Mahathir’s political blunder by tying his future to solving currency crisis

Developing Just Leadership

Our Southeast Asia Correspondent

Jumada' al-Akhirah 14, 1418 1997-10-16

South-East Asia

by Our Southeast Asia Correspondent (South-East Asia, Crescent International Vol. 26, No. 16, Jumada' al-Akhirah, 1418)

Prime minister Mahathir Mohamed of Malaysia may have made a strategic political blunder by tying his political future to solving the deepening currency and stockmarket crisis. He has thus handed his detractors the opportunity to undermine his position.

Like all politicians, he could turn around and say that he did not mean what he said and walk away from the problem, but his October 4 outburst in Buenos Aires, Argentina may cost him dearly. It has already put him at odds with his ambitious finance minister Anwar Ibrahim who is also the deputy prime minister.

Kingship knows no kinship, as the saying goes. Anwar has been issuing clarifications or retractions each time Mahathir has put his foot in his mouth. The more Mahathir tries to rectify the situation by issuing statements, the worse it gets. For instance, following his Buenos Aires statement, the Malaysian currency hit a new low against the US dollar. It has been on a downward spiral since last July’s crisis that engulfed the Thai bhat. The Indonesian rupiah and the Singapore dollar were also affected but their rulers kept their heads low and their mouths shut. Not so Mahathir.

‘If I cannot overcome the problem, then rightly I should not be here, but give the opportunity to another, more capable person,’ he said in Argentina. ‘But so far, I haven’t given up.’ That will hardly reassure jittery investors. And the American currency speculator, George Soros, is bound to exploit the situation further.

Some of the things Mahathir has said are true. The currency speculators are criminal in nature. Currency speculation should be outlawed but Mahathir cannot have it both ways. When it suited his convenience and money flowed into Malaysia on the basis of the same currency speculation, he had no qualms about it. In the early eighties, Mahathir tried, unsuccessfully to corner the tin market. Again, he saw nothing wrong with that.

True, the international monetary fund (IMF), the world body that is also the target of his wrath, is dominated by sharks. They are busy sucking the blood of the poor people in Asia and Africa.

But how to deal with them is at the core of the problem. They cannot be fought off by rhetoric. This requires determined effort backed by the support of the masses. This will be forthcoming only when there is transparency and openness and people see that their rulers live up to what they say, unlike Mahathir and his cronies who expect the people to make sacrifices while they indulge in corruption and nepotism.

Last month, when Mahathir lashed out at currency speculators at the IMF meeting in Hong Kong attended by 700 bankers, it put additional pressure on the ringgit. Anwar had to immediately issue a statement saying that Malaysia will not ban currency trading. This put him at odds with his prime minister and exposed fissures in the top echelon of the Malaysian leadership.

‘We have a problem and we must face it ourselves. Through discipline and resilience, we will be able to tackle [it],’ he said. ‘If we panic, we lose... if the press panics, then we are finished.’ But Mahathir has neither demonstrated discipline nor shown leadership qualities.

While telling the press not to panic and in turn expecting them to reassure investors, a herculian task in the first place, he will likely blame them next for the continuing crisis after he has exhausted the list of ‘wicked foreigners.’ Whereas the crisis has raised questions about the political judgement of the 71-year-old Mahathir, it has also focused attention on his deputy and anointed successor, Anwar Ibrahim.

Speculation of renewed pressure on the prime minister’s position was fuelled by a cover story on Anwar in the latest regional edition of Time magazine, in which the latter argued for ‘generational’ change and a more liberal Malaysia. Anwar was clearly staking out his position for the succession battle. Stung by this and the relentless media criticism, Mahathir claimed on October 4 that foreigners were backing his deputy for the top post.

He sought comfort in the ‘undivided’ support Malaysian businessmen travelling with him in South America have given for his handling of the crisis. He hopes that the cheer brigade will help him weather the storm. He is clutching to any straw he can grab. This is a mistake all those drowning usually make.

In his interview with Time, Anwar conceded that his efforts at damage control with foreign investors - and his denials that Malaysia would take unilateral action to control currency trading - had created friction with Mahathir. ‘In most developing countries, I would get the chop immediately. But I come from a different generation. I have to contend with things I understand and things I know,’ he said.

This is as good a challenge to Mahathir’s leadership as he is likely to get. While it may be too early to write off Mahathir, he has definitely entered the twilight zone of his political career.

Muslimedia: October 16-31, 1997

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