by Khoo Boo Teik

The 1987 UMNO General Assembly saw the fiercest electoral contest in UMNO’s then 41-year history. On 24 April, Prime Minister Dr Mahathir Mohamad barely survived Razaleigh Hamzah and Musa Hitam’s joint challenge.

There was no comparable challenge to Mahathir’s presidency at the UMNO General As sem bly which ended on Sunday, 19 June 1998. Officially no election was scheduled. Yet so many things about this year’s assembly should remind us of the circumstances and manoeuvres that surrounded 24 April 1987.

‘Economic mismanagement’

In 1985-86, the economy was in recession. Economic hardship caused many, in and out of UMNO, to accuse Mahathir (and Tun Daim Zainuddin) of ruining the country with disastrous policies (notably HICOM’s heavy industrialization), ‘mammoth projects’ (for instance, Dayabumi), and cronyism (favouring big Malay corporations). Mahathir was also criticised for damaging Malaysia’s foreign investment climate by his anti-Western outbursts, following the collapse of commodity prices and the G-7’s manipulation of the yen-USD exchange rate.

Now, when the economy faces recession once more, many, in and out of Malaysia, charge that Mahathir has mismanaged the economy with his ‘overheating’ policies, ‘mega projects’, and ‘cronyism, nepotism, and lack of transparency’. He stands accused, too, of exacerbating the ‘loss of investor confidence’ by ceaselessly attacking Western currency traders and speculators.

A rumour of crisis

When the economic crisis of the mid-1980s developed into a political crisis, part of the intra-UMNO battle was fought over Mahathir’s supposed vices, and his antagonists’ presumed virtues. It would be awkward to list all of them here. Briefly, Mahathir made no bones about being blunt, uncompromising, and listening to no one. Musa was said to be cultivated, liberal, and tuned to the grassroots. ‘Ku Li’ was reportedly congenial, efficient, and friendly to busi ness.

Just before the recent UMNO assembly, the present economic downturn showed signs of producing another political crisis—perhaps not this year, but next. Pemuda UMNO, led by Anwar Ibrahim’s ally, Ahmad Zahid Hamidi, gave notice that it would initiate a debate on ‘cronyism and nepotism’. In other words, it would risk a public criticism of  Mahathir.

In the background, once more, Mahathir’s supposed bullheadedness, autocratic ways, and ‘denial syndrome’ had been contrasted with Anwar Ibrahim’s assumed flexibility, consultative style and openness.

Who’s who in crony country

But Zahid turned out to be little more than ‘a young bull which couldn’t recognize a tiger’. His move backfired.

On the eve of the Pemuda and Wanita assembly, Mahathir commenced his counter-attack. Unapologetically, he categorised all bumiputera who received governement assistance as his cronies—‘six million’ of them, he proudly noted. After that, all kinds of people, big and small, businessmen and politicians, were not unhappy to be called ‘cronies’. Unwilling to appear like kacang lupakan kulit, they were relieved that Mahathir had made ‘cronyism’ respectable.

That was not all. In 1987, Mahathir had declassified tender documents to prove that his foes were party to Cabinet decisions on the ‘mammoth projects’. This time, at the main assembly, he released lists of people who had gained from privatised projects and share allocations to demonstrate that his current critics were also his ‘cronies’.

Smile if you can

Whether Zahid can ‘still smile’ after that only Zahid can say. Whether Anwar can smile at all only time will tell.

Anwar toppled Tun Ghafar Baba from the UMNO Deputy President’s post in 1993 only to put himself in a double-edged position. On the one hand, he had become Mahathir’s successor, and could take over, ‘if for some reason I should suddenly drop dead’, as Mahathir said. On the other hand, Anwar had to behave like a ‘son’ to Mahathir lest the latter suspected him of disloyal intentions.

Anwar’s predicament was not eased by speculation (mostly in the foreign press) that his ‘boys’ were eager to get their share of the plums before they were all privatised away. Some said that the ‘boys’ would force the ‘son’ to challenge the ‘father’ before it was ‘too late’.

On his part, Mahathir remarked that he was young ‘compared to Deng Xiaoping’! He refused to give a timetable for his retirement, saying he did not want to be reduced to a lameduck.

East Asian crisis

Even so, it was possible, before July 1997, to place a small bet that Mahathir would voluntarily hand over the UMNO presidency to Anwar in 1999, remain as Prime Minister to see the country enter the new millenium, and retire.

That scenario became unthinkable when the East Asian financial crisis broke out in July 1997. Mahathir simply would not depart under the shadow of an economic mess. Or, as he put it, the leadership of the country will see a ‘transition’ only when the crisis is overcome.

So, the crisis now lies at the heart of the question of Mahathir’s succession. The reason is not the ‘son’s impatience’ or the ‘father’s obstinacy’. Rather, perhaps for the first time, the Mahathir-Anwar differences that people have talked about for years may come to a head—just as the Mahathir-Musa differences became insoluble under recession in 1986-87.

The UMNO assembly scarcely aired those differences. But the ‘market’ has been buzzing over them for almost a year.

Market matters

Speaking crudely, there is no love lost between the ‘2Ms’—Mahathir and the Market.

From Mahathir’s point of view, the 1980s’ collapse of the commodity markets wreaked havoc on the Malaysian economy. The BMF scandal had a connection to the shakeout in the Hong Kong property market that occurred when UK and China agreed a date for ‘Hong Kong’s return’. The G-7’s intervention in the forex market in 1985 increased the burden of Malaysia’s yen-denominated loans. And Bank Negara lost billions of ringgit during the George Soros-led attack on sterling in 1992.

Is that why Mahathir absolutely blames the East Asian currency crisis of 1997 on the instability of the global forex market, the greed of foreign speculators, and Soros’s ‘moronic’ and ‘roguish’ conduct?

