VZCZCXYZ0000
PP RUEHWEB

DE RUEHBD #0161/01 1580451
ZNY CCCCC ZZH
P 070451Z JUN 07
FM AMEMBASSY BANDAR SERI BEGAWAN
TO RUEHC/SECSTATE WASHDC PRIORITY 3832
INFO RUEKJCS/SECDEF WASHDC PRIORITY
RHHMUNA/HQ USPACOM HONOLULU HI PRIORITY

C O N F I D E N T I A L BANDAR SERI BEGAWAN 000161 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR EAP/MTS 
 
E.O. 12958: DECL: 06/07/2017 
TAGS: PREL PGOV MARR SENV BX
SUBJECT: BRUNEI: WHY WE CARE, HOW WE'RE DOING 
 
Classified By: Ambassador Emil Skodon, reasons 1.4 (b) & (d) 
 
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SUMMARY 
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¶1.  (C) A mid-fiscal year stocktaking confirms that Brunei's 
significance for the U.S. continues to be summarized in three words: 
oil, religion, and location.  The following developments have occurred 
in each of these areas so far during FY-07: 
 
-- Increased oil and gas exports helped reduce market volatility, and 
Brunei signaled its intention to allow market forces to continue to 
drive production decisions. 
 
-- Popular identification with the global Islamic "ummah" and a world 
view emphasizing victimization of Muslims by U.S.-led western nations 
has been on the upswing, increasing the potential for regional Islamic 
terrorist groups eventually turning their attention to Brunei. 
 
-- External powers continued to make use of Brunei's strategic 
location, with the British taking steps to ensure it remains home to 
their third largest contingent of permanently stationed overseas 
troops, the Chinese expanding defense ties, and the Singaporeans 
continuing to train land forces here. 
 
¶2.  (C) Given the above, U.S. interests continue to lie in seeing 
Brunei enjoy long-term stability, contribute to regional security, and 
help to foster improved U.S. relations with the Islamic world.  To date 
we have been most successful at improving counterterrorism cooperation, 
largely through intensified mil-mil and law enforcement interaction. 
We are close to a public endorsement of PSI principles and signing of 
an HSPD-6 terrorist information sharing agreement.  Although we have 
had better than expected success in our public diplomacy efforts, our 
limited resources have only marginally blunted the impact of media 
coverage that portrays the U.S. as anti-Islam. 
END SUMMARY. 
 
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BRUNEI'S SIGNIFICANCE:  OIL, RELIGION, AND LOCATION 
--------------------------------------------- ------ 
 
¶3. (C) Now that Department review has validated our recently submitted 
FY-09 Mission Strategic Plan and we have passed the halfway point in 
the current fiscal year, we believe this to be an appropriate juncture 
for taking stock of U.S. interests in Brunei and our progress on FY-07 
MSP performance indicators.  We continue to hold that Brunei's 
significance for the U.S. lies in its role as a reliable exporter of 
oil and gas, its status as a moderate member of the Muslim community of 
nations, and its strategic location.  Those three factors continue to 
underlie U.S. long-term interests, but each has been affected by 
developments so far in FY-07. 
 
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OIL 
--- 
 
¶4.  (SBU) Oil and gas production data indicate that Brunei has 
continued to be a reliable hydrocarbons producer that follows 
market-friendly policies which contribute to reduced price volatility. 
Brunei recorded its highest annual hydrocarbons production and export 
levels for several years in CY-06, helping to lessen pressure on an 
otherwise tight market.  The bulk of those exports were directed to key 
U.S. allies Japan, Korea, and Australia (Brunei petroleum executives 
estimate that approximately one out of five light bulbs in Tokyo are 
lit by power derived from Bruneian natural gas).  The value of crude 
exports to the U.S. -- mostly to West Coast refineries -- exceeded a 
half billion dollars. 
 
