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26 March 2003

Threat of Terrorism Said to Strengthen U.S.-Southeast Asia Ties

(Deputy Assistant Secretary's Daley testimony to House subcommittee)
(7780)



The countries of Southeast Asia are "largely coming to grips with
terrorism," according to Deputy Assistant Secretary of State Matthew
Daley.

In testimony March 26 before the House International Relations
Subcommittee on East Asia and the Pacific, Daley said the 2002
terrorist attack in Bali, Indonesia had shown nations in the region
that "terrorism threatens us all and it can happen anywhere."

He added that "the common threat of terrorism has actually
strengthened cooperation and (U.S.) ties with key Southeast Asian
countries."

Daley stressed the importance of Indonesia to U.S. interests in the
region, and in the larger Muslim world.

Indonesia as the world's fourth most populous nation, Daley said,
"gives it an intrinsic importance."

That country's importance is even greater, he said, as Indonesia has
the world's largest Muslim population, "thus making it a key player in
our engagement with the Islamic world."

Following is the text of the March 26 prepared testimony of Deputy
Assistant Secretary of State Matthew Daley before the House
International Relations Subcommittee on East Asia and the Pacific:

(begin text)

Statement of Matthew P. Daley
Deputy Assistant Secretary
Bureau of East Asia and Pacific Affairs

To the House International Relations Committee

March 26, 2003

"U.S. Interests and Policy Priorities in Southeast Asia"

Mr. Chairman, I would like to take this opportunity to thank you and
the members of the Subcommittee on East Asia and the Pacific, for
inviting me to discuss our interests and policy priorities in
Southeast Asia.

Chairman Hyde's invitation requested our assessment of U.S.-Indonesian
relations, regional counterterrorism efforts, the situation in Burma,
possible troop deployments in the Philippines, the political climate
and election preparation in Cambodia, and human rights conditions in
Vietnam. I will cover all these topics in the course of my
presentation as well as other Southeast Asian issues of special
concern.

Southeast Asia is a region in which democratization has proceeded at a
mixed pace. In the past decade, the Philippines and Thailand have
consolidated relatively young democracies. Indonesia, under
authoritarian rule for thirty years, continues to make strides in its
democratic transformation. In Laos, Cambodia, and Vietnam, we are
promoting more open societies and democratic government. In Burma,
although we were heartened by the release of Daw Aung San Suu Kyi last
May, we have subsequently been disappointed by a lack of progress
toward democratic change.

At the same time, Southeast Asia is a region that is largely coming to
grips with terrorism, again with some countries moving to take
effective action more rapidly than others. The common threat of
terrorism has actually strengthened cooperation and our ties with key
Southeast Asian countries. One need think only of October 12 in Bali.
That attack shows that terrorism threatens us all and it can happen
anywhere.

INDONESIA

Indonesia's status as the world's fourth most populous nation gives it
an intrinsic importance. In addition, Indonesia has the world's
largest Muslim population, thus making it a key player in our
engagement with the Islamic world. Indonesia's importance to U.S.
interests is further enhanced by the nation's ongoing transformation
into a vibrant democracy following decades of authoritarian rule. We
also have substantial commercial and environmental interests in
Indonesia, a nation with significant natural, energy, and mineral
resources, and a storehouse of biodiversity, home to some of the
world's largest tracts of tropical rainforest and expanses of coral
reef.

We view the Indonesian example of tolerance and democracy as a model
for other Muslim countries. It is imperative that we support the
democratic transition in Indonesia, not only because of Indonesia's
intrinsic importance, but because its experience gives the lie to
those who would claim that Islam and democracy are mutually
incompatible. The outcome of Indonesia's experiment with democracy has
profound implications for our strategic interests in fighting
terrorism, preserving regional stability, promoting human rights and
the rule of law, expanding access for U.S. exports and investment, and
preserving the global environment.

The risks of Indonesia's failure to consolidate its democratic gains
are sobering to contemplate. A breakdown in law and order would
accelerate the spread of terrorism, crime, illegal drugs, infectious
disease, and trafficking in persons. A dissolution of central
authority and rising separatist movements would risk destabilizing the
region, raise the menace of substantial humanitarian emergencies,
accelerate regional environmental degradation, and invite the growth
of militarism and violence. To avoid such daunting outcomes, we must
assist Indonesia with its effort to create a just and democratic
society.

Combating Terrorism/Police Assistance

The terrorist threat that endangers Indonesia and its neighbors was
graphically illustrated by the bombings in Bali in October of last
year that killed more than 200 people, including seven Americans.
Indonesia responded to this bombing by conducting a professional and
competent police investigation that made remarkable progress in
solving the Bali attacks and in disrupting the Jemaah Islamiyah terror
network behind them. The Indonesian government has pressed ahead with
domestic counterterrorism legislation and increased cooperation and
consultation with its neighbors. With newfound determination, the
mainstream Muslim groups that represent the vast majority of
Indonesians are speaking out against the extremist fringe that are
involved in acts of terrorism and other violence.

As part of our Anti-Terrorism Training Assistance Program, funded
through the Non-Proliferation, Anti-Terrorism, Demining, and Related
Programs (NADR) account, we are assisting the Indonesian National
Police (INP) in the formation of a counterterrorism unit. Once
established, this unit will substantially enhance the Indonesian
Government's capability to neutralize terrorist cells and conduct
terrorism-related criminal investigations.

