MFA Press Release: Transcript of Minister for Foreign Affairs George Yeo’s Speech at the US-ASEAN Business Council Luncheon in Washington DC on 28 April 2009

I would like first to thank Stan Roth and Scott Marciel for their very kind introductions - very warm words not just about me but the bilateral relations between Singapore and the US. It is a very good relationship, no big issues between us which make visits to the US always a pleasure and a delight. The conversations are not about problems between the two of us but about the larger region about developments in the world, and just sharing perceptions about the challenges that confront us together. I thank all of you for coming for today's session. I thank you, in particular also those from ASEAN who have turned up here to support me. I am very touched by the strong presence from all the ASEAN Missions.

We meet against the backdrop of a very severe global economic downturn - the likes of which have not seen before in a long time and it complicates all our calculations, it complicates every pre-existing problem that we had. Singapore expects a contraction in our economy of between six to eight percent this year. It could be more, depending on how the last two quarter eventuates. We have dug into our reserves which in Singapore requires us to get the approval of our President and his advisors. It is the second key system that we have and we have told the people of Singapore that we may continue to do so next year. We do not know how long this downturn will last. We do not think anyone knows. All governments are flying partially blind but it is important that we prepare our people psychologically for a longer period than to raise hope that this would be over and life will return to normal quickly. In fact, looking at the problems realistically and in historical terms it is not likely that we can go back to the pre-crisis world. When all this is over, it will be a different world - one with a more sharply edged multi-polar contours.

Through the crisis, some countries may react more realistically than others. All are faced with domestic political pressures to ameliorate pain but sometimes, the drugs taken, do more harm than good. When all this is over, we will see countries surging ahead and other sliding behind and the league table will look quite different when all this is over. I believe that Asia will on the whole, move ahead when the crisis is over because it is still growing. China is determined to achieve eight percent growth this year and is making Herculean efforts to achieve this target. It will probably succeed because it has enormous infrastructural and social needs - it has got the means to finance those needs. In fact, I have been told that they have many plans which they held in abeyance in the past because the economy was already overheating. But now the economy has slowed down, all these plans have been taken down from the shelves for implementation.

In China, the big story and really it is the biggest story on earth is its urbanisation - urbanisation on a scale and speed never seen before in human history. Under Mao Zedong, China was twenty percent urban, forty percent rural. Today, it is close to forty percent urban, and in twenty to thirty years time it might become like Taiwan, Korea or Japan which means eighty to ninety percent urban. To achieve this density of urbanisation, they have got to make choices. They know that they cannot sprawl like you have in the US because they do not have the land. In China the arable land is less than twenty percent and they are very careful now not to allow too many golf courses or too many suburbs being built. So they are going for big cities densely developed which are energy efficient. They are thinking in terms of ten to fifteen super cities each with a population of forty to fifty million people - really the size of a major country. Not growing haphazardly like Lagos or San Paolo but cities planned with infrastructure to accommodate such huge populations. Of course they cannot just create this cities ab initio (inaudible) but if you observe the way they are planning their growth - the way they are developing new areas - the way that they are developing their intra-city rail, ring roads, airports - entire suburbs for university campuses which can accommodate easily twenty to thirty universities with high tech parks and incubators and so on. They are embarking on urban projects which will define the 21th century and much of the monies that they are pumping into the economy are now going into accelerating these programmes. These cities in turn will be connected by high speed rail. What you see in Japan but on a continental scale. Even though they already have a highway network greater in length than the US, they know that they can never own cars the way you do in this country. I mean, the world cannot take it. Climatically the world will boil if all of them were to drive cars like the Americans.

If you look at India, India of course is a very different society from China it is a rambunctious democracy. It is messy. It is chaotic. But those of us who visit India regularly can sense a certain organic vitality in the way that country is recreating itself. It would be a very different pattern of development from China. It will continue to be divided by ethnicity, by caste, by religion and in some ways, it will look more like Europe than America in the longer term. But it will still grow and even this year, I think easily five to six percent. A few months ago, I was in the State of Bihar on a project to revive an ancient university, Nalanda. It was a university which flourished for centuries in the 1st millennium and was finally destroyed by Afghan invaders in the 12th century just before Oxford and Cambridge were established. But in its heyday, it had over 10,000 students drawn from China, Japan, Korea, Southeast Asia, Central Asia, all over the region. Records of which have been kept in China, and which - when the British were in India - the engineers referred to in order to understand the ruins which they discovered in the Indo-Gangetic plains. So we have in Southeast Asia and ASEAN, on one side China and on the other side India, both re-emerging as major powers in the global stage. It has always been in the past that when they were in ascendant [and] when they prospered, the prosperity spread to us in Southeast Asia. We are called in different languages, the peninsulas and islands beneath the trade winds. The trade winds carried trade - the China trade. It was in one of those periods, when the British were in India, that Singapore was established as a daughter city of Calcutta to service that China trade. And in the 19th century, the biggest trading partner of British India was, guess what, China, as it is again today.

