Professor Danny Quah, Dean and Li Ka Shing Professor in Economics, Lee Kuan Yew School of Public Policy,
Professor Aaron Thean, Deputy President (Academic Affairs) and Provost, NUS
Faculty and staff,
Alumni and students,
It is a pleasure for me to be back because when I was in NUS many decades ago – I was involved in the NUS Student Union for four years and of that, through the NUS Political Association for two terms. So, it is indeed a homecoming.
The theme for this year’s Forum is navigating the future. In order to navigate the future, you must first know where you came from, and then you need to know the winds and tides. Based on where you come from, you know where you are today. Based on the winds and the tides, you then decide which way you point to go and where you will go to.
Fundamentally, this also requires you to know what you are trying to achieve in the first place – your ultimate destination. Bear this frame in mind as I try to share the next couple of points. So, let us start with how we got here.
When I was a student at NUS four decades ago in the 1980s, the world was in a very different place. The United States had just established formal diplomatic ties with China in 1979, shortly after China under Deng Xiaoping began the process of “gaige kaifang” (reform and opening up), which really launched the Chinese economy on a completely new trajectory.
The Cold War was in full swing and there were multiple crises occurring in the world. The Yom Kippur War in Israel in 1973 was followed by the global oil embargo orchestrated by the Organisation of the Petroleum Exporting Countries (OPEC) which led to a period of very high inflation and very high interest rates. It had global economic impact.
The fall of Saigon was in 1975, and subsequently Vietnam’s invasion of Cambodia in 1978.
In 1978, there was also the Iranian revolution, with the establishment of an Islamic theocracy, the reverberations of which continue to sweep across the Middle East.
On Christmas eve in 1979, the Soviet Union invaded Afghanistan. I can still remember my university days in 1980 – the students here were in an uproar.
By the time I graduated in 1985, there was an economic downturn in Singapore, referred to as the “Pan-Electric crisis”. The stock market crashed, many of my friends who graduated in the mid-80s had difficulties getting jobs. But fundamentally, we overcame that quite rapidly. Senior Minister Lee Hsien Loong was Minister for Trade and Industry at the time, and he made some pretty radical changes, including changes to CPF rates, and we recovered pretty quickly.
Beyond Singapore, the 1980s and the 1990s were really the golden age for economic liberalism. Instead of ideology, people were focusing on economics, on being pragmatic, on growing productive capacity and creating jobs.
China’s decision to reform and open up under Mr Deng Xiaoping in 1978 was a key development. Just a month before he announced the reform, Mr Deng visited Singapore and noticed that an Asian society, with a non-communist, Chinese majority population, seemed to be doing rather well. I do not know to what extent that influenced his approach to the reform and opening up of the Chinese economy. But it is worth recounting one story which Mr Lee Kuan Yew shared of his private meeting with Mr Deng who had asked how China could improve relations with Southeast Asia. Mr Lee, in his usual direct manner, had replied, “Stop supporting communist insurgencies in Southeast Asia, and in particular, stop your radio broadcast from Kunming.” In those days, we did not have communications as a course in university, but there was real broadcast and communications directed towards forming a real communist insurgency. Mr Deng did not answer Mr Lee at all. But two years later, the broadcast from China aimed at Southeast Asia stopped, and China’s relationship with Southeast Asia started focusing on economics. The rest is history.
US-China relations were also warming up during that period. By that time, the bilateral relationship between China and the Soviet Union had broken and the US, quite correctly under Henry Kissinger and President Richard Nixon, decided China was right to swing over onto their side. This was a period in which the US and China were, in fact, strategically on the same side.
In that climate, Singapore was a city state that was non-communist, trying to do business with the world, and willing to overcome xenophobia and colonial hangovers and welcome investors. As long as they brought ideas, technologies, markets, management and investments into Singapore, they were welcome. We were trying to be global or to run a globalised economy even before the word “globalisation” was popularised. Of course, you could also say part of the reason we had to pre-position ourselves this way was because we had no choice. The moment in 1965, when we were cut off from Malaysia, we lost our natural hinterland. We avoided the siren calls of import substitution and protectionism, self-reliance, high tariff barriers, as well as barriers to entry for companies and other competitors, which were the conventional economic wisdom for developing countries at the time. Those options were not available for Singapore and therefore, we globalised ahead of time. It is no surprise then, in retrospect, that for that practice and the fact that we had honest, competent leadership and hardworking, disciplined people, Singapore’s per capita GDP grew from US$500 in 1965 to about US$85,000 today. This is an incredible rate of growth which occurred in 59 years – very few countries, even cities, have experienced that kind of trajectory.
