In what can only be regarded as a gauntlet flung down to Malaysia’s minority races, former Prime Minister Mahathir Mohamad is due to provide the keynote address for a mammoth Malay rights rally in the eastern state of Terengganu on Thursday, May 13, the 41st anniversary of the worst racial riots ever to occur in the country.

Some 10,000 people representing some 45 Malay-rights groups are expected to attend the rally in a stadium in Kuala Terengganu, according to local newspapers. The organizer is a Malay rights organization called Gerakan Kebangkitan Rakyat, or Gertak for short, which means “scare” in the Malay language.

Leaders of the fundamentalist Islamic Parti Islam se-Malaysia, or PAS, condemned the plans to hold the upcoming event. PAS vice-president Salahuddin Ayub and secretary-general Mustafa Ali described it as dangerous and “bordering on extremism.”

“We are taking serious steps (on this) so that the public is aware and told that (the organizing group) are dangerous, and that the people should stay away from them,” Salahuddin told local media.

The May 13 incident, as it is known, was a traumatic episode that seemingly remains fresh in most Malaysian minds despite the fact that it occurred in 1969. Although officially only 196 people were officially listed as killed during the riots, which went on sporadically for more than two months, some estimates are that as many as 2,000 people were killed, mainly in Kuala Lumpur as ethnic Malays and Chinese battled it out. The riots ultimately resulted in the suspension of parliament. To this day, Malaysian politicians on all sides refer to the riots constantly.

The riots were also the wellsprings of the New Economic Policy, instituted in 1971, an affirmative action program established for ethnic Malays, who at that time occupied the bottom economic rungs of Malaysian society, while the Chinese largely ran the economy. Expected to last only until 1990, it was reconstituted under a new name, the National Development Policy, but stayed basically unchanged. It is still referred to by most as the NEP. And, critics say, it has largely failed.

But doing away with it at this point appears extremely difficult if not impossible. Prime Minister Najib Tun Razak is calling for a New Economic Model that would cut back on some Malay privileges to increase national competitiveness. However, his efforts have generated a growing backlash among ethnic Malays and in public pronouncements he has indicated that the special position of ethnic Malays will be maintained in some form.

The 84-year-old Mahathir has played an increasing role in demanding special rights, or ketuanan Melayu. He has appeared at a series of rallies to point out that the concept of special rights goes back to the founding fathers of the country despite the fact that equality is enshrined in the Constitution.

Mahathir’s comments themselves have been relatively mild, however. In his blog, Che Det, which is read by tens of thousands of Malaysians, he wrote recently that “The BN must remember that in the 2008 election it lost a lot of seats. Where it won the margins are very small. If a few hundred Malays decide not to vote BN, even the seats that it had won would be lost in the 13th General Election. UMNO and the Government are facing a dilemma. In trying to win over the Chinese with allocations and abolishing New Economic Policy provisions, the BN will lose Malay support as indeed it did in 2008. On the other hand no matter how the Government try to satisfy Chinese demands, the Chinese have clearly rejected the BN.

“The opposition is no alternative. They have shown no capacity to rule. Playing race politics in Malaysia is dangerous. This country may find itself being governed by a weak Government. There will be more politicking and more racial conflicts. There will be instability and chaos. Then everyone, whatever race he may be will suffer.”

Race politics are raising problems for Najib, who has allocated US$24 million to be spent through the US public relations giant APCO on his 1Malaysia campaign designed to bring the country’s three disparate races together and to seek to rebuild the Barisan Nasional, or ruling national coalition.

It is also raising problems for his New Economic Model, which has been delayed repeatedly since he took office in April 2009 as he attempts to maneuver the fine line between economic liberalization and alienating his base. After a major speech at the end of March giving broad outlines, the details have been delayed until the release of the 10th Malaysia Plan, probably next month.

His decision to remove a long-standing requirement demanding ethnic Malay participation in 27 economic sub-sectors and a requirement that 30 percent of IPO shares go to ethnic Malays caused unease among his constituents. In particular, an NGO named Perkasa has been growing rapidly and appealing to Malay outrage over perceptions of cuts to Malay privileges.