Thank you, my good friend, His Excellency Josep Borrell, Ms Alicia García-Herrera, my virtual audience in Spain and beyond, and of course, back home in Singapore. Let me first say a very big thank you for this honour of addressing this seminar. I know this is one of the most popular courses in the International University of Menendez Pelayo (UIMP), and it has been going on for 20 years. It is a privilege and honour to be able to address you, even if I am not attending in person in Spain.
The theme for today’s seminar, “Europe in the post-COVID World: Sustaining Multilateralism in a Time of Crisis”, is very apt. I am going to sketch out both the short-term, immediate impact of COVID-19 on Europe and Singapore and Asia, and try and zoom out and also take a longer-term view of what this pandemic represents and what a post-COVID world would look like.
This crisis is the crisis of our generation. I think Europe is expecting its GDP to shrink by about eight percent or so this year. In the case of Singapore, we are expecting about five to seven percent contraction in GDP. This is both a health pandemic challenge as well as one of the biggest economic challenges in our lifetimes. It is also a socio-political challenge, because at the end of all this, the people in our respective regions will judge whether we have been able to respond adequately, appropriately, and whether the lessons learned from this would make our world safer, more adaptable, more efficient and more future-ready.
I want to make a few points and highlight them in order. The first point I would make is that now, with the benefit of the last seven, eight months, we know that COVID-19 is highly contagious. It is certainly more contagious than its earlier cousin, SARS (Severe Acute Respiratory Syndrome). Fortunately, however, the mortality rate from COVID-19 is much lower. I say this because if you think about SARS, which affected Singapore and Asia in 2003, the mortality rate was about 10 percent. If you look at the Middle East Respiratory Syndrome – also due to a coronavirus – its mortality rate was 30 percent. In the case of Singapore, we have had more than 55,000 cases diagnosed, but we have only had 27 patients who have passed away. Right now in Singapore there are zero COVID-19 patients in the Intensive Care Unit (ICU). So if you look at the mortality rates in Singapore, it is less than 0.1 percent. The reason the mortality rate is so low is because in the case of Singapore, the majority of our patients who have had COVID-19 were fit young men. These are migrant workers living in dormitories. And what we know now is that if you have people living in close proximity, whether they are in their dormitories or in a luxury cruise liner or an aircraft carrier, you will have high rates of infection.
But the other reason for our very low mortality rates is, of course, the quality of healthcare and in particular ensuring that our healthcare facilities are not overwhelmed by the sheer number of cases presenting to hospitals. The larger point I am making is that if you were to look at this pandemic in context, and I want to emphasise that I am not trying to minimise it at all, but I am making the observation that if you look at it historically: for instance the early 20th century, the 1918 influenza epidemic probably resulted in the deaths of about 40 million people worldwide. If you go further back to Europe in the mid-14th century, just between the period from 1347 to 1351, between 75 million and 100 million people died. In fact, the Black Death resulted in the decimation of populations in Europe and Central Asia. Somewhere between 30 to 60 percent of people were felled by this pandemic. The point is that if you take a long historical view of pandemics, you know that this is a clear, present and historical threat to human societies. The other point worth recalling, if you think again about the Black Death, is that it also occurred in a period when there was trade. At that time there was the overland Silk Road, and there were traders from Genoa who were also trading across the Black Sea and across the Mediterranean. It is postulated that this pandemic was carried along by trade routes.
I reflect on this because even as we reflect on the relatively lower mortality rate, it is worth remembering that we are overdue for a pandemic. This is not the first or the last global pandemic. And we need to be psychologically, and from a public policy perspective, prepared for a far more lethal pandemic, which could occur, by definition, unpredictably but nevertheless certainly in the future. That is the first point: to understand that in a world with trade, a world with connections, a world in which people can travel quickly and because we now live in a jet age, the speed of transmission has accelerated.