We caught the tides and the winds at the right moment, and we maximised our lift. Fast forward to today, and the world is in a very different phase. It has changed dramatically. There are growing tensions as the world transits from a unipolar world, where there was only one real superpower – the United States. Today, we are moving inexorably into a multipolar world. It will not be just one superpower in the game. The rival to the US today is not the Soviet Union – the Soviet Union broke up in 1991. The rivalry is unfortunately between China and the US and there is a fundamental lack of strategic trust between the two of them. I believe US National Security Advisor Jake Sullivan is in China, and I am glad communication channels and face-to-face talks are going on, but the strategic picture is taxed.
The bifurcation in the global economy in the name of resilience and de-risking is worrisome for us in Singapore, because for the last 59 years, Singapore has had the best of both worlds. America was and is the largest foreign investor in Singapore by a long way. Singapore also benefited tremendously from the reform and opening up of China. Even if the US and China do not go to war, if relations are fraught, if their economies diverge, then the situation for us will be very tricky. It can easily slip, if there is a mistake, from the best of both worlds to the worst of both worlds.
In addition to that, we are also back in a world where there are major hot wars again. The Russia-Ukraine conflict grinds on. I do not need to remind you that the war in the Middle East continues with horrendous consequences for innocent civilians. The point is there is a real risk of a regional conflagration which will have profound impact on energy, and on the economy.
The world has cycled back into division, tension, hot wars, and on top of that, we are also having to face other problems. We have emerged from COVID, and just when you thought it was safe, now the question is – what is Mpox going to do. It does make you worry about whether we are ready for the next pandemic with significant mortality rates, and for climate change. The question now is whether we have reached tipping points where the changes will be cataclysmic, will be major, and what I can safely say is that your generation will live through the consequences of actions or inaction on the climate change front. That is where we are today.
The question is, here we are navigating our little boat, where are we going and how should we sail? Let us start by asking ourselves, what has not changed in 59 years? The first dimension that has not changed is we continue to remain a tiny, small, low-lying island city state in the heart of Southeast Asia. Our geographical position has not changed – we are not landlocked but “sea locked”, and we will always have to continually navigate narrow waterways and airways in order to secure supplies. The territorial seas of our closest neighbours actually abut each other, and if we did not have the United Nations Convention on the Law of the Sea (UNCLOS) which guarantees freedom of navigation and right of overflight, we would be in a similar situation as a landlocked country.
The next point is whether we should continue to be an open, globalised, liberal economy. That has not changed. Our population has grown, but we still do not have a natural market. We do not have a large market, domestic or regional, within our borders, and we need to remain open. It is a simple fact; it is not a choice. We cannot build a fence or a wall around us and we cannot insulate ourselves, whether it is from viruses or competition or diversity or external politics or external influence. Openness is simply a fact of Singapore. That has not changed.
Another point I want to make is, if you look in history, small states usually do not survive. History and geopolitics are very cruel to small states, especially a small state which has no intrinsic relevance to the global order. If Singapore disappeared tomorrow, sea levels rose and we just disappeared, there would be no shortage of alternative sites to perform many of the functions that we perform. We have to be different. We have to be smarter, more hardworking, more organised, more useful, more constructive, and more dependable than everyone else. Again, it is not a choice, it is an imperative. Never assume we can just sit still and everything goes on smoothly.
We need to be exceptional on the global stage if we are to be noticed. Some fundamental realities have not changed, and what this means for our foreign policy is that we are dealing with changed circumstances, but we fundamentally have the same set of vulnerabilities.
How do we conduct our foreign policy given these circumstances? Singapore has to be a consistent stalwart advocate for a rules-based world order and for international law. The reason is because we are small, and if you do not operate by rules, the law of the jungle applies to diplomacy, which is that might is right, and big is powerful. Our insistence on operating by principles, formulating rules, getting people to agree to rules, enforcing those rules, abiding by those rules is precisely because we are small.
