"Challenges for Asia" by GOH Chok Tong, Prime Minister, Republic of Singapore

Speech by Mr. Goh Chok Tong, Prime Minister of Singapore at the Research Institute of Economy, Trade and Industry (RIETI) in Japan, on Friday, 28 March 2003

The world is being reshaped before our very eyes, for better or worse. The question is: how can Japan and Singapore influence the outcome in our national interests?

The end of the Cold War has not resulted in a more peaceful world. On the contrary, the post-Cold War world is a messier and more dangerous place. After the Cold War, we were plunged into the Gulf War to liberate Kuwait from Iraq. That was followed by the long struggle to disarm Saddam Hussein, culminating in the on-going war. In the 90s, we also saw political turmoil, ethnic cleansing and a NATO-led intervention in the Balkans. We witnessed the collapse of states in Somalia and Haiti, and genocide in Rwanda. Meanwhile, the Israeli-Palestinian conflict continues with increasing violence.

Then there were the horrific 9/11 attacks by Al Qaeda. Suddenly, no one is safe. We are all vulnerable to further attacks from this highly-organized and well-financed global terrorist network.

The world is also being reshaped geo-politically. Three key developments contribute to this re-configuration of international political and strategic relations:
-First, the unprecedented pre-eminence of the US;
-Second, the rise of China; and
-Third, the political discontinuity in Indonesia.

First, US pre-eminence. The defining characteristic of the post-Cold War world is the pre-eminence of the US. This pre-eminence is on a scale unprecedented in modern times. It is multi-dimensional: not just military, but also economic, financial, technological and even cultural. US pre-eminence is not likely to be challenged by any country or grouping of countries for a long time.

So whether we like it or not, it is a geo-political reality that no major international issue today can be resolved without the co-operation of the US. And whatever their public rhetoric, every Asian government understands the need for a good relationship with the US. Since the end of the Second World War, the US presence has been the irreplaceable foundation of stability and growth in East Asia. Without the US presence, there would have been a destabilizing rush to fill the power vacuum. The US is also a vitally important market and source of technology and investments.

This sheer scale of US pre-eminence has evoked discomfort, even among friends of the US.

Discomfort with US pre-eminence is currently focused on the US decision to disarm Iraq through war. Asian countries with large Muslim populations are sharply critical of the war. Even non-Muslim countries are unsettled. But in these tumultuous and uncertain times, we must no lose sight of the fundamental reasons behind the war.

It was unfortunate that the UN Security Council was unable to reach a consensus on a second resolution. But this was more a political than a legal necessity for war. Iraq has been in violation of Security Council resolutions for twelve years since the Gulf War. The onus was always on Iraq to disarm completely and avoid a war.

Iraq's decade-long flouting of the UN's effort to disarm it of weapons of mass destruction assumed more threatening proportions after 9/11. Indeed, 9/11 changed the way the US looked at the world. It felt vulnerable, and re-assessed its security priorities. In this reassessment, Iraq, which the US believes to possess weapons of mass destruction, was deemed an unacceptable threat. To protect itself, the US decided to use its enormous power to remove the threat.

In the debate leading up to the current war, this was sometimes presented too simplistically as a choice between unilateralism and multilateralism.

Suppose the Security Council had been able to reach a consensus on Iraq: would it have diminished US pre-eminence?

The answer is clearly "No." But it would have preserved the stature of the UN.

On the other hand, when the UN Security Council failed to support the pre-eminent world power in enforcing previous UN resolutions, which are of vital interest to the US and the international community, multilateralism and the UN are the losers.

The moves of France, Germany, Russia and other countries to block Security Council action against Iraq also carry implications beyond the UN.

For instance, can trans-Atlantic relations return to business-as-usual? What remains of Europe's aspirations towards a common foreign and security policy? How will NATO remain relevant to European security? It will take some time for these questions to be answered definitively. But the impact of the answers is likely to be grave and profound.

Let me give you a further reason why we think action against Iraq was necessary. Weapons of mass destruction in the wrong hands pose a horrific threat to all civilized states. Used against small states like Singapore, they can also mean the end of the county. If action had not been taken against Iraq, or if the US fails in Iraq, what signal will this send to extremist groups around the world? Will this make it easier or more difficult to persuade North Korea to give up its weapons of mass destruction?

Already, North Korea has taken advantage of the international pre-occupation with Iraq to push forward with its own nuclear weapons programme. And if North Korea becomes a nuclear power, this will spark a strategic re-assessment in all neighboring countries.

