Speech by Minister for Foreign Affairs to Los Angeles World Affairs Council and the Asia Society Southern California Center

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ASEAN AT THIRTY : ACCOMPLISHMENTS AND CHALLENGES

1 I am greatly honoured to address the Los Angeles World Affairs Council and the Asia Society Southern California Center.

2 In recent months, Asia and especially Southeast Asia have been very much in the news. Media attention has focused on the political strife in Cambodia, the forest fires in Indonesia and the ensuing haze or smog affecting neighbouring countries and, of course, the currency crisis that has affected several countries. The impression is that all is not well in Southeast Asia.

3 It is true that some Southeast Asian countries are now going through a difficult period. To view these developments in context, we must note that this is not the first time that the region is facing difficult problems. Neither is this the first time that there has been an air of pessimism. When the Association of Southeast Asian Nations (ASEAN) was formed in 1967 amidst an environment of conflict and turmoil, there was also much gloom and pessimism. Few thought that ASEAN would take-off as a regional organisation. Then, in 1969, Mr Owen Harris, who is the current Editor of the National Interest, said that "an honest appraisal of conditions in Southeast Asia can lead only to considerable scepticism...The states of this region are characterised by neither stability nor effectiveness."

4 But today, after thirty years, ASEAN is regarded as one of the most successful regional organisations in the developing world. ASEAN's overall trade grew from a mere US$10 billion in 1967 to over US $620 billion in 1995. In the last six years, the ASEAN economies grew at an average rate of 7% per year, outperforming the world average growth rate of 1.6%. This has led to rising standards of living and levels of literacy. Intra-ASEAN trade has also been rising. In 1995, trade among the ASEAN countries was US$122 billion, around 20% of ASEAN's total trade. ASEAN is thus not only a viable and cohesive regional organisation, it has brought peace and prosperity to 500 million people in Southeast Asia. But not many understand how ASEAN works and why it has worked successfully. Why did ASEAN succeed where so many other regional organisations failed? What accounts for ASEAN's success as a regional organisation?

Four Key Factors for ASEAN's Success : Each Factor is Under Challenge

5 In my view, there are four key factors that explain ASEAN's success:

. The first is a stable regional security environment that has allowed ASEAN to grow and prosper.

. The second is that ASEAN leaders focused their energies on economic growth and development.

. Third, ASEAN was creative in engaging and networking with the major powers who have traditionally played an important role in Southeast Asia.

. The fourth factor is ASEAN's role in creating a sense of community and a habit of cooperation.

6 As I elaborate on these factors, it will be evident that that the very same factors that have accounted for ASEAN's success in the last thirty years are also the source of its future challenges. Within these factors lie the seeds of potential problems that must be managed if ASEAN is to remain viable. It will also be abundantly clear that a benign external environment underpinned by American leadership and security presence in the region has been a common denominator in these factors.

I A STABLE REGIONAL SECURITY ENVIRONMENT

7 The first and foremost factor that accounted for ASEAN's success is a secure and stable regional environment. Since its founding in 1967, there has been no armed conflict or confrontation between any ASEAN members. Indeed, one of ASEAN's most important achievements is that it changed Southeast Asia from a region of conflict and poverty to a region of peace and prosperity.

8 This is a remarkable achievement, considering that Southeast Asia had often been called the Balkans of Asia. ASEAN achieved this by providing a framework for cooperation and consultation. But can ASEAN continue to keep the region stable? This will depend very much on not just developments in Southeast Asia but also on larger strategic developments in the Asia-Pacific region. The security of ASEAN cannot be regarded in isolation from developments in the Asia-Pacific region.

9 Potential Flashpoints : There are potential flashpoints in the Asia-Pacific region. These cannot be taken lightly. Stability on the Korean Peninsula is one example. Whether tensions in the Taiwan Straits will resurface is another issue. Territorial disputes in the South China Sea could be another source of tension. Just two years ago, there was some tension over the Spratlys Islands which are claimed by China and several ASEAN countries.

