MFA Press Statement: Visit by Minister for Foreign Affairs and Minister for Law K Shanmugam to the United States of America: Meetings with US Secretary of Commerce Penny Pritzker, US Senators, and Address to the American Jewish Committee Global Forum World Leaders Plenary, 13 May 2014

Meeting between US Secretary of Commerce Penny Pritzker with Minister K Shanmugam and Senior Minister of State, Ministry of Trade and Industry & Ministry of National Development Lee Yi Shyan, 13 May 2014 [Photo: MFA]
 

Minister K Shamugam delivering keynote address at the Amercian-Jewish Committee Global Forum, 13 May 2014 [Photo: MFA]
 

    Minister for Foreign Affairs and Minister for Law K Shanmugam, accompanied by Senior Minister of State, Ministry of Trade and Industry & Ministry of National Development Lee Yi Shyan, met with US Secretary of Commerce Penny Pritzker on 13 May 2014.  Both sides welcomed the robust and expanding bilateral trade and investment ties facilitated by the US-Singapore Free Trade Agreement, which celebrates its tenth anniversary this year.  Both sides also expressed support for the expeditious conclusion of the Trans-Pacific Partnership (TPP) as an integral component of the US’ economic engagement to the Asia-Pacific.

   Minister Shanmugam also had meetings with Chairman of the Senate Foreign Relations Committee Senator Bob Menendez (D-New Jersey), and Chairman of the Senate Foreign Relations Subcommittee on European Affairs and member of the Subcommittee on East Asian and Pacific Affairs Senator Chris Murphy (D-Connecticut).  During the meetings, Minister Shanmugam expressed support for the Senate Foreign Relations Committee Majority Staff Report “Re-balancing the Rebalance: Resourcing US Diplomatic Strategy in the Asia-Pacific” which underscored the importance of US engagement and sustained presence in the Asia-Pacific, and made recommendations to improve and properly resource the non-military aspects of the rebalancing policy towards Asia.  The Senators also welcomed the strong Singapore-US bilateral relations, underlined the importance of the Trade Promotion Authority and a successful conclusion of the TPP, and discussed with Minister Shanmugam regional and international developments.

   In addition to the official meetings, Minister Shanmugam had a discussion with participants of the Foreign Policy Roundtable where there was a wide-ranging discussion on the future of the Trans-Pacific agenda including the international and regional geo-political developments.  In the evening, Minister Shanmugam delivered a keynote address to the American Jewish Committee Global Forum World Leaders Plenary.  In his speech, Minister Shanmugam underscored Singapore’s close ties and friendship with the US and Israel, and spoke on US-China relations, East Asia and the Middle East. A copy of Minister Shanmugam’s speech is enclosed.

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MINISTRY OF FOREIGN AFFAIRS

SINGAPORE

14 May 2014

SPEECH BY MINISTER FOR FOREIGN AFFAIRS AND MINISTER FOR LAW K SHANMUGAM

AT THE AMERICAN JEWISH COMMITTEE GLOBAL FORUM:

EAST ASIAN GEOPOLITICS ON 13 MAY 2014

Mr Stanley Bergman, President of the American Jewish Committee;

Mr David Harris, American Jewish Committee Executive Director;

Distinguished Guests, Ladies and Gentlemen;

1                 I am deeply honoured to be invited to address the AJC Global Forum 2014.  Today, I will touch on (i) the background of Singapore’s relationship with Israel; (ii) the US’ role in our part of the world; and (iii) developments in East Asia.

Singapore-Israel Relations

2                 Singapore became unexpectedly independent in 1965.  We were a small island with a land area of about 580km², population of under 2 million and GDP of about US$500 per person.  We had set about building a better life for our people, and to defend ourselves as we did not believe that anyone else would come to our aid.  We needed help to build up our armed forces, but no one was willing to help us, because I do not think anyone expected us to survive. We had no natural resources; given our small size, we did not have our own water and we depended on Malaysia for water.  With Indonesia, we had low-intensity conflict called ‘Konfrontasi’ and with Malaysia, we had an uncertain relationship. 

3                 One country that came to our assistance was Israel. Our concept of defence was modelled after Israel’s.  It was a small standing army, since a small population cannot afford a large standing army.  Every able-bodied male goes through National Service.  A substantial and well-trained reservist force is the backbone of our defence.  Israeli instructors trained our officers, non-commissioned officers and soldiers.  They helped us build up a core of professionalism in the army and training doctrines.  We had to call them Mexicans because of regional sensitivities.

