SCENE SETTER FOR THE VISIT OF ASSISTANT SECRETARY

S E C R E T KUALA LUMPUR 002041 SIPDIS SIPDIS DEPT FOR EAP/MTS, PM/RSAT E.O. 12958: DECL: 10/31/2016 TAGS: MARR MASS MCAP MOPS OVIP PREL PTER MY SUBJECT: SCENE SETTER FOR THE VISIT OF ASSISTANT SECRETARY HILLEN Classified By: AMBASSADOR CHRISTOPHER J. LAFLEUR, REASONS 1.4 b, d. Summary -------------- ¶1. (C) Malaysian-American relations rest on an impressive range of economic exchanges and have improved significantly in other areas as well over the three years of Prime Minister Abdullah Badawi's tenure. This moderate Muslim-majority state is our tenth-largest trading partner worldwide. Although Malaysia is not a treaty ally, we have increasingly strong military-military and counter-terrorism cooperation. In international affairs, Malaysia strongly opposed us on the Iraq invasion and more recently on our stance on Israel's use of force in Lebanon. However, Malaysia has stepped forward to offer troops for the UN force in Lebanon and continues to contribute to peacekeeping operations in places such as East Timor. While Malaysia often takes positions opposing our own in the UN, Prime Minister Abdullah has met regularly with President Bush and has developed a useful dialog on Muslim world relations with the West. Abdullah promotes a moderate vision of Islam and Malaysia has worked to defuse ethnic conflicts involving Muslims in the Philippines and elsewhere in Southeast Asia. We hope your visit will further strengthen the mil-mil ties between Malaysia and the U.S., recognize Malaysia's continued contribution to international peacekeeping, encourage Malaysia's participation in multilateral counterterrorism efforts, and promote Malaysia's support for non-proliferation regimes and eventual participation in PSI. Political/Economic Landscape -------------- ¶2. (C) Malaysia has been a difficult political partner in the past. Malaysians nurse strong anti-colonial sentiments, are fiercely portective of their sovereignty and (among the Malay majority) hold some resentment over perceived ill treatment of Islam by the West. Malaysian intellectuals tend to hold a "Euroskeptic" view of U.S. foreign policy in general and like to cast themselves as defenders of "third world" interests. Former Prime Minister Mahathir played on these sentiments to generate political support for himself and his ambitious economic agenda. When he relinquished his post in 2003, he left behind a modernized economy but also strained relations with much of the West. Today, however, Malaysia presents us with important transformational opportunities. In terms of its economic development, educational achievement, public welfare, and political stability, Malaysia stands out among muslim-majority nations. The Malaysians project a moderate version of Islam, and, over the longer term, could lend additional support to democratic forces in the Middle East and Iraq. We also share strong common East Asian regional interests in stability and prosperity. Malaysian counter-terrorism cooperation is indispensable in defeating Jemaah Islamiyah (JI) in the region. Malaysia's economy is one of the most open, diverse and well-developed economies in the Islamic world and in ASEAN. Malaysia is our tenth largest trading partner, we are Malaysia's number one foreign investor, and economic ties could strengthen further if ongoing negotiations on a free trade agreement are successful. Bilateral Ties--Improving the Substance -------------- ¶3. (S) In our bilateral relations, the GOM has begun matching improvements in tone with improvements in substance. PM Abdullah has openly espoused improved relations with the U.S., and values the good rapport he established in his meetings with the President. In July, Secretary Rice met with PM Abdullah and FM Hamid at the ASEAN Regional Forum and President Bush met with PM Abdullah on the sidelines of the UNGA in September. Last year the GOM acceded to our long-standing urging and signed the IAEA Additional Protocol; the Malaysians have also started sending observers to recent PSI exercises; and the GOM is preparing to implement an export control regime. The third round of our FTA talks is underway in Kuala Lumpur at this moment. ¶4. (C) Although they keep the details closely held, the GOM has been a key partner on counterterrorism. Early round-ups in 2001-2002 of scores of Jemaah Islamiyah (JI) suspects helped ensure there have been no terrorist attacks here. However, Malaysian extremists, as illustrated by a series of recent arrests in Malaysia's Borneo states, still have the capability to support JI operations elsewhere. Two Malaysian citizens were among the 14 high value U.S. detainees transferred to Guantanamo