America first, geo-economic logic last


April 27, 2017

America first, geo-economic logic last

by Gary Hawke, Victoria University of Wellington

http://www.eastasiaforum.org

Image result for tomahawk over syriaTrumponomics–Military Power over Geo-Economics

The Trump Administration has introduced a new set of challenges to the international economy. It has profoundly changed the role of the United States in international economic diplomacy, ceasing to be a champion of multilateralism.

Within the first 100 days of the Trump administration, reality has overwhelmed a good deal of campaign rhetoric, and individuals experienced and skilled in conventional public management have prevailed over some who epitomised revolt against elites. But ideas that challenge longstanding US positions on the world economy and international integration remain at the core of the Trump administration.

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Get the Message, Theresa May?

Bilateral trade balances have long been known to be an inappropriate policy objective. Yet the Trump administration is pursuing this without any sound argument. Its belief is that only bilaterally balanced trade (or an excess of US exports) is ‘fair trade’. This nonsense is reinforced by concentrating on trade in goods, ignoring surpluses on services trade. And the capital account is ignored entirely.

Trump expands the idea of bilateral balance to the trading relationship with every other country. He insists on what Gary Hufbauer has called ‘mirror-image reciprocity’. Every component of a deal, every individual tariff rate, any provision about rules of origin for specific products, and any condition for foreign investment must be no less favourable for US exporters than the corresponding rule applied to the United States. This is misplaced concreteness has gone mad.

The idea of a win-win overall deal is rejected. The very idea of complementarities between economies is ignored. That this is endorsed by the chair of the newly established National Trade Council Peter Navarro, who holds a Harvard PhD in economics, is a conclusive argument for an enquiry into Harvard standards.

Two of Trump’s executive orders on trade deficits and trade laws would both fail the most elementary of economics examinations.

Under the Trump Administration, history is no more respected than economics. It has been argued that the WTO and its predecessor GATT were intended to apply only to developed economies. Those who were at the Havana conference in the 1940s and those who negotiated with developing economies in the Uruguay Round saw no such belief among their US colleagues.

This is a thin disguise for wishing to continue using subterfuge rather than economic logic in consideration of so-called ‘countervailing duties’ and ‘anti-dumping penalties’ against China. The idea that there is an indisputable definition of a ‘market economy’ is absurd, but then so is the underlying idea of dumping. Artificial lowering of prices with the intention of raising them after forcing a competitor out of business should be countered — if it were ever properly detected.

Even more absurd is the notion that ‘over capacity’ is something that requires government intervention. Consumers gain from cheap products. When producers cannot sustain output levels at such low prices, the appropriate response is for the least efficient producers to exit. In the case of steel, ‘least efficient’ is probably not the same as ‘Chinese’.

Most concerning is an attack on the WTO dispute resolution system. US opposition to it predated the Trump administration. The Obama administration vetoed the reappointment of a judge to the Appellate Body for the little-disguised reason that his decisions were uncongenial.

US resistance to the dispute resolution system has never been far from the surface. It is often rationalised by a constitutional principle that only the US Congress can create laws which bind US citizens. Some US judges can nevertheless make positive use of international reasoning, and previous administrations have recognised that membership of international institutions could require them to persuade Congress to amend US law or to compensate a foreign party.

The language in the final statement of the WTO dispute resolution system is in no way an exemption of the United States from the dispute resolution system. The words of the dispute settlement understanding that a ruling can’t ‘add to or diminish the rights or obligations’ of a member country — relate to member countries’ commitments, not US law, and their interpretation is not a US prerogative.

Rhetoric about a ‘rules-based international order’ or the ‘modern liberal international order’ is now entirely empty when set beside the declared intentions of the Trump administration. Again, the problem is deeper than Trump. No country can be an effective advocate of the rule of law when its partisan politics dominates the choice of its most senior judges. Fundamentally, the United States has to adjust to no longer being able to dominate global affairs.

Economic integration now has to be led by countries other than the United States. But successful integration elsewhere will cause responses within the United States as businesses miss profitable opportunities and as voters see that they are missing out on consumption and employment gains.

Gary Hawke is retired Head of the School of Government and Professor of Economic History, Victoria University of Wellington.

When a sophisticated Jordan trained Islamic Scholar becomes a Bigot and Racist: Taking on the Malaysian Indians/Hindus


April 24. 2017

When a sophisticated Jordan trained Islamic Scholar becomes a Bigot and Racist: Taking on the Malaysian Indians/Hindus

by Mariam Mokhtar@www.malaysiakini.com

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Dr Maza–Zakir Naik bootlicker

Everyone is entitled to his or her own opinion, but when a supposedly learned religious man makes an ‘incorrect’ analysis of another faith, the damage he causes is worse than if the remarks had come from an ignorant oaf.

Of all the muftis in Malaysia, the one from Perlis, Dr Mohd Asri Zainul Abidin (Maza), was considered the most progressive and respected, whose insights resonated with many Malaysians.

His views on Act 355 were applauded when he said that this ruse was just another political ploy by PAS and UMNO Baru. He disagreed with the use of khalwat squads to test people’s morality. He said that non-Muslims had a right to use the word ‘Allah’.

Maza opposed forced conversions of children, when one parent decided to convert to Islam. He blasted the syariah courts for taking years to reach a decision on divorce cases. He courted controversy when he said that religion should not be forced on Muslims.

Whilst Maza’s reputation soared, that of other muftis plummeted. The respect Maza enjoyed ended when he published his poem on Facebook last week. He allegedly claimed the Hindus worshipped cows and practised ‘suttee’.

Maza exposed his poor understanding of Hinduism and its practices. Hindus do not worship cows and suttee has been outlawed for almost two centuries. We cannot say the same about some ‘Muslim’ practices, like female genital mutilation.

Maza’s back-pedalling did not help him. First he said that his poem was directed at Narendra Modi, the nationalist prime minister of India. That simply exacerbated the problem, so he said that Malaysian Hindus should ignore his remarks, because they did not apply to them.

He also alluded to “our preacher” being handed over to a tyrannical government. Was he referring to Zakir Naik, the controversial Muslim preacher who is purportedly seeking refuge in Malaysia to escape two arrest warrants issued by the Indian authorities? Why does Maza harbour a soft spot for Zakir, who seemingly likes to stoke religious fires amongst Malaysians?

Maza’s work and opinions are highly valued and sought after. He is also human and it is possible he made a mistake, and should apologise. The only positive aspect of Maza’s debacle is that he has put the spotlight on Malaysia’s marginalised Indian community.

When government-linked companies (GLCs) took over British rubber estates, they converted land into housing developments, golf courses and oil palm plantations. The displaced Indians drifted to urban areas to form Indian ghettos, which became breeding grounds for gangsters.

Bumiputra policies and quotas denied Indians access to education and work opportunities. Places in local universities were limited and Indian graduates claimed they face discrimination when applying for jobs.

Lack of self-confidence

With so much against them, is it any wonder that the Indian community suffers from a lack of self-confidence, low self-esteem, the highest rates of suicide and low performance in business, equity ownership and employment in professional sectors and the civil service?

A few have escaped the poverty trap, and at the other end of the social spectrum, there are many qualified and successful Indian professionals, who form a large proportion of the country’s top lawyers and doctors.

