KUALA LUMPUR, July 6 — Opposition leader Datuk Seri Anwar Ibrahim faces another gruelling trial for sodomy starting on Wednesday that could break his career and which also risks deepening political divisions in this Southeast Asian nation.
In 1998 at the height of the Asian financial crisis, Anwar, then deputy prime minister and heir apparent to Prime Minister Tun Dr Mahathir Mohamad, was accused of sodomy and corruption, sacked, tried and eventually sentenced to a total of 14 years in jail.
Today, the world is mired in an economic crisis. Malaysia is burdened with its biggest budget deficit in 22 years, its first major recession since 1998 and a government that has still not come to terms with big losses in the 2008 general election.
Anwar insists the trial is politically motivated and told Reuters he would not roll over.
It comes at a crucial time for Malaysia as new Prime Minister Datuk Seri Najib Razak, branded a hardliner by the opposition, attempts to introduce reforms in this developing country of 27 million people whose export-driven growth model has run out of gas.
"The trial will be bad for Malaysia and seriously discredit Najib," said Bridget Welsh, a Malaysia expert at Johns Hopkins University.
"He will be compared to Mahathir and be seen as a weaker version of an autocrat for having to resort to this sort of measure early on to weaken a challenger."
Anwar's marathon trials in the late 1990s lasted 14 months and saw witnesses change testimony, contradictory medical evidence and bizarre scenes, including a semen-stained mattress paraded in court and a witch doctor casting spells outside.
The new trial is scheduled to start on Wednesday.
Conviction or a trial that exposes the weaknesses of Malaysia's judiciary to international scrutiny once more may put Malaysia in a harsh light.
"One thing must be made clear, it is my opinion that what we are doing to Anwar Ibrahim is starkly similar to what is happening to (Myanmar's) Aung San Suu Kyi," former Bar Council chairman Datuk Ambiga Sreenevasan said in a recent lecture.
"I ask, show me the difference between the two. I ask, how can we condemn the latter and do the former."
It is not just criminal courts that are under scrutiny, rule of law is a key concern for many investors. According to a World Bank survey, Malaysia ranks 63rd of 178 economies in enforcing contracts, a great deal lower than its 24th rank overall.
The Barisan Nasional (BN) coalition that has ruled Malaysia for 51 years since independence from Britain lost its iron-clad two thirds majority in Parliament in the 2008 elections and saw the opposition end up in control of five states.
Since then, it has lost three parliamentary by-elections, including one that saw Anwar returned to Parliament.
While most political analysts say that it will be hard for Anwar and the opposition to win power in elections that must be held by 2013, the opposition does look as if it is in a position to make further inroads into the Barisan Nasional's majority.
But without Anwar, holding together the opposition rainbow Pakatan Rakyat coalition of reformers, Islamists and the mainly ethnic Chinese DAP could be hard.
If found guilty, Anwar could be jailed for 20 years, effectively ending the career of the one opposition politician who has held senior government office and who is the glue that holds the disparate bloc together.
The PAS recently appeared to signal it was again open for talks with Umno, although it later backtracked.
"If you remove Anwar, who seems to be only person who can bring PAS and the DAP together in an alliance, then I think the chances of them destabilising Pakatan Rakyat increases appreciably," said Terence Gomez, professor at the University of Malaya economics and administration facility.
Malaysia has long since lost its status as a favoured destination for foreign direct investment (FDI) to the likes of neighbouring Thailand, which overtook it in 2001 as a recipient of foreign FDI, according to UN data.
Since the BN coalition lost its two-thirds parliamentary majority in March 2008, which coincided with the global financial crisis, foreign investors have fled Malaysia.
Investment flows have dried up and the country has been overtaken by neighbouring Thailand in terms of direct investment since 2001 and portfolio flows turned negative to the tune of RM92.3 billion in 2008.
In the first quarter of 2009 they remained negative to the tune of RM12.2 billion, even as investment in other emerging Asian economies has recovered. Malaysia's stock market has risen 20 per cent this year, underperforming a 30 per cent rise in Asian markets excluding Japan.
"Of course, once the headlines of his trial come to the fore, foreign investor attention might be focused on this again, and it would probably have some marginal negative impact on sentiment," said an economist at an investment bank who declined to be named.
The loss of confidence in the governing 13-party coalition, headed by Umno, saw lacklustre premier Tun Abdullah Ahmad Badawi replaced with Najib who took office in April promising reforms and to clean up politics.
Najib has last week announced a surprisingly strong set of reforms, rolling back much of the affirmative action for ethnic Malays that the country is founded on.
Given Malaysia's poor fiscal situation, its budget deficit will hit a 22-year high of 7.6 per cent of gross domestic product this year, Najib has little room for manoeuvre.
The government depends on oil giant Petronas for 45 per cent of its money. At a time of low oil prices, that is a big risk.
"Najib will not have the tools of expenditure and public spending that helped Mahathir win over support post-1998," said Welsh from Johns Hopkins.
"A trial like this will spook investors who are already wary. The economic drive that Najib is pushing to gain legitimacy will be undermined." — Reuters
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Wholeheartedly agreed! There is no prima facie in this case at all. All the medical reports showed no sign of an intrusion, much less to say it was done by Anwar. This hearing is smack of injustice and a waste of tax payers' money.