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### Viewing cable 06KUALALUMPUR705, SCENESETTER FOR UNDER SECRETARY OF THE AIR FORCE DR. RONALD SEGA

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
06KUALALUMPUR705 | 2006-04-18 08:45 | 2011-07-08 00:00 | CONFIDENTIAL | Embassy Kuala Lumpur
Appears in these articles: http://www.malaysia-today.net/mtcolumns/41743-the-americas-foresaw-najibs-threat-to-pak-lah

`

    VZCZCXYZ0001
    PP RUEHWEB

    DE RUEHKL #0705/01 1080845
    ZNY CCCCC ZZH (CCY ADBC5B85 MSI0950-695)
    P 180845Z APR 06 ZDS
    FM AMEMBASSY KUALA LUMPUR
    TO RUEKJCS/SECDEF WASHDC PRIORITY
    RUEHC/SECSTATE WASHDC PRIORITY 6423
    INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS PRIORITY
    RHHMUNA/CDR USPACOM HONOLULU HI PRIORITY

` `

    C O N F I D E N T I A L KUALA LUMPUR 000705

    SIPDIS

    SIPDIS

    C O R R E C T E D COPY CLASSIFICATION

    E.O. 12958: DECL: 04/18/2016
    TAGS: PREL MASS MARR PTER ECON MY
    SUBJECT: SCENESETTER FOR UNDER SECRETARY OF THE AIR FORCE DR. RONALD SEGA

    Classified By: DCM David B. Shear for reasons 1.4 b and d.

    ¶1. (C) SUMMARY:  Malaysian-American relations are good and
    improving; on March 8 we notified Congress of our intention
    to conclude a Free Trade Agreement with Malaysia.  This
    moderate Muslim-majority state is our tenth-largest trading
    partner worldwide, and we have robust military-military
    cooperation.  While moving slowly away from the anti-Western
    rhetoric of former Prime Minister Mahathir Mohamad, Malaysia
    continues to oppose us on some key international issues.
    Counterterrorism cooperation is largely good, but we remain
    concerned about the release of certain suspects and the level
    of surveillance of those suspects.  Malaysia and its
    neighbors increasingly realize the importance of maritime
    security, but enforcement efforts are hampered by sovereignty
    concerns and a lack of resources.  A new Malaysian coast
    guard is slowly getting its sea legs.  Malaysia supports the
    Mindanao peace talks but has differed sharply with Thailand
    over separatist violence.  The Malaysian government is making
    progress in implementing a non-proliferation regime, but is
    no closer to signing an Article 98 agreement with the U.S.
    End Summary.

    Political Landscape
    -------------------

    ¶2. (C) While Malaysia has plenty of warts, it remains a rare
    example of an Islamic-majority country that is stable,
    civilian-led and prosperous.  Malaysia has also maintained a
    largely tolerant social system and a tightly managed
    democracy, with the same multi-racial coalition in power
    since independence in 1957.  While we continue to urge the
    government of Malaysia to improve its own governance, we also
    recognize the constructive role Malaysia can play in the
    Islamic world and have encouraged Malaysians to increase
    support for moderation and progress in the Middle East.

    ¶3. (C) Prime Minister Abdullah Badawi is a breath of fresh
    air after the long-serving and vituperative Mahathir Mohamad,
    who retired in late 2003.  Abdullah promotes a tolerant,
    progressive approach to religion that he calls "Islam
    Hadhari" (civilizational Islam).  He is publicly committed to
    fighting corruption and reining in costly mega-projects,
    though his government's follow-through has been
    disappointing.  His mild-mannered and cautious approach has
    also led critics to question his leadership and
    effectiveness, but his ruling coalition remains secure.
    Abdullah's chief potential rival, Deputy Prime Minister (and
    Defense Minister) Najib Razak, plays the role of a loyal
    bulwark.  After two years in power, Abdullah has appealed to
    the public for patience in delivering reform.  As long as the
    economy continues to grow healthily, the public will grant
    him that.

