MALAYSIA'S ELECTION SHOCK - THE WORLD TURNED

C O N F I D E N T I A L SECTION 01 OF 02 KUALA LUMPUR 000160

SIPDIS

SIPDIS

FOR EAP

E.O. 12958: DECL: 03/10/2018
TAGS: PGOV PREL KDEM MY
SUBJECT: MALAYSIA'S ELECTION SHOCK - THE WORLD TURNED
UPSIDE DOWN

REF: A. KUALA LUMPUR 158 - FINAL PUSH

B. KUALA LUMPUR 154 - CLEAN FINGERS DIRTY ELECTION?

C. KUALA LUMPUR 140 - CAMPAIGN UNDER WAY

D. KUALA LUMPUR 90 - ELECTION PRIMER

E. KUALA LUMPUR 95 - ELECTION DATE SET

Classified By: POLITICAL SECTION CHIEF MARK D. CLARK, REASON 1.4 (B AND
D).


1. (C) Malaysia's March 8 national elections and the
unprecedented success of the opposition have stunned the
dominant UMNO party of Prime Minister Abdullah Badawi,
shattered component members of the National Front (BN)
coalition, put 5 of 13 states in opposition hands, and
propelled former Deputy Prime Minister Anwar Ibrahim to
become a a major opposition force. Based on a simple
majority in parliament, UMNO with BN will continue to form
the national government, but the political debacle is
undeniable. BN lost its two-thirds hold on parliamentary, a
key benchmark that ensured BN could amend the constitution at
will. UMNO itself suffered substantial losses over its
previous margins, down by 31 seats in parliament and 64 state
seats. UMNO's Chinese (MCA) and Indian (MIC) partners in BN
suffered substantial declines, and were reduced to minor
party status; the Chinese-dominated Gerakan party was all but
eliminated. Leading members of all BN parties suffered, as
voters threw out four BN cabinet ministers (three from UMNO),
10 deputy ministers, two party presidents and other prominent
figures. Never before has the BN lost control of more than
two states; now the opposition holds four key states across
northern Malaysia and the richest, most developed state,
Selangor, which envelops the capital.


2. (C) The King swore in Abdullah today as Prime Minister in
a brief ceremony featuring all the gaiety of a funeral, but
due to political damage from the election we believe Abdullah
may not be able to serve out a full term. Abdullah could
lose his position as UMNO president (on which his Prime
Minister position depends) at the UMNO party elections, which
could be held as early as September/October, or UMNO elites
could approach Abdullah quietly to convince him to step down;
less likely, UMNO supreme council members could try to unseat
him through a vote of no-confidence. So far, senior UMNO
leaders, perhaps as a temporary expedient, have pledged their
support for Abdullah and not joined former Prime Minister
Mahathir's calls for Abdullah's resignation. It is not clear
how much criticism will be leveled at Deputy Prime Minister
Najib, who was technically in charge of the election
campaign, but Abdullah most likely will bear the brunt of the
blame. If Abdullah falls, those tied to him, like ambitious
son-in-law Khairy Jamaluddin, also will suffer.


3. (C) Former Deputy Prime Minister Anwar Ibrahim has
emerged as a major opposition force. Anwar is the lynchpin
in the loose opposition alliance; his PKR party is now the
second largest in parliament; and PKR controls the key state
of Selangor. The opposition has divergent policy views,
particularly between the Chinese-led DAP and the Islamist
PAS, and almost no experience in working together in
positions of power. Whether they can govern effectively is a
key question. The opposition passed an important early test
as the DAP agreed to let a Malay from PAS assume the Chief
Minister post in Perak, even though DAP has the majority of
opposition seats in the state (talk of a non-Malay in that
post led to a day of rumors of a constitutional crisis).
PAS' strong showing does not appear to be a growing
endorsement of Islamist views, but a negative vote against
UMNO; nevertheless, in Kedah PAS will attempt to apply
stricter morals laws for Muslims.


4. (C) We face a more difficult challenge in pursuing U.S.
objectives in Malaysia in the short to medium term.
Abdullah's political standing has suffered a grievous if not
fatal blow, leaving him far less able to take difficult
policy decisions or work on new initiatives. The cabinet
that emerges over the next week will be seen as an interim
cabinet prior to resolution of Abdullah's role and the UMNO
election. More than ever, Malaysia's leaders will be
preoccupied with domestic challenges and internal
repositioning. BN has never had to contend with an
opposition so potent. Malaysia will have less political will
and policy attention for U.S. and other external concerns.
The electoral shock to the political status quo strengthens
democracy in Malaysia, however, and over the long term could
instill greater checks and balances in the political system;
bolster rule of law and transparency; cause the government to
address minority concerns and reexamine ossified economic and
social policies; and give us new opportunities to pursue U.S.

KUALA LUMP 00000160 002 OF 002


economic, political and security priorities.

KEITH