Malaysia isn’t usually associated with Islamic terrorism. Home to an ethnically-diverse population tending more towards torpor than unrest, Malaysia has had no major Islamic terror attack and no major outbreak of violence in more than forty years.

Indeed, the images most foreigners are likely to associate with it are those from Malaysia Truly Asia tourism adverts – the gleaming Petronas Twin Towers, quaint shadow puppet shows, kites flying in idyllic little towns, people of different races in colorful clothes smiling and dancing and living together in a somewhat cheesy harmony.

Yet in TREC, the nightlife center of Kuala Lumpur, sentries armed with automatic rifles guard against potential Islamic terrorists. The shadow puppet shows and cultural dances are labeled unIslamic and banned in certain parts of the country, along with many other traditional practices. In rural areas an increasingly intolerant strain of Islam grows amongst the Malay population, and Islamist gender-segregated madrasas sprout up, some of them openly revering jihadi militants.

Whilst not a base for Islamic terrorists, Malaysia has served as a transit point. In 2000, Al-Qaeda operatives, including two of the 9/11 hijackers, attended a meeting in Kuala Lumpur hosted by Malaysian accomplices to plan their attacks. According to a captured terrorist, Malaysia was chosen because of its perceived lax security, and because it doesn’t require visas from citizens of Gulf states. In the late 80s and early 90s, Malaysia was also a refuge for Indonesian exiles fleeing President Suharto’s crackdown on Islamic militants. Some of these exiles went on to form the terrorist group Jemaah Islamiyah, which was responsible for the 2002 Bali bombings.

It’s also been a recruiting ground. Malaysian authorities have detained 122 people who have either joined or tried to join ISIS. 200-250 Malaysians are estimated to have gone to fight for ISIS in the Middle East, of which 50 are seeking to return.

Most worrying of all is the rising Islamic extremism amongst the Malay-Muslim majority (Malays make up 50% of the population, and by law every Malay is forced to be a Muslim). One Pew survey found that 11% of Malaysians had a favorable view of ISIS and another found that 18% of Malaysian Muslims thought suicide bombing could sometimes be justified in defense of Islam. Whilst only a few hundred Malaysians have joined Islamic terror groups, those who sympathize with them number in the millions.

What’s causing this slide into extremism? One cause is the spread of fundamentalist Wahhabi Islam from Saudi Arabia, chiefly through Saudi-funded mosques and madrasas. The pernicious effect of this influence is well known in many countries, and the harm it’s caused in Muslim communities in Malaysia, and neighboring Indonesia, cannot be overstated. Many Malaysian Muslims have taken to adopting Arab beliefs and practices, eschewing the more tolerant Islam of their heritage, and most Malay women now wear headscarves, something their mothers or grandmothers never did.

Another cause is politics. Like most governments of Muslim-majority countries, the authoritarian Malaysian government plays a double game. It markets itself as moderate, officially eschews extremism (as it defines it), and fights Islamic terrorism. Like most governments of Muslim-majority countries, its claims to moderation ring hollow, for at the same time it actively promotes the kind of extremist ideology that leads people to sympathize with Islamic terrorists.

The politicians of the Barisan Nasional (BN) ruling party use Islam to shore up support and distract from their mismanagement, constantly railing against American/Christian/Jewish/Chinese/Communist conspiracies (they can never seem to decide on one) supposedly bent on destroying Islam. BN uses Islam to rally Muslim voters (its main support base) against the non-Muslim minority. The Islamic enforcement bodies the government funds preach intolerance, straightjacket Muslims into an increasingly narrow orthodoxy, and seek to police the morals of Muslims and non-Muslims alike. Increasingly draconian Islamic laws are being mooted in Parliament. Certain classes in public schools and universities teach the supposed supremacy and purity of Islamic civilization over all others. Politics and society, of course, feed into each other, with more Islamist politicians enacting policies that lead to more Islamist people, who then prompt politicians to become more Islamist.