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Restrictions on places of worship mean that Hindu temples are forced to be built without planning permission. The Indians could only watch in silence when Hindu temples of historical and cultural importance were demolished.

In 2000, TimeAsia reported that Indians had the lowest share of the nation’s corporate wealth – 1.5 percent compared to 19.4 percent for the Malays and 38.5 percent for the Chinese.

In 2003, The Economist reported that Indian Malaysians comprised “14 percent of juvenile delinquents, 20 percent of wife and child abusers, 14 percent of its beggars, and that under 5 percent of successful university applicants were Indian.”

In 2011, the erstwhile MIC Deputy President, Dr S Subramaniam, claimed that Indians were ashamed of their community, were looked down upon by the other races, and that 45 percent of the country’s crimes involved Indians.

The Indians are viewed as an afterthought, because if Chinese or Malay communities were treated as badly, there would have been a severe backlash; but with Indians, the common response, is “Who cares? They are only Indians. Even their own politicians fail to promote their cause.”

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Zakir Naik granted PR status by Nalaysian authorities

Zakir Naik was granted permanent resident (PR) status, but many Indians remain stateless, and do not have birth certificates or identity cards. The Indians form the highest percentage of deaths, whilst in police custody. The poorest Indians survive on a ‘hand to mouth’ existence.

Ironically, Maza’s faux pas has highlighted the plight of Indian Malaysians/Hindus. Will he help make Malaysians understand that we cannot alienate the Indians? Issues which affect the Indian community are not solely an Indian problem; they are a Malaysian problem.

Doctor Soft Power–“What I Tell My Non-American Friends”


April 17, 2017

Doctor Soft Power–“What I Tell My Non-American Friends”

by Joseph S. Nye

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https://www.project-syndicate.org/commentary/american-institutions-resilence-trump-by-joseph-s–nye-2017-04

I frequently travel overseas, and invariably my foreign friends ask, with varying degrees of bewilderment: What in the world is going on in your country? Here is what I say.

First, do not misinterpret the 2016 election. Contrary to some commentary, the American political system has not been swept away by a wave of populism. True, we have a long history of rebelling against elites. Donald Trump tapped into a tradition associated with leaders like Andrew Jackson and William Jennings Bryan in the nineteenth century and Huey Long and George Wallace in the twentieth century.

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The Enigma that is Donald J. Trump–Keeping the World Guessing–Unpredictability

And yet Trump lost the popular vote by nearly three million. He won the election by appealing to populist resentment in three Rust Belt states – Michigan, Pennsylvania, and Wisconsin – that had previously voted Democratic. If a hundred thousand votes had been cast differently in those states, Trump would have lost the Electoral College and the Presidency.

That said, Trump’s victory points to a real problem of growing social and regional inequality in the United States. J.D. Vance’s recent best-selling book Hillbilly Elegy compellingly describes the vast difference between California and Appalachia.

Research by the Princeton economists Anne Case and Angus Deaton shows that the demographic trends among lower-income whites without a college degree are worse than those for African-Americans, who historically anchored the lower extremes of inequality. In 1999, mortality rates among whites with no college were around 30% lower than those of African-Americans; by 2015, they were 30% higher.

Moreover, manufacturing employment, once a prime source of high-paying jobs for working-class whites, has fallen sharply over the last generation, to just 12% of the workforce. These previously Democratic voters were attracted by Trump’s promises to shake things up and bring back manufacturing jobs. Ironically, Trump’s efforts to repeal President Barack Obama’s health-care legislation would make their lives worse.

The second thing I tell my foreign friends is not to underestimate Trump’s communications skills. Many are offended by his tweet storms and outrageous disregard for facts. But Trump is a veteran of reality television, where he learned that the key to success is to monopolize viewers’ attention, and that the way to do that is with extreme statements, not careful regard for the truth.

Twitter helps him to set the agenda and distract his critics. What offends commentators in the media and academia does not bother his supporters. But as he turns from his permanent self-centered campaigning to trying to govern, Twitter becomes a two-edged sword that deters needed allies.

Third, I tell my friends not to expect normal behavior. Normally, a president who loses the popular vote moves to the political center to attract additional support. This is what George W. Bush did successfully in 2001. Trump, by contrasts, proclaims that he won the popular vote and, acting as though he really did, appeals to his base voters.

While Trump has made solid centrist appointments to the Departments of Defense, State, and Homeland Security, his picks for the Environmental Protection Agency and the Department of Health and Human Services are from the extremes of the Republican Party. His White House staff is divided between pragmatists and ideologues, and he caters to both.

Fourth, no one should underestimate US institutions. Sometimes my friends talk as though the sky is falling and ask if Trump is as dangerous a narcissist as Mussolini. I tell them not to panic. The US, for all its problems, is not Italy in 1922. Our national political elites are often polarized; but so were America’s founders.

In designing the US Constitution, the founders’ goal was not to ensure harmonious government, but to constrain political power with a system of checks and balances that made it difficult to exercise. The joke goes that the founders created a political system that made it impossible for King George to rule over us – or for anyone to ever do so. Inefficiency was placed in the service of liberty.

It is still early in the Trump Presidency, and we cannot be sure what might happen after, say, a major terrorist attack. So far, however, the courts, the Congress, and the states have checked and balanced the administration, as Madison intended. And the permanent civil servants in the executive departments add ballast.

Finally, my friends ask what all of this means for American foreign policy and the liberal international order led by the US since 1945. Frankly, I don’t know, but I worry less about the rise of China than the rise of Trump.

While American leaders, including Obama, have complained about free riders, the US has long taken the lead in providing key global public goods: security, a stable international reserve currency, relatively open markets, and stewardship of the Earth’s commons. Despite the US-led international order’s problems, the world has prospered and poverty has been reduced under it. But one cannot be sure it will continue. The US will need to cooperate with China, Europe, Japan, and others to manage transnational problems.

During the 2016 campaign, Trump was the first major party candidate in 70 years to call the American alliance system into question. Since taking office in January, statements by Trump and his appointees suggest that it is likely to persist. American hard and soft power, after all, stems largely from the fact that the US has 60 allies (while China has only a few).

But the stability of the multilateral institutions that help manage the world economy and global commons is more uncertain. Trump’s Budget Director speaks of a hard-power budget, with funds cut from the State Department and the United Nations system. Other officials advocate replacing multilateral trade deals with “fair and balanced” bilateral arrangements. And Trump is repudiating Obama’s efforts to address climate change. I tell my friends I wish I could reassure them on these issues. But I cannot.

 

Big Challenge for Asian Modernization


March 30, 2017

Cultural-Intellectual Reinvigoration: Big Challenge for Asian Modernization

by Michael Heng Siam-Heng (received by e-mail with thanks)

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Asia has been experiencing an economic revival since the 1960s, first Japan, then the Four Little Dragons, the Asian Tigers and now China and India. With Asian economies doing relatively well against the background of global recession, many Asians hope that the 21st century would be the Asian Century. But what kind of Asian Century?

How would Asians like this period of their history to be understood and remembered in centuries ahead?  It could be a period of impressive economic growth but also known for its environmental degradation, crimes, corruption, social disparities, religious extremism, and social conflicts. Or it could be a period that draws on the best of human achievements and advances them.  The second case would contribute immensely to a new global civilization characterized by peace, social justice, cultural brilliance, technological advancement, and sustainable economic growth.

