Saturday, June 11, 2011

Water issue's twists and turns

Jun 11, 2011

In his book, Diplomacy - A Singapore Experience, former Senior Minister S. Jayakumar reflects on a number of events and episodes during his years of public service, particularly when he was Foreign Minister from 1994 to 2004. The details of some of these episodes were previously known only to a handful of senior government officials. Insight features from the book edited excerpts of some of his reflections on neighbouring Malaysia, and how he got into diplomacy

SINGAPORE'S relationship with Malaysia is a complex one, based on a fraught legacy of shared British colonialism, a short-lived merger, and a separation that continues to cast a long shadow over bilateral ties.

Despite historical, social and economic affinities, there are certain fundamental differences that impact on bilateral ties, which are unlikely to change in the near-to-medium term.

Each country has pursued competing visions and different paths towards nation-building. Meritocracy and equal opportunity are the hallmarks of Singapore's system of governance.

In Malaysia, the Constitution guarantees special privileges for Malays and power-sharing among the major racial groups undergirds Malaysian politics.

While we must be realistic that these fundamental differences will remain, we must not overplay their impact but recognise the close cooperation in various areas and people-to-people contacts that have continued regardless of the prevailing bilateral atmospherics.

Singapore is consistently one of Malaysia's top investors over the years. Every day, tens of thousands of Malaysians cross the Causeway to work in Singapore. Every year, millions of Singaporeans visit and holiday in Malaysia.

More importantly, the close cooperation between the security agencies of both countries, especially on transnational crime, drug trafficking and terrorism, are insulated from the vagaries of the bilateral political relationship.

Looking back, successive generations of leaders on both sides have indeed largely recognised the benefits of cooperation and sought to work together for mutual benefit.

The relationship has had its cyclical ups and downs, hitting its lowest point perhaps during the final years of Malaysian Prime Minister Mahathir Mohamad's administration. I was Foreign Minister and it fell on me to deal with a number of difficult issues and bilateral spats.

Breakdown in water talks

SINGAPORE still relies on Malaysia for the supply of water. There are two agreements that the PUB had signed with the Johor Government in 1961 (expiring on Aug 31, 2011) and 1962 (expiring in 2061).

Given the critical nature of water supply to Singapore, when we separated from Malaysia, the Separation Agreement contained a clause that the Malaysian Federal Government would ensure that Johor abided by the terms of the Water Agreements. In other words, the Federal Government guaranteed the observance of the Agreements.

Before my posting as Permanent Representative to the UN, PM Lee Kuan Yew had told me in 1970 that the Water Agreements were 'a matter of life and death', which could lead to war if the Malaysians did not observe them. He had good reason to say so.

Umno politicians had from time to time used the water issue to intimidate us whenever bilateral relations were strained. It was not uncommon for veiled threats that Malaysia would turn off the supply of water, repudiate the Water Agreements, or even 'pollute the supply with either chemical or biological agents'.

At other times, Malaysian politicians raised the issue of the price of water, alleging that Singapore was profiteering. The suggestion was that these agreements were lopsided and that the Malaysian Government should do something about it.

We had always reacted to these statements calmly, pointing out that these were agreements guaranteed by Malaysia. The supply of water was essential to Singapore's survival and we would take seriously any reneging or unilateral action by Malaysia. Fortunately, there were some key personalities in Malaysia who counselled caution.

For example, former Malaysian Army Field Commander LG Zaini Mohd Said said that 'it is crucial the issue of water is addressed with caution by the leaders and governments of the two countries... A military conflict must be avoided because it will only hurt both countries'.

'Water-for-funds' package deal talks

IN THE late 1990s, when considering our long-term water needs, we decided to negotiate supplementary agreements for additional supply of water beyond 2061. The opportunity arose in the wake of the financial crisis in 1998, when PM Goh Chok Tong and Dr Mahathir discussed this as a quid pro quo in return for financial assistance to Malaysia.