Unfortunately, ASEAN today looks a little patchy. The last Summit, which was held in Pattaya, was disrupted in a manner which caused us in ASEAN great humiliation. I could understand how distraught the Thai Prime Minister and his Ministers were and how painful it was that we who were the guests, had to be informed that Saturday at lunch time, that the Thai government could no longer ensure our security and that we should evacuate quickly. Leaders by helicopter, Ministers by sea. We do not know really what happened, because for reasons not entirely clear to us, police and the army which were there in force, put up no resistance to the Red Shirts when they broke through the barricades, occupied the conference centre, and rampaged around looking for the Prime Minister and Foreign Minister. They have done great harm to us, to ASEAN [and] of course to Thailand as well. Even now as we are thinking of reconvening the meeting, security looms large. I noticed just a few days ago, the Thai Foreign Ministry [was] putting it up that China, Japan and Korea have all expressed security concerns about the reconvening of that meeting. But we will see. Whatever happens, it is critical that we do not allow the ASEAN project to be derailed. It may have slowed down, that is all right because we can pick up speed again, but we should never allow it to be derailed. And ASEAN is important for not only us in ASEAN. In a curious way, ASEAN's greatest strength is its weakness. We occupy a critical point in architecture not because we are big, hard or powerful, but because we occupy a space which allows the larger pieces to hold each other in balance. Like in a vault - a space which has to be kept open in order that the other pieces balance off one another. It is for this reason that the Americans, the Japanese, the Chinese, the Indians, the Europeans and the Australians want to see us do well, because if we do not do well, the structure crumbles and they inherit the mess, which they would rather not have. You take, say, the unending story of Myanmar. In my meetings here in Washington, it is a subject which crops up again and again - what is going to happen in that country. After the demonstrations by monks who were brutally cracked down a couple of years ago, some people said, "Why should we keep Myanmar in ASEAN?" But let us think about it - let us push the argument. If Myanmar was not in ASEAN, Myanmar becomes a buffer state between China and India, and it is a buffer state between China and India. Both China and India have both defensive and offensive interests in Myanmar. Sooner or later, their rivalry must divide that country because each will seek friends internally, and when that happens, you the Americans and we in Southeast Asia, others, will all say, "Look at what is happening, what about our interests?" In other words, a Myanmar not in ASEAN will be another failure in architecture which will lead to further troubles. So in a curious way, China and India are all quite happy for Myanmar to be in ASEAN. Then it is less of a problem for them and they can take a more detached approach. Because China keeps its borders open, the Western sanctions have not worked. And because the Indians view with some concern China's growing influence in Myanmar, so they too kept their borders open and set aside other concerns about human rights and so on. That is the reality of the situation. It is precisely because of the re-emergence of China and India that there is in ASEAN, a certain collective instinct that whatever problems we face, we had better bunch together. So whether it is Thaksin or Ahbisit or whoever it is in charge of Thailand, when it comes to ASEAN, they are completely supportive and so too in all the other countries. When we embarked upon the exercise of writing a Charter for ASEAN, many of us were rightly sceptical that we could succeed because it seemed so difficult and there were so many problems. Somehow, every time an issue cropped up and was put before the Ministers - put before leaders, decisions were taken. And so the Charter was signed by the leaders, ratified without too much difficulty by all the countries and we are now about the implementation. Persisting in doing this is very important.

An ASEAN which is reasonably integrated and united is critical to the construction of a larger architecture of peace in Asia. After the last Asian financial crisis, ASEAN+3 was created. That is ASEAN plus China, Japan and Korea. In the face of this crisis, [there is] an agreement now to increase the currency swap arrangement under the Chiang Mai Initiative. We have concentric circles. We have the EAS which brings ASEAN and its immediate neighbours together - China, India and Australia. Reaching further afield, APEC, which is really the "premiere organisation" bringing the Pacific together, and then other outreach efforts to bring in Europe, the Gulf and Latin America. And because it [ASEAN] is a soft centre and completely unthreatening, so everyone feels relaxed about it, "Oh, it is ASEAN, it is okay". And we say, "ASEAN centrality you know, we are in the driver's seat". Sometimes, they humour us by saying, yes you are in the driver's seat, you decide what we should do, and you decide the agenda. But really, is it just to humour us? It is better ASEAN in the driver's seat, because ASEAN is not likely to drive the vehicle in dangerous directions, than to have somebody else, a possible rival, in the driver's seat. In a strange almost ironic way, looking down the century, if we can maintain another generation of peace in the Asia-Pacific, the transformation that we are already seeing today will change the entire world.

