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10-minute guide to Malaysian Politics: A foreigner’s view October 7, 2008

Posted by Sverre in : Malaysia, World politics , 4comments

Malaysian politics are fascinating, but as with any country not easy to understand unless you’ve studied them. I’ve had a keen interest in Malaysia for a few years, so I’ll try to sum up the most important things you need to know to follow what’s going on. This reflects my understanding of things, which I admit may be flawed. Please comment on any mistakes you believe I have made. Also a word of caution: Wikipedia articles on these subjects have occasionally been contaminated by “jokes” or partisan statements and should be used with caution. (more…)

Yes, Tun Mahathir – we can fault the BN concept and governance September 21, 2008

Posted by Sverre in : Malaysia, World politics , add a comment

In this post on his blog chedet.com, former Malaysian Prime Minister, Tun Mahathir Mohamad, of whom I have previously written quite a bit asserts his claims that the recent election losses by the Barisan Nasional coalition have been caused by loss of confidence in the BN leadership rather than because of genuine support for the opposition.

His analysis is for the most part sound. It makes sense that people would vote for a genuine opponent rather than a utopian third party candidate if what they wanted was to punish the BN. I believe he is right that at least a good portion of the opposition votes were the result of BN disillusionment. I do however think he underestimates the genuine support in Malaysia for reform, and most importantly I think he is mistaken with regard to his final point:

14. We cannot fault the BN concept and governance. We have to look elsewhere for the loss of confidence in the party.

For reasons I have discussed at much more length earlier, there are several things that make me believe that the very UMNO (and BN) system is unsustainable in the long run: (more…)

Malaysia censors news portal August 29, 2008

Posted by Sverre in : Malaysia , 1 comment so far

A number of sources can report that the Malaysian government has ordered a ban on the popular independent news portal Malaysia Today, and Malaysian ISPs have reportedly complied. According to the website owner himself, Raja Petra Kamaruddin, the reason is his article “Malays, the enemy of Islam“, an attack on conservative Malay Islamism and corruption and abuse by the Malaysian Sharia court system.

The article in question is in my opinion neither well written nor particularly constructive in its criticism. Nevertheless it is a matter of course for me to defend the writer’s right to make the claims he does. Freedom of speech is natural to us in the west, not so in Malaysia. Malaysia has never had a completely free press. The government has always reserved itself a right to protect the people against statements that threaten racial harmony or public morale. And the Malaysian government has a long history of abusing this legislation to crack down on political opposition.

Malaysia claims to be a democracy, but this isn’t the behavior of a democratic state. It is further proof to the autocratic nature of the Malaysian regime. (more…)

Anwar Ibrahim returns to the Malaysian parliament August 29, 2008

Posted by Sverre in : Malaysia, World politics , 2comments

Anwar Ibrahim, former “crown prince” of the Malaysian government party UMNO – for many years convicted to exile form Malaysian politics, is now set to return to the Malaysian parliament after winning the by-election in his home constituency of Permatang Pauh in the Malaysian state Penang (Pulau Pinang). He fills a parliamentary seat left open by the withdrawal of his wife. The election came as no surprise to anyone, but is extremely significant, as it shows an Anwar who is back on his feet and once again leading the opposition after being removed from power by former Prime Minister Mahathir Mohamad (you can read more about that in the post “Sex, Lies and Capital Controls” from this blog).

To many, Anwar Ibrahim’s arrest and conviction on charges of corruption in 1998 was seen as a decisive victory by then prime minister Mahathir. Likewise, it was by many (my self included) seen as a decisive crackdown on the call for democratic reform by the power of Malaysian autocracy. Anwar’s real return to politics this week turns that short term victory into a long term setback. Not only has Anwar personally been able to return to a position of leadership, but his political ideas of “reformasi”) are still alive, represented by his party Pakatan Rakyat (People’s Justice and are now strongly represented in the parliament. Strong enough to take away the parliament 2/3 majority that the government coalition Barisan Nasional (of which UMNO is the most prominent member) has held since the country’s independence in 1957. (more…)

10 year anniversary celebrated with new sodomy charges – Badawi learning from his master? August 7, 2008

Posted by Sverre in : Malaysia , add a comment

Today, BBC reported that Malaysia’s former deputy prime minister Anwar Ibrahim was once again charged with sodomy (gay sex), a very serious offense in Malaysia.

