Just two days after he was sacked as Deputy Prime Minister, Anwar Ibrahim sat on the floor of his study with TIME correspondent John Colmey and reporter David Liebhold to present his side of events. Outside his unassuming home, scores of admirers chanted his name; inside, friends trooped in, offering support. One retired minister hugged Anwar and advised him to "have courage." During the interview Anwar's wife, Wan Azizah, sat supportively beside him. Although he was expecting arrest at any moment, Anwar projected a relaxed mood, laughing easily.

TIME: The authorities appear ready to charge you with various crimes. How can you defend yourself?
Anwar: I don't plan to fight the specific charges. They are all fabrications. This is a political battle.

TIME: You've said there is a conspiracy against you. Why haven't you mentioned Mahathir's name?
Anwar: Before the UMNO Supreme Council meeting [Sept. 3], I wanted to impress upon him that he could still show he wasn't personally involved. I have been convinced all along, but I wanted to give him that opportunity. He did not respond.

TIME: When sexual allegations against you first appeared in a "poison pen" letter a year ago, you suspected they came from the PM's department. Why didn't you sue?
Anwar: Because he said: "Why do you need to respond to this, no one will believe it." I didn't imagine that it was part of a long-term political plot.

TIME: What happened to cause the fallout between you and Mahathir?
Anwar: The relationship was solid, but I think I made my views and my vision of society known to too many people.

TIME: When did you realize things had gone sour?
Anwar: After he came back from his two-month vacation in July 1997, about the time the letter appeared. I thought, "How is it his closest confidantes can do this to me and he still condones it? He said to me: "I should have told them off, I should have asked them to resign." But nobody was punished.

TIME: Is it true that Indonesian President B.J. Habibie urged you to challenge Mahathir?
Anwar: Not quite. He told me, while I was in Canada [in May], "Anwar, as a brother, please take care. My problem is that it is too difficult to disassociate myself from Suharto. You must be careful not to be too closely linked to Mahathir. Don't repeat the mistake that I made."

TIME: So, did you then decide to challenge the Prime Minister at last June's ruling-party convention?
Anwar: No, no. I did tell the Prime Minister: "You have to accept the fact that the undercurrents are strong. You stay, but some adjustments have to be made. People are talking about reform and accountability. Why not? Why should you be defensive?" It was a sincere comment, but he took it wrong.

TIME: Mahathir was upset by the convention's opening speech, in which the youth wing leader called for an end to corruption and nepotism. Did you O.K. the speech or write it?
Anwar: The speech was a much more watered-down version of the one he wrote. But I did say some type of message must be sent. Otherwise UMNO would become completely irrelevant.
 

TIME: What exactly has transpired over the past two weeks?
Anwar: The showdown [Laughs.]. I didn't know the extent of the threat. After they arrested [Anwar associate] Nallakaruppan Solaimalai under the Internal Security Act, I began to suspect something. Then on [Aug. 23] I went to see [the PM] and he told me he thought I should resign. He said, "These sexual allegations are serious." I said, "Do you mean to say if you womanize you are not qualified to be Deputy Prime Minister." He said, "No, I am not [saying that], but you are going to take over this country." I said, " You put a different standard on me than for the rest." And he said, "Yes. You have an image as an Islamic leader." And I said, "All right I accept that. I challenge you to prove these allegations." And he said, "I have these sworn statements." And I said "So what?" And he said, "I have these police files." I knew he had already made up his mind. He said, "O.K., explain your case." I did, and I wrote about the harassment of witnesses and the conspiracy [involving various bodies]. But in further discussions it became clear he couldn't even be bothered to read what I had written.

TIME: So when did Mahathir finally act?
Anwar: On Sept. 2. I met the Prime Minister after the cabinet meeting, at about 1:00 p.m. I said, "I hear that you are going to arrest me under the Internal Security Act?" He said "No. I want you to resign." We had a big argument, and I told him, "You are obsolete in many of your views. You are unwilling to make partial reforms or be more tolerant. And you think you are so popular because of these crowds, 10,000 here and 20,000 there. But we still lost [a recent] by-election." I didn't resign, and they sent the letter [of dismissal] and they sealed my office.

TIME: As former Finance Minister and former deputy president of the party, you have a lot of information about a lot of people. Would you ever use that?
Anwar: Well, that is why I told him: "Don't threaten me and push me too far." Of course now they haven't charged me. But one of the issues they have to think of is whether they have enough ammunition. They have underestimated me. They thought that by making a series of threats I would resign... To make these allegations of treason--of selling documents to foreign governments--I think they are making a big mistake. I said, "Don't forget the fact that, other than you, I know about this country: the deals, the contracts, the meetings and understandings with foreign governments. So don't play that game with me."

TIME: We've heard that the best evidence they have is Chief Minister Datuk Seri Sanusi Junid's tape of a conversation [allegedly recording Anwar's attempt to seduce a party member's wife].
Anwar: First, I have heard from friends--who have heard the tape--that it doesn't even sound like me. Second, even if it had sounded like me, I wouldn't be surprised if they had fabricated it.

TIME: Is there anything you wish you had handled differently?
Anwar: Had I known that they were up to these nasty tricks, I probably would have challenged earlier. It's unheard of. You name a country where people can fabricate this sort of thing. I mean, I'm the "worst guy around." From treason to ... you name it. Just because his position was untenable, maybe he assumed that I was going to challenge him and that I would get the most support from the masses.

TIME: Do you think Malaysia isn't ready for the civil society you've written about?
Anwar: No, he is not ready! I think Malaysians as a people are ready, and this is a problem.

TIME: Will you start a new party?
Anwar: These are things to consider, but they are tactical maneuvers. The underlying principle is initiating change and reform of the system.

TIME: In the end, you couldn't do it from the inside?
Anwar: I could, but he had to stop me, because he said that reform would undermine most of the things that he has done, in terms of the manner in which he controls the media and stifles dissent, even his management of the economy. He thought that, given half a chance, I would change all those.

TIME: Would you have?
Anwar: Yes, and he knew it.

TIME: Do you think the new currency controls are going to work?
Anwar: No, but for the sake of the country I wish them all the best.