DID Mahathir Mohamad announce capital controls and other extreme economic measures last week to safeguard Malaysia, or just his own job? The answer is probably both. The prime minister's new right-hand man and economic tsar, Special Functions Minister Daim Zainuddin, conceded as much on Friday. 'Without growth, we think there's going to be political instability and when there is instability, there's going to be economic chaos in Malaysia,' Mr Daim said. Malaysia's economy had been spiralling dangerously out of control and Dr Mahathir was reportedly becoming increasingly nervous about losing his grip on power. He needed desperate measures for desperate times. Anwar Ibrahim, who was sacked as deputy prime minister and finance minister last week, said Dr Mahathir had been paranoid about losing power ever since Indonesia's ex-president Suharto was toppled on May 21 after 32 years in power. Mr Suharto's sudden departure left Dr Mahathir in the precarious position of being the region's longest serving political ruler, with 17 years under his belt. History has repeatedly shown that when stock markets and property prices boom and work and food is plentiful, the populace tend to tolerate a degree of cronyism and corruption at the top. But when economic bubbles burst and hardship bites, the public's tolerance level often quickly falls. Hence, Dr Mahathir's need to take urgent new steps to stop the economic slide. Mr Anwar was not only seen as the most likely internal threat to his supremacy, but his economic policy ideas clashed with the prime minister's. Publicly, Dr Mahathir talks of his split with Mr Anwar with regret. 'Personally, I wish it had not happened, certainly not at this point of time when the country is facing a terrible economic problem and we need to stand together and solve this problem,' Dr Mahathir said last week. 'But this has gone out of my control,' he said. 'I don't have any say.' Mr Anwar has hinted that unnamed forces may have begun engineering his downfall a year ago when anonymous letters attacking his integrity emerged. The regional currency crisis was getting into full swing, and Dr Mahathir was making seemingly increasingly outlandish public statements accusing everyone under the sun for Malaysia's troubles - including a wild George Soros and Jewish international conspiracy theory - but never himself. Looking back now, Mr Anwar can openly mock his former mentor and boss. 'Some people believe the problem is always with the West or some other quarters, but never me,' he said. Around the same time, Dr Mahathir claimed in an interview with the South China Morning Post that global currency trading by speculators should be banned or at least curbed and regulated. The idea ran totally against consensus opinion and was widely condemned as an impossible thing to to. A year later, it has become reality in Malaysia. Over the past year, grass-roots pressure was growing for the prime minister's heir-apparent to mount a political challenge for the leadership of Dr Mahathir's political party, the United Malays National Organisation (Umno). The president of Umno is traditionally prime minister. While respecting his past contributions to the country, Dr Mahathir was seen by some Umno members as lacking economic skills at this critical time and sometimes a national embarrassment with his wild public remarks. Mr Anwar suspects the behind-the-scenes manoeuvrings and investigations leading up to his sacking last week escalated around the time of Mr Suharto's downfall in May. That is when he believes serious investigations began into a host of allegations ranging from sexual misconduct to working as a foreign agent, all of which he vehemently denies. Most of the allegations appeared in a book, entitled: Fifty Reasons Why Anwar Cannot be Prime Minister . Mr Anwar secured an injunction to get the book banned, but the damage to his integrity had already been done. Throughout all this, a fundamental ideological rift ensued between the prime minister and his deputy over economic policy, primarily over whether to cut interest rates. During the early stages of the crisis, Dr Mahathir was willing to concede to Mr Anwar's greater financial experience and International Monetary Fund advice and raise interest rates to protect the national currency, and conduct strict fiscal and monetary tightening to rein in Malaysia's current account deficit and eradicate some of the excesses of the past. But a year later, these measures showed few signs of halting the economic slide. Come July, Dr Mahathir decided to follow his gut feeling and do it his way. He wanted to shut Malaysia off from international speculative forces and try to return to the old order. His old ally Mr Daim was called back into the Cabinet to help begin pioneering a new expansionary economic approach, in doing so undermining Mr Anwar's authority at the finance ministry. Mr Daim helped dig Malaysia out of its last recession in the mid-1980s when he was temporarily made finance minister and was seen as a loyal ally who could help him do it again. Like Mr Anwar, Mr Daim says he too believes in free markets. 'But the market is not perfect. When the whole economy is in trouble except America, maybe Europe, we have to look after our own interest first,' Mr Daim said, hence the need to implement temporary foreign exchange controls to shut out any further risk of contagion. Meanwhile, Mr Anwar feels any fears Dr Mahathir may have had of a Jakarta-style violent national uprising were misplaced. 'The circumstances are different,' Mr Anwar said. 'I certainly don't share the view that the diagnosis of the problem is similar. In many ways, we are less corrupt or having the same excesses as they had in Indonesia. 'But less corrupt does not mean we should be comfortable with the present arrangement.'