Damage Control

In the wake of their election losses, "shell-shocked" UMNO leaders consider the fallout - and the direction their party should take. By SANGWON SUH and ARJUNA RANAWANA Kuala Lumpur

Elections are over. Now it's time for some soul-searching - and damage control - for the United Malays National Organization, Malaysia's dominant political party. From Dec. 3 to 6, Prime Minister Mahathir Mohamad was on the resort island of Langkawi with UMNO heavyweights to conduct a postmortem on the results. And for good reason. While the Nov. 29 polls had ended in victory for UMNO-led Barisan Nasional (BN) - the ruling coalition won 148 out of 193 parliamentary seats - for UMNO itself, the outcome was less than sweet. Its share of seats dropped from 94 before the polls to 72. For the first time in history, UMNO's allies outnumber it in Parliament.

Perhaps more crucially, in the Malay-belt states of the rural north, UMNO either lost or scraped by with severely reduced majorities. The opposition Parti Islam SeMalaysia (Pas) not only retained control of Kelantan but wrested Trengganu from BN hands. In Kedah, Mahathir's home state, Pas made significant inroads, winning more parliamentary seats than BN. UMNO has traditionally claimed the mantle of the party for Malay Muslims. But now the rise of Pas is putting that claim, if not under threat, then certainly under pressure. These worries will affect the struggles for top leadership positions next year, when UMNO posts will come up for election. Already, internal campaigning has begun that will change the shape of the party in the coming years.

"UMNO is shell-shocked at the moment," says Abdul Razak Baginda, executive director of the Malaysian Strategic Research Center. "It has lost the trust and confidence of the Malays. It needs a total reformation and perhaps even restructuring." UMNO's election performance reflects not only on the party but on Mahathir himself. UMNO officials in Trengganu say that the cause of the party's defeat in the state was "federal issues" - a codeword for the "Anwar factor." The sacking and jailing of populist leader Anwar Ibrahim is widely seen as causing the split in the Malay vote. Malay anger was directed at Mahathir over the treatment of his erstwhile deputy - which Pas exploited by targeting the PM in its campaigns. Says Pas vice president Mustafa Ali: "To reject Mahathir was to reject UMNO and BN."

Now the pressure is on Mahathir. On the outside is the opposition alliance - including Pas, the pro-Anwar Parti Keadilan Nasional and the Democratic Action Party (DAP) - which continues to call for reform and change. On the inside are UMNO's Chinese coalition partners, to whom Mahathir is beholden as they delivered the Chinese vote that proved vital to BN's victory. The PM also has to deal with a variety of voices within his own party, including those disgruntled by UMNO's loss of influence and those who feel the party urgently needs to "rejuvenate" and "reinvent" itself. The pressure, says political scientist A.B. Shamsul, is for UMNO to "change substantially, actually reform." Yet there have been few suggestions on how exactly this should happen, and Shamsul doubts UMNO is capable of changing: "They don't know how."

Given the difficulty of balancing all the competing interests, it is perhaps not surprising that, as of Dec. 8, the PM still had not named his cabinet. Mahathir's position is clearly not as secure as before, but few observers foresee a direct challenge against his leadership in the party. One reason is that Mahathir is, well, Mahathir. An inside source notes: "We cannot replace Mahathir because he is the only one who can bring change. He has the moral courage and stature to make the changes. He has also won the election and has been vindicated and can be magnanimous in victory."

Another reason is that there is no other leader with enough backing in the party to go for the top post. "There is no one in sight at the moment," says the source. Some say the reason for Anwar's sacking was that he was planning to make a move for Mahathir's post. What subsequently happened to the former deputy PM will certainly act as a deterrent to any potential challenger.

There will be plenty of action, however, in the second and third tiers of leadership. The post of UMNO deputy president has been vacant ever since Anwar was expelled. Most observers see the current deputy prime minister, Abdullah Ahmad Badawi, as the likely sole candidate for the position. Abdullah headed the BN election machinery in Anwar's home state of Penang, which the coalition retained despite a huge wave of sympathy for Anwar. Abdullah is seen as a moderate, conciliatory figure who appeals to both non-Malays and conservative Muslims.