Military-to-Military Relations

There is no question that the military-to-military relationship is one
of the most controversial aspects of our bilateral partnership.
Reforms in the Indonesian military have not kept pace with Indonesia's
broader democratic development. The lack of a track record on
accountability for human rights abuses is of particular concern.

Nevertheless, it is in the U.S. national interest to engage with the
Indonesian armed forces. For good or ill, the Indonesian armed forces
will play an extremely influential role not only in the future of the
Indonesian state, but also in the survival of that state. To influence
the behavior and attitudes of the members of the Indonesian armed
forces, and to ensure adequate protection of American and American
interests in Indonesia, we must interact with them.

While military reform is lagging, there have been some signs of
progress. The military has accepted more changes in its status and
role in the national life over the past four years than at any other
time in its history. It did not intervene in the 1999 elections, and
it resisted political pressure to violate constitutional norms during
the turbulent period of President Wahid's impeachment and the
succession to President Megawati. The military has formally
relinquished its special, parallel function in government, and
accepted a sharp reduction in appointed parliamentary seats and the
end of appointed representation in legislative bodies by 2004. The
conviction on March 12, 2003 of an Army General officer for East Timor
human rights abuses represents a tangible step on the path to
accountability.

Fundamental problems remain, however. Progress on accountability has
been slow; the military has grudgingly gone along with trials for a
small number of officers for human rights abuses. Discipline remains a
problem. The military also deals with inadequate central government
funding through running unofficial businesses and foundations, and
sometimes engaging in illicit activities.

Papua

One of the most important issues of concern in our bilateral
relationship with Indonesia is the case of the murder of American
citizens in Papua in August 2002. This ambush by unknown gunmen took
the lives of three teachers, two Americans and one Indonesian, and
wounded many others. According to public statements by the officer in
charge of the initial Indonesian police investigation, the evidence
pointed to possible involvement by members of the Indonesian military,
rather than members of the separatist movement known as OPM. The
Indonesian and international media have reported various comments by
sources suggesting that members of the Indonesian Army Special Forces,
known as KOPASSUS, were responsible for the attack. Other reports or
theories have blamed members of the Indonesian Army Strategic Reserve,
known as KOSTRAD. While the preponderance of evidence appears to
indicate that elements of the Indonesian Army were responsible for the
crime, we cannot make any definitive judgments until the investigative
process is complete. Until we have a better understanding of this
terrible crime, we must be careful not to assign blame to
institutions.

We have made clear to the Government of Indonesia that those
responsible must be identified and punished. Anything short of a full
accounting and punishment for those responsible will hurt our entire
relationship. In response to our concerns, the Indonesian Government
formed a joint Police/Armed Forces investigative team to conduct a new
investigation, and accepted participation by the FBI. In mid-January,
FBI agents traveled to Papua to conduct interviews of persons
connected to this tragedy. The FBI agents recently finished their trip
to Papua, but given the complexities of this investigation, they will
have to return before they can conclude their investigation.

Political Developments

In the political field, 2004 will be a momentous year for Indonesia's
government due to the upcoming landmark elections. Indonesia will hold
its first ever direct Presidential election, in addition to nationwide
parliamentary elections. We have provided extensive assistance to help
these elections proceed smoothly, and we are also assisting the
Indonesian Government in its implementation of a regional autonomy
program. Indonesia's transition to democracy has been a turbulent
process, but it is progressing in a very positive and dramatic manner.

Despite continued problems with impunity, corruption, and weak
institutions, Indonesian democracy is characterized by a dynamic and
burgeoning civil society. The trends are very positive, but require
the patience of the Indonesian people, as well as interested
international observers, as change is always uneven and often
unpredictable. However, real change is only lasting when it comes from
within rather than being imposed from outside.

The eve of an election year is bringing predictable political
struggles to Indonesia. Political leaders have an eye on their
campaigns to promote their respective parties' own interests.
Bureaucratic infighting increases, and the public seeks avenues to
voice its discontent with government policies, including through
demonstrations. This is all part and parcel of the democratic process,
and should be seen as evidence of continued growth rather than
portents of instability.

Economic Issues 

2002 saw a number of positive macroeconomic developments, including
steady economic growth, moderating inflation, and a strengthening
balance of payments. However, the Bali bombings dealt a blow to
Indonesia's tourism sector and investment climate, thus weakening
Indonesia's long struggle to recover from the devastating 1997
financial crisis. As a result, economists forecast Indonesia's 2003
economic growth rate at 3.5 percent. While macroeconomic stability has
been achieved, Indonesia cannot attract the investment it needs to
grow and employ its people because of the uncertainty due to
corruption, security concerns, opaque regulations, and a lack of legal
clarity. The terrorist threat needs to be reduced to improve the
investment climate, and the newly created "National Investment
Protection Team" must be accompanied by reforms to the tax and customs
system and the cumbersome bureaucracy. In addition, the practice of
treating commercial disputes as criminal cases, a chilling factor on
foreign investment, must cease.

