He may be a colorful and easy target for economic pundits, as well as having a reputation as a paranoid anti-Semite, but Malaysian Prime Minister Mahathir Mohamad is poised to become the international economic guru du jour.

On Wednesday, Treasury Secretary Lawrence Summers announced the creation of an international financial cabal to stem disruptive and disjointed global reforms, and last week Joseph Stiglitz of the World Bank was lauding currency controls. Both of these measures have in the past been championed by Mahathir.

Here is the man whom financier George Soros once described as "a menace to his own country, who should not be taken seriously," now being praised by international decision makers.

"I think in the context ... of the quick recovery in Malaysia, the fact that the adverse effects that were predicted -- some might say by some people wished upon Malaysia -- did not occur, is also an important lesson," Stiglitz said last week.

Before it was Soros who was on the defensive, retorting to Mahathir's accusations of detrimental hedge-fund speculations. This year, however, amid the fallout from the revelations over Russian Mafia money laundering and possible Ecuadorian default, it is the International Monetary Fund and World Bank that must defend themselves against Mahathir-like criticisms.

Early in the Asian crisis, Mahathir proved himself a conspiracy theorist extraordinaire. At the IMF-World Bank meeting two years ago, he claimed the Asian landslide was orchestrated or at very least exacerbated by large currency speculators like George Soros acting on instructions from -- oh, yes, it had to be -- the U.S. government, whose ultimate goal was to humble the Asian tigers.

Now the Great Satan, sweating over a weaker dollar and stronger yen, is rallying the troops behind "the Group of 20," to comprise the world's wealthiest nations and a geographically diverse representation from developing nations. The group, designed to develop future reforms to the international financial system, will be launched this weekend at the G7 finance ministers meeting in Washington, preceding the annual general meetings of the World Bank and the IMF.

Mahathir, who had criticized the "old beggar-thy-neighbor instinct of a group of ultrarich people," should appreciate the regional and economic diversity of the Group of 20, and he should pat himself on the back for the idea. Back in December 1997, he called for the World Trade Organization to draw regulations controlling international currency trading.

Previously, he had suggested that a new international finance fund should be created to monitor currency transactions and hedge-fund speculations. One could wonder that had such a body been in place, the Long Term Capital Management fiasco might been averted.

International observers fretted that Mahathir's ravings would drive more investors away, deepening the crisis in Kuala Lampur, but Malaysia has weathered the storm in typical iconoclastic fashion.

Following the ruble's plunge last year, Malaysia went against the grain and imposed short-term capital controls. The country locked in all foreign capital, pegged its currency to the dollar and later added a hefty tax on money leaving the country. The results? In lieu of complete devastation, Malaysia will experience an estimated 1% growth by year's end, partly reversing precontrol contractions of 7.5%.

"It seems like they succeeded in targeting it correctly, which I think is important that governments with good administrative capacity can fine-tune some of these procedures, particularly for short-term interventions in a very unstable world," said Stiglitz.

Such praise is dangerous, warns Mark Mobius, head of emerging markets at Franklin Templeton. In an earlier interview with TheStreet.com he warned that "the future of emerging markets around the world will be threatened" if such currency controls were touted.

Ruth Krivoy, president of consultancy Sintesis Financiera and former president of the Central Bank of Venezuela, cautions that Sitglitz's statements and the restructuring of Ecuadorian debt are two troubling precedents that other developing nation's governments, including Venezuela, may see as useful in desperate times.

While Malaysia has relaxed the majority of its controls, its short-term success has placed capital controls on the list of topics to be debated during special assemblies at the IMF/World Bank meetings next week.

Before other countries risk deeper recessions with their own currency controls, finance ministers should note the pressing long-term problems that Mahathir is refusing to acknowledge and which continue to threaten his and other economies -- irrational capital allocation, little domestic demand, low return on capital investments and a damaged banking system.

Nonetheless, Mahathir has shown himself to be an abrasive, often offensive and individualistic leader to be heard rather than dismissed completely. Granted, Mahathir's insistent call for a ban on currency trading will probably not be adopted by the world's finance ministers, but then again, who knows what an inspired Group of 20 with a little distance from Mahathir's rhetoric may prescribe?

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