Heir Today, Gone...
	After years as Mahathir's favorite, Anwar Ibrahim is being forced to toe the line—or risk a dangerous showdown with his boss
	By John Colmey | Kuala Lumpur

Originally published August 24, 1998
Years ago when they were still close friends, Deputy Prime Minister Anwar Ibrahim used to join his mentor Prime Minister Mahathir Mohamad every Sunday to go horseback riding. They would canter through the forests outside Kuala Lumpur and discuss books, their families and the future of Malaysia. The outings came to a halt after Anwar, the lesser rider of the two, took a bad fall and was rushed to the hospital. "Mahathir said to me then," Anwar once told TIME, "'That is what happens when you try to race ahead of me.'"

He should have listened. Last week—as a friend and former tennis partner of Anwar's was dragged into court under the Internal Security Act, as close aides and friends traveled around the capital under heavy surveillance and held coded conversations over phones they suspected were tapped—Anwar was in the depths of despair. Reeling under the weight of a political attack perpetrated by Mahathir supporters, the once up-and-coming deputy may have been sidelined from power indefinitely. At worst, political analysts say, he may no longer be Mahathir's chosen successor. Anwar could even face a challenge—perhaps from Foreign Minister Abdullah Ahmad Badawi—for his position as deputy president of the ruling United Malays National Organization (UMNO) in next year's party elections. The normally upbeat Anwar, 51, appeared ashen-faced and uneasy in television appearances last week. He has begun to greet visitors by saying, "I can't talk about a civil society, I can't talk about human rights, I can't talk about corruption, and I can't talk about democracy."

A permanent split between the Prime Minister and his deputy, and the potential political instability it could cause, is just about the last thing Malaysia needs right now. Second-quarter figures, due out shortly, are expected to show the economy will shrink by as much as 4% this year. The ringgit has lost 67% of its value against the U.S. dollar in the past year, inflation is rising and a growing number of companies are pleading insolvency against creditors. Amid all this, it now appears that Mahathir, in a bid to consolidate his power, will call a snap general election as early as December.

That growing atmosphere of crisis may have contributed to a bizarre incident in Kuala Lumpur earlier this month. A rumor appeared on the Internet that Indonesian migrant workers were preparing to riot in the capital. Frightened residents stockpiled food and stayed indoors. The government launched a manhunt for the rumor's source, and three people were detained. "This is not a matter of just playing pranks," said deputy home minister Tajol Rosli Ghazali. "This is a question of national security and racial harmony."

Meanwhile, the prospect that Anwar might play a smaller role in running the country was spooking foreign investors. They see him as a financial expert and a counterweight to Mahathir's attempts to blame the West for Asia's downfall and exert control over the central bank. "Mahathir is a visionary, not a short-term crisis manager," says Simon Mahadevan Flint, head of research at Independent Economic Analysis in Singapore. "He is constantly saying the wrong things to the market."

The seeds of Anwar's downfall were sown last August, shortly before an UMNO party convention. A sister-in-law of one of his closest aides, together with his former driver, jointly delivered a letter to the Prime Minister's office. It contained accusations that Anwar was having an affair with the aide's wife and had engaged in homosexual relations with the driver. After nearly every member of UMNO and much of the press had pored over its contents, Mahathir ordered the two people arrested and said he found no truth in the allegations. But as the economic crisis deepened, differences between the two leaders—which had always been painted over as a generational divide—broke out into the open. At issue was whether to let companies and tycoons closely aligned with the ruling party go under, and whether to apply the International Monetary Fund's prescription for tight monetary policy and deep budget cuts. Anwar favored those courses, Mahathir didn't. As a result, little was accomplished and the economy plummeted.

Fast-forward to this year's UMNO assembly in June. Before the meeting, confidence in Malaysian economic management was low. In particular, foreign media and financial analysts criticized a bailout by the state oil company of a heavily indebted shipping firm owned by the Prime Minister's son Mirzan. When Indonesia's President Suharto fell in mid-May, Anwar's supporters hatched a plan to push Mahathir out, or at the least to paint him with the same brush that had brought down Suharto. In the meeting's opening address, the leader of the party's powerful youth wing let loose a blistering attack on party corruption aimed directly at the Prime Minister. In the midst of it all, Anwar sent the Prime Minister a message: "You've lost support of the party."

Mahathir struck back with a vengeance. He quickly issued a list of UMNO members and others who had been awarded contracts by his department or had received preferential shares as part of the government's privatization program. Members were shocked to find the beneficiaries included the youth wing leader and Anwar's father, brother and sister. Although the Deputy Prime Minister was not on the list and took no part in favoring his family, the effect was devastating. To further embarrass him, many UMNO members were given copies a book titled 50 Reasons Why Anwar Cannot Become Prime Minister. It repeated the sexual allegations and even tried to link Anwar to the death of his former driver's wife in a car accident.

Anwar's standing has fallen steadily ever since. Shortly after the meeting, Mahathir appointed Daim Zainuddin—a former Finance Minister and the brains behind the recovery from the 1980s recession—as Minister with Special Functions in charge of economic development. The move was seen as sidelining Anwar, who is also Finance Minister. Next the Mahathir camp forced the resignations of two powerful newspaper editors known to be Anwar loyalists. Meanwhile, Fifty Reasons continued to be distributed, an usual occurence in a country where minor innuendoes are often met with lawsuits or even imprisonment, until Anwar three weeks ago obtained an injunction against it. Last week, authorities filed charges against the author for publishing false news. But while investigating one of the book's charges—that Anwar's tennis partner Solaimalai Nallakaruppan had organized the deputy prime minister's alleged trysts—police reportedly found 125 bullets in Nallakaruppan's home. He was charged with illegal possession of live ammunition, which carries the death penalty. Says a lawyer: "It is Mahathir's way of saying to Anwar, 'Behave yourself, or we will let him out to spill the beans.'"

Analysts say there is a possibility Anwar can still recover if he lies low and convinces Mahathir of his loyalty. Accordingly, the Deputy Prime Minister last week traveled to Pulau Pinang, his home state, and—with Mahathir at his side—proclaimed that he would support the Prime Minister's re-election as UMNO president next year. Yet if the economic downfall continues, party members may mount a challenge without Anwar's blessing. That is one reason why Mahathir, who doesn't have to call an election until 2000, may want one in December. He may be counting on an outpouring of national pride to follow September's Commonwealth Games and November's Asia Pacific Economic Cooperation meeting, both of which Malaysia is hosting. And since Mahathir has veto rights over the list of candidates who will contest the polls, he can winnow out diehard Anwar supporters.

Either way, one of Asia's rising political stars is facing the battle of his lifetime. Mahathir has won admiration for allowing his number two to join him on the global stage. "How many deputy prime ministers or vice presidents can you name around the world," asks Karim Raslan, a lawyer and UMNO insider. "Mahathir is now saying 'Hold on, I'm in charge.'" That may not please the global investment community, or even many Malaysians. But if Anwar expects to survive, his best hope may be, this time, to listen.

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