The right way, and the wrong way, to lead a Muslim country

ARTICLE: “Taking Politics Out of Malaysian Business: Prime Minister Abdullah Is Banking on Active Role for State-Owned Investment Agency,” by Cris Prystay, Wall Street Journal, 21 March 2006, p. A5.

ARTICLE: “Change is in the air but happens slowly on the ground: Under its still-eccentric leader, could Libya ever loosen up? The Economist, 11 March 2006, p. 42.

Malaysia is another country that I continue to admire more and more, although I admit that my infatuation with them is recent, as in, since the Islamic scholar Abdullah Ahmad Badawi replaced crabby Matahir Mohammad as PM (who wasn’t so bad for his time, it’s just nice to see Malaysia outgrow him).

Badawi, whom I cite as a shining example in BFA as a modern Muslim leader able to balance a sense of Islamist identity with free market integration into the global economy, is praised in this WSJ article for his efforts at “transforming Khazanah Nasional Bhd.--the state-owned investment agency that controls Malaysia’s power, auto, airline and telecommunication companies--from a passive, bureaucratic investor into an active, professionally run investment fund with some $16 billion of assets.”

This move is similar to that of other Asian countries which are still trying to revamp the role of, or simply shed, the sort of state-run investment houses and businesses that got them into so much trouble in the Asian flu of the late 1990s (all that crony capitalism leading to over-borrowing and over-investment). But Badawi, as lead goose-like as he is, aims to follow the example of the über-goose itself--Singapore. Singapore did this with its own state-run investment house, and turned it into a vehicle for diversifying the nation’s investments beyond its borders (Singapore has no peer in this regard in the world), and such investment patterns signal really positive financial connectivity of the sort that drives my strong expectation that no one will be logically describing SE Asia as Gap in 10 to 20 years. In my opinion, that Gap shrinkage is getting more deterministic by the day, and it’s potential to show the way for the Muslim Middle East becomes more powerful by the day.

Still, the old dunderhead autocrats will hold on in the Middle East for as long as possible. Crafty sonovabitches that they are, many will change their stripes regularly to avoid “external” prosecution, and play all sorts of nasty and cynical and brutal games with their own publics to make sure that internal unrest doesn’t get them either. Qaddafi seems a master at this: reversing himself on basically his entire foreign policy three years ago once he got a whiff that he might be put on the Axis of Evil list.

But what has changed at home? Nothing. Despite all the oil wealth, Qaddafi’s done nothing to modernize or liberalize his economy, and as such, most Libyans are no better off (“I met a guy who spent 15 years abroad, and he said he recognized the same potholes as when he left,” chuckled a Tripoli taxi drive, snarled in one of the rubbish-strewn capital’s daily jams.”).

The good news? Libyans can travel abroad a lot more easily, and have access to foreign goods through private markets, shunning the crappy state-owned ones. And foreigners are swarming in the other direction, including Americans.

In the end, it’s not the worst trade. We just need to make sure we marginalize Qaddafi as much as possible within his national economy, so that when the crazy old jackass finally dies, it’ll be a post-Castro like collapse of the political system and an immediate wiring up to the global economy.

I say, the Libyan version of Development-in-a-Box should be sitting in somebody’s inbox in DC.