspending
the repatriation of foreign funds invested on the KL stock exchange
and arresting his reform-minded deputy Anwar Ibrahim prompted
commentators as diverse as Amnesty International, Indonesian
President B.J. Habibie, George Soros and Al Gore to direct a chorus
of disapproval at Malaysia's political and economic failings. Given
Malaysia's dependence on foreign direct investment and manufacturing
exports, it is curious that Mahathir regards foreign influence and
the global market with such unbridled suspicion. Does that suspicion
simply reflect the uncertain mood swings of an Asian gerontocrat
unwilling to go quietly into the political night? Or does it--and the
authoritarianism and rhetorical dissonance that go with it--mask
irresoluble tensions at the heart of the late developing state that
Mahathir christened "Malaysia Incorporated"? What, moreover, will be
the future for the once acclaimed but now widely disparaged Malaysian
version of the Asian model, after UMNO's somewhat uncertain electoral
victory in November 1999?

Constructing Malaysians

The incoherent character of contemporary Malaysian politics reflects
the contingent factors that shaped Malaysia's development.
Modernizing states, as Ernest Gellner remarked, require nations. As
in many other post-colonial states, building the Malaysian nation has
been an anxious affair. There were few cultural resources upon which
to draw. Apart from Islam, which wafted over on the boats of spice
traders from Moghul India, and the Malacca sultanate that fell to the
Portuguese in 1511, there was little in the way of tradition to
support a national identity. Somewhat disturbingly for Malaysian
amour propre, just as it was the British architect A.B. Hubbock who
designed the mosque and railway station that give the nation's
capital a distinctively oriental flavor, so it was the British
Colonial Office that first cobbled the new state together from the
fragments of its Southeast Asian possessions: the Federated Malay
States that accepted British advisers, the independent northern
sultanates, Sarawak and Sabah on the island of Borneo, and,
initially, Singapore.

In the aftermath of World War II, the British made various efforts to
create a viable political arrangement to unite these disparate parts,
a task made more urgent by the serious communist insurgency on the
peninsula. After a couple of false starts, these culminated in the
creation of a Malaysian Federation in 1963. While it solved the
problem of disunity, the Federation served to make the question of
Malay identity and its relationship to an evolving national
consciousness a matter of political urgency. In the uncertain and
unstable world of postwar Southeast Asian politics, the very
formation of the new state exacerbated regional tension. The Malayan
Emergency caused by the communist insurgency (1948-58), followed by
confrontation with Indonesia (1963-66), whose irascible first
president, Sukarno, violently objected to the new entity, fed a
burgeoning siege mentality in the leaders of the new state. Not only
were the boundaries of Malaysia a source of anxiety, but the notion
of what constituted a Malay--let alone a Malaysian--was equally
unclear. Thus, traditionally, to be Malay was to be kerajaan, or
unconditionally loyal to the sultan. At the same time, after 1946
UMNO's brand of populist nationalism emphasized the shared and equal
identity of the bangsa Melayu (the Malay nation). But, differently
again, to be Malay was to be Muslim. For the more religiously
disposed Malays--who eventually were to form the backbone of the
Parti Islam se-Malaysia (PAS)--the fact that the privileged status of
Islam was written into the 1957 constitution bequeathed by the
departing British intimated the future possibility of an Islamic
state. For pragmatic political leaders, however, the pressing need
for a sustainable Malay unity tended to override these conflicting
understandings of feudally, ethnically and religiously defined
allegiance.

Related to the uncertain character of Malay identity, there existed
the problem of establishing the terms of interracial engagement in
the multiracial, post-colonial state. (At the time, of Malaysia's
population of around ten million, 56 percent were Malays, 34 percent
Chinese, and 10 percent Indian.) Between 1955 and 1969, this meant an
electoral "alliance" between UMNO, the Malay Chinese Association and
the Malay Indian Congress. This coalition of ethnic elites presided
uncertainly over a friable community. The arrangement initially
provided for the political dominance of Malay aristocrats, epitomized
by post-independence Prime Minister Tunku Abdul Rahman, whose urbane
style afforded considerable latitude for Chinese economic influence.
But the alliance fell apart in the course of the 1960s, and the fear
that Chinese economic power might translate into political domination
prompted Singapore's expulsion from the Federation in 1965.
Subsequently, in the wake of elections that saw UMNO's parliamentary
dominance threatened, serious interracial riots involving hundreds of
deaths erupted in Kuala Lumpur in May 1969.

