It took two decades, but Malaysia's Mahathir Mohamad is finally a Wall Street sensation.
In the late 1990s, during his first stint as prime minister, Mahathir became a pariah of the New York trading pits. His battle with speculators, and Western-style capitalism in general, sent the ringgit cratering and erased his economy from global markets.
These days, Mahathir's Malaysia is basking in warmer glows among investors. His surprise return to leadership in May coincided with a mini-crisis in emerging markets. But, thanks to some quick footwork from Mahathir, Malaysia is faring surprisingly well as U.S. President Donald Trump's trade war upends financial sentiment.
The ringgit's 3.5% decline against the U.S. dollar this year compares favorably to the 6.5% fall in the Philippine peso and 9% plunge by Indonesia's rupiah. MSCI's index of Malaysian equities is down less than 1% over the past 12 months, compared to a near-14% loss in emerging markets overall.
Malaysia is having a good crisis because of perceptions Mahathir is taking on Kuala Lumpur's notorious cronyism. He is turning heads, too, with his resolve to claw back cash he alleges Goldman Sachs "cheated" out of Malaysians as part of the financial scandal that finished his predecessor, Najib Razak.
Since his shock election, Mahathir has grappled with a $6.5 billion fraud involving 1Malaysia Development Bhd, a state fund that Najib created in 2009, from which funds were allegedly siphoned for personal use, including for Najib. The former prime minister has pleaded not guilty to charges of corruption and breach of trust.
On Nov. 12, Mahathir's team demanded a "full refund" from Goldman, triggering the steepest share plunge for the U.S. investment bank since 2011.
That came days after disclosures that then-Goldman CEO Lloyd Blankfein attended two meetings with an alleged key player in the scandal in 2009 and 2013, according to The Wall Street Journal. He reportedly met fugitive financier Jho Low, who has been indicted by the U.S. Department of Justice on allegations of having helped to steal 1MDB funds.
Goldman netted almost $600 million in fees for deals related to 1MDB. Blankfein has not been accused of any wrongdoing. Tim Leissner, Goldman's former chairman of Southeast Asia, this month pleaded guilty to conspiring to launder money.
That is just one variable going Mahathir's way. The U.S. DOJ is probing the case, as are authorities from Singapore to Switzerland.
As well as pursuing the alleged perpetrators, Malaysia wants to claw back cash to help finance debts that risk spooking investors.
Mahathir's government spends 30% of its income on debt service. Yet, foreigners, including some on Wall Street, are largely giving Mahathir the benefit of the doubt.
Since May, foreign investors have withdrawn less than $3 billion from Malaysian bonds, outflows that compare well with peers. Still, it is a reminder to Mahathir that the world is watching -- and waiting.
Playing hardball with Goldman is part of cleansing a system that Mahathir helped build in his 1981-2003 stint as leader. It is a sordid period Malaysian officialdom would rather forget, one that seemingly pitted an entire government against George Soros. The American billionaire may be Trump's boogeyman these days, but he was Mahathir's sworn enemy in the 1997-1998 Asian crisis.
The return of a kinder, gentler Mahathir, now 93, puts Malaysia back on global market screens. Mahathir made amends with Anwar Ibrahim, his 1990s deputy who was imprisoned for alleged corruption and sodomy, which he denied. To this day, many believe Anwar's only crime was favoring the Western-style capitalism Mahathir is now embracing (Anwar is widely expected to replace Mahathir in a couple of years).
Along with arresting Najib and going after Goldman, Mahathir has pushed back against China.
He has, for example, scrapped the Chinese-funded East Coast Rail Link amid concerns about new debts and undue influence from Xi Jinping's government. Instead, Mahathir cozied up to Japanese Prime Minister Shinzo Abe, a contrarian bet in the age of China.
The pivot is already reaping dividends. Last week, Abe offered to help Mahathir with his debt, aiding Malaysia in issuing yen-denominated bonds. This "samurai" debt, worth almost $1.8 billion to start, will be guaranteed by the Japan Bank for International Cooperation. Along with low-cost financing, Malaysia will get a kind of Good Housekeeping label from Tokyo. And a chance to play China off against Japan.
Yet Mahathir still needs to convince investors Malaysia can become financially self-reliant. Foreigners own roughly 23% of Malaysia's government debt, a comparatively high proportion.
Predecessor Najib left his nation in a precarious position. Once in power, Mahathir learned the $164 billion debt load Najib claimed was actually $263 billion. Servicing the debt has become more complicated since Mahathir scrapped a 6% goods and services tax, fulfilling a campaign promise.
As a result, the budget deficit is heading in 2018 for a five-year high of 3.7% of gross domestic product. Sliding global oil prices may now threaten the current-account surplus of a resource-rich nation. Mahathir wants to close the gap by hitting state-owned enterprises for dividends, for example, oil behemoth Petronas which is targeted for $12.9 billion in payouts next year, double the 2018 take.
Mahathir should use his 1MDB cleanup to launch deeper economic reforms. On Najib's watch, Malaysia fell six rungs on Transparency International's corruption perceptions index. Today, it ranks 62nd, trailing Saudi Arabia. Mahathir must champion higher standards of corporate governance and merit-based decision-making.
An obvious fix: discard 47-year-old affirmative-action policies favoring ethnic Malays over Chinese and Indian minorities. These quotas stymie efficiency and scare off multinationals. Since the 1MDB scandal erupted in 2016, Malaysia lost seven places in the World Economic Forum's competitiveness report, to 25th from 18th.
Leveling the playing field would create more space for startups, upping the odds Malaysia can beat the middle-income trap. It would enliven a tax base needed to service debt and keep Wall Street happy.
At the six-month mark, Mahathir 2.0 needs to move faster. His determination to tackle the cronyism of the past is helping Malaysia stand its ground as peers take big blows from the market. Yet without bigger forward-looking reforms, the Mahathir bears may have the last laugh -- again.
William Pesek is an award-winning Tokyo-based journalist and author of "Japanization: What the World Can Learn from Japan's Lost Decades." He was given the 2018 prize for excellence in opinion writing by the Society of Publishers in Asia, for his work for the Nikkei Asian Review.