Indonesia's long-term economic health also depends on the government
tackling tough issues such as the sale of excessive state assets,
civil service reform, and corruption in the judicial sector.
Indonesia's $5 billion IMF program will terminate at the end of the
year and the government is not expected to request an extension. While
completion of the IMF program demonstrates the success of Indonesia's
macroeconomic management in the short-term, the challenge the
government now faces is maintaining market confidence in the absence
of a donor-approved plan of action. To do so, Indonesia will need to
announce and stick to a credible economic program.

Trafficking in Persons (TIP)

Indonesia is a major source, destination, and transit country for
trafficking in persons for sexual and labor exploitation. Although
Indonesia does not yet comply with the minimum standards outlined in
the Trafficking Victims Protection Act, Indonesia has made notable
efforts to bring itself closer to compliance. Some concrete results in
combating TIP include a commitment of increased resources, and the
attainment of some benchmarks that are in line with U.S.
recommendations. These benchmarks include the establishment of a
national action plan and passage of a child protection bill. Police
have also become more engaged, freeing approximately 600 victims in 17
known cases in 2002, and our police training programs are contributing
to this success. Despite these advances, Indonesian efforts remain
weak in the area of investigation and prosecution of traffickers. Many
officials and security force members continue to be complicit in TIP.
Indonesia's full compliance with minimum standards will require
sustained commitment over the long-term, and we will continue to urge
Indonesia's government to work toward full compliance with U.S.
standards.

Religious Freedom

The government of Indonesia generally respects the religious freedom
provisions of the constitution, but there continues to be religiously
motivated violence and tension. We monitor these developments closely,
and are encouraged by recent evidence that there is growing religious
tolerance since the Bali bombings. In particular, mainstream Muslim
groups and leaders have improved dialogue with their Christian
counterparts. The terrorist acts did not, as intended, drive Muslims
and Christians apart, but rather brought them together to condemn the
attacks and work against the spread of radicalism. We saw this most
publicly over the Christmas-New Year's period, when Muslim groups
committed their security staff to guard places of worship. This
positive development follows the sustained successes of the Malino
Accords signed in Maluku and Sulawesi, and the reported dissolution of
the Muslim extremist group, Laskar Jihad, in October 2002. In Bali,
although Muslims are under greater scrutiny from local Hindus, the
harsher backlash that some feared did not take place.

Human Rights

The Indonesian military's human rights record remains poor, and
serious abuses continue to be committed, particularly by Indonesian
security forces in outer provinces. Our embassy reported in depth on
this issue, and we actively promote respect for human rights and
accountability for violations. We have seen some positive trends in
Maluku and Sulawesi with the sharp decline of serious abuses last year
and a reduced death toll in most conflict zones. In Aceh, the
Cessation of Hostilities Agreement (COHA) has succeeded in almost
halting the violence.

BURMA

With respect to Burma, unfortunately I must report that efforts to
foster peaceful democratic change have come to a halt. The regime has
released only a few political prisoners since late November (and those
in advance of a visit by the UN Special Rapporteur), and has made new
arrests of political activists in that same timeframe. Most seriously,
the junta has not demonstrated a willingness to begin a real dialogue
with the National League for Democracy on substantive political
issues. Although Aung San Suu Kyi has been able to travel in Burma,
her most recent trips were marred by incidents instigated by
government-affiliated organizations and believed to be based on orders
from Rangoon. An already poor economic situation has been further
unsettled in recent weeks, with a banking crisis causing financial
uncertainty in the country. This crisis serves as an indisputable
illustration of the mismanagement of the economy by the regime.

We continue to support the efforts of UN Special Envoy Razali Ismail
to broker a solution. Absent progress, we will be forced to consider,
in conjunction with the international community, additional sanctions
and/or other measures. However, we cannot expect universal support in
these measures, and the evident lack of agreement within the
international community on the appropriate approach has hampered
efforts to isolate and target the regime effectively.

I also must point out that international sanctions on arms transfers
to Burma have encouraged the regime to turn to China, North Korea, and
Russia, as suppliers, each of which seems prepared to supply both
basic and advanced weapons to Burma.

The military dictatorship in Burma severely abuses the human rights of
its citizens. There is no real freedom of speech, press, assembly,
association, or travel. Patterns of abuse are even worse in ethnic
minority areas. These abuses include extrajudicial execution, rape,
disappearance, beating, persecution, and forced labor, including
conscription of child soldiers censorship, forced relocation, and the
curtailing of religious freedom,

The United States has consistently co-sponsored Burma resolutions at
the United Nations General Assembly and the United Nations Commission
on Human Rights containing strong language condemning the ongoing
systematic abuse of human rights. We have also supported and continue
to support United Nations Special Rapporteur for Human Rights
Pinheiro's efforts to initiate an independent, credible investigation
of allegations of widespread rapes by the Burmese military. For his
part, Pinheiro has proposed several options to the regime for
establishing a credible mechanism for investigating allegations of
human rights violations in ethnic minority areas. The regime has yet
to agree to a specific mechanism.

Pinheiro cut short his visit to Burma this week after finding a hidden
microphone in a room he was using to interview political prisoners. We
regret that the Burmese government has chosen to treat a
representative of the United Nations with such disrespect. The U.S.
Government is supportive of efforts by the International Labor
Organization to engage the regime in discussions to develop a viable
plan of action to eliminate forced labor.