We actually came close to an agreement. Dr Mahathir had agreed to most of Singapore's requests for additional water, but then he wanted Singapore to do more in terms of the financial assistance that he needed.

This led to an impasse.

In December 1998, Dr Mahathir abruptly announced that Malaysia no longer needed funds from Singapore.

In 2000, Senior Minister Lee Kuan Yew stepped in to negotiate with Dr Mahathir, but achieved little success as Dr Mahathir repeatedly upped Malaysia's demands.

Meanwhile, Malaysia made repeated comments to the media that the existing Water Agreements were unfair. This prompted us to send a Third Party Note (TPN) in February 2002 to remind Malaysia that, pending a binding agreement on the overall package of issues, all legal obligations of existing Water Agreements were still in force.

We also pointed out that the Separation Agreement was the fundamental basis of Singapore's existence as an independent sovereign nation, and that its terms including the 1961 and 1962 Water Agreements could not be altered without the express consent of both parties.

In October 2002, Malaysia unilaterally discarded the package approach to the negotiations and declared that it would raise the price of water (under existing agreements) to RM6.25, with or without Singapore's consent.

We sought clarification for the basis of the price review but Malaysia could not provide a satisfactory explanation.

We pointed out that, according to the provisions of the Water Agreements, the review of the price of raw water must be based on the rise or fall in the purchasing power of money.

This would result in a price of not more than 12 sen for raw water in 2002.

We became even more concerned when Dr Mahathir and several Malaysian politicians stoked up ground feelings by making serious allegations about the Water Agreements. These included:

That the Water Agreements had been drawn up by the British in favour of Singapore when it was about to join Malaysia in the 1960s;

That Singapore buys water from Malaysia at 3 sen and sells to ships at S$20 or RM40, thus making enormous profits of up to RM700 million annually;

That Singapore profits by buying water from Malaysia at 3 sen and selling it back to Johor at 50 sen;

That Hong Kong buys water from Mainland China at RM8 per thousand gallons;

That the Water Agreement is only 'an ancient piece of paper' and Malaysia can raise the price anytime it wants;

That Malaysia can pass its own laws to make the Water Agreements null and void.

This barrage of statements seemed intended to make the public case that the Water Agreements had been foisted on Malaysia by the British and were intrinsically unfair to Malaysia and that Singapore had profiteered at Malaysia's expense.

They appeared to be laying the ground for unilateral action.

In December 2002, FM Syed Hamid even said publicly that 'Singapore has two choices. If it refuses to compromise, go to war'.

How were we to respond? We had two considerations.

First, we had to impress upon the Malaysians that these were solemn agreements which the Malaysian Government itself had guaranteed in 1965 after Separation.

They had to understand that we viewed this matter with the utmost seriousness. We even sent Minister for Home Affairs Wong Kan Seng to Kuala Lumpur in February 2002 to speak to DPM Abdullah Badawi to register our grave concerns and to reiterate the importance of them honouring the Water Agreements. Water was a critical issue for us.

We did not want them to miscalculate and make some rash move, resulting in further escalation and serious damage to our relations.

Second, we also had to watch the reactions of our own people and third parties.

Some Singaporeans and international observers may indeed fall for the Malaysian propaganda and believe that we were the unreasonable party, that these were unfair agreements, and that we should agree to a price review.

It was important for us to give them the full story, so that they, especially Singaporeans, would have confidence in the position that Singapore had taken and not feel defensive or apologetic.

Ministerial statement and 'Water Talks' booklet

WE DECIDED therefore that I should set out all the facts in Parliament through a Ministerial Statement on Jan 25, 2003.

I spoke about the sanctity of the Water Agreements, which had been guaranteed under the Separation Agreement.

I also gave a detailed chronology of the package negotiations involving the Water Agreements. As past experience showed that the Malaysian media would give scant coverage to our points, we asked our High Commissioner in Kuala Lumpur to send copies of my statement together with the various exchanges presented to Parliament to key personalities including Malaysian Members of Parliament.

