DASD SEDNEY HEARS OF SINGAPORE'S MALAYSIA

C O N F I D E N T I A L SECTION 01 OF 03 SINGAPORE 001019

SIPDIS

E.O. 12958: DECL: 09/16/2018
TAGS: PGOV PHUM PREL ASEAN SN MY BU ID IN TH KN
CH, RU
SUBJECT: DASD SEDNEY HEARS OF SINGAPORE'S MALAYSIA
ANXIETIES (AND BILAHARI'S TAKE ON THE REST OF THE WORLD)

REF: A. SINGAPORE 1001

B. SINGAPORE 586

Classified By: DCM Daniel Shields for reasons 1.4 (b) and (d).


1. (C) Summary: Singapore perceives a distinct possibility
of racial conflict in Malaysia, Bilahari Kausikan, MFA Second
Permanent Secretary told David
Sedney, Deputy Assistant Secretary of Defense for East Asia
September 15. Kausikan offered his view that if racial
conflict provoked ethnic Chinese to flee Malaysia, they could
"overwhelm" Singapore. Providing views on events elsewhere,
Kausikan said the situation in Thailand is not as dangerous
as in Malaysia, but the current political instability in
Thailand would continue. Indonesia is the most stable of the
three countries, but its governance is weak. Burma's
neighbors prioritize its stability, fearing that the junta's
collapse could provoke a Yugoslavia-style breakup. Kausikan
predicted India would not be able to serve as a
counter-balance to China for a long time due to serious
deficiencies with its physical and legal infrastructure.
Arguing that North Korea's leaders just want to survive,
Kausikan said he is more comfortable with the prospect of a
nuclear-armed North Korea than a nuclear-armed Iran.
Regarding Russia (where he once served as Ambassador),
Kausikan said no one should be surprised by Russia's actions
in Georgia but dismissed any notion of a Russian resurgence,
citing its serious domestic and demographic challenges and
its over dependence on oil revenue. End Summary.

Anxiety About Malaysia
--------------


2. (C) The situation in neighboring Malaysia is confused and
dangerous, Singapore perceives a distinct possibility of
racial conflict, Singapore MFA Second Permanent Secretary
Bilahari Kausikan told Deputy Assistant Secretary of Defense
for East Asia David Sedney in a September 15 meeting.
(Embassy Comment: The Kausikan meeting took place a few days
after Malaysian authorities arrested three persons, including
two ethnic Chinese citizens, under the Internal Security Act,
causing a political uproar, but no security incidents. End
Comment.) Kausikan warned that Malaysia's current political
instability could lead to unconstitutional action or a
"constitutional emergency." He did not think that opposition
leader Anwar Ibrahim had found the thirty crossover votes in
Parliament necessary to fulfill his vow to bring down the
government. But one side or the other might try the
"time-tested strategy" of inciting communal conflict or some
other incident to provoke a reaction. The possibility of
conflict is high because the three competing factions backing
Anwar, Prime Minister Abdullah Badawi, and Deputy Prime
Minister Najib Razak all have much at stake. Should Anwar
fail in his bid to become Prime Minister, he would likely end
up back in jail. Najib "has his neck on the line" in
connection with a high-profile murder case and also needed to
prevail politically in order to avoid prosecution. Having
been in power for so long, ruling UMNO party leaders would
also likely face repercussions if they lost power.


3. (C) A lack of competent leadership is a real problem for
Malaysia, Kausikan said. Anwar might be the most competent
leader, but he too comes with liabilities. While Anwar had
made concessions to non-Muslims in order to build his
coalition, he is unlikely to live up to his commitments to
his non-Muslim partners should he gain power, Kausikan
predicted. Should racial conflict break out, China would be
compelled to weigh in on behalf of the ethnic Chinese
population in Malaysia, though it was unlikely (at that
stage) that anyone in Malaysia would listen to China's
concerns. Kausikan said the GOS is also watching the
situation carefully as it fears any significant racial
conflict in Malaysia could lead to an influx of ethnic
Chinese to Singapore and "overwhelm" Singapore. (NOTE:
60,000 - 70,000 Malaysians commute daily to work in
Singapore. END NOTE.) Kausikan characterized Malaysian
traditional foreign policy as including elements that are 1)
anti-western, 2) pro-business, 3) supportive of China's
growing role in the region. However, as China's influence in
the region grows, Malaysia's "pro-Malay" domestic policies
would eventuallylead to problems with China.


