SCENESETTER FOR VADM CROWDER AND MGEN REMINGTON'S

S E C R E T KUALA LUMPUR 001652

SIPDIS

SIPDIS

PACOM FOR VADM CROWDER, COMMANDER, 7TH FLEET, AND FOR MGEN
REMINGTON, HQ, PACIFIC AIR FORCES

E.O. 12958: DECL: 11/27/2027
TAGS: MARR MASS MCAP MOPS PREL PTER OVIP MY
SUBJECT: SCENESETTER FOR VADM CROWDER AND MGEN REMINGTON'S
VISIT TO MALAYSIA FOR LIMA '07 (DECEMBER 3 - 8, 2007)


Classified By: Acting Deputy Chief of Mission Matt Matthews,
for reasons 1.4 (b, d).

Summary
--------------


1. (C) Malaysia is important to us because it is an
economically successful, stable, predominantly Muslim country
that, over the longer term, may be able to support us more
strongly in places like the Middle East. It is strategically
located on the Straits of Malacca, through which one quarter
of the world's trade flows, and it borders five of the other
nine ASEAN countries. Behind the scenes, Malaysia is also a
good partner in the war on terror. It is our tenth largest
trading partner, and many major American companies have
invested here. The overall tone in Malaysian-American
relations has improved considerably since Abdullah Badawi
became Prime Minister in late-2003, and we seek to translate
this into substantive improvements. Bilateral relations
eroded under Abdullah's vituperative predecessor Dr. Mahathir
Mohamad, but Abdullah brought with him a friendlier style and
an interest in projecting a more moderate image, both for
himself and for his country. CT cooperation remains strong.
We have increased senior-level exchanges since Abdullah came
aboard, for example conducting our first ever Senior Dialogue
with the Foreign Ministry at the Assistant Secretary level in
May 2005. Malaysia has acceded to the IAEA Additional
Protocol, and participates as an observer in PSI exercises.
Malaysia has played a positive role in helping to stabilize
Aceh, Mindanao, and East Timor.


2. (C) Military-to-military cooperation is improving, with 22
US Navy ship visits to Malaysian ports thus far in 2007,
three more scheduled for the month of December, and 23 in

2006. This is up from only three in 2003. Malaysia's
traditional approach to global issues, which Abdullah has
continued albeit at a lower decibel level, remains an
impediment to closer bilateral cooperation. Malaysia
actively participates in the Non-Aligned Movement (NAM) and
the Organization of Islamic Conference (OIC),often adopting
distinctly third-world positions on issues of importance to
us. Our public affairs environment is also challenging. The
Malaysian public is strongly opposed to our policies in the
Middle East and the Persian Gulf. A strong "post-colonial
overhang" also colors Malaysian attitudes toward the U.S.
role in Southeast Asia. With Abdullah we have nevertheless
been able to pursue a set of broad common interests, and
pragmatism generally rules in bilateral security relations.
End Summary.

Political/Economic Landscape
--------------


3. (C) Malaysia has been a difficult political partner in
the past. Malaysians nurse strong anti-colonial sentiments.
They are fiercely protective of their sovereignty and (among
the Muslim Malay majority) resent 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 version of
Islam that emphasizes modern learning and economic
development, and, over the longer term, could lend additional
support to progressive 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.


4. (C) Malaysia's economy is among the more open, diverse,
and better-developed within the Islamic world and in ASEAN.
The United States is Malaysia's largest trading partner, and
Malaysia is our tenth, largely due to strong trading
relationships in the electronics and energy sectors. While
the U.S. was Malaysia's largest source of foreign direct
investment for more than a decade, Japan surpassed U.S. FDI
to Malaysia in 2006 after the signing of a limited trade
partnership agreement between those two countries. This
year, a joint venture between a private Malaysian company and

the National Iranian Oil Company to build a refinery here has
put Iran as the largest foreign investor year-to-date, while
the U.S. has slipped to fifth place after the Netherlands,
Japan, and Singapore.

Bilateral Ties--Working to Improve the Substance
-------------- ---


5. (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. Last year, 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. Also last year the GOM acceded to our long-standing
urging and signed the IAEA Additional Protocol; and the
Malaysians have also started sending observers to recent PSI
exercises. Nevertheless, Malaysia's support for U.S.
positions in the United Nations has not improved under
Abdullah as Malaysia consistently votes in disagreement with
the United States on nearly all measures we have classified
as "important votes."


6. (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
arrests in Malaysia's Borneo states last year, still have the
capability to support JI operations elsewhere. Two Malaysian
citizens were among the 14 high value U.S. detainees
transferred to Guantanamo last year. In 2003, Malaysia
established the Southeast Asia Regional Center for
Counterterrorism (SEARCCT),which runs a full schedule of
GOM-focused and 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. In
cooperation with GOM, we undertook a Border Control
Assessment Initiative (BCAI) in eastern Sabah with
participants from the Department of State, Homeland Security,
USCG and JIATF West. We are providing some technical
assistance to the GOM for the drafting of an export control
law -- important to our non-proliferation goals -- but
Malaysia has moved very slowly on establishing an export
control regime.

