It may be asserted that the economic crisis which began from Thailand in July 1997 and quickly spread to many countries in Asia, is a major factor in changing the face of Malaysian politics. Prime Minister Mahathir Mohamad blamed foreign financial speculators as the primary cause of this crisis.

In order to get maximum political support from the majority Malay/Muslim population within the country, he directed his blame on one George Soros, pointing out that he is not only an American but also of Jewish origin.

While Mahathir put his blame mainly on external factors, on the other hand, Anwar Ibrahim, his deputy, was subtly pointing out that the main cause was actually internal, namely the deteriorating situation of corruption, cronyism and nepotism within the country, and especially at top leadership level. This undermined competitive capitalism.

Perhaps the combination - both internal and external factors - was responsible. A country weakened by a long accumulating process of corruption, cronyism and nepotism can easily be attacked by a virus from outside which takes the form of financial speculation.

Of course, there can be other explanations or analyses that can be offered as the cause of the crisis, such as the effect of overproduction and so forth. But they appeared to be irrelevant to the context of the Mahathir-Anwar conflict. Undoubtedly it was Mahathir's and Anwar's opposing assertions that finally influenced the political development that took place subsequently.

Anwar's indirect attack and blame on Mahathir, at the beginning, generated the PM's suspicion that Anwar was mounting an attempt to oust him. Mahathir seemed to have concluded that his suspicion was confirmed when Anwar's accusations were repeated, especially by Zahid Hamidi, the Umno Youth chief considered to be Anwar's protg, during his opening speech at the youth meeting, a day before the Umno General Assembly in June, 1998.

It so happened that in Indonesia, the reformasi movement was beginning to heap allegations on President Suharto for perpetrating corruption, cronyism and collusion in Indonesia. Although Mahathir had always been a close ally of Suharto, yet he abhorred being likened to him.

Furthermore, under Suharto Indonesia had decided to accept the International Monetary Fund prescriptions and conditional loans for solving the problems of its financial crisis. On the other hand, Mahathir was vehemently against the IMF. Consistent with his claim to patriotism, he rejected the IMF, which he branded and accused, quite correctly too, as a tool of US neo-imperialism.

On Sept 2, 1998, Mahathir removed Anwar as his deputy. The next day he was sacked as deputy president and expelled from Umno. The impression given for Anwar's removal from office was that he was pro-IMF and in favour of IMF prescriptions for overcoming the country's financial. Not long before this, Bank Negara governor, who was considered to be Anwar's handpicked protg, was forced into retirement. After that a National Economic Action Council was formed with Daim Zainuddin as it CEO.

This move was seen as an attempt to undermine Anwar's position. Daim, very close to Mahathir but considered a rival of Anwar, had been a finance minister before and he was reappointed to the same position after Anwar was removed.

Just a day before Anwar's removal, the government announced its own recipe, without the help of IMF, for economic recovery. It included, among other things, capital controls, pegging RM3.80 to an US dollar and reducing the interest rate that had been raised earlier by Anwar. The decrease in interest and the stabilising of the ringgit through pegging, were welcome moves especially among businessmen, mainly Chinese.

On the other hand, other reasons that had nothing to do with finance or economics, were given for the decision of the Umno Supreme Council that met on the same day, to sack Anwar. On the night he ceased to be DPM and the following day, before he was sacked from Umno, the media went to town with the allegations that Anwar was involved in all types of sexual misdemeanour. This included sodomy and sexual affairs with several women that included the wife of his private secretary.

It is interesting to note that not long before Anwar was removed, two chief editors of mainstream Malay newspapers together with the head of programme for a private television channel, were forced into early retirement. All three were considered close to Anwar.

The allegations against Anwar were based on an affidavit produced by the police against Nallakaruppan, a tennis partner of Anwar, who had been earlier arrested for alleged possession of 150 live bullets, which could carry a mandatory death sentence. Nallakaruppan was accused, by insinuation and without any proof, that he was actually a procurer of women for Anwar. This affidavit, which was prepared by the police, was already available to the media even before it was submitted to court.

Despite the fact that it was made public even before the trial, the Attorney General did not make any effort to find out those responsible or to bring them to book. The scandal that created headlines in all the media was used as a reason for the sacking Anwar. Mahathir emphasised later that he would not have a sexually misbehaving person to be his successor.

The two allegations raised against Anwar, relating to his views on plans for economic recovery and his allegedly scandalous sexual pursuits did not appear to be real reason behind his removal and sacking. These appeared to be mere excuses. The economic reason would not go down well among the people, because they would not be able to make sense out of them.

On the other hand, sexual misbehavior has been found to be quite common among some government leaders, but they were not punished for their amorous activities. But to be practising sodomy in addition to having affairs with another person's wife, especially by one who has always been regarded as religious, would be most scandalous.

Sodomy particularly, is something considered despicable in Islam and Malay culture. So, it was certainly the best allegation to make to completely destroy Anwar politically. But, as it turned out to be, this did not succeed. Instead most Malays did not believe these allegations and tended to take pity on Anwar as a victim of lies ( fitnah ).

Perhaps, the real reason behind Mahathir's swift and crushing action on Anwar was the question of succession. Nearly 10 years before, Mahathir underwent a heart by-pass surgery and there were rumours that he was then not in the best of health. Some people around Mahathir and close to him as his children and cronies, were very worried about who would succeed in case anything suddenly happened to him. They had become very wealthy because of their closeness to the prime minister and also thanks to the government policy to help create big Malay capitalists.

The most powerful of them is Daim, because of his control over wealth and of these capitalists, who had grown almost under his wings. This small group of wealthy cronies was concerned if Anwar became successor, for two reasons.

Firstly, Anwar himself had around him a coterie of ambitious young people who wanted to take the place of Mahathir's cronies. Naturally they were considered to be a threat by Daim and company. Secondly, they were afraid that Anwar was capable of taking action against them, for corruption or mismanagement, if not for other more noble reason, at least to weaken them to make way for those regarded as Anwar's own cronies. To save their own position they had to act fast. One way was to remove Anwar from power. This was what subsequently happened.

Tomorrow: The seeds of Anwar's destruction, Part 2

This is the first of three parts of a paper which formed the basis of addresses to students and academics in Cambridge, London (LSE & SOAS), Manchester, Oxford and Warwick Universities, during PRM president SYED HUSIN ALI's seven-day "lecture tour" in the first two weeks of May. Part 2 appears tomorrow.