Mahathir keeps old guard in new Cabinet

Mahathir keeps old guard in new Cabinet

KUALA LUMPUR (Reuters): Malaysian Prime Minister Mahathir Mohamad on Friday retained the old guard and his market-savvy finance minister in a new cabinet that was welcomed by markets.

In his first major political move since winning a Nov. 29 election, Mahathir opted for continuity, keeping most key ministers in the same posts while filling empty junior positions with young blood.

The 73-year-old leader kept Daim Zainuddin, architect of Malaysia's controversial capital controls, as finance minister in a signal to markets that economic policy would stay on track.

Deputy Prime Minister Abdullah Ahmad Badawi, Foreign Minister Syed Hamid Albar, Trade Minister Rafidah Aziz, Transport Minister Ling Liong Sik and Primary Industries Minister Lim Keng Yaik retained their portfolios. Abdullah also kept the Home Ministry portfolio.

A surprise omission from the cabinet line-up was Tengku Razaleigh Hamzah, a former archrival of Mahathir's who had been considered a potential successor to the prime minister.

Mahathir, whose 14-party coalition won a 10th consecutive mandate in the election, had been widely rumored to be ready to readmit Razaleigh to the cabinet inner circle. But Mahathir said Razaleigh "did not fit with the criteria".

Najib Abdul Razak, who won his parliamentary seat by a razor- thin margin, was shifted from education to defense in what was seen as a demotion for one of Mahathir's potential successors.

The cabinet marked Mahathir's first move since the Islamic opposition Parti Islam se-Malaysia (PAS) made electoral gains at the expense of his United Malays National Organization (UMNO) party in the Malay heartland in the north of Peninsular Malaysia. Mahathir played down PAS's gains.

"This is not the first time UMNO had lost votes to PAS. The split is not so much a split. It's all due to intra-party rivalries, loyalty to personalities, rather than a party. Don't read too much into this thing," he told a news conference.

Analysts highlighted Mahathir's decision to keep almost all of the key players in the same posts, especially Daim, credited with pulling the economy out of two recessions in 13 years.

"Coming out of a recession, Mahathir did not want to rock the boat too much," Eddie Lee, regional economist at Vickers Ballas in Singapore, told Reuters.

"For the present, Daim was seen as indispensable by the alliance. Daim is expected to follow the same economic policies."

A regional economist at a foreign brokerage in Singapore said: "To me, it's a sense of relief. Nobody has the stomach for a big upheaval at this point. People want to see the country get down to business."

One notable new face will be Hishamuddin Tun Hussein, named youth and sports minister. Hishamuddin, 38, is the grandson of UMNO's founder, son of a former prime minister, and one of the country's fastest-rising political stars.

But the chairman of the opposition Democratic Action Party, Lim Kit Siang, said "the new cabinet is most disappointing as it does not impress Malaysians as a millennium cabinet but looks very Jurassic".

Lim, who was opposition leader until he lost his seat in last month's polls, said "many old, tired faces remain" and faulted Mahathir for not "dropping political deadwoods".

The Kuala Lumpur Stock Exchange's 100-share index, which gained in the morning on expectations of cabinet continuity, retreated slightly after the line-up was announced as market players pocketed profits.

But the index still closed higher at 743.6, up 0.88 percent or 6.47 points.

With the cabinet selected, Mahathir's UMNO now looks to crucial leadership elections set for mid-2000.

Mahathir, who won an unprecedented fifth mandate in last month's elections, said he would not run for a sixth term.

"By the next term I'll be very near 80 years old. I'll be having a stiff neck, bad eyesight, and all that kind of things. So this will be my last term," he said.

After announcing the cabinet on Friday, Mahathir lashed out at his jailed former deputy Anwar Ibrahim and the foreign press.

Mahathir, who had been silent on the political situation since his coalition won snap polls on Nov. 29, reverted to his characteristic combative form at a news conference once he had unveiled his new cabinet.

He first attacked the foreign press for failing to recognize voters' loyalty to his coalition, which has won all 10 general elections since independence in 1957.

"Of course, I don't expect the foreign press to ever understand this. You have your own agenda, and you have interfered in our campaigning by propping up people who have done all kinds of funny things," he said.

Mahathir has often criticized the foreign media, saying it favors Anwar, who was sacked in 1998 and later sentenced to six years in jail for corruption. Anwar says he was the victim of a plot to destroy his career.

On Anwar Mahathir said: "He creates loyalty to himself, not to the party. That's why the moment he left the government he joined the opposition. I've been sacked before from the party, but I've never joined the opposition."

The 73-year-old prime minister said many people continued to hold the government responsible for beating Anwar in detention when the person responsible was the former police chief.

He said it was not true that Malaysians were denied full political freedom. Many government critics say civil liberties in the country have been curbed under Mahathir's 18-year rule.