Transcript of Minister for Foreign Affairs Dr Vivian Balakrishnan's Keynote Address and Question and Answer with Bloomberg Chief Correspondent Haslinda Amin at Asia Society Australia's "Asia Briefing LIVE" Forum on 7 October 2021

Keynote Address

Minister: Excellencies, ladies and gentlemen,

Thank you for this invitation to speak at this year’s Asia Briefing LIVE.

We are now into the second year of COVID-19. The virus is now endemic and will be a permanent presence in humanity. The emergence of new variants, in particular the Delta variant which we know has greater infectivity, has caused huge waves of secondary infection everywhere despite the unprecedented speed of vaccine development. Yet, vaccine access and vaccine hesitancy remain a challenge in significant parts of the world.

Furthermore, we also see a sharpening of the geopolitical tensions, in particular the US-China tensions, and the emerging strategic re-arrangements like AUKUS and the Quad. Asia is really at the confluence of all these strategic fault lines.

Today, I will focus on my remarks on: first, the impact of the US-China relations on our region; second, the exigent need to engage Southeast Asia on our own merits; and third, the role of Australia and Singapore.

Let me begin with the most consequential bilateral relationship in the world – the US-China relationship.

China’s strategic and economic influence has grown, and today it demands to be treated as an equal. The US remains pre-eminent. It now sees China as a strategic peer competitor – something that is really quite unprecedented for the US. China sees itself as an alternative centre of influence and source of prosperity.

The strategic choices that both these countries make – including whether they can work together to uphold a stable and peaceful rules-based international order and meet the challenges of managing the global commons – will determine international peace and stability.

Actually, the US and China are not inevitable enemies. Strategic competition between the two powers does not need to descend into conflict. The US and China are both aware of this. US President Joe Biden and Chinese President Xi Jinping both alluded to this in their recent speeches to the UN (United Nations) General Assembly, which I have just returned from a week ago.

President Biden said that all major powers have a duty to carefully manage their relationships so that they do not tip from responsible competition into conflict. Similarly, President Xi emphasised the point that it should not be a zero-sum game. One does not need to achieve success at the expense of the other.

I do not think that either side wants a collision. Both are painfully aware of the enormous consequences if a collision occurs, whether by design or, more likely, unwittingly by accident. We hope that both parties will work out a modus vivendi that will allow for cooperation in areas of mutual interest even as competition remains in many other areas. We are in the midst of this strategic rebalancing, readjustment, and recalibration of the US-China relationship.

Southeast Asia, which has been at the cross-roads of civilisations and trade routes for many centuries, is where the action will be for at least the next couple of decades.  Southeast Asia wants to be engaged on our own merits, rather than to be seen purely through the lens of the US-China competition. We believe that an open and inclusive regional architecture is the best way for countries, big and small, to be able to prosper and to do so peacefully.

We believe there are huge opportunities for our region and our external partners in fact have significant equities right here. We welcome them to remain engaged. SEA has 650 million people, (and) a combined GDP of US$3 trillion, which by the way will more than double in the next two decades. ASEAN is projected to be the fourth-largest single market by 2030, after the EU, US and China.

The US is the largest investor in Southeast Asia, with a larger stock of investment in the region than what it has cumulatively invested in China, India, Japan, and South Korea combined. China has been ASEAN’s largest trading partner for the past 12 years, but what many people do not realise is that ASEAN has now become China’s largest trading partner since 2020. Australia’s trade with ASEAN countries is larger than Australia’s trade with Japan and the US.

There are therefore many areas for regional cooperation. Let me briefly touch on three of them – the COVID-19 recovery, the digital economy and climate change.

In the immediate term, countries are focused on recovery from COVID-19 – and in particular, managing this transition from a “COVID zero” strategy to a “COVID resilience” strategy.

All of us need to work together on this recovery, helping each other with medical supplies and vaccines, sharing experiences, working together on R&D, as well as real-time information sharing.

In the longer term, we need to take forward the recommendations of the G20 High Level Independent Panel to address major gaps in pandemic preparedness; to strengthen the multilateral support for the WHO (World Health Organization) and the UN; and to mobilise resources for our collective security – because this is a clear example where no one is safe until everyone is safe.

Second, COVID-19 has in fact accelerated the digital revolution, with the digital economy a key new area of growth.

Southeast Asia’s digital economy is projected to grow three-fold by 2025. But the digital divide is also widening around the world and within countries. Digitalisation requires a concerted global response.

There are many opportunities, in fact, for digital economy cooperation. Examples include the Digital Economy Agreement between Singapore and Australia; the Digital Economy Partnership between Singapore, New Zealand and Chile; and the WTO (World Trade Organization) Joint Statement Initiative on e-commerce that Singapore and Australia co-lead, together with Japan.

We need a global framework to maximise the opportunities and to deal with the challenges posed by the digital revolution. There are several paths that we can take – the UN Secretary-General Antonio Guterres’ proposal for a Global Digital Compact is one, another possibility is a new UN convention on digital transformation for sustainable development, or a framework of norms and principles.