I will dwell on four points.  First, on what basis can we argue for an Asian cultural-intellectual rejuvenation? Second, is such a historical project necessary? Third, three challenges facing us. Fourth, being in Malaysia, I will briefly touch on roles that can be played by this country.

Conceptual Basis for an Asian Cultural Rejuvenation

History tells us that radical economic and social transformations are often accompanied by intellectual ferment and cultural effervescence. The transformations generate social dislocations that challenge existing cultural norms, ideas, and social institutions.  The problems are serious and they engage the best brains of the time. In attempts to solve the issues, these best and brightest draw on their intellectual heritage, learn from other sources, cross-fertilise them and creatively synthesize them to produce original thoughts.

Examples are Ancient Greece, the Spring-Autumn-Warring period of China, the Islamic golden age, and the Maurya and the Gupta period of India. The most recent experience is the European Renaissance and Enlightenment, which produced giants in the fields of philosophy, natural sciences, social sciences, fine arts, music, architecture, and literature. We all know at least a dozen of such names.  These European thinkers or cultural giants acted as a positive force during that critical period, functioning both as a social conscience and as sources of forward-looking ideas. Their works have shaped the character of modern European civilization and continue to exert an influence on our thinking and cultures even until today.

The Need for the Historical Project

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Deng Xiao Peng–China’s Great Modernizer–Pragmatist

Ever since Asia suffered defeat and humiliation in its encounters with Western imperial powers, Asian leaders slowly realized the crucial importance of reform and modernization in order to face the onslaught. Country after country began to borrow ideas from the West, not all of which were positive, as we see in the case of Japanese imperialistic aggression.

By the end of the 19th century, Japan, through its  Meiji Restoration (明治維新), was the most successful in modernizing its military and economy, fulfilling its national agenda of being both powerful and wealthy. Once powerful, Japan began to behave aggressively, turning Korea into its colony, seizing large tracts of Chinese territories and occupying Southeast Asia. It was a military adventure which ended in total defeat at the closure of WWII.  To use a  simple metaphor, modernization is like the flight of a bird.  It requires two wings to function in a harmonious manner.  Being wealthy economically and strong militarily is one wing.  The other wing is sound cultural-intellectual development.

Fast forward into early 21st century, Asia has regained much of its share of global economy.  Statistics provided by the IMF, the World Bank and transnational banks testify to this shift of economic power from the West.

To the ordinary public, this shift is visible, in the form of improved standards of living, and the new physical landscape.  The most visible is the super-tall buildings – architectural icons of modernity.  Of the ten tallest buildings in the world, 8 are in Asia, 2 in the USA.

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In contrast to the modern landscape in Asian cities, Asia has a string of disturbing social ills.  There is dysfunctional culture exhibited by the people at the top running the show.  State infrastructure projects are awarded to friends and relatives rather than to the most competent.  Newspapers are full of examples of practices that reflect mindsets that are out of sync with the demands of a modern economy. In societies where there are modern economic and legal institutions, many of these institutions lack integrity and independence.

Even in a modern economy and society operating efficiently, we need something more.  Again using the example of Japan.  It is the most modern Asian country. Yet its modernization is confined to the fields of economy, technology, and life styles. It has not undergone a philosophical development based on a foundation of critical rationality and humanism. The Japanese nation as whole has not been able to come to terms with its atrocities during World War II.

 Three Major Challenges

Asians face three major challenges at this juncture of their history, namely (a) drawing on their own cultural resources and rejuvenating them, (b) learning from others, and (c) learning from each other.

The first challenge can be formulated as: how and what Asians can draw from their own cultural and intellectual resources in the process of dealing with new problems.

With an open and inquisitive mind, old ideas take on new meanings and interpretations in the context of new social problems. If a new interpretation provides an effective way in solving problems, the new solution is likely to find easier acceptance because it is framed in language familiar to the people. A sense of continuity is useful in coping with change.

Interestingly, there is often a link between the old and the new. Even a new philosophy is dependent on the intellectual achievements of the preceding centuries and millennia.  A scholar of the European Enlightenment observes that “enlightenment philosophy simply fell heir to the heritage of those [preceding] centuries. It ordered, sifted, developed and clarified this heritage rather than contributed and gave currency to new and original ideas.  Yet in spite of its dependence with respect to content, the Enlightenment produced a completely original form of philosophical thought.”  In other words, old beliefs can put on modern attires and assume modern colours. The result is a new idea.

This sounds rather straightforward. But it is not so if we observe carefully around us.  Hardcore conservatives prefer a literal and rigid interpretation of their traditions, all the more so if these are written. There is also the fear that in rejuvenating local culture and tradition to cope with the demands of a modern economy, the local culture and tradition may disappear, and that future generations will become culturally rootless.  Another problem is what to select from the past.

I believe that the proper attitude is to embrace change, and to see culture as something living, tradition as living tradition.  They are products of their times, and they will change with the demands of the time.

The second challenge is how and what to learn from others. To the extent that there are similarities in the issues involved in the transition from pre-modern societies to modern societies, we should learn from others’ experiences, both positive and negative. To quote the Indian philosopher Sarvepalli Radhakrishnan : “Similar experiences engender in men’s minds similar views”. Since the West has a longer history of modernization, Asia can certainly learn from them.

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Again like the first challenge, learning from others is not easy. Some believe that it is very difficult, or even impossible, to transplant ideas, values, and institutions that have sprouted and developed in a different culture and a different set of historical conditions.

Take the case of China’s difficult journey of learning after defeat at the hands of Japan in 1895. While the Chinese leadership welcomed the adoption of obviously more advanced technologies from the West, they had difficulties embracing the Western ideas and value system. The problem is less acute today but is not over.

What happened in China a century ago is happening in West Asia. The common belief was that “Eastern” culture of spirituality was superior to “Western” culture of materialism.  There is a fear that the spirit of local heritage and culture was threatened with destruction by the importation of western ideas and values.

Adoption and adaption of foreign ideas to local conditions is a long drawn out process, which requires creativity, flexibility, and openness. Though the process is complex, it has happened in history, in Southeast Asia, elsewhere in Asia, and Europe.

Evidence in history support the claim that we can borrow ideas that originated in a very different historical context, and adapt them to serve local needs or even improve upon them in the process of creative synthesis. Let me list briefly three examples. First example: Southeast Asia was able to adopt religious beliefs, ways of life, and institutions from India, China, the Middle East, and Europe. These influences from distant lands had originated in settings that were alien to Southeast Asia. Second example is Europe’s absorption of bureaucracy from China. Combining it with check and balance by civic society, the Western practice is more efficient and less prone to corruption, offering useful lessons for China. This is a vivid illustration of the Chinese saying, 青出于蓝而胜于蓝, or the pupil excelling the master. Third example: Buddhism was introduced to China, a country with a profoundly different culture. After centuries of acclimatization, we have a synthesis of the two cultural traditions known as “Chan” in Chinese and “Zen” in Japanese.

The sensible attitude of learning is to be open-minded and rational rather than be influenced by emotion and sentiments. We must be curious and humble while at the same be meticulous, critical and independent minded. Just as Asians should not feel a sense of superiority in being a source of Western modernization, they should not feel a sense of inferiority in borrowing from the West.  Learning from the findings of others can only increase the range of possible solutions.

