The great showdown between the Malaysian Prime Minister Mahathir Mohamad and the financier George Soros got even more personal yesterday when the American-based financier described Dr Mahathir as a "menace to his country."
The previous day the Malaysian Prime Minister said that international fund managers, like Mr Soros, engaged in currency speculation were "unscrupulous profiteers" involved in an "unnecessary, unproductive and immoral" trade.
He called for currency trading to be banned. "It should be made illegal," he declared. Mr Soros described this suggestion as being "so inappropriate that it does not deserve serious consideration". He added: "Interfering with the converting of capital at a moment like this is a recipe for disaster."
According to Mr Soros the idea is so barmy that it is unlikely ever to become Malaysian government policy. Malaysian officials who are clearly embarrassed over this row gave some credence to Mr Soros's position by suggesting that their Prime Minister had been misquoted in a newspaper article when he said that Malaysia itself would ban foreign currency trading.
Dr Mahathir had previously described Mr Soros as a "moron" and accused him and other fund managers of deliberately creating the crisis that wrought havoc in South-east Asia's currency and stock markets. Both men have been speaking in Hong Kong at seminars held before the annual World Bank/International Monetary Fund meetings which, this year, have been dominated by the Asian financial markets' turmoil in general, and the epic feud between Dr Mahathir and Mr Soros in particular.
"I have been subjected to all kinds of false and vile accusations by Dr Mahathir," said Mr Soros, "He is using me as a scapegoat to cover up his own failure." Twisting the knife even further, he alleged the Malaysian PM "couldn't get away with it if he and his ideas were subject to the discipline of independent media inside Malaysia".
Behind the knockabout between the two men is a serious debate about the extent to which international capital should be allowed to influence the domestic financial markets of developing countries.
Mr Soros yesterday made a thoughtful contribution to the debate, arguing against the notion of a fully laissez faire market system: "I consider it a dangerous idea. The instability of financial markets can cause serious economic and social dislocations."
He argued that if markets were left to their own devices they would "over- react and behave in an indiscriminate fashion". International capital was "notoriously fickle" and the best way to achieve stability "is to mobilise domestic savings for domestic capital formation efficiently".
Dr Mahathir appears to be convinced that "a few people who are in the media and in control of the big money seem to want to see these South- east Asian countries and in particular Malaysia stop trying to catch up with their superiors and to know their place".
He stopped just short of calling this a conspiracy but said these people "have their own agenda which they are determined to carry out".
Specifically Dr Mahathir has accused the funds controlled by Mr Soros of selling the Malaysian currency, alongside other fund managers who are alleged to have deliberately caused the sell-off on the stock market which keeps plunging to new lows.
Mr Soros said that the accusations about his funds "have no basis in fact". On the contrary, he said, his company had sold the Malaysian currency for two months prior to the crisis and was a buyer afterwards, although it did not take big enough positions to affect the market.
Alongside the battle of responsibility for the Asian financial crisis, Dr Mahathir and Mr Soros are engaged in another festering dispute over the Malaysian leader's advocacy of "Asian values" which Mr Soros dismissed as a convenient pretext for resisting democratic aspirations.
Dr Mahathir believes Western countries are trying to impose their ideological and political agenda on the Asian countries. These controversies have injected a sense of excitement into the often soporific proceedings of the World Bank/IMF meetings.
The talk in Hong Kong last night was whether that excitement would spill over into Malaysia's financial markets when they open today.
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