10 The rise of an economically dominant and politically powerful China is one of the most important strategic challenges facing ASEAN and the Asia-Pacific as a whole. The need to engage and integrate China into the world community is one of the most important tasks facing the major powers and countries in the region. A China that is engaged and integrated as part of the region is crucial for continued peace and economic growth in the region. This is why the role of the United States is critical in the Asia-Pacific.

11 Seminal Role of the US: For nearly half a century, the United States played a seminal role in ensuring peace and security in the Pacific. The US role in Vietnam in the mid-60s was crucial in stabilising Southeast Asia. The United States held the line in Indochina. This gave Southeast Asian countries valuable time to put their houses in order and focus on economic growth. American power projected into the region created the climate of stability that allowed each Southeast Asian country to grow and flourish. It was American capital, American technology and American markets that nurtured the Asian economies. Without America's involvement, the transformation of Southeast Asia and the Asia-Pacific as a whole could not have happened with such speed and scope. But this transformation is not irreversible. The US must remain engaged in the region to protect not only its economic but also its vital strategic interests in Asia.

12 Triangular Relationship: US-China-Japan: In the Asia-Pacific, stability will rest heavily on the shaping of the triangular relationship between the United States, China and Japan. Within this strategic triangle are three key bilateral relationships, namely the US-Japan-China relationship. It is the US-China relationship that will determine peace and stability in the region and determine the political climate of the world. A stable US-China relationship will lay the foundation for stability and growth throughout the region. An acrimonious and unstable US-China relationship will reverberate in the region and cause anxieties.

13 Clinton-Jiang Summit: This is why the Clinton-Jiang summit in Washington was followed with keen interest in the region. A stable US-China relationship will mean continued stability and growth in Asia. It was good to have the Clinton-Jiang meeting two weeks ago. The institutionalisation of visits and exchanges between the leaders and senior officials of the most powerful country in the world, the United States, and a growing power, China, is welcomed by Asian countries as an indispensable step towards a stable relationship. The indications are the visit has broadened the dialogue into new areas of co-operation.

14 ASEAN Regional Forum (ARF) : ASEAN is not a power in itself; it cannot on its own shape the course of developments in the Asia-Pacific region. ASEAN needs to work with its larger partners to maintain a peaceful regional security environment. ASEAN had therefore taken the initiative to engage the major players. The creation of the ASEAN Regional Forum (ARF) in 1994 was one such example. The ARF was a response to deal with an uncertain security situation in the post-Cold War era by creating a setting or framework within which confidence building between countries of the region can begin.

15 Today, the ARF has emerged as the only security forum that brings together all the major powers in the region, including the United States, Japan, China and Russia and others. It has provided an important avenue for countries in the region to discuss sensitive political issues. It will remain an important mechanism to build confidence, comfort levels and nurture habits of co-operation among all the powers. In the long run, ARF will move from confidence-building to preventive diplomacy and from preventive diplomacy to conflict resolution. It may evolve and play a role in conflict resolution. We are still in the stage of confidence building. A certain comfort level has been established and ARF is gradually moving toward preventive diplomacy. For instance, at the fourth ARF meeting in Kuala Lumpur in July 1997, it was decided that defense officials will be included in the meeting since the meetings will be talking about security, a positive development.

16 The challenge will be to keep the ARF relevant by continuous adaptations. The ARF success can provide an important underpinning for a stable and secure Southeast Asia. The US role is critical. The US has participated actively in moving forward the ARF process. We welcome this. Singapore has been working with the US on ARF issues such as Search and Rescue. We will continue to work with you to maintain the momentum in the ARF process.

II ECONOMIC GROWTH AND DEVELOPMENT

17 The second factor that has contributed to ASEAN's success is that the leaders of Southeast Asia focused their energies sharply on economic growth and development. There is a variety of political systems in Southeast Asia. But all the ASEAN countries are united by their common emphasis on economic growth and cooperation, not confrontation and conflict. ASEAN leaders realise that ASEAN is not only good for the region but also for the development of their own national economies.

