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.
THE CORRIDORS OF POWER
Raja Petra Kamarudin
C O N F I D E N T I A L KUALA LUMPUR 000705
SIPDIS
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 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 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.
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.
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