I would also like to point out our concern about the growing
humanitarian crisis of HIV/AIDS in Burma. In 2002, USAID initiated a
$1 million program to address the HIV/AIDS epidemic by funding
international non-governmental organizations (INGOs) to undertake
prevention activities. In FY 03, we hope to increase funding to INGOs;
but, no assistance is given to the regime. Discussions with the
government continue on allowing INGOs to conduct voluntary HIV testing
and counseling, as well as on the regime's commitment to more
effective prevention, treatment, and care programs, including for
pregnant mothers and high risk groups.

PHILIPPINES

U.S.-Philippine relations have never been stronger in the past decade.
President Gloria Macapagal-Arroyo is a firm ally who last year
characterized our bilateral relationship as a "moral partnership"
based on shared values and strategic interests. As a reflection of
this strong relationship, President Arroyo will make a State Visit to
the United States in the spring of this year, only the third State
Visit in the Bush Administration.

President Arroyo has adopted an ambitious program of economic and
political reform along with taking strong actions against terrorists
in the Philippines. She announced last December she would not run in
the 2004 election so that can she can focus on her agenda including
poverty alleviation, good governance, economic reform, and
reconciliation between the government and insurgent groups in the
southern Philippines. The United States supports this agenda, and is
providing economic and development assistance.

Internationally, President Arroyo is a vociferous supporter of the war
on terrorism and a totally disarmed Iraq. She has spoken out on the
need for North Korea to accept international non-proliferation norms.

The Philippines is confronting a serious threat at home from Communist
and Muslim insurgencies and international terrorists. There has been a
recent increase in violence by the Communist People's Party and its
armed wing, the New People's Army. The Moro Islamic Liberation Front
(MILF), the largest Islamic extremist group in the Philippines, is
responsible for attacks on both infrastructure and civilians.
Philippine authorities recently arrested members of the MILF in
connection with the March 4 bombing at the Davao international
airport. One American was among the many killed in that attack, and
three Americans were wounded. The Abu Sayyaf Group (ASG) has kidnapped
several hundred Filipinos and foreigners in the last several years. It
has been responsible for the deaths of three Americans. It appears
that ASG is no longer interested only in kidnap-for-ransom but also in
bombings and other traditional terrorist activities.

We and the Philippine Government are concerned at the growing evidence
of links between Philippine and international terrorist groups,
including al Qaeda and Jemaah Islamiyah. Similarly, our two
governments also are concerned there could be a link between the ASG
and Iraq.

We have formed a strong coalition with the Philippine government to
combat terrorism in the Philippines. Last year's "Balikatan 02-1"
represented a special counterterrorism-focused exercise on Basilan, at
the request of the GOP. We are consulting to determine the form it
should take this year, and going ahead with plans for the annual
training deployment, the eighteenth in
a series of exercises which began in 1981. 

Current programs will further enhance Philippine military CT
capabilities in line with our global campaign against terrorism. These
programs are consistent with our robust overall security assistance
package for the Philippines.

President Bush has told President Arroyo that we will continue to help
the Philippines in its efforts against terrorism. U.S. officials
traveled to Manila in February to discuss our counterterrorism
cooperation. Secretary of National Defense Reyes visited Washington in
late February to discuss next steps. General Abaya of the Southern
Command has just left Washington after consulting with us and with
DOD. We are optimistic that such close consultations will produce a
plan that will fit the needs of both sides. We respect the
Philippines' sensitivities regarding its Constitution and laws. As we
did last year, we would send forces only at the express invitation of
the Philippine Government.

CAMBODIA

Our main policy and assistance goals in Cambodia are to promote
democracy and support RGC adherence to human rights standards. The
centerpiece of the current U.S. policy is a robust strategy to prepare
for the July 27 National Assembly elections and to promote human
rights NGOs and civil society.

As the anti-Thai riots of January 29 indicate, provocative rhetoric,
ethnic tensions, and political violence are a plague on the body
politic of Cambodia and serious check on democratization. The
government itself is part of the problem, as evidenced by the Prime
Minister's provocative public comments in the preceding days and in
the slow response by authorities on the night of the riots, and the
government's use of the riots as a pretext for harassment of political
opposition and independent media.

Killings of political leaders in the run-up to the national election
are another major concern. The shooting death in February of Om
Radsady, a respected FUNCINPEC advisor, has focused international
concern. Although we have confirmed reports that police captured one
of Om's assailants, we continue to stress that we wish to see more
prosecutions and convictions in cases of political violence and
intimidation.

As the July 27 elections approach, we are pressing hard for the
government to establish a safe environment for all participants to
compete, provide equal media access, and control election abuses. We
are steadfast in our resolve. High-level U.S. officials during visits
to Phnom Penh have made public statements highlighting our concerns.
We believe the government is listening but much more needs to be done.

We have asked the RGC to provide a full report on the 1/29 events and
the measures that will be taken to ensure security on the one hand and
democracy and human rights on the other. Our strategy for
strengthening the election process calls for support of democratic
institutions and democratic parties. USG $11 million supports NGOs
with voter and candidate education, issues media programs, broadcasts
of candidate debates, and well-trained cadres of election monitors.

