Transcript of Minister's Q&A session at the IISS Fullerton Lecture, 30 June 2014

Dr Tim Huxley (Moderator): It is my great pleasure to welcome you to this Fullerton lecture event in the ballroom of the historic Fullerton Hotel in the heart of Singapore’s business district. We have with us this morning approximately 200 guests drawn from a broad spectrum of Singapore’s society and community, including the business, media, governmental, diplomatic, intellectual and educational communities. We organised around six IISS lectures every year. Previous speakers have included UN Secretary General Ban Ki-moon, then-President Calderon of Mexico and Cabinet Ministers from Australia, Germany, India, the Philippines and other countries. I’m delighted that this morning, IISS Fullerton lecture takes the form of a conversation with Mr K Shanmugam, Singapore’s Minister for Foreign Affairs and also Minister for Law. It is a privilege for us to have with us this morning a senior member of Singapore’s government and I’m very grateful to you, Minister, for making the time in your very hectic schedule to join us this morning for this conversation. By way of introduction, I should say that Mr Shanmugam was educated in Raffles Institution and the National University of Singapore where he graduated at the top of his class with first class honours in 1984. He was admitted to the Singapore Bar in 1985 and had a highly successful practice as senior partner and Head of Litigation and Dispute Resolution in the local law firm Allen and Gledhill. He was widely recognized as one of the leading litigation, arbitration and insolvency counsel in Asia. In 1998, he became one of the youngest-ever lawyer to be appointed Senior Counsel of the Supreme Court of Singapore. Mr Shanmugam was elected as a MP in 1988 as a Member of the Sembawang GRC. In 2008, he joined the Cabinet as the Minister for Law and concurrently as the Second Minister for Home Affairs. He assumed the role of Minister for Home Affairs in 2010. After the 2011 General Election, Mr Shanmugam gave up his Home Affairs portfolio and became Minister for Foreign Affairs while continuing to serve as Minister for Law. He is now a MP in Nee Soon GRC. Given the scope of our remit in the International Institute for Strategic Studies, I suppose it is natural for our primary interest in Mr Shanmugam’ s role is in his capacity as Foreign Affairs. But his long standing role for Minister of Law is at least equally important and I wouldn’t be surprised if someone in our audience this morning might like to discuss with Mr Shanmugam matters related to the law in Singapore’s domestic context. I like to organise this session if it is alright with you, Minister, in the following way: first of all, I would ask several questions which maybe you and I could discuss and then in the second half of the session we will open up for broader discussion and involving members of the audience. I’m sure they will have a lot of questions to put to you. So perhaps I could start off with a fairly general question about Singapore’s foreign policy in quite wide terms. I think it is fair to say that Singapore has for decades had what you could describe as a remarkably successful foreign policy. It encompassed relations that underpin Singapore’s prosperity and Singapore’s security with many countries in the region and in the wider world. Singapore seems to be a friend to all and an adversary of none, or at least very few. For example, Singapore manages to maintain close relations with both the United States and with Japan at the same time that it has very solid ties and expanding ties with the People’s Republic of China. And so I suppose my first question is how does Singapore manage this? How does Singapore manage to have positive relations with so many countries?

Minister: It is a very wide question. I suppose you could start off by talking about size. Now, size matters in the sense that because we are so small, our territorial and regional interests don’t come into conflict with so many countries. But I would say primarily it is due to the fact that our leadership took the world as it is, rather than taking an idealistic view of the world. So you start off with your region, where do you live? You take the region as it is and you learn to live with it. A very practical approach and a clear understanding that you need regional mechanisms to try and resolve, provide a platform to resolve disputes but fundamentally of course you need to be able to protect yourself. Absent that, to rely on others to protect you is not very sensible, doesn’t often work. But as long as you are able to protect yourself then you set up regional mechanisms or you take part in regional mechanisms to try and resolve disputes, provide platforms and ASEAN is obviously the prime example. Often, I hear criticisms and arguments about ASEAN but absent ASEAN, we would be in a far worse position. So we are one of the founding members together with four others and that has now grown into a much larger organization which is providing the platform for far bigger powers to come and speak about issues. So within Singapore, defence is key. Once you sort that out, you are able to talk to people without having to worry about where you stand. Then regional mechanisms and then internationally we play quite an active role, quite disproportionate to our size in international organizations particularly the United Nations. We have always emphasized the importance of international law. Again because in the context where size matters a lot, we emphasize law for obvious reasons. It’s very difficult to argue against that position philosophically. Now, that’s only of course one side of the coin. The other side is for people to take you seriously, you need to be successful. If we are a barren piece of rock or island 720 square km off the southern coast of peninsular Malaysia, you and I won’t be sitting here, and we won’t have 200 people in this room, and we won’t have as many Ambassadors. So the country has to be successful economically and politically. And we have been successful economically and politically. We started out with a GDP of $500 per capita in 1965, with most people writing off this place as an artificial country. Today, it is US$65,000. Each time people say we will fail, we proved them wrong. To be taken seriously outside, you need to be successful inside. Third, there was a certain practicality also in the approach of the leadership, in how it is structured, the relationship with US, with China, with Japan. We refused to be drawn into alliances with anyone. We made it clear that we are honest, straight, we say exactly what we mean to all and we can play a useful role because of the quality of leadership and how they are able to interact with international leaders. None of the factors that I have outlined are either constant or a given – they are dynamic and they can change.

