With Malaysia in the midst of a crackdown on political dissent with the first use of the draconian Internal Security Act in at least half a decade and Prime Minister Abdullah Ahmad Badawi under fire from both domestic and international human rights organizations, where does the country stand today? Will dissent increase? Is Abdullah Badawi in electoral trouble? Will unrest spread outside of the opposition parties to the populace at large? What do the demonstrations mean for investors?

The answers are mixed. Despite a general feeling of malaise over the economy, it actually grew at the fastest pace since 2005 — 6.7 percent in the third quarter — on rising domestic demand and investment as well as commodity exports, although manufactured exports declined somewhat. So far, unrest appears to have been contained largely within the opposition despite widespread grumbling, particularly on the Internet, and does not appear to be concerning investors. The Japan External Trade Organisation (Jetro) said in its 2008 Economic Outlook for East Asia, released this week, that reduced corporate taxes are expected to continue to lure foreign investment. Nobody is particularly nervous about the protests.

Unless there is a dramatic change, it is inconceivable that the Barisan Nasional, the collection of ethnically-based political parties that make up the national ruling coalition, would lose an election when it is called, expected to be sometime next year. But by Malaysian standards the electorate may deliver a blow to the Barisan, which has ruled the country since independence in 1957. Ethnic Chinese, who make up 23.7 percent of the population according to the CIA World Factbook, have been disenchanted by rising Malay bellicosity and widespread reports of corruption.

Rural Malays can largely be expected to continue to support the Barisan and the United Malays National Organisation, the leading ethnic party in the coalition because of the benefits delivered to them by the National Development Plan, the successor to the New Economic Policy or NEP in the form of schooling, redistribution of wealth and other assistance. Commodity prices, because of China’s voracious appetite, are up, particularly for palm oil and rubber.

Although urban professional Malays in Kuala Lumpur and other cities appear to be increasingly unhappy with what they regard as the hijacking of the NEP by rent-seeking cronies and a series of events involving local corruption, nothing has galvanized them into real action against the Barisan. For one thing, their options are relatively limited. The jeans-wearing BMW drivers and their companions in the urban areas who have forsaken strict Islamic dress have little in common with the ascetic Islamic foundations of Parti Sa-Islam Malaysia, the biggest Malay opposition party outside the coalition.

There appears to be little trust for the opposition leader Anwar Ibrahim and Parti Keadilan Rakyat despite his charisma, partly because he is perceived to be too close to the International Monetary Fund and the Washington Consensus. A recent statement by the US Department of State calling on Malaysia to respect human rights was perceived as an effort to help restore Anwar to the power he lost when he was fired as deputy prime minister by Mahathir Mohamad and subsequently jailed on charges of corruption and sexual misconduct. The charges of sexual misconduct were later reversed. The charges have been widely viewed as trumped up. However, in recent weeks, an internet site perceived as favorable to Abdullah Badawi’s son-in-law, Khairy Jamiluddin, has begun to sprout with other tales of sexual misconduct, including a purported 10-year-old videotape of a woman filing a police complaint against him for attempting to fondle her breast, and another purportedly tapped suggestive telephone call between Anwar and a woman.

Demonstrations organized by opposition parties and civic organizations, particularly Bersih, which brought out as many as 30,000 people on Nov. 10, energized a surprising number of urban, middle-class Malays as well as the fundamentalists organized by Parti sa-Islam Malaysia, or PAS, the Islamic opposition party. Urban Malays talk of “teaching the Barisan a lesson,” but it is not likely to be a lesson that will sink the coalition. Some key urban areas could go to the opposition, particularly cities dominated by the Chinese such as Penang.

Penang looks shaky because the Chinese there are very unhappy because of a controversial project in the prime minister’s home state, the Penang Global City Centre. It is being built on a 104-hectare site now occupied by the Penang Turf Club by an entrepreneur named Patrick Lim, who has been nicknamed Patrick Badawi because of his close ties to the prime minister. While cronyism is nowhere near the levels it reached during the reign of the previous prime minister, the project has stirred criticism, which has been exacerbated by what many people consider the inappropriate use of Abdullah Badawi’s name by Khairy.

One well-connected analyst told Asia Sentinel that because Chinese and Indian voters are increasingly frustrated by the political situation and leaning towards voting for the opposition, particularly in major cities including Penang, Kuala Lumpur, Ipoh and Johor, UMNO leaders see their path to preserving their majority as playing to ethnic tensions. “You are going to see a lot more keris-waving before the election,” he said, a reference to the wavy-bladed dagger that forms a part of Malay ceremonial costumes. UMNO leaders have occasionally got carried away and waved the daggers, vowing to bathe them in Chinese blood.

The demonstrations themselves have caused massive traffic jams in Kuala Lumpur, the latest on Tuesday as police sought to keep opposition leaders away from the Dewan Rakyat, or Parliament building where they sought to present a petition for electoral reform. They have been largely organized by opposition parties and it is unclear how far participation has spread outside the opposition. Malaysians are particularly averse to demonstrations. The traumatic 40-year-old events of May 1969, when hundreds of people died in ethnic riots in Kuala Lumpur and other cities, seem to Malaysians — partly because the government keeps reminding them — to have happened only yesterday. Consequently, urban residents, while sympathetic to the need for change, have very little patience for the disruption of their daily lives.

They have particularly little patience with Hindraf, the Hindu Rights Reaction Force, five of whose members were detained Thursday under the ISA and which organized a demonstration on Nov. 25 that drew another 30,000 protesters, all Indians, protesting that Indians were the lowest-income ethnic group in the country. Hindraf sent a petition to the Queen of England, asking for redress of US$4 trillion — US$1 million for every Indian resident of Malaysia — for bringing the Indians from India to work in rubber plantations, build roads and do other tasks during the colonial period. The assertion of Indian poverty was quickly contradicted by Malaysia’s Economic Planning Unit director-general, Sulaiman Mahbob, who said that average household income for Indians in 2004 stood at RM3,456 a month, while Malays’ monthly average household income was RM2,711. For the Chinese, monthly average household income was RM4,437.

On balance, while there seems to be general irritation on the part of voters, it is concentrated in pockets and it doesn’t seem to extend to the population at large. If the election were to cost the coalition some of the bigger cities, and especially if the coalition’s balance of power in the Dewan Rakyat fell below its historic two-thirds margin, Abdullah Badawi would be in trouble.

Not with the electorate at large, but in the country’s real election — the UMNO party elections that may be held in 2008 or 2009. If Abdullah Badawi is perceived to still be in trouble, the man waiting in the wings is Najib, despite the hot breath of scandal over allegations of the purchase of submarines and jet fighters that appeared to guarantee fat commissions for friends, and for the alleged involvement of his bodyguards and best friend who are now on trial for the gruesome murder of a Mongolian translator.

Najib is the man who has been delivering the bacon to the Malay rank and file. So far, barring dramatic announcements, he appears to be the beneficiary of Abdullah Badawi’s troubles.