Singapore Lectures 1980-2018: A Selection 9789814881920

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Singapore Lectures 1980-2018

The ISEAS – Yusof Ishak Institute (formerly Institute of Southeast Asian Studies) is an autonomous organization established in 1968. It is a regional centre dedicated to the study of socio-political, security, and economic trends and developments in Southeast Asia and its wider geostrategic and economic environment. The Institute’s research programmes are grouped under Regional Economic Studies (RES), Regional Strategic and Political Studies (RSPS), and Regional Social and Cultural Studies (RSCS). The Institute is also home to the ASEAN Studies Centre (ASC), the Singapore APEC Study Centre and the Temasek History Research Centre (THRC). ISEAS Publishing, an established academic press, has issued more than 2,000 books and journals. It is the largest scholarly publisher of research about Southeast Asia from within the region. ISEAS Publishing works with many other academic and trade publishers and distributors to disseminate important research and analyses from and about Southeast Asia to the rest of the world.

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First published in Singapore in 2020 by ISEAS Publishing 30 Heng Mui Keng Terrace Singapore 119614 E-mail: [email protected] Website: All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the ISEAS – Yusof Ishak Institute. © 2020 ISEAS – Yusof Ishak Institute, Singapore The responsibility for facts and opinions in this publication rests exclusively with the authors and their interpretations do not necessarily reflect the views or the policy of the publisher or its supporters. ISEAS Library Cataloguing-in-Publication Data Name(s): Cook, Malcolm, editor. | Singh, Daljit, editor. Title: Singapore Lectures 1980–2018 : a selection / edited by Malcolm Cook and Daljit Singh. Description: Singapore : ISEAS – Yusof Ishak Institute, 2020. Identifiers: ISBN 9789814881913 (hardcover) | 9789814881920 (PDF) | 9789814881937 (epub) Subjects: LCSH: Statesmen. | Speeches, addresses, etc. Classification: LCC DS501 I597 2020 Typeset by Superskill Graphics Pte Ltd Printed in Singapore by Markono Print Media Pte Ltd

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Contents Introduction 1. The Invisible Hand in Economics and Politics Milton Friedman, Professor of Economics, University of Chicago 2. American Foreign Policy: A Global View Henry Kissinger, Former US Secretary of State 3. The Soviet Union: Challenges and Responses as Seen from the European Point of View Helmut Schmidt, Former Chancellor of the Federal Republic of Germany 4. Trends in the International Financial System Raymond Barre, Former Prime Minister of France

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5. Regionalism, Globalism and Spheres of Influence: ASEAN and the Challenge of Change into the 21st Century Mahathir Bin Mohamad, Prime Minister of Malaysia

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6. US Policy in the Asia-Pacific Region: Meeting the Challenges of the Post-Cold War Era George H.W. Bush, President of the United States of America

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7. India and the Asia-Pacific: Forging a New Relationship P.V. Narasimha Rao, Prime Minister of India

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8. Australia, Asia and the New Regionalism Paul Keating, Prime Minister of Australia

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9. South and Southern Africa into the Next Century Nelson R. Mandela, President of the Republic of South Africa

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10. China and Asia in the New Century Zhu Rongji, Premier of the State Council of the People’s Republic of China

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11. Global Values: The United Nations and the Rule of Law in the 21st Century Kofi A. Annan, Secretary-General of the United Nations

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12. Peace on the Korean Peninsula and East Asia Kim Dae-jung, President of the Republic of Korea

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13. Japan and ASEAN in East Asia: A Sincere and Open Partnership Junichiro Koizumi, Prime Minister of Japan

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14. EU and Asia: Sharing Diversity in an Inter-regional Partnership Romano Prodi, President of the European Commission

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15. Global Challenges in the 21st Century: A View from Chile Ricardo Lagos, President of Chile

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16. Indonesia: The Challenge of Change Susilo Bambang Yudhoyono, President of the Republic of Indonesia

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17. Japan and ASEAN, Always in Tandem: Towards a More Advantageous Win-Win Relationship through My “Three Arrows” Shinzo Abe, Prime Minister of Japan

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18. Forging a Strong Partnership to Enhance Prosperity of Asia Xi Jinping, President of the People’s Republic of China

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19. India’s Singapore Story Narendra Modi, Prime Minister of India

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20. The Netherlands, Singapore, Our Regions, Our World: Connecting Our Common Future Mark Rutte, Prime Minister of the Netherlands

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21. Democratic Transition in Myanmar: Challenges and the Way Forward 292 Aung San Suu Kyi, State Counsellor of the Republic of the Union of Myanmar The Singapore Lecture Series 309 The Editors 316

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Introduction Malcolm Cook

On 14 October 1980, the Institute of Southeast Asian Studies (ISEAS) hosted the inaugural Singapore Lecture given by Professor Milton Friedman to a packed audience at the Singapore Conference Hall. The First Deputy Prime Minister and Chairman of the Monetary Authority of Singapore Dr Goh Keng Swee chaired the lecture. The Monetary Authority of Singapore provided an endowment to ISEAS for the Singapore Lecture Series that year that was augmented three years later by a donation from Mobil Oil Singapore. Since then, the lectures have been co-funded by the Ministry of Foreign Affairs and ISEAS. The lectures usually are chaired by the Prime Minister or a Senior Cabinet member to reflect their purpose and status. At that time, it was unlikely that ISEAS or the Singapore government realized how important a platform this lecture series would become for senior foreign experts and leaders to share their views on regional and global developments with a particular focus on their country or institution and Singapore. The lectures, spanning over almost four decades, have addressed the most important economic and strategic changes Singapore and Southeast Asia have had to respond to. These include the East-West confrontation of the Cold War, the end of the Cold War, the re-emergence of China as Asia’s leading power, India’s resurgence, ASEAN centrality, global financial turmoil, globalization and its drawbacks and the threat of global terrorism. By the end of August 2018, ISEAS, by then renamed ISEAS – Yusof Ishak Institute, has had the honour of hosting forty-four Singapore Lectures. A complete list is available at the end of this volume. Prime Minister of Australia Bob Hawke was the first serving political leader to deliver a Singapore Lecture, the 8th lecture delivered in November 1987. A year later Prime Minister Mahathir Mohamad of Malaysia became the first leader from Asia to give a Singapore Lecture. The roster of eminent persons who have accepted the invitation to give a Singapore Lecture is truly global in scope. Speakers have come from all parts of Asia,

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from Africa, South America, Oceania, Europe, North America and NATO and the United Nations. Befitting Singapore’s location, seventeen Singapore Lectures have been delivered by serving political leaders from Asia, including the 44th Singapore Lecture by Li Keqiang, the premier of the People’s Republic of China. The Singapore Lectures are the Institute’s most prestigious series of public events. The two editors have selected twenty-one of the forty-four lectures for this volume. The choice of which to include was far from easy and led to many discussions within ISEAS. The intrinsic intellectual quality of the speech, the importance of its main topic and its relevance for Singapore and Southeast Asia were the primary considerations for selection. The question and answer sessions of the selected Singapore Lectures also have been included as we believe that they add to the overall theme of their related lectures.

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The Invisible Hand in Economics and Politics Milton Friedman

Milton Friedman, Nobel laureate in economics and Professor of Economics at the University of Chicago, delivered the inaugural Singapore Lecture on 14 October 1980. He was introduced to the audience by Singapore Deputy Prime Minister Dr Goh Keng Swee. A proponent of free market capitalism with minimal governmental involvement, Professor Friedman’s influential ideas helped to move economic consensus to the right, leading to the free market revolutions in Britain and America in the 1980s. They also had strong influence in other parts of the world. Professor Friedman’s lecture, followed by a Q&A session, was a stimulating exposition of his ideas. I am going to talk tonight about some very broad issues, but issues that I believe have a direct bearing on the prospects of much of the world over the coming decade. My comments will be divided into three parts. I want to talk, first, about the changing trends that have dominated developments in the world over the past several centuries, and that I think foreshadow the developments that we shall see in the coming decades. I want then to examine a bit more carefully the nature of the forces that produced those trends; finally, I want to conclude by looking at what developments are likely in coming decades in response to those forces. In 1899, a famous British constitutional lawyer, A.V. Dicey, gave a series of lectures at Harvard University, which were later collected and published in a book under the title: Lectures on the Relation between Law and Public Opinion in the Nineteenth Century. That book contains a profound analysis of the forces that determine the government policies and of the role of public opinion in shaping those policies. Dicey’s main thesis was that legislation affecting public policy follows

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public opinion but only after a long lag. If public opinion moves, then some ten or twenty years later, that movement in public opinion is reflected in policy. This idea was expressed later in a famous paragraph by John Maynard Keynes when he talked of “madmen in authority ... distilling their frenzy from some academic scribbler of a few years back”. Though Dicey developed his thesis in terms of the experience of Great Britain, his analysis has a much wider relevance. He argued that, once a trend in public opinion develops, it tends to gather momentum, to have a great deal of inertia, to continue for a long time. Similarly, when it is affecting legislation, the legislation to which it gives rise has a similar inertia and produces a long trend in the same direction. However, throughout a period when such a trend in opinion is developing and later when it is translated into legislation, there are always crosscurrents, always people who feel a bit different, always opposite views that are being developed. And there generally comes a point at which the crosscurrents become stronger and stronger, at which the dominant view is roughly balanced by an opposing view. Those are the only times, he argued, when a fundamental change in the trend of policy is possible. That change, in turn, takes some time, but it does occur. The trend in Britain in the eighteenth century, at the time of Adam Smith that Dr Goh referred to, had led to a pervasive governmental influence. That was the period of mercantilism, of government restrictions on imports, of controls over prices and wages—indeed over every aspect of life. Though nobody in this room is old enough to have lived in that period of mercantilism, we have all lived in a similar environment—the much later period of mercantilism. Adam Smith’s Wealth of Nations was a reaction against mercantilism. It was one of those crosscurrents Dicey talked about, and it started or encouraged a trend of opinion that became dominant many years later. In the nineteenth century, opinion shifted away from the belief that benevolent kings, benevolent monarchs were the way to run society and toward belief in a free market, in laissez-faire and in the avoidance of central control. That trend developed first in Great Britain, where it dominated most of the nineteenth century. But it was worldwide, and now I am going beyond Dicey’s specific analysis to show how his thesis has much broader scope. The same trend toward a fundamentally free enterprise, laissez-faire society affected the United States and the continent of Europe, somewhat later in both cases than in Britain. However, the most dramatic example of its worldwide scope was the experience of Japan. In 1867, when the Meiji Restoration occurred, the new men who ruled Japan were automatically infected, as some would say, or affected, as I would say, by this trend in opinion. The policies they adopted were predominantly those of capitalism, of private enterprise, of free markets. By the late nineteenth century, though laissez-faire apparently dominated policy and had been highly successful, the trend of opinion in the world was turning the other way. Fabian socialism was on the rise. Dicey dates the turn in opinion as

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occurring in Britain around 1880 to 1890. However, the new trend did not have any appreciable effect on policy until the early part of the twentieth century. Many people have argued that the growth of the welfare state, of centralized government in Britain, was a result of World War I. That is wrong. A second edition of Dicey’s book published in 1914 contains a lengthy preface that Dicey wrote specially for that edition. In that extraordinarily prescient preface, he foresaw the developments that took place later on. He pointed to the enactment of measures for old age pensions and unemployment insurance as the first steps in response to the changing tide of public opinion. And he predicted that the coming decades would see a trend towards socialism and towards governmental involvement and intervention. He was, of course, entirely right. No doubt, World War I speeded up the process, but, with or without World War I, the same general trend of policy would have been produced by the change that had occurred in public opinion. What happened in Britain in the first decade of the twentieth century again was part of a worldwide trend. In my own country, the United States, the trend of opinion developed some twenty years later than in Britain. However, by the 1920s, the same views were dominant among the intellectual classes. After the Great Contraction of 1929 to 1933, public opinion became crystallized in the policies that were introduced under the presidency of Franklin Delano Roosevelt. To go farther afield, the Communist Revolution in Russia, no less than the emergence of the welfare state in Britain and the New Deal in the United States, reflected fundamentally a response to that turn of opinion. That was an extreme response but it illustrates how widespread it was. Similarly, the move in Italy toward the corporate state under Mussolini, in Germany to national socialism under Hitler, was part of the same trend. So also, later on, were the adoption of central planning by the new rulers of India after it achieved independence in 1948, and the coming to power of communism in China shortly thereafter. As Dicey pointed out, once such a movement gets under way, it is for a time almost impossible to stop it; it has an inertia that is nearly irresistible. However, as he said, crosscurrents do accumulate. And so they have in this case. In the past several decades, the trend of opinion has been changing again. Beginning in the 1950s, on into the 1960s, and increasingly in the 1970s, as Dr Goh said, public opinion and the opinion of intellectuals have been moving away from belief in the virtues of collectivism, as Dicey termed the view that came to dominate, and toward more emphasis on individualism and free markets. This turn in public opinion was no doubt fostered by intellectual argument, but it was produced primarily not by argument but by the facts of experience. Welfare state policies failed repeatedly to achieve the results that had been hoped. “Stagflation” emerged throughout the world as inflationary policies led in their turn to economic stagnation. Even more dramatically, experience in the communist countries revealed the ugliest face of collectivism. Stalin, Khrushchev, and Mao, inadvertently, and Solzhenitsyn, by an

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incredible display of heroism and genius, played as great a role in changing the trend of public opinion in the West as did experience in their own countries, or as did Western intellectuals. Now, after the same kind of a time lag that Dicey pointed out, policy is following public opinion. Singapore was one of the first countries in the world to reflect the new tide of public opinion. It calls itself socialist, but much to the credit of its farsighted leaders, it has essentially followed capitalist principles. It has promoted a free market. That free market has enabled Singapore to thrive, despite extensive interventions of government. The same trend is worldwide. The election of Margaret Thatcher in Britain was a dramatic example of the change in public opinion. The extent to which the Labour Party in Britain is now tearing itself apart in doctrinal fights is another example of the same thing. In the United States, the election that is underway is another example of that change in trend. I believe it was Oscar Wilde who said “hypocrisy is the tribute that vice pays to virtue”. The many people in the United States who have spent their lives in politics promoting big government and large spending, and who are now running for office proclaiming the virtues of thrift, austerity, and smaller government, are striking examples of that kind of hypocrisy. But it is also a sign that the new “virtue” is greater freedom for the people and a smaller role for government. Both candidates for the presidency—one because he has long believed it, the other because he finds it politically profitable—talk about restraining government expenditures and about reducing the extent of regulation. And I believe that the result of the election will again show the strength of the movement. I believe that Mr Reagan will be elected, primarily because his views, which twenty years ago were held by only a small minority, today come close to corresponding with the views of the majority of the public. Beyond this particular presidential election, events in the United States over the past four or five years provide further evidence of the changing trend. There was the much publicized vote in California in favour of Proposition 13 which drastically reduced a major tax. That was only the tip of the iceberg. In state after state, there has been a movement to limit the size of government and cut it down to size. On the federal level, amendments have been proposed to the Constitution to limit total federal government spending and cut it back. Again, I want to go beyond the familiar countries of Singapore, Britain and the United States, and point out that the same trends are affecting the communist countries. If you look at the Soviet bloc, the most dramatic example has been what happened recently in Poland. That could not have happened thirty years ago. It has happened because of the change in public opinion which cannot be kept from affecting everybody. Nations have been very successful at times in erecting barriers to the flow of trade and of people. They have never effectively succeeded in stopping the flow of ideas, good or bad. Hungary and Romania have sought to introduce a

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greater role for the market mechanism in their societies. They have been trying to move away from a centrally directed society. Earlier than any of these, Yugoslavia moved away from detailed central direction in the Russian pattern and substituted a decentralized policy that includes a considerable role for the market. My wife and I have just spent three weeks in China. I was astounded to receive an invitation from the Chinese Academy of Social Sciences to give some lectures in China. One of the topics they asked me to lecture on was the use of market mechanisms in connection with central planning. They, too, are responding to the worldwide trend of opinion and are making a serious effort to try to introduce at least some elements of a market mechanism into their own system. For the first time, they are allowing some farmers to have private plots, to sell the produce of those plots in what are called free markets; they are allowing some individual entrepreneurs, individuals, to engage in small-scale handicrafts or service. Just this morning in one of your local papers, I saw a story about a speech by a leading Chinese economist saying that there was nothing wrong with having small capitalist enterprises in China. This trend of opinion has affected policy not only in the major democratic capitalist societies such as Britain and the United States, not only in the communist countries, but also that whole group of countries that are neither democratic nor communist: countries like many of the South American countries—Argentina, Chile. All through South America, one government after another is departing from the policies of autarky, of high tariffs, of restrictions, of protection, which they had been adopting under the mistaken so-called structuralist hypothesis of development during the 1950s and 1960s, and are turning in the direction of a greater reliance on free markets. In my opinion, this change in trend of opinion and of policy is a major factor that will dominate the developments in the world in the 1980s. The crucial question is, will it succeed? Will a trend in that direction dominate the course of policy? How soon could it do so and to what extent? Before making some comments on what I believe are the likely developments, I want to turn to the second topic I mentioned at the outset, the basic forces that underlie these trends. So far, I have been describing things that have been happening, not explaining, not getting at their foundations. Throughout this whole period we have been observing a conflict between the invisible hand in economics and the visible hand of politics. Adam Smith, whom Dr Goh quite properly referred to as the father of modern economics, had the great insight that it was possible to achieve order without central direction, that an ordered society could arise out of the activities of millions of individuals, each pursuing his own objective without anybody intervening. He used the famous phrase in which he said that an individual who “intends only his own gain” is “led by an invisible hand to promote an end which was no part of his intention”. Adam

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Smith simultaneously poured scorn and derision upon the operation of the visible hand—in his time, the hands of the monarch, of the ruler of his country, who was preventing people from engaging in voluntary transactions through restrictions on trade, on the prices that could be charged, the wages that could be paid. His great book, The Wealth of Nations, was a political tract as well as a scientific economic document. As a scientific economic document, it was devoted to explaining how it could be that people, acting separately according to their own interests, without any central direction, could, through what he called a system of natural liberty, create a great society. As a political tract, it was devoted to explaining the bad consequences of government intervention. He himself, and this is an interesting illustration of Dicey’s thesis, was not very optimistic that it would be possible to replace the visible hand with the invisible hand. He wrote, “To expect, indeed, that the freedom of trade should ever be entirely restored in Great Britain is as absurd as to expect that an Oceana or Utopia should ever be established in it. Not only the prejudices of the public, but what is much more unconquerable, the private interests of many individuals, irresistibly oppose it.” Fortunately, he was wrong. But it took seventy years, from the time he wrote until the repeal of the Corn Laws in 1846, before that visible hand was eliminated. The essence of Adam Smith’s thesis is extremely simple, and yet almost everybody finds it baffling to understand and to accept. The essence is simply that, if two people engage in a voluntary exchange, both parties must benefit; that if two people trade a good or a service between each other, so long as the exchange is voluntary and there is no force, that transaction will take place only if both people are better off. There is no such thing as a fixed pie, so that one man’s benefit must be at the expense of the other man. That’s a great fallacy that bedevils the real understanding of economic affairs. What has enabled Singapore and every advanced country in this world to reach its present stage is that there is no fixed pie, that it is possible for everybody to benefit, provided the actions are voluntary. Adam Smith went on to show how this simple insight of two people could be generalized to a much more complicated structure in which transactions were indirect, in which there might exist large business enterprises as intermediaries. I may say that one point on which he was wrong in this analysis was with respect to joint stock companies. He conjectured that such corporations could not survive the competition of private ownership because of the dilution of responsibility. However, his fundamental insight was correct and remains as important today as it was when he first enunciated it; that if people are responsible for their own actions, if people engage in transactions on a voluntary basis, everybody can be made better off. That invisible hand was permitted to operate in Great Britain. The Corn Laws were repealed. Britain entered into a period of free trade, and in the latter half of the nineteenth century, laissez-faire produced everything that its proponents had claimed for it. Britain prospered and became the leading nation in the world, economically

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and politically. The level of well-being of the ordinary people in Britain rose at a rate and to a level that had not been seen before. And yet—and this is the fascinating part of Dicey’s story—just when that system was achieving its great successes, public opinion, the opinion of intellectuals, turned against it. The most interesting part of Dicey’s analysis is his explanation of why that happened. I will not try to summarize or repeat his explanation, because it is not my main purpose here, which is simply to lay the ground for examining likely developments in our time. However, one element is worth pointing out. A major reason why public opinion turned against laissez-faire was precisely because it was so successful. We always take the good things for granted. We only get disturbed by the bad things. When we drive a motorcar and it is functioning well, few of us pay much attention to the complicated mechanism under the hood. But when it is three o’clock in the morning and the car stops running on a dark road, we suddenly pay a great deal of attention to what we have neglected before. In the same way, as laissez-faire succeeded in Britain, the conditions of the ordinary people improved, but there remained evils. Perfection is not for this world. And the remaining evils were all the more visible by contrast with the affluence and the success that surrounded them. Naturally everybody wanted to do something about those evils. It is the most natural thing in the world to think that if something is wrong, you have to do something about it. Moreover, the success of laissez-faire made it possible to do something about it by creating an efficient and honest civil service. In the eighteenth century, as you will recall from your study of history, Britain was a corrupt nation. It was a nation of smugglers. It was a nation in which parliamentary seats were bought and sold; there were rotten boroughs. One of the greatest economists of all time, David Ricardo, sat in Parliament because he bought a seat. He made his money at the stock exchange, speculating. A very successful, a very able man, he wrote a great book on economics, and he also accumulated a great fortune, part of which he used to buy a home that entitled him to a seat in Parliament. (I must admit that there is something to be said for that system if it leads to a Ricardo in Parliament.) Bribery was widespread. The civil service could not be depended on. Indeed, that was one reason why public opinion turned against government control. It was one of the factors that gave laissez-faire its appeal. The economic reform was accompanied by a political reform—the Reform Act to abolish these corrupt boroughs and to widen the franchise. Even more important, as Britain increasingly relied on the invisible hand, corruption in government automatically declined because there was nothing worth buying from government. Why should anyone try to bribe a civil servant if government has little power and is devoted simply to doing things that everybody agrees on—to preserving law and order, preventing theft, murder, and violence, and defending the country? What is there to bribe anyone for if anybody can go into business without a license from government, anybody can buy and sell in any country he wants without a by-your-

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leave from government, if no one needs a permit to buy foreign exchange? And so governmental corruption largely disappeared. Britain developed a worldwide reputation for having an efficient, an incorruptible civil service—and so it did. People all over said, aren’t the British wonderful, and forgot what scoundrels they had been in the eighteenth century. The existence of an incorruptible civil service, and an excellent one, made it possible to achieve reforms that would not have been possible a century earlier, with the kind of civil service that then existed. This is another respect in which the very success of laissez-faire and the invisible hand of economics paved the groundwork for a change in opinion and policy in the opposite direction. In the twentieth century, we have been experiencing the development of the visible hand in politics. The visible hand in the form of government intervention of all kinds, welfare state intervention, regulation, nationalization, government ownership, government privilege. What has been happening has been the converse of what was happening in the nineteenth century. There is not only a visible hand in politics, there is also an invisible hand which was undermining the objectives that were aimed for by the use of the visible hand. The objectives of most supporters of the welfare state, of socialism, and of collectivism are fine; they are noble objectives that almost all of us agree with. However, the results are terrible. The extreme case is that of the communist countries, countries that were supposedly established to eliminate the exploitation of man by man. I am sure you all know the famous joke that is always for some reason told about Poland. One Pole says to the other: “Do you know the difference between capitalism and socialism?” The other says, “No, what’s the difference?” “Well,” says the first Pole, “you know, under capitalism man exploits man.” The other fellow says, “Yes, that’s right.” “Well,” says the first, “under socialism it’s vice versa.” That is a good joke, but it is wrong. The fundamental principle of socialism is that it is appropriate to use force to organize society, to take from some to give to others. The government does not give anybody anything. The government has nothing to give. The government is simply a mechanism which has the power to take from some to give to others. It is a way in which some people can spend other people’s money for the benefit of a third party—and not so incidentally, themselves. So it is true that under socialism man exploits man because that is the character of the system. On the other hand, under capitalism the fundamental principle is that transactions shall be voluntary and no force shall be used, which means that the exploitation of man by man is a violation of that fundamental principle. No doubt it occurs, but as an exception, not the rule. Where in the world today are workers being exploited? Who are the exploited workers? Are they the workers in the United States or in Britain or in Singapore or in any other of the capitalist countries? Or are they the people who are objecting in Poland? There is no doubt about what the facts are and that is not an accident.

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It is in accord with the fundamental principles of a system that elevates the state above the individual. As I say, the objectives of most of the supporters of these societies are noble, they are good. But those objectives are perverted by the operation of what I call the invisible hand of politics. Adam Smith said that in the economic sphere a person who “intends only his own gain” is “led by an invisible hand” to promote a public interest which was no part of his intention. In the political system, the situation is quite different. A person who intends only to serve the public interest is led by an invisible hand to serve private interests which it was no part of his intention to serve. That has happened over and over again if you simply look at the record of experience in those countries which have used the visible hand of government. And again it happens not by accident but for a very good reason. The invisible hand operates in politics because it is possible to use government to benefit some at the expense of others. In an economic transaction, everybody must be better off or the transaction will not take place. But that is not necessary in a political transaction. In a political system, small concentrated interests have far greater power than widely dispersed diffused interests. I will take examples from my country because I know it much better; I suspect there are counterparts in yours. Here is a proposal to abolish urban slums. That is an excellent thing to do, it has an excellent objective. The US adopted an urban renewal programme for this purpose. What happened? Those people who were clever and smart and had special interests, who owned property in these slum areas, were much more effective at getting the political authorities to buy up their properties than the poor people who lived in those areas were effective in preventing government from moving them somewhere else. So our urban renewal programme led to the destruction of low-income housing and the building of high-income housing. In area after area it came to be called the Negro removal programme. That was an accurate description. Those were its results, not its intentions. Let me give you a different example, a more obvious example, the tariff situation. Here is the steel industry in the United States or, at the moment, the automobile industry. The steel industry feels that it is threatened by foreign competition; it wants a tariff. If it gets a tariff, that would make a big difference to a small group. Who will bear the cost? The population as a whole. Maybe the steel industry will benefit by several millions; the cost to me will be, maybe, a dollar or two dollars a year. It does not pay for me to go to Washington to lobby against the tariff. It does not pay for me to vote against my representative because he votes for the tariff. It is not even worth my time to find out about it. On the other hand, it means a great deal to the people in the steel industry who want tariffs. Let me take a very different example. The Congress of the United States recently made the great mistake of voting to guarantee loans to the Chrysler Corporation. Why did we do so? Can anybody make any sense out of a policy which is designed

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to preserve jobs for a group of people who are making twice as much on the average as the people who are going to pay the taxes to preserve those jobs? Is that a sensible policy? Yet that is our policy. Who is paying the cost of bailing out Chrysler? The consumers throughout the country are going to have to pay a higher price for cars. The people in other industries will have to pay higher taxes in order to finance the bad loan that we are guaranteeing for Chrysler. In addition, of course, no jobs are being preserved. What would have happened if Chrysler had gone bankrupt is that those facilities would have been taken over by more efficient enterprises, maybe Volkswagen, maybe Datsun, maybe some other enterprise—maybe they would not be used for automobiles. But the bankruptcy of a firm does not mean that machines are destroyed or factories fall to the ground. They would have been taken over and used. Why then was the guarantee voted? Because a concentrated interest was arrayed against a diffused interest. The workers in Chrysler, the automobile dealers—to them this was a matter of real importance. The cost is going to be spread very widely. Therefore, a political system is one which tends to give excessive power to small groups of special interests at the expense of the general public interest. That is why the invisible hand in politics works the way in which it does. That is why there is the extraordinary sharp contrast between the rhetoric of these policies and the reality. No person proposing a governmental programme ever defends it on the grounds that it is for his self-interest. Oh no, it is in the national interest. And every one of us is a member of one or more of these special interests and we do the same thing. We must not blame other people, we have to look in the mirror. Everyone of us knows that what is good for him is good for the country. One of my favourite quotations comes from a speech made by a deputy at the French National Assembly at the time of the French Revolution in 1790, not quite two hundred years ago. He was dealing exactly with the question I am dealing with— the difference between intentions and results. And he wrote and said, “Gentlemen, it is a disagreeable custom, to which one is too easily led by the harshness of the discussions, to assume evil intentions. It is necessary to be gracious as to intentions; one should believe them good, and apparently they are; but we do not have to be gracious at all to inconsistent logic or to absurd reasoning. Bad logicians have committed more involuntary crimes than bad men have done intentionally.” I think that is a very important statement, because I must emphasize, I am not questioning anybody’s intentions; I am not criticizing the objectives which were sought by the people who promoted these measures, I am talking about the results. I come to the third major part of my talk. I believe you will agree with me as you look about the world that there has been a reaction against centralization, against the welfare state, against governmental control and government involvement. The crucial question is, will it be possible to cut down the size of government and to restore a greater measure of individual control over people’s own destinies? Here,

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it is not possible to be certain about the outcome. Once government gets involved in things, it is very hard to reverse course. In all manner of things, whether it be personal illness or governmental programmes, it is almost always easier to prevent than to cure once you have allowed the illness to develop. It is easier to keep government from getting involved in something than it is to get government out once it gets involved, because vested interests are created that are extremely difficult to dislodge, not least the vested interests of the civil service. Great Britain currently offers an excellent example. Margaret Thatcher and her government have specified excellent goals of policy. They have stressed that they want to restrain monetary growth in order to control inflation. They have set targets for monetary growth to achieve that objective. They have said they want to reduce the size of government, to get rid of nationalized enterprises, to widen the scope of free markets. The difficulty in carrying out these excellent policies is not coming from opposition from the Labour Party. The Labour Party is disorganized and is offering no opposition. The greatest obstacle is the civil service. The government has set targets for reduced monetary growth, but actual monetary growth has grown. Why? Because those policies are carried out by the civil servants in the Bank of England, who have been there for a long time and are imbued with methods of operation that are not appropriate to the new policies. The civil servants in other areas of the government have resisted curtailment in government spending. Government has set cash limits, maximum amounts that any agency can spend. So the civil servants have used the obvious recourse. They have proceeded to cut down on those activities that are most visible and that the public most objects to eliminating. I am sure there are many civil servants in this room and you all understand this very well. Again, I am not blaming them or you. I am sure the British civil servants are doing what they think is right. But the vested interests of the civil servants help explain the difficulty that the Thatcher Government is having in reversing course. Moreover, in predicting the likely developments, one must recognize that there are uncertainties that are outside the realm that I have been talking about. What happens to the next two or three decades depends very critically on international political developments. Whether there is a major war will be far more important fundamentally in affecting our destinies than some of the things I am talking about. And obviously, I am incompetent to make any confident judgements about that. Similarly, economic developments over the next few decades will be greatly affected by what happens in the Middle East with respect to the situation in oil. Will the Iraq-Iran war spread? Will other countries have revolutions like Iran’s? Will we have further major disruptions in oil supplies? I am going to put all of these matters to one side because I do not see any way of saying anything sensible about them, except “maybe it will happen” and “we trust not”. If we put those to one side, the major problems which face us and which are a consequence of the trend of the past fifty or sixty years are inflation and

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slow economic growth. These two problems are closely related; yet they are also distinct problems. Historically, all combinations have occurred: high inflation along with high growth and with slow growth; no inflation with high growth and with slow growth; deflation with high growth and with slow growth. However, under current circumstances, inflation and slow growth are related because they are both consequences of the same basic cause—namely, the excessive growth of governments. As government has grown, so has resistance to ever higher taxes. When the welfare state was starting, it was possible to finance considerable benefits to a few by small taxes on many. As the welfare state grew, everybody had to pay taxes to benefit everybody. A famous French economist, Frederic Bastiat, said nearly two centuries ago that “The state is that fiction by which everybody tries to live at the expense of everybody else.” The growth of government and the pressures for more and more government spending led in country after country to resistance to imposing additional taxes. And the easiest way to avoid the pressure was to permit inflation, which is a way of imposing taxes without anyone having to vote for it. It is taxation without representation. Similarly, the growth of government along with the rise of inflation has reduced incentives for individuals to work, to save, to invest, to innovate. Government intervention in the form of detailed regulations, controls, tariffs, and the like has led to a distortion in the use of resources. As a result, both major problems—inflation and slow growth—are a consequence of the triumph of the visible hand over the past fifty years; and in my opinion, both require for their solution restraint of government. Curing inflation requires a slower rate of monetary expansion and a lower level of government spending. Curing slow growth requires a reduction in government spending as a fraction of income, in government regulations, and in government intervention. It is easy to state the problems and it is easy to state the cures. To that point, there is not much dispute about what I have just been saying. Every government that has been faced with these problems, whether it is the Thatcher Government in Britain, the coalition government in Sweden, the Democratic Party in the United States, or the Republican Party in the United States, the military juntas in Chile, Brazil, and Argentina, the emerging government of Portugal, has ultimately had to agree that the cures are the ones that I have discussed. The question is: will it be politically possible to carry them out? Here the situation differs from country to country. I am, I may say, not very optimistic for the short run, but I am very optimistic for the long run. And I am optimistic because I agree with Dicey’s view that public opinion will ultimately determine actual policy. So far, the most successful attack on these problems has been in Japan, and its success is a good augury for the rest of the world. In 1973 Japan was experiencing a rate of inflation of something like 25 per cent. That was just at the same time that the oil crisis erupted and the price of oil was quadrupled. Many countries in the world

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blame their inflation on the oil crisis. That is wrong as is demonstrated by Japan’s experience. Just when the oil crisis erupted, Japan undertook a policy of monetary restraint. It cut the rate of growth of the quantity of money from 25 or 30 per cent a year down to something like 10–12 per cent a year. It had a difficult year in 1974 and early 1975, but since then it has been doing very well. The inflation rate has come down, for consumer prices, to somewhere in the neighbourhood of 5 per cent a year, and real growth has been satisfactory. I have every reason to expect that Japan will continue to experience real growth and slow inflation. As to Britain, I have a great deal of respect and confidence in Margaret Thatcher, Geoffrey Howe, Keith Joseph, the other people who are in the government. They have the great good fortune that I mentioned earlier, that the Labour Party is tearing itself apart. So, I believe that the Thatcher Government is likely to have a long enough period in office to be able to conquer the opposition of the civil service and to put its policies into effect, even though the first year and a half have in large part been wasted. The United States too is a democracy in which the will of the people will be effective. The public is fed up with big government. There is no doubt about that; it is reflected in every poll, in every expression of sentiment. I believe, therefore, that we will succeed in the coming decades in curing the major problems. We shall not do so perfectly, not without costs, not continuously. We will experience backsliding; but I expect that by the end of this decade the US will have a low rate of inflation, a satisfactory rate of growth, and a government sector that, while still too large for my tastes, will be decidedly smaller relative to the rest of the economy than it is now. So, on the whole, while I do not expect any miracles, I am optimistic that the trend I have described will carry things before it. What about the communist world? That is much more difficult. China is making significant changes right now. I have no doubt that for a few years these changes will produce rapid growth. I am much more pessimistic about whether China can maintain a sustained, viable, long-term rate of growth with its present political and economic system. The Chinese are a remarkable people. I have always said that if any country in the world can make communism work, China is the country, but I do not believe it can either. That is not a pessimistic conclusion. On the contrary, it is rather an optimistic conclusion—because of its implications for human freedom. Needless to say, it is always far easier to see where we have been than where we are going, especially in the early stages of a change in direction. We are, I believe, in just such an early stage of one of those changes in trends that Dicey referred to. If I am right, we will find a similar course of events throughout the world, and a course of events that is capable of conferring untold benefits on the suffering masses as well as on the thriving minority. I trust that will be true in Singapore as well as everywhere else, and that it will enable you to convert your extraordinary success into an even more extraordinary success.

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Milton Friedman

Question and Answer Session Question: Professor Friedman, I would like to ask two naive questions: first, you talked about a lot of expenditure, excessive expenditure by civil servants who work for governments. In Singapore, I have only observed very efficient expenditure by civil servants. I have observed very successful government expenditure on housing, on infrastructure and on what someone calls seed capital—I think it was Dr Goh himself actually—in big projects where entrepreneurs may not be able to get enough money or withstand a long period of gestation before they get their rewards. I am not sure, when you talked about excessive government spending, that you are referring to this. May I also bring in a second point. You have talked about the success of Japan; and here I speak in great ignorance. It is my suspicion that there are some areas in which it is very difficult to export materials and goods into Japan because of certain regulations. Friedman: Let me start with the second first because it is the easier question to handle. First ‘of all, Japan at the moment has very extensive governmental intervention, of course, and it does have restraints on trade. Those are doing Japan harm. The Japanese would be far better off if they eliminated them. Japan has been doing very well despite those interventions, not as a result of them. One piece of evidence for that is that if you go back to the nineteenth century that I referred to, from 1867 to the end of the century, Japan had no restraints on imports, no subsidy on exports and had complete free trade; it had a very small government sector, and yet, during that period, it managed to make enormous strides towards becoming a prosperous, highly developed, modern, important country. So it was perfectly possible for it to develop without these restraints. At the moment, Japan does have a mixture, as every country does. There is no such thing as a pure all one thing or all the other. We are talking about the degree of the mixture. You know, the question is rather like the old joke about German Hasenpfeffer: half horse, half rabbit; or one horse, one rabbit. The question is, what is the mixture? In Japan, while you do have a great deal of governmental involvement, you also have a very broad area of essentially market operations. Market forces are exceedingly important. We get a misleading impression, precisely because the political hand is visible and the market hand is invisible. And as a result we tend to grossly overestimate the importance of the visible hand which we can see, and underestimate the importance of the invisible hand which we cannot see.

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Let me illustrate in a very simple way with Japan. Most people regard Japan as a country which is enormously dependent on exports and imports. Total exports of Singapore are something like 150 per cent of its income; total exports of Japan are 13 per cent of its income. Japan is predominantly a self-contained economy and not predominantly an export economy. The United States is about 8 per cent, so Japan and the United States are not very far off in that league. Now, let me turn to your first question. Needless to say, there are exceptions to every rule, and perhaps Singapore is an exception. I am certainly not going to comment on the details of Singapore; I know too little and there are too many people around here who know too much. But if I may convert your question from a question about Singapore to a question in general, I do believe all of the kind of expenditures you described are excessive expenditures. I do not believe civil servants make excessive expenditures in the sense of anything scandalous or anything like that. It is only that if there is a venture which private enterprise does not undertake, presumably it is because it is not worth undertaking. Let me put this in a different way, in a more sophisticated way. I see no reason why government officials should not be just as smart, just as intelligent about what projects they undertake as private individuals. People often refer to an enterprise system as a profit system. That is a great mistake. It is a profit and loss system, and the loss part, in my opinion, is more important than the profit part. The crucial difference is not in what ventures are undertaken. The crucial difference is in what ventures are continued and which ones are abandoned. In any dynamic society which is growing and developing, there are bound to be risks, uncertainties, in what is done. The crucial requirement for maintaining growth and progress is that successful experiments be continued and unsuccessful experiments be terminated. In a private enterprise, you do not have any choice about whether to terminate an unsuccessful experiment unless you can get government to come and bail you out, as Chrysler did. But in a governmental venture, the one thing you could be sure about an unsuccessful experiment is that it will be expanded. So, the crucial difference, in my opinion, is that the excessive expenditure occurs because there is no effective mechanism in general for terminating unsuccessful experiments. Certainly, this is true in most cases. As I say, Singapore may be an exception. You are a very small society, it is much more nearly possible for you to keep an eye on what is going on and to have judgements on this, and you have done a very excellent job. But, in general, if you look around and take a broader range of experience, the problems of excessive expenditures arise because unsuccessful experiments are not, in fact, terminated. You talked about a project having a longer time span than private enterprise can undertake. Again, if you look at experience, the most short-sighted people in the world are governments. In democratic societies, no government looks beyond the next election. We talk and this is again one of those examples of the diversion

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between rhetoric and reality—we talk about the possibility that government can have a long view. In the kind of societies that I am acquainted with like the United States, like Great Britain and so on, the situation is quite the reverse. There are private enterprises which undertake investments that they do not expect to bear fruit within ten, fifteen, twenty years. Government enterprises will undertake ventures only if they think they are going to be fairly immediately profitable in the political sense. So I do not really believe it is true that government has any role on grounds of the unavailability of private enterprise, or of private capital or private foresight. Governments have a very important role, do not misunderstand me. I believe you need governments, but their role is in respect of those items that private enterprise cannot undertake. And those are in general the tasks such as providing for the national defence, providing for law and order, establishing the rules under which we operate, and protecting some people, particularly children, and other irresponsible people from being mistreated by other people. Those are the areas of government responsibility, not the erecting of buildings, not the building of houses, in my opinion. I know that this is a very unpopular view in Singapore, and I believe you have been very wise in the way in which you have done it, in the sense of promoting the selling of the houses to those who occupy them. That is a very wise policy and I do not know of any other country that has been successful in doing it. But do look beyond your particular situation, which is a very special situation, and look at the broader context. You have a neighbour over here, not very far from here, Hong Kong, which is operating under much more adverse circumstances than you are. You have a beautiful green island, and you have made it more beautiful over the past twenty years. But I ask you to contemplate what would have happened to this island if you had faced the population problem that Hong Kong has. In the course of the past thirty years, your population has gone up 50 to 60 per cent, Hong Kong’s has multiplied tenfold. If you had experienced the population problem of Hong Kong, the population of Singapore today would be 15 million. So Hong Kong is operating under vastly more adverse circumstances. It has even less, or certainly no more, land or physical resources than Singapore. Yet in terms of the rate of economic growth, it has done as well. Obviously, the conditions of living are much less satisfactory in Hong Kong than in Singapore. But that is because of the population problem and the scarce resources. Obviously, three-quarters of the people in Hong Kong, if they had a chance to move, would like to move somewhere else. And I think the United States would be well advised to offer a home for many of them. I am in favour of freer migration as I am of freer trade. But my point is a different one. From the economic point of view, given the problem it had to solve, while

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Singapore is a very great success, Hong Kong is an even greater success, in the sense that it had so much more difficult a problem. And yet Hong Kong did it without government involvement of the kind that you were describing. It has had complete free trade, it has had complete free exchange of monies as you do, it has had very few government ventures, and a much smaller government sector. So I do think you want to spread a broader net. Question: You said that part of the blame for Britain’s lack of an economic miracle lies really with the civil servants for not really putting into effect what Margaret and the rest are trying to bring about. Could you explain that a little bit more closely for us, please, because I do not quite understand what you mean? Friedman: I would be very glad to. Let me go back for a moment to my own country because I know it better. The country is not run by the elected officials; the country is run by the permanent civil servants. They have all the details at their fingertips; they have been there for a long time; they were there bfore any new government comes in; they expect to be there long after any government goes out. It is incredibly difficult for newly elected people to enforce policies which do not have the internal support, not explicit but subconscious, of the civil service. And you will find, as everybody who has had experience with governments of this kind knows, that if the civil servants believe a certain policy is undesirable, it will be knocked down. It will come up in another form; it will be knocked down. An elected government cannot operate without operating through the civil service. Now, the civil servants are obstructive not because they want to do bad things but because they honestly believe that the policies they are being asked to implement are not desirable policies. They are not being subversive, they are not being disobedient, but they know how to get things done and what things ought to be done. Moreover, it is very hard to ask a group of people to curtail their own scope and their own importance. Let us not kid anybody. There is no doubt that in any major government, whether it is the United States or Great Britain, if you could go down the line and discharge every third civil servant, the total amount of work done would go up. But no civil servant likes to be discharged. I do not blame them; I would not like to be discharged under those circumstances and you would not either. So it is very natural for every civil servant to find the excuses and the reasons why the function he is performing is essential and should not be curtailed. And it is just really as simple as that, I believe.

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Question: Mr Chairman, Professor Friedman, in discussing the role of public opinion in moulding and changing policies and trends, has also cited China and recent changes in China. But in my opinion, changes in China were moulded more by the leadership’s opinion imposed on the people rather than by public opinion. How different is this to the former? And how effective will it be in terms of bringing about change? Friedman: The case of a communist country is a very extreme case and you are quite right that, in any direct sense, the new policy is imposed on the people and does not come from the people. But that does not mean that public opinion does not play a role. Moreover, it does not mean that the policies which the leaders impose upon their people are not themselves affected by public opinion of a broader kind. Let me illustrate. The leaders of Japan after the Meiji Restoration had no interest whatsoever in democracy, freedom or anything like that; they only wanted to make Japan a great nation. But it was the fact that the climate of opinion in the world at large was a climate of opinion favourable to laissez-faire and free enterprise that led them to adopt that policy. They imposed it on the people. But they were themselves reflecting a broader range of public opinion. When India gained its independence in 1948, the leaders of India were strongly in favour of freedom, democracy and so on. But the climate, the international climate of public opinion, was a collectivist climate and they were led to impose collectivism on their people. They imposed it on their people, but they did so as a result of a broader public opinion. That is one sense in which public opinion influences even the communist or dictatorial states. But the other sense is that even the ruling class in a country like Russia, or in a country like China, must somehow or other bow to widespread public resentment and opinion, or there will be another revolution, another turnover, another change of power.

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American Foreign Policy A Global View Henry Kissinger

On 30 October 1981, Dr Henry Kissinger, the former US Secretary of State, gave the 2nd Singapore Lecture after being welcomed by Singapore’s Deputy Prime Minister S. Rajaratnam. Dr Kissinger was the second American and first former government official to give a Singapore Lecture following Professor Milton Friedman in 1980. His lecture analyses the unique position of the US globally in the post-World War II era and the challenges this poses for US foreign policy. This is followed by his observations on communism and the Soviet Union and US relations with the developing world, including a critique of the non-aligned movement’s criticisms of the US. The lecture serves an excellent primer for the domestic and global dimensions of US post-war foreign and security policy. Mr Deputy Prime Minister, Excellencies, Ladies and Gentlemen, I accepted the invitation to speak here with great eagerness. Although Singapore is a relatively small country in terms of population, I must say that in terms of its influence—when I was in office—under the distinguished leadership that you have, Singapore has always played a very significant role. I want to take this opportunity to tell you how important for my own intellectual development and understanding of this area has been the constant friendship, and the occasional scolding, we have received from your Prime Minister. The first time I met your Prime Minister, he was telling my academic colleagues at Harvard that they didn’t know what they were talking about. Later, he appeared from time to time in Washington, when I was in office, to recall us to our duty. So I am here as an admirer of what has been accomplished here, and as a friend of your leaders.

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I believe that the Deputy Prime Minister has posed exactly the right question for our period and exactly the question that the United States must answer if free societies are to survive. The key question of our period is whether the United States can muster sufficient understanding and sufficient resolution to maintain and to prevail in the contest that is now taking place. For the emotional balance of those members of the American Embassy who may be here, I would like to stress that I speak in my private capacity, and that you must receive the official formulations from our Ambassador and his outstanding staff. At the same time, I want to stress that I strongly support the main lines of the foreign policy of the Reagan Administration, and that I make this qualification only so that I can talk to you as a philosopher and as an observer. But you should remember that I am at ease about the main directions of our foreign policy and that I support it. The question that has been put to me is important because there is no doubt that the United States has found itself in the post-War period in a world for which very little in our historical experience has prepared us. It had not occurred to Americans before the end of World War II that we had responsibility for a continuing foreign policy. Until 1945, the United States felt itself secure behind two great oceans, and it was inconceivable to Americans that other peoples in distant continents could affect American· security. It was considered a basic principle in the United States that nothing that occurred in Europe could possibly affect the United States directly. And in both World Wars it took the United States—three years in World War I, and two years in World War II and an attack on our territory—before we committed ourselves to maintaining the global balance of power. As late as 1947, an American Chief of Staff could present the military budget to the Congress with a statement, “This budget has been prepared without any political considerations whatsoever, strictly on its military merits”, as if the relevance to the global balance of power was not of concern to him. Therefore, you have to understand that the post-War period has been a rather painful process for Americans. When I read foreign commentaries about the complicated dark designs of American strategy, I sometimes wish they were true. The truth is much less complicated. The truth has been that for much of the post-War period, the United States has had reluctantly to understand that conflicts in distant parts had a direct impact on America’s future. The hardest lesson for us has been implied in the question that your Chairman put at the beginning: We have had to learn that the American national interest has to be sought in the global interest, and that for the United States to believe that it can protect itself by sacrificing others was only to put off the evil day and to mortgage our own future. I speak to you this frankly because you are all familiar with debates that have had very unfortunate outcomes, such as the debate characteristic of the period of the Vietnam War.

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There have been in the United States, until fairly recently, two dominant schools of reflection about international politics. There has been a school that has treated foreign policy as if it were a sub-division of psychiatry. According to it, relations among nations are like relations among people; you achieve peace through the strenuous exercise of personal goodwill, and you put people at ease by making unilateral concessions. That was very much apparent during the Vietnam negotiations, a great part of which I conducted: Many of our media described the negotiations as if they were a detective story in which the North Vietnamese would throw out vague clues and we had to guess at the answer. And if somehow we didn’t quite get the point that these sensitive, put-upon North Vietnamese were trying to make, they would be so offended that it was always our fault when the negotiations failed. The other school of thought tends to see, or has tended to see, foreign policy as a sub-division of theology, as an example of the eternal struggle between good and evil. By this theory one conducts foreign policy by the strenuous condemnation of one’s opponent, by never having anything to do with him, and by isolating oneself as much as possible from the impurities of a world that cannot be expected to reach one’s own moral exaltations. Thus in America there have been periods of isolationism because we considered ourselves too good for this world, and other periods of isolationism because we didn’t consider ourselves good enough for this world. The impact on international politics has not been fortunate in either case. I am tracing this historical process so that you can understand that for the United States the post-War period has also been a process of self-education. Americans have had to learn that foreign policy is a process and not a series of disconnected events. Contrary to our historical experience, we have had to accept the proposition that there are no final answers in foreign policy, that every apparent solution is an admission ticket to a new set of problems. We would like to think as a nation that we can work for a day in which it can be said that the world is now at peace, and everybody can live with a consciousness of harmony. But history teaches us that almost every war that has occurred has broken out between peoples who have been at peace. It is only in the Middle East that wars occur between countries that are already at war. Therefore, the process, or the problem, of maintaining the conditions in which peace can be preserved is unending, and there will never be a period in which Americans can withdraw from the world. There can never be a period any longer in which we can say that our own selfish interest permits us to withdraw to the continental United States and let other nations fend for themselves, because, to the extent that we ever attempted to do this, we would simply produce a crisis of enormous magnitude for ourselves later on. A properly understood American selfinterest must take into account the interests of those who depend on us and of our friends, and even must understand to some extent the interests of our adversaries.

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Henry Kissinger

I believe that after a period of enormous national anguish, produced in part by a rebellion against a world which does not let us escape from it, the American people are now behind an Administration which agrees with the principles that I have put forward here—though they might express them, not having been born in Germany, in somewhat simpler language than is my habit. Fundamentally, American foreign policy now realizes that there can be no peace in the world without a balance of power, that there can be no progress in the world without a significant American role. The balance of power is not something that we can “do” once and for all, but it is something that has to be tended with great care, by constant assessments, and careful analysis. In fact, the biggest problem in the conduct of foreign policy is that when one’s scope for action is greatest, the knowledge on which to base such action is at a minimum; when one’s knowledge is greatest, the scope for creative action has often disappeared. So we, all of us, have to adjust our policies to new conditions whenever they arise. This, quite frankly, is one of the sources of the debate that is now going on between the United States and some of our European allies, about the nature of military strategy. It is no escaping American responsibilities to assert that technology and military capabilities have radically changed since the days that the Atlantic Alliance was first formed. It is a fact that nuclear stockpiles on both sides have grown immeasurably. Where I differ with our allies, or some of our allies, is that they seem to think America is seeking to escape the common defence when it calls attention to the new realities. In fact, there is no escaping the common defence. If the United States is perceived to sacrifice the interests of friendly countries, much less the existence of friendly countries, all global structure and order will disappear. By the same token, if the United States is serious about the survival of its friends, it has a duty to put before them periodically its strategic assessment, and it has an obligation to invite them to participate in their defence. It is simply not logical in our relations with European countries to assume that a continent that has a population larger than the Soviet Union and a gross national product larger than the Soviet Union cannot make a greater effort in the common defence, and especially when there are so many other areas of the world that cry for our attention. With the same reasoning, one has to look at this part of the world. Almost miraculously, Southeast Asia has developed economically more rapidly than many expected, despite the set-backs in Vietnam, for which, quite frankly, our domestic debates bear a heavy responsibility. Despite this, there has developed here in this region a political self-confidence, and an attempt—a successful attempt—at the elaboration of its own destiny. It is in the American national interest that this process continues, and it is in our interest to prevent outside powers from imposing on this area a destiny which this area has not chosen, either directly or by the use of proxy forces.

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Let me therefore now turn to some discussion of our principal adversary, the Soviet Union. The Soviet Union is the heir of the old Russian Empire and it has added to it an ideology that claims to be of universal significance. When your Chairman said that, however lovable the United States may or may not be, we are crucial to the future of this area, I must tell him that it is the American illusion that we are infinitely lovable, and that we can prevail because people like us. It is, I feel, the Russian knowledge that they are not particularly lovable, and that if they are going to prevail anywhere, it has to be by military force. We have, after all, the astonishing phenomenon that nowhere has a Communist government ever come to power by peaceful methods. Wherever a Communist government has been established, it has required the Red Army or at any rate a Communist military effort. Those areas controlled by the Soviet Union are ironically the only developed countries in which popular revolutions have taken place, or have been attempted, contrary to any Communist theory. We face in the Communist system an opponent who, as your Chairman said, is austere and determined, maybe even implacable—an adversary that has spent several decades elaborating his military capabilities. But at the same time we have to realize that it is a system that is top-heavy and stagnating. On the one hand, it places great stress on what it calls “objective factors”, which means the balance of power and material conditions. Nothing is more futile than to attempt to persuade Soviet negotiators through personal charm and good personal relations. The basic attitude of Soviet negotiators to their Western counterparts, or to their non-Communist counterparts, is like that of Western psychiatrists to their patients: No matter what we say, they think they understand us better than we understand ourselves. They believe very strongly in so-called “scientific materialism” and in what they call “the correlation of forces”. The only trouble is that if you look at the correlation of forces and at this scientific materialism, you find a society of great military power, but not one that, in any sense, can represent a meaningful wave of the future. The Soviet system now has been in existence for 65 years. In that whole period it has had exactly three changes of top leadership. The first two (Lenin and Stalin) died in office. The third (Khrushchev) made the mistake of going on vacation without his colleagues. The fate of the fourth one is as yet open. Nobody has ever retired honourably from a top leadership position. There is no system of regularized succession. A few months ago the Central Committee of the Communist Party of the Soviet Union—one of the party congresses—met and looked over their top leadership, found that their average age was 74, and concluded that that same group was exactly what they needed for the next five years. I find it difficult to believe that a system that does not govern itself by any set of regular procedures can possibly continue in its present shape indefinitely. If one

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looks at the history of Soviet succession, the new leaders have always emerged from a process that was essentially unpredictable when the process started. In a funny way, the Soviet system is run, not by organized, legalized procedures, but more like a feudal system on the basis of personal loyalties to individual members of the Politburo. The second major problem they have is that clearly a system of total planning cannot possibly work. In fact, the more elaborated the Socialist economies become, the less they seem to work. Wherever in the world market economies have competed with planned economies, there is no example of a system of Socialist planning that has ever done anywhere near as well as the market system. Whether you look in this area—where even today South Vietnam is still better off than North Vietnam—or if you look at South Korea and North Korea, or West Germany and East Germany, or Austria or any of its neighbours, the fact seems to be that it is impossible to run an economy in which managers know neither their suppliers nor their customers and are totally dependent on bureaucrats. The curious feature is that a system of bureaucratic planning leads to essential arbitrariness and corruption and can be sustained only by a system of black markets, which is to say, free markets. That gets us to the fundamental problem of all Communist societies, and especially all Soviet Communist societies, which is expressed in this paradox: What do you do with the Communist Party in a Communist state? The Communist Party is needed to seize power; it may be needed to establish a government. But once it is in power it produces a group of supernumeraries who are not needed for government, who are not needed for the economy, who are not needed for any function except to solve the internal and external crises they themselves create. And therefore it is not accidental, as I mentioned before, that in industrialized countries the only revolutions that have been attempted are in Communist countries. And secondly, that these crises all concerned the role of the Communist Party. That is the fundamental problem in Poland. Thirty-five years after the Communists established a monopoly of power—after they took control of all the media of communication, the secret police, the army, the open police and any other form of pressure the human mind can imagine—after all of this, there is not one Communist country in Eastern Europe where the Communist Party would have a chance of winning a free election. Therefore, while it is possible to mention many mistakes that the United States has made, and while it would be idle to claim that the United States has not had very great difficulties of its own, our problems are problems of self-education, of policy, of gaining understanding. The Soviet problems are problems of structure— they are insoluble without a fundamental change in the Soviet system. This being the case, we face this policy challenge: The temptation for the Soviet Union must be very great to try to extend its domination over the external environment, so that whenever they tum to the problem of domestic reform there

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is no conceivable competing centre of power in the outside world. But it is also true, if they should fail to achieve this domination of the outside world, that then the problem of domestic reform will become absolutely unavoidable. Conversely, the problem of American foreign policy is to deprive the Soviet Union of any hope that it can escape its domestic dilemmas by foreign adventures, either by foreign adventures that they generate directly or by foreign adventures that are conducted by proxy—by Cuba in Africa, or by Vietnam in Southeast Asia. Therefore, all those who are concerned with the future of peace in this world must work together to prevent this. They must not believe that either the Soviet Union or its proxies can be appeased by conciliatory statements. My life span was significantly shortened by having to negotiate with the North Vietnamese for a period of over four years, and it is an experience I wish on all my mortal enemies. It is my conviction, based on experience, not that negotiations are impossible, but that negotiations must reflect a balance of forces. And without that balance of forces there is no magic formula, there is no gimmick, that can rescue us. It is an illusion to believe that a political solution is an alternative to a balance of power. A political solution is the result of a balance of power. Those are not alternatives; those are causal relationships. Negotiations are not a substitute for strength but a result of strength. As long as I have been in public life, I have advocated a policy of linkage, by which I mean that we should not permit our adversaries to pick, among all the problems that exist in the world, those which most relieve their difficulties and to negotiate on those, while continuing acts of pressure, intimidation and aggression elsewhere. It is surely not asking too much to ask Soviet forces and Soviet proxy forces to stay within their own national borders if they want expanded economic relations with the free societies. That has to be the major thrust of any negotiations that one can favour and that so many people urge upon us. I believe that if there were assurances that Soviet forces would stop blackmailing their neighbours, and if Soviet proxy forces in Vietnam and Cuba and elsewhere withdrew into their national territories, then new conditions would exist. But until these conditions have arisen, one should not believe that there is some abstract diplomatic formula that can substitute for resolution on the part of the free societies, and for their unity. I am sure that what I have said here is the current view of the American Government, and is strongly supported by the American public. I would like to make a few additional remarks about relations between the United States and the developing world, because I do not want to leave the impression that the United States believes that all problems in the world can be subsumed under the category of East-West problems. There is no doubt that what we witness in the developing world will, in retrospect, be seen as one of the great revolutionary movements in history, not in the Marxist sense, but in the sense of the expansion of human consciousness. After

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all, when the United Nations was formed there was something like fifty sovereign states in the world. Today, there are some 150 states, and each of them in its own way has to develop its own identity in a time period much shorter than anything that the European nations, the original nation-states, experienced. In fact, there is often a very important difference between the original nation-states and many of the states that have come into existence. The original nation-states were nations before they were states. Many of they were states. Many of the developing countries are states before they are nations, and they therefore have a much more complicated problem of defining who they are and what political process they choose to follow. It also means that some of the advocates in America, who believed that we could spread our institutions and practices at random throughout the world with the best intentions in the world, often have had a dissolving impact on the political structure of new countries, where the problem of democratic forms takes quite a different character than it does in a society, where they developed over 150 years of evolution. It is also remarkable that if one looks at the developing world—and in this I speak for myself—many of the nations that make most noise have been least successful, and many of those who have been most successful do not make all that much noise. Some extraordinary concepts have developed in the post-War period. Before World War II it would never have occurred to any nation in the world that it had a right to economic assistance as the principal means of its own development. Until the end of World War II, it would have been taken for granted that a nation that wanted to develop had to do it largely by its own efforts and had to relate itself in some means to its own capacities. And indeed the successful developing nations, such as this country, which has no natural resources to speak of, have done exactly that. The notion of “aid without strings”, that trips so lightly off the lips of individuals, is really another extraordinary concept. Why is it that nations should give aid without any conditions? Recipients have a right to complain about the conditions, but they have no right to demand that one gives resources without a purpose. And, I must say, there is the phenomenon of non-alignment. Of course, every nation has a right to be non-aligned. What it cannot do is insist that we not make a distinction between friends and non-aligned. Of course, we treat friends better than we treat non-aligned. If we didn’t, what would be the sense in friendship with the United States? Without wanting to be offensive, or more offensive than I have already been, I must tell you that when I was in office—shocking as this may be to your Chairman— I never read the full text of the Biennial Declaration of the Non-aligned Nations. My staff gave me a summary, which did not whet my appetite. But when I left office, I decided to read the full text of what I had missed and I made an astonishing discovery. I found in reading these documents that it was almost impossible to find in

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these declarations even one word of approbation for the United States, or one word of criticism for the Soviet Union. Then I said to myself: It is, after all, statistically improbable that the United States is always wrong; sometimes by accident we’ve got to do something that’s right. And yet the so-called non-aligned have never found this statistical probability. How long do you think it is possible to ask the American Congress and the American public to make economic contributions in a world in which our economic system is reviled by the recipients, in which it is claimed that any purpose we have in giving the aid is improper, and in which on top of it the recipients identify non-alignment with constant opposition to every purpose we have? I am not asking that they support us all the time. I believe that the non-aligned are such because they do not feel involved in all of the conflicts of the world— although it is another paradox that the largest bloc of nations that now exists is the alignment of the non-aligned. I have said all of this because when reading some of the newspaper articles and the commentaries on the recent conference in Cancun I find repeated some of the controversies of recent years. When I was in office the slogan was “a new economic order”. Now the slogan is “a global dialogue”. When I was in office nobody could tell me what was meant by “new economic order”, but it was considered the test of American sincerity to embrace it. Now I don’t know exactly what is meant by “a global dialogue”. Does it mean everybody talks to everybody simultaneously, or does it mean anybody is entitled to raise any subject at one point in time? I don’t think it makes any sense for nations to tie us to slogans. I favour negotiations between the United States and developing countries that have common purposes. And I believe it is important that these negotiations deal with concrete issues of economic progress in which all the world shares. And, in this sense, the fact that the current Administration is not playing the game of slogans should be a reason for reassurance to our friends and not a cause for debate. I have tried to answer the points which your Chairman raised in general terms. I want to repeat: Even the wisest American leaders are bound to make mistakes now and then; even with the best of intentions there are bound to be disagreements between us and friendly nations. Fundamentally, however, I think it is the duty of the United States to look after the global balance of power, and the global balance of power is composed of a series of regional balances. For that, we need the assistance of other countries. But it is not a duty we can delegate to surrogates. However friendly they may be to us and however important they are in their region, we cannot turn over Southeast Asia, or the defence of Southeast Asia, to neighbouring friendly countries. We must play an important role in it ourselves with the assistance of the countries that are importantly concerned. We face a difficult and austere adversary. But if a man came to this earth from a distant planet and were given the balance sheet of the strengths anti weaknesses

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of the United States and its principal adversary, he would be mad if he chose the Soviet side. Our problems are soluble by our decisions. Their problems require structural change. So I would say to you, ladies and gentlemen, not that history will do our work for us, but something perhaps more fundamental: If we do what we are capable of doing, we, all together and with strong American support for your efforts, can do our job for ourselves. Thank you very much.

