Malaysia and U.S. renew defense pact, discuss security

Malaysia and U.S. renew defense pact, discuss security

Agence France-Presse, Kuala Lumpur

The United States offered to help ensure security in the pirate-
plagued Malacca Strait as it renewed a defense pact with Malaysia
on Monday, Defense Minister Najib Razak said.

U.S. Deputy Secretary of State Robert Zoellick made the offer
after witnessing the renewal of the Acquisition and Cross-
Servicing Agreement (ACSA), a 10-year military logistics
cooperation pact.

"Zoellick was very pleased with the level of cooperation given
by Malaysia in the field of tackling terrorism, especially in our
Counter Terrorism Center, our domestic efforts to eliminate
terrorism and our role in the region to reduce terrorism and
conflicts," Najib said.

Zoellick had also touched on the sensitive issue of security
in the Malacca Strait, where pirate attacks have raised fears
terrorists could hijack an oil tanker and use it as an enormous
bomb.

Najib said Zoellick had offered help which would not undermine
the sovereignty of the three states bordering the busy shipping
lane -- Malaysia, Indonesia and Singapore.

Malaysia has in the past rejected suggestions that the U.S. or
other foreign navies be allowed to help patrol the strait.

"It (the United States) wants to help out without affecting
the sovereignty of the states, and the U.S. recognizes that they
do not want to undermine the principles of sovereignty in this
area," Najib was quoted as saying by the official Bernama news
agency.

"In what way and what areas they want to help is for the U.S.
to consider," he said.

Later Zoellick said the U.S. recognized the responsibility for
the Malacca Strait was under the littoral states but it was
prepared to provide capacity building to enhance security in the
vital waterway.

The Malacca Strait is one of the busiest shipping lanes in the
world, carrying about a quarter of the world's trade on some
50,000 vessels a year.

Foreign Minister Syed Hamid Albar said later Monday that
Malaysia, Singapore and Indonesia would meet soon to discuss
security issues in the strait. The discussions would include the
use of private armed escort boats providing security for
commercial vessels, he said.

Malaysia is reportedly considering a billion dollar arms deal
that calls for it to commit part of the country's gold reserves
to help finance the purchase of warships and other defense
equipment.

Under the deal, British defense contractor BAE Systems PLC
would arrange financing for the arms purchases with a loan
secured by gold certificates issued by the Malaysian government,
the Asian Wall Street Journal reported on Monday, citing people
familiar with the plan.

Other aspects of the BAE-initiated proposal, such as the
tenure of the proposed loan and the specific details of the
equipment Malaysia intends to purchase, have not been finalized,
it said.

Commenting on the report, Defense Minister Najib Razak told
the official Bernama news agency Malaysia had not made any
decision on the proposal but it would not be out of the ordinary
if the government were to consider an arms deal with a loan
secured by gold certificates.

"It's still very initial and unsolicited," Najib said of the
proposal.

A spokesman for BAE Systems in London acknowledged that the
company was in discussions with the Malaysian government over its
defense requirements, but declined to elaborate or to discuss the
arms-financing proposal, the newspaper said.

Malaysia, which has announced a major arms build-up in stages
over the past few years, said last July that it had set aside an
extra 1.609 billion ringgit (US$423 million) in 2004 for weapons
purchases, including submarines, tanks and helicopters.

Najib said then that a large slice of the money -- 731.1
million ringgit -- would go towards upgrading the Royal Malaysian
Navy's power with Scorpene submarines, Fennec and Super Lynx
helicopters and new patrol vessels. Another 523.6 million was for
the army, which would acquire main battle tanks and air defense
systems, Najib said.

Malaysia has already announced agreements to buy Russian
fighter jets for $900 million, French submarines for $972
million, British and Russian missile systems for $364 million and
Polish attack tanks worth $368 million.