4                 We started from scratch.  We were previously a city within a larger country, with no real army.  With Israel having made a decisive contribution to our well-being in the early years, the Singapore Armed Forces (SAF) is now recognised as amongst the most professional, effective and technologically advanced in the region.  The SAF now has excellent equipment, technology and a highly effective airforce.  That has helped provide Singapore with stability, which in turn helped us prosper and become one of the largest economies in ASEAN.

5                 Singapore’s relationship with Israel is now a mutually beneficial and good relationship.  We understand, and appreciate the effort Israel has put in.  We do not forget those who stood by us.  We value our friends.  In international fora, we have a strong record of supporting Israel’s position.  We do not always agree, and when we do not, we explain why.  Not everyone is always happy about the relationship though.  In 1986, when then-Israeli President Chaim Herzog made a State Visit to Singapore, there was a storm of protests in the region.  But we stood firm and the visit went ahead.  We have since continued to have a regular exchange of high-level visits both ways.  Just a few months ago, Israeli Defence Minister Moshe Ya’alon visited Singapore for our biennial airshow.

6                 Let me now say a little about our Jewish Community in Singapore.

Long relationship with the Jewish Community

7                 After Stamford Raffles founded modern Singapore in 1819, Jewish traders, mostly of Baghdadi origin, were among the first to settle in Singapore.  Our first synagogue in Singapore, the Maghain Aboth Synagogue, dates from 1841.  It is the oldest working synagogue in Southeast Asia.  I was there just three weeks ago.  They were very proud of their 29 Torah scrolls, the oldest of which came 150 years ago from Baghdad.

8                 The Jewish community in Singapore is not large, but it occupies an honourable and valued place in our society.  When we attained limited self-government in 1955, our first Chief Minister was David Marshall, a Jew of Baghdadi origin.  He was one of Singapore’s most distinguished lawyers, and later served for 14 years as our Ambassador to France.  Today, there are about 3,000 Jews from all over the world living and working in Singapore.  We have three synagogues, and the Jewish community find Singapore a peaceful and great place where they are welcome, which is not always the experience in the region. 

9                 The earliest description of Jewish community in Singapore was from an Englishman named John Thomson, who was a surveyor for the East India Company in Singapore from 1841 to 1853.  In his memoirs, Thomson described a dinner he had with the patriarch of the Jewish community, Abraham Solomon (1798-1884), an Orthodox Jew.  This was what he had to say: “Subjects of nations at war are friendly here. They are bound hand and foot by the absorbing interests of commerce. The pork-hating Jew of Persia embraces the pork-loving Chinese. The cow-adoring Hindu hugs the cow-slaying Arab. Even the Englishman, proud yet jolly, finds it in his interest to unbend and associate with the sons of Shem, whether it be in commerce, in sports or at the banquet.” Note the phrase “even the Englishman”. . In the 19^th century, it would have been a stretch in either England or Baghdad for an Englishman and an orthodox Jew to sit down to dinner together.  However, in Singapore, traditional barriers dissolved, and that approach continues.

10               With that as backdrop, let me now turn to the main theme of my comments, which is on the geopolitics of East Asia and what the possible implications for the rest of the world are.  Let me start with the US’ role in East Asia. 

US’ Role in East Asia

11               The US played the most important role in post-World War II East Asia.  It provided and guaranteed stability, allowing the phenomenal growth of economies like Japan, Taiwan, the Republic of Korea, Singapore, Thailand, Malaysia and Indonesia.  The US generously opened its markets to the region, while the 7^th Fleet kept the sea lanes safe.  It was a mutually beneficial relationship between the US and East Asia.  East Asia provided developing markets for the US, and this in turn helped the US cement its influence and soft power in the region.  This has brought significant benefits to the US, particularly US companies.

12               Today, as the superpower, the US has interests all around the world.  One vital area is East Asia, where we have the world’s second (China) and third (Japan) largest economies; plus India; ASEAN, which is the 7^th largest economy; and the Republic of Korea.  These are all vibrant economies with strong growth.  Hence, the US’ trade is also growing at a very fast rate with East Asia, faster in fact than with any other part of the world.  In 2012, the amount of US foreign direct investments into the Asia-Pacific stood at US$622 billion, a 35% increase since the beginning of the Obama Administration.  ASEAN-US trade amounted to US$200.2 billion in 2012.  ASEAN was the US’ 4th largest export market in 2012, and a third of all exports dependent jobs in the US depend on exports to Asia. In 2012, US exports of nearly US$80 billion to ASEAN alone created or supported over 560,000 jobs in the US. 

