Malaysia under the leadership of Prime Minister Dr Mahathir Mohamad has been critical of Anglophile countries. The premier has on different occasions engaged in wars of words with leaders of these countries, including several former prime ministers of Australia.

However, politics aside, Malaysia's economic and education ties with them have grown stronger over the decades, more so for the case of Australia.

In this last part of an exclusive interview with malaysiakini , Australian High Commissioner to Malaysia Peter Varghese talks about the relationship between Malaysia and his country and says there is more to it than what appears.

Malaysiakini: It appears that Malaysia-Australia relationship is cold and warm alternately.

Varghese: We do have a strong relationship. If you look at just the media headlines, you may get a different impression. But the relationship is actually both strong and historically close in defence, education, trade, tourism and cooperation in police matters and anti-narcotics. We do a lot of good things together.

There is however a difference in views on our involvement in regional insitutions. We take the view that Australia has something constructive to contribute to regional discussions on security, trade, finance, investment all the areas in which Australia already has extensive linkages to the region. Malaysia has taken a restrictive view on regional organisations and that they should be restricted to Asian countries. We haven't been able to bridge that difference.

It is two different conceptions of East Asian regionalism. I hope that we will reach a point to find accommodation because Australia does have something to offer to regional discussion on issues. These are not cultural or values issues.

When you are talking about trade, finance, investment, security; the question is what you can bring to the table. If you look at the nature of our linkages to the region, we can bring a lot to that discussion. We are one of the most East Asian-oriented economies in the world. The pattern of our trade with East Asia is much more extensive than the case among East Asian countries. And our strategic interest lies in this part of the world.

These are the point of views that we will continue to articulate. I think there is growing acceptance in the region that our arguments have their validity.

Does Australia feel that it is being singled out because of its outspokenness on democracy and human rights?

It may well be part of Malaysia's view and that of the region that a Western society based on liberal democracy like Australia is unnatural for East Asian grouping.

But what is the core business of a regional institution? Is it security, trade, economics and other linkages or is it culture and values? The effective core of these organisations, if they were to succeed, would be on the basis of strengthening regional security and economy rather than becoming a cultural festival or a grouping of so-called Asian values.

The other thing about the region is that it is a diverse region. You will find countries with different historical and cultural experiences and political developments. You've got communist-ruled countries in the region and you've got strong vibrant democracies. We are not talking about one single monolithic SEA with one political system and one set of values. It is a very heterogenous area.

Do you think the leaders will become more pragmatic?

We've got good argument and I hope in the end we will prevail.

Do you think Asean does not want Australia's participation for fear that Australia, which is close to US, will play regional watchdog?

I don't think Asean countries have that concern and even if they do, it would be very misplaced. There is no contradiction between a close Australia-US relation and the capacity to participate constructively and effectively in the region.

We are an ally of US because it is in our interest to be their ally. It is also in the interest of the region for US to be closely engaged in this part of the world. We are not alone in thinking that. A number of countries in East Asia share that view.

The suggestion that we cannot be an effective regional partner because we are close to US is completely not the case for East Asia and Australia.

What about Prime Minister Dr Mahathir Mohamad's named successor? Will he help in the future political relations between Australia and Malaysia?

We have a lot of respect for Deputy Prime Minister Abdullah Ahmad Badawi and we have worked very well with him up to now. I have every confidence that when he assumes prime ministerialship, the relationship will continue to be a very positive and healthy one.

He has been to Australia on a number of occasions. He was the foreign minister for a period and had a lot to do with Australia at that time. He was at Chogm (Commonwealth Heads of Government Meeting) last year and I think he knows Australia reasonably well. We have confidence that we will have a good relationship with the government he leads, just as we do now with him as the deputy.

Is Australia concerned that Mahathir's departure will disrupt regional stability?

We hope that it won't. If the transition is a smooth and well-ordered one, it will mean that the implications for regional stability will be much less. I think the changing of guard in any country can sometimes be destablising, but if it is properly handled, there's no reason why it should be destabilising.

It seems to me that Umno had mapped out a very carefully orchestrated transition. I hope it will go on smoothly.

But 16 months is a long time...

They say a week is a long time in politics (laughs).

Dr Mahathir seems to have better relationship with Prime Minister John Howard compared with the previous Australian leaders. But why didn't Dr Mahathir attend the Chogm in Canberra?

You have to ask him why. I can't speak for him on his attendance or absence. I'm not sure how many Chogms he attended, but I know certainly that he did not attend all of them. There were quite a few that he missed.

