Aging Mahathir To Meet Soros Since 1997 Crisis

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Dec 13 2006
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I read with great interest that Mahathir agrees to meet Soros after almost a decade of hostility due to the 1997 Asia Economic Crisis which created havoc to Malaysia stock market generally and wiped out billions of dollars of losses specifically to some of the top GLC (Government-Link-Companies). Before the crisis, it was reported that both Mahathir and Soros were good friends.

Dr Mahathir’s aide confirmed that the meeting with Soros, who is scheduled to make his first visit to Malaysia to deliver a talk on Challenges to Promoting a Global Open Society is on.

George Soros, the billionaire financier and philanthropist has been invited to address the London School of Economics and Political Science Alumni Society of Malaysia at a fund raising dinner in The Ritz Carlton Kuala Lumpur on Friday, Dec-15-2006. Soros himself was a graduate from the London School of Economics.

Soros said that he and Dr Mahathir had exchanged letters and a personal meeting was planned, depending on the former premier’s health who suffered a mild heart attack on Nov-9. In 1997, Dr Mahathir blamed the Asian financial crisis on Soros, whom he called a “moron” and later refused to meet him when the latter had indicated an interest to talk to the former premier.

During the crisis, Mahathir urged a ban on currency trading while Soros replies that intervening with convertibility of capital is a recipe for disaster and calls Mahathir a menace to his own country.

At a launch of fully computerized Kuala Lumpur Stock Exchange in 1997 and before some 1,000 guests, Mahathir declared that the currency crisis was the handiwork of “powerful predators” from abroad. A few days later, he banned the couple-of-months-old “short-selling” as he claimed it was being manipulated but didn’t goes well with international investors and the Malaysia stock market was being punished further with continuous dumping of stocks by the investors.

The reverse decision on the ban of short-selling a week later didn’t help, partly because Mahathir went on to blame the rapidly spreading contagion on foreign speculators in general, calling them “ferocious beasts”, “racists” and “moron”.

At the World Bank-International Monetary Fund meetings in Hong Kong, Mahathir asked that currency trading be made illegal. A month later at a rally in Trengganu state, Mahathir told supporters that the people perceived a connection between the fact that Soros was a Hungarian-born Jew, while the currency crisis victims in Malaysia and Indonesia were Muslim. That prompted three U.S. Congressmen to sumbit a resolution to a House committee asking Mahathir to apologize for his allegedly anti-Jewish remarks – or resign. He did neither.

Foreign investors with plenty of other options continued to pull money out of Malaysia. And domestic investors seemed to lose confidence too. At one time, the Malaysian ringgit fell to its lowest since it was floated in 1973 where it hit RM 4.58 to USD 1.00. Bank Negara announced that Sime Darby’s banking unit needed over RM 1.0 billion in fresh capital besides government-run Bank Bumiputra Malaysia Bhd and two other finance companies. In a desperate move, Mahathir introduced the currency peg, which anchors the ringgit at 3.80 to the U.S. dollar in September-1998.

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