SCENESETTER FOR THE VISIT OF PACOM COMMANDER

S E C R E T SECTION 01 OF 05 KUALA LUMPUR 000651

SIPDIS

SIPDIS

FROM AMBASSADOR FOR ADMIRAL KEATING

E.O. 12958: DECL: 04/10/2027
TAGS: MARR MASS MCAP MOPS PREL PTER OVIP MY
SUBJECT: SCENESETTER FOR THE VISIT OF PACOM COMMANDER
ADMIRAL KEATING

Classified By: Ambassador Christopher J. LaFleur, reasons 1.4 (b, d).

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


1. (C) Admiral Keating: Welcome to Malaysia. Malaysia is
important to us because it is a successful, moderate,
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. 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. 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, begun drafting export control legislation, and
participated 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 23
US Navy ship visits to Malaysian ports in 2007, up from 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 NAM and the 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. Your visit will help us further cement
military-to-military ties, and we look forward to your
arrival. 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 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
--------------


4. (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

KUALA LUMP 00000651 002 OF 005


meetings with the President. Last summer, 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.


5. (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
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. The heads
of the Embassy's Defense Attach and Defense Cooperation
offices attended the field portion of this assessment.

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


6. (C) The strong state of U.S.-Malaysia bilateral defense
ties finds expression in the very successful visit to the
U.S. of former Malaysian Armed Forces (MAF) Chief Admiral
Anwar in October, including Anwar's meeting with the Chairman
of the Joint Chiefs of Staff; the Mid Year BITACG review in
November; and the Chiefs of Defense Conference in November
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. 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.


7. (C) Malaysia has had success 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. 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. We are awaiting final 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 arrangement is the Five Power
Defense Pact with the UK, Singapore, Australia and New
Zealand.


8. (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 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

KUALA LUMP 00000651 003 OF 005


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.


9. (C) Malaysia has one of the best records in UN
Peacekeeping Operations. They have committed forces to
operations in Timor in the past and are presently engaged
there in police operations. 360 Malaysian troops are
currently participating in UNIFIL and the GOM has offered a
contingent of up to 1000 soldiers. We believe Malaysia is
strongly considering a deployment in support of possible
peacekeeping Missions to Sudan or Somalia. 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 as well as personnel from
foreign militaries. The USG has obligated almost 1.1 million
dollars for GPOI funds that will focus on a developing a
multilateral peacekeeping operations exercise in 2009.


10. (C) 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 clearly and publicly for Iran to respect UNSC
resolutions on its nuclear program. 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 Syria
Non-proliferation Act (ISNA) for its role in shipping
proscribed materials to Iran. The activities of local firms
doing business with Iran need to be closely monitored and we
continue to request Malaysia's assistance in investigating
suspicious activity. 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.


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


11. (C) On 6 October 2006, PACOM staff and the Malaysian
Armed Forces conducted mid-term bilateral defense talks.
There were a good number of issues advanced during this forum
such as counter-terrorism cooperation in the Sulu/Sulawesi
seas, pandemic response, and peacekeeping. The annual BITACG
meeting will take place in Port Dickson, Malaysia during the
first week of May. Malaysia has recently agreed to co-host
an annual conference for military intelligence chiefs in the
Asia-Pacific region.


12. (SBU) Malaysia has put forth a regional 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 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 preparedness is
another promising area of bilateral cooperation. Last
September, PACAF conducted a successful AI SMEE with the
Ministry of Health. The U.S. team recommended changing
Malaysia's AI preparedness rating from High risk to Partner
Nation. Building upon this success, the ODC has proposed a
regional workshop on Bio-terrorism Defense-Strategic and
Tactical Planning for spring 2007 with PACAF and the U.S. has
provided personal protection gear and laboratory analysis
equipment to the Malaysian government. Malaysia will co-host
this multilateral/regional event as it has demonstrated
capacity as a regional partner in preparing for the threat of
avian/pandemic influenza. PACOM's efforts in furthering
Malaysia's capacity as a regional responder are critical to
the country teams in this regard.

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


KUALA LUMP 00000651 004 OF 005



13. (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. These soldiers deployed to Lebanon in
January.


14. (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 on the Iranian
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 with then 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.


15. (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 repeatedly
called for a 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.


16. (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 an honest 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
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 because it championed Burma's entry into ASEAN.
Having publicly criticized the Burmese regime, however, FM
Hamid appears to be at a loss as to what to do next.
Malaysia spoke out against the UNSC draft resolution on
Burma, which we championed before the UN Security Council in
January, and firmly backed the ASEAN argument that Burma was
not a threat to international peace and security.

Malaysia's Moderate Islam
--------------


17. (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, long known for their 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. Nevertheless,
Malaysia has kept inter-ethnic tensions well under control by

KUALA LUMP 00000651 005 OF 005


regional and world standards for almost 40 years.
LAFLEUR