The events of May 1969 represented the year zero of the new state.
Subsequently, official state ideology animadverted against
"communalism." To reinforce this, UMNO altered the constitution,
"removing issues considered sensitive from public discourse", and
redrew electoral boundaries in favor of rural, ethnic Malay
constituencies. The "consociational" contract was renegotiated to
facilitate increased Malay economic participation. After a period of
emergency rule, Malaysia's second prime minister, Tun Razak,
announced a New Economic Policy (NEP) in 1972 that defined the terms
of the new contract. Henceforth, the government actively engaged in
economic management to ensure that bumiputeras (sons of the soil)
directly participated in and benefited from economic growth.

The renegotiated social contract was, moreover, extended to include
the offshore states of Sabah and Sarawak. The evolving understanding
that the native peoples of East Malaysia shared a common identity
with the native Malays, which distinguished them from the
non-indigenous, urbanized Chinese, facilitated this development.
UMNO's capacity to dominate a new multi-ethnic Barisan Nasional
(National Front) coalition in the Malay interest, maintain a
two-thirds majority in the federal parliament, and, without quite the
same urgency, dominate the state assemblies of the peninsula and East
Malaysia was subsequently central to political stability. As Mahathir
caustically observed in 1971, Malaysia's internal politics were
"racial politics" and its evolving democracy a limited and
elite-guided one "to ensure that the mutually antagonistic races of
Malaysia will not clash."

The Doctor's Prescription

On the basis of this revised contract, Malaysia's post-colonial
elite, unlike that of several of its Southeast Asian neighbors,
sustained economic growth with equity and maintained political
stability without undue recourse to political violence or
"extrajudicial killing." Given the inauspicious conditions that
shaped the emergence of Malaysia, it was an impressive achievement on
the part of UMNO that between 1969 and 1998 Malaysia was transformed
from a commodity-based colonial economy of 10 million people into an
urbanized manufacturing economy of 22 million with a per capita GDP
of $5,000. In the process, the incursion of the party into economic,
social and political engineering facilitated both a concentration and
centralization of power, as well as an ideological understanding of
the state as an incorporated enterprise association.

The deliberate construction of a "nation incorporated" particularly
appealed to Malaysia's fourth prime minister, Mahathir Mohamad. Given
the Malay conception of power and the need for unswerving loyalty,
the political ideology of contemporary Malaysia is largely reducible
to the personality of its leader. Mahathir is a self-proclaimed "man
in a hurry" who brooks no interference with the realization of his
visions. Uncharacteristically for a Malay ruler, he is a self-made
man who avoids the elaborate courtesies that elsewhere define Malay
social and political etiquette. The son of a Kelantan schoolmaster of
Indian Islamic extraction and a Malay mother, Mahathir apparently
developed early on an anxiety about identity, an acute sensitivity to
the humiliation of subjection (particularly the colonial variety),
and a consuming desire to build a new, self-confident Malay released
from feudal tutelage and adapted to the needs of a rational modernity.

His involvement in nationalist politics dates from the colonial era,
when as an unassuming medical student in Singapore he compiled
pseudonymous articles for the Malay press. Indeed, a surgical
approach to political problems, combined with anxiety about his own
miscegenated provenance and the need to overcome Malay backwardness,
seems to constitute the psychological template through which Mahathir
assesses such problems. He considers politics

"a good profession for people with medical training. Doctors go
through the process of observing a patient, recording his or her
medical history, then you make a physical examination, do lab tests
and finally arrive at a diagnosis. The process is basically the same
in politics."

Medical science also contributed a distinctively eugenic and Social
Darwinian flavor to his world-view. As early as 1971 Mahathir had
controversially identified The Malay Dilemma, the title of a book he
wrote in that year. This consisted of the eugenic and
climatologically induced Malay propensity to an inbred dependence,
fatalism and apathy. The need to address these flaws in the Malay
character through state intervention along the lines prescribed by
"Dr. UMNO" was of such urgency that dissent from the proposed course
of treatment could not be tolerated. Mahathir's political aggression
thus masks an acute sensitivity to Malay weakness and an awareness of
a need to strengthen the country in order to catch up with a West
whose economic achievement he wishes to emulate, but whose
free-market blandishments and democratic rhetoric he considers an
insidious attempt to reimpose colonial subjection.