earlier this year. In 2003, Malaysia established the Southeast Asia Regional Center for Counterterrorism (SEARCCT),which runs a full schedule of multilateral training courses, many conducted with U.S. support. We and our colleagues in Manila, Jakarta and other Southeast Asian posts have embarked on a regional effort to strengthen these countries' border controls. We are currently seeking the GOM's concurrence to carry out a Border Control Assessment Initiative (BCAI) in Sabah. Security Cooperation -------------- ¶5. (C) Mil-mil cooperation between the United States and Malaysia has grown in recent years particularly with regard to the greater frequency of high-visibility ship visits. Security-related training sponsored by the United States for military and law enforcement participants has also been on the rise. Although the possibility of a terrorist threat to the Malacca Strait has received the bulk of international attention, the fact is that although pirate attacks illustrate vulnerabilities, we have never identified any terrorist activities in the Straits. Conversely, terrorists operate regularly in the Sulu/Sulawesi Sea corridor and we have redirected our focus to this theater. Malaysia's recent success initiating regional aerial monitoring of the Straits of Malacca (the "Eyes in the Sky" program),has helped reduce piracy in the Straits though it moves cautiously forward in its multilateral efforts in this area. Malaysia has recently concluded a new 505 agreement that will allow us to utilize 1206 funds to put CT equipment into the vulnerable Sulu and Sulawesi Seas border areas of Sabah where terrorists are known to transit. We are awaiting approval of the 1206 proposals made in conjunction with regional embassies. Malaysia has not signed either a PSI or Article 98 agreement. In general, Malaysia remains open to bilateral cooperation that strengthens its own defense capacity, but the GOM will quickly raise the principles of sovereignty and territorial integrity when discussing international security regimes and coordination, such as for the Straits of Malacca. Malaysia's only multilateral defense arrangment is the Five Power Defense Pact with the UK, Singapore, Australia and New Zealand. ¶6. (S) We have been pleased by the overwhelmingly positive media coverage our ship visits have received, in contrast to the quiet arrivals of past years. The flip side to this is that our visits are getting increased attention from ideological foes on the Islamic right, and lately from former Prime Minister Mahathir. Deputy Prime Minister Najib has stoutly defended our cooperation before Parliament, and we do not see that our engagement is under threat. However, we do need to be cognizant of our increased military visibility and sensitive to GOM concerns, particularly with high tensions in the Middle East. The GOM cited concerns about the growing visibility of training in eastern Sabah when it recently decided to review on a case by case basis proposed training events involving foreign military forces in that region. ¶7. (C) Malaysia has one of the best records in UN Peacekeeping Operations continues to be very active and supportive. They have committed forces to operations in Timor in the past and are presently engaged there in operations. The GOM has volunteered forces for UNIFIL duty as well. Malaysia has developed a Peacekeeping Training Center and updated the facility in recent years to provide specialized training for the troops it sends into the field. USG has obligated almost 1.1 million dollars for GPOI funds for training and equipment that can be but into action with the signing of a new 505 agreement. Malaysian Foreign Policy and US--A Mixed Bag -------------- ¶8. (S) Abdullah champions his moderate vision of Islam -- albeit with limited impact to date -- within the Organization of the Islamic Conference (OIC),which Malaysia will continue to chair through early 2008. Malaysia supports Abbas, the Palestinian Authority, the MEPP roadmap, and Iraqi reconstruction. However, the Malaysian public remains highly critical of our Middle East policies, and the GOM is consistently critical of Israel, with which it has no diplomatic relations. Malaysia volunteered 1,000 troops to participate in UNIFIL. After more than a month of lobbying, and in the face of objections from Israel, UN SYG Annan agreed to allow Malaysia to send a force of 376 soldiers to support UNIFIL with deployment expected at the end of November. ¶9. (S) In early September, Malaysia surrendered the chairmanship of the Non-Aligned Movement, but as past chair remains a member of the leadership troika. During Malaysia's tenure it championed policies which supported the NAM stance