: SCENESETTER FOR VADM CROWDER,S VISIT TO

S E C R E T KUALA LUMPUR 000366

SIPDIS

PACOM FOR VADM CROWDER, COMMANDER, 7TH FLEET

E.O. 12958: DECL: 05/09/2018
TAGS: MCAP MARR MASS MOPS PGOV PREL PTER OVIP MY
SUBJECT: : SCENESETTER FOR VADM CROWDER,S VISIT TO
MALAYSIA

Classified By: POLITICAL SECTION CHIEF MARK D. CLARK, REASON 1.4 (B AND
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.
Military-to-
military cooperation is improving, with 9 US Navy ship visits
to Malaysian
ports thus far in 2008, 22 visits in 2007, and 23 in 2006.
This is up from only
five ship visits in 2003. Recently initiated engagement with
the Royal
Malaysian Navy?s developing submarine force has successfully
forged a
relationship in this critical warfare capability. Our
security relationship also
finds expression in regular high level visits and counterpart
visits. Behind the
scenes, Malaysia has been a good partner in the war on
terror. 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.


2. (C) While the surprise results of the March 2008 election
have remade
Malaysia?s political landscape and severely shaken the ruling
coalition, our bi-
lateral relations have remained on an even keel. Malaysia is
our sixteenth
largest trading partner, and many major American companies
have invested
here. 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. 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.

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


3. (C) 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.
The objective is to encourage the three nations to share
information, data and
intelligence on a national interagency level and
tri-laterally to create a common
operational picture to enhance their effectiveness in
maritime enforcement.
These visits, and the relationships developed, have fostered
strong mil-mil
cooperation between the United States and Malaysia, and have
not been
adversely impacted by recent leadership changes. Ship visits
have significantly
increased and received greater visibility. Security-related
training sponsored by
the United States for military and law enforcement
participants, including
Malaysia?s new coast guard, Malaysian Maritime Enforcement
Agency, 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.


4. (C) The Malaysian-initiated coordinated surface patrols
and "Eyes in the
Sky" program, a regional aerial monitoring of the Straits of
Malacca, have been
more effective in creating a perception of security than
actual operational
capability. However, a reduction in incidents of piracy and
improved risk
assessment by Lloyds of London has eliminated the GOM?s
resource allocation
to the programs and they continue in their limited
implementation. A pirate
attack and kidnapping of sailors in the Straits on August 13,
2007, was the first
high-seas abduction in over two years but was followed in
April 2008 by
another violent attack and robbery have captured attention.



5. (C) Malaysia concluded a new 505 agreement in 2006 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 this 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
Arrangement, in place since the 1940?s, with the UK,
Singapore, Australia and
New Zealand.


6. (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 Islamist 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 and, in 2006, decided
to review on a case
basis proposed training events involving foreign military
forces in that region.


7. (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.


8. (S) Malaysia maintains friendly relations with Iran,
including a growing
commercial relationship. The Foreign Ministry's support for
Iran's attempted
participation in a Defense Services Asia (DSA) military sales
exhibition, held in
Kuala Lumpur April 2008, highlights the challenges we face on
the Iran issue.
Iran initially was permitted to exhibit weapons at the arms
show and their
exhibit, which violated UN sanctions, was only dismantled
after strong
interventions by the U.S. and others. De facto opposition
leader Anwar Ibrahim
criticized the Malaysian government for bowing to U.S.
pressure on this matter.
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 sanctions or taken other
discernable
actions to implement the UN restrictions on Iran. 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
--------------



9. (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 2007. In September 2006, the U.S. Navy
initiated annual
Submarine Staff Talks which have been successful in fostering
a close
relationship with the Royal Malaysian Navy as they develop
their Scorpene
submarine program.


10. (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. 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.

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


11. (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. In 2006, 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 in 2006, 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."


12. (C) Beneath the turbulent power politics, we continue to
benefit from close
counter-terrorism cooperation, albeit with Guantanamo access
an increasingly
sore point. 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 in 2006, still have the
capability to support JI
operations elsewhere. Two Malaysian citizens were among the
14 high value
U.S. detainees transferred to Guantanamo in 2006. 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.

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


13. (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 attended the Annapolis Conference laast November,
and has
expressed a keen interest in helping further the MEPP.


14. (S) Malaysia surrendered the chairmanship of the
Non-Aligned Movement
in September 2006, 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 in August
2007, 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.


15. (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.


16. (C) Malaysia has played an increasingly prominent role
in addressing
conflicts facing its Southeast Asian neighbors. In 2006
Malaysia completed its
earlier peacekeeping mission to East Timor following the
armed uprising that
led to deployment of Australian, Malaysian and Portuguese
forces, and
dispatched a new deployment of Malaysian police to that
country. 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.
Malaysia's recent 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. 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. Most
recently, the GOM refused to join the U.S., E.U., and others
in condemning the
Burma?s referendum process on a proposed constitution. The
GOM firmly
backs the consensus ASEAN argument that Burma is not a threat
to
international peace and security.

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


17. (C) The surprise results of the March 2008 election have
remade Malaysia?s
political landscape and severely shaken the ruling coalition.
A resurgent
opposition increased its parliamentary representation from to
82 seats, denying
the Ruling party a two-thirds majority for the first time in
decades. In the wake
of this 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,
acknowledging
that 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. 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.


18. (C) The embattled Abdullah has 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 recent
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.


19. (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 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.


20. (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.


21. (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 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, but strong trading relationships
remain in the
electronics and energy sectors. 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 dampen growth in Malaysia this year. 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.

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


22. (C) Malaysia 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 comments last year 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.


Suggested Talking Points
--------------


23. (U) We suggest the following talking points for your
official meetings in
Malaysia.

-- Thank Malaysia for their hosting of a notable increase in
ship visits and note

the positive media attention these visits have received.

-- Burma: We urge Malaysia join us in taking an active role
in encouraging
Burma to permit urgently needed humanitarian assistance to
enter the country
and to grant international humanitarian relief workers access
to the affected
areas. How could Malaysia and the U.S. cooperate in
assisting the Burmese
population?

-- Congratulate Malaysia's efforts in combating Jemaah
Islamiyah (JI) and other
terrorist groups, including efforts to deny terrorist transit
through the tri-border
area of the Sulu and Sulawesi seas. Note our excellent
cooperation on CT
issues and hopes that this will continue.

-- Note Malaysia?s role as a facilitator for the southern
Philippines peace
process, and express our desire to see progress in the talks
despite Malaysia's
recent decision to withdraw its soldiers from the
International Monitoring Team
in Mindanao.

-- Iran: Stress the importance we place on international
respect for the UNSC
resolutions as a means to support a diplomatic solution to
Iran's nuclear
program.
KEITH