Question and Answer Session Question: I have two interrelated questions on what is perhaps the missing link in Dr Kissinger’s masterly analysis because he has not mentioned China at all. The first question is: US policy in the Asia-Pacific region rests on the need to strengthen China as a counterweight to the Soviet Union. At the same time, the US wants to have close links with ASEAN. How would America reconcile the arming of China with ASEAN’s fear of a militarily strong China? The second question is: Washington’s relationship with Beijing is dictated by global strategic considerations. But there are some who argue that by putting too much emphasis on the China card the US may, in fact, be provoking the Soviets to adopt a more adventurous policy. Do you subscribe to this view, Dr Kissinger? Kissinger: Let me take the second question first, because it involves the general principle of relationships between the United States and China. Then I will discuss the impact on the ASEAN countries. I have never believed in the so-called “China card”, if it means that we tighten our relations with China in order to punish the Soviet Union, and by implication that we loosen our relations with China if the Soviet Union behaves in a manner more acceptable to us. After all, the Chinese have the longest continuous record of self-government in history, and they did not get to this point by being anybody’s “card”. I, therefore, believe that we have to base our relationship with China not on fluctuating tactics with the Soviet Union but on the specific weight we assign to the various factors in our foreign policy. In analysing the balance of power, one has to try to understand who is the weaker and who is the stronger; which is the threatened country and which is the one that is engaged in making the threats.

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What brought China and the United States together was the fact that the Soviet Union built up about a million combat troops on the Chinese border and that the Chinese decided that they needed outside friends. It was not that we in Washington suddenly said, “Wouldn’t it be nice if we had the Chinese on our side against the Soviet Union? Let’s see whether we can get them involved against the Soviet Union.” From this it follows that given the importance historically, culturally, and physically, of China, the United States has an interest in the independence and territorial integrity of China even when we do not agree with its ideology. And the American interest in that is not in order to annoy the Soviet Union but in order to prevent the real balance of power from being overturned by some collateral event like the dismemberment of China, which would have the profoundest consequences not only in Southeast Asia but in many other parts of the world. Of course, we have to conduct our policy with due prudence. And I don’t deny that it is conceivable that we might do things which transcend the purposes that I stated and could have a provocative aspect. But a wise American foreign policy will not do this anymore than a wise Chinese policy will do that. It is not in either of our countries’ interest to provoke a Soviet-Chinese war, but it is in the American interest to help maintain the territorial integrity of China against Soviet military pressure. There is no doubt that there is in some ASEAN countries a fear of a rearmed China. Of course, at this moment, the United States is not supplying, to the best of my knowledge, any military equipment to China. And my estimate would be that in the foreseeable future whatever military equipment may be sold to China will not be of quantities that will rapidly make a decisive difference in the situation. But in any analysis of foreign policy, one has to look at the time-scale involved. It would seem to me that China is almost certain to be preoccupied with its domestic necessities for the best part of the next generation, and that during that period, if the ASEAN countries continue to make the progress they have made in the last five to ten years, they will be able to create a bastion in this area that it would not be all that easy to attack, especially since one can also expect that under those circumstances the relations with the United States will become much stronger. Question: After the withdrawal of American military support to South Vietnam, which was interpreted by some people as being tantamount to desertion of an ally in the face of the enemy, there has been as you are undoubtedly aware, a considerable erosion of confidence in this area—and I presume in other areas—in the actual will and ability of American governments to carry out promises of support, which they have given to people who are in a very precarious position. Now, we are told by the new Administration that they will indeed support their commitments to these countries,

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but we’ve been told that before. ls it your opinion that the position of the American Government and of American society in general is now such that they really can give firm, and lasting, and consistent support to such commitments? Kissinger: The Vietnam War was a great national tragedy for the United States. The Nixon Administration inherited it from its predecessors, who then turned against the war they had themselves committed our country to and left us to fight it as best we could against the opposition of those who had originally committed us to it, which was an extremely difficult situation. Even then I think we had achieved an honourable outcome had not the Watergate crisis deprived our executive of the authority to enforce the agreement. We had an agreement which we had had every intention of enforcing when we made it. As a result of totally unpredictable American domestic circumstances that can never be repeated, we lost the capacity to enforce it. No agreement in history has ever been self-implementing. I believe that the American people have now seen the consequences of this abdication. During the Vietnam War, a lot of fun was made of the so-called “domino theory” by the opponents of the war. Every American has now seen that there has been a terrible domino theory not just in Southeast Asia, but in every other part of the world in which people have depended on American promises. And I think one has to interpret the recent American election as an affirmation by the American people that they are tired of retreat and that they will not accept the proposition that the most ruthless are going to inherit the earth. Of course, ho one can ever make an absolutely certain prediction about the future. But I would think that the recent election and the present mood in America give a force to the pledges of the current Administration that in the more innocent period of the sixties and in the domestic strife of the early seventies was not there. You have identified our key problem, and it is to convince people that we have now a settled policy that will be carried out over an indefinite period of time by whoever is in office in the United States. It’s our biggest national problem. I believe we are on the way to solving it. But you have raised an important question and I can only tell you my best judgement. Question: Mr Chairman, Dr Kissinger played a prominent role in settling the Vietnam War. Since then we’ve had a take-over of the whole of Indochina by the Vietnamese and the Russians, and a near take-over of Afghanistan by the Soviet forces. If Dr Kissinger were to be the Secretary-General of the UN today, what measures would he adopt to rectify the situation in these two countries?

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Kissinger: It is almost impossible when you are not in office to make a responsible statement about the detailed tactics one would pursue in given circumstances. With respect to the Vietnamese occupation of Cambodia, I believe that the policy pursued by the ASEAN countries as supported by the United States is essentially correct. I think that Pol Pot is a genocidal murderer and I have absolutely no use for what he represents. But, nevertheless, one cannot accept the principle that the Vietnamese simply have the right to march into a neighbouring country, all the more so as the last reason that they did it was out of human delicacy about the conduct of their neighbour: His crime to the Vietnamese was not how many Cambodians he was killing; his crime was that he wanted to be independent from Hanoi. So I think we have to maintain the principle that this was an illegal act. And I think we have to make it as difficult as possible for Hanoi to maintain itself in that territory. Again we do not, certainly the United States does not—and I would be amazed if the ASEAN countries do—have any particular interest in having Cambodia as any kind of military or political outpost against Vietnam. If Vietnam wants security, that in my judgement is relatively easy to arrange. What is not easy to accept is the proposition that they can have security only by occupying all their neighbours. With respect to Afghanistan, I would apply the same principle: I would make it as difficult and as costly as possible for the Soviet Union. In this respect, I must say that I am not happy with the fact that eighteen months after the occupation of Afghanistan, every punitive action that has been taken, including those taken by my own country, has been withdrawn. This is hardly designed to discourage Soviet adventures. The Soviets have to know in the future that military aggression against their neighbours has certain irremediable consequences and not simply a 12- to 18-month interruption of certain economic deliveries. Question: Mr Chairman, under what circumstances would the Soviet Union invade Poland, and if such an invasion should take place what kind of response could one expect from the United States and other Western countries? Kissinger: So that you can judge the answer which I will give you, I must tell you that I have been consistently wrong in predicting what the Soviet Union would do about Poland. I quite frankly thought they would invade during the last year. My reasoning was that for the Soviets the situation in Poland, whatever happens— whether they go in or not—is a disaster for the Soviet Union. It’s a disaster because

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here you have a so-called “workers’ state”, in which they create a trade union to negotiate with the workers’ government, which is a fundamental offence to any theory of the Communist state. So the mere existence of Solidarity is an assault on Communist theory. Then you have the phenomenon of a general, who is Minister of Defence, Prime Minister and Secretary-General of the Communist Party. Does that make the Party a sub-division of the army, the army a sub-division of the Party, or both of them a sub-division of the government? Is it bonapartism? Communism? What is it? Thirdly, the Soviets have a very serious problem in Poland. When they invaded Czechoslovakia and Hungary, they could foresee the consequences, in the sense that once they had established a civil authority it was likely to be obeyed and the countries were small enough so that authority could be enforced. I suppose if the Soviet Union put enough military power into Poland, they could also enforce authority. But a normal military operation will have consequences that are not that easy to foretell. So I think that the present Soviet strategy is to let the chaos deepen, and perhaps hope that the Polish people will turn against Solidarity as the cause of the chaos rather than against the Communist Party—or to use force, if they have to, by backing up a state of emergency, which the Polish government may call, by sending in selective forces rather than a blanket invasion. What should be the Western reaction? I have always believed that when the Soviets use military force the first reaction is always panic, and people think that they are going to go on. The real danger is that it is almost always followed by a Soviet peace offensive. And if the Soviets destroy the free institutions in Poland, one way or the other, by the use of military force, then I think there have to be exacted penalties that are substantial and long-term in nature. I would think it is very difficult to imagine that we would continue arms control negotiations that are now going on. Secondly, I would think that serious economic penalties would have to be exacted. We should be honest with ourselves in defining what we mean by “economic penalties”. There are at least three kinds of questions. First, if there is some kind of economic restriction put on, does it apply only to new orders or does it also apply to existing orders? If it applies only to new orders, it will have no effect for two to three years and before then it will probably be abandoned. Secondly, does it apply only to the Soviet Union, or does it apply also to the East European regimes? Thirdly, if it applies to the East European regimes, does it also apply to East Germany or does it exclude East Germany? Those are questions that we must answer to ourselves. We don’t have to announce it. But they will determine whether we are serious, and whether the penalty will have an effect. I think I have made clear in the way I pose the question what answers I would recommend.

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Question: Mr Chairman, I am not asking a question but I would like to know what Dr Kissinger thinks about the opposition that’s going on in friendly Europe towards American policy with regard to the arms that America proposes to put in Western Europe. Kissinger: Well, I tried to express what I think delicately at the beginning of my remarks, but I’ll be glad to do it indelicately too. I think we are in an absolutely absurd circumstance. There is absolutely no doubt that the United States can defend itself in a nuclear war without basing nuclear weapons in Europe. There are thousands of Soviet nuclear weapons aimed at Europe. The United States has now offered to put 572 nuclear delivery vehicles in Europe. Any freshman in college should be able to figure out that this cannot possibly be for our own selfish purposes. We could put them at sea. We can put them anywhere. We don’t have to have them in Europe. We are putting them in Europe in order to prevent selective blackmail, in order to keep the Soviet Union from threatening Europe with nuclear war, and in order to create the automaticity of response which the Europeans claim they want. Now the Europeans, or tens of thousands of them, are marching around the streets acting as if they are doing us a favour by taking these weapons, and all kinds of complicated negotiations have to be undertaken so that we have to prove that we have no aggressive intention, that we’re really quite willing to give up all these weapons. We have not even deployed one of them there yet while the Soviets are building them by the dozens. And yet there was a recent NATO meeting in which we were asked to say we are prepared to go down to zero. We are at zero. It’s the Soviets who are not yet at zero. I once said to a non-aligned friend whose country seems to depend extraordinarily on the United States, which did not stop his passionate criticism of our action—I said to him, “Be careful what you recommend because some day we are going to accept your recommendation, and then where will you be?” And I would say that to some of our European critics: They shouldn’t tempt us too much. Comment: Until recently, you obviously know, the British were engaged in a similar dilemma about dominating the world. This we would periodically fight out between the French and the Belgians and the Dutch and the Danes and the Portuguese. It seems to me—I will admit the British made a few mistakes in the past—that the greatest force at our disposal was usually the crossbow and the twelve-pound cannon-ball.

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But now there is, it seems, the means a politician has at his disposal for exerting his power and influence or such awesome force that one weapon could eliminate a major city—50 million people. One minor weapon could eliminate the whole of Singapore, or the whole of London, or the whole of Washington. Surely there must be a point where everybody has to say that we have to at least stop manufacturing the weapons. Thank you. Kissinger: I agree with you about the contemporary dilemma. I think it is true that the destructiveness of modern weapons imposes on leaders a responsibility now that none of their predecessors faced. No previous leader had to confront the risk that he might destroy, in a very brief period of time, tens of millions of human lives. On the other hand, the other side of this dilemma is that if one side pretends that it is prepared to do this, and the other side announces that it fears this more than anything else, it practically invites nuclear blackmail. So that the real dilemma is to avoid both war and surrender. That has two aspects. I have in all my published writings since the midfifties warned against exclusive reliance on nuclear weapons for defence. I did so because I thought the point would come, that is now approaching, where these weapons are so fearsome that they will generate pacifism rather than resolution. And I therefore have always believed, and I believe today, that we must develop alternative strategies in which we rely less on nuclear weapons and more on other technologies, as we have after all in previous wars, so that we are not so completely dependent on this strategy you described. I am afraid that simply stopping production will not be any answer because so many have already been produced. In fact the tendency in new weapons production is now in the direction of discrimination rather than of mass extermination. The mass-extermination weapons, as you know, have been more or less produced. So I don’t think that your solution is the right one. But the problem you have stated is one to which we have to pay great attention. And it is one reason why I—even though, as you could tell from my remarks, I have taken a very dubious view of Soviet purposes and believe very strongly in establishing a military balance—was also always prepared to discuss questions of arms control in the nuclear field. We have this special responsibility. But we have to take care that these do not turn into unilateral disarmament, because unilateral disarmament will not even save us from nuclear war. It may make it more likely. Question: Dr Kissinger, given what you say about the attitude of the so-called friends, or the so-called non-aligned movement, coming back to the Polish question will you not

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think that the invasion of Poland, if it were being invaded by the Soviet Union, would be beneficial to the United States? And if so, in a cold way, will it not therefore be in the interest of the United States to encourage a possible invasion of Poland? Kissinger: That is not something we could possibly do. First, I don’t think we would know how to do it, and secondly, it would be too cynical. In addition, I am not so sure that it would be all that beneficial. In the short term, yes, it would make certain things easier. But unless we answer some of the questions that I put earlier, if the pattern of previous events of this kind is followed, it won’t be many months before people will say, “After all, the Soviets were provoked.” And then a few more months later, people will say, “Now that there is so much tension, it is even more important to have negotiations than before.” I just don’t believe that the unopposed use of military force by the Soviet Union is ever to our benefit. I remember in 1956, people were saying, after Hungary, “Now the non-aligned will be on our side. Now they have seen how evil the Soviets are.” Then they said it after ‘68 in Czechoslovakia. Then they said it after ‘79 in Afghanistan. And it never happens. There are one or two U.N. resolutions, but if you look at the U.N. resolutions on Afghanistan, every succeeding resolution has been milder. We wouldn’t know how to do it. I wouldn’t be all that much in favour of it even if we did. It used to be said during the war that there was a British Naval Officer who said, “the way to deal with the sub-marine problem is to heat the ocean, and boil them to the surface”. Somebody said to him, “How are you going to do that?” He said, “I have given you the idea. The technical implementation is up to you.” Question: Thank you, Mr Chairman. Dr Kissinger, could I raise the Afghanistan issue with you. The Soviet Union has not been very successful in the invasion of Afghanistan for the past two years and they are still there. They’ve got their feet wet, and should they decide to gain any further ground, they would have to commit quite substantial resources. Under such circumstances, what are the options open to them in view of the very expensive political and economic price they have to pay, should they decide to move further? And how will these options affect their strategy in Vietnam? Kissinger: I think that the Soviets in many ways are in a morass of their own making. For them to maintain a military operation in Afghanistan, a military operation in Vietnam, and a de facto military operation in Poland—in the sense that they are keeping

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forty divisions around Poland—is an enormous strain. If they increase their forces in Afghanistan, it reduces further their capacity for intervention in other parts of the world. If I were the Vietnamese, I would begin to ask myself at what point something has to give. And if you add Cuba to this list, the Soviet economic resources are not infinite, to put it mildly. So I think that the Soviets are facing enormous difficulties, and therefore it would be a pity if we ease these difficulties before we have negotiated some political self-restraint and before we have got the Soviets back to their own territories. I think the same is true in Vietnam. I think if present trends continue—with the crisis in Poland, the crisis in Afghanistan and the crisis in Indochina—and if the West does not supply the resources to manage these crises, the Soviet Union sooner or later will have to make some serious decisions: which of these crises it considers more important, and which it will have to abandon, or whether it should make some accommodation with the West. After all, I can only repeat: We are not asking anything untoward to ask the Red Army to stay within its own territory; this would still leave them the largest land army and largest land area in the world. But I think they have a problem. You know, there is a Russian saying about somebody running into the village and saying, “Mikhailov is stuck in the mud up to his ankles.” And a fellow says, “Well, up to his ankles; it doesn’t sound so bad.” And he replies, “Yes, but he dived in head first.”

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The Soviet Union Challenges and Responses as Seen from the European Point of View Helmut Schmidt

On 10 November 1983, the former Chancellor of the Federal Republic of Germany Helmut Schmidt gave the 4th Singapore Lecture after being welcomed by Minister for Culture S. Dhanabalan. Mr Schmidt was the first German and second European former political leader to give a Singapore lecture. Former President of France Valéry Giscard d’Estaing gave the 3rd Singapore Lecture in 1982. Mr Schmidt’s lecture is a very erudite speech setting out the challenge of the Soviet Union to Western Europe and the wider world. Six years before the fall of the Berlin Wall, it serves as an eloquent reminder of the nature of the global Cold War system. Mr Minister, Ladies and Gentlemen, Thank you, in the first place for your kind invitation, and secondly, Mr Minister, for your kind words of introduction. I have been told that in former years my friends, Valery Giscard d’Estaing and Henry Kissinger, have given talks at this occasion. And this reminds me of a little story which I related to Prime Minister Lee Kuan Yew. It is a true story. Earlier on this autumn, some old friends met in the house of former President Gerald Ford in Colorado, USA: Valéry Giscard, Henry Kissinger, Jerry Ford himself, Jim Callaghan from Britain, Malcolm Fraser from Australia, and myself—all of us “elder statesmen”, so to speak. And one evening, at the end of a private conversation, Jerry Ford summed it all up by saying, “Well, obviously, we ought to agree that the world was much better run in our time of office.” Mr Lee Kuan Yew said over lunch, “And this may even have been true.”

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I think Jerry Ford would have said the same thing if one more gentleman had been present, who also was out of office in the mean time. I am talking of the former British Foreign Secretary, Lord Carrington, whom I admire very much. He, I think, was the world’s outstanding Foreign Secretary in the late seventies and early eighties. Earlier on this year, he gave a marvellous speech, the Alistair Buchan Memorial Lecture, in London, where he not only criticized profoundly the present political, economic, military upheaval within the Western Alliance, but beyond that demanded what he called “a positive political strategy” in dealing with the Soviet Union. And I think he really did hit the nail on the head. I would like, firstly, to talk a little about the development of grand strategy of the democratic nations vis-à-vis the Soviet Union in the last thirty-five years. Then, secondly, to make a few remarks about the position of the Soviet Union today. After that, to touch upon the economic situation, which in my judgement has an enormous strategic bearing. And then, fourthly, to come to some conclusions.

A. Grand Strategy A generation ago, an Englishman, Captain Liddle Hart, a great strategic author, did popularize the notion of grand strategy, as he called it, which included not only military strategy but also political objectives and methods. Of course, military positions and strategic plans as well as the strategy of arms limitation and arms control are included, and nowadays, I would add to that, international economic behaviour. In that sense of grand strategy, we have so far seen three stages since World War II. The first stage had essentially been defined by the United States due to the situation after the War. They then presented the Baruch Plan and the Marshall Plan, or, in other words, a total renunciation of nuclear weapons plus joint economic reconstruction. The Soviet Union rejected both these plans, much to their disadvantage. They did not participate in the Marshall Plan and did not allow their clients to participate. Instead, Stalin very quickly provoked the second phase of Western grand strategy by his developing nuclear weapons, by his threat against Berlin, by not demobilizing his troops, and so on. The second phase of Western grand strategy could be characterized by John Foster Dulles’ global anti-Soviet system of alliances and also by the doctrine of massive nuclear retaliation, or the threat of massive nuclear punishment if the Soviet Union trespassed Western borders. I think that Kennedy’s management of the Cuban missile crisis in 1962 was at the same time the culminating point and the definite end of this phase. The phase could also be characterized by George Kennan’s phrase of containment vis-à-vis the Soviet Union. I think “containment” is still the right word to characterize Western grand strategy vis-à-vis the Soviet Union.

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If 1962 was the end of the grand strategic doctrine of massive nuclear punishment or retaliation, the third phase had already started earlier on, at first tentatively during the fifties. It was also during the fifties that, for the first time, allies of the United States asked to have some say with regard to Western strategic decisions. The North Atlantic Alliance had put up a committee of three Wise Men: one was an Italian (Gaetano Martino), one was a Norwegian (Halvard Lange), and one was a great Canadian leader (Lester Pearson). This was in 1956. And these three Wise Men demanded consultation before decision-making. The lesson was well received at the time, but it seems to me that now, almost thirty years later, it is sometimes forgotten by some people and has to be revived once again. But the most important change in the fifties was the gradual understanding that the Soviet Union was to become an equal power with regard to strategic nuclear weaponry, and that therefore the time would come in which the threat of massive nuclear punishment was not very credible any longer. This then led to more emphasis on conventional troops, and as you may know, on so-called theatre nuclear weapons instead of just the one big bang. It also coincided with Jack Kennedy’s Philadelphia speech about the two pillars of the Atlantic community, conceiving of Europe as being one pillar and North America the other—a structure resting on two pillars. This also seems to have been forgotten by some in the mean time. Above all, as I have already mentioned, the military strategy was totally changed in the third phase, started by a former American general who then was already a pensioner and is still alive, Maxwell Taylor, who wrote that famous book The Uncertain Trumpet, telling his nation that perhaps the trumpet of the massive nuclear retaliation was not to be blown. And what then? His answer was that you need other methods of defending yourselves besides your nuclear trumpet. This, then, together with the buildup of the German forces, which did not exist at the beginning of the fifties, but came into their own in the late sixties, enabled the Atlantic Alliance to engage upon a new military strategy, which then was called flexible response—flexible to any situation rather than the hitherto strategy of nuclear punishment only under any thinkable circumstances. Also, from a broader and more political point of view, this third phase was rather fruitful. Instead of thinking in categories of punishment, there was also consideration in terms of responsibility for preserving stability in the political sense. This understanding was expressed in 1967, when the fifteen governments of the Atlantic Alliance under the chairmanship of the Belgian Foreign Secretary, Pierre Harmel, undertook to write down this philosophy. It was a dual-track philosophy. The so-called Harmel Report described a twofold concept of the Western Alliance vis-à-vis the Soviet Union: in the first place, to have sufficient political solidarity and sufficient military capability in order to deter the Soviet Union from attacks or pressures and in case of emergency to defend effectively the Alliance; and, secondly, based on that security, to seek co-operation with the Soviet Union, thereby seeking

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detente. This is the hour and the date and the document in which the term “detente” first appeared in official NATO language. At present, there are some who want to drop it, and others, like myself, who want to maintain it. This went hand in hand with some very important developments between Washington and Moscow in the sixties and early seventies. The two men who mattered most were of course Nixon and Brezhnev. Not only the Teststop Treaty, not only the Non-Proliferation Treaty with regard to nuclear weapons, was negotiated and concluded, but also SALT I between Nixon and Brezhnev and the ABM Treaty, which limited the number of anti-ballistic missiles of either of the two superpowers. In the pursuit of this co-operation with the Soviet Union, my country also concluded a number of treaties with our Eastern neighbours—first with the Soviet Union, of course. And all these treaties together stabilized the equilibrium not only in Europe, but also in the Atlantic area as a whole. They also stabilized the balance of inter-continental strategic nuclear missiles. And they signified at least a partial security partnership between the two superpowers, despite the fact that both of them were still engaged directly or indirectly in the Vietnam War. The Conference of Helsinki in 1975 and the Final Act of Helsinki, in which not only the European powers but also the two North American governments in Washington and Ottawa and Moscow participated, were in a way the peak of that phase. It did not turn out to be that successful afterwards, and in the mean time the word “co-operation” has come to be a dirty word to some people. Over the second half of the seventies the superpowers lost much of their confidence in the calculability of the other side, a confidence that had existed between the Russians and Americans at least until the end of the Nixon-Ford-Kissinger era. The SALT II Treaty, which was negotiated between Carter and Brezhnev, never legally came into force due to the great amount of mistrust which had piled up in the mean time, in this case mostly on the American side. Since the middle of the seventies, consistency and continuity of Western grand strategy have suffered quite a bit, slowly at first and faster and faster later on. The decay of Western grand strategy is in manifold ways apparent. In some places, the insight in and the necessity of equilibrium of weapons as a condition for maintaining peace have been lost. Co-operation in arms limitation, not to mention economic co-operation, has deteriorated into shouting matches. Half-hearted measures in the field of economic warfare have been undertaken. The economic strategy among the democratic nations of the world is not at all convincing. The world is lapsing deeper and deeper into a structural economic crisis. A great debate is going on about the grand strategy—about its arms limitation component as well as about the military strategic component—and as I have already hinted, we have increasingly seen a development into unilateral decision-making by the United States.

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B. The Soviet Union Today The Soviet mistakes of the last eight years have had a heavy bearing on that development. The Soviets suffer from a double complex of inferiority and security— you might also call it a persecution complex—and they, of course, try to compensate for that complex. From a psychological point of view, one can perceive how that works, but with regard to global policy and world peace it is dangerous. It has caused a fearful speeding up of the arms race in almost any field. In order to compensate for these complexes, the Soviet Union has settled herself in several states of the Middle East, of Africa, of America. In Asia, she has encouraged and protected Vietnamese imperialism. She has invaded Afghanistan. She is recklessly taking advantage of Carter’s omission of the medium-range ballistic missiles in SALT II. She has taken advantage of that omission by building up a very impressive and powerful SS-20 rocket fleet, a weaponry for political oppression, capable of dividing Europe and the United States in case of crisis. And with the 108 or so Siberia-based SS-20s she threatens to put pressure on any Asian country, with the few exceptions of Singapore, parts of the Philippines, and Indonesia. At the same time, their building up missiles of shorter range, SS-22s for instance, may lead to further destabilization of the world. I think Andropov’s position, which as yet is not definitely consolidated, does bring about some additional uncertainties. But, on the other hand—I wish to be very clear on that point—there will be no change in the basic Russian line of calculated, cautious expansion. Minister Dhanabalan referred to me not only as a spectator but also as a practitioner, if I recall his phrase correctly. In fact I am more than a spectator because I live in a place very close to Soviet military power. People living in Singapore may not perceive this so easily. But, when I get into my car at home in Hamburg and drive up to the so-called Iron Curtain, it takes me 45 minutes, and then, if I am permitted to pass it, it takes me only another 15 minutes to meet the first Russian tank division. And there is not just one division! There are quite a few. And if you do not drive a car or a tank, but fly an aircraft, it takes just 5 minutes. Also in the opposite direction. We have been living with that situation for more than a generation now. We have not become complacent about it. But we are not too happy about it either. And living with such threats gives us a little more experience than other people may have sitting back in India or in Singapore. But during the last five years or so the thrust of cautious Soviet expansion has also been felt in this part of the world. And it will take you a few more years to fully understand it. So, I am not only a spectator, but I come from a country that knows what Soviet military strength and political pressure backed by military strength is all about. I said Andropov’s position does not seem to be consolidated right now. It seems that he has been elected by a coalition rather than by a unified membership of the

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Politburo. “Coalition” means that he may owe something to some people. Andropov is, relatively speaking, a young man, although he is about 70. All the people in the Politburo are elderly, but still very active operational statesmen, not given to quick changes. They would be very conservative with regard to their strategy. This is the main reason why I believe that the change from Brezhnev to Andropov or whoever might follow Andropov, is unlikely to mean a change in grand strategy of the Soviet Union. I think it will remain a strategy of cautious expansion, of calculated risks, which does of course not mean that they may not miscalculate from time to time. Everybody miscalculates from time to time. They obviously have miscalculated the invasion of Afghanistan; they never did foresee that it would take so much time and so much trouble and so many human lives; they still have not really achieved their goals in Afghanistan. I am told that there is a Chinese proverb saying, “He who does not understand the future should look into the past”. I read it as saying, “He who wishes to understand future Russian behaviour ought to study Russian history”. And this is what I recommend to my friends all over the globe, telling them at the same time that the behaviour of the Soviet Union today is in my view at least three-quarters Russian behaviour and, if it comes out, 25 per cent Bolshevik or Communist behaviour. It is the Russian superpower that we are dealing with, and it would not be much different if it were not a Communist power but some other form of dictatorship under a tsar or whoever it might have been. Russia has always tried either to expand its borders or to enlarge its empire. Five hundred years ago, even before Ivan the Terrible, the tsars maintained among others the title of “Gatherer of Russian Soil”, which of course really meant “to conquer other peoples’ territories first and Russify them afterwards”! This has been going on for centuries and centuries. It was true under Ivan the First. Later on it was true under Ivan the Fourth, the Terrible, true under Peter the Great, true under the tsars of the eighteenth and nineteenth centuries. Stalin, by comparison, swallowed less than his predecessors. It was his predecessors who conquered Siberia, even parts of China, and great parts of Asia. There has not been much change in Russia’s outward grand strategy so far. But also inside Russia have there not been great changes either. The secret police has always played an enormous role. It was always true that people who opposed what the government did were beheaded, shot, or sent to Siberia. Nowadays, they are sent to clinics or to Siberia only. Russia has never seen human rights for the individual. The Russian people have always suffered from a dictatorial rule. They are used to it, and I have a feeling that they may even have a certain passion for suffering. Please do not just read Marx and Lenin. Please read Dostoevsky’s books, written before the Communist Revolution: read Tolstoy, Chekhov, the great Russian authors, in order to understand what Russia is. Russia still remains the same.

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To my judgement, the international behaviour of the Politburo, at least under Brezhnev and right now, is very much along the traditional lines of Russian strategy. I would like to remind you that the Russian people, the men in the street or in the villages, certainly did not like Stalin’s rule. But it was totally natural for them, at least for the great majority, under Stalin’s command to defend their country against Hitler’s invasion. They did not hesitate for a minute. They are and have always been great patriots. Despite a tremendous suffering in World War II and a tremendous loss of human lives—altogether twenty million Russians were killed during this War—they have fought and fought on. From their experience in World War II, I have no doubt whatsoever that the Russian people certainly do want peace. But out of this deeply rooted desire of the Russian people for peace comes a willingness to suffer again—if their Politburo or the General Secretary tell them plausibly that the West was about to wage an economic war or an arms race against them, and thereby threaten their peace, they would again be just as willing to suffer. They would rally behind the leadership of the Politburo or whoever it is in that situation, just as the Americans or any of us would rally behind our government in times of danger. It goes without saying that, in that context, to nourish ideas like economic warfare against the Soviet Union is obviously wrong. It will not lead to any result. The Russians will just be told to tighten their belt a little more and they will do it. Right into the next centuries the behaviour of the Soviet Union will be Russian behaviour. The Asians and the Muslims within the Soviet Union—there are some 60 million or so out of 250 million—will increase in number. Fertility rates are greater among them, but numbers will increase slowly and will play a decisive role only in the course of the next century. The Russian leaders have had, and the Soviet leaders of today do have, a zest and a zeal for military equality with the United States. The idea of military equality, military security—equal security, as they call it—does spring from their historical experience—the Crimean War, World War I, World War II—and from their psychological need to compensate for their obvious shortcomings. If one puts oneself into the shoes of the Andropov Politburo, I think one would find three main concerns (and the same was true under Brezhnev and under Krushchev). Firstly, the concern about Germany, at least since 1941, since Hitler invaded the Soviet Union. Secondly, the concern about the Americans, at least since the middle of the forties. And thirdly, the concern about the People’s Republic of China, at least since the break between Mao Zedong and Krushchev. I think most of the international behaviour of the Soviet leadership has to be understood in the light of these three perceptions of danger or concern. They themselves intend and believe in being cautious, at least since Krushchev, who was uncautious from time to time, and was therefore replaced. He was a poker player

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rather than a chess player; normally, the Russians are chess players and very good ones. They intend to be cautious, but they fail to understand that absolute security for the Soviet Union means absolute insecurity for us Europeans, for the Americans, for the Chinese, for the Japanese—for anybody. On the other hand, Brezhnev did understand that he had to compromise. He was willing to. He showed this in his treaties with Nixon, and he adhered to the treaties that he signed. Brezhnev as a person had learned enormously by his extended and intimate contacts with Western leaders like Nixon and Ford, like Carter, Giscard, Willy Brandt, myself, and others. Andropov, compared with his predecessor, may not be as emotional as Brezhnev was: if Brezhnev was a Russian soul—if I may oversimplify for a moment—Andropov is more of a computer, I think. He will be very cautious, and he will, of course, not let himself or let his country be humiliated. The greatest concern of the Politburo last year was not foreign policy or security. The greatest concern was or still is the poor state of the Soviet economy, in particular the deficiency of Soviet agriculture, which necessitates the import of some 40 million tons, or in case they really do have a bad crop, some 50 million tons of grain a year which they have to pay for. And they cannot pay in rubles; they have to pay in hard currency. They have to earn the hard currency first, and it is rather difficult nowadays for a Communist economy to earn such amounts of such currency. So, Andropov is thinking about economic reforms. I think it will be very hard, it will take very long, and will not amount to much. He will have to conquer the anxieties of the military who of course must be afraid of losing some of their prerogatives over the best parts of the Soviet gross national product; he has to overcome the in-built resistances of the bureaucracy, the nomenclature, and so on. There is a French proverb that says “Nothing is distributed more justly among men than intelligence, because everybody believes he has got a sufficient portion”. With regard to economic intelligence, it seems to me that Russian Communists—as Communists all over the world—have not been given a fair share. For instance, in some of the East European countries under Communist rule which I visit from time to time the story is told that the two German states divided the heritage of Karl Marx between them by the following scheme: the Western Federal Republic got the whole “Capital” and Communist East Germany got only the “Communist Manifesto”. And this more or less is the case for other Communist economies as well. They got manifestos. They got paper decisions but no efficiency. And as long as they adhere to their bureaucratic way of managing their economies this will not really change much. Before I leave the Russian situation, I would like to be a little more specific with regard to the Russians in Asia as we in Europe try to perceive them. I have already referred to Afghanistan: one could also refer to the Horn of Africa, the solid position

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of the Soviets in Yemen or Ethiopia. One need not refer to the whole Middle East situation, neither to Libya nor to Syria and so on. Of course, you know the situation of Southeast Asia much better than we Europeans do, but it might be interesting to you to see how we perceive the situation here. And you will, I guess, detect a mistake or two. It seems to me that the year 1980 brought about a rather: great change in this region. It is the year in which Vietnam militarily intervened into Kampuchea and became a member of the Comecon, the Communist economic framework, to which not only the Soviet Union and the East European powers, but also Cuba, belong. In marching into Kampuchea, Hanoi made clear that they decided to pursue— and now have put into reality—the old aim of an Indochinese compound under Vietnamese hegemony. Therefore they needed the full political and economic backing of the Soviet Union, otherwise they could not have undertaken the operation. They, therefore, did away with an attitude that they had declared only three years earlier in 1975, when the Vietnamese leadership declared not to take sides in the dispute between Beijing and Moscow. Three years later they had to take sides because they needed Soviet help. They got into a cold war with China. Right now Vietnam gets about 25 per cent of all economic aid that the Russians are giving outside their country. There is only one country in the world that gets even more than Vietnam—that is Cuba. Otherwise, the Russians are not giving much economic aid. They mostly provide arms. The Vietnamese think that they do not get enough economic help from the Soviet Union. They have quarrelled a bit. But they do, of course, try to limit Soviet influence in the Indochinese region. They also follow the process of detente between Beijing and Moscow with some concern. They are quite aware of the fact that a couple of years ago the Chinese served the Soviets with a pre-condition for a normalization of relations between Beijing and Moscow by asking the Soviet Union to interrupt their assistance for Vietnamese expansion into Cambodia. So the Vietnamese are a little uneasy about what is going on between Moscow and Beijing. To my impression they are afraid that in the long run the Russians and the Chinese between themselves may again come to some division of spheres of influence in Asia. That is a long-range shot, but it seems to me that there is some anxiety in Hanoi. It seems to me that in this part of the world, only since the aggression and the expansion of Vietnam into Cambodia have you invested more of your interest in the problem. As the relationship between Moscow and Hanoi became apparent, there seems to have been increasing concern in the ASEAN group. Obviously, you are also to some degree concerned about the increasing military presence of the Soviet Union, whether it is a naval base or an airfield on Vietnamese soil, or a Soviet reconnaissance aircraft or a Soviet aircraft carrier in the not-too-distant waters.

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On the other hand, I am quite relieved to see that there is no nervousness in the ASEAN group. You seem to accustom yourselves to Moscow’s policies of threats as well as of temptations, just as we have accustomed ourselves to that specific mixture in Europe over thirty to thirty-five years. This is especially so for us Germans, who are a divided nation: the Russians of course always think that they can tempt us into a certain behaviour by holding out something which they will never give us. Of course, the greatest reaction has come from Japan—especially after the Korean aircraft incident. I think the present Japanese Prime Minister is the first one to clearly speak up publicly on the necessity for Japan to contribute to Japan’s defences more than before. This, of course, is a new factor for the whole region. Obviously, Nakasone is cautious in operating. He is obviously aware that, for some in the ASEAN group, memories of the not-so-recent past still linger. He is no doubt also aware of some memories in Beijing. But I think that it is only natural that, given for instance the fact that SS-20s cover all of Japan, the Japanese think about the future of their security—they have to. They have to as much as we have had to in our situation for the last thirty-five years. I want to stress again that the economic difficulties of the Soviet Union are enormous. Their inability to bring about an efficient economy is frustrating. It is true that they have set aside enormous proportions of their GNP (in the order of 12 or 13 per cent) year after year for military purposes. But they are not ten feet high; one should not be too overwhelmed by what they have achieved so far. Their naval buildup is considerable but by no means equal to the fleets of the United States or of the United States plus Britain plus France. Their strength on the ground is enormous but the ratio of superiority has not increased over the sixties and seventies due to the buildup of the German army; the same is true of their forces in the air. It is only one military field in which they have really gained an advantage, that is, these 350 SS-20 missiles with three independently targetable warheads each. This ought to be corrected. In the inter-continental missiles field, the Russians do not have much advantage. I do not agree with some of the rather timid judgements coming out of some quarters in Washington. Both sides still suffer from many “Windows of Vulnerability”. This is in essence equilibrium!

C. World Economy at Stake Now, let me say a few words about the global economic situation. What we are experiencing right now is not necessarily the deepest point of the structural crisis of the world’s economy. But even now everybody is hit by it, although Singapore is not hit very severely as yet. Everyone is hit by it with the one exception of the People’s Republic of China, which is not hit by the structural upheaval because the PRC is not a part of that structure. Their entanglement in the world’s economy

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is marginal when compared with the Chinese economy as a whole. The Soviet entanglement is quite large—it is as big as the United States’ entanglement, that is, between 9 and 10 per cent of exports and imports. And the Russians suffer much more from the structural crisis of the world’s economy than they ever anticipated and then we in the West understand. The industrialized countries are hit as well, including the Communist industrialized countries in Eastern Europe: Poland, Cuba, Romania, Hungary, the GDR. The Soviet Union has quite a few clients to provide it with hard currency! All these countries have suffered a set-back in the real standard of living for their masses, some of them by three or four years; some of them, like Poland, have been set back to the level of the standard of living, let me say, of 1969 or 1970, that is, by more than twelve years! Many developing countries as well as the non-oil lesser developed countries have suffered enormous set-backs in their standard of living—to the level of the middle or early seventies and, for some, even lower. Even the OPEC countries are now under some strain: look at Nigeria; look at Saudi Arabia, which is no longer providing additional deposits for Western banks, but is drawing on its accounts in order to be able to pay for the long-term projects that are underway. So the world at large is economically in deep disarray. I will only mention, but not deal with, the debt problem and the hitherto unconvincing way of dealing with it. There are many countries in which you can foresee that the economic deterioration will lead to social destabilization, and where social destabilization might lead or already has led to political destabilization. Take one example: the Argentinian invasion of the Falkland Islands/Malvinas would never have happened if the Argentinian generals had not felt that they should try to distract the mind of the people from their social and economic situation. If they had won the world championship in football it would have been as good—for that purpose. I could give many more examples, but besides the Argentinian generals, I am not going to insult anybody else. There are many other cases in the Caribbean region or in the Central American region where political destabilization at the same time not only can become a menace to peace but can also open up chances for Soviet infiltration. They are masters in the art of “fishing in troubled waters”. I will cut this economic chapter short by just saying that the lack of a united conscious economic behaviour within the community of the Western nations means a lack in grand strategy. A structural slump of the world’s economy is a great set-back, not just in economic terms, but in strategic terms. And if we fail to help those deeply indebted LDCs, if we fail to help them bring about sound economic and fiscal and banking policies in their own countries, if we fail to provide the necessary moratoriums, rescheduling and fresh credits, if we fail to bring about enough development aid, we might see a very quick expansion of Communist or

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Soviet influence. The danger lies much more here than in aircraft carriers or other weapons systems.

D. Conclusions and Outlook: Leadership Is Needed Summing up the global situation, I think one has to state first that on both sides the diplomacy of arms limitation is in danger of sinking to the role of a servant of militaristic prejudices. Since the beginning of the sixties, the need for concerted arms limitation has never been so much neglected as in the last couple of years. Diplomacy degenerates into the mutual abuse of loudspeakers. There is an increasing danger of political, economic, and military confrontation. It is necessary that the Western Alliance puts an end to that phase. Secondly, it is also necessary to bring to attention some facts about the enormous success of the Western type of alliance. Look at NATO, for instance—for three and a half decades the Alliance has preserved peace in all its territories. It has not preserved peace beyond its territories. But with regard to the territories which are defined in the North Atlantic Treaty, that alliance has been the most successful alliance of modern times. Many times it has proved its ability for political adjustment to new situations, new insights. There is no reason at all to believe that these qualities, that these abilities—to readjust, reshape, or reconceive—will be lost. Thirdly, Russia was and remains to be an expansionist power, and therefore, in the future as it was in the past, a determined counterweight is necessary. They have not really got an edge over the West, neither on the ground nor in the air, nor at sea, nor in outer space, except in that one field I mentioned earlier on—medium-range strategic missiles—and this has to be corrected. They have not been successful in those areas where a clear-cut joint defence was at work. On the other hand, they have been successful in areas where such clear-cut defence preparation was absent. They have been successful outside the borders of NATO territory. There they have gained their greatest strategic advantages during the last decade by intruding into, by influencing several states in Asia, Africa, and even America. It was an error made by those who in the late sixties and early seventies seemed to have believed that arms limitation treaties would prevent this in other areas of the world. In order to correct that situation, we do require effective Western help and political flexibility vis-à-vis the states in the Third World, including respect for their desire to maintain their non-aligned status. A fourth point in summing up: it has now become a fact that the Soviet Union has been severely hit by the economic decline—more than anybody would have expected. She has become an integrated part of the world’s economy. On the other hand, her efficiency remains deeply disappointing at least to her own leaders and to the masses. And here is a field in which she can be approached. She needs economic traffic and economic co-operation.

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In the arms limitation field, as I have said, not much has been achieved since Richard Nixon. Negligence, even cynicism, sometimes seems to have taken over. It is necessary to get new efforts going. One could sum it all up in one paragraph by saying that an intra-Western and intra-Pacific analytical debate about our future grand strategy is necessary. It will take some time, but it has to be started. And this region of the world also has to play its role. You cannot expect that the people in Washington, D.C., in Paris or London or even in Bonn would simply by their own means understand the needs of your region. You will also have to participate. During the eighties, I think, we need a sufficient degree of international consistency in our grand strategy aims and in our methods to attain them. In this connection the name of your city comes to mind. I have heard that the name “Singapore” comes from Sanskrit and means “City of the Lion”. Well, in present times, one does need the courage of a lion to face the challenges. But, at the same time, one needs the patience and the strong nerves of an elephant in order not to lose one’s courage, and not to lose one’s temper or one’s nerve either. And one needs the steadiness and the firmness of an old tortoise, in order to attain one’s aims in the end. One needs to remain a reliable partner, and also to remain a reliable adversary. Friends ought to be calculable, but adversaries ought to be reliable, ought to be calculable as well. All this of course does need leadership. Leadership has come from many people in the last fifty years. Rather often it has come from the United States, for instance from George Marshall or Kennedy or Nixon or Ford or Kissinger. On the other hand, one realizes that in the United States there always exists a temptation to pursue isolationism. It alternates with the temptation to pursue American hegemony—two extreme attitudes which come up from time to time. And one knows that many Americans find it a burden to carry the responsibility for other parts of the world. But I can assure the Americans that many Europeans, and I guess many people in this part of the world as well, sometimes find it disagreeable to accommodate to American views and wishes. So, there is some difficulty on either side. And of course leadership among free and sovereign states cannot consist of instructions or orders, neither in the military, nor in the political, nor in the economic field. It must be based on discussion, and questions and answers, and new questions and new answers. It must be based on the principle of give and take, and finally on consensus. But in the end we all have to understand that at the present time in history the economic strength as well as the military and political power of the United States does predestinate her to take the lead. That is how the people in Tokyo see it, how we in Europe see it, although we see it rather reluctantly and do not like to acknowledge it. We even say so. The Japanese do not like to acknowledge it either; but they do not say so: they are more polite than we Europeans are.

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But we have to understand that the vitality and generosity of the American nation (which is a very young nation after all, compared at least with Japanese or European or Chinese history) make it easier for them to take up leadership. And America must know that if it fails in leadership, there will be nobody else to take it up. Let me again quote my friend Peter Carrington. In his aforementioned speech he said there was a strong defensive element in our post-war actions: “We had not yet got the measure of our new adversary or of our own capacity for recovery. But, today, 1983, we are entitled to approach our problems, and particularly those of East-West relations, with more self-confidence. We are now in a position of considerable strength, not only militarily, but economically and politically, too. Of course, confidence should not slip into complacency. But it is perhaps a good moment to reflect coolly on the strength of the West as well as on our weaknesses and to compare both with the Russians.” He added that it seems to him extraordinary, against the dictates of common sense and against the evidence of our own eyes to claim that the West, in military terms, is in danger of sinking to its knees. He underlined the necessity for sobriety and calm resolution: “The West would make a major mistake if it reduces East-West diplomacy to nothing but to nuclear accountancy. Public opinion is understandably concerned when their own nerve of nuclear competition is over­exposed. We must be seen to be taking the broad view. A dehumanization of the East-West relationship would be the quickest road to catastrophe. Sound common sense it called for.” I would like to add to that long quotation that it seems to me that there is a lot of common sense in the city of Singapore, in the people, also in its government. I have been here only once before, about five or six years ago, but one can literally see the enormous progress. You have done a marvellous job in the past. And I do trust that also in the future common sense will not permit you to “slip into complacency”, to quote Peter Carrington, neither with regard to your further economic effort, nor with regard to your future security. Leadership is needed by every country, not only by the super-powers, not only by the United States, not only by greater powers but also by the small powers. And I trust, ladies and gentlemen, you are aware of the wise leadership which your country so far has enjoyed. Thank you very much.

Question and Answer Session Question: Sir, you mentioned grand strategy, but you did admit that the grand strategy had to be changed three times, from no weapons to massive retaliation to flexible response.

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Can you really have a grand strategy when you are living in a world which is flexible with changes all the time and you are dealing with intelligent opposition, whose responses and actions you cannot know beforehand? Would it not be more proper to call it a flexible strategy? Schmidt: The answer would be yes. But what would it mean in concrete terms? For instance, if you look to the military component of flexible response, in fact—and I am not giving away anybody’s state secrets—it would mean to defend Western Europe with conventional weapons, and foreseeing that this would not be sufficient, then to resort to nuclear ones, thereby threatening to be the first one to use nuclear weapons. This is not flexible. It is almost automatic and the only question is: Will it take three days or a fortnight or longer? “Flexible response” is a self-deluding term if indeed we do not have the means to fight back against the conventional attack with conventional means only. If this were an American audience and not a Singaporean one, I would now engage in a long talk about the necessity of the United States to go back to conscription and national service. I really mean what I say: One cannot help to defend the free world by just spending ever more dollars. What you need in the case of defence is young men who have the motivation to defend their country, who have had military training. Only then do you need dollars to buy for them guns and boots and what have you. And not the other way around. In my view, it is a wrong capitalist notion to defend a country by spending money. And this has led to the inflexibility of our defences—much too much spending on hardware, and great neglect of the men in uniform and the reserves. For instance, my little country with 60 million people—one-quarter the population of the United States—has conventional forces numbering 500,000 which after mobilization within a week could be enlarged to 1.3 million, all of them living on the battlefield, all of them having served at least 15 months, quite a few of them 24 and 36 months, well-trained, and there is equipment and weapons for all of them. This is what you can do if you have conscription. The Americans have not. The British have not, either. There are no manpower reserves. I am asking, for instance, for much greater manpower reserves in the military field in order to really become flexible. Now, I am not sure whether your remark hinted only at the military aspect of grand strategy; you could also have hinted at the economic aspect of grand strategy vis-à-vis the Soviet Union. In the economic field, too, one ought to be flexible. But does “flexible” mean that from time to time with an interval of just a couple of years, you have economic co-operation with the Soviet Union, and then serve them with an embargo on grain? Then you lift the embargo on grain, but instead serve them

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with an embargo on pipes? This I would not call flexible. I would not give it such a nice name. I agree with the need for flexibility, but I would also very much wish to stress the necessity of continuity, of being calculable for one’s adversary. Too much flexibility would lead to weaknesses. Question: Mr Schmidt, if we compare Soviet and Western economic aid to Third World countries, it would seem that the West has been far more generous and their help probably more useful on development grounds. And yet, the Soviet Union has on the whole managed to gain great political mileage even with their crude propaganda techniques. Can you explain this phenomenon and tell us what Western governments can do to better their image in the Third World? Schmidt: I do not believe that the Western powers, as a category, have an image amongst the developing countries worse than the Soviet Union’s. From time to time, some leaders in a developing country or an area of developing countries get angry about some specific features of Western policies. This has happened over the Falklands; this has happened over Grenada: it happens from time to time. But most of the developing countries are quite happy with the fact that there is some sort of strategic equilibrium vis-à-vis the Soviet Union. There are quite a few who started out as Marxist revolutionaries, then became heads of government or state in their respective countries, and now, after a couple of years, understand not only Western technology but the whole way of organizing an economy; and here the West is by far superior to the Soviet economy. You said the Soviet Union got much more mileage out of their rather little economic aid. That is true. Soviet aid has been rather limited, and if you detract the aid for Hanoi and Havana, then it is almost nothing. They were successful in providing military aid, not only military hardware—most of it is a decade older or so—but also military advisers, colonels as well as non-commissioned officers, and advisers in the field of intelligence. How could it be that they have been successful? I think in a number of cases it is because the original revolutionaries who brought about independence of former colonies were not treated intelligently enough by their former colonial superiors or by their mighty neighbours. In most cases these new governments in the developing world were rather insecure themselves and wanted to have weapons and armies. And they did not get the weapons from the West. So they looked for somebody to give them the weapons. If the total sum of official development aid—including bilateral and multilateral aid, World Bank, and all the rest—is put at 100, then the

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expenditure for their own military purposes of all these receiver countries is between 200 and 300. They spend two and a half times more for military purposes than what they get in terms of economic aid. I mention this figure in order to make you understand, that—for appropriate reasons or not—they obviously have a strong desire for building up military forces. And the West obviously is not to the same extent fulfilling their desires in the way the Russians are willing to. There are some examples in Asia which I will not mention, some more examples in Africa, and right now even some examples in Central America. I must confess that in my country I was among those who declined to deliver weapons to non-aligned Third World countries because I do not see much moral legitimation for doing so. In Germany, we have set up a rule which has been adhered to by a number of governments, one after the other, not to deliver military weapons outside our own Alliance. There are in addition a very few countries who are considered as equals although they do not belong to the Alliance. Australia is one of those. Switzerland, although neutral, is one of those, but they do not need our weapons—they have very good ones themselves. Now, you might say this is wrong policy and we would have to argue about it. But then, on the other hand, I would like you to understand that Germany is a specific case after World Wars I and II. France has never pursued such a policy. The French have delivered weapons and planes to anybody who could pay for it. And I think the limitations which the British imposed on themselves do not go much further than the limitations of the French. But the Soviets deliver weapons with no payment at all. Sometimes they ask for some payment, but if it is not paid, it does not matter very much for them. They know what they are doing. Question: Mr Schmidt, over the last three years, the peace movement seems to have been gaining momentum in Europe. To what extent have the Russians gained political mileage out of this peace movement in Europe? Schmidt: It is obvious to me from the foreign political behaviour of the Soviet leaders— and their broadcasting, television, their newspaper people travelling around in the world—that they very diligently try to exploit the West European peace movement to their advantage. This is also obvious to some of the leaders within the peace movement. Some of them take that into account and try to prevent it from happening, some of them do not bother. There are even a few who think it is all for the better that the Russians do that. Now, before giving you my own judgement, I would like to say a few words in favour of a psychological understanding of the peace movement.

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I talked earlier on about my own home city of Hamburg, just five minutes by air away from the next Soviet military airfield. And there is not only one airfield close by. Germany is a very small country. It is about the size of the American state of Oregon. In Oregon, there are two and a half million people; in Germany, there are sixty-two million people. In Oregon, you may have one or two military airfields, used mainly for the training of young officers of the reserves who are studying at the State University of Oregon. There are no nuclear weapons on the soil of Oregon. On the soil of Germany, you have the German army, which, as I mentioned earlier on, is quite a good one, quite a big one. Secondly, you have an American army and air force. Thirdly, you have a British army and air force. Fourthly, you have a French army and air force; a Belgium force, a Dutch force; a Canadian force; even a Danish general. This is quite something for that small territory. What is even more disturbing to some of the young people is the fact that on top of that there are 5,000 nuclear weapons on German soil. I was able to diminish it in my time of office by 1,000, again it will be diminished by another 1,400 in the course of the next five years or so, but still, it is an enormous arsenal of nuclear weapons. All these are targets for Russian nuclear weapons, of course. And this is not so nice an environment for 62 million people to live in. So I have some understanding for people who want to terminate that kind of a situation. On top of that, there are some moral reasons to see to it that a war is not started from Germany’s soil again—historic reasons, moral reasons. And it is understood that Germany would be the primary battleground if anything ever happened in Europe. I mention all this in order to give you some understanding of the psychological situation out of which comes the peace movement, at least in my country. Having said all this, I am not a sympathizer with regard to the peace movement, partially because of the way in which you reason your question, partially because I really do know that, if we want to maintain peace in Europe, we ought to be on our guard, mend our fences and be able to fight back in the same fashion in which we might be attacked. I think that you have to bear in mind that there is a peace movement also in the United States of America, in England, in Holland, in other places. In the United States of America, all the Catholic bishops and archbishops, after a long period of almost public debate, have jointly, after two preliminary drafts, put their signature to a paper which condemns nuclear weapons. This of course makes an enormous impression in Europe. Also in America, you have people who are not necessarily members of the peace movement but who publicly speak up for a freeze of nuclear weapons and nuclear developments. There are various freeze proposals, various proposals for non-first-use strategies and for non-early-first-use strategies. There are many people in the world who live under the threat of a theoretically thinkable

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exchange of nuclear weapons, who think about ways and means to terminate the situation or at least to limit the amount and the volume of the nuclear threats and counter-threats. I have some understanding for that. It is also in that context that I said we do need a thorough intra-Western debate and that would include Japan and the Southeast Asian region (perhaps the word “intra-Western” is not appropriate— I do not know a better one); a debate among the free nations of the world who want to be aligned, about our strategies for the late eighties. I would make one prophecy. Nations with a television democracy, like America, like Germany, like England, like almost any European country nowadays—nations in which television audiences decide the course of their democracy, mainly under the influence of what they see with their own eyes (they at least believe that they have seen it with their own eyes on the screen)—will not for a much longer period accept strategies which they believe will destroy themselves. The acceptability by one’s own public of a strategy becomes of ever greater importance in the present and in the future. Thirty years ago, nobody in the general public knew anything about military strategy. Nowadays, they do. And they see movies like War Games or The Day After. And they think they have seen with their own eyes what could happen—nuclear warfare, decisions being made within a second by a computer. Now, in a democracy you need strategies which are accepted at least by the majority of people. You also need it for a second reason. How could the Soviet leadership think that you have the guts, in a case of emergency, to do what you threaten if your own population does not accept your strategy? How does a strategy of the West, for instance, become credible for the people in the Kremlin if it is not credible enough for our own public opinion in Western countries? This is a very recent phenomenon, which has never played a role in the sixties or fifties, not to speak of the periods before World War II or World War I. The acceptability of grand strategy and military strategy will play a great role, and public opinion will therefore also play a great role in making strategies acceptable. We shall need a lot of education, we shall need a lot of public debate. And there will be quite a few people in all of our countries who will come up with the Bible and tell you that this is all wrong, and Jesus Christ has said you should not do these things, you should not have weapons, you should not fight back. Quite a few other religious people will also come up with their religious teachings and philosophies. We are in for an in-depth debate within the West, and we have to win it because we want to resist Soviet pressure. So, the situation becomes much more difficult in the course of the eighties than it has ever been in the sixties or the fifties. And it really does require leadership, not by clandestine decision­making in some governmental palace or White House or Chancellor’s Office in Bonn, or what have you. What is needed is the consent of the majority of the people, a decision by the people. This is what it adds up to in the course of this decade. Therefore, as I said, what is needed is leadership, also, moral leadership. It takes a moral decision

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to be prepared to do something which might, if it had to happen, be disastrous. And it ought to be understood that there is also an enormous moral quality at question if you decide not to equip yourselves with appropriate ways and means to defend your nation, because it might mean delivering your nation and others into the hands of an aggressor. This moral quality of that strategic debate has been understood by some of the leaders of the peace movement. It has been understood by some government leaders, but they so far have not been too successful in projecting their moral convictions of their public. If you read what the Catholic bishops, for instance, in the United States have said, it is quite obvious that the political elite of the United States so far have not convinced the elite of the clergy. I am far from thinking—and I guess you are, too—that the Catholic bishops of the United States are something like clandestine fellow-travellers of the Soviet Union. They are certainly the opposite, but still they have moral doubts about the US military strategy being appropriate. So this is what the great debate of the eighties is all about. Mr Chairman, I beg your pardon for these lengthy answers, but it is sometimes difficult to be short, at least if you talk in a foreign language.

