Signs of Stress; Why is former prime minister Mahathir Mohamad taking swipes at his successor? It may be because Malaysia's cozy consensus is beginning to unravel.

Byline: Joe Cochrane and Lorien Holland

Ungrateful" and "gutless." Those are some of the harsh words used by former Malaysian strongman Mahathir Mohamad to describe the government led by his successor, Prime Minister Abdullah Badawi. "I have helped many people [into power]," he told reporters, "only for them to stab me in the back." What prompted such wrath? Since taking office in 2003, Abdullah has abandoned a string of his former mentor's initiatives, including a planned bridge to Singapore and the special status of the national car program--moves that Abdullah backers see as an attempt to tackle Malaysia's deeply rooted crony capitalism. "A small crack has opened in the democratic space," says Anwar Ibrahim, a former Mahathir deputy who was purged and spent six years in prison before his release in 2004. "It should therefore come as no surprise that these shady deals are unraveling before our eyes."

What's also unraveling is the cozy consensus that Malaysia's ruling elite has struggled for decades to maintain. A factional struggle is developing over control of the ruling United National Malay Organization, or UMNO. On one side are Mahathir and his loyalists, who helped develop Malaysia with state-driven economic policies--manifest in the New Economic Plan (NEP), which favors the indigenous Malay population. On the other side is Abdullah and his political supporters, who want to battle corruption and modernize an economy that, even buoyed by oil, has been growing at a rather sluggish 5 percent annual rate over the past few years. They concede they have not kept up with the reform pledges made during the 2004 general elections but also insist they are not anti-Mahathir.

Meantime, Malaysia's vigorously cultivated reputation as harmonious melting pot is under considerable stress. Chinese and Indian minorities comprise some 45 percent of the Malaysian population, yet they remain shut out from the Malay-dominated political mainstream. From their perspective, the leadership struggle is merely about which faction will control the contracts, jobs and other perks earmarked for ethnic Malays under the NEP. Decades of institutionalized bias have embittered minorities, warns Malik Imtiaz Sarwar, a constitutional-law attorney. Racial polarization, he asserts, is at its "worst point" since the period just after the race riots of 1969.

Abdullah entered office by declaring himself "the prime minister for all Malaysians." But he's presided over a period of resurgent Malay nationalism, shot through with Islamic overtones. At a recent national meeting of Muslim preachers, participants roundly condemned pluralism and called for a government review of a policy that encourages citizens to attend the festivals of other religious and ethnic groups. "There's the misperception that this is the land of moderate Islam," says Aloysius Mowe, a Kuala Lumpur-based Islamic scholar. In May, Muslim mobs broke up a forum being held on Penang Island to discuss religious pluralism and constitutional protection for minority religious rights. Forum organizers said the message was clear: attempts to equate other religions with Islam in Malaysia will be met with violence. Malay politicians routinely make veiled references to a possible reprise of rioting if minority parties are perceived to be gaining too much strength.

The NEP, which was put in place following the 1969 riots, lifted millions of Malays out of poverty and helped create an urban Malay middle class. But NEP critics say the program has since become a mere political tool for UMNO--opening the door for bribes and ...