It’s been 10 years since the great power struggle between Mahathir Mohamad and Anwar Ibrahim, then Prime Minister and deputy in Malaysia. In 1998 it ended with Anwar being accused of sodomy, arrested, expelled from the party and the parliament. He was cleared of those charges by the court, but convicted for corruption after trying to pressure the police to drop the investigation. I live in Malaysia at the time, and like everyone else around me, didn’t believe much in the charges. At least the part about sodomy.

Anwar was released from prison in 2004, and earlier this year had his ban from political activity lifted. Then he went on to lead his party to their best election ever, for the first time breaking the 2/3 majority of the Barisan Nasional coalition that has ruled Malaysia since the country’s independence from Great Britain.

Mahathir Mohamad resigned after 22 years as Malaysia’s Prime minister in 2003, at age 78, and finally handed the reins over to his successor, Mohammad Badawi. Although few expected drastic changes in Malaysia, there was at least a hope that Badawi might gradually move Malaysia in a less authoritarian direction.

In this previous post I presented a paper I wrote on the struggle between Mahathir and Anwar and how the interplay between domestic politics and international economy forced Mahathir to desperate action. Is what we’re seing now, 10 years after the events described there, a case of history repeating itself in a slightly less dramatic way? Is this Badawi’s counter-move to the serious threat posed by an Anwar that once again has the winds of politics in his sails? (more…)

Sex, lies and capital controls – how Mahathir painted himself into a corner August 5, 2008

Posted by Sverre in : Malaysia, Political economy , 4comments

Malaysia was the odd ball out in handling the great Asian financial crisis of 1997-98. Rather than follow the stream and adapt to the measures enforced by the International Monetary Fund, Malaysia’s prime minister Dr. Mahathir Mohamad chose to go in a different direction by imposing capital controls that effectively closed off the Malaysian economy.

A huge amount of work has been produced by scholars worldwide on the crisis. As among others Kishore C. Dash and Rudiger Dornbusch point out, economic factors can explain why the crisis broke out, but the subsequent management on it must also take the domestic political situation into account. Much more accomplished scholars than myself have examined to great length the reasons for the crisis and the results of the choices taken.

What this analysis focuses on is to fill in the picture of why the crisis was handled the way it was, going beyond the macroeconomic arguments. The economy and the currency can be important tools for control and important totems of nationalism. In the attached paper, I show that regardless of macroeconomic concerns, Prime Minister Mahathir Mohammad had based his power on these tools and had all but painted himself into a corner, having no option but to choose the policy he did if he wanted to avoid the risk of serious damage to his regime.

Three steps form a process of elimination by which closing off the Malaysian economy becomes the only viable solution for Prime Minister Mahathir:

Firstly, the possible policy choices were constrained by the Mundell-Fleming conditions, also dubbed the “unholy trinity.” They state that it is impossible to maintain both a fixed exchange rate, monetary autonomy and a free flow of capital simultaneously. Malaysia had still been fairly close to achieving this, but the face of a massive macroeconomic shock made it impossible to keep doing so. A choice about which goals to pursue had to be made

Secondly, Mahathir’s power was strongly dependent on the economic network centered around the UMNO party that constituted the major part of his power base. Abandoning monetary autonomy, with the possibilities of high interest rates sure to hit sub-prime loan markets hard, posed a serious threat to the UMNO business conglomerate. Relinquishing monetary policy control thus seemed difficult.

Thirdly, Mahathir had through his Wawasan 2020 plan emerged on a path to bring Malaysia to become an industrialized nation through a new state-centered nationalism. The currency was a vital national symbol and currency stability was thus also prioritized.

Making the two first options go from difficult to impossible was the the concurrence of a macroeconomic shock and a political crisis in the form of Anwar’s challenge to Mahathir’s rule. With attacks against his power in the elections of 1993 and 1996, Mahathir’s apparatus for autocratic rule was being threatened. Anwar’s advocacy of austerity measures threatened to shake the UMNO patronage system even more strongly.

Constrained by the Mundell-Fleming conditions, the last remaining option was to abandon free flow of capital, which had played a major role in the prosperity of the Malaysian economy to over the last decades. With a considerable distrust towards international markets, this option seemed less unthinkable to Mahathir than to most mainstream economists. Additionally, the policy facilitated both the discrediting of Anwar’s supporters and the possibility to blame domestic economic problems on foreign actors. This explains why Mahathir was willing to go to great lengths to enforce these policies, regardless of the risks (or even predictions of impending doom) stressed by a unitary corps of international economists.

The complete paper, fully referenced, can be found here: sex-lies-and-capital-controls (PDF)