Had not greed and graft overtook his concience, he would made a perfect masquerade to fool (Tun) Dr Mahathir, the then PM. Anwar was the blue- eyed boy of Dr Mahathir- he even made Anwar de facto PM for two weeks during his surprise holiday tour overseas . What was the intention Dr Mahathir had in mind then? Was it God intervention? Read more from Jonathan Smith, author of the I Files
Anwar Ibrahim was a man for whom fortune did not merely smile, it offered to carry his briefcase. But his incredible run of luck, his numerous talents, and what appeared to be a void in his soul that allowed him to be anything and everything to anyone and everyone else would have been wasted but for Mahathir’s patronage – a patronage that would very soon prove very dangerous and mistaken in the end.
Explaining how Mahathir missed all of this for so long requires understanding some things about the man lost on the young – when I first told my sons this story, what should have been a quick five minutes instead turned into an hour-long history lesson on Malaysia, the details of which seem lost to the mists of time today. For this, no secret files are needed, merely the accounts of eyewitnesses who lived there.
Well, perhaps a few semi-secret files.
As I’ve mentioned before, Mahathir had fought his way out of the political wilderness all the way to Prime Minister by his own force of will and by his predecessor’s almost accidental decisions. Once there, he’d spent almost the entire 1980s cementing his control of his own party and ruthlessly driving PAS into permanent minority status. In the process, his tendency to Malay chauvinism and his response to the Umno Team A/Team B split had opened fissures in Barisan Nasional that he would spend the next decade unsuccessfully repairing as he drove Malaysia toward the 21st Century.
Mahathir, you see, really was preparing to hand over the reins to Anwar – but he wanted his legacy, and Malaysia’s future, secure first. The old man clearly believed Anwar his natural heir as the outsider who’d come in determined to conquer the world. It was yet another case of Anwar being Anwar, being everything to everyone. A master manipulator. He even fooled Dr M.
And so Mahathir was obsessed with Vision 2020, and Putrajaya, and Cyberjaya, and bringing Malaysia into the foremost of the ranks of nations. Formula One teams, infrastructure development, all of that talk of ‘green spaces’, all of the things that other nations take for granted, Mahathir wanted for his beloved country.
The first thing was to eliminate the power of Malaysia’s royalty to stymie his programmes, a feat he accomplished in 1994 by constitutional amendment and publicising the alleged extent of the corruption, viciousness, and venality present in some of their households – and all because one hockey coach was beaten. With that remaining threat eliminated, that meant Mahathir’s only real opponents would be inside his own team.
This ruthless consolidation of power would earn Mahathir several well-deserved titles, ‘autocrat’ among them. He was a man who tended to see politics not as the give and take of opinion, but as a war that must be won at all costs. Political opponents should not merely be defeated, they should be crushed and if necessary imprisoned.
And it must be remembered, he still faced war in his own party.
This was no small thing, much as it is no small thing for Najib now. Then as now, an old guard who believed in personal advancement before public service – and were therefore a drain on and impediment to large-scale infrastructure projects – was riddled throughout Barisan Nasional. Mahathir had only a few years before he succeeded in reunifying his party, and did not have enough internal political capital to toss aside those old warlords, even as they worked to undermine him again and again.
What this in turn meant was that Mahathir had to tolerate a certain level of corruption even while working behind the scenes to stem it. He had a macro-plan for Malaysia, and he was thinking big. He therefore tolerated corruption in his mega-projects – Anwar’s corruption, quite often – in the Peninsular and in Borneo, believing the cost was worthwhile. Anything that stood in his way needed to be eliminated or suborned.
Mahathir fought these pitched battles even as he guided his country into its position as one of the ‘Asian Tigers,’ the economies taking off so rapidly and, in theory, showing the old West how to beat the world.
It was in this environment, with his trusting patron occupied, that Anwar would expand, and finally become too comfortable, and too secure. It is here that his certainty that he would always win would finally trigger the chain of events that led to his downfall.
It is important to remember that while Anwar is a bit of a bumbler these days, perhaps a bit too busy to keep his own coalition unified, back in the 1990s he was on top of his game. So many aligned with him on the strength of his force of will, his charisma, his intelligence, his canniness …… and of course, his graft and scheming.
