As I looked at the agenda for this conference, I actually think that the appearance of
the foreign minister of Singapore, Vivian Balakrishnan, is actually one of the most important
sessions we're going to have. Singapore is a very close partner of the United
States. In fact, I believe the United States is the largest investor in the economy of Singapore. Singapore is also
in the tradition that Singapore has had um a country with strong links to China.
I see as a diplomat Singapore as a country that punches about a thousand times its weight in the international
system. And one of the Asian leaders who understood both China and the United
States best was the great Lie Kuan Yu. And so I'm really happy that the
minister is here today to talk about his experience, his country's attitude
towards the evolving great power situation in the Indoacific and in the world. And Minister Balik Krishnan is
going to be interviewed I think by one of the most knowledgeable correspondents on China and the United States and
that's Dmitri Seasto of the Financial Times. So gentlemen, thank you so much for being with us.
Thank you. Thank you Nick. Thank you very much. And Nick, it's embarrassing that your Greek
pronunciation is better than mine, but thank you. Uh, Vivian, it's a pleasure to have you
here. Great to see you, too. I think if you put both of our countries together, we'd have the population of a size of a midsize city in Guangong, but
Singapore and Ireland both punch above their weight, as Nick said. Um, you've been in this role for 10
years, roughly as long as Wangi in China. You've a bit long. He's been there a bit
longer. Bit longer. Okay. Um, you have dealt with the Trump administration the first
time, obviously the Biden administration, now we're back at Trump again. So, I want to start off by asking you, how does how is Singapore
navigating Trump 2.0? And just to put a little bit of context, you have a trade deficit with the US. You have a free
trade agreement with the US. Um, you haven't received one of Trump's uh trade love letters yet.
Not yet. Not yet. Are you is Singapore in a safe zone?
Singapore is a tiny city state, an island
the size of Rhode Island and we are not yet 60 years since
independence. So just put things in context. Small place, heart of Southeast
Asia, but our trade volume is three times our GDP. So I I say all this so
you understand where I'm coming from. Next point is because it's only been 60
years of independence. We have in a sense had a turbocharge
to our economy from two large factors Pax Americana and the reform and opening
of China from Taoing. And just to give you again some context,
some sense of the numbers involved when we were indep made independent and I say
made independent in 1965 because we were divorced by from our northern neighbor.
Our per capita GDP was 500 US. Today if you check chat GPT or whatever
your favorite search engine, you'll get a figure somewhere between 80 to 90,000
US. So not bad. for six decades. But the
point is that it was Pax Americana and China. And let me just what Pax
Americana did was that the US which was the ultimate victor of the second world
war and actually the ultimate heir of the industrial revolution was a very
unusual victor because it usually victor
collects the spoils, imposes its will, life goes on. The US in 1945
embarked on a unique historical unprecedented
action rebuilt those it vanquished Japan Germany Marshall plan for Europe. It
actually envisioned and underwrote in blood and treasure what we today call
rulesbased multilateralism globalization. the UN, the WTO, the
World Bank, the IMF. In a very ironic sense, a haggamon,
but a magnanimous haggamon actually created multilateralism and
because that set the stage for globalization. Do you see how a tiny city state in Southeast Asia with no
hintterland, no resources and in fact very much like Ireland by making
ourselves relevant, hospitable and to facilitate the expansion of
multinational corporations and today I think in Singapore and Ireland we both have more than 5,000 American companies
and that has been a turbocharge to our economic development. So when we say
we kind of like the Americans to be around, we even like even better the
American investments and we believe in free trade because Singapore's trade volume is three times
our GDP. Can you understand it's not a negotiating point, it's lifeblood. So
just to give you some context of where I'm coming from and I think there quite a lot of parallels with Ireland. So I
can't let you escape without answering the question which is is Singapore safe? Are you in a safe zone or do you expect
that life is going to get more difficult? History is replete with the carcasses of
small states. Well let let's be realistic about it. And the thing that Mr. Lee you always
reminded all of us take the world as it is not as how you wish it to be. So no,
a small city state is never safe. And what is happening now in the world
is in fact that magnanimous hegamon
has changed its posture. But that change and I don't want to
personalize this but think about it. What has really changed is domestic
politics in the United States because at the end of World War II, American GDP
was 40% of global GDP. At that rate, it is entirely worth
America's wow in its own enlightened national interest to underwrite in blood
and treasure the global system because for every additional dollar generated in the world, 40 cents came back to
America. Today, it's 26%. Now, in nominal terms, the US is still
the largest GDP in the world. But at 26%
it is an entirely legitimate question for the American voter to say, "Excuse me,
why are we shedding blood and treasure underwriting this system?
