Anwar factor haunts PM Mahathir

By Simon Cameron-Moore

KUALA LUMPUR (Reuters): Not all of Malaysian Prime Minister Mahathir Mohamad's problems are as simply dealt with as the opposition activists police locked up ahead of a banned street protest last week.

Winning back lost support is a lot harder.

His own party is grumbling, the economy is stumbling, workers are angry, business lacks confidence, the Islamic opposition won't talk to him, and, try as he may, Mahathir can't make the Anwar Ibrahim issue disappear.

The humiliation and jailing of his former deputy, Anwar Ibrahim, who was sacked two years ago and then imprisoned on sex and graft convictions he says were fabricated, remains the most divisive issue splitting Mahathir's ethnic Malay power base.

Mahathir's United Malays National Organization (UMNO) is watching the clock tick down on elections three years away, after its worst result since 1969 in the last vote 18 months ago.

Although the 75-year-old prime minister has said he will not serve another term, many people believe Mahathir won't let go.

"He can't solve these problems of waning support through economic polices," says Khoo Boo Teik, a political scientist at Universiti Sains Malaysia in Penang.

"It's mostly to do with Anwar, the Malays reaction to his treatment and the government's loss of credibility."

No one thinks Mahathir, who calls Anwar immoral and unfit to rule, will cut short the 15 year jail term, though many think his successor might do to win favor with disenchanted Malays.

"Hopefully we can have somebody for leader who can add a new dimension and bring less baggage of the past. Dr. Mahathir has the baggage of the Anwar issue and that will not go away," a senior UMNO member told Reuters on condition of anonymity.

Seven pro-Anwar activists were locked up last week, ahead of a weekend civil rights procession on the anniversary of Anwar's first conviction.

Police invoked the Internal Security Act allowing detention without trial, accusing the seven of planning riots and seeking weapons and explosives. Mahathir says the pre-emptive arrests kept the peace and protected democracy in Malaysia.

The opposition, who brought several thousand Anwar supporters on to the streets for a peaceful protest on Saturday, say it's all rubbish. It has asked for proof but failed on Tuesday to secure the early release of the activists.

Some of the jailed activists had led a campaign, called "Save the Peoples' Money", attacking the government over a series of bail-outs for favored Malay tycoons.

After discovering its money was being invested in these tycoons' firms, Malaysia's biggest union, representing half a million workers, announced it would hold a one day picket on May 12 to protest the way the state-run pension fund is being run.

The Employee Provident Fund, with nearly 10 million contributors, paid its lowest dividend in 26 years last year.

The Islamic clerics in Parti Islam se-Malaysia (PAS), which leads the four party opposition front, have used their pulpits to rail against corruption generally.

But at religious teach-ins outside the sanctity of mosques, PAS leaders really let rip at Mahathir and UMNO.

Wrapped up in religion, it is a potent message for poor Malays who have missed out on the country's very real economic advances during Mahathir's rule.

UMNO leaders appear at a loss as to how to persuade PAS to tone down attacks they fear are deepening divisions among Malays, leaving their coalition dependent on support from ethnic Chinese and Indian parties.

Efforts to draw PAS into talks on Malay Unity, have, after four months, come to naught.

Meantime, UMNO has problems in its own ranks.

Grassroots members have told Mahathir that money is deciding internal elections for divisional leaders, who will vote in the party president and Supreme Council members in 2003.

And one disaffected UMNO member rocked the party by lodging a complaint with police calling for an investigation of alleged mismanagement of timber concessions by UMNO Secretary General Khalil Yaakob, the information minister.

The economy can't help lift spirits.

Last month's racial clashes between Malays and Indians in a squatter area outside Kuala Lumpur highlighted the plight of the urban poor and festering social problems.

And falling export demand from the United States and Japan and low world prices for plantation crops, palm oil and rubber, have pinned down the economy.

The government is spending to ease the economic hardships Malaysia is facing, but Mahathir knows he has to boost UMNO's image.

This month he launched a "Meet the People" campaign. One key question now is likely to be what the people have to say.