18 Today, however the economic success of the region faces a series of tests with the currency problems looming large over Southeast Asia. This is a major problem that every Southeast Asian country must address head on. I am optimistic that ASEAN will bounce back in (2 to 3 years) if the affected countries take the necessary decisions to get their macro-economic policies in balance. Once the correct policies are in place, investors will return. In the meantime, their weaker currencies will boost exports. The basic conditions for rapid growth have not changed - high savings rates, governments that are pro-growth, emphasis on education and infrastructure building. The crisis will force the affected countries to liberalise and become more market oriented. Indonesia, the largest economy in the region, is already implementing a solution brokered by the IMF. Singapore, together with Japan and the US, have offered assistance to supplement the IMF package. Malaysia, Australia and Brunei have also offered assistance. We believe that a healthy Indonesian economy is good for the region.

19 Notwithstanding the recent currency problems, ASEAN remains a region of high growth when compared to other parts of the world. It represents a market of 500 million with higher than average growth rates and rising per capita incomes. It is already one of the most important trading partners of the US.

20 Many may not know that ASEAN is the 3rd largest market for US exports, after the EU and Japan. From 1990-1996, ASEAN was the second fastest-growing US export market after China. Singapore, although small, is the eighth largest export market for the US. It may surprise you that the US exports more to Singapore than it does to larger countries like France or China. US companies have recognised the tremendous potential of the ASEAN market and are taking advantage of it. As at end 1995, US companies have invested over US$30 billion in ASEAN, more than double the 1990 level. This makes the US one of the most important economic players in the region.

21 ASEAN's attractiveness as a market will be further enhanced when the ASEAN Free Trade Area or AFTA is realised. AFTA, initiated in 1992, is intended to help preserve ASEAN's competitiveness in the new environment. By the year 2003, tariffs within ASEAN would be reduced to 0 - 5% on virtually all products. AFTA is progressing on schedule. The new ASEAN members have been given a different timetable to conform to the common tariffs. In addition to tariff reductions, ASEAN has pushed on regional liberalisation in trade and services in a Framework Agreement, and is now looking towards creating an ASEAN Investment Area (AIA).

III ENGAGING THE EXTERNAL PLAYERS

22 The third factor that accounted for ASEAN's success is its efforts in engaging and networking with the major powers who have traditionally played an important role in Southeast Asia. It did so by a series of innovative forums such as ARF, APEC and ASEM and the ASEAN dialogue processes. ASEAN's dialogue relationships with other countries started in the 1970s and has now expanded to include the US, Russia, China, Japan, the EU, Canada, Australia, New Zealand and others.

23 ASEAN's latest move was to invite other countries to their summit meetings to network and dialogue with the other leaders in the region. Last year, the ASEAN leaders invited the leaders of Cambodia, Myanmar and Laos to their first informal summit. For the forthcoming informal summit in Kuala Lumpur in December, they will meet with the leaders of China, Japan and South Korea. This will be a significant meeting as it is the first time that all the leaders of Southeast Asia will be meeting as a group with their counterparts from Northeast Asia.

24 The other side of the ARF coin is APEC. APEC does in the economic field what the ARF seeks to do in the security field. The leaders of all the 18 APEC economies will meet at a summit in Vancouver soon. APEC is to promote trade liberalisation, open markets and economic cooperation. In the process, it also builds political links between the countries in the Asia-Pacific region. Singapore has worked closely with the US from the outset to promote the trade and investment liberalisation objectives of APEC.

25 APEC is important for ASEAN because it prevents a division of the Pacific Ocean down the middle. It ensures that the United States is engaged in the Pacific, not just economically but in security and in maintaining stability. The Vancouver Summit will deal with some of the regional financial concerns as well. We expect APEC to move the region towards the liberalisation that is envisioned in 2020 for the developing economies and 2010 for developed economies.