I had gone, since coming here, from being a salaried field agent to being the deep cover MD of a small multinational, to opening a specialised consultancy that brought the best of both worlds together. I had never cheated on my taxes or in business, I had worked hard, and I had been blessed with a brilliant local wife who somehow managed to raise our children and provide me the sort of shrewd outsider’s view that is so vital to anyone running a complex set of activities and surrounded by chaps who all see the world the same way.
But being in Malaysia in the 1990s made everyone involved with making money look good.
I nevertheless insisted on getting my hands dirty. My father instilled in me lessons learned from his time in the Air Force: Stay in, stay engaged, support your wing, and you’ll both come home.
So it was that one beautiful morning I discovered that the Prime Minister was taking an extended holiday in Italy, and making his Deputy Prime Minister his temporary replacement.
Looking through the file notes my assistant had worked up, I asked, “Why does the name Paul Wolfowitz sound familiar?” The other names were immediately apparent – William Cohen, Richard Holbrooke, Madeleine Albright, all members of the American Cabinet or its foreign policy apparatus – but the name was tickling me for some reason.
“Former Reagan Administration official, and old friend of Anwar’s,” Philip responded. He’d left our old shop shortly after I had, and I’d gladly taken him on as my associate. “He’s in touch with the Republican opposition, sort of an intermediary between his old friends at State and Defense.”
I nodded. “Why on Earth are these names arranged here as if they’re somehow important?”
“Anwar has been preparing the ground for a sudden takeover. He’s trying to get it pre-cleared with the Brits and the Americans. Those are the Americans he’s contacted who we can confirm are Anwar-friendly, and they’ve all given him the thumbs-up.”
In Anwar, finally, here was a Malaysian politician that the Democrats could appreciate. The perfect chameleon. The man who seemed to share the values of the American establishment. Anwar did not drink, but even by the mid-1990s the tales of his alleged infidelity were thick on the ground, and he had meanwhile decided at some point that in economics, he would be a neoliberal.
Neo-liberalism clashed with Mahathir’s more guarded approach of sheltering – one might say favouring – certain industries and companies until they were strong enough to compete on the global stage, but the friction this caused between the two men was minimal: Anwar yielded where Mahathir was most insistent, and with the raging economic boom in the region, everything everyone did seemed to turn to gold.
But to the Americans, neo-liberalism was the only acceptable form of economic policy, and Anwar played them well. Mahathir’s open anti-Semitism was a particular affront to Western leaders, who treat that behaviour as a sickness – a view Anwar nurtured. According to first-hand reports, Anwar actually won over Wolfowitz by seeming to be pro-Jewish and by condemning Mahathir behind his back. Coupled with his bold and eloquent proclamations at various international fora – Shakespeare and TS Eliot quotes at the ready – here at last was the Malaysian for whom the world had been looking: a Malaysian who could prove charming in Washington, D.C. and right-minded in Whitehall, a Malaysian who could mutter to Wolfowitz that it was a shame Mahathir was such a Jew-hater.
When Anwar came to them and let them know that he hoped for change in his country and that Mahathir would soon be gone, they were overjoyed. Anwar made himself into a hero of the State Department and the East Coast Jewish establishment, both Democrats and Republicans.
But it was not just abroad that Anwar began to work in earnest for the takeover, with a special emphasis on his portfolio in Finance. As I mentioned before, he understood the importance of media control. The business editors and reporters of the New Straits Times and Utusan Malaysia were threatened and where appropriate replaced or supplemented with ‘deputy editors’ who would see to it that coverage of Anwar was not merely favourable, but glowing. The editors of those papers and at TV3 exercised final control, and worked diligently to reinforce the message.
It was here that Anwar began to overplay his hand. Mahathir, for all of his many flaws, is not a man who believes in luxurious holidays. Anwar’s unrelenting caginess had finally slipped, and when given the chance to exercise power as Acting Prime Minister, his pride overwhelmed him.
One of his first major acts was the Anti-Corruption Act, a facially commendable move designed to replace the 1961 Act and to root-out the perennial corruption in Malaysia’s political system. Of course, we all noticed that he waited until the probe of his political secretary Azmin Ali had been shelved and then appointed cronies to fill every slot created or reformed by the ACA. Rumours were that he almost appointed Azmin to head the agency, but common sense finally got the better of him.
