Keynote Remarks – HE Lee Hsien Loong, Prime Minister and Minister for Finance, Singapore

 

 

Ladies and Gentlemen

 

 

1.            I welcome all delegates to the 5th Shangri-La Dialogue.  It has been an eventful year since our last meeting.  In East Asia growth continues apace, and the outlook remains positive.  But East Asia is affected by develop­ments elsewhere in the world, especially in the Middle East.  There the year has seen more uncertainty and turbulence, punctuated by several setbacks.

 

2.            The security situation in Iraq has not improved.  After the attack on the Golden Mosque in Samarra in February, fears grew that the country is sliding into civil war.  The recent appointment of Prime Minister Nouri al-Maliki and his new government after months of deadlock has brought fresh hope of stabilising the situation, but enforcing basic order and security remains a difficult challenge.  If the US leaves Iraq under conditions that can be portrayed as defeat, its enemies everywhere will be emboldened, and we will all be at greater risk.  There is no choice but for the US and its coalition partners to stay the course and complete the work in Iraq.

 

3.            The impasse over Iran’s nuclear programme is another intractable problem.  If Iran acquires nuclear weapons or becomes the subject of unilateral action, it will have a seismic effect on the Middle East and beyond.  President Ahmedinejad’s rhetoric about destroying Israel has been rightly condemned internationally, but it has struck a chord with the Arab street.  The fatwa by some Iranian clerics that nuclear weapons are lawful has only intensified doubts about Iran’s intentions. 

 

4.            Many countries, including Arab ones, are deeply worried about the prospect of a nuclear armed Iran.  Yet when President Ahmedinejad visited Indonesia recently, he received a hero’s welcome from students there.  This showed how successfully Iran has portrayed itself as a leading Muslim country, its nuclear programme as a project in which Muslims worldwide should take vicarious pride, and the issue as a nationalistic struggle and a legitimate right of the Islamic world.  We have to refocus on the core issue, which is nuclear proliferation and Iran’s obligations under the Non-Proliferation Treaty, as policed by the International Atomic Energy Agency and the UN Security Council. 

 

5.            The Permanent Members of the UN Security Council are divided over how to deal with the problem.  The US and European positions are converging, but the cooperation of Russia and China will be necessary.  For example Iran has applied to join the Shanghai Cooperation Organi­sation (SCO), where it is already an observer.  Russia has confirmed that Iran’s membership is being negotiated, while China has said that since Iran has applied the matter should be discussed. Coming at a moment when the Western powers are seeking a meaningful vote in the UNSC, Russia and China have reminded the West of their combined influence on world turning events.

 

6.            Events in the Middle East will have profound consequences for the world. The Palestinian and Iraqi problems have inspired extremist terrorist groups everywhere.  Security concerns post 9/11 have fuelled economic nationalism in many countries.  These global problems affect Asia too, where major changes are underway.  The rapid emergence of China and India will shift the strategic priorities of countries and shape the emerging framework for security cooperation in the region. These security issues are the focus of my speech tonight.

 

7.            The fight against terrorism is a long-term ideological struggle for the soul of Islam.  Terrorist leaders have attracted, indoctrinated and mobilised new recruits by propagating an ideology that is infused with an implacable hostility to all secular governments, and exploits deep historical and contemporary grievances of the Muslim world, especially sympathy for the plight of Palestinian Muslims and rejection of American policy and actions in the Middle East.  It is easy for young people without a good knowledge of Islam and searching for answers to be drawn to these ideas and become radicalised.

 

8.            This is why terrorism remains a threat in Southeast Asia.  Regional governments have substantially disrupted the operational capacity of the Jemaah Islamiyah (JI), a regional terrorist group affiliated with Al-Qaeda. But dangerous JI operatives are still at large, recruiting and training new members in pursuit of their violent agenda.  For example, Noor Din Mohd Top, who played a key role in major terrorist attacks in Indonesia, has repeatedly evaded arrest and now appears to be heading his own splinter group called Tanzim Qaedatul Jihad (Organisation for the Basis of Jihad).  In a video-tape recently recovered by the Indonesian authorities, he has threatened more attacks against the “enemies of Islam”. 