¶5.  (SBU) Bruneian oil and gas authorities signaled that market forces, 
not political decisions, will continue to drive their decision making. 
This approach was the basis for the contract Mitsubishi signed in FY-07 
for construction of a methanol plant using local feedstock, as well as 
for negotiations with an Australian-led group to build potentially one 
of the world's largest fertilizer plants, and for discussions with U.S. 
company Alcoa on a large aluminum smelter powered by locally-generated 
electricity.  Also in FY-07, Brunei's government reached production 
sharing agreements for two onshore blocs with consortia of local and 
foreign firms, and we understand there may be quiet movement toward a 
production sharing agreement with Malaysia that would open disputed 
offshore areas thought to contain extremely large oil and gas deposits 
to further exploration. 
 
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RELIGION 
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¶6.  (C) While Brunei has long been the most dogmatic Islamic nation in 
East Asia, we perceive a trend toward greater identification with the 
global Islamic community and a world view that portrays all of the 
"ummah's" problems as the result of victimization by the West, led by 
an anti-Muslim United States.  Opinion polls do not exist here and we 
cannot quantify this trend; however, our sense is that the "War on 
Terror" is increasingly perceived as a "War on Islam."  This is due in 
part to the continuing stream of negative news from the Middle East, 
and in part from the introduction to Brunei in FY-07 of media outlets 
with an anti-U.S. editorial bias:  al-Jazeera's English-language 
satellite channel, and the Brunei Times daily newspaper, which features 
an editorial page that draws heavily from Arab press service op-eds. 
These trends, along with the pressure that regional Islamic terrorist 
groups have come under in neighboring countries, have increased the 
threat of such groups turning to Brunei as a potential safe haven or 
target of operations. 
 
¶7.  (C) The government has attempted to channel popular identification 
with the "ummah" into positive initiatives that are often consonant 
with U.S. interests.  In January, the Sultan announced that a new 
Islamic university would be established in Brunei before the end of 
FY-07 which will seek to draw students from the southern Philippines 
and other Muslim areas of Southeast Asia into a curriculum that 
emphasizes moderate and non-violent Islam.  The Sultan also supported 
limited tolerance for non-Muslims in FY-07.  Following Embassy 
intervention, he overturned a strict interpretation of zoning laws 
advocated by dogmatic Islamists which threatened a long-standing 
Christian congregation with the loss of its house of worship.  In 
April, university students in Islamic Studies visited Anglican and 
other churches to learn about Christian theology and observe worship 
services, a first for Brunei (this was not reported in the unclassified 
religious freedom report as church leaders are concerned that public 
exposure would force an end to this act of religious tolerance). 
 
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LOCATION 
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¶8.  (C) Brunei's strategic location at the geographic heart of ASEAN 
continued to attract attention from established and emerging global 
powers.  The British and Bruneian governments made progress on a 
revised cost-sharing arrangement for updating the infrastructure 
supporting the UK's Gurkha battalion and jungle training school.  That 
should ensure that Brunei remains home to the third largest contingent 
of UK forces permanently stationed overseas, after Germany and Cyprus. 
Singapore also continued to use its facilities in Brunei for land force 
training.  The Chinese tell us that they and the Bruneians have agreed 
to exchange Defense Attaches and Assistant Attaches this summer.  (This 
will give the Chinese Embassy the second largest diplomatic staff of 
any foreign mission in Brunei after the Philippines, one which will be 
more than twice as large as U.S. diplomatic staff.)  FY-07 has also 
seen the graduation of the first two Chinese diplomats to complete 
English language training at the University of Brunei. 
 
--------------------------------------------- -------------------- 
U.S. INTERESTS: STABILITY, SECURITY, RELATIONS WITH ISLAMIC WORLD 
--------------------------------------------- -------------------- 
 
¶9.  (C) FY-07 developments noted above confirm the view expressed in 
our MSP (and confirmed by Department) that U.S. interests lie in seeing 
Brunei enjoy long-term stability, contribute actively to regional 
security, and help to foster improved U.S. relations with the Islamic 
world.  The MSP identified six specific program goals for advancing 
those interests.  Following are our self-assigned grades for how we are 
doing in each of those areas so far in FY-07, based on the benchmarks 
set in the FY-07 goal papers. 
 