We support efforts to establish a credible tribunal that brings to
justice senior leaders of the Khmer Rouge and others who bear the
greatest responsibility for atrocities committed between 1975 and
1979. Accountability for these crimes is important not only to
bringing reconciliation and lasting peace, but also to promoting the
rule of law and developing democracy in Cambodia. UN Legal Advisor
Hans Corell stated the recently negotiated agreement is in conformity
with the UN General Assembly resolution passed in December 2002,
noting that the Tribunal will exercise jurisdiction in accordance with
international standards of justice, fairness and due process. We hope
passage and implementation of this agreement will meet the standards
set out in the General Assembly resolution to ensure a credible
tribunal. We are reviewing the agreement and look forward to the
Secretariat's full report once it is released.

Domestic and cross-border trafficking in women and children, including
for the purpose of prostitution, remains a very serious problem in
Cambodia. As of April 2002, the Government of Cambodia had not fully
complied with minimum standards for the elimination of trafficking and
had not made significant efforts to do so. Cambodian police have
investigated trafficking crimes and some traffickers have been
convicted and are serving time in prison. But, corruption, complicity
of government authorities, lack of police training and poor
implementation of laws facilitate trafficking of persons and similar
crimes, such as baby selling.

The Ministry of Women's and Veterans' Affairs takes a lead role in
combating human trafficking and alleviating the suffering of its
victims. We have already provided assistance to establish a prevention
program overseen by the Ministry, and to facilitate the return and
reintegration of Cambodian victims. We are examining additional
programs that might increase the capacity of the law enforcement
establishment to bring trafficking criminals to justice.

We give no assistance to the central government, except in the
legislatively prescribed areas of HIV/AIDS, basic education, Leahy war
victims, and combating trafficking in persons. Our assistance programs
for health, especially on HIV/AIDS prevention and treatment, are also
an important area where the USG is giving value added directly to the
people of Cambodia.

Bilateral relations with Cambodia are difficult to keep on an even
keel in light of the January riots and subsequent political killings;
nevertheless, we have close cooperation on several issues of
importance to the United States: POW/MIA accounting; addressing
corruption that caused us to suspend adoptions; and the return of
Cambodian nationals deported by the U.S. Department of Homeland
Security.

VIETNAM

Bilateral relations between the United States and Vietnam have
expanded dramatically in recent years. From our original focus on full
accounting for POW/MIA (which remains central to our concerns) and
refugee resettlement, our relations now encompass heightened
cooperation on a number of global issues, including counter-terrorism,
HIV/AIDS, de-mining, and disaster preparedness.

One of our primary goals in Vietnam is to stimulate growth and
development through economic and legal reform and through promotion of
greater transparency in the implementation of law and policy. The
Bilateral Trade Agreement (BTA) has become a key catalyst for change
in Vietnam, along with parallel reform programs undertaken by the
World Bank and the IMF.

We also wish to broaden the relationship through public diplomacy,
high-level official visits, and regular exchanges and raise the level
of our discussions to a strategic dialogue on issues of mutual
concern.

Another important goal is to encourage political and legal reforms to
help bring prosperity and greater stability to the Vietnamese people,
and to increase respect for human rights. While the Government of
Vietnam's human rights record remains poor and freedoms of religion,
speech, the press, assembly, and association are limited, Vietnam is a
much less repressive society now than ten, or even five, years ago.

We continue to press Vietnam on its human rights record. While we hold
an annual Human Rights Dialogue to raise our concerns with the
Vietnamese on human rights violations, we have been disappointed by
the lack of results from this Dialogue.

Promoting human rights and religious freedom in Vietnam is a
significant Embassy activity. Mission officers speak with authorities
at all levels of government on various human rights issues including
religious freedom, and the status of persons of concern detained,
imprisoned, or harassed.

We continue to be troubled by reported harsh persecution of the
Montagnards in the Central Highlands, and we have been frustrated at
the Vietnamese Government's refusal to allow us reasonable access to
the region for further investigation. We have made clear that we do
not support separatist movements in the Central Highlands or anywhere
else in Vietnam. But, we do insist that basic, universally accepted
standards must be enjoyed by all citizens of the country, including
the Montagnards.

The United States encourages the Government of Vietnam to ratify
International Labor Organization conventions addressing worker rights,
and in the context of our expanding trade ties, to promote the
recognition of core worker rights.

Given our history, the Vietnamese remain wary of our intentions.
Progress toward our objectives on all fronts will require patience,
consistency, and the building of trust.

MALAYSIA

Bilateral relations with Malaysia have historically been very good,
particularly at the working level. Despite sometimes blunt and
intemperate public remarks by Prime Minister Mahathir, U.S.-Malaysian
cooperation has a solid record in areas as diverse as education,
trade, military relations, and counterterrorism.

Malaysia is our eleventh largest trading partner, and we are
Malaysia's largest trading partner and investor. Malaysia hosts 15-20
U.S. Navy ship visits per year, and Malaysian military officers train
at U.S. facilities under the International Military Education and
Training (IMET) program. Bilateral ties have been especially strong
since the 9/11 attacks, and reached a high point during Mahathir's
working visit to Washington and meeting with the President last May.