Security Cooperation
--------------


7. (C) The U.S. and Malaysia share strong defense ties, and
this relationship finds expression in numerous high level
visits. The Chairman of the Joint Chiefs of Staff, General
Peter Pace, recently concluded in May a very successful visit
to Malaysia which included calls on both the Prime Minister
and the Deputy Prime Minister. General Pace's visit came on
the heels of former Malaysian Armed Forces (MAF) Chief
Admiral Anwar's visit to the U.S. in October 2006; the Mid
Year Bilateral Training and Consultative Group (BITACG)
review in November 2006; and the Chiefs of Defense Conference
in November 2006 that was hosted jointly for the first time
by PACOM-MAF. Anwar retired in March and was replaced by
General Abdul Aziz bin Hj Zainal. Changes in the military
leadership have not adversely impacted mil-mil cooperation
between the United States and Malaysia which grew in recent
years under Anwar's leadership. In fact, the Chief of
Defense Forces, Chief of the Air Force, and the Chief of the
Royal Malaysian Navy have all recently concluded trips to the
U.S. for counterpart visits. Ship visits have significantly
increased and received greater visibility and
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
are focusing increasingly on this theater.


8. (C) Malaysia has had limited success in initiating the
"Eyes in the Sky" program, a regional aerial monitoring of
the Straits of Malacca. However, a reduction in incidents of
piracy and improved risk assessment by Lloyds of London have
lowered the program's priority in the GOM and it moves
cautiously forward in its multilateral efforts in this area.

A pirate attack and kidnapping of sailors in the Straits on
August 13 was the first high-seas abduction in over two
years.


9. (C) Malaysia concluded a new 505 agreement last year 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. Congress has approved
funds for building and installing coastal radars in eastern
Sabah and the first sites have been identified and
contracted. A joint forces command and control center funded
under 1206 is planned for next year to functionally link the
various radar sites. 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
arrangement is the Five Power Defense Pact with the UK,
Singapore, Australia and New Zealand.


10. (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 could attract increased attention from
ideological foes on the Islamic right, and from some
mainstream politicians pandering to the conservative Islamic
vote. 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.


11. (C) Malaysia has an excellent record in UN Peacekeeping
Operations. They have committed forces to various UN
operations since the early 1960s. Currently, 360 Malaysian
troops are participating in Malaysia's second rotation to
UNIFIL (Lebanon) and the GOM has offered a contingent of up
to 1000 soldiers if the need arises. Malaysia has a well
developed Peacekeeping Training Center that provides
specialized training for the troops it sends into the field
as well as personnel from foreign militaries. The USG has
obligated almost 1.1 million dollars for GPOI funds that
focus on developing Malaysia's PKO training to UN DPKO
standards.


12. (S) Malaysia maintains friendly relations with Iran,
including a growing commercial relationship. Malaysia has
lent rhetorical support to Iran's right to develop "peaceful"
nuclear technology but has also consistently maintained that
it will implement UN decisions on Iran, including sanctions
regimes. After the latest UNSC resolution, Prime Minister
Abdullah called for Iran to respect UNSC resolutions on its
nuclear program. Malaysia, however, has not yet submitted
its report to the UN on implementation of UNSC 1737
sanctions. Recent actions by Malaysian firms have generated
concerns of violations of U.S. laws and the Wassenaar
Arrangement and a Malaysian company was among those recently
sanctioned under the Iran Non-proliferation Act for its role
in shipping proscribed materials to Iran. The activities of
local firms doing business with Iran need to be closely
monitored. One Malaysian firm has signed an agreement for a
multi-billion dollar investment to develop enormous natural
gas fields in Iran, a deal which has drawn condemnation from
U.S. congressional voices in light of the Iran Sanctions Act.
Additionally, Iranian and Malaysian firms have recently
inked deals to develop oil refineries in both Malaysia and
Iran, and Iran is purported to be a principal investor in a
proposed oil pipeline to span northern Malaysia and link the
Andaman and South China Seas.

Recent Mil-Mil Talks
--------------


13. (C) In May 2007, Malaysia hosted the annual Bilateral
Training and Consultative Group (BITACG) meeting in Port
Dickson. BITACG is a forum used to promote and strengthen
mil-mil relations through discussions of bilateral exercises,
intelligence exchanges, C4 issues, logistics engagement, and
defense cooperation. Malaysia also hosted a BITACG mid-year
review in Kuala Lumpur in November 2007. Additionally,
Malaysia co-hosted an annual conference for military

intelligence chiefs in the Asia-Pacific region (APICC) held
in September.