This year in November, the APEC Economic Leaders' Meeting will be held in Singapore. Now, it will be Obama's first visit to the region as President, great expectations of what he would bring, what he would say, what he would do, because everyone knows that, all said and done, the US is the world's leader. I mean, there may be other major powers in the world, but you are primus inter pares and you will remain so for a long, long time to come. Yes, there are difficulties which you face now because of economic downturn, but no one doubts that you will fix your problems. You can be very brutal in the way you address your problems and allow your companies to be structured and unemployment rates to go up. Yes, you will fight in Congress between Republicans and Democrats, but the capacity of this country, the ability of this country to renew itself, no one doubts. You will be the first to recover and when you do, you will bring the whole world along. Of course we will hope that China, India and others will give us additional filler but look at the numbers, you are a fourteen trillion economy. China with the renminbi strengthening is now a four trillion economy, India is only a trillion. And it is really the US consumer which drives the world. Of course he has got to save more now because he has overspent in the past. Assets have to be re-priced and the financial system has got to be fixed and so on. It may take two years. It may take five years. Whatever. But you will be back and people know that and when they see the emerging landscape in Asia, they want you around because your being around softens proceedings, makes everything a little more comfortable. Most importantly, maintain the multilateral system which is like an internet, anybody can plug in, add to it and draw from it. It is a new configuration in the world.

In the past, you are an empire, you receive tribute, you give trading privileges. These are half-spoke bilateral relationships. Trade as a component of managing foreign relations. But this idea that to be all on the Internet, TCPIP, you accept the protocol you are in. So in the global system these are the rules of accounting to capital markets - the WTO, you conform, you are in, you are part of it. We know that moving the WTO forward is not easy. I was involved from Seattle, Seattle was an aborted step. In Doha, two months after September-11, we were able to launch [the Doha round] because the mood was a united one, but then we failed in Cancun and we failed again subsequently. And now we do not know how long more it will take to conclude Doha. It is important to persist because it is the most important overarching system of rules that we have in place keeping globalisation a growing concern. But, it is a system which does not run on its own. It requires leadership, and the US, as the world's biggest trading nation, has no choice but to provide the leadership. If the US gives up that leadership then we are all in trouble. I had a good discussion with Ambassador Ron Kirk this morning at the USTR and I told him how important it is that the Pacific be the arrowhead of the global trading system.

The APEC economies, just 21 economies, making up half the global GDP, about half of global trade, [it is] just 21 economies under the WTO, which is 150-160 member countries. If you look at just the pattern of merchandise flow, the six busiest ports in the world today are all in East Asia - Singapore, Hong Kong, Shanghai, Shenzhen, Pusan, Kaohsiung - after that comes Rotterdam and the others. After some distance come the others. So this region, the Asia-Pacific, is going to drive the global economy this century. And keeping that global system healthy and vital is critical to that future. And APEC will, must, play a leading role in this. For this reason, the Trans-Pacific [Strategic Economic] Partnership, which many of you are familiar with, is a very interesting ball now being played. It started with a relatively small plurilateral free trade agreement among Singapore, Brunei, New Zealand [and] Chile. We are all open economies so we are able to have an agreement with high standards. We knew that others would have difficulties joining us today, but eventually they will come along. Then last year, the US, Australia, Peru signalled they were interested, so they have come onboard. Negotiations have yet to begin because the new Administration has taken over in Washington. Interestingly, the Vietnamese have formally informed us that they are interested. All the others in the Pacific are studying it. Japan I am sure -China is watching it very closely and all the others. If we can establish, grow this Trans-Pacific [Strategic Economic] Partnership, and have it address not just 20th century issues, but 21st century issues - intellectual property, covering entertainment, IT, bio-medicine, financial, legal services and computers - the "weightless economy" that will set patterns and trends, bring the rest of the world along. You can be sure that the Brazilians, the Indians, the Europeans will take careful note. So we have in front of us enormous challenges but also great possibilities and under a new Obama Administration. Coming to Washington after a few months, I can sense that it is a different atmosphere. We do not quite know what will happen but there is a feeling that yes, things once considered not possible have become possible. And this is a time to address old problems with fresh minds. Thank you.

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Streaming video of Minister George Yeo's address at the ASEAN-US Business Council Luncheon on 28 April 2009