Mathahir's `heir' sacked over crisis

IN A sign of his country's growing international isolation and the seriousness of its economic crisis, the Malaysian Prime Minister, Mahathir Mohamad, yesterday sacked his Finance Minister and one time political heir, Anwar Ibrahim.

After months of rumours about his deteriorating relationship with Dr Mahathir and a series of defamatory pamphlets alleging a homosexual affair between Mr Anwar and his chauffeur, his dismissal was not unexpected. The curt announcement came after a week of increasingly dramatic measures intended to save the Malaysian economy which officially sank into recession last week.

"Anwar Ibrahim has been sacked from his posts as Deputy Prime Minister and Finance Minister effective 5.30pm," said the statement issued yesterday evening by Dr Mahathir's department. Three trucks of riot police were deployed outside the Prime Minister's home after the announcement, apparently to deter angry supporters of Mr Anwar.

The Finance Minister is just the latest casualty in an on- going struggle between reform-minded free marketeers and those like Dr Mahathir who blame Malaysia's financial and economic problems on malevolent foreign speculators.

Last week the governor of the central bank and his deputy resigned in protest at Dr Mahathir's plans to see off speculators by fixing the value of the ringgit. Mr Anwar backed the bank's tight monetary policy. Yesterday, after Tuesday's announcement of controls on foreign exchange transactions, the currency was pegged at 3.8 ringgit to the dollar, a move which sent confusion through the financial markets.

Mr Anwar was regarded for years as Dr Mahathir's natural successor - a young and charismatic former student leader, commanding particular respect among Malaysia's Muslim majority. But a year ago came the Asian economic crisis, which sucked down the value of the ringgit and destroyed 72-year- old Dr Mahathir's dream of joining the ranks of the industrialised countries by 2020.

After years of economic growth, Malaysia suddenly found itself struggling to avoid the fate of its neighbours Thailand and Indonesia, which were both driven to seek humiliating rescue packages from the International Monetary Fund. The fall of Indonesia's President Suharto gave courage to opponents of Dr Mahathir who accused him of corruption and nepotism, and many regarded Mr Anwar as their figurehead. The Prime Minister saw off the political threat, but the gap between the two men widened.

This summer, Mr Anwar was humiliated by the appointment by Dr Mahathir of his old friend, Daim Zainuddin, as "Special Functions" Minister responsible for economic matters.

Kuala Lumpur has recently been rife with rumours about 51-year-old Mr Anwar's sexual peccadilloes, slurs he has always denied. The authors of one book, entitled Fifty Reasons Why Anwar Shouldn't Be Prime Minister are on trial for defamation. To many the smears appear to be a campaign to discredit Mr Anwar with his Muslim constituency.

The opposition leader, Lim Kit Siang, said that Mr Anwar's demise threatened further chaos during the regional economic crisis. "The sacking of the deputy prime minister will plunge the country into an unprecedented political crisis and turmoil," said Mr Lim, "unless Dr Mahathir can convincingly establish the legitimacy of the drastic action."