A Post-COVID World
Next, I want to address the question of what a post-COVID world will look like. I would ask you to think about three factors, because, although COVID-19 is a major defining crisis of our generation, the larger trends and driving forces for our politics, our economy and our societies have already been in play before COVID-19 broke out. The three big trends I want to highlight are first, an evolution towards a multipolar world; second, an ongoing digital revolution; and third, climate change and the need for us to develop green and sustainable economies. Let me just spend a little bit of time on these three factors, because it is these three factors that, to my mind, will determine to a large extent what the post-COVID world will look like.
Let us deal with the first: multipolarity. At the end of WWII in 1945, the undisputed winner and the biggest elephant in the room was the US. Its GDP constituted about 40 percent of global GDP. Its technology was ahead of the rest of the world. Yes, there was a contest – a Cold War, there was an Iron Curtain, part of which cut across Europe. But in a sense, the economic vitality, technology, education, and economic innovativeness of the American economy allowed it to not only succeed locally, but also to dominate the global economy. In a sense, its victory in the Cold War was not a surprise. You could say it was an outcome that was to be anticipated.
The other point worth noting is that in the initial phase of the post-WWII period from 1945 to about 1980, China, India, and to a large extent Eastern Europe were not part of the global economy for a variety of reasons. China was in the throes of a communist revolution, a Cultural Revolution, and other gyrations that accompanied its own very difficult period after WWII. India was operating on the basis of import-substitution and was not oriented externally. Eastern Europe was behind the Iron Curtain. But from about 1978 onwards, China opened up and reformed. We witnessed the fall of the Berlin Wall and the reconnection of Eastern Europe. The breakup of the Soviet republic also connected more pieces into the global economy. India also opened up, particularly after 1991. So if you think about the second phase of this post-WWII economic history, the seeds of multipolarity were already planted by then. And in the last 40 years, you have seen the rise of new engines of economic growth.
If you look at the world today and the relative share of global GDP, the top three are the US, China and the EU. The US’ relative share of global GDP has shrunk from 40 percent post-WWII to 23, 24 percent today. China and the EU constitute about 16 percent each in nominal GDP terms. After that, there is Japan, India and the rest. My point is that we are emerging into a truly multipolar world; there will not be a single hyperpower. A lot of people are focused on the US and China. They forget that the EU is in the same league in terms of its share of global GDP, in terms of its technology, in terms of its ability to organise, produce goods and services. So the first point is that we are moving towards a multipolar world. And the question for diplomats and for political scientists is, how will a multipolar post-COVID world be different from the past?
For instance, in the past, when there was one hyperpower constituting 40 per cent of global GDP, that single superpower would underwrite the liberal rules-based multilateral world that has become so familiar to us over the past 75 years. Think about the establishment of the UN; it is no accident that its headquarters are in New York and Geneva. Think about the post-Bretton Woods institutions – the World Bank and the IMF – and the leadership over decades shared between the US and Europe. These are all manifestations of the relative economic, political and military power after WWII. But now, as we move into a multipolar world, these post-WWII institutions have to adapt and accept that the centre of gravity has now shifted and we are now in a world with more shared locus of power and economic weight. If we keep harkening back to a past where you expect one superpower to be the ‘global policeman’ and to underwrite a world order, that would be wishful thinking.
We need to focus our minds on a multipolar world with big regions or countries, each constituting 16 to 20 percent of global GDP. What is the modus vivendi for the big players in such a world? And what are the opportunities for other nation states, especially for tiny city states like Singapore, for whom trade volumes are three times our GDP? We thrive on globalisation, on global supply chains, on remaining open, on being able to do business with people in Europe, America, China and India seamlessly, and to be a global focal point for trade, capital, people and ideas.
The second point is about the digital revolution. Today, it is not just about computers or connectivity. You talk about big data, artificial intelligence, robotics. There is a lot of middle-class angst about wage stagnation and growing inequality. But when you look in history, every time there was a technological leap, it was usually initially a gilded age. The people who mastered technology first usually gained a disproportionate share of the profits, influence, and power. The reason I am speaking English today is because the Industrial Revolution began in the UK, spread across to Europe, and Asia was late in the game. Now, if you believe that there is another revolution going on – this time in the digital space – the question is, how prepared are our societies to educate and train our people, upgrade our digital infrastructure, and formulate policies that will create opportunities and a level playing field for competitiveness in a digital world?