Tim Huxley: Thank you very much, Minister. You mentioned the question of relations with the big powers. Looking at the big picture in the Asia-Pacific region, I think it’s fair to say that developments over the last two or three years have really not been encouraging. The major powers seem to be becoming more assertive in this region. We have seen that as China grows, China is becoming more assertive in relation to its territorial claims in the East China Sea but closer to Singapore, in the South China Sea. We’ve seen Japanese PM Abe over the last year or two adopting a more assertive foreign policy. We have seen the US rebalancing the Asia-Pacific region. Some would say the regional security environment has become more tense, and even deteriorating, and a regional arms race is on the way. How is Singapore trying to protect its interests in the increasingly difficult regional environment?

Minister: You know, I will make a couple of observations before I answer your question. Talk about the region becoming increasingly tense, if you go back to the late 60s, you had communist insurgencies across most of Southeast Asian countries. You had the Vietnam war. The Korean war ended 10, 15 years ago before that. If you look at countries in Southeast Asia, be it Singapore, Thailand, Malaysia or the others, both in terms of human development, in terms of basic abilities to deliver goods and services to people, we were in a very different stage. And you had the Cold War in full swing, late 60s, early 70s.

Are the circumstances today worse than at that time?

And secondly, which region in this world today does not have problems? The reason I’m saying this is, take Middle East, take Europe, different types of problems, but to be practical means to accept the world as it is, accept that conflict and tension is an essential part of human existence.

As long as you have nation states, you have conflicting interests, you have countries of different sizes and at different development stages, you are going to have conflict. So the idea of the end of history is premature then and premature now.

We start with the proposition that it will be a difficult and dangerous world in most parts, and then you deal with it.

On that basis, if you look at - the way to analyse this is to ask yourself, what are the interests of the different countries involved? You take the US, it is in alliance with Japan, Australia, South Korea. It has deep economic interests in many parts of Asia, its companies are all over. It is both a Pacific and Atlantic power. America recognises the growth in this region. Their own national intelligence agency estimates that 40% of the GDP in the world in the next 10-15 years is going to be weighted in the Asia Pacific region. So they recognise that. With so much interests in the region, is America going to walk away? Most unlikely. It will be here because its interests are here.

If you take China, with its $7 trillion economy growing very quickly, and on a PPP basis probably due to overtake the US within a period shorter than most people think, and a military that’s growing fast as well. China has huge amount of interests, obviously both in mainland Southeast Asia as well as in the broader Asian region. It has some issues vis-a-vis Japan going back to history, at least to the WWII which have not been fully settled. What are China’s interests? First, you have to look at the domestic issues China faces. It has got a rapidly ageing population - China will become old before it becomes rich, the number of people getting into the labour force is already declining. You have vast gaps in wealth, both between the coastal regions and in the internal regions and between the urban centres and the rural centres. You have a massive task of restructuring society to reduce some of the inequities, some of the practices which mean that not all resources are used in the way they should be used. The issue of corruption has been talked about by the President as a cancer that could destroy the Communist Party.

How do you do all of this while the Communist Party with its 80-90 million cadres is above a framework or rule of law? And China is trying to develop an idea of rule of law in the way that you and I will understand it. They recognise the need, it is a massive challenge, and the internal challenges are huge and China doesn’t really need, and Chinese leaders really don't want, any trouble outside. Because the legitimacy of the leadership is going to depend on how they can deliver social and economic progress which is not going to be easy.

If you look at Japan, there is impetus, I think, to correct what the prime minister sees as accidents of history and makes Japan a more “normal country”, coupled with the internal social issues that Japan faces, that most of us are aware of, including a falling birth rate, falling population, ageing society, but with a huge amount of economic interests in the region.

So all three of these major powers have very substantive interests in the region. We start from that and therefore if they don't sort it out, there will be trouble because no one is going to walk away.

China has talked about a new model of great power relationships. Not quite clear what it is but if you look - go back to the recent CICA conference - China talked about Asia for Asians which suggests that therefore non-Asians should be out of Asia. Not sure that is actually going to happen in very stark terms, but I think China and the US will not want trouble with each other because they are mutually dependent on each other. So they have to work out a modus vivendi.

The current norms of international law, rules were developed at a time when China was weak. China is developing its power, may not necessarily agree with all those norms. The question is, what norms would be changed? How would the changing of norms be done? How would China push the change? How would the US, Japan, other countries accommodate China?