From the Market’s point of view, Mahathir failed to practise the thrift he preached. Money that was gained from years of growth was plowed into loss-making ‘pet projects’ or unproductive ‘mega projects’—Perwaja, KLIA, Bakun, Twin Towers, Sukom, KL Tower, Linear City, etc. Hence, Privatisation and Malaysia Inc. became synonymous with ‘cronyism’ and ‘lack of transparency’ which benefitted huge corporations close to Mahathir.

Is that why the Market and George Soros warned that Mahathir had become a ‘menace to is own country’?

Mahathir’s immediate attempts to curb speculation and short-selling—in ringgit and shares -- triggered a capital flight. Later, he rescued his party’s commercial interests (Renong and EM), his son’s corporate flagship (Konsortium Perkapalan), and some businesses he had long considered strategic (MAS and Perwaja).

In response, the flight became a strike. Mr M(oneybags), or the foreign fund manager, would not put his cash back to work in Malaysia Inc. if Dr M cannot be disciplined. Thus, the ringgit remains devalued, the shares deflated, the investors low in confidence, and the market limp in trading.

Pressure from the press

Such was the profitless standoff that cried for a strikebreaker. And, wittingly or unwittingly, Anwar was cast in that role.

When Anwar became Minister of Finance, some market people, privately and uncharitably, wondered if this ‘man of letters’ could count when it counted. Since July 1997, however, the market and the ‘international community’ have warmed up to him.

Anwar, they perceived, could take tough confidence-building measures, like trimming the budget and imposing austerity measures. Anwar, they heard, said the right kinds of things, such as good governance, transparency and reform.

Soon they were prepared to gamble that Anwar was poles apart from Mahathir, and not just in the books they read. They observed, for example, that Mahathir blamed foreigners, but Anwar criticised domestic weaknesses. Mahathir bailed out companies, Anwar planned to discipline them. Mahathir listened to no one, Anwar heeded the advice of competent technocrats. And Mahathir and Anwar differed over interest rates.

The foreign press, which voiced ‘market opinion’, made endless comparisons of that sort. The market initially complained that it was receiving ‘conflicting signals’ from the two leaders. By and by, the market and the press thought that Anwar seemed like the kind of guy to do business with. Mahathir only looked more and more like Suharto to them.

In turn, Mahathir lambasted the Western press for trying to force him out of office. Even this was not new. Back in 1987, he had made a similar accusation. But don’t take Mahathir’s word for it. Read, for instance, Time, and Asian Wall Street Journal. They give enough suggestions that Mahathir should step aside for Anwar—preferably now.

‘UMNO futures market’

Of course, that is not going to happen now.

The assembly is over. Mahathir came out on top, as he had been used to doing for as long as anyone cared to remember. Anwar led a chorus of support for his president, even though someone thought he could give ‘50 Reasons’ why Anwar would not become premier. (Incidentally, that recalls an earlier book that ran down Musa prior to 24 April 1987.)

A few days after the assembly, Mahathir appointed Daim as a Minister of Special Functions (for economic development), or ‘economic czar’, as the foreign press put it. Mahathir de clared that he has ‘full control of the economy’, which the market interpreted as reducing Anwar’s influence in financial and economic matters.

All that has not prevented UMNO watchers from speculating about Anwar’s real intent in the party election of 1999. But who really knows how long more Mahathir will remain in power? Who really knows what Anwar’s prospects of becoming premier are? Who can tell us now who will ally with whom to contest which position(s) in 1999?

In a sense, these are not new questions, either for UMNO or anyone else. In different forms, these questions have been raised again and again because factionalism has become a part of UMNO’s ‘way of life’. Just think of Harun Idris and the hunt for UMNO’s ‘communists’ in 1976, the Musa-Razaleigh battles of 1981 and 1984, Team A v. Team B in 1987-88, ‘UMNO Baru’ and Semangat 46, and Anwar v. Ghafar in 1993.

From that point of view, UMNO watchers, in and out of Malaysia, might consider the UMNO assembly this year to be a minor dress rehearsal for what may happen next year. That is, if both Mahathir and Anwar are unable to control that factionalism.

Back to the future

The average Malaysian who has no insider information would be ill-advised to play the ‘UMNO futures market’.

Instead he or she should focus on a different ‘future’, about which the UMNO assembly, ironically, had little to say. That is the future of Malaysian society.

Most of us sense—and not less correctly than so-called experts—that we are in a jam. Before the ‘East Asian meltdown’, our economic development was guided by Wawasan 2020, managed by Malaysia Inc., and dominated by the tokoh korporat. The high growth we achieved trickled down so that most Malaysians did improve their standard of living (leaving largely foreign labour to form the poor in our society).

Today, the tokoh korporat are in deep trouble. The market finds Malaysia Inc. unacceptable. Hardly anyone wants to talk about Wawasan 2020. There is contraction instead of growth. The trickle-down will come in unemployment, reduced income and spreading poverty.

There is no easy way out of this jam. Contrary to what individuals promise, the solutions will not come simply from one man’s vision or another man’s brain. The solutions will not come only from a government that admits no mistakes, or a market that admits no failures, or media which sees it fit only to voice ‘government policy’, or ‘market opinion’, or the ‘Washington-IMF consensus’.

Most of us have no solutions beyond trying, in our modest daily lives, to limit the injuries rust upon us. But we could begin by going back to fundamentals.

Since the UMNO assembly neglected to raise, we should ask: What kind of Malaysian society should emerge that is neither beholden to ‘political business’ at home, nor captive to a global economic system which has shown itself, like money, to be without ‘heart, soul, conscience or homeland’?