14. (SBU) Malaysia has put forth a regional Humanitarian
Assistance/Disaster Relief (HA/DR) Center initiative that is
promising, and has wide support in the government. The MAF
has identified Subang Airfield as a likely choice for the
center which would be administered under UN (World Food
Program - WFP) auspices. Subang, the former international
airport, served as the focal point for Malaysia's tsunami and
Yogyakarta relief efforts. The facilities are modern and are
available. Malaysia is an ideal location for a regional
HA/DR center-centrally located, modern, stable, and Islamic.
Malaysia is no further than two hours by air to almost any
country in the region. Avian influenza (AI) preparedness is
another promising area of bilateral cooperation. The
Ministry of Health and the Malaysian Armed Forces (MAF)
Health Services have been excellent partners in conducting
preparedness training for pandemic influenza. Previous
assessment teams (PACOM and MARFORPAC) have assessed Malaysia
as a significant country in assisting in a pandemic influenza
response. While not identified as a donor nation, Malaysia
has the potential to assist in a regional response in the
near term. To date, PACOM has provided an AI Subject Matter
exchange and a bioterrorism workshop co-hosted by the
Ministry of Health and MAF Health Services. This year we
expect delivery of 20,000 sets of personal protective
equipment, laboratory analysis equipment, and a medical
surveillance system. The country team has requested
exercises on medical surveillance and containment of a
pandemic outbreak. PACOM's efforts in furthering Malaysia's
capacity as a regional responder are critical to the country
team in this regard.

Malaysia's "Civilizational Islam"
--------------


15. (C) Malaysia, with its entrenched majority coalition, is
hardly an ideal democracy, but it can still serve as a
reference point for evolving Islamic societies elsewhere.
The Malay people, traditionally known for their social
tolerance, have become more religiously 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. Observers
are wary of a longer-term trend toward greater divisions
between the Muslim Malay majority and other ethnic groups,
and religious minorities increasingly complain of growing
Islamization, as highlighted by the controversy surrounding
Deputy Prime Minister Najib's recent comments that Malaysia
is an "Islamic state." Nevertheless, Malaysia has kept
inter-ethnic tensions well under control by regional and
world standards for almost 40 years.

Malaysian Foreign Policy and U.S. -- A Mixed Bag
-------------- ---


16. (S) Abdullah champions his development-focused 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, Fatah, 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
has committed to attend the Annapolis Conference November
26-27, and has expressed a keen interest in helping further
the MEPP.


17. (S) Malaysia surrendered the chairmanship of the
Non-Aligned Movement in September last year, but as past
chair remains a member of the leadership troika. During
Malaysia's tenure it supported NAM positions defending Iran's
nuclear program, and engaged with such problematic
international players as Zimbabwe, Cuba and Venezuela. The
GOM nevertheless tells us that they argued for moderate
approaches within the NAM on such issues as Iran. Abdullah
hosted Hugo Chavez for a visit to Malaysia last August, and
assured Chavez of his support for Venezuela's election to the
Latin American chair on the UN Security Council. This was
followed by a well publicized visit to Venezuela by Abdullah
in December to explore stronger commercial ties. In October
2007, North Korean Premier Kim Jong Il visited Malaysia with
a large economic entourage, and Malaysia remains an important

economic supporter of North Korea.


18. (C) Nevertheless, the GOM issued a public condemnation
of North Korea's nuclear testing and publicly supports UNSCR
1718, although it has no enthusiasm for sanctions. In the
past, Malaysia supported the return to the six-party DPRK
nuclear talks and criticized North Korea's truculence. 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.


19. (C) Malaysia has played an increasingly prominent role
in addressing conflicts facing its Southeast Asian neighbors.
Last year 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 is in
East Timor now. The GOM has also taken a leading role as the
facilitator for the southern Philippines peace process.
Malaysia's sympathies for the Muslim Moro population and
geopolitical calculations vis-a-vis the Philippines do not
make it a neutral broker, but Malaysia has nonetheless hosted
negotiations and contributed observers to the International
Monitoring Team in the southern Philippines. Geography and
cross-border ethnic bonds make Malaysia a de facto safe haven
for southern Thai insurgents, though the GOM has not
supported or encouraged this. The Malaysians have urged the
Thai government to resolve peacefully the unrest in Southern
Thailand, with its ethnic Malay Muslim population, and
Malaysia and Thailand are cooperating on new border security
measures. Malaysia is especially chagrined by Burma's
intransigence and political crackdown on the recent democracy
movement, especially since Malaysia championed Burma's entry
into ASEAN. Although they have publicly criticized the
Burmese regime, PM Abdullah and FM Hamid appear to be at a
loss as to what to do next. Malaysia joined other ASEAN
nations in condemning Burma's actions against the protesting
Buddhist monks in September but has otherwise taken a
staunchly non-interference position in regards to Burma's
domestic politics. The GOM firmly backs the consensus ASEAN
argument that Burma is not a threat to international peace
and security.

Trafficking in Persons creates a setback
--------------


20. (C) In June, the State Department determined that
Malaysia had not undertaken sufficient efforts to meet the
minimum standards for combating trafficking in persons,
resulting in a Tier 3 ranking in the annual report to
Congress. In October, President Bush waived all possible
sanctions allowed under the U.S. Trafficking Victims
Protection Act in the interests of national security. We are
encouraging Malaysia to take significant actions in the
coming months in order to improve its tier ranking and thus
avoid future U.S. sanctions consideration.
KEITH