This is an essential focus of our policy attention, because this is where there are opportunities for new jobs. This is where we have to define what the new skills are, and what digital literacy means. This is where we have to decide what will be the rules of competition, otherwise you will get new monopolies, new robber barons amassing for themselves a disproportionate share of the harvest from the digital economy. And we also have to pay attention to the protection of people's privacy and to securing cybersecurity. This will be another major force that will determine the contours of a post-COVID world.
The third factor I want to leave with you is climate change, and the essential need for us to adopt sustainable economic development. On this point, I am very glad that it is the young people – in Singapore, Asia, and Europe – who are the most fervent advocates for green and fair economic development. Climate change is a reality. The levels of carbon dioxide in the atmosphere now exceeds 400 parts per million (ppm). The last time levels were this high was about 800,000 years ago, before human beings were walking on this earth. It is a reality, but – all the technology needed to create a green and sustainable economy is already available. It is now a question of policy, a question of global cooperation, a question of getting the rules right, ensuring transparency, ensuring compliance, and making sure that we are capable of securing a multilateral global good without free riders. This is a key political and diplomatic challenge of our generation. If we do it right, we will have a sustainable, safer and fairer world.
The point I am trying to make is that COVID-19 is a clear and present danger. It is the defining crisis of a generation. But these three factors – a multipolar world; a digital world; and a green, sustainable economy – are the key driving forces that will shape what the post-COVID world would look like.
The challenge for us in politics and diplomacy will be to deal with the current problem. In the case of COVID-19, the key focus will be on the development of a vaccine, because that is the only way we are going to be able to resume a more normal life. There are many efforts going on, and many vaccine candidates. In the case of Singapore, we believe in ‘vaccine multilateralism’. And I like to believe that the EU also adopts a similar philosophy because no country is safe until everyone, every single country and people all over the globe are safe.
Even as we develop vaccines, we need to hedge our risk because we do not know which candidate vaccine will ultimately turn out to be the most appropriate. We also need to look after our neighbours and we need to work together. That is why Singapore supports GAVI, the Coalition of Epidemic Preparedness Innovations (CEPI), and the COVAX facility. Switzerland and Singapore co-Chair the Friends of the Facility (FoF). I have also had discussions with Josep Borrell and other foreign ministers in Europe to support the cause of ‘vaccine multilateralism’.
EU-Singapore Relations
The other things which we are doing with Europe in the short-term: we signed the EU-Singapore Free Trade Agreement (EUSFTA), which came into force in November last year. I am glad to report that even in the midst of this crisis, the trade volume between Europe and Singapore has held more or less steady. That is a significant achievement in a time like this. In the medium-term, we look forward to elevating our relationship between the EU and ASEAN to a Strategic Partnership. We have actually approved this in principle, but we have yet to cross the finish line. We have ongoing negotiations on a Comprehensive Air Transport Agreement (CATA); that is almost within reach, and we have to push it past the finish line.
Let me end by thanking you for this opportunity. This is a crisis. We need to work together to overcome it in the short-and medium-term. But the longer term trends – multipolarity, the digital revolution and climate change – these are what will shape a post-COVID-19 world immensely. Thank you.
Q&A
Question: In the last few years, China’s foreign policy has been assertive in many areas, for instance the New Silk Road; the Digital Silk Road; in the South China Sea – based on economic power and increasingly military power. In the post-COVID world, will China continue this strategy or will it adapt to the new circumstances?