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Trends in the International Financial System Raymond Barre

On 25 November 1986, economist and former Prime Minister of France Raymond Barre gave the 7th Singapore Lecture after being welcomed by Senior Minister S. Rajaratnam. Professor Barre was the third of three eminent economists to give a Singapore Lecture, starting with Professor Milton Friedman in 1980. Professor Barre’s lecture is a very lucid analysis of the systemic risks inherent to the post-Bretton Woods international financial system. A decade prior to the cataclysmic Asian Financial Crisis centred in Southeast Asia, it serves as a timely reminder of the power and economic and political risks of global financial flows. Excellencies, Ladies and Gentlemen. I am very grateful to the Institute of Southeast Asian Studies and to its Director, Professor Sandhu, for the kind invitation to deliver the Singapore Lecture 1986. I thank the Senior Minister, Mr Rajaratnam, for introducing me with such witty and gracious words. Mr Minister, I am not Godot because I am here; I am an economist—but I do not know whether I am an optimist or a pessimist. I am an economist who has to face facts, and the facts are strong and problematic. I have had to face facts in the European Community, I have had to face facts as Prime Minister of my country. And based on my experiences, I feel that the main quality of an economist should be humility. He tries to solve problems but he is not sure to succeed. What is important is neither optimism nor pessimism, but lucidity. And I will try tonight to be lucid about the problems which I have chosen to discuss. Firstly, let me say that I am honoured and pleased to address such a distinguished audience, in a country which, despite its small size, plays a very important role in

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this region under the leadership of its Prime Minister, Mr Lee Kuan Yew. It is an example of hard work, innovation, and adaptability. It has reaped the fruits of its continuous effort. May I express today, to Singapore, one of the dragons of Southeast Asia, all my wishes for the same success in the future. *** In the last fifteen years, the evolution of the international financial system—I define the financial system in its broadest sense as the financing of the world economy—has been characterized by important structural changes which are largely interrelated. The stability of exchange rates has been upset by the collapse of the Bretton Woods system, itself provoked by the dollar crisis of the beginning of the seventies. Under the regime of floating currencies we have observed not only the volatility of exchange rates, but also their misalignments resulting from overshooting—overappreciation, or over-depreciation. The necessity of achieving a greater stability in international monetary regulations has been frequently underlined. Yet the divergencies of economic policies and the magnitude of capital movements are big obstacles to the restoration of a durable system of fixed but adjustable exchange rates and even to the working of a system of target zones requiring co-ordinated interventions of the major central banks within mutually agreed margins of fluctuation of currencies. Except for Great Britain and Spain, the countries of the European Community have decided to participate in the European Monetary System which appears in the present international financial system as a zone of relative stability. The working of the system has resulted in a greater convergence of economic policies of the member states. This convergence has led to orderly exchange rate realignments. Since its inception almost eight years ago, the European Monetary System has been useful for all participants. In periods of heavy US dollar fluctuations, it has undoubtedly been advantageous in that a good deal of foreign trade—about 50 per cent for member states of the Community—has been carried out within a zone of comparatively stable exchange rates. But we must recognize that this system cannot be generalized now, mainly because the success of the EMS is linked to the fact that there is no big reserve currency in our European System. During the last fifteen years, two other big changes have taken place in the international financial system. The United States, a net creditor in the world in the seventies, became a net debtor in 1985. The United States’ foreign debt at the end of 1985 amounted to $120 billion and will rise under present conditions to $500 billion in the nineties—which means a big problem not only for the United States but also for the rest of the world. At the same time, Japan has become the main creditor country in the world. There is also the debt problem of developing countries. In spite of some improvement in the situation in recent years, this now appears as a long-term problem for which economic considerations cannot be dissociated from social and political considerations.

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To complete the scenario, I would like to highlight the rapid integration of financial markets which presents three dimensions. The first dimension is the integration of exchange markets in the world. Exchange transactions have been globalized such that after the opening of the Auckland and Sydney markets on Monday morning until the closing of the US markets on Friday afternoon, exchange transactions take place continuously, 24 hours around the world, with exchange rate movements in one market immediately affecting those in the market next to open. Such integration has been brought about by the remarkable improvement of telecommunications which has enabled us to gain access to exchange markets all over the world all the time. The second dimension of integration is the integration of interest rate movements. Interest rate movements in one country may affect interest rates in other countries. And it is not always easy to disconnect interest rates in one country from those in others unless those countries are willing to accept fully the possible adverse impact of interest rate differentials on exchange rates. The third dimension of integration is deregulation and innovation. The financial revolution which is developing largely in New York and London is spreading more and more to the financial communities of the markets. If the financial revolution can afford advantages, it can also become a factor of vulnerability for the international financial system. This broad-based picture shows that in the medium run we could have to face some dangers in the world economy which relate primarily to the financial system. Let us examine three aspects of the international financial system that could constitute possible breaking points—the extent of current balance of payments imbalances and their influence on the evolution of exchange rates; the international debt problem, the greatest challenge of the present and the future; and the financial revolution which can affect the world’s banking system. These aspects constitute a challenge for the economy and the responsible authorities. Effective and durable solutions must be found, yet this is not easy in the light of the many constraints on the economies and their increasingly complex interdependence.

I Very large imbalances have risen between the industrial nations. The 1981–85 period was marked by a sharp divergence in fiscal policies among the three largest economies of the world: whereas budgetary deficits declined in West Germany and in Japan, the budgetary deficit in the United States widened substantially to reach $220 billion this year. In a country with a rising budget deficit, the financing for it must come from increased domestic private savings, or from reduced investment, or from increased foreign borrowing. The mechanisms which may bring about this additional financing are a rise in real interest rates and an appreciation of the exchange rate—which happened in the United States. In this country, private

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savings rose very modestly, an evolution contrary to the hopes of the supply-siders, which implemented a very important tax cut in 1981. Private investment increased strongly in response to fiscal incentives introduced in 1981. It was left to foreign financing to close the budget gap. In 1985, foreign borrowing by the United States amounted to more than half of the budget deficit. This year, the current balance of payments deficit of the United States will remain very high. The depreciation of the dollar relative to the Deutschmark, to the European currencies, and mainly to the yen which began in February 1985 and was accelerated by the Plaza Agreement in September 1985, no longer has a full impact on trade volumes. The J-curve effect of a devaluation explains why the US trade deficit in nominal terms has not yet been reduced and at the same time why Japan and Germany are enjoying their highest surplus. Two questions arise at this point of the discussion: Is the present rate of the dollar satisfactory? And can the devaluation of the dollar do the job alone? Relevant to the first question is whether the depreciation of the US dollar has gone far enough. A positive answer is given by Paul Volcker who recently stated: “In contrast to the situation eighteen months ago, and assuming growing markets are open to us, my sense is that we are, for now, reasonably close to an appropriate adjustment in that area”. The recent agreement between the monetary authorities of Japan and the United States tends to stabilize the dollar-yen exchange rate around 160 yen for one dollar. This rate is considered as conforming to the economic fundamentals. The president of the Bundesbank has expressed the same view on the present US dollar level vis-à-vis the European currencies, that is to say, around two Deutschmark for one US dollar. I understand their position. A further depreciation of the dollar could for Europe endanger, through the fall of exports, the process of economic growth which is now under way. It would also badly affect the Japanese economy. For the United States, a fall in the dollar would lead to increasing inflationary pressures and high interest rates without contributing much to a better trade balance. Moreover, the results cannot be reached without time lags which cannot be underestimated. For example, United States industries remain less export-minded than German or Japanese competitors. Many big US companies manufacture abroad, thus they do not export. We should also not forget that important trading partners of the United States with substantial surpluses in their current account peg their exchange rate to the US dollar or have devalued their currency relative to the dollar: Canada, some Latin American countries, or some Asian countries. For all these reasons, one cannot expect quick results. However, I am personally inclined to think that the present rate of exchange of the dollar is only temporary and that the fall of the dollar could continue in the forthcoming months. This view is not only mine but is shared by leading American experts. It is supported by two considerations: first the magnitude of the US deficit and foreign debt which in the forthcoming years will incur annual servicing amounting to at least $40 billion.

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I will try now to sketch an answer to my second question, that is, whether devaluation of the dollar alone can do the job. The United States urged its partners, mainly Japan and Germany, to stimulate their economies in order to increase domestic demand and consequently imports. In countries the growth of which is export-led and which have benefited from the rapid expansion of the United States in 1983–84, it appears necessary, in order to reduce international imbalances, to shift the determinants of expansion from foreign demand to domestic demand. But this proposition, according to which Europe and Japan should relax their monetary policies and increase public sector expenditure, is naive and dangerous. Were such a policy actually to be pursued, government and central banks would rekindle inflation and boost public sector borrowing. In this way, there could be a return to the imbalances we had at the end of the seventies and sooner or later we would be confronted again with a new painful adjustment process. Above all, this would reduce the rate of world savings in view of the capital required to finance technical progress and to keep up with population growth—this would be bound to damage the economic well-being of future generations. The Europeans and mainly the EEC governments are convinced that the medium-term strategy, aiming at sustainable non-inflationary growth is a much better contribution towards more international equilibrium than returning to the stop-and-go policies of the past. Excessive preoccupations with the short term can sometimes undermine stability in the medium term. A steady course of policy is necessary to achieve fundamental economic objectives. It is all the more necessary that most European countries have to take account of this external constraint. They cannot create international money. They cannot borrow in their own money. They have to react by vigorous restrictive policies when there is a balance of payments deficit. An efficient medium-term strategy can yield results. In West Germany the entire growth of real GNP in the second and third quarters of 1986 was solely attributable to the domestic demand. The second quarter showed an increase of 5.5 per cent over the same period last year. In other words, domestic activities have so far proved strong enough to offset the dampening effect emanating from the external sector and the fall in the dollar. As for the German trade balance, the surplus in volume terms has already declined substantially—from January to August 1986 the volume of exports increased by only 1 per cent, imports increased at a rate of roughly 5.5 per cent. The German monetary policy is anything but restrictive—the money supply target will be significantly overshot this year. As for Japan, the Maekawa Report shows big changes in mentalities and behaviour which will be necessary to reduce the role of the external sector in Japanese growth. This evolution has to be accepted by Japan if it wants to play its part in the harmonious working of the international economy and give up a rather mercantilist attitude. Such an evolution will take time. Countries with large balance of payments surpluses have a duty to sustain domestic demand growth at an adequate pace,

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that is to say, their policies should be compatible with the medium-term objectives of durable growth and financial stability. But the United States cannot be relieved of its responsibilities. The United States needs to carry out the plans put forward by the US Administration and Congress to reduce the US fiscal deficit. A major reduction of this deficit is needed if interest rates are to moderate further and if external imbalances are to be reduced in an orderly way. Moreover, efforts should be made to avoid a substantial decline of the dollar rate which would strongly affect the standard of living in the United States and would encourage protectionist measures that would in turn destroy the international economic system. Can the United States administration achieve such results within the last two years of President Reagan’s mandate? Scepticism prevails. My conclusion on this topic is that effective co-operation and shared efforts are necessary if we want to overcome imbalances in the world economy. Budgetary and monetary policies will have to be pursued in the surplus countries in a way which would lead to efficient financing of the American deficit by resources coming from abroad.

II The imbalances I have just analysed cannot be considered independently of the international debt problem. This problem cannot be restricted solely to servicing of debt as it is closely linked to the economic and financial equilibrium between nations. After the serious crisis of 1982–83, the international debt problem lost some of its acuteness. Thanks to restrictive measures adopted by the indebted countries, the rescheduling implemented by creditor countries, the upswing in the world economy and mainly in the United States, the most highly indebted countries were able to improve their external positions and thus pay the main part of their obligations. However, this improvement appears only temporary. Despite major reductions in world interest rates, the slow-down of the US economy and weak growth in Europe and Japan have hit developing countries at a particularly bad time causing reduced output growth and a deterioration of most debt service indicators. Moreover, the fall in oil prices has caused a deterioration of the economic situation of some oil producers, like Mexico, through a strong drop in export earnings. At the same time, efforts made by debtor countries to reduce domestic imbalances and to deal with structural rigidities have notably weakened. The fall in the standard of living and the income per capita was so important that social and political tensions rose in most of these countries, particularly in the countries which have implemented the IMF programmes of adjustment. A new strategy has been introduced with the recent agreement between the International Monetary Fund and Mexico: less austerity and more flexibility in the programme, more growth for the debtor country. The IMF gives Mexico the guarantee that it can draw on additional facilities should the oil price fall below a certain level; if on the other hand the price rises above a

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specific point, Mexico has to forego part of the credit given to it. This new strategy appears more sensible and more acceptable for debtor nations. In fact, debtor countries have to adopt growth-oriented policies because of the growth in their population. They have to combine macroeconomic and structural policies in order to create an environment of overall financial stability, while providing appropriate incentives for increasing exports, savings, investment and economic efficiency. They have to deal with the problem of capital flight mainly in Latin America and encourage both their residents and foreign investors to invest in their economy. Financial flows in the developing countries can also be facilitated through adequate official export credits and increased official development assistance. The massive transfer of resources from the Third World to the industrial countries caused by recent declines in developing countries’ terms of trade—about $80 billion this year alone—means that creditor countries are in an improved financial position to support the growth efforts of the developing world. It is in the interest of developed and industrialized countries to do that—developing countries now take a fourth of all industrial countries’ exports. However, let us briefly look at the problem of the debt in the wider context of the global balance of payments structure. There is now a paradox. It is a matter of simple logic that today the United States clearly cannot keep on playing the role of global borrower of German and Japanese surplus, and remain a global spender. Sooner or later, the US external position could become unsustainable and the sooner the imbalance in the international distribution of liquidity is corrected the better. The obvious solution to this imbalance would be to channel Japanese and European surpluses into young and fast growing economies. Their savings surpluses would improve real growth but not fuel stock market speculations. The United States trade balance could improve with the opening of new markets and surplus countries would find first-class opportunities to build up a stock of productive assets in the developing countries. Of course, there is no question of debtor countries borrowing unconditionally. But it is clearly in the interest of the world community as a whole that industrial nations accelerate the rescheduling of the outstanding debts, develop new techniques for channelling more of surplus countries’ savings to the Third World, and find ways to include good quality developing countries’ debt in the current international securities boom. Strong co-operation between the North and the South is a condition of further progress in the solution of this fundamental problem of development, fundamental for the stability of the world in the forthcoming years.

III The third aspect of the international financial system which I have chosen to highlight is the financial revolution, that is to say, the rapid structural change affecting financial

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markets in general and the banking industry in particular, leading to a globalization of financial markets. This financial revolution can be defined by three main features: first, the growing interconnection of financial markets which appears in the structure of banks’ balance sheets and profit and loss accounts, in the geographical migration of banks, in the connection of interest rate movements, and in the increasing size of observed capital flows; second, the wave of financial innovations; third, domestic deregulation and the gradual dismantling of controls on capital movements. These developments can be linked to a fundamental trend in the evolution of modern societies, a trend towards becoming information or communication societies that work on the basis of the information standard, to use Peter Drucker’s formula. Technological advances in communication and data processing and in computer technology have allowed for the analysis of continuously updated positions and market developments; the pricing and the rapid exchange of instruments in unprecedented amounts eliminating space and time barriers between national markets so that the participants in the main financial centres have basically the same information at the same time. The “Big Bang” in London; the creation of the Association of the West German Stock Exchanges last July; deregulation in other countries and the progressive bringing down in the economic community of barriers to the free movement of capital—all this contributes to the concept of the international financial system as a “global village”. In this globalized financial market, the special political and economic conditions of recent years have led to a greater degree of volatility as regards fundamental economic factors such as interest rates, exchange rates, and rates of inflation. This has increased the need for new and refined possibilities of hedging risks. International debt problems have increased the awareness of risk in the financial field and the capital requirements for banks have become greater in many countries. This in turn has aroused interest in financial instruments through which tying up a bank’s loan to capital can be avoided. Financial markets responded to this new environment by developing techniques to unbundle the different risks of financial transactions: the interest rate, liquidity, currency denomination and maturity of financial instruments were separately priced and negotiated on separate markets with an unprecedented proliferation of possibilities to invest, borrow, hedge, or speculate. A larger share of intermediation started to flow through securities markets which were able to expand rapidly to the demands of new instruments. Credit has been made increasingly under the form of securities, that is to say, negotiable instruments. It is the process of “securitization”. In both the debt and the equity markets, savings were increasingly channelled through institutions such as insurance companies, pensions and investments funds, so much so that these institutions no longer have the same need of traditional intermediaries as in the past. Therefore, banks have started to look for ways to reduce the need for capital—while preserving their share of intermediation. They

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have thus expanded their activities as suppliers of services in the capital and foreign exchange markets. All new financial instruments—note insurance facilities, futures, auctions, and swaps with a number of hybrid forms in between—are characterized by the fact that they are not reflected in a bank’s balance sheet. This implies that banks’ balance sheets do not include off-balance sheet items and they reveal less and less information. Generally speaking, it is true that the process of financial innovations is working to provide the users of financial services with better and less expensive services, and with a wide array of outlets and instruments to diversify both sides of the balance sheets. Similarly for banks and financial institutions, financial innovation is providing access to new markets, new sources of profit potential, and new opportunities to diversify and/or hedge their balance sheets. These clearly beneficial aspects of financial innovation should work to make our financial system both more efficient and stronger, but there are some other aspects which should be considered with caution. Financial innovations transfer risks from one agent to another and may in the process redistribute these risks to such an extent that systemic risk is reduced, but the risk itself cannot be eliminated. And the burden of exposure can be placed on those who are less able to absorb shocks. Moreover, in the event of shocks or instability, some of the risks can find their way back to the depository or other financial institutions. It is also possible that financial innovation may encourage relatively faster growth in debt; for example, interest rate swaps may be providing credit market access to borrowers who might otherwise be rationed out of the market or, at the very least, may be required to pay a higher risk premium. This might all result in a situation in which the economy as a whole is simply taking on too much debt relative to its equity base or to its income-producing capabilities. Finally, financial innovation is introducing greater elements of complexity and interdependence into the system— some contemporary transactions entailing multiple parties in multiple locations can defy ease of comprehension even by seasoned experts. All these aspects suggest the necessity of co-operation in an international framework—co-operation amongst the authorities responsible for supervising the financial industry on a world-wide and multilateral basis. The geographical mobility of financial institutions, financial transactions, or simply of book-keeping locations has become astonishingly high. No country can be left out of an international cooperative effort which tends to reduce the potential instability of the international financial sector. *** In today’s highly interdependent world economy it is my conclusion that more effective international co-operation is indispensable for overcoming the balance of payments problems, the debt problem, and for ensuring the stability of the financial industry. I would have reached the same conclusion if I had discussed the problem

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of growth, or the problem of trade and protectionism which is so important, not only for industrialized countries, but also for developing countries. In recent years, our countries have made real progress towards setting the world economy on the path of international co-operation and co-ordination. We have to go on even if we encounter difficulties. The challenge is great but so too will be the reward for success. Thank you for your attention.

Question and Answer Session Question: In his comments dealing with the balance of payments adjustment, Dr Barre has pointed to a number of very statesmen-like policies which I suspect would be very unpopular with the electorates of the countries concerned. Since Dr Barre is a Professor of Economics and also a very successful elected politician, I wonder if he could tell us how he would reconcile a dilemma. Barre: I think that we have to face the facts. We have tried in the past to reconcile divergent objectives, mainly in European countries just after the first oil shock. You will recall the policies implemented by governments which tried simultaneously to maintain high wages for households and to make enterprises and firms bear the burden of the adjustment process of the balance of payments. And they tried to postpone the adjustment by using recycled petrodollars. In 1979 after the second oil shock, it was impossible to go on with this policy and they had to face the facts. I think that now, if we want to restore some stability in the world economy, we have to adopt measures which are not always easily accepted by the electorate; but which are gradually being understood. In my own country, before the first oil shock the reluctance of public opinion to accept the necessary restrictive and painful measures has largely disappeared because there was a learning process. I think that in many countries, developed and developing, there is a learning process which leads to an understanding and acceptance of some rigorous measures. And if there is a loss in the electorate and success for the adversaries, when the adversaries become responsible for implementing the policies, they have to recognize that their promises cannot be respected. This is another aspect of the learning process. Question: We have to thank you for a really brilliant piece of summarizing a very complex problem in a very subtle way. But when one goes back to what you say, the phrase

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that keeps recurring is the need for greater international co-operation. Everyone agrees there should be more co-operation but in a certain sense one sees a hardening of positions. What can we do now to gain this greater international co-operation? Barre: I told you that it was difficult but that international co-operation was needed. Look at the past few years and you can measure the progress which has been made. Consider, for example, the trade pledge in OECD in 1975 that avoided the adoption of protectionist measures—this would have been destructive to the international economy. The last report of the GATT says clearly that there is fear of new protectionist measures but that till now, the level of free trade already reached in the world economy has been respected. Look at the situation after the collapse of the Bretton Woods system—there was co-operation among central banks. And I consider that there is now greater co-operation among the main countries responsible for the international monetary system and for the developing countries. In June 1982 I was in Washington and I discussed with senior officials of the Administration the problem of the debt of Latin American countries. They told me that there was no problem—that the problem would be settled the way our economies are going, interest rates would fall, there would be no problem. I told them that I was not as optimistic as them. And I came back in December 1982, just after the Mexican crisis. With regard to this crisis, you may recall the reaction of all the financial and monetary institutions in the world, not only the US Treasury and the Federal Reserve System, but also the BIS and other governments. They succeeded in avoiding the collapse of Mexico. And last July, there was also a co-operative effort to avoid new difficulties for Mexico. I think that day after day we are experiencing slow progress toward co-operation. What is now important, in my view, is that international institutions and mainly the IMF and the World Bank should be given the means for adopting long-term strategies. Till now, they have introduced emergency solutions and we are facing new problems. I think that for the debt problem it is necessary to implement longterm strategies and to have financial resources to do that. I read a newspaper report that Japan is ready to increase its contribution to the IMF by lending to it $3 billion dollars and also to increase its contribution for helping developing countries. I think that a creditor country with such a big surplus has to do that. There will be, in my view some progress—not because people are generous (although there are good feelings, I do not allow feelings into the analysis), but because as an economist I think it is a problem of basic interest. The feeling of interdependence is now very strong and it is in the interest of all industrialized countries to help developing countries to remain open as markets and outlets. Industrialized countries need markets and the markets which can be very fruitful

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for industrialized countries are the markets of developing countries. We could help those countries to increase their income per capita—an aspect which in my view explains the change in the strategy of the International Monetary Fund and of the World Bank. From 1982 to 1984/85, there were only programmes of adjustment looking at the demand side and neglecting the supply side. Now, the programmes which are prepared by the banks are growth-oriented. And the rate of growth which is envisaged in those programmes is slightly superior to the rate of growth of the population. I think this is interesting progress. But I agree with you, Sir, there are a lot of supplementary factors, too. Question: With regard to the international exchange rate, I see that the problem at the moment lies with the big US deficit. My question is this: how does the United States regard this big deficit and what are the social consequences such as unemployment and a lot of other problems? I wonder also what sort of implications there are for international exchange rates. Barre: I think it is very important to understand the importance of the budget deficit of the United States. The United States is in a very privileged position. When the United States experiences a deficit in their balance of payments they can borrow; they borrow in their currency—in dollars—and they can repay in dollars because the dollar is an international currency. This may be acceptable within certain limits. If the deficit is too high and too durable, there are problems because there is a risk, an exchange risk, the risk of the devaluation of the dollar. This risk has been supported by the Japanese pension funds which have bought a lot of American securities and they are in dollars, and which now have to evaluate their portfolios with a depreciated dollar. But I think that the United States decided in 1981 to reduce the unemployment problem by using a domestic policy without considering the external consequences of this policy. What Mr Reagan did in 1981 was to stimulate investment by a tax credit, a very important tax credit, which was very useful for American firms which had to develop their productivity. Then he introduced the tax cut for households, a very important tax cut, and at the same time he increased military expenditures. He thought that it was possible to offset those measures which led to a reduction of fiscal resources (taxes) by reducing expenditures. He succeeded in reducing some expenditures but did not succeed in reducing social expenditures—mainly social security expenditures. There was a disequilibrium. The supply-siders thought that if there was a tax cut there would be a strong increase in economic activity, that

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incomes would rise and that important tax receipts would come to the government. They thought also that reducing personal taxes would be an incentive to savings. This hope was not realized because when incomes increased, there was no increase in savings but an increase in consumption expenditures. Under the pressure of consumption expenditure, the American economy developed very quickly in 1983–84, but at this time the balance of trade began to deteriorate. Normally, when a balance of trade and a balance of payments deteriorate, there is a fall in the value of the currency. But this time, the situation was different. Interest rates were high in the United States, because there was a big budgetary deficit, because the government had to borrow. Foreign resources or funds were attracted by the level of interest rates. At the same time, there was a strong expansion in the United States and many people thought that it was interesting to invest in the United States. The result of all those factors was a rise in the dollar value. The dollar reached record levels, the consequence of which was a new fall in American exports and a new increase in American imports. Other countries came and sold their products in the United States market. The United States was outpriced. In 1985, the President of the United States understood that it was necessary to modify the situation and the Plaza Agreement led to a more rapid devaluation of the dollar. But this is not enough. The budget deficit remains. The budget deficit means an absorption of resources by the government, not for productive expenditures, investment expenditures, but for financing unproductive or consumption expenditures. This is why there are now in the United States some people who begin to be worried about the productivity of the United States—mainly the productivity of industries relative to the productivity of Japanese or European industries. All this can be related to the magnitude of the budget deficit. In order to reduce this deficit there is no other way than introducing taxes. But the President of the United States who in 1981 introduced a tax cut does not now want to raise taxes. This is why I mentioned earlier that there is great scepticism about the possibility of the United States reducing significantly its budgetary deficit in the next two years. This means that the dollar will go on falling and that there will be a sort of trade-off between the devaluation of the dollar and the amount of financial resources which will be lent to the United States by surplus countries, that is to say, European countries and Japan. This is the network of economic phenomena which in my view are related to the budgetary problem of the United States. I hope I have answered your queries. Question: Following on to what you are saying Dr Barre, do you foresee the yen taking over from the US dollar as the world’s major reserve currency in the longer term?

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Barre: I do not think so in the medium run, perhaps in the long run. When you look at the key currencies in the present international economy, you find the dollar, the Deutschmark, and the yen. The dollar represents about 65 per cent of international reserves. It is the key currency par excellence because it is a trade currency; for example, Japan is denominating most of its transactions in dollars. The dollar is a finance currency, and it is a reserve currency because it is a trade currency and a finance currency. The share of the Deutschmark in international reserves is about 13 per cent; it is important, but it is relatively low. As for the yen, the share in international reserves is about 4.5 to 5 per cent. The Deutschmark is not a trade currency. It is partially a finance currency. Many bonds are issued in Deutschmark. Deutschmark is kept in international reserves in a limited way. The German authorities have decided to avoid a wide utilization of the Deutschmark as reserve currency even in the European Community. For example, when we prepared the European Monetary System, the German Government asked for special provisions in order to avoid the building up of Deutschmark reserves. It is a similar situation with regard to the yen. The Central Bank of Japan does not want to see the yen become a reserve currency and this is one of the reasons for which monetary authorities in Japan have so long resisted the internationalization of the yen which was asked for by the Americans. What is important for Japan is that it has become the main net creditor in the world, that is to say, the main supplier of capital in the forthcoming years. You know that Japan is exporting to the United States about $50 billion a year and that 40 per cent of the US Treasury bonds are held by Japanese institutions. I think that there is a sort of bilateral relationship between the yen and the dollar. The use of the yen is at present limited to the Asian-Southeast Asian region. I am not sure that the yen could achieve greater usage. For that it would be necessary for trade transactions to be denominated in yens and financial transactions also to be denominated in yens, but this is now very limited. The single possible alternative to the dollar would be the ECU in the international financial market, mainly in the Euro-currencies markets. If the ECU, which is now widely accepted for issuing bonds, for example, can circulate without any restrictions in the member states of the community as a currency which would be parallel to the national currencies, I think that there could be a development of the ECU in international financial transactions, and not only in European financial transactions. Why? Because the ECU is a basket of European currencies. It is clear that the weight of the basket and the stability of the basket are better protected than other currencies. This is my view of the various currencies used in the international monetary system.

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Question: Over the last fifteen years, the IMF was a force, advising the balance of payments deficit countries regarding one crisis or the other. I think that the Fund has to use some minimum discipline (if I may use that word) on the surplus countries. Having shared that thought with you, I have one very short question. It has often been expressed in macroeconomic management circles especially in the developing countries that while the central bank has effective co-ordination and control on the domestic credit policies of the private banks, the enormous growth of offshore banking probably has not contributed to an evolution of a co-ordinating and controlled process. I just wanted to know if you had any ideas on these two aspects and whether there is something that can be done, viz., with regard to strengthening the Fund’s capability to advise the surplus countries and then the co-ordination and control functions on the international lending operations of the private banks. Barre: Sir, I agree with you and I share your view on the necessity of a symmetrical process of adjustment—not only deficit countries but also surplus countries have to respect some discipline. I am not sure that the Fund was looking only at deficit countries and mainly developing countries experiencing big deficits. If the Fund, in my view, has to recommend strong measures to deficit countries, it is because if those measures were not implemented the consequence would be a collapse of those countries. The situation had deteriorated to such an extent that a very strong remedy was necessary—those countries and many countries understood that that it was impossible to go on with such remedies for a long time. That is why a change in the strategy of the Fund was necessary and a change has now happened. But, I recognize that there is a deficit country on which it is impossible for the Fund to exert any influence— this country is the United States. It is an old problem. The United States has in the Fund and in the World Bank the power of veto and great diplomacy is needed in order to advise the American authorities. As for surplus countries—I will consider mainly the European surplus countries—you have to take account of two facts: first, in 1979–80, these countries had to avoid committing the same mistake as in 1974, that is to say, postpone the process of adjustment of the balance of payments following the second oil shock. They did that at one time; it was impossible to begin again. And all European countries including Germany—Germany facing a very important budget deficit, experiencing a rate of inflation which was high for this country, and an evolution in wages which was also worrying—decided to restore their basic equilibria. Why? Because they were in a bad shape and they could not go on borrowing. It was necessary to find again an equilibrium of the current balance of payments. Since 1983, the same time,

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there was an increasing deficit in the United States’ balance, and increasing surplus in the balance of payments of West Germany and of Japan. I consider personally that it is their responsibility to respect the disciplines of a surplus country. This means increasing domestic demand in a way which is consistent with the mediumterm strategy. It would be dangerous to stimulate strongly the economy causing a new disequilibrium and to adopt a restrictive policy which would be detrimental not only to European countries but to other countries. Second, they have to lend funds to countries with deficits and mainly to developing countries. There is a duty to lend. There is a duty to respect basic equilibrium but when there is a surplus of the balance of payments the country has a duty to lend. And I think that a co-ordination of lending is now absolutely necessary. What happened from 1975 to 1979 was that there was competition among banks to lend credits. When a developing country wanted to borrow, there was a proposal by one bank, but another bank would propose better terms and so on. This was responsible for the dangerous situation in 1981–82. Such lending was made on the basis of variable interest rates. At this time, the interest rates were low but when the American interest rates rose very quickly, it was a catastrophe for the borrowing countries. This is why I think that it is necessary to create some co-ordination among the banks of lending countries. This is linked to what I said about the financial revolution and the sort of explosion of various measures which can allow for lending, for hedging, for investing, and so on. What is considered now mainly in the framework of the Bank of International Settlements in Basel is a process of cooperation in the supervision process of financial innovations and of lending by banks. But it is up to the central banks to exert their influence on the banking system of their country in relationship to the special authority which is in many countries in charge of supervising the banking system. There is co-operation between the central bank and the supervision authority in every country. As mentioned earlier, financial markets are now interconnected and characterized by a great inter-penetration, cooperation by central banks and supervising authorities appears absolutely essential. This is one of the ways which could prevent financial instability in the world of tomorrow. Question: If down the years the United States is unable to arrest its propensity to overspend and is unable or unwilling to accept a lower standard of living, what sort of problems do you foresee for a world confronted by a United States that is much poorer yet remaining incredibly strong in military terms. Barre: I do not adhere to such a pessimistic hypothesis. You know the saying, trees cannot grow to reach the sky; so, too, deficits cannot go on indefinitely—neither

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a budgetary deficit nor a balance of payments deficit. What is characteristic of the United States is that the reaction lag is longer in this country than in other countries. Why? Because the United States is a dominant economy; it has a position which gives it a leading interest rate, a leading exchange rate, a leading currency, and so on. But it will be necessary for the United States to reduce its budget deficit and the deficit of the balance of payments. It will take time; the problem is, what could happen during this interim period? There will be difficulties for other countries, there will be difficulties for countries the rate of exchange of which will have to be revalued. There are problems now for Japan, there are problems for West Germany. I think that West Germany is very determined to maintain price stability and avoid inflationary pressures. Germany is convinced of the fall of the dollar and of the appreciation of the Deutschmark. The Germans consider that with a strong devaluation of the dollar they will become less competitive and they have to face strong competition from the United States. They have to rigorously maintain a very low rate of inflation in order to avoid rises in production costs which would render them uncompetitive. This is in my view the rationale of the present attitude of West Germany. And I think that other countries have to adopt the same attitude. Some weeks ago I met Swiss bankers, monetary authorities, businessmen, and all of them told me, “We have to learn to live with a very strong Swiss franc”. This is a burden for them mainly because Swiss firms have to export, and to export with a very strong Swiss franc is very difficult. But their concept is they have to learn to live with a strong Swiss franc because they are convinced that the dollar will remain low in the future because of the deficit in the balance of payments, because of the burden of the service of the American debt. This is in my view the source of difficulties for many countries. The danger is that if there is no reduction in the fiscal deficit and no improvement in the current balance of payments situation of the United States in spite of the devaluation of the dollar, the United States could be tempted, could be led under the pressure of economic and social groups in the United States, to adopt protectionist measures. I do not think that they will adopt complete protectionist measures; they cannot isolate themselves from the rest of the world; but they will adopt protectionist measures in some specific sectors and strategic sectors for other countries. This is the danger. This is why I think that to avoid that danger there will be a trade-off between the United States and surplus countries. The trade-off will consist of accepting a relatively low rate of exchange of the dollar with the currencies of the surplus countries but to stabilize the dollar at a tolerable level and to go on financing the deficit of the balance of payments of the United States during the progressive return to balance of payments equilibrium. This is my scenario. We economists are perhaps optimistic, but I think it is in the interest of the United States and the rest of the world to find a co-operative solution to this very big problem.

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Rajaratnam: Do the creditor countries really expect the Third World debtor countries to repay their debts? Second, what would happen if, through divine intervention, the Third World countries were in a position to repay their debts that run into billions of dollars, which means repayment by way of products? Third, would the debtor countries be more worried or the creditor countries be more worried if the debtor countries decided to repudiate their debts? Barre: I think that if creditor countries wait for developing countries to repay their debt, they would be waiting a long time for Godot. When I discussed this problem with bankers, they explained to me that what is important for them is the service of the debt, the payment of interests. You will recall that in 1982–83, the IMF succeeded in organizing a circular flow, by lending money to the debtor countries in order to allow them to repay interest of the debt to commercial banks of creditor countries. And at once, commercial banks re-lent the money to the developing countries. It is a very intelligent circular flow. Your second question is linked to the first. It would be necessary not to stop the circular flow but to envisage some supplementary payments. At such a time, the debtor countries could use the funds afforded to them by investments in their countries if there were investments. Or they would have to export products. In my view, it is impossible to consider in the long run a satisfactory solution of the debt problem if it is impossible for developing countries to export to industrialized countries the manufactured products or the basic products they are able to sell. In the long run, markets of industrialized countries have to be more and more open to the products of developing countries. And when developing countries become semi-industrialized countries, or industrialized countries, they have to reduce their customs duties or stop subsidizing their exports in order to create fair trade between countries having reached globally the same level of development. This is my answer to your question. There will be a problem for basic products because when you look at the trends in international trade, you observe that there is now a de-connection between industrial activity in industrialized countries, and the import of basic products. This is partly because there are processes of substitution; for example, you can use plastics or synthetic fibres instead of basic products exported by developing countries. That is why the strategy of development, in my view, has to be devised to take into account this de-connection in the world economy. In response to your third question, I think that debtor countries would be more worried than creditor countries. Creditor countries would be also worried because of the interpenetration of markets. As mentioned earlier, a fourth of exports by industrialized countries are

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absorbed by developing countries. There would be a shock for both the developed and industrialized countries but I think that developing countries would be more affected. This is why I think it is absolutely necessary to avoid a collapse. I do not think the world economy could collapse but there could be breaking points for some time. This is why, like other economists and statesmen who are conscious of the present inter-dependence of the world, I urge that there be greater co-operation not only among developed countries—this co-ordination is increasing, for example, among the seven members of the summit of industrialized countries—but also between developed and developing countries.

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Regionalism, Globalism and Spheres of Influence ASEAN and the Challenge of Change into the 21st Century Mahathir Bin Mohamad

On 14 December 1988, Prime Minister of Malaysia Mahathir Bin Mohamad gave the 9th Singapore Lecture after being welcomed by Singapore’s first foreign minister S. Rajaratnam. Prime Minister Mahathir was the first Asian leader to give a Singapore Lecture and the second sitting political leader to give a Singapore Lecture following Prime Minister Bob Hawke of Australia in 1987. Prime Minister Mahathir’s lecture stands out for its broad and ambitious vision. The lecture weaves together the emergence of a pragmatic post-Cold War global era, the rise of China and the need for closer ASEAN integration and cooperation in this emerging global order. The lecture serves as a useful source of reflection for current analysis of these very same issues. Mr Rajaratnam, Honourable Prime Minister, Excellencies, Ladies and Gentlemen. Before I speak I would like to say thank you to Mr Rajaratnam for his kind words. I am afraid he has raised too many expectations from my talk. I am going to be very conservative tonight and I am not going to be nasty to anyone. So, it would be a different person from the person who was born on 20 December 1925 who will be speaking before you tonight. So I apologize for the disappointment I am about to cause. I would like to thank the Institute of Southeast Asian Studies for inviting me to deliver this Singapore Lecture, the ninth in your series. It is indeed a great honour for someone who is not an economist and who is not a retired statesman to be invited to speak at one of the most celebrated events of the Institute.

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The subject of this Singapore Lecture is related to the future. My fear is that economists and politicians, retired or otherwise, are about as good at foretelling the future as those who rely on the stars and the tea leaves. Practising economists have the aid of the most sophisticated models and the most sophisticated and complex theories. The members of this profession have the advantage of being able to rely on the staple of their trade: the two hands—on the one hand, this, on the other hand, that. Unfortunately, in predicting the future, even two hands are often not enough. I should, of course, not be too tough on the economists since the members of my own profession—and here I am not referring to the medical profession—do not have an enviable record either. Like the economists, politicians too have some advantages when it comes to discerning the future. They are in a better position to plan the future and hopefully to execute it. If they fail, the profusion of words that constantly issue from their mouths are likely to confuse and cause a lapse of memory among those who heard thein. In any case, politicians can modify their predictions as they go along. In the end, of course, they are never too far wrong. Still, the wise politician always hedges his bets. And so I would like to remind you that the one thing that we must expect about the future is to expect much that we don’t expect. *** I would like to reflect a little on two quite unextraordinary thoughts about the future. The first is that the world has entered with some fanfare into a historical era of transition and its attendant uncertainty. This is the second transition the first was when all empires had to be dismantled after the war. Mankind has reached a historical turning point rich with political possibilities but replete also with serious economic threats. The second is that in a shrinking world no one will be allowed to escape the consequences of the changes the world is going through. There will be winners and there will be losers. There will be those who will be caught in between and who will be squeezed. Some will not know what hit them. Whichever it may be, life for everyone will not be quite the same again. It is, therefore, necessary for us to fully grasp the critical elements of continuity and transition and to respond quickly, flexibly, with creativity and strength, to the opportunities that will present themselves as well as the challenges that will be hurled at us. To do this, we have firstly the task of comprehension. The second is the challenge of action: attempting to do the right thing at the right time and in the right way, which is extremely difficult in the best of times. The task of comprehension in an age of uncertainty demands that we wear no blinkers and have no illusions. It is especially important to ensure that we are

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informationally rich and analytically well endowed. It is incumbent upon us to be prepared to confront new realities and their logic, however discomforting they may be to preconceived notions. This does not mean the abandonment of our personal and national, regional and global ideals. Far from it. But it does mean the need for quick and continuous re-assessments of our objectives and ideals in response to quick and continuous changes in our external environment. Knowledge, because it is power, is an essential ingredient for our survival. The challenge of action confronts us at all levels: the national level, the regional level, the inter-regional level, and the global level. Comprehension without action is about as fruitful as action without comprehension. My remarks this evening focuses largely on the external environment of states. But I feel I cannot let the occasion pass without stressing the central importance of action at home; the criticality of continuous reform and reconstruction within our respective national borders. The primary determinant of our fortunes in the challenging days ahead, as in the past, will be our own national resilience. The most important helping hands we can rely on will always be the ones that are at the end of our own arms. As for action beyond our shores, there is every need to be realistic. The nations of the ASEAN community, influential though they may be, must realize the limitation of their influence. There is only so much they can expect from their trading partners but beyond that they will have to rely on themselves. In the new developmentalist world which is emerging, ethics and friendships are not to be relied upon too much. At the same time it would be foolish for us to be negative in thought and action in the international arena. It would be a great tragedy if we are oblivious to our potentialities—oblivious to what we can get from and what we can give to the world if we can summon the will and the statesmanship, the guts and the grit. We in ASEAN, and indeed everywhere else, must remember that the twenty-first century is not some far-distant time. It is no more than eleven years away. A proper sense of time is important for we should not waste our time on fascinating possibilities—the emergence of Japan as number one, the surge of China to number two, the possibility of a “Super Europe” stretching from the North Atlantic to the North Pacific, or a fortress America from the Arctic to the Antarctic, or the actual dismantling of the nation state, or even the very destruction of a viable habitat for the survival of the human race. All these can come to pass, but not within the space from now to the twenty-first century. What actual great challenges of change, then, can we expect the world to throw up in the next 132 months? Because history will not bow to Mahatma Gandhi’s plea that there be more to life than increasing its speed, the changes that we need to deal with will come thick and fast. Fortunately, a large proportion of them have and will continue to

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be positive structural trends whose course and contents are already clearly evident and clearly constructive of a more prosperous, peaceful and stable world. *** Among the most hopeful of these changes must be the big swing to the Right: in the countries of the Left, the modernizations and perestroika, and in the countries of the Right, privatizations and deregulations. In comparison to what is happening now in the market economies, Malcolm Forbes with his capitalist tool is a leftist. These developments—internally generated, self-determined, an expression of the wishes and the will of their own people—have undermined totally any faith in the permanency of ideologies and systems. Nothing is sacred any more. Economic atheists have now taken over everywhere. Of course, it is possible to envisage circumstances in which the trend will be reversed. But this is most unlikely in the foreseeable future. Certainly, from the frozen wastes of Siberia through Eastern Europe, Central America and much of Asia there has been an erosion of faith among the faithful. Dogmatic Marxism and the traditional command economic system as a method are on the retreat in the minds of men and in their actions. I think it was Rousseau who said that there is nothing more powerful than an idea whose time has come. Some may paraphrase it by putting it the other way round, that there are few things more powerless than an idea whose time is over. The time of rigid central planning and regulation of economies is over. To be sure, there could be some negative elements in this trend. It can be carried too far. The switch from trading in real goods to trading in paper, including nonexistent money, is one of them. Trading in corporations and not trading through corporations is another. But the ascendancy of pragmatism over dogmatism, the decline in “the age of ideology” in the traditional historical sense, the reduction in the play of passion and the complication of dogma in international relations all augur well for the world community as they will for ASEAN. Pragmatism’s rise to power in the People’s Republic of China initiated the transformation of many key elements of the Seventy Years “War” between the so-called “East” and the “West”, a war which began with the Russian Revolution in 1917 and shaped much of the history of the world in the twentieth century. Pragmatism’s rise to power in the Soviet Union and likely changes in the national priorities of the United States and elsewhere threaten to eventually put an end to this “war” in the remaining years of the twentieth century. As is the case with all protracted conflicts in world history, an ending comes with a redefinition of national priorities. This is often tied to a sense of psychological and material exhaustion (on the part of at least one side in the conflict) and a realization (on the part of more than one side) that there are other important battles to be fought, different dragons to be slain, new powers and new constellations to relate to.

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It is a fact that after the Second World War, neither the United States nor the Soviet Union settled down to a peace economy as did the defeated powers, Japan and West Germany. Because of the narrower economic base of the USSR, it has been forced to sustain a quasi-war economy, with the result that Soviet missiles can deliver at this instant a million-ton TNT equivalent load to any place on earth with impeccable precision whilst Soviet agriculture cannot produce quite enough for Ivan’s dining table. The United States too has paid a high price, as evidenced by massive deficits and erosion of its leadership position. In the context of new global and domestic realities, passions and priorities, the decline of the Seventy Years “War” can be expected to have major effects on the lives of practically everyone everywhere. Already, we see tremendous effects on Iran and Iraq, Afghanistan, Cuba, Angola, Namibia, Palestine, Israel, Kampuchea, Vietnam and a host of other arenas and theatres. *** Even the humblest student of international relations will notice that both the military superpowers were in political decline even as they achieved the peak of their military might. Because of the momentum of military production and the mad scientists who are forever devising newer and better ways of killing and destroying, the build-up of military weaponry will continue; but this will not slow down the rise in the power of moral and immoral suasion, as evidenced by the Western-originated transnational pressure groups, the power of economic arm-twisting in their various forms, and the uninhibited role of the media, to name a few. Conventional war as an instrument of policy has become increasingly illegitimate, increasingly costly, and increasingly ineffective in producing the required results. War is no longer a glorious activity to which even nobility would contribute the flower of its youth. Today, in the eyes of the individual, in the eyes of the world community, and often in the eyes of the very perpetrator, war has, frankly, a bad smell. There was a time when wars could be won at what may be termed as a reasonable cost. It no longer is. Even the richest oil nations can be bankrupted by a few days of hurling ballistic missiles at each other. In the end there is so little to show—no new empires, no subject people and no new sources of wealth to plunder. Powerful nations have invaded and conquered only to negotiate ignominious retreats with nothing to show except a long list of casualties. Conquest is a messy business in an age where people matter and where the masses will not simply lie down and submit. I am not saying that we have or we will ever reach that condition where swords will be turned into ploughshares and men will war no more. Man is a contrary creature. There is a madness in him which leads him into doing extraordinary things. Despite the obvious futility of war in this day and age, there is no certainty that a mad man on a mad impulse would not precipitate a war. And so we have to keep our powder dry and, like the Scouts, we have to be prepared.

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Empires and conquests may no longer be the acceptable things they once were but a willingness to fight and defend oneself and render aggression costly and unprofitable are essential to sustain modem mores or the proper behaviour of nations, big and small. The problem is what level of preparedness. Only acknowledged enemies can determine this, that is, if they can talk with each other. Some of them are at last talking to each other. I have little doubt that the increasing realization of the decreasing utility, power and the application of conventional military force, the turning inwards towards domestic reform, the reduction in the push of ideology and perhaps the thirst and the need for a period of peace and tranquillity in important quarters—have all conspired to produce an outbreak of peace in 1988. One might be excused for thinking that for the first time in a long while the world is being confronted by a peace epidemic of sorts. War, it has been said, has its own momentum. Peace, too, may possess that quality. I would expect that in the nineties, although new brush wars may break out, the peace momentum will continue. It might also be noted that just as war has its awesome consequences, peace too will have its enormous threats and problems as powerful nations seek to use other weapons to manipulate in their favour. This is what we are really concerned with. *** Pragmatism’s assault on archaic ideologies has resulted in what might be called the “Modernisations in the Five Kingdoms”. It started off with China’s “Four Modernisations”. Then came glasnost and perestroika in the Soviet Union. Because of the force of other factors we are now seeing the second opening of Japan, a process that in terms of domestic change may rival the Meiji Restoration. Now the European Community is about to create a single market with free movement of people, goods and money throughout Europe by 1992. The process of the modernization of the Five Kingdoms will be complete when the United States launches its own programme of internal reform and reconstruction. The Americans who have been so engrossed with their own success and are not quite capable of imagining that others too can be successful have finally awakened to the facts of life. An inability to compete and massive and intractable deficits have contributed towards this realization. Still, for the moment more ideological and economic reforms are needed in the United States than anywhere else. What is the modernization of the Five Kingdoms all about? It is about economic prosperity and developmentalism as they affect the people rather than the state. A powerful state is no compensation for citizens living in backwardness and poverty. Today, a state is only meaningful if it is able to provide its people with real prosperity and rights. The power of the leaders and the strength of the state no longer bring glory and respect for a nation.

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The 180-degree tum that China took under Deng’s modernization and the glasnost and perestroika of Gorbachev are as motivated by developmentalism and economic needs as are the unification of Europe and that of the United States and Canada. Of course, Japan’s single-minded drive for prosperity since its defeat in World War II needs no analysis. This switch in policies is intended to give their respective peoples a better life. If the Russians and the Chinese are willing to reduce their arms unilaterally, it is because they know that supporting a modern military machine is debilitating for the economy of even the richest nations. If they need any convincing they have only to look at the Allied-enforced Japanese policy of minimal expenditure on arms. Clearly, any country wishing to prosper must spend less on defence, and to do so they must have less tension in the world. That developmentalism itself has reduced tension and stopped wars is obvious. But it must be remembered that peace is sought not for itself but for the sake of economic development and national prosperity. In the past, the prosperity of the big powers had always been largely at the expense of the poor. Nations were conquered so that their wealth could be plundered. It was an easy and an acceptable approach when wars were glorious and empires respected and admired. But will the desire for economic development in the post-imperial period lead to yet another rape of the poor? The answer could be Yes. The poor may have to pay so the rich can prosper. The truce among the Five Kingdoms is, consequently, fraught with danger for the unsuspecting poor countries of the world. The array of weapons at the disposal of the Five Kingdoms are as numerous and as varied as their military weaponry, and they are just as effective. Aid, loans, markets, GSPs, currencies, labour unions, media, transnational pressure groups, non-tariff barriers, tariffs, technology, investment funds and know-how, global corporations and a host of other institutions can be manipulated to ensure that the development of the Five is achieved, if need be, at the expense of the poor. We see how the poor are made poorer through borrowings. Some have profited from the loans but most have been forced into the equivalent of debt slavery of old. By pushing up the value of the currencies of the NICs, immense economic gains can be achieved by the rich. If that fails, there is always protectionism to fall back on. If, as a side-effect of revaluation, the debts of some poor countries are doubled, that is too bad. The fluctuation in the currencies of the world, manipulated not just by powerful governments but by the equally powerful commercial banks of the West must have driven a number of finance ministers and central bankers in the poor countries out of their minds. *** In the centuries of exploitation of the natural resources of the rich countries, vast forests were denuded to make way for farms and cities. Now suddenly, the value of

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these forests in the protection of the environment is realized. Do the rich countries reafforest their land in order to restore the ozone layer? Of course not. The poor countries are told not to log their forests even if that is their sole revenue earner. If, in the process, the softwood producers in the rich countries have the market to themselves, this is just coincidental. But the poor can take heart. The Five Kingdoms may have to compete with each other so fiercely that there may be room or opportunities for the poor to reap some benefit in between. However, much depends on the South’s reading of the situation and their willingness to act. They say when elephants fight it is the mousedeer that gets trampled on. But an alert and nimble mousedeer should not only escape but should gain something as well. Poor as they may be, the countries of the South together still constitute a huge market. But the key word is together. Alone, their individual market is too small to influence the attitude of the rich. It is, therefore, important that the countries of the South at least present a united front, if not unite. *** The states of Southeast Asia have already opted for regional grouping. It must be admitted that ASEAN was not intended to counter the pressures exerted by others. It was really a political grouping to facilitate problem solving between neighbours. Nevertheless, the grouping should prove convenient for countering the pressures from the North. So far, ASEAN has proved effective in the political field. It has not been so successful in economic co-operation. Yet, now it has to face new economic challenges resulting from the modernization of the Five Kingdoms and their stress on the economic betterment of their people. The GATT experience and the Uruguay Rounds may be a foretaste of what is in store. Just as in politics, the rich and the powerful can totally ignore world opinion even when alone; it is equally certain that they can and will ignore the world if need be, should anything be proposed that is not in their interest. Already, the Group of Seven has taken it upon themselves to shape the world’s economy. A unified European economy together with an economic union of the United States and Canada working through the Group of Seven would be even more powerful. Perhaps an economically powerful Russia and China can provide an alternative for ASEAN, but that will be a long time in coming. There is no certainty that they will not exert their own kind of pressure in order to achieve the economic gains they are seeking. Closer regional economic co-operation within ASEAN is now imperative. ASEAN member countries must learn to complement rather than to compete. In agriculture, the climate and other natural attributes have forced us to be competitors. But manufacturing can be planned for complementation and yet remain mutually

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profitable. No country in the world can manufacture everything that it needs. By choice it has to buy from other nations or face retaliatory measures. ASEAN countries must accept that even if each can manufacture all its domestic needs, it is economically cheaper and more profitable to cater to the whole ASEAN market. With a big domestic market it will be in a better position to export competitively its products. But ASEAN is not the only regional grouping in the developing world. In South Asia, Africa, and Latin America there are also regional organizations which for the moment are still political in character. A link-up of these groupings in the economic field would make the South more capable of playing a role in the world economy and even in the inevitable economic wrangles between the emergent Kingdoms of the North. *** The South Commission has been set up to look at the potential and possibilities of greater economic intercourse between the countries of the South. There is no way they can stop trading with the North but a fair proportion of the trade in goods and services can be redirected to the South for mutual benefit. There will be tremendous obstacles. Dumping, aid and grants by the rich North are but a few of the obstacles to trade between the countries of the South. But if there is a will, a resolve to correct an unfair and inequitable wealth distribution, many things can be done. At the very least the threat to buy from the South will push the North to sell their goods and services at more reasonable prices. I am not suggesting a trade war between the South and the North as a solution to the new threats consequent upon the swing to the right in the Five Kingdoms. Such a war cannot be won by the South. But the fact is that the fortress mentality in Europe and America and the desire by the Soviets and China to go for economic growth, as well as Japan’s already overwhelming economic power require some adjustments by the regional groupings of the South. ASEAN has so far shown the greatest promise. The region has adjusted itself to numerous pressures from outside and some debilitating internal problems. But the countries of ASEAN will need to do more if they are not going to be deprived of their growth potential in competition with the developmentalist strategies of the new North. There is no doubt that a more united ASEAN with a single common strategy will be more safe than separate strategies devised and implemented by each member state. Also, ASEAN, together with other regional groups of the South, would be in an even better position. Confrontation is not necessary. Every effort must be made to co-exist and to benefit from the new tum of events in the North.

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There are many things that can be done. But the most important of all is for the member countries to get closer together and for the regional groupings of the South to do the same. Till the end of the century, the whole world must rearrange itself. The nations of the world did a good job when the first transition took place with the shedding of the global empires of the West. Now the nations of the world must do an even better job in order that the end of the Seventy Years War will see the shaping of a better and less oppressive world. *** Many of our ideas on politics, economics and social affairs are out of date. They are out of date not because they were ill-conceived in the first place. They are out of date because they have been correct and effective and they have changed human society so much. When Marx wrote Das Kapital, rich individuals personally owned and controlled what he called the means of production: capital, land and labour. It was an inequitable world and an unjust society. But even as Marx suggested ownership of the means of production by the state in the interest of the people, the capitalists were rushing to correct the extreme exploitation that they practised. They succeeded too well. Indeed, they lost control of the process. More and more, the profits of a capitalist system became distributed among the people. It took the Russian communists seventy years to acknowledge that their laudable objectives have been achieved by their rivals, the capitalists. The acknowledgement was painful. But with the acknowledgement, a whole new era must begin. *** We are living in the beginning of that era. We are still sceptical. Will the leopard change its spots? Will diehard communists sworn to spread the creed throughout the world really give up their ideological mission? We are not completely sure. But the process that has been started cannot be easily stopped or reversed. Like the capitalists who liberalized their ownership and control in order to counter the spread of communism, the communists are likely to lose control of the liberalizing process which their leaders have started. We do not know for certain where this will end up. But for the next few years, before the century ends, we are likely to have more peace in order to build, quite lite rally, a new world. It will be a more truly inter-dependent world where decisionmaking on the management of the world’s economy will not be confined to a few major powers. Decisions must involve greater participation—a democratization of nations rather than just people. I see a need for strengthening the U.N. system in its role in economic and social development, in securing peace and the mitigation of such global problems as drugs, terrorism, environmental degradation and refugees. God

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willing, we will have a more comprehending world able to act positively to meet the problems posed by the latest age of transition.

