Searight: Thank you very much Minister Balakrishnan. I confess that when we saw disruption in your title - in this town, disruption is usually used to think about other things - but you make a very incisive and persuasive case about the disruption caused by technology globalisation and other trends. And as usual, our Singaporean friends are very good at putting the case forward about how and why US presence and engagement in the region has been so important historically and continues to be important today. As we think about the Trump Administration's Free and Open Indo-Pacific, you among others initially expressed some concern about whether ASEAN Centrality was at the core of this vision, and I think since then, the Trump Administration - Secretary Mattis, Secretary Pompeo, Vice President Pence, have gone out of their way to explain that they do see not just geographically but politically, diplomatically, ASEAN playing a very central role. But in recent months it seems that perhaps Southeast Asia has somewhat fallen off the radar for the Administration - we don't see quite as much engagement, perhaps as we did in the first year, of the Trump Administration by President Trump himself. And you know we're hearing that perhaps Secretary Pompeo’s schedule of this summer for attending the meetings in Bangkok – the ASEAN Regional Forum and the East Asia Summit Foreign Ministers’ Meeting – that his schedules are not yet confirmed and he has some other priorities they're working through. In your view what is the importance of Secretary Pompeo participating in those meetings, is it important, and if so, how would you make the case for why it's important?
Minister: Well I'll see him tomorrow afternoon. I'll put your question to him. But more seriously, if you consider what's on his plate right now, even as he's flying back, I think from Europe back to Washington, he's got trouble in the Middle East, he's had a series of meetings in Moscow. There are still things happening in Europe, especially in Eastern Europe. And of course, the mother of all, negotiations with China. Southeast Asia is not a squeaky wheel; that's why we don't get into the news. I think I rather prefer it this way. But the purpose of my trip here and my engagement, there are a whole series of meetings so far over the next two days, this reminds everyone that this is not a squeaky wheel but in fact this is a wheel that's going very far, and very quickly, and that the growth prospects are significant in our part of the world. And also to remind Americans that you've been here for a long time. You've invested, you've put your money where your mouth is. In fact, sometimes there's more money invested in Southeast Asia than people give America credit for. And because the growth prospects are so positive, take advantage of it. So that's my message. We're not the sort of people who throw a tantrum and create unnecessary attention-seeking behaviour, but having said that, I will tell him tomorrow, apart from conveying your question, that yes in Asia, face time is important. Even in this age of video conferencing, nothing beats a handshake, eye-to-eye contact, and making sure that despite the cultural and linguistic differences, it's very important that everyone understands at a very profound level what the hopes, aspirations, anxieties, and concerns are, in order to avoid miscommunication and unnecessary conflict. If you think about even the current negotiations with China, I am very sure all the academics in this room are capable of writing a solution. It's not rocket science. But the challenge is political. To make sure we don't get trapped by our rhetoric, to make sure that we provide enough political off-ramps to de-escalate the situation. And that's why I would rather have more quiet consultations, discussions, less headlines, and less rhetoric in public.
Searight: Picking up on the tariff war, the escalating tariff war between the United States and China, the recent announcements of tariffs being raised to 25% on US$250 billion of goods from 10%, and now the threat of potentially additional new tariffs on virtually the remainder of goods imported from China, about US$300 billion, what has been the impact so far on Singapore and in the rest of Southeast Asia? Of course it's still early days, you know tariffs have only started to, perhaps take a bite, but looking forward there's certainly uncertainty, and then there's potentially a much larger tariff impact. And so I'm just wondering, there's some optimistic analysis that is appearing more and more saying Southeast Asia may be a winner in this tariff war because of diversion of trade and investment, despite the uncertainty causing dampening economic growth. What is your view about where this is headed to?