I can’t give you answers but I think nobody wants serious trouble. But the politics and the nationalist sentiments in each of these countries - China, Japan, US, it’s everywhere, but I'm just mentioning these three - is such that what is rational in international terms to do a deal, to structure, to give and take, may not always be doable within the framework or context of local domestic political opinion.

Anything that any Chinese leader does would be questioned by 500 million people on the Net. So no Chinese leader can afford to be seen to be giving up on any claim. In fact he’s got to be seen to be assertive, likewise in the US, and likewise in Japan.

So that it is unfortunately a dynamic that can lead to some degree of irrationality on the part of any one or two or all three of the parties but within that framework, I think all three understand what is necessary. None of them wants trouble but international relations are not always dictated by logic and rationality.

Tim Huxley: Just to focus a little bit more on one specific aspect of the regional environment: on the South China Sea, we have seen over the last two or three years, China being much more assertive on its territorial claims and in terms of its activities in the South China Sea which has brought tensions with some of the other claimants, particularly Vietnam and the Philippines. The view of Southeast Asian states is that international law should be paramount in dealing with contending claims in the South China Sea. That doesn’t seem to be China’s view. I wonder how do you think it is possible to reconcile China’s view of the South China Sea where it emphasizes the historical significance and basis for its claims with the Southeast Asian states’ view and the ASEAN view which emphasize the importance of international law, and particularly UNCLOS?

Minister: I would say the assumptions behind your question are slightly biased against China, not quite fair or accurate.

Let me explain. I mean you are posing China’s position and contrasting it with an ASEAN position which you say supports international law. By implication, China is not following international law. I think that is perhaps not the most accurate, even on the facts, and unfortunately the international media tends to be slightly anti-China, and you don’t get the full facts.

I don’t hold a brief for China, neither do I hold a brief for any of the others. We are completely neutral.

But these are the facts: China claims various islands. UNCLOS doesn’t deal with ownership of islands - that depends on a variety of factors under international law, including historical title. Whether you have a good historical claim is a separate matter.

What UNCLOS does is: if you own a piece of territory, either a coastline or an island, what territorial waters, economic zone are you entitled to based on the claim on the terra firma. So China claims various islands, in fact a very large number of islands. The various other claimant states also make claims to islands, so there are conflicting claims.

And obviously those conflicting claims lead to conflicting claims over the waters. China has taken a number of steps to assert its claims over the waters. And China, if you ask the Chinese, they will say, for all these years others have been drilling in areas which are clearly disputed, in waters which are associated with islands which are themselves disputed. But when China does it, there is a big hue and cry. And that will be the Chinese position. If you ask the others, they will say, these are indisputably ours. And if you ask China, China will say these are indisputably ours. So the reality is there is a dispute. And none of the countries can walk away and give up a claim on the dispute.

Let’s look at the latest one where China put in this huge oil rig, a billion-dollar oil rig, near Triton island, part of the Paracels. You don’t get all the facts from the international media. In the international media, there is a big bully which has come in, which has put its oil rig and is doing all these things.

If you go back in history, in 1958, China made a declaration that these islands belong to it and…the waters associated to the islands that it claims. The reason China did that is because, in the context of the Vietnam war, it wanted to let the Americans know what waters China was claiming. Leave aside whether China is entitled to make a claim, they made the declaration.

The North Vietnamese Prime Minister, made an announcement where he said, “you know, we accept China’s claim”. China says, “you see, North Vietnam has agreed”.

Vietnam’s position today is a little bit more nuanced. It says, “well, first of all, North Vietnam did not control those islands, so it can’t have given away what it did not own”. Second, “at that stage, the Vietnam war was going on, we were dependent on China, do you really expect us to argue”. Third, they say, “well if you look more carefully - what my Prime Minister said was not that we accepted China’s claims, but we accepted certain parts of the statement”.

I think those are matters of argument. I’m not saying Vietnam is right or China is right, but if you look carefully, the dispute is a little bit more nuanced than the way it is being portrayed in the international media, and which then gives the background to the way you have phrased your questions.

On the other hand, China has not helped itself in a couple of ways. First, there is a lot of doubt as to exactly what is the nature of China’s claim. If it is the islands and the waters associated with the islands in accordance with international law, I think very few people will have an argument, philosophically, with the type of claim being made – ie., that the law recognizes that you could make such a claim, whether you indeed are entitled to it, is a separate matter. Where China hasn’t helped itself is that the claims have not been very clear. It’s not clear whether by drawing these nine lines, it’s claiming all the waters within the nine lines which means a claim to the high seas, or is it only claiming all the islands within those nine-dashed lines and the waters associated with those islands.

And as long as there is a lack of clarity there, I think China opens itself up for a lot of questions.