The only person with the stature to challenge Abdullah for the No.2 spot is Tengku Razaleigh Hamzah. The flamboyant former finance minister, however, failed in his task to reclaim his home state Kelantan from Pas, and many in UMNO consider him more-or-less out of the race. Still, there remains the possibility that the well-connected, well-funded prince will organize a challenge in the next six months.

In the race for the three vice presidents' posts, the main contender is Education Minister Najib Tun Razak, already one of the VPs. He was once considered a candidate for the deputy presidency, but his less-than-convincing election result - he won his seat by just 241 votes - means that he will settle for keeping his present post. The other challengers are Abdul Ghani Othman, chief minister of Johor state, which was swept clean by BN; Foreign Minister Syed Hamid Albar; and former Perak chief minister Ramli Ngah Talib.

Besides the internal politicking, Mahathir must address a more fundamental concern: which direction UMNO should take. If the party is to woo back the Malay-Muslim voters it lost to Pas, it clearly needs to present itself as an advocate of simple Islamic values, while shedding its image as an elitist party a#sociated with big business, money politics and vested interests. An UMNO worker's remarks on the election campaign in Trengganu are telling: "These Pas leaders, they come to every kampung [village]. They talk to everyone and have tea or meals with the people. Our UMNO leaders arrive in a Mercedes, tell everyone what they should do, eat by themselves in a special airconditioned room and drive off." Says political columnist James Wong Wing On: "It has been known for some time that the cla#s struggle - the lower cla#ses versus the upper cla#ses - is expressed through religious forms."

But there are forces pulling the party in the other direction. The increasingly a#sertive Chinese have expressed concern over UMNO "going Islamic." Gerakan, one of BN's Chinese components, recently said that it had clarified this point with Deputy PM Abdullah, who gave a#surances that UMNO would remain secular.

While it sorts out its future, UMNO is also looking for ways to stem the rise of Pas. It has been active with its negative campaigning, painting Pas as an anti-business party bent on imposing its conservative Islamic agenda on the country. The state-controlled press has played up statements from Pas leaders suggesting they might ban alcohol and gambling and impose an Islamic tax on non-Muslims.

DAP parliamentarian Tan Seng Giaw counters: "All the laws that prohibit Muslims from drinking and gambling, as well as the establishment of the International Islamic University, have been initiated by UMNO." Still, it is apparent the DAP is not entirely comfortable with Pas and its policies. Lim Kit Siang, who stepped down as DAP secretary-general on Dec. 2 to take responsibility for the party's poor performance in the elections, said in his resignation letter that the new political equation effected by the rise of Pas would pose a threat to a "democratic secular Malaysia."

Pas rejects such suggestions. Mustafa insists: "Islam is not here to take away the rights of the Chinese or other minorities. What has been provided for by the Constitution will be respected." The DAP has announced that it would monitor whether Pas really abides by its promise.

BN leaders point to such differences as evidence that the opposition will break up, but Pas maintains that it will not abandon its alliance partners. For his part, Tan thinks that Pas should temper its radical image: "If Pas can moderate the statements that are anathema to non-Muslims, then the opposition alliance can hold." And not only that. If, indeed, Pas is able to present itself under a more moderate light, it would give UMNO one more thing to worry about as it goes about its soul-searching. --------------------
Pas or Fail in Trengganu
The party gets a chance to prove itself By JONATHAN SPRAGUE and ARJUNA RANAWANA Kuala Trengganu

Pas is seeking to display its competence to govern as well as its Islamist roots
Edwin Tuyay for Asiaweek

"Do you think they will close the pubs?" asks the young Chinese woman tending bar in a Kuala Trengganu watering hole. They are the Parti Islam SeMalaysia (Pas). Since winning control of the Trengganu state government in the Nov. 30 elections, the Islamist party has vowed to "eradicate vice." The cozy pub does not look like a den of iniquity. Most of the customers are Chinese regulars here to have a beer, watch football on the satellite TV and play some darts. Women and kids are present as well, listening to the Canto-pop on the sound system. Pas insists that it does not want to shutter all pubs and places of entertainment, but wariness remains. "This is certainly the talk of the town," one drinker says.