SINGAPORE 00001019 002 OF 003


Thailand Not as Dangerous
--------------


4. (C) The situation in Thailand is confused, but not nearly
as dangerous as in Malaysia, Kausikan said. Although Thaksin
was corrupt, so is everyone else, including the opposition,
he said. While Thaksin tried to reform the political
structure of the government, he made a mistake in pursuing a
relationship with the Crown Prince by paying off the Crown
Prince's gambling debts. Kausikan said the Crown Prince was
"very erratic, and easily subject to influence." However,
even after the coup ousted Thaksin, his party still remained
in power, and would continue to remain in power. Thus, the
current instability would likely ontinue in Thailand.

Indonesia Most Stable
--------------


5. (C) Kausikan noted that there is ongoing debate within
Indonesia over what kind of country it will eventually
become: a unitary state, a federal state, or a loose
confederation. Indonesia is "greening" (i.e., becoming more
Islamic) but not as quickly as Malaysia, and Indonesia is
unlikely to evolve into a theocracy. The role of the
military is one of the big issues that still needs to be
addressed, as the military is one of the few consistently
effective institutions in the country. However, despite
Indonesia's significant governance and structural problems,
it is much more stable than either Malaysia or Thailand.

Burma's Neighbors Prioritize Stability Over Justice
-------------- --------------


6. (C) Kausikan praised the United States' humanitarian
assistance response to Cyclone Nargis in Burma, adding that
it was far superior to the approach taken by European
countries such as France. Addressing the political
situation,Kausikan argued that Burma's neighbors, including
China and India, are more concerned with stability than
justice there. Burma has over 100 different ethnic groups,
and despite the Burmese military's obvious problems, the
military is "holding everything together." Burma's neighbors
feared that if the junta were ousted, things could get worse,
this could produce an Asian reprise of the breakup of
Yugoslavia.

India Not Yet a Match For China
--------------


7. (C) Kausikan said that India is not a counter-balance to
China and would not be for a long time, due to serious
deficiencies with both physical and legal infrastructure.
Indian politics is always complicated and the decision-making
process is cumbersome. At the same time, there exists a
nostalgia among some segments of the population for India's
former role as a leader of the so-called "Non-Aligned
Movement" that looked to the USSR as a natural ally of India
and the Non-Aligned" states. Kausikan claimed that India had
changed its previous view that "weak neighbors make good
neighbors," and that it now desired its neighbors to be
stable and their governments to be capable. Expressing a
"personal opinion," Kausikan said he had "no problem with"
the U.S.-India nuclear deal.

North Korea
--------------


8. (C) Describing North Korea as a "theocracy," Kausikan
expressed optimism that some of its leaders realize its
economic situation is unsustainable and that some changes
will have to be introduced. He noted that Kim Jong Il has
become less critical of China's economic transformation.
Despite the often virulent ideological statements, the
leadership of North Korea just wants to survive, Kausikan
argued; thus he would be "more comfortable with a
nuclear-capable North Korea, than a nuclear-capable Iran."
Recalling his two visits to North Korea (in May, reftel, and
two years ago),Kausikan said he noticed several subtle signs
of improved conditions in the three cities he visited. He
compared favorably conditions in Pyongyang today to those he
observed in Hanoi when Vietnam opened up in the 1990s.


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Same Old Russia
--------------


9. (C) Recounting his former service as Singapore's
Ambassador to Russia, Kausikan said no one should be
surprised by Russian actions in the Caucasus. "Russia is
just behaving like Russia," he added. Despite Russia's
current "bravado," the country is in serious trouble. The
economy is "third
world," the health care system is a shambles, and the
demographic challenges are almost insurmountable, he said.
Russia has little influence in Southeast Asia and appears to
have no clear strategy for what it wants to achieve in
Asia. Rather, it appears just to join organizations and
events just to prove to itself that it remains a great power.
Kausikan said Russia's dependence on oil revenue left it
vulnerable to market fluctuations. He doubted the country
would be in any better shape ten years hence.

China's Focus Internal, Can be Patient on Taiwan
-------------- --------------


10. (C) China's major domestic concerns will continue to keep
the government's primary focus internal, Kausikan said. High
inflation, a bad banking system, growing social inequity,
increasing nationalism, a looming environmental
catastrophe and the need to sustain high growth rates are all
key challenges for China's leadership. China appears willing
to work with the new KMT leadership in Taiwan, and
Cross-Straits relations have improved greatly over the last
year. Kausikan praised China's appointment of the unusually
capable Wang Yi to run the Taiwan Affairs Office. He
suggested that China had adopted a long-term
approach to Taiwan and was not in a hurry to change the
status quo.

Vietnam
--------------


11. (C) The economy of Vietnam is experiencing significant
inflation for the first time, Kausikan said. However, the
country is stable, has competent leadership, and would likely
"weather the storm."


Visit Embassy Singapore's Classified website:
http://www.state.sgov.gov/p/eap/singapore/ind ex.cfm
HERBOLD