Fervent belief in his own diagnostic rectitude, exacerbated by
anxiety at the prospect of being left behind, contributed to an
evolving climate of political confrontation and crisis after Mahathir
became prime minister in 1981. Indeed, he admits to relishing a
fight. It permits him to isolate the disease, whether feudal,
Islamic, communalist or Western, and surgically remove the infection
from the body politic. This mixture of "surgical" ruthlessness,
pragmatism and narcissism has consistently characterized Mahathir's
approach to the economy, to the Malaysian constitution, to the
inchoate opposition and to foreign relations.

Malaysia, Inc.

As early as 1971 Mahathir had envisaged the NEP redistributing
socioeconomic goods to the economically deprived Malay and other
indigenous communities, thereby building a self-confident,
entrepreneurial, new Malay identity. While the earlier
administrations of Razak and Hussein Onn had seen the NEP as
inaugurating a new era of state intervention, it was Mahathir who
gave the policy urgency and a definitive shape. After 1981, Mahathir
and his favorite financial adviser, Daim Zainuddin, promoted a
Malaysia Incorporated strategy creating a bumiputera capitalist class
through the partial privatization of state-owned banks and
industries. UMNO's investment arm, the Renong conglomerate, with its
various media, finance, infrastructure and tourist interests,
exemplified a policy Mahathir has variously described as "affirmative
action" and "constructive protection." In 1985 the Heavy Industries
Corporation of Malaysia launched a national car, the Proton Saga
(really a Mitsubishi Lancer assembled in Malaysia), which seemed to
symbolize the success both of industrialization and of the
Japan-focused Look East strategy.

The evolution of the NEP under Mahathir also distorted the character
of Chinese economic activity. The large Chinese trading
conglomerates, like Quek Leng Chan's Hong Leong Group and Vincent
Tan's Inter-Pacific Group, increasingly cultivated close ties with
key figures in the UMNO elite--like Mahathir, Daim and Anwar--and
functioned as their business proxies. The evolving developmental
coalition thus co-opted the conglomerates into UMNO business
politics, while the recently created bumiputera enterprises became
inured to state dependence. While business became entangled in
politics, the governmental bureaucracy developed an institutional
investment in shielding corporate activity from public scrutiny.

The increasing malleability of the constitution and the money
politics that became inseparable from the Malaysian electoral process
further enhanced both single-party rule and the evolution of state
corporatism. In all elections held since 1969, including the most
recent one in November 1999, UMNO and its coalition partners have
secured the two-thirds majority in parliament necessary to amend the
constitution, and they have not been reticent in using it. The
constitution has now been altered thirty-four times. Increasingly,
the party treats the document merely as a technical mechanism for
securing political ends. Through judicious constitutional
manipulation Mahathir has eroded judicial independence and the rule
of law; undermined the autonomy of state assemblies and the
traditional authority of the sultanate; and increased the authority
of the party in general and the office of prime minister in
particular.

As a commoner and a political outsider who was excluded from UMNO in
1971 for his attacks on the aristocracy's indifference to Malay
backwardness, Mahathir particularly has sought to detach the Malays
from their feudal past. In that same year, he accused Tunku Abdul
Rahman of playing the "grand vizier." In 1983 as prime minister, he
succeeded in removing the monarch's power to veto parliamentary
bills. And in 1992, when the sultan of Johore assaulted the state
hockey coach for questioning his son's big match temperament,
Mahathir took the opportunity to curb the aristocracy's extrajudicial
authority.

In the same vein, in 1988 Mahathir manipulated an internal UMNO
crisis to sack the Lord President of the Supreme Court and two other
judges. Subsequently, the judiciary was made directly accountable to
the executive. This development, together with the Internal Security
Act dating from British rule and the Malayan Emergency--which
permitted detention without trial and trial without jury--effectively
undermined the rule of law. In the course of the 1980s, a leading
critic of Mahathir's growing autocracy observed that parliament, the
judiciary and the royalty had surrendered their power to the UMNO
executive "to which everything else in the country is subservient."