Eliminating corruption is one of those noble things politicians like to talk about, and that a handful actually want to do. Anwar was not one of those. He directed his appointments to begin investigating every enemy he had in Umno, fairly transparently to develop files on each for later use. He even sent his best men tunneling into Mahathir and his family, hoping to prepare the trump cards needed to win out in the leadership battle he saw coming.
This was all obvious to any intelligent observer at the time. My only question – answered in the negative both by my associates and by later events – was whether Anwar realised that Mahathir already had a box of files deep on him.
By this point, we were largely resigned to Anwar becoming the Prime Minister. I was in a meeting in July when one of my juniors raced into the conference room to tell me that there was a panicked call coming in from our subsidiary in Bangkok: The government there was set to float the baht. What had up until that point been concern about Thailand’s finances was now dangerously close to becoming a financial contagion.
The chain of events this set in motion completely rewrote Malaysia’s political landscape.
Anwar would lose far more.
One by one, the Asian Tigers started to falter and collapse. Real estate prices cratered. Centuries-old trading houses were crammed down in vicious takeovers. Governments faltered and in a handful of cases fell. Malaysia, stronger in its own way than many, was pushed to the brink: shares fell by over two-thirds, the ringgit nearly collapsed, foreign direct investment plunged, and riots began.
The West stood with its mouth agape. When it finally realised the extent and the depth of the crisis, it reached for the only policy tool it had at hand: The International Monetary Fund.
The IMF is a curious institution, and certainly a polarising one. Its opponents accuse it of neoliberalism and neo-colonialism; its supporters describe it as one of the bulwarks of the international system.
It’s really just a group of clods.
The IMF’s policy prescriptions are almost invariably associated with loans and conditionality; its loans, with its policy prescriptions; and its policy prescriptions, with demands for austerity and some sort of governmental reform. This tends not to work, because financial crises tend to be immune to easy resolution by any system.
It is here that most observers believe they know the story: Anwar sided with the IMF. He blamed ‘cronyism and corruption’ for the crisis, never explaining how his own cronyism and corruption and the system he created and maintained as DPM was not a key factor. He implemented austerity programmes, including cutting government expenditures and ministerial and government salaries by upward of 20 per cent, and stripping funding from the enormous infrastructure projects into which the country had poured so much effort for so long.
He also let every press outlet with a Singapore or KL office know that he was a sudden and devout convert to the cause of free market capitalism. Mahathir, by contrast, blamed the entire crisis on foreign currency speculation, was not about to be dictated to by the IMF, and was not about to see Anwar and his friend the international financier George Soros win the day.
Mahathir claims to have been vindicated by history, a claim greater in the telling than in the proof. Those Asian Tigers who adopted austerity and free market reforms recovered as quickly as those that did not; and at any rate, Mahathir’s almost paranoid insistence on blaming the crisis on the Jews seemed deranged and also alienated Western nations at a critical time.
As the story goes, so began the rift between Anwar and Mahathir in earnest. And it is true, so far as it goes.
But the real story is deeper. In Hong Kong in September of 1997, the major economies of the world were working desperately to avoid an international financial collapse, and to get the Asian Tigers running again. While there, Mahathir and Soros began taking potshots at each other in the assembled international press, with everything from attacks on preferred policy (Mahathir called for an end to currency exchanges, Soros called for a variation on the IMF prescriptions) to personal attacks.
Into this free-fire zone Anwar leaped. He began immediately explaining away Mahathir’s comments, taking Soros’s arguments as his own, and even occasionally directly undercutting Mahathir with hundreds of reporters about. He portrayed this to the gullible reporters covering the event as his heroic attempt to save Malaysia from Mahathir’s ill-considered rhetoric.
This was not mere insubordination. Malaysian civil society was on the brink. Anwar was damaging Malaysia. Seeing where Indonesia was headed, he was inciting anti-Mahathir sentiment. It worked because some foreign investors were frightened of Mahathir’s rhetoric,; and Mahathir was frightened of the enormous damage those same investors had just done in the region. The question of how to stabilise the ringgit and to keep Malaysia from devolving into chaos was not a trivial one, nor an easily-resolved one.
