Moreover.

Razaleigh elaborated particularly on how Mahathir's economic

deregulation contradicted NEP principles of ethnic redistribution and Malay favouritism.

The government policy today that give, a guarantee that the (foreign) ownership will
not be regulated again worries us. This means that Malay, as well as other Malaysian people,
cannot get equity of new companies because foreign capital now can own 100 per cent. This
also means that the Malay cannot amass their financial basis as to the level early
implementation of NEP before.

To me this policy is not the continuation of NEP. On the contrary, this keeps belittling
the original aspiration of NEP which tried to balance foreign ownership and local one. I am
worrying, without clear guidance concerning foreign investment, eventually, the fortune of
our country, our people and our workers will not be very much different from that of colonial
times. (Razaleigh. 1991)

In the above argument, Razaleigh reiterated that the original intention of the NEP was
ethnic restructuring. Although the NEP did not intend to deprive what non-Malay and foreign
capital had, the NEP clearly imposed regulations on them. It was through these regulations
that the government controlled the growth of non-Malay and foreign capital. The NEP
envisioned that the larger part of the enlarged economic pie should be the Malay community's
share. What Razaleigh found in Mahathir's privatisation and deregulation was a reversal of
the original intention of the NEP. By giving freedom to non-Malay and foreign capital, the
policy of promoting Malay ownership was in danger.

As examined here. Razaleigh criticised Mahathir's economic policy which had, he

claimed, digressed from the ethno cultural nationalist path of the original NEP and
maintained that the original NEP should be extended. Compared with Mahathir's position as
shown in his economic policy, Razaleigh's argument was clearly more ethno cultural Malay
nationalist. Ethno cultural Malay nationalism assumes that Malaysia is a Malay nation, in
which the Malay community is in a dominant position vis-a-vis the non-Malay community,
culturally, politically as well as economically. Razaleigh argued that the NEP's efforts to
achieve Malay economic dominance should be maintained, to eventually achieve the Malay
Malaysia.
3.4. Fresh race for nationalist legitimacy after the Mahathir-Razaleigh clash in the 1987
UMNO elections

This section examines the protracted dispute between Mahathir and Razaleigh from
the 1987 UMNO elections to the 1990 general elections. This section argues that the 1987
UMNO dispute was extended to a contest between the two political rivals over nationalist
legitimacy and the Malay mandate until the 1990 elections. In the inner party dispute.
Mahathir's narrow victory was insufficient to quell a further challenge that attempted to
discredit Mahathir's legitimacy in the wider Malay community beyond UMNO. To appeal to
the Malay community, the competing factions attempted to "out-Malay" each other, adopting
ethno cultural Malay nationalist arguments. Mahathir abandoned his earlier stance and tried
to be an ethno cultural Malay nationalist leader to survive politically. Eventually, as shown in
several by-elections results and the 1990 elections results, Mahathir regained his legitimacy
and support by 1990.

3.4.1. The UMNO showdown and its aftermath

UMNO elections and campaigning

It is helpful to review the issues, the campaign and the results of the 1987 UMNO
elections as background for exploring the protracted dispute. The elections campaigns for the
Team A and Team B showdown began in February 1987 when the Razaleigh-Musa electoral
pact emerged and ended on 24 April 1987 when the elections were held. Other than the
central issue of nationalism that has been examined in the previous sections, the competing
elites raised disagreements over leadership matters and policies and resorted to personal
attacks in their desperate attempts to outmanoeuvre their opponents. Team B used various
scandals involving government enterprises such as BMF (Bank Bumiputera Finance) and
Maminco to criticise Mahathir. Team B laid responsibility for the economic crisis in the mid-
1980s on these scandals. They also criticised Mahathir's undemocratic leadership style that
excluded party elites from decision-making except his close allies such as Daim Zainuddin,
Anwar and so on (Sharnsul. 1988: 175).

