Prime Minister Goh Chok Tong warned yesterday that Malaysia's model, if followed by the rest of Asia, could trigger U.S. protectionism and a collapse of interregional trade. Mahathir's position, of course, is that with or without formal protectionism, Malaysia's economy has already been smashed, and there is little hope in looking for salvation in trade with the United States. Punctuating this exchange on economic theory, Malaysia banned overflights by Singapore aircraft, disputes over minor border issues have begun to flare again, and Malaysia has threatened to ban exports by Malaysian companies through the port of Singapore. Thus, Malaysia's internal political argument has important international ramifications. So while Australia condemns Mahathir's suppression of Anwar and Singapore warns of dire consequences, the Japanese are lending him money.
Nothing is decided in Malaysia.
The Central Bank moves back and forth on regulations and the situation is fluid. Our sense, however, is that Mahathir will carry the day both because of his entrenched power and because his economic policies promise, albeit only in the short run, some relief from economic pressure. Asianists and Internationalists, those looking to the West for answers and those arguing that answers are national and regional. This debate, of course, takes place on the Straits of Malacca, one of the most strategic waterways of the world. Should the debate adjourn from the theoretical and political, it would have extraordinarily important consequences for nations outside the region.