Indeed, Anwar began working in secret and in earnest with the American delegation to pave his way to the top, pointing up Mahathir’s ‘dangerous’ talk. Members of the Clinton Administration – from Treasury Secretary Robert Rubin (in Hong Kong) to Defense Secretary William Cohen – told Anwar that Washington was behind him. Wolfowitz and his allies in the Republican Congress also sent their encouragement. Wolfowitz was enthusiastic, according to one of his aides, and determined to see Anwar become Prime Minister.
Anwar’s Saudi backers, delighted at seeing their Islamist protégé finally reach his goal, pledged billions of ringgit to aid Malaysia after his ascent. Their funds would be credited to Anwar’s leadership, and would sweep him – and his radical real agenda – into a lock on power greater than Mahathir’s ever was.
Word was sent back to Anwar’s cronies to prepare for the sudden change, to be executed in 1998.
On Anwar’s return to Malaysia, he doubled down on his austerity programme. He felt emboldened; after all, Mahathir had done nothing more than dress him down in private. Anwar had truly begun to believe the image he had crafted for himself.
Mahathir was incensed, but more importantly, if he had harboured any doubts about Anwar to that point, they were finally vanquished. On his return to Malaysia, he summoned his closest advisors – those who he could be sure were not Anwar’s – into a private meeting at an advisor’s home. Seri Perdana had not yet been completed, and everyone assumed there was no safe place in any government building for this meeting.
While Mahathir was designing the currency controls and reforms that would ultimately stablise and save Malaysia, he appointed his most loyal followers to another cause: Determine whether Anwar could be saved, or whether he was past redemption. He was not ready to let Anwar go yet, but he was still loathe to destroy the man he’d once thought of as like a son.
It was some time later that Mahathir finally began to use the weapons at his disposal to destroy his deputy once and for all. He opened his files to his allies, not just on Anwar, but on Anwar’s friends, allies, cronies, and family.
In the end, it was his corruption, and not his dalliances, that would bring Anwar down.
But that is a story for next time.
Anwar Ibrahim was a man for whom fortune did not merely smile, it offered to carry his briefcase. But his incredible run of luck, his numerous talents, and what appeared to be a void in his soul that allowed him to be anything and everything to anyone and everyone else would have been wasted but for Mahathir’s patronage – a patronage that would very soon prove very dangerous and mistaken in the end.
Explaining how Mahathir missed all of this for so long requires understanding some things about the man lost on the young – when I first told my sons this story, what should have been a quick five minutes instead turned into an hour-long history lesson on Malaysia, the details of which seem lost to the mists of time today. For this, no secret files are needed, merely the accounts of eyewitnesses who lived there.
Well, perhaps a few semi-secret files.
As I’ve mentioned before, Mahathir had fought his way out of the political wilderness all the way to Prime Minister by his own force of will and by his predecessor’s almost accidental decisions. Once there, he’d spent almost the entire 1980s cementing his control of his own party and ruthlessly driving PAS into permanent minority status. In the process, his tendency to Malay chauvinism and his response to the Umno Team A/Team B split had opened fissures in Barisan Nasional that he would spend the next decade unsuccessfully repairing as he drove Malaysia toward the 21st Century.
Mahathir, you see, really was preparing to hand over the reins to Anwar – but he wanted his legacy, and Malaysia’s future, secure first. The old man clearly believed Anwar his natural heir as the outsider who’d come in determined to conquer the world. It was yet another case of Anwar being Anwar, being everything to everyone. A master manipulator. He even fooled Dr M.
And so Mahathir was obsessed with Vision 2020, and Putrajaya, and Cyberjaya, and bringing Malaysia into the foremost of the ranks of nations. Formula One teams, infrastructure development, all of that talk of ‘green spaces’, all of the things that other nations take for granted, Mahathir wanted for his beloved country.
The first thing was to eliminate the power of Malaysia’s royalty to stymie his programmes, a feat he accomplished in 1994 by constitutional amendment and publicising the alleged extent of the corruption, viciousness, and venality present in some of their households – and all because one hockey coach was beaten. With that remaining threat eliminated, that meant Mahathir’s only real opponents would be inside his own team.
This ruthless consolidation of power would earn Mahathir several well-deserved titles, ‘autocrat’ among them. He was a man who tended to see politics not as the give and take of opinion, but as a war that must be won at all costs. Political opponents should not merely be defeated, they should be crushed and if necessary imprisoned.
