Since the elections of 8 March 2008, Malaysia has been in a state of political turmoil. One hand has promised reforms and openness, greater democratic space and better governance. The other has foreshadowed increased political entrenchment based on Malay chauvinism, deep-seated insecurity and the economic protection of crony interests. In July 2008, this explosive political contestation has imploded in public view.

Bridget Welsh is assistant professor in Southeast Asian studies at Johns Hopkins University. Among her publications is (as editor) Reflections: The Mahathir Years (JHU/SAIS, 2004)

Also by Bridget Welsh in openDemocracy:

"Malaysia's democratic tsunami" (13 March 2008)

The headlines make any soap-opera pale in comparison. In a déjà vu of the political crisis of 1998, the former deputy prime minister and de facto opposition leader Anwar Ibrahim was the target of a highly suspicious legal report of sodomy which led him to take temporary refuge in the Turkish embassy. The report was filed by what appeared to be a plant in his office, a young man close to the incumbent United Malays National Organisation (UMNO) machinery who had met with the current deputy prime minister Najib Tun Razak before filing the damning document. Anwar, wearing a bullet-proof vest, was arrested after leaving the embassy and strip-searched while in custody. He is out of custody as the investigation continues.

The saga's intricacies continued when a crucial witness in the high-profile case of a murdered Mongolian model - namely, the private investigator - filed a statutory declaration of the alleged involvement of Najib. One day later the investigator retracted the declaration, and now he and his family are mysteriously missing. These elite attacks have been personal, and sordid. All understand that this saga has been a contest for political power which has pitted incumbents unwilling and unable to reform against those offering a new future for the country that moves its politics away from race-based parties, crony interests and less optimal governance.

A political dead-end

At the helm of this political turmoil is prime minister Abdullah Badawi whose inept and rudderless leadership since 2003 has allowed the cracks to surface. There are those who feel his actions - or rather inactions - have permitted the current situation to come about. No question, Abdullah's abysmal management of the flailing economy and weak leadership style have contributed to instability. Abdullah lost the mantle of non-corrupt reformer two years into his term of office, and since 2005 perceptions of corruption connected to his family have ballooned.

From Kenya to Armenia, Russia to Spain, openDemocracy authors assess the outcome of elections around the world in 2008:

Irfan Husain, "Pakistan's judgment day" (22 January 2008)

James Ker-Lindsay, "Cyprus: walk, don't run" (22 February 2008)

Gérard Prunier, "Kenya: histories of hidden war" (29 February 2008)

Andrew Wilson, "Russia's post-election balance" (3 March 2008)

Armine Ishkanian, "Democracy contested: Armenia's fifth presidential elections" (4 March 2008)

Ivan Briscoe, "From the shadows: Spain's election lessons" (10 March 2008)

Robert Parsons, "Georgia's dangerous gulf" (30 May 2008)

John Crabtree, "Bolivia: democratic tides" (2 July 2008)

He has proven unable to implement reforms. This contributed to the electoral thrashing his Barisan Nasional (National Front / BN) coalition received in the 8 March elections which gave him a narrow thirty-seat majority. He holds onto power because of the conflict among the contenders to replace him and his strategic placement of a now tainted deputy as his chosen successor. His tepid measures of reform since the polls have been largely rhetorical, similar to those he promised when he first took office and failed to deliver. He has promised to step down in 2010, but given Abdullah's record for indecisiveness it remains uncertain whether he will deliver on this pledge either.

Without capable leadership at Malaysia's helm, weaknesses in the country's political institutions have surfaced. The murder trial of the Mongolian model Altantuya, which began in 2007, raises serious questions about the fairness of the judiciary; at least, it suggests that the prosecutory system has been politicised.

The latest allegations against Anwar Ibrahim reinforce this perception. The involvement of senior police officers in highly charged political cases raises questions about their professionalism. The biggest cracks are within political parties. The lack of a clear transition of power within the UNMO (the main party in the BN coalition) points to a deficit of effective debate and the shrinking vitality of the key government party. The system in place for electing the party's leadership ensures that incumbents are able to resist challengers and stalwarts with financial pockets cling on to leadership positions. The UMNO's response to its apparent inability to deliver any alternative is increasingly to turn to racial discourse, which serves as a cover for the vested economic self-interest of many of the entrenched warlords in this party.

Other parties in the BN fold - the Malaysian Chinese Association (MCA), the Malaysian Indian Congress (MIC) and the Malaysian People's Movement Party (Gerakan) - are equally riddled by personal interests as in-fighting reigns. The intra-BN tensions that have emerged bring into question the viability of this race-based coalition and its inclusiveness of East Malaysia. The result is that many Malaysians are questioning the ability of the BN to represent citizens across races and move beyond personal interests.

The opposition alternative also offers uncertainty. The opposition coalition Pakatan Rakyat, was formed only in March 2008. It gathers under its roof a secular-based party, an Islamic party and a personal party of Anwar Ibrahim, along with other individuals - a composition that in part explains why it has yet to present a clear plan to address the country's problems. There are no formal mechanisms in place to coordinate policy, and such policy initiatives that is has proposed thus far have largely been populist and have not won over the business community.

Pakatan thus has yet to show whether it is capable of working together effectively or of governing without a dependence on one man. Its record in the five state governments it won in March is mixed. Pakatan has yet to even form a national shadow cabinet or decisively shown that it has the majority of support it would need among the national elites in order to govern. The opposition remains highly fragmented, with reports of the Islamic party engaging in talks with the UMNO, and is in search of political momentum that would enable it to win the number of seats required to win national office.

A public corrosion

The crisis is an economic one as well. Under Abdullah's leadership, Malaysia has experienced record inflation, unprecedented since the early 1970s. Inequality has widened sharply, now the highest in southeast Asia. The areas that Abdullah showcased as new engines of growth - biotechnology and agriculture - have failed to provide substantial gains. His administration has relied on race-based handouts rather than structural reforms. Real doubts have circulated about the under-reporting of inflation, employment and deficit realities. The government remains unwilling to reveal the major contingent liabilities of expenditures caused by "sweetheart deals" to cronies that date back to before 1997 and overestimates revenues in the contracting world economy.

The lack of transparency and inability to initiate governance and education reform has reduced competitiveness. Under Abdullah, foreign investment in Malaysia has dropped precipitously, especially in this last year of political instability. The incumbent government's petty political blinders in showing an unwillingness to work with opposition-led governments - who now control the states that generate 56% of GDP - have served to weaken Malaysia's economy further. The result has been a real economic decline. Malaysia's citizens have been forced to bear the brunt of the contraction, absorbing a 41% increase in fuel prices in June 2008. Abdullah's cronies in contrast continue to bleed the government coffers and buttress Abdullah's hold on political power.

Personalities tied to underlying economic interests are a well-known story in Malaysia. It played out in 1999 with street protests, and in Anwar Ibrahim's serving six years in prison following his conviction. What distinguishes the current situation from the earlier one is that the public is much more sceptical and hungry for reform. They voted for better government and instead have had to face the impact of elite contestation and weak institutions head on. As political turmoil has deepened, a widespread social anxiety has set in.

Yet Malaysians hold onto the dream of a more democratic system that treats all with fairness and dignity. In the months ahead, the cracks in Malaysia's political machinery will widen. Unless decisive steps are taken to strengthen the opposition nationally or to clean up the incumbent government more substantively under new untainted leadership, the corrosion of Malaysia's politics and institutions will only deepen.