Malaysia's prime minister called an emergency session of the ruling party's top policy-making body, seeking to stamp his authority after the dramatic defection of ex-premier Mahathir Mohamad. Mahathir's departure, which cast further doubt on Prime Minister Abdullah Ahmad Badawi's own future, has raised Malaysia's political risks and spooked investors as the government grapples with high inflation, slowing economy and rising subsidies.
Abdullah, who was to chair a special meeting of the United Malays National Organisation (UMNO) supreme council at 12:00 GMT (4:00 PM NZ), also faced pressure from opposition leader Anwar Ibrahim, who said his group had the numbers to topple the government. "The excessive politicking has generated extra uncertainties into the whole political and economic environment," said Zainal Aznam Yusof, a senior fellow at Malaysia's Institute of Strategic and International Studies.
UMNO has been in turmoil since a poor showing in March elections, when the Barisan Nasional (BN) coalition which it dominates lost its crucial two-thirds majority in parliament. Malaysia said on Wednesday the annual inflation rate hit 3.0% in April, the highest in 15 months, led by firmer food prices.
The government is also considering reforms to fuel subsidy policy, aware that substantial fuel price hikes could stoke popular anger. Record food and energy prices are increasing Malaysian price pressures but price controls on goods such as flour and cooking oil are helping to keep inflation among the region's lowest.
The stock market eased on Wednesday, after losing more than one percent the previous day on jitters over the political flux, prompting the second finance minister to reassure the market that economic fundamentals remain strong.
Anwar waiting in the wings?
Mahathir's bombshell resignation on Monday from the party he led for 22 years came with a call for other UMNO members to quit en masse. A meeting of lawmakers on Tuesday ignored the call and rallied behind Abdullah. Mahathir, who has become increasingly vehement in criticism of his successor, said he was leaving UMNO in an attempt to force Abdullah out.
Mahathir wrote in his blog www.chedet.com that BN lawmakers should temporarily leave the coalition and declare themselves as independents in a vote of no-confidence in Abdullah. "This is one way to force Abdullah to resign. Once he resigns, the MPs can return to the BN fold," he said. Abdullah has refused to quit.
Analysts said the most likely outcome of Wednesday night's meeting was a reaffirmation by UMNO leaders of their support for him. "At this point, there are so many factions and alliances within the leadership," said Lee Hock Guan, senior fellow with Singapore's Institute of South East Asian Studies. "But he will probably get the support of the majority within the Supreme Council." Mahathir's resignation came three days after Abdullah ordered the attorney-general to investigate the former premier and five others on possible offences over the appointment of judges while the former premier was in power.
The political uncertainties have added to speculation over whether the BN coalition can keep its stranglehold on power. An emboldened opposition, headed by Mahathir arch-foe Anwar, is seeking to wrest parliamentary control by wooing BN defectors.
"We have the numbers"
"I do intend to topple the government, we have the numbers," Anwar told reporters in Singapore, a claim echoed by government insiders. "I'm looking forward to early elections," Anwar said, adding that he hoped these would take place before September. "The moment we are sure we can contest, we move." "If you have a one to two majority, the government will be too fragile...You don't need a two-thirds majority," he said, adding that he wanted a majority of five or six and saw a vote of no-confidence in parliament as the best course of action.
UMNO, backbone of the 14-party BN that has ruled since independence from Britain in 1957, holds 79 of its 140 seats. The opposition is a loose alliance of Islamists, a Chinese-based party and the multiracial PKR, and needs to gain just 30 seats to win a simple majority and form the government.
In a sign that the party is tearing itself apart, the leader of UMNO's youth wing demanded on Wednesday that another senior member, Mukhriz Mahathir, son of the former premier, face disciplinary action for urging Abdullah to resign. Mukhriz said on Tuesday he would not join his father in quitting UMNO but demanded that thepremier steps down. But another of Mahathir's sons, businessman Mokhzani, decided to leave the party, along with Mahathir's wife.