And it must be remembered, he still faced war in his own party.
This was no small thing, much as it is no small thing for Najib now. Then as now, an old guard who believed in personal advancement before public service – and were therefore a drain on and impediment to large-scale infrastructure projects – was riddled throughout Barisan Nasional. Mahathir had only a few years before he succeeded in reunifying his party, and did not have enough internal political capital to toss aside those old warlords, even as they worked to undermine him again and again.
What this in turn meant was that Mahathir had to tolerate a certain level of corruption even while working behind the scenes to stem it. He had a macro-plan for Malaysia, and he was thinking big. He therefore tolerated corruption in his mega-projects – Anwar’s corruption, quite often – in the Peninsular and in Borneo, believing the cost was worthwhile. Anything that stood in his way needed to be eliminated or suborned.
Mahathir fought these pitched battles even as he guided his country into its position as one of the ‘Asian Tigers,’ the economies taking off so rapidly and, in theory, showing the old West how to beat the world.
It was in this environment, with his trusting patron occupied, that Anwar would expand, and finally become too comfortable, and too secure. It is here that his certainty that he would always win would finally trigger the chain of events that led to his downfall.
It is important to remember that while Anwar is a bit of a bumbler these days, perhaps a bit too busy to keep his own coalition unified, back in the 1990s he was on top of his game. So many aligned with him on the strength of his force of will, his charisma, his intelligence, his canniness …… and of course, his graft and scheming.
∞
It was a good time to have business concerns in Malaysia.I had gone, since coming here, from being a salaried field agent to being the deep cover MD of a small multinational, to opening a specialised consultancy that brought the best of both worlds together. I had never cheated on my taxes or in business, I had worked hard, and I had been blessed with a brilliant local wife who somehow managed to raise our children and provide me the sort of shrewd outsider’s view that is so vital to anyone running a complex set of activities and surrounded by chaps who all see the world the same way.
But being in Malaysia in the 1990s made everyone involved with making money look good.
I nevertheless insisted on getting my hands dirty. My father instilled in me lessons learned from his time in the Air Force: Stay in, stay engaged, support your wing, and you’ll both come home.
So it was that one beautiful morning I discovered that the Prime Minister was taking an extended holiday in Italy, and making his Deputy Prime Minister his temporary replacement.
Looking through the file notes my assistant had worked up, I asked, “Why does the name Paul Wolfowitz sound familiar?” The other names were immediately apparent – William Cohen, Richard Holbrooke, Madeleine Albright, all members of the American Cabinet or its foreign policy apparatus – but the name was tickling me for some reason.
“Former Reagan Administration official, and old friend of Anwar’s,” Philip responded. He’d left our old shop shortly after I had, and I’d gladly taken him on as my associate. “He’s in touch with the Republican opposition, sort of an intermediary between his old friends at State and Defense.”
I nodded. “Why on Earth are these names arranged here as if they’re somehow important?”
“Anwar has been preparing the ground for a sudden takeover. He’s trying to get it pre-cleared with the Brits and the Americans. Those are the Americans he’s contacted who we can confirm are Anwar-friendly, and they’ve all given him the thumbs-up.”
∞
To say there was no love lost between Mahathir Mohamad and the Americans is to understate the matter. Reagan had respected him for what he’d done to the Communists, and the elder Bush had found Mahathir’s positioning on the Israelis unhelpful, but Bill Clinton saw in Mahathir everything he hated: Protectionist, chauvinist, stern, proud, authoritarian, and prone to bucking the President of the United States in all but the direst of situations.In Anwar, finally, here was a Malaysian politician that the Democrats could appreciate. The perfect chameleon. The man who seemed to share the values of the American establishment. Anwar did not drink, but even by the mid-1990s the tales of his alleged infidelity were thick on the ground, and he had meanwhile decided at some point that in economics, he would be a neoliberal.
Neo-liberalism clashed with Mahathir’s more guarded approach of sheltering – one might say favouring – certain industries and companies until they were strong enough to compete on the global stage, but the friction this caused between the two men was minimal: Anwar yielded where Mahathir was most insistent, and with the raging economic boom in the region, everything everyone did seemed to turn to gold.
