by James Hookway
Wall Street Journal

Malaysian leader Najib Razak pointed to the acquittal this week of opposition leader Anwar Ibrahim as evidence he’s serious about political reforms, even inviting an election battle that could propel him out of power.

Eager to paint himself as a leader of the Malaysia’s most sweeping political reforms since independence, Mr. Najib appears to be betting that the judiciary’s release of Mr. Anwar would help rather than hurt him politically.

Three days after Malaysia’s High Court acquitted Mr. Anwar on sodomy charges this week, Mr. Najib said in an interview Thursday that both the government and opposition camps will step up their race to claim the center-ground of Malaysian politics in the coming months—but that this will only strengthen the predominantly Muslim country and provide a fresh example that democracy and Islam can coexist.

Once the verdict was released, “all of the tension surrounding the trial suddenly fell away and people suddenly realized there are more important things than just the Anwar issue,” such as economic growth, Mr. Najib said in the interview in his office in Malaysia’s administrative capital, carved out of the palm-oil plantations and jungle surrounding the commercial hub of Kuala Lumpur.

“What is important now is that we move forward,” he said, ticking off new measures to make elections more transparent ahead of the next vote, which is due by March 2013, but could be called as early as a month or two from now, and laying out plans to roll back press censorship and limit the government’s powers to hold suspects without charge. Malaysia’s parliament has already repealed several laws that allow for warrantless detention, and is working on other steps.

Many Malaysians continue to doubt the sincerity of Mr. Najib’s push to court the political middle in Malaysia, an important U.S. trading partner. Some activists say they fear the next elections won’t be free and fair, which the government denies, and many of Mr. Najib’s reforms over the past several years—including liberalization of the country’s economy–have fallen well short of investors’ hopes.

Mr. Najib, though, is trying to position his administration among a growing number of others across Asia that have given their citizens more political freedoms in recent months, even if it means stripping the ruling United Malays National Organization of some of the advantages it has enjoyed in past elections.

Thailand’s army—which has often intervened in politics in the past—stood aside to let the populist Puea Thai, or For Thais, Party sweep to power in a landslide election win last July. Myanmar’s leaders have launched a closely-watched effort to reform that country’s politics and reverse its reputation as an oppressive police state, while Singapore has taken steps to expand the political space for its opposition leaders.

Mr. Najib says Malayisa’s changes could provide the U.S. with a new partner in promoting democratic politics and free trade across Asia and the Islamic Middle East, Mr. Najib says.

“America considers Malaysia a moderate, progressive Muslim country, so in terms of their engagement with the Muslim world it is important that we are perceived as a democratic country,” said Mr. Najib, the 58-year-old British-educated son of a former prime minister.

Once famed as the country that rose from a colonial backwater to build the cloud-scraping Petronas Twin Towers, Malaysia has suffered a series of black eyes in recent years, including the trials of Mr. Anwar, the opposition leader.

A one-time deputy prime minister, Mr. Anwar was sacked from the government in 1998 after challenging the leadership of former Prime Minister Mahathir Mohamad and was accused of sodomizing a speechwriter and a chauffeur. Anwar denied the charges, saying they were part of a government plot to silence dissent. He spent six years in jail before his conviction was overturned in 2004, the year after Dr. Mahathir stepped down. Dr. Mahathir denies conspiring against Mr. Anwar.

Then, after leading a new multiethnic opposition alliance to its best election performance in years during 2008’s national polls, Mr. Anwar was again arrested after a male aide accused the 64-year-old opposition leader of sodomizing him in a Kuala Lumpur condominium. Again, Mr. Anwar said the accusations were a government plot—a claim which Mr. Najib denies.

Last July, meanwhile, foreign governments criticized the way riot police used water cannons and tear gas to break a mass demonstration in support of cleaner, fairer elections.

Mr. Najib responded with a series of political reforms. He said Thursday that Mr. Anwar’s acquittal underscores the depth of the reform process.

“It shows that as chief executive of the country, I don’t interfere in the judiciary,” he said.

Some analysts say Mr. Najib may have concluded it is better to have Mr. Anwar out of jail than behind bars. Johan Saravanamuttu at the Institute of Southeast Asian Studies in Singapore said that Mr. Anwar is a known quantity outside prison.

“Inside, the sympathy factor would be great in an impending election,” he said.

Nor will the election fight likely be entirely clean. Both government and opposition camps have lobbed sexual accusations against each other.

Some of Mr. Anwar’s foes last year presented a videotape to the media which they say portrayed Mr. Anwar having sex with a prostitute, which Mr. Anwar denied. Prosecutors may also still appeal his recent acquittal in the sodomy case.

Some opposition activists, meanwhile, have tried to link Mr. Najib and his wife to the murder of a Mongolian model who once had an affair with one of Mr. Najib’s closest advisers. Mr. Najib denies having anything to do with 2006 death of Altantuya Shaariibuu, whose body was destroyed with plastic explosives.

Both sides, though, seem to sense that the outcome of the vote depends on whether they can capture mainstream voters who are more interested in the economy than scandals.

Mr. Anwar told The Wall Street Journal earlier this week that he is now reconfiguring the opposition alliance to tackle a gamut of issues in the upcoming vote, from ensuring greater economic freedoms to tackling poverty and stamping out corruption.

Mr. Najib is countering by pointing to the way he has already rolled back parts of the country’s decades old-affirmative action policies, which were designed to boost the country’s majority Muslim Malay population but which are hugely unpopular among Malaysia’s large ethnic Chinese and Indian minorities.

On Thursday, he told members at a local sports club that they face a choice between an administration pushing economic development “or a man who talks of ‘toppling governments’ and ‘overthrowing’ elected officials,” in reference to Mr. Anwar.

Mr. Najib also gets to choose the date of the election in Malaysia’s parliamentary system, a significant advantage.

In his interview Thursday, Mr. Najib said he hopes the vote will be “soon” but added that his government still has to show that its economic reforms are producing real results before he is ready to go to the ballot box amid mounting speculation the worsening global economy might push him to call a vote sooner rather than later.

“Essentially, it’s a call you have to make on the basis of a feel-good factor, and that’s when you press the button,” he said.

“Essentially, it’s a call you have to make on the basis of a feel-good factor, and that’s when you press the button. But of course at the end of the day it’s a rather intuitive decision,” Mr. Najib told The Wall Street Journal in an interview at his offices in Malaysia’s administrative capital, Putrajaya.

“You can have all the polling numbers but you must have the sense that this is the right time. I hope it will be the right time soon enough, but we still have to deliver on our promises and it’s important for people to have the feeling that the reforms we have promised will actually benefit them,” he said.

Mr. Najib has to call an election by March 2013.

He acknowledged that the deteriorating global economic environment, especially the persistent debt crisis in Europe, could complicate his decision about when to call a vote. A worsening outlook could encourage him to call an election sooner than planned. “But so far we are still quite comfortable because our exposure to the EU in terms of total trade is only about 9%, so we are less vulnerable,” he said. “But a euro-zone collapse or some other catastrophe there will affect the whole world.”

Turning to the Anwar verdict, Mr. Najib said it was unclear whether prosecutors would opt to appeal the High Court decision, saying it was a matter for the attorney general, although he added that the acquittal would likely help to convince critics that the government doesn’t interfere in politically charged judicial cases.

Mr. Anwar has accused Mr. Najib’s government of orchestrating the case against him after a former male aide accused the opposition leader of sodomizing him in 2008. Mr. Najib denies having anything to do with the case.