Second, and this is where ASEAN comes in, from the Singapore’s perspective or a non-claimant perspective, it doesn’t matter who owns which islands, but where there are disputes, we want it to be dealt with in a way that doesn’t lead to ships confronting each other, shots being fired, increasing kinetic conflict. The actions on all sides have increased rather than decreased tension.

No one party I think is solely responsible, and in terms of looking at international law, my sense is, there are a number of parties whose actions are not in strict conformity with international law.

So really, everyone should obey international law, but that sounds more like an expression of hope and I started out by saying that we are very practical people.

But, second, we need to move to a situation where people start clarifying their claims. But here again, the Chinese leadership is in a difficult position as well as the leadership in Vietnam and Malaysia and the Philippines because none of the countries will give up any part of their claims. That is part of the problem today. We managed all these issues very successfully by leaving them aside. Now, you know, all the stuff is out there and is a potential for tension.

Tim Huxley: Given what you say, Minister, it seems that it’s very important for a foreseeable future to find a way of managing these tensions in the South China Sea…

Minister: That is the best that can be hoped.

Tim Huxley: Yup and there has been, I think, there is a pretty strong consensus within ASEAN that a code of conduct governing the behaviour of the various parties in the South China Sea would be extremely desirable and there has been a lot of impetus over the last year or so to push agreement on a code of conduct. I think the ball is in China’s court at the moment. Some have said that China is not that keen on a code of conduct and this is tending to delay the formulation of a workable code of conduct and has been talking about the DOC rather than the COC. Do you see much sign of real interest on China’s part in a workable code of conduct?

Minister: Again, the presumption in your question – there is one party – which is clearly wrong. You know, I am a lawyer so I’m used to these sorts of questions and analysing the factual assumption behind questions which are usually inaccurate. But, sorry I don’t agree with that assumption. The reality is, as I said, China is coming out, becoming a big boy at a time when the international rules and norms have been set. A larger philosophical question is really, which I alluded to earlier, to the extent to which China would be prepared to accept the current rules of international law and international norms which, in their view, were developed by states - primarily Western states - Europe and the United States - at a time when China was weak. Inevitably, there will be a challenge to those norms because they will say “We were not party to the development of these norms. We don’t accept some of these norms or we don’t accept all of them”. I think the extent to which they want to change the norms, which norms do they want to change, the extent to which others will agree to it, these are areas that are going to be quite interesting.

From our perspective, many of these norms - if you take UNCLOS for example – was developed really with the interests of the large coastal states. So it is actually in China’s interest. That’s the point we have made to China.

Coming back to the COC, the best that I think we can hope for, I don’t see these disputes being resolved in our lifetimes. The best that I think we can hope for is to try and manage conflict and make sure that some common sense prevails. That is why you have the DOC and we are trying to work on the COC.

Both China as well as ASEAN have publicly professed that they are keen on the COC. Rationality would suggest that we should proceed with it. There are going to be difficulties because China says the COC has got to keep to the spirit of the DOC and the DOC requires, you know, various types of conduct, and some countries are in breach of the DOC. And if you can’t even keep to what you already agreed, why should I agree to something new when I don’t know that you will keep to the spirit of the DOC? Other countries accuse China of breaching the DOC.

So if we get into these accusations and counter-accusations, we’ll never get to the COC. We have made some progress in getting the COC on an official track. I’ve never thought it’s going to be easy, partly because if you take all the complexities and if you take the fact that China is growing…, the power balance within China and the rest of the world – certainly rest of Southeast Asia – it will keep changing and it will keep changing to the benefit of China and large countries, and China is not unique in this context, generally do not like to be bound by rules because they are large.

Tim Huxley: Thank you very much. Just a shift of focus of our discussion a little bit and look a bit closer to Singapore’s immediate region. I think one feature of Singapore’s foreign policy environment in recent years has been the general stability of its relations with its two immediate neighbours, Indonesia and Malaysia under the SBY administration in Indonesia and under Najib’s leadership in Malaysia. Such stability has not always been the case, even this year we have seen some ripples you might say in Singapore’s relationship with Indonesia. How do you see the prospects for continuing stable and productive relations with Singapore’s immediate neighbours, North and South?