The above two challenges are related. It is difficult to learn from foreign sources and adopt their useful elements if we are not culturally and intellectually confident. With confidence in our own cultural heritage, we are at ease to critically appreciate the achievements of others. And cultural confidence can only stem from a deep and critical understanding of our own cultural roots, to the extent of discarding outdated ideas and practices of our own traditions.

he third challenge is for Asians to know much more of each other’s history, intellectual achievements, and cultural traditions.  Though language may present a barrier, most Asian intellectuals use English as the second language which renders exchange of ideas possible. What holds them back is their attitude.  Asians tend to know more about Australasia, Europe and America than their Asian neighbours.  

Given the guarded attitude many Asians have regarding learning from the West, they have less misgivings regarding learning from each other. They can benefit from sharing their experiences in modernization.  In fact, Japan’s path of rapid economic development has provided valuable insights to Southeast Asia and later on China and India. This pattern of economic development is described as the Flying Geese, with Japan as the leading goose. In coping with the broader social and cultural issues arising from modernization, the Middle Eastern countries are more likely to consult the experiences of Malaysia and Indonesia than those from the West.

As a concrete project of mutual learning and co-operation among Asian countries, they can compile a set of books – the Great Books of the East, containing the cream of Eastern intellectual achievements. It is a doable project.  It serves as a platform for top scholars of Asian countries to work together, creating as a byproduct a network Asian intellectuals of similar interests.  It would produce a convenient reference work for libraries all over the world.  It world form a key component of common body of knowledge for serious minded global citizens.

Another concrete project is traditional medicine.  Asia is the home of traditional Chinese medicine, traditional Indian medicine, and traditional Middle Eastern medicine. It represents distilled knowledge accumulated over many centuries of medical practice, often under poor material conditions. It is thus evidence-based.  However, critics of traditional medicine often claim that it is not scientific because its research method departs from that of western medicine. Its theory needs a modern set of vocabulary and updated to take into account new medical findings. We can think of a productive sharing and conversation among the three streams of Asian traditional medicine. This is an area for active collaboration of Asian countries that can boost the cultural and intellectual confidence of Asia, while making concrete and valuable contributions to healthcare in the whole world.

Malaysia as the Italy of the Asian Mediterranean(Venice)

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Malaysia is unwilling to tap its rich diversity due to myopic Malay-centered leadership and  corruption–Bodoh Sombong

Cultural and intellectual rejuvenation is often a synthesis and product of the cross-fertilization of cultures and ideas.  Its birthplace is located at the cross-roads of diverse cultures and intellectual currents. For example, Italy, widely regarded as the birthplace of the European Renaissance, was an important meeting point of different cultures and intellectual traditions in the Mediterranean.

Malaysia can have an important role in such a historical process. Here, the four major currents of world civilizations (Chinese, Indian, Islamic and Western) are co-existing as mainstreams of social life. They represent invaluable resources. Southeast Asia is a region with a multi-layered sedimentation of diverse cultures. It is a vibrant, peaceful and forward-looking region when we compare it to other regions with similar historical background. If we borrow the language of the European Renaissance, Southeast Asia may be seen as a kind of Mediterranean region in the cultural revival of Asia and Malaysia can aspire to be the Italy of Asia (Venice).

Reinventing prevalent social-cultural practices is quite common in societies undergoing structural changes.  It is part of the efforts of a society to refine and refurbish the inner resources of their societies. It is through such processes of renewal that societies try to overcome internal stagnation and meet external challenges.

The process touches societies profoundly, involving ideas, values, morality, belief systems, culture, and institutions. It requires us to revisit our concepts of goodness, truth, and beauty.  The blossoming of culture represents the sublimation of the human spirit, the enrichment of human experience and the nurturing of human nature towards goodness. It is a project with both social and spiritual dimensions. It is a project with a historical soul.

Economic resurgence in itself does not guarantee a corresponding intellectual ferment and cultural effervescence. There are formidable obstacles in the long journey. First, Asian intellectuals may not rise to the call. Second, there is lack of freedom and internalized self-censorship that originates from a culture of fear. Third, there is no critical mass of thinkers to stimulate each other. Fourth, there are as yet no powerful social groups willing to adopt and champion new philosophies developed by their people.

The rise of Asia may thus be conceived of as an opportunity for an Asian cultural revival, which may or may not happen. Much depends on how Asians will make use of the opportunity. Will they translate the opportunity into a mission, and turn it into a reality?

The project of an Asian cultural rejuvenation is an ambitious undertaking.  It is likely to last for several generations. It has no walls and borders. Contributions from all corners of the world are warmly welcome. Though the stage is in Asia, the cast and audience are global.   This opens up a new arena of international cooperation for all those who aspire to contribute to the long term well-being of humanity.  As co-operation and competition with the West can be expanded to include friendly co-operation and competition in the field of ideas, this new arena could well be an alternative to the geopolitical rivalry between an emerging China and a US in decline.

Let us imagine that East Asia or South Asia could provide a case of cultural revival together with economic modernization.  It would be an attractive alternative to the current Western model for the Middle East. It may offer new insights and solutions for solving the whole array of social, economic and political problems there.

If and when Asian cultural and intellectual reinvigoration does happen in its full glory, it will lift Asian civilization to a higher level. In so doing, it will contribute to the cultural resources of the world and indeed to a richer modern civilization.  It will also impart a more profound and enduring meaning to the term Asian Century.

This is the text of the author’s public lecture delivered at the Sungei Long Campus of Universiti Tunku Abdul Rahman on  March 17, 2017.

Singapore Foreign Policy Update


March 3, 2017

Singapore Foreign Policy Update

by Dr Vivian Balakrishnan

https://www.mfa.gov.sg/content/mfa/media_centre/press_room/pr/2017/201703/press_201703021.html

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2016 was a tumultuous year for the world and a very busy year for (Ministry of Foreign Affairs) MFA staff. The previous global consensus on the benefits of free trade and, on economic integration is broken. And unfortunately, political discourse in many countries, unlike in this House, has become increasingly nationalistic, anti-incumbent and even sometimes xenophobic. The threat from terrorism, radicalism and extremism has increased, and new media has also amplified this threat far and wide.

Quite frankly, we have to anticipate even more of such external challenges and challenges that will test our resolve, our unity and our agility. As a small city state, Singapore has no option. Isolation and protectionism is not an option for us. In fact, the world is even more interconnected than ever before. So we have actually to double down on globalisation. The economic headwinds and the global protectionist sentiments are not going to go away soon, and they will have serious implications on our trade-dependent economy. We are probably the only country where our trade volume is three and a half times our GDP.  So for us, free trade is not a debating point – it is our lifeblood.  So if you think about it, the larger context of this budget debate, of the COS, and of the Committee on the Future Economy (CFE) is that we have to enhance the competitive position of Singapore and Singaporeans.  That is the only way we can survive and thrive in this uncertain world. Add to that, the fact that major power interactions and rivalry will impact the region, and will impact us and we have seen evidence of that.