26 APEC, ARF and the ASEAN dialogue relationships are part of the network that forms overlapping linkages among countries in the Asia-Pacific. They also enable ASEAN to institutionalise its links with its key economic and political partners. At the same time, they enable ASEAN's major dialogue partners to maintain their ties with one of the most dynamic group of countries. These relationships facilitate trade and investment links between the major powers and Southeast Asia. It is in ASEAN's interest to continue to expand these dialogues in order to remain connected to the larger Asia-Pacific region and the world.

27 Singapore believed that it was not enough for ASEAN to just concentrate on the Asia-Pacific region. Europe's involvement in Southeast Asia and the Asia-Pacific was also important. That is why Singapore proposed the concept of a Asia-Europe Meeting or ASEM, a summit meeting of leaders between Asia and the EU. A link was missing between the three major centres of economic growth in the world, North America, Europe, and the Asia-Pacific. While there was dialogue at the highest level between America and Europe, and between America and the Asia-Pacific, the link between Europe and the Asia-Pacific was weak. This has now been established by ASEM. The first ASEM was held in Bangkok in 1996 and the next ASEM would be held in the UK next year. It is our hope that ASEM will not only fill the gap but will bring closer all the three regions.

28 ASEAN's endeavours to engage other players faces some problems. Some of ASEAN's dialogue partners question the wisdom of the admission of Myanmar into ASEAN. This has presented some problems in the ASEAN dialogue relationship with some Western countries. For example, the ASEAN-EU Joint Cooperation Committee (JCC) meeting scheduled to be held in Bangkok this week had to be postponed over differences on the participation of Myanmar. In ASEAN's view, it is important to engage Myanmar constructively, not isolate it through economic and political sanctions. With exchanges and interaction, Myanmar will change as it opens up to the region and the world. Isolation did not change Myanmar in the past. Engagement will, given time. I do not believe this issue need derail the long-standing dialogue relations ASEAN has built over the years with the United States and Europe.

IV ASEAN : A SENSE OF COMMUNITY

29 The fourth factor that accounts for ASEAN's success is its role in building a unique sense of community among the countries of Southeast Asia. ASEAN has created and entrenched a habit or a culture of cooperation and consensus-building, or musyawarah, among leaders of Southeast Asia. It is this spirit of consensus and cooperation that has enabled ASEAN leaders to resolve their differences. Even when relations among some members have been at a low ebb, they put their differences on the backburner and have not allowed these to impede ASEAN cooperation. For example, some of us who have disputes on territorial claims have agreed to refer them to the International Court of Justice. ASEAN leaders have also agreed to meet annually in order to maintain the close contact and consultation that has been built over the years. Indeed, next month, the nine leaders of ASEAN will hold an informal summit meeting in Kuala Lumpur. This is in addition to the formal summit that is held once every three years.

30 The challenge for ASEAN is to maintain this spirit of cooperation and consensus-building. Will the recent expansion of the group from 9 and eventually to 10 erode this tradition? Many have pointed out that ASEAN has become too large too quickly. They argue not without reason that, with expansion, it will become more difficult to maintain the spirit of close consultation and consensus.

31 It is true that ASEAN is no longer a cosy club of five members, as in the 1970s and early 1980s. But we in ASEAN recognise that it is important to maintain the tradition of consensus and consultation. It is inevitable that as any organisation or club expands, new forces will be introduced. The European Union is facing a similar situation.

32 ASEAN has given the new members sufficient time to appreciate the ASEAN spirit. They did not join ASEAN overnight. Before Vietnam, Myanmar and Laos joined ASEAN, they were observers and as such they went through a gradual process of osmosis. They were engaged in a dialogue process with ASEAN for many years. As the new members add to the ASEAN culture, ASEAN also affects the new members with its established spirit of cooperation, consultation and consensus-building. The new members are learning and adjusting to the ASEAN way of making decisions and can strengthen ASEAN as a regional organisation.

