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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

GETTING HOTTER

Page 2


EVEN THOSE STAYING INDOORS were not immune to the events outside. As police continued their crackdown deep into the night, they entered neighborhood homes in search of agitators. Noriha Jafaar, 26, was having dinner at home with her housemates and their fiancés when they heard the commotion near the mosque. "We asked the boys not to leave until the incident ended," she says. After the three men in the house went outside anyway and then returned, the police showed up and tried to break down the door. "They threatened us with pistols," claims Noriha. The men were dragged out and given a harsh beating. "I pleaded with them that we had nothing to do with this reform movement," says Noriha. That didn't dissuade the intruders from breaking the windows and trashing the house. In the morning, Noriha and her housemates lodged a complaint at the local police station; other residents also complained of police heavy-handedness. "It seemed as if the police were deliberately provoking the people," says one.

The violence died down at around 2 a.m. About 260 people were arrested (76 were later released without being charged). Two policemen were injured, as were many more protesters, including at least 16 who were hospitalized with severe head wounds. The incident was Malaysia's worst outbreak of violence in recent memory - certainly the worst since Anwar's arrest.

Reactions to Saturday's events were predictably divided. The government-controlled press was full of articles decrying the protesters' violent behavior, while those sympathetic to the reformasi cause were quick to point the finger the other way. On Oct. 27, the broad opposition alliance Gerak held a large rally outside Kuala Lumpur where leaders slammed the police action and the local media.

Prime Minister Mahathir Mohamad, who has labeled the political unrest so far as an attempt to impose "mob rule," was characteristically unrepentant. "The groups calling themselves reformists seeking to uphold justice are the ones breaking the law," he told reporters on Oct. 25. "Don't blame the government if children are burnt during rioting. The authorities have discovered Molotov cocktails and kerosene at the scene." Mahathir has also hit back at allegations that the police provoked the protesters. "Obviously they wanted to be provoked so they can have an excuse to retaliate against the police," he said. As to charges of police brutality against women and children, he accused the demonstrators of using children as "shields." The police warned people against bringing kids to future rallies, threatening to take away such children to protect them from their parents.

The Saturday violence comes at a sensitive time for Mahathir. First, there is Anwar's closely watched trial for corruption, due to start Nov. 2. Then there is Malaysia's economic situation, which is entering a vital phase now that Mahathir has unveiled the budget - his first since replacing Anwar as finance minister.

With tax waivers, increases in government spending and other reflationary measures, the 1999 budget displays the hallmarks of Mahathir's expansionary economic approach - and thus marks a turnaround from the tight fiscal policies favored by Anwar and the International Monetary Fund. (Some observers were surprised the budget did not go as far as they had expected. "One would have thought they would go for massive reflation and pump-priming, but what they are doing is fairly moderate," says Manu Bhaskaran of SG Securities Asia.) Coupled with capital controls introduced in September, the new measures would enable the economy to grow by 1% in 1999 after a contraction this year.

Or so goes government thinking. Many financial analysts agree that the budget will likely raise public confidence and provide relief for banks and businesses, but the jury is out as to whether it will ultimately resuscitate the economy. The government's injection of funds into the economy means it will run into a deficit of about $4.36 billion; state planners say they have sufficient money to cover the deficit, but no specific source has been mentioned. A report by Kuala Lumpur-based Smith Zain Securities states that the measures "will arrest the downward spiral of the economy," but it adds that "a mild recession is still expected in 1999."

The key to the success of the budget lies in foreign investments. Most analysts say an injection of external capital is required to truly push Malaysia out of the dumps. At the moment, not only is the political crisis putting a damper on consumer spending, it is also keeping tourists and foreign investors at bay. The tourism industry, already straining under an oversupply of hotel rooms, has been hit hard by the unrest; according to some estimates, arrivals in Malaysia have dropped about 25% since the demonstrations started. Says an ethnic Indian businessman: "The budget measures are business-friendly. But the most important thing is to solve the political problems."

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