Minister: On the whole, positive. Malaysia and Indonesia both are blessed with huge amount of natural resources and high quality human resources. And they are reaching that stage. Malaysia is certainly further up the curve, reaching the stage where they probably with the right sort of framework, rules, they can make a leap to the next level. Indonesia will take a bit longer but they are both on that path. If both our neighbours do well, that’s going to be good for us. Any small country that is next to large countries which are doing well will do exceptionally well because we are much more flexible; we are the regional financial centre; we are the services centre; our population is highly qualified. The economy within Singapore is simply not big enough for us to support our young people’s aspirations. It has to be the region. There, ASEAN comes in. If Thailand does well, Indonesia does well, Malaysia does well, and if you have an ASEAN which is more integrated where goods and services flow more seamlessly, where you have companies in different parts of ASEAN doing business with each other and you have people to people connectivity, air services. The tremendous potential of greater connectivity and integration within ASEAN cannot be underestimated and Singapore is in a unique position to benefit from that. Every country will benefit. We will benefit differently because of our small size. I see the long-term trajectory and in that context as the secular trend to be positive. There will be ups and downs. It has come down to a run-off between two candidates in Indonesia. Both have put forward or have espoused policies that are slightly more nationalistic in economic terms than the current president. It is understandable, you know. Politics means that you have got to assure your people that your primary interest is taking care of them, so that’s understandable. Maybe the economic policy may well become slightly more nationalistic but at the same time in today’s world, for a country to succeed, it has to be connected to the world and I think Indonesia’s leadership over the years has recognised that. It plays a leading role in ASEAN in political strategic terms, it recognises that it needs to trade, it needs to get inward investment and export, to provide jobs to 240 million people. Malaysia has recognised that for some time. Malaysia is in talks on the TPP. What can happen in three months, six months – some unforeseen event, incident? I can’t predict. But the longer term secular trend, I think it gives some room for cautious optimism.

Tim Huxley: Thank you very much. I think now it’s the time for members of our audience to pose their own questions to the Minister. Could I ask that if you do have a question, you raise your hand. Once I recognise you, the microphone will come to you. So please stay in your seat and if you, before asking your question to the Minister, if you could say who you are and what your affiliation is, I’ll appreciate that a lot. And also if you could please ask your question as concisely and as pointedly as you can.

Audience: Good morning. My name is [inaudible]. I am from Alpha-Omega Consultants in Singapore. Your excellency, you dwelled rather extensively on three countries, China …

Minister: You are going to say I didn’t talk about India.

Audience: Well, probably so. So, China, Japan, United States for various historical reasons. You also stressed the neutral policy to all these countries. I am kind of reminded of the non-alignment policy of India, when you mentioned neutral policy. However, in the 1980s and 90s, the ASEAN countries used to be called NICs or Newly Industrialised Countries, and the Tigers. Now we have been talking a lot about neighbours towards the North, South, East and West. I’ll like to ask you whether another neighbour we have, which is India, is going to play a major role or part in your international relations strategies and especially in view of the fact that in the 1970s, 80s, and 90s, these countries were like tigers. India was not even a tiger. It was just an elephant. And in the 1990s, the elephant started dancing. Now that the elephant is awaken, it is dancing more vigorously and whether this dance or the elephant and tigers can be an orchestra where Singapore plays a good role and what respect or what perspective can Singapore be approached for that?

Minister: It’s a big question. I think there is a book by Sunil Khilnani “The Idea of India”. It’s a wonderful idea. India is engaged in an experiment that very few countries have in the past succeeded in. In fact, I know of no successful country that has taken a similar experiment. Let me explain.

If you look at how democracy developed and universal franchise developed, let’s take UK and US. How did it develop? When it started out in the UK, a very small percentage of the population had the franchise and the vote. The truth about both US and UK and in fact almost the entire western world is that economic development preceded universal franchise. And those in power - for example, if you take the two major parties in the US, through the 18th and 19th centuries, basically came from the same class. White, land-owning, wealthy, middle class, values were similar, there was political stability, one or the other took over. They fought hard, they had differences of opinion but by and large, there was stability. If you take UK, I think even as of the early 20th century, a small percentage of the population I think, which had the vote. And women didn't have the franchise until a little bit later. In fact, the US had universal franchise only in the 1960s. Singapore had universal franchise before the US. What India has done is that, with a very low economic base in 1947 at independence, it gave universal franchise, one man one vote to everyone. So political development and universal franchise preceded the basic economic development. India has struggled with that. I think on the whole the very fact that India has managed to survive, and do as well as it has, is a testimony to the Indian spirit. But it is an experiment that I have not seen happen anywhere else successfully. So India has succeeded against the odds, I mean that's the way I will put it. If you look at the Asian tigers, leave Singapore out, but none of the others really had democracy in the sense of the Western world. They all had political stability, and they were lucky to have leaders who looked at economic development over a long period of time and developed the countries. We had elections and universal franchise, but we also managed to have political stability for a long period of time until the economy reached a certain level. So I wanted to put that in context because the Indian experiment is an interesting one, and it is unique, and it has never been tried in this way anywhere and it has never been tried on such scale.

Second, when you talk about India, you know by the way I'm flying off this evening to India, at five o'clock I'm taking the flight. India is - we talk about it as one country - but you go from Delhi to Chennai to Hyderabad, to Bangalore, back to Patna, you are in different countries. Different cultures, different languages. The Prime Minister in the centre, if he gives a directive, the Chief Minister in a State may or may not agree, because he or she is from a different party anyway. And they may not owe their position or power or allegiance to him. They depend on the voters in their State. So it's very, in that sense, decentralised, so you got to understand the limitations of power in Delhi, within a large democracy, with so many languages, so many, really, different countries, put together and the very fact that the country has survived as a unitary state, in such a way and has progressed as much as it has, and is looking at a new dawn again, is actually quite amazing. I agree with you that there is a lot of optimism and hope.

