After a final bruising encounter with the West, Islam's fiery spokesman Dr Mahathir bows out of public life

No one thought Mahathir Mohamad would go quietly. But few expected a row of the magnitude that saw Malaysia's Prime Minister taken aside by President George Bush yesterday and told in no uncertain terms his remarks about Jews were "wrong and divisive".

The frosty encounter was at the Asia-Pacific Economic Cooperation (Apec) summit, which opened in Bangkok yesterday, attended by 21 world leaders. The meeting should have been an occasion to honour Dr Mahathir, retiring at the end of this month after 22 years of autocratic rule. Instead, it has turned into another storm for the combative Malaysian leader, who claimed last week: "Jews rule the world by proxy ... they get others to fight and die for them."

The comment, at an Islamic summit, provoked an international uproar. The EU, Australia and the US condemned it. Yesterday, a White House spokesman said, Mr Bush told the 78-year-old Dr Mahathir: "It stands squarely against what I believe in."

The spokesman did not record the response of Asia's longest-serving elected leader, but it might be assumed that Dr Mahathir - making his final appearance on the international stage - was not particularly contrite. Dr M, as he is affectionately known at home, has never worried about diplomatic niceties. His intemperate outbursts have become the stuff of legend, although he often feigns surprise when offence is taken.

When he finally relinquishes his iron grip on power, his old adversaries, particularly in the US, Britain and Australia, will probably heave a sigh of relief.

But while he may not be popular in the West, his standing is high in his own region, where he is an outspoken champion of Muslim causes and of the developing world.

In Malaysia, a former British colony which he has transformed from an economic backwater into one of Asia's wealthiest countries, most people find it difficult to imagine life post-Mahathir. "Whenever you think of Malaysia, you think of Dr M," said Zuraini Harun, a 32-year-old Kuala Lumpur café manager whose generation has known no other leader. "Mahathir is Malaysia."

Many people harbour a deep attachment for their authoritarian leader. Crowds thronged to hear his farewell speech to his ruling United Malays National Organisation party in June, blocking city streets as they watched him on giant television screens.

He initially announced his retirement last year, but was persuaded to postpone it by his tearful deputy, Abdullah Ahmad Badawi.

Although economic achieve-ments have given Malaysia self-confidence, not everyone in the ethnically diverse nation of 24 million people is happy. Dr Mahathir has blatantly favoured the ethnic Malay majority over the large Chinese and Indian communities. Critics say the independence of the press and judiciary has been eroded, and a culture of cronyism and government unaccountability has thrived.

Malaysia is nominally a democracy, but Dr Mahathir has brooked no dissent. Political opponents have been locked up without trial and his former deputy prime minister, Anwar Ibrahim, once his anointed successor, is languishing in jail, six years into a 15-year sentence for corruption and sodomy.

Mr Anwar's sin was to question the handling of the 1997 Asian economic crisis, a move interpreted as a leadership challenge. Dr Mahathir fired him, accusing him of conducting secret [and illegal] homosexual relationships. Mr Anwar organised Malaysia's largest street protests for years, calling for sweeping government reform. Arrested and beaten in jail by the chief of police, he was left a virtual cripple. His conviction provoked more riots and was widely condemned.

Britain was more than happy to do business with Malaysia, negotiating a £417m aid deal to build the controversial Pergau Dam in exchange for orders for fighter aircraft from British arms manufacturers. The agreement was struck under Baroness Thatcher, and was revealed when a secret memo of understanding became public. The British government had ignored warnings that the project was environmentally flawed; large areas of rainforest were destroyed and the habitats of rare wild- life threatened.

Over the years, Dr Mahathir has become famous for his fiery rhetoric. In 1997 he blamed the financial crisis on George Soros, the American financier, calling him a "moron" and noting that he was Jewish. This year, he described those who died in the World Trade Centre and the Bali bomb as "collaterals".

The irony is that Dr Mahathir is actually a voice of moderation in the Muslim world. He has spent most of his career fighting religious fundamentalism and preaching tolerance. The main point of his speech last week was that Muslims should give up violence and modernise. Unlike some of his Asian contemporaries, such as the former Indonesian president, Suharto, he has never sought to enrich himself.

Even his critics acknowledge that he has managed to maintain racial harmony, with Malaysia avoiding the ethnic and religious turmoil that has blighted neighbouring Indonesia. Racial riots that left hundreds of people dead in 1969 are a fading memory.

Malaysia is a modern secular society, albeit with a strong Islamic influence. Teenage girls in designer jeans and Muslim headscarves go window-shopping in suburban malls, and Chinese men play mahjong over beer and pork crackling in nearby cafes. A physician from the northern state of Kedah, Dr Mahathir made his name in politics by defining what he called the "Malay dilemma", portraying Malays as downtrodden by the economically superior Chinese. Malays are now guaranteed places at universities, shareholdings in corporations and other benefits.

During the Asian boom years of the 1980s and early 1990s, Dr Mahathir energetically wooed foreign investment, spending billions of dollars on occasionally grandiose mega-projects; Kuala Lumpur has some of the world's tallest buildings. He made Malaysia into one of the top 20 trading nations, with a national auto industry and major exports of tin and rubber.

Dr Mahathir has condemned the war on terrorism as anti-Muslim and accused the US of "trying to out-terrorise the terrorists". But he has proved a valuable ally. Malaysia has arrested more than 70 suspected members of Jemaah Islamiyah, the regional terrorist network, detaining them without trial.

Dr Mahathir's hand-picked successor, Badawi, is dull by comparison. A former Islamic student and career politician, he will find it difficult to stamp his personality on a country that, for nearly half of the period since gaining independence from Britain in 1957, has been dominated by one man.

But few people expect Dr Mahathir to disappear from public life. As a former US ambassador, John Malott, said: "It is not Mahathir's style to remain silent."

* At Apec, President Bush called for talks with North Korea on its nuclear programme as Pyongyang test-fired a short-range missile.

THE MAVERICK: MAHATHIR ON....

.... AMERICA'S WAR ON TERROR

They made a mistake in Iraq. Now in Iraq, instead of feeling happy and saying thanks to the liberators, they are killing the liberators.

October 2003

..... AUSTRALIA

This country stands out like a sore thumb trying to impose its European values in Asia as if it is the good old days when people can shoot aborigines without caring about human rights.

December 2002

Australia has made known to the world that it wants to be the deputy sheriff of this region. It's very difficult to get along with deputy sheriffs.

October 2003

.... JEWS

The Jews for example are not merely hook-nosed, but understand money instinctively.

in his 1970 book, "The Malay Dilemma"

.... MUSLIMS

Disunited, confused about Islam, fighting each other for power and lacking in essential knowledge and skills... Muslims today have reached the lowest point of their development.

January 2003

.... EUROPEANS

Many among them are of the opinion that Muslims cannot possibly succeed, more so when their skin colour is brown.

1999 speech