Japan, for example, might have to re-visit its security options. China will then have to do so as well, both in response to Japan and to the possibility of a nuclear-armed, united Korea. The US must respond, and Russia too. Confidence and stability across Asia will be badly rattled.

Fortunately, there is slightly more time to deal with North Korea. We hope that the major powers - the US, China, Japan, Russia and South Korea - will use this time available to defuse the situation peacefully.

Let me now turn to China.

In the last 20 years, China's GDP has grown by an annual rate of almost ten percent. Its foreign trade has grown even faster, at 15 per cent. China is now an important trading partner of the US, Japan, Korea, the EU and the ASEAN countries, and a major investment destination for the world. It has become an immense opportunity for everyone, but also a challenge.

For instance, by one calculation, 16 per cent of Japan's exports to the US are in competition with China. The figures for Southeast Asian countries are much higher. Almost 36 per cent of Singapore's exports to the US, 48 per cent of Malaysia's export, 65 per cent of Thailand's exports, and 82 per cent of Indonesia's exports, are in competition with China in the US market.

What role will a rising China play regionally and internationally? How should we view such a China?

A prosperous and globally integrated China is in all our interests. The alternative of a poor and isolated China will be like having 60 North Koreas at our doorstep. It will pose challenges without the opportunities.

China is conscious that it needs to be seen as a responsible power and has taken pains to cultivate this image. This is comforting to regional countries. Nevertheless, many in the region would feel more assured if East Asia remains in balance as China grows. In fact, maintaining balance is the over-arching strategic objective in East Asia currently, and only with the help of the US can East Asia achieve this.

The US-China relationship is therefore the key bilateral relationship in East Asia. If the relationship is stable, it has a calming effect on the entire region. If US-China relations are brittle, the region is unsettled.

As China's strategic weight grows, its influence, especially in the region, must increase. On the other hand, as the pre-eminent global power, the preservation of the status quo is, by and large, the US interest. This fundamental difference is real. But it does not doom US-China relations to conflict. Let me explain.

The current US Administration is more sceptical towards China than its predecessor. But the US needs China, among others, to support the global anti-terrorism effort. In Washington, the debate between those who view China as a strategic competitor and those who want a more constructive relationship is still unresolved. However, the anti-terrorism campaign has muted the debate and restrained the hawks' approach towards China.

For its part, China is uncomfortable with US unilateralism. It is also distrustful of Japan's military support for the US beyond Japanese waters. But China has refrained from pressing these concerns. It has its own problems with terrorism. It faces internal political and social challenges and has just undergone a leadership transition. Moreover, it wants to concentrate on economic growth. Beijing therefore wants stable and constructive relations with the US. It does not want to tangle with an US that is in a mood of heightened assertiveness. For example, it has taken a restrained stand on the Iraqi question to keep its relations with the US on an even keel.

Overall, therefore, I see the immediate US-China strategic situation as stable.

North Korea aside, Taiwan is still the issue most likely to give the region anxious moments. With the end of the Cold War, "One China" may be less of a strategic imperative for the US. But for China, it remains a non-negotiable issue. Even so, China has softened its posture without compromising its bottom-line. It now recognizes that its growing economy has shifted long-term trends in its favour. China has also been assured that the present US Administration will not support Taiwan's independence.

As for Japan's relations with China, I think that Japan is rightly concerned that a rising China might relegate it to a secondary status in Asia. China's proposal for a free trade agreement (FTA) with ASEAN was therefore met by an immediate riposte from Japan in the form of a Comprehensive Economic Partnership. These are only the opening moves in a new geo-political chess game in East Asia. ASEAN countries will be watching to see how China and Japan turn these moves into real benefits for them.

Indeed, Japan must remain centrally involved in ASEAN. Japan is still the second largest economy in the world, of great importance to Singapore and the region. But I am concerned that Japanese investments into ASEAN have decreased sharply since 1997. Japan's trade flows with ASEAN have been declining since 1995.

It is in this context that I view Prime Minister Koizumi's efforts to reform the Japanese economy as of vital importance, not just to Japan but to East Asia as a whole. Of course, it takes two hands to clap. Southeast Asia governments too, have to take painful but necessary measures to restore their region as an attractive economic partner.

This brings me to my next topic.

Significant political and economic changes are unfolding across Southeast Asia, generating serious challenges. 9/11 and the war against Iraq have brought more attention to the most complex challenge of all: political Islam.