The Malaysian delegation under the deputy prime minister was very welcoming and they made a very strong contribution to our discussion.

Was there expectation that Dr Mahathir was not coming?

We weren't working on the assumption that he would definitely be coming or not coming (laughs). We were happy to have Abdullah there.

What about the late PAS president Fadzil Noor who met with Foreign Minister Alexander Downer last year? Was he invited?

He wasn't. He was making a private visit to Australia and he asked whether he could meet our foreign minister in the course of his visit. Downer agreed to meet with him. In our system, there's nothing unusual with the foreign minister meeting the leader of Opposition of a country that Australia has a lot to do with. It's natural in our system.

Just as when our Opposition Leader travels overseas, our embassies and high commissions will always seek to arrange calls by him on heads of government or ministers in those countries. It is part and parcel of the way our system operates. It's our political culture and it wasn't signalling anything specific about Malaysia. It is just the way we regard Opposition Leaders in democracy. That's the reason why Downer met Fadzil.

Could this be one reason why Mahathir did not attend Chogm?

There's no reason to believe that the two incidents are linked at all. If there was any concern in Malaysia about that meeting, I think the explanation of how we do these things in Australia it was held in Australia after all will satisfy anyone with such concern.

Dr Mahathir later described Fadzil's visit as an example of Malaysians begging for help from white people. There seems to be wariness on Malaysia's part towards Australia, probably likewise. How would you propose to overcome this?

(Laughs) A good start would be for everyone to have good understanding about what contemporary Australia is all about. Images about the old, white colonial Australia is very out of date. Australia is a different country now.

Perceptions about countries always lag in time. If you were to take a snapshot of Australian perception about Malaysia, it would be out of date. I think some of the Malaysian perception about Australia is out of date too. Anything we can do to inform each of our community about contemporary events would help break down some of those perceptions.

Education perhaps?

Sure, direct contact is always the best way of updating people's views about a country. In that case, we are very fortunate that there's so much contact between people of Malaysia and Australia. If you look at the number of Malaysians studying and visiting Australia as tourists, there's a reasonable size of the Malaysian community in Australia. That creates important linkages at the personal level. Malaysians may have more first-hand experience about Australia than [about] other SEA countries. It is one of the strengths between Malaysia-Australia bilateral relations.

Currently, 25,000 Malaysian students are doing Australian degrees through twinning-programme or foreign university branches in Malaysia. Of this figure, 13,000 are in Australia and the rest are here in Malaysia.

The total of Malaysian students who graduated from Australia over the past 50 years is probably 250,000. In terms of tourism, there are 160,000 from Malaysia a year, though our figure shows about 200,000.

Does the Australian government take any measure to ensure that the quality of its education in Malaysia is not compromised with more of their institutions operating here?

Well, we have. It is an important issue. At the end of the day, quality is crucial to the credibility of our education system and the credibility of individual institutions. If the perception is that quality is going down, then our reputation will suffer very badly.

From the government's point of view, we are very concerned to ensure quality is maintained. We have set up in Australia a body called the Quality Assurance Agency. It is to audit the quality of university programmes and point out any shortcomings. The auditing process will include offshore programmes offered by Australian universities too.

I hope it will help assure people about quality of twinning programmes and offshore arrangement for education. This is good incentive for the institutions to make sure that they are up to mark. If they know quality is to be audited, they will be more vigilant.

In the last 12 months, the jump of Malaysian students increased by 20-25 percent. It's a very sharp rise due to a number of reasons. Australia is a cost-competitive country for international students. Compared with other alternatives such as United Kingdom and US, we stand very well. Proximity also helps. The growing international reputation of Australia's education is a plus for us and it means that more and more people recognise the quality of education in Australia.

The knowledge in Malaysia about Australia is also a big plus for us. We are now seeing the second and even third generations of those educated in Australia going there. We are now the largest destination for Malaysians studying abroad. We overtook the United Kingdom last year.

Foreign Minister Syed Hamid Albar may visit Australia this year. What are the issues likely to be addressed?

We very much hope he will visit. It has been a long time since a Malaysian foreign minister made a bilateral visit to Australia. We would want to talk on ways to continue bilateral relationship, and other regional agenda terrorism, security and regional institutions.

We also have quite a broad agenda on international, UN-related issues. We have a number of views in common, including the form of UN system and how we can make the UN a power structure that reflects the contemporary world rather than the world in 1945.

This is the final part of a three-part Q&A; series.