VZCZCXYZ0000
OO RUEHWEB

DE RUEHKL #2041/01 3050838
ZNY SSSSS ZZH
O 010838Z NOV 06
FM AMEMBASSY KUALA LUMPUR
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7890
INFO RUEHBY/AMEMBASSY CANBERRA IMMEDIATE 2216
RUEHJA/AMEMBASSY JAKARTA IMMEDIATE 1570

S E C R E T KUALA LUMPUR 002041 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EAP/MTS, PM/RSAT 
 
E.O. 12958: DECL: 10/31/2016 
TAGS: MARR MASS MCAP MOPS OVIP PREL PTER MY
SUBJECT: SCENE SETTER FOR THE VISIT OF ASSISTANT SECRETARY 
HILLEN 
 
Classified By: AMBASSADOR CHRISTOPHER J. LAFLEUR, REASONS 1.4 b, d. 
 
Summary 
------- 
 
¶1. (C) Malaysian-American relations rest on an impressive 
range of economic exchanges and have improved significantly 
in other areas as well over the three years of Prime Minister 
Abdullah Badawi's tenure.  This moderate Muslim-majority 
state is our tenth-largest trading partner worldwide. 
Although Malaysia is not a treaty ally, we have increasingly 
strong military-military and counter-terrorism cooperation. 
In international affairs, Malaysia strongly opposed us on the 
Iraq invasion and more recently on our stance on Israel's use 
of force in Lebanon.  However, Malaysia has stepped forward 
to offer troops for the UN force in Lebanon and continues to 
contribute to peacekeeping operations in places such as East 
Timor.  While Malaysia often takes positions opposing our own 
in the UN, Prime Minister Abdullah has met regularly with 
President Bush and has developed a useful dialog on Muslim 
world relations with the West.  Abdullah promotes a moderate 
vision of Islam and Malaysia has worked to defuse ethnic 
conflicts involving Muslims in the Philippines and elsewhere 
in Southeast Asia.  We hope your visit will further 
strengthen the mil-mil ties between Malaysia and the U.S., 
recognize Malaysia's continued contribution to international 
peacekeeping, encourage Malaysia's participation in 
multilateral counterterrorism efforts, and promote Malaysia's 
support for non-proliferation regimes and eventual 
participation in PSI. 
 
Political/Economic Landscape 
---------------------------- 
 
¶2.  (C) Malaysia has been a difficult political partner in 
the past.  Malaysians nurse strong anti-colonial sentiments, 
are fiercely portective of their sovereignty and (among the 
Malay majority) hold some resentment over perceived ill 
treatment of Islam by the West.  Malaysian intellectuals tend 
to hold a "Euroskeptic" view of U.S. foreign policy in 
general and like to cast themselves as defenders of "third 
world" interests.  Former Prime Minister Mahathir played on 
these sentiments to generate political support for himself 
and his ambitious economic agenda.  When he relinquished his 
post in 2003, he left behind a modernized economy but also 
strained relations with much of the West.  Today, however, 
Malaysia presents us with important transformational 
opportunities.  In terms of its economic development, 
educational achievement, public welfare, and political 
stability, Malaysia stands out among muslim-majority nations. 
 The Malaysians project a moderate version of Islam, and, 
over the longer term, could lend additional support to 
democratic forces in the Middle East and Iraq.  We also share 
strong common East Asian regional interests in stability and 
prosperity.  Malaysian counter-terrorism cooperation is 
indispensable in defeating Jemaah Islamiyah (JI) in the 
region.  Malaysia's economy is one of the most open, diverse 
and well-developed economies in the Islamic world and in 
ASEAN.  Malaysia is our tenth largest trading partner, we are 
Malaysia's number one foreign investor, and economic ties 
could strengthen further if ongoing negotiations on a free 
trade agreement are successful. 
 
Bilateral Ties--Improving the Substance 
--------------------------------------- 
 
¶3.  (S) In our bilateral relations, the GOM has begun 
matching improvements in tone with improvements in substance. 
 PM Abdullah has openly espoused improved relations with the 
U.S., and values the good rapport he established in his 
meetings with the President.  In July, Secretary Rice met 
with PM Abdullah and FM Hamid at the ASEAN Regional Forum and 
President Bush met with PM Abdullah on the sidelines of the 
UNGA in September.  Last year the GOM acceded to our 
long-standing urging and signed the IAEA Additional Protocol; 
the Malaysians have also started sending observers to recent 
PSI exercises; and the GOM is preparing to implement an 
export control regime.  The third round of our FTA talks is 
underway in Kuala Lumpur at this moment. 
 