13               It is clear that East Asia is fundamental to US prosperity, and vice versa.  An economically vibrant US is vital to our prosperity as well.  The World Bank has estimated that this year, East Asia will contribute to 40% of global growth.  The National Intelligence Council estimates that by about 2030, East Asia will surpass Europe and North America in terms of GDP, population and even technological innovation. In this context, US engagement in East Asia and the Trans-Pacific Partnership (TPP) will be game changers.  TPP would connect a dozen economies across the Asia-Pacific in an economic bloc covering 40% of global GDP.  Specifically for the US, the TPP alone will create nearly 700,000 new jobs in the US by 2025 according to the US Chamber of Commerce.

14               It is therefore a no brainer that it is in the US’ core interests to tap into East Asian growth and be part of the unfolding East Asian story.  If the US does not have the TPP, it will be a big loss to the US.  Meanwhile, other trading arrangements are coming into play, like the Regional Comprehensive Economic Partnership (RCEP) and the Asia-Pacific-wide FTA (FTAAP). The importance of the TPP to the US is recognised by a broad cross-section of thinkers and business people here. 

15               Now let me touch on developments in East Asia which will impact on the US and the World.

Developments in East Asia

16               Just as all roads once led to Rome, all discussions on Asia now inevitably lead to, and start with a discussion on China.  As the world’s second largest economy, China is an economic competitor as well as a strategic competitor for influence in East Asia. 

17               Some things are likely to happen.  Fairly soon, China will overtake the US as the largest economy, in absolute terms.  The various statements that we see about China’s economy being unsustainable and that it will implode and so on are, in my view, based more on wishful thinking on the part of commentators rather than reality.  Nevertheless, China does face enormous challenges, and I will touch on that later.

18               But the Chinese leadership, at all levels, is made up of the best and most competent officials who have risen to the top in a fiercely competitive environment.[1]  They were chosen for their ability to get things done, rather than deliver good sound-bytes on television and make populist promises.  They are also extremely determined to see China succeed.  They are not in denial about the issues which China faces and that is already half the battle. They have the ability to conceptualise and execute plans over a ten to twenty years timeframe, without too much distraction in the way of partisan politics, which is significant at the current stage of development.

19               The key question is how a rising China and the presently dominant US will structure their relationship.  It is really a growing power versus resident power analysis, and scholars who have studied this have said that it inevitably led to war.  But that is not the scenario which most sensible people consider as the most likely in the US-China context.  The general assumption is that neither wants war and both will seek to avoid open conflict. China has benefitted from the current international order, but it will seek to re-shape the norms and rules, at least in the region.  This is because China believes that the norms and rules were created by Western powers, at a time when China was weak.  How China seeks to change these norms, and the extent to which it is prepared to accept them as they are will determine the shape of relationships in the region. 

20               It is useful to think a little about the internal dynamics within China as well because that will impact on how China interacts with the rest of the world. At the Third Plenum held in November 2013, the Chinese leadership recognised the need for serious structural reforms.  The Chinese leadership under President Xi Jinping is determined to do this.  That will require, amongst many other things, more market-based policies, dealing with very powerful State-owned Enterprises, and managing powerful vested interests.  It will not be easy, because it means reforming the very structures which are all essential parts of the system.  I do not have time to go into details on this now, but previous repeated attempts to reform even on a modest scale have failed.   

21               What President Xi is seeking to do is not at all modest; it is in fact quite revolutionary.  Since he took office in March 2013, President Xi has consolidated his position and his control over the military, economic, and Party structures.  Probably the most powerful Chinese leader since Deng Xiaoping, Xi has placed himself in a strong position to carry out the reforms that he believes China needs. However, the challenges that he faces remain enormous.  China has 500 million people on the internet and several hundred thousand students studying in overseas universities every year.[2] China is also experiencing a large growth of urban centres, with 60% of China’s population going to live in urban centres very soon.  They had tremendous success, but not enough credit has been given to them for what they achieved between 1980 and 2010 when they lifted with their own bootstraps 300 million people out of poverty.  No country has ever achieved that.  That was done in the context of absolute central power and ability to execute that power. They are seeking to do another revolution now, in the next twenty years, but in a very different context where people are on the internet, where power is not so absolute anymore and where every decision is subject to challenge internally. 

