Mahathirism goes to Yemen

I am using the same title as did Din Merican for this article. The similarities end there as the intent of this article differs.

The man who can walk on water has been invited to Yemen. Yemen wants to learn the secrets of unlocking value from Dr Mahathir. It has been described as Mahathirism goes to Yemen.  I can only offer sympathies to those who are jumping up and down joyfully thinking Yemen will be saved.

Mahathir will find himself like fish out of water. If the man leading Yemen has similar characteristics like Mahathir, then Yemen stands a chance. If it has oil, minerals, oil palm, rubber- then Mahathir can apply his magic. Mahathir can function iff ( the economist’s way of saying if and only if)  there are two preconditions- a political system where power is concentrated in the hands of a few. If it is in the hands of one man, the better. The other precondition is- Yemen must rid itself of any romance with organic growth of its indigenous people. Mahathir works best if the system allows for cronyism.

Yemen is one of the poorest and least developed countries in the Arab World. It has very small oil reserves and depends heavily on the oil it produces. Its government receives the vast majority of its revenue from oil taxes. Here is where Dr Mahathir can probably work his magic best. Mahathir has direct experience with what to do with oil revenues having 'managed' PETRONAS directly. Under him PETRONAS has bought over MISC, bailed out Mirzan’s business and saved a bank.  Needless to say, he will advise the Yemeni leader of similar strategies.

But when the oil reserves are depleted by 2017, things will be different. It would possibly lead to economic collapse.  It can probably save itself by depending on the large proven reserves of natural gas.  Yemen's first liquefied natural gas (LNG) plant began production in October 2009. Maybe Mahathir can use his Japanese connections to secure enlarged markets for Yemeni oil.

But there’s a another aspect of Yemeni life which Mahathir is perhaps the most qualified to advise. How to humanize rampant corruption. How to disguise it to make corruption looks like a favour to the Yemeni people.

Will Mahathir advise the Yemeni government to debunk the economic programs set up by his bête noir, the IMF?  The Yemeni government made an agreement with the International Monetary Fund (IMF) to implement a structural adjustment program. Phase one of the program included major financial and monetary reforms, including floating the currency, reducing the budget deficit, and cutting subsidies. Phase two will address structural issues such as civil service reform.

As early as 1995, the government of Yemen launched its own version of ETP. In Yemen it’s called EFARP (Economic, Financial, and Administrative Reform Program). It was designed by the World Bank and the IMF, as well as international donors. The poorest of the Arab country had its own ETP as far back as in 1995. Here, the much ballyhooed ETP was launched by Najib and he has made it looked like we owe him the world.

In 1997, IMF and the Yemeni government began medium-term economic reform programs under the Enhanced Structural Adjustment Facility (ESAF) and Extended Fund Facility (EFF). This program aimed to reduce dependence on the oil sector and to establish a market environment for real non-oil GDP growth and investment in the non-oil sector. Increasing the growth rate in the non-oil sector was one of the government's most important objectives. Programs also focused on reducing unemployment, strengthening the social safety net, and increasing financial stability.

To achieve these reforms, the government and IMF implemented containment of government wages, improvements in revenue collection with the introduction of reforms in tax administration, and a sharp reduction in subsidies bills through increased prices on subsidized goods. As a result, the fiscal cash deficit was reduced from 16% of GDP in 1994 to 0.9% in 1997.

So Mahathir goes to Yemen, he will see what Najib is trying to do, is something copied from the poorest of Arab countries. Here, the ETP, the GTP and a mélange of acronyms were hailed as some sort of godsend and Najib the copycat, in turn hailed as the new messiah.

To understand what it is that Mahathir wants to bring to Yemen, we must understand what Mahathirism is. It’s the application of Mahathir’s thinking on matters of state. What it is, only Mahathir knows and unless he has also confided in God, then God also knows.

But we can identify its main tenets. Applied to politics it’s the concentration of power in the hands of a few people. When UMNO 1946 was made illegal, Mahathir found himself without a party. He ceased also to become chairman of BN. so how can a man, during that interlude still remain a PM without a political party? In the history of politics only an outright dictator does not require a political party to become head of state. Or the Monarch in a Monarchy.

Mahathir found his elixir for political longevity when UMNO 46 was declared illegal.  The illegality of UMNO 46, gave Mahathir new lessons on how to run the country. He didn’t want to use any legal provisions available or any prerogative available to revive the old UMNO. Because to do so would result in a reelection which could very well see him forced into retirement.

What he learnt from the episode was that he could rule without being fettered by the niceties of democratic tenets. That brief interlude during which Mahathir was without a political party taught Mahathir that he could become a dictator in a totalitarian state. He then sets out to carve out the new politics of Malaysia that has become known as Mahathirism- totalitarianism disguised behind the masks of democracy.

Ling Liong Sik was asked to chair that meeting to reinstate Mahathir as chairman of Barisan Nasional, so that Mahathir could still become PM. You see, Mahathir wasn’t interested in UMNO. After Ling Liong Sik, his lapdog did what he was told; Mahathir formed a new pliant party full of half past six fellows in a new UMNO. That new UMNO became a tool serving to legitimize Mahathir’s vision.

Applied to economics, its cronyism. The parceling out of revenue earning assets and licenses to the select few. These few will serve as the umbrellas beneath with lesser mortals seek succor.

When Mahathir took over Malaysia it signaled the end of organic growth of Malay economics. Mahathir doesn’t believe in organic growth- he wants everything fast. He wants to jump-start. He wants to bypass. So, in came a few advisors among them was of course the wily Daim Zainudin who came up with the idea of selecting winners. Organic growth is too slow to achieve the targets of the NEP.

The 30% quota and requirements were quickly replaced by the Mahathirnomics strategy of blitzkrieging the economy. This was done by choosing a few running dogs to spearhead the Malay economy. Out goes the 30% organic growth method- in came the closed tender system, the direct negotiations style and other forms of piratization of the Malaysian economy by some selected buccaneers.

So what is Mahathirism? It was the Mahathir way to (1) destroy a legitimate democratic political party and ( 2) the economics of cronyism- privatization of profits and sharing the costs with the public.

So good luck to the Yemeni government.