SENATOR BOND IN SINGAPORE: TAKING THE PULSE OF THE

C O N F I D E N T I A L SECTION 01 OF 04 SINGAPORE 000102

SIPDIS

E.O. 12958: DECL: 01/25/2020
TAGS: PREL ETRD OREP ECON PINR SN ASEAN
SUBJECT: SENATOR BOND IN SINGAPORE: TAKING THE PULSE OF THE
REGION AND APEC

Classified By: Classified by Charge d'Affaires, a.i., Joel Ehrendreich,
reason 1.4 (b) and (d).


1. (C) Summary. Over the course of a full day of meetings,
Senator Kit Bond spoke with numerous Singaporean leaders and
intellectuals on a broad range of regional issues, to include
U.S.-Singapore relations, Indonesia, China, India, Vietnam,
Malaysia, Thailand, Burma, as well as economic opportunities
in the region for U.S. business and U.S. strategic interests
in the region. The Senator also met with the newly arrived
Executive Director of APEC, where he took the opportunity to
stress the need for Southeast Asian countries to improve
transparency and rule of law, and to reduce corruption in
order to attract significant new U.S. investment. End
Summary.

-------------- The Meetings --------------


2. (C) Senator Christopher "Kit" Bond traveled to Singapore
for several meetings with Singaporean leaders, intellectuals
and others on January 8. The Senator was accompanied by
professional staff members (Senate Select Committee on
Intelligence) Louis Tucker and Gordon Matlock, along with
Legislative Assistant for Foreign Policy Michael Dubois.
During the course of the day, the Senator met with Minister
Mentor Lee Kuan Yew, Prime Minister Lee Hsien Loong, Foreign
Minister George Yeo, Asia Pacific Economic Cooperation (APEC)
Executive Director Muhamad Noor Yacob, Ambassadors Ong Keng
Yong and Tan Keng Jin, and professors Zheng Yongnian and
Leonard Sebastian. He also met with Internal Security
Department Director Pang Kin Keong (reported separately).

-------------- Promoting U.S. Business, but the Region Needs to Build
an Attractive Environment --------------


3. (C) The Senator assured his interlocutors that he was
fighting hard to keep America from going down a path of
protectionism, emphasizing his belief that maintaining free
and open trade is especially crucial in a global recession
and adding that the Southeast Asia region needed to do its
part by also combating protectionism, addressing corruption,
protecting intellectual property rights, and having
institutions in place to provide for transparent business
practices which respect the sanctity of contracts and
agreements. American companies are very interested in
investing in the region and could potentially bring tens of
thousands of jobs, Senator Bond explained, but will be wary
of investing in countries where fair and reliable business
practices are not in place. Private U.S. investment is our
best development tool, the Senator said, which could be
leveraged to bring new technologies to the region and help
develop small and medium enterprises. He added that
investment in the region promotes the United States'
relationships and is a key to our long-term economic
interests, and pointed to the Trans-Pacific Strategic
Economic Partnership (TPP) as an excellent potential vehicle
for a model trade agreement for the region for the future.
Foreign Minister Yeo agreed on the importance of the TPP, as
well as the hope that TPP negotiations will be completed by
the time the United States hosts APEC in 2011. Yeo noted
that China would prefer a system of bilateral or regional
agreements in which it could dominate its partners, while the
TPP, on the other hand, would pull all of Asia along and
would "keep everyone honest."


4. (C) Numerous interlocutors expressed their appreciation
for the Senator's commitment to free trade and to fighting
protectionism. Prime Minister Lee said the Singapore
government has been trying to encourage American leadership
on free trade, assessing that the Administration believes in
free trade at heart but could be doing more to demonstrate
it. Citing two cases of anti-dumping measures the USG has
taken on Chinese products, the Prime Minister suggested U.S.
actions would be seen as protectionist.