¶4.  (C) Although they keep the details closely held, the GOM 
has been a key partner on counterterrorism.  Early round-ups 
in 2001-2002 of scores of Jemaah Islamiyah (JI) suspects 
helped ensure there have been no terrorist attacks here. 
However, Malaysian extremists, as illustrated by a series of 
recent arrests in Malaysia's Borneo states, still have the 
capability to support JI operations elsewhere.  Two Malaysian 
citizens were among the 14 high value U.S. detainees 
transferred to Guantanamo earlier this year.  In 2003, 
 
Malaysia established the Southeast Asia Regional Center for 
Counterterrorism (SEARCCT), which runs a full schedule of 
multilateral training courses, many conducted with U.S. 
support.  We and our colleagues in Manila, Jakarta and other 
Southeast Asian posts have embarked on a regional effort to 
strengthen these countries' border controls.  We are 
currently seeking the GOM's concurrence to carry out a Border 
Control Assessment Initiative (BCAI) in Sabah. 
 
Security Cooperation 
-------------------- 
 
¶5. (C) Mil-mil cooperation between the United States and 
Malaysia has grown in recent years particularly with regard 
to the greater frequency of high-visibility ship visits. 
Security-related training sponsored by the United States for 
military and law enforcement participants has also been on 
the rise.  Although the possibility of a terrorist threat to 
the Malacca Strait has received the bulk of international 
attention, the fact is that although pirate attacks 
illustrate vulnerabilities, we have never identified any 
terrorist activities in the Straits.  Conversely, terrorists 
operate regularly in the Sulu/Sulawesi Sea corridor and we 
have redirected our focus to this theater.  Malaysia's recent 
success initiating regional aerial monitoring of the Straits 
of Malacca (the "Eyes in the Sky" program), has helped reduce 
piracy in the Straits though it moves cautiously forward in 
its multilateral efforts in this area.  Malaysia has recently 
concluded a new 505 agreement that will allow us to utilize 
1206 funds to put CT equipment into the vulnerable Sulu and 
Sulawesi Seas border areas of Sabah where terrorists are 
known to transit.  We are awaiting approval of the 1206 
proposals made in conjunction with regional embassies. 
Malaysia has not signed either a PSI or Article 98 agreement. 
 In general, Malaysia remains open to bilateral cooperation 
that strengthens its own defense capacity, but the GOM will 
quickly raise the principles of sovereignty and territorial 
integrity when discussing international security regimes and 
coordination, such as for the Straits of Malacca.  Malaysia's 
only multilateral defense arrangment is the Five Power 
Defense Pact with the UK, Singapore, Australia and New 
Zealand. 
 
¶6.  (S) We have been pleased by the overwhelmingly positive 
media coverage our ship visits have received, in contrast to 
the quiet arrivals of past years.  The flip side to this is 
that our visits are getting increased attention from 
ideological foes on the Islamic right, and lately from former 
Prime Minister Mahathir.  Deputy Prime Minister Najib has 
stoutly defended our cooperation before Parliament, and we do 
not see that our engagement is under threat.  However, we do 
need to be cognizant of our increased military visibility and 
sensitive to GOM concerns, particularly with high tensions in 
the Middle East.  The GOM cited concerns about the growing 
visibility of training in eastern Sabah when it recently 
decided to review on a case by case basis proposed training 
events involving foreign military forces in that region. 
 
¶7.  (C) Malaysia has one of the best records in UN 
Peacekeeping Operations continues to be very active and 
supportive.  They have committed forces to operations in 
Timor in the past and are presently engaged there in 
operations.  The GOM has volunteered forces for UNIFIL duty 
as well.  Malaysia has developed a Peacekeeping Training 
Center and updated the facility in recent years to provide 
specialized training for the troops it sends into the field. 
USG has obligated almost 1.1 million dollars for GPOI funds 
for training and equipment that can be but into action with 
the signing of a new 505 agreement. 
 
Malaysian Foreign Policy and US--A Mixed Bag 
-------------------------------------------- 
 
¶8.  (S) Abdullah champions his moderate vision of Islam -- 
albeit with limited impact to date -- within the Organization 
of the Islamic Conference (OIC), which Malaysia will continue 
to chair through early 2008.  Malaysia supports Abbas, the 
Palestinian Authority, the MEPP roadmap, and Iraqi 
reconstruction.  However, the Malaysian public remains highly 
critical of our Middle East policies, and the GOM is 
consistently critical of Israel, with which it has no 
diplomatic relations.  Malaysia volunteered 1,000 troops to 
participate in UNIFIL.  After more than a month of lobbying, 
and in the face of objections from Israel, UN SYG Annan 
agreed to allow Malaysia to send a force of 376 soldiers to 
support UNIFIL with deployment expected at the end of 
November. 
 