Question and Answer Session Question: Mr Prime Minister, I was wondering whether you would like to elaborate a bit more on one of the themes that you touched on several times in passing. This is the factor of Japan’s increasing, in fact, dramatic increase in its economic and technological power which is also being reflected probably in the flexing of its political muscle. I was wondering whether this might not lead to the situation of the creation of, as you mentioned in the title of your talk, a sphere of influence, both economic and possibly political, by Japan in this part of the world, particularly in the context of an impending recession of American power and an introverted Soviet policy. Mahathir: Obviously, Japan is becoming much more visible over the horizon than it used to be and that is because it has shown its capability to adapt to a world that is based on technological advance and an ability to trade with a considerable amount of profitability. Japan seems to be able to overcome all kinds of problems like the oil shock, the endaka or the increase in the value of the Yen and all that, and with that ability, I don’t think the Japanese are just going to sit at home and watch the beautiful Japanese gardens that they have. Obviously, they are going to be much more visible in the future. But I think the lessons of the last war are not lost yet and I think Japan is not going to try to attempt another military adventure. In any case, I have pointed out in my talk that military adventures are not profitable. Also, they are getting what they want without having to expend even a single life, so why should they do that. We are going to see much more of Japan, and Japan’s influence over world affairs is bound to increase. Since we are in the region where Japan is we are going to feel the impact of that influence. So far, it has been quite positive because Japan’s investments in this region are what has helped the growth of this region. But Japan will not be content to confine itself to this region alone. It is already now interested in Africa, for example. More and more Japanese are going to Africa, initially, of course, to involve themselves in helping the Africans to improve their lot. But, like the Marshall Plan, for example, when you help people to get rich, eventually they become good customers for you and you get back your money. So, although Japan may not be accused of not being altruistic, the fact remains that a richer world would

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benefit Japan and if you help people, people are bound to remember that you have helped them before and, therefore, you are going to be more influential later on. My guess is that Japan will become one of the great powers of the world although, hopefully, not a military power but an economic power with very considerable influence over the economy and the politics of the world. Question: Mr Prime Minister, what in your assessment are the implications for Asia of the election of a new Republican President in the United States? For example, does he possess both the political will and the capacity to resist any potential increase in pressure from a Democratic-dominated Congress and organized interest groups for greater protectionist legislation? Mahathir: If you pardon me, I think the United States has got the wrong system of government! I wouldn’t last two days in parliament if the majority party in parliament is not my party. But if you are asking the American President to live with the opposition all the time, obviously, his ability to act is going to be circumscribed by the fact that he has always to watch out for what the Democratic Congress and Senate are going to say. But you are not likely to follow Malaysia’s political system. So, I would like to say this about the new American President. We feel, of course, that he is a better choice than having Mr Dukakis as President of America. With a Democratic Congress and Senate, and a Democratic President all dedicated to closing the American market to the rest of the world we are going to have a big problem, especially countries which expect to sell to America in order to grow a little. Even Malaysia is involved in that. Mr Bush, I think, is a much more experienced man by comparison and he knows the world much better than Mr Dukakis, who, I am told, was one of the radicals of the 1960s and we do not yet have any experience of such a president. I think he will have to continue the policies of Mr Reagan to a large extent. The fact that he has chosen a number of Mr Reagan’s men to be members of his government is quite indicative of his desire to continue a policy which is much more welcome by the rest of the world than a very protectionist, inward-looking policy that could be the kind of policy that Mr Dukakis would have followed. The Democratic Congress and Senate will continue, of course, to try to block Mr Bush but, I hope, and I think, Mr Bush will be able to overcome at least some of these obstructive tactics and that will mean that we can still deal with America without feeling that we are going to be excluded from the American scene altogether. I think America will be very much like America under Mr Reagan except, hopefully, the deficit will be reduced. Candidates for the presidency make promises just like candidates in Malaysia make promises, but after you get your job, I think

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it is best to forget some of your promises! I am not confessing anything at all but I am quite sure that he will have at some stage or another to collect more taxes and restructure the finances of America and get away a little from the kind of financial policies that Mr Reagan followed domestically. That, I think, will be good for the rest of the world and for us also. On the whole, I would say I welcome the appointment of a Republican President but I hope and pray that the Americans will reduce the number of Democratic Congressmen and Senators. Question: Mr Prime Minister, you proposed in the course of your lecture, that the various regional groups of the South, including ASEAN, should work more closely together as a kind of antidote to the economic pressures you foresee being exerted upon them in the 1990s by what you call the Five Kingdoms. But, given that the bulk of ASEAN’s trade and the bulk of its capital sources are in the West, would it not be better for ASEAN to work more energetically and effectively to influence the outcome of the current round of GATT negotiations which are of critical importance to the future of free or fair international trade? And failing that, would it not be better for ASEAN to develop perhaps or pay more attention to a PanPacific economic co-operation that would bring it into closer co-operation with Japan, with South Korea, with the United States, Australia and other economically dynamic countries in this region? Mahathir: I certainly agree with you. We should try to work through GATT and have a much more equitable trading arrangement with the rest of the world. But the latest round of talks in Montreal does not seem to indicate that is going to be easy or that we are going to get the kind of results that we hope we would get. Obviously, it is how strong you are that counts, not the logic of your reasoning. The results of the Montreal talks have been very disappointing, especially for us. We have been trying to push for a fast track action on tropical products but we have found that attempts to tie up that with other factors like farm subsidies, etc. have been futile. If we are going to talk about farm subsidies, I think we can keep on talking till the cows come home and we are not going to reach any conclusion because everybody is doing exactly that. And if you try to drop subsidies you are going to have demonstrations by farmers bringing in their tractors in Washington, in Paris and elsewhere. So, it is not going to be easy. But if we talk only of tropical products it would be much easier because obviously the temperate countries do not produce tropical products. I am afraid Australia is trying to overcome that and may be successful.

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We are also interested in co-operation in the Pacific Rim. But there are so many countries with unequal economic and political clout. In the Pacific, you find countries like Tuvalu, and then you also have countries like the United States. Now, how does Tuvalu apply pressure on the United States? Or Nauru, which cannot even get pilots to fly its planes? We are very unequal here in the Pacific Rim. If, of course, we are going to be democratic at the national level, then I think it would be worthwhile to concentrate on Pacific co-operation. But whereas we are told that we must be democratic in the administration of our own people, nobody says that countries in their relationship with each other should be democratic. In other words, your size does not count but numbers do. When we vote in a country, we don’t say you are seven feet tall, and therefore you get two votes. But it would seem that in international relations if you are big then you seem to get more votes than the small chap. So, it is not a very democratic world. I would like to see a much more democratic world so that we can participate and feel safe enough to go along with neighbours and partners who are huge compared to us, small countries. Still, despite all that, we are looking at the Pacific countries and we think that we may have a try at it. But for the moment, we think we should strengthen ASEAN itself. There is still a lot to do within ASEAN which would help us to overcome many of our weaknesses. Question: Mr Prime Minister, Canada recently signed a free trade agreement with the United States and you mentioned the Common Market coming into being in 1992. Two big economic blocs are being formed. Some of the indications from the GATT negotiations in Montreal suggest that the world economy is going to become a lot more competitive and especially between these two big economic blocs which will have their own tariff barriers. What can and should ASEAN do to strengthen its competitive advantages in world markets and what collective action by ASEAN is necessary to assure a fair access to the trade with these major economic blocs? I think what I would like to hear is what you can do here to make your voice and your impact felt not only in the North American bloc but also in the European bloc. Mahathir: Well, as I said in my talk just now, it is important to look at ourselves and find out what internal strengths we have rather than to depend on friendship and ethics, etc. I feel that we should accept that the world is not a very friendly world even if countries stop fighting against each other. Therefore, we need to strengthen ourselves. And the way we can strengthen ourselves is, of course, to have greater

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economic co-operation among the ASEAN countries. There is a great deal of scope for that. Perhaps, as I have said, in agriculture it may be difficult because we have the same environment, the same climate, and therefore, we are likely to produce the same products. But in industry, it is very easy to complement provided we have the political will to decide that we must complement, that we should not compete with each other in producing certain manufactured products. There are millions of manufactured products in this world and even in a country like Malaysia, we need a lot of different manufactured goods which at the moment we have to procure from the developed North. We can produce those things in the ASEAN countries but the economies of scale demands that we share our markets. Our markets are again unequal. Singapore has got three million people although with a bigger income, but Indonesia has got 170 million. So the natural feeling is that the bigger country has got the bigger market and, therefore, the big country has very little that it can extract from the small country. But I feel that this is not so. We have to realize that it is the purchasing power rather than the number of people that counts. If we work on the basis of purchasing power multiplied by the number of people, we can have a much better division in terms of proportion. We can then share in proportion to our own capacity to buy or sell things. In that way we can apportion certain manufacturing functions to certain countries. Even with all the industries that we have now, we still have a huge number of industries which we can begin in the ASEAN region. That way we can build our economy depending almost entirely on ourselves. But then, most ASEAN countries have to trade with other countries. Together with a very strong domestic market we would be in a better position to haggle with our trading partners elsewhere; that will give us a great deal of advantage. But the first thing that we have to do really is to accept the need to work together, to co­operate in the economic field. If we can do that, I think we would succeed without bothering about whether the United States joins with Canada, or Europe has a Union or not, because when we talk to them, we will be talking from a position of strength with a population of 240 million and a per capita income which is quite high compared to most other regions. That way, we can ensure our own prosperity without hoping other people would help us. Question: In a speech in Hong Kong in June 1985, you stated that the Soviet bogey seemed overplayed. Tonight, in almost similar fashion, the same thrust was projected. It would appear at the same time that the Soviets do not have much to offer ASEAN in the way of economic relations. Yet, in spite of what you have called liabilities, the Soviet military presence continues to be formidable and indeed has grown in the Asia-Pacific region since March 1985.

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In view of these circumstances, Mr Prime Minister, would it not be a sensible response to Gorbachev’s initiatives to remain firm and cool-headed, or should we pragmatically, as you call it, assist him in succeeding at home and in this region? Mahathir: You may remember I said just now that we are still sceptical. We are sceptical about what is happening in Russia but that does not mean that we should dismiss everything that Mr Gorbachev does as a mere stage show. I think there is a great deal of seriousness in what he is doing and I think he is taking a great deal of risks in his own country. And if he makes the wrong move he might not be there after some time, as has happened to some of his predecessors. However, this is the first time in seventy years that there is a Soviet leader who dares to even talk about it. He may not do it, but it is the first time that a Soviet leader dares to talk radically, saying things that are heresy. There is heresy almost for the Soviet, for the communist faith. And we should give him a chance. I think we should help him if necessary. As I said just now, if he succeeds in changing a little, the momentum that will gather will be beyond his control and before you know it, you are going to have a lot of changes which I think would be for the better. It has been so bad that it cannot be worse than that. It is true that a lot of Russians are not familiar at all with any other system than their own and they believe they have a good system because there is no way they can compare. But a lot of Russians also go out of their country and they see how other systems work. Even in this region we have some countries whose leaders have been around and who have seen the development of countries like Singapore, Thailand, etc., and feel that they should have the same thing. And Russians who have been abroad, I am quite sure, feel that their own country should also be like that. And if there are more such Russians, I think it is better for all of us. If there is a Russian who is willing to stick out his neck and propose things that are, in our eyes at least, much more reasonable, much better, we should not just brush him aside and say this is all nonsense, you are not serious, and we do nothing to push him forward. We should try to give a helping hand if necessary to Russia so that they can change their ways. Hopefully, they can be converted. But Russia spends huge sums of money on their military forces and if they can reduce that, I am quite sure their own people will have a better life. Once people get the taste of a better life they are not likely to subscribe to a system which deprives them of so much. So, while we should be a little skeptical, we should not dismiss what Mr Gorbachev has done and I think we should even facilitate his revision of the communist doctrine. And before long, I think you will not recognize it as a

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communist doctrine at all. If you go to China now and see what’s happening in Canton, I am quite sure, you won’t know that you are in a communist country. But if you go to some communist country you will find that you feel that it is a communist country—not many cars around, everybody is walking around, they like the fresh air. But once they have a taste of the good life it is not easy to persuade them to go back to the old ways, and that will be a turn for the better, and I think we should encourage it. Question: Mr Prime Minister, I was interested in your remark about an idea taking root, and its power once it takes root. Would you agree that an idea which is increasingly taking root among the peoples both in your country and in this country is the idea that they should have greater participation in the decision-making process? Do you, Mr Prime Minister, think that it is a good idea that should be encouraged, and if you do, what do you think the governments of both these countries should do to encourage the idea, and could you tell us what exactly you are doing in Malaysia to encourage this idea? Mahathir: I think I have given enough advice to the Americans, I am not going to advise Singapore but we know what we are going to do in Malaysia; we are going to have greater participation, of course. But greater participation in itself does not resolve everything because when you have many very rigid people coming together and participating, you don’t get any consensus at all. There is a feeling that a big number of people cannot go wrong, a small number of people must always be wrong. It is not always so. Sometimes, a lot of people make a lot of mistakes and, of course, in Malaysia, they made the mistake of electing me as their Prime Minister—that is, the majority in my country. The opposition always feels that it is a mistake on the part of the majority but then they say they subscribe to democracy and therefore they have to accept it. We are going to allow for greater participation, for example, in the shaping of our country’s economic policy after 1990. We are going to allow everybody, including opposition members, people representing rather extreme racial views, etc., to participate in the shaping of our economic policy after the New Economic Policy. We will call it perhaps the Newer Economic Policy. Question: I have two questions actually, one of which perhaps requires a certain amount of prediction on your part. The first is what influence will Islamic fundamentalism have on the process of change and development in the ASEAN countries and what

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should the ASEAN governments do to meet this influence? The second, with the appointment of a woman as prime minister in an Islamic country, will this have a positive influence on the progress and development of Islamic women throughout the world? Mahathir: I think there is far too much being said about Islamic fundamentalism. In the first place, the fundamentalists are anything but fundamentalists. If you stick to the fundamentals of Islam, you will not be extreme. But these people are extreme, so I would call them Islamic extremists rather than fundamentalists. I consider myself as an Islamic fundamentalist in the sense that I stick to the teachings of Islam, not to some interpretation of Islam which says that I cannot talk to a person who is not a Muslim, I cannot do this and I cannot do that. I am doing quite a lot of things which they say are not Islamic. So the influence of fundamentalism would be comparable to the Harikrishna movement: it has not made the United States change or Britain change—not many people are shaving their heads and leaving strands of hair on the top. It is a passing fad. We have this little problem in Malaysia. For example, we have a group of people who feel that Islam means wearing green capes or gowns. They have found it is very useful because it convinces a lot of people, especially girls, that they are very good Muslims. And once you feel that you have some power over people the tendency to do wrong is very great. So, I don’t think we should bother too much about this idea that the Islamic fundamentalists are going to change the world. It is not going to change the world at all in the sense that they are extremists. But fundamentalists like me may contribute somewhat to the changing of my village or my town. But that is about all that I can say about Islamic fundamentalists—they are not the power that people seem to think they are. I think a lot of these things are the result of watching Iran, for example, and thinking that these are fundamentalists. They are not fundamentalists; they are people with a different interpretation of Islam, and that is all there is about it. I think the appointment of a woman as the prime minister of an Islamic nation is a progressive step for women. We should accept that. Slowly, the women are going to come forward. There is no stopping them but the kind of extremist female crusade to the extent that they want everybody to follow men is something not equated with progress. The fact that there is a woman prime minister in an Islamic world is not a bad thing at all. As far as I am concerned she is just another prime minister. Question: Mr Prime Minister, you have mentioned time and again the need for economic cooperation among the ASEAN countries, As a political group, there is no doubt it has

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been very effective. Do you foresee, though, that this lack of slowness in economic co-operation may sound the death knell for ASEAN? Do you foresee ASEAN becoming irrelevant and out of date? Mahathir: No, I have a great deal of faith in ASEAN. We have made considerable progress. Even if we may not be very remarkable for economic co-operation, the fact remains that politically we co-operate very well. In whatever forum that we participate, ASEAN delegates and leaders invariably have some sort of pre-council. They decide on what line to take and usually they agree, and they have a single approach to any problem. It will take time, but eventually I am quite sure they are going to co-operate in the economic field, especially so when they find that unless they work together, they are going to be crushed under the weight of so many other economic forces. One good example of this is the ATPC (Association of Tin Producing Countries). Now, it was an ASEAN creation although we did persuade non-ASEAN members to join in. It took quite a bit of effort on the part of the people concerned to persuade the countries of ASEAN to cut back on their production of tin in order to deplete the overhang in the market. And we know that they were successful although in some countries people feel that control is very difficult. But it has been successful and as a result we now have a tin price that can help support the industry. There are still a lot of possibilities and I think ASEAN will eventually come round to working closely together in the economic field. Question: Mr Prime Minister, I think another trend evident today, and examples abound, relates to the revival of ethnicity. I think we can give a lot of examples on this, but to save time, I do not wish to elaborate. The point I want to emphasize here and seek your expert view, Mr Prime Minister, is that in the government’s attempt to resolve this ethnic resurgence, many governments resort to what I would term, for lack of a better word, a process of indigenization policies—for instance, the insistence that the indigenous people should be in charge of government, or at least have a major say in governmental affairs. One view of this issue is to see it as negative breeding of an insular parochial culture, unnecessary polarization of ethnic relations, emigration of non-indigenous communities, shutting out of professional talent at a time when this is much needed to develop the country, and so on ... My question to you, Mr Prime Minister, since you are an exponent of bumiputra policies in your own country and with much respect, and Malaysia was one of the earliest countries to have supported the indigenous first policy of Colonel Rabuka’s Fiji, could you share with us your views

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on this matter as we face a competitive, even vicious, challenging world? Is this still a defensible policy for states? Mahathir: Well, if you go on that basis, that we should not indigenize as you say, why do we try to gain independence? I mean, we were quite well off under the British. Let’s forget the race factor. The British were also people. They were also living in this country. Some even claimed themselves to be Singaporeans and Malaysians, and yet we struggled for independence. Why? We struggled for independence because we believed that the British do not own this country, that they come from outside and therefore their place is outside this country. We who are inside feel that we have a right to rule our own country. So if you work on that premise, then you would say that the people who are there in the first place are the people who should own the country so to speak, or govern the country, and not somebody else from outside. And so you have wars of independence, etc., and you try to gain independence. But supposing you gain independence and you have nothing, nothing in that independent country; you are still the poor of that country, you are still having to serve other people, then independence would be quite meaningless to the indigenous people. You are still at the same level with the same status that you were in when you were under the British. It seems pointless to struggle for independence from the British only to be dependent upon others. That is why countries insist that when they are independent there must be an identity for that country which is related to the indigenous people. Now, if you say Malaysia should not consider itself as having any indigenous people at all and, therefore, we could call it China, we could call India, it does not matter, then what is there for the Malays in the country and for the Fijians in their country. They are released from the British and they are placed under another group which refuses to integrate, which refuses to absorb the local culture. There is this controversy going on in Australia at the moment. And you find that the white Australians do resent the coming of the Asians. There is a big fight over that, I hear—I haven’t been there yet. I think your Prime Minister went and advised them on it and I think they should take that advice. But the fact is that the Caucasian Australians consider themselves the indigenous people of Australia. Of course, they are not because there are still the aborigines, you know. But what are the aborigines going to do? There are too few of them and they are too weak. They can’t have their say. If they can have their say, they are going to say that this is not Australia, this is aborigine land, and everybody coming here should be called an aborigine. Then it would be meaningful for the aborigines, but as you know the aborigines in Australia are having a very bad deal. Lots of them die in jail these days. That’s happening.

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The fact is that people feel differently about these things because there is no real integration. If you retain your own culture, your own language, and you refuse to have to do with the people in that country, then of course, they are going to feel alienated. They do not see the reason why they should allow another race to overwhelm them. It may sound a bit archaic for some people but it is very real for these people—it’s real for me. I mean, if people are all changing their names as they have to do in some countries—they have to change their names so that they sound indigenous; they have even to change their religion; they have to change their language; they are not allowed to have schools in their own language—then that may sound oppressive, but that is one way to integrate the people who come later on to their country. But if integration is not possible then there will always be the fears of the indigenous people that they will be overwhelmed. If, on the other hand, the indigenous people are strong and powerful and able to compete, that fear will not be so great. But as you see in Australia, although the Caucasians are strong and powerful, still they fear the Asians. I suggested in a reply in London that Britain should accept something like 50 million Indians and Bangladeshis and that the Indians and the Bangladeshis should have their own school, their own language and they should represent themselves in England, and I think the average Englishman did not appreciate that. I do not know why not because they say that we should appreciate that, but when it comes to their own country, it is quite a different thing. The same with Australia. I asked an Australian parliamentarian who wrote to me complaining about what I do in my own country. Of course, I do not interfere in their domestic politics but they want to interfere in my domestic politics. I asked them why don’t they accept, say, another 20 million Indians and Chinese who wish to migrate to Australia— it’s such a big country, it’s gone to waste. But he didn’t see the point at all. He couldn’t understand me, but my feeling is that the indigenous people feel that way simply because there is no integration, and they feel that way because they really fear that they may be wiped out and lose their identity altogether, like the Maoris. Fortunately, the Maoris reproduce much faster than the pakehas, and eventually you are going to find New Zealand is full of Maoris and less of pakehas—I suppose you understand “pakehas”, which is “white men”. Then, of course, it would be the other way round, the other chap is not going to be happy about it because he is going to be colonized instead of the other group. So I still maintain that what we are doing is the right thing to do, unless there is complete integration so that there is no difference culturally in terms of language, in terms of religion, in terms of everything else between all the different racial groups living in any country. But if there is going to be a difference then, of course, the indigenous people are going to insist they must have a premier place in their own country.

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US Policy in the Asia-Pacific Region Meeting the Challenges of the Post-Cold War Era George H.W. Bush

On 4 January 1992, President of the United States of America George H.W. Bush gave the 12th Singapore Lecture after being welcomed by Senior Minister Lee Kuan Yew. President Bush was the first and still the only US President to give a Singapore Lecture. His lecture focuses on the profound global strategic changes ushered in by the end of the Cold War, and for US engagement in East Asia and with ASEAN. In the current period of doubt over the US interests and influence in East Asia, this lecture serves as a useful, recent counterpoint. Thank you, Mr Minister. Prime Minister Goh and Senior Minister Lee, I am delighted to be here and thank you for that very kind introduction. Let me take this opportunity to say a few words about these two gentlemen. Minister Lee, a quarter century ago, you led this small island of cultural and ethnic diversity, of limited physical resources, to independence. Then, through your vision and your force of intellect and will, you forged Singapore’s nationhood. You stood courageously in a life and death struggle against the communists, and you prevailed. You led your nation and your region in the quest for peace and prosperity. It is my convinced opinion that future generations will honour the name of Lee Kuan Yew. And as you know well from your visits to my home in Kennebunkport, I am pleased to know you as a friend. Prime Minister Goh, I salute you for your wisdom and your vigour in carrying Singapore forward on its path to the future. I pledge America’s steadfast friendship as you lead Singapore in facing the challenges of the coming generation. I am also pleased that you, like many of your countrymen, came to the United States of America for part of your education. These, too, are ties that bind us together.

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George H.W. Bush

It is an honour to deliver this lecture, following such leaders as Brian Mulroney, Helmut Schmidt, Rudd Lubbers, Bob Hawke, Mahathir bin Mohamad, and Valery Giscard D’Estaing and such distinguished thinkers as Henry Kissinger and Milton Friedman. And, let me acknowledge: Professor K.S. Sandhu, Director of the Institute of Southeast Asian Studies; A.V. Liventals, Chairman, Mobil Oil Singapore; Lee Hee Seng, Deputy Chairman, ISEAS Board of Trustees; and Dr Richard Hu, Chairman, Monetary Authority of Singapore, and Finance Minister. The addresses in this series reflect the changes in our world. Your first lecturers focused on the ideological and military struggle between socialism and democratic capitalism and especially between the United States and what we used to call the Soviet Union. Think of that phrase for just a moment—“what we used to call the Soviet Union”. When citizens pulled down the hammer and sickle ten days ago and hauled up a new tricolour of freedom over the Kremlin, the Soviet Union ceased to exist, and the prospect of a new world opened before us. That act culminated a decade of liberation—a time in which we witnessed the death throes of totalitarianism and the triumph of systems of government devoted to individual liberty, democratic pluralism, free markets, and international engagement. As this struggle has drawn to a close, these lectures have shifted their focus from military confrontation to matters of economic co-operation. Our new world has little use for old ways of thinking about the roles and relations of nation-states. The Cold War categories—North-South, East-West, capitalist-communist—no longer apply. The future simply belongs to nations that can remain on the cutting edge of innovation and information; nations that can develop the genius and harness the aspirations of their own people. Individuals wield power as never before. An innovator equipped with ideas and the freedom to turn them into inventions can change the way we live and think. Governments that strive only to maintain a monopoly of power, rather than to strengthen the freedom of the individual, will fall by the wayside, swept away by the tides of innovation and entrepreneurship. Liberating technologies—telephones, computers, facsimile machines, satellite dishes, and other devices that transmit news, information, and culture in ever greater volumes and at ever greater speeds—have disabled the weapons of tyranny. The old world of splintered regions and ideologies has begun to give way to a global village universally committed to the values of individual liberty, democracy, and free trade and universally opposed to tyranny and aggression. If we are to realize the opportunities of this new era, we must address three intertwined challenges: the new requirements of peace and security, the challenge

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of promoting democracy, and the challenge of generating greater economic growth and prosperity around the world. Consider first the challenge of peace and security. The world has learned, through two world wars, and most recently, through Saddam Hussein’s naked aggression, that the dogs of war can be unleashed any time would-be aggressors doubt the commitment of the powerful to the security of the powerless. As a nation that straddles two great oceans, a nation tempered by painful wartime experience, the United States remains committed to engagement in the Atlantic Community and the Asia-Pacific region and we are unalterably opposed to isolationism. That’s my vow to you, as long as I am President of the United States of America. A quarter century ago, many feared that free nations would fall like dominoes— remember the domino theory?—to the subversion of communism. Now, we can say with pride and a robust sense of irony that the totalitarian powers—the powers that fomented conflict the world over—have indeed become the dominoes of the 1990s. This end to the Cold War gives the United States an opportunity to restructure its military. Having said that, I want to assure you and all of our many friends in this part of the world that the closing of bases in the Philippines will not spell the end to American engagement. We will maintain a visible, credible presence in the Asia-Pacific region with our forward deployed forces and through bilateral defence arrangements with nations of the region. That is why I am pleased to announce that this morning the United States has reached agreement with the Government of Singapore to explore in detail how we can transfer a naval logistics facility from Subic Bay in the Philippines to Singapore in the next year. We appreciate Singapore’s far-sighted approach to the security requirements of a new era. The United States does not maintain our security presence as an act of charity. Your security and your prosperity serve our interests because you can better help build a more stable, more prosperous world. An unstable Asia burdened with repression does not serve our interests. Nor does an Asia mired in poverty and despair. We need you as free and productive as you can be, and we understand that our security presence can provide a foundation for our mutual prosperity and shared defence. But we also need your support in addressing the new threats of this new era— regional conflicts and weapons proliferation. So I am pleased that the ASEAN nations are working with us to craft new and flexible arrangements to ensure the common defence. Access agreements and increased ASEAN-US dialogue can help us work co-operatively to promote stability in the whole region. By working co-operatively, we better share the security responsibilities of the post-Cold War era.

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Strong, credible security agreements enable us to meet the second challenge, the challenge of democracy—a challenge of shared interests and shared ideals. Again, ASEAN is helping to spread positive political change, in ways that reflect the values, aspirations, and cultures of the nations in this region. ASEAN is trying to help the former communist states in Indochina reintegrate themselves in a world that respects free markets and free people. Those efforts are starting to produce hopeful results. Just a few weeks ago, American diplomats arrived in Phnom Penh for the first time in 16 years. We owe that breakthrough to years of effort by many nations. But the Cambodian peace accord signed by Secretary Baker in Paris last October could not have existed without the help and co-operation of ASEAN. This historic agreement offers the very real hope of national reconciliation to the long-suffering people of Cambodia. Additionally, when the Paris Conference agreed on a peace settlement for Cambodia, my Government offered to remove our trade embargo as the UN Advance Mission began to implement the settlement. Today, I am pleased to announce the lifting of that embargo. Working with others, we need to turn attention to the economic reconstruction of that deeply wounded land, so its new political reconciliation has a home from which to grow. We are now normalizing our ties with Laos and have begun to move with Vietnam along a path marked by implementation of the Paris Accords, and for the sake of many, many American families, the satisfactory resolution of our concerns about POWs and MIAs. The key point is this: after being strong, determined, and patient, we finally can entertain realistic hopes of building lasting ties of interest and affection with Indochina. Organizations such as ASEAN, which promote security, more open political systems, and open markets, form the building blocks for what I have called the New World Order. This movement towards democracy leads us to the third challenge for the future, the challenge of economic growth and building a world of open and fair trade. Everyone agrees that political rivalry and military adventurism threaten international stability. But no one should doubt that economic isolationism— protectionism—can be at least as threatening to world order. The protectionist wars of the 1920s and 1930s deepened the Great Depression and set in motion conflicts that hastened World War II. On the other hand, during the past half century, engagement and trade have produced unprecedented peace and prosperity—here, in Singapore; throughout free Asia; in Europe; and in the United States. This prosperity also has led naturally to democracy, a fact that illustrates the indivisible relationship between security, democracy, and individual liberty. The United States will remain engaged economically, especially in this part of the world. The Asia-Pacific region has become the world’s economic dynamo.

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Our trade with Singapore has increased tenfold during the past sixteen years. We now export more to Singapore than to Italy or Spain; more to Indonesia than to the whole of Eastern Europe. The economies here continue to grow at an astonishing rate, while enjoying impressive income equality and general prosperity. The ASEAN countries, along with other nations in the region, helped initiate the Asia-Pacific Economic Co-operation process two years ago. APEC offers a powerful vehicle for sustaining free, market-based trade, for advancing the cause of regional and global trade liberalization, and for strengthening the cohesion and interdependence of the whole Asia-Pacific region. This is important to us. Most of America’s recent economic growth has come from export industries. Each billion dollars’ worth of US exports supports many thousands of good American jobs. A delegation of executives from major American businesses—from the automobile industry to computer and electronics firms to food and energy companies—has joined me in order to express our national commitment to free and fair trade. Our executives will learn more about opportunities here, and they will also work to help other firms compete fairly throughout the world. With us today also are the American ambassadors to the ASEAN countries. They will be returning to the United States soon to tell American businesses there about the opportunities that exist here in ASEAN. The United States is trying to establish an economic operating framework to facilitate and encourage these ties. This past October we agreed to a new Trade and Investment Framework Agreement with Singapore. I propose that we complement that Agreement by negotiating a Bilateral Investment Treaty. When combined with our global efforts through GATT, and our regional initiatives through APEC, this comprehensive approach can enable us to meet the economic challenges of the post-Cold War era. Americans believe in free and open trade. Nations can achieve astonishing levels of prosperity when they embrace the challenge of the marketplace. The General Agreement on Tariffs and Trade can play an especially crucial role in expanding freedom’s economic frontiers. That is why on each stop of this important trip I am calling for urgent action on behalf of the international trading system. I am urging the world’s trading nations to join with us in making GATT Director Dunkel’s proposed draft agreement the basis for the successful conclusion of the Uruguay Round. While all of us have problems with portions of that draft, none of us can afford to let the progress it represents slip away into the past. Now is the moment for a strong collective response. I particularly urge the dynamic trading nations of this region to help us to convince all GATT participants to build the momentum to achieve this agreement. A successful conclusion to this Uruguay Round can prepare the way for even greater trade liberalization in years to come and greater prosperity for everyone.

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GATT ensures that the world will continue moving towards broad economic integration and not towards trade blocs. I do not have to point out to an audience in Singapore, especially to an informed audience like this, that there is a huge difference between a trade zone—an oasis of free trade—and a trade bloc that attempts to hold the rest of the world at bay. We resolutely oppose efforts to create economic “fortresses”—anywhere. On the other hand, we wholeheartedly endorse free trade agreements. Our North American Free Trade Agreement (NAFTA) will beckon all nations to make the best of the resources and opportunities that the United States, Canada, and Mexico have to offer. NAFTA is not a threat to Asia. It would not encourage the division of the world into trading blocs. Instead, our increased growth can stimulate more trade with Asia. And we support efforts to build free trade agreements elsewhere, including among the ASEAN nations. Consider your own experience. A regime of free trade has enabled Singapore to become one of the Four Tigers of Asia and one of the fastest developing nations on earth. When other nations’ economies falter, you suffer. The worldwide economic slowdown has slowed your rate of economic growth this year, although most nations would be overjoyed to settle for six per cent growth. I can speak for one. Singapore has one of the most open economies on earth, and I appreciate Singapore’s leadership in pressing for even greater market freedom around the world. But we also need to consider the full import of economic development. An economy is the aggregate of work, ingenuity, and optimism of a nation. The term “economy” encompasses what millions of people do with their lives. Therefore, when we talk about strengthening economies, about growth, about opportunity, we mean much more than signing trade pacts. We mean building better lives for our people. Americans understand that no nation will prosper long without a first-rate educational system. I have encouraged Americans to mount a revolution in education, which we call the America 2000 Education Strategy. America 2000 challenges our citizens to set high standards for their schools, and it encourages all Americans to join forces in creating world-class schools. Meanwhile, we will continue to strengthen our university system, we think the world’s finest, and the host today to over 200,000 students from Asia. Perhaps one may be a future Prime Minister. I am certain she will be a good one. And, our APEC Educational Partnership initiative is seeking to link these educational ties to our mutual economic interests. Once we have given students basic skills, we must give them the freedom to make the most of the knowledge they have acquired. Tax cuts and deregulation in the 1980s helped unleash the greatest peace-time economic recovery in American history. While in my country reducing the tax on capital gains is somewhat controversial politically, most of our competitors impose very low taxes on capital gains. Some, like Singapore, do not tax capital gains at all. We can learn from you; we can create

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a climate even more conducive to risk, to innovation, to the bold exploration of new technologies and ideas, and I am confident that we will. Beyond that, the nations of the world want to enjoy the blessings of growth without destroying the environment. Yet we need to achieve environmental protection without denying developing nations the opportunity to develop. The United States has environmental expertise and state-of-the-art environmental technology. The Asian nations have environmental challenges. I am pleased to announce today that AID, the US Trade Development Program, the Overseas Private Insurance Corporation, and our Eximbank have developed a creative approach in partnership with this region to better address the challenge of balancing environmental protection with development. We hope we can co-ordinate our efforts with those of other developed nations, through various types of support, including U.S. equipment and technology. This will be good for Asia’s environment and good for American jobs. In conclusion, the nations committed to democracy and free markets have brought the world to a new era, one that promises unprecedented freedom from violence and deprivation. But this world will not simply happen. It will require hard work, tough negotiation, sacrifice, and the courage of our convictions. If we cast our lot with the forces of enlightenment and freedom over the counsels of defeatism and ignorance, we will build a better world—a world bound by common interests and goals. Like you, Americans want a world at peace, one in which no blood must be shed for the ideals we all share. So we will maintain a vigorous security presence in order to prevent despots and tyrants from undermining the triumphs of freedom and democracy. Like you, Americans want to live in a world enriched and enlivened by international trade—in goods, in ideas, in cultures, and in dreams for the future. We want the opportunity to compete aggressively in the international marketplace. At the same time, our consumers want access to the best goods and services that your economies have to offer. We want to live in a world made better by the genius and achievement of every culture. So we will advance the prospects for more open trade. And like you, Americans want a world united and enlightened by freedom and justice, by political pluralism, and by the universal commitment to individual liberty and prosperity. So we will stand fast by our principles and remain confident, strong, and vigilant. Since 1784, when an American trading ship, the Empress of China, sailed for Canton from New York, the United States has tried to build strong ties of commerce with Asia. We remain committed to that vision. Together, the United States and its Asia-Pacific allies can indeed build a world filled with economic tigers—nations growing rapidly; pioneering new intellectual,

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commercial, and cultural terrain; spreading the blessings of free markets, democracy, and peace. My trip through Asia this week marks a new start. The next step is up to us all.

Question and Answer Session Chairman: Ladies and Gentlemen, the ever-tighter schedule threatens to squeeze out the question and answer session. We have a few questions which the President has offered to meet. So, can I ask questioners to be brief, state your name, and get to the point quickly, please. Question: Mr President, the trend towards closer economic interaction within regions—with Europe forging a single market and the United States, Canada and Mexico moving towards a North American Free Trade Area—will grow in momentum in the 1990s. How in your opinion can we ensure that these trends do not result in inward-looking economic blocs? How can APEC as a body promote greater economic openness and counter these inward-looking trends? Bush: First, help us reach a successful conclusion to the GATT round. Therein lies the most important single step that can guarantee against trading blocs. Second, accept my word that nothing in the North American Free Trade Agreement wants to contribute to dividing the world into trading blocs that shut out other people’s goods. That is not what it is about. If we are successful in NAFTA, that will increase markets for Asian goods in South America, which has been an area that needs economic help. So, the first answer is help with GATT, successful conclusion of the Uruguay Round. And the second answer is, please understand that NAFTA—I can only speak for American participation therein, but I am sure it is also true of President Salinas of Mexico and Brian Mulroney of Canada—has no intention of having that free trade between ourselves be a bloc to ASEAN goods. Stop worrying about that! That isn’t going to happen. Question: Mr President, I believe that most countries in the Asia-Pacific region want to see the United States continue to play a major economic and security role in the Western Pacific. But many are worried that Japan may become the leader in the economic competition, especially in trade and investments in the Asia-Pacific region. Will

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the United States respond to this Japanese economic challenge and stay in the competition? If Japan does eventually become the pre-eminent investor and trader in the region, will the United States be engaged in the economies and the security of the region? Bush: Good question, and the answer is yes, regardless of what happens. We are going to continue our co-operation in terms of security. That is a given. That is important, I think, to ASEAN and it is very important to my country, the United States of America. I am not as gloomy as the question implied in terms of Japan’s dominating ASEAN. I would be worried about it if I thought that we would all acquiesce, including Singapore, in a bloc to offset Canada or to offset a perceived trading bloc in Europe. Then I would be concerned about that. But I don’t think that that is going to be the reality because we are going to forcefully—with the best we can offer in terms of economics and investments and in two-way trade—stay involved in the area. If you predicated it by saying the world order divided into three blocs and do we have any concern about domination from an economic superpower, which is Japan, I would say you could have some concerns there. But that is not what I see as the reality. And I hope that in some way this trip contributes to the idea that we want to avoid blocs that shut people out, and we want to open markets that cause people to come in. That is the way I look at it right now. But we will stay engaged, and I am looking forward to the part of my trip that takes me to Japan. We have trade problems there. They are aware of it. We are going to talk to them, but it is not going to be exclusively on that. I am interested, as you know, in creating jobs for Americans through fair trade, through access to markets, through matters of this nature. But we also have a wide array of considerations that I will also be discussing with the very able leaders of Japan, and it might well be that we will talk about the idea that we ought not to see this world divided up into regional blocs. So I will do my best in that regard. Question: It is with some irony that I read recently that in the observation of Li Peng, China’s Prime Minister, that—with events surrounding the dissolution of the Soviet Empire, with events in Yugoslavia—the single source of threat to your New World Order is no longer security in the Asia-Pacific but in fact Europe. Your comments, please. Bush: Please elaborate. I didn’t see the comment by Li Peng, I need a little bit more on what he was talking about. A threat from Europe—in what sense?

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Question: In the sense that there is a threat to the New World Order that you referred to earlier, that the theatre of threat from a sort of geo-political and military sense is no longer the Asia-Pacific but more the European theatre. Bush: I wouldn’t agree with the premise that in the past the concern wasn’t about the Soviet Union, if that is what he was talking about. The major superpower confrontation has been between the United States and the Soviet Union—the Soviet Union with its satellites and the United States with its friends and allies. And now, with the dissolution of the Soviet Union, we see that this doesn’t exist, that the major Cold War security threat, if we handle things properly with the emergence of these republics or this commonwealth, should no longer concern us. We are going to stay engaged with the republics, we are going to stay engaged with the commonwealth, helping in every way we can these now fledgling democracies as they emerge and strengthen their independence. Now we want to see that there isn’t a security threat from that part of the world. I may be missing what he is getting at, but I think that we have to guard against unpredictability. Thus the security presence will remain in Asia. It may be different than it has been in the past. The whole make-up of the U.S. defences has been changing as you know, but because of unforeseen circumstances we are going to retain a security presence here with the welcome of our friends in this area. So, if the distinguished leader of China was implying that wasn’t necessary anymore, fine. I am confident that China is not seeking external hegemony. There was a time when everybody was much more concerned about that, but we will be here, we will be around as a stabilizing, reassuring security presence where wanted. By that I can’t say that we think the only threats to worldwide security might emerge in this area, we don’t. But we have had a Pacific presence and we are going to continue to have a Pacific presence.

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India and the Asia-Pacific Forging a New Relationship P.V. Narasimha Rao

On 8 September 1994, Prime Minister of India P.V. Narasimha Rao gave the 13th Singapore Lecture after being welcomed by Senior Minister Lee Kuan Yew. Prime Minister Rao was the first Indian leader and second political leader from Asia to give a Singapore Lecture. The lecture focuses on India’s historic and contemporary ties to East Asia and the importance of ASEAN to India. The lecture serves as a good foreshadowing of India’s growing relationship with ASEAN as shown by India becoming a full ASEAN dialogue partner a year later and a founding member of the East Asia Summit in 2005. Mr Chairman, Senior Minister Lee Kuan Yew, Mr Prime Minister, Excellencies, Ladies and Gentlemen. I am grateful to my friend and senior statesman Lee Kuan Yew for his kind remarks. This is a truly historic moment for all of us, not merely in a temporal, but also in a historical sense. Although my own association with Southeast Asia and Singapore goes back to a decade and a half, the ties that bind India and Southeast and East Asia are so old that they are still being fully traced by historians, who increasingly have to get the assistance of archaeologists. Singapore has graciously hosted Alamkara, an exposition titled “Five Thousand Years of India”. It was conceived as a presentation not merely of the ancient Indian civilization but a reaffirmation of the ties that bound our ancestors together. You may be interested to know that even the name of your city is very common in India and I know at least two villages close to my own with the same name. And I myself carry part of your city in my own name. I am sure you cannot think of another guest so closely identified with you. I was therefore not a little perplexed when I faced the task of drafting an address to this distinguished gathering on the “new relationship” India is forging with the

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Asia-Pacific. I suppose the connotation has something to do with the fact that in Asia, the industrial and technological revolution was heralded only late in this century, but the advances in development have been so rapid in recent decades or even years that it would be fair to say that it is not the reality that is changing, but change which is becoming a reality. So let us address the seeming paradox of this “new relationship”. In 1941, just before he died, the great Indian poet Rabindranath Tagore had this to say in his work, “The Crisis in Civilization”: I had at one time believed that the springs of Civilization would issue out of the heart of Europe. But today when I am about to quit the world, that faith has gone bankrupt altogether And yet I shall not commit the grievous sin of losing faith in Man ... I would rather look forward to the opening of a new chapter in his history, after the cataclysm is over and the atmosphere rendered clean with the spirit of service and sacrifice. Perhaps that dawn will come from this horizon, from the East where the sun rises.

After the cataclysm of World War II we have continued to see much turbulence through the period of the Cold War, which dominated political and strategic perceptions. By the end of that struggle, by 1992, Jane’s Defence Weekly had identified a total of seventy-three hot spots worldwide, including ongoing and potential conflicts. Asia has had its share of troubles, apart from the continuing suffering and humiliation we had to put up with during the phase of our colonial history. Permit me another quote which reads as follows: But there is yet another spirit of Asia today. As we all know, Asia is no longer passive today; it had been passive enough in the past ... It is no more a submissive Asia ...! It has tolerated submissiveness for so long. Asia of today is dynamic.

Mr Chairman, these words were spoken by Pandit Jawaharlal Nehru not far from here, at the Asian-African Conference in Bandung in April 1955. It is remarkable how true and relevant these words continue to be today. We cannot ignore the fact that while the world has become a smaller place, thanks largely to the technologies of travel and telecommunications, the hiatus between regions, nations and even communities may be said to have increased in one sense. If ideological rigidities have been jettisoned or at least largely muted, with the end of the Cold War by most of the contenders, new barriers are in evidence, in the form of tariff and non-tariff walls, immigration laws, cartelization of technological capabilities to ensure domination over nations which are slightly behind in the race, and several other ingenious innovations. It seems ironic that man has changed everything except his own mind and proclivities. The reason is not far to seek. It is much easier to change dead matter than to alter mental attitudes formed over many centuries, even millennia. In any event, while the effort to transform matter has been massive and continuous, a matching effort to adapt the human mind so

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as to be in tune with material changes has not been undertaken, except in a very few awakened societies. It takes a good deal of statesmanship to proceed on the path of nation-building along democratic lines while ensuring that the nation remains a worthy member of the international community. The problems are both endogenous and exogenous. The first category includes: 1. The massive challenges of development: In cases such as India’s, feeding, clothing and educating hundreds of millions whose eyes have still to adjust to the bright light of the twentieth century, and who are already being rushed into the mysterious twenty-first; 2. The challenge to human values thrown up everywhere by rapid changes. Prime Minister Goh alluded to this last month in his speech on Singapore’s National Day when he stated: But societies change. They change with affluence, with technology, with politics. Sometimes changes are for the better but sometimes changes make a society lose its vitality, its solidarity, make a people soft and decline ...

3. The emergence of an attitude which seeks to define an individual’s social, and increasingly political, identity more on ethnic, religious and sometimes geographical lines, with the pernicious motivation of organizing forces for ostensibly economic, but in reality for political and even personal ends. In the exogenous category, some of the main elements which I could identify are: 1. The temptation, to which several political elites increasingly tend to succumb, of blaming their own internal problems, some of which I have just outlined, entirely on supposed events or attitudes abroad; 2. Friction between cultures. Although I would not go so far as to subscribe to the thesis that we are seeing a clash between Western and non-Western civilizations, there are unmistakable “fault lines” in some parts of the world, which are still to be repaired. This could, and sometimes does, lead to the export and import of fundamentalism and the assertion that religion has some overriding, transnational and supra-sovereign validity. This dangerous theory needs to be contained effectively. 3. The increasing tendency on the part of dominant powers today to assume that they can not only define the means, but even the ends, of collective international endeavour. This has been revealed to us in recent years in the form of intrusive prescriptions in the areas of social regulation, dissemination of knowledge, technological development and even domestic administration. The worst part of this tendency is that on closer scrutiny, it can be easily shown to be based on unsympathetic half-knowledge, and often even total ignorance.

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4. Worldwide criminal networks of drug smugglers, terrorists, money launderers and other such elements who have no stake in peace and real prosperity but manage to suborn governments to ensure the furtherance of their own interests. Mr Chairman, I have dwelt at some length on these global issues before I come to the Asia-Pacific. This is because I sincerely believe that the nations that comprise the Asia-Pacific today must address these problems in their totality; because this region, if it can be referred to as a region, encompasses well over half the world’s population and wealth, and is today a primary source of the dynamism that impels global activity. The Asia-Pacific region is rather loosely defined, I understand. While organizations such as APEC (Asia-Pacific Economic Co-operation) and ARF (ASEAN Regional Forum) have a membership based more or less on geographic criteria, there can be no gainsaying that political and economic imperatives have mainly contributed to the process of the coming together of these nation-states. The constitution and the vitality of these fora speak well of the diplomatic and political maturity of the concerned governments. The issues are formidable: • interpretations of sovereignty, whether over the oceans, in outer space, over territory, resources, etc.; • frictions arising out of differing cultural perceptions—as we witnessed in the case of Michael Fay; • massive needs and demands of relatively underdeveloped populations and migratory tendencies, with no respect for national boundaries; • confrontational postures on a broad range of fundamental issues related to trade barriers, currency stabilization, international aid and investment flows; • intensification of the debate over linkages between issues such as human rights, labour laws, environmental protection and resource management, liberal information flows, etc., in political and economic relationships. The Asia-Pacific region is fairly disparate in the levels of economic development and physical size of the constituent states, as well as in terms of political attitudes, given the incredible racial, ethnic and religious diversity of its populations. While India has been observing the Asia-Pacific objectively, we cannot ignore the fact that our civilizations are organically linked to those which have founded so many of the nation-states of East and Southeast Asia. The evidence lies in the temples of Java, Indochina and Thailand, in the manifestations of the great religions of Buddhism and Hinduism that spread across this vast continent, and more aptly today, in the physical origin of ASEAN and other countries of the Asia-Pacific region. In these communities living here in peace with others, we have a true example of the Asian symbiosis.

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But we must look beyond our own continent, and you have started doing so. With the organizational bonds you have established with Australia, New Zealand, Canada, the USA and some of the Latin American countries, Asia has transcended the boundaries that were imposed by the Pacific. These boundaries were not merely physical but psychological and political as well. Enlightened leaderships of the region have realized that co-operation is fully compatible with healthy competition. If I may quote Pandit Nehru’s Bandung speech again: We send out greetings to Australia and New Zealand. And indeed Australia and New Zealand are almost in our region ... They are next to us and I should like indeed Australia and New Zealand to come nearer to Asia.

Mr Chairman, I repeat, these words were spoken in 1955 by a man who almost had an intuition of the Asia-Pacific as it evolves today. While in those days, the Cold War was at its peak, and therefore the superpowers were looked upon with some caution mixed with suspicion, it is gratifying to note that ASEAN can today speak from a position of strength at the same table with the United States, Russia, China and Japan. The equations have indeed altered. While one cannot deny the overwhelming military superiority of the United States, one cannot ignore the significant military development of China, Japan and Australia. The stakes in the Asia-Pacific region are indeed high. They involve rights of passage through crucial waterways, security of navigation from piracy, claims over disputed lands, maritime zones and resources, and hostilities through history that have been defused but not dispelled. Recently, there have been attempts to depict India, along with China and Japan, as a potential power which could fill the vacuum created by the withdrawal of the United States with the end of the Cold War. This theory was partially rejected by American and Southeast Asian strategic thinkers and even in the Australian Senate report of 1991. George Tanham, in his essay entitled “Indian Strategic Thought”, prepared for the U.S. Department of Defence in 1991, stated: India retains a long-term unshakeable commitment to strategic independence and autonomy in its decision-making and military capabilities, although its economic, industrial, and technological shortcomings continue to limit the success of such a strategic design ...

It is these shortcomings which we are striving to remove with single-minded attention. India could well appear as a large enigma located between an interactive AsiaPacific and the somewhat unclear West-Central Asian attempts at regional integration. This is understandable. But there is no cause whatsoever for the alarmist views propounded about India’s alleged expansionist designs, or its blue water navy. On any basis of rational and impartial comparison, it will be crystal clear that India

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has not coveted any land or other asset belonging to any other country, leave alone having any expansionist design through military might. Indeed, India has been an oft-invaded land throughout history. I do not know what a Prime Minister should feel about this, but I am citing it as an undeniable fact. In the first place, it is difficult to conceive of a navy that does not sail in blue waters, by any one’s definition. I hardly need to describe to this gathering the magnitude of India’s territory; the distance of its island territories from the mainland; its maritime boundaries which are demarcated with those of ASEAN; and the enormous resource base which has to be protected, whether it be our fisheries, offshore oil and gas or even under-sea mineral deposits in the area we have been allotted in the Indian Ocean as a pioneer investor recognized under the United Nations Convention on the Law of the Sea. Any country’s strategic policy can be analysed in terms of its interests, intentions and infrastructure. India’s interests are patent. A careful study of the past fifty years will convince anyone that India has, in fact, been subjected to considerable burdens on account of migrations of populations, terrorist attacks, smuggling, and so forth. Our interests lie in peace and harmony which will enable us to improve our standards of living. Our intentions are also evident from our recent policies, as also the fact that in terms of per capita expenditure and as a percentage of gross domestic product (GDP), our defence expenditure is perhaps among the lowest of any country that maintains an armed capability even half our size. The Australian Senate Report of 1991 has also concluded that India does not have the capability of sustained force projection far beyond its boundaries; and capability reflects intention. Having said this, I must add that, while India can be said to have been confined to its own strategic defence, this does not detract from its ability and willingness to exercise its role in global affairs. Our armed forces have participated in peace-keeping operations from Cambodia to Congo, and have recently shed blood in Somalia. We have not shrunk from our commitment to the cause of global peace and we shall not do so in future. At the same time, we do not accept any agenda that seeks peace at the cost of any country’s self-respect. We are willing to contribute troops to a U.N. standby force but would reserve the right to object to the deployment of such forces under circumstances that would make such deployment look like that of an aggressor. Mr Chairman, I have only reiterated what I consider our firm policy. I also think that the Non-aligned Movement is fully relevant today except in the minds of those who see no self-respect in it and seek to predicate it only in terms of the existence of rival blocs. In point of fact, however, its principles have not really been diluted by the recent strategic changes—we continue with the determination to decide our own destiny independently according to our rights, and to ensure genuine international consensus on matters that concern the world community.

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This view may be supported by some, rejected by others. Indeed, the approach adopted in the ARF may well contribute to overall regional security. For this to happen, however, there must be a thorough consensus among all the powers, big or small, who have a stake. Security cannot be compartmentalized when the global reach of weapons, and the scope for rapid deployment of forces has increased to the point where the threat of armed intervention and conflict can never be ruled out in any part of the world, and where the struggle for sovereignty over territory and resources is getting more and more acute. Mr Chairman, India’s preoccupation with economic development and its determination to withstand the onslaught of inimical internal and external forces, have together wrought a political economy which has a self-respecting GDP and a technological base which is the envy of many other countries. But as the second most populous country in the world, India’s special problems need to be noted carefully, before prescriptions of unsuitable models of development are accepted without adequate forethought. India’s economic imperatives should be seen both in short-term and long-term perspectives. Right now, the necessity of massive investments in infrastructure looms large. We need huge investments in power, oil, telecommunications, fertilizers and, of course, agriculture and irrigation, apart from roads, railways and ports. I have come to extend my hand of partnership in this venture—a partnership having so much in common, and so close already in multi-faceted co-operation. Investment is coming from several industrialized countries already. My present endeavour is to draw, as much as possible, investment and co-operation from the Asia-Pacific countries, in consonance with our common concept and solidarity and my faith in our common destiny. This, of course, will bring large-scale employment to India’s young people at different levels—skilled, semi-skilled and unskilled. When we in India look at employment in the long-term perspective, the question of the right technology confronts us. If we take to gigantism in order to attain the economies of scale, we accept increasingly sophisticated technology which, in many cases, replaces man with machine, accentuating unemployment and imposing unacceptable social costs in a populous country. On the other hand, if we accept the route of large-scale employment with old technology and low wages, the large mass of people, as well as their economic activity, including the product thereof, would remain at an unacceptably primitive level in quality. Obviously, both these positions are unacceptable. There are six factors involved here: size, environmental acceptability, cost, quality, technology and employment potential. Environmental acceptability and quality are obviously a sine qua non. If the objective is to maximize employment and minimize the per unit size at more or less the same cost, the only imponderable that remains to be determined is technology. I see no alternative for populous developing countries except to develop these technologies of the future. One may perhaps call them the “Laptop technologies”,

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taking the analogy of the computers, wherein all the six factors listed above are integrated. I invite the technology experts here and everywhere to ponder over this particular aspect of our necessity and direct their research and innovation to this end, working in co-operation with us. Coming back to the present situation, until recently, we laid emphasis on selfreliance and trade with traditional partners. This is changing now. In the calendar year 1993, proposals from APEC economies, excluding the United States, constituted over 20 per cent of the total foreign investment collaborations approved by the Government of India. Between January 1991 and June 1994, a total of 1,904 foreign collaborations were approved with APEC economies. During this period, direct investment from APEC in India amounted to approximately 54 per cent of the total foreign investment received. These figures are indeed revealing. On the other hand, Indian businessmen have established joint ventures all over the Asia-Pacific—148 in the APEC economies. The overseas Indian community, which retains strong links with its homeland, but prefers to live and work abroad, constitutes a vital link between India and the countries of the Asia-Pacific. We have a stake in their prosperity, as they have a stake in our future. From April 1993 to March 1994, APEC economies accounted for 45 per cent of India’s exports and 30 per cent of its imports. But all this trade amounted to only about 1 per cent of intra-APEC trade. We are acutely aware of the considerable potential that exists, considering India’s natural resources, its growing infrastructure, human resources, a well-developed legal system and an increasingly open financial and investment regime. Last year, we commenced an economic dialogue with ASEAN. My visit to Singapore and earlier visits to other ASEAN countries have convinced me that the potential for India’s partnership with this nucleus organization in the Asia-Pacific is immeasurable. Already, we find Indian enterprises prospecting oil, constructing railroads, building power plants, setting up enterprises to manufacture engineering goods, process agricultural products and trade all over the region. At the moment, however, all this is on a minuscule scale. Much more is possible and desirable. India therefore wants a real and sizeable jump. India’s premier railway construction enterprise has rehabilitated, electrified and built several hundred kilometres of railway track in Malaysia. I found it significant when last month a leading Malaysian company presented me with a proposal to construct a 10,000 kilometre toll highway on a “build-operate-transfer” basis, linking India’s major cities. Yet another Indian company, Bharat Heavy Electricals Limited, has set up thousands of megawatts of generating capacity in the Asia-Pacific region, in those very countries from where we are now receiving offers to set up power plants in India. Is it a paradox that Indian companies are exerting themselves abroad to execute projects of a nature which firms from those countries are attempting

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to set up in India? Far from being a paradox, I think this is the essence of eclectic enterprise—business that constantly seeks to move beyond its boundaries. This has been the key to success in the Asia-Pacific and a valuable lesson we have learned from you. The creation of wealth in this region, particularly in those countries which were eclipsed for two to three centuries by colonial rule, is an example to mankind everywhere. It has also aroused sufficient interest among the developed members of APEC for them to have realized that a partnership with Asia is not only desirable but inevitable. Speaking for a developing country, I feel we must not barter our advantage without ensuring that we can become equal partners with equal say in the eventual codification of international laws and regulations that will govern international political, economic and social activity in the next century. What we see in the Asia-Pacific region cannot be called a clash of civilizations but a mesh, interwoven with religious, ethnic, racial, linguistic and professional strands. And it is this diversity which gives the resilience that enables this mesh to sustain the almost unbelievable growth rates that Asia has seen in the past decade and will continue to see well into the next century. Mr Chairman, I am consciously including India in this reality and this vision of the Asia-Pacific that I propound. If a new relationship is to be forged, it is only the visible superstructure that needs to be erected over the very sound and solid foundation that already exists. This superstructure will include increasing levels of interaction through travel and communication links. Rural Indian homes today receive TV programmes in Indian languages beamed from Hong Kong and Moscow. We expect that in the nottoo-distant future, programmes made in India will be beamed over the Asia-Pacific. We in India are conscious of the dangers posed by commercial media networks whose indiscriminate satellite footprints stamp over our cultural sensitivities and disrupt our social ethos. But we have full faith in our cultural heritage and believe that it will survive all onslaughts from outside, integrating healthy influences and also influencing external factors in the process. The information revolution should have, as its natural corollary, an enlightened understanding of our cultural affinities and differences. The more we know of each other, the better we understand each other. Geographical, linguistic and legal barriers must come down. I realize India has a big responsibility in this regard and I assure you that we will not shirk this responsibility. We will vindicate the cardinal principle of responsible media projection, namely, that profit must be predicated on propriety. Mr Chairman, India has already taken steps to liberalize its currency regime, open the economy to more imports and investment, and educate its people on the benefits of exposure to the outside world. The Asia-Pacific could be the springboard for our leap into the global market-place. Much has been reported recently, as you pointed out, Mr Chairman, very interestingly just now, including in the Singapore press, about the slowing down

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of India’s economic reforms. May I clarify that if we appear to have slowed down, it may only be because the pace of reforms over the past three years has been extremely rapid. Only last month my government further liberalized the currency regime to make the rupee convertible on current account. Meanwhile, the Bombay Stock Exchange continues its bull run. With regard to our labour policy, one has to understand the Indian situation, and spare a thought for the hundreds of millions of people who face the prospect of unemployment. A hire-and-fire policy in India would not only be inhumane, it would be economically unwise—this can be proved, this can be demonstrated. At the same time, businessmen who are planning future investments have little to worry about, because unlike established businesses whose work-force may have over-grown for various reasons, and not be germane to results, new business can always assess its manpower requirements accurately so as to avoid the risk of becoming uneconomic on that score. I can assure this gathering that India not only welcomes but is also worth your time and money. Investment in India is an investment in the future—a future not only for the investor but for a population of one billion which will remain a force for stability in the world. In return, countries of the Asia-Pacific will find in India a reliable partner, a vast market, the process of whose development will simultaneously involve the renaissance of a great and noble civilization which we all share in some measure. Mr Chairman, before I conclude, I would like to revert to my earlier quotation, what our great poet Rabindranath Tagore said about the new dawn coming from the horizon of the East, where the sun rises. Those were the days of World War II, of the horror that made no sense to anyone. The war ended only to give rise to the Cold War. That too has ended, only to leave the world in a flux of a different kind. The world has no big war now, hot or cold; yet it has no peace either. Thus, the transition to the post-Cold War world, welcome as it is, is likely to be equally difficult, if not more. The days of celebrating the demise of a system are over. The contours of a different world have begun to emerge, a world so different from the world of blocs and deterrents that we had hardly expect it even to exist. But Cold War attitudes persist—not because there is anything permanently valid or inevitable about them, but because their removal takes time and even more than time, the genuine realization that the change in human destiny needs a corresponding change in man’s own mindset. I firmly believe that beyond the processes of diplomacy and inter-state relations that occupy our attention most of the time, there is an immeasurably vast area in which all the tiny specks that make up humanity are surprisingly equal. We have to capture the spirit and quality of that equality and realize the unity of man. This is the challenge of the unipolarity which we witness today. This challenge is an opportunity which history does not often throw up. We miss it at our own peril. And we can capture it, through the essentially Asian

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ethos of compassion, harmony and a sense of sharing, where the individual and the collective entities are beautifully blended to make life a consistent whole. I am happy to have had this opportunity to enunciate my belief in this vision of a new relationship between India and the Asia-Pacific from Singapore, which I consider the geographic and symbolic centre of the Asia-Pacific. I trust this vision will be realized in the near future and that the next century will be a century of partnership for us all. Thank you very much.

