Friday, October 12, 2012

From Istana to Canberra

Oct 11, 2012

The Australian newspaper's foreign editor Greg Sheridan interviewed Prime Minister Lee Hsien Loong at the Istana last month, ahead of PM Lee's visit to Australia that began on Tuesday. Below is an excerpt from the article published in The Australian on Sept 29.

LEE Hsien Loong has a reputation something like that of his father, the legendary Lee Kuan Yew. It's a reputation for speaking his mind, sometimes bluntly.

Singapore's Prime Minister is 60 now, long out of his father's shadow. Like his father, though, he sometimes sounds like a lord mayor, when discussing Singapore's new casino, and at other times like a great strategic thinker, a South-east Asian Henry Kissinger.

It is part of Singapore's unique identity to have transformed a tiny island - 500 sq km - into the richest society in South-east Asia, with a per capita income above Australia's, while establishing a reputation for strategic sagacity pretty much unrivalled in the region. Big picture, small picture, macro or micro - PM Lee has a view, and a strategy, at all levels.

(He is in Australia for his second official visit as Prime Minister.) Australians will not be in any doubt about his views on any big issues. In a long interview in his Istana office in the heart of Singapore, Mr Lee gave the strongest endorsement the Gillard government has received from Asia for the policy of rotating 2,500 US Marines through Darwin each year.

"I think the Singapore-Australia relationship is very good," Mr Lee tells me. "We share very compatible strategic perspectives on the region and on America's role in the region."

US pivot

AND specifically on the Marines' presence in Darwin? "It's decided by America and Australia. We are happy that the Americans are present in the region."

But Mr Lee goes further, comparing Australia's policy with Singapore's: "For our part, we have facilitated the visits by American air force and navy units to Singapore. They don't have bases here but they visit frequently and there's a logistics support unit here for their navy ships. We will be helping to keep their ships supplied while they are operating in the region.

"We think it is good that the US presence remains in the region, including the security presence and the Seventh fleet. We are such a tiny area that there are a lot of constraints, but what we can do to help the American presence we will do."

Mr Lee is unambiguous in supporting President Barack Obama's "pivot" to Asia. The only qualification he enters is to observe that "there are some Americans who worked in the previous administration who say they never left".

But overall: "It's good the US administration is focusing on Asia because the US has many interests here, many friends and interests."

In the light of Mr Lee's forthright comments, it is difficult to see how the argument can be sustained that Canberra has hurt its standing in Asia by accepting the Marines.

But Mr Lee also has an excellent relationship with Beijing, of a type any Australian leader would envy.

US-China ties

HOW does he see the US-China relationship unfolding? Can the two giant powers maintain a cooperative relationship?

"I think it will always be a cooperative as well as a competitive relationship, there will be frictions as well as areas of convergence," Mr Lee says.

"I think the powers-that-be on both sides, Chinese leaders and the US administration, after they get elected, have shown they don't want to go on the route of confrontation, whatever might be said during presidential elections.

"But there are issues which are not easy to reconcile. There are political pressures on both sides that you cannot ignore," he says.

"The Chinese have issues and so definitely do the Americans, when it comes to the exchange rate or trade issues.

"There are problems. The biggest challenge is to rebalance strategically in a way that gives the Chinese more space without unsettling things and destabilising longstanding, gradually built-up relationships."

But Mr Lee is clear he is not talking about giving the Chinese, or anyone else, an exclusive zone.

He says: "I don't think it's a matter of ceding space to the Chinese in Asia. I mean, you're not talking about spheres of influence.

"The Americans have been present in the region since the war, since World War II. Other countries continue to welcome their presence.

"But the Chinese will have a bigger role trade-wise, economics-wise and in terms of influence with countries in the region. I think that's something countries welcome. At the same time they want the US to be part of the region. How do you achieve that? That's the challenge.

"I don't think the Americans have done anything against Chinese relations in the region. The Chinese have trade relations with so many of America's major partners. All the (US') major partners now have China as their major trading partner. Australia has China as its major trading partner. So too Korea. So too Japan.

"There is an issue in the South China Sea which is a security issue, and in the other islands which are disputed (between China and Japan), but other than that, the shift is not so much a military shift as a shift in terms of economic weight and political influence."

Maritime confrontations

IS HE worried about recent confrontations at sea between China and various South-east Asian nations in the South China Sea, and between China and Japan over the Senkaku Islands?

"It's sharper, it's definitely sharper," Mr Lee says.

"First of all, everyone thinks there's hydrocarbon there, which is worth a lot, which previously was not so certain.

"Secondly, I think the nationalist pressures are there and no government can be seen to be weak. In Japan there's a contest between the Tokyo governor and the central government as to who can be more zealous in guarding the national interest."

Without being alarmist, Mr Lee is sombre about where this could all lead.

"You could have a mishap at sea and lives could be lost for no rhyme or reason, and the problem could escalate, which would be very bad for the whole region.

"We (Singapore) don't have any direct stake in this because we are not a claimant state, but we do have a stake in the stability and prosperity of the region.

