SCENESETTER FOR VISIT TO MALAYSIA BY REAR ADMIRAL

S E C R E T KUALA LUMPUR 000078

SIPDIS

PACOM PLEASE PASS TO RADM CONNOR

E.O. 12958: DECL: 02/07/2030
TAGS: MCAP MARR MASS MOPS PGOV PREL PTER OVIP MY
SUBJECT: SCENESETTER FOR VISIT TO MALAYSIA BY REAR ADMIRAL
MICHAEL CONNOR

Classified By: Deputy Chief of Mission Robert G.
Rapson for reasons 1.4 b and d.

Summary and Introduction
--------------


1. (C) Rear Admiral Connor, Embassy Kuala Lumpur warmly
welcomes your visit to Malaysia, which comes at a moment of
opportunity in U.S.-Malaysia relations. In his ten months in
office, Prime Minister Najib Tun Razak has demonstrated a
more pragmatic and action-oriented approach than his
predecessor and he appears to be more inclined to move
Malaysia at least some distance toward the international
mainstream on issues of importance to the United States. In
this context, our efforts are focused on continuing our good
security cooperation with Malaysia, especially on the mil-mil
front, expanding the trade and investment dimensions of our
ties, and deepening our partnership on key global issues,
including Malaysia's diplomacy towards Iran.
Non-proliferation and the passage of an export control law
remain very high on our mission agenda, as does securing a
Malaysian commitment to providing assistance to Afghanistan.
The domestic political tempo in Malaysia has slowed since the
'political tsunami' of the March 2008 general elections that
saw the opposition capture a record number of seats. More
recently, PM Najib and his administration have been
confronted by the challenge of growing Islamic drift and
managing the societal divisiveness of issues like the use of
the word "Allah" by non-Muslims, which resulted in arson
attacks against churches early in 2010. The trial of
opposition leader Anwar Ibrahim for sodomy, which began on
February 3, is likely to dominate Malaysia's domestic
political scene for the foreseeable future. End Summary and
Introduction

The Broader Relationship in Context
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2. (SBU) Robust trade and investment ties remain the solid
foundation of our relationship with Malaysia, our 18th
largest trading partner (bilateral trade totaled USD 44
billion in 2008). The GOM has been an important partner on
counterterrorism and we enjoy expanding law enforcement
cooperation as well as evolving military-to-military ties.
Malaysia already hosts regional Humanitarian Assistance /
Disaster Relief (HA/DR) related conferences and operations,
and we have been working to improve our disaster relief
cooperation. Our people-to-people ties build on decades of
Malaysian students studying in America (5,400 Malaysian
students studied in the U.S. during in 2007-2008). The
emergence of new administrations in both our countries has
provided expanded opportunities to pursue vigorous public
outreach to often-skeptical, but now more receptive, Muslim
Malay audiences.

Najib and His Cabinet Seek Better U.S.-Malaysia Ties
-------------- --------------


3. (C) PM Najib has a more nuanced sense than his
predecessor, Abdullah Badawi, of international politics as
well as Malaysia's place in the region and the world. Najib
places a priority on foreign relations beyond Malaysia's
traditional reference points of the Non-Aligned Movement
(NAM) and the Organization of the Islamic Conference (OIC).
Although it would be inapt to describe Najib as pro-Western,
the UK-educated Prime Minister recognizes the benefits to
Malaysia of engaging the U.S., sustaining access to our
market and U.S. investment, along with rapidly developing
ties to China and India, and of participating in
international institutions. He has given explicit
instruction to his cabinet to improve relations with the U.S.
Over the past year, and with the advent of the new U.S.
administration, we have seen an uptick in the tempo of our
senior-level bilateral interactions, to include the
President's extended phone conversation with Najib in June,
Foreign Minister Anifah's meeting with Secretary Clinton in
DC in May, Deputy Secretary Steinberg's visit to Kuala Lumpur
in September, and Special Advisor Einhorn's visit in October.



4. (C) DefMin Zahid Hamidi has also emphasized Malaysia's
desire to strengthen our bilateral military relationship,
Malaysia's role in anti-piracy, UN peacekeeping, humanitarian
and Disaster Relief Operations and Malaysia's potential
assistance to Afghanistan. Zahid has indicated some concern
with China's activities in the South China Sea, but has also
encouraged broad U.S. engagement with China. Zahid's
proposed visit to DC in March 2010 followed by the PM's visit
to Washington in April (for the Nuclear Security Summit) will
impart additional momentum to improving bilateral ties.

MIL-MIL Cooperation
--------------


5. (C) The Malaysian military has consistently been more
willing to engage with us and more willing to be seen doing
so than its civilian government counterparts. In contrast to
some of its Southeast Asian neighbors, the Malaysian military
is not a key player in either foreign policy or the
maintenance of public order. It is accordingly free to focus
on the nation's defense and is keen to increase training and
exercise opportunities with us, within well established
boundaries and with the necessary concurrence of the Foreign
Ministry. The army-to-army training annual Keris Strike has
been our premier command post exercise; it continues to
evolve rotating different Malaysian Army Division's as our
exercises partner and developing appropriate and challenging
scenarios such as HA/DR operations.