22               Given this situation, it will be difficult for President Xi and his administration to exercise absolute centralised control.  In addition to reform, China faces other significant challenges. There is a large wealth gap, with a significant urban-rural divide, and coastal-interior divide. China has to carry out these reforms without a framework of the Rule of Law as we understand it.  They recognise this as well.  It will not be easy, but on the whole, looking at how they are going about it, looking at the competence of the leadership and determination, and how they want to succeed, I am cautiously optimistic that China will overcome the enormous challenges and will be transformed.  Given this context, let me now turn to the US-China relationship.

US-China Relations

23               First and foremost, given China’s priorities, one can imagine that China really does not desire external conflict. China will also seek stable relations with the US, as it is aware that the only power that could check China’s growth or alter China’s trajectory, remains the US.  Now, please do not get me wrong. China will seek to advance its interests externally in every way – but Beijing is not actively looking for trouble with the US.  China continues to need US investments, trade, technology and management expertise from the US.  It has been noted often that China holds large amounts of US Treasury bonds. Likewise, Washington sees stable relations with an economically dynamic China as in its interests, and necessary to the continued health of the US economy. A new US-China relationship will be the foundation of any new East Asian architecture.  All other relationships quite frankly will be secondary.  China has said that the Asia-Pacific is big enough for both the US and China and has spoken about “a new model of great power relations”.  The US has echoed this, but while Washington and Beijing may use similar terms and words, it is not clear that they mean the same thing.

24               Tensions and spats in the East and South China Seas are an illustration of how these dynamics work.  China claims cover 90% of the SCS, although the precise, legal basis for these claims is unclear.  A senior Chinese scholar recently wrote that the basis of the claims will not be clarified.[3] Time does not permit to go into his explanation in detail, but suffice to say that this shows: first, a tacit acknowledgement that China has not spelt out the legal basis for its claims; and second, that the validity and moral strength of China’s claims do not depend on legal technicalities, at least on the part of this scholar, who, by the way, happens to be the President of the National Institute for South China Sea Studies. 

25               A Chinese leader today cannot be seen to be giving up on China’s claims. He will be seen as weak and Chinese public opinion will be most unforgiving.  Likewise, other countries who feel that their claims intersect with China’s claims, cannot be seen to be passive either. This is a dynamic that increases risks and tensions.  Furthermore, this dynamic arises regardless of the legal merits of the respective claims.  I note that the US is trying to urge all claimants not to resort to aggression and has called for a reduction of tensions.  To some extent, this reflects the new reality. The US now needs the co-operation of others and asks for it. As opposed to the post World War II situation, when the US could impose its will.

26               China frequently accuses the US of meddling in its affairs.  From China’s perspective, East Asia should be within China’s sphere of influence. This has shades of the 19th Century Monroe Doctrine.  I say “shades” because you can point to obvious differences between the two situations, but the reality is that Big Powers behave in this way.

China-Japan Relations

27               Next to US-China relations, the relationship between China and Japan is critical to the East Asian architecture.  Sino-Japan relations are infused with the emotions generated by the bloody and tangled history of Northeast Asia in the years leading up to and during World War II.  But the essential issue in Sino-Japan relations has far deeper roots. Both China and Japan have hierarchical world views.  Seldom, if ever, in the last two thousand years of the recorded history of their relationship have they ever interacted on equal terms.  Both countries still seem uncomfortable with doing so., It is this relationship, more than any other in East Asia, that a ‘new model of great power relations’ is urgently required.  Although at present, the prospect of such a model arising seems remote.

28               China and Japan need each other, as Prime Minister Shinzo Abe recently acknowledged. Japan needs China’s market; while China needs Japanese investments.  A ‘new model’ of Sino-Japan relations requires China to recognize that contemporary Japan is not and can never return to the Japan of the Taisho and Showa eras before World War II.  It also requires Japan to come to terms with its own history.  Prime Minister Abe’s December 2013 visit to the Yasukuni Shrine, where the souls of war criminals are enshrined, have complicated the management of tensions over disputes over the islands the Japanese call Senkaku and the Chinese call Diaoyu.  It may not be the two Governments’ motive, but for both sides, keeping the dispute simmering may have domestic upsides. Ironically, for rather similar reasons. For Japan, Prime Minister Abe is seeking to consolidate domestic support for his ‘third arrow’ of difficult structural reforms.  For President Xi, he is similarly seeking a platform for the next stage of China’s key reforms.

