AMB MARCIEL'S MEETING WITH MFA SECGEN RASTAM

S E C R E T SECTION 01 OF 02 KUALA LUMPUR 000135 SIPDIS FOR EAP/MTS AND INR E.O. 12958: DECL: 02/23/2019 TAGS: PREL PARM PHUM ECON ETRD ETTC MNUC IR MY SUBJECT: AMB MARCIEL'S MEETING WITH MFA SECGEN RASTAM REF: A. KUALA LUMPUR 113 -- AMB KEITH MEETS SECGEN RASTAM ¶B. STATE 15444 -- MALAYSIAN PARTICIPATION IN PIRACY CONTACT GROUP Classified By: Acting Political Counselor Jeremy Nathan for reasons 1.4 b and d. Summary -------------- ¶1. (C) In a meeting February 23 with Ambassadors Marciel and Keith, MFA Secretary General Rastam expressed hope that Secretary Clinton will visit Malaysia in July when she is back in the region (for the ARF) and that the President will consider a visit here later in the year. Rastam emphasized that Malaysia,s foremost concern at the moment is the global economic crisis and its growing impact on Malaysia and the region. Rastam discussed Malaysia,s interest in achieving peace in Southern Philippines and Southern Thailand, and noted that Malaysia is prepared to resume playing a facilitating role in Mindanao. On Burma, Rastam expressed frustration that nothing has succeeded in changing the Junta's policies, but suggested that the U.S. will need to play a prominent role no matter what initiatives are taken in the future. Ambassador Marciel briefed Rastam on Secretary Clinton,s trip to Jakarta, and noted U.S. support for Malaysia to join the UN anti-piracy contact group. On Iran, Ambassador Marciel requested that Malaysia not approve a license for Bank Mellat to open up a branch in Labuan. Rastam was non-committal in his response, which tracked closely with his comments on this subject to Ambassador Keith several days earlier (ref A). End Summary ¶2. (SBU) Ambassador Marciel opened the February 23 meeting with MFA SecGen Rastam with a quick overview of the Secretary's visit to Jakarta. Rastam acknowledged that the MFA had followed her trip to Jakarta with "interest" and labeled renewed U.S. engagement with Southeast Asia a "good sign." Rastam also expressed appreciation that the Secretary will attend the ASEAN Ministerial in July, and hoped that both she and the President will visit Malaysia later in the year. ¶3. (SBU) Shifting to economic issues, Rastam expressed deep concern over the state of the world economy and the negative impact the crisis is having on Malaysia. Rastam said the U.S. was the key to a global recovery and urged the U.S. to do everything in its power to fix its economic problems as quickly as possible. Ambassador Marciel noted that addressing the current economic situation is at the top of President Obama's agenda. ¶4. (C) Rastam noted GOM "concern" about developments in the southern Philippines after the peace process broke down last year and Malaysia suspended its facilitation efforts in Mindanao. Rastam explained that Malaysia had pulled back for two reasons: first, there was no mandate to continue; and second, because the situation was still uncertain. According to Rastam, the GOP is now quietly lobbying Malaysia to return to its facilitation role. Rastam added that Malaysia also sees a need for there to be direct monitoring of a cease fire, but that Manila is less interested in Malaysia taking on this kind of role. Rastam expected that GOP President Arroyo will meet with the Prime Minister to finalize any agreement between Malaysia and the Philippines. ¶5. (C) On Southern Thailand, Rastam expressed hope that the new Thai government would devise a more effective approach for dealing with the situation in the South, but understood that PM Abhisit perhaps had other more pressing matters to deal with first. Rastam emphasized that only the Thais can solve their southern problem and the "key," according to Rastam, is more economic development in the South, but that will first require peace and greater stability. ¶6. (C) Describing Burma as "ASEAN's most troublesome member", Rastam evinced frustration that neither hard nor soft approaches with the regime have yielded results. He stressed the need for finding the right balance between carrots and sticks, but added that isolating Burma "would not be helpful" either. Rastam felt that the US had a leading role to play in any initiatives towards Burma. ¶7. (C) Ambassador Marciel expressed appreciation for Malaysia's contribution to fighting piracy, and noted U.S. KUALA LUMP 00000135 002 OF 002 support for Malaysia,s participation in the UN anti-piracy contact group. (Note: Post will provide Rastam's office with full ref B demarche points separately. End note). Rastam replied that Malaysia was "happy to be a part" of the fight against piracy, and noted that Malaysia planned to organize a piracy conference later this year. ¶8. (S) On Iran, Ambassador Marciel expressed concern about the opening of a Bank Mellat branch in Labuan and asked for Malaysia to deny the license. Rastam acknowledged U.S. concerns, but offered no other substantive comments. ¶9. (U) Ambassador Marciel did not have a chance to clear this message before departing Malaysia. RAPSON