But to the Americans, neo-liberalism was the only acceptable form of economic policy, and Anwar played them well. Mahathir’s open anti-Semitism was a particular affront to Western leaders, who treat that behaviour as a sickness – a view Anwar nurtured. According to first-hand reports, Anwar actually won over Wolfowitz by seeming to be pro-Jewish and by condemning Mahathir behind his back. Coupled with his bold and eloquent proclamations at various international fora – Shakespeare and TS Eliot quotes at the ready – here at last was the Malaysian for whom the world had been looking: a Malaysian who could prove charming in Washington, D.C. and right-minded in Whitehall, a Malaysian who could mutter to Wolfowitz that it was a shame Mahathir was such a Jew-hater.
When Anwar came to them and let them know that he hoped for change in his country and that Mahathir would soon be gone, they were overjoyed. Anwar made himself into a hero of the State Department and the East Coast Jewish establishment, both Democrats and Republicans.
But it was not just abroad that Anwar began to work in earnest for the takeover, with a special emphasis on his portfolio in Finance. As I mentioned before, he understood the importance of media control. The business editors and reporters of the New Straits Times and Utusan Malaysia were threatened and where appropriate replaced or supplemented with ‘deputy editors’ who would see to it that coverage of Anwar was not merely favourable, but glowing. The editors of those papers and at TV3 exercised final control, and worked diligently to reinforce the message.
It was here that Anwar began to overplay his hand. Mahathir, for all of his many flaws, is not a man who believes in luxurious holidays. Anwar’s unrelenting caginess had finally slipped, and when given the chance to exercise power as Acting Prime Minister, his pride overwhelmed him.
∞
We were all a bit surprised by Mahathir’s decision to go on holiday, and decided that the old man was either testing Anwar’s fitness to be Prime Minister; preparing to step down himself; or – and this is something I frankly did not believe at the time – testing Anwar’s loyalty. To this day, none of us quite know why Mahathir did what he did. He’s been cagey about it all these years, and I personally suspect he is still hurt by Anwar’s betrayal. Regardless, off he went. Anwar stepped hungrily into the gap.One of his first major acts was the Anti-Corruption Act, a facially commendable move designed to replace the 1961 Act and to root-out the perennial corruption in Malaysia’s political system. Of course, we all noticed that he waited until the probe of his political secretary Azmin Ali had been shelved and then appointed cronies to fill every slot created or reformed by the ACA. Rumours were that he almost appointed Azmin to head the agency, but common sense finally got the better of him.
Eliminating corruption is one of those noble things politicians like to talk about, and that a handful actually want to do. Anwar was not one of those. He directed his appointments to begin investigating every enemy he had in Umno, fairly transparently to develop files on each for later use. He even sent his best men tunneling into Mahathir and his family, hoping to prepare the trump cards needed to win out in the leadership battle he saw coming.
This was all obvious to any intelligent observer at the time. My only question – answered in the negative both by my associates and by later events – was whether Anwar realised that Mahathir already had a box of files deep on him.
By this point, we were largely resigned to Anwar becoming the Prime Minister. I was in a meeting in July when one of my juniors raced into the conference room to tell me that there was a panicked call coming in from our subsidiary in Bangkok: The government there was set to float the baht. What had up until that point been concern about Thailand’s finances was now dangerously close to becoming a financial contagion.
The chain of events this set in motion completely rewrote Malaysia’s political landscape.
∞
The Asian Financial Crisis had struck. We all lost a great deal of money.Anwar would lose far more.
One by one, the Asian Tigers started to falter and collapse. Real estate prices cratered. Centuries-old trading houses were crammed down in vicious takeovers. Governments faltered and in a handful of cases fell. Malaysia, stronger in its own way than many, was pushed to the brink: shares fell by over two-thirds, the ringgit nearly collapsed, foreign direct investment plunged, and riots began.
The West stood with its mouth agape. When it finally realised the extent and the depth of the crisis, it reached for the only policy tool it had at hand: The International Monetary Fund.
The IMF is a curious institution, and certainly a polarising one. Its opponents accuse it of neoliberalism and neo-colonialism; its supporters describe it as one of the bulwarks of the international system.
It’s really just a group of clods.
The IMF’s policy prescriptions are almost invariably associated with loans and conditionality; its loans, with its policy prescriptions; and its policy prescriptions, with demands for austerity and some sort of governmental reform. This tends not to work, because financial crises tend to be immune to easy resolution by any system.