To ensure wide dissemination, we also took the unusual step of publishing my statement and correspondence between Malaysian and Singaporean leaders in a booklet entitled 'Water Talks? If only it could' in Malay and English.

This way, both the Malaysian and Singaporean public would have the facts and documents and could draw their own conclusions.

We did this to show that, contrary to claims by Malaysia, Singapore had in fact been accommodating and prepared to pay a higher price for water had there been give-and-take on other issues. We had to explain why a final deal proved elusive.

For both the Ministerial Statement and the booklet, we did of course carefully consider whether there were downsides in releasing the correspondence.

We were aware that some other countries might raise eyebrows over the disclosure of correspondence between leaders but we decided that this was the best way to set the record straight and let the people judge the issue themselves.

Malaysia responded by advertisements

WE LEARNT from third parties that Dr Mahathir was furious when he heard about the booklet. Beginning in July 2003, Malaysia took out a series of full-page advertisements in the Asian Wall Street Journal (AWSJ) and their local media (which were captioned 'The Rakyat's response').

These advertisements, taken out by their National Economic Action Council, alleged that Singapore was getting water at a price unfair to Malaysia.

We decided not to respond to each of these advertisements. After the second advertisement, our Ministry of Foreign Affairs (MFA) spokesman commented that there was nothing new in their advertisements.

Referring to the facts and documents in my Ministerial Statement, the MFA spokesman added: '... It is telling that the Malaysian advertisements have so far ignored all the documents that are now in the public domain.

'It is on record that Singapore offered to raise the price of raw water from 3 sen to 45 sen and later again to 60 sen as part of the package. Malaysia first accepted this. Then they reneged on the deal and later arbitrarily asked for RM3 and then more than RM6. Then Malaysia unilaterally called off the package talks.

'Having called off the negotiations, the next step is arbitration, which is what the Water Agreements provide for. Malaysia has initiated steps in this process. We have said we are ready. But instead of following up, they have resorted, six months later, to this ad campaign... We do not know what they hope to achieve. To make progress, Malaysia must engage the substance of the facts. They need to go beyond old stories and repeating tired arguments.'

We also published a full page 'advertorial' in AWSJ on July 25, 2003 after their eighth advertisement in the AWSJ and their third 'Rakyat' ads. Malaysia took out one more advertisement on July 28, 2003 to give a point-by-point reply to our AWSJ advertorial.

Interestingly, to our point that 'arbitration is therefore the only recourse', its response was that 'Malaysia agrees that arbitration is the only way'.

That was significant in that Malaysia effectively acknowledged that it could not act unilaterally. There have been no further talks on the water issue. However, our offer to go for arbitration on the price of water remains on the table.

A switch from law to diplomacy

How I got involved in diplomacy 
IN THOSE early days in the late 1960s and early 1970s, when I first got involved in Singapore's foreign policy, there was really no fully developed, well-oiled machinery like today's Ministry of Foreign Affairs (MFA). There was no choice but to pull in officers from all walks of life, including the Civil Service and private sector.

President SR Nathan came to MFA from the labour movement. Our first High Commissioner to Malaysia, in fact our first-ever Head of Mission, Ko Teck Kin, was a businessman. The late President Wee Kim Wee was a well-known journalist before he became an Ambassador.

Similarly, before joining politics and becoming a minister, I was pursuing an academic career in law at the National University of Singapore Faculty of Law. I had envisioned a life-long career in academia and never anticipated I would get into diplomacy or politics.

It was my academic background in international and constitutional law and a stint as Permanent Representative to the UN that gave me early exposure to Singapore's foreign policy interests, and the difference between theory and practice in international relations.

Tommy Koh becomes Permanent Representative to the UN 
IN 1968, Tommy Koh and I were teaching colleagues in the Faculty of Law at NUS.

