But he could not be blamed for many of the ills that he inherited from the forceful Dr Mahathir and he has certainly moved to free up the media and political debate, in general, and while the economy has stalled that is more a reflection of the world situation than any particular mismanagement at home.

The new prime minister might have weathered the storm were it not for the constant carping of Mahathir in the background and the re-emergence of Mahathir's old nemesis Anwar Ibrahim. Anwar, a bright, articulate Muslim activist, started his rise in UMNO when he led the organisation's youth wing with an ideological approach which today would be seen as fundamentalist. Rising to the post of finance minister and deputy prime minister he was once seen by Mahathir as his successor.

Perhaps it was because he became too overtly ambitious or perhaps it was because the two men had genuine differences in policy matters – Anwar advocated IMF assistance with the Malaysian economy in the great Asian crash of 10 years ago and Mahathir did not; Mahathir was anti-western and Anwar was seen as pro-western. In any event, Mahathir elected to see off his rival by fair means or foul. In the event he chose foul and Anwar ended up serving a lengthy jail term for allegedly sodomising his driver. The evidence was deeply questionable and the corrupt court case which put Anwar behind bars came to symbolise all that was wrong about the Mahathir era – the corruption of the high standards in the civil service, police and military, not to mention the rapaciousness of the politicians.

As a result of his conviction and jail time Anwar was banned from participation in politics until April of this year. There was, therefore, a clear government determination to prevent him from participating in the general elections which they decided to hold in March. But even without the power of Anwar campaigning full time – he has been informally advising the opposition coalition – UMNO lost its two-thirds majority hold on the parliament and the opposition coalition won control of five of the country's 13 states, including the areas of its greatest economic strength.

Perhaps it was his bold prediction that the opposition would topple the coalition government through a series of defections from the government that reignited the spite of Anwar's enemies but soon he found himself facing new accusations of sodomising a former employee. Medical tests soon proved that the allegations were demonstrably false. That came as no surprise to most observers of the Malaysian political scene but what was hard to fathom was the establishment's belief that they could hoodwink the populace with the same tired accusation and their profound cynicism in yet another attempt to debase the political currency.

The government-backed media have worked hard to undermine Anwar's determination to create a broad-based coalition, a kind of rainbow coalition of the races on which to build the country's political future portraying him, at various times, as being pro-American, sympathetic to the Chinese-Malaysians, and therefore likely to help promote unrest along the lines of the 1969 race riots but also, bizarrely, of betraying the Muslim cause. All this in an attempt to undermine someone who is calling into question the current New Economic Policy, which gives preferential treatment to Malays, in an attempt to free up the economy and make it more competitive. He wants 'a market economy but tempered with a strong dosage of definitive justice' and nobody knows better than Anwar just how radical a step that would be given the tight state control over the economy that has been the norm since independence. Acknowledging that, Anwar said in a recent interview that it had to be done cautiously and in a sense that it shouldn't be destructive. 'It's economic policy with a conscience, to cite (Paul) Krugman', he told Asia Times Online. 'It's hard to be fair with a policy that protects cronies and that allows for endemic corruption.

'If in the process in a multi-racial society you find groups marginalised or the indigenous population feels insecure, they can be propped up through measures such as affirmative action but it must be transparent and based on needs, not based on family connections. I think this is most important for assuring (foreign investors).'

Anwar said that hundreds of millions of ringgit were lost every year because dispute settlement and litigation were taken to other jurisdictions because of the lack of integrity in the judicial system. And he sent an unmistakable signal that there will be a settling of accounts if his coalition should some day achieve power: 'We would have to be very cautious at this stage. It would require so many resources and energy… we would probably concentrate on a few select cases that involved billions of public funds.'

Eschewing Mahathir's grand vision of the status of a developed country by 2020, Anwar said that he just wanted to make sure that 'Malaysia cherishes its freedom, has a vibrant economy and is a country that brings all races together to feel the benefit of the vast resources the country can offer.'

Though Anwar's tone is moderation itself he is calling for a complete overhaul of the political and economic status quo that has existed virtually since independence with all that that implies for those who have benefited from it corruptly. The notion that there might be investigations of previous governments, though Anwar has so far held back from the idea of a truth and reconciliation commission, is enough to terrify any number of former government officials, politicians and businessmen. His comments come at a time of unprecedented success for international tribunals in bringing recalcitrant political leaders to book.

Also implicit in what Anwar is saying is a root and branch reform of the political system, up to and including dissolution of UMNO and its replacement by something more reflective of a multi-racial, multi-religious society. This is not merely something got up by the opposition to annoy Mahathir and his cohorts but the reality dictated by the evolving politics of the street.

But more important on the world stage than the requests and requirements of the people of Malaysia is its current symbolic status in both the Muslim and western worlds. In the former it shows that in a Muslim-majority state – Malaysia is not legally an Islamic state – democracy and the Islamic faith can co-exist successfully and to the latter it is an important talisman of what can be achieved in the troubled Islamic states of the Middle East.

And now, Anwar's handsome victory in the much-awaited August 26 by-election to the parliamentary seat of Permatang Pauh, vacated by his wife Wan Azizah Wan Ismail, has the governing authorities in veritable panic. This is only serving to emphasise their almost pathological fear of Anwar's re-emergence as a political force.

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