Between India and Singapore. We've always had excellent relationships, and we think that there is scope to do a lot more. The Indian government's priorities must be and they seem to be, really, the upliftment of the ordinary Indian, and economic development. The country cannot become very powerful externally until and unless it gets its house in order internally, and there is a lot to be done internally for example in terms of education, in terms of female empowerment, in terms of basic primary healthcare. I mean some of the statistics about India - on the one hand this is the country that sends rocket into space, physics and maths and computer science; on the other hand, on some issues, for example, infant mortality, it doesn’t do well. So there is a lot for the government to do, and my sense is the priorities of the government are focused on the internal development of India. In external interactions, the focus will be on where the issues are greatest, which means India will probably be focused on the North-West first, dealing with, you know, putting its relationship with Pakistan on a good footing, dealing with the issue in Afghanistan. I'm sure Southeast Asia and East Asia would figure in the Indian calculus, but in order of priority I suspect it is not going to be the highest priority. But in economic relationships, because India's priorities dovetail with the strengths and the priorities of various Southeast Asian countries, including Singapore - for example, the Prime Minister has talked about 100 smart cities, urban solutions, those are all areas we are strong on. We see a lot of scope for partnership with India. But for us, you know, whoever is in the centre, whoever is in the States, we deal with the country and we deal with the States. Each government comes, there are a set of policies and we work with them.

Tim Huxley: One quick follow up, Sir.

Audience: You mentioned Singapore was one of the founding fathers of ASEAN and now from four to five governments to ten, nine or ten. Is India one of the countries that you look into to cooperate in the ASEAN countries or region?

Minister: I think that you'll have to do a little bit of geographical gymnastics to include India as a member of ASEAN. India is a dialogue partner of ASEAN, and a strong dialogue partner, and our hope and wish is that the dialogue partnership can be developed more substantially.

Tim Huxley: Next question from a gentleman at the front here.

Audience: Thank you very much. My name is Yoshioka from NHK TV. Allow me to go a little bit specific in an issue you have raised in previous conversation that the Japanese Prime Minister Shinzo Abe is now trying to change the interpretation of the Japanese Constitution in order to exercise the right of collective self-defence. At the earliest, I think they will announce officially tomorrow I think. So in Asia some countries welcome this new action and others are not so pleased. Will you let us know your opinion over what kind of influence will this action bring to the security environment of the Asia Pacific and what is Singapore’s position over it?

Minister: Can you repeat the last part of your question? I got the part on Singapore’s position. But before that what did you say?

Audience: Yes I’d like to know what kind of influence will this action bring to the security environment of the Asia Pacific region.

Minister: I think what the Japanese Prime Minister is doing - and I alluded to this in my earlier remarks - is to make Japan a more normal country. The reactions to that obviously have been a little mixed. Some countries have welcomed it, but in the countries where the historical memories of World War II are very strong, there has been a degree of unhappiness not necessarily with the idea of a greater collective security or defence posture by Japan but also by what seems to be understood as the questions raised by some Japanese leaders, about the facts of what happened on the ground in Korea, in China, and that questioning I think has unnecessarily clouded what legitimate aspirations Japan may have in terms of its economic and security profile.

One is purely emotional. What happened in Korea, what happened in China, what happened in the rest of Asia, who is responsible to what extent? Is there culpability? Did it happen? And when questions are raised as to whether any of these happened, you have seen the reaction in Korea who are allies with the US and who are also your allies.

And as my Prime Minister has said more than once, we in Singapore have moved on from our Second World War past; we have drawn a line and decided for very sensible reasons to forge a new relationship with Japan, which we did from the 60s and 70s; and Japan is a very close economic, strategic partner for Singapore.

But other countries haven’t done that and Japan hasn’t quite squared its accounts - historical accounts - with those countries. And I think that continues to be an emotional block and Japanese actions continue to be perceived through that prism. That’s one issue. And also, often there are words and then the next question is what is meant by the words. Who can argue about a greater self defence capability or greater contribution to collective security? Everyone will welcome it in principle. But what China understands by those terms when used by Japan is different from what Japan understands by those terms when used by Japan, and that is part of the problem. We believe that Japan, as the 3rd largest economy in the world with significant interests in the region, will inevitably want to play a bigger role and we believe that Japanese aspirations in that context need to be accommodated within a framework. With Japan-China relations, the two countries should try and sort it out because the most important relationship is between Washington and Beijing. If there is trouble there, there is trouble for the rest of us. The second most important relationship is between Tokyo and Beijing. If there is trouble there, there is trouble for all of us. That’s why there needs to be a framework that accommodates the legitimate interests and aspirations of China, Japan and the United States in this region.

