Malaysias Desperate Gamble

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The words may have come from a Boston economist, but the inspiration clearly came from the country Mahathir touts as the East's answer to U.S. world dominance: China. Ironically, it has been China that has been the West's great consolation in this crisis: By refusing to devalue the yuan, even as slowing growth threatens to derail her own emergence as a first-world economy and nation, China has kept a bad situation from getting much worse. Strict currency controls -- its invisible Great Wall against the briefcase-wielding Western barbarians -- have allowed China this bravery.

The wave of Western capital that sloshed through Malaysia at the height of the Asian miracle in 1993 had just begun to recede when Mahathir began using the example of China to connect his disdain for Western economics with his hatred of Western politics. "China may be authoritarian, but it is better than anarchy," Mahathir said in 1994. "Business needs order. It needs to have a predictable future." He continued: "The sanctimonious pronouncements on humanitarian, democratic and environmental issues are motivated by the same selfish interest -- the desire to put as many obstacles as possible in the way of anyone attempting to catch up with the West."

Absent from those and any other of Mahathir's proclamations over the past few years has been any sense of personal culpability for the tar pit that his countrys economy has abruptly become. The usual Asian suspects - crony capitalism, lack of financial disclosure and plain old-fashioned corruption - are as responsible for Malaysia's fall from grace as any of the wretched excesses of Western investment capitalists. But now, Mahathir has in mind for Malaysia a resurgence that not only restores to his people their achingly recent prosperity but forces a cataclysmic readjustment of the way the West would have emerging markets run. In short, Mahathir Muhammed dearly wants to teach the West a lesson.

Every revolution needs a purge, and when Mahathir decided on his desperate measure, the heads of those advisers who had pushed for IMF-style prescriptions immediately began to roll. Last week saw the resignations of the central bank governor, Ahmad Muhammed Don, and his deputy, FongWeng Phak. On Wednesday, Mahathir fired his IMF-friendly deputy prime minister and sometime political rival, Anwar Ibrahim, after Anwar refused to resign.