33 The spirit of ASEAN consensus and cooperation was clearly put to the test over the issue of Cambodia. A special meeting of the ASEAN Foreign Ministers held in Kuala Lumpur on 10 July 97 made the significant decision to delay Cambodia's admission into ASEAN. This set the direction which the international community took note of. The events in Cambodia were a major test of ASEAN's resolve and credibility. Since the 1980s, ASEAN had invested a great deal of time and energy to resolve the Cambodian problem. ASEAN had to signal clearly that it could not accept the use of violent means by one faction in Cambodia to change the political order. If ASEAN had not acted, the credibility that ASEAN had built over the years would have been damaged. When Cambodia will join ASEAN now depends very much on what the authorities in Cambodia decide to do. On its part, ASEAN, and Singapore in particular, has stressed the importance of holding free and fair elections by May 1998 as a key to enduring political stability in Cambodia.

34 There are other examples of the spirit of ASEAN cooperation. As I mentioned earlier, Singapore, Malaysia and Brunei have pledged to supplement the IMF package of assistance for Indonesia to deal with the currency turbulence. Singapore, Malaysia, Brunei and Indonesia also pledged their assistance to the IMF package for Thailand. The logic for such assistance is not solely economics but also a sense of ASEAN cooperation and interdependence. On the environment front, the ASEAN Environment Ministers have stepped up cooperation to combat the problem of forest fires and smog. I am confident that, given the spirit of cooperation within ASEAN, we will be able to resolve this problem.

The US and ASEAN

35 ASEAN now moves forward with a tradition of consensus-building and a record of thirty years of cooperation. We certainly face some difficult problems that we have to deal with. But it is precisely because ASEAN has spent the last thirty years painfully building a framework for regional cooperation that I remain optimistic that Southeast Asia will be able to deal with the challenges facing it today.

36 In dealing with these challenges, ASEAN will continue to reach out and work with its major partners, in particular, the United States. The US-ASEAN relationship is one of the most important for ASEAN. It is in ASEAN's interest to strengthen this partnership. Likewise, it is also in the interest of the United States to have a close relationship with ASEAN. A stable, peaceful and prosperous community of 500 million people serves US fundamental interests in more ways than one. Today, no American strategic thinker denies that US interests across the Pacific will be greater than those across the Atlantic in the 21st century. But huge uncertainties remain in the Asia-Pacific. A stable and prosperous ASEAN can help to diminish these uncertainties by providing a stable anchor for US engagement in the region. If ASEAN did not exist today, US policy-makers will be looking at an unstable geo-political environment across the Pacific. ASEAN's existence is one key reason why the tone and chemistry of the Asia-Pacific region remains generally positive. This serves America's interests for obvious reasons.

37 When AFTA takes off, a prosperous market of 500 million people will also provide significant opportunities for American businessmen. US exports to ASEAN are dominated by high-technology items, such as aircraft and parts, computers and telecommunication equipment. These high-value added exports not only translate as jobs for Americans but also keep US corporations which export to the region profitable and competitive in the global arena. There is a strong reservoir of goodwill for America in Southeast Asia. This goodwill gives American businessmen an edge in the Southeast Asian business environment.

38 Within ASEAN, Singapore has worked closely with the United States to strengthen the links between our two regions. Singapore and the US enjoy a very close and strong relations. We will continue to work with the US as a partner and a friend to promote peace and prosperity in Southeast Asia.

Conclusion

39 In the Asia-Pacific, we are going through a period of economic and political transformation. I am confident that, amidst these changes, ASEAN will continue to make its contribution to peace and prosperity in Southeast Asia. At the larger strategic level, whatever the new configuration, the United States has always and will always remain an indispensable factor for peace, security and economic growth in Asia. Only the United States has the strategic weight, economic strength and political clout to exercise leadership in the Asia-Pacific region. There are also enormous economic opportunities to be seized by American businesses. It is in America's economic and political interest to remain firmly engaged in the Asia-Pacific region. This is not a burden but an opportunity for America to shape the course of events not only in Southeast Asia but in the Asia-Pacific and the world.