Unfortunately, the IMF's short-term prescriptions have failed to deliver quickly anywhere in Asia. High interest rates have choked businesses, and budget cuts have deflated economies. Indonesia and South Korea still resemble car crash victims, badly in shock and in danger of losing limbs, but placed on radically low cholesterol diets. The treatment seems virtuous, and might do good in the long run, but it hardly helps the patients out of the economic intensive-care ward. In Malaysia, well-connected companies have been unable to pay back loans, and banks can't get their money back. Mahathir favored helping those firms, many of which he had nurtured through the years with government contracts and funding. Anwar believed bailouts represented the worst side of the Asian economic miracle: cronyism and collusion a la Marcos or Suharto.

Some big bailouts were approved--among them for Halim Saad, an UMNO big shot, and Mirzan Mahathir, the PM's eldest son. In recent months, Anwar became increasingly aggressive in describing the path of recovery for Malaysia that he favored as more virtuous. His supporters, emboldened by the fall of Suharto in May, tried to hijack UMNO's annual assembly in June by having the leader of the youth wing give a blistering first-day speech about party corruption. But Mahathir, or his aides, were ready for Anwar's attack. Delegates to the meeting found in their conference kits copies of a book entitled 50 Reasons Why Anwar Cannot Become Prime Minister. Among the reasons were allegations that Anwar had indulged in sexual affairs with his chauffeur and an aide's sister-in-law, stories that had circulated for 10 months and been dismissed by Mahathir previously. The book also accused Anwar of ordering the murder of the chauffeur's wife.

Anwar's pedestal kept crumbling. Former Finance Minister Daim Zainuddin was appointed economic czar; two newspaper editors loyal to Anwar were sacked on orders from above; his tennis partner (and alleged pimp) was arrested for having revolver bullets in his home, which didn't match his current, registered gun. (His lawyers say it was a simple oversight because he forgot to turn the bullets in at the police station when he surrendered his old gun.) On Aug. 24, Mahathir lowered the boom. According to Anwar, the Prime Minister confronted him, saying he had new, credible evidence of Anwar's sexual improprieties and asked him to resign--sweetening the deal by offering not to press charges against him. Anwar refused and accused the Prime Minister of trying to blackmail him into resigning. Two days later, Mahathir's son Mokhzani made a call and asked Anwar to find a compromise solution before both men were damaged. Anwar, still not believing he would be sacked, paid no heed.

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R E L A T E D   S T O R I E S :

COVER STORY Prime Minister Mahathir Mohamad banishes Anwar
CRANKY OLD MAN The PM has a history of lashing out
VIEWPOINT Mahathir rails against financial orthodoxy
INTERVIEW Anwar explains what went wrong
OUT OF LINE Where does the ex-heir go from here?
POLL Does former Deputy Prime Minister Anwar Ibrahim have a future in Malaysian politics?
POLL Will the new currency controls help or hurt the Malaysian economy?