SCENESETTER FOR DEPUTY NATIONAL SECURITY ADVISOR

UNCLAS SECTION 01 OF 02 SINGAPORE 000035

SIPDIS

SENSITIVE
SIPDIS

NSC FOR DEPUTY NSA DANIEL PRICE FROM AMBASSADOR HERBOLD

E.O. 12958: N/A
TAGS: ECON ETRD EFIN ETTC PREL PGOV SN
SUBJECT: SCENESETTER FOR DEPUTY NATIONAL SECURITY ADVISOR
DANIEL PRICE

REF: SINGAPORE 23


1. (SBU) Embassy Singapore looks forward to your January
14-15 visit. While we are not allies, the United States
enjoys a close relationship with Singapore, based on similar
strategic views and substantial trade and investment ties.
Singapore is a keen observer of regional developments, but
for political and demographic reasons does not play a
leadership role. Your meetings with key Singapore government
officials, regional financial analysts, and U.S. business
representatives offers an excellent opportunity to:

-- discuss economic developments in Southeast Asia and beyond;
-- encourage continued support for our efforts in the WTO and
APEC; and
-- seek Singapore's views on regional developments and ASEAN.

Partners, not Allies
--------------


2. (SBU) Our excellent relationship with Singapore is founded
on a convergence of views on key strategic issues and
substantial trade and investment ties. As a tiny, wealthy,
predominantly ethnic-Chinese state surrounded by much larger,
poorer, Malay/Muslim neighbors, Singapore has an acute sense
of vulnerability. It is also grappling with the economic and
strategic impact of China's and India's resurgence.
Consequently, Singapore views a strong U.S. diplomatic,
economic, and military presence in the region as essential to
its own and the region's peace and prosperity. No matter how
broad or deep our engagement with Southeast Asia, however,
Singapore's leaders always encourage us to do more. The GOS
worries that perceptions of flagging U.S. attention to the
region could embolden terrorists and others who might see
opportunities, if they think we are not watching.
Singapore's leaders are equally concerned about the
"Arabization" of Southeast Asia's traditionally tolerant
approach to Islam and the potential spread of Middle
East-inspired radicalism here.


3. (SBU) Singapore is a valuable logistics hub for U.S.
forces, supports Coalition efforts in Iraq, and contributes
to a Provincial Reconstruction Team in Afghanistan. However,
Singapore worries about being seen in its Muslim-majority
neighborhood as "too close" to the United States. Thus,
Singapore does not wish to be a treaty ally. Our military
leases its facilities here; there are "places, not bases" on
the island.

Economic Success and the FTA
--------------


4. (SBU) With Singapore,s commitment to free trade,
attracting Foreign Direct Investment (FDI),and sound
economic management, the country has enjoyed four decades of
high growth, giving it a per capita GDP of approximately USD
30,000. Our bilateral economic ties are flourishing. The
2004 U.S.-Singapore Free Trade Agreement (FTA) has been a
tremendous success; U.S. exports have grown by more than 50
percent and in 2006, we enjoyed a USD 6.9 billion trade
surplus with Singapore. FTA implementation has proceeded
smoothly. However, during the third annual review of the FTA
in May 2007, we noted a number of areas where Singapore
needed to make further progress, such as on
telecommunications (especially providing reasonable access to
"last mile" leased lines),intellectual property rights,
environmental cooperation, and market access. Some 1,500
U.S. companies operate here, and U.S. Foreign Direct
Investment (FDI) in Singapore exceeds USD 60 billion, second
only to Japan in Asia. Singapore is a strong supporter of
our efforts to conclude the Doha Round, works closely with us
within APEC, and is eager for us to join its "P4" Free Trade
Agreement with Brunei, Chile, and New Zealand.

The Hub
--------------


5. (SBU) Singapore's role as the leading shipping and
transportation hub in the region has long been the foundation
of its economy. By attracting FDI, Singapore has also become
a major regional hub for financial services and a
manufacturing center in information technology,
pharmaceuticals, and oil refining. Singapore has enjoyed 6-8
percent growth per year since 2004, fueled by booming exports
to China, the United States, and India. To further diversify
the economy, Singapore has aggressively moved into private

SINGAPORE 00000035 002 OF 002


wealth management and biomedical research, and the GOS has
licensed two multi-billion dollar casinos, set to open in

2009.

Domestic Scene
--------------


6. (SBU) The People's Action Party (PAP) has held power since
1959 and won another landslide victory at the polls in May

2006. While the PAP's hardball treatment of the opposition,
gerrymandering, and tight media controls contributed to the
magnitude of victory, there is no doubt the PAP enjoys broad
public support based on its record of delivering security,
prosperity, excellent services, and clean government.

Burma
--------------


7. (SBU) Singapore is clearly fed up with the incompetence,
brutality and insularity of the Burmese regime, but
unconvinced that stepping up international pressure on the
junta can actually bring about positive change in Burma. It
has maintained a strong rhetorical stance -- Singapore was a
key driver of ASEAN's tough September 27 Chairman's statement
on Burma and founding father Lee Kuan Yew has been scathing
in public remarks about the regime -- but does not support
expelling Burma from ASEAN or imposing sanctions, which it
believes would only further isolate the regime. While
Singapore wants to see meaningful change, it also worries
that a rapid transition that sidelined the military
altogether could be highly destabilizing in light of Burma's
ethnic divisions and lack of alternative national
institutions.

ASEAN
--------------


8. (SBU) The Burma issue overshadowed the Singapore-hosted
ASEAN-related summits in November, which were to highlight
ASEAN,s institutional development, celebrate its 40th
anniversary and develop further the East Asia Summit (EAS).
Singapore sought to have UN Special Advisor Ibrahim Gambari
brief the EAS on the situation in Burma, but the plan
collapsed when Burma rejected it (reftel). This brought back
into play sharp underlying divisions between ASEAN's more
developed members and its "newer" members (Vietnam, Laos,
Cambodia, and Burma).


9. (SBU) On the positive side, ASEAN leaders signed the ASEAN
Charter and the ASEAN Economic Blueprint, which aim to
strengthen ASEAN institutions and establish a "single
economic entity" by 2015, respectively. These are important
steps in ASEAN,s efforts to transform itself from a loose
grouping of highly diverse countries into a more cohesive and
effective organization. (Singapore was the first member to
ratify the Charter on January 7.) Singapore sees this
transformation as a strategic imperative in order for the
small countries of Southeast Asia to maintain political and
economic leverage relative to the region's growing powers. A
more integrated ASEAN (collectively our fifth largest trading
partner and fourth largest export market in 2006) would also
benefit U.S. strategic and economic interests in Asia.

Regional Pacesetter, but Not a Leader
--------------


10. (SBU) Singapore, with its strategic vision and efficient
and effective government, wants to come in first and be seen
as a leader in fields ranging from e-government to
globalization to economic (but not political) freedom.
This does not translate, however, into a capacity to be a
regional leader, particularly in the political arena.
Singapore's small size (in terms of territory and
population),wealth, demographics, and unique political
culture often lead to testy relations with its neighbors.
Even when it wants to, Singapore is not always well-suited to
play a leadership role or carry water for the United States
in Southeast Asia. Normally, it prefers to work within
ASEAN's slower, consensus-based style to deal with regional
issues. However, Singapore's leaders are keen observers of
regional developments and able to share useful insights with
USG counterparts.

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