"Asean has some role and Singapore has a role as a member of Asean. If something is happening on our doorstep, we cannot not be involved. We can counsel moderation and restraint and encourage the parties to work towards a code of conduct, which would not resolve the competing claims but at least allow us to manage them without coming to blows."

At its last ministerial meeting in Cambodia in July, Asean was unable to issue any joint statement, reportedly because Beijing had influenced the Cambodian government as host and chair to reject any reference to recent skirmishes at sea, which the Philippines and Vietnam wanted included.

Mr Lee, for whom Asean is central in foreign policy, is blunt in his assessment of this failure. "Yes, it was a setback," he says. "It was no good for us. It cast doubt on our effectiveness and our seriousness."

This was partly salvaged, he believes, by a compromise statement Indonesian Foreign Minister Marty Natalegawa negotiated a week later.

"But nevertheless the damage had been done," Mr Lee says.

"Partly because of a perception that there had been pressures brought to bear which led to intransigent positions being taken, and which led to the inability to agree (on) a consensus statement."

It would be wrong to second-guess Mr Lee, who chooses his words with great precision, but the reference to "pressures brought to bear" can only mean Chinese pressure.

Chinese nationalism

SO WHAT is Mr Lee's assessment of the dynamic force of rising Chinese nationalism?

"If you talk to the Chinese foreign policy establishment, especially the professionals in the Foreign Ministry, they will tell you they are under pressure from public opinion, and particularly from Internet opinion," Mr Lee says.

"And Chinese Internet opinion, like Internet opinion in most countries, is neither moderated nor pro-establishment.

"It's also partly the result of many years of - indoctrination is not quite the word - education, I suppose, of reminding the people of the Sino-Japanese War and all the indignities Chinese people suffered at the hands of the Japanese. In fact they just celebrated the anniversary of the Manchurian incident which led to the Japanese invasion of China.

"Every Chinese knows that date. So do I, so does every Singaporean who studied in Chinese schools in my generation.

"The other element is that the new generation of Chinese have grown up in a period of China's rapid emergence and growing self-confidence.

"They are the ones who are the most vocal in asserting their nationalist righteousness. That is something to be concerned about in the long term. Because the generation who lived through it don't want to go to war again. They know that this is not the 1930s, it's the 21st century and China is a nuclear power and Japan has a nuclear umbrella. The balance is shifting towards China, so why do you want to upset things and precipitate a confrontation?

"The younger generation have not seen the horrors of war, or the turmoil of the Cultural Revolution, and they just see China getting bigger and stronger every day. They just say the time has come for us to take our rightful place. The Chinese government has to take that into account."

Meanwhile, Singapore lives with less apocalyptic realities.

At the worst point in the global financial crisis, in 2008, it recorded a year of negative growth of about 1 per cent. The following year, Mr Lee tells me, it rebounded with an astounding growth rate of 14.5 per cent.

"It was a rebound, it was not a trend," Mr Lee says.

He thinks Singapore this year will have 2 per cent or so growth. He sees Chinese growth slowing in part because of a lack of demand in Europe and the United States. But he gives the impression that if the global economy just sees a bit of slowing, that will not be too bad.

"Our worry beyond that is the transmission of shocks through financial institutions. European banks could be cutting back on lending because they've got more stringent capital requirements and they are big players in Asia, for trade financing and project financing.

"If something really goes wrong in Europe we don't quite know what the knock-on effects will be on the whole global system, on confidence, the financial system, or even the attitude towards globalisation and free trade."

I ask Mr Lee whether he thinks the Western world is suffering a crisis of entitlement spending.

His response is robust: "In America, entitlement spending is a big chunk of your budget. In Britain, it's half the budget. In Europe, it's not just entitlement spending but the whole idea of state welfare, which is entrenched and you cannot undo this. How do you cut back on spending when benefits, once given, cannot be taken back?

"The Germans have done a big restructuring over the last 20 years, but the French have not given up their attitude to entitlements, neither have fundamentally the Spanish or the Italians."

Sense of entitlement

IS THERE a lesson here for Singapore, now as affluent as any European nation?

"We have started with very minimal welfare and we've gone on the basis of growth and high employment and low unemployment. If you're out of a job you can find a new job. You will get help but the help is not something you're absolutely entitled to.

"We have to adjust that without going overboard and ending up where the Americans are or the Europeans are or where the New Zealanders were".

Or where Australia is, I ask.

"Even Labor governments have not quite reformed your labour laws," he says.

Singaporeans, more affluent than ever before, also, perhaps paradoxically, expect more from their Government, according to Mr Lee: "People are not so poor. They think their Government is not poor so they expect the Government to do more for them.

"They're not poor but they feel less well off relatively than others they can see in society. There is that relative sense that 'I should get my entitlement'."

Mr Lee is extremely appreciative of the training facilities that the Singapore Armed Forces get from Australia and he cites joint operations in Afghanistan, and against piracy in the Persian Gulf, as examples of the intimacy and trust between the two nations.

He would like to push the free trade agreement between the two nations a bit further, especially more deeply into air services, but acknowledges: "I think your airlines have other views on that."

But Singapore under Mr Lee is an intimate partner for Australia in South-east Asia. It's a partnership we should work hard to cultivate.


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