Question and Answer Session Question: I am Ngiam Kee Jin, Senior Economics Lecturer, National University of Singapore. Mr Prime Minister, we see the emergence of powerful trading blocs, such as the North American Free Trade Area (NAFTA), European Union (EU), ASEAN Free Trade Area (AFTA), and possibly the East Asia Economic Caucus (EAEC), which may include China and Japan as members. Now, Mr Prime Minister, are you concerned that India will be left out of these major trading groups, and how do you assess the implications for India? What would be India’s trading strategies vis-à-vis all these trading blocs? Also, I would like to ask, would India like to be considered in the East Asia Economic Caucus? Rao: I would really put a counter question—what would their policies be towards India? You see, India has never been overawed, cowed down by any combinations because we consider all combinations good enough for friendship, good enough for trade, mutual trade, and for mutual advantage. We can certainly have all the caucuses in the world and still be what we are. And as I said in my own intervention, we do want to be as close as possible. We are already what is called a “dialogue partner”— I don’t know what it is but if there is anything closer than a dialogue partner, we would like to be that. And then, one step at a time. Question: My name is Carl Lande. I am a Visiting Fellow at the Institute of Southeast Asian Studies. Mr Prime Minister, despite the deep religious and other divisions of your country, its great social problems, and massive poverty, India has been able to remain united, has kept the military out of politics, and remains the world’s largest democracy. What is the secret of your success?

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Rao: That is a good question. The secret of this, if I may say so, is in our holy past. India has been invaded by many people, as you know. But every invader became part of India, except the British, and that’s why they had to leave—they could not become part of the scene. And I told Mr Major, “You were once ruling over us, but now we are friends. The attitudes have changed, and the attitudes have really changed.” I was very happy when I went to the United Kingdom. I found that in the younger generation, there is really nothing like a relationship between the ruler and the ruled—it’s not there at all. So except the British, all other invaders, they came as invaders and became part of the scene, part of the land. And that is how this diversity has come about. Islam came, and before that, Christianity came. Perhaps many of you may know that Christianity came to India before it went anywhere else, AD 27 to be exact. So India has had this capacity for absorbing everything, and becoming the variegated society that it is. Yes, there have been skirmishes here and there—Hindu, Muslim and Hindu, Sikh, and all these—which we read in the newspapers because unless there is a dispute, it doesn’t figure in the newspapers—that’s the trouble. Millions of people in India live in peace and amity. Go to any village, and you will not know who is a Hindu, who is a Muslim, who is a Christian. In the south of India, they all have this similar lungi—we just don’t know who is what. They speak the same language. So it is an example of co-existence between different communities, different religions, different languages, and this is what has come to us as a legacy. That’s why I said the question is a good one—because it goes back centuries and centuries. Question: Prime Minister, the Indian central government is taking the lead in attracting foreign investments, but some state governments appear to be disinterested. At the same time, particular rules, regulations and bureaucracy would put off any potential investor. How would you reassure businessmen keen on investing in your country? Rao: I would first request them to go to the states that are favourably inclined. We would think of the other states later. It is not true that any state government would be against this. What is true is that conditions are different from state to state; they vary from state to state widely, and I don’t think there is any state government which is against the policy by their own conviction or anything like that. Coming to bureaucracy, I have had to defend my bureaucracy many times before, and I’m now doing it again. Take any bureaucrat in India, take any bureaucrat in Singapore.

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I am sure they have been educated at the same university, like Cambridge, like Oxford, like Harvard, and so on. No one has come from, say, Lubumba University, or the like. So, the training is the same, the education is the same, the approach is the same. But the point is that for forty years, we had a particular view of our economy, we wanted central planning to be the anchor of our economic activity. I am not against it. I want to tell you that this central planning, taking the country as a whole, as an integrated whole—had there not been central planning, I am sure that the integration of the country would have been affected. But now we have come to a stage where we are able to absorb capital, technology, everything coming from outside. We are no longer in that infant stage where some walls had to be built around us. We do not need any protection. In fact, protectionism is growing in developed countries rather than in developing countries—that’s what our demand has been. We are having lots of problems with our exports. When we did not export, they said that we were backward and we were not even able to export. When we are exporting, people are putting walls there. But this is how the paradox is working. So there is no real difficulty about either the state governments or the bureaucracy. After all, the rules have been made by the bureaucracy. We are making the same bureaucracy change the rules. That’s all there is to it. Question: Mike Carey, ABC, Radio Australia. Is there any possibility, since you have done such a wonderful job so far with the economy, that a new broom approach might also be applied to the subcontinental nuclear arms race, that somehow you might be able to address that in a new and novel way and do something about it? Rao: Well, I don’t know. This question has been formed in the minds of critics, and they have already decided for the moment there is no arms race; there is only the question of interference in the internal affairs of one state by another. This is all there is to it, there is no big arms race going on. I have said something about my defence expenditure. You see, a country has a particular level of defence expenditure inevitably. No country can say, “I don’t want any defence expenditure at all, I don’t want any defence at all”. So what I said just now is, look at our coastline, look at the size, look at the requirements, look at our environment—and any expert, if he is able to convince me that we are having a defence which is more than adequate or more than necessary, I am prepared to discuss with him. I am telling you that we are really less than what we should be for the simple reason that our money is needed more for development. But of course, the needs for defence are supreme, they are paramount. There is no Prime Minister who can say, for the sake of development,

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I will give up defence, or part of my defence—that’s not done. But having said that, please look at our defence preparedness—is it a defensive kind or something which can aggress into other territories? This is all I want you to understand and assess. Question: Kanwaljit Soin, Nominated Member of Parliament. Mr Prime Minister, with the increasing participation of women in the public sphere in India, what are the changing relationships of men and women in the family, especially in India, which is considered a traditional society? Thank you. Rao: That is a very good question. I don’t think there are any changes in family relationships. In fact, in our new law, which deals with our local governments— panchayat, as they are called—we have reserved one-third of the seats for women, and the time is not far when the same formula will come up and reach the Parliament. There has been no change at all, and there will be no change in family relationships. But within the family relationships, in the family structure there has been a lot of change between that of thirty or forty years ago and today. The joint family system in India is not so common today as it was about fifty years ago, in my childhood. Families are separating for the simple reason that people are not residing in one village or one place. One brother gets employment elsewhere, another brother remains in the village to look after agriculture, and so forth. So there has been some kind of disintegration in the family structures, but as a result of women coming up in public life and getting more rights, etc., I am glad to say— I know what the lady, the questioner wants to know—I am glad to tell her that this has not affected family relations. Question: Chong Ja Ian, Victoria Junior College. In your speech earlier, Mr Prime Minister, you talked about development towards democracy and freedom, and at the same time political stability. Do you think that too much democracy and too much freedom would impair political stability and hence economic growth and development? Rao: No, the answer is no. In fact, I have said often that the remedy for the ills of democracy is more democracy, not less. Question: Zainul Abidin, Editor of Berita Harian. May I ask the Prime Minister whether he sees cultural, religious and ethnic diversity in this part of the world, whether it

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will in fact impede or help the kind of prosperity which we are talking about for the future. Rao: All these diversities have always made for greater unity. What has happened is that politicians in some countries have run out of issues, so they take a short cut through religious fundamentalism, religious fanaticism, and so on. This has happened in India and I have been fully involved in solving this problem. What they do is, in the name of religion they create a problem and challenge the government to solve it. They go to the people and say that this government cannot solve it; you vote for me, I will solve it. The people fall for this sometimes, not always. Now the people of India have seen through this game. They don’t see any advantage to themselves in any of these issues, or the solutions of those issues. Both are irrelevant to them, they have come to know this. That’s why when we had elections in November 1993, the results very clearly showed that the religious card had run out of steam and I can assure you that it will never come back, never come back. We have solved it in such a way. Because if there is a problem you have to solve it, you have to show a way to solving it; don’t wish it away. Don’t oppose it. If it’s a temple, show a way to build the temple rather than say a temple is not necessary. If you say that, then again you will be in trouble. So we have managed these problems and managed them well. And I am confident that in elections in the near future, none of these problems is going to figure as an issue. Question: My name is Roy Rampal. I am a Senior Fellow at the National University of Singapore. Sir, my question is that obviously Indian socialism of more than forty years was not able to deliver the goods, from an economic standpoint, for the people of India. I was wondering whether socialism, in retrospect, also kept India from assuming its place in the world in correspondence with its size and capabilities. Rao: The answer is no. We do not decry socialism even today. Pandit Jawaharlal Nehru started and expounded what was called a mixed economy under democratic conditions. Now, the kind of mix that you have in India is something unprecedented in the sense that on the economic side we wanted a certain amount of control on disparities. If India had not taken that line of action, we would be having endless trouble today. I am not quite sure that India would have remained India. So to the extent that socialism or that pattern of society was taken as our ideal, it was right when it was taken.

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Now, we have come to a stage where it is just not possible for me to continue with public sector undertakings in the economic field—undertakings, many of which are going into the red, they are making losses. I cannot give them budgetary support. I have been giving them budgetary support for more than forty years. I just cannot do it now because my programmes on the social side are suffering. My schools are suffering, my teachers are suffering, my hospitals are suffering, my primary health centres are suffering, and if I tax the people and go on giving money to these undertakings which are again necessary—power is necessary, irrigation is necessary, so many things are necessary ... So what I have done is to request the private sector to step in where the public sector was functioning from budgetary sources. Now that money I have saved, and that money is going back to the people for the much needed and much neglected programmes for their own development. This is all that I have done. I have neither violated socialism as we understood it then and now, nor brought any new socialism from anywhere else. We have called our economy a socialist economy. We have called our polity a socialist democracy. Both are there. Democracy has been implemented. Socialism in the sense that we do not allow too many, too steep disparities in the society, a society which is backward, a society which is already, from the feudal point of view, full of disparities, as a result of which, we revolted against that society. The feudal society has been done away with, and now we cannot have another kind of feudalism, any kind of disparityridden society. It was just not possible, so we have taken a line which does not find a parallel, perhaps in any other country. This is our own, and Panditji has said it many times, that when you call it socialism, it is not something which we have taken bodily from any other country, but it is something which we have evolved ourselves. Question: I am Shilpa Khanna. I am studying in Temasek Junior College, and I am here on a scholarship. Can I request you to comment on the latest condition in Kashmir, and relations with Pakistan, especially after the comment of Nawaz Sharif. Rao: You may know that when Mr Nawaz Sharif was Prime Minister of Pakistan, we met six times. And every time we met, the meetings were extremely cordial. Personally, we have the best of relations, but after all he has his own compulsions. No leader of the opposition in Pakistan can help raising Kashmir. Just as a rivalry, just as a competition with the ruling party there, it is Kashmir’s domestic party question, so far as Pakistan is concerned. It’s not so in India, so we don’t face it. We only tackle the problem as a government has to tackle it.

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The situation in Kashmir today, the terrorist violence has been subdued during the last one year. The situation is far better today than what it was a year or a year and a half back. But of course it has not completely been eliminated—that’s not going to happen. Meanwhile, we are proceeding towards re-establishing the democratic set-up there. The election commission has just taken up the revision of the electoral rolls which takes about a couple of months or maybe three months, and then we are proceeding towards elections there. We want a popular government. Jammu-Kashmir has remained without a popular government, according to me, too long already. We should not allow this to continue and, therefore, that will be the next step we take. Meanwhile, we are talking to all the leaders, established political parties, and others who do not see eye to eye with us right now, but who do subscribe to the view that a solution has to be found within the four corners of the Indian Constitution. They are all welcome, we have welcomed them, we have been talking to them. Those who don’t want to remain, they are different, they have nothing in common with us to talk about. But the vast majority of people do want a solution within the Indian Constitution and the dialogue is going on, I cannot say at the political level— at different levels it is going on, organizational and so on—and we expect all these to converge on elections some time after these preliminary steps are taken.

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Australia, Asia and the New Regionalism Paul Keating

On 17 January 1996, Prime Minister of Australia Paul Keating gave the 14th Singapore Lecture after being welcomed by Singapore’s Deputy Prime Minister Tony Tan who referred to Mr Keating as “Australia’s most Asia-oriented Prime Minister”. Prime Minister Keating was the second of four Australian leaders to give a Singapore Lecture following Prime Minister Bob Hawke in 1987. His lecture is a clear exposition of why Australia has turned its focus to Asia. It also reflects the optimism at the time about regionalism, with Keating regarding APEC as the “new model for regional cooperation” particularly suited for the post-Cold War era. It is a great honour to have been asked to give this lecture and I thank Professor Chan Heng Chee and the Institute of Southeast Asian Studies for the invitation. Australia has had a long and productive association with the Institute over many years. I also want to thank the Government of Singapore for its support for the lecture and, especially, Deputy Prime Minister Tony Tan for his courtesy to me in chairing it today. This is my third visit to Singapore as Prime Minister and it is always a pleasure to come here. There is an energy about Singapore which flows from people who are conscious of the inevitability of change and who are trying to shape that change for the better. I admire that Singapore, perhaps more than any other place in the world, teaches the vital lesson that we cannot prepare for the future until we know what we want it to be. This has been the distinctive principle guiding Singapore’s modern history: the same principle that some time ago began to guide Australia through the present era. When you face things and begin to do what must be done, you liberate ideas

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about what can be done. This great era of change has meant that as we approach the centenary of Australia’s nationhood a new, stronger and clearer vision of our future has begun to emerge. And it now goes without saying that much of the future we see—we see in the Asia-Pacific. The vision of a future for the region, and of the potential for our relationship to serve our separate and mutual interests, has been the inspiration and the guide for the joint efforts between Australia and Singapore over the past four years, and it is the reason why I have so much enjoyed working with Prime Minister Goh and his colleagues on issues like APEC and regional security. And although this lecture is not about our bilateral relationship, I want to begin by saying how pleased I am that the Prime Minister and I were able this morning to issue a major declaration on the Australia-Singapore partnership which will help ensure that this old relationship between us remains relevant and creative into the next century. And it is an old relationship. In Singapore, of all places, the provenance of Australia’s engagement with modern Southeast Asia is clear. Indeed, for the generation of Australians before mine, Singapore was interchangeable with what we then referred to as the Far East, although it was really the Near Northwest. Singapore’s history and Australia’s have been closely linked throughout this century. You need only go to the cemetery at Kranji where so many Australians are buried. After Singapore’s independence, the links between us grew through our partnership in the Five-Power Defence Arrangements and the bilateral defence ties which emerged from it. Today, our bilateral defence co-operation is extensive. The Singapore Armed Forces train in Australia and the RSAF has established a Flying School at Pearce Air Force Base in Western Australia. Our close engagement was strengthened through the people-to-­people links established under the Colombo Plan and since. Last year nearly 10,000 Singaporeans studied in Australia. And, of course, our growing trade and investment ties underpin an economic relationship which is important to both of us. Singapore and Australia are consistently among each other’s top ten trading partners. We have also developed a strong habit of co-operation on regional issues where our views so often coincide—APEC most recently, of course, but earlier with ASEAN, with which Australia was the first country to establish a formal dialogue relationship. Now in the declaration we have signed today we have affirmed the strength of our partnership and established a framework to support our continuing co-operation in all these areas. For me this partnership is especially important because, as Prime Minister, one of my central goals has been to see that Australia is better integrated with the rapidly changing region around us, that we have an opportunity to play a role in

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shaping it and are better prepared to meet whatever challenges the 21st century may offer. I have said more than once before—if Australia does not succeed in Asia it will not succeed anywhere. But success clearly requires more than the traditional tools of foreign policy. For Australia, as I suspect for most countries, our external relations can no longer exist in a separate box marked “foreign relations” or “foreign policy”—largely unconnected with the domestic policies which are needed to build a society which is both open and competitive and cohesive and strong. That was why it was imperative for Australia to dismantle the ring fence of tariffs and protection to open our economy to competitive breezes, and in so doing, lift our gaze to the world. We deregulated our capital and exchange rate markets and opened them to the world for the same reasons. As a result, in the decade to 1994/95, Australia’s export to GDP ratio increased from 14 per cent to 21.5 per cent. The level of direct foreign investment in Australia has increased eight fold and the level of direct Australian investment abroad has increased seven fold. It was all there, waiting to be unlocked. It is also why it has been necessary for us to address other challenges thrown up both by our history and the imperatives of the future. One of those has been the injustice done to Australia’s indigenous people, not least through the lingering pretence that before Europeans arrived on our continent it was a terra nullius— a land of nobody. We have undertaken a huge effort in social justice to see that historic wrong put right. I think it will be equally good for our long-term national cohesion and sense of ourselves if we make the leap to a republic. The time has come for an Australian, rather than the monarch of Great Britain, to be our head of state. I want Australia to be, as Singapore is, a Republic—and a Republic within the Commonwealth. The change will not make us what we want to be, but it will help describe us to ourselves and to others. It will help define our complex identity, help articulate our ambitions and values, help fuse the links between the old Australia and the new. Much the same desire to preserve Australia’s egalitarian values and traditions and maintain cohesion and harmony led us, as we made the structural changes to intensify our efforts to strengthen Australia’s social fabric. Our economic effort has been matched by an effort to develop sophisticated social programmes which deliver equity and encourage tolerance. The path we have taken leads towards a modern multicultural Australian social democracy, one that is dynamic economically and socially fair. All this change, economic, social and political, has set Australia up for the future. It is also divining our path in the Asia-Pacific.

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I have always said that the nature of Australia’s relationship with Asia has been long and for the most part honourable. But Australian Governments and the Australian people have recently come to recognize the implications of living in and with the region which Gareth Evans describes as the East Asian hemisphere. Australia’s closer relationship with Asia is partly driven by economic realities, of course. Already two-thirds of our trade is with the APEC region, more than half of it with East Asia. But our engagement with the region around us is not just commercial. And it is not just the result of some crude economic determinism. It goes—and must go—much deeper than that. It goes to a genuine desire for partnership and real involvement. For example, it has changed our thinking about our defence—on the basis that Australia needs to seek its security in Asia rather than from Asia. That is why we have so strongly supported the development of the ASEAN Regional Forum. It is why we have worked hard to develop strong defence links with our neighbours like Singapore and Malaysia, as well as new partnerships with countries like the Philippines and Vietnam. And it is why we recently signed with Indonesia a new Security Agreement which builds on the development of our bilateral defence links. This agreement sets out formally for the first time the reality that neither Australia nor Indonesia threatens the other and that we have common interests in the stability and security of the region around us. And it goes further than that, to make it clear that we are prepared to consult if those interests are challenged. The agreement marks a major step not only in Australia’s relations with our largest neighbour but also in the outlook for regional stability. It expresses a common understanding that we are stronger together and that we should affirm a common interest. Similarly, Australia’s engagement with the region extends much more freely to people-to-people contacts. Language and capacity in language is central to this. Accordingly, the Federal and state governments have committed themselves to a language strategy which aims to have by 2006 sixty per cent of all Australian schoolchildren from years three to ten studying one of four Asian languages— Indonesian, Japanese, Mandarin Chinese or Korean. And this change is already well underway. Already more people are studying Japanese in Australia than in any other country apart from China, Korea and Japan itself. And more schoolchildren from Australia spend time studying in Japanese schools than children from any other country. At the same time there can be no doubt that the course of closer engagement with Asia on which Australia is now embarked is having its impact on our culture and outlook as well.

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The nearly 40 per cent of immigrants to Australia who now come from Asia are playing their part in changing the way Australians think about the world and their country; in just the same way that earlier waves of immigrants, ever since 1788, successively shaped and re-shaped Australia’s sense of itself. And, it goes without saying, Australia is shaping them and their descendants as it shaped those who have come before. I don’t want to enter the debate about “Asian values” here but I do want to say something about Australian values. Although it is often described as a young country, Australia is one of the oldest democracies in the world. We had universal suffrage and secret ballots well before the United Kingdom and before almost any other country. The democracy is old and runs deep. Our sense of ourselves is imprinted with ideas of equality and equity—among them, the conviction that all members of our society not only have a right but a duty to have their say. That is why voting in Australia is compulsory. And despite deep imperfections in our record, including the racism inherent in our immigration policies until a quarter of a century ago, Australia has also been a very tolerant community, absorbing settlers from all parts of the world with remarkably little tension. In many—perhaps most—respects, the values I believe in and most Australians believe in are precisely those that are often referred to in this debate as “Asian”. The importance of family, the benefit of education, the need for order and public accountability, the inherent value of work—most Australians I know would describe these as Australian values. Indeed the word most Australians would very likely choose to describe as the core Australian value is “mateship”—and “mateship” expresses an ethic of communitarianism and mutual obligation which in other contexts is called “Asian”. In other areas—respect for authority, the importance of “face” and the preference for harmony and the avoidance of conflict—the differences between Australia and some other Asian countries is clearer, but the degree to which this is a debate about values, as opposed to cultural practices, is less clear. More important over time, I think, will be where we stand on the larger debate— not about “Asian” or Western values, but about values themselves and what the role of government should be in shaping them. Fundamentally it will be a debate between those who believe the main role of government is to get out of the way and let the market rip and those who consider that government—provided it is operating with the consent of the governed—has a role in shaping and expressing the values of our community. Defined this way, the debate cuts across Asian and Western societies alike. I have never believed that Australians should describe themselves as Asians or that Australia is or can become part of Asia.

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We are the only nation in the world to inhabit a continent of our own. I have said more than once before, we can’t be Asian any more than we can be European or North American or African. We can only be Australian and can only relate to our neighbours as Australians. Our history, including the 40,000 year history of our indigenous people and the histories of the 150 different cultures from which Australians derive, make us unique in the world. Our somewhat unlikely history and geography should not change this fundamental conviction and this irrevocable commitment—that Australia is and must always be an integral part of the region around us. Let me turn now from Australia to the issues of this wider region, and to the question of regionalism itself. I want to use this lecture to say some things about the region, about what regionalism means in the post-Cold War world, and especially for the Asia-Pacific. Finally, I want to look ahead at some of the issues we will have to address in the next decade or so. The fact that we describe the present international scene as the post-Cold War world—in terms of what came before us rather than what we have become— underlines how fluid the international environment is at present and how uncertain we are about the shape it is taking. We are living through the greatest period of change in the world since the emergence of the nation state, and we have a very limited time in which to shape the new international structures before nations and institutions settle into new grooves from which it will be very difficult to dislodge them. What we—I mean all of us—do now will lay the foundations for prosperity and security in the 21st century just as fatefully and inevitably as the actions of Europe’s leaders did a century ago. And unless we get it right now, our failure might be no less calamitous than theirs. When the Berlin Wall came down, when President Yeltsin and his supporters later stood on the tanks outside the White House in Moscow to defy the coup plotters and brought down the Soviet Union, they also brought down the post-war international order. The expectations of a new international order, based on a concert of powers operating to a large extent through a revived and renewed United Nations, have not been fulfilled. In part, I believe, this is because our global international structures are incomplete and immature. They still reflect too directly the world into which most of them emerged at the end of the 1940s. Japan and Germany, the world’s second and third largest economies are selfconstrained from playing their full part in the international system.

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Russia will always be one of the world’s great powers, but now and over the next few years it will be preoccupied with the consequences of the end of the Soviet Union. China is emerging into the world, and the way that happens will dominate the Asia-Pacific like no other issue over the coming decades. But for the time being China, too, is largely preoccupied with domestic issues and especially developing its economy. Meanwhile, in the United States, the world’s only remaining superpower, the struggle goes on as it has since the foundation of the Republic—between those who believe the United States should avoid foreign entanglements and those who want it to be engaged with the wider world. This, as always in the United States, is not only a debate among the politicians and the political elite. Its outcome depends, in the end, on what the American people think, and we should not be surprised if it is harder to engage them with foreign policy now than it was for the high moral struggle of the Cold War. At another level, too, global structures are often too large and rigid to permit productive discussion. The sheer weight of numbers in the United Nations, for example, means that complex negotiations often have to be conducted through increasingly out-of-date groupings which often fail to reflect current economic and political realities. Australia can speak with feeling on this matter. For United Nations purposes, we are relegated to the category of “others”, as part of a Western European and Others grouping. It is not just the absurdity of this classification which irritates but the practical consequences. More and more clearly, Australia’s interests cannot be properly pursued in such a framework. It is a structure which emphasizes North/South divisions. This tends to generate—on the side of the North—a strongly Eurocentric perspective on global problems. But the “South” is where Australia’s neighbours are, and it is with the “South” that our interests often coincide rather than diverge. For all these reasons, the present global structure is inadequate. This is not an unchangeable state of affairs. There is much that can be done about it. For example, Australia supports permanent membership of the United Nations Security Council for both Germany and Japan, a position for which Japan’s excellent chairmanship of the Osaka APEC meeting further justified it. And we believe it is essential to encourage the United States to play an active and engaged role in the world—not just in the Asia-Pacific, but globally. We hope that such outside encouragement—like the joint declaration which Singapore and Australia issued this morning—will strengthen the position of those Americans who share our conviction that US interests, as well as ours, are

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advanced by their continuing active engagement in East Asia. Nothing is more likely to generate security tensions in this part of the world, or threaten the region’s continuing economic and social development, than uncertainty in countries like Japan and Korea about the continued US security commitment. One of the main reasons behind Australia’s support for APEC has been our conviction that closer American economic engagement in Asia and the Pacific will reinforce the essential political underpinnings of its security relationships. The other great uncertainty about the international situation in the coming decades, as I said earlier, is China. The economic reforms introduced by Deng Xiaoping and President Jiang Zemin have brought profound benefits for the international community as a whole, not just for China. There have been few more significant developments in the past half century. I do not believe China is an expansionist or aggressive power, or that it is likely to become so. It is an essential and central part of the regional community. However, the sheer size of its population and economy raises questions for the rest of us about how we deal with it. For my part, I think there is little doubt about what the broad approach should be. Above all, the answer is to ensure that China is engaged comprehensively in global and regional institutions. This has been a major aim of APEC and the ASEAN Regional Forum—to engage China, not to contain it or isolate it. But the answer also lies in China’s neighbours making their own way in the region and taking responsibility for their own future. It is the responsibility of all of us to build what ASEAN calls our national and regional resilience: a region which is self-confident and co-operative, rather than apprehensive and self-absorbed, will be better for all of us—including China. And, in part, that means building institutions and structures which engage all the countries of the region in a dialogue about the future. So, again, we are brought back from the global to the regional. It is a sign of the times—the most important sign of the times, I believe. For the time being, at least, the role of the great powers in shaping the development of the international system is less dominant than it might otherwise be. And this, as I said earlier, is happening at the very time when we are moulding the institutions and processes and ways of resolving problems which will form the pattern of the next period in international relations. I think that one outcome of this situation is that regionalism and regional approaches will come into their own as never before. This century was dominated by global struggles. Imperialism and later Communism were of their nature global. Two world wars and the ideological struggle of the Cold War taught us to structure our ways of thinking about the world in essentially global terms.

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Regional approaches were usually subordinated to this broader competition. The multilateral defence pacts of the 1950s were an example. Even the development of the EEC was driven in part by the need to strengthen Western Europe economically and politically against the Soviet threat. But with the breakdown of the bipolar structure of the Cold War, regional problems no longer automatically form a metaphor for a wider global and ideological struggle as they did in Afghanistan and Angola and Central America. Instead, it is easier now to address regional issues on their own terms. And a degree of flexibility is possible in regional institution building which has never been possible before. Vietnam’s membership of ASEAN and the common membership of APEC by the three Chinese economies are important examples. So, for all these reasons, I think that in the immediate future regionalism offers the capacity to generate new ideas, subsume old enmities and provide new ways of doing things. It can let the light in—in a way which global structures are too large or unwieldy or rigid to do. This, in turn, means that the opportunities for small and medium sized countries to shape the international agenda are greater than they have ever been in the past. So long as they know what they want and where they are heading. I am sure that one of the reasons for the success of the Asia-Pacific in global terms is the creative way in which regionalism has been embraced in this part of the world. It is not a new phenomenon, of course. ASEAN has been an enormous success in transferring the tensions of the confrontation era in Southeast Asia into a habit of working together. But the next burst of regionalism, including within ASEAN, is growing in range and ambition. APEC has made huge strides in a few short years. When I first proposed the idea of meetings of APEC leaders in 1992, I did so because I was convinced that unless APEC could begin to draw upon the executive authority of national leaders it would remain a modest and essentially peripheral organization, making progress only at the pace of its slowest officials. It is leaders who have the political authority to commit a country to a certain course in pursuit of certain outcomes, and leaders who are charged with the responsibility to recognize the bigger picture and the bigger opportunities that come with it. Once leaders were involved in the development and formulation of policy in APEC, a different dynamic evolved and the pace of action quickened. Most leaders believe that any event in which they participate should deliver a good result: so, from Seattle on, the pressure was on to formulate a strategy and then drive it.

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At the same time, once the leaders met—and don’t forget that the Seattle meeting was the first time leaders from across the Asia-Pacific had ever met—the pressing reality of our interdependence generated a new momentum for co-operation. The very feeling of co-operation generated even more goodwill. This happened in Seattle, where we set out the vision of an Asia-Pacific community. Then the following year in Indonesia, President Soeharto gave this vision a concrete form in the Bogor Declaration’s historic commitment to free trade and investment in the region by 2010 and 2020. And finally, last year, in Osaka, where we put together the plan of action for reaching our objective as well as offering specific down payments on our Bogor commitments. APEC was conceived as an organization of economies and it is vital that its main function continues to be economic. If the East Asian economic miracle is not to run out of steam—to end up, as some European commentators wishfully predict, as a short-term and unsustainable phenomenon—it is essential that the trade and investment arteries within the region are kept open. It is essential that we do all we can to help the activities of our business people, who make the trade happen. So the pressure on APEC will not diminish. Every meeting, every year has to make progress. Later this year in Subic Bay we will need to take the first steps to implement our individual plans of action. Such progress is critical not only for the Asia-Pacific’s continuing economic growth, but for its security as well. Because, although APEC’s purpose is economic, it will have, like ASEAN before it, important political and strategic consequences. It is already having them. No one who has participated in those three successive leaders meetings, or in the Ministerial meetings, can fail to notice the increasing ease with which leaders representing half the world’s production now deal with each other. And no one can be blind to the amount of business which is now conducted in the corridors and related bilateral meetings. APEC is in many critical respects a new model for regional co­operation and I believe it shows the way forward. It is “new” in at least three ways. First, its development has been driven as much by the small and medium powers as by the large ones—a fact that has been one of its strengths given the global situation I described earlier. Of course President Clinton’s decision to invite APEC leaders to the informal meeting in Seattle was critical, as was the support which the Japanese Government and Prime Minister Murayama gave the free trade agenda during their chairmanship of the Osaka meeting. But ideas and energy have come just as powerfully from economies like Korea and Singapore and Indonesia and Australia. In other words, the sense of ownership and participation is broadly spread throughout the organization. APEC gives the smaller and middle sized countries of the region a very direct say in shaping its future.

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Second, APEC is possibly the best practical example the world has yet seen of co-operation between countries at different levels of development. Developing countries are not just participants, they are at the core of the organization’s activities. President Soeharto’s chairmanship of the Bogor meeting was a critical moment for APEC, but it was also an example to the world of the new sort of partnership between developed and developing countries which will be essential as the process of globalization and internationalization proceeds. The world’s fifteen most dynamic trading nations between 1980 and 1993 were all developing countries. Third, APEC has offered an approach different from the formal structures and legalisms of other regional approaches like the European Union or NAFTA or, at the global level, from the Uruguay Round and the WTO. Unlike earlier models of trade liberalization, APEC first announced its end point—that is, free trade and investment by 2010 or 2020—and left the getting-there to a process of concerted liberalization between members rather than to direct negotiation. This approach is not only new, it has aroused considerable scepticism, especially from those whose experience of international trade negotiations has been in the heavyweight boxing ring of the Uruguay Round and its predecessors. I can understand this scepticism, but I am also convinced it is misplaced. The drag out/knock down approach to trade negotiations has surely reached the end of its useful life in an environment where almost every country in the world, rather than just a handful of industrialized countries, has a stake in global trade. Few even among the hardiest, trade negotiators can relish the idea of another seven year Round conducted like the last one. And one where the real offers, the real impetus to liberalization, were too often left in the negotiator’s pocket to take back home. So I remain an optimist that APEC will be able to deliver on the promises it has made, and that, in doing so, it will offer an example which will be useful to the rest of the world. Drawing on these experiences with APEC, as well as other regional organizations, it is becoming possible to draw up a number of rules for the new regionalism in the Asia-Pacific. Let me try to enumerate them. The first rule: there are no rules. Or, at least there are no fixed approaches and as far as possible we should avoid the nightmare of a bureaucratic and legalistic approach to what we are doing. The Asia-Pacific needs to be a small “c” community if it is to succeed. For the approach to work, however, a high degree of trust will be required—not a commodity which is thought to flow freely through international discourse. The best way of encouraging trust—as ASEAN has shown and APEC will—is through close personal contact between leaders and Ministers and with officials and, beyond that, their counterparts in business.

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As 20th century European history vividly testifies, contact does not rule out conflict—but it is certainly impossible to develop trust between countries and cultures without it. The second rule is that we need to avoid closing Asia and the Pacific off to the outside world. My argument in favour of regionalism is not an argument against global multilateral approaches when these are most appropriate, as they often will be. Indeed, they are often essential. A comprehensive test ban treaty or a chemical weapons convention must be negotiated globally. And although intra-regional trade in East Asia has grown much more rapidly and is of greater volume than extra-regional trade, we all have a deep and growing interest in the world trading system. We need a regional approach which can be reconciled with the development and strengthening of that system. This is one of the challenges for the first WTO Ministerial meeting, when it meets, very appropriately, in Singapore later this year. The final rule is that the region must not become complacent with success. The challenges to economic growth and to security in this part of the world remain serious. We will only have a chance of overcoming them if we confront them directly and with a clear-eyed sense of what they mean for us. Let me end by speaking in particular about two of those challenges which I believe should be placed more prominently on the agenda of regionalism in Asia and the Pacific. The first of them is the environment. Sooner than many people expect, environmental problems will begin to affect not only the degree to which people in Asia and the rest of the APEC region can enjoy the fruits of recent economic growth, but, more fundamentally, will begin to impede the extent of that growth. Demand for food and energy in the region will grow disproportionately as standards of living rise and expectations increase. China’s demand for food, for example, is growing so fast that its shortage within fifteen years could be three to six times Australia’s total annual wheat production; just feeding chickens to satisfy China’s demand by 2000 will take more grain than Australia currently produces. World food production will have to increase by more than 75 per cent over the next thirty years if global food security is to be assured. But significant questions exist about whether the green revolution—responsible for 90 per cent of the great growth in food production over recent decades—can be sustained, and whether we can afford environmentally to sustain it. Heavy use of fertilizers, irrigation and pesticides has caused major problems in many countries. Soil erosion, salinity and pollution of water resources increasingly accompany pressure for greater agricultural productivity. The region’s ability to sustain high levels of economic growth will also depend on its capacity to meet the growing demand for energy. By 2010, electricity demand

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across the APEC economies is expected to increase by between 50 per cent and 80 per cent. East Asia’s demand for energy is doubling every twelve years, compared with twenty-eight years for the world as a whole. Few people now question the judgement that we are seeing a discernible human influence on global climate. While to date developed countries have contributed disproportionately to this problem, by the year 2000 developing countries are expected to contribute more than half of global CO2 emissions. And much of this will be in Asia. Today’s global population is expected to grow by 2.6 billion—45 per cent—by the year 2025. Ninety per cent of this increase will take place in developing countries and 90 per cent of this will be urban. By the end of the century—for the first time in history—more people will live in cities and towns than in rural areas. The absolute growth of urban environments will be greatest in Asia. The United Nations estimates that cities in the region will gain 500 million inhabitants in the next ten years. By 2025 the Asian region is expected to be predominantly urban. This demographic shift will put a huge strain on basic services such as water, sanitation and shelter. Only half the urban populations in Asia currently have access to water supplies and 42 per cent to sanitation. The growth of urbanization is being accompanied by a disproportionate growth in the incidence of poverty in urban areas. Across the Asia-Pacific region, some 25–35 per cent of urban dwellers are thought to be squatters. To compound the problem, marginalized urban dwellers often live in ecologically vulnerable areas. The environment has become a sensitive issue in Asia because environmental arguments have sometimes been used as a disguised form of protectionism by developed countries. And developing countries have understandably resented being told by developed countries that they should not do what developed countries did— namely, pass through their period of industrialization without having to consider the impact on the environment. But we cannot deny the reality of the environmental challenges facing the region. We must see protection of the environment in the Asia-Pacific not as an alternative to economic growth, but as the only thing that will ensure its continuation. Sustainable development was neatly defined by the Brundtland Commission on the Environment and Development as “meeting the needs of the present without compromising the ability of future generations to meet their own needs”. At its heart this is—or should be—a very Asian issue. Because if there is one characteristic which has underpinned Asia’s recent economic growth it has been the willingness of current generations to work for the future good of the community and postpone immediate reward. So the idea of inter-generational equity—a key to the environment debate—is very Asian.

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With the environment, as with economic liberalization, we will get further in this part of the world if we use a flexible and co-operative approach which takes account of the particular development needs of all the countries in the region. With its mix of developed and developing country members which have already demonstrated the political will to co-operatively tackle some difficult issues, APEC may help us find a way through the developing/developed country divide which has hindered progress on environment issues at the international level. The advantage we have is a set of goals and aspirations shared by both developed and developing countries. A regional approach to environmental management will also help us to respond effectively in international forums to European approaches which, while appropriate to their economic and environmental circumstances, too often ignore the environmental differences in the Asia-Pacific and the different demands of industrializing and fast growing economies. It is important that we work together to ensure outcomes on international negotiations reflect not only northern but southern hemisphere realities. APEC has already adopted framework principles for integrating environmental considerations into its overall programme and into the activities of its working groups and committees. This integrated approach is essential if environmental issues are not to be marginalized. This was the thinking of the leaders at Osaka when they decided on joint action to deal with the demand for food and energy and the pressures that will be put on the environment. The region’s economic expansion and accompanying high rates of investment are taking place at a point in history when energy efficient technologies and processes are widely available. This presents a unique opportunity to get it right the first time—to put in place up-to-date technologies that use materials and energy efficiently, minimize emissions, improve product quality and reduce costs. Developing APEC economies currently use 50 per cent more energy to produce a unit of GDP than developed APEC economies. So, clearly, the potential gains from improving efficiency are very substantial. And significantly, if the region doesn’t take up this opportunity it will face not only an investment bill exceeding US$1.6 trillion to build the infrastructure for its growth in energy demand by 2010, but the additional costs of fixing avoidable environmental damage. Australia is committed to working with countries in the region to avoid this— for example, by addressing emissions, including through the use of energy-efficient or renewable energy technologies. One area with considerable potential is the replacement of fossil fuel-based power with photovoltaic (solar) energy systems. We are already co-operating with Indonesia on solar energy and the feasibility of

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using Australia’s leading edge clean coal technology and HI Smelt technology for its future steel plants. Integrated management of our natural and urban environments will become more important as urbanization intensifies, particularly where hazardous and industrial wastes have the potential to impact on marine and coastal environments and fisheries. Managing urbanization in a way which is ecologically and socially sustainable is one of the key challenges confronting the region. If we succeed, we will see continued improvements in our quality of life. If we fail, we risk slowing economic growth and having to divert resources to deal with waste and pollution, increased vulnerability to natural disasters and, eventually, social unrest. In preparation for the UN’s Habitat II conference in June, Australia is looking at how we can better utilize our aid programme to address the challenges of urbanization. Key issues include low cost housing, assistance for squatter settlements, land-use planning, human resource development, support for micro-enterprises, and infrastructure development. We need in general to have a much better sense of what is happening to our land cover. The preparation of Australia’s first National Greenhouse Gas Inventory showed that we were still clearing substantial areas of native vegetation for agriculture, and thus contributing significantly to our greenhouse gas emissions. This came as a surprise. It would not have, had we been monitoring overall changes in land coverage. We have now embarked on a major project to monitor agricultural land cover change using remote sensed data from the Landsat satellite. As far as I know, it is the biggest project of its type undertaken anywhere. The data, including maps, resulting from this project will improve our greenhouse gas emission calculations, providing a basis for better catchment planning, dryland salinity management and conservation of biodiversity. This is something that should be done region-wide if we are to improve the quality of global data and provide a more accurate and comprehensive information base for global policy-making on climate change. No Australian Prime Minister is going to claim that getting the balance right between the immediate needs of economic growth and the longer-term requirements of the environment is easy or painless. We have been wrestling with it in many areas, most recently in our forest policy. But it has to be done and it will be easier if we can co-operate regionally—not just because so many environmental problems have no regard to national borders, but because we can make greater progress if we learn from and draw on the experiences of our neighbours. A second challenge the region faces is in meeting its human resource development needs. President Ramos has already spoken of his hope that APEC will address this challenge directly during the year of his chairmanship. The Asia-Pacific already faces serious shortages of skilled workers who are vital for economies that are moving into export-oriented manufacturing and service industries.

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Thailand, for example, produces only half of the 10,000 engineers it requires each year. Malaysia estimates it has a shortage of 9,000 engineers and 18,000 engineering assistants. China needs to find 2 million technically qualified workers each year, but produces only 1 million. Many APEC Governments are already addressing these problems individually. Malaysia, for example, is reviewing its entire education structure. And Hong Kong and Singapore as well as Malaysia are giving higher priority to vocational training in secondary schools. Australia, too, has dramatically increased its investment in education. More than three quarters of young Australians now complete twelve years of schooling, and since 1983 we have increased the number of students at university by 70 per cent. We are linking education much more closely to industry through a new nationwide vocational education and training system. A regional approach can help strengthen what each of us is doing nationally. We can make the temporary movement of professional people easier. We can strengthen existing exchange schemes and cross-accreditation arrangements for students in different countries. We can improve the mutual recognition of professional qualifications, and Australia has proposed the establishment of an APEC regional skills centre to facilitate this. More fundamentally, the resources invested in education and training will need to grow throughout the region. And this will be easier if we can encourage cross investment in education and training among APEC members, as Malaysia is doing now. As I noted earlier, I am quite convinced that we are living through the period of the most fundamental change in the world for the past century and a half, and possibly longer. We may live at the end of the millennium, but we do not live at the end of history. And that history—the world in the 21st century: the structure and shape of its international system, the nature of its conflicts, the forms of its co-operation—is being decided now. And here.

Question and Answer Session Question: I’m Chia Siow Yue, economist with the National University of Singapore. I would like to ask Mr Keating two very simple questions. One, you make constant reference to the region. As Australia’s Prime Minister, what is the geographical boundary of this region you are referring to? Two, you’re a very strong advocate and of course

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initiator of APEC, yet in your lecture on regionalism you were singularly silent on EAEC, Dr Mahathir’s proposal, as well as on the Indian Ocean Association. In the case of the EAEC, I understand many Australians are averse to it but in the case of the Indian Ocean Association, I understand that many Australians are strong advocates. Could I have your views, please? Thank you. Keating: I think there will be all sorts of definitions of the “region”. I mentioned in my speech my Foreign Minister’s definition which is the East Asian hemisphere, from East Asia and through Australasia. Perhaps you could call it the Pacific Rim, too. One thing we are all clear about, I think, is that it’s good for us to have the largest economy, the largest liberal democracy in the world, economically and strategically engaged in East Asia and that’s the United States. The United States’ strategic protection of Japan and Korea which is embodied in their treaties remains more convincing to everyone in the region if it is underpinned by a higher level of United States’ economic engagement. This is perhaps the distinguishing feature between the EAEC proposal and APEC. It is also a fact that the United States represents the largest market for the greater number of the developing countries of East Asia. It’s the largest market, and it’s the largest strategic power and the largest strategic influence. So APEC, as distinct from East Asia, includes, of course, the United States which has a boundary on the Pacific Ocean. It’s a trans-Pacific body and the I think that’s the distinguishing feature between the two. As to the Indian Ocean Association, I think some good may come from some clarity about common interests in Indian Ocean trade patterns and trading trends, or even trading facilities. But I don’t see the Indian Ocean as being part of APEC or the APEC region which is distinguished by the coincidence of its trade sinews and its strategic alliances. The Indian Ocean is altogether different. Question: Lee Yuan, former APEC-EPG member. Mr Keating, Sir, could you please give a definitive definition of APEC’s commitment to open regionalism? Does this mean that APEC would extend its free trade obligations to others on a reciprocal basis, on a unilateral MFN basis? Does it mean a simultaneous lowering of its barriers towards non­members as it lowers its barriers towards members? Keating: You might recall I said in my address that one of the rules should be that we don’t close the Asia-Pacific area off, that we don’t get complacent about it, that we are not smug about it, and that we should engage with the rest of the world. I extol the virtues

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of the WTO and the multilateral trading arrangements that came from the Uruguay Round. That is the position I hold fairly firmly. The other thing is that Australia did some substantial economic modelling on APEC to examine who receives the greater benefits. The benefits total, we believe, up to US$1 trillion of additional wealth from the APEC reforms. That’s the Australian and Korean economies together in additional value. Obviously some countries will secure more of that trillion dollars of benefit than others, but one thing that the study did reveal is that there is a very minimal free-rider effect from countries outside the Asia-Pacific. In other words, the notion that the European Union, for instance, would in some way be a free-rider on the reforms in APEC was really not borne out by the study. This reinforces in my mind the view that the issue of whether APEC is a preferential or MFN area is really not much of an issue at all. Even if we were to make it a preferential area—indeed, under the GATT rules, it was a free trade area— each individual country could independently decide whether it wanted to extend the preference anyway. I think more likely, we will all decide that we do want it to be an open system but of course this is a matter of debate in the United States. I think if the United States is convinced that there is no free-rider effect, but a much more harmonious world effect, they’ll probably share the view that I would take, and I suspect your Prime Minister takes, about where we see APEC and free trade arrangements in the Pacific going. Question: Robin Ramcharan, Visiting Associate with Institute of Southeast Asian Studies. It is quite clear that economically and geopolitically, Australia is part of Asia, yet historically and culturally, it has been affiliated with the Anglo-Saxon world. To what extent do you see this as a hindrance or a handicap on your efforts at integrating within Asia? Keating: I don’t see it as a hindrance or a handicap. The point I made in my speech is that Australia is unique. Australia is unique in many ways. For a start, as a nation, let me repeat the point, we share a border with nobody. The continent is geologically old. Australia is a very old place. Evidence has been backed by the fact that the indigenous civilization has been there for 40,000 years. The important thing for Australians of European origin or Asian origin is that they understand that it is imperative that to become part of the region—let’s call it that rather than Asia—it has to come to terms first with its own indigenes so that we are at peace with ourselves, that we move together forward as a nation, and that the tolerance and diversity I mentioned in the text is the defining quality that marks out the Australian nation as a unique nation. If it is unique, therefore, why would it want to be Asian? It would have a crisis of

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confidence if it wanted to be any other than what it is, and whatever else Australia has, it has no crisis of confidence. What we want to be is part of the region. We don’t want to be Asian though of course over half of our intake in migration now comes from Asia and the culture of Asia is having a very large impact within Australia and upon Australia. But the fact that 75 per cent of our exports go to the Asia-Pacific area underlines that we are integrated with the region and that’s what we want to be. As I said, it would be foolish for us to describe ourselves as Asians because we are not. Whether we are part of Asia or the Asia-Pacific is a debating point. Whether we are part of the East Asian hemisphere is another debating point. But we are not European, we are not African, we are Australians. I believe we can play not just an active role in this region but a very constructive and supportive role which will enhance the quality of life of people in the region—Asian people in the region as well as people who have come from Europe. Question: I’m Dr Philip Eldridge, currently Research Fellow in Australia-Southeast Asia Relations at ISEAS. The question is about human rights. How do you see, Mr Keating, the role of regional organizations, in particular, APEC which is the one regional organization Australia is part of, in promoting dialogue about human rights? What we mean by human rights, I guess, is another question. Keating: I think it is another question for many people. I made a point in the speech that Australia is one of the oldest democracies in the world. We had the universal suffrage in the secret ballot before the United Kingdom for instance. Egalitarianism and equity have mattered in our country, and the rights of individuals have mattered. I think the reason for Australian tolerance of a very multi-cultural population, or the degree of tolerance within that population, comes from a deep sense of democracy which Australia has. That sense of democracy gives everybody a lot of intellectual space. Therefore, human rights, the liberties, and all the issues of the social contract have always been in our mind. And they always will be. That’s not to say that we can impose our values on others, but invariably whenever we think human rights are being violated, we say so. And when they are perpetually or consistently violated, we keep on saying so. But I think we know that dialogue is the answer, and economic growth and prosperity generally will liberate many societies or individuals oppressed in this way. It is impossible to grow economies and societies without growing their politics as well. It’s not possible to liberate them and yet constrain liberty, freedom and the mind. Economic growth and prosperity have been great liberalizing forces in breaking down ideology and

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lifting opportunities and at the same time, one hopes adding a premium on human rights and good values. These are the things we have been supporting as well as forthrightly putting a view whenever we think those human rights are violated. I’m often asked, “Is the Australian sense of democracy and liberty a handicap in dealing with Asia?” I never believe that it is because I think Australia can contribute a lot to the region. It is a very democratic state and people’s liberties are very obviously clear. Taking that sort of inheritance and tradition to the region, I think it must be a good thing. Question: Mr Keating, Sir, I’m Jack Cook, Humanities Department, Victoria Junior College, Singapore. I would like to ask you about exchange rates. It’s not been mentioned at all this afternoon. A number of impediments have been offered that might stand in the way of further APEC, Pacific Rim, or whatever developments in the next twenty or even thirty years. European experience suggested when a number of other problems have been cleared out of the way, currency then starts to rise towards the top of the list as being something which simply stays in the way. Do you feel we might see any kind of developments on currency harmonization in this region over the next even ten or fifteen years? If we do see a regional unit, I might dare to suggest a name for it—the regional unit of course will be called a RU. Thank you. Keating: A ru. Maybe hooroo? Who can say in ten to fifteen years, what will happen in these things? I doubt very much that any of us will ever be in a position of being able to design something which provides so-called stability to exchange rates. Since the days of fixed exchange rates broke down in the 1970s, we have now got a very large flux of international markets and flows of funds. Where each country’s characteristics are different, where they are assessed differently, and where their levels of wealth and prosperity are different, the value of their currency will reflect that. In the reflection of it, it will adjust the parameters within the economy as well as those outside of it. So I’m not one for managed exchange rates. I don’t believe in them. And all that happened in the Plaza Accords, which we often hear about, in the 1980s was a lucky break at the end of a long period when a correction was overdue, and if the Plaza Accord partners today sought to do what they did then, I think the markets would trample on them. If you run a good country with good policies, you can always stand in the market-place and get a fair price on your currency. It might be a bit overdone some days, a bit underdone on others, but by and large, the fundamentals will come out. And I think tricky management by central bankers trying to pick the

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rate has been the cause of much of the world’s problems in the post-War years. It’s a habit we have all kicked, and I think should stay kicked. Question: Good afternoon, Prime Minister Keating. My name is Lee Kam Chi, the MD of Innovation Pharmaceuticals in Singapore. Earlier on, you mentioned there is significant increase of Asian migrants into Australia. I think it has been well documented that that has caused some problems and some Australians have been rather upset about this trend. Does this worry your government? Will you please comment on what is your government going to do about that? Thank you very much. Keating: I don’t want to correct your assumptions in any strident way but let me assure you, there is very little tension or adverse comment on Australia about the make-up of the migration intake. Half of it now is from Asia, and the settlement of people in Australia is as harmonious now as it was five years ago or ten years ago or earlier. In fact, I think it’s more harmonious now than perhaps it has ever been. And Australia is singularly devoid of racial problems, be it around Asians or Muslims or any other categories of persons. By and large, it’s not an issue there. The issue in Australia, if ever there is an issue, is just on a population basis—how large the migration programme should be, not what its composition is. I represent a constituency which has a very cosmopolitan make-up and I have a very good feel of these issues in Australia. I can assure you that there is almost complete equanimity about the character of the cosmopolitan make-up of the country. I think people are very happy with Asian migration to Australia as it has brought wealth, business experience, diversity, and strength. If there is, perhaps, one phrase that I can borrow, is that many Australians feel that in diversity, there is strength, vitality, and interest. It’s no longer really an issue for us to manage our country or our society in some exclusive way to Asia. It’s not on and hasn’t been on for twenty-five years.

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South and Southern Africa into the Next Century Nelson R. Mandela

Nelson R. Mandela, the President of the Republic of South Africa, delivered the 16th Singapore Lecture on 6 March 1997. He was introduced to the audience by Singapore’s Deputy Prime Minister and Defence Minister Dr Tony Tan. President Mandela was the first of two African leaders to give a Singapore Lecture, followed in 2005 by his successor President Thabo M. Mbeki. President Mandela speaks of his vision for South and Southern Africa and the need to re-establish and strengthen the historical ties between Africa and Asia. Master of Ceremonies, Distinguished Guests, Ladies and Gentlemen. Long years ago, trade and other relations existed between Asia and Southern Africa—relations that we are only now starting to fully appreciate. In our own country, recent excavations have attested to the existence of kingdoms with advanced mining, smelting and other skills, along part of the highway from the coast to Southern Africa’s great settlements in the hinterland. Some of the pottery and other artefacts discovered here had their origins in the dynasties of Asia, as evidence to the trade and exchange of skills that existed at the turn of the last millennium. Our people are proud to uncover a history all along concealed. They are proud to establish that, contrary to conventional wisdom, they were a full and active part of Africa’s relations with the world, long before European settlers set their foot on the continent. Then came the interregnum of colonial plunder which not only brought untold suffering to the African peoples, but also destroyed the international relations across the wide frontiers of seas and oceans. During this interregnum, Africa found itself tied to Europe’s colonial apronstrings: its trade, diplomatic relations, education and culture were systematically

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remade in the image of the colonial victors. But it was an interregnum, too, when colonizers who, as unwitting tools of history, brought new technological and communication skills that have redefined the world. Now as we stand at the threshold of a new millennium, we are fortunate witnesses to the rebirth of natural relations between Africa and Asia, relations which colonialism sought to mediate in its own interest. We are happy victims to that famous curse: may you live in interesting times! It is in this spirit, ladies and gentlemen, that we have come to your shores and to Southeast Asia. We are driven by a deep desire to rekindle old relationships. We yearn to rebuild what was destroyed. We seek to forge strong multilateral ties among our nations under the new and more favourable conditions of freedom, technological advance and peace. I wish therefore to thank the Institute of Southeast Asian Studies for the invitation to share ideas with you, to contribute to intellectual discourse in a changing world. I am aware that, in speaking to such an august gathering, I am treading in the footsteps of giants. Ours is therefore only a drop in the ocean of ideas and wisdom that your Institute is renowned for. We have, above everything else, come to learn. We have come to learn about a country that has risen from the mire of poverty and dependence; a country once considered an irredeemable port city of traders; a country that has become a modern and sophisticated financial and manufacturing centre, standing tall among the best in the world. Your products in electronics, plastics, industrial chemicals and other manufactures are well known. Many across the world marvel at the quality of your education and the high standard of life which continues to improve. We have come to learn about a region of 500 million people that shines in the world as a prime economic growth area. We have come to learn about how the bonds that you forged among countries of Southeast Asia served as a spur to this economic miracle of our times. Over the years, you were able to bring your countries closer as nations with a common destiny. We have come to learn about the plodding industry that it took to develop your human resources and advance your technological base. And we are also inspired by the ongoing efforts in your region to remove the legacy of past inter-ethnic tensions. We have come to learn about all these things and more because they are the foundation of the renaissance abroad, in our land, in our sub­continent and in Africa as a whole. We are encouraged by the fact that in the few years since our democratic elections, relations between South Africa and Southeast Asia have grown in leaps and bounds. In a period of only three years, trade between South Africa and Singapore has doubled, and it now reflects a healthy balance for both of us. Investments have also increased significantly.

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Given the history we referred to earlier, it is natural that this should be the case. And precisely because such relations are natural, we can honestly say that they are still insufficient—they do not reflect the potential that exists. In our discussions with Prime Minister Goh Chok Tong, who was in our country a little more than a week ago, and in the wide-ranging talks that we have held with President Ong Teng Cheong and others here, we were left in no doubt that both sides are determined to improve these relations at the diplomatic, trade and investment levels. Many new and exciting ideas are being explored. We refer to these relations between South Africa and Singapore, between the Southern African Development Community and ASEAN, not merely out of historical sentiments nor narrow selfish interests. Our enthusiasm derives from the reality of a changing world. Ladies and gentlemen, how then do we define this world and what role should we play in this ongoing transformation? These are questions that I suppose are engaging your minds as much as ours in the Southern African subcontinent. There is no doubt that the last decade of the twentieth century has turned upon its head the old paradigms on international and societal relations. Humanity has moved beyond the old narrow ideological mindsets. Gaining in prominence over all continents is the challenge of how to better the quality of life of all. There is growing recognition of the communion of all sectors: workers, the rural masses, business, professionals and others—for all to work in partnership to reap the full benefits of modern technology, in terms of education, information, health, industry, trade and other areas of endeavour. It would be presumptuous in the extreme to claim that this realization has infused all sectors of society. It would be inaccurate to assume that all social conflict has thus been subsumed. Yet steadily, societies are coming to the common realization that, without the all-round development of the individual, without ensuring that everyone feels a sense of belonging to the political and economic endeavours of society, there cannot be technological advance, let alone economic growth. Conflict among various sectors of society there will always be. The challenge is how to mediate it in such a way that the energies of all can be channelled towards building better nations and a better world; and mediate it primarily by ensuring that those without employment and in the lowest rungs of industry are not relegated to grinding poverty in the midst of plenty. We live in a world in which democratic systems of government are becoming the norm in all continents, affording societies the right to freely elect governments of their choice. Beyond this, there is a realization that civil society has a central role to play in governance. Gradually, a redefinition of government is under way, with various social sectors claiming their right to directly influence policy determination and implementation.

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Transparency and openness are gradually becoming the norm, spurred on not only by political factors, but also by the communications revolution. Government as an institution is gradually becoming a facilitator of people governing themselves. New forms of social organizations are starting to take root in line with the challenges of the new age. Indeed, without individuals at work, in institutions of learning, in industry and elsewhere becoming a full part of policy determination and implementation, technological advance and a better life cannot be attained. Another defining character of the world in which we live is the shrinking of relative space and time, occasioned by the gigantic changes in communications technology. Trade and capital flows have compressed the globe into one market-place. In this context, a number of questions arise, impacting especially on developing countries like ours in Southern Africa. Firstly, how do we hitch onto the communications highway in a manner that benefits ordinary people and not just the elite—through rural telecommunication, and tele-links in education, health and social services? While technology transfer and training are critical, the fact is that the application and adaptation of such technology to our own needs and conditions depend on us. Secondly, trade barriers are becoming a thing of the past, imposing heavy obligations on developing countries to speed up processes towards productivity and competitiveness. In many respects, this is to the advantage of these countries. Yet can we say with confidence that the pace of such programmes and the exclusions that exist are determined on the basis of the collective interest or merely the interest of those with international economic power? Thirdly, capital flows have become more dynamic. Yet real investments are woefully inadequate, compared with short-term flows that contain very little social benefit. In addition, competition among the powerless for the little that is available holds the danger of unbridled mutual beggaring. Lastly, all these developments have put in bold relief the concept of sovereignty in the new age. The institution of nation-states is under increasing pressure as the world becomes a common market-place. What may happen is that smaller states may be forced to defer their sovereignty to those with economic power, rather than a well-considered and systematic process of the pooling of sovereignty among all nations. Ladies and gentlemen, emerging from this, nations throughout the world have individually and collectively started to engage two challenges, among others. The first challenge pertains to the restructuring of the United Nations. There is no gainsaying that no other body can give leadership to the evolution of the new world order than the United Nations. Yet it is structured on the basis of an old paradigm, according authority and power on the basis of definitions of security that are, to say the least, incongruent to current challenges.

