17Apr2001 

           MALAYSIA: ANALYSIS 

           Anwar factor haunts Malaysia's Mahathir. 
 

           By Simon Cameron-Moore 

           KUALA LUMPUR, April 17 (Reuters) - Not all of Malaysian Prime Minister Mahathir Mohamad's
           problems are as simply dealt with as the opposition activists police locked up ahead of a banned street
           protest last week. 

           Winning back lost support is a lot harder. 

           His own party is grumbling, the economy is stumbling, workers are angry, business lacks confidence,
           the Islamic opposition won't talk to him, and, try as he may, Mahathir can't make the Anwar Ibrahim
           issue disappear. 

           The humiliation and jailing of his former deputy, Anwar Ibrahim, who was sacked 2 years ago and then
           imprisoned on sex and graft convictions he says were fabricated, remains the most divisive issue
           splitting Mahathir's ethnic Malay power base. 

           Mahathir's United Malays National Organisation (UMNO) is watching the clock tick down on elections
           three years away, after its worst result since 1969 in the last vote 18 months ago. 

           Although the 75-year-old prime minister has said he will not serve another term, many people believe
           Mahathir won't let go. 

           "He can't solve these problems of waning support through economic polices," says Khoo Boo Teik, a
           political scientist at Universiti Sains Malaysia in Penang. 

           "It's mostly to do with Anwar, the Malays reaction to his treatment and the government's loss of
           credibility." 

           No-one thinks Mahathir, who calls Anwar immoral and unfit to rule, will cut short the 15 year jail term,
           though many think his successor might do to win favour with disenchanted Malays. 

           "Hopefully we can have somebody for leader who can add a new dimension and bring less baggage of
           the past. Dr. Mahathir has the baggage of the Anwar issue and that will not go away," a senior UMNO
           member told Reuters on condition of anonymity. 

           Seven pro-Anwar activists were locked up last week, ahead of a weekend civil rights procession on the
           anniversary of Anwar's first conviction. 

           Police invoked the Internal Security Act (ISA) allowing detention without trial, accusing the seven of
           planning riots and seeking weapons and explosives. Mahathir says the pre-emptive arrests kept the
           peace and protected democracy in Malaysia. 

           The opposition, who brought several thousand Anwar supporters on to the streets for a peaceful protest
           on Saturday, say it's all rubbish. It has asked for proof but failed on Tuesday to secure the early release
           of the activists. 

           WHAT ABOUT THE WORKERS? 

           Some of the jailed activists had led a campaign, called "Save the Peoples' Money", attacking the
           government over a series of bail-outs for favoured Malay tycoons. 

           After discovering its money was being invested in these tycoons' firms, Malaysia's biggest union,
           representing half a million workers, announced it would hold a one day picket on May 12 to protest the
           way the state-run pension fund is being run. 

           The Employee Provident Fund (EPF), with nearly 10 million contributors, paid its lowest dividend in 26
           years last year. 

           The Islamic clerics in Parti Islam se-Malaysia (PAS), which leads the four party opposition front, have
           used their pulpits to rail against corruption generally. 

           But at religious teach-ins outside the sanctity of mosques, PAS leaders really let rip at Mahathir and
           UMNO. 

           Wrapped up in religion, it is a potent message for poor Malays who have missed out on the country's
           very real economic advances during Mahathir's rule. UMNO leaders appear at a loss as to how to
           persuade PAS to tone down attacks they fear are deepening divisions among Malays, leaving their
           coalition dependent on support from ethnic Chinese and Indian parties. 

           Efforts to draw PAS into talks on Malay Unity, have, after four months, come to naught. 

           Meantime, UMNO's has problems in its own ranks. 

           Grassroots members have told Mahathir that money is deciding internal elections for divisional leaders,
           who will vote in the party president and Supreme Council members in 2003. 

           And one disaffected UMNO member rocked the party by lodging a complaint with police calling for an
           investigation of alleged mismanagement of timber concessions by UMNO Secretary General Khalil
           Yaakob, the information minister. The economy can't help lift spirits. 

           Last month's racial clashes between Malays and Indians in a squatter area outside Kuala Lumpur
           highlighted the plight of the urban poor and festering social problems. 

           And falling export demand from the United States and Japan and low world prices for plantation crops,
           palm oil and rubber, have pinned down the economy. The government is spending to ease the economic
           hardships Malaysia is facing, but Mahathir knows he has to boost UMNO's image. 

           This month he launched a "Meet the People" campaign. One key question now is likely to be what the
           people have to say.