US embassy cable - 05SINGAPORE1790

C O N F I D E N T I A L SECTION 01 OF 03 SINGAPORE 001790 
 
SIPDIS 
 
STATE FOR DEPUTY SECRETARY ZOELLICK 
 
E.O. 12958: DECL: 05/10/2015 
TAGS: OVIP, PREL, PGOV, ECON, ETRD, SN 
SUBJECT: DEPUTY SECRETARY ZOELLICK'S MAY 10 MEETING WITH 
PRIME MINISTER LEE HSIEN LOONG 
 
1. (U) Classified by: Ambassador Franklin L. Lavin.  Reason 
1.4(d) 
 
2. (U) Date Time and Place: May 10, 2005, 11:30AM, Istana, 
Singapore 
 
3. (U) Participants: 
 
U.S. 
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The Deputy Secretary 
Ambassador Franklin Lavin 
DAS Marie Huhtala, EAP 
D Executive Secretary Ross Wilson 
Deputy Spokesman Adam Ereli 
D Special Assistant Chris Castro 
D Special Assistant Christine Davies 
Chris Kavanagh (Embassy Notetaker) 
 
SINGAPORE 
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Prime Minister Lee Hsien Loong 
MFA Second Permanent Secretary Bilahari Kausikan 
PM's Principal Private Secretary Ong Ye Kung 
PM's Press Secretary Chen Huai Liang 
MFA North America Branch Director Simon Wong 
MFA North America Branch Assistant Director Lee Chong Hock 
(Notetaker) 
 
4. (C) Summary: During their May 10 meeting, the Deputy 
Secretary and Prime Minister Lee Hsien Loong discussed 
 
SIPDIS 
developments in China, Southeast Asia and Iraq.  PM Lee 
reviewed China's growing influence in the region and the 
improvement in the cross-Strait situation over the last 
year.  Turning to Southeast Asia, he said Indonesia was 
making the right noises about tackling corruption, but 
there had been little progress.  PM Lee complained that 
Indonesia should pursue terrorist infrastructure rather 
than just individual terrorists.  Singapore's relations 
with Malaysia had improved, but the long-term rise of an 
Islamic identity in Malaysia was a concern.  The Deputy 
Secretary noted the progress in Iraq and the commitment by 
 
SIPDIS 
the courageous new government to deal comprehensively with 
the insurgency.  End Summary. 
 
5. (C) Opening his May 10 meeting with Prime Minister Lee, 
the Deputy Secretary said he wanted to make a trip to 
Southeast Asia early in his tenure to gauge developments in 
the region and listen to leaders, views on issues of common 
concern.  Prime Minister Lee told him that U.S.-Singapore 
bilateral relations were good and trouble-free.  The 
Strategic 
Framework Agreement talks were almost complete and he hoped 
that it would be signed in July, when he hoped to visit the 
United States. 
 
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Rise of China 
------------- 
 
6. (C) China was active in Southeast Asia and its influence 
was particularly noticeable -- not militarily but 
strategically and economically, commented PM Lee.  Its 
leaders came prepared to regional meetings, such as ARF and 
APEC, with small "goodies" to make sure its partners knew 
that China was thinking about them.  China was building 
friendships, securing access to natural resources, and 
avoiding troubles.  It had been most successful in 
Indochina.  All the countries in Southeast Asia wanted to 
have good relations with China and recognized its 
importance. 
 
7. (C) The cross-Strait situation had improved considerably 
since last year, when it had been quite tense, the PM 
continued.  The Anti-Secession Law and the visits to the 
PRC by Taiwan opposition leaders Lien Chan and James Soong 
had helped put President Chen Shui-bian in a corner. 
Furthermore, people of Taiwan were tired of 
cross-Strait tensions and did not want to lose economic 
opportunities in China. 
 
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Japan's Reaction 
---------------- 
 
8. (C) Asked about Japan's response to changes in the 
region, PM Lee responded that it had been too preoccupied 
with its own internal economic problems.  It had made 
progress in addressing its banking sector problems and 
Singapore had noted a recent increase in Japan's 
investments in the region.  He thought that Japanese firms 
were diversifying out of China.  In response to domestic 
political pressure, Prime Minister Koizumi had taken a 
nationalist line with China, observed PM Lee. 
 