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We in South Africa, along with the Organization of African Unity and the Non-Aligned Movement, are calling for a rapid restructuring of this world body to ensure that continents and regions of the world can play an effective role in the restructuring of international relations. As we redefine security to encompass, as its primary component, the socio-economic well-being of nations, representation in the most important decision-making bodies should take this factor into account. And in order to ensure the pooling of sovereignty rather than the submergence of other nations by the most powerful, the United Nations must be accorded its central place in the conduct of world affairs. The second challenge pertains to regional integration. ASEAN in this subcontinent and the Southern African Development Community in our part of the globe are good examples of this. Among developing countries in particular, much progress has been made in consolidating such regional blocs. Yet our fast-changing world and its anomalous balance of forces dictate that we look beyond definitions based on geographic proximity. The concept of the Indian Ocean Rim starts to address this challenge. Indeed, the pre-colonial history we referred to earlier, the current potential for trade and investments, as well as collective security, dictate that the idea of the Rim should be pursued with vigour. Our own subcontinent enjoys the unique position of being located midway between Asia and Latin America—countries with broadly the same level of development, and the same economic and social interests. In our interaction with states in Latin America, there is a conviction that the Indian Ocean Rim should be a precursor to similar relations between us and that part of the world. There is a conviction, too, that such relations are important not only in terms of the mutual benefits that they will bring our peoples, but also because they should help redefine the world balance as we know it. All these are matters that I suppose the Institute is seized of, and we are confident that you will make a critical contribution to the ongoing discourse about how our countries can become midwives of the new world order in gestation. We in South Africa are fortunate to have emerged from the era of apartheid into such a vibrant world. We are proud that in many respects, our liberation to which the world has so generously contributed, has helped unlock potential that has for centuries been lying dormant. To the extent that our limited experience can contribute to these debates, we shall not hesitate to do so. This we shall do, fully cognizant of the fact that for us to deal with the disparities that racism created in our society—the backlogs in income distribution, education, health, housing and social services—we require the support and co-operation of all nations, particularly those who have gone through similar experiences.

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Ladies and gentlemen, in the short three years of our young democracy, we have come to fully appreciate the mammoth challenges that South Africa faces. Among the lessons that we have learnt is that nation-building and reconciliation depend on consistent thorough-going democracy. Openness and transparency in matters of governance are the best guarantee for the survival of the democratic process. Our national parliament, the judiciary and other institutions such as the Human Rights Commission, the Public Protector and the Truth and Reconciliation Commission are firmly committed not only to exorcise the evils of the past. They are also actively promoting the new culture of human rights so that all our people, irrespective of race, gender, religion and language can live as equals in a just society. At the same time, we do recognize that change of the magnitude we are engaged in will result in uncertainties and apprehensions, especially among those who were all along beneficiaries of the system of apartheid. Our principled approach is to strive for as much accommodation as possible, to put in place mechanisms to protect the religious, cultural and language rights of communities, and to vigorously pursue integration in all affairs, including government, the work-place, sports and other areas. However, most South Africans are keenly aware that nation-building and reconciliation can only succeed under conditions of a rising quality of life. Progress in our socio-economic programmes is a sure guarantee to the long-term security of all. Thus, within the context of our Reconstruction and Development Programme, projects are under way to ensure nutrition and food security, to bring more children and women into the welfare safety net, to implement a comprehensive human resource development programme, and so on. At the same time, our government has embarked on a massive restructuring of the state machinery to improve service delivery, including, in particular, the agencies delegated to deal with crime. Great progress has been made in these areas. And though our crime and violence statistics come from a very high base of the apartheid years, we are satisfied that we have contained and started to reverse past trends. In the final analysis, the success of these efforts depends on economic growth and development. Since 1994, the economy has made a turnaround, from negative growth figures onto a path of sustainable growth, based on the improvement of manufacturing output, exports, gross domestic fixed investments, and productivity. However, the growth rate of about 3 per cent that we registered in the past two years is not sufficient for us to attain our objectives of job creation and improving the quality of life. Thus, we introduced during the course of last year, a macro-economic strategy aimed at harnessing the many positive qualities that our country possesses. Many great opportunities have opened up, including massive mega-projects in minerals processing, petrochemical industries, telecommunications, car manufacturing, tourism, transportation and other infrastructure. In all these

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areas, the contribution of Singaporean and other investors will be critical—with opportunities for large profit margins, the advantage of a sophisticated banking system, the availability of a developed communications network, the freedom to repatriate profits, and the advantage of tax holidays in certain designated areas. Many of these initiatives are being pursued in partnership with our neighbours in Southern Africa, as we move towards regional integration. Indeed, Southern Africa today constitutes one of the most exciting regions of the world, a region endowed with abundant mineral resources, a market of over 100 million people, great tourist potential, democracy and peace. In this changed and changing world, the region has the potential to be the geographical anchor of new relations among Asian, African and Latin American countries. It has the capacity to become one of the centres of rapid economic development, given the potential that has yet to be exploited. It has people ready to learn and to exploit their talents and potential to the fullest. Long years ago, the kingdoms of our region and dynasties of Asia shared their expertise, products and social experiences in a natural relationship among friends. Today, the possibilities are limitless. The will is there to achieve the best for our peoples. Technology has redefined the time and space that separate us. Our task is to seize these opportunities with open arms. Thank you.

Question and Answer Session Question: Mr President, in recent years, many African leaders have visited East Asia, seeking to learn lessons from the East Asian economic miracle. As an Asian, I believe that learning should be mutual and that there are lessons which we Asians can learn from the South African experience. Mr President, you walked out of jail after twenty-eight years, with no hatred in your heart and no rancour in your head. During the long years of apartheid, many coloured people of South Africa suffered grievous wrongs from their white tormentors. However, you have set up a commission to seek the truth and to forgive the wrongdoers. Mr President, may I ask you to share with us what spiritual and moral inspirations led you and your comrades in suffering to travel the high road of reconciliation and forgiveness instead of the low road of hatred and revenge. Mandela: That is an important question. In so far as the feeling of bitterness is concerned, the best way of expressing that feeling is to change the status quo and to reverse

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the order and to ensure that those who are deprived, against whom gross human violations were committed, are now free to determine their future. One of the most powerful weapons that we found was that dialogue, discussion, persuading your enemy, is more effective than taking up a rifle. When we came out and set up negotiations, we discussed our approach very, very carefully as the leadership of the African National Congress, and we adopted certain principles: firstly, that in these negotiations, neither the African National Congress, which is now in power, nor the enemy, the policy of apartheid, none should win, but South Africa as a whole should win. We also decided very consciously that we should do nothing to humiliate our enemies. In all these discussions, we should emerge closer to one another instead of increasing what divided us. That was the second principle. When we were victorious and now with the majority government, we have adopted another principle: that we should avoid making the minority parties a rubber stamp of the majority party. Let us consolidate and let us accommodate their views, even though we are not convinced sometimes that they are correct, because one of the things we have to do as a democratic government is to unite the nation, to build mutual confidence. The combination of these three strategies have prevented my colleagues and I from concentrating, brooding on the injustices that were committed against us. We have a programme, and as you know better than I do, each one of us passes through this world but once; you don’t want to waste your time by concentrating on negative issues, however justified you might be. On a number of occasions, I have found a clash between my brain and my feelings, but when you are facing a situation of transforming society, you have on a number of occasions to reject what your blood tells you and listen to your brains. I have colleagues, comrades, some of whom were in exile, others who worked underground, others who were in prison for long terms who understand these lessons far better than I do. It is because I worked with comrades of this nature that we were able to persuade our enemies not to turn our country into ashes, to let us save our country. Now that we have done so, I have been forced to say that although I was born and brought up in South Africa, I did not know my country very well, because I never expected that it would make such progress and that those who have been primarily responsible for the miseries through which the majority of the people of South Africa lived for the last three centuries, are now also heading the process of nation building. It is because of the talented people both within the ranks of the liberation movement and in the ranks of the oppressor that we have been able to bring about this transformation. We sincerely, fully believe that there are good men and women in all communities in our country, among Africans, Coloureds, Indians and Whites, and that the duty of the leadership is to create an environment in which those good men and women can exercise their talents.

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It is the combination of these factors that has allowed us to progress in South Africa, and I want to stress again that it is not one man, it is a collective leadership and many people who have never been to jail, who have never been underground, have done more than some of us who were in prison. We have therefore to appreciate a collective effort, and that to turn society into a rainbow nation, to unify those who are enemies is a task which cannot be achieved by an individual, is a task which requires a collective effort, and that is how we explain what is happening in South Africa today. Question: Your Excellency, my question is: despite the long road you have walked, I am sure that there are many problems on your head which you are facing in South Africa today. If I can focus on just two: one is the pursuit and striving for social justice and a more equitable distribution of income, what is your experience in terms of affirmative action and what model are you pursuing to achieve that goal to make up for lost time? And two, the question of political regeneration and succession, what are your immediate concerns for the future of South Africa’s stability? Thank you. Mandela: We are not concerned with labels, whether our system is capitalism or socialism. We are concerned with delivering services to the masses of the people who were denied all the basic rights of citizenship, who could not go to school, who could not acquire knowledge, skills and expertise. We have declared in our election manifesto that our aim is to better the lives of our people. And we then spelt it out in detail, that we want to create jobs, we want to build houses, schools, hospitals and clinics. We want to introduce electricity, we want a sports stadium, we want a clean environment, we want the disabled and the women to enjoy equal rights with the rest of the members of society. But of course, we have warned in the run-up to the election that to address these basic needs is not something that can be achieved overnight. I went so far in all those meetings to say that before we can deliver services, we need to mobilize resources, to create an atmosphere for investments and also to ensure that the massive public debt that we inherited, and which we service at the rate of R40 billion (US$9 billion) a year is reduced. These are the problems under which we are trying to better the lives of our people. But within these three years that we have been in power, we have made tremendous progress. And again, we are not concerned with labels. We are concerned with restructuring our economy in such a way that it should be able to deliver services to our people. And what encourages us in so far as our economy is

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concerned, are the permanent features which indicate that we are going to have this sustainable growth rate. We have the basis, the motive power behind our economic efforts, which is private sector investment. We are also on the way to increasing our exports so that we export more than we import. There is still this imbalance if you compare us with countries like Japan, Britain, Germany, France and so on; we are importing more from those countries than we export to them. But again, we are on the way towards reversing that imbalance because in 1996, we imported US$97 billion, but we exported US$98 billion. So, we are on the way to reversing this trend by concentrating on manufacturing. At the present moment, manufacturing has a narrow base but we are taking all measures to ensure that we increase this base. That is the first point. We are not interested in labels. Our task is to deliver services. Mandela: What is the second question again? Chairman: Succession. Your preparation for your succession. Mandela: Oh, I see, that’s right. Well, if I wanted to see real progress in our country, I should have stepped down about three years ago. We have such capable young men and women that at present several men of seventy-eight in the leadership have actually prevented more capable young people who would not just walk, they would run. And we have a collective leadership and I must say with all humility, that each and everyone of them has more quality, more competence than I command. And you must listen to discussions in our political structures to see that it is a mistake to think that only one man is responsible for the miracle that has taken place. It is a collective effort and even now I am doing less and less day-to-day work in government. That is being done by the present deputy president, Thabo Mbeki, who is one of the most skilful, most talented, hardworking but broad individuals, and who believes even more than I do in the weapon of dialogue or persuasion. He has got a Master’s degree in Economics. He is one of the most powerful amongst us. But, nevertheless, we cannot say that he is going to be the president of the country when I step down because that is not my task. That is the task of the collective leadership of the ANC. And there are many in the leadership who are as competent and as broad-minded as he is. But if the leadership of the ANC decides to appoint him as the next President, I will fully support that because he has those talents. But I want to make it clear that I have no successors—that is not the tradition of our organization.

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And I might just add, that this question has been raised on countless occasions: What is going to happen when so and so goes? The same question was asked when Chief Albert Luthuli was the President of the ANC from 1952 to 1967. They asked what was going to happen when Luthuli went. This country would go to the dogs, into chaos. Nobody knew about Oliver Tambo, but I knew him because we were together at university. We started our youth life together, we formed a legal partnership. I always said that if I clashed with him, I would know that I would be in the wrong because he was not a person who was controversial and would quarrel with anybody. Once Luthuli died, Oliver Tambo emerged and placed this organization on a level it had never reached before. And when I go, I know that there will be leaders who will follow, who will raise this organization and make it far stronger than I have been able to do. So we ought not to have any fears whatsoever about a successor; we have a lot of rich talent. Question: About forty years ago, I read a poem by one of your great poets who said, when the Europeans landed in Africa, they had the crosses and the Africans had the land. Now the Africans have the crosses and the White people have the land. I do not know if I pronounce it correctly, “Mayibuyi Afrika” (Africa Come Back). My question, Sir, is to what extent has the land come back to the Africans? Thank you. Mandela: Well, that is another very important question because it is true that when Whites came into our country, we had the land, and the Whites came along with the Bible. Now, they have the land and we have the Bible. Now, one of the strategies, one of the first steps we took as a government was to create a Land Claims Court and to make provision for those people who had been driven by force out of their land to repossess their land where that is possible. We had to do this very sensitively because there are some people who bought what they regarded as vacant land genuinely and those people are now entitled to that land. There is nothing that we can do about it. But there are cases where you find that some people have vast land which they cannot use, and land which they have taken over from people, from legitimate owners who were forced out of their land. In such cases, we make sure that there is restitution, that people get back their land where no third party is going to be prejudiced. We also have vast state lands, we have land which was put aside in order that the Generals of the South African National Defence Force or the top officers of the South African police services could go and shoot buck, and so on. And that land we are systematically taking away and making it available to the masses of the people. We have provided capital for poor people to be able to buy land and we

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have made great strides. The chairman of the Land Court is a colleague of mine. We were together in Robben Island. We made sure that the President of that court is a person who is sensitive to the needs of the masses of the people. And, already we have transferred large pieces of land to the people who did not have that right before. But again, I say we are doing this gradually so as not to create any repercussions on the part of those people who monopolized the land, but our mandate is to ensure that there is equitable distribution of land. When we took over, 87 per cent of the land of the country was owned by Whites who constitute only 14 per cent of the population. And the overwhelming majority of our people were entitled to only 13 per cent—sometimes, not even on the basis of freehold. But things are reversible, and we have made great progress in this area. Question: Mr President, you have spoken of your country as being a democracy and I am sure no one anywhere has any doubt that you have made your country a beacon of democracy. But my question to you is: what is the democracy that you are practising, because in this country there are voices and particularly one voice which says that democracy is not for Singaporeans, not for Asians, but we must have our own brand of democracy. What I would like to know is whether you subscribe to that. Mandela: Now, democracy, the meaning of democracy can have as many definitions as there are people here. And I will not take the risk of trying to define what democracy means for the world but I will be able to tell you what democracy means for South Africans, especially at the present moment. The first thing that we did was to maintain what is regarded by the entire world as the basis of democracy—separation of powers. We have a Parliament which is fully operative. We have the Executive. We have the Judiciary which is independent, and the independence of the Judiciary is extremely important, in order to ensure the basic rights which are contained in the constitution and in particular in the Bill of Rights. We made sure that that document would not be just a piece of paper, but would become a living document in the sense that it cannot be tampered with, even by the government, by the Cabinet. We have created the office of a Public Protector which corresponds to an Ombudsman. We have also set up a Commission for Human Rights consisting of some of the most eminent South Africans. And we have set up the Truth and Reconciliation Commission under the chairmanship of Archbishop Tutu, one of the most powerful religious leaders in our country. And above all, we have set up a Constitutional Court which is there to ensure that the government is bound by the constitution of the country.

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And we have a very good case to illustrate our commitment to democracy. Firstly, there are nine provinces in South Africa. We won seven provinces and lost two—one to the National Party of the previous government, the other to Chief Buthelezi. Now, in the western Cape which was won by the National Party, Parliament gave me power to issue two proclamations which affected the elections in that province. The premier took me to the constitutional court. Now, that court had a president who was my attorney, my lawyer. But on this particular question, he felt so independent and so deeply entrenched that he overruled me. And he said I acted beyond the powers which I had. And within an hour of that judgement, I issued a public statement in which I said this is the highest court on constitutional matters. They handled a very difficult case competently and without fear or favour. And I called upon the whole country in general, and in particular the members of the ANC, to obey that judgement. I did so because I wanted the implementation of the safeguard that we had created—and the implementation must be observed by the President himself, and I issued that statement that we should obey that decision. That is how we interpret democracy in our country. How is democracy interpreted in Asia? That is a matter for Asians to decide in the light of the specific conditions existing in their country; we will not interfere. But in so far as South Africa is concerned, this is, broadly speaking, what we mean by democracy. Question: My question, Mr President, is this. In the anti-apartheid struggle, sanctions were part of the strategy. In your opinion, given the current economic climate that you touched upon in your speech, are these sanctions still effective in helping or liberating people under oppressive governments today. Thank you. Mandela: Again, the methods of action that we use are to be determined by the bodies that are there to bring about peace and stability in the world. As I said, we have the United Nations, we have the Non-Aligned Movement, and we have the regional blocs, and it is proper for us to act through those structures. Naturally, if there is a situation somewhere they—the United Nations and all its members—will discuss that situation very carefully and decide on action. If the United Nations or a regional organization takes a decision to apply sanctions, as members we are all obliged to carry out that decision, and that is what South Africa will do. But it is extremely difficult in cases of this nature to say that next year we will apply sanctions if so and so does this, because it is not a decision of one country; it is a decision of the world body. Sanctions against South Africa succeeded because it was firstly the decision of the United Nations, and it was supported by other regional organizations and

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by the people themselves. But the cornerstone and ground play for that response by the international community was what South Africans themselves were doing. Once the people saw South Africans standing on their feet, ready to pick up stones to destroy military tanks of the enemy, the world admired such courage, such initiative, such leadership, and rallied around us. If people in any particular country struggle to topple a dictatorial regime materially, then the natural response of the world is to support those people. But the specific weapon, the specific type of action that will be employed, will be decided collectively by all of us as members of that particular body, and if on examining the situation we feel that sanctions are the most appropriate weapon to use in order to pressurize that country to change, we will do so as disciplined members of an international body.

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China and Asia in the New Century Zhu Rongji

On 30 November 1999, Premier of the State Council of the People’s Republic of China Zhu Rongji gave the 17th Singapore Lecture after being welcomed by Deputy Prime Minister Lee Hsien Loong. Premier Zhu was the first Chinese political leader and second leader from Northeast Asia to give a Singapore Lecture. Befitting China’s size and Premier Zhu’s responsibilities, his speech focuses on changes to the Chinese economy and the benefits for Asia and the world of Chinese economic development and growth. The lecture serves as an early statement on China’s emerging central economic role in Asia and globally. Your Excellency Prime Minister Goh Chok Tong, Ladies and Gentlemen, Friends, Thank you, Your Excellency Deputy Prime Minister Lee Hsien Loong. The Singapore Lecture is a highly acclaimed international forum. State leaders, eminent politicians, specialists and scholars from many countries have made weighty and inspiring remarks on regional and international issues at this forum. Today, I feel greatly honoured and delighted to have the opportunity of meeting you, people from different circles in Singapore, briefing you on developments in China and discussing with you the development prospects for China and Asia. Many of you here are old friends and long-term partners of the Chinese people. I would like to take this opportunity to express my sincere thanks to you and all other Singapore friends who have contributed to enhanced friendship between our two peoples. Mankind is at the threshold of the 21st century. In the evolution of world civilization, the 20th century is one of hardships and sufferings as well as one of unprecedented material and spiritual wealth. The rise of Asia and the enormous changes in China represent one of the greatest miracles of this century.

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From the mid-19th century to the mid-20th century, the Chinese people fought courageously and finally won national independence and liberation and founded New China. Not long ago, the Chinese people held a grand celebration of the 50th anniversary of the People’s Republic of China. Over the past fifty years, China has witnessed earth-shaking changes. For the past twenty years in particular since China started its reform and opened up to the outside world, it has scored even more remarkable achievements in its socialist modernization drive. From 1979 to 1998, its GDP grew 4.9 times in real terms with an annual increase of 9.7 per cent. In terms of economic aggregates, it has grown from the world’s 11th largest economy in the 1970s to the current 7th largest, and in terms of imports and exports from 32nd largest trading nation in the 1970s to the current 11th largest. The urban and rural populations have made the historic stride from poverty to sufficiency in food and clothing and will achieve a relatively well-off level in future. These achievements have not only laid a solid foundation for China’s future development, but also contributed to peace and development in Asia and the world as a whole. Over the past two years, in face of the new issues and new challenges, China has still managed to keep the momentum of a sound economic development. Though it was hit by the Asian financial crisis and the devastating floods last year, it still attained a 7.8 per cent growth rate of its GDP in 1998 as compared with that in 1997. From January to September this year, its GDP increased by 7.4 per cent over that of the corresponding period of last year. It is expected to reach over 7 per cent for the whole year. At the same time, important measures have been taken in economic structural readjustment. As a result, enterprises have improved their economic performance. Monetary and financial mechanisms are functioning smoothly. Foreign trade has resumed its strong momentum of growth. RMB exchange rate has been kept stable with the total foreign exchange reserves exceeding US$152 billion. The life of both the urban and rural populations has continued to improve. The present good economic situation in China should be mainly attributed to the concerted and tenacious efforts, the prompt and appropriate measures and the continued reform and opening-up undertaken by the Chinese people under the leadership of President Jiang Zemin. To galvanize economic growth, we have adopted a proactive fiscal policy and other supporting macro-control economic policies to boost the domestic demand. We have increased input in the infrastructure and the technological upgrading of enterprises by issuing more treasury bonds to expand the investment demand. Furthermore, to directly stimulate consumer demand, we have increased the income of both urban and rural residents, and by a fairly big margin that of the low and medium income families in urban areas. All these measures have yielded good results. In face of relative economic difficulties, we have never stopped our reform. We have taken major steps forward instead, which has injected new vitality into economic development. Reform of state-owned enterprises has made visible

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progress. Reform of the financial system has made headway. Reform of the foreign trade system has deepened further and that of the housing, social security systems and the government institutions has been going on smoothly. In the meantime, we have adopted new measures to expand the opening-up process. We have opened up more areas for foreign investment and rendered greater support to enterprises with overseas investment by taxation, financial and other means. More importantly, while pressing ahead with reform, opening-up and development, we have given much attention to the maintenance of social stability and have nurtured a good social environment for a sustained development of our national economy. There still exist difficulties and problems in China’s economy, the major ones being insufficient effective demand, increasingly conspicuous inadequacy in the economic structure and greater employment pressure. To counter these difficulties and problems, we have decided to adopt the following three strategic measures with a view to long-term development in the next century. I. Continue to expand domestic demand and boost economic growth by increasing both investment and consumption. To this end, we should continue to implement a proactive fiscal policy, bring into full play the role of monetary policy and introduce other macro-control measures to supplement the former. Next year, the central financial authorities will issue additional long-term development treasury bonds to state-owned commercial banks, channel part of residents’ deposit savings into development funds to be mainly used in infrastructure building and technical upgrading of enterprises, and increase input in education, science and technology and other fields. The financial sector should give a stronger support to economic growth and various measures will be taken to moderately increase money supply. They mainly include the following: granting more loans to infrastructure projects by state-owned banks, ensuring working funds to economically sound enterprises that are doing well in the market, increasing loans to small and medium-sized enterprises and vigorously developing a consumer credit scheme for housing, education and large durable commodities. At the same time, forceful measures will be taken to actively encourage and guide expansion of investment by nonstate-owned enterprises. To stimulate consumer demand is a very important aspect of expanding domestic demand. We will ensure low-income earners a steady increase of their income, increase the transparency of the reform measures we introduce and implement these measures in such a way as not to hurt the actual living standards of the majority of consumers. This will enhance people’s expectations and enable people to have a greater desire to buy and spend now. New forceful measures are to be put in place to alleviate burdens on farmers and increase their income as well as open up the vast rural markets. We will also encourage service consumption and try to foster consumption hot spots such as housing, telecommunications and tourism,

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culture and health-building to stimulate faster economic growth by upgrading the consumption pattern. Our macro-economic policy to boost domestic demand is based on necessity and possibility. With sufficient materials, a big exchange reserve and great production potential, this policy entails no risk. On the other hand, we have a population of more than 1.2 billion with a relatively low level of per capita income. Hence expanding the domestic market and focusing on stimulating domestic demand will be our long-term strategic guideline. II. Make a strategic readjustment of our national economic structure and vigorously promote optimization and upgrading of the industrial pattern. China has entered a new historical period of economic development, as evidenced by the greatly improved life of its people in both urban and rural areas from a mere subsistence to today’s sufficiency in food and clothing and with the supply of major commodities in excess of demand. To effect a strategic readjustment in the economic structure is not only a pressing need of expanding domestic demand and promoting sustainable economic development, but also a fundamental measure to improve the quality and performance of our economy and effect a virtuous economic cycle. While working hard to maintain relatively fast economic growth, we will intensify the structural readjustment so that our economy will move forward in a healthy manner on the basis of accelerated structural readjustment. To meet the demands on the domestic and foreign markets, we will concentrate our efforts on industrial upgrading by relying on scientific and technological innovation and progress. First, while continuing to restructure and upgrade the primary and secondary industries, we will give a big boost to the rise of the service sector, in particular accelerating the development of such industries as information, tourism, intermediary social service and community services. Second, we will actively transform and upgrade traditional industries. Backward production capacity, techniques and equipment that turn out non-marketable goods, cause environmental problems and waste resources shall be phased out resolutely. We shall extensively use high and new technologies in the transformation of those traditional industries that turn out marketable products and still have development prospects. We should particularly accelerate the transformation of old industrial bases. Third, we will develop hi-tech vigorously and hi-tech industries speedily, in particular expediting an information-based national economy and hence promoting the rise of new industries and cultivating new economic growth points and development chains. At the same time, we will accelerate urbanization and ensure a co-ordinated development of urban and rural economies. In short, the proposed major strategic readjustment in the economic structure will afford the Chinese economy a vast scope for development and markedly enhance its competitiveness and capabilities against risks.

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III. Implement the strategy for all-out development of western China and speed up the development of its central and western regions. As early as in the 1980s, Mr Deng Xiaoping put forward two important strategies for China’s modernization drive. One is to accelerate the opening-up of China’s east coast, enabling it to develop first. The other is to ensure the Chinese people a comfortable life by the end of this century and then make more efforts to help accelerate the development of China’s central and western regions. President Jiang Zemin has attached great importance to the all-out development of western China. He has explicitly pointed out that “all-out development of western China is of strategic importance for China’s overall national development” and that “the conditions are available and the time is ripe for such development”. China’s west covers a vast territory, boasts abundant resources and a potentially big market and offers great potential for development. To open up the west and speed up the development of central and western parts of China is a major policy decision that China has made to usher in the new century. Just as the development of China’s east coast has contributed to the sustained and rapid development of the whole country for the last 20 years, the development of western China will afford the eastern and central parts of China a big market and a strong impetus to their growth, and will lead to greater prosperity of the national economy. To this end, the state will channel more development investment to the central and western parts of China, especially western China, to expand the size of investment in China’s west and increase the payment of financial transfer to the region. The eastern parts of China will also give more support to the west in various forms. The west will accelerate its reform and opening-up and actively improve its investment climate. The Central Government will in the meantime adopt more effective measures to attract more capital, technologies and talents from home and abroad for the all-out development of China’s west. From now to some time in the future, in the all-out development of the west, priority will be given to accelerating the building of infrastructure, improving the ecological environment, vigorously developing those economic sectors with local characteristics or industries where the west has a comparative edge and foster science, technology and education with a view to creating a better foundation and conditions for accelerated reinvigoration of the west. Reform and opening-up are the only way leading to China’s modernization. We will unswervingly push forward reform and open China wider to the outside world. We will continue to readjust and improve the ownership structure to fit in with the socialist market economy, and further encourage and guide sound development of the non-public sectors without prejudice to the dominant role of public ownership. State-owned enterprises serve as the pillar of China’s national economy and their reform and development are still an important and pressing task. In the year 2000 we will concentrate our efforts on this task and achieve the previously set year goal to get most large and medium-sized SOEs out of their plight

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and establish a modern enterprise system in most key large and medium-sized SOEs in three years so as to lay a solid foundation for their reform and development in the next century. We will also give great importance to a speedy development of a social security system so as to create a stable social environment to facilitate economic restructuring, reform and opening-up. Next year, while continuing to implement and improve the existing measures, we will actively create conditions for the institution of a sound social security system with Chinese characteristics, a system that is independent of enterprises and is financed by a multiple of channels and commercially managed. Opening-up is a long-term basic state policy of China. We will provide foreign businessmen with more investment opportunities in the banking, insurance, telecommunications, tourism, retail, foreign trade, legal consultancy and other services. We will also accelerate the opening-up of the energy sector, transportation, communications, environmental protection and other infrastructural areas. In the meantime, efforts will be made to encourage the participation of foreign investment in the restructuring and technological upgrading of SOEs in various forms, improve services to foreign-funded enterprises, simplify procedures of review and approval of such projects and improve the efficiency. China will become one of the world’s most attractive regions for foreign investment. It can be predicted that an ever-opening China will march into the new century more steadily and forcefully. The big-scale modernization drive, ever-expanding market capacity and the deepening reform and opening-up will create broad prospects for the development of trade and economic co-operation between China and other countries in the world. The great business opportunities in China are within the reach not only of Chinese entrepreneurs but also of those foreign business people who have the courage, vision and aspiration to make investments in China. In twenty days, Macao will return to the embrace of the motherland. This will be another important step forward taken by the Chinese people on the road to national reunification following Hong Kong’s successful return more than two years ago. The policy of “one country, two systems” is a set guideline for China’s reunification. The eventual reunification of Taiwan with the mainland represents the trend of the times and conforms to the aspirations of the people. It is a historical tide that no one and no force on earth can stop. A unified, stable and prosperous China will not only serve the fundamental interests of the entire Chinese people, but also make a greater contribution to peace, stability and development in Asia and the world as a whole. Ladies and Gentlemen, Friends, Asia’s development story of half a century, the past two or three decades in particular, has fully testified that a stable and developed China, a big country with one third of

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Asia’s population and one fifth of its land, is an important factor for the peace and prosperity of Asia. The growth of China’s economic aggregates and the consumer purchasing power of its people has provided a vast market and more opportunities for Asia’s development. The sustained, rapid and sound development of the Chinese economy is of great and positive significance to promoting economic growth in Asia, improving its resilience against risks and bolstering the confidence of the rest of the world in Asia. As a World Bank report points out, “China’s rapid growth and continued liberalization will be an opportunity for the world economy, not a threat”. More importantly, as one of the initiators of the Five Principles of Peaceful Coexistence, China has developed ties of good­neighbourliness and friendship with other Asian countries strictly according to the principles of mutual respect, treating each other as equals, seeking common ground for mutually beneficial co-operation while shelving differences. The ever-growing ties between China and other Asian countries have shown that as long as these principles are upheld, all countries in Asia can live together in peace and harmony despite differences in the size, historical background, social system, level of development, cultural tradition and values. The rejuvenation of China’s economy cannot be achieved without the development of Asia. In the past two or three decades, the economy of Asia, East Asia in particular, has been growing rapidly, making the region one of the most dynamic in the world. We have also noted with gratification that, thanks to readjustment and reforms, some East Asian countries that were hit by the financial crisis have seen a strong momentum of economic recovery and a growth rate much higher than what was expected early in the year. Although the foundation for economic recovery in some countries remains relatively fragile, it is widely believed in the world that the East Asian economy has bottomed out. Zhuang Zi, an ancient Chinese philosopher, once said that security is easily turned into danger, happiness often accompanies misfortune and the reverse is also true. Asian countries, East Asian ones in particular, have a relatively solid economic foundation and fine cultural traditions. As long as they make serious efforts to sum up experience and lessons, improve their economic development models and bring out their best while avoiding their weaknesses, their economy will emerge from difficulty, renew its vigour and vitality and take up an important position in the global political and economic configuration of the next century. An overview of the major global trends reveals that there will be both unprecedented opportunities and severe challenges, foreseeable or unforeseeable, in the next century. For us Asian countries, we need to open our arms to embrace and grasp those opportunities and to learn to meet challenges. Only by so doing will we be able to obtain a position of strength in the vicissitudes and intense competition in the new century. To maintain peace, stability and prosperity in Asia in the 21st century, the Government and people of China stand ready to work together with other countries and peoples in Asia in the following respects:

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• To continue to develop the partnership of good-neighbourliness and mutual trust between China and other Asian nations in line with the purposes of the Joint Statement issued by President Jiang Zemin and leaders of ASEAN nations in 1997 and the documents governing the cross-century development of bilateral relations signed between China and some Asian countries and on the basis of the Five Principles of Peaceful Coexistence. • To pay close attention to the trend of economic globalization and respond to it in an active and prudent manner. Economic globalization is an inevitable trend of the times. It is also a double-edged sword, bringing both new development opportunities and unavoidably severe challenges and risks to countries, particularly developing countries, which are relatively weak. Therefore, it is necessary for a country to choose a development road suited to itself. It must grasp the opportunity to advance reform and innovation boldly and expand opening-up. At the same time, it must proceed from its specific national conditions, adroitly guide the development of the situation in a way that takes care of its interests and helps avoid the harmful, seek steady progress and do its best to ensure state sovereignty and national security. ln sum, to promote economic growth and ensure economic and financial security remains an important component for the maintenance of stability in Asia. With economic restructuring gathering pace on the global scale, Asian countries should accelerate industrial upgrading and economic structural optimization. Only in this way can we greatly improve the competitiveness of our national economy. • To endeavour to improve the hi-tech level and increase the ability for technical innovation. Most Asian countries used to depend mainly on natural and labour resources for their economic growth. In the present-day world where advances and innovations in science and technology are being made everyday, we should give top priority to accelerating scientific and technological progress and innovation in our development strategy. We should also emphasize the fundamental role of education and actively cultivate and recruit high-calibre professionals with innovative power so as to provide an inexhaustible source for sustained economic development. • To establish a full-fledged and sound financial system that is efficient and reliable. Finance is at the core of the modern economy. A stable and sound operation of the financial sector is vital to the overall economic development. The cloud of the Asian financial crisis that had hung over Asia has dissipated. But “lessons learned in the past can serve as a guide for the future”. It is essential for Asia, East Asian countries in particular, to eliminate the latent dangers that might lead to a financial crisis and continue to intensify the financial reform, take stock of the financial assets, rectify the financial order and improve the financial regulation and supervision. In the meantime, we Asian countries should actively participate in the reform of the international financial system, reinforce the

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monitoring and control of short-term capital, curb excessive speculation and enhance international and regional financial co-operation. • To give full play to the role of the market and the government, with a view to realizing economic reinvigoration. We need to attach more importance to market forces and laws and encourage competition in order to increase economic vitality and efficiency. Meanwhile, a strong government is an important guarantee for economic growth and prosperity of the country. It is essential for the government to properly identify its role in a market economy and actively, vigorously and appropriately play the role of macro control of the national economy. • To continue to tap the potential for mutually beneficial co­operation between China and ASEAN countries in areas such as trade, investment, science and technology, agriculture, tourism, machinery and electronics, telecommunications, medicine, environmental protection and human resource development. China welcomes the economic integration process of ASEAN. We hope to establish contacts with AFTA and AIA and stand ready to provide funding support to the development of the Mekong River basin area. China welcomes ASEAN entrepreneurs to China for economic, trading and investment activities, and in particular, their participation in the all-out development strategy of China’s western regions. The Chinese Government will continue to encourage and support Chinese enterprises of strength to invest and set up factories in ASEAN countries. • There is another point I would also like to stress. Proceeding from the overall interests of peace and stability in the region, China faithfully observes the political consensus reached with ASEAN and stands ready to continue to maintain the healthy atmosphere and momentum of dialogue and co-operation. We always stand for properly addressing differences and disputes through friendly consultation on an equal footing. Good-neighbourliness, friendship and peace represent the common interests and needs of China and ASEAN countries. Ladies and Gentlemen, Friends, Singapore is the financial, business and trade hub of Southeast Asia and is also a vibrant force in the global and regional political and economic arenas. A good foundation has already been laid for co-operation between China and Singapore. I hope that Singapore will play a more important role in promoting all-round cooperation between China and ASEAN. Although my visit is a brief one, your country has left a deep impression on me. Singapore is a bridge between the East and the West, and the creative people of Singapore have made admirable achievements in a short period of time. During my visit to other Southeast Asian countries, I was equally impressed by the courage and the undaunted enterprising spirit of the people in Southeast Asian nations to overcome difficulties and by the renewed vigour and

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vitality in this region that has witnessed the onslaught of the financial crisis. Looking into the future, I am filled with confidence with regard to the prospects for peace, stability and prosperity of the region. Let us, China and Southeast Asian nations, stand on a high plane and look forward, enhance co-operation and join hands in creating a better future for Asia. Thank you all.

Question and Answer Session Question: I am a correspondent with the Lianhe Zaobao, Singapore. Recently Chancellor Schroder of Germany has indicated their desire to see China join the G-8 meeting. My question to you, Premier Zhu, is what are the political and economic significances if China becomes part of the G-8 meeting? Do you think the timing is already right for China to join them in the discussion? Zhu: In our view, G-8 is not broadly representative. But China has maintained close contact with the G-8 and they inform us of what they are going to discuss in advance. China stands ready to continue to maintain its contacts with G-8 and strengthen its cooperation. As for a physical presence in the G-8 summit, we have not yet received their official invitation. Question: Prime Minister Zhu, I am Richard Tan from Overseas Union Bank, Singapore. Of the past and present world political leaders, who do you most admire and what is your reason for your admiration? Zhu: I don’t have any intention to run for public office in Singapore. So your question sounds as if you want to test my political wisdom. Honestly speaking, I have not thought about such a question so I am not in a position to answer it now. Question: I am from Singapore Chamber of Commerce. In your presentation you also talked about the threats and opportunities arising from the growth of China. However, it has been a general rule that excessive nationalism would in most cases cause trouble. What is your view on this and how are you prepared to deal with it?

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Zhu: I am sorry to say that I am not very clear about what you mean by excessive nationalism and state-ism, the two terms you used in your question. However, let me assure you that China is a member of the world community, a member of the developing world and a member of countries in Asia and Southeast Asia. We are ready to cooperate with people of all other countries and regions. China will never become a threat. We have also emphasized time and again that China has never sought and will never seek hegemony. For a long time, China was threatened and invaded by various imperialist powers. How can China threaten others? We have felt deep pain from being bullied, we will never attempt to bully anyone else. Question: I don’t have a question involving high politics or big issues. I just want to ask your advice concerning a specific difficulty that I have encountered in my investment in China as a citizen of Singapore. I have made some investment in real estate industry in the Pudong area and I have had some difficulties. There was a law suit. I won the trial in the first instance and in the second instance. But still I cannot get my money back. So the result is the same whether you take it to the court or not. But I believe that the law is the ultimate means to defend one’s legitimate interests and rights. I’ve tried this route but still the result is not good. Could you give me any advice on what to do next? Zhu: You have my deep sympathy, but I can guarantee that this is by no means targeted specifically at you or Singapore citizens. There are many people in China who won the lawsuits but failed to see the rulings being enforced. I will be frank enough to admit that in our effort to build China into a country of law, we are yet to get to the point where laws are fully and effectively enforced. The fact that some of the court rulings fail to be enforced has already come to our attention and we are right now striving to improve the situation. When I return, I will convey your complaint to the Supreme People’s Court and advise them to do their best to enforce the court decisions. Question: I am a correspondent from Taiwan. I have noticed that in your prepared statement there is one paragraph about the question of Taiwan but you didn’t read it out in your presentation, but I would like to ask a question about it. In your prepared statement you said that Macau would come back to the motherland and Hong Kong successfully returned to China in 1997. So the next

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question is the question of Taiwan in order to achieve reunification of the motherland. But of course the question of Taiwan is more complicated. Before we achieve the ultimate solution of reunification of Taiwan to the mainland, what do you think is the most ideal state of affairs between the two sides of the Taiwan straits? Zhu: Before I address this audience I crossed out about a quarter of the prepared statement in order to save time. And while I was making my presentation I noted that among the audience was seated Mr Lien Ying Chow, a man already at the age of 94. So once again, I crossed out half of the remaining paragraphs. I did it while I was reading so probably it would give people the impression of inconsistencies between paragraphs. So it is my advice that before you leave this room, please pick up a Chinese and English copy of my speech. With regard to your question, suffice it for me to say that we are firmly opposed to the “state-to-state” theory. How come there are grounds for a state-to-state theory. China is not alone in opposing strongly the state-to-state theory. The overwhelming majority of the countries in the world have diplomatic relations with the People’s Republic of China, they all adhere to the one China policy, so there is no cause and no grounds for the two states theory. Our policy towards the policy of Taiwan has been consistent and clear cut. I just want to reiterate that we stick to the policy of “peaceful reunification, one country, two systems” in the hope of solving the problem by peaceful means, but we will never undertake to abandon the use of force. Question: I come from China originally and I am now doing academic research here. You mentioned the three development strategies and in each of them you mentioned the need for the development of education, science and technology in order to achieve national economic growth in the next century. Over the past 20 years, tens of thousands of Chinese students went abroad to study and later many of them remained there and started work. I came here in the 1980s and most of the students that left China at that time are now engaged in science and technological research. They also have various sorts of links and co-operation with their counterparts back at home. However, they have encountered some practical difficulties. Various ministries, including the foreign ministry, did not give them adequate support for instance when they turn to them for renewal of their passports. I wonder if you have any policy measures that you can elaborate which will help overcome such obstacles. In this way, Chinese researchers or students abroad could have better technological exchanges with their counterparts back at home. And I want to clarify that we are not here because of political reasons.

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Zhu: I will convey your concern to the relevant department in China and I will ask them to improve their work style. Just now in your question you also say that some overseas Chinese scholars are unable to go back to China, I don’t think the cause lies with us. Universities, particularly those top universities that include my alma mater Qing Hua University, have seen their graduates stay on after they finish their courses abroad. A considerable proportion of those overseas students have not come back, most of them are in the United States. The education level in the United States is high enough, hence I can’t see why we should help it train undergraduate students? Some of those students have indeed come back, but this time round as representatives of foreign companies in Beijing. At the bottom of my heart, I am really anxious to see and welcome our students back. Our policy is to support them in their study overseas, encourage them to come back and assure them of the freedom to come and go as they wish. Nevertheless, given the gap by dozens of times in salary between developed countries and China, I find it hard to bring myself to insist on their return at present! Of course, I don’t think the gap is as wide in terms of actual living standard or income, for things are pretty cheap in China and it is quite easy to lead a fairly comfortable life. One does not need that much money to live a life in China that is as comfortable as in a foreign country. I have all along been contemplating ways to improve the compensation for our academic fellows, state-owned enterprise executives and civil servants. Once this is done, I will have every confidence in welcoming you back. Question: I am from the South China Morning Post from Hong Kong. Can I ask when both China and Chinese Taipei join the WTO, would you be prepared to use the WTO to speed mechanisms to sort out some cross straits trade problems, for example, direct transportation and investment or would you like this to be resolved before Chinese Taipei is allowed to join the WTO? Zhu: China is yet to become a member of WTO so it is still premature to answer this question. But one thing is for certain that is mainland China, the People’s Republic of China, would become a member of WTO ahead of Chinese Taipei, and we will not allow people to use WTO as a floor to create “two Chinas”. Question: I am a correspondent from the Singapore media. In Southeast Asia, people always refer to you in private as the Money Man or the God of Wealth. Now China and

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United States have already concluded the bilateral agreement on China’s accession to the WTO. So it looks like China’s membership in the WTO is inevitable and this would also help improve China’s competitiveness. Singapore is a small country and I am sure that many business people would echo my opinion that this would pose a challenge. What do you think are the future challenges and what kind of role China would play? Zhu: It’s true that recently China and the United States reached an agreement on China’s accession into the WTO which has provided a favourable condition for China to become a member of this body. But it will still take a while before China can become a full member of the WTO because this won’t happen until after China concludes bilateral agreements with twenty-two other countries. But I expect that it would be easier for China to reach agreement with those countries than with the United States. We won’t have to wait until our hair turns white. The agreement between China and the United States has not come by easily. Had there not been the leadership and personal involvement of President Jiang Zemin and President Clinton, it would have been very difficult to conclude the agreement. In the course of the negotiation, Ms Barshefsky, the US Trade Representative and Mr Spurling, the US President’s Economic Adviser, spent a whole week in Beijing, and during that period, they booked their air tickets four times, only to cancel each time. And in the course of negotiation Ms Barshefsky made three telephone calls to President Clinton in order to seek his instructions and advice on how to proceed with the details. I know you probably would wonder how come I found out they made three telephone calls. She told me in person. But of course I made far more than three telephone calls to President Jiang Zemin. All in all that agreement was the result of political decision-making by the top leaders of the two countries. It was a win-win deal that was achieved on the basis of equality and mutual understanding and accommodation through consultation. All the countries in the world welcome the conclusion of this agreement but in our view this brings both positive as well as negative impacts. It’s a challenge and test for the Chinese Government and Chinese enterprises to ensure that it will generate more positive aspects than negative ones. But some people might wonder if it also provides more advantages than disadvantages for the other Asian countries, in particular the countries in Southeast Asia. My answer is a positive one. It will bring about more positive impacts than

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negative impacts on those countries—actually there are far more advantages than disadvantages. Compared with the gains, the losses will only be minor. First, China would not only open up its commodity market and investment to the developed countries, China will also open up its market to the developing countries. So the opportunities are equal for all countries in the world. Actually this provides us with the opportunity to further enhance our co-operation and economic exchange with the countries in Southeast Asia. Second, some people might be concerned that there would be competition between China and the countries of Southeast Asia because China would export more of its products to the United States and Europe after becoming a member of the WTO. Well, I cannot rule out completely the possibility of competition between China and countries in Southeast Asia but such competition would be very modest. Because of the difference in our respective economic structures, there is also a corresponding difference in our export mix. Hence there is little opportunity for us to confront each other in terms of the commodities that we all try to sell. Let me use textile exports as an example. In the past China was the biggest exporter of textile products to the United States. However, because of the introduction of quotas and other discriminatory measures by the United States, our export of textile goods to the United States has dropped drastically. China is now the third largest exporter of textile goods to the United States next to Mexico and Canada. It is increasingly difficult for China to maintain its position as the third largest exporter of textile products to the United States. Of course as a result of the agreement the US side is committed to give up the quota control but this won’t happen in five years’ time. Who can predict what will be the situation in 5 years’ time? So even if China manages to increase its exports of textile products to the United States, arising from membership of the WTO, this would only mean that China regains lost ground of its exports of textiles vis-à-vis Mexico and Canada. This would have little impact on the exports of Southeast Asian countries towards the United States or Europe. The third point I wish to make is that most of our exports to the United States and Europe are the products from the processing trade. Let me elaborate on what the processing trade means. It refers to the investment by foreigners who set up a factory in China to take advantage of the cheap labour available in China. These processing plants would use imported raw materials and they do the processing there. After that they re-export the products to overseas markets. Such trade accounts for 57 per cent of China’s total export. Last time I told this to Senior Minister Lee Kuan Yew, he was surprised. He told me that in Singapore there was also some portion of processing trade but not to such a large proportion. In the past, the United States complained about the trade imbalance with China. They claimed that they ran a deficit of dozens of billions of US dollars in their trade

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with China. So last time when I visited the United States, I gave a lecture at MIT where I quoted the statistics from the research fellows from Stanford University, and gave a true picture of the so-called U.S. trade deficit with China. Since then I haven’t heard as much complaining from the United States on this matter. In my speech at MIT I gave an example of sports shoes, whatever brand, Nike, Adidas, or other brands—they are all produced in factories of foreign investors or investors from China’s Taiwan. And these factories will use raw materials imported from the United States or Japan. And then after they do the processing, the products will be re-exported to those markets. During my visit to the United States, I asked my secretary to do a market survey, in particular, to check the price of these sports shoes. The result on average is that each pair of shoes would cost US$120. But the cost of the price of the shoes paid to the factory in China was only US$20. Out of the US$20, $2 would go to the purchase of the raw materials, the air insole, air padding for the sports shoes. The Chinese workers that do the job only get $2 out of the US$120—so who actually benefits from such processing trade? My conclusion is: had there not been exports of such products to the United States, that is, low price and of good quality, made possible by the cheap labour in China, then the inflation rate in the U.S. economy would have gone up by at least 2 percentage points. I don’t think any of the business people present here would be interested in engaging in such trade, that is, to go for only a profit of US$2 out of something worth US$120. I believe no Singaporean will ever do such kind of business, so we see no competition from you. I also see little hope in the further expansion of such processing trade. Because if you visit any US department store, you can see the shelves are filled with either shoes or hats or handbags all made in China—there is little room for an increase in exports of such products anymore. Fourth, some people are concerned that once China opens up its market, it would win foreign investment away from the other countries in East Asia. I don’t think there is ground for you to have such a worry, there is no such possibility at all. Although China managed to absorb a lot of foreign direct investment over the past few years—the figure for 1997 and 1998 exceeded U$45 billion—the fact is, little of the investment actually came from the developed countries. Half of the FDI came from Hong Kong, and if we include Singapore and Taiwan, then the FDI coming from Hong Kong, Singapore and Taiwan accounted for 60 per cent to 70 per cent of the total FDI we received. Because of the Asian financial crisis, our neighbours in this region devalued their currencies one after another. As a result, China’s export competitiveness has been seriously compromised. This year the total amount of foreign direct investment we have attracted has dropped sharply. I expect there will be a decline of US$10 billion. So it is quite difficult for us to restore the level of FDI next year to the 1997 and 1998 level.

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But of course I cannot rule out completely that there won’t be any challenge arising from Chinese membership in the WTO vis-à-vis those countries in Southeast Asia. But I can assure you that Chinese membership in the WTO would basically have a positive impact on you. The advantages would far outweigh the disadvantages. In the future when China becomes a member of the WTO, China will be ready to stand to work together with Singapore and other countries in Southeast Asia for the interests of the people of this region. Thank you for your patience.

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迈向新世纪的中国与亚洲 －在“新加坡讲座”的演讲 中华人民共和国总理朱镕基 (1999年11月30日）

尊敬的吴作栋总理阁下， 女士们、先生们、朋友们： 谢谢李显龙副总理阁下。 “新加坡讲座”是享有盛誉的国际论坛。许多国家的领导人、知名的政治家和 专家学者曾在这里对地区和国际问题发表过颇有影响的真知灼见。今天，我有机会 在这里同新加坡各界人士会聚一堂，向诸位介绍中国的情况，与大家探讨中国与亚 洲的发展前景，感到非常荣幸和高兴。在座的不少是中国人民熟悉的朋友和长期合 作的伙伴，我愿借此机会，向你们以及所有为增进中新两国人民友谊作出贡献的新 加坡各界人士，表示诚挚的感谢！ 人类即将跨进21世纪的大门。回首百年，20世纪是世界文明进程中充满艰辛苦 难的世纪，同时也是创造无与伦比的物质和精神财富的世纪。其中，亚洲崛起和中 国巨变是最伟大的奇迹之一。 从上一个世纪中叶到本世纪中叶，中国人民经过浴血奋斗，终于实现了民族独 立和人民斛放，建立了新中国。不久前，中国人民隆重庆祝了中华人民共和国成立 50周年。50年来，中国发生了沧海桑田的巨大变化。特别是改革开放20年来，中国 社会主义现代化建设的成就更是举世瞩目。1979-1998年，国内生产总值实际增长4.9 倍，年均增长9.7%。在世界的排名中，中国经济总量由70年代的第11位上升到现在的 第7位；进出口总额由70年代的第32位上升到第11位。全国城乡居民生活实现了从贫 困到温饱，进而向小康迈进的历史性跨越。这些成就的取得，不仅为中国今后发展 奠定了坚实的基础，也为亚洲乃至世界和平与发展作出了贡献。 近两年来，在面临各种新情况、新问题和新挑战的情况下，中国经济依然保持 着良好的发展态势。尽管亚洲金融危机给中国带来了不小影响，去年中国国内还 遭受了百年不遇的洪涝灾害，1998年国内生产总值仍比上年增长7.8%。今年1-9月

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国内生产总值同比增长7.4%，预计全年经济增长7％以上。经济结构调整迈出重要 步伐，企业经济效益明显回升。财政金融平稳运行。对外贸易恢复了强劲的增长势 头。人民币汇率保持稳定，外汇储备已达1520多亿美元。城乡人民生活继续改善。 当前中国经济的好形势，主要是在江泽民主席的领导下，全国人民团结一 致，顽强拼搏，及时采取因应措施，坚持推进改革开放的结果。 为拉动经济增长，我们实施了扩大内需的积极财政政策和其它配套的宏观经济 政策。通过增发国债，加大基础设施和企业技术改造的投入，扩大投资需求；增加 城乡居民收入，特别是较大幅度地增加城镇中低收入家庭的收入，直接扩大消费需 求。这些措施收到了良好效果。在比较困难的经济环境下，我们的改革不仅没有 停步，而且迈出了重要步伐，为经济发展不断注入新的活力。国有企业改革成效明 显。金融体制改革取得积极进展。对外贸易体制改革进一步深化。住房，社会保障 制度和政府机构改革进展顺利。与此同时，我们还采取新的措施扩大对外开放，放 宽了外商投资领域，从税收和金融等方面加大对外商投资企业的支持力度。更为重 要的是，我们在推进改革开放和发展过程中，十分注意保持社会稳定，为国民经济 持续发展创造了良好的社会环境。 中国经济还面临着一些困难和问题。主要是有效需求不足，经济结构矛盾突 出，就业压力增大。针对这些矛盾和问题，并着眼下个世纪的长远发展，我们已决 定实行以下三个方面的战略部署。 第一，坚持扩大内需，加大投资和消费对经济增长的双重拉动。为此，继续实 施积极财政政策，进一步发挥货币政策的作用，并综合配套地运用其它宏观调控手 段。明年国家财政将继续向国有商业银行增发长期建设国债，把居民的部分储蓄资 金转化为建设资金，重点用于基础设施建设和企业技术改造，以及增加教育科技等 方面投入。加大金融对经济增长的支持力度，采取多种方式适当扩大货币供应。主 要措施包括：国有商业银行将对基础设施建设项目加大贷款投放，银行要保障有市 场、有效益的生产对流动资金的需要，增加对中小企业贷款，大力发展住房、教育 和大件商品消费信贷。同时，采取有力措施积极鼓励和引导非国有企业扩大投资。 刺激消费需求，是扩大内需的一个非常重要的方面。我们将积极引导居民收支 预期，保障中低收入阶层收入的稳定增长；提高改革措施的透明度，要使各项改革 的推进都不会造成大多数居民实际生活水平下降，以改善居民心理预期增强人们 即期消费的意愿和行为；采取新的有力措施，减轻农民收入，开拓广大的农村市 场。还要鼓励各性消费，努力培育住房、电信、旅游、文化、健身等消费热点，以 消费结构升级带动经济的更快成长。 我们实行扩大内需的宏观经济政策，是建立在需要和可能基础上的，现在有比 较充裕的物资，外汇储备和巨大的生产潜力，不会发生什么风险。同时，我们是拥 有12亿多人口的国家，目前人均收入水平还比较低，以扩大国内需求为主、拓展国 内市场，将是我们国家长期实行的战略方针。 第二，对国民经济结构实施战略性调整，大力推动产业优化升级。随着中国城 乡居民生活从温饱型向小康型转变，主要商品供过于求，中国经济已进入一个新的 历史发展阶段。从战略上调整经济结构，既是扩大内需、促进经济持续发展的迫切

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要求，也是提高经济素质和效益、实现经济良性循环的根本性措施。我们将努力使 经济保持较快增长的同时，加大结构调整的力度；在加快结构调整的基础上，促进 经济向前健康发展。 我们将以国内外市场需求为导向，依靠科技创新和进步，着力抓好产业升 级。一是在继续调整和提高一、二产业的同时，大力促进第三产业的兴起，特别要 加快信息、旅游、社会中介和社区服务等产业的发展。二是积极改造和提升传统产 业。坚决淘汰没有市场、污染环境、浪费资源的落后生产能力和工艺设备；广泛 运用高新技术改造仍有市场前景的传统产业，加快老工业基地改造和产业升级步 伐。三是大力发展高科技，加快高技术产业发展，特别要加速国民经济信息化进 程，带动新兴产业的崛起，努力培育新的经济增长点和成长链。同时，要加快城镇 化进程，促进城乡经济协调发展。总之，通过对经济结构进行重大战略性调整，将 为中国经济开拓广阔的发展空间，并显著提高经济的竞争力和抗风险能力。 第三，实施西部地区大开发战略，加快中西部地区发展。邓小平先生早在80年代 就对中国现代化建设明确提出了“两个大局”的战略思想：“一个大局”是东部沿 海地区加快对外开放，率先发展起来；“另一个大局”是到本世纪末全国达到小康 水平时，要拿出更多力量帮助中西部地区加快发展。江泽民主席高度重视西部地区 大开发。他明确指出：“实施西部大开发，是全国发展的一个大战略”，现在“条 件已经具备，时机已经成熟”。西部地区幅员广阔，资源丰富，有着巨大的市场和 发展潜力。着手实施西部大开发，加快中西部地区发展，是中国面向新世纪作出的 重大决策，一定会象前20年东部沿海地区率先发展带动了全国经济持续快速发展一 样，将为东部和中部地区提供巨大的市场与发展前景，有力地促进全国济的更大繁荣。 为此，国家的建设投资将向中西部特别是西部地区倾斜，扩大对西部地区的投 资规模，加大对西部地区财政转移支付力度。东部地区也将采取多种形式加强对西 部地区的支持。西部地区将加快改革开放步伐，积极改善投资环境，国家还要采 取更加有力的措施，吸引更多的国内外资金、技术和人才参与中国西部地区大开 放。当前和今后一个时期，西部地区大开发的重点将放在加快基础设施建设、改善 生态环境、大力发展当地特色经济和优势产业、发展科技教育，为西部地区的加快 振兴创造更好的基础和条件。 改革和开放是中国实现现代化的必由之路。我们将坚定不移地推进改革、扩大 开放。要按照社会主义市场经济改革方向，继续调整和完善所有制结构，在坚持公 有制为主体的条件下，进一步鼓励和引导非公有制经济健康发展。国有企业是中国 国民经济的支柱，推进国有企业改革和发展仍然是一项重要而紧迫的任务。明年我 们将集中精力实现国有企业改革和脱困的三年阶段性目标，使大多数国有大中刑 亏损企业摆脱困境，在大多数国有大中型骨干企业初步建立现代企业制度，为下个 世纪国有企业改革和发展奠定良好基础。我们还将把加快社会保障体系建设提到更 加重要的位詈，为推进经济结构调整和改革开放创造稳定的社会环境。明年要在坚 持和完善有办法的同时，积极创造条件，加快形成独立于企业之外、资金来源多渠 道、管理服务社会化的有中国特色社会保障体系。

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对外开放是中国的一项长期的基本国策。我们将进一步为外商投资金融、保 险、电信、旅游、商业零售、外贸和法律咨询等服务业提供机会，加快能源、交通、通 信、环保等基础设施领域的对外开放。积极吸引外资以多种形式参与国有企业的改 组、改造。努力改善对外商投资企业的服务，简化外商投资项目审批手续，提高办事 效率。中国必定成为世界上对外国企业家越来越有吸引力的投资地区之一。 可以预见，中国将以更加稳健、更加开放、更加强劲的步伐前进在新世纪的征 程上。大规模的现代化建设，市场容量的不断扩大，以及改革开放的深入推进，必 将为世界各国与中国发展贸易和经济合作，带来非常广阔的广阔前景。中国未来的 巨大商机，不仅属于中国的企业家，更属于那些有胆识、有气魄、有志于到中国投 资办厂的外国企业家。 再过20天，澳门将回到祖国怀抱。这是继两年多以前香港顺利回归之后，中国 人民在实现祖国统一道路上又迈出的重要一步。“一国两制”是我们实现祖国统一 的既定方针，海峡两岸的最终统一是大势所趋，人心所向，是任何人和任何力量都 无法阻挡的历史潮流。一个统一、稳定、繁荣的中国，不仅符合全体中国人民的根 本利益，而且必将为亚洲和世界的和平、稳定与发展作出更大贡献。 女士们、先生们、朋友们： 五十年来特别是近二、三十年亚洲发展的历程充分表明，作为占亚洲人口三分 之一、幅员五分之一的一个大国，中国的稳定和发展，是亚洲和平与繁荣的重要力 量。中国经济总量和居民购买力的增长，为亚洲的发展提供了广阔的市场和更多的 机会。中国经济持续快速健康发展，对促进亚洲经济增长，提高抗御风险能力，增 强世界对亚洲的信心，具有重要和积极的意义。世界银行研究报告认为，“中国经 济迅速增长和继续放活，对世界经济来说是一个机会，而不是威胁”。 更为重要的是，作为和平共处五项原则的倡导者之一，中国坚持在相互尊 重、平等相待、求同存导、互利合作原则的基础上，与亚洲国家发展睦邻友好。中 国与亚洲国家关系不断发展的事实已经表明，虽然国家幅员有大小，历史背景、社 会制度、发展水平、文化传统和价值观念不尽相同，但只要坚持上述原则，亚洲各 国之间就能和睦相处。 中国经济的振兴离不开亚洲的发展。近二、三十年来，亚洲特别是东亚地区经 济快速增长，成为世界上最有活力的地区之一。我们也欣慰地看到，遭受金融危机 冲击的一些国家，对经济调整和变革后，今年以来出现了强劲的复苏势头，经济 增长率明显高于年初的预期。尽管有的国家经济复苏的基础还比较脆弱，但国际 上普遍认为，东亚经济最困难的时期已经过去。中国古代哲人庄子说过：“安危相 易，祸福相生”。亚洲尤其是东亚国家有较为坚实的经济基础和优秀的文化传 统，只要认真总结经验教训，完善发展模式，扬长避短，兴利除弊，经济一定会转危 为安，重新焕发活力和生机，并在下个世纪的全球政治和经济格局中占有重要位置。 纵观世界发展大势，在新世纪的征途中，既有空前巨大的机遇，也有许多可预