To counter these accusations. Team A members defended their past performance and
insisted that only the current leadership could deliver more benefits to the Malaysian people.
Team A also maintained that as the decisions related to the scandals were made when
Razaleigh was Finance Minister and Musa was Deputy Prime Minister. Team B was equally
responsible for the decisions. Mahathir also argued that not only was Team B's challenge to
the party president unprecedented and against Malay tradition, it would also undermine party
unity and stability and eventually harm the unity of the entire Malay community (Funston.
1988: 366-367: Kershaw. 1988: 134-139).

The factions had to woo grassroots UMNO members to ensure that more delegates
voted for them in the elections. The factious resorted to all sorts of means to maximise the
winning chance. Delegates to UMNO elections were comprised of division members elected
by their own divisions, which in turn were comprised of elected branch members sent to
division meetings. While Mahathir could use the mass media to tell his version of the story.
Team B was unable to do so since most of the mainstream mass media was controlled by the
UMNO party president or by the government under Mahathir. Instead, Team B relied on
widely distributed video and audiotapes (Shamsul, 1988: 178). In addition, when the
delegates arrived in Kuala Lumpur, both factions offered accommodations in five-star hotels,
meals and even money. Despite complaints of pre-elections improprieties, the party ethics
committee, divided into two teams, did not act on the complaints (E. Lee, 1987: 15;
Malaysian Business, 1987a: 4).

After a frenzy of last minute canvassing to win over uncommitted delegates and
influential political figures (Gill, 1988: 34-35), the party entered polling on 24 April 1987.
The elections resulted in a close victory for Team A, with Mahathir obtaining 761 votes and
Razaleigh 718 votes. Some scholars attributed Team A's victory to the last minute support of
such influential political figures as Najib Razak (Gill, 1988: 35; Shamsul, 1988: 185) while
others maintained that Team As last minute persuasion during the break for Friday prayers on
election day made the difference (Gill, 1988: 37; Shamsul, 1988: 180). Other reports claimed
that the Razaleigh team was already ahead in the early stages of polling and that it was
irregularities in vote counting that brought about Team Bs defeat (Mauzy, 1988: 215). There
is also a view that distrust between the Razaleigh and Musa factious within Team B
contributed to its defeat (Malaysian Business, 1987b: 10).
New political race began after the 1987 UMNO elections

After the UMNO elections, another phase of competition between Mahathir and
Razaleigh began. Razaleigh was predicted to challenge Mahathir again in the upcoming party
elections in 1990 (Malaysian Business, 1987b: Suhaini Aznam, 1987a). However, the
challenge came much earlier, indicating that Mahathirs 43-vote win was insufficient to
discourage the challenger. The post-elections developments must be reviewed to show that
the competition between Semangat 46', organised by Team B, and Mahathir's UMNO Baru
was really an extension of the 1987 UMNO elections.

The first major development was a court case. 11 Team B members sued UMNO in
court to nullify the 1987 party elections results, claiming that unregistered (and therefore
illegal) branches took part in the elections. Unexpectedly, the court outlawed UMNO itself
under the Societies Act. While the court's decision appeared straightforward, it was actually
quite controversial. The disgruntled Team B members wanted the elections results invalidated
so that they might have a fresh election. However, there were allegations that Mahathir
deliberately created this situation to exclude Razaleigh supporters from UMNO and to re-
constitute UMNO with only his own followers (Muzaffar, 1989: 62. 67).

Immediately after UMNO was declared unlawful by the courts, Team A, led by
Mahathir, successfully registered a new party, UMNO Baru, outsmarting Team B members
who wanted to use the UMNO name as well. The UMNO name had symbolic importance as
it would confer legitimacy on the new party and its leader as the successor of old UMNO.