Minister: I would look at it in terms of short term, medium term, long term. In the short term, if you just look at the gyrations in the stock market, you know that this is a time of great volatility. In fact, the volatility probably exceeds the value of the additional tariffs you're talking about, so you know that the volatility actually represents a deeper underlying concern. In the medium term, given the uncertainty, you will see companies and regions being far more cautious about investments, especially long-term investments, and therefore you will expect an impact on our economies in a slowdown. If this is not resolved in the short and medium term, the long-term problem is – are we really going to see a bifurcation of this highly integrated global economy? Because, you know, it's like trying to separate Siamese twins. And as a physician, when you try to separate two systems whose vasculature are so deeply intertwined, it's a very dangerous and bloody process. So that's the long-term threat. I hope we don't get to that stage. So we're still in the early phases, and that's why the main thing which we are witnessing now is, increased volatility. But the next step is decreased growth, and after that we've got far deeper existential anxieties.
Searight: On the technology front, you made the point that who is going to build these platforms and develop the norms around technology. It's going to have a big impact going forward. This has been a growing concern in Washington about who is going to be building the digital platforms, and there's been a real attempt by the United States to warn Southeast Asia about Huawei and the risks involved of Huawei's investment in 5G and other technologies. How is that playing in Southeast Asia? Do you think that the US approach on this is working in that regard?
Minister: Well, I don't want to prejudge some private discussions tomorrow. But let's step back for a moment. Is there a technological revolution in communications? The answer is yes. Where is the scientific leadership and genesis of this technological quantum leaps happening? The answer is it has certainly in the last seven decades substantially been here. Second, in Europe. Third, because in the last 40 years China has opened up and transformed its economy, and has been willing to put money into research and development, China is now also a player in this field. So I think the point I would make is that in the same way the world economy has become multipolar, the scientific enterprise has also become multipolar. Now, the next point then is, particularly for communication technology. Security, privacy, reliability are key issues. And the fact of cost. So now let's think about it. Regardless of where the technology comes from, are there bugs, are there bug doors, backdoors? And the answer is, regardless of where the technology comes from, those are clear and present dangers. What's the best way of addressing it? The best way of addressing is actually for a global consensus for open source codes, for complete transparency, and for everyone to be able to trust but verify. But this requires a collaborative, open, and transparent approach. Frankly, insisting on a bifurcated internet or communications sphere is not my vision of the interconnected world able to harvest the fruits of this revolution. But, my diagnosis of the problem is that right now there's the lack of strategic trust between the major players, and that's why we are now put in this uncomfortable position of choosing one or the other, and I really don't believe that is the most important decision. The thing is, regardless of what choices countries make, they will all want the same thing. They want a system that works, a system that is reliable, a system that is secure, a system that protects people's privacy. So let's wait and see how that plays out, I don't think we should prejudge the issue.
Searight: Let me ask one more question before I open up to the audience. Turning to security issues, you listed a number of ways that Singapore has contributed to regional stability and security including providing a presence for the United States through facilities and agreements. One thing you didn't mention is, I think a real contribution that Singapore does every year which is host the Shangri-La dialogue bringing together the American Secretary of Defense among many other Defense Chiefs in the region and even the world. This year Acting Secretary of Defense Patrick Shanahan…
Minister: Well he might be the Secretary by then…
Searight: He may be confirmed… perhaps he'll be confirmed by then. So what kind of messages do you think the region would like to hear from him that would be reassuring including on the South China Sea, which we haven't really touched on much today?
Minister: Well, first I should in all candid sincerity give credit to former Secretary Mattis. His calm, consistent, firm and resolute reassurance was very welcome. We hope the new Secretary will continue on this tone, and frankly, I haven't had a chance to interact with him, but there's no reason for him not to continue this tradition. That's the first thing. I think the second thing which people all want to see is the interaction between the United States delegation and the Chinese delegation who will be present in a significant way. And people will be trying to read the tea leaves, the tea that they're drinking, (laugh) and we hope that there will be open, frank and sincere conversations in good faith between them. If there is, the rest of us would be far more assured. As I said earlier, Singapore wants both sustained US presence, which we believe is positive, and we also want China to be able to assume its rightful place, as it develops and becomes a superpower in its own right. I should share with you a quote from my first Prime Minister. This was a statement he made in 1973. He said, “when elephants fight, the grass suffers. But the thought also occurred to me that when elephants flirt, the grass also suffers. But when they make love, it is disastrous.” (laugh) Take your pick – fight, flirt, or make love.