So the question, therefore, that all of you have posed is: How will we navigate these challenges? Our fundamental realities remain.  We are still a tiny island in an uncertain neighbourhood, we still have to try our best to build a wide network of friends.  We have to be a relevant, valuable, reliable partner, and at the same time, be realistic about our place in the world.  As former British PM and Foreign Secretary Lord Palmerston once pointed out, nations have no permanent friends or allies, they only have permanent interests.

Tenets of Singapore’s Foreign Policy

Our key foreign policy principles therefore have not changed.  First, we conduct an independent sovereign foreign policy in order to safeguard our independence and the interests of all Singaporeans.  Second, we promote ASEAN unity and centrality.  And third, we have to remain committed to a rules-based international system.

Finally, foreign policy begins at home.  And the effectiveness of our foreign policy depends on us being a successful nation-state and on the continued support of a united citizenry. And one point which I want to commend today – I’ve listened to the very thoughtful speeches from Mr Low Thia Khiang, Mr Pritam Singh, and I am grateful for the bipartisan support that we have in this House.  This unity of purpose is essential for us to pursue our foreign policy goals in this uncertain and volatile environment.

So all the Members of this House understand and appreciate these key tenets of our policy.

Long-Term Value Proposition and Relevance to Other Countries

Many of you have asked questions on Singapore’s long term value proposition and the relevance of Singapore to other countries.  Ms Sun Xueling asked about Singapore-China relations.  Mr Cedric Foo asked about US-Singapore relations under the new Trump Administration.  Mr Amrin Amin, Mr Chia Shi Lu have asked for updates on our relations with Malaysia and Indonesia.  All of these are key relationships.

Singapore and China

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Let me deal first with China.  Singapore has been a steadfast and longstanding friend of China.  Our bilateral relationship, right now, I will describe it as in “good working order”.  In November 2015, when President Xi Jinping came here, we signed an agreement which characterised our relationship as an ‘All Round Cooperative Partnership Progressing with the Times’.  Putting aside the words, the point is historically, our relationship has been built on the strong foundations laid by Mr Lee Kuan Yew and Mr Deng Xiaoping.

And over the decades, Singapore has supported and demonstrated in action and investment in China’s peaceful development and its progressive engagement of the region and the international community.  And we do so because we believe that China’s success is good first for the citizens of China.  It is also good for the region and it is good for us.

I am always amazed that tiny Singapore currently is China’s largest foreign investor, and we have been so since 2013.  China is Singapore’s largest trading partner, also since 2013.

Several Cabinet members including myself just accompanied DPM Teo to Beijing.  We came back just two days ago.  We attended the Joint Council for Bilateral Cooperation (JCBC).  It was a very good meeting and it gave both sides opportunities to explore ways to deepen cooperation especially in this flagship project of President Xi Jinping’s, the “One Belt and One Road” initiative.  I also had a very good meeting with my counterpart, and I can say that this again is a reflection of the deep resilient nature of our relationship.

Our third and latest Government-to-Government project, the Chongqing Connectivity Initiative, has been designated a priority demonstration project for the “Belt and Road”, and will play a catalytic role in linking up Western China – both to Southeast Asia as well as across to Central Asia and beyond.

Besides the JCBC, we also have candid exchanges and sharing of experiences through established platforms such as the China-Singapore Forum on Leadership; and the Singapore-China Social Governance Forum.

The various projects, the business engagements, the people-to-people ties – you’ve heard 2.8 million Chinese tourists to Singapore and I think for us, it would be 800,000 or so Singaporeans who have travelled to China in a year.  The high frequency of interactions at senior leadership level have conferred a very high degree of resilience and I would add strategic trust in our relationship.

Therefore, even when we have differences over some issues, as I said in an earlier session, we should not overreact and we should, in a sense, anticipate that these incidents are not unusual even amongst close friends and neighbours, and we must recognise that our shared interests far exceed these differences.  So we must not be distracted from the larger strategic imperatives or allow incidents to derail the substantive, longstanding and mutually-beneficial cooperation.

Singapore-US Relations

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let me turn now to the US.  There is a new Administration.  It is settling in.  There’s always a period of uncertainty, a period of adjustment that goes on both domestically when a new Administration takes over, and also at the international level.  Basically because the US is such an important superpower.

As far as Singapore is concerned, we believe that our many decades of consistent policies and interactions with the US, have created trust and I believe they consider us a reliable partner.  I am confident that we will be creative and adaptable in developing win-win partnerships with the US even as President Trump pursues a new set of policies.

We have had a strong and enduring base of relations for the last 51 years.  These mutually-beneficial ties have spanned five Republican and four Democratic Administrations. On the economic front, the US is Singapore’s 4th largest trading partner in goods and our top trading partner in services.  The US is also Singapore’s largest foreign direct investor.  And Singapore is the US’ 4th largest Asian investor (after Japan, Australia and the ROK).

On the defence front, our Air Force has training detachments in Texas, Idaho and Arizona.  The US is a significant user of both Changi Naval Base and Paya Lebar Air Base.  And Singapore also supports the rotational deployment of US Littoral Combat Ships and P8 Poseidon aircraft. These fundamentals of our relationship remain unchanged and their value is recognised by both Republican and Democratic Administrations.

Similarly, the strategic and economic imperatives that have underpinned America’s longstanding engagement of our region actually remain unchanged. We have to constantly look for new areas of convergence for win-win cooperation with the US.  So for instance, one of the more recent things we are working on is cybersecurity, and we signed an MOU on Cybersecurity in 2016.

Mr Nair and Mr Low Thia Khiang also asked some searching questions about how the relationship between China and the US will impact Singapore.  And indeed, this is the key bilateral relationship that will affect peace, security and prosperity in our region and indeed in the world.

Whilst competition between the US and China is inevitable, but what is different in historical terms is that never before have two powers been so interdependent, so intertwined economically.  Even in the depths of the Cold War, remember, that the American and Russian economies were never intertwined to the same degree that the US and Chinese economy is.  So therefore, we hope that both sides, after they have measured these imperatives will come back to the same conclusion that a constructive engagement and win-win cooperation is the right formula.  If they can achieve this, this will provide space for countries in the region, including Singapore, to be part of a common circle of friends, and achieve win-win outcomes for all.

This is in fact a key reason why for the last 51 years, Southeast Asia, in particular the founding members of ASEAN, have enjoyed peace, security, prosperity over the last five decades.  So we hope that they would arrive at this conclusion.  But we should also bear in mind that we have no say.  We cannot determine the dynamics of that relationship.  Mr Low asked, “what do we do, if they don’t get along”.  And the answer, is that number one, we have no say.  Number two, we should avoid being forced to choose sides for as long as possible.

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“Relationship with Malaysia is actually as good as it ever has been.”

Now, closer to home, our relationship with Malaysia is actually as good as it ever has been.  More recently, we reached a milestone by signing the Agreement on the KL-Singapore High Speed Rail (HSR) in December 2016. And this is a landmark agreement that will transform the way both countries interact and do business. It will bring our two peoples and economies even closer together. In addition to the HSR, we are also looking to sign a bilateral agreement on the Singapore-JB Rapid Transit System (RTS) this year. The RTS will improve the flow of people and business between Singapore and Johor, and bring both sides closer together. On the whole, our bilateral relations are excellent.  Other than these connectivity initiatives, the economic, the people-to-people ties remain strong.  We will continue to cooperate on security, defence and counter-terrorism.