-------------- U.S.-Singapore Relations --------------


5. (C) FM Yeo affirmed that Singapore and the United States
share almost identical interests on all core foreign policy
issues. Minister Mentor Lee began his conversation with
Senator Bond by saying Singapore has had a long relationship
with the United States and "we know who are friends are and
who are not our friends." He described the "difficult
position" the United States was in with regard to terrorism,
noting that the USG position is to close Guantanamo Bay,
however we are now faced with a dilemma of released prisoners
potentially being involved in new attacks on the U.S., a
problem exacerbated by connections to Yemeni terrorists

SINGAPORE 00000102 002 OF 004


stemming from the December 25 attempted bombing of a
Northwest Airlines jet. The USG "may have to do a U-turn" or
get blamed for a possible future attack, MM Lee surmised,
adding that President Obama could tell the American people
that having been presented with new facts since the campaign,
he had to change course. MM Lee also described Afghanistan
as a major problem facing the United States, noting the
treacherous nature of Afghan fighters and the fact that
history was full of armies who had been defeated in
Afghanistan. He hoped the United States would not pull its
troops out of Afghanistan before the security situation was
stabilized, even if that meant going beyond the stated plan
of beginning withdrawals in 2011.

-------------- Outlook on Indonesia Darkening --------------


6. (C) Several interlocutors gave gloomy assessments of the
recent path Indonesia was taking. Foreign Minister Yeo
agreed with the Senator that corruption was a major obstacle
to overcome in Indonesia and said that Singapore businesses
have also suffered from this cause. Professor Sebastian went
as far to say that Indonesia's institutions are "rotten to
the core," and suggested that the way forward was through new
institutions, citing the Constitutional Court as a promising
example. Sebastian said President Yudhoyono's (SBY)
government lacked a Jusuf Kalla figure -- someone with the
political skills to take aggressive action to advance
government reform -- and added that the United States should
be urging SBY to think about his political legacy and to
focus on combating corruption in Indonesia. Prime Minister
Lee encouraged Senator Bond to discuss corruption directly
with SBY, but said he wasn't sure Jakarta would be able to
implement necessary basic changes; while SBY wants to go down
as the greatest president in Indonesian history, reforming
corruption is "beyond his powers," the Prime Minister said.
Minister Mentor Lee described the quandary SBY faced over a
couple current corruption scandals in his government and
expressed his disappointment that the controversy would
likely prohibit SBY from achieving the reforms that would be
necessary to fundamentally change Indonesia's investment
climate.

-------------- Vietnam: Most Promising --------------


7. (C) Asked by the Senator what is the most promising
country in the region, the Minister Mentor quickly pointed to
Vietnam. He told a story of his own counseling of Vietnamese
leaders in the 1990s, where he said the key to market reform
was to stick to promises and to not change halfway. While
Vietnam's upper echelon still has the guerrilla mindset of
the past generation, the younger Vietnamese are learning an
open market system and slowly Vietnam has begun to change, he
said. Vietnam also respects intellectual property rights
and the sanctity of contracts, the Minister Mentor stated.
Prime Minister Lee said that while Vietnam is not as cohesive
as China, Singaporean investments are doing quite well in the
country. He added that while Prime Minister Dung is a
reformist, the corruption that is inevitable when introducing
an open market has left the reformists vulnerable to attacks
from conservatives. Professor Zheng and Ambassador Ong
agreed that Vietnam is concerned about increasing Chinese
influence in the country and Zheng noted Hanoi is
particularly wary of China's development of Hainan as a
center of tourism due to the island's proximity to
controversial areas in the South China Sea.

-------------- Thailand in Trouble --------------


8. (C) Thailand's image has been badly tarnished in recent
months, and the question of succession of King Phumiphon
poses additional challenges for the country, several people
told Senator Bond. Minister Mentor Lee believed the Queen
was fooling herself if she believed she could control the
Crown Prince as king, adding that former President Thaksin
had influence over the Crown Prince and a score to settle
with several generals. Foreign Minister Yeo also predicted
trouble when King Phumiphon passes, citing Thailand's
"puerile" political institutions for which the King has set
himself up to be the ultimate arbiter -- institutions which
will have difficulty coping with an unpopular new king.

-------------- China and India and the Battle for Regional Influence
--------------


9. (C) Minister Mentor Lee described the most important trend
in the region as being the growth of powerhouses China and
India, noting that Singapore is at the crossroads of their
battle for influence so can benefit from the competition.