Audience: My name is Alvin Kang. I’m a practicing Singapore lawyer. Minister sir, my question relates to the ASEAN Economic Community which is scheduled to kick start next year. How do you see the impact of AEC on Singapore and do you see the AEC becoming an ASEAN version of the European Community with free movement of goods, not only goods and services but people? And would that lead to some form of harmonisation of laws in the ASEAN countries?

Minister: I’m a great believer in Europe. And I am on record as saying that the people who talked about the demise of Europe, and last year and the year before, I have said this on record and in public, that people who believe in the demise of Europe or the European Union, really don’t know what they are talking about because there are few other centres of excellence with such deep reservoirs of talent, capital, knowledge, and history and culture. But at the same time, I think even the Europeans will agree that the precise EU model may not be the ultimate model for us in ASEAN to follow right now. You know - again one word that I keep using - you got to be practical about it. If you take Europe, you have countries with broadly similar histories and they have been fighting with each other for so many centuries. This project started in the 20th century after the Second World War. Similar religion, similar culture, shared history, and you had all of that to start the European project and even then, it has taken quite some time and a lot of effort and a lot of money. I’m sure it will do well. They are getting over the crisis.

But if you look at ASEAN, the vast differences in economic development for a start - you take Singapore and you take a country like Cambodia, they are at very different levels. Culture is also very different; the geography is quite different; religions are different. So given such vast differences, to think in terms of a project similar to the European project at this point in time is very unrealistic. What you can do is we have a set of common shared mutual goals in security, in economics, and we have a shared goal in increasing the people-to-people movement. So work with that - try and create a community that increases people-to-people connectivity, that puts across rails, roads, ports, airports that bring people together, it’s already beginning to happen. That allows a freer movement of goods across the countries. Services, a little bit more difficult. So we got to move at a realistic place on services. On tariffs, we are about 85, 86 percent to the way down. The next year more will come down. By 2015, we will have reached at a decent place. Doesn’t stop there, it’ll have to continue. So you let the facts on the ground speak for themselves and let integration take place. Let the business logic drive business and social logic drive this. But in terms of political systems, I think we are still quite far away from having a single ASEAN government. The values and approaches are quite different.

How does Singapore stand to benefit from greater integration? If you look at Asia today, leave out India, China, Japan, which is the most important financial centre? Which is the centre of excellence for law, accounting, banking, other services? Which place has the best logistics you can fly in and fly out? Which place is the safest? There’s only one place and that place can serve as an intellectual financial place, centre for ASEAN. But that’s only possible if the rest of ASEAN does well. If there is no business to be done, there is nothing to be done here either. So if they all do well, we do well. And ASEAN 2015 and the project of ASEAN Common Community is part of that picture.

Tim Huxley: Thank you very much. I think we have time for, if it’s alright with you Minister, we’re running over a little bit, but if, I think we have time for one or two more questions. Mr Suria.

Audience: Sir, Singapore has got asymmetric but excellent relations between Singapore and China on one side and Singapore and India on the other side. What is Singapore’s perspective on China-India relations? One is interested to know about that. Thank you.

Minister: I’m not sure that I have a unique perspective on China-India relations. I noted with interest that the Chinese Foreign Minister was one of the first to visit Delhi after the new government was sworn in. We are also fairly early in terms of going. I am going today and meeting officials and the Prime Minister tomorrow and day after. The visit by the Chinese FM is indicative of a desire, both on the part of Delhi and Beijing to structure a relationship, they know that they have to get along. Again, I think both don’t need the distraction of a major dispute and economically there is much that they need to discuss, there is a lot of potential. It will be cooperative, but I’m sure it will also be competitive. Both know that and my sense is, they are trying to work out something that’s workable for both. China would be concerned that India should not be drawn into any sort of a loose coalition or alliance of countries against China. It’s never been an Indian approach to be part of any such major alliances. But these are interesting times.

Tim Huxley: For our final question from the audience, gentlemen on the left at the front.

Audience: Thank you. Francesco Mancini from IPI. I want to draw you out of the region and ask you a more global question. Many are pointing to the Middle Eastern in flame, a more assertive Russia, the UN incapable of delivering global public good. What is your overall analysis of the state of global affairs (inaudible). Thank you.

