VZCZCXRO9001
OO RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGP #1323/01 1920908
ZNR UUUUU ZZH
O 110908Z JUL 07
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3571
INFO RUCNASE/ASEAN MEMBER COLLECTIVE

UNCLAS SECTION 01 OF 02 SINGAPORE 001323 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
FROM AMBASSADOR HERBOLD FOR ASSISTANT SECRETARY SULLIVAN 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EFIN PGOV PREL SN
SUBJECT: SCENESETTER FOR EEB A/S SULLIVAN'S VISIT TO 
SINGAPORE 
 
REF: A. SINGAPORE 1304 
 
     ¶B. SINGAPORE 933 
     ¶C. SINGAPORE 703 
     ¶D. SINGAPORE 394 
     ¶E. SINGAPORE 221 
     ¶F. 06 SINGAPORE 3110 
 
¶1. (SBU) Embassy Singapore looks forward to your July 22-23 
visit.  While we are not allies, the United States enjoys a 
close relationship with Singapore, based on similar strategic 
views and substantial trade and investment ties.  Singapore 
is a keen observer of regional developments, but for 
political and demographic reasons does not play a leadership 
role.  Your meetings with key Singapore government officials 
and regional financial analysts offers an excellent 
opportunity to: 
 
-- discuss economic developments in Southeast Asia and beyond; 
-- support efforts to ensure that Singapore has the strongest 
possible Anti-Money Laundering and Countering the Finance of 
Terrorism (AML-CFT) regime; and 
-- encourage Singapore to fulfill its outstanding FTA 
obligations. 
 
Partners, not Allies 
-------------------- 
 
¶2. (SBU) Our excellent relationship with Singapore is founded 
on a convergence of views on key strategic issues and 
substantial trade and investment ties.  As a tiny, wealthy, 
predominantly ethnic-Chinese state surrounded by much larger, 
poorer, Malay/Muslim neighbors, Singapore has an acute sense 
of vulnerability.  It is also grappling with the economic and 
strategic impact of China's and India's reemergence on the 
world stage.  Consequently, Singapore views a strong U.S. 
diplomatic, economic, and military presence in the region as 
essential to its own and the region's peace and prosperity. 
No matter how broad or deep our engagement with Southeast 
Asia, however, Singapore's leaders always encourage us to do 
more.  The GOS worries that perceptions of flagging U.S. 
attention to the region could embolden terrorists and others 
who might see opportunities, if they think we are not 
watching.  Singapore's leaders are equally concerned about 
the "Arabization" of Southeast Asia's traditionally tolerant 
approach to Islam and the potential spread of Middle 
East-inspired radicalism here. 
 
¶3. (SBU) Singapore is a valuable logistics hub for U.S. 
forces, supports Coalition efforts in Iraq, and contributes 
to a Provincial Reconstruction Team in Afghanistan.  However, 
Singapore worries about being seen in its Muslim-majority 
neighborhood as "too close" to the United States.  Thus, 
Singapore does not wish to be a treaty ally.  Our military 
leases its facilities here; there are "places, not bases" on 
the island. 
 
Economic Success and the FTA 
---------------------------- 
 
¶4. (SBU) With its commitment to free trade, attracting 
Foreign Direct Investment (FDI), and sound economic 
management, Singapore has enjoyed four decades of high 
growth, giving it a per capita GDP of approximately USD 
28,000.  Our bilateral economic ties are flourishing.  The 
2004 U.S.-Singapore Free Trade Agreement (FTA) has been a 
tremendous success; U.S. exports have grown by nearly 50 
percent and in 2006 we enjoyed a USD 6.9 billion trade 
surplus with Singapore.  FTA implementation has proceeded 
smoothly.  However, during the third annual review of the FTA 
in May, we noted a number of areas where Singapore needed to 
make further progress, such as on telecommunications 
(especially providing reasonable access to "last mile" leased 
lines), intellectual property rights, environmental 
cooperation, and market access.  Some 1,500 U.S. companies 
operate here and U.S. Foreign Direct Investment (FDI) in 
Singapore exceeds USD 56 billion, second only to Japan in 
Asia. 
 
The Hub 
------- 
 
¶5. (SBU) Singapore's role as the leading shipping and 
transportation hub in the region has long been the foundation 
of its economy.  By attracting FDI, Singapore has also become 
a major regional hub for financial services and a 
manufacturing center for information technology products, and 
pharmaceuticals, and even oil refining.  Singapore has 
enjoyed 6-8 percent growth per year since 2004, fueled by 
booming exports to China, the United States, and India.  To 
 
SINGAPORE 00001323  002 OF 002 
 
 
further diversify the economy, Singapore has aggressively 
moved into private wealth management and biomedical research, 
and the GOS has licensed two casinos, set to open in 2009. 
 
AML-CFT 
------- 
 
¶6. (SBU) The casinos could lead to an increase in criminal 
activity and money laundering in Singapore.  A major weakness 
in Singapore's AML-CFT regime is the lack of reporting 
requirements for the physical cross-border transportation of 
currency.  Singapore is working to implement the 
recommendations of the Financial Action Task Force (FATF) and 
is scheduled for a FATF review in September.  We hope this 
will push Singapore to further tighten its AML-CFT 
regulations and adopt a declaration system for cash couriers. 
 In general, Singapore has been reluctant to share financial 
data with our law enforcement agencies due to its stringent 
bank secrecy laws and highly restrictive Official Secrets Act. 
 
Domestic Scene 
-------------- 
 
¶7. (SBU) The People's Action Party (PAP) has held power since 
1959 and won another landslide victory at the polls in May 
¶2006.  While the PAP's hardball treatment of the opposition, 
gerrymandering, and tight media controls contributed to the 
magnitude of victory, there is no doubt the PAP enjoys broad 
public support based on its record of delivering security, 
prosperity, excellent services, and clean government. 
 
¶8. (SBU) Minister Mentor Lee Kuan Yew (LKY), founding father 
of modern Singapore, remains active and continues to 
inculcate younger ministers with his hard-nosed approach to 
promoting Singapore's interests, as he defines them.  His 
continued prominence, however, has made it difficult for his 
son, Prime Minister Lee Hsien Loong, to put his own stamp on 
the Singapore political system.  Most observers agree that 
fundamental change toward a more democratic system is 
unlikely until the older generation of leaders passes from 
the scene, and even then is likely to come slowly. 
 
Regional Pacesetter, but Not a Leader 
------------------------------------- 
 
¶9. (SBU) With its strategic vision and efficient and 
effective government, Singapore wants to come in first and be 
seen as a leader: whether it is in its use of e-government to 
deliver services, or surveys on the world's most globalized 
city, to indices of economic (but not political) freedom. 
This does not translate, however, into a capacity to be a 
regional leader, particularly in the political arena. 
Singapore's small size (in terms of territory and 
population), wealth, demographics, and unique political 
culture often lead to testy relations with its neighbors. 
Even if it wanted to, Singapore is not well suited to play a 
leadership role or carry water for the United States in 
Southeast Asia.  Rather, it is content to work within ASEAN's 
slower, consensus-based style to deal with regional issues. 
However, Singapore's leaders are keen observers of regional 
developments and able to share useful insights with USG 
counterparts. 
 
Visit Embassy Singapore's Classified website: 
http://www.state.sgov.gov/p/eap/singapore/ind ex.cfm 
HERBOLD