Shouldn't there be a fairer distribution of the burden? Shouldn't there be less
free riding and all this thing about the peace dividend?" Right? The US spends 3% on
defense. What about the rest of the world? And
you know there was a speech that my good friend Joseph Borels who was the vice president of the European Commission and
he's in charge of foreign invest one speech where he said look in Europe we outsource security to the US outsource
energy to Russia and outsource trade to China. Is that sustainable? The point
I'm making is that this is the end of an era. It's not just because of one man or
one country, but that these 80 years have been historically unprecedented
and now we just have to grow up and realize it's the end and now we have to look forward. So I want to ask you about
trade. Singapore has been one of the loudest voices um over time over the
last number of years calling for the US to be more engaged not just security in the region but trade. Trump abandoned
the Trans-Pacific Partnership. Biden attempted something called IPF which essentially flopped. Now you have US
tariffs on countries all across Southeast Asia although Indonesia has done a deal and Vietnam may have done a
deal. Um, what opportunities is this providing for China? Well, let's back up
a bit and look at some numbers, right? US trade with
Southeast Asia, I think it runs at somewhere about half a trillion dollars. If you look at
China's trade with Southeast Asia, it runs at a about a trillion US dollars.
So, a factor of two. But beyond trade, let's look at investment. And if you
look just in the year, say 2024, you'll find that in fact the flow of FDI
from US to Southeast Asia is four times that of China.
And these are things which people don't delve into. Is that gap shrinking or is it fairly
constant? Well, if you look at in terms of stock of FDI
of FDI, the US stock of FDI in Southeast Asia is something like half a trillion
dollars. Because China came on later, I think the ratio is about a tenth, one tenth of the
US. So my point I'm making is that yes, look at trade. These are significant
numbers but look at investments because you can trade with anyone but investment
requires a certain belief a certain optimism a certain confidence in the
future. So in Trump 1.0 whenever I met
the president I used to tell him sir you have a trade surplus against Singapore.
Initially he didn't believe me and I said no these are figures from your own BIS.
I I made a point and he still didn't believe them. Well he came round to it. The next time I met him I said I repeated it. He said
you must be the only one. I said no no no we're not the only one. So for us now
to be subjected to a 10% baseline when we in fact have had a free trade
agreement with the US since 2004 and the US has a trade surplus against
us. obviously as far as we're concerned doesn't quite compute
but actually the problem goes far deeper than this because you could say well 10%
and if 10% is baseline and universal this is just a revenue raising measure
on the part of US and after all the US does have a deficit you could say not
such a big deal but it goes far far more than that because it in fact is a
repudiation at a very fundamental level of this principle called MFN most
favored nation which is article one of GAT a foundational article of the WTO
and if the US of all superpowers abrogates this it gives ideas to me
everyone else in the room so my point is instead of a rulesbased base global
system that promotes trade. You now have a system where every trade agreement
becomes a bilateral arm wrestling match and can you see how hostile that would
be to a tiny city state with trade three times our GDP. So we're worried at that
level. But there's another level in which what's happening now is deeply worrying because if you impose tariffs,
there will be strong temptation from the other side to impose reciprocal tariffs and you end up in an escalatory spiral.
So far not there yet. But if things really get off the skids, we're back in
the 1930s and we all know that was not a glorious
period for economics, for globalization, and for peace and stability. So yes, we
are deeply worried. We'll have to see what happens now. And
obviously the real big contest in the room is actually China and the US,
right? And while I've been in Washington, what a month ago, I was in
two months ago. I was in Beijing a month ago. Um,
actually let me let you in on a not really a secret, but the Chinese are
in a confident mood. Why? Because number one, you see, look,
this trade tensions just turbocharges our efforts at
self-reliance. It is a spur to our people that you
can't be complacent. You can't take the world for granted and we need to speed up this journey for self-reliance. So,
making virtue out of a necessity. Number two, and I think that's become clear even to the US now,
China has leverage. Take rare earths, critical minerals for instance. So it's not as if your
counterparty has no agency. And third,
China has a much higher threshold for pain
than others. And whatever the criticisms you may have
on political systems, China has a system which is capable of a
long-term outlook. So it's in a state of confidence. Now
that does not mean that China actually wants to wreck the global trading system
because I mentioned Singapore as a beneficiary of Pax Americana and the
other Asian tigers but actually the biggest beneficiary of the last 80 years
has been China especially after reform and opening. So China is not a
revenentious power from an economic perspective. So they would still much
prefer a modest vivandi
with America and that does require respectful,
candid, constructive conversation in the room. I want to come back to China
specifically in a minute, but before that I'm I'm going to do something very unfair. I'm going to ask you something
that your former boss um Lee Kong's son, Prime Minister Lee, said in 2018.