¶9.  (S) In early September, Malaysia surrendered the 
 
chairmanship of the Non-Aligned Movement, but as past chair 
remains a member of the leadership troika.  During Malaysia's 
tenure it championed policies which supported the NAM stance 
on the Iranian nuclear program, and engaged, often on overly 
friendly terms, with such problematic international players 
as Zimbabwe, Cuba and Venezuela.  Abdullah hosted Hugo Chavez 
for a visit to Malaysia in August, and assured Venezuela of 
his support for election to the Latin American chair on the 
UN Security Council (although they have indicated privately 
since they could support an alternative candidate once the UN 
voting stalemated.) 
 
¶10.  (C) The GOM issued a public condemnation of North 
Korea's nuclear test and publicly supports UNSCR 1718, 
although it has no enthusiasm for sanctions.  They have 
repeatedly called for a return to the six-party DPRK nuclear 
talks and have criticized North Korea's truculence.  Malaysia 
has lent rhetorical support to Iran's right to develop 
"peaceful" nuclear technology and is pursuing closer trade 
ties.  The Malaysian government is publicly supportive of 
China's "peaceful rise", welcoming in particular China's 
growing imports of Malaysian products, despite lingering 
suspicions among some officials of China's long-term 
intentions. 
 
¶11.  (C) In Southeast Asia, Malaysia has played an important 
and constructive role.  In August Malaysia completed its 
earlier peacekeeping mission to East Timor following the 
armed uprising that led to deployment of Australian, 
Malaysian and Portuguese forces, while a new deployment of 
Malaysian police personnel to East Timor is underway.  The 
GOM has also taken a leading role in the southern Philippines 
peace process, hosting negotiations and contributing 
observers to the International Monitoring Team in the 
southern Philippines.  The Malaysians have urged the Thai 
government to resolve peacefully the unrest in Southern 
Thailand and are hopeful that the new junta will take a more 
conciliatory role in calming their northern border.  Malaysia 
is especially chagrined by Burma's intransigence because it 
championed Burma's entry into ASEAN.  Having publicly 
criticized the Burmese regime though, FM Hamid appears to be 
at a loss as to what to do next and Malaysia has of late 
suggested it is up to the UN now to deal with the problem. 
 
PM Abdullah's Challenges 
------------------------ 
 
¶12.  (C) Prime Minister Abdullah's main priorities are 
sustaining economic growth and spreading it to less-developed 
rural areas of the country and encouraging more efficient and 
collegial government. No one doubts his sincerity but his 
mild-mannered and cautious approach has led critics to 
question his leadership. Now three years into his five-year 
term, Abdullah has appealed to the public for patience in 
delivering reform. 
 
¶13.  (C) PM Abdullah currently faces a new problem:  in 
April, former PM Mahathir began openly attacking his 
successor for failing to follow through with many of the 
former PM's initiatives, not promoting economic growth and 
for corrupt practices of Abdullah's family members.  These 
attacks have escalated, with Mahathir now calling for 
Abdullah to step down.  Mahathir can no longer dictate policy 
(unlike Singapore's Minister Mentor Lee Kuan Yew), but having 
the "father" of the nation's economic success -- and a once 
much feared political boss -- attacking his former 
subordinates has made them all nervous.  Abdullah has often 
maintained an "elegant silence" and tasked others in the 
Cabinet to explain his decisions and defend against 
Mahathir's attacks.  At this point, Abdullah's power of 
incumbency and control over the United Malays National 
Organization (UMNO) party apparatus should help ensure 
Mahathir's campaign fails.  However, Mahathir's public 
insinuations that the PM and his supporters are "not Malay 
enough" may constrain the PM's public statements on foreign 
policy issues.  Abdullah will seek to use the annual UNMO 
convention, to take place the week following your visit, to 
reaffirm and strengthen his party leadership position. 
 
 
Malaysia's Moderate Islam 
------------------------- 
 
¶14.  (C) Malaysia, with its entrenched majority coalition, is 
hardly an ideal democracy, but it can still serve as a useful 
model for evolving Islamic societies elsewhere.  The Malay 
people, long known for their tolerance, have become more 
conservative in recent years, but Prime Minister Abdullah has 
enshrined the Malay political elite's continued preference 
 
for moderation in his "Islam Hadhari" or "Civilizational 
Islam" policy.  Abdullah's key message is that Islam can 
become a leading world civilization again only if it embraces 
economic development, education, innovation and tolerance. 
While observers are wary of a longer-term trend toward 
greater divisions between the Muslim Malay majority and other 
ethnic groups, Malaysia has kept inter-ethnic tensions well 
under control by regional and world standards for over 35 
years. 
LAFLEUR