One morning, I got a phone call from Tommy asking if I could come over to his office. I went over and he told me he had just gotten a call from Foreign Minister S. Rajaratnam's office and that Raja wanted to see him that afternoon.

Tommy asked if I had any idea why Raja might want to see him. I said I did not. Half in jest, Tommy wondered if it was because he had said or done something wrong for which he was going to get scolded! I told him to just go and find out what it was all about.

Later that afternoon, Tommy saw me again to recount his meeting with Raja.
He said Raja had asked him to accept the appointment as Singapore's next Permanent Representative to the UN in New York.

Tommy's immediate response was to demur as he did not consider himself qualified for the post. He said he had instead recommended me to Raja as I was teaching international law, had worked in the UN Secretariat and so on. Raja replied that they might consider me for the post later, but at that point the Government was keen on appointing Tommy.

Fortunately for Singapore, Tommy eventually accepted the appointment.
He went on to do an outstanding job as our Permanent Representative in New York.

Meeting PM Lee Kuan Yew and succeeding Tommy Koh 
SOMETIME towards the end of Tommy's first term, he primed me that the Government was considering appointing me to succeed him and said he hoped I would accept.

I discussed this prospect with my wife. We knew it would be a challenging job and would disrupt my academic career and her medical career. At the same time, it would be an exciting task given that Singapore had only recently become independent. We also felt it was a call of duty to serve the country and, if asked, we should not decline.

Then in 1970, having decided that I would succeed Tommy, Raja asked to see me. After ascertaining that I would be prepared to take up the job, he said Prime Minister Lee Kuan Yew would want to see me before a final decision was made.

An appointment was made for me to see PM Lee in his office at City Hall about a week later. Raja met me and asked me to wait in the adjoining waiting room while he met with PM Lee first.

Some time later, Raja came out saying that PM Lee would be delayed somewhat because some urgent matter had arisen.

He was then called into PM Lee's office again, and after what seemed like an incredibly long time, the door opened and both Raja and PM Lee strode into the waiting room.

PM Lee asked me a few probing questions about my family, my wife's family, my educational background and the work I had done at the UN Secretariat. We had barely gone 10 minutes into this conversation when an aide came and handed him a note, whereupon he apologised, saying he had to attend to an urgent matter.

He came back after five minutes, heaved a deep sigh and explained that they had been dealing with a problem that had just cropped up about the Water Agreements with Johor on the supply of water to Singapore.

I later learnt that the Public Utilities Board officials had briefed him on some disagreements that had arisen between Singapore and the Malaysian and Johor authorities over the Water Agreements.

PM Lee then used that issue to illustrate our foreign policy challenges. Looking me squarely in the eye, he said: 'You know, if these chaps do not observe the Agreements it will be a very serious matter for us... it is a matter of life and death... it can lead to war. You will have to bring it up at the UN Security Council and that will be your job.'

He asked if I was familiar with the terms of the Water Agreements. I said I had read the text of the Agreements and I also knew that the Separation Agreement with Malaysia contained specific provisions guaranteeing their observance.

That meeting with PM Lee and Raja had a huge impact on me. It drove home in a real way the interplay between national interest, international agreements and international law.

After I had served my term at the UN and returned in 1974, the Government decided to send Tommy back to the UN for another term.

Just before Tommy left for New York, PM Lee asked to see both of us.

The Water Agreements were still uppermost in his mind. At that meeting, PM Lee tasked Tommy and me to jointly prepare a comprehensive legal study for him on the status of the Separation and Water Agreements and Singapore's options under various scenarios.

Some 35 years after the first meeting with PM Lee in 1968, the Water Agreements still continued to be a major issue in bilateral relations with Malaysia.

Ironically, the water issue is also a success story. Singaporeans should take pride that we used this major problem as an opportunity to create a real and important asset for Singapore.

Pressure and adversity forced us to improvise and innovate in the management of our limited water resources. Necessity is indeed the mother of invention: we broke new ground with NEWater, desalination and water resource management.

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