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Now that he has executed politically unpopular fuel and power price increases, Abdullah prepares to gracefully exit the stage. Over the next six months, he quietly arranges to hand power over to his stated successor, Deputy Prime Minister Najib Razak. by Bill Tarrant
(Reuters) - Malaysia has sharply raised fuel and gas prices, a move that could drive inflation to a 10-year high and risk further stoking anger against Prime Minister Abdullah Ahmad Badawi, already fighting for his political life. The stock market has fallen 3 percent and the ringgit weakened just over half a percent, as investors worry about growing political risks due to a possible change in government. Here are some possible political risk scenarios, compiled by Reuters on the basis of interviews with analysts. ABUDLLAH WEATHERS STORM FOR NOW; PRESSURE BUILDS Abdullah's ruling coalition was weakened after handing control of five of the country's 13 states to the opposition in March elections, and he has been pressured by some members of his party -- including former prime minister Mahathir Mohamad -- to step down. But he weathers the storm by adeptly adressing social and political concerns of his constituency. - Cushioning the impact of the fuel price increases on the needy with cash handouts for motorcyclists and small car-owners proves to be politically smart. - The government uses the $4 billion in savings from cutting fuel subsidies to fund social programs and infrastructure projects that Abdullah's government had to shelve earlier. Such projects and the lucrative contracts they engender have been a key element of the country's political patronage system and a way of keeping a sometimes fractious UMNO together. -- Abdullah tries to win over voters by addressing grievances such as rising food prices, street crime, corruption and cronyism. He also keeps to his vow to restore the integrity of the judiciary. "Whether groups within UMNO divisions and the supreme council use the fuel price issue to add more pressure to the prime minister to resign remains to be seen. There will be public support but private discontent will be there," said Lee Hock Guan, senior fellow with Institute of South East Asian Studies in Singapore. ABDULLAH LEAVES IN ORDERLY TRANSITION Former prime minister Mahathir Mahathir Mohamad's shock resignation from UMNO and his call for Abdullah to resign late last month had already prompted speculation that festering rifts in the United Malays National Organisation (UNMO) could widen and speed up the premier's exit. -- Now that he has executed politically unpopular fuel and power price increases, Abdullah prepares to gracefully exit the stage. Over the next six months, he quietly arranges to hand power over to his stated successor, Deputy Prime Minister Najib Razak. -- A transition is executed with Najib as number one, and Mahathir's choice for premier, Trade Minister Muhyiddin Yassin, number two, at December party elections.The trade minister has urged Abdullah to quickly set a timetable for his succession to end the flux in UMNO. -- UMNO began drafting a post-election blueprint on Thursday at a two-day retreat to reinvent the party. "The fuel price hike makes it more difficult for the prime minister to conduct a smooth transition of power," said Hussin Mutalib, a political scientist who tracks Southeast Asian issues in National University of Singapore. "The momentum for the prime minister to step down has picked up with the Mahathir factor, the Anwar factor and the oil price factor. There could be a push forward for him to leave fast." ANWAR EXPLOITS THE SITUATION AND TOPPLES GOVERNMENT The head of the largest opposition party and a former finance minister, Anwar says the cut in subsidies reflects economic mismanagement, maintaining that Malaysia's oil revenues were squandered on big prestigious projects that mainly benefited UMNO cronies. -- "The people have been denied essential information on (state oil firm) Petronas's coffers and the wealth from this key source of revenue has not been enjoyed by all," Anwar said in a statement from his blog a day after the fuel price hike. "The wealth is used to award the family and cronies (of the Prime Minister) with projects and contracts." -- The price increases prove to be more unpopular than expected, giving fresh impetus to Anwar's challenge to the ruling National Front coalition. Anwar has promised to cut fuel prices. "We may see protests similar to the ones that took place in March 2006, when petrol prices were last raised," said Tricia Yeoh, director of the Center for Public Policy Studies in Kuala Lumpur. "People do not see this being matched by a plan that will help them meet the growing cost of living." Anwar himself favours reducing the price of petrol. -- UMNO, backbone of the 14-party coalition that has ruled since independence from Britain in 1957, loses its grip on the 79 of 140 seats it holds. Anwar's claim that at least 30 Front legislators are ready to join the opposition is proved right. -- Anwar sneaks to victory in September, when he plans to call for a no-confidence vote against the government. The opposition's loose alliance gains the 30 seats needed to win a simple majority and form the government. PM SURVIVES, STRENGTHENED: - After an initial outcry and bout of protests, Abdullah is given credit for doing the right thing in saving government finances, cushioning the impact on the poor and making people who can afford it pay market prices for energy. -- Lawmakers, the cabinet and UNMO's policy-making Supreme Council stay firmly behind him. He shores up support by reaching out to the disgruntled grassroots -- Malays in the heartland and people in the eastern states of Sabah and Sarawak. -- With Mahathir sidelined and Anwar frustrated in his attempt to topple the government, Abdullah strengthens his grip on power and retains the party presidency in December. -- Late last month he made key concessions to Sabah, lawmakers who have been wooed by Anwar. During a visit to the resource-rich but otherwise largely poor eastern state of Sabah on Borneo island, Abdullah pledged to tackle the problem of illegal immigrants, increase rural development funding, build a power plant and give the state direct access to federal funds. That could be enough to thwart defections to Anwar and frustrate his bid to oust UMNO from power. ABDULLAH REFUSES TO LEAVE IN FACE OF GROWING UNPOPULARITY -- A lame-duck Abdullah refuses to go as calls for his resignation grow. Dissatisfied UNMO members say voters in the constituencies are up in arms over the price increases and are now worried about their own political skins. Food price increases were a key factor behind the the party's humiliating loss of its two-thirds majority in parliament, and five of the 13 states at the March election. -- The 82-year-old Mahathir's enduring appeal as a respected figurehead eggs on fellow critics, making it hard for Abdullah to win the middle ground. He loses support among grassroots Malay and the already-alienated and sizeable non-Malay minority. -- Lawmakers and top UNMO leaders are forced to ride the wave and isolate themselves from Abdullah, setting the scene for his defeat at December party elections.
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