Southeast Asia Islam has traditionally been syncretic and moderate. The region's governments are secular. But globalization has heightened the impact of Islamic influences, particularly from South Asia and the Middle East. A greater religiosity is now evident throughout the region.

The highest stakes in this political Islam challenge are in Indonesia, which has the largest Muslim population in the world. The majority of Indonesian Muslims are tolerant. The conventional wisdom is that they are different from the intense and austere Wahhabis of the Middle East.

But this tolerant state of Islam in Indonesia is being challenged by a growing group of extremists who want to turn the country into an Islamic state.

This challenge began after Soeharto stepped down as President. The political system he had tightly controlled for more than three decades collapsed, and Indonesia suffered a discontinuity. This threw open the gates of power to groups who want to place Islam more prominently at the centre of the polity, and even as the basis of the Indonesian state. In the last general elections, the religious parties obtained less than 20% of the votes. But their influence in the political system is greater than these numbers suggest, and may increase with time. In fact, whatever their personal beliefs, in pursuit of their ambitions in the 2004 general elections, many Indonesian politicians now vie for the support of Islamic groups.

So must President Megawati, even though she is a committed secularist and believes firmly in a pluralistic Indonesia based on nationalism, not religion.

President Megawati has no illusions about the Muslim parties' attitude towards her. She has not forgotten how a coalition of Muslim parties denied her the Presidency in 1999, despite the fact that her political party won the largest number of popular votes in free elections. Hence, although she understands the dangers posed to Indonesia by extremist Islam, she must tread carefully whenever she has to move against Muslim militants.

Indeed, Indonesia initially took a passive role in the fight against terrorism. Some politicians even denied that terrorists existed in the country. It took a tragedy, the Bali bombings of October 2002, for them to acknowledge the problem, and for the government to take action against the terrorists.

I believe that President Megawati is committed to Indonesia's fight against terror.

But if the Indonesian state veers toward radical Islam, terrorists may again find a sympathetic environment there.

This will have severe consequences for Asia. A more radically Islamic Indonesia that sits astride strategic sea-lanes linking the Pacific and Indian Oceans will have profound implications for many countries, including Japan.

The challenges I have described will be around for many years. And there will be other developments that will also impact the stability of our region. We should therefore have a long-term vision of how we can manage such challenges. East Asia should evolve a framework that can ensure peace within region.

One such framework can be the East Asia Free Trade Area, or EAFTA. EAFTA is a practical and realistic way to enmesh the economies of East Asia. When East Asian economies are interdependent and intertwined, they will have a shared future. This sense of a common future, of being in the same boat, will help prevent intra-East Asia conflict.

EAFTA is not meant to be immediately realized. It can be a medium term goal, achieved by building on the bilateral FTAs now being pursued, such as the FTAs Japan is discussing with Thailand and the Philippines, and the sub-regional FTAs between ASEAN and China and Japan. EAFTA can include Taiwan under the "One China" principle, and even North Korea if it decides to open up.

The years and effort put in to achieve EAFTA will build up understanding and trust among the East Asian economies. This, plus the real benefits of interlocking relationship in a free trade area, will prevent future disputes from getting out of hand. And even if there are serious disputes, there will be established channels of communication and mechanisms to deal with them.

Here, we can learn from Europe. Europe has suffered many wars, the latest being last century's two World Wars. These wars were one of the primary impetuses behind the formation of the European Community. The thinking was that if the countries of Europe worked together for the common good in an alliance, and their fortunes were inextricably interwoven, this would discourage wars between members.

Europe has succeeded. There have been no wars between traditional rivals in the last half-century, and none are in sight. So powerful is the idea of the EU that we are now seeing a long queue of countries to join it. The EU's expansion is not just for economic prosperity. It is to widen the region of peace and harmony in Europe.

Likewise, East Asia, which has also seen wars among member countries, should have the vision, courage and wisdom to aim for an East Asian Community as a long-term goal.

EAFTA can be the vehicle to bring this about. The idea has already been floated in previous ASEAN+3 Summits. But it needs a push. ASEAN+3 should set things in motion, identifying and pursuing areas of co-operation within East Asia. We must breathe life into EAFTA, so that 50 years from now, when the geo-political situation is different, we in East Asia will still be able to live in peace, harmony and prosperity.

Singapore has little say in the reshaping of the world. Japan, on the other hand, can certainly influence the course of events here in East Asia. Let us together exercise initiative to bind the region close for our national common good.