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见的和难以预见的严峻挑战。对亚洲国家而言，我们既要张开双臂，拥抱和抓住各 种机遇，又确实需要学会并善于应对挑战。这样，才能在风云变幻、竞争激烈的新 世纪中立于不败之地。为了使亚洲在21世纪保持和平、稳定与繁荣，中国政府和人 民愿与亚洲其他国家和人民朝着以下几个方面作出共同的努力： ——根据1997年江泽民主席与东盟国家领导人发表的《联合声明》所确定的宗 旨，以及中国与亚洲有关国家签署的跨世纪双边关系文件，继续在和平共处五项原 则的基础上，发展中国与亚洲各国的睦邻互信伙伴关系。 ——高度重视和积极稳妥地应对经济全球化趋势。经济全球化是一个无法回避 的历史潮流。同时，经济全球化又是一把“双刃剑”，既为各国的发展提供新的 机遇，也不可避免地给各国特别是实力较弱的发展中国家带来严峻挑战和风险。因 此，要坚持走适合自己国家持点的发展道路。既要抓住时机，大胆推进变革与创 新，扩大开放，又要坚持从本国实际出发，因势利导，趋利避害，稳步前进，注意 维护国家主权和安全。大力促进经济增长，保障经济和金融安全，仍是维护亚洲稳 定的重要课题。随着世界范围的经济结构调整步伐日趋加快，亚洲国家都应当加速 产业升级和经济结构优化步伐。这样，才能显著提高本国的经济素质和竞争力。 ——努力提高科技水平和技术创新能力。亚洲国家过去大多主要依靠自然资源 和劳动力优势实现经济增长。在世界科学技术日新月异的新形势下，应当把加速科 技进步和创新放在发展战略的首位。要注重教育的基础地位，积极培养和延揽具有 创新能力的高素质人才，为经济的持续发展开拓不竭源泉。 ——建立健个稳健、高效、安全的金融体系。金融是现代经济的核心。金融 是否稳定、健康运行，关系经济全局。亚训金融危机的阴霾虽已消散，但“前事 昭昭，足为明戒”，我们亚洲特别是东亚各国应进一步根除产生金融危机的隐 患，在深化金融改革、清理金融资产、整顿金融秩序、强化金融监管等方面继续努 力。同时，积极参与国际金融体系的改革，严格对短期资本流动的监控，遏制过度 投机，加强国际和区域金融合作。 ——国家要实现经济振兴，必须充分发挥市场和政府的作用。我们需要更加重 视市场力量和市场规律，鼓励竞争，增强经济活力和效率。同时，一个强有力的政 府是实现国家经济发展和繁荣的重要保障。关键是要找准政府在市场经济中的定 位，积极主动和正确地发挥政府对国民经济的宏观调控作用。 ——继续挖掘中国与东盟各国的互利合作潜力。包括扩大在贸易、投资、科 技、农业、旅游、机电、电讯、医药、环保、人力资源开发等领域的合作。中国欢 迎东盟经济一体化进程，希望与东盟自由贸易区和投资区建立联系，愿意为湄公河 流域开发合作提供融资支持。中国欢迎东盟企业家来华从事经贸和投资活动，尤其 欢迎参与中国西部地区的大开发。中国政府也将继续鼓励和支持本国有实力的企业 到东盟国家投资办厂。 我还愿强调一点，中国愿从地区和平与稳定的大局出发，恪守与东盟达成的政 治共识。继续维护良好的对话合作气氛和势头，坚持通过平等友好协商，妥善处理 彼此间存在的一些分歧和争议。睦邻友好，维护和平，是中国和东盟国家的共同利 益、共同需要。

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女士们、先生们、朋友们： 新加坡是东南亚的金融和商贸中心，也是世界和地区政治经济舞台上的一支活 跃的力量。中新两国已经奠定了良好的合作基础，希望新加坡在促进中国与东盟全 方位合作方面发挥更重要的作用。我在新加坡的访问虽然短暂，但贵国给我留下的 印象是深刻的。新加坡是联结东西方的桥梁，新加坡人民有着很强的创造力，在 不长的时间里取得了令人钦佩的成就。我在访问其他东南亚国家的时候，同样强烈 感受到东南亚国家人民具有战胜困难的巨大勇气和自强不息的进取精神，感受到曾 经遭受金融危机冲击的这片土地正在重新焕发新的生机和活力。展望未来，我们对 本地区和平、稳定和繁荣的前景充满信心。中国愿同东南亚国家登高望远，加强合 作，携手迈进，共创亚洲更加美好的明天。 谢谢大家。

讨论 问题一： 朱总理您好！我是新加坡联合早报的记者。我有一个问题，就是最近德国总理施罗 德提出邀请中国加入八大工业国会议，请问加入八国集团对中国有哪些政治经济意 义？中国加入八国集团的时机是否已经成熟？谢谢。

答： 我们认为八国集团没有广泛的代表性，但是我们与八国集团还是保持了密切的联 系。他们开会，谈什么问题，跟我们打过招呼。我们将继续保持与八国集团的联 系，加强合作。至于参加八国集团，我们没有收到正式的邀请。

问题二： 朱总理您好！我是新加坡华联银行的陈秀汉。请问古今中外，你最敬佩，最心怡的 政治领导人有哪几位？而您敬佩他们的原因又是什么？

答： 我不想在新加坡参加选举，你好象在考验我的政治智慧！我老实告诉这位朋友，我 没有考虑过这个问题，现在不便于回答。

问题三： 我来自新加坡总商会，叫李柄宣。朱总理你好，我问一个总理，就是中国的威胁与 机会。刚才你已经提到这个问题，有时过度膨胀的民族主义，以及过度膨胀的国家 主义通常是带来灾害的，请问你对这个问题有什么看法？以及如何处置？

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答： 很抱歉，我对你提出的国家主义、民族主义这个两个名词的内涵还搞不清楚。但 是，我可以告诉你，中国是世界大家庭中的一个成员，是发展中国家的一个成 员，是亚洲和东南亚国家的一个成员。我们愿意跟所有国家和地区的人民合作，永 远不会成为一个威胁。我们也多次强调，中国从来不称霸，永远不会称霸。中国长 期遭受帝国主义列强的威胁和侵略，中国怎么可能威胁别人呢？我们有遭受欺负的 深刻体验，我们绝对不会欺负别人。

问题四： 朱总理您好！望穿秋水，盼望你来。我问的不是国家大事，我只讲一个在中国投资 的新加坡公民所遭遇的非常困难的事。我在中国浦东的房地产纠纷中已经打赢了官 司，在一审、二审都赢了，但是强制执行之后就是收不到钱。我原来在想，打还是 不打官司，其实结果都是一样的。我认为诉诸法律是最后的途径，这条路已经走 了，请间我下一步怎么走？

答: 我非常同情你的遭遇，但是我可以向你保证，这绝不是针对你个人，也不是针对新 加坡公民的。中国也有很多人打官司，虽然打赢了，却老是执行不了。我很坦率 承认这一点：我们在建设一个法治国家，但是我们还没有完全做到有法必依。法院 的有些判决没有能够得到执行，这已经引起我们的注意，我们正在改善这方面的工 作。我回去以后，就向最高人民法院反映你的要求，请他们尽一切努力执行所作出 的判决。

问题五： 朱总理您好！我是台湾中国时报记者梁东屏。我刚刚注意到你演讲稿里面本来提 到了台湾问题，但是你刚才没有讲，不过这个问题还是值得问一下，因为澳门马上 就要回归了，香港在1997年也已经成功的回归了，那台湾问题显然是下一个要解决 的。但是台湾问题比较复杂一点，你认为这个问题在最后真正解决之前，台湾跟大 陆之间理想的关系应该是一个什么样的状态？

答： 来作讲演以前，我已经删掉了讲稿的四分之一。刚才我在念这个稿子的时候，看到 连瀛洲老先生坐在那个地方，他已经九十四岁了，所以我又把稿子删掉了－半。但 是，我希望诸位走的时候，可以要一份英文稿，还是以印发的讲演稿为准。因为我 刚才一边讲一边删，删得上下不连贯也是可能的。关于中国时报记者提出的这个问 题，我只有－句话要说，我们坚决地反对“两国论”，怎么有两个中国呢？不仅是 我们反对这个“两国论”，世界上的绝大多数国家都坚持一个中国的政策。中国对 台湾的政策是非常明确的、一贯的。我只是重申，我们坚持“和平统－、一国两

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制”的方针，希望用和平的方式来解决台湾问题，但我们绝对不承诺放弃使用武 力。

问题六： 朱总理，我是在新加坡国立大学生物系工作的申文全，从中国来的。教育、科技 对中国下个世纪国民经济的发展很重要。过去二十多年来，每年我们都有好几万中 国学生到国外去念书，然后在国外工作。象我们这些八十年代到国外念书的人，现 在都是在各个科技领域工作。现在有一个问题，我们同国内有很多科技方面的联 系，有很多合作，可是现在国内有些部门包括外交部，连我们护照的延期都不允 许，有成千上万的人的护照到时间都不能延期。有没有考虑过应该排除这些人为的 障碍，让我们这些在海外的学者，可以比较方便地到国内进行科技交流，而不至于 连回国都不能。我这里说的并不是因为政治上的原因不让回国。

答: 我一定会把你刚才讲的情况和所提的问题，转告我们有关部门，改进他们的 工作。至于你刚才提出海外学者不能够回国，那不是我们的原因。现在中国所培养 的大学生，特别是那些顶尖大学的毕业生，包括我的母校——清华大学，相当一部 分留学生不回来了，大部分在美国。美国的教育那么发达，还要我们帮它培养大学 生干什么呢？有些人也回来了，但是作为外国公司在北京的代表。从内心来说，我 确实是希望他们回来，欢迎他们回来，我们的政策是“支持留学，鼓励回国，来去 自由”。但是我现在也不好意思要求他们回来，因为发达国家的工资比中国国内的 高几十倍呀！当然我不认为实际的生活水准、实际的收入有那么大的差距，因为中 国商品是很便宜的，生活是很容易的，不需要那么多钱就可以同在国外生活一样 好。所以，我一直在想办法提高知识分子的待遇，提高国有企业管理人员的待 遇，提高政府工作人员的待遇，到那时候，我就会理直气壮地欢迎你们回来。

问题七: 我是南华早报的记者。在中国和中国台北都加入世贸组织以后，中国是否准备用世 贸组织这个机制，来解决海峡两岸之间存在的一些问题。比如说直航以及投资方面 的问题，还是说中国在允许中国台北加入世贸之前，应该先把这些问题解决？

答: 中国现在还没有加入WTO，一切言之过早。但是肯定中国会先于中国台北加入 WTO，而且我们也不允许利用 WTO 来制造“两个中国”。

问题八： 我是新加坡传媒机构的记者陈桂月。朱总理，在您到访这个东南亚国家的时候，大 家都叫你财神爷。在中美达成中国加入WTO的双边协议之后，中国加入WTO已经

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势在必行，那么中国的竞争力也会大大提高了。作为新加坡这么一个小国，我相信 在座的许多商家都很希望知道，将来我们面临的挑战是什么？中国在这方面又扮演 怎么样的一个角色？

答： 最近，中国和美国就中国加入WTO问题达成了双边协议，这为中国加入WTO提供 了一个有利的条件。但是，中国加入WTO还有一个过程，我们还需要跟22个国家 达成双边协议以后才能够进入。当然，我想跟这些国家达成协议会比同美国达成 协议要容易一点，头发不会变白。这次中美达成协议真是不容易呀，要是没有江 泽民主席、克林顿总统的领导和参与，我们两国很难达成这个协议。在这次谈判 过程中，巴舍夫斯基女士和斯帕林总统顾问在北京整整呆了一周，买了四次飞机票 要走，又退掉了。在这个期间巴舍夫斯基给克林顿总统打了三次电话，请示谈判 的具体细节。你们要问我，你怎么知道她打了三次电话？请不要多心，是她亲自告 诉我的。当然，我跟江泽民主席打的电话绝对不止三次。总之，我们这一次达成的 协议，是双方领导人的政治决断，它是一个在平等协商、互利互让的基础上达成 的“双赢”协议，世界各国都欢迎这个协议。从我们看来，这个协议是有利有 弊，如何能够使它利大于弊，是对我们政府和企业的－个考验和挑战。对于亚洲国 家，对于东南亚国家来说，是不是利大于弊呢，我可以肯定地说，是利大于弊，而 且利益很大，弊端很小。 第壹， 我们对发达国家开放市场，同样也向发展中国家开放。机会是均等的。这为我们和 东南亚国家进一步加强合作，提供了一个商机。 第贰， 是不是我们通过进入WTO，能够将大量的商品出口到美国和欧洲，因而与东南亚 国家发生竞争呢？我看这种竞争不能说一点没有，但是很少。因为我们之间的经济 结构不同，我们向美国、欧洲出口的商品结构也不同，很少有互相冲突和矛盾的 地方。比如说纺织品，这过去是中国向美国出口最多的商品。中国也是美国进口 纺织品量最大的国家。由于美国采取配额和其他种种歧视性的措施，使中国纺织品 对美国出口急剧下降，目前中国已经退居第三位了，第一位是墨西哥，第二位是加 拿大，现在中国要保住第三位也不容易了。当然，这一次美国承诺放弃针对中国纺 织品的配额，但要实现是在五年以后，谁知道五年以后它又有什么新招啊！即使我 们能够增加一点对美国的出口，也仅仅是恢复一点我们被墨西哥和加拿大抢走的市 场。对于东南亚国家没有什么妨碍啊！ 第叁， 中国对美国和欧洲商品的出口，主要是加工贸易，就是外国投资者利用中国的廉价 劳动力，用进口的原材料，加工以后把商品再返销到外国去。中国的出口百分之五

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十七左右是这种加工贸易。我把这一点告诉李光耀资政，他都感到惊奇。他说新加 坡也有加工贸易，但没有这么大的比例。过去，美国一直说中美贸易逆差是几百亿 美元，美国是逆差。我今年四月份到美国访问的时候，在MIT作了一个报告，所引 用的全是美国 Stanford 大学的数据，充分阐明了美国对中国所谓贸易逆差的真实情 况。从我那－次讲了以后，似乎没有听到他们说这个贸易逆差了。我举了一个例 子，就是运动鞋，现在美国的运动鞋，不管什么牌号，什么 Nike 啊，Addidas 或者 是 Converse 啊，几乎全是在中国制造的。但都是外国的投资者，也有来自中国台 湾的投资者。他们在中国开厂，进口美国和日本的一些原材料，生产运动鞋再返销 到美国去。我叫我的秘书专门在美国市场上做了调查，这个调查说明什么问题？在 美国市场上买一双运动鞋平均是120美元，但是在中国工厂的出厂价是多少呢？20 块美元。这20块美元里面，有两块美元是买美国的一块气垫，那块气垫就值两个美 元，而中国的工人得到多少钱呢，也是两块美元，和那块气垫差不多。－双鞋出口 到美国120美元，中国人只赚了两块美元。所以，这种加工贸易究竟是对中国有利 呢，还是对美国更有利呢？我得出的结论是，要没有中国人提供这么价廉物美的消 费品，今天美国的通货膨胀至少要提高两个百分点。 在座有许多企业家，我想你们谁也不会愿意作这种生意，120美元的生意只赚两美 元。我想这种生意你们新加坡人是绝对不会做的，跟我们没有竞争。同时，我想这 种加工贸易也没有什么前途了，因为现在美国百货公司里面，什么鞋子、帽子、手 袋呀，几乎全是 made in China，不会再多出口，没办法再多出口了。 第肆， 是不是由于中国开放了市场，就把外国投资者都从东南亚吸引到中国去了呢？我 看你们不必担忧，这种可能性一点都没有。中国现在利用的外资数量确实不 少，1997、1998年吸收的直接投资每年都有450多亿美元。但是这些投资从发达国家 来得少，一半是从香港来的，如果包括新加坡和台湾的投资的话，占了百分之六十 到七十。由于亚洲金融危机的影响，东南亚一些国家的货币都贬值了，因而我们的 出口竞争力下降了，到中国去投资的减少了，今年外商直接投资将比去年减少几十 亿美元。我预计，明年也很难恢复到1997、1998年的水平。 当然，我并不是说中国加入WTO以后不会给东南亚国家带来－些挑战。可以肯定 地说，正面影响是主要的，利是大于弊的。如果我们参加了WTO，我们愿意同新 加坡及东南亚的国家站在一起，为我们的国家和人民的利益携手合作。 Thank you for your patience!

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Global Values The United Nations and the Rule of Law in the 21st Century Kofi A. Annan

Kofi A. Annan, Secretary-General of the United Nations, delivered the 18th Singapore Lecture on 14 February 2000. He was introduced by Minister for Foreign Affairs and Law Professor S. Jayakumar. The lecture is an eloquent defence of the importance of international law and the need for all countries to uphold the rule of law. These issues have assumed greater salience in present times when international rules and norms are being challenged by powerful states. Thank you, Professor Jayakumar, for that most generous introduction. You have raised expectations which I shall have difficulty living up to. Indeed, your dual credentials as scholar and policy-maker make you a hard act for any lecturer to follow. But one thing about those credentials does give me great encouragement for the topic I have chosen to speak about in front of this very distinguished audience. And that is the fact that you are both Minister for Foreign Affairs and Minister for Law. Offhand, I cannot think of any member state of the United Nations in which those two positions are combined. And I imagine that in some member states the combination might even be thought eccentric. People still tend to see law as an almost exclusively domestic matter, while foreign policy is seen as the realm of pragmatism and even Realpolitik—a domain where there is no law but the law of the jungle. I am very glad to see that in Singapore you think differently. Not that you have a starry-eyed confidence in the eternally benign and law-abiding instincts of your neighbours. I know that you also set great store by being able to defend yourselves if need be, and that is certainly not something I would reproach you for. Every state enjoys the right of self-defence, under Article 51 of the United Nations

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Charter. And, so long as its intentions are purely and unmistakably defensive—as yours are—the fact that a state is able and willing to defend itself reduces the risk that others will attack it. In addition, a state with strong defence forces is better able to contribute to collective security operations when the need arises. Singapore, for example, was able to make a significant contribution to the collective action to uphold the sovereignty of Kuwait against aggression by Iraq in 1991, and—more recently—to the international force (INTERFET) which went to restore order and security in East Timor last year. Singapore has also contributed Military Observers to several United Nations peacekeeping operations, and you have now supplied the Deputy Chief of Staff, as well as a medical team, in the United Nations Transitional Administration in East Timor. We greatly value these contributions, and I hope that Singapore will feel able to contribute to other United Nations peacekeeping operations in the future. So there is no contradiction at all between having the ability to defend yourself and having the determination to uphold international law. On the contrary, the two go hand in hand. All states, but small states especially, have an interest in maintaining an international order based on something better than the grim maxim that “might is right”—based, in fact, on general principles of law, which give the same rights to the weak as to the strong. That point, I know, has never been lost on Singapore. But there is a second reason why I believe Singapore has a strong and growing interest in the development of international law. Singapore may be a small state, but it is surely the least isolated state that anyone could ever imagine. Most countries trade a certain fraction of their gross national product overseas—large or small according to the case. But your foreign trade is three times the size of your national product. That makes yours easily the most international national economy (if I may put it like that) of any member state of the United Nations. In other words, you have built your extraordinary success and prosperity on international trade and investment. When investors lose confidence in the international system—as happened, briefly but dramatically, during the financial crisis two years ago—Singapore’s economy suffers, even though the source of the alarm may have nothing to do with Singapore itself. And if trade were interrupted, your economy would virtually disappear. Yet trade, services, and investment can only cross national boundaries when law crosses them as well. The minimum condition for such transactions is that the trader and investor have confidence that their property rights will be respected, that contracts will be fulfilled, and that when disputes arise there is some agreed method of settling them. Up to a point, such arrangements can be made on an ad hoc basis. But we have long since moved beyond the stage where ad hoc arrangements are sufficient. Today

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we live in a 24-hour trading universe, in which the markets never close because, as the hymn says, The sun that bids us rest is waking Our brethren ’neath the western sky. Traders in New York, or certainly in Los Angeles, are still in their offices when you in Singapore start work in the morning, and markets in Frankfurt or London are open before yours close. And we are all in constant touch with each other by telephone, e-mail, and fax. In such a global economy, it is vital to have clear, simple rules that everyone knows and everyone applies. That is by now virtually a truism in the world of business. What is not so widely appreciated is the extent to which such rules already exist, along with institutions to manage them. And still less widely known is the fact that many of these rules and institutions fall within the United Nations system. Let me give you some examples: • When ships sail freely across the seas and through international straits, they are protected by rules legitimized in United Nations conferences. • Commercial airlines have the right to fly across borders, and to land in case of emergency, thanks to agreements negotiated by the International Civil Aviation Organization. • Similarly, it is protocols of the Universal Postal Union which allow mail to move freely across borders. • Trademarks and patents are registered throughout the world by the World Intellectual Property Organization. • The United Nations Statistical Commission helps ensure that economic statistics, accounting standards, and commodity descriptions, wherever they are produced, mean the same thing to people reading them in other countries. • The World Health Organization sets quality criteria for the pharmaceutical industry worldwide, and standardizes the names of drugs. • The United Nations Conventions on Sales and on the Carriage of Goods by Sea help to establish rights and obligations for buyers and sellers in international commercial transactions. • The International Telecommunications Union, by allotting frequencies, keeps the airwaves from becoming hopelessly clogged; and its technical standards enable transmitters and receivers on opposite sides of the world to connect with each other. • The World Meteorological Organization (WMO) collects data from member states and redistributes them, making it possible to forecast the weather both around the world and in specific countries. It is also—as you may have heard—taking steps

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to ensure that weather patterns are given names derived from the culture of the regions of the world where they occur. So in future, thanks to the WMO and the United Nations Economic and Social Commission for Asia and the Pacific, Asian typhoons, instead of being called “Ted” or “Gloria”, will have names such as “Yu-tu” or “Fung-wong”. These are all services that many of us take for granted in our daily lives. But it is only thanks to a carefully woven network of international rules and regulations that we are able to do so. And the more we find ourselves living in a single economic space, the more we shall depend on such rules. But the case I want to make to you this afternoon is that technical standards are not sufficient. True, they help to reduce transaction costs and to make the risks and profits of business more predictable. But if we treat globalization as a purely economic phenomenon, and apply common rules only in the purely technical and commercial areas, we are running very high social and political risks. Why? Because market forces, especially when unleashed on a global scale, bring about enormous and very rapid changes in people’s lives. Societies and political systems have to adjust to those changes. Indeed, they should be able to manage them, so that the maximum number of people benefit, and those who suffer do not suffer unbearably. At present that is not happening. Social and political structures are falling far behind the spread of markets. Let me give an example which probably affects everyone in this audience quite directly. Three years ago a health-threatening haze spread right across this region. It was caused mainly by forest fires in Indonesia. They in tum were caused mainly by plantation owners starting fires deliberately. For various reasons, mainly to do with the political system then prevailing in Indonesia, the authorities did little to stop this, although it was against the law. In other words, a failure of governance in one country caused severe environmental problems for many of its neighbours. Not surprisingly, they protested. Last year, when there were fears that the same thing might be happening again, ASEAN environment ministers met here in Singapore and issued a statement, in unusually tough words, urging Indonesia to enforce the “zero burning” policy which President Habibie had announced. It would be hard to find an international organization that is more respectful of its members’ sovereignty than ASEAN. But in this case ASEAN ministers felt no compunction about “interfering” in Indonesia’s domestic affairs, because what it was doing clearly affected the lives of people in the other member states. Everyone understood, in a case like that, how important it is to have common standards, and for those standards to be enforced. I think the protests we saw in Seattle two months ago, during the World Trade Organization conference, were symptoms of a similar malaise on the global level.

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The protest groups were giving voice to some very widely felt fears and anxieties about the effects of globalization. Those groups are right to be concerned—about jobs, about human rights, about child labour, about the environment, about the commercialization of scientific and medical research. They are right, above all, to be concerned about the desperate poverty in which so many people in developing countries are condemned to live. They were only wrong in seeking to solve these problems by forging new shackles for world trade. Such restrictions, if adopted, would make the problems even worse, by aggravating poverty and obstructing development. If we want to preserve the benefits of the new global economy, and ensure that they are shared by a much larger number of the world’s citizens, we must find a better way to address these problems. We must show greater determination to tackle social and political issues directly. In many areas, the United Nations and its specialized agencies are mandated to do precisely that. We are charged with advancing the causes of development, the environment, human rights, and labour. Given appropriate funds and support, we can be part of the solution. So too can the private sector. Transnational companies, which are the prime beneficiaries of economic liberalization, must share some of the responsibility for dealing with its social and environmental consequences. Economic rights and social responsibilities are two sides of the same coin. That is why a year ago in Davos I proposed a Global Compact between business and the United Nations. I asked them to act, within their sphere of influence, according to internationally accepted standards in the areas of human rights, labour standards, and the environment—and I offered the services of the relevant parts of the United Nations system to help them do so. The response so far has been very encouraging. I believe we can achieve a great deal by working together more closely. But business can only do so much. Most businessmen are understandably alarmed at the idea that they should have the responsibility of setting environmental standards, or of inventing health insurance on a company-by-company basis. And frankly, I think it would be an abdication of responsibility by states if they were left to do so. It is, above all, the job of the state to define and enforce standards in these areas. And where common standards are needed, as increasingly they are, it is the job of states working together, through multilateral institutions. And these standards have to be rooted in shared values. In the last resort it is common values that hold every society together, and what we are talking about is really a global society. Moreover, every society must have a language; the language of global society is international law.

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Of course, that society cannot and must not be completely uniform. The wonderful diversity of human cultures is something of inestimable value in itself, and also the main source of human dynamism. It must be preserved. But if different traditions are to coexist peacefully, they must do so within a framework of shared values—a sense of our common humanity. People must be able to follow their own traditions without making war on each other. They must have sufficient freedom to exchange ideas. They must be able to learn from each other. And that means that each nation must not only respect the culture and traditions of others, but must also allow its own citizens the freedom to think for themselves. I am not sure that any culture has ever been successfully preserved by limiting the free thought and expression of the individuals who belonged to it, or by denying them free interaction with currents of thought from elsewhere. On the contrary, that tends to stifle their creativity, and thus to sap the vigour and dynamism of a culture from within. That is perhaps the greatest danger facing the cultures of today’s developing countries. The greatest gap between them and the industrialized world is the “knowledge gap”. It can only be bridged by open-minded research and free, courageous thought. The only tradition worth preserving is a living tradition. And traditions can only be kept alive by people whose minds are free to absorb and understand a world that is constantly changing. In short, we cannot build a global economy and society simply on the principle of “live and let live”, in the sense of letting each state enforce its own orthodoxy on all its citizens. Still less can we do so by allowing one or two powerful “core states” in each region of the world to enforce their own will on others which are deemed to share their culture. On the contrary, we must accept—and even cultivate—the presence of different traditions within each region, and indeed within each society. Ladies and Gentlemen: All the great traditions and religions overlap when it comes to the fundamental principles of human conduct: charity, justice, compassion, mutual respect, the equality of human beings in the sight of God. That is what has made it possible for states in all parts of the world, representing many different religious and cultural traditions, to espouse the Universal Declaration of Human Rights, and other more detailed agreements which flow from it. And those agreements, I submit to you, form a corpus of international law no less essential to the future health of our global society and economy than the more everyday ones I listed for you just now. Just as we scrupulously adhered to the latter, we must be equally firm in our commitment to these more fundamental agreements.

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The Conventions against Genocide and Torture; the International Covenants on Civil and Political Rights and on Economic, Social, and Cultural Rights; the Convention on the Rights of the Child and the ones outlawing discrimination whether on grounds of race or gender—these and others like them define the ground rules of a global civilization within which there will still be room for the human spirit to express itself in many, many rich and diverse forms. In fact, there should be room for greater diversity than ever before, because the purpose of all these international instruments is to safeguard human freedom. The practices that they forbid are those which cramp and oppress the human spirit, and prevent human beings from realizing their full potential. I have yet to hear of a civilization which claims torture or repression or discrimination as one of its positive values. I am convinced that all societies and cultures will blossom and flourish when international law, firmly rooted in the global values I have outlined, is fully implemented and enforced. It is only when coercive power is used to limit freedom of thought, out of exaggerated fear of external influences, that the vitality of a culture is really in danger. Let me conclude then, Mr Chairman, by borrowing a famous phrase from one of the founders of the United Nations: “We have nothing to fear, save fear itself.” Thank you very much.

Question and Answer Session Question: Mr Chairman, I am Tommy Koh and I am the protem chairman of the Kofi Annan fan club in Singapore. Mr Chairman, I would like to thank the Secretary-General for his important message to us this afternoon, which is that all countries big and small should co-operate to uphold international law and the rule of law between states, as well as within states. The question I would like to put to him concerns the application of international human rights law to one of our closest neighbours, Indonesia. Following the atrocities which occurred in East Timor, two commissions of inquiry were established, one by Indonesia and one by the United Nations. The Indonesian National Commission of Inquiry has submitted a report which names over thirty individuals as being suspected of responsibility for the atrocities. The International Commission of Inquiry has submitted a report to the Secretary-General but that report has not yet been published. The leaks to the media, however, seem to be that the International Commission’s Report suggests the establishment of an international tribunal to hold accountable those guilty of wrongdoing. We therefore face two very important choices. Should those who are suspected of wrongdoing

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be held accountable by Indonesia at the national level or be held accountable by the United Nations at the international level? Given the delicate situation which exists in Indonesia and the willingness of the Indonesian government to enforce the rule of law within its country, I wonder if the Secretary-General could share with us his own views on these two critical choices. Annan: Thank you very much, Tommy, and thank you also for your support. I need it. Let me say that the situation in Indonesia and the issue you raise is of great importance to me and to the United Nations. We set up a Commission of Inquiry after very difficult discussions within the Human Rights Commission. The group has submitted its report to me, which I have studied, and I have also asked Indonesia to comment on the report. I have recently given both the report and Indonesia’s comments to the Security Council, which is studying the next steps. I had discussions with members of the Security Council and shared with them my own view, which I suspect they would also share, that the main thing is to send a message that crimes against humanity and such gross violations of human rights will not be allowed to stand, and that those responsible would be held accountable. It is important that they are brought to justice. If the country involved consents and shows the willingness and the capacity to undertake the trial and to make them accountable, my sense is that we should allow Indonesia or the country concerned in the first instance to put them on trial. But I suspect the Council will keep its eye on developments and ensure that it does happen and I think it will be in the interest of future developments in Indonesia— not only in the interest of human rights, but the democratic process that Indonesia has launched—that they go through this process. And if they do it, there will be no need for the Council or the United Nations to set up another tribunal to compete with one set up by the government that is going to do exactly the same thing. So I would encourage the Indonesians to move ahead with their process and I am sure if they do that, the Council may conclude that there is no need for an international tribunal. Question: Mr Chairman, my name is Simon Tay. I teach International Law at the University and I am Chairman of the Singapore Institute of International Affairs. May I ask the Secretary-General a question about humanitarian intervention. Secretary-General, I share your belief that some things are universal, especially human rights and environment. I was glad to hear you talk about the fires the region has suffered. But I want to question what should be done and by whom in

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the name of humanitarian intervention. This is particularly when it is more than words and it’s actually the use of force. In particular, the report of the independent inquiry into the United Nations actions during the 1994 genocide in Rwanda called on the United Nations to act in future to prevent acts of genocide wherever they may occur and not to exercise double standards. When we look at these tragedies, we have to ask not whether they are worth reacting to, but whether the United Nations can live up to this challenge. In particular is the doctrine of humanitarian intervention—when it’s applied to Kosovo and perhaps East Timor, but not to Chechnya and other cases—will this lead to the United Nations being accused of applying double standards? What criteria could we use to guide ourselves through these very difficult questions? Annan: I share all the concerns you have raised, and that is precisely why last September in the General Assembly I put this issue firmly before the member states. I think we have a dilemma here, a really serious problem. Article 2.7 of the Charter indicates that we should not interfere in the internal affairs of member states. But the same Charter demands of us that we take steps to save future generations from the scourge of war and gives us a very fundamental responsibility. We saw what happened in Kosovo where NATO intervened without Security Council approval and the debate that ensued. We have seen all these situations where we have not been able to intervene. The question then is, if we argue that our own Charter allows us to intervene and even to use force in the common interest, what is the common interest, who defines that common interest, who defends it, by what means, and under whose authority? These are issues that I believe the member states of the United Nations should debate and discuss and come to some consensus as to how to tackle them in the future. We need clarity as we move forward. I define intervention from benign diplomatic action to the extreme cases where use of force may become necessary. The international community intervened during Apartheid in South Africa, we imposed sanctions. In fact I was talking to some ambassadors who were a bit dubious about this question of intervention, and I raised the question. If I had made the speech I made this year some years ago, when Apartheid was at its height, the then South African government would have said this is out of question and you are out of order. But what would have been the reaction of the majority of South Africans? Anyway, since I made the statement there has been quite a lot of discussion going on. I see Ambassador Kishore Mahbubhani is here. The General Assembly is going to be discussing this; the Security Council is discussing it. I have a task force of my own, in the Secretariat, looking into it, and we have challenged academic institutions and professors like you and research centres as well to think it through.

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And I hope in the next nine months or a year or so, we will come back to this, and hopefully some brilliant ideas will come up. But the membership has to face this issue—it’s not going to go away—and come up with some guidelines and consensus as to how we should react. But the fact that we may not be able to react in all situations should not mean that we should not act. Question: My name is Kasise Ricky Peprah. I am from Ghana, and I am presently on a social visit in Singapore. The United Nations has tended to support regional groupings in conflict resolution and it struck me as very, very important that the Economic Community of West African States (ECOWAS) intervened in Sierra Leone in its capacity as ECOMOG. There was a very indicting commentary on CNN lately entitled “Cry Freetown” in which even the peacekeepers themselves were supposed to have descended into the worst carnage, if I can put it at that. First of all, I want to ask the Secretary-General for his comment. From your investigations, did the ECOMOG soldiers really descend to such depths? And if they have done that, what is the rationalization behind your supporting regional groupings and how can we be sure that peacekeepers do not become more of a threat to the peace of the place they are supposed to be keeping peaceful. Annan: Thank you very much for that question. Let me say that the United Nations has not done any independent investigation into the behaviour of the ECOMOG troops from the West African regional grouping. We also saw the film on CNN but, not having done any independent investigation, I would not want to comment on the validity of the report. What I will say is that peacekeepers have the responsibility to respect international humanitarian law and respect the human rights of the people in the area they have gone to help. They have a special responsibility because they have come in the name of peace; they go and travel in the name of peace. We have issued guidelines for peacekeepers on these issues—on international humanitarian law and on human rights. I think what is also important is that peacekeepers must be well trained. It is the best soldiers who make good peacekeepers. There is no point in sending in men and women who may be in uniform and have guns but are not trained at all and are not prepared for the task. In fact, peacekeeping is much more difficult, soldiers tell me. Some have told me it’s much easier to fight a war—you know the enemy, you know what to do, and you are trained to fight. But in peacekeeping you are trained to be patient, to talk, to hold back, and that takes greater discipline, which not everybody has. And this is why I am stressing the question of training peacekeepers.

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On the question of the regional role, when we look at the peacekeeping operations of the last ten to fifteen years, there is a regional dimension that we cannot get away from. Let me start with this region. During the Cambodian operation, the backbone were the Asian countries which offered troops and assistance and which worked with the United Nations to implement the peace agreement. Look at East Timor. Without the support and the engagement of the Asian countries, from Singapore to Thailand to the Philippines to Australia, we would not have had a force. I called several leaders around the world and they said, yes, we understand the problem but we will not put in troops. The Asians had to do it. You go to Europe—in Kosovo and in Bosnia, the bulk of the troops for that problem came from that region. It is also natural that Africa should begin to develop its capacity so that it can help put out fires in its own neighbourhood when they break out. We are beginning to recognize that more and more, not all, governments are prepared to send their troops across continents to go and take on these kinds of operations. And, therefore, we need to train troops, we need to train national and regional troops to be able to participate in these operations. Of course, it does not mean that the United Nations has no responsibility as a universal organization. We do have a responsibility; we support the regional organization and in some cases where there is no regional organization to do it, we have done it directly. But we will always need the support of the countries and the governments in the region, and this is the reality of these operations. Question: Thank you, Mr Chairman. My name is Harvind Singh. I am a second-year law student at the National University of Singapore. My question for His Excellency Mr Annan concerns the mechanism for United Nations’ intervention. Your Excellency, Sir, a common indictment of the United Nations has always been deadlock in the Security Council. My question is how can we have realistically one rule, one law for all, if intervention means intervention in the internal affairs of a country which commands a permanent Security Council seat; and I say this with special reference to the civil war that is going on in Chechnya. Annan: I think our Charter is as it stands. Unless the Charter is amended, we have to live with these veto powers. It is a fact that Chechnya was not discussed at all in the Security Council. I issued several statements but the Council could not discuss it and I think we all know why. Statements were made by the European leaders, by President Clinton, and I made a statement. I sent an envoy to go and talk to the Russian authorities about ensuring that the civilian population are given assistance and are protected. And two weeks ago, when I was in Moscow, I had a discussion

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with Acting President Putin on this issue but I am afraid that if a permanent member vetoes an operation, there is not much we can do at this stage, except go to the General Assembly under a resolution known as “Uniting for Peace”, and allow the membership at large to discuss this issue. This has not been used very often and in the case of Chechnya we got nowhere near triggering that mechanism. Question: My name is Leonard Sebastian. I am a Fellow at the Institute of Southeast Asian Studies. Your Excellency, I have a question for you regarding the United Nations situation in East Timor. The United Nations has played a central role in East Timor in the process leading up to the United Nations Consultation on 30 August to INTERFET right up to UNTAET at this present moment. The UNTAET mandate will end on 31 January 2001. Are there any plans for the United Nations to extend that mandate, taking into account, first and foremost, the immense difficulties the East Timorese face on the one hand, and on the other the fact that United Nations prestige is at stake and it would be nice to see the East Timor experience as a United Nations success story. Annan: It’s a good question because it’s one of those areas where obviously the mandate as initially given to us by the Council is for a two-year period, but the United Nations operations have been extended frequently and it depends upon what happens. What we have to be clear about here is that there are elements within East Timor who believe that the faster they become independent, the better it would be. We have an enormous task of reconstruction and institution-building to do with the people of East Timor and we are going to try and assist them as far as we can on the road to statehood, and I hope that all concerned—the East Timorese and the international community—would be patient and try and get the work done and get it done properly before we leave. I think it would be more realistic to link our departure to specific achievements and benchmarks rather than an arbitrary deadline. I am sure that when the time comes, the Security Council will consider that, but I hope and pray that the East Timorese would also be patient because nation-building is a tough, difficult, complex, and slow process. Question: My name is Pui Hee and I work for a multinational corporation. Mr Kofi Annan, Sir, sanctions have been used by the United Nations on some rogue countries, but in most cases, the sanctions will only affect the people in the street, rather than the people in power for whom the sanctions were originally instituted. So given the fact

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that sanctions is itself a very blunt instrument, what is your view on United Nations sanctions in the 21st century? Annan: The sanctions issue is a real problem for us. In Iraq, the Council itself has recognized that sanctions could be a blunt instrument and therefore authorized the oil for food scheme, whereby Iraq is allowed to sell a certain amount of oil and the revenues are used to import food and medicine. But despite the scheme, there are constant accusations that the children of Iraq and the population of Iraq are suffering and that the United Nations sanctions are responsible for it. The Council and actually also us in the Secretariat have looked at this issue and there are discussions about coming up with smarter sanctions, sanctions that will be targeted against the leaders whose behaviour one wants to change, rather than a sanctions regime that affects the population. This is something that is being looked at very carefully and in more recent years, the Council has tended to demand a humanitarian impact assessment before it approves new sanctions. It was done in the case of Sudan and I think it is going to be the norm in future. We are also looking at other means of getting compliance with Security Council resolutions rather than imposing sanctions, which I agree with you, can be a blunt instrument. Question: My name is Khong Yuen Foong. I am the Acting Director of the Institute of Defence and Strategic Studies at the Nanyang Technological University. Mr SecretaryGeneral, towards the end of your Lecture you pointed us to some governance and the universal declaration of human rights and some conventions which supposedly can be a basis for what you call ground rules of a global civilization. What I did not get a sense of from the Lecture was whether you thought there are any obstacles that might be in the way of these governance and universal declarations due to their being the ground rules of such a civilization. I wonder if you might comment on that. Annan: There is no doubt that there will be some difficulties along the way. In my own experience, though, the difficulties often do not come from the people or from the governed. The difficulties and objections often come from leaders, invariably dictatorial leaders, who believe in their mind that they are in control of the situation. But I think in this day and age, leaders who like to control and are dictatorial are going to have a great deal of difficulty controlling information given the advances in information technology and the access people have to information, and there

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is a renewed consciousness around the world about the rights of people, their human rights, and they clamour for and demand this. So even though in some situations leaders may be able to slow the process and may be able to deprive their people of this right, in the long run they will lose. So I think in the long run these values, which as I indicated are shared by every culture and every religion, will prevail, but there will be difficulties no doubt and there will be resistance in some quarters.

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Peace on the Korean Peninsula and East Asia Kim Dae-jung

President Kim Dae-jung of the Republic of Korea gave the 19th Singapore Lecture on 27 November 2000. He was introduced by Deputy Prime Minister Lee Hsien Loong. President Kim was awarded the 2000 Noble Peace Prize for his efforts to improve the lives of the Korean people at great personal cost, and to reach out to North Korea through his “Sunshine Policy” which resulted in the historic first summit meeting between leaders of the two Koreas in Pyongyang. The lecture focuses on inter-Korean relations and their importance to East Asia. Thank you, Deputy Prime Minister Lee Hsien Loong, for that very warm introduction. Your Excellency, Prime Minister Goh Chok Tong, Deputy Prime Minister Lee Hsien Loong, Chairman Chia Cheong Fook, and Director Chia Siow Yue of ISEAS, distinguished guests, ladies and gentlemen. I am infinitely honoured to be given this opportunity to speak at the prestigious Singapore Lecture organized by the world-renowned Institute of Southeast Asian Studies. Under the outstanding leaderships of Prime Ministers Lee Kuan Yew and Goh Chok Tong, Singapore has attained the highest levels in international competitiveness, as well as social stability and welfare. I am quite aware that behind this national feat has been the input of such an outstanding think-tank as the Institute of Southeast Asian Studies. Ladies and gentlemen, history tells us that peace on the Korean Peninsula has far-reaching implications for the fate of East Asia as a whole. At the end of the 19th century, imperial Japan was victorious in war against China and Russia in the early 20th century, and thus colonized the Korean Peninsula. Building upon this strength,

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Japan went on to invade mainland China, and further—Malaysia, Singapore, and Indonesia. More recently, the Korean War of the early 1950s, which is still a vivid memory for many of us here, affected most countries of East Asia, directly or indirectly. Because of the unique geopolitical location, peace on the Peninsula is closely linked to that of East Asia. It has been fifty years since the Korean War broke out. During the half century since, South and North Korea have lived as hostile enemies in extreme distrust of each other. It was as if the two Koreas were unaware that the Cold War had ended elsewhere. However, in February 1998, with the start of the government of the people in South Korea, a new mood began to unfold on the Korean Peninsula. Upon inauguration, I proclaimed my “Sunshine Policy” towards North Korea with its three basic principles: first, South Korea would not tolerate any armed provocation from North Korea; second, the South would not seek to harm North Korea in any way or attempt reunification through absorption; and third, both South and North Korea should strive to reconcile and co-operate towards peaceful coexistence and peaceful exchanges. The four powers surrounding the Korean Peninsula—the United States, Japan, China and Russia—as well as Singapore and other nations of the world fully supported this initiative of mine towards the North. Prime Minister Goh and Senior Minister Lee came to Korea and gave their official endorsements for the “Sunshine Policy”. We were greatly encouraged by this global support. North Korea’s initial response was very negative. They publicly denounced the “Sunshine Policy” as a scheme to bring down their system and to weaken their military readiness. However, convinced that the policy was the only way to realize durable peace and eventual peaceful unification on the Korean Peninsula, my government and I stayed with the policy and tried to put it into action with consistency and patience. Unlike the previous governments of South Korea, we encouraged the United States, Japan, and other friends to engage in dialogue with North Korea and to give it much needed economic assistance. We asked all members of the international community to open diplomatic ties with North Korea and start friendly exchanges with it. Despite these sincere efforts on our part, North Korea did not respond to our calls. In fact, Pyongyang seemed to intentionally ignore our calls, while it sought to negotiate with the United States. However, this could not succeed in the face of the close policy co-ordination between South Korea, the United States, and Japan. In particular, the United States told the North that under no circumstances would it work without South Korea as South and North Korea were the principal parties involved. The United States was steadfast in saying that without rapprochément

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with South Korea, North Korea could not expect to achieve rapprochement with the United States. On numerous occasions, President Bill Clinton of the United States endorsed my “Sunshine Policy”. Japan also took the same stand. Even China and Russia—erstwhile allies of North Korea—and many other countries of the world urged North Korea to engage in dialogue with the South. In the end, North Korea began to change. Ladies and gentlemen, on 9 March this year, I spoke at the Berlin Free University in Germany. In the speech, I reiterated the three principles of the “Sunshine Policy”. I stressed that South Korea does not want to realize unification by absorbing the North, in the way the unification of West and East Germany was brought about. South Korea, I pointed out, does not have the resources to do so. I made it clear that it is imperative for the two Koreas to realize peaceful coexistence and interaction. I also said that South Korea is ready to actively help the North in overcoming its economic difficulties, and I proposed that the top leaders of the two sides meet face to face and talk. I believe that my Berlin Declaration was effective in convincing North Korea of our genuine intentions. Thus, North Korea eventually agreed to talk to us. Ladies and gentlemen, I went to Pyongyang on 13 June for the historic interKorean summit. I was filled with profound and mixed emotions. I was excited to be able to visit the northern part of my divided homeland for the first time, but I was also filled with apprehension over whether I would be successful in the encounter with the North Korean leader. Fortunately, in a series of long talks over three days, I was able to engage Chairman Kim Jong-il of the North Korean National Defence Committee in serious and sincere discussions and achieved some significant successes. First, we agreed that the Korean people must take the initiative on the road to national unification, although we acknowledged that immediate complete unification would be difficult to achieve. We concurred that for now the two Koreas should focus on realizing peaceful co-existence and exchanges. What was noteworthy in this regard was that the North withdrew its longstanding demand that a centralized federal government be set up for Korea to achieve unification, and instead proposed a “loose form of federation” as the formula for unification. This proposal is very similar to South’s formula of a SouthNorth confederation of one people, with two systems and two governments. Thus, common ground has been found upon which the two sides can start negotiating eventual unification. Secondly, what I regard as the most important outcome of the summit discussion is that North Korea has consented to the South’s view that US troops should continue to stay on the Korean Peninsula. The Korean Peninsula, as you can see, is a bridge linking the Pacific Ocean to the Eurasian continent. As already mentioned, the Sino-Japanese War at the end of the 19th century, and the Russo-Japanese War

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at the beginning of the 20th, were motivated by the desire to take control of the strategically important peninsula. Japan won both wars, and as a result, could annex the Korean Peninsula. The Korean Peninsula sits between big powers. Korea is the only country in the world where the interests of the four powers—the United States, Japan, China and Russia—converge. I have long been convinced that the US military presence on the Korean Peninsula is necessary for the stability and balance of power in Korea and Northeast Asia. I explained this to Chairman Kim of the North, and to my surprise he readily concurred with me that it was for the safety of the Korean people, in a sharp departure from North Korea’s demand for half a century that the US troops must withdraw. It was truly a significant concurrence of views. This would not only prevent another war from breaking out between South and North Korea but also contribute to maintaining peace and stability on the Korean peninsula, even after unification. I take it that you will all agree with me that the strengthening of peace and stability on the Korean Peninsula will be a positive force for the peace and stability of all of East Asia, of which Singapore is a key player. Thirdly, South and North Korea agreed on co-operation and exchanges. We agreed to seek ways to enable the 10 million separated family members living across the South and North to reunite and to find out the whereabouts of their long-lost loved ones. The two sides also agreed on economic co-operation, as well as cultural and social exchanges. Fourthly, Chairman Kim agreed to visit Seoul in return for my visit to Pyongyang. This is very significant. We expect the visit to materialize by the spring of next year. Distinguished guests, since the June inter-Korean summit, South Korea has been advancing the dialogue with the North along two tracks. The first is to ease tensions between South and North Korea. The defence ministers of South and North Korea have met. They have agreed not to wage another war on the Korean Peninsula, to actively support the 15 June South-North Joint Declaration, and to co-operate with each other in the demilitarized zone on the relinking of the severed inter-Korean railroad. Along with these inter-Korean developments, as you may be aware, relations between North Korea and the United States have also been making great progress. In Pyongyang, I had stressed to Chairman Kim the need for North Korea to forge better ties with the United States to ensure its security, and to resolve its economic difficulties. Seeing his positive response to my advice, I called President Clinton after I returned from the North. I stressed to President Clinton that direct talks with Chairman Kim would be the only way for the United States to succeed in the negotiations with the North on various issues, including its missiles. I also recommended to Japanese Prime Minister Yoshiro Mori to take a more active stance towards North Korea.

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Improvement in inter-Korean relations, without parallel improvements in North Korea’s relations with the United States and Japan, will not be enough for peace on the Korean Peninsula. In this respect, I hope that East Asian nations will actively support the efforts of North Korea to improve relations with the United States and Japan. At the APEC Leaders Meeting in Brunei, not only I but also the leaders of Japan, China, and Russia expressed support for a meeting between the top leaders of North Korea and the United States, for this is indispensable to peace on the Korean Peninsula and all in East Asia. The second track is to overcome the fifty years of division, distrust, and confrontation between South and North Korea and to restore love and trust among all Koreans. To this end, we have agreed to engage in numerous exchanges in the social and cultural fields. As part of the efforts, we are trying to ascertain how many of the 10 million members of separated families are still living, and their reunions are taking place. In the field of economic co-operation, a project to relink the South-North Railway is under way. A new highway is also under construction linking the South to Kaesong city, just north of the demilitarized zone, where an industrial complex will be built. The South and the North have also worked out draft agreements on investment protection, avoidance of double taxation, clearance of accounts, and settlement of business disputes. Inter-Korean exchanges in the social and cultural areas have also been activated, as could be seen in the joint march by South and North Korean athletes at the opening of the Sydney Olympic Games. The international community has wholly welcomed these peace efforts on the Korean Peninsula. Support has been extended by statesmen at the G-8 Summit in Okinawa, the Millennium Summit of the United Nations, the Korean Session of the United Nations General Assembly, the Third ASEM in Seoul, the APEC Leaders Meeting in Brunei, and the ASEAN plus Korea, China, Japan summit here in Singapore. I am convinced that continuing support from around the world will greatly contribute to peace and stability on the Korean Peninsula and in East Asia. I wholeheartedly thank Prime Minister Goh for his leadership in forging the support at the ASEAN plus Korea, China, Japan summit that he so ably chaired, and the support he has so graciously expressed in his press statement. Ladies and gentlemen, improvements in inter-Korean relations and the settlement of peace on the Korean Peninsula will provide the East Asian countries with greater economic opportunities. The economic conditions in North Korea are poor at this point, especially in terms of the social infrastructure. However, North Korea also has a high-quality low-cost work-force, abundant mineral resources, and beautiful tourist attractions. Because of its geographical location, North Korea can become a gateway to great economic opportunities in the three northeastern provinces of China, Russia’s

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maritime province of Siberia, Mongolia and further in Central Asia, and even further in Europe. Going through North Korea, the cost and time for cargo transport can be reduced significantly. I urge all countries of East Asia, including Singapore, to take an active interest in trading with and investing in North Korea. South Korea will do all it can to support such efforts with information and materials. We will of course welcome such efforts taking the form of joint ventures with South Korean companies to advance into North Korea. Distinguished guests, North Korea has begun to take part in joint efforts for the security of East Asia by joining the ASEAN Regional Forum (ARF) in July this year. The APEC leaders have decided to welcome North Korea’s participation in the activities of its working groups. We have also begun to accept North Korea as a responsible member of the international community. Ladies and gentlemen, peace on the Korean Peninsula and peace in East Asia are indivisible. Prosperity on the Korean Peninsula and prosperity in East Asia are also closely linked. Let us work together for the greater peace and prosperity that will be shared by Koreans and all other peoples of East Asia. The future, I am convinced, will reward us very handsomely in these efforts. Thank you for your kind attention.

Question and Answer Session Question: I am Geraldine Goh, from Channel NewsAsia. Sir, how can the success of the Korean peace initiative be emulated across the Taiwan Strait to bridge the ideological divide and promote greater dialogue and engagement that will foster peace, security and stability in East Asia? Kim: I must say that it is a very difficult question and I am not sure I have an easy answer to that. This may not be an answer to the question but my feelings, my perceptions about the situation there. When I was first faced with the very hostile stand-off between South and North Korea, which was the situation not too long ago, it was a situation far more intense than that which exists between China and Taiwan at this point. South and North Korea have lived as hostile enemies for half a century, we have fought a very serious war that resulted in millions of casualties, and even today, whereas China and Taiwan are separated by the sea, South and North Korea are separated by only barbed wire. So when I first faced this situation, it seemed an almost impossible situation to overcome.

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However, given this extreme situation, a couple of factors were very vital. The first factor is the conviction that no matter what the rhetoric is, no matter the hostility in terms of the words spoken, deep inside both sides must want peace; deep inside both sides must want to avoid a violent conflict which will result in great destruction for both sides. Based upon this assumption, based upon the trust in the aspirations for peace on both sides, I thought I must come out with a proposal to the other side, a proposal that would be good for both sides, a proposal that would be appealing to the other side. Having made the proposal, I should continue to repeatedly table that proposal even though the other side may initially refuse it. Thirdly, such a proposal must be something that would appeal to all the other countries who are closely watching, who are worried that something may flare up from the very tense situation. And finally, that to succeed in the end you must be patient, consistent, and sincere in intentions. Question: Mr President, my name is Richardson from the International Herald Tribune. You have emphasized the importance of direct high-level talks between the United States and North Korea, and Japan and North Korea. Do you think that US President Bill Clinton should visit Pyongyang to hold such talks before he leaves office on 20 January, or would you prefer to see his successor, whoever that may be, undertake that delicate diplomatic task? Secondly, do you think that Japan is being flexible enough in its negotiations with Pyongyang on normalization of relations between Japan and North Korea? Kim: This is a very difficult question from a journalist from an outstanding newspaper. Whether President Clinton should or should not go, this would be a decision for the President to make, depending upon his reading of all the situations concerned, including the domestic situation in the United States. In Brunei for the APEC summit, on the sidelines, I had a bilateral consultation with President Clinton, and he presented that exact question to me in the bilateral talks. I responded to that by saying that since the June summit, since my return from Pyongyang, I had been consistent in saying that the United States must present somebody who can deal directly with Kim Jong-il, whether that be President Clinton or somebody else. I also commented on how, as I saw the results, Secretary of State, Madeleine Albright’s visit to Pyongyang and discussions with Kim Jong-il had achieved very significant successes in terms of working towards the resolution of the issues that lay between the two sides.

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I went on to say, from my perspective, of course we want all the issues—the pending issues between the two sides, including the North Korean missile issue— to be resolved as soon as possible. That’s my basic position. But whether this should be done by President Clinton or not, the decision has to be made based upon various considerations, including the domestic political considerations in the United States. I added, should President Clinton, after having taken into consideration all the factors including the domestic political consideration, decide to go, I will fully welcome the decision. Concerning North Korea-Japan talks, I must say that I have been like an “errand boy” between Prime Minister Mori and the North Korean leader. Before going to Pyongyang, I spoke to Prime Minister Mori, and he asked me to convey to Chairman Kim Jong-il his wish for an early normalization of relations between Japan and North Korea. I conveyed the Prime Minister’s wish to the Chairman. The Chairman said, please tell Mr Mori that he received the message with gratitude. So upon returning from Pyongyang, I called Mr Mori and conveyed the message from the Chairman, and I added that, like the United States, Japan, in order to make any progress to reach key decisions, must present someone who can deal with Kim Jongil, the Chairman himself, because he calls all the shots, he makes all the decisions in the North. Since then, Prime Minister Mori has taken some bold steps towards North Korea. I understand that he has sent several letters to the Chairman. He has also decided to extend 500,000 tons in food assistance to the North. But in the negotiations, the Japanese Government is in a very difficult situation because of the domestic public opinion. On both sides, the colonial past still stands as a very big barrier. In Japan also, the public resentment is very strong, calling for a resolution to the issue of Japanese nationals that have been reportedly kidnapped by North Korea. However, with advances in South-North Korean relations, and advances in US-North Korean relations, I believe that this will be a very positive stimulus for things to progress between Japan and North Korea as well. South Korea, the United States, and Japan have closely co-ordinated a trilateral agreement in the area of security thus far—the security of the Peninsula and the region. Since the summit and with the beginning of reconciliation on the Korean Peninsula, security will continue to be our common task, but along with this, we now have another task to promote among the three countries, and that is, to improve relations with North Korea and all three countries. Question: I am Eunice Yoon from CNBC. When do you expect the peace process to get into talks on actual arms reduction, and why hasn’t that come up so far in any serious way?

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Kim: Well, it’s difficult to say when serious talks will begin in this regard but that is the direction we are aiming at. As mentioned in my speech, our approach to the dialogue with North Korea is, at this point, two-track. The first track is to expand exchanges and co-operation in various areas, in terms of separated families, in terms of economic co-operation, and in terms of social and cultural exchanges, so as to strengthen the understanding, trust and homogeneity of the Korean people. The second track, as I have said, is tension reduction in order to achieve durable peace. We have already had the first South-North Defence Ministers Meeting, and it produced three basic agreements. The first is that the two sides will not engage in another war, that the military of the two sides will actively co-operate and support the implementation of the 15 June joint declaration. Thirdly, on a more concrete level, that the two sides would render all the assistance necessary to relink the railroad, to rebuild the highway linking the Kaesong industrial complex with the South, as the construction work requires the co-operation of both sides because these efforts have to be made in the demilitarized zone. To further implement these agreements, especially on the construction within the demilitarized zone, we have working-level military consultations between the two sides. We have proposed to North Korea that the second Defence Ministers meeting be held as soon as possible, when we hope to be able to get the North to engage in discussions on some concrete measures towards confidence-building, such as the establishment of a military hotline, agreement to notify each other in terms of massive military troop movements, and to invite observers from the other side to various military exercises and to participate in military personnel exchanges. Once these small steps have been agreed on, in further consultations between the two defence ministers, we will be able to take more concrete steps towards a durable peace system on the Korean Peninsula. Then there is the four-party talks among South and North Korea, the United States, and China—talks designed to discuss a peace system for the Korean Peninsula. But the four-party talks have not been held since August last year. The primary reason for the break in the talks last time was North Korea’s continued insistence on the withdrawal of US forces from the Korean Peninsula, but as I have told you, they no longer make that demand. Therefore, I see the need for the revival of the four-party talks and I took the occasion of my talk with Chinese Prime Minister Zhu Rongji on the sidelines of the ASEAN Plus 3 Summit here, to ask his views on the four-party talks, and he readily agreed that they should be revived. We already have an agreement with the United States that the talks should be revived. Our plan at this point is therefore to make the proposal to North Korea that the four-party talks should resume.

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Our approach to the four-party talks is that South and North Korea should be the principle parties to sign the peace treaty that will replace the amnesty. With the United States and China providing encouragement and support for the peace treaty, the issue that you raise of arms reduction can of course be discussed within the four-party framework. Thank you.

