Malay leader turns on the West

MALAYSIA'S RULING party launched a fierce attack on foreigners yesterday as the source of the country's economic collapse.

Mohamad Mahathir, the combative Prime Minister who has made a name for his fierce attacks on foreign currency speculators, did not speak at the opening session.

It was left to his deputy and finance minister, Anwar Ibrahim, to tell the the 2,000 delegates that "attacks of outsiders" were the reason why the Malaysian ringgit had slumped in value. "Our currency has slid because of attacks from foreign currency speculators," he said.

Mr Anwar, dressed in a traditional Malay shirt and songkok cap, said that Malaysia confronted its most critical test since independence from Britain in 1957. In a ringing endorsement of Mr Mahathir, he called on the party to "unite as one front under our leadership headed by our Prime Minister".

Mr Anwar at one point was reported to have had differences with Mr Mahathir. There was no sign of that yesterday. "If there are foreign media or outsiders who try to create conflict among our leaders, let us not be influenced," he said.

Echoing Mr Mahathir, Mr Anwar said that foreign currency speculators were to blame for 35 per cent devaluation of the ringgit since the Asian currency crisis began in Thailand last July.

The call to rally round Mr Mahathir's leadership was given concrete expression with moves to forbid any contest for the party's top two positions. If the motion passes, it will shield Mr Mahathir and Mr Anwar even further from criticism. In defence of the motion, party officials said that a political battle for the party leadership would only make the unstable economic position even worse. The next poll was scheduled for 1999.

Mr Mahathir earlier said he did not want a no-contest motion. In an interview with the Far Eastern Economic Review, published yesterday, he said: "If anyone wants to challenge me, he can ... but I don't think anyone will."

In a rare sign of dissent, a party youth leader at the congress ignored the injunctions against controversies and criticised corruption, nepotism and cronyism. "Nepotism will bring Malaysia to its knees," Ahmad Zahid Hamidi, head of the party's youth wing, said.

Malaysia's economy shrank by 1.8 per cent in the first quarter of 1998, compared with 6.9 per cent growth last year. The economic downturn is expected to result in massive job losses. In Washington, the World Bank yesterday was expected to approve a $300m (pounds 181m) loan to help stimulate the economy.