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SUPPORT FOR REGIONAL SECURITY: "B" 
---------------------------------- 
 
¶10.  (C) Progress on the diplomatic front was satisfactory.  Brunei 
generally supported closer ties with the U.S. within ASEAN, where it 
currently serves as the group's country coordinator for China.  Support 
for the U.S.-Brunei Joint Reconstruction Project in Aceh as the 
flagship project for the U.S.-ASEAN Enhanced Partnership was strong in 
principle, but Bruneian implementation on the ground has been slower 
than hoped, an issue we are currently addressing.  The government 
implicitly endorsed the Proliferation Security Initiative Statement of 
Interdiction Principles through participation in PSI events and was set 
to provide explicit endorsement as a deliverable during the Sultan's 
proposed trip to the U.S., but since Bruneian postponement of that trip 
the momentum has lagged and we need to revive it in conjunction with 
the Australians, who have the PSI lead with Brunei.  As a first step 
toward improving its regional emergency response capabilities, the GoB 
agreed to run a Disaster Management Workshop later this year in 
partnership with APCSS. 
 
¶11.  (C) Bruneian participation in peacekeeping progressed.  During 
FY-07 the Bruneian military rotated a new contingent into the 
Malaysian-led International Monitoring Mission in Mindanao, 
participated in a PACOM-led MPAT exercise, and consulted with Indonesia 
and Malaysia on the possibility of embedding Bruneian troops into their 
UNIFIL contingents later this year.  The new update of Brunei's Defense 
White Paper commits the armed forces to develop deployable and 
sustainable peacekeeping and humanitarian response capacities. Brunei 
also plans to send up to a platoon to the multinational Khan Quest 
exercise later this year in conjunction with the Global Peace 
Operations Initiative. 
 
--------------------------------- 
COUNTERTERRORISM COOPERATION: "A" 
--------------------------------- 
 
¶12.  (C) We met or exceeded MSP benchmarks for military cooperation 
designed to help improve the counterterrorism capacity of Brunei's 
military and its interoperability with U.S. forces carrying out the CT 
mission in Southeast Asia.  We aimed for two USN ship visits overall in 
FY-07; we have had five so far, as relatively good force protection and 
a low threat level made Brunei a desirable port of call.  After 
considerable effort by post, the Ministry of Defense accepted a DOD 
proposal to conduct a Defense Resource Management Study aimed at 
introducing a capabilities-based procurement system, and implementation 
has begun.  We continued to push for an HSPD-6 agreement on the 
exchange of terrorist watchlist data, and are now down to negotiations 
on specific language in the text; it is conceivable that a concerted 
and coordinated USG effort could secure conclusion of an HSPD-6 
agreement before the end of FY-07. 
 
--------------------------------- 
MUSLIM UNDERSTANDING OF U.S.: "C" 
--------------------------------- 
 
¶13.  (SBU) Our Public Diplomacy program designed to improve perceptions 
of the U.S. among young Bruneian Muslims was generally on target. 
Extensive educational promotion increased the number of Bruneian 
students at U.S. universities to 21 in FY-07, just shy of our goal of 
25; the Ministry of Defense agreed to send six winners of its 
prestigious scholarships to U.S. universities in the 07-08 school year; 
and, we laid groundwork for cooperation with the planned Islamic 
university through a DVC between U.S. and Bruneian Islamic studies 
experts and a visit to the U.S. by the Deputy Education Minister.  Post 
secured government approval for establishment of a U.S. alumni 
organization and hopes to hold its initial meeting before the end of 
the FY.  We are on track to achieve Bruneian participation at planned 
levels in Fulbright, IVP, and APCSS programs.  The Embassy already 
placed 49 local media stories so far in FY-07, exceeding our overall FY 
goal of 35.  And, we are quietly working on an informal program to 
place publications on U.S. history and society into secondary school 
libraries without first subjecting them to censorship review. 
 
