SCENESETTER FOR THE VISIT OF GENERAL PACE,

S E C R E T SECTION 01 OF 05 KUALA LUMPUR 000924

SIPDIS

SIPDIS

FROM AMBASSADOR FOR CHAIRMAN PACE

E.O. 12958: DECL: 05/24/2027
TAGS: MARR MASS MCAP MOPS PREL PTER OVIP MY
SUBJECT: SCENESETTER FOR THE VISIT OF GENERAL PACE,
CHAIRMAN OF THE JOINT CHIEFS OF STAFF


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

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


1. (C) General Pace: Welcome to Malaysia. During your
meetings here with the Deputy Prime Minister and other senior
officials, we recommend in your discussions you:

-- Applaud Malaysia's success in the reduction of piracy
attacks in the Straits of Malacca and inquire what are the
next steps Malaysia plans to take with its littoral partners.
(ref para 8)

-- Congratulate Malaysia's efforts in combating Jemaah
Islamiyah (JI) and other terrorist groups, including in
Malaysian portions of the triborder area of the Sulu and
Sulawesi seas. (ref para 6)

-- Request Malaysia's consideration of a multilateral
exercise to enhance cooperation; propose CARAT exercises as a
venue to work with neighboring countries and develop
Malaysia's Joint Command Headquarters capability. (ref para
13)

-- Note that after a long hiatus, the U.S. is planning a
major increase in our assistance program, including radars
and communications equipment (CENTRIX) through 1206 funds.
(ref para 8)

-- Thank Malaysia for their hosting of a notable increase in
ship visits and note the positive media attention these
visits have received. (ref para 10)

-- Note Prime Minister Abdullah's visit to Afghanistan (that
should be on-going during your stop in Malaysia) and provide
your assessment of the situation there. (ref para 16)

-- Describe our approach in Iraq and note how countries such
as Malaysia could help the Iraqi government. (ref para 4)



2. (C) Malaysia is important to us because it is a
successful, moderate, predominantly Muslim country. 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. It is our tenth
largest trading partner, and many major American companies
have invested here. Malaysia is also a good partner in the
war on terror. The overall tone in Malaysian-American
relations has improved considerably since Abdullah Badawi
replaced the vituperative Dr. Mahathir Mohamad as Prime
Minister in late 2003. Abdullah brought with him a
friendlier style and an interest in projecting a more
moderate image, both for himself and for his country.
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.
Military-to-military cooperation is improving, with 23 US
Navy ship visits to Malaysian ports in 2006, up from three in

2003.


3. (C) However, 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 Non-Aligned 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, in broad terms,
strengthen our bilateral relationship. We look forward to
your arrival. End Summary.

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


4. (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

KUALA LUMP 00000924 002 OF 005


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" and
Non-Aligned 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
--------------


5. (C) Secretary Rice met with PM Abdullah and FM Hamid at
the ASEAN Regional Forum in July 2006 and President Bush met
with PM Abdullah on the sidelines of the UNGA in September

2006. Last year, the GOM acceded to our long-standing urging
and signed the IAEA Additional Protocol; the Malaysians have
also sent observers to recent PSI exercises; they are
preparing legislation to implement an export control regime
and have recently passed a Trafficking in Persons (TIP) law
that is a positive step in avoiding U.S. sanctions.


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 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 Assistance 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
--------------


7. (C) Former Malaysian Armed Forces (MAF) Chief Admiral
Anwar conducted a very successful visit to the U.S. in
October 2006, including Anwar's meeting with you; 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 this year and was
replaced by General Abdul Aziz bin Hj Zainal. Changes in the
military leadership have not adversely affected mil-mil
cooperation between the United States and Malaysia, which
grew 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. Moreover, the number of
pirate attacks in the Straits had dropped in the last two
years. Conversely, terrorists operate regularly in the
Sulu/Sulawesi Sea corridor and we are focusing increasingly
on this theater.