Searight: Ok, let me open it up to questions. I’ll start with Stanley. Could you wait for the microphone and introduce yourself?
Question 1: Stanley Roth, no affiliation. Good to see you again.
Minister: Hi Stanley, always great to see you.
Question 1: Although your presentation emphasised economic issues, in terms of opportunities as well as disruption, you did talk about the criticality of the Pax Americana to everything that's happened. I'm asking this question because I hope you're telling me that what I'm about to say is wrong. But it seems to me that Pax Americana is eroding. It's eroding from two directions. What China is doing, thinking about the rising military capacities, things in the South China Sea, East China Sea – I won’t spell them out in the interest of time. But also things that the Trump Administration isn't doing. In terms of its view towards alliances and bases – very transactional rather than security based, at least by the President. I won't speak for everyone in the US government. And there’s concern that countries may therefore look, including in ASEAN, to accommodate China in the wake of the erosion of the Pax Americana. Please tell me why I'm wrong.
Minister: I would take a step back from that. The United States was the real winner of WWII. In fact, the United States was the ultimate heir and successor of the last Industrial Revolution which began in England, Europe. That's why we are here and that's why we're speaking English. The United States was the ultimate winner. So at the end of WWII, the United States’ GDP was probably 40%, 50% maybe of global GDP. At that level, it was worth America's while to create and underwrite, with blood and treasure, this Pax Americana that has been a feature of the last seven decades. Because for every additional dollar generated globally, 40 cents came back to Washington. Today I think the American percentage is down to about 24 – 23% and everyone knows although the American GDP will continue to grow, your relative weight in the world may come down further. That's why I said earlier in my presentation that it is a perfectly legitimate question for the Administration, and indeed for all American voters, to ask why should I pay blood and treasure to underwrite this system. This is not a blame game. It's legitimate to ask yourself that. The second point and I said it earlier also, the biggest beneficiary of Pax Americana has been China. The Chinese take a long-term and careful view of the world. When I say long-term, they think in terms of centuries and millennia. A thousand years ago, I think it was still in the dark ages in Europe, China had invented gunpowder, the compass, paper making and printing. China's GDP was probably 30 or 40% of global GDP. So China remembers a time when it was number one. And it is entirely understandable and legitimate for China to aspire to be number one again. So you juxtapose these two things. The third factor, which is worth remembering about China, is that China missed the Industrial Revolution. That's why it was so weak when European powers, beefed up by the Industrial Revolution, were able to colonise many of us in Asia. China’s lowest point of its history, arguably, was the period of the Opium War when it couldn't even stop the trafficking of opium, lost to the superior military force that the traffickers could amass and had to surrender Hong Kong. So, for a civilisation with such long memory, and remembering being number one, and remembering the ignominy due to the fact that it missed the Industrial Revolution, do you understand why China aspires to be number one and is resolute in making sure it never again has to go through the humiliation of the last two centuries? So, this is a brutal reality. The next question then comes, which is Graham Allison’s question. I think by definition if you are a diplomat you've got to be hopeful and the question then is how can we reform the architecture of the world so that these two powers will make the right call. My point again which I made in my earlier presentation is that there is a need for reform because if you don't reform quickly enough, alternative arrangements will be made and sometimes those alternative arrangements may not necessarily be positive. Another element to make life more difficult for leaders everywhere is that not only are you seeing a shift of global strategic power, you're also seeing this ongoing technological revolution which has gutted the middle class in advanced economies and the prime advanced economy is America. So since 1980 or the late 80s, the middle class in America, I think, has lost a certain amount of confidence. The golden age for Pax Americana was the end of WWII, for about 25 to 30 years after that. Now there's that domestic loss of confidence, and foreign policy begins at home. If you don't have the confidence, unity, and cohesion back home, if you don't have the wherewithal to continue to invest in your infrastructure, education system and healthcare, people are not going to feel sufficiently assured to get onto this rollercoaster that we are on. We are living through very challenging times because there's a transfer of global power, there's a change due to technology, our domestic politics have become fractious and our institutions are not reforming quickly enough to keep up with all these changes. That's how I see it. Is there a way out? Like I said, every academic here could spell a formula in which we could arrive at a brave new world. In fact, all politicians know it too. It's just that politicians have to figure out how to do the right thing and win the next election and sometimes that's not so easy.