Minister: I would like to take a step back and look at history. China, when it was united and when it was at peace with itself and had secure borders, always constituted a very big proportion of global GDP. The fact is that China will be a major player in the same way that Europe is. In fact, a lot of global trade in centuries past was precisely between Europe and China. The Silk Road connected China to Europe over land. There was also a Maritime Silk Road, which incidentally also passed by Singapore by the Straits of Singapore and the Straits of Malacca. So it is important to understand that from a Chinese perspective, they have had a couple of centuries of humiliation, fundamentally, in my view, because they missed out on the Industrial Revolution which began in Europe and the chief beneficiary of was ultimately the US.
Now that [China has] opened up and connected their economy to the world, they believe, and they have a legitimate ambition to take what they feel is their rightful place in the world. But here is where I would draw the distinction. Just earlier today I had a meeting with [Member of the Political Bureau of the Communist Party of China Central Committee and Director of the Office of the Central Commission for Foreign Affairs] Yang Jiechi. China does not intend to replace America. I think what they actually mean is that they also foresee a multipolar world with multiple significant centres of economic weight and power. It is not that they are aiming to be the sole hegemon in the region or in the world.
Having said that, as countries rise in power, they also have to learn how to wield that power and also how not to wield that power. I think the next few years is going to be a process of learning on all sides. And that is what I meant about hoping that a modus vivendi will occur. China and US right now represent the most acute phase [of this process], but ultimately how will it relate to China and Europe.
The other point which I would also want to stress is that most people have not paid enough attention to Southeast Asia. We have over 630 million people in Southeast Asia. Our combined GDP right now is small, about US$2.7 trillion. But we have high growth potential. We have young demographics and we expect that combined GDP to double or even quadruple in the decades to come. In fact, China's largest trading partner is not the US or Europe; it is with Southeast Asia.
The point I am trying to make is that when I talk of a multipolar world, it is not just wishful thinking. It is looking at the trends and – assuming we do not have a war or any kinetic action either in the sea, in the air or on land – we are likely to arrive in a multipolar world. It will be essential for Europe, the US, China, India, Japan, and Southeast Asia to work out the rules of engagement, rules of investment, the ways to keep trade free, as well as the infrastructure and policies needed for keeping a digital economy going. This is where European values and European policymaking is also crucial, because, for instance, the rules on GDPR (General Data Protection Regulation) in Europe. Whether you agree or disagree with it in full, the fact is, it has significant signalling value. And eventually the rest of the world will have to catch up. So that is how I see it. I hope I do not come across as overly optimistic, but there is a realistic basis for why it is possible for us to secure peace and prosperity in the decades to come.
Question: How do Europe and Southeast Asia become less passive and more active in ensuring that we have space to manoeuvre, and not be ‘squeezed’ by the two hegemons, i.e. China and the US?
[Garcia-Herrero speaks]
Minister: I agree with so much that Alicia just said. Your question was ‘How?’. First, be confident within your own country, invest in your own infrastructure, invest in your education system, make sure your country is able to create jobs and is competitive on the global stage. This starts by being confident and strong within.
Second, maintaining unity within the EU, and for us in Southeast Asia, maintaining ASEAN centrality and unity, because that is how we have a voice. That is how we have agency. Third, there was a strategic reason why we signed the EUSFTA. The EUSFTA was meant to be a pathfinder for the EU to ultimately establish free trade arrangements with the whole of Southeast Asia. Now, I know that negotiations will be difficult and complicated. It will take a long time, but I am making the strategic argument that this is worth doing in its own right. It will expand opportunities both within Europe and Southeast Asia and it will also help us create a more stable world.
Both Europe and Southeast Asia believe in multilateralism. This is a time when multilateralism is under pressure, when unilateral instincts, protectionist instincts, even xenophobic instincts and populists are rising to the fore. This is a time for people who believe in multilateralism, free trade, integration and mutual cooperation to stand up. Do not forget that Europe, in fact, has a head start in Asia, because, based on past investment patterns, the EU has always been a major investor in Asia, and particularly in Southeast Asia. Even for the less developed countries, the EU has always been a major source of overseas development assistance.