I look forward to a global architecture that is open, inclusive, and inter-operable, and that will help us manage the digital commons in order to maximise opportunities and reduce the divide.

Third, climate change is an existential threat that requires a concerted global response.

The August 2021 Intergovernmental Panel on Climate Change report found that without a drastic and rapid reduction in emissions, global temperatures are likely to rise above 1.5 degrees Celsius within the next two decades. This will disproportionately impact developing countries and island states, including especially those of us in Southeast Asia.

The fight against climate change will be a stark litmus test of our ability to manage the global commons through multilateral action. Cooperation between China and the US, the two largest global emitters, will be absolutely critical.

At the same time, the green economy presents opportunities for the region to work with key partners like the US and China in developing new and innovative solutions in areas including energy, infrastructure, and finance for green opportunities.

So where does Australia fit into this picture?

We welcome Australia’s continued constructive engagement of our region. The ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) is one of the most comprehensive ASEAN-plus FTAs in force.

Australia is already making significant efforts to engage our region in the three areas I mentioned earlier. Australia has made significant contributions to ASEAN’s COVID-19 recovery efforts such as through its Regional Vaccines Access and Health Security Initiative for the Pacific and Southeast Asia, and Australia had made vaccine donations to Southeast Asian countries as well.

Australia is also working with Singapore in pursuing forward-looking and ambitious pathfinding initiatives. I mentioned the Digital Economy Agreement earlier. We are now discussing a Green Economy Agreement as well. These could be pathfinders for regional agreements in both the digital economy and green economy.

Australia’s participation in our region helps keep our regional architecture open. Australia has always been a strong supporter of ASEAN Centrality since becoming ASEAN’s first Dialogue Partner way back in 1974. Australia is also part of several overlapping regional frameworks, including the East Asia Summit, the ASEAN Defence Ministers’ Meeting-Plus, the RCEP (Regional Comprehensive Economic Partnership), the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership), and the almost five decade old Five Powers Defence Arrangements. Even if you do not remember this alphabet soup, the key point is that Australia has been an integral part of our region.

Now, the newly announced AUKUS, is something which we hope – and I speak now from the perspective of Singapore – we hope that AUKUS will contribute constructively to the peace and stability of our region and the world, and that it will complement the existing regional architecture that is open and inclusive, with ASEAN at its centre.

I would like to sum up with three key points.

One, in the strategic recalibration of the US-China relationship, constructive competition and cooperation between these two major superpowers is absolutely necessary and indeed possible. The converse outcome would be a catastrophe for everyone.

Two, Southeast Asia should be recognised and engaged for our own merits, and not viewed merely as an arena for proxy major power rivalry.

Three, COVID-19, the digital economy and climate change are three areas where regional partners can cooperate with all of us in Southeast Asia in dealing with this challenge of the global commons.

I look forward to further discussions on these issues with you and a robust Q&A with Haslinda. Thank you all very much.

Q&A

Haslinda Amin (Bloomberg): Dr Balakrishnan, always good to have you with us, and really good to see you again. I know you are a tad jetlagged. Let us continue with our discussion. You have just returned from what appears to be a positive trip from the US. You talked about engaging Southeast Asia. What is your assessment of US engagement in Southeast Asia, in light of AUKUS, and the nuclear submarine technology that is shared with Australia?

Minister: Well, I would look at this in two dimensions. First, there is no question that the US is trying to engage our region. In fact, I think in the last few months, Antony Blinken has engaged with us, both virtually as well as in person three times, with all the foreign ministers of Southeast Asia. So, we are not lacking for attention. The question on AUKUS is actually a different, completely different dimension. Let me put it to you this way. If you look at AUKUS, what it really shows is that Australia has decided to tack far more closely to its historical staunch ally – the United States. You can talk about the specifics of nuclear-powered submarines or you can talk about their cooperation in cybersecurity technology and the rest of it. But really, those are details. The strategic point is that Australia has done its own calculations and decided it needs to tack far more closely with America at a strategic level. In the case of Singapore, we have longstanding, good relations with the US, with Australia and the UK. On our part, we do not have any undue anxieties about this. These are three longstanding partners. We understand their strategic interests. We know this is not directed against us. We will see how this evolves, and as I said in my remarks earlier, the key point is to make a constructive contribution to regional peace and stability, and to complement the regional architecture in an open and inclusive way. As long as these conditions are met, I think this will be positive.

Haslinda: The thing is, many countries were caught by surprise. The Philippines now has come out to say that it may be rethinking its support for it (AUKUS). Could it be a threat to regional peace, with some suggesting it might spark, even a regional arms race?