Searight: This gentleman here in the second row.
Question 2: Thank you very much Mr Minister. My name is Paolo von Schirach, President of the Global Policy Institute here in Washington. You mentioned quite accurately about Pax Americana, and the new environment that it created and how China has indirectly benefited from it. Pax Americana is really about a rules-based system. Some argue, and I don’t know what your opinion is on this, that China wants to re-write the rules. Not integrate itself into an existing architecture, which was the promise of its succession to the WTO several years ago, but it really has an alternative idea of how things should be done. It is an alternative to the liberal rules-based system of which Pax Americana was the main guarantor or proponent. What is your view? Because this is really dramatically different. Are we talking about a broadening of the environment, with the legitimate accession of a resurgent China that as you pointed out, is reclaiming its stature long lost because of it having missed the Industrial Revolution? The issue of the South China Sea is viewed by some at least as an indication of trying to re-write the rules. Does China have international law-based grounds to claim sovereignty over the islands in the South China Sea or not? Because these are really important distinctions. Thank you.
Minister: I mentioned earlier, I do not believe China wants to upend the system of which it has been a chief beneficiary. But I do believe China wants to have the right to revise the rules, and wants to have speaking rights. Because it views that when these rules were written 70 years ago, it was not at the table. So now, between revising and completely upending, is quite a large room for manoeuvre. And the question is how this will be conducted. Our preference is a multilateral process, multilateral institutions, appropriately reformed and fit for a purpose. We believe if it’s just a condominium, a G2, then the rest of us have no say, no role, or similarly if they come to blows, it will be an even worse outcome. So I don’t know what will happen, I’m just expressing a hope that we will still be able to double down on multilateralism in a rules-based international order. You must realise, international law requires mutual consent, acceptance of norms, and the restraint that comes with it. The temptation for superpowers always is to say that it is too slow, too laborious, I know how to make it happen, and to try to do it unilaterally, because that is the formula for might is right. Or bilaterally, because it is only the two of us who count and no one else. I think, speaking for Asia and I think for Europeans as well, we would all prefer a multilateral system.
Question 3: Thank you very much. Raghubir. I am a journalist in the White House – India Globe. My question is: now I believe Prime Minister Modi will be back (in power); second time. Can you Mr Minister describe the relations between Singapore and India and also if you see any changes during his second term? Also, Singapore is a model for many nations, including for India, as far as environment and rule of law is concerned. How and what India can learn from Singapore? Finally, do you see, as many nations do, China as a threat in the region as far as building up militarily and South China Sea?