However, Malaysian elite and public opinion was irritated by massive
visa backlogs last summer after we tightened our regulations; by
regrettable indignities suffered by Deputy PM Abdullah and other
Malaysian leaders at U.S. airports; and by leaks of INS documents
incorrectly describing Malaysia as a terror-prone country. We have
stressed to Malaysia that we are streamlining our procedures to
minimize inconvenience to travelers and that our goal is secure
borders and open doors.

Malaysia is a staunch partner in the global war on terrorism. The
Malaysian government pursues terrorists relentlessly, and currently
has about 90 suspected terrorist in detention, including members of
Jemaah Islamiyah, which was plotting to bomb U.S. military,
diplomatic, and commercial facilities in Singapore. Some of the
detainees have links to al Qaeda.

Malaysia's quiet, nuts-and-bolts support has proved crucial to our
efforts. As Defense Minister Najib announced publicly last May,
Malaysia granted the U.S. military overflight clearance on a
case-by-case basis during Operation Enduring Freedom in Afghanistan.
The Malaysian government also provides superb on-the-ground law
enforcement and intelligence CT cooperation. It has agreed to freeze
assets identified by the UNSC Sanctions Committee, though to date it
has located no terrorist assets belonging to those entities. It
requires financial institutions to file suspicious transaction reports
on all names listed under U.S. Executive Order 13224, but is not yet a
party to the International Convention for the Suppression of the
Financing of Terrorism.

During Mahathir's U.S. visit, we signed a bilateral Declaration of
Cooperation against International Terrorism. Malaysia has also played
a lead role in regional CT efforts in Southeast Asia, and hosted an
inter-sessional meeting CT of the ASEAN Regional Forum March 20-22.
The Malaysian Cabinet has approved establishment of a Malaysia-based
regional CT training center, in which we expect to play a significant
role.

In recent months the tone of Malaysian rhetoric regarding the United
States has soured. We have objected to a series of public remarks made
by senior Malaysian officials criticizing America's role in the world,
beginning with Prime Minister Mahathir's opening speech at the NAM
Summit in Kuala Lumpur in late February. While we, of course, respect
Malaysia's right to disagree with us on Iraq, we have engaged them
diplomatically to urge their support for keeping the Iraq case in the
UN Security Council and to explore other areas of common ground on
Iraq.

Notwithstanding our differences on Iraq and on Middle East issues,
Malaysia has repeatedly made clear that it will met its obligations to
protect foreigners and related institutions. Its on-the-ground
law-enforcement and intelligence cooperation against terrorism remains
extremely strong, illustrating the close integration of the Malaysian
government with our vital security interests.

Malaysia generally respects the human rights of its citizens although
concerns remain in certain areas. The U.S. has criticized Malaysia
over the years when the Internal Security Act has been used to stifle
domestic opposition, although we distinguish between that use and its
current implementation in a counterterrorism context. We consider
detained former Deputy Prime Minister Anwar, a political prisoner,
based on clear manipulation of his trials. We are following with
interest the appeal of his second conviction, which is taking palace
this week in Kuala Lumpur.

SINGAPORE

Our political, commercial and military relationships with Singapore
are excellent across the board. Singapore welcomes U.S. engagement in
Southeast Asia as vital to regional stability. We cooperate closely
with Singapore in regional and international fora, including APEC,
ASEAN and the ASEAN Regional Forum (ARF) and the UN, where Singapore
was a non-permanent member of the Security Council until its term
expired at the end of December 2002.

Perhaps the high point of our bilateral relationship this last year
was the successful conclusion of two years of negotiations on the
U.S.-Singapore Free Trade Agreement (FTA). Singapore ranks 12th among
our trading partners, and the U.S.-Singapore FTA will strengthen our
trade relationship, eliminate barriers and tariffs, and phase out
significant restrictions in several services sectors (financial, legal
and the media), as well as enhance IPR protection. The FTA is now
pending before Congress per the requirements of the Trade Promotion
Authority Act. I would refer you to the U.S. Trade Representative for
specific questions regarding its provisions; I only note here that we
at the State Department see this FTA as a major achievement in our
bilateral relationship with Singapore and a positive step for the
overall U.S. trade agenda.

As a member of the UN Security Council until its term expired in
December 2002, Singapore worked hard for the adoption of Resolution
1441, giving Saddam one last chance to disarm peacefully. Since
leaving the Council, Singapore has strongly supported the U.S.
position that Saddam Hussein is a threat to the world who must be
disarmed. We are proud that Singapore counts itself among the members
of the Coalition for the Disarmament of Iraq, despite the fact that
Singapore remains sensitive to the reaction of its Muslim population
(15 percent) to such a war.

Singapore has been also been among our strongest counterterrorism
partners and in the forefront of Southeast Asian counterterrorism
efforts. The Government of Singapore made two highly publicized major
arrests of terrorists who had been planning attacks in Singapore
against U.S., British, and Singaporean targets. The first, of 13
suspects, was in December 2001 and the second, of 21 suspects, was in
August 2002. The majority of these suspects were members of the Jemaah
Islamiyah (JI) terrorist network active in Southeast Asia, including
several who had trained with al Qaeda.

On October 17, following the Bali bombing, Singapore joined Australia,
the U.S., and 47 other governments to designate the JI as a terrorist
entity to the UN.