 

9.            Governments and secular institutions cannot refute the religious distortions propagated by the terrorists who claim to act in the name of Islam.  Only Islamic scholars and religious teachers can do this.  Fortunately, many of them are speaking out.  For example the Grand Sheikh of Al-Azhar University in Cairo, Dr Muhammad Sayyid Tantawi, visited Southeast Asia recently.  In Singa­pore, he urged Muslims to respect the law of the land and work with their fellow citizens to promote social justice.  He also condemned terrorism in unequivocal terms: “Islam rejects totally terrorism, extremism and aggression…Don’t believe those who commit terrorism and pretend to do it on behalf of Islam – they are liars. They will be punished in the strongest way and God will determine their punishment.”[1]

 

10.        We are fortunate that Muslim clerics, teachers and scholars in Singa­pore have come forward to combat erroneous teachings of the extremists, and rehabilitate those who have gone astray. They have formed a Religious Rehabilitation Group (RRG) which has provided religious counselling for JI detainees and their families.  These counsellors have also been speaking against extremist ideologies in mosques and public forums to reach out to the broader Muslim community.  These initiatives have guided Muslims on the proper interpretation of Islamic concepts such as jihad, and will help to prevent others from being led astray or tacitly condoning the extremists. 

 

11.        Other countries are undertaking similar efforts too.  The US, for example, is developing a rehabilitation programme for Islamic clerics to counsel the extremists who have been detained.  In Indonesia, Muslim clerics have set up a taskforce to counter the influence of extremists, and are reaching out to scholars and teachers of Islamic boarding schools in a national effort to weed out deviant teachings.  If countries are to win the war against terrorism, they must continue to work with moderate and peace-loving Muslims to condemn and disown the extremists and their distorted ideologies.

 

12.        The security of nations depends not only on physical precautions or the fight against terror, but also on countries being interdependent on one another.  The greater our stakes in one another’s success, the more incentive countries have to cooperate, and to uphold a stable world order which fosters growth and prosperity.  Globalisation has resulted in more intensive international cooperation than ever, and is therefore a force for stability and peace. The salient example of this is the US-China relations. The huge economic interdependence that has developed between the two powers has given both of them strong reasons to keep bilateral ties stable, and prevent problems from escalating out of control.

 

13.        This is why we should continue to foster free trade and an open trading environment. The WTO holds the global trading system together, and forms the backbone of a stable, rules-based international order.  To strengthen this system, it is crucial that countries do their utmost to secure a successful Doha Round. 

 

14.        However, economic cooperation is not the only consideration for countries.  Security and strategic issues often are the decisive ones.  For example, over-dependence of the US on oil imports from the Middle East, or Europe on natural gas imports from Russia, is not just an economic issue, but also a security one.  In the aviation industry, US and EU policies are driven not just by economics, but also the need to maintain leading-edge R&D and technology capabilities which are of crucial importance to their respective defence industries.  That is why disputes between Boeing and Airbus over government subsidies are so difficult to resolve.

 

15.        The problem is how to balance these economic and security considerations, and at the same time take into account public sentiments.  In a post 9/11 world, it is easy for the public to get worked up over the perceived security risk of commercial transactions, even when there is no real threat.  A good example is the bid by Dubai Ports World to take over P&O’s terminal operations at six sea ports in the US.  President Bush had announced that it had no national security implications for the US, and that he would veto any legislation passed by Congress blocking the deal.  But the American public overwhelmingly rejected this conclusion, Congress reflected this public mood, and the deal became completely unviable.

 

16.        Another aspect of international economic cooperation is for countries to compete for resources through open markets, rather than by seeking exclusive access for themselves.  However, with commodity prices high and rising, countries are intensifying their search for raw materials to support their continued growth.  The US has expressed concern that China appears to be trying to “lock up” energy supplies for exclusive use.  On its part the US too tries to assure its access to oil and gas. So CNOOC’s bid for Unocal last year generated intense and emotional opposition, even though many analysts assessed that in this case there was little real threat to US energy security. 

 

17.        These are worrying trends.  Economic frictions and obstacles to trade and investment weaken countries’ stakes in one another, and their incentive to uphold the global order.  The more we restrict the flow of trade and investments, the more likely that we will have rivalry and tensions, rather than shared interests in one another.  The challenge is to find the right balance – we cannot ignore security considerations; but if countries override the rules citing security too often, even when it is not involved, we will weaken the international system, and make ourselves less rather than more secure. 