SINGAPORE 00000102 003 OF 004


The strength of both China and India's economies contributed
to Singapore being able to bounce back quickly from
recession, he said. Foreign Minister Yeo said that the rise
of China means that all of Southeast Asia ants the United
States and India to play a bigger role in the region. He
said that Singapore favored including India in the East Asia
Summit (along with Australia and others) to counterbalance
China, but cautioned that regional players must handle the
Indians in a thoughtful way, characterizing them as having a
"strong amour-propre." Ambassador Ong said that all
Southeast Asian countries are concerned about China's new
assertiveness; the "charming phase of Chinese diplomacy
toward the region is over, he believes, and China is becoming
more assertive in both diplomacy and business. Discussing
the United States relations with the region, FM Yeo expressed
the belief that Japan under and Ichiro Ozawa-led DPJ will try
to improve relations with China, but will not shift too far
from the United States. "In the long term, Japan will be a
more reliable partner (for the United States) than South
Korea," he stated.

-------------- U.S. Engagement with Burma Welcomed, Patience Urged
--------------


10. (C) Foreign Minister Yeo said all ten ASEAN countries
welcomed the U.S. move to engage ASEAN comprehensively,
noting the relationship had previously "foundered on the rock
of Myanmar." While acknowledging that Burma is still a
serious issue, FM Yeo said there is now hope that the Burma
problem will no longer be the defining issue for the region
in American eyes. FM Yeo cautioned against any expectation
of near-term political opening in Burma. Although Burma's
2010 election will bring in a new government, the generals
will certainly retain their power, even if Aung San Suu Kyi
is given the opportunity to play a political role, he said.
Both FM Yeo and MM Lee described Singapore's long-term view
of Burmese political development, expecting little in the
short term. Rather, Singapore looks forward to generational
change, with MM Lee noting "They (the junta's leadership)
will die sometime" and FM Yeo saying "people get old, people
die, things happen." MM Lee said many of the junta's leaders
come to Singapore for medical treatment, and that Singapore
"has a good idea" of who are the ailing ones. FM Yeo added
that Burma does not want to be too close to China, and that
while Burma has opened itself up to infrastructure projects
from Beijing, it has also courted similar projects from India
and ASEAN in an effort to keep its strategic options open.
FM Yeo cautioned the U.S. not to push Burma in "the wrong
direction."

-------------- Malaysia's Competing Dangers --------------


11. (C) Prime Minister Najib faces danger from three internal
sources according to Ambassador Ong: Islamists, the
democratic opposition, and Malay ultra-nationalists. In
order to accomplish anything, Najib has to manage all of
these groups, he said, and the groups are consciously
leveraging their position to demand more from the national
government. Ambassador Tan agreed with Ong's assessment and
added that the Prime Minister and opposition parties were
trying to "out-Islam" each other in an appeal for popular
support. Minister Mentor Lee said that race politics have
created a divided society, citing divisions between urban and
rural Malays, manifested most recently in the "rampage" by
Muslims over the use of the word "Allah" by non-Muslims. PM
Najib is attempting to position himself to be seen as the
defender of Islam, the Minister Mentor opined.

-------------- APEC Executive Director: Team Building and Focus on
Core Mission --------------


12. (C) Senator Bond stressed the importance of free trade
and investment liberalization, to include expansion of the
TPP, with Ambassador Muhamad Noor Yacob, the Executive
Director of the APEC secretariat. Ambassador Noor, who had
just assumed office on January 4, expressed thanks to the
U.S. for its many various contributions to APEC. His
immediate emphasis will be to instill a sense of team and
teamwork in the secretariat, with a longer term focus on the
organization's core mission of trade and investment
liberalization. The Senator and Ambassador Noor agreed on
the benefits of agriculture technology in addressing food
security, as well as technology driven solutions for greener
ways of producing energy, with Noor noting that Japan, as
host of APEC for 2010, was highlighting 'knowledge-based
growth." Senator took the opportunity to stress the need for
Southeast Asian countries to improve transparency and rule of
law, and to reduce corruption in order to attract significant

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new U.S. investment.


13. (U) Codel Bond has cleared this message.
SHIELDS

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