It is here that most observers believe they know the story: Anwar sided with the IMF. He blamed ‘cronyism and corruption’ for the crisis, never explaining how his own cronyism and corruption and the system he created and maintained as DPM was not a key factor. He implemented austerity programmes, including cutting government expenditures and ministerial and government salaries by upward of 20 per cent, and stripping funding from the enormous infrastructure projects into which the country had poured so much effort for so long.
He also let every press outlet with a Singapore or KL office know that he was a sudden and devout convert to the cause of free market capitalism. Mahathir, by contrast, blamed the entire crisis on foreign currency speculation, was not about to be dictated to by the IMF, and was not about to see Anwar and his friend the international financier George Soros win the day.
Mahathir claims to have been vindicated by history, a claim greater in the telling than in the proof. Those Asian Tigers who adopted austerity and free market reforms recovered as quickly as those that did not; and at any rate, Mahathir’s almost paranoid insistence on blaming the crisis on the Jews seemed deranged and also alienated Western nations at a critical time.
As the story goes, so began the rift between Anwar and Mahathir in earnest. And it is true, so far as it goes.
But the real story is deeper. In Hong Kong in September of 1997, the major economies of the world were working desperately to avoid an international financial collapse, and to get the Asian Tigers running again. While there, Mahathir and Soros began taking potshots at each other in the assembled international press, with everything from attacks on preferred policy (Mahathir called for an end to currency exchanges, Soros called for a variation on the IMF prescriptions) to personal attacks.
Into this free-fire zone Anwar leaped. He began immediately explaining away Mahathir’s comments, taking Soros’s arguments as his own, and even occasionally directly undercutting Mahathir with hundreds of reporters about. He portrayed this to the gullible reporters covering the event as his heroic attempt to save Malaysia from Mahathir’s ill-considered rhetoric.
This was not mere insubordination. Malaysian civil society was on the brink. Anwar was damaging Malaysia. Seeing where Indonesia was headed, he was inciting anti-Mahathir sentiment. It worked because some foreign investors were frightened of Mahathir’s rhetoric,; and Mahathir was frightened of the enormous damage those same investors had just done in the region. The question of how to stabilise the ringgit and to keep Malaysia from devolving into chaos was not a trivial one, nor an easily-resolved one.
Indeed, Anwar began working in secret and in earnest with the American delegation to pave his way to the top, pointing up Mahathir’s ‘dangerous’ talk. Members of the Clinton Administration – from Treasury Secretary Robert Rubin (in Hong Kong) to Defense Secretary William Cohen – told Anwar that Washington was behind him. Wolfowitz and his allies in the Republican Congress also sent their encouragement. Wolfowitz was enthusiastic, according to one of his aides, and determined to see Anwar become Prime Minister.
Anwar’s Saudi backers, delighted at seeing their Islamist protégé finally reach his goal, pledged billions of ringgit to aid Malaysia after his ascent. Their funds would be credited to Anwar’s leadership, and would sweep him – and his radical real agenda – into a lock on power greater than Mahathir’s ever was.
Word was sent back to Anwar’s cronies to prepare for the sudden change, to be executed in 1998.
On Anwar’s return to Malaysia, he doubled down on his austerity programme. He felt emboldened; after all, Mahathir had done nothing more than dress him down in private. Anwar had truly begun to believe the image he had crafted for himself.
Mahathir was incensed, but more importantly, if he had harboured any doubts about Anwar to that point, they were finally vanquished. On his return to Malaysia, he summoned his closest advisors – those who he could be sure were not Anwar’s – into a private meeting at an advisor’s home. Seri Perdana had not yet been completed, and everyone assumed there was no safe place in any government building for this meeting.
While Mahathir was designing the currency controls and reforms that would ultimately stablise and save Malaysia, he appointed his most loyal followers to another cause: Determine whether Anwar could be saved, or whether he was past redemption. He was not ready to let Anwar go yet, but he was still loathe to destroy the man he’d once thought of as like a son.
It was some time later that Mahathir finally began to use the weapons at his disposal to destroy his deputy once and for all. He opened his files to his allies, not just on Anwar, but on Anwar’s friends, allies, cronies, and family.
In the end, it was his corruption, and not his dalliances, that would bring Anwar down.
But that is a story for next time.
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