Malaysian premier Abdullah Ahmad Badawi visited Washington, London and Paris with calculation. Discussing security and trade, Malaysia's role in fighting Islamic terrorism earned Abdullah praise from US President George W Bush and British premier Tony Blair. Blair venerated Malaysia as a 'model' peaceful, secularist Islamic state for Muslims to emulate.

Meanwhile, Malaysia's truculent trade minister, Rafidah Aziz, was in Melbourne to talk up trade and explore a bilateral free trade agreement (FTA) with Australia this after Malaysia had consigned Australia as an irrelevant British colonial outpost and America's deputy sheriff in Asia.

Back home, Malaysia's state-controlled media editorialised Abdullah's diplomatic 'success', while the proposed Malaysia-Australia FTA was barely mentioned. Abdullah's success was measured the usual way praise, not substance, heaped on Malaysia by others, particularly powerful Westerners.

Malaysia still suffers from colonial cringe, and such eulogies help salvage Malaysia's tortured soul. Which is why Malaysia remains big on perpetuating the national psyche of self-grandeur through constant barrages of self-promotion, a hang over from the Mahathir years.

The spin and drivel will stay, but Abdullah is changing Malaysia's staunch pro-Muslim and pro-Asia foreign policy focus. After 22 years of Mahathir's grand posturing on foreign policy, his signature anti-West recalcitrance and schizophrenic Asia-only neo-nationalism have proved banal.

New leader, direction

Abdullah, aware that Malaysian foreign policy is hopelessly imbalanced, recognises that neighbours and primary economic competitors Indonesia, Singapore, the Philippines and Thailand have been realigning their policies westward. Amid transnational terrorism, Malaysia, like Australia, seeks 'great and powerful friends' in the US.

Since becoming premier, Abdullah has been dodging Mahathirist bluster on Asia-only economic regionalism, mostly as a result of the facile East Asia Economic Caucus. Mahathir wanted it to bury the Australia-mooted, US-dominated multilateral Asia Pacific Economic Conference (Apec).

But Asia paid it only lip service. Even Mahathir's Asia-only, yen-dominated currency bloc has collapsed, as will his Arab-dinar common currency plan. As such, Abdullah dispatching Rafidah to Australia to talk up an FTA is no great surprise.

Bilateral FTAs have become popular since multilateral organisations like Apec and Asean have proved farcical and are on the brink of inevitable collapse. All seriously lack political will and broad, sustainable consensus among member states on genuine tariff reductions.

The WTO 'victory' in Geneva of putting the Doha round on global trade liberalisation back on track will also come unstuck. Intractable differences between Western, semi-developed and underdeveloped Third World states and their powerful competing social forces will return the Geneva 'coup' to the Cancun position.

The region's FTAs have been spearheaded by New Zealand, Singapore and Australia with other nations quickly jumping onto the bandwagon. However, despite being naively seen as an 'open' economy, Malaysia is among Asia's worst protectionists.

Malaysia's economy remains highly import-substitution based and inept, notwithstanding its foreign export-oriented sector. Moreover, the Malaysian state's powerful business cronies and rentier capitalists control this sector.

Rafidah claims 96 percent of Malaysian products are now tariff free. Perhaps, but they hold little trade value. Potential stakes in national car maker Proton, steel, telcos and agri-business will be blocked.

Any FTA involving Malaysia can only be partially successful. Malaysia must be pressured into tearing down high tariff walls to the domestic economy at a rate faster than Kuala Lumpur is willing.

But that'll also depend on whether Abdullah is willing to unshackle crony political and economic structures, while forcing real economic reforms that have been absent since the late '90s Asian crisis. Don't bank on this, though.

Appeasing the US

For the sake Bush's re-election campaign, China's grip on the currency peg came under fire from the US again. Malaysia also retains its currency peg, but neither Bush nor John Howard will press Malaysia to drop it.

In world terms Malaysia, like Australia, is too small and inconsequential something Abdullah knows. Which is why he has been taking a less strident position on US policy in the Middle East and Southeast Asia.

Realists' naively claim Malaysia's vital role against Islamic terrorism. It has done just enough to roll back Islamic fundamentalism in Malaysia enough to appease Bush and his followers.

Malaysia has already acceded to the US and Australia to 'host' an anti-terrorism centre, funded by Washington, with US and Australian intelligence agencies to play key roles here. It'll also accede to US pressure for US-led military patrols in the Malacca Strait vital for East-West trade and for the free passage of Arab oil to the massively oil-dependent Asian economies.

Nowadays, Malaysia's economy is highly dependent on growing Malaysian-US relations that Mahathir previously eroded. And the US economy, the world's largest, is crucial for Malaysia's unreformed and uncompetitive labour-intensive economy.

As the multilateral trading system remains shaky, bilateral trade with the US will become more important and increasingly tied to security. Malaysia is fishing for a US FTA.

Australia has shown that cultivating strong security ties with its great and powerful friend in Washington curries favours, like expediting bilateral FTAs. Here, Australia could prove handy for Malaysia, and full trade ties could thaw the icy Malaysian-Australian relations that have prevailed since Mahathir became premier.

Thus, Mahathir's recent departure can only be seen as good for both sides, and for Malaysian foreign policy. Still, Abdullah will have to tread gingerly; loyal Mahathir neo-nationalists still occupy powerful positions of political influence. He'll have to weed them out, and quickly.

MANJIT BHATIA, an academician and writer, is also research director of AsiaRisk, a political, economic and risk analysis consultancy in Australia. He specialises in international economics and politics, with a focus on the Asia-Pacific.