Minister: Am I optimistic about the world? I think, you know, I take the world as it is, I think there will always be trouble and the US today for a number of reasons is less able to impose world order than it used to be. It needs to be a more cooperative effort between the US and several other major powers. Some are willing, some are unwilling, some are unwilling to be co-opted into a current system which is dominated by rules put forward by the US. I’m broadly optimistic that eventually we will move towards a system where a new equilibrium, new dynamic would be structured. Don’t get me wrong, there will always be problems, there will be wars, there will be tensions, there will be trouble everywhere. But I think we will muddle along mainly because, if you look at Africa, it’s now a positive story. Differing pictures but on the whole you’re looking at growth rates of somewhere between 6 to 8 percent, maybe higher in some places. If you look at South America that importance of rule of law and structures and transparency is beginning to be accepted and it’s another area of growth. These were all not significant areas of growth say 30-40 years ago. Europe is coming out of its economic malaise. There will be some trouble but on the whole it’s beginning to show positive momentum. The US is also beginning to show, despite the latest figures, broadly positive trajectory and the US is helped, I’ve said this a number of times, by the fact that its energy costs are going to be much lower than the cost anywhere in this region. The huge advantage that countries in this region had in terms of labour cost is now going to be reduced by the fact that a large amount of US manufacturing could potentially be done through 3D printing and so on. So US is an area of optimism. Japan’s policies, the jury is out but it is generally more likely than not the Japanese will succeed. China, people put a question mark on its economic policies and the slowing down of growth, but on the whole given how competent the Chinese are in managing their economy and the vast reserves that China has to tide over problems, on the whole I’m more optimistic than pessimistic about China. So economically the picture, I think one can be cautiously optimistic and if there is a broadly positive economic picture or be it slow growth, then there is interest on the part of the countries to try and avoid trouble.

Russia's actions in some places have raised eyebrows, we have issued statements, but on the whole, I think in international terms, Russia has seen in some places, it has seen fit to go along with the international flow of events. In some places, it has stood against them but I'm not sure that its ability to disrupt this large picture is going to be that significant. India has just started with a new government. It is not so much new government or an old government, but government with a strong mandate which is important and gives it at least the basic parliamentary tools to push through legislation. I keep telling people don't forget, people think in terms of China and India in Asia but ASEAN's economy today is actually larger than India's economy. So you have actually four major centres in Asia; Japan, China, ASEAN, India, all 4 there's some room for being optimistic about. So on the whole, despite all the troubles, I am more optimistic than pessimistic.

Tim Huxley: Minister, thank you very much for your excellent answers to these good questions. I am particularly struck by your upbeat answer to that question, despite an expectation that there are always going to be troubles...

Minister: I would probably be cautiously optimistic.

Tim Huxley: You are on balance, optimistic. Maybe just to round off the session I would just like to ask one last question, that's about the making of Singapore’s foreign policy. I wonder if you could just say a few things about the process by which Singapore's foreign policy is made. To what extent does Singapore's foreign policy result from the work of diplomats in MFA? How does MFA coordinate with other Ministries such as MTI and MINDEF. What are the other influences on foreign policy making? How important are discussions with your Cabinet colleagues on foreign policy?

Minister: Again, I go back to the point about size. We are too small a place to not realise that an impact in one area impacts in all areas. For example, a relationship with Malaysia and Indonesia or US or China. Take China for example. 2013 we were the largest investor in China, big number, 2013 we were also, I think, one of the largest investors from Asia into the United States, if I have gotten my figures right. Do we have significant economic interests in both countries? Obviously yes. If something goes in our relationship with either of them, would there be an economic impact? Yes. Would there be a strategic impact? So, how do you divide between MTI, MFA, MINDEF, they are all interlinked. It’s too small a place for it not to be interlinked and for us not to recognise it. We have been fortunate enough to have a civil service as well as a foreign service that is highly professional. Not by accident, the system went out to choose the very best people, bring them in, send them overseas, scholarships, they get in. You could argue whether it has the same vigour and entrepreneurship as for example it had when there were far less people and there were less rules and you were in a start-up environment, in the 60's and 70's. Today, it’s more of a developed country environment. Where you come in, there is a large organization. Whichever Ministry you go to, there are set rules, you know, there are hierarchies. But on the whole, I think, one of the areas, where Singapore would be identified as successful, as being successful, is in governance and the delivery of public services. On the whole, I think that is a fair assessment. That comes about because it is a small place, quite cohesive and at the political level, the Cabinet level, all the issues are discussed, including all foreign policy issues, the key Ministers involved and Ministries which have a stake in foreign policy would be actively involved in thinking through all positions. Positions which are developed through experience, knowledge by the foreign policy professionals in the Ministry.

Tim Huxley: Thank you very much. Well, thank you, Minister for answering all our questions so thoughtfully, fully and so candidly. I'm sorry that I must bring this morning's IISS Fullerton Lecture to a close but before doing that, I would like to thank Mr Shanmugam for making time in his schedule to honour us by agreeing to have this conversation here in the ballroom of the Fullerton Hotel this morning. Minister, you cast light on some very important aspects of Singapore's foreign policy, both in Singapore’s own region and more widely in the Asia Pacific and throughout the world, you touched on economic as well as security aspects. I’m sure I speak for everyone here when they say that we are all very grateful for us to start off the week this morning. Thank you very much.

Minister: Thank you.

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