On the financial counterterrorism side, Singapore is also a regional
leader. Since 9/11, the Government of Singapore has enhanced its
anti-terrorist financing regime, ratified the UN Convention on the
Suppression of Terrorist Financing, passed of new legislation to
permit its authorities to freeze and seize terrorist assets under
UNSCR 1373, and implemented asset freeze orders for the UNSCR 1267
list. To date, no terrorist assets have been identified in Singapore.

The Government of Singapore hosted a regional financial
counterterrorism conference in January in which U.S. experts trained
Southeast Asian and Pacific island countries in their responsibilities
under the various UN financial counterterrorism resolutions.

Singapore tightly controls charities, requiring reporting on overseas
partners and details on transactions. However, Singapore encourages
capital influx with bank secrecy laws and lack of currency reporting
requirements and does not share financial records with U.S. law
enforcement authorities because of the lack of a Mutual Legal
Assistance Treaty (MLAT). We have been discussing the possible
benefits of an MLAT with Singapore.

Singapore was the first Asian port to sign on to the U.S. Customs
Service "Container Security Initiative" (CSI) which became operational
this month. CSI allows for pre-inspection in Singapore of goods
destined for U.S. ports, and is an important security and efficiency
measure. In addition, working with U.S. experts, Singapore has
implemented a new strategic trade control system to better control
trade in illegal goods that may pass through its port and to enhance
worldwide non-proliferation efforts. The new system has some
weaknesses, which we are working with the Singapore government to
address, but still represents a significant step forward.

Our military relationship is also very strong. Although Singapore is
not a treaty ally, it supports a strong U.S. military presence in the
Asia-Pacific region and has offered the U.S. increased access to its
facilities since the closure of our bases in the Philippines.

The U.S. and Singapore in 1990 signed a Memorandum of Understanding
(MOU) allowing the U.S. access to Singapore facilities at Paya Lebar
Airbase and the Sembawang wharves. Under the MOU, a U.S. Navy
logistics unit was established in Singapore in 1992; U.S. fighter
aircraft deploy periodically for exercises, and roughly 100 U.S. Navy
vessels per year visit Singapore. The MOU was amended in 1999 to
permit U.S. Navy ships to berth at a special deep-draft pier at the
Changi Naval Base.

Our two militaries have extensive contacts and participate in combined
military exercises regularly, supported by approximately 150 U.S.
logistics personnel stationed in Singapore. In addition, Singapore is
a major customer for U.S. defense sales in the Asia-Pacific region. A
new RSAF Apache AH-64D helicopter training detachment has recently
been set up in Arizona.

In sum, our relationship with Singapore is as strong as it's ever
been. We speak plainly to each other, even when we disagree on
details, in pursuing our common goals of a terror free, stable and
prosperous world and we look forward to continued good relations in
both the short and long term.

THAILAND

Relations between the U.S. and Thailand are strong and multi-faceted.
Thailand is one of five U.S. Treaty Allies in Asia, and we have a
close and active security relationship with the Thai. Thai troops
fought alongside Americans in Korea and Vietnam. More recently,
Thailand has provided critical support, including a military
engineering unit currently at work in Afghanistan, for Operation
Enduring Freedom. Thailand has actively cooperated with us on all
aspects of the war on terror.

We recognize Thailand as a fully functioning democracy in Asia. Over
the last decade, the military's role in Thai politics has been greatly
reduced, due to strong public opinion, through Constitutional reform
and Thailand's overall political maturation. This evolution has had
the support of the Thai military.

Thailand enjoys a generally free and open press.  

Thailand is our seventeenth largest trading partner with two-way trade
of about $20 billion. The U.S. is the second largest foreign investor
in Thailand. Last year, the U.S. and Thailand marked another milestone
in the commercial relationship with the signing of a Trade and
Investment Framework Agreement.

Thailand and the U.S. have been fighting drugs together for several
decades, and joint U.S.-Thai efforts have led to the elimination of
thousands of acres of opium previously grown in Thailand. Thailand is
now no longer a significant producer of opium or heroin, though it
remains a major transit point. Thailand faces a serious domestic
methamphetamine problem.

In response to this situation, the Thai Prime Minister declared a
ninety-day war on drugs beginning on February 1, 2003. According to
media reports, the war on drugs had led to over 1,500 extra-judicial
killings, of which only a handful of the alleged extra-judicial
killings are under investigation. We have discussed this matter with
the Thai and expressed our concerns.

We continue to work closely with Thailand to address the challenge of
trafficking in persons. Thailand has made great strides and has
demonstrated regional leadership in the areas of protection and
prevention. We have strongly encouraged Thailand to emphasize
prosecution measures as a national priority, most importantly to
increase law enforcement efforts in going after traffickers and reduce
incidents of officials' corruption and complicity. The U.S. government
has provided funds to assist Thailand in its efforts.

Thailand is making an effort to improve relations with Burma, in part
to achieve cooperation on counternarcotics. Embassy Bangkok maintains
contact with Burmese refugees and displaced persons in Thailand,
including political activists working outside refugee camps. We also
provide financial support to NGOs active in the Burmese democracy
movement. Thailand's policy towards Burmese refugees and dissidents
outside refugee camps is in flux. Thailand continues to accept those
fleeing fighting and political persecution, but may become less
tolerant of activities that complicate its effort to resolve tensions
with Burma.