29               The danger is of conflict by accident or miscalculation. Regionally, the visit to the Yasukuni shrine by Prime Minister Abe, despite Vice-President Joe Biden’s caution, must have strained the bilateral relationship, and could not have been helpful for strengthening the US-Japan Alliance. The US-Japan Alliance is the cornerstone of the current East Asian system.  It is in the interests of the entire region that the Alliance endures. The troublesome scenario is this: if the Alliance is weakened, Japan may well eventually have to reconsider its steadfast disavowal of nuclear capabilities.

30               Then-US President Richard Nixon and Secretary of State Henry Kissinger recognised this and had made this point to Chinese Premier Zhou En Lai. Their point was that, should the US get out of Japan, Japan could go nuclear, and that "paradoxically, the presence of US troops on Japan helped to restrain the Japanese rather than the reverse”.  Thus, in an ironic way, it is in China’s, as well as everyone else’s interests that Japan feels secure about the US-Japan Alliance. Remember that this is a country with rocket technology and nuclear capabilities and the ability to miniaturise.  A nervous, nuclear-capable, and technologically advanced Japan, facing a nuclear-armed China, is not the best scenario for the US or for regional stability. How to avoid this situation will require wisdom and cool-headedness in Washington, Beijing and Tokyo.

ASEAN

31               Let me now turn to ASEAN.  ASEAN has prospered, and has been a source of prosperity, while maintaining good relationship with all major powers.  However, the rise of China has required ASEAN to rethink existing paradigms.  China probably plays the most important role for ASEAN in terms of investments, trade flows and economic relationships.  The rise of China benefits ASEAN tremendously.  At the same time, China and four ASEAN Member States have conflicting maritime claims.  These conflicting claims have led to incidents which have clouded the picture on how the relationship is perceived.  A case in point is the series of recent incidents between China and Vietnam, resulting in the ASEAN Foreign Ministers issuing a statement.  Such incidents and conflicts are not in the interests of China nor ASEAN.  , The disputes should be set aside for the time being while a constructive engagement takes place.  ASEAN has to consider how to deal with both China and the US – while mindful that both powers do not always have common interests, and both may view their relationship at a different level.

32               Despite these issues, ASEAN offers tremendous opportunities.  By 2015, ASEAN integration will be more complete, when ASEAN establishes its Economic Community.  With growth rates of over 5%, a young and skilled population of 650 million, rising incomes and a growing middle class, we will require more energy, food, other goods and services.   Almost US$100billion worth of goods and services exports go to ASEAN, and more than 560,000 American jobs are directly or indirectly supported by these.  Singapore is well-positioned to be the hub or New York of ASEAN.  With our well-educated population, rule of law, and as a centre of financial and legal services, we are able to service the region.  The opportunities are tremendous. 

Questions

33               In summary, I will leave you with some questions, the answers to which will define the Pacific Century, America’s role in it, your well-being, as well as ours:

First, how will a fast-rising China interact with the US, particularly in East Asia?

Second, how will a fast-rising China deal with the existing order, norms and laws?  Will it seek to change them?  And if it did, how will it seek to change them?

Third, how engaged will the US be in East Asia?  The answer to that will define a lot of the answers to the other questions.  Every thinking American has got to be thinking about this.  How important is East Asia to you, to your security and prosperity?  With your long coast on the Pacific and with your trade and economy tied up to East Asia, can you afford to be out of it, or should you be part of it?  How will the Sino-Japan relationship evolve, and how will the US-Japan Alliance evolve?

Fourth, how will the US, China and Japan structure their relationship vis-à-vis ASEAN and other East Asian countries?

Conclusion

34               These are questions to which there are yet no clear answers.  But it is not too early to try and discern the trends and ask the questions.

35               Ancient Chinese are said to have cursed their enemies by wishing them interesting times. My friends, all of us are living in interesting times, which I think will get even more interesting.

36               Thank you.  And once again we thank the US for the friendship and support it has given to Singapore and we thank Israel for the great partnership.

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[1] (on Chinese Princelings): “The leadership is extremely competent, and generally follows a meritocratic process. People have commented on “Princelings” within the system. While princelings are a fact, in general the point about meritocracy still holds, particularly for the top political leadership - even the princelings will have to be good to rise to the top.”

[2] (on Lampton): “I do not quite agree with everything Lampton says, but he offers several interesting insights and I have used some of them in this and paragraphs above.”

[3] President of the National Institute for South China Sea Studies, Wu Shicun, “南海九段线法律地位不容否定”,环球时报, 14 February 2014.