KUALA LUMPUR, Malaysia—When it finally came,
release from detention Wednesday was almost as dramatic as the pivotal democracy leader’s first arrest more than 22 years ago—ordered by the man who is again leading Malaysia, Prime Minister
Swarmed by news-camera teams at the hospital where he had been serving a sentence on what he says were trumped-up sodomy charges, Mr. Anwar was hustled into a black SUV by prison guards in camouflage fatigues and red berets for a trip to the national palace to see the country’s king,
Sultan Muhammad V.
Along the way supporters waved banners and chanted “Long live Anwar!” in Malay and English and “Reformasi!” (Malay for “reform”).
After a brief ceremony with the king and a handshake with Mr. Mahathir, Mr. Anwar left a free man for the first time in three years, telling reporters he would take time to rest and travel before considering his political role.
“I will be informed and I will take an interest,” Mr. Anwar said, looking trim and with a tidy goatee. “But I don’t have to serve in the cabinet for now.”
His return will likely revive a decades-old rivalry with Mr. Mahathir, political insiders say—this time, to direct the ragtag coalition they formed to defeat former Prime Minister Najib Razak and the United Malays National Organization, which had led the country since independence in 1957.
One complication is that the 92-year-old Mr. Mahathir has already pledged to hand power to Mr. Anwar in a year or two, making him something of a lame duck. The two men are also at odds on economic policy, Mr. Anwar more a free-market advocate and Mr. Mahathir a champion of economic nationalism during his first stint in office, from 1981 until his retirement in 2003.
Many in Mr. Anwar’s camp remain wary of Mr. Mahathir’s autocratic tendencies, although he has said he would try to rein himself in.
“There is still a lot that can go wrong,” said one person familiar with the situation.
The two men have a long and complex history.
Two decades ago, helicopter searchlights swept the streets outside Mr. Anwar’s Kuala Lumpur home as police moved in to arrest him, and his wife pleaded to Mr. Mahathir for mercy. The prime minister had just fired Mr. Anwar as his deputy after a protracted dispute over how to steer the economy through the 1990s Asian financial crisis.
Knowing he was facing arrest on a first set of sodomy charges, Mr. Anwar took to the streets, organizing mass protests against Mr. Mahathir and the ruling coalition. Unusually for Malaysia, all the country’s ethnic groups joined in—the majority Malays as well as thousands of ethnic-Chinese and Indian Malaysians, bound together by the rallying cry “Reformasi!”
Mr. Anwar spent six years in prison before his conviction was overturned.
But the drama kicked off a political-reform movement that led to Mr. Mahathir’s turning against Malaysia’s establishment. He accused Mr. Najib of stealing hundreds of millions of dollars from a state investment fund—and rode the reform wave back to power in last week’s elections.
In an interview before his release, Mr. Anwar said he accepted Dr. Mahathir’s offer to hand over power and had agreed to put their conflicts behind him.
“It has been difficult,” he said, especially for his wife, his children and grandchildren. “We have suffered a lot….But we have enough common ground to move forward together.”
Speaking to reporters Wednesday, Mr. Mahathir said the new ruling coalition would hold a meeting Thursday on Mr. Anwar’s immediate political role.
“I don’t think they’ve really sorted out those issues,” said one person who knows both men.
Mr. Anwar’s long-term objective is to win a seat in Parliament through a special election before taking on the premiership. But some political analysts say a lengthy delay could suit his interests.
an expert on Southeast Asia and professor at the National War College in Washington, said Mr. Mahathir’s deep connections with the civil service and judiciary will could allow him to be “the hatchet man going after Najib and corruption” that Mr. Anwar couldn’t.
Mr. Mahathir’s particular priority is recovering $4.5 billion that the U.S. Justice Department says was siphoned out of state investment fund 1Malaysia Development Bhd., or 1MDB, between 2009 and 2015, including $681 million allegedly received by Mr. Najib, referred to in U.S. lawsuits as “Malaysian Official 1.” Mr. Mahathir said Wednesday he would contact the governments of the U.S., Singapore, Switzerland and Luxembourg.
“This money belongs to Malaysia and comes from 1MDB,” he said, adding that the government would seek to repatriate the assets while honoring 1MDB’s debt obligations.
Mr. Najib and the fund deny any wrongdoing, but Malaysia’s new government has banned him and his wife,
from leaving the country. Mr. Mahathir said Wednesday that investigators had already amassed substantial evidence implicating Mr. Najib and many others.
According to people familiar with the matter, the government plans first to charge Mr. Najib with misappropriating about $25 million in 2014 and 2015 from a state institution called SRC International Bhd., previously part of 1MDB. All the transactions took place in Malaysia, allowing prosecutors to proceed without placing time-consuming mutual assistance treaty requests with other countries.
Meanwhile, people familiar with the matter say Mr. Anwar will attempt to ensure that the opposition alliance he helped form doesn’t come to be dominated solely by Mr. Mahathir. Members of Mr. Anwar’s People’s Justice Party already have squabbled with Mr. Mahathir over cabinet posts.
Mr. Anwar also intends put on some weight. “I want to enjoy the food I’ve not been able to eat for a while,” he said.
—Yantoultra Ngui in Putrajaya, Malaysia, and Jake Maxwell Watts in Kuala Lumpur, Malaysia, contributed to this article.
Anwar Ibrahim served three years in detention before his release Wednesday. An earlier version of this article incorrectly stated he had served nearly five years. (May 16)
Write to James Hookway at [email protected]