    Economic Situation
    ------------------

    ¶4. (C) In his early days, PM Abdullah made rural development
    and control of government spending, partly as a means to
    encourage private sector led growth, his top economic
    priorities.  So far, only his reduction of the government's
    deficit -- now down to 3.8 percent of GDP -- can be chalked
    up as a clear success.  Abdullah's partisans say that the
    Ninth Malaysia Plan (9MP; a five year plan for economic
    policy and development spending) will be the vehicle for
    advancing his other economic goals, but the 9MP, unveiled on
    March 31, contained little in the way of drama or new
    initiatives.  Abdullah has emphasized the need for fast
    implementation of 9MP (a tacit acknowledgement of the
    perceptions weak follow through by his government) and
    created a new government agency to focus on the problem.

    ¶5. (C) Meanwhile cuts in government subsidies for gasoline
    and diesel fuel -- one of the tools used to rein in the
    deficit -- have proved highly unpopular, and raised concerns
    about inflation.  Increases in prices of other
    government-managed commodities, such as electricity, may be
    in the works.  For now, the economy is in reasonably good
    shape, with projected growth of around 5.0 percent in 2005
    and official inflation of around 3.8 percent (although
    private analysts believe the real rate of price increases is
    much higher).  However, the government may be facing a tough
    choice in the coming year between stimulating the economy to
    get back on a higher growth track, or raising interest rates
    to control inflation.

    Malaysia's International Posture
    --------------------------------

    ¶6. (C) Malaysia currently is the chair of the Non-Aligned
    DR. RONALD SEGA

    Movement (NAM), the Organization of the Islamic Conference
    (OIC) and of ASEAN.  Malaysia hosted the ASEAN Summit and the
    East Asia Summit last December, and will host the ASEAN
    Regional Forum ministerial this summer.  Secretary of State
    Rice has told the ASEAN foreign ministers of her plans to
    attend the ARF meetings in July.  Malaysia backs the
    six-party DPRK nuclear talks and supports Iraqi
    reconstruction efforts, but has been overeager to embrace
    Hamas and defend the Iranian nuclear program.  The foreign
    ministry seems to be moving slowly away from some of
    Mahathir's anti-Western rhetoric and policies, but retains
    friendships with troublesome states like Cuba, Zimbabwe,
    Sudan, Syria and Uzbekistan.  The Malaysian government is
    publicly supportive of China's "peaceful rise" and recently
    signed a defense cooperation MOU with China, despite
    lingering suspicions among senior Malaysian military
    officials of China's long-term intentions.  Malaysia has
    actively supported peace efforts in the southern Philippines
    and Aceh in Indonesia.

    Counterterrorism
    ----------------

    ¶7. (C) Malaysia has generally been a reliable and
    constructive partner on counterterrorism.  In 2003, Malaysia
    established the Southeast Asia Regional Center for
    Counterterrorism (SEARCCT), which now runs a full schedule of
    multilateral training courses, many conducted with U.S.
    support.  Early round-ups in 2001 and 2002 of scores of
    Jemaah Islamiyah (JI) suspects crippled that organization's
    activities in Malaysia.  Over 70 suspected terrorists remain
    in custody under the Internal Security Act (ISA), a
    "preventive" measure that has also been used to jail
    political opponents of the government in the past.  To our
    knowledge, prosecutions and trials of the terrorist suspects
    are not planned.  Drawing on their experience in defeating a
    communist insurgency, the Malaysians take a "rehabilitative"
    approach for some terrorists, keeping them under police
    supervision in "restricted residence."  Several leading
    figures (such as JI financier Wan Min) have been released
    from ISA detention without warning.  We remain concerned that
    surveillance of released terrorist suspects may be inadequate
    and their "rehabilitation" may be incomplete or insincere.
    JI, while weakened, still has the capability to strike here,
    and the Malaysians need to remain vigilant.