Now, what that means in practice is that we must be prepared to call out violations of international law, breaches of the UN Charter, or where fundamental principles are at risk. We did so when Russia invaded Ukraine in February 2022. We condemned the invasion because it was a flagrant contravention of the UN Charter and a threat to the peace and security of all countries, especially small countries with big neighbours. We have also spoken out in other instances, such as when Vietnam invaded Cambodia in 1978, and when the US intervened in Grenada in 1983.
When Hamas conducted a terrorist raid – 1,200 people dead – and took hostages on 7 October (2023), what I was really thinking about was if someone had fired 1,000 rockets at Bukit Panjang, if an insurgent force had come into Woodlands. Now you understand why we had to say it was an act of terror and we had to assert that Israel had the right of self-defence. Because if that similar situation happened here, we would have to do what we needed to do – to deter and to salvage the situation and to bring our people home.
However, it does not stop there. Because even if Israel launched its response, asserting the right of self-defence, it still has to comply with international law. So, when we decided the Israeli response in Gaza has gone too far, we said so. The point I am trying to make is that you have to take a step on principle to defend international law, but we are doing so not in an ideological sense but practically because every time something happens, I think about Singapore and Singaporeans and what we need to do in those circumstances.
The other aspect I would emphasise is why we play the leading role in the 1982 UNCLOS. I already told you why it is important for a “sea-locked” country like Singapore – which is why Professor Tommy Koh presided over the negotiations. More recently, there was the historic treaty on Marine Biodiversity of Areas beyond National Jurisdiction. These are treaties which apply to the international domain, and Singapore wants to be present, wants to be heard and wants to play a constructive role. One of the highlights of my diplomatic career was to be a regular ministerial facilitator for several years during the negotiations that ultimately led up to the 2015 Paris Agreement on climate change. Again, it is not just about the world; it is about Singapore's place in the world.
Singapore has to be a credible, reliable and predictable partner to all. Promoting friendly relations is a way to advance Singapore's national interest, because having a friendly relationship with the person across the table, at a minimum, ensures that you do not miscommunicate, you do not misunderstand, you do not create quarrels when there is no need to quarrel. Ideally, having a friendly relationship also enables you to look for compromises – landing zones where you can win some, lose some, or ideally, win-win. The point here is that Singapore tries to be friends with all, and we do not go around poking people in the eye. The purpose of doing that is to advance our own long-term national interests.
And here is where I want to make a point which often gets misreported and misunderstood – about whether Singapore should be neutral. Our foreign policy does not aim to be neutral. What we do aim for is to always act in a principled and consistent way based on Singapore's long-term national interests. We do not take sides. We uphold principles. If there is one line I need you to take away from today is, do not take sides but uphold principles. I found that actually, by being consistent, sticking by the rules, upholding principles, I get less pressure. It allows me, whether I go to Washington or Beijing, to say exactly the same thing. It depends on the issue. Sometimes, they are pleased because we seem to be on their side. Sometimes, they are not so happy because we are not on their side. But it is not a wishy-washy shifty position where, if I put enough pressure, I can pressure you and you will change your mind. When we say yes, it is valuable. That is the point. We are not aiming for neutrality, we are not choosing sides, we are upholding principles.
Finally, I want to tell you that foreign policy begins at home. Our unity, our cohesion, the compromises and the special arrangements that we have made for Singapore to be united and successful is why people even bother to look at us with interest. The day we are divided, the day our delegations no longer reflect our diversity, the day that the positions and speeches made do not reflect a confident, united, successful, multiracial, multilingual state in the heart of Southeast Asia – that is the day our foreign policy becomes irrelevant. Thank you.
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Photo Caption: Minister for Foreign Affairs Dr Vivian Balakrishnan at the NUSPA Kent Ridge Ministerial Forum, 2024
Photo Credit: Ministry of Foreign Affairs, Singapore
Photo Caption: Minister for Foreign Affairs Dr Vivian Balakrishnan at the NUSPA Kent Ridge Ministerial Forum, 2024
Photo Credit: Ministry of Foreign Affairs, Singapore
Photo Caption: Minister for Foreign Affairs Dr Vivian Balakrishnan at the NUSPA Kent Ridge Ministerial Forum, 2024
Photo Credit: NUS Students’ Political Association
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