on the Iranian nuclear program, and engaged, often on overly friendly terms, with such problematic international players as Zimbabwe, Cuba and Venezuela. Abdullah hosted Hugo Chavez for a visit to Malaysia in August, and assured Venezuela of his support for election to the Latin American chair on the UN Security Council (although they have indicated privately since they could support an alternative candidate once the UN voting stalemated.) ¶10. (C) The GOM issued a public condemnation of North Korea's nuclear test and publicly supports UNSCR 1718, although it has no enthusiasm for sanctions. They have repeatedly called for a return to the six-party DPRK nuclear talks and have criticized North Korea's truculence. Malaysia has lent rhetorical support to Iran's right to develop "peaceful" nuclear technology and is pursuing closer trade ties. The Malaysian government is publicly supportive of China's "peaceful rise", welcoming in particular China's growing imports of Malaysian products, despite lingering suspicions among some officials of China's long-term intentions. ¶11. (C) In Southeast Asia, Malaysia has played an important and constructive role. In August Malaysia completed its earlier peacekeeping mission to East Timor following the armed uprising that led to deployment of Australian, Malaysian and Portuguese forces, while a new deployment of Malaysian police personnel to East Timor is underway. The GOM has also taken a leading role in the southern Philippines peace process, hosting negotiations and contributing observers to the International Monitoring Team in the southern Philippines. The Malaysians have urged the Thai government to resolve peacefully the unrest in Southern Thailand and are hopeful that the new junta will take a more conciliatory role in calming their northern border. Malaysia is especially chagrined by Burma's intransigence because it championed Burma's entry into ASEAN. Having publicly criticized the Burmese regime though, FM Hamid appears to be at a loss as to what to do next and Malaysia has of late suggested it is up to the UN now to deal with the problem. PM Abdullah's Challenges -------------- ¶12. (C) Prime Minister Abdullah's main priorities are sustaining economic growth and spreading it to less-developed rural areas of the country and encouraging more efficient and collegial government. No one doubts his sincerity but his mild-mannered and cautious approach has led critics to question his leadership. Now three years into his five-year term, Abdullah has appealed to the public for patience in delivering reform. ¶13. (C) PM Abdullah currently faces a new problem: in April, former PM Mahathir began openly attacking his successor for failing to follow through with many of the former PM's initiatives, not promoting economic growth and for corrupt practices of Abdullah's family members. These attacks have escalated, with Mahathir now calling for Abdullah to step down. Mahathir can no longer dictate policy (unlike Singapore's Minister Mentor Lee Kuan Yew),but having the "father" of the nation's economic success -- and a once much feared political boss -- attacking his former subordinates has made them all nervous. Abdullah has often maintained an "elegant silence" and tasked others in the Cabinet to explain his decisions and defend against Mahathir's attacks. At this point, Abdullah's power of incumbency and control over the United Malays National Organization (UMNO) party apparatus should help ensure Mahathir's campaign fails. However, Mahathir's public insinuations that the PM and his supporters are "not Malay enough" may constrain the PM's public statements on foreign policy issues. Abdullah will seek to use the annual UNMO convention, to take place the week following your visit, to reaffirm and strengthen his party leadership position. Malaysia's Moderate Islam -------------- ¶14. (C) Malaysia, with its entrenched majority coalition, is hardly an ideal democracy, but it can still serve as a useful model for evolving Islamic societies elsewhere. The Malay people, long known for their tolerance, have become more conservative in recent years, but Prime Minister Abdullah has enshrined the Malay political elite's continued preference for moderation in his "Islam Hadhari" or "Civilizational Islam" policy. Abdullah's key message is that Islam can become a leading world civilization again only if it embraces economic development, education, innovation and tolerance. While observers are wary of a longer-term trend toward greater divisions between the Muslim Malay majority and other ethnic groups, Malaysia has kept inter-ethnic tensions well under control by regional and world standards for over 35 years. LAFLEUR