    ¶8. (C) While the Malaysian leadership firmly opposes
    terrorist organizations at home, it is deeply uncomfortable
    with any association of Islam with terrorism, and frequently
    lectures us on the need to eschew terms such as "Islamic
    terrorists" or "jihadists."  Reflecting the broad support for
    the Palestinian cause among the majority here, the Malaysian
    government has no relations with Israel and often argues for
    the need to address the "root causes" of terrorism in the
    Middle East.  In February, negotiators from the United States
    succeeded in reaching an agreement here on a text for a
    bilateral Mutual Legal Assistance Treaty (MLAT). We are
    hoping the treaty will be ready for signature in time for the
    Secretary of State's July visit.  The treaty will be a good
    tool in fighting terrorism and other forms of transnational
    crime.

    Maritime Security
    -----------------

    ¶9. (C) In July 2005, the insurer Lloyd's of London designated
    the Strait of Malacca (SOM) as a "war-risk zone," raising
    premiums for shippers transiting these waters.  This prompted
    a flurry of public cooperation among the littoral states --
    Malaysia, Singapore and Indonesia, plus neighboring Thailand
    -- including conferences of foreign ministers and military
    chiefs.  On September 13, 2005, the three littoral countries
    launched an "Eyes in the Sky" (EiS) program to conduct
    international aerial surveillance of the Strait.  EiS
    currently comprises separate flights by Malaysia and
    Singapore (Indonesia has "temporarily" dropped out for
    operational capacity reasons), with crews that use binoculars
    to survey shipping traffic and make non-secure radio
    transmissions to shore and ship facilities of the three
    littoral states.  Malaysia has also committed a single
    Beechcraft B-200 with infrared capability, to enable some
    night-time surveillance.  Talks on establishing an EiS
    standard operating procedure continue, with a view towards
    reactivating Indonesian participation and bringing Thailand
    into the program.

    ¶10. (C) EiS represents an important symbolic step forward for
    the littoral states' cooperation on SOM security, but could
    be difficult to sustain without international support.  DPM
    Najib has told the media on several occasions that Malaysia
    DR. RONALD SEGA
    would welcome international involvement in Eyes in the Sky.
    Our working-level contacts remain vague, however, on what
    sort of American assistance might be accepted in this
    sovereignty-conscious region.  Malaysia will host a meeting
    this summer sponsored by the International Maritime
    Organization (IMO) in which the littoral states are to
    identify and prioritize their needs for assistance in
    enhancing SOM security.  On February 15-17, the USG hosted a
    meeting of key SOM user states at Coast Guard Island,
    Alameda, California, to discuss the possible range and scope
    of such assistance.

    ¶11. (C) Meanwhile, the Sulu Sea remains an under-monitored
    passageway for terrorist elements in transit between
    Indonesia and Mindanao.  Terror groups have also carried out
    a number of kidnappings for ransom in the area.  While the
    region has little value for international shipping compared
    to the Malacca Strait, it is tremendously important to the
    travel and fundraising operations of groups like JI and Abu
    Sayyaf.  Together with Embassies Jakarta and Manila, we have
    focused on this region as a specific theater for building
    capacity and cooperation between the governments of Malaysia,
    Indonesia and the Philippines. Significant new resources,
    which we are in the process of identifying and prioritizing,
    will be required to make these efforts successful.

    New Coast Guard
    ---------------

    ¶12. (C) Malaysia's new coast guard began limited operations
    on November 30,  2005.  The government's goal is to reduce
    overlap and turf battles among the 11 Malaysian agencies
    tasked with patrolling the country's seas and waterways.  The
    coast guard, officially named the Malaysian Maritime
    Enforcement Agency (MMEA), will possess 72 vessels
    transferred from the navy, marine police, marine department,
    and fisheries department, and has recruited about 1,000
    personnel from these and other existing agencies.  The navy
    vessels will transfer with their crews intact.  MMEA hopes to
    fill its 4,000 approved positions within a year.