Minister: I would not venture into that kind of speculation. As I said, take a step back and understand that, at a strategic level, the big game is the US and China. The US – in its 245 years of independence and emerging from the post-Cold War “unipolar moment” – has never had a peer competitor on this scale and at this level of sophistication and occurring at such a critical moment of both globalisation and threats to the global commons. This is uncharted, unprecedented territory. That is on the bilateral level. Now if you look within Asia, and you ask yourself, well, who are treaty allies of the United States? The answer is Japan, (Republic of) Korea, Australia. Within Southeast Asia, the two treaty allies are actually the Philippines and Thailand. I would stress that Singapore is not a formal ally of the US. We are in a unique category called Major Security Cooperation Partner. Now, I think (for) every country in Southeast Asia – what is it that we want at a strategic level? We want peace and prosperity. For the last five to seven decades, a multilateral rules-based world order based on open economies, free flow of investments and trade, and to a large extent, envisioned and underwritten by the US, has been a formula for peace and prosperity in our part of the world. But actually, the biggest beneficiary of this world order, in fact, has been China, so things have spiralled up into a new situation. I think it is important to understand, therefore, that as far as Southeast Asia is concerned, we do not want to be forced to choose sides. We do not want to become an arena for proxy contests, or even conflict. But depending on the issue, we will take positions, according to our own long-term national interest. A certain amount of, I would not say divergence, but a certain amount of diversity in views is to be expected. I would not, again, be unduly anxious or worried about it.

Haslinda: But there are neighbors which are anxious and frankly, I am quite surprised that you say that Singapore does not consider itself an ally of the US. I have always thought that Singapore was a close ally of the US.  

Minister: You know, we have no treaties (of alliance) that we have signed with the US. We have a Memorandum of Understanding (Regarding US Use of Facilities in Singapore).  

Haslinda: On the back of the AUKUS saga. Dr Balakrishnan, there have been suggestions that perhaps the EU may bid to play a bigger role in the Indo- Pacific region. Your thoughts on that?

Minister: Well, first you should ask why the UK is part of AUKUS. Again, at a strategic level I would say, first the UK has always been a very close ally of the US and of Australia. Second, I think it also reflects a post-Brexit UK, and also projecting its interests to this part of the world. In fact, you know that the UK also has applied to be part of the CPTPP. The EU is also reminding everyone that it has interests in Southeast Asia, and indeed in the Pacific itself.

I think France regularly reminds us that they have got a lot of EEZs (Exclusive Economic Zones) in the Pacific. It depends on how you want to view this. I think the Pacific is where the action is going to be, and the fact that if this is where the action is going to be, major powers and including powers of regional blocs like the EU and the mid-size powers, will all have interests in our part of the world. The challenge for us is to be (a) realist, to read the situation as it is and as I said, not to panic, not to overreact but to understand what is going on, why these evolutions in architecture are going on, and then to avoid the pitfalls. It can be done. Like I said, I have expressed the hope that the modus vivendi will first be established between the US and China, and I am making the argument for multilateralism, and a rules-based system. I am making the argument for greater economic interdependence, the continued emphasis on cross-border flows of ideas, capital, investments and trade, because I strongly believe that this is a formula for peace and prosperity. But we will see. Events will unfold and we will see.

Haslinda: You have expressed hope. I think everybody hopes that it is not a zero-sum game, at least the two sides – the US and China – will not look at it that way. Are US-China relations getting better or getting worse, do you think? What is your assessment at this stage?

Minister: I think that the tensions have escalated. I think the rhetoric has sharpened. But both at the very top – President Xi Jinping and President Joe Biden – they are experienced, seasoned statesmen. I do not believe that they are aiming for conflict. But there are certainly issues that they will have to work through, and we do need to give them some space and time to do so. What we are saying from the point of view of Southeast Asia, and in fact from the Pacific, is to say, look, in fact, confronted by a digital revolution and an existential threat of climate change, and an acute challenge from COVID-19, there is so much more to be gained by working collectively, working together. I really believe this does not have to be a zero-sum game.

Haslinda: We know that President Biden is reviewing his US policy towards China. What needs rethinking? You talked about how there needs to be a realignment, rebalancing, readjusting. What would it take for both sides to come to some sort of a compromise and work together?

Minister: Well, this is where you are asking me to venture into dangerous territory and to give advice.

Haslinda: Your thoughts? I mean a lot is at stake for the world.

Minister: Just bear in mind, Singapore is not even a mid-sized city in China or in the US. But obviously, we have skin in the game. I guess one point which I would make is for the US to understand that whilst China certainly became part of the multilateral system, particularly with its accession to the WTO 20 years ago, and this has been an avenue for an unprecedented historical achievement of lifting hundreds of millions of people out of abject poverty. But one caveat I would insert is that the US should not expect China to become more like the US. China has a deep, historical sense of identity. It is a civilisation state. It has absolutely no intention of becoming more like the US – both culturally, politically, and even in its economic manifestation, for the sense of it. That is one caution which I would include. From the Chinese perspective, China feels its time has come. It had a century plus of humiliation, primarily because it missed the Industrial Revolution. It is determined not to let that episode of history repeat itself. It does demand to be treated as an equal. It does demand, if need be, for rules, processes, multilateral global institutions to reflect that new balance. Therefore, this is a period of adjustment, recalibration and rebalancing, which the two superpowers will have to come to terms with but the rest of us too. As I said, watch this space. Again, understand the key forces moving these tectonic plates. For the rest of us who are on those fault lines be very, very careful.

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