Wirathu, a monk who has been described as ‘the Buddhist Bin Laden’, was preaching a sermon on the outskirts of Mandalay, Burma’s second biggest city, on Sunday night when a home-made bomb went off inside a parked car. Five people – a child novice monk, three women and a man – were slightly injured by the blast and taken to hospital. Wirathu himself, standing at least 12 metres away, was unharmed.

A petite figure, barely five feet tall with cupid bow lips, Wirathu was jailed in 2003 after making an anti-Muslim speech in Kyauk Sae, the home town of the former dictator, Senior General Than Shwe. Released in an amnesty, he has singlehandedly done more to destroy the image of Burmese Buddhism in the world’s eyes than all the nation’s half million monks put together.

After Sunday’s explosion, Wirathu immediately described the blast as “the work of Islamic extremists”, adding that “ordinary Muslims wouldn’t have done this.” He offered no evidence for his claim.

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In the spring, speaking in his leafy monastery in Mandalay, he told The Independent that he did not condone the murder of Muslims, let alone encourage it. But he is widely seen as the main inspiration for attacks on the Muslim minority which have taken at least 250 lives in the past year, and made 140,000 people homeless.

Belying the traditional Buddhist hallmarks of mildness and serenity, he makes no bones about his hostility to Islam. “You can be full of kindness and love,” he said recently, “but you cannot sleep next to a mad dog. I call [Muslims] troublemakers because they are troublemakers.”

Burmese police have yet to make any statement about their investigation, but that did not hold Wirathu back. He told Radio Free Asia’s Burmese service, “I’ve no idea who exactly carried out this explosion. But it must have been done by those who usually carry out terrorist acts. The motive could be to shut my mouth.”

Wirathu is the man behind an anti-Muslim movement in Burma called 969, which aims to persuade Buddhists – who make up more than 90 per cent of the population – to shun companies owned or operated by Muslims, a small minority in the country but disproportionately concentrated in shops.

The current wave of communal violence erupted in Rakhine state (also known as Arakan), in the far west of the country, in June last year after a young Buddhist woman was raped and murdered by Muslims. President Thein Sein declared martial law and sent in the army.

Explaining his campaign, Wirathu told The Independent, “Our goal is a strategic one. We represent Burma’s 135 ethnic groups. We are urging members of those ethnic groups not to follow the Muslim religion and not to sell anything to Muslims, and that includes paddy fields and houses.”

The 969 campaign urges Buddhist shopkeepers, taxi drivers and the like to display stickers identifying themselves as Buddhists, and tells Buddhist consumers to shun those who do not display the sticker. “The reason,” Wirathu explained, “is because we have to protect our religion. If we trade with the Muslims, they become rich: many Muslims have grown rich and have built big houses for themselves, and mosques, and slaughterhouses, which are a problem for Buddhism. Muslims are now dominating the Burmese economy.” The monk has also led a campaign for a law restricting marriages between Buddhist women and Muslim men.

There have been frequent outbreaks of violence between Buddhists and Muslims over the past half century, especially in Arakan state, which shares a long and porous border with Bangladesh. These attacks were often incited by the military junta as a way to deflect attention from economic and other domestic problems.

But the attacks which began last year were much worse than any before. Enraged mobs attacked Muslim colonies with swords, chains and sticks and burned many homes to the ground, forcing tens of thousands of Muslims to flee. There was a second bout of violence in the state in October; a detailed report by Human Rights Watch, entitled “All You Can Do Is Pray” and published in April, claimed that the close co-ordination of attacks on many Muslim settlements in this second wave indicated that they had been planned in advance, with the collusion of the authorities.

This year the attacks have spilled over into the rest of the country. Attacks on Muslims in the central town of Meiktila killed more than 40 and forced thousands more to flee. And now it appears that the attacks may not go unanswered. Last week a news agency linked to al-Qa’ida claimed that a brigade of Muslim volunteers from Burma, Bangladesh, Indonesia and Pakistan had formed to fight the Burmese government.

After Sunday’s explosion, President Thein Sein held a meeting with leaders of all the main religions in the country to discuss the crisis. Both Thein Sein and opposition leader Aung San Suu Kyi have come under attack for failing to take a robust line against those responsible.

The continuing violence is becoming a serious distraction from the government’s attempt to attract Western investment and ignite Burma’s economy. In fact, some see the hand of disgruntled army generals behind the attacks, attempting to derail the President’s policies.