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Indonesia 
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9. (C) Indonesia and China had always had a complex 
relationship, noted PM Lee.  There had been clashes in the 
past and Indonesia saw itself as the dominant power in 
Southeast Asia.  Concerned about China's influence in an 
exclusive East Asia Summit, Indonesia had argued that India 
should be included.  At the same time, Indonesia saw 
significant economic opportunities in the China market. 
China was interested in "courting" Indonesia and securing 
access to energy supplies.  The Deputy Secretary commented 
that President Yudhoyono appeared to want a more active 
role for Indonesia in ASEAN.  PM Lee said President 
Yudhoyono had a good view of the external environment and 
recognized that ASEAN had to work together in the face of a 
rising China and India.  He had difficulty, however, 
placing greater ASEAN economic integration ahead of 
narrower nationalist economic interests. 
 
10. (C) President Yudhoyono was making the right noises 
about tackling corruption and promoting economic 
development, observed PM Lee.  He was uncorrupt, but his 
ministers had "varied" reputations and there had not been a 
drastic improvement in the corruption climate.  The 
President would have to be personally engaged on this issue 
to make progress, but he was moving cautiously. 
Multinational firms would not invest in Indonesia, because 
it was too difficult to operate there and there were more 
attractive options elsewhere, notably China. 
 
11. (C) According to PM Lee, Indonesian Vice President 
Jusuf Kalla was positive the GOI would reach an agreement 
with the Acehnese separatists (GAM).  The GAM had shifted 
its focus from independence to autonomy and now both sides 
needed to find a face-saving formula for a settlement.  PM 
Lee said it would also depend on the attitude of the 
Indonesian Armed Forces (TNI).  Asked about security reform 
in Indonesia, PM Lee said it would take time to divest the 
TNI of its business interests.  It would also require a 
large increase in the military budget to ease the 
transition, but he did not think that was likely to happen, 
suggesting the reforms will be incremental and incomplete. 
 
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Limits on CT in Indonesia 
------------------------- 
 
12. (C) PM Lee said that when a terrorist committed a 
bombing attack in Indonesia, the authorities would arrest 
and charge the individuals involved.  The GOI would not, 
however, pursue their infrastructure and support networks, 
complained the PM.  Indonesia allowed many extremist groups 
to operate openly because they were not seen as a threat 
to the state and enjoyed public sympathy. 
 
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Relations with Southeast Asia 
----------------------------- 
 
13. (C) PM Lee commented that Malaysian Prime Minister 
Abdullah Badawi had set a new tone in bilateral relations 
with Singapore and wanted to solve problems, unlike his 
predecessor.  At the same time, Badawi had good Islamic 
credentials, which gave him some leeway domestically to 
deal with the Islamic party (PAS).  Badawi was confident 
that Malaysia would not turn into a radical Islamic state. 
Over the last 15-20 years, however, the underlying 
situation had shifted, cautioned PM Lee.  The Islamic 
identity of Malaysia had become more pronounced than the 
Malay and many Malaysian students had returned from 
studying in Pakistan, Iran, and Saudi Arabia with a more 
radical conception of Islam. 
14. (C) PM Lee expressed his concern over the violence in 
southern Thailand.  Although it had not yet happened, 
outside groups such as Jemaah Islamiyah could take 
advantage of the separatist violence and turn it to their 
own ends.  The cleft between the south and the rest of the 
country was deep and the police had done a poor job of 
maintaining control. 
 
15. (C) Turning to Vietnam, PM observed that its leadership 
was keen to move forward and develop the economy.  Vietnam 
was making a series of incremental reforms and lacked the 
major strategic change of direction that Deng Xiaoping gave 
China.  Vietnam wanted to join the WTO, but had difficulty 
fulfilling its requirements. 
 
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Iraq 
---- 
 
16. (C) The Deputy Secretary thanked Singapore for its 
support on a range of issues of importance to the United 
States.  He noted that he had recently visited Iraq and the 
new government had been formed by very courageous people. 
They understood what was at stake in creating a new 
democracy and were willing to meet the challenges.  It 
would take a combination of political, economic, and 
military means to defeat the insurgency.  He remarked that 
the elections in Afghanistan, the Palestinian Authority, 
and Iraq signaled momentous changes in the region and 
reminded him of the dramatic changes in Eastern Europe in 
1989.  PM Lee commented that the Iraqi elections were a 
great triumph and undermined the reasons for an 
insurgency.  At the same time, he urged the United States 
to do more to "lower the temperature" between Israel and 
the Palestinians, since it had an effect on Muslims in 
Southeast Asia, including Singapore.  The Deputy Secretary 
noted the President and Secretary's interest in an Israeli 
disengagement from Gaza as well as our Broader Middle East 
and North Africa Initiative. 
LAVIN