How sworn enemies toppled Najib but pose a new risk to Malaysia

(Bloomberg) – But already there’s fresh friction between the two, and Mahathir has been coy when asked when he’d make good on his promise to step aside.

A courtroom handshake between sworn enemies in September 2016 may have sealed the fate of Malaysia’s ousted premier Najib Razak.

The rapprochement between Mahathir Mohamad and Anwar Ibrahim led to an alliance between their parties and a shock election win last week, sweeping away a coalition in power for six decades.

Now the fledgling government faces a big early test of its durability, with Anwar expected to be released from jail this week.

Mahathir, reinstalled as prime minister after a prior stint that lasted 22 years, said before the election he would hand power to Anwar once he was pardoned for a sodomy conviction. But already there’s fresh friction between the two, and Mahathir has been coy when asked when he’d make good on his promise to step aside.

“We are following through on our promise to get a pardon for Anwar, but the process and procedure will be followed and there might be slight delays,” Mahathir, 92, told reporters on Monday. Anwar’s party said the Pardons Board committee would meet Wednesday.

At stake is the ability of the government to execute quickly on campaign promises to scrap an unpopular goods and services tax, review big-ticket infrastructure projects and cut spending. While economic growth is solid and markets recovered Monday from an initial slump on the election outcome, any cracks in the ruling coalition — and the potential for a power struggle — would raise doubts about the ability of the administration to deliver.

“The lack of a fixed timetable to pass on the baton to Anwar is a key source of political risk,” said Hugo Brennan, a Jakarta-based senior Asia analyst at risk consultancy Verisk Maplecroft. “There is likely to be a deal of early goodwill between the pair, given the historic nature of the election outcome. The question is to what extent this can be maintained over the longer term.”

Lawmaker Nik Nazmi Nik Ahmad, the youth leader of Anwar’s People’s Justice Party, or PKR, said in an interview Tuesday the ruling coalition did not expect Anwar, 70, to take over as prime minister for several months.

“Naming the time period now when Tun has just been appointed would be a bit disrespectful to Tun,” Nik Nazmi said, using an honorific for Mahathir. ”So as far as Anwar has said personally to Tun, as well, is that Tun will be given the time to run this government and from that later on once things stabilize then we will talk about the transition from Tun to Anwar,” he said.

“The focus will be on his release and probably he will take some time off and give Tun the focus to run the country and then we’ll talk about time.”

Mahathir’s decision to show up when Anwar appeared in court in 2016 marked the public start of their thaw. But decades of bitterness lingers, stemming from Mahathir’s decision to sack Anwar as his deputy in 1998 amid a dispute on how best to respond to the Asian financial crisis.

After he was fired, Anwar was jailed in the majority Muslim nation for committing sodomy and abusing power, charges he denied. He is currently in jail on a subsequent sodomy conviction and would require the royal pardon to bypass a five-year ban on re-entering politics.

“The belief that I dismissed him because I was afraid he would oust me is without basis. I dismissed him for two reasons only: he was unsuitable to continue serving in the government and he was unsuitable to succeed me as prime minister,” Mahathir said of Anwar in his book “A Doctor in the House.” He added: “I may have made many mistakes, but removing Anwar was not one of them.”

Mahathir also said in September 2005 that he could not “have a person who is like that in my cabinet who may succeed and become the prime minister. Imagine having a gay prime minister. Nobody would be safe.”

Anwar meanwhile, once accused his former mentor of “orchestrating” a “Gestapo-style” smear campaign to destroy his political career. “To use the sodomy and sexual perversion in order to appeal to the conscience and sentiments of the rural masses, particularly the conservative Muslims, is clearly pathetic,” he said in a 2012 interview.

Asked about a timeline for handing power to Anwar, Mahathir said last week that the process could take “a long time”.

“Before he can join the cabinet, he will have to be a member of parliament first,” he told reporters. “Whether he will immediately join the cabinet or not will be decided when the time comes.”

There are other signs of tensions. Anwar’s wife Wan Azizah Wan Ismail, who is deputy prime minister and also president of the People’s Justice Party, or PKR, was notably absent from Mahathir’s announcement on Saturday of his initial cabinet picks. PKR’s leader later said Mahathir would need Anwar’s approval for the appointments.

Anwar met with Mahathir on Saturday night and said in an emailed statement that he expressed concern about the need for discussions to be more inclusive. Still, “I reiterated the support of the People’s Justice Party for the leadership of Dr Mahathir,” he added.

Najib last month referred to Mahathir’s coalition as a “motley collection of parties” that he said would struggle to remain united. Prior versions of that alliance — before Mahathir joined — collapsed in acrimony over ideology, and at times parties competed against each other for votes in the same districts.

The current four-party Pakatan Harapan grouping includes one mostly representing ethnic Malays, and one representing Chinese.

Investors will also be watching if Mahathir and Anwar bicker over policies, given differences in the past. Anwar had favoured austerity measures during the Asian crisis and higher interest rates, in line with the International Monetary Fund’s prescription for some neighbours. He also called for a repeal of the race-based affirmative action policies that favour ethnic Malays, arguing economic aid should be given based on need.

“It remains to be seen what role Mahathir will play, after the intended leadership transition to Anwar takes place,” said Lawrence Loh, an associate professor at the National University of Singapore. “Given the strong personalities and even differing ideologies of the duo, the political field will have to be treaded carefully to sustain the harmony.”