¶14.  (SBU) Despite the above achievements, we give only a "C" grade to 
Public Diplomacy efforts because our program, and hence its 
effectiveness, paled in comparison to the flood of media stories that 
portray the U.S. as anti-Islam and Muslims worldwide as victims of 
western policies.  At best, we are marginally blunting this media 
impact by giving a small number of young Bruneians reason to question 
if everything negative they hear about the U.S. is really true.  That's 
pretty small beer, but even that is a stretch given that our entire 
Public Diplomacy program consists of one Foreign Service National and 
no/no dedicated PD officer.  We believe we could make a much greater 
impact on Muslim perceptions of the U.S. through more extensive 
personal interaction with university faculty and media representatives, 
but that will not be possible without establishment of the full-time PD 
Entry Level position requested in our MSP. 
 
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POPULAR PARTICIPATION IN GOVERNMENT: "C" 
---------------------------------------- 
 
¶15.  (C) The good news is that the revived Legislative Council held its 
annual session as scheduled and expanded somewhat its scope of 
substantive debate, and that political parties have been allowed to 
organize, meet with the Embassy, and have access to the media, albeit 
within tight limits.  The bad news is that there was no movement toward 
adding directly elected members to the Council or ending the State of 
Emergency under which the country is governed, nor any interest in our 
offer to facilitate NGO assistance in formulating an election law. 
This is a long-term effort that will require patient and persistent 
behind-the-scenes lobbying by the Embassy for the remainder of this 
fiscal year and well beyond. 
 
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SUSTAINABLE DEVELOPMENT: "B" 
---------------------------- 
 
¶16.  (SBU) Brunei supported U.S. trade initiatives with ASEAN and 
within APEC, and the Trade and Investment Council meeting in May 
featured a productive exchange on regional and global trade issues. 
The TIC also addressed specific trade barriers, but poor protection of 
intellectual property and non-tariff barriers to U.S. agriculture 
remain a problem.  U.S. merchandise exports in CY-06 captured slightly 
below the 11.5 percent market share we had targeted (according to 
Bruneian data), but groundwork was laid for potentially large sales in 
 
aerospace and defense in the remainder of FY-07 or FY-08. 
Environmentally-friendly development was boosted by Brunei's signing of 
the "Heart of Borneo" forest conservation declaration, the arrival of a 
U.S. consultant to assist with sustainable prawn agriculture, and the 
USG offer of further aquaculture capacity-building assistance made in 
the TIC.  Post also began work with colleagues in the Department and at 
Embassies Kuala Lumpur and Jakarta on a possible regional IVP program 
to support Heart of Borneo implementation. 
 
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EMBASSY FACILITIES: "B" 
----------------------- 
 
¶17.  (U) Progress on a New Embassy Compound (NEC) took a big step as we 
won host government agreement to build a second access road to OBO's 
preferred NEC site, clearing the way for acquisition of the property. 
In the remaining months of FY-07 we still need to work closely with OBO 
to complete Congressional consultation on the purchase, make a firm 
offer, obtain host government approval, and carry out the Integrated 
Planning Review. 
 
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COMMENT: OUTLOOK FOR REMAINDER OF FY-07 
--------------------------------------- 
 
¶18.  (C) Overall, we pin average achievement of MSP program goals at 
about a C so far in FY-07.  Given our current level of resources we 
cannot expect much improvement in the Public Diplomacy area for the 
remainder of the FY, and, while the long-term trend toward greater 
popular participation in government is headed in the right direction, 
we cannot predict with any confidence that significant milestones will 
be reached within FY-07.  On the other hand, with coordinated efforts 
on PSI, HSPD-6, and other diplomatic initiatives, and close support and 
engagement from OBO on the NEC project, we could conceivably end the 
year with an "A" grade on counterterrorism, embassy facilities, and 
garnering Bruneian support for regional security.  In short, the 
outlook for the remainder of FY-07 can be summarized as:  good for CT; 
promising for regional security, sustainable development and embassy 
facilities; and, just a passing grade at best in the "hearts and minds" 
areas of Public Diplomacy and greater political openness. 
 
FRIEDMAN