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Mahathir discusses Malaysia's economic crisis
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Originally published June 15, 1998
These are trying times for Prime Minister Mahathir bin Mohamad.
When Asia's currency crisis first erupted last summer, Malaysia
appeared likely to weather the storm. Now it seems set to become
the region's next big casualty. In a spirited, 60-minute
interview with TIME Asia deputy editor Adi Ignatius and
correspondent John Colmey, Mahathir revealed the depth of his
anger and frustration. Excerpts:
TIME: How did the economy turn out so badly? What happened?
Mahathir: Nothing really happened. I never subscribed to the
theory that this was going to be a short crisis. The people who
said Malaysia's fundamentals were strong did not realize the
strength of the people who can undermine the economy. We cannot
do anything to help us recover. Anything that we do is seen as
wrong and will cause a loss of confidence.
TIME: Is there anything you would have done differently?
Mahathir: No. The only thing that can stop this is if we have
order in the international financial system. There is total
anarchy.
TIME: Surely Malaysia did not move as fast as it might have.
Mahathir: Someone accused us of following the IMF prescription
too closely. Why do we raise interest rates? Why do we squeeze
credit? I replied: because we are frightened. If we were to
follow the IMF any closer, we would bankrupt all our companies.
TIME: Do recent events in Indonesia have any bearing on Malaysia?
Mahathir: Yes, because Western experts cannot distinguish
between Indonesia and Malaysia. They expect what happens to
Indonesia must happen to Malaysia. This is self-fulfilling
because they will publish their analysis and be believed. The
economic attack on Malaysia will be increased. After a long time
they might just notice the difference and desist. Malaysia will
survive.
TIME: Do you feel there has been a conspiracy against you?
Mahathir: There is no conspiracy. But I listen to these
questions and it is obvious that you have already made up your
mind that we are doing the wrong things.
TIME: But the fact is, you do have a crisis at hand. How do you
restore confidence?
Mahathir: We have done what we think will restore confidence.
For example, helping companies that are in trouble. It is done
everywhere, even in America. The savings and loans, Chrysler and
Continental Bank were helped.Why is it we are not allowed to do
the same thing?
TIME: Let's assume speculators did bet against the ringgit in
July. Why would anyone move against Malaysia now?
Mahathir: Maybe they make money out of it: buying and selling,
short selling. We live in fear.
TIME: Who's running the economy? One day someone says there will
be no bailouts; the next day a bailout is announced, and so on.
Mahathir: We all say the same thing: there will be no bailouts.
But we have some large companies that have non-performing loans
simply because the currency—and their share prices—have been
devalued. We are not bailing them out in the sense that they are
badly managed and the government pumps in money. But when you
reduce the value of the currency by 50%, all companies are going
down, and we choose the ones we think we can save.
TIME: Does it bother you that people say your deputy, Anwar
Ibrahim, understands the global economy while you seem to be in
a state of denial?
Mahathir: I am not saying that I am an expert about the market
economy. I feel that not everything about the market economy is
right. And I think people are pushing the market economy in
order to get the best advantage for themselves.
TIME: O.K., but the differences between you and Anwar seem to
have widened considerably over the past year.
Mahathir: Do I have to kiss him on the street before people will
stop saying there is a rift? We get on together, we manage this
country together. I admit we have differences, but in the end a
common view prevails.
TIME: Anwar talks in terms of taking advantage of these tough
times to improve Malaysia's economy. You say, "We live in fear."
It's a different approach.
Mahathir: He also knows fear. But he feels a need to blanket his
feelings. You know me, I have always been very blunt.
TIME: Your feistiness—is it for effect?
Mahathir: No. I am a person who feels things very strongly. I
feel a great injustice has been done here. The countries of
Southeast Asia spent 40 years building up their economies, and
in two months, simply by devaluing their currencies, they have
become poor. One should think that the world would have some
sympathy, but all they can say is, "Ah, they are bad."
TIME: To what extent do you regard what's happened as a Jewish
conspiracy?
Mahathir: There is no Jewish conspiracy. It is greed, sheer
greed. You can make money trading currencies much easier than
you can manufacturing cars and selling goods and facing the
uncertainty.
TIME: But in earlier comments you have singled out Jews.
Mahathir: What I said is that if people who do currency trading
happen to be Jews and the countries that suffer happen to be
Muslim, then people will say it is a Jewish plot. I didn't say
that this is a Jewish plot.
TIME: Have your dreams been shattered?
Mahathir: I admit that I feel disappointed, frustrated and at
times very angry that the world would see the destruction of the
economies of a whole region and say that this was caused by
something else, while ignoring that if the currency had not been
devalued this would not have happened.
TIME: Maybe the currency was overvalued.
Mahathir: Even if it was overvalued, reduce it slowly. You take
away 50% of your wealth, and you expect people to behave
normally? Now they can't even buy food. There is not one word of
blame for those people who devalued the currencies. And if I say
this—I must admit it is frightening—and you publish it, the
next day my ringgit will go down.
TIME: Many now accept that the world's financial system needs
reexamining.
Mahathir: Yes, and while you are examining it people are losing
jobs, people are suffering. Where is the sense of compassion
that we expect from those who talk about human rights, about
caring? Not one word. Those are real people who have lost jobs.
TIME: Many investors were stunned when state oil company
Petronas stepped in to bail out your son's ailing shipping firm.
Mahathir: People are determined to say I am helping my son. The
fact is, I have been very firm about these things. I have
prevented my children from going into politics. I have prevented
them from going into government. I prevented them from doing
business with the government all this time. But here it so
happens that the shipping firm belongs to a government company.
It is not my fault. I didn't make any decision.
TIME: But there's no way he could have borrowed $250 million to
buy the company in the first place if he wasn't your son. Local
bankers wouldn't have lent to him.
Mahathir: How dare you say these things! He bought companies in
Hong Kong. Do you think I have influence in Hong Kong? He bought
companies in Germany. Do you think I have influence in Germany?
TIME: You can influence local bankers.
Mahathir: You assume that because I am Prime Minister I must
have used my power. That's why I say it is not worthwhile to
answer your questions. You have it fixed in your mind that this
man must be corrupt, he must be helping his son.
TIME: How has your own life changed since the onset of the crisis?
Mahathir: I have to work harder. I have to spend more time
reading, trying to understand these very complicated market
forces which are supposed to discipline me. I suppose I have not
yet been disciplined, because I keep on saying the wrong things.
That doesn't mean I am going to follow what people tell me. I am
going to do things that are good for this country.
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