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.

Consequently, the National Economic Action Council used the state-imposed currency stability to restructure its foreign debt. Malaysia looked east for liquidity. Japanese loans, together with judicious raids on the state pension fund, provided the capital necessary to re-float faltering UMNO-linked conglomerates.

In August 1999 the Malaysian Central Bank announced plans to combine fifty-eight banks and finance companies into six financial groups (subsequently modified to ten). Interestingly, the proposed financial restructuring only reinforces the corporatist links between party and business, for the terms of amalgamation depend not on their bottom lines but on their ties to politically favored UMNO patrons. Fueled by a cheap currency the Malaysian economy rebounded strongly in the second quarter of 1999. If little else, the Malaysian case demonstrates that, structural weakness notwithstanding, the developmental model can survive the challenges of globalization. Moreover, as the economy recovered so too did Mahathir's prestige.

Mahathir's approach to depression economics received international plaudits--notably from the economist Paul Krugman. At home, Mahathir reimposed his political authority. In the manner of the tales of the sixteenth century; Sejaruh Melayu (Malay Annals), the aging ruler removed the adherents of the disgraced pretender from his court and rebuilt links with previously excluded factions. Mahathir publicly reconciled himself with the leaders of Team B and appointed one of their more innocuous members, Abdullah Badawi, as his new deputy. To forestall any possible leadership challenge, Mahathir altered the party constitution, postponing its general assembly until after the federal election held in November 1999.

Outside the party, Mahathir took full advantage of the economic turnaround to revile the opposition and present himself as the defender of Malay and Malaysian interests. The incoherence of the opposition has enhanced his appeal. Thus he portrays the PAS demand for a restitution of Islamic law and their attack upon UMNO "infidels" as extremist, while National Justice, he contends, threatens the inter-ethnic pact that sustained growth and stability. To both the Chinese and the Malay communities, he emphasizes UMNO's pragmatism and evokes the specter of communalist violence perpetrated in the name of reformasi in neighboring Indonesia.

Internationally, he defends the national interest against interfering Western democrats, Jewish speculators and IMF economic colonialism. Here Vice President Gore proved unexpectedly useful. Mahathir shrewdly exploited Gore's support for reforms--maladroitly delivered at an APEC meeting in Kuala Lumpur in November 1998--to caricature Anwar and the opposition as "foreign stooges."  This capacity to play the nationalist and pan-Asian card was again evident in his attack in September 1999 on what he considers Australia's imperialist ambitions in East Timor. Mahathir's ability to appeal to different constituencies in different languages often appears--and often is--inconsistent. But at the same time, this rhetorical dissonance and the repression it necessitates hold together the fragile Malaysian enterprise association that he has so carefully crafted.

IN contemporary Malaysia, anxiety over national identity, the uncertainty of globalization, and the historic propensity to adopt a siege mentality legitimates the UMNO oligarchy and its machinery of corporatist controls. With the example of a disintegrating Indonesia close at hand, the UMNO elite, the Malay middle class (their misgivings over the treatment of Anwar notwithstanding) and the Chinese community all felt reluctantly constrained to support a reorganized UMNO leadership in the November elections. Mahathir milks this anxiety, presenting UMNO-style nationalism as moderate while excoriating opposition reformism as communalist and conducive to political fragmentation. Given the fundamental fragility of Malaysia, the uncertainty of economic recovery, and an external environment more unstable than at any time since the 1960s, pragmatic single-party rule remains central to political order.

The November election--in which PAS increased its representation in the federal parliament and in the rural northeast, and in which Wan Azizah was returned for the Penang seat of her jailed husband--left the succession question unresolved and the Malay community worryingly divided. The fact that the aging gerontocrat has announced that this will be his last term has merely exacerbated the problem. The issue that most troubles the Malaysian polity is not liberalism but succession. The alternative to a smooth leadership transition in an Asian political culture is not liberty but anarchy, and from the contingent perspective of Malaysia, Inc., to democratize will be to disintegrate.

David Martin Jones is senior lecturer at the University of Tasmania's School of Government, and author of Political Development in Pacific Asia (Polity Press, 1997).