Mr. Baey Yam Keng asked about the Pedra Branca case and how this impacts our bilateral relations. Part of what underpins our good relations with Malaysia is a commitment by both sides to resolve disagreements amicably in accordance with international law, while allowing mutually-beneficial cooperation to continue in the meantime.  So you will recall that in 2003, Singapore and Malaysia agreed to submit the case concerning sovereignty over Pedra Branca, Middle Rocks, and South Ledge to the International Court of Justice (ICJ). In its judgment dated 23 May 2008, the ICJ found that sovereignty for Pedra Branca belonged to Singapore, sovereignty over Middle Rocks belonged to Malaysia, and sovereignty over South Ledge belonged to the State in the territorial waters of which it is located. On 2 February 2017, Malaysia applied for a revision of the judgment under Article 61 of the ICJ’s Statute.

 Under Article 61, an application for a revision of judgment must satisfy several criteria.  These criteria include: first, it must be based upon the discovery of facts which were unknown to the court and to the party claiming revision when judgment was first given.  And these newly-discovered facts must be decisive, and of such a character as to lay the case open to revision.  An application for revision must also be made at latest within six months of the discovery of the new fact, and within ten years of when the judgment was given.

Our legal team has studied Malaysia’s application carefully, including the three documents relied on by Malaysia to support its application. Our legal team strongly believes that the documents relied on by Malaysia do not satisfy the criteria under Article 61. We will submit to the ICJ our comprehensive and compelling rebuttal to Malaysia’s application by 14 June, which is the time limit fixed by the ICJ.

We are confident of our legal team and our case. We are very fortunate to still have Professor Jayakumar, and we have Senior Judge Chan Sek Keong, and Ambassador-at-Large Tommy Koh who led our original Pedra Branca team. They are also working very hard now, very enthusiastically, I may add.  They are also working with a younger team of bright legal minds in AGC. This way, we are also using this episode as an opportunity to build up expertise and experience in the next generation. Succession again. This is important as I am sure there will be more international legal issues in future.  And equally, we must ensure that the same whole-of-government spirit of unity prevails. These are crucial ingredients in order for Singapore to punch above our weight at international fora. Singapore is committed to resolving this issue amicably and in accordance with international law.

Bilateral relations with Malaysia therefore are good, will remain good, and we will continue with all our mutually-beneficial bilateral programmes. Singaporeans should not be disconcerted by these developments, because even with the best of diplomatic and personal relationships, we must expect other states to act in their own self-interests.

Relations with Indonesia

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Our relations with Indonesia are also strong.  Prime Minister Lee Hsien Loong and President Jokowi (Joko Widodo) had a successful Leaders’ Retreat in Semarang last November.  They jointly witnessed the opening of the Kendal Industrial Park, and agreed to set up an Indonesia-Singapore Business Council and to explore cooperation in the energy and tourism sectors.

The positive and stable partnership that we have enjoyed in recent times has been mutually-beneficial.  Business ties and tourism continue to grow. Singapore remained Indonesia’s top foreign investor in 2016.

This year, we celebrate 50 years of diplomatic relations with Indonesia.  The Indonesian Foreign Minister, Ibu Retno Marsudi, and I jointly announced the start of these celebrations last month during her official visit to Singapore.

We also marked a milestone in bilateral relations through the exchange of instruments of ratification for the Eastern Boundary Treaty on 10 February 2017. This was a demonstration of how both countries can work together to resolve bilateral issues in areas of mutual interest, in accordance with international law. This is an important principle that both sides share, because as neighbours, we must expect disagreements to arise from time to time, but what matters is how we resolve these disagreements.

Bilateral Relations with Brunei

Singapore and Brunei, of course, share a long-standing and a special relationship, anchored in deep mutual trust and respect, which has been built up over decades, over generations of leaders. This is epitomised by the Currency Interchangeability Agreement, which marks its 50th anniversary this year.  We will continue to build on this special relationship with the younger generation of Bruneian leaders though platforms like the Singapore-Brunei Young Leaders Programme.

Singapore in ASEAN

More broadly, Southeast Asia is our immediate hinterland.  And as many of you have said, ASEAN serves a crucial role as the main platform for regional cooperation.  ASEAN has kept our region peaceful and allowed our Member States to focus on growing our economies and improving the lives of our people.  Dr Teo Ho Pin, Mr Liang Eng Hwa, and Mr Low Thia Khiang asked very timely and important questions about ASEAN’s relevance, the pace of integration, the future of ASEAN unity and the key achievements as we celebrate its 50th anniversary.  Mr Cedric Foo and others also asked about our coordinatorship of ASEAN-China dialogue relations.

ASEAN enables us to more effectively shape our external environment and to have our views taken into account by bigger players.  In an often turbulent world, ASEAN is, as Mr Low puts it, Singapore’s anchor and a cornerstone of our foreign policy.

ASEAN has a strong value proposition. We are now already the seventh largest economy in the world and barring any mishaps, we are projected to become the fourth largest economy by 2050. Today we have 628 million people, our combined GDP US$ 2.5 trillion, and by sometime between 2030 to 2050 we hope that this will quadruple to US$10 trillion.  What’s important also is that we will have the third largest labour force in the world, and more important than that, more than half of the population of ASEAN is under the age of 30. So we have a demographic dividend that is not yet harvested.

To maintain our relevance, ASEAN must continue to be neutral, united, and committed to an open and inclusive regional architecture, and that means that we will continue to consolidate and to deepen our economic integration.  We adopted the ASEAN Community Vision 2025 and the three Community Blueprints in 2015.

We must do more to help Singaporeans better understand and to identify with ASEAN. We must also explore ways for ASEAN to ride the technological wave of the Fourth Industrial Revolution.

We will continue to partner with organisations like the Singapore Business Federation and the Association of Small and Medium Enterprises to help our businesses maximise the economic opportunities that ASEAN presents.

Working closely with Philippines as ASEAN Chair

We will also work closely with the Philippines to ensure the success of its Chairmanship this year, and to begin preparations for our own ASEAN Chairmanship in 2018.

It is important that we strive for an integrated, outward-looking and confident ASEAN. To that end, we also hope to build new links with other regional organisations, for instance the Pacific Alliance and the Eurasian Economic Union.

At the same time, the events unfolding in the EU are also a salutary reminder for us not to reprise their problems, and ASEAN must remain pragmatic and practical in managing the pace and the scale of the implementation of our economic integration. The sequence, the pace and the scale – the implementation of all of these are very important.

ASEAN’s cohesion and unity, to be frank with you, have been tested by difficult issues, not only just last year but many times before.  Nonetheless, we have endured and we have even thrived over the past 5 decades.

Looking ahead, I can tell you that ASEAN will become more, not less, critical to our foreign policy.   I totally support Dr Teo Ho Pin’s three suggestions on strengthening unity, promoting partnerships between businesses and encouraging more people to people ties.

Now let me turn to our role as the dialogue relations coordinator between ASEAN and China. Again I want to stress that we have to be honest brokers and we have to do our best to manage this strategic partnership based on mutual benefit and respect.  We upgraded the ASEAN-China FTA in 2015 and we facilitated a successful and substantive ASEAN-China 25th Anniversary Commemorative Summit last year.  We will continue advancing other initiatives such as enhancing connectivity and making progress on the Code of Conduct in the South China Sea in the remaining one and a half years of our coordinatorship.