Yes. I think at the Shangala dialogue if I'm not mistaken. He said it would be better or desirable if ASEAN countries did not
have to choose between the US and China, but the day may come when it has to. So my question is are we closer to that day
when let let me give you a Southeast Asian view when we look at Europe and I
know there was discussion of the war in Ukraine just now. It seems to me and Nick can correct me
that the fundamental strategic question in Europe is where is that line?
the Iron Curtain, the Warsaw Pact, the eastward expansion of NATO, where is
Ukraine and where does Russia fit into Europe?
Where is that line? And unfortunately, that question
still results in ongoing bloodshed. In Southeast Asia,
we don't want to be trapped in that same paradigm of where is that line. The preferred strategic model for all of
us in Southeast Asia is to make sure that the two superpowers, the United
States and China and the middle powers including India, Australia,
the Middle East have skin in the game and have a stake in our continued peace
and prosperity and that we do not want Southeast Asia to become again
an arena for proxy wars. So can you see we are on a completely different
operating on a completely different paradigm. What my former prime minister said in Southeast Asia we believe in
overlapping circles of friends which means your circle may be different from mine but they're overlapping circles and
we truly believe in win-win arrangements. We are champions at negotiating free
trade agreements. 74 and from a Singapore perspective over 90% of my trade is covered in some free trade
agreement or the other we are strong proponents of the WTO we engage in
multilateral plurilateral arrangements but we still make all these stepping
stones to ultimately a free trade area for the world right so it's a completely
different paradigm so when you pose the question do you want to be forced true
size. Of course, we don't. That goes against our organizing principle. But having said that, we don't control the
agenda in Beijing and Washington. What I can say from direct experience over a
decade is that so far both sides reassure us, we're not forcing you to
choose sides. Now I will take that at face value but it is a delicate
balancing act. But do you feel like it's becoming harder to do that delicate balance
balancing act? It will become, let's put it this way, in a period where you've
reached an end of an era and the rules
are no longer underwritten. And you know, any student of history
will know the most dangerous phase is the intergnum between one world order
and an incoit new world order. Are we in that interactum? Yes, we are. Are we
witnessing hot wars in Europe? Hot wars in the Middle East? Yes, we are. Are we
anxious about potential rising tensions in the Pacific, in the South China Sea, in the
straits? Yes, we are. So, I am concerned
and on on a macro level that this is a very dangerous time geopolitically.
This is a very unconducive time for trade
because of the profound damage to an architecture which has served us well
for 80 years. And I may add the United Nations and the Security Council is
essentially paralyzed. So there are enough reasons for amber
lights to be going off and it's not just because of Washington and Beijing. I'm trying to take a broader, you know, a
broader and longer view of what's happening in the world. So, I want to ask you on China, one of
the interesting slight differences of opinion last night between Nick and and
Zany and their talk. Yes, I replayed his his session twice last night. Twice.
You you deprived me of an hour of sleep. So the one area where they had a slight
disagreement was China and the US have been essentially in a game of economic chicken over the last few months. I
think Zan's view was that China came out on top. Nick's view was not necessarily actually the US had measures it used.
How do you see it? I don't think China sees it as a chicken
game. I think their posture right now has been to stand firm.
Right. as I said earlier and they have a high threshold for pain. They have a
longerterm perspective. They have leverage but at the same time they would still
much prefer the system continues with appropriate reform.
Right? So they're still holding out and it's not just China. Frankly, the rest of the world still holds out hope that a
reformed global architecture politically and economically will
emerge. And maybe let me answer what we are trying to do in Southeast Asia. for
Singapore and my Southeast Asian uh neighbors. You know, we have ASEAN and
within ASEAN, we are focused on bringing down systematically and comprehensively
not just tariff barriers but non-tariff barriers because in fact intraan trade
can and still should expand. We are also members of overlapping
multilateral free trade agreement. So for instance, we've got the regional comprehensive economic partnership which
is the 10 ASEAN countries plus five China, Korea, Japan, Australia, New
Zealand, Singapore and I think another three more ASEAN
states are also members of the CPTP. Now the TPP which is its predecessor is
worth unpacking. The predecessor to the TPP was the P4.