 

18.        There is no easy solution.  Ultimately, governments have to take an enlightened, long-term view of their national interests, and resist populist sentiments and protectionist pressures.  They must help their publics understand what is at stake and why sustaining an open, globalised system will in the longer-term enhance both their security and prosperity.  This calls for leadership and political will, to explain to the people the important security issues and the trade-offs involved.  Only thus can governments create more space for themselves to take rational actions that may be difficult in the short-term but will over time lead to greater security and stability.

 

19.        Within Asia, the trend is towards greater economic cooperation, and hence a stabler, more secure regional order.  New patterns of trade and investments are emerging.  China has become the largest trading partner of many Asian countries including Japan and South Korea, and the second largest trading partner of India.  India started to reform and open up only in the 1990s, but it has made significant progress over the last dozen years, and has strengthened its ties with the region.  Overall, intra‑regional trade now accounts for more than half of the region’s total trade, while intra-regional FDI makes up more than 40% of the region’s total investment flows to the rest of the world.  A complex web of economic linkages is stitching East Asia together.

 

20.        The changing economic patterns in East Asia will create a new regional architecture of cooperation.  In the past, many Asian countries traded more with the US than with one another.  The result was a “hub and spokes” model of cooperation, with the US as the hub engaging each of the countries in the region bilaterally.  The trans-Pacific link continues to be of vital importance today, but a new framework of regional cooperation that reflects the growing intra-regional trade, investment and people linkages is emerging.  One manifestation is the East Asia Summit (EAS), a new cooperation forum which comprises ASEAN countries, their three dialogue partners in Northeast Asia – China, Japan and South Korea, and also India, Australia and New Zealand.

       

21.        It is too early to predict the final form of the regional architecture, but from East Asia’s perspective, the most robust and stable configuration for regional cooperation is an open and inclusive one.  Closer cooperation within Asia is good, but the downside risk is that the region may neglect its ties with the rest of the world and across the Pacific.  If we end up with a closed Asian bloc centred on China on the Western side of the Pacific, with a rival bloc centred on the US on the Eastern side, rivalry, antagonism and conflict will be inevitable.

 

22.        The way to avoid this is not to hold back Asian cooperation, but to acknowledge the growing intra-regional linkages, and simultaneously nurturing the links between Asia and the rest of the world.  Asia’s prosperity will always depend on its being part of the global economy, and not a closed trading bloc. When Asia grows a diversified web of trade and investments, an open architecture for economic cooperation will naturally follow.  Building this comprehensive web of linkages is a deliberate process that requires effort on the part of Asian countries, as well as its partners outside the region, including the US. 

 

23.        The new economic realities in the region will have strategic and security implications.  As the regional countries strengthen their economic linkages with one another, their strategic priorities will shift towards attending to these relationships. 

 

24.        China has been diligently and thoroughly engaging all ASEAN countries, allaying fears of a future dominant China.  It participates actively in regional fora, including the ASEAN Plus processes and the ASEAN Regional Forum (ARF).  In the South China Sea, where China’s claims overlap with several ASEAN countries, China has handled disputes in a restrained manner. It has adopted a joint declaration with ASEAN to reduce the risk of a clash, and reached bilateral understandings with several of the other claimants individually on joint development of the area.

 

25.        Japan is another key player.  It is still the biggest and most advanced economy in Asia.  A revitalised Japan will continue to bring high value investments into the region and play an important role in shaping the emerging regional architecture.  Japan will need to maintain its Security Alliance with the US, while developing mutually beneficial economic interdependence with its neighbours.  Japan can do this better if it comes to terms with its war past.  Then it can close this chapter of history and move on to forge stronger cooperation and integration in the region.

 

26.        India’s economic revival will be another factor in Asia’s regional architecture.  Increasingly India’s “Look East” policy will give India an interest in what happens in the East Asia.  India and China have signed a “strategic and cooperative partnership for peace and prosperity”, and agreed on the parameters for settling their longstanding border dispute.  Both sides understand that they need peace to grow and prosper, and are engaging in strategic dialogue to address bilateral and regional issues.