8. (C) Malaysia concluded a new 505 agreement last year that
allows us to utilize 1206 funds to put CT equipment into

KUALA LUMP 00000924 003 OF 005


Malaysia's hands in the vulnerable Sulu and Sulawesi Seas
border areas of Sabah where terrorists are known to transit.
Malaysia has not signed either an Article 98 or PSI agreement
but has consistently stated its support of the principles
behind PSI, including recent public remarks by DPM Najib. A
reduction in incidents of piracy in the Straits of Malacca
and improved risk assessment by Lloyds of London have lowered
the priority in the GOM of projects such as the "Eyes in the
Sky" program, a regional aerial monitoring of the Straits of
Malacca (SOM) and Malaysia moves cautiously forward in its
multilateral efforts in this area.


9. (C) 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 remains reluctant to engage in multilateral
exercises. 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 are getting increased attention from
ideological foes on the Islamic right and secular left.
Deputy Prime Minister Najib has 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) Port fees and aircraft clearances represent two
challenges to our practical mil-mil relations. The
Malaysian port authority is attempting to impose port fees on
U.S. naval vessels, which we cannot accept. We desire to
continue or increase the pace of our port visit and naval
interaction, but need to resolve the port fee issue. This
has greater national security implications as we attempt to
bring in our larger vessels, including an aircraft carrier
later this year, as we have done during the last two years.
Another issue is Malaysia's requirement that we get
individual aircraft clearances for the 1000 plus overflights
we have each year, representing support missions to Central
Asia and the Middle East for the GWOT. We seek to convince
Malaysia to ease their requirements, as they did during the
tsunami relief operation in 2005.

SIPDIS


12. (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. Some 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 developing a
multilateral peacekeeping operations exercise in 2009.

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


13. (C) We continue an active agenda of mil-mil talks. On
May 3-4, PACOM staff and the Malaysian Armed Forces conducted
annual bilateral defense talks (BITACG) in Port Dickson.
While Malaysia declined PACOM efforts to increase engagement
in Eastern Malaysia near the Sulu and Sulawesi seas and
refused to commit to multilateral events, there were a good
number of bilateral issues advanced that underscored our
effective relationship. Malaysia recently hosted the
military law conference and has agreed to co-host the first
annual conference for military intelligence chiefs in the
Asia-Pacific region this September. Malaysia's request to
hold bilateral policy-level discussion is moving forward.


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

KUALA LUMP 00000924 004 OF 005


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 no
further than two hours by air to almost any country in the
region.


15. (C) 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. In August-September, Marine Force
Pacific will conduct an avian influenza subject matter expert
exchange with the Health and Defense ministries. 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
-------------- ---


16. (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 March 2008. Malaysia supports Abbas, the
Palestinian Authority, whe MEPP roadmap, and Iraqi
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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 no
further than two hours by air to almost any country in the
region.


15. (C) 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. In August-September, Marine Force
Pacific will conduct an avian influenza subject matter expert
exchange with the Health and Defense ministries. 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
-------------- ---


16. (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 March 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. However, in part to channel domestic
anger in a constructive direction, PM Abdullah 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 and GOM has requested their term be
extended. During your visit, the Prime Minister and the
Foreign Minister will be in Afghanistan in line with
Malaysia's desire to be seen as helpful in addressing needs
in Muslim countries.


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 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 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. There is
little evidence to date that Malaysian business is actually
pursuing such opportunities seriously.


18. (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. The Malaysian firm announced its
intention to carry out 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.


19. (C) The closer you get to home, the more practical

KUALA LUMP 00000924 005 OF 005


Malaysian policy tends to become. 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. The recent improvements in bilateral defense and
cooperation with U.S. track closely with the clear rise in
Chinese economic influence here, indicating KL's intent to
maintain balance.


20. (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--vis the Philippines do not
make it a completely honest broker, but Malaysia has
nonetheless played a valuable role, hosting negotiations and
contributing observers to the International Monitoring Team
in the southern Philippines. Geography and cross-border
ethnic bonds make Malaysia a de facto safe haven for some
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. Malaysia, however,
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. In late May, Malaysia
joined the ASEAN chorus calling for Burma to release
political prisoners.

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


21. (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
regional and world standards for almost 50 years.
LAFLEUR