A big worry in Iraq and the wider Middle East is that Islam and modernization are enemies. But Malaysian history over the past three decades shows that this belief is mistaken. In fact, Islamization has proved to be an effective political means of reconciling the majority of Malays to the country's rapid economic development.
In the early 1970s, when it was still an overwhelmingly agrarian country and Islamization was just gaining momentum, Malaysia embarked on its so-called "New Economic Policy" (NEP), designed to help the majority Malays gain a bigger share of the country's wealth. After three decades of spectacular economic growth, many Malays have become prosperous and content not only through secular capitalism, but through the country's renewed sense of Islamic identity, one which -- for the most part -- embraced modernization. (Of course, paradoxes appear every now and then, such as when globalization is advocated alongside demands for stronger censorship.)
Islamic-minded politicians such as Anwar Ibrahim gained prominence when Islamization took off in the 1970s. But the Islam they promoted was not backward looking; instead, it sought to shape a modernizing economic policy that took note of Muslim sensibilities.
Faced with the grassroots popularity of this movement, by 1982 the government of then prime minister Mahathir Mohamed decided to co-opt Anwar Ibrahim into his United Malays National Organization (UMNO), the dominant party within the country's ruling coalition. The strategy worked well, and helped defuse Islamic opposition to the wrenching changes that accompanied the country's rapid economic modernization.
During the 1990s, however, Anwar increased his influence within the party, unsettling many of the old guard. Matters came to a head after the 1997 financial crisis, when Anwar, the deputy prime minister, adopted an even more economically liberal approach than Mahathir. Partly in response to this challenge, Anwar was sacked.
Anwar's bizarre trial and sentencing on charges of sodomy and abuse of power invigorated the reformasi movement, as growing anti-UMNO and anti-Mahathir sentiments took hold among Islamic-minded Malays. This culminated in poor electoral results for the ruling coalition in November 1999.
The Islamist party, Parti Islam SeMalaysia (PAS), took power in the states of Kelantan and Trengganu and strongly threatened UMNO in other northern states. The personal conflict between Mahathir and Anwar thus led to an apparent rupture between Malaysia's Islamist political forces and the modernizers of UMNO.
So, once again, Mahathir felt pressure to adopt a strategy aimed at preventing Islam from becoming a tool of opposition. This impulse strongly affected his choice of a successor when he decided to step down as prime minister. His choice of Abdullah Badawi, the current prime minister, helped UMNO regain the Islamist moral high ground that the PAS had been claiming.
It was the beginning of the US' global "war on terror" in 2001, however, that brought the political march of the Islamist parties to a screeching halt, as it provided an excuse for the government to crack down on the Malay right and the PAS.
But this only renewed UMNO's desire to portray itself as sufficiently Islamist. So, before stepping down, Mahathir went so far as to declare Malaysia a de facto Muslim state. Eyebrows were raised and questions were asked about the lengths to which Mahathir would go to counteract the Islamist appeal.