Dr. Mahathir Mohamad retired in fall 2003 after serving for 22 years as Malaysia's Prime Minister. He spoke with Businessweek International Managing Editor Robert Dowling and Asia Correspondent Frederik Balfour in Beijing on the sidelines of the BusinessWeek CEO Conference on Nov. 10 and covered topics ranging from the role of moderate Muslims in the war against terror to the future of Malaysia's auto industry. Here are edited excerpts of that conversation:
Q: Is the Western world engaging the help of moderate Muslim nations such as Malaysia enough in its war against terrorism?
A: No, I don't think it is enough. If you want support from so-called moderate Muslims, you must listen to them as to what should be done. But merely asking for support on a strategy they do not agree with is not going to work.
Q: What suggestions do you have for tackling the issue in a different way?
A: We have always stressed the need to look for root causes. People don't blow themselves up for no reason, even if they want to go to heaven, they don't blow themselves up. People are very very angry and very very frustrated, that's why there are so many candidates for suicide bombings.
Q: In places like Indonesia are there similar issues?
A: It is still the same issues. They would like to get at the people who they think are responsible, the Australians or the Americans. Of course, they are more likely to kill their own people than the targets.
Q: And thereby alienating their own support base?
A: To a certain extent there is some tolerance. While people are angry, they are not as angry as they really should be since so many of them have been killed. Even in Iraq so many been killed, but the support for what they believe to be a fight to remove American occupation is still very strong among the Iraqis.
Q: Right after 9/11, didn't you have a better relationship with the Bush Administration than now?
A: Yes. When Bush announced he would mount a fight against terrorists, it coincided with our own view. Before 9/11 we had already identified people who trained with al Qaeda who came back to Malaysia and wanted to mount violence against the government. We took action including detention of these people. When Bush said he would take action, we agreed.
But later on he made the fight against terrorism translated into fighting against Afghanistan and Iraq, which we did not agree with.
Q: How would you have suggested an alternative?
A: I have spoken to President Bush, I have written letters to him, to [British Prime Minister Tony] Blair, to [French President Jacques] Chirac, and to [German Chancellor Helmut] Schr?der to explain we have to look for the root causes and deal with them. We had terrorism in our own country, discovered [the reason for] it was feeling of dissatisfaction with the government over citizenship for the Chinese section of the population.
And the government gave a million citizenships to them without question. That solved the anger. It stopped helping the terrorists, they kept on, but got no more support.
Q: If there was an opening in Palestine, how would you suggest to handle it?
A: There's going to be a troubled period for some time, until the Palestinians decide who should succeed Arafat. Even if Arafat is not there, if Bush is seen as favoring the Israelis -- even when they commit acts of terror -- I think Bush won't make any headway.
Q: Some people in the Administration say they're actually interested in a settlement.
A: Settlement on what terms? The [Palestinians] have been expelled, their land confiscated without compensation.
Q: On the terms of the Oslo agreement, where most of the territory is returned to the Palestinian state and investment in the state in return for recognition of Israel.
A: I think that would satisfy the majority. But there will always be a fringe which will not be satisified with anything. But as in case of Malaysia, over time they will have to give up the violence they have perpetrated because it is not leading them anywhere.
Q: So you are not hopeful for the next four years?
A: I am not hopeful for the next four years.
Q: Do you agree with reports that PAS [the fundamentalist opposition party in Malaysia] is helping incite violence in Southern Thailand?
A: PAS leaders have been going to Southern Thailand to speak to people on religion, but they did not speak about politics. We also know that from Southern Thailand, a number of people have two identity cards from Thailand and Malaysia, which enable them to participate in our elections. Of course their sympathy is entirely with PAS, and that made it difficult for us to win in Kelantan.
I cannot say for certain whether they are involved in activities in Southern Thailand, but for the moment they have very close links with people there.
Q: During your 22-year rule you handpicked captains of industry to spearhead growth. Has the model of Malaysia Inc. changed now?
A: Initially we didn't have people who were trained and experienced. We had to pick and choose those who seemed to have the potential. Some have succeeded, and some have failed. But in the meantime we have been training our people, sending them out of the country to gain experience and qualifications, and now they have come back. We should give them an opportunity.
Q: Proton [Malaysia's national car company] was your baby. Now it's in talks with Volkswagen. Is now the time for it to be seeking a strategic foreign partner?
A: We don't see any urgency in that. Proton is a strong company, not in need of cash injections. It's a cash-rich company. It can pick and choose. Initially we don't see a need for Volkswagen to buy into the company, but we do need to cooperate using mutual strengths. They can bring in technology and a name that will give Proton a lot of prestige and acceptance.
On the other hand Volkswagen needs to come into the Southeast Asian market. They need to produce cars a lower price than they do in Germany.
Q: What impact has the economic pull of China had on Malaysia?
A: Malaysia is China's biggest trading partner in Southeast Asia. We see a future where China would be able to consume more of what we produce, not just raw materials but in terms of production of some components and electronics.
Q: Lastly, how do you see the role of Anwar [the former Deputy Prime Minister who was recently released from jail serving a sentence for sodomy and corruption]?
A: His popularity has waned quite a lot. Initially, of course, people did not believe at all the accusations leveled at him, but now more more do. There are still some diehard followers of him, but by and large the public is not that excited about his release. Certainly UMNO [the ruling party] rejected him totally. This is from the grassroots. In Malaysia, if you aren't in UMNO you can't make it to the top ranks.