Relations with other countries – Japan, India, Australia and the EU – are also important, and I am glad to report that relations are also good and will deepen.

Singapore-Japan 50 year partnership

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We commemorated 50 years of diplomatic relations with Japan in 2016. We had a series of high-level exchanges including a State Visit by President Tony Tan.  We are working towards upgrading the Japan-Singapore Economic Partnership Agreement and our Air Services Agreement, and we hope to strengthen bilateral cooperation in air, land and sea transport and infrastructure through the inaugural Vice-Ministerial Transport Forum this year.

India

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In India, steady progress has been made under the Strategic Partnership signed when Prime Minister Narendra Modi visited us in November 2015.  The Strategic Partnership has allowed us to broaden and to deepen relations in diverse areas, both at the central level as well as in selected states in India.

And this was reaffirmed during Prime Minister Lee Hsien Loong’s visit to India in October 2016, when he launched the Centre of Excellence for Tourism Training (CETT) in Udaipur. The master-planning of Andhra Pradesh’s new capital city, Amaravati, by Singapore experts has been completed, and a Singapore Consortium is now bidding to be a participant in the “seed development” of this brand new city.

Bilateral Relations with Australia

Singapore has a close and longstanding bilateral relationship with Australia. This was elevated in June 2015 with the Comprehensive Strategic Partnership (CSP), and this is a substantive undertaking with over 40 bilateral initiatives that will be delivered through the period to 2025.

We have moved quickly to implement the CSP.  Key agreements were signed during PM’s visit to Australia in October 2016. The MOU on Military Training and Training Area Development gives the SAF significant enhanced access to training areas in Australia over the next 25 years.  Areas which, I may add, are multiples the size of Singapore.  This will add significantly towards addressing the SAF’s evolving training requirements.

The upgrade to the Singapore-Australia Free Trade Agreement is expected to come into force this year. It will create many more opportunities for Singapore businesses and professionals to access the Australian markets.

ASEAN-EU Relations

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Brexit notwithstanding, we continue to engage Europe and the EU, for example through the EU-Singapore FTA.  Yes, it has been delayed by certain legal hurdles that we have to go through, but so far all the countries that we have engaged within Europe have expressed support for this free trade agreement.  We are also working on the EU-ASEAN Comprehensive Air Transport Agreement.

Singapore will also continue to seek economic links and opportunities for our companies in emerging markets such as Africa, Latin America and the Middle East, and SMS Maliki will elaborate on this, after I finish my contribution. But let me just say the following short points on the Middle East.

We are one of few countries that engages in a principled way with all of the protagonists in the Middle East.  In the short one and a half years I have been here, I have accompanied the PM to Jordan, to Israel and to Ramallah, under the Palestine National Authority (PNA).  We have gone to the Temple Mount, visited the Dome of the Rock, Al-Aqsa Mosque, Church of the Holy Sepulchre, been welcomed by all parties.  And it is amazing again if you think about it: us, tiny little Singapore is welcomed by all parties.  I believe we have this special position because we take a principled position.  And we also work in a win-win way to support all parties.  So for instance, with the Palestinians we have extended our technical assistance with the PNA.  But more importantly I think one of the key secret ingredients is the fact that Singapore itself, is a successful model of multi-racial multi-religious integration.  Because that gives us a special moral standing to be able to engage, and to speak, and to interact with all parties. Very few countries have this special role that we have.

And so, apart from all these engagements, bilateral and regional, we need to continue to support international groupings and arrangements.  These arrangements increase opportunities for Singapore companies and Singapore to do more in the face of a world which is sometimes at risk of insularism and protectionism.

RCEP

We will work towards the expeditious conclusion of the Regional Comprehensive Economic Partnership (RCEP), and will continue to further the development of the ASEAN Economic Community. We will explore ways to take the TPP forward, despite the US’ withdrawal.

Prime Minister (Lee Hsien Loong) attended the G20 Summit in China last year at President Xi’s invitation, and he will attend the G20 Summit in Hamburg in July this year at German Chancellor Angela Merkel’s invitation.  This will be the seventh time that Singapore is invited to attend a G20 Summit.

An Independent Foreign Policy

The next aspect that I want to talk about is about how we pursue an independent foreign policy.  This means having a foreign policy that serves Singapore and Singaporeans’ interests first and foremost.

Mr Sitoh Yih Pin spoke about the importance of a rules-based international system.  And this is critical for a small state like Singapore.  And you asked how we can strengthen the multilateral system. As a small country, the rule of law is crucial for our survival. The UN, and other international organisations and fora are key components of a rules-based international system.  They create a stable framework for cooperation, for managing tensions and addressing global trans-boundary problems. The multilateral system must become more inclusive, more transparent. Global solutions must have broad-based support from countries to be effective. On our part we play our role by initiating or by catalysing the work of organisations like the Forum of Small States (FOSS), that we actually initiated, and the Global Governance Group (3G), and we work closely with many other small states to have a greater collective voice on the international stage.

We also contribute to the multilateral system through technical assistance to developing countries.  I think we have trained over 112,000 officials from many other countries because they want to understand how Singapore works, and how these lessons can be brought back home. And humanitarian assistance is important and we do contribute when there are disasters and actually it is this training, this development that makes a longer term impact on many other countries.

Foreign Policy Begins at Home

Finally, I want to stress and repeat that foreign policy begins at home.  We need the support and understanding of a united citizenry.  Ms Joan Pereira’s question about how MFA can better engage the public on Singapore’s foreign policy is very timely.

While MFA takes the lead in foreign policy, the issues are becoming more complex and cross-cutting in nature.  Other Ministries and government agencies play an increasingly vital role in Singapore’s external front.  MFA must therefore act as a coordinator to work closely with other Ministries and agencies to pursue a ‘Whole of Government’ foreign policy and to strengthen our domestic resilience in the face of an uncertain and sometimes hostile external environment.

This also means convincing Singaporeans of the need for consistent and principled diplomacy for our long term interests instead of taking the path of least resistance in order to achieve short term gains.  The events of the last six months actually is a reminder of this.  And I am grateful for the support of Singaporeans and of members of this House.

So we will continue to work with all stakeholders to raise awareness amongst our fellow Singaporeans of the stakes for us, of the principles behind our policy, and of the sometimes difficult positions that we have to take, despite the pressures we will face from time to time.

Terrorism–A Real and Present Threat

Terrorism still remains a real and present threat.  This is evidenced by the high-profile attacks in parts of Europe and Southeast Asia, and we are actually at even higher risk, even as ISIS loses its strong hold in the Middle East.  So MFA and MHA (Ministry of Home Affairs) will continue to monitor security and terrorist threats, and we stand ready to assist Singaporeans in distress overseas. We have had Singaporeans injured or otherwise involved in terrorist incidents overseas.  Singaporeans are one of the most widely travelled people in the world.  One of our top challenges is to strengthen our consular assistance. Dr Maliki will elaborate more on this later on.

A united citizenry allows us to pursue effective foreign policy.  We may be small, but the unity of our people is a source of strength.  Our stability, our consistency,our reliability are all the more valuable in an increasingly fractious world, and people respect Singapore for that. Such respect is hard-earned, but it allows our voice to be amplified and heard on the international stage.