Thailand's relations with Cambodia were downgraded in the aftermath of
January 29 anti-Thai riots in Phnom Penh. The RTG froze all aid and
economic cooperation with Cambodia, and suspended diplomatic
relations. The RTG has demanded an apology, compensation for losses,
and thorough investigation leading to justice for the perpetrators.
The two countries now seem to be repairing the rift.

BRUNEI

The United States and Brunei have enjoyed friendly relations since
Brunei's independence in 1984. The December 2002 working visit of
Sultan Hassanal Bolkiah further cemented our relationship with the
signing of a Trade and Investment Framework Agreement, and the
establishment of a Fulbright program to increase bilateral educational
opportunities.

The United States and Brunei are also examining ways of increasing
military cooperation, especially increased sales of defense equipment
and opportunities for training for Bruneian military officers in the
U.S. This would supplement the MOU on Defense Cooperation signed in
1994, under which Brunei's armed forces engage in annual joint
exercises with the U.S.

Brunei is strong supporter of counterterrorism efforts in the United
Nations and in regional fora, including APEC, ASEAN AND ARF, where
forceful Brunei leadership was instrumental in the adoption of strong
counterterrorism declarations. After the Bali bombing, Brunei joined
Australia, the U.S., and 47 other governments in the designation of
the Jemaah Islamiyah to the UN as a terrorist entity. Brunei also has
strengthened its legislation to control terrorist financing, and
recently acceded to the UN Convention on the suppression of Terrorist
Financing.

Although a strong supporter of our counterterrorism efforts, Brunei
has said it deeply regrets that dialogue and diplomacy failed to avert
a war and calling on the international community to seek a peaceful
solution within the UN framework.

LAOS

U. S. policy in Laos focuses on five primary interests: ensuring the
fullest possible accounting for Americans still missing in action from
the Indochina War; pressing for progress on a broad range of democracy
and human rights issues, including religious tolerance; supporting
counter-narcotics efforts; securing the transition of the Lao economy
to an open, market-oriented system; and cooperation in the war on
terrorism.

The United States has maintained uninterrupted diplomatic relations
with Laos since 1954. One of the ten poorest countries in the world,
Laos is the only country with whom we maintain normal diplomatic
relations that we do not have a normal trade relationship, and one of
only three in the world without NTR (the other two being North Korea
and Cuba). Two-way trade between the United States and Laos amounts to
less than ten million dollars annually, with the main Lao exports
being hand woven textiles, lumber and coffee. A Bilateral Trade
Agreement was negotiated in 1997, which requires NTR to go into
effect. In February of this year, Secretary Powell and USTR Zoellick
sent a letter to the Chairs and Ranking Members of the House Ways and
Means and Senate Finance Committee signaling the Administration's
support and urging the Congress to consider granting Normal Trade
Relations status to Laos. In response, Rep. Crane of the Trade
Subcommittee issued a Request for Public Comment on NTR for Laos, open
through April 21.

The promotion of human rights, including religious freedom, is an
integral part of our bilateral relationship. We remain deeply
concerned about Laos' poor human rights record, and have made human
rights an integral part of our ongoing dialogue with the Lao
government. We are encouraged to see modest improvements in religious
freedom. A Prime Ministerial Decree governing religion seeks to
regularize religious practice, and local religious leaders have
responded favorably. Isolated problems remain, particularly in
Savannakhet province, but many previously closed churches have
reopened, and we have seen fewer detentions and arrests and received
no reports of new church closings.

We are aware of allegations of U.S.-based groups claiming the use of
chemical weapons and "genocide" against Lao minorities, and
particularly the Hmong. Our Embassy continues to investigate and
evaluate all such claims, but has not been able to verify that such
acts have taken place. Ambassador Hartwick traveled to Saisomboun
Special Zone this fall and both the Ambassador and other Embassy
officers have traveled extensively throughout Laos looking into
allegations of human rights abuses both on the ground and through a
web of formal government and informal contacts.

We are also cooperating with Laos on the issues of POW/MIAs and
counter-narcotics. Approximately 391 U.S. Servicemen remain
unaccounted for in Laos from the Vietnam War. Lao Government
humanitarian cooperation in POW/MIA recovery missions is generally
very good; there are five joint task force recovery missions taking
place this year. We continue to seek greater Lao flexibility to
facilitate our increasing the pace of searches. The League of POW/MIA
families recently visited Laos, and reports that they are pleased with
Lao cooperation. Laos is the third largest producer of opium in the
world behind Burma and Afghanistan. The U.S. provides law enforcement
and alternative development assistance to Laos in an effort to reduce
opium cultivation. We are encouraged by the decline in the acreage of
land devoted to opium cultivation the past two years but believe that
law enforcement cooperation could be enhanced.

To date, counterterrorism cooperation has focused on strengthening Lao
capability to prevent use of Laos as a possible target for terrorist
activities and in preventing the use of the Lao banking sector for
terrorist financial movements.

(end text)

(Distributed by the Office of International Information Programs, U.S.
Department of State. Web site: http://usinfo.state.gov)