6. (SBU) Mil-mil engagement continues to expand in frequency
and quality, as is evidenced by the increase in ship visits
over the last four years, from approximately six per year to
over 27 in 2009. With about two dozen ports calls per year,
we have a robust program of naval exchange, our investment in
maritime domain awareness in East Malaysia is developing
well, and our nascent cooperation with the Malaysian Coast
Guard is also maturing. Although there have been some recent
positive moves on this by their defense leadership, KL
continues to resist active participation in prominent
multilateral exercises, such as Cobra Gold, which it only
observes. Nevertheless, we are steadily expanding our
cooperation, including by embedding a C-130 pilot in a
Malaysian unit, increasing our senior NCO exchanges and
looking for NCO training opportunities, and focusing on
humanitarian assistance and disaster relief exercise
opportunities, talking in mil-mil channels about pandemic
preparation, and developing a more and more robust program of
institutional and personnel exchanges and visits. Under the
BITACG (Bilateral Training and Consultative Group)
arrangements we are deepening our engagement in areas such as
exercises and training, intelligence exchanges, and logistics
and communication.

Foreign Policy
--------------


7. (C) Malaysia's foreign policy is not well aligned with
that of the United States. Instead, it is Non-Aligned
Movement (NAM)-centric which leads Malaysia to vote opposite
the U.S. position on almost all important UN issues. U.S.
support for Malaysia joining the Somalia anti-piracy Contact
Group was a useful start to moving Malaysia toward more
engagement in multilateral security structures. Malaysia is
a leading member of ASEAN, and could play a more positive
role in Southeast Asian conflict resolution and ASEAN's
approach to Burma to bring about democratic change in that
country. The one foreign policy issue that resonates most
profoundly with the Malaysian public is the Israel-Palestine
conflict, where predominantly Muslim Malaysians (55 percent
of the population) identify with the Palestinians and
criticize U.S. support of Israel. The Malaysians are
currently providing training to Afghan teachers in Malaysia,
but at our encouragement have given indications recently that
they will consider expanding their technical assistance and
support into other areas. The GOM supports the
Non-Proliferation Treaty (NPT) regime, with emphasis on the
need for all countries to denuclearize. Malaysia claims to
enforce the letter of UNSCR resolutions, but it has not
entered into the spirit of putting pressure on Iran to
relinquish its nuclear weapons development programs.

CT and Law Enforcement
--------------


8. (C) Counterterrorism cooperation with Malaysia has been
effective. Early round-ups in 2001-2002 of scores of Jemaah
Islamiyah (JI) suspects helped prevent terrorist attacks
here, but Malaysian extremists remain engaged in JI
operations elsewhere. Two Malaysians were among the 14
high-value U.S. detainees transferred to Guantanamo in 2006;
Malaysia has a pending request for their return. Growing
domestic political pressure to do away with preventive
detention laws, principally the Internal Security Act (ISA),
could pose a long-term challenge to Malaysian law
enforcement, which is overly reliant on administrative
detention. Interagency engagement has also increased with
the newly formed Malaysian Maritime Enforcement Agency
(MMEA),which has broad maritime law enforcement,
humanitarian, and security responsibilities similar to those
of the U.S. Coast Guard.

The Economy and Trade Relations with the U.S.
--------------


9. (SBU) Malaysia's economy was estimated to have contracted
about three percent in 2009 and is expected to recover slowly
in 2010. The global recession led to dramatic declines in
exports and investment in Malaysia, resulting in a recession
since the first quarter of 2009. Hence, the political stakes
are high for PM Najib, who must ensure that the economy
continues to provide growth and prosperity to a large middle
class. Najib has used the recession to push forward economic
reforms needed to keep Malaysia competitive. Najib's
recognition that reforms are needed also presents
opportunities for our trade and investment agenda
specifically with regard to market access issues related to
government procurement and competition policy, among others.
While it is not yet ready to join, Malaysia is interested in
discussions related to the Trans-Pacific Partnership regional
trade agreement. If it decided to join, it could make use of
much of the work done during the U.S.-Malaysia Free Trade
Agreement negotiations.

Domestic Politics
--------------


10. (C) The broader domestic context is more settled than a
year ago, but worrisome factors are still embedded in the
system. Najib came to power as Prime Minister in April 2009
in the midst of domestic political discord that raises
long-term questions regarding the continued dominance of his
ruling UMNO party, in power since independence in 1957. He
replaced former PM Abdullah Badawi, who was eased out after
the ruling National Front (BN) coalition lost its
near-perpetual two-thirds majority control of Parliament--and
five of 13 states--in the March 2008 general elections.
Najib successfully presided over the October 2009 UMNO
national convention, which bolstered his leadership, but is
finding it challenging to identify and implement popular
political reform measures while maintaining UMNO's tight
control over state levers of power and patronage. Opposition
leader Anwar Ibrahim remains at risk of imprisonment over
what most observers would agree are politicized charges of
sodomy; his trial began on February 3. Malaysia has a long
record of religious tolerance, but non-Muslims are concerned
about what they see as creeping Islamization of Malaysian
society. A contentious issue in January was whether
non-Muslim Malay-language religious publications could use
the word "Allah" to refer to God, which led to arson attacks
on Christian churches. A surau, and a Sikh temple in five
different states. The government recently made four sets of
arrests in connection with the attacks.

KEITH