    Mindanao Peace Talks, JI Presence
    ---------------------------------

    ¶13. (C) Malaysia has facilitated peace talks between the
    Philippine government and the Moro Islamic Liberation Front
    (MILF), and the negotiations have had some success with the
    sticky issue of "ancestral domain."  The talks are hosted by
    the Malaysian External Intelligence Organization, which in
    the past covertly supported separatist activities in
    Mindanao.  JI presence at MILF training camps remains a
    concern, though the MILF has publicly disavowed any
    connection to JI.  We continue to press the Malaysians to
    make clear to the MILF that it must sever its connections to
    JI and Abu Sayyaf.

    Southern Thailand Strains Relations
    -----------------------------------

    ¶14. (C) Separatist violence in southern Thailand has killed
    over 1,000 people since January 2004, and attacks continue
    almost daily.  The Malaysian government has repeatedly denied
    Thai accusations that it supports the separatist groups,
    though the people on both sides of the porous border share
    Malay ethnicity and the Muslim religion.  Families and
    business interests straddle the border as well.  In August
    2005 Malaysia offered temporary refuge to 131 Thai citizens
    who said they were fleeing their government's crackdown in
    the south.  The issue, which has also involved the UN refugee
    agency, rubbed raw nerves in Kuala Lumpur and Bangkok, as
    government officials abandoned the usual neighborly ASEAN
    rhetoric for sharp verbal attacks on each other.  The
    rhetoric toned down somewhat after the Malaysians returned
    one of the 131 asylum seekers, who was wanted on criminal
    charges in Thailand.

    Slow Progress on Non-proliferation and PSI ...
    --------------------------------------------- -

    ¶15. (C) In 2003, a private Malaysian company (partly owned by
    PM Abdullah's son) was found to have manufactured and shipped
    nuclear centrifuge parts to Libya.  The company pleaded
    ignorance, but the case underscored the need for Malaysia to
    adopt effective export controls.  The government is moving
    ahead with plans to adopt such controls, including the
    conclusion of an Additional Protocol (AP) with the
    International Atomic Energy Agency (IAEA) on November 22,
    ¶2005.  The AP provides a sound policy framework for the
    implementation of nuclear-related export controls.
    DR. RONALD SEGA

    ¶16. (C) We continue to urge Malaysia to participate in
    Proliferation Security Initiative (PSI) meetings and
    exercises.  Malaysia sent two observers in August 2005 to a
    PSI exercise in Singapore, and three observers in April 2006
    to a PSI exercise in Australia.   The government has said it
    supports PSI "in principle," and that it would take part in
    PSI operations on a case-by-case basis.  We have been told
    that the government is considering an endorsement of the PSI
    Statement of Interdiction Principles, which would allow full
    participation in PSI events.  However, elements within the
    foreign ministry remain adamantly opposed, perceiving that
    the PSI is targeted against "friends" of Malaysia, like Iran,
    Pakistan and China.

    ¶17. (C) As the chair of the Non-Aligned Movement (NAM),
    Malaysia has been too supportive of Iranian claims that its
    nuclear program is a peaceful one.  More recently, the GOM
    has moved somewhat away from behavior that bordered on
    "coaching" the Iranians.  The EU-3 made considerable efforts
    to get Malaysia to exert a restraining influence on Iran.
    While it appears the Malaysians have privately counseled Iran
    to exercise restraint, it does not seem these words had much
    influence on the Iranians.  Malaysia failed to condemn
    Ahmadinejad's threat to "wipe Israel off the map" and gave
    President Ahmedinejad a red carpet welcome in Kuala Lumpur as
    the IAEA was referring his repeated violations to the United
    Nations Security Council.

    ... But No Progress on Article 98
    ---------------------------------

    ¶18. (C) Malaysia has steadfastly rebuffed our efforts to
    conclude an Article 98 agreement, citing unspecified "policy
    reasons."  Though Malaysia is "studying" the Rome Treaty that
    created the International Criminal Court (ICC), we believe
    they are unlikely to sign the treaty because of their own
    concerns over sovereignty.  The Malaysians have told us that
    since they are not party to the Rome Treaty, they see little
    reason to conclude an Article 98 agreement with us.
    LAFLEUR

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