 

27.        Two other actors can affect the outcome of Asia’s transformation. The EU has the economic weight and the civilian technology to speed up the advance of the Asian economies.  Russia has the military technology to shorten the learning curve of China and India.  Asian countries should welcome both to play constructive roles in the region.

 

28.        Within a decade, economic and technological advances of the major countries in Asia will alter the economic and strategic weights of the world’s steering economies and require a reconfiguration of the G3, G7 and G8 groupings. We are living through a period of rapid shifts in the global balance. The big question is whether these changes will occur without disruptive conflicts.   

 

29.        While the strategic picture will change and evolve, we can maintain international order and stability only if the emerging powers accept that the underlying basis for strategic cooperation will not change so quickly.  These imperatives mirror those on the economic front.  First, the region should be kept open, and all the major powers should have stakes in Asia. This is most likely to produce a stable, predictable regional order in which countries big and small can prosper together. 

 

30.        Second, ASEAN should play a central role.  ASEAN is non-threatening, enjoys good relations with all the major powers, and thus provides a neutral core around which to develop the regional architecture.  To do this, ASEAN must be a strong and effective organisation, able to be an effective partner of China and India.  If ASEAN’s own integration stagnates while the rest of Asia forges ahead, ASEAN will be left behind and become irrelevant.  This is why ASEAN has set up an Eminent Persons’ Group (EPG) to guide the formulation of the ASEAN Charter. This will provide a clear road-map towards a more cohesive and vibrant ASEAN.

 

31.        Third, the US remains an important and constructive player in Asia.  The US military presence contributes to the security of the whole region.  In Southeast Asia, the US is vital to the war against extremist terrorism.  The US is also a major economic partner of Asian countries, and American MNCs generate investments and jobs on a scale which Chinese and Indian companies cannot yet match.  It is therefore very much in Asia’s interest for the US to remain engaged in the region. 

 

32.        Asian countries understand and accept this reality.  As former Vice Premier of China Qian Qichen wrote in a recent article, “China respects the interest of the US in the region and welcomes its positive and constructive role.”[2]

 

33.        ASEAN countries too want to deepen our ties with the US.  Both sides have agreed on an Enhanced Partnership.  Recently Senator Richard Lugar called for an American ambassador to ASEAN to help implement this partnership and strengthen ties with the region.  ASEAN would welcome this.   

 

34.        A stable Asia also depends on managing potential trouble spots in the region.  One hotspot is North Korea. The Six-Party Talks remain the best means to manage the North Korean nuclear situation, but negotiations have stalled since the last round of talks in November 2005.  The main stumbling block is a lack of trust, complicated by domestic politics in several countries.   A way will have to be found to restart the talks based on existing realities.

 

35.        Another hotspot is the cross-strait situation between China and Taiwan.  For now, the situation has stabilised.  The US, China and mainstream opinion in Taiwan have each implicitly accepted that the status quo best serves their core interests.  In Taiwan’s local elections in December, the opposition Kuomintang Party (KMT) won a clear victory.  This showed that many Taiwanese want closer economic cooperation with China, and do not want to upset the status quo.  The US has continued to take a clear position on Taiwan.  US Deputy Secretary of State Robert Zoellick recently testified in Congress that “independence means war”.  This clarity has focussed minds on both sides of the Pacific, and both sides of the Taiwan Straits.

 

36.        Over the last half century, Asia has undergone three profound revolutions – the political, economic and modernisation revolutions.  What we have today is the cumulative impact of these successful revolutions.  Every country in the region is seeking growth and prosperity by participating in the global economy.  Countries no longer pursue inward looking policies, save for one or two die-hard holdouts whose parlous state demonstrates the awful price of rejecting globalisation and going it alone.  The consequence will be to strengthen established relationships that work, and also to generate new opportunities that will in time cause shifts and realignments to the present order.  If all parties recognise their shared interests in sustaining an open and inclusive framework, both regionally and globally, we can build a strong foundation for peace and stability, with immense benefits for Asia and the world.

 

[1]           The Straits Times, “Work with Fellow Citizens to Defend Interests of State”, 27 May 2006.

[2]           People’s Daily, “Peaceful Development is China’s Strategic Option”, 21 Nov 2005

 

 

To view a transcript of a 'door stop' interview with Minister Teo Chee Hean at the Shangri-La Dialogue, please visit the website of the Singapore Ministry of Defence.