Identifier
Created
Classification
Origin
08KUALALUMPUR340
2008-05-02 09:50:00
SECRET
Embassy Kuala Lumpur
Cable title:  

MALAYSIA'S FLUID SCENE - DAS MARCIEL'S MAY 5-7

Tags:  PGOV PREL PINR ECON KDEM MY 
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VZCZCXRO3816
OO RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHKL #0340/01 1230950
ZNY SSSSS ZZH
O 020950Z MAY 08
FM AMEMBASSY KUALA LUMPUR
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0921
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHHMUNA/USCINCPAC HONOLULU HI PRIORITY
RUEKJCS/SECDEF WASHDC PRIORITY
S E C R E T SECTION 01 OF 03 KUALA LUMPUR 000340 

SIPDIS

SIPDIS

FOR EAP DAS MARCIEL FROM AMBASSADOR KEITH

E.O. 12958: DECL: 05/02/2018
TAGS: PGOV PREL PINR ECON KDEM MY
SUBJECT: MALAYSIA'S FLUID SCENE - DAS MARCIEL'S MAY 5-7
VISIT

Classified By: Ambassador James R. Keith, reason 1.4 (b and d).

S E C R E T SECTION 01 OF 03 KUALA LUMPUR 000340

SIPDIS

SIPDIS

FOR EAP DAS MARCIEL FROM AMBASSADOR KEITH

E.O. 12958: DECL: 05/02/2018
TAGS: PGOV PREL PINR ECON KDEM MY
SUBJECT: MALAYSIA'S FLUID SCENE - DAS MARCIEL'S MAY 5-7
VISIT

Classified By: Ambassador James R. Keith, reason 1.4 (b and d).


1. (U) Thank you for coming to Kuala Lumpur. Your May 5-7
visit to Malaysia provides an excellent opportunity to assess
Malaysia's fluid political scene, identify new openings to
pursue U.S. objectives, and support key areas in our regional
and bilateral diplomacy.


2. (C) Not quite two months after Malaysia's March 8
election shock, the political scene remains fluid and UMNO's
leadership question unresolved. PM Abdullah Badawi so far
has persevered in the face of calls to immediately step down
from within his UMNO party. At the most recent peak of this
pressure Abdullah announced he eventually would resign in
favor of Deputy Prime Minister Najib Tun Razak, but only
after reelection as party president in December 2008 and a
further two-year grace period. Despite urgings from other
UMNO leaders, Najib has not pressured Abdullah, perhaps
believing he can wait to inherit the UMNO presidency, or
because of vulnerability related to allegations of corruption
and links to the Altantuya murder trial. UMNO branch
elections later in May represent the next forum for the
leadership struggle. An active push by Najib or heightened
concern over losing power due to sharp opposition challenges
could result in UMNO elites pushing Abdullah out prior to the
December 2008 party assembly.


3. (C) My April 25 meeting with Abdullah left me with the
impression that he was at peace with himself. He may feel he
has little to lose and therefore he might as well try to
solidify his legacy and do what he seemed genuinely intent on
accomplishing when he first came to power. He seemingly
courted public support outside UMNO by announcing planned
policy reforms he originally promised in 2004. These include
a judicial appointments commission and a strengthened
Anti-Corruption Agency, measures more popular with the
opposition, which is also calling for a repeal of the
Internal Security Act (ISA). Abdullah also has scaled back

plans to reduce fuel subsidies recognizing his weakened
administration could not carry such unpopular actions. With
UMNO divided and a more prominent (and potentially powerful)
opposition, Malaysia is experiencing greater press freedom,
though as the Home Ministry's politically motivated closure
of a Tamil newspaper demonstrated, no permanent legal reforms
underpin the current democratic openings. The state retains
authoritarian levers from the Mahathir era.


4. (S) The opposition Peoples' Alliance, led by Anwar
Ibrahim, is testing itself in four newly-claimed state
governments, including Malaysia's richest state Selangor
(surrounding Kuala Lumpur). In their first weeks in power,
opposition state executives have tried to set themselves
apart from UMNO and its National Front (BN) by addressing
ethnic minority grievances, promoting clean governance, and
announcing populist economic decisions. Abdullah's central
government is fighting back by redirecting federal revenue
support outside of state government channels and in some
cases setting up parallel local authorities. In Parliament
opposition MPs have marching orders to aggressively challenge
the government side at every turn, and Parliament's first
session on April 30 immediately descended into a cacophony of
insults. Anwar continues to publicly prod BN with claims
that he has 30 BN MPs ready to cross over, which would bring
down the BN government. UMNO elites, who have never lost
power, would be sorely tempted to preempt such a move by
imposing emergency measures, and rumors of the government's
intention to use ISA provisions of imprisonment without trial
have circulated within the opposition.


