Malaysia’s prime minister, Mahathir Mohamad, resigned on Monday but was then asked to stay on as interim PM in a day of political drama and confusion.

The king accepted Mahathir’s resignation before appointing him as interim prime minister that evening.

The moves prompted the collapse of the ruling alliance and uncertainty over the future leadership of the country.

The crisis began after Mahathir’s supporters apparently attempted to form a new coalition, preventing the appointment of his agreed successor, Anwar Ibrahim.

Mahathir had promised Anwar he would succeed him as prime minister when the fierce rivals partnered in an unlikely alliance that won power less than two years ago.

Anwar was previously jailed over sodomy allegations under Mahathir’s rule, charges widely criticised as politically motivated. On Monday, he said the prime minister had told him “he played no part” in attempts to form a new government.

Some speculate that Mahathir was behind the drive to form a new coalition, and that he may have resigned in an attempt to reinstate himself in a more powerful position. Others suggest he is likely to have been aware of the discussions being held by those in his party.

Regardless of how involved Mahathir was with his supporters’ activities, he appeared to have reaped huge gains from the episode, said Bridget Welsh, an honorary research fellow at the University of Nottingham Malaysia’s Asia Research Institute. “Right now he has the most power he’s had since May 2018, because he is no longer as dependent on the other parties,” she said.

Two possible outcomes are that he could form a new government with those who have called for him to stay with the ruling alliance, Pakatan Harapan.

Alternatively, he could follow his traditional supporters, who have abandoned the alliance and are in talks with Malaysia’s Islamic party, PAS, and with the United Malays National Organisation (Umno), the party he ousted in 2018, which is mired by corruption charges.

It is unclear whether Mahathir – who has long refused to announce a date for Anwar to take over as prime minister – intends to stand down as prime minister. Welsh said it was likely he would continue for longer than the short window in which he must form a government.

“That is something that is probably being negotiated. There will be people who will want him to have a clear date, but he has a lot of influence,” she said. “He has been able to command the loyalty of every single political party in the manner of three days.”

A snap election could be called, and those remaining within Pakatan Harapan, which has lost four of five recent byelections, may be concerned about their prospects if a Malaysians are asked to go to the polls.

Welsh said the political games played out on Monday were unlikely to impress the public. There was also concern about what a new government might mean for minorities.

Prof James Chin, the director of the Asia Institute Tasmania at the University of Tasmania, said: “The possible outcome is that you have a much stronger Malay-centric government with a much more Islamic outlook. This is very bad news for non-Malays – the Chinese and Indian communities in Malaysia make up more than 30% of the population.”

As rival politicians rushed to meetings to forge deals and consolidate their numbers, the country’s stock markets plunged. The political turmoil comes at a time when Malaysia’s economy already faces the threat of coronavirus, and as trials relating to the world’s largest kleptocracy case, the 1MDB saga, continue.

Q&A What is Malaysia’s 1MDB financial scandal? Show Hide Malaysia’s extraordinary 1MDB corruption scandal allegedly involved billions being stolen from the country's sovereign wealth fund and spent on everything from Hollywood films to handbags.



Former prime minister Najib Razak was arrested in the 1MDB corruption inquiry set up by his successor, which engulfed the ex-leader and his cronies and resulted in his loss at elections in May 2018.



1Malaysia Development Berhad (1MDB) is a state investment fund that Najib launched in 2009 shortly after becoming prime minister.



Its portfolio has included power stations and other energy assets in Malaysia and the Middle East, and real estate in Kuala Lumpur.



The fund was closely overseen by Najib.



Whistleblowers say Low Taek Jho, or ‘Jho Low’, a shadowy, jet-setting Malaysian financier close to Najib but who has no official positions, helped set up 1MDB and made key financial decisions. Jho has now been charged with conspiring to launder billions of dollars embezzled from 1MDB by the US Department of Justice, though he remains at large. After the scandal emerged, Najib purged 1MDB critics from his government, curbed domestic investigations, enacted a tough new security law and generally lurched to the right.



But the issue exploded in July 2015, when the Wall Street Journal published documents showing Najib received at least $681m (£518m) in payments to his personal bank accounts.



The US justice department has piled on the pressure by filing lawsuits to seize $1.7bn in assets it said were purchased with stolen 1MDB money.



Najib's dramatic election loss in 2018 left him facing the possibility of prosecution and imprisonment.



The election winner, 93-year-old Mahathir Mohamad, pledged to investigate the scandal and try to recover stolen funds from 1MDB that have been sent abroad.



Mahathir’s supporters reportedly held talks with Umno on Sunday at a hotel near Kuala Lumpur about a possible new alliance. On Monday, his Bersatu party announced it would leave the ruling alliance and support him as leader.

Shortly afterwards, in another surprising announcement, Bersatu said it had also received a letter from Mahathir resigning as party chairman. Eleven other lawmakers, including several cabinet ministers, announced they would quit Anwar’s party.

Anwar said on Monday that Mahathir had spoken to him and been “very clear that in no way will he ever work with those associated with the past regime”, referring to those implicated.

Anwar also accused Mahathir ’s party and “traitors” in his own camp of plotting a change in the ruling coalition that would exclude him from taking power.

'I love him': Malaysian PM and former rival publicly bury hatchet after 20 years Read more

He served as deputy prime minister and finance minister during Mahathir’s first 22-year stint in office under Umno, but was sacked in 1998 after they clashed over economic policy during the Asian financial crisis.

Anwar was jailed twice on sodomy charges that were widely viewed as politically motivated. He was released on a royal pardon after the 2018 election.