As ISIS’ caliphate in the Middle East disintegrates, the terrorist network looks set to metastasize into a more international organization. American policy in Southeast Asia, in a nutshell, should be to prevent it from becoming like the Middle East: a hotbed of Islamic extremism and terrorism. Because of the Muslim majorities in Malaysia and Indonesia, and significant Muslim minorities in regions like Mindanao in the Philippines, and rising Islamism in these populations, this is a real possibility. The takeover of Marawi by ISIS-linked militants may not prove to be an isolated incident. Strong American leadership is needed to avert that future.

The first thing America should do is persuade the Saudis to stop spreading their Wahhabism overseas. The spread of the Wahhabi brand of Islam has done more to increase Islamic extremism, and by extension Islamic terrorism, than any other factor I know. For too long America and the rest of the world has tolerated the Saudi policy of exporting its anti-Western, anti-liberal, anti-Semitic ideology around the world, from Kosovo to Pakistan to the UK, turning people from modernity to fanaticism, and turning potential friends into enemies.

The Saudis must be persuaded to stop funding Wahhabi mosques and madrasas overseas and to put an end to their religious scholarships for foreign students, which chiefly serve to radicalize those students, who then often return to radicalize their communities. If more vigorous persuasion is required, the US has recourse to arms embargoes and trade restrictions, as well as travel bans, targeted sanctions, and asset freezes of prominent figures. It’s time to recognize that those who fund and promote Islamic extremism aren’t really that different from those who fund and promote Islamic terrorism, and should be treated as such.

US policy towards the Malaysian government will need to be balanced. As long as BN remains in power, it will likely work to increase Islamic extremism in the country. Whilst the opposition coalition Pakatan Harapan is more liberal it is at present divided and rudderless, and isn’t likely to dethrone BN anytime soon.

The US will have to continue to work with the present Malaysian government, and to cooperate with it on trade and security, but it can do so whilst holding the latter to account for its abuses and whilst helping to check the spread of Islamism in Malaysia. When there’s a major abuse of power by the Malaysian government, top US officials have sometimes spoken out against it. The US embassy in Malaysia keeps a close tab on the situation in the country and has often condemned rights abuses. By investigating the 1MDB corruption scandal, the US Department of Justice is working to unwind the trail of embezzlement of public funds by the Malaysian prime minister and his cronies – something the Malaysian government will not do.

These things matter. They give encouragement to Malaysians who are struggling for greater freedom, who are sick of the Islamofascism and corruption of the government. The US should continue to hold to and promote its principles in its dealings with the Malaysian government, and in case of grave abuses by the latter, should consider the use of the same diplomatic tools – trade restrictions, travel bans, targeted sanctions, asset freezes – mentioned before.

At the same time, it needs to shore up its soft power. The State Department should continue and expand its cultural exchange program, which builds ties with Malaysian Muslim community leaders. The US will benefit from its continued support of the Fulbright programs and the Young Southeast Asian Leaders Initiative, and should revive its Peace Corps initiative in Malaysia, which was discontinued in 1983.

Most of all, the US should help to fund more international schools in Malaysia. Because of the dismal Malaysian public education system, the demand for places in private schools, and international schools in particular, is huge, and growing, though only some families can afford their fees. Graduates of international schools, usually educated under the American or British curriculum, tend to be far more liberal and tolerant. Every student educated at one of these schools is one less being indoctrinated at a madrasa, or being fed Islamist propaganda at a public school.

After WWII, the Marshall Plan helped to rebuild Europe. It turned out to be one of the best investments America ever made. A fraction of that commitment could yield great returns in Southeast Asia.

Despite its claims, Malaysia has proven to be a poor model for a moderate Muslim state. Indeed, as Turkey slid into repression and the Indonesian government bowed to the Islamist mob in Jakarta this year, it’s debatable whether there can be a moderate Muslim state. But if America can push Malaysia to become one, if it can help build a true model of moderate Islam in Southeast Asia with modest effort, it owes it to itself, and the rest of the world, to try.

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