5. (C) Beneath the turbulent power politics, we continue to
benefit from close counter-terrorism cooperation (though
Guantanamo access is an increasingly sore point); the
bilateral military interaction remains strong; and we along
with Embassies Jakarta and Manila are implementing the
Regional Security Initiative (RSI) concept through a maritime
policymakers' conference in Sabah. Our careful, persistent
diplomacy on trafficking in persons has somewhat overcome the
setback from the 2007 Tier 3 decision, and the GOM is
implementing its new law. We continue to pursue an FTA;
USTR's Barbara Weisel will be in KL May 4-5 for meetings with
MITI and other counterparts in an effort to clarify the GOM's
negotiating intentions. If the GOM signals are positive,
there could be a follow-up visit by USTR's Doug Bell and a
negotiating round in July. Malaysia believes it has limited
direct exposure to the U.S. sub-prime market in part because
of lessons learned from the 1997-8 Asian financial crisis,
though it does expect the economic slowdown in the U.S. will

KUALA LUMP 00000340 002 OF 003


dampen growth in Malaysia this year. Malaysia is now the
16th largest trading partner for the United States after
two-way bilateral trade dropped 12 percent in 2007 to $46
billion in 2007.


6. (C) Malaysia continues to place great stock in ASEAN,
including as a forum to safely engage China, but under
Abdullah has become less of an ASEAN driver. Beyond public
remarks last year, the GOM has shown no willingness to join
us in measures to pressure the Burmese junta. Malaysia's
decision to withdraw its soldiers from the International
Monitoring Team in Mindanao as a means to pressure Manila in
the MILF negotiations could result in an end to Malaysia's
facilitation role. Malaysia wants to continue peace-keeping
deployments and has indicated it could consider a role in
Afghanistan if asked by the Afghans or UN. Malaysia handed
over the OIC chair in March, but will continue to place
emphasis on OIC activities. Malaysia's participation at the
Annapolis peace conference was a highlight of recent
diplomatic cooperation. The Foreign Ministry's support for
Iran's attempted participation in the recent arms exhibition
highlights the challenges we face on the Iran issue. Since
the 2003-2004 SCOMI incident, we have continued to urge
Malaysia to pass an export control law.


7. (SBU) We recommend the following themes for your official
meetings in Malaysia.

-- ASEAN: The U.S. seeks ways to strengthen relations with
ASEAN, including through the U.S.-ASEAN Enhanced Partnership;
my appointment as Ambassador for ASEAN Affairs also
represents the U.S. commitment to bolster ties.

-- Burma: We urge Malaysia take a more active role in
persuading Burma to take positive steps. That will help
prevent Burma from becoming an obstacle to our desire to
advance U.S.-ASEAN relations.

-- Iran: Malaysia's upholding of UNSCRs supports efforts to
find a diplomatic solution to Iran's nuclear program; this
issue attracts interest at the highest levels in Washington.

-- Kosovo: We welcomed Malaysia's statement on Kosovo's
independence, and urge Malaysia to move to formal recognition.

-- Nonproliferation: The international community expects
modern economies and trading hubs to take serious steps on
nonproliferation; an export control regime is needed by any
country hoping to attract investments in sensitive technology
and take full part in the international financial network.
We see your establishment of a robust export control regime
as critical to your strategic interests and ours.

-- Rule of law: We are impressed by the recently announced
judicial reforms; these also send a good signal to Malaysia's
investment partners.

-- Trafficking in persons: Passage of law and initial
implementation have attracted positive attention to
Malaysia's anti-TIP commitment; look forward to learning more
about enforcement efforts and victim protection. We respect
and want to hear your opinions.

-- Refugees: We appreciate the GOM's cooperation in the large
U.S. resettlement effort; we are working with your officials
to speed the process; handling of refugees attracts intense
world attention.

-- Parliament: We encourage greater exchanges between our
legislative branches; more Congress-Parliament contacts would
increase understanding and enrich our relations.


8. (U) We suggest the following broad themes for your press
conference:

-- Mutual respect: My meetings in Malaysia focused on the
shared interests between the U.S. and Malaysia, our mutual
respect as sovereign nations, and the value we place on
Malaysia's views of the region and the world. I appreciated
the opportunity to learn more about Malaysia's priorities.

-- Partnership: Malaysia just emerged from an election and
has a new cabinet, and in eight months the U.S. will have a
new president. I am confident mutually productive cooperation
will continue because our relationship is based on enduring
national interests in both countries. We remain committed to
negotiating a mutually beneficial FTA; we look forward to

KUALA LUMP 00000340 003 OF 003


participating in the Third International Conference on the
Muslim World and the West, hosted by Malaysia in June; and we
both remained engaged in countering international crime,
including terrorism.

-- ASEAN: I had good exchanges with the Ministry of Foreign
Affairs and others on key ASEAN issues. The U.S. seeks ways
to strengthen relations with ASEAN, including through the
U.S.-ASEAN Enhanced Partnership and my appointment as
Ambassador, and I value Malaysia's leadership and views on
ASEAN affairs. Burma is a genuine challenge for us and for
ASEAN; we need to identify ways to achieve positive change
for the sake of the Burmese people.
KEITH