In fact, it started off as Singapore, Brunai, New Zealand, and Chile. Three, four little minnows. It is only after
Japan and the US got interested that the TPP became a transpacific
big deal. Now, I know you said earlier on that President Trump pulled out the TPP, but it is worth remembering even
before the election, Secretary Clinton also backed off.
The point here is again not to personalize it, but to understand that within domestic politics of America,
there's been a push back against globalization, free trade, impact on industrialization
and so on. and and and so forth. What we are now trying to assemble is the CPTP
and the EU which makes quite a natural partner for globalization, rulesbased
trade integration to explore whether we can do some sort of partnership between
the EU and the CPTP. And there are others, you know, I mean, for instance, the CPTP
had 11 because America pulled up, but we now have 12 because the UK has joined. And there are others in the queue. So,
can you see what we're trying to assemble is a coalition of the willing who still believe in globalization,
economic integration, and free trade. And we but we still hope that America
will come back in some form or the other. and we leaving that door open.
So, I'm going to ask one final question and then I think we'll have time for one question from the audience on Taiwan.
Um, Admiral Paparo sadly is not here uh this week, but he has said over the last
few months that the Chinese military exercises around Taiwan are not just exercises, there are rehearsals for an
attack on Taiwan at some point in the future. Does Singapore share that view?
Singapore has a long and complicated relationship
across both sides of the streets. You need to understand that Singapore is the only political
entity outside China and Taiwan where 74% of us have Chinese ancestry.
This gives us both a special vantage point, a special
understanding, but also puts us sometimes on with
addition adds additional stress to us. Let me put it to you this way. We have
long-standing friendships across both sides. To answer your question
specifically, we do not believe that kinetic action is inevitable. We don't
believe that and I do not believe that that is China's first choice either.
But having said that, you know, strategic ambiguity which prevailed now
for 53 years,
America did enough to deter China from embarking on kinetic action, but it also
projected enough ambiguity to deter Taiwan from declaring independence.
But over 53 years, the relative power
has shifted and also although everyone proclaims that they're maintaining the status quo
you know as well as I do that everyone is salami slicing
slowly but surely so that's why this is a
moment of danger but if you accept my hypothesis that
kinetic action is not inevitable Then the question becomes well
how are you going to get how are you going to avoid that and how do you reduce the chances of accidents and
miscalculations spiraling and escalation and again the
standard diplomatic answer which I think Nick and I will certainly agree is you
need to sit down and talk arrive at a modest vendi you need to
make sure you deploy forces in a way that they don't even accidentally get into collisions. And mind you, there was
a collision. I think it was in 2001. I think the Chinese plane crashed with
loss of life. The American plane was severely damaged but managed to land in
there was intense negotiation. I don't know whether Nick was involved at that point. No, there was intense
negotiations and you know a solution was found.
Can you imagine a similar incident today? And if you can't even pick up the phone
and be sure that someone on the other side is going to listen, it's far more dangerous. So our hope is
that there will not be a war since it's not inevitable and it's unnecessary
but that everyone can calm down talk and there are you know there are
many situations in diplomacy which cannot be resolved overnight.
territorial disputes for instance and I know something about that in Southeast Asia and sometimes diplomats need to
understand you need to leave it to future generations right but don't
prematurely push because some sometimes instead of putting things together you
get a rupture and that's not in anyone's interest so I'm making the plea for
strategic patience and engagement and to organize
you know the prospect of a modest reandandy between the US and China if
that happens bear in mind the biggest thing that's happening in town now is
the technological revolution AI quantum biotech
energy and our greater anxiety looking forward
is that for two to three centuries the world has essentially been working on a
common scientific application stack which means
we make a discovery, you publish it, you patent it, you get a
temporary monopoly but the world benefits from it and others get to work on it. This common stack planetarily has
been a formula for rapid advances in science and tech innovation
and we have been beneficiaries of it. If you get a hard attempt to bifurcate that
stack, three things happen. You will cause inflation because you're
no longer organized on the principle of comparative advantage and efficiency and sharing and competition.
