Malaysias Desperate Gamble

(3 of 3)

After just a few days, it is far too soon to tell whether Dr. Mahathir's desperate gamble will succeed or fail. The details of the plan have yet to be laid out, and those details will likely determine whether the plan is panacea or poison. Malaysian stocks tumbled on the news Tuesday, then lurched upward Wednesday as investors scrambled for bargains; the next few weeks will likely be turbulent as investors and speculators learn the ropes of what will be a very different Malaysia as far as outsiders are concerned. Inside Malaysia, Mahathirs plan has already caused chaos - after Anwars sacking, three truckloads of riot police were dispatched to the prime ministers residence to quell protests by Anwar supporters.

Mahathirs plan is easy to dismiss as the folly of an economically inept autocrat. But by going through with it, Mahathir has drawn a line in the sand: Its him against the barbarians. And in this age where economic and political ideology have become inextricably entwined, the stakes are high. Mahathir evidently dreams of an Asia resurgent on its own terms, reborn in its own image, not that of the West. If his course succeeds, and Malaysia recovers, the rest of the region could follow his example and pull disastrously back from necessary economic reforms. At worst, the West could eventually be confronted with a China-led belligerent East - and new Cold War for the 21st century. At best? Malaysia does as Krugman recommends: use the breathing room afforded by the plan to continue reforms and thus emerge with a hardier economy than before.

The current global crisis has no precedent since the Great Depression - and that led to World War II. As Russia melts and Asia founders, the Wests credibility is waning fast, along with some cherished ideas, both political and economic, about the way to run a modern planet. But what works must come before what should work, and as Mahathir shakes his fist at the West and talks holy war, what he may not realize is that pragmatists everywhere - bankers, speculators, barbarians, maybe even George Soros - are rooting for him. If only for a little while.