Minister: Wow, that’s several questions in one. First, Singapore never holds itself out as a model. We are just a tiny city-state. The example I often give – think of Manhattan being ejected by a hostile, upstate New York. No, we can’t be a model. We’re a useful laboratory. There are many officials in Asia who come and visit us, analyse us, take the ideas, modify it. It has to suit their own national circumstances. That’s the limit of what we can do. Specifically, with India, we have excellent relations. This is a combination of history, language, culture. Incidentally, this year we commemorate the 200th anniversary of the founding of modern Singapore, not by the British Crown, but by the British East India Company. In fact, in the first few years, Singapore was administered out of Calcutta, just to illustrate that historical link. We have excellent relations with Prime Minister Modi. As I said, one key thing which we are working on is the RCEP, and we hope that now that the election is out of the way, that he and his economic team can focus on getting this done. One other key element worth emphasising is that Singapore has always stood for better integration of India, South Asia, with the rest of Southeast Asia. And the successive Indian governments, both the current government and previous governments under Congress leadership, know that we have always stood for integrating India into the larger regional architecture. I mean, offhand, I can’t even think of a single problem to raise with respect to India. But we would like to settle the RCEP as quickly as possible.
Searight: Ok, we have time for one last question. The gentleman over here.
Question 4: Thank you. Steve (inaudible), independent consultant. You mentioned Graham Allison, he spoke here in DC a few months ago and related that he had been in Beijing last December, I think for ten days, and he spoke to someone who he described as one of the closest personal advisors of Xi Jinping. And that person told him “we have come to accept your thesis, the Thucydides thesis, or what you want to call it, completely. We didn’t a year ago, but now we are completely on board with it and we think that because of that, we should be working with the US to come up with ideas of how we can avoid this trap.” But my question is this. I have seen the top Asian experts here in DC recently, this year, almost unanimously reject the Thucydides thesis – say it’s bogus, baloney, has nothing to it. Maybe in your position, you could urge some of the people here to do a re-think on that. Maybe set up some groups to try and work out what the options might be. I don’t know, because you seem to be thinking that Graham Allison has a point.
Minister: You know the challenge about being in government and therefore having the responsibility, is that it is not just an academic anxiety on our part. You have to prepare for the worst, and hope for the best. And then, within the limits of your capacity, you have to try to arrange the architecture, so that the worst outcome becomes a little less likely. So, my point is that I am not in a position to say whether Graham was right or wrong. I don’t even have that luxury of speculation. I do know that for a tiny city-state like Singapore, trade three times our GDP, America our largest investor, China our largest trading partner. If there is any conflict or even tension between America and China, we will suffer and we will suffer disproportionately. So, do I hope good sense and goodwill will prevail? I do. And the point which I made repeatedly today, is that actually the solutions are not that difficult to imagine. My point is that it is the politics. How to win the next election and make the right choices for a more peaceful and prosperous future? That is the political challenge of our times. It is like even the example of the negotiations on trade. I am very sure any of your institutes could write an agreement. But agreements are not just about content, it is about how you arrive at them and how they are packaged. The point which I just want to leave with you is please pay attention to history, pay attention to the unique experiences that China and the rest of Asia have gone through, over centuries, and how you negotiate and how you present this package. In Asian culture that matters a lot. You may want to give me a present but if it is packaged wrongly, I may not be able to accept it. And if I can’t accept, it what’s next? That’s why this is a dangerous time, I make no bones about it. This is a dangerous time; we are deeply concerned. But we continue to hope and bank on goodwill and good sense. And I think all of you have a role also. Another thing that I have noticed over the last few years, we were discussing it just now, there does to be a sea change in attitudes in Washington vis-à-vis China. I’ve seen this in Congress, I’ve seen this among businesses, and now I see it amongst academics. I’m sure my Chinese colleagues and the multitude of Chinese students feel it as well. I don’t think that’s positive. Raising anxiety in the sense of insecurity does not help build strategic trust which we need in order to formulate the solutions to the common challenges that we confront. I wake up every day and see what happens. Literally.
Searight: Thank you. Well, as a general rule, any discussion that has a quotation from Lee Kuan Yew and a reference to Thucydides is a pretty rich discussion. So, I think we have met that mark today. Please join me in thanking Foreign Minister Balakrishnan. Thank you so much.
Minister: Thank you very much. I hope it was useful.
Searight: Yeah, it was terrific.
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