The point I am making is that these are facts and numbers which most people do not pay enough attention to. And you have a head start, it is for you to harvest. And that is why I am looking forward to the leadership of Josep Borrell, the European Commission. Look east! You are, in fact, just restoring a historical pattern that has been there for many centuries. And not only will you improve the position of Europe and Southeast Asia, but you will create a more stable and truly a more multipolar world.
Question: Minister, a former Speaker of the US House of Representatives, Tip O’Neill, had a sign on his desk that read: “The Golden Rule is that those who have the gold make the rules”. This was a reflection of the post-Cold War world. But today, the economic power is dispersed. How does one make the rules, especially in the digital sphere, when there are at least three conflicting models of digital regulations from the US, Europe and China? From the Asian perspective, do you see a contradiction between Europe’s perception of its strategic economy and multilateralism?
Minister: I see Europe as a key player. I see Europe as a key advocate of multilateralism, maybe because of your own history - nation states, wars fought in the name of nationalism or religion, and your instinct now to secure peace and prosperity by working together. I believe our attitudes to the reform of the WTO, our belief in investment flows, trade flows, are very similar.
You mentioned that there are three or more models in the digital space: the US model, the Chinese model, or the European model. The fact that Europe has autonomy and a voice, is a reason for optimism. For even if the two largest hegemons are trying to bifurcate the world, the rest of us will say, no, we still believe in working together. We still believe in formulating common standards. We still believe in enabling our digital systems to interoperate. We believe that vaccines should be a public good and that the way we procure, develop, manufacture and distribute public goods should be done in a way that is both fair and effective and safe for the world. So I see Europe as part of the solution, not the problem.
Question: The European Commission has announced plans to issue large quantities of bonds denominated in Euros. There is also willingness by some countries to diversify from using the USD as the sole reserve currency. How is this perceived in Asia, and are we at a turning point?
[Garcia-Herrero speaks]
Minister: Thank you, it is always wonderful to hear your insights. I am not an economist, I am an ophthalmologist, so take my comments with appropriate skepticism. Why is the US dollar the reserve currency of the world? I think there are a couple of reasons. First, after WWII, 40 per cent of global GDP was accounted for by the US alone. Because of the size of its GDP and because it was trading across the world, it was quite natural for people to start thinking of using that as a unit for accounting and exchange. Second, if people want to deal with a currency unit, people would expect a certain amount of stability in value. This in turn means there has to be some predictability, and predictability usually comes with having a coherent, consistent and fairly applied set of rules and standards. The American economy provided that. The fact was that it was convertible, and people could invest in US assets and the US would be buying goods and services from other parts of the world.
There are obviously advantages to a country whose currency is the reserve currency in terms of interest rates and even in terms of leverage. When it comes to the Euro – and here I would leave it posed as a question rather than a comment – if you have a single currency, it would stand to reason that you need to have a single or at least a coherent collective monetary policy. Which in turn means far tighter central bank coordination of monetary policy across all EU Member States. This is ultimately a political question, and one which the European governments will have to settle internally. As far as the rest of the world, looking on from the outside, will it be good to have options for reserve currencies? Yes, I think it will be good. But time will tell the role that the Euro will play on this field.
So, again, it comes back to the recurring theme of today’s discussion that we are moving towards a multipolar world. We are living through a digital revolution. We are facing global challenges like pandemics, climate change. We believe the answer lies in multilateralism. The answer lies in formulating global standards which are fair, a level playing field applied consistently – a rules-based world order. We look to Europe as a key stabiliser in this multipolar world undergoing an inflection, even a revolutionary time. But I remain optimistic that Europe will appreciate its own strengths, its own autonomy, its own sense of agency, and its own ability to set standards and to shoulder weight. And my appeal today to Europe has been to look east. There are opportunities, there are partners. There are friends in Asia, in Southeast Asia. This is the time for you to stand up, open your eyes, open your ears, to reach out and to grasp the many opportunities that I believe will multiply in the decades to come.
So on that note, let me thank you for this chance to participate and to listen to you and to take those questions. Thank you very much, Josep.
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