Trengganu is where the future course of Malaysia will be set. Pas has governed neighboring Kelantan for 10 years, but that state is a quiet, resource-poor backwater. In Trengganu, Pas will run a state with 64% of Malaysia's proven oil reserves, substantial heavy and tourist industries, and controlling stakes in several listed companies. "We are sitting on a gold mine," says Syed Azman Syed Ahmad, a Pas member of Parliament. A political as well as an economic gold mine, because this is where Pas will be able to prove that it can manage a modern economy, balance the interests of various ethnic and religious communities, and become a credible alternative to Mahathir Mohamad's United Malays National Organization (UMNO) at the national level. Or this is the place where Pas will show that it can't.

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The state could be an ideal proving ground. About 95% of the population is Malay Muslim. It is a conservative region likely to be comfortable with Pas's puritanism - head scarves are common and short skirts are rare in the capital of Kuala Trengganu. The state's 5% cut of the estimated $3 billion in annual oil and gas production provides a steady stream of cash for investment. "If they do well, spend wisely, then we will find it very hard to recapture the state," says Wan Ahmad Farid Wan Salleh, an UMNO Youth leader in Trengganu. Pas has already carried through on campaign promises to abolish bridge tolls and residential property taxes.

And there is plenty to reform. Despite oil revenues, the state is Malaysia's second-poorest after Kelantan, and many of its oil and tourist industry facilities are in the hands of investors regarded as cronies of UMNO leaders. "Resources have not been managed properly, and money does not go into the right hands," says Pas vice president Mustafa Ali. Many of the state government's holdings are lackluster at best - what is believed to be its biggest investment, the Kuala Lumpur-owned steel maker Perwaja, is hemorrhaging money. Cleaning house, fighting for a greater share of oil revenues - the new state government is demanding 20% - and putting more contracts and business licenses into local hands will win Pas support.

But Pas stumbled slightly at the kick-off. The new state government said it plans to levy a tax on non-Muslims called kharaj. In Pas's eyes, it will simply balance a tithe, zakat, that Muslims pay. But zakat is a religious obligation that goes toward maintaining mosques and helping the poor, so non-Muslims, including the Chinese-based Democratic Action Party (DAP), Pas's allies in the recent polls, are crying foul. "Pas should seriously weigh the political costs of imposing kharaj at the expense of alienating the sensitivities of non-Muslim Malaysians," DAP national chairman Lim Kit Siang says. Pas's Syed Azman promises that any tax on non-Muslims will be imposed only with the approval of their community leaders, but that hasn't eliminated non-Malay suspicions.

Those suspicions will be difficult to ease. Pas has always made the imposition of strict Islamic law a core policy, and Trengganu's new chief minister, Abdul Hadi Awang, has a reputation as an ideologue - as a parliamentarian, he repeatedly tried to table a bill penalizing apostates with death. Stock-market investors are playing things safe by selling off shares in gaming and liquor companies. But the president of the Trengganu Chinese Chamber of Industry and Commerce, Low Kian Chuan, is keeping an open mind. "What we want is a progressive, efficient and transparent government," he says. "Pas must continue policies that will attract investment from other parts of the country as well as from overseas. If this is done, they will have no problems."

In Kuala Trengganu's small but bustling Chinatown, cans of beer still stand next to the soft drinks in grocery stores. But one shopowner says he plans to clear his beer stocks as soon as possible. "We don't want to get stuck with something we can't sell," he says. If that becomes the attitude of too many businesses, Pas could be in trouble. But if the new state government learns how to balance its Islamist ambitions with the needs of business, investors and non-Muslims, then it could be Mahathir and UMNO that is in trouble.