two, you'll get a more disrupted uh relations because you have less to
lose from just chucking the whole kitchen sink at the other person. And three, you
will slow down progress. So again, I'm trying to make the argument, you know,
if we are to maximize opportunities for the future, you need a modest vendi. But my final point I wanted to make is that
foreign policy, economic policy, technological policy begins at home. If
you don't settle the situation back home, you won't be able to embark on all
this. In the case of Singapore, we believe that free trade must be
complemented by industrial policy and social
security. If you don't get this triad settled and instead you get polarized,
divided people who feel that free trade has been an exercise in de-industrialization,
unfairness, greater inequality. You will never generate the political consensus
to make the necessary compromises internationally
to put ourselves to be ready for the future. So that's my my my closing pitch
that you if you believe in free trade globalization rules based global you
need to pay attention to your domestic factors and the two things industrial policy and social security and by the
way on industrial policy I don't mean picking winners and losers I mean focusing on education on infrastructure
on connectivity and giving your people the skills and the confidence to go out
there and harvest the opportunities that the new technological revolution offers
and you need to work on your genie coefficient. One of the things which we are most proud about you mentioned my
former prime minister is that in the last decade of his term Singapore was
able to reduce our genie coefficient after taxes and redistribution.
It fell from 0.4 4 Z 4 0.4 4 to 0.36
not we and we hope to continue to work on that but can you see how these things
social policy industrial policy and diplomacy all interlock and I just want to make
this appeal you know that everyone just chill take step back understand the
opportunities of the future and understand the need to get your
foreign policy your domestic policy and your economic policy in sync. If we can
do that, we have a second win for another season
of opportunity. So, if we can
take one, no question, one super quick one. Um, I'll get in trouble with Ne. She'll
shout at me in Irish so no one else can understand. Um, so one super quick question. Um, lady in the very back.
Sorry, it's it's it's not a lady, it's Nick Shiffron.
Apologies. I've been called worse. It's okay. Uh, thanks very much. Great session. Can I pick up on the security
aspect where Dimmitri left off, which is that you you may believe that conflict is not inevitable, but what seems to be
the reality is an expansionist Chinese policy throughout Southeast Asia. Uh
whether it's military, economic or diplomatic. Um the for the last decade or so the US has prioritized things like
miniaterals or constellations around the region to try and get at that including
uh or or in addition to increasing security in the Pacific. So what do you believe is the best way to respond to
Beijing's expansionist policy? Thanks. I I used every year and I used to pay my
respects to Henry Kissinger in his office right up to the final year.
And the point he kept reminding me was that a war between China and the US
must never be fought because the consequences are just too catastrophic.
And I think even now Henry's admonition and remind to all of us is worth bearing
in mind. So if you start with that as the first line then next is to
understand the domestic politics and selfimage of both China and the US.
China is a 5,000year civilization. And the reason we are both
speaking English today is because the industrial revolution began in England
and then went across to Europe. And the ultimate beneficiary or the ultimate
heir of the industrial revolution was United States of America.
The last time China had a maritime fleet,
you've got to go back to the Ming dynasty 1403 or so at Milton her rest of it.
And then China decided it would stop these fleets. There was a waste of money.
Anyway, China had reached the zenith of civilization. There was nothing the barbarians could
teach. And China paid a very heavy price for turning inwards.
And Europe and America won.
And what the Chinese remember most now is if you really want to trigger a
Chinese diplomat, talk about unequal treaties. I think Nick is familiar with it. Do you agree? That's if you want to
press a button, unequal treaties. And China is not short of treaties in the
last two centuries which are highly unequal including some with its greatest
pal today. Let's not get into it. Right. The point is that if you look over
millennia, every time China was at peace and intact and running a continental
size economy, it constituted about 25 to 30% of global GDP.
But the trouble is if you look across two to five millennia, the United States
was not there. The United States is what 240
49 years. thereabouts. So what you have now is two superpowers
with no historical memory of ever having to engage with one another. Do do you
see this? So we are truly in uncharted waters.
Having said that, we have to all hope and pray that these two giants work
something out because war is not
you know, inevitable, right? And you can sit down and focus on the
future and focus on your domest getting your domestic house in order. And
frankly, both China and the US have got a lot of domestic homework to focus on.
And for the rest of us, do the same. Check our domestic situation and check
our fitness for the future. try to make common cause and when the two big boys
have sorted their modest reveni try to plug them in and give make sure they
have a stake in our survival our prosperity and our stability and that's
why maybe well maybe it's just I've been in this post for too long but diplomats have to be somewhat optimistic otherwise
you can't get up and go to work every day so anyway I hope you don't you you
accept my thesis and you know coming from a tiny island city
state dependent on the world but having to take the world as it is but still
have enough hope and vision that there is a better tomorrow.
So on that optimistic note Vivian thank you very much.
Thank you Minister Balak Krishnan and thank you Dmitri. We'll we'll take Minister Balak Krishna's advice.