Shortly thereafter, Musa and his close followers, who had joined forces with Team B,
defected to Mahathir's UMNO Baru. Although Musa and Razaleigh had joined forces to
challenge Mahathir, there was speculation that their rivalry had not ended as they had bitter
contests in 1981 and 1984. It was rumoured that there was further division within Team B
between Musa's and Razaleigh's factions at the grassroots level in the 1987 UMNO elections
(Shamsul, 1988: 178). The cooperation between Razaleigh and Musa lasted until the victory
of Shahrir Samad. Musa's close ally and Team B member, in the Johor Baru by-elections in
1988. In late 1988, when the enthusiasm of the challengers had subsided and UMNO Baru
had recovered, Musa and his allies switched to Mahathir's camp, arguing that, as the unity of
the Malay community and UMNO came first, Musa would build unity from within UMNO.
 In 1989. Team B members, led by Razaleigh, and registered a political party called
Semangat 46'. The competing factions in the 1987 dispute, that is, Mahathir's Team A and
Razaleigh's Team B were reorganised into UMNO Baru and Semangat 46' respectively.
Hence, the competition in UMNO between Team A and Team B was extended to one between
UMNO Baru and Semangat 46'. UMNO Baru, under Mahathir's leadership, included his
supporters and excluded the elites and grassroots members involved with Team B.
Meanwhile, Semangat 46' included all the prominent members of Team B, excluding a few
defectors such as Musa Hitam and Shahrir Samad. For the first time, two secular Malay
nationalist political parties, with the same origins, were to compete for the mandate of the
Malay community in Malaysia.

Mahathir's legitimacy damaged?

Mahathir's legitimacy was badly damaged during the 1987 dispute and the aftermath,
thereby fuelling the protracted contest over Malay mandate and struggle to rebuild
legitimacy. Mahathir had legally retained his position in the party elections but his legitimacy
as an UMNO and Malay community leader was damaged. No UMNO president before
Mahathir had ever faced a challenge of such magnitude. In addition. Mahathir managed to
keep his position with only an extremely narrow margin: 43 votes or less than 3 per cent of
the votes cast.

When Mahathir announced that he would still be the President of UMNO, even if he
had won the election by only one vote, he was technically correct. However, whether
Mahathir had also managed to keep his legitimacy and the Malay community's confidence
was a different matter. A. B. Shamsul observed: '[Team B] had not lost the "moral battle".
Razaleigh received 48.55 per cent of the total votes cast, a more-than-respectable figure...
Mahathir received only a half mandate to run UMNO and the country, hardly a confidence
boosting prospect (Shamsul, 1988: 181). Abdul Rahman, the first Prime Minister, was more
upfront: 'If the leadership of the day is showing questionable traits and thereby no longer
enjoys the confidence of the people, it is high time that he fades away respectfully for the
sake of the good name of the party' (Tasker & Suhaini Azman, 1988: 12).
 With his legitimacy in UMNO shaken, Mahathir had to face a strong challenge front
his political opponents, especially Semangat 46' in the upcoming 1990 general elections.
Both parties were led by UMNO heavy weights-- Mahathir and Razaleighwho had
received almost similar support in the 1987 party elections. The two groups shared a similar
outlook as secular Malay nationalist parties claiming to be legitimate successors of the
original UMNO. For these two groups, the Malay community's mandate was the top priority.
For Mahathir, losing the support of the Malay community was like losing the war despite
winning the battle, that is, the 1987 party elections. For Razaleigh, it was a matter of his
political survival as lukewarm support from the Malay community could mean his political
death.

Therefore, in the post-1987 UMNO elections period, the issues were who the supreme
leader of the Malay community was and who deserved the Malay mandate rather than who
won more votes from UMNO delegates. Before Mahathir, UMNO Presidents had enjoyed
unquestioned legitimacy and mandate as leaders of the Malay community. After the 1987
elections and the UMNO split, however, Mahathir's legitimacy was badly hunt and there
began a contest between Mahathir's UMNO Baru and Razaleigh's Semangat 46' to win the
Malay political mandate.