Anwar Ibrahim, Malaysia’s former deputy prime minister and former finance minister, was recently sentenced to nine years in jail after he was found guilty of sodomy. The verdict, which has been condemned by government leaders and human rights groups around the world, represents another triumph of the xenophobic and corrupt Malaysian political establishment over forces of reform and openness.

The trial was almost certainly a political maneuver by Malaysia’s tyrannical Prime Minister, Dr. Mahathir Mohammed. The 74-year-old Mahathir, who has been in office for 19 years, accused Anwar of trying to topple him, saying that Anwar was backed by Western governments – the very same governments, financiers, and “international Jewish conspiracy” that Mahathir has blamed for Malaysia’s economic woes. Indeed, Anwar would have been a formidable political rival, and a probable champion of reform, but his jail time now removes him from politics until Mahatir’s 90th birthday.

It was when the Malaysian economic situation became desperate in 1997/98 that tensions between the Prime Minister and his Deputy grew apparent. Anwar refused to support a government bailout of a Mahathir family business; he upheld a corruption investigation into a politically linked steel company; he opposed an illegal restructuring to benefit a major, politically-linked business conglomerate; and he refused to endorse spending on nonsensical infrastructure projects.

The result? Trouble for Anwar began immediately. Mahatir had Anwar removed from office by trying and convicting him for “corruption,” for which he is currently serving a six-year prison term. The even more serious criminal charges of sodomy mysteriously surfaced at the same time. (Incidentally, evidence is unusually flimsy in the case, as Anwar’s “victim” has alternated between supporting and denying claims that he’d been sodomized, and has provided contradictory dates, apparently unable to recall in which year he’d been “victimized”).

Anwar Ibrahim spoke after his conviction: “If justice, the law, or public interest were threatened, I would defy Dr. Mahathir. I objected to the use of massive public funds to rescue the failed businesses of his children and cronies. And it was precisely because I defied him and sided with public interest that I was dismissed and persecuted. This is a small sacrifice to pay in the cause of democracy and justice. But I worry for the nation. Corruption is endemic. The pillars of democracy, civil society and the rule of law are shattered. This nation needs reform and renewal. To Dr. Mahathir and his greedy family and cronies, I say beware the wrath of the people, for the people are rising to reclaim justice, they are rising against graft and abuse of power.”

I believe that potential investors in Malaysia should seriously consider Anwar’s strong warning. A country in which trials are political, and reformers are jailed while favored cronies are bailed out, and foreign financial interests are demonized, does not sound like a promising investment locale.

On the surface, a country controlled by one individual can appear stable. Political opposition is quickly crushed, while the media serves as a supportive political instrument of propaganda. But in the subterranean depths, discontent invariably builds until it eventually erupts like a volcano. It may be too soon to tell, but it looks as if Prime Minister Mahatir has potentially created this situation in Malaysia.

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Andrew West

Andrew West is a Contributing Economics Editor for Capitalism Magazine. In 1997 he received the Chartered Financial Analyst designation from the Association for Investment Management and Research.