Just a fortnight before he was due to retire, Malaysia’s Prime Minister Mahathir Mohamad triggered an international furore over anti-Semitic remarks made to the triennial gathering of the Organisation of Islamic Conference (OIC). The episode was symptomatic not just of Mahathir’s racialist outlook but the rising anger in Muslim countries at the murderous actions of Washington and its close ally, Israel.

As leader of the host country, Mahathir delivered a lengthy opening speech on October 16 devoted, in the main, to castigating Muslims for their lack of unity and opposing Islamic fundamentalism. In the course of arguing that Muslims had to “use their brains” and not react emotionally, he declared: “The Europeans killed six million Jews out of 12 million. But today the Jews rule this world by proxy. They get others to fight and die for them.”

His remark that “Jews rule this world” recalls the anti-Semitic conspiracy theories propagated by the Nazis that were used to justify the slaughter of millions of Jews in concentration camps during World War II. His outburst was racist to the core: “Europeans” as a whole were no more responsible for the holocaust than “Jews” as a whole are responsible for Zionism, the Israeli regime’s repression of the Palestinians or the militarist agenda of the Bush administration.

Mahathir’s unabashed anti-Semitism was no slip of the tongue. It was consciously aimed at appealing to the millions throughout Malaysia and South East Asia who are outraged at the Bush administration’s “war on terror” and the assassinations, reprisals and terror carried out against Palestinian civilians by the Israeli regime. The remarks were an attempt to shore up his credentials as “a defender of Muslims” against criticisms—and political inroads—being made by more extreme Islamists.

Not only did Mahathir make the comment, he has defended it publicly for the last two weeks. During the APEC summit in Thailand, he told the Bangkok Post on October 21 that the backlash in Europe and the US against his remarks “shows” that Jews control the world. The following day he lashed out at the “great exponents of democracy” for “terrorising the world”—a reference not only to Israel but to the methods being used by the US military to suppress opposition to its illegal occupation of Iraq.

Earlier this week, the US Senate registered its disapproval by tying $1.2 million in military aid to Malaysia to a State Department review of the country’s attitude to religious freedom, particularly of Jews. Far from backing off, however, Mahathir further exacerbated the controversy by insisting, contrary to the White House, that Bush had not privately rebuked him at the ASEAN summit for his remarks.

A communalist politician

That Mahathir’s world outlook is shaped in communalist and racial terms is not surprising. His entire political career has been based on populist and nationalist appeals to the Muslim Malay majority. He took over as prime minister in 1981, espousing policies that further entrenched a pro-Malay bias in university entrance, business and the public sector at the expense of the country’s substantial ethnic Chinese and Indian minorities.

Confronted with international criticism of his own appalling record on democratic rights, Mahathir has never hesitated to hit back, pointing to the hypocrisy of the Western powers and their own dirty crimes. Australia has been singled out for special mention, with Mahathir highlighting the country’s treatment of Aborigines and its racist immigration policies.

But for all his anti-Western rhetoric and populism, Mahathir is a rightwing autocrat whose policies have served to benefit a narrow and privileged layer of the Malay middle class. In order to bolster his party’s social base among the poor urban and rural Malays, he has used crude nationalist rhetoric.

Writing in the New York Times on the latest controversy, economic commentator Paul Krugman noted that the last time Mahathir railed against Westerners and Jews was during the 1997-98 Asian economic crisis. Under pressure from the US and the IMF to restructure the Malaysian economy and impose austerity programs, the prime minister denounced Western speculators, referred to the Jewish background of George Soros, and implemented currency and capital controls.

“What became clear watching Mahathir back then was that his strident rhetoric was actually part of a delicate balancing act aimed at domestic politics,” Krugman commented. “Malaysia has a Muslim, ethnically Malay, majority, but its business drive comes mainly from an ethnic Chinese minority. To keep the economy growing, Mahathir must allow the Chinese minority to prosper, but to ward off ethnic tensions he must throw favors, real and rhetorical, to the Malays.

“Part of that balancing act involves reserving good jobs for Malay workers and giving special business opportunities to Malay entrepreneurs. One reason Mahathir was so adamantly against IMF austerity plans was that he feared that they would disrupt the carefully managed cronyism that holds his system together. When times are tough, Mahathir also throws the Muslim majority rhetorical red meat.”

Over the last five years, Mahathir’s balancing act has become even more precarious. There has been growing opposition, including within his ruling United Malays National Organisation (UMNO), from those who regard his regime’s cronyism and corruption as a barrier to their own economic interests. In 1998, his deputy Anwar Ibrahim opposed the imposition of currency and capital controls and advocated the IMF’s restructuring program.

Mahathir expelled Anwar from UMNO, along with his supporters, and denounced him as being an agent of foreign interests. When Anwar began an anti-government campaign, he was detained under the country’s notorious Internal Security Act (ISA) and then tried on trumped-up charges of corruption and sexual misconduct, aimed at destroying his political reputation.

But the campaign against Anwar rebounded on Mahathir, resulting in electoral gains for the opposition parties. In the 1999 elections, the Islamic fundamentalist group Parti Islam se-Malaysia (PAS) made further inroads into UMNO’s base of support among rural Malays in the economically backward northeastern states. Mahathir responded by cracking down on opposition activists, a number of whom were detained indefinitely without trial under the ISA.

In many ways, Bush’s “global war on terrorism” following the September 11 attacks on the US proved a political boon to Mahathir. It enabled him to justify the detention of opposition activists as “suspected terrorists” and to smear PAS with the same label. Moreover, all criticism from Washington concerning Malaysia’s anti-democratic practices abruptly halted, as the Bush administration implemented measures that made Malaysia’s security laws seem tame by comparison. Mahathir tacitly supported the US invasions of Afghanistan and Iraq, cooperated with US intelligence and was duly feted by the White House as a reliable ally.

At the same time, however, Mahathir and UMNO risked being undermined by rising mass hostility to US aggression in the Middle East and to its unstinting support for the measures of the Sharon regime. Moreover, while Malaysia’s economy strengthened following the Asian financial crisis, many Malaysians still face economic hardship and blame the US and IMF for the free market policies implemented throughout the region.

If Mahathir is particularly sensitive at present, it is because he is about to formally hand the reins of power to his deputy, Abdullah Badawi. One of the consequences of Mahathir’s autocratic methods of rule is that he has removed from positions of power anyone with any degree of independence, who might have posed a threat to his domination. Badawi, who was inserted as deputy after Anwar was ousted, is a colourless yes-man whose ability to hold UMNO and the ruling Barisan Nasional coalition together is completely untested.

Mahathir’s racist rhetoric over the last two weeks is an indication that he intends to play a major role as senior statesman, even in formal retirement. More fundamentally, however, it is a sign that the Bush administration’s “war on terrorism” and its unstinting support for Israel’s atrocities are unleashing social forces that loyal political allies like Mahathir are finding increasingly difficult to control.