I am grateful to Dr Teo Ho Pin and Mr Pritam Singh for your support for the staff of MFA and for adequate resources to be provided in the light of all these challenges. I totally agree with you that MFA staff must be well staffed and must be well resourced. Our MFA officers actually are the real key assets. Our budget may be, I think, the second smallest or the smallest budget of all the ministries but I think you will agree with me it is the staff of MFA.

We have a rigorous selection system. We continue to recruit high-quality people.  But we also provide continuous training to nurture our staff and to develop their leadership potential.  We also regularly review our manpower resources and our work functions to ensure that this precious manpower is deployed in an optimal way.

The work in MFA is very demanding and very labour-intensive and eats up all hours of the day and night.  Our officers work under very challenging conditions and at great cost to their personal and perhaps even more so to their family lives.  I would like to express my appreciation especially to the spouses, of MFA staff and to the children who probably have absentee parents because their parents are out there looking after the longer term interests of our nation and they sacrifice so much for Singaporeans.

But our officers have proven themselves to be dedicated and professional.  They are driven by their mission to advance the interests of Singapore.  They understand our vulnerabilities and what we need to do in order to remain relevant.  I think Members of this House who have ever travelled with MFA staff – I am very sure you can attest to their professionalism and their hard work and I want to thank Members of the House for your continued support of MFA.

Conclusion

Let me conclude. The events of the past year have been a stark reminder of the reality that Singapore faces.  But it has also provided lessons on how we can overcome these challenges. I think in a way, the pressure that we have come under has made us stronger and more united. So we will face another year of uncertainty ahead, MFA will continue to enhance Singapore’s long-term value proposition and relevance to other countries; we will maintain our commitment to an independent and principled foreign policy in a rules-based global order; we will continue to work with all Members of this House to build a deeper appreciation of the hard truths that underpin our foreign policy.

 

 

 

Sri Lanka and China’s Indian Ocean Strategy


February 22, 2017

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Number 372 | February 21, 2017

ANALYSIS

Sri Lanka Suffers from China’s Indian Ocean Strategy

By Shiyana Gunasekara

Amidst local protests against the Chinese presence in the southern Sri Lankan town of Hambantota, Beijing insists that the town’s port project has been discussed in the “spirit of equality and mutual benefit, and follows market rules.” China’s activity in the Indian Ocean – particularly in Sri Lanka, which is a focal point in China’s One Belt One Road (OBOR) plan – appears to be predatory lending under the guise of economic development.

India needs to recalibrate its strategy towards the other South Asian countries for its own security, if not regional stability; however, Delhi has yet to offer a comparable alternative to doing business with China. Instead, India has taken its asymmetric power in the region and the de facto allegiances of its much smaller neighbors for granted.  With China’s recent track record of placing military vessels in traditionally commercial docks, India must take its role as the South Asian hegemon seriously.

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80% share of  Sri Lanka’s Hambantota Port goes to China

In October 2016, Sri Lanka’s Prime Minister Ranil Wickremesinghe announced that the China Merchants Holdings (International) Company Ltd. would hold an 80% share of the Hambantota Port in exchange for over USD $1 billion in the country’s debt.  This should be of particular concern to India, since China has used the Colombo South Container Terminal, owned by the same Chinese firm, to dock submarines, as opposed to the Sri Lanka Port Authority’s mooring designated for military vessels.  Previously, Colombo intended to hide visits of two other Chinese naval vessels from the media. With the majority of the Hambantota Port sold to China’s semi-private sector, India should be prepared for another visit by the People’s Liberation Army (PLA) Navy – perhaps for a much longer period of time.

The complete details of Chinese loans and other financial assistance have not been disclosed to the public, notably including details of the loan interest rates. China leads the country’s foreign inflows, with 98% of Chinese assistance to Sri Lanka being loans and only two percent as grants. China’s Export-Import Bank accounts for 77% of these loans, with 14% coming from the China Development Bank, and five percent from interest-free loans. China’s Export-Import Bank has notoriously given loans to countries on its OBOR initiative with strict self-serving procurement and contracting regulations: Chinese companies must be awarded the contract, both for the project itself and for procurement, and at least 50% of project procurement must be services, equipment, technology and materials from China.

Foreign direct investment and other forms of financial engagement from a G2 country to an emerging economy should be focused on market-friendly approaches to supporting economic development in the latter. Chinese investment in Sri Lanka, and other countries along China’s visionary trail would be a true boost to the local economy if the loan money were staying in the country through greater local employment and project procurement. Instead, Sri Lanka borrows money from China, which China requires to be used to contract largely state-owned Chinese companies. These companies provide salaries to Chinese employees who come to Sri Lanka to build infrastructure projects using mostly Chinese materials and technology.

The Mattala Airport and the Hambantota Port are prime examples of large-scale infrastructure projects financed by China that did not promote local economic development.These projects were purely gambles by the former Sri Lankan government, for which there was no guaranteed return on investment – a risky move for an economy coming out of an expensive three-decade war.

Sri Lanka, undergoing vast economic reforms outlined by the International Monetary Fund (IMF), might not be the only South Asian state that will have to be bailed out due to crushing Chinese-owned debt.  An IMF report on the Chinese-Pakistan Economic Corridor (CPEC), noted that import requirements of the project “will likely offset a significant share of inflows, such that the current account deficit would widen.” While the IMF acknowledges that the long run benefits may help mitigate said costs, such success is not guaranteed, as seen in Sri Lanka.  Hence Pakistan too should take into serious consideration the equity-for-debt swap that Sri Lanka was forced into due to the island nation’s ill-advised decisions and China’s over-eagerness to offer self-serving loans.

India is the largest power in South Asia in essentially every measure, and should continue to initiate deeper maritime collaborations with its neighbors for its own interests as well as for the benefit of the region. India can accomplish this goal by providing fiscal alternatives for its smaller neighbors to develop their infrastructures and human capital that are more favorable than Chinese-financed loans with unclear intentions.

China is a pragmatic power, and most likely foresaw Sri Lanka’s economic decline that resulted in Chinese ownership of the Hambantota port. China’s actions of fostering questionable loan conditions and blurring the line between commercial and military objectives do not correspond to its purported aim of establishing a positive public image. Ultimately, if China commits to increased transparency, its ambition to become a re-emerging global power will be better received.

About the Author

Shiyana Gunasekara is a masters candidate at Johns Hopkins School of Advanced International Studies focusing on international economics and Asian affairs, and was a Fulbright Scholar to Sri Lanka in 2014-2015. She can be contacted at Shiyana.Gunasekara@jhu.edu

The East-West Center promotes better relations and understanding among the people and nations of the United States, Asia, and the Pacific through cooperative study, research, and dialogue.

Established by the US Congress in 1960, the Center serves as a resource for information and analysis on critical issues of common concern, bringing people together to exchange views, build expertise, and develop policy options.

The Asia Pacific Bulletin (APB) series is produced by the East-West Center in Washington.

APB Series Editor: Dr. Satu Limaye, Director, East-West Center in Washington
APB Series Coordinator: Peter Valente, Project Assistant, East-West Center in Washington

The views expressed in this publication are those of the authors and do not necessarily reflect the policy or position of the East-West Center or any organization with which the author is affiliated.