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Japan and ASEAN in East Asia A Sincere and Open Partnership Junichiro Koizumi

On 14 January 2002, Prime Minister of Japan Junichiro Koizumi gave the 20th Singapore Lecture after being welcomed by Deputy Prime Minister Tony Tan. Prime Minister Koizumi was the second Japanese prime minister to give a Singapore lecture following Prime Minister Ryutaro Hashimoto who gave the 15th Singapore Lecture in 1997. Prime Minister Koizumi’s lecture stands out for three reasons: his focus on Japan’s relations with ASEAN, a clear set of policy recommendations for future Japan-ASEAN cooperation, and his argument that the Japan-ASEAN relationship should be the platform for a wider East Asian community. This speech is a clear enunciation of the idea of ASEAN centrality in East Asia. Your Excellency, Prime Minister Goh Chok Tong, Your Excellency, Deputy Prime Minister and Minister for Defence Tony Tan, Ladies and Gentlemen. I am greatly honoured to give this speech here in Singapore, the final stop on my schedule of visits to the countries of ASEAN. Singapore is a remarkable nation with remarkable people. Bursting through the constraints of size and resources, Singapore through sheer energy and willpower has created a tremendous place for itself in the world. Through its economic and diplomatic vitality, it contributes to the international community far in excess of what size alone would warrant. And so to the government and people of Singapore, let me express my admiration and respect for your achievements. I am told that Singapore is called the “Lion City”. Maybe it has something to do with my hairstyle, but in Japan I am known as the “Lion Prime Minister”. Perhaps that is why I am so delighted to be here in the Lion City.

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Today I would like to speak about co-operation between Japan and ASEAN and my concept of how this co-operation can contribute to all of East Asia. Let me begin by defining what co-operation truly is. Co-operation is working in common purpose with others in order to accomplish more. In the simplest terms, this is what I would like to see Japan and ASEAN accomplish—more prosperity, more peace, more understanding, more trust. This co-operation requires an exchange of ideas, opinions and people. Exchanges between Japan and the countries of Southeast Asia have a long history. As early as the 14th century, the Kingdom of the Ryukyu, which ruled the islands of Okinawa, traded with Thailand. In the 16th century, the sea-borne trade in vermilion seals was active in the waters that connect East Asia, and a thousand Japanese lived in Ayuthaya, the Thai capital of the period. One recent anecdote in particular demonstrates to me how fate has destined exchange between Japan and Southeast Asia. In 1989, a child living on the southern Japanese island of Tanegashima placed a “letter of friendship” in a bottle and set it adrift in the sea. That very same bottle traversed the seas that our ancestors had themselves travelled in trade—and ten years later in 1999 it washed up on the shores of Malaysia. The Malaysian citizen who found the message invited the Japanese child to come to Malaysia, which resulted in both a real and a symbolic exchange. Today, many kinds of bottles travel between Japan and Singapore—economic, political, diplomatic and cultural. At present, Japan’s pop culture has become a part of Singapore’s pop culture, and the young people of Singapore are teaching English to young Japanese people. In such ways and many others, our mutual exchanges are passed to the younger generation. The exchanges between Japan and Southeast Asia, of course, also include more formal and diplomatic exchanges. Twenty-five years ago in 1977, the then Prime Minister Takeo Fukuda made a speech in Manila, citing “equal partnership” and “heart-to-heart understanding” between Japan and ASEAN. Based on the fundamental concepts of the “Fukuda Speech”, Japan’s ASEAN policies have been passed on from that time to each subsequent Cabinet. I, too, am eager to promote such policies. In the quarter-century since the “Fukuda Speech”, the global situation has undergone tremendous change. In Southeast Asia, peace has progressed with the resolution of conflicts in Indochina, resulting in the expansion of ASEAN to ten countries. Democratization and a market economy are also progressing in Asia. The People’s Republic of China and Taiwan have joined the WTO. Furthermore, as a result of the terrorist attacks on the United States, we have seen a paradigm shift in security concepts, making patently clear the importance of working together for the sake of peace and stability.

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In the 21st century, the changes confronting Japan and ASEAN will be even more swift and momentous. We must face such changes with unflinching resolve and courage. And we must face them together. Despite enduring difficult trials in the midst of economic globalization, despite living in different stages of economic development, despite a diversity of backgrounds, all of the ASEAN countries increasingly share the basic values of democracy and market economy. Efforts to harmonize the region’s diverse histories, societies, cultures and religions have reaped a greater good for all. I believe that Japan has made a contribution in strengthening the countries of ASEAN. True to the old adage, “A friend in need is a friend indeed”, Japan at the time of Asia’s financial crisis played a role in easing that crisis. We viewed the situation not just as your challenge but as our own. I believe that Japan-ASEAN relations have reached a new level of maturity and understanding. In the 21st century, as sincere and open partners, Japan and ASEAN should strengthen their co-operation under the basic concept of “acting together—advancing together”. So, what are the areas where we should focus our co-operation as we “act together—advance together?” First, by undertaking reforms in our respective countries, we will advance individually and jointly towards increased prosperity. During the mid-19th century, Japan underwent major reforms for modernization known as the Meiji Restoration. At the end of World War II, Japan conducted major reforms based on democracy. Now, in order to adapt to radical changes in the international community of the 21st century, I am convinced that Japan must undergo a “third major reform”. Since my appointment as Prime Minister, I have been tackling such reform under the banner of “structural reform without sanctuaries”. I know that no great reform is accomplished without pain and resistance. I also know that the countries of ASEAN are awaiting Japan’s structural reform and the subsequent return of a dynamic Japanese economy. I realize that when it comes to the global economy, rain does not fall on one roof alone. The reason that the Japanese economy stagnated for such a long period in the 1990s is clear. Japan’s previous success had made us complacent. Despite the significant changes taking place in the global economy, Japan failed to respond by reforming its political and economic structures. Information and communications technologies have rapidly created a single, unified global market. Competition has become much more severe. To succeed under such conditions, a country needs a free and efficient market that can be trusted by global investors and consumers alike. It needs a strong and healthy financial market. These challenges are as important for the countries of ASEAN as they are for Japan. The Asian financial crisis showed us that the ASEAN countries also required new economic structures. Change is not easy for individuals or for countries. Someone once said that courage is the power to let go of the familiar—and that is what we

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must do. As I mentioned a moment ago, reform will inevitably be accompanied by pain, which eventually will be succeeded by sustainable prosperity. Japan is ready to support ASEAN’s serious efforts of reform. Specifically, Japan offers its co-operation to improve legislation, administrative capabilities and nationbuilding measures. We offer our help to improve the capabilities of each country to compete economically and to participate in a multilateral trading system based on the WTO. We also offer our co-operation in developing a healthy financial system, which is to a country what the circulatory system is to the human body. Japan will continue to co-operate in such areas as Mekong Subregion Development so that Cambodia, Laos, Myanmar and Vietnam may accelerate their economic development. It is also important that we continue to co-operate in information and communications technology, which contributes to the integration of ASEAN. Through the swift realization of an ASEAN Free Trade Area and an ASEAN Investment Area, ASEAN should continue to be an attractive place of investment for Japanese companies. To this end, the promotion of supporting industries is also an important part of our co-operation. The second point is to continue and strengthen our co-operation for the sake of stability. Instability is not always elsewhere. Sometimes it is at home. Factors for instability are also in the region. Japan for many years now has been the largest contributor of foreign aid in the world. In Southeast Asia, Japan would like to actively co-operate in reducing poverty and preventing conflicts, in such cases as Mindanao, Aceh and East Timor. In particular, by the spring of this year Japan will dispatch a Self Defense Force Engineer Unit to Peace-Keeping Operations in East Timor. In recent years, Japan has begun to fulfil its international obligations, such as peace-keeping missions. We have dispatched Self Defence Forces to help in Cambodia, Mozambique, Zaire and the Golan Heights. And, in co-operation with the countries of ASEAN, we intend to make an even more active contribution to ensure regional stability here in Southeast Asia. The ASEAN Regional Forum has made steady progress in building confidence and trust on security matters. Now is the time to aim for a higher degree of co-operation. Japan is eager to consider how together we can develop this forum for the future. Efforts towards democratization in Myanmar must also be accelerated, and this is an endeavour that we fully support. Together, Japan and ASEAN must also tackle a variety of transnational issues such as terrorism, piracy, energy security, infectious diseases, the environment, narcotics and trafficking in people. These ancient and modern ills represent a major challenge to us all. Japan-ASEAN co-operation must extend its reach globally. I believe we should increase our co-operation on such issues as peace and reconstruction assistance to Afghanistan, measures for disarmament and non-proliferation and reform of the

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United Nations. We have a role to play in the world, and we should play it. In particular, I hope to see active participation on the part of the countries of ASEAN at the Ministerial Conference on Reconstruction Assistance to Afghanistan to be held in Tokyo on 21 and 22 January. In the recent past, the people of Southeast Asia have suffered from war and violence; so they well understand the hardship that the people of Afghanistan have endured for so many years. A third area of co-operation between Japan and the countries of ASEAN relates to the future. I would like to propose initiatives in five areas. One, we must focus on education and human resources development, which form the foundation for national development. I would like to dispatch a governmental mission to ASEAN countries to promote exchange and co-operation between universities. Some Japanese universities have already opened courses in English as well as Japanese language courses for students in ASEAN by utilizing the Internet. Through such efforts I expect that university exchanges will develop. I would also like to continue the training of information and communications technology engineers in both Japan and ASEAN in order to enhance practical opportunities in the region. In addition, I emphasize the importance of the institution building and capacity building in governance, as well as the promotion of supporting industries. Two, I propose that 2003 be designated as the Year of Japan-ASEAN Exchange. We should present a number of ideas to stimulate exchanges in all areas, including intellectual and cultural. I also believe it would be useful to strengthen the network that links research institutions in Japan and ASEAN countries. Three, I would like to propose an Initiative for Japan-ASEAN Comprehensive Economic Partnership. Of course, we will co-operate in the new round of multilateral trade negotiations under the WTO. At the same time, we must strengthen broad ranged economic partnership by stretching further than trade and investment—to such areas as science and technology, human resource development and tourism. The Japan-Singapore Economic Agreement for a New Age Partnership, which was signed yesterday, is an example of such economic partnership. I would like to see us generate concrete proposals for endorsement at the Japan-ASEAN Summit Meeting. Four, in order to pursue development in a new era, I propose the convening of an Initiative for Development in East Asia meeting. Based on East Asia’s development experiences to date, my hope is that such a meeting would provide an opportunity for us to re-examine where we are and to consider together future models for development—thus raising the standard of living for the peoples of the region. Five, I propose that Japan and ASEAN security co-operation, including transnational issues such as terrorism, be drastically intensified. Now, more than ever, we realize that one’s own security is at stake when a neighbour’s wall is ablaze. I believe we need an agreement for regional co-operation on piracy, and I will promote consultation to achieve that end. We must band together to eradicate the plague of piracy. In addition, I would like to strengthen co-operation between

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the Coast Guard of Japan and ASEAN counterparts. I also wish to promote regional co-operation in strengthening energy security, in light of the gap between rapid increase of energy demand and lagging energy supply within Asia. Finally, let me turn to how co-operation between Japan and ASEAN should be linked to co-operation with all of East Asia. I believe that East Asia’s whole can be greater than the sum of its parts. Ladies and gentlemen, if you took a poll of the world’s economists and asked them what region of the world they believe to have the greatest potential in the immediate future, I have no doubt of their answer. They would say East Asia. By co-operating, I believe we can gain the critical mass to advance this potential. Our goal should be the creation of a “community that acts together and advances together”. And we should achieve this through expanding East Asia co-operation founded upon the Japan-ASEAN relationship. While recognizing our historical, cultural, ethnic and traditional diversity, I would like to see countries in the region become a group that works together in harmony. Our pasts may be varied and divergent, but our futures can be united and supportive of each other. The realization of such a group needs strategic considerations in order to produce positive consequences. And in order to contribute to global challenges, we must play a role in linking our region to the world. Certainly, such an objective cannot be achieved overnight. The first step is to make the best use of the framework of ASEAN+3. We should promote co-operation on the broad range of areas that I have been discussing today, in order to secure prosperity and stability in our region. The deepening of Japan’s co-operation with China and the Republic of Korea will also be a significant force in propelling this community. The Trilateral Meeting of the leaders of Japan, China and the Republic of Korea set some wonderful precedents. I would like to highly praise the active role China is willing to play in regional cooperation. With its wealth of human resources and huge economic potential, China will surely make an enormous contribution to regional development. In addition, I would like to express my respect for the Republic of Korea’s dynamic initiatives in promoting regional co-operation. I can confirm that the three leaders of Japan, China and the Republic of Korea are resolved to co-operate with each other; because we all know that our trilateral co-operation will make a great contribution to the prosperity of the region. An important challenge is strengthening economic partnership in the region. The Initiative for Japan-ASEAN Comprehensive Economic Partnership that I mentioned earlier will be an important platform for this purpose. I expect that the ASEANChina Free Trade Area and moves towards economic partnership between ASEAN and Australia and New Zealand will make similar contributions. If one considers the specific challenges to be tackled in the region, it is only natural that these countries will deepen their partnerships with each other.

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Through this co-operation I expect that the countries of ASEAN, Japan, China, the Republic of Korea, Australia and New Zealand will be core members of such a community. The community I am proposing should be by no means an exclusive entity. Indeed, practical co-operation in the region would be founded on close partnership with those outside the region. In particular, the role to be played by the United States is indispensable because of its contribution to regional security and the scale of its economic interdependence with the region. Japan will continue to enhance its alliance with the United States. Co-operation with Southwest Asia, including India, is also of importance, as is co-operation with the Pacific nations through APEC, the Asia-Pacific Economic Co-operation group, and with Europe through ASEM, the Asia-Europe Meeting. APEC and ASEM are important tools to link our region to other regions. Through such efforts, the community I have described can take meaningful actions for regional co-operation. I believe that this in turn will benefit global stability and prosperity. Let me summarize by using an analogy. I am a great fan of opera. To me, the appeal of opera lies in the fact that a myriad of singers and instruments, each possessed of different qualities of voice and sound, against the backdrop of a grand stage and beautiful costumes, come together in one complete and impressive drama. The community that I have outlined today is exactly such a creation. As we “act together and advance together”, let us in concert compose a harmonious community of many voices raised for the greater good. As was the case with the “letter of friendship” sent in a bottle by the child from Tanegashima, I sincerely hope that my words today will reach each of your hearts and prompt you to join me in creating such a community in this region. Before closing my remarks, let me express my appreciation to Your Excellency Prime Minister Goh Chok Tong for having joined us this morning. Thank you for inviting me, and thank you for your kind hospitality.

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EU and Asia Sharing Diversity in an Inter-regional Partnership Romano Prodi

Mr Romano Prodi, President of the European Commission and former Prime Minister of Italy, gave the 22nd Singapore Lecture on 6 July 2002. He was introduced to the audience by Deputy Prime Minister Lee Hsien Loong. Prodi is optimistic about the EU’s ability to deal successfully with the complex challenges that its planned expansion from 15 to 25 or 28 members would pose. It is a worthwhile point of reflection for both for the EU and for ASEAN which itself expanded from 6 to 10 members in the 1990s. Deputy Prime Minister, Mr Chairman, Ladies and Gentlemen. It is both a pleasure and an honour to be with you today to deliver this Singapore Lecture. The list of speakers invited to give this series of lectures includes many prestigious names and world leaders. I am happy to join their company and I thank the Institute of Southeast Asian Studies for inviting me. This is my second visit to Asia this year, but my first to Southeast Asia as President of the European Commission. I welcome this opportunity to discuss issues of mutual concern with the distinguished company present today and in meetings with members of the Singapore Government. Co-operation between Europe and Asia is going from strength to strength: we have ASEM, the co-operation framework with ASEAN, and a wide range of bilateral and informal contacts. We have close economic ties and share many concerns. Our relationship now embraces far more than just “trade and aid”. So why have I chosen diversity as my theme today? Diversity defines the relations between two entities that are not identical. Diversity in nations and cultures, in interests and objectives, creates the need for

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an effort towards convergence so that we can work together. It characterizes the regional structures we are building in Europe and Asia, and indeed our interregional partnership. Integration processes are taking place at the two ends of the Eurasian continent. Indeed, there is a clear trend towards regional co-operation throughout the world. In fact, regional co-operation, subject to certain principles and conditions, is one of the most effective answers to the challenge of globalization. I will come back to this issue later. Ladies and gentlemen, we in Europe have been pioneers in regional integration for close on fifty years. Here in Asia it is a more recent process. In the European Union it has given us tangible returns: peace, stability, and growing prosperity. The greatest reward of all is that we have stopped settling disagreements by armed conflict. But this has taken many years of hard work. We are now gearing up for the entry in 2004 of 76 million people to our existing Union of 380 million people. The enlarged Union will then account for more than a quarter of world GDP and one fifth of world trade. This expansion from six members to the current fifteen, and soon twenty-five, is an amazing achievement. At the same time, we have driven forward the process of “ever closer Union”—creating common policies, a single market, and now a single currency—all built on common institutions: a Parliament directly elected by the citizens, a Council representing the Member States, a Commission as an executive body representing the general interest, and the new Central Bank. We can say that that Europe is a union of peoples and states. Of course it has put a strain on our structures. With up to ten countries shortly joining the Union, the Brussels institutions and decision-making machinery are shortly due for a shake-up. The Convention on the Future of Europe will map out the future shape of the EU. And we are doing it in a way that is more open and democratic than ever before. All sources of democratic legitimacy at national and European levels are represented within the Convention: national parliaments and governments from the current and future Member States and the EU institutions. These achievements have been built on respect for diversity and pluralism. These are fundamental values of European integration. To give you a concrete example: when I work in the Commission I always use English or French as a working language; when I go to Parliament, I speak only my native Italian. And everybody there speaks his own language. Of course it is a problem. We share around twenty or twenty-one languages but this is what Europe means, it is the Europe of peoples, nations and states. And we must hold on to these values if we are to move forward and make a success of enlargement. This is because the union we are building rests on deeplyrooted national, regional, and local identities.

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Our institutions have to reflect a balance between pooled sovereignty and the preservation of national prerogatives. I shall even go so far as to say that the EU epitomizes respect for cultural diversity and for minorities. I heard the best definition of Europe in the Romanian Parliament: Europe is a union of minorities. But we have constructed a union on the basis of common values and objectives. The Single Market and the single currency are springboards to the growth and prosperity we all want. But we do not want growth and prosperity at the price of a fragmented society, a society where the poor and vulnerable are left behind. Nor do we want them at the price of the environment or our health. The income gaps within our societies and between North and South are one of the main issues we must tackle urgently together. Ladies and gentlemen, our project is, I believe, of great relevance in Asia and elsewhere, especially at a time when all nations have to come to terms with the implications of globalization and increasing interdependence. It is relevant both for its lessons in regional integration and for the way Europe is finding a common voice on the international stage. We believe that the qualities we have developed in building Europe—the qualities of negotiation, collective decision-making, and respect for diversity—have given us a distinctive voice. And we firmly believe that this puts us in a unique position to give the lead and broker solutions when dealing with the key issues of globalization and governance. We must find solutions if we are to deal with the new threats to peace and security. The EU does not intend to avoid its share of the responsibility for maintaining peace and stability in the world. The political vision that inspired us to embrace the new democracies in eastern Europe is proof of that. Ladies and gentlemen, if our distinctive voice is to be heard loud and clear, we in the EU have to develop common policies and structures to dialogue with the outside world. Our Common Foreign and Security Policy must become just that. We must harness our enormous potential as an international player. I am referring to more than just foreign policy and defence. It means welding together all components of our external action: diplomacy, trade and development, economic policy, and external management of the euro zone. Not forgetting common policies with an international dimension—such as the environment, energy, transport, and culture. Our external policy has to be flexible and responsive to new developments in world politics. The moves towards wider co-operation and integration in Asia are important developments. We are following them with keen interest. To take only one chapter, Europe’s trade with Asia is bigger than Europe’s trade with America. Here in Asia there is a staggering diversity. It is certainly impossible to apply any blanket policy. Asia includes some of the largest countries in the world, some of

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the richest, and some of the poorest. Some countries have gained their independence only recently. They are still in the nation-building stage. Many are home to several cultures and peoples. Asia is one of the world’s great spiritual and cultural cradles. It can pride itself on the diversity of its cultural heritage. But you are also aware that a globalizing world means working together. And you are building new structures for co-operation and dialogue—ASEAN Plus One and Three, or even Four, the South Asian Association for Regional Cooperation, and the Shanghai Co-operation Organization. All have their own histories and their special roles to play in the region. Singapore, a small island State whose influence far outstrips its size, has always been keenly aware of the importance of co-operation. You have been the driving force in ASEAN and in initiatives such as the ASEAN Regional Forum and ASEM. We welcome all these regional developments, as well as Asia’s recent progress towards monetary co-operation, prompted by disillusionment with international financial institutions. While I wish you every success, let me warn you that the road is long and difficult. Working towards a common currency is a huge challenge: it implies structural reforms and real convergence between all the economies involved. We warmly welcome regional integration as a stepping-stone towards broader global co-operation. It is in everyone’s interest to support the WTO and to foster a better system of international governance. Both Asia and Europe are keenly aware of the importance of foreign trade and investment. Both regions are dependent on the success of the open, rules-based multilateral trading system. For both regions it is crucial to safeguard this system and extend it to those who have benefited less. The Doha Development Agenda points in the right direction. But we must make sure that the momentum built up is not lost, and there are a lot of dangers around. To make the new WTO Round a success, we must get the poorer countries on board and offer active support for their development. The EU has already acted to improve the terms of trade for these countries with its “Everything But Arms” initiative. In practical terms, this initiative means that all imports from the poorest countries may freely enter the EU, everything but arms that is. The European Union played a key role at the Monterrey Development Conference and pledged to increase its aid budget. We are working hard to make a success of the Johannesburg Conference on Sustainable Development next September. Johannesburg is a chance to make good the promises of the Rio Earth Summit and to achieve the Millennium Development Goals: to eradicate poverty, to improve living standards based on sustainable patterns of consumption, and to ensure that the benefits of globalization are shared by all.

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EU leaders reaffirmed their commitment to the Johannesburg Summit at their last meeting in Seville just a few weeks ago. The EU will throw its weight into getting agreement on quantifiable targets and timetables in the key areas of water, energy, health, agriculture, and biodiversity. Of course I have to say that at the last G-8 meeting in Canada we made progress in this subject, but I also have to tell you that our resources are certainly not yet sufficient for Africa. We want Johannesburg to send a clear political message that globalization must work for the benefit of us all. And here the European Union’s credibility and experience in handling problems collectively and democratically will give it added weight. We intend to continue building up our proactive partnership with Asia. I am happy to note that the EU-Asia partnership has grown closer and more comprehensive. This is exemplified by ASEM. The ASEM process, which of course was initially inspired by Singapore, is unique. It is the only regular inter-regional forum solely for Asian and European leaders. And it has helped a lot to strengthen EU-Asia relations. Mutual awareness and trust now mean we can turn our diversity to account in the search for common solutions to global challenges. Preparations for the fourth Asia-Europe summit—ASEM 4—in Copenhagen next September illustrate this. Ministerial-level meetings have taken place on the environment, migration, finance, and the economy. The recent foreign ministers meeting in Madrid last April gave us a unique opportunity for open dialogue on burning issues such as terrorism, the Middle East, and India and Pakistan. The EU is committed to strengthening its presence in the Asian region. Opening more channels of communication between our two regions is an important part of the European Commission’s strategy for a broader-based presence in Asia. I am very happy that we shall have a European Delegation here in Singapore by the end of the year to ensure constant liaison between us. Our main aim in consolidating our network in Asia is to increase mutual awareness. In the past, we sometimes lacked the confidence to point out clearly the differences between Asia and Europe. I believe it is now time for greater openness. We have come to realize that the differences between our regions are an asset in our relationship. Mutual understanding is the key, and promoting it is an important part of our co-operation. Here in Singapore our joint Asia-Europe Foundation—the ASEF—has an important role to play in promoting people-to-people contacts, intellectual networking, and cultural exchanges between our two regions. Diversity is crucial for our two cultures as well. Of one thing I am sure: Europe and Asia will never be melting pots where cultures merge and disappear. Asia and

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Europe will never allow that. Our cultures are too firmly rooted and too vital. Our long histories have taught us to value and nurture our diversity. Cultural cross-fertilization is another thing. Because we both appreciate diversity and dialogue between cultures within our regions, we are ready to respect and learn from others. We have long been engaged in fruitful exchanges: just think of the wealth of wisdom and know-how that passed along the Silk Route, that early international trade route. Our partnership has matured to a point where the advantages are clear for all. We are advancing in the direction of “equal partnership” called for in our Asia strategy. We can now roll up our sleeves and concentrate on the real issues. Closer relations between Europe and Asia also have enormous impact on the world as a whole. If we can find areas of agreement, we can exert great influence in the world. I am thinking of the problems of globalization. Globalization has brought enormous opportunities. It has also brought new problems that have to be tackled collectively. A world of increasing interdependence needs fair rules on global governance, because there are issues which no individual country can deal with on its own. In Europe, we are trying to bring together countries that are very different. You might call such regional globalization “modest”, but it is not that modest when you look at it. The enlargement that we are working on this year will entail a 33 per cent increase in land area, a 30 per cent increase in population, and only a 6 to 8 per cent increase in income. We are bringing together, with enormous effort, countries with big differences in income. This means changes to our regional and social policies, and distribution of a lot of resources to the peripheral countries in order to help them develop. This was done when Spain, Portugal and Ireland joined the Union, and it was successful. Twenty years ago, Ireland was poor. Now Ireland has a per capita GDP that is higher than the United Kingdom, partly because of the huge funds for structural aid. Historically, this may be an aberration. But this is how Europe has forged ahead and now we have this new challenge. And the biggest challenge is the Balkans. The Balkans will never be at peace if they are not integrated into the European Union. Not today, not tomorrow, but in the longer term this is quite possible. The GDP of the Balkans region is no more than 1.7 per cent of the EU’s GDP and so even if we do make this effort, it is something within our grasp. This is the type of policy that we are trying to develop in the context of what I earlier referred to as a minor, modest, but important globalization. We need the widest possible global alliances to tackle the problems that concern us all and to preserve the assets that belong to us all. Fortunately, our Europe-Asia partnership is giving rise to an increasing number of global alliances. For better or worse, we are all caught up in globalization. You in Singapore are well placed to know that. It can be for the better. Globalization in

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the true sense can offer us a world that is wealthier, both materially and culturally. The examples of Europe and many Asian nations show that modernity can go hand in hand with strong regional and local identities. Ladies and gentleman, by harnessing our different assets and skills and by drawing on the diversity that gives us our identities, we can become really stronger. Thank you very much.

Question and Answer Session Question: I am Henri Chollet, a former Ambassador of France to Singapore. Mr President, you have very convincingly described the present approach of the European Union with Asia. You have explained that it will develop harmoniously and efficiently through the common effort and not by avoiding the diversity, but taking advantage of the diversity of the situation of the two groups of countries. I would like to ask you a question, Mr President. Why don’t we in Europe follow the same path, the same technique, the same way that Europe is following in its relation with Asia, with the so-called new candidates for enlargement of Europe? Europe has fifteen members now, it contemplates to introduce another thirteen or twelve new members. It is an enormous amount. Isn’t there a risk to see a “new giant with a soft belly” being created? And isn’t the way as it is done with the relations with Asia more progressive and more realistic? May I make two comparisons. One is very trivial, please forgive me, but I think it is convincing, and the other more classical. The first comparison, the more trivial one, is the confection of mayonnaise, which is to add oil, preferably olive oil, progressively, and to avoid adding in a large amount at the same time because it will dilute the mayonnaise, making it impossible to eat. The second example is more classical. It is well known to historians—the fall of the Roman Empire in 476 through the inclusion of the new states, Visigoths, Ostrogoths, Burgundians, and so on. The Roman Empire was forced to absorb them and it was the beginning of its end in 476 when it exploded because it became too unwieldy. Europe is not forced to admit new members, and I wonder if the procedure that you follow with Asia would not be the better choice. That is my question. I have not mentioned the infinite discussion that will imply the distribution of powers between the new members and the old. Prodi: You have touched on a big problem, and I am very grateful. You asked, whether in business terms Europe has the capacity to expand so quickly and so widely?

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Where are the borders of Europe? These are really crucial questions that you raised and, believe me, they are also problems for us because nobody has ever defined Europe. There are some who assume that the twelve candidates are definitely in simply because they were spiritually part of Europe, and that the fall of the Berlin Wall sparked a real political movement shared by everybody. Of course, a lot of work is needed to make this wish reality. But I am convinced that the decision we have taken, namely to negotiate with the twelve countries—giving a future Union of fifteen plus twelve—will not have any “Roman Empire” effect because there is an underlying unity. But it is still a serious problem. I have been to the European Parliament twice to take part in discussions with the title: “Where are the borders of Europe?” It was an impossible question to answer because we are still in a phase where many want to enter the European Union. In my last bilateral meeting with Mr Putin he told me that, according to Russian opinion polls 58 per cent of Russians want to join the European Union. He asked me if they were considered European or Asian. I said that they are certainly European but that they had one eye turned towards Asia. They are also too big. It would lead to us having two capitals. They would have a position of strength in Europe, two-fifths of members of the European Parliament would be Russians. We are not creating NAFTA, we are not creating Central America. Let us take Mexico: it is a member of NAFTA but that does not make it a US state with representatives in the Senate and the House of Representatives. That is the difference. We in the EU are creating a new political entity. It will take time; it will take generations. I am explaining to you the difficulties and problems we have and that we are not creating any barriers to trade. And so we return to the problem of borders. I do not know where the borders of Europe are. We are capable of coping with enlargement but we need a big change in our institutions to do so. It is not by chance that in 2002 we are deciding not only on enlargement but also on the future shape of Europe. The members of the Convention on the future of Europe represent governments, parliaments and the European institutions. We have taken one and a half years to discuss the new-look Europe because we need new institutions and, above all, we cannot go on with unanimous voting. Unanimity is not possible with twenty-five states, so we have to adapt our institutions just to avoid that “Roman Empire effect”. This is the strategy we have chosen. Turkey is a different case. It is a candidate but we are not yet at the negotiation stage because it does not meet the co-operation criteria regarding democracy and so on. In my opinion, the Balkans will have to join because otherwise there would be no peace and no solidarity in that part of Europe. Nobody knows what will happen, nobody knows how many generations will be needed to build a different Europe.

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Question: My name is Claudio Piron, from the Standard Chartered Bank. The point you made about diversity is well taken and we all share in that belief. But there is one area perhaps where we don’t have that diversity and that is in the global foreign exchange reserves. With 76 per cent of global foreign exchange reserves in US dollars, we have an overdependency on the dollars in the foreign exchange reserves of central banks. My question would be, would you welcome a greater role of the euro within that system? Do you think it would help to create better stability in the global financial system? In reading many of the reports from the Asian-European meetings, foreign exchange stability is something that you focus on. Do you think a greater role would help that stability in the world? Finally, do you think the European Union is prepared to take on that role as guardian in the financial system for the stability of the world? Prodi: This question should be handled by a consultant, not the European Union, but thank you anyway. When we created the euro it was no small undertaking. It was like giving birth. But that baby will grow up in time and grow up to be strong and healthy. Even so, the euro was quite a big baby. The income of the euro zone is currently equivalent to 66–67 per cent of income in US dollars. Of course, there is a difference in that the borders of the euro zone are not clear. There is the big question mark hanging over the United Kingdom, for example. But public opinion in Denmark and Sweden, countries which are also outside the euro zone, has swung around completely. They have tested the euro and they are now more favourable. Other countries will enter the zone, step by step, after careful thought, and I think that in the medium term the euro will be a real alternative to the dollar. It is already gaining ground. Three or four years ago when I was Italian Prime Minister I advised Chinese Prime Minister to take the euro. He later told me that I had given him very bad advice because the euro was going down. But let me say this. The Chinese themselves are a major country and are the second largest holders of reserves. In future their reserves will be half in dollars and half in euros. There are two reasons for holding the same quantities in dollars and in euros. First, we don’t want a monopolar world. There is a strong political reason for this because a political entity’s currency is part of what it is. Second, the euro will strengthen. In future, I think the euro will have a role, standing, and weight comparable to the dollar. To take just one simple illustration, the eurozone countries’ participation in the IMF will in theory be more than that of the Americans. In a few years’ time, when Europe has 500 million people, we shall be by far the biggest economic entity in the world.

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Question: My name is Simon Tay. I am the Chairman of the Singapore Institute of International Affairs. May I ask you a question about managing diversity or sharing diversity. It is an issue that concerns us, too, here in Southeast Asia. We are multi-racial. Movements recently in Europe have been of concern to us because we have seen in some senses a return of a right that is concerned about immigrants and Muslim people within Europe’s borders. Are these concerns shared by others in Europe? And do you think it will affect Asia-Europe relations? Prodi: The immigration debate is a very hot issue in Europe for a simple reason. When I said that Europe was not a melting pot, I meant that we preserve our languages and our heritage. I was asked at an Indian university the difference between the enlargement of Europe and the enlargement of United States—because even the United States enlarged. My answer was very simple. When the Americans went West they found the Rocky Mountains and Idaho. The EU is embracing Budapest and Prague—places with strong, deeply-rooted societies. So the situation is quite different. Problems arising from immigration cause a lot of anxiety in places with a strong identity but Europe cannot do without immigration. Politically, it is very difficult. Immigration is indispensable for a simple reason: Germans, Italians and French of the younger generation do not want to do night shifts in hospitals or work long hours in agriculture or construction. So we need immigrants. But this creates fear. At the last European Council in Seville we had a lengthy discussion on immigration. We started with an antiimmigration proposal but in the end the position we took was against illegal immigration. It is a tough position but it shows we want to properly manage the flow of immigrants, who are increasingly needed in Europe. This is a shock for Europe but it cannot be halted. Europe is becoming more diverse not only through immigration but also through enlargement. Because of communist rule, many countries in eastern Europe have borders that don’t coincide with their ethnic make-up. There are Hungarians in Slovakia. There are Russian minorities in the Baltic countries. So one of our principles of enlargement concerns obligations to minorities. Concretely, there is an obligation to apply the same rules to all ethnic groups; without guarantees concerning minority languages and jobs in the public administration, these countries will not join the European Union. It is a difficult and important process we are engaged in now. If you don’t guarantee local democracy and equal participation in the local administration for minorities, you cannot be a member of the EU.

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Question: I am Michael Ewing-Chow from the Faculty of Law, National University of Singapore. Thank you Mr Prodi for the talk. To share diversity in an inter-regional partnership must inevitably require people to put aside differences for a common goal. For Europe, which was recovering from the ravages of two world wars, this common goal at that time, with the German-French Steel Commission, was a common goal of ending the European wars. EU would not have succeeded today if not for such a common goal—a symbiotic ideal of ending a war. What similar common goal or symbiotic ideals exists for EU-Asia partnership? Prodi: You mean that Europe is where it is now because of a common history of tragedy, two world wars, and that this is a unique experience? If I understood your question correctly, you want to know whether the European Union-Asian partnership has a common ideal to build on. I am convinced that we are now in a phase where we share many common ideals and can work together in many areas, including economic ones. We have more and more shared rules. Of course this is not the type of union that we are building in Europe. I am speaking now as President of the Commission. We still have many differences but with cultural cross-fertilization they are diminishing. The Asia-Europe partnership is facing a big challenge and the current economic outlook inspires two completely different views. The first is one inspired by fear of globalization. I will explain very quickly. According to this view, Asia has much lower costs and Asians are very intelligent— they absorb technology very quickly. This means we ought to be afraid. That is the first model. The second approach is to say “Asians are very intelligent but we can handle it”. We can specialize and advance in some subsectors. If we integrate, our imports would obviously increase enormously but so would our exports. This would make us all better off. I am fighting for this second approach. But it is a fight because this issue creates a lot of political anxiety both in Asia and in Europe. If entire industries are forced to migrate, everybody in the communities concerned will be against globalization. This is why I mentioned social solidarity and justice in my speech. They are not just empty words of a politician, they are necessary. Finally, I am convinced that if we want globalization, we have to manage it. This means we have to work together.

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Global Challenges in the 21st Century A View from Chile Ricardo Lagos

President Ricardo Lagos of Chile gave the 24th Singapore Lecture on 30 April 2004 during his state visit to Singapore. He has been the only Latin American leader to do so. He was introduced to the audience by Deputy Prime Minister Lee Hsien Loong. While sharing Singapore’s outlook on good governance and free trade, President Lagos expresses concern about the downside of globalization on the weaker sectors of society and the environment, something that was to attract more international attention in the second decade of the new century. He advocates for new international institutions and rules to ensure that globalization is fair to everybody. Mr Lee Hsien Loong, Deputy Prime Minister of Singapore; Professor Wang Gungwu, Chairman of Institute of Southeast Asian Studies; Mr K. Kesavapany, Director of the Institute; Authorities, members of the diplomatic corps; members of the academic community; members of the business community; and students present here this afternoon. Dear Friends I am so sorry that I think that the friends in Singapore will keep referring to Miss Cecilia Bolocco than today’s speaker. I am so sorry for that. Let me tell you that it was not without hesitation that I accepted the task of sharing with you some views on Global Challenges in this 24th Singapore Lecture. I say “some hesitation” because the list of my predecessors here is indeed impressive, and I am extremely honoured that you think I can follow in the steps of my predecessors. I accepted this invitation primarily because of our interest in Singapore. We certainly share an ocean, but also much more than an ocean. I would say that we

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share a common value: a common approach to economic reform. Both countries, Chile and Singapore, look forward to integration into the world society and this integration is convenient for our own people. We also understand that in order to integrate in the society we need to share some common values to build the kind of society we are going to be. To be competitive today, you need to have some kind of internal cohesion. You need to share some common values in the way that you have been able to, to succeed in that particular area here in the last forty years in Singapore. Our two countries have an interesting track record in what we are trying to do. Both are active members of APEC. Both have actively supported the Forum for East Asia–Latin America Cooperation (FEALAC) and both are working through trade agreements to bring together our two countries plus New Zealand. We hope to be able to finish this agreement between the three countries early next year. Within ASEAN, Singapore is one of the most active business centres and, needless to say, the main port from which many of the Chilean products are distributed to the other member countries around the region. At the same time, for both countries, multilateralism has become both a global and a national imperative. If we want to make progress, we need a world with very clear rules, where opportunities are open to all. This is why we thought that it was important to thank you for this invitation. We think the forces that shape our world today are forces that have to do with processes of globalization, and at the same time, with the processes of what happens with multilateral institutions that will have to shape, to some extent, the global process. In other words, I do think that there is a growing tension between these two forces. While globalization is gathering strength, multilateralism—I wouldn’t say that it is losing force, but, at least, multilateral institutions and the rules that are supposed to be applied by them are not growing as fast enough as the processes of globalization. And this is very clear. Foreign trade today is equal to 60 per cent of the global gross national product. Of all the products of the world, 60 per cent is trade. Just one single indicator: international telephone traffic rose from 5,000 million minutes in the mid-eighties to 30,000 million minutes by the turn of the century—six times in just fifteen years. Nevertheless, if globalization is blooming, there is also a bad part of the globalization process. Because illegal and criminal activities are rising, terrorist activities have become more global and less confined to geographic boundaries, and terrorist activities represent a tremendous menace to the process of globalization. On the other hand, what about multilateral governance? Despite the ever-increasing need for global governance, it is difficult to see how we are going to be able to keep the multilateral process increasing.

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Global markets are growing very fast, without parallel in the last sixty years. But what kind of institutions are we going to have in order to make global markets provide global rules in the area of trade and finance? And to what extent are those rules going to be fair for everybody involved? In other words, the multilateral system is responsible for designing and implementing international policies. Let’s take an example: What has happened with the World Trade Organization (WTO)? What happened at Cancun? It is very clear that the failure at Cancun is going to make it much more difficult to have fair trade at the international level. For many decades, multilateral rules and policies have shaped the system of global governance and this is something we have to be moving again. In addition to this kind of new world and governance, we have new actors. In 1945 almost nobody talked about non- governmental organizations and today non-governmental actors seem capable of such powers and have to be taken into account in this kind of multilateral organization. What can we do? In what way are we going to be able to have some global rules, some new concepts given this new world that is before our eyes? There is no doubt that isolation is not possible any more, and therefore economies such as Chile and Singapore will rely in the near future on the strength of global institutions. This is what we think is important to consider today. If we consider what happened during the last two centuries after the Napoleonic wars in the Congress of Vienna, what do we have? A shape of a new Europe during those days that was shaping a new world. What happened after World War I in 1919? Well, the Paris Conference drew a new map for Europe, a new map for the Middle East, and to some extent, for Africa. Of course, you also have the League of Nations, which was the first attempt to have some kind of multilateral governance. Nevertheless, these initiatives had all lived for only a few years—probably because they failed to take into account the realities and the needs of the nations involved. Perhaps after World War II, with the birth of the United Nations, a new multilateral system was established. I think what happened in 1945 represented the power and the world of 1945. The United Nations and fifty-one countries in San Francisco drew a charter that represented what was the world in 1945. The decision to have a Security Council with five Permanent Members represented, I would say, what were the political realities of the world in 1945. The next question should be what are the political realities in today’s world— in the political sphere, in the economic sphere, in the cultural diversity that we see. It seems that since 1945, we have been asking the international system to say something in areas that in the past used to be the domain of individual countries. Now, we ask the international system that some kind of public goods—if you allow me to use that expression—have to be dealt with: The environment, and do they care for the environment? The treaty of Rome and international justice? Human

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rights and the need to preserve human rights no matter where they are going to be violated? Now, the international community would like to say something. What about a concerted action against international epidemics? Or are we going to be able to have some concerted action in favour of cultural diversity? And how do we keep cultural diversity in this global world? In other words, it is not only a question of how we are going to liberalize our trade, how we going to build a new international financial architecture according to the new realities of today’s world, which is so different from the world of 1945. If we want to have social cohesion at home, in order to avoid in our own country social tensions, then what about avoiding some kind of social cohesion at the international level? There are many areas where new institutions have emerged. There are many areas today that are quite different from 1945. It is not only with respect to capital transfers, but also on the political and social fronts. What I would like to share with you is that to some extent if we are going to have a more global world, then the question is how are we going to be able to set up today the international institutions that will have to regulate this world. Especially for small countries like us, it is important to have some rules in place so that everybody can share a part of the profits of this process of globalization. There is no question that globalization is here to stay. There is no question that globalization is essential for the welfare of mankind, but some rules are essential. We saw what had happened at Cancun very recently with regard to trade. I think at Cancun we missed an opportunity to achieve a more free and a more fair trading system. It’s true that there are interests that are very difficult to reconcile. But I also think that some advances now will have to take place. Negotiation, in our view, should resume as soon as possible; otherwise more protectionist trade policies are going to appear any time. Major players in the field have to make some compromises if we want to see some advance. Institutions that were established in 1945 were essential for that period of time. The International Monetary Fund (IMF) was established primarily to fix the rate of exchange between the different countries when the Gold Standard was over. But the World Bank was primarily a bank designed for the reconstruction of Europe, the reconstruction of those countries after the war. Similarly, in today’s world the problems of the IMF are quite different from the problems that it was supposed to tackle in 1945. The World Bank is becoming a world bank primarily devoted to the task of helping developing countries become developed. This is why we think the United Nations multilateral system must constitute the core of global governance and it should be given enough powers and instruments to be able to tackle those issues. And there are more issues that we would like looked into: What about the environment? Where to discuss that? What about human rights? What about in the area of the International Criminal Court? Those are the institutions that are

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shaping the new world and the problem is how can we move ahead sixty year after the major events in 1945? This, I guess, is the most critical issue that we have to face, and in order to advance I think it is going to be essential to also take care of some other areas. What about labour standards as defined by the International Labour Organization? What about the so-called social protection for individuals and families? Who is going to establish the rules? Let me tell you when we were negotiating with an important country, the question of our labour legislation in Chile emerged. They thought that our labour legislation was not “advanced” or “up-to-date”. So as not be accused of some kind of social dumping, I said: “Look, where should I go to find out those rules and who defines the rules?” What about the environment? Is our own legislation enough? Or in the near future are we going to have no tariffs but instead have new trade barriers? In other words, when we are talking about the process of globalization, it is essential to be able to address these new areas. On this point, I think it is up to every country to face the realities. There are different kinds of countries, some more powerful than others, and differing in size. Nevertheless, it is essential to have a minimum of rules. In the case of Chile, it is our belief that integration into the world is key to a better life for our own citizens. In other words, what happens abroad has a bearing on what happens in our own country. International politics is becoming more and more domestic politics, and it is necessary to understand this. We have taken an open view of global integration because Chile thinks that our development is here. The reason we are now in Singapore is because we have so many things in common with what you have been able to accomplish. And in a new world, in a new multilateral system, according to the new global world, it is going to be extremely important to be able to share some of these ideas. In the case of Chile, we have quite a number, as you mentioned, of free-trade agreements. We do that simply because our market is small and we think that our economy is performing in such a way that we are efficient and have some level of competitiveness and that in the global world we can hold our own. It is true. To be in the global world means that you have to have your house in order. This means that the macroeconomic variables have to be in order—responsible fiscal policy and independent monetary policy. The so-called Washington Consensus is essential. But that’s not enough. In our case, in addition to the so-called Washington Consensus, we have been trying to implement a social network that is essential so that the benefits of growth will reach every citizen in Chile. Free trade agreements are not enough. Free trade agreements are not going to replace the need to have some kind of international regulations.

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What about anti-dumping legislations? What about the elimination of agricultural subsidies? There are many of these issues that are not going to be tackled by free trade agreements and can only be resolved at a multilateral level in the World Trade Organization. It is very important to keep in mind that in addition to these free-trade agreements, we will also need to have some kind of multilateral negotiations in those areas that are not going to be covered by free-trade agreements. In addition to free-trade agreements, I would say that what we can do at the regional level is also very important. Foreign policy is rooted to a great extent in a country’s geographical location. The foreign policy of Singapore is rooted in the realities of Southeast Asia. Our foreign policy is rooted in the realities of Latin America. This is because of geography. This is because of history. But, in addition to belonging to a region like Latin America we want to see to what extent we would be able to have some kind of integration. At the same time, there are some other regions in today’s new world and this new region is the Pacific Ocean. And the Pacific Ocean that used to be an ocean that produced division now can be seen as a bridge between different worlds, and this is something new. It is something new to discover that a country does not end in the ocean but the country just begins because of the ocean. And you can reach what you have at the other side of the ocean. In the case of Chile, when you have a sense of those almost 5,000 kilometres along our coast facing the Pacific, it is normal that once we see what’s going on in the Pacific, then we have the feeling that for the first time we are witnessing a new kind of history. When the world was Europe, Chile was far away from the centre of the world. When the major emphasis was placed on the growth of the world trade taking place between North America and Europe, Chile was far away. For the first time, global trade has been moving from the North Atlantic Ocean to the Pacific Ocean. And for the first time, international trade is growing faster in the Pacific rather than in the Atlantic Ocean. What this means for us in Chile is that for the first time in our history we have the feeling that now we are closer to where the major historical action is taking place. And all of us know that more than 50 per cent of the world trade now is taking place in the Pacific Ocean. Therefore, at the regional level, our belonging to Latin America is very important. But we also pay tremendous attention to what is going on in the Pacific Ocean, and therefore in the APEC economies. At the multilateral level what happens with the United Nations, what happens with the economic and social institutions established after World War II? The establishment of APEC as an institution of twenty-one economies today is extremely important in terms of a new kind of thinking on the way that you can go for the regional grouping of different countries. Because now

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geography is not the land but the sea. More importantly, I think, is that APEC has been established on a voluntary basis in order to have free and open trade and at the same time to establish co-operation among different countries. It is true that in the APEC economies each country is free to commit itself in different areas. But what I would like to present this afternoon here is what was decided ten years ago in the so-called Bogor Goals, by which free and open trade is going to be established either in 2010 or 2020 according to the decision of each economy. It is important to note that the world has also changed since 1994 when the goals were established. The idea was that each country would voluntarily reduce tariffs in order to have free and open trade. And to some extent it was going to be a free ride for those countries that were going to benefit from that reduction of tariffs. It’s true that most of the countries have made major advances in this particular area. In our own case, in 1994 we used to have a flat tariff of 11 per cent and we have now reduced the tariff to 6 per cent. When we take into account the free trade agreements that we have already agreed upon, our average tariff is less than 3 per cent. So we can say that we are approaching the Bogor Goals. Nevertheless, when we are thinking about the mid-term evaluation of these goals, the question is: How are we going to evaluate? And the fact is that Chile is going to chair the next APEC meeting in November this year. I think this is a very good opportunity in a very open and careful way to evaluate what has happened. Because in the last ten years, instead of lowering tariffs—which had been introduced at different stages in different countries—a large number of free-trade agreements had been established. Many people thought in 1994 that because the world trade agreements were moving too slowly, the decision was going to be to go through free-trade agreements, everywhere. And we now have quite a number of free-trade agreements. How many countries among the APEC countries have free-trade agreements today, or are in the process of negotiating new free-trade agreements? In our own case, in addition to our trade agreement now with Singapore and New Zealand, there has been some talk about trade agreement with China, with India, with Indonesia, etc. And then the question is if there are so many trade agreements among the APEC member countries, would it be possible to think about some kind of a more general agreement based upon those trade agreements that already exist in order to advance some kind of free trade area among those economies that would like to move along a little bit faster. It is different from what was thought of at the beginning of APEC. At the beginning of APEC, we thought that if international trade was going to advance, the institutions must rapidly follow what had happened. In APEC, given the diversity of countries in size, in power, in trade, in cultural diversity, those twenty-one economies represent to some extent the diversity of this global village, and it is good if there

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is something to advance a little bit further in terms of negotiation at the global level. In other words, is it too difficult to think that some open discussions either through our ministers or our different institutions in APEC may also be useful at the world level? The changes between 1994 and today, 30th April, are not only in terms of trade; there is also a new area that has emerged, like security and terrorism—in connection with trade. And therefore, more attention during the last twenty years had been devoted to these new areas. Originally, APEC was not designed to tackle issues related with political matters. But the realities in today’s world are more urgent. Today in Chile, a meeting of the Ministers for Education of the APEC economies is discussing the importance of learning English for the APEC economies. They talk about advances in the areas of science and technology, as these are related to a global world. It is true that language has become an essential in this global village and, therefore, the question of how are we going to co-operate is becoming more and more important also in connection with trade and globalization. In short, because of the global processes, it is necessary to have more up-to-date multilateral institutions. At the same time, at the regional level, what is going on in the European Union is one way of approaching the process of integration. But what we are trying to accomplish among the APEC countries is different—it is open to all those countries that are committed to walk a little faster. I think this is something we can discuss and work on. If global institutions and multilateral institutions are not prepared to move fast enough, some middle-level institutions like APEC may provide the answer to the lack of rules at the global level. This, I think, represents a tremendous challenge from the point of view of what we are trying to accomplish. In other words, the changes that are taking place are moving so fast and it is so difficult for us to realize this is an epochal change. Probably at the end of the Middle Ages when nationalist states were emerging, there was a transfer of sovereignty from the feudal system to the kings at the national state. That transfer of power took quite a number of centuries to happen, but it took place. And finally you have a nationalist state, as we know. In the process of globalization, more and more of the powers of sovereign states are being shared. Now it is shared in Europe with regard to monetary policy and the euro. I remember John Maynard Keynes said that the sovereignty of England was of course the Bank of England. What about the Bank of England when you have a European Bank? Now, that kind of approach is a new approach. And what I would like to consider is to what extent some kind of international institutions will be necessary to establish rules so that the process of globalization is fair to everybody. But, as often seen in history, such a process will take many years. Nevertheless, it is important to realize what are the challenges that we have. It seems that for Singapore and Chile—both small and open economies—the near

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future means many other things in addition to investment, and these are science and technology. This morning, when we were discussing with the Prime Minister and the members of his Cabinet, this issue arose again and again. Why? Because knowledge is becoming increasingly important. If this is the case, why don’t we invest part of our knowledge into establishing the rules of this global village so that everybody can have a voice in trying to shape the new rules. I think this is no easy task. But look at what you have been able to accomplish with your own society here in Singapore. Perhaps some forty years ago, it was very difficult to think about what you are all going to be in the year 2004 and to accomplish it. And to realize something at the global level and regional level, it is going to take even longer. But when you have a success story like the success story of Singapore, then you think it is possible to have some other success stories at the global level. In order to be able to participate in that challenge, Chile and Singapore have a lot of things to share and to build. Thank you very much for your attention.

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Indonesia The Challenge of Change Susilo Bambang Yudhoyono

President Susilo Bambang Yudhoyono of the Republic of Indonesia gave the 25th Singapore Lecture on 16 February 2005, less than four months into his presidency and less than two months after the devastating Boxing Day tsunami that hit Sumatra. He was introduced by Senior Minister Mr Goh Chok Tong. Yudhoyono was an active foreign policy president and a strong supporter of ASEAN. His lecture focuses on Indonesia’s domestic challenges and IndonesiaSingapore relations. My good friend Prime Minister Lee Hsien Loong; Excellencies; Ladies and Gentlemen. Dear friends: Thank you, Senior Minister Goh Chok Tong, for your kind words and for graciously agreeing to chair our session today. We remember you as an able statesman and a good friend of Indonesia, who did exemplary work carrying the baton from Singapore’s remarkable leader, Lee Kuan Yew. I wish to begin by thanking ISEAS for inviting me to give the Singapore Lecture here today. Since having been elected President, I have given several keynote speeches at different forums, but this is the first time since I received my doctorate degree that anyone has asked me to give a “lecture”. As flattering as this is, I do not feel that I am in a position to lecture to an audience made up of Singapore’s best brains. In fact, Singapore, being the world’s most successful city-state, has a lot to tell the world about the lessons of governance. I stand here today to speak about “the challenge of change for Indonesia”. All of you in Singapore know the meaning of “change” very well. I know of no other country in the world which has changed as rapidly and as frequently as

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Singapore. In the last few decades, you have transformed this island into a modern city-state, a world-class trading, manufacturing, financial centre, thus making Singapore relevant—relevant to the region, relevant to the world economy. There are many ways to measure “greatness” in a nation, but history tells us that the measure of a country’s greatness lies in its ability to adapt—adapt to changing times, adapt to new challenges, adapt to emerging trends, adapt to new terrains. The examples are all around us. China is the important player that she is today because in the 1970s she changed course, adopted Four Modernizations, opened up to the outside world, and embraced market principles. Vietnam too realized after winning the Vietnam War that her future relevance would depend not on her superb military experience, but on her becoming economically competitive and on integrating herself with the region. The United States is today the world’s only superpower and the world’s largest economy because over the last two centuries she demonstrated an uncanny ability to reinvent herself over and over again. And Chile, which I visited a few months ago while attending the APEC Summit, has rapidly transformed herself in the last decade or so to become one of the most successful recent examples of democratic governance. Different countries adapt differently, but adapt they must. Those who fail to adapt will be swept aside by history. Just look at strong-state Yugoslavia, which is shattered to pieces because her superstructure was no longer able to contain and pacify the disintegrating forces within her borders. Change, therefore, is the essence of adaptability, the hallmark of progress, and for some, the necessary measure of survival. For us in Indonesia, too, we cannot escape the necessity to adapt, to change. And this is something that goes a long way back. Our founding fathers learned the concepts of nation-state and nationalism, learned about constitutional government and rule of law, learned about representative democracy, adopted the terminology “Indonesia”, and mixed them all up to create the sovereign Republic of Indonesia. In the 1960s, a new generation of Indonesians discovered a new term— pembangunan, or development—and set in motion a long- term economic progress which in the next three decades would give Indonesia one of the highest growth in the region. And at the end of the twentieth century, another generation of Indonesians began yet another strategic adaptation, by launching reformasi, which effectively set the country on the path of democratic transition. My mission as the sixth President of Indonesia is to advance as far as possible Indonesia’s democracy and reformasi. During the presidential elections last year,

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a great number of Indonesian voters chanted “change”, and in so doing the voters were expressing their desire to see greater clarity over the direction of the nation. What I promised the Indonesian voters was quite simple: to do my best to make Indonesia more democratic, more peaceful, more just, more prosperous. And I intend to keep that promise. Indonesia is a country that can change in so many different ways. Which is why we have to avoid “change for the sake of change”. Upon assuming office, my immediate priority was to make sure that “change” be given direction, that change has a target and a plan, and that change has relevance to the lives of the people. For the first time, we have an elected Government that is mandated directly by the Indonesian voters, and for the first time since 1997 there is a Government that has the luxury to plan and execute for the full five years. There are several challenges of change that I would like to highlight today. As I go through this list, I think you will find that some of them might be of some relevance to Singapore as well. The first challenge is to ensure that Indonesia’s present macroeconomic stability leads to real improvement in the living standards of ordinary Indonesians. This is easier said than done. The previous Government was able to deliver macroeconomic stability, but for some reasons this did not translate into a feel-good factor and more employment. To achieve this, my Government is adopting what I call a “triple-track strategy”: 1. promote growth through exports and investment; 2. promote employment by stimulating the real sector; and 3. reduce poverty by promoting agriculture and rural development. The triple-track strategy is in essence pro-growth, pro-jobs, pro-poor. Over the next five years, my Government is aiming for an average annual growth of 6.6 per cent, but, more importantly, we want that growth to help reduce poverty from 16.6 per cent to 8.2 per cent, and we want that growth to half unemployment from 9.5 per cent to 5.1 per cent by 2009. We want growth to be coupled with equity, and we want to ensure that prosperity to eradicate poverty. The second challenge of change goes beyond numbers and statistics. There are some things that cannot be measured by numbers and statistics. Employment may rise, inflation may go down, and the GDP may go up, but none of these things mean much if the nation as a whole becomes insecure, if conflicts persist, if it loses its fibre, if it loses its sense of identity. That is why the real challenge of change is not just ensuring the growth of the economy, but also the growth of the nation. Not just economic growth, but national growth. My aim as President is to see to it that the Indonesian nation grows to be prosperous, but also resilient, competitive, peaceful, and confident about itself and about its future.

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All of you in Singapore know what I am talking about. In the 1960s, people who lived in this island had a hard time figuring out its identity. You experimented with different political arrangements before deciding to form your own independent sovereign Republic of Singapore. And from then on Singapore transformed itself into a coherent, vibrant nation. With decades of stability, effective leadership and nation-building, your economy grew, and your sense of national pride also grew. Finally, the challenge of change is to bring out the best in Indonesia. What are the best things about Indonesia? Our independence, our diversity, our tolerance, our simplicity, our openness, our love of family and community, our passion for unity and harmony, our rich spirituality, our neighbourliness. These are the values that make us distinctly Indonesian. My grandparents and parents lived by them, and so should my generation and my children’s generation. The more we change, the more we need to embody the essence of being Indonesian. I have described to you some of the challenges of change that we face. After over three months in office, I remain as optimistic as ever about Indonesia’s future. There has been intense focus in Indonesia on the performance of my Government in the first 100 days. I have listened to these criticisms as we plan our next moves. But we are only at the beginning of a long journey. We are running a marathon of five years, not a sprint of 100 days. I have no doubt that in the end our hard work to change Indonesia for the better will prevail. There is one recent event which in my view has also changed Indonesia, and perhaps changed all of you, too. None of us predicted it, none of us was ready for it, but it hit us like a brick wall. I am talking about the earthquake and killer tsunami waves that destroyed communities in Aceh and North Sumatra on December 26, 2004. Never before in the history of Indonesia had so many people perished in a matter of minutes. For those who survived, the emotional damage will stay with them for a very long time. Indonesia has seen many natural disasters before, but the tsunami practically brought the whole country together like never before. After the tsunami, Aceh became seen not as a conflict area but as a disaster area. The whole of Indonesia wept, and came together. They donated what they could to the victims in Aceh and North Sumatra, through the Government, through the media, through local organizations and schools, through their work place. The rich, the poor, children, students, housewives, artists—everyone got into the act of caring and contributing. No other event has brought the whole country together like this. Seven weeks after the tsunami, we still have much to do. We have found many of the dead and buried them, and even as we gather here, rescuers are still finding the dead under the ruins. Over 550,000 homeless Acehnese are still in the emergency camps, and tens of thousands of tsunami orphans need to be looked after.

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We are aiming that the current emergency relief phase will be completed by the end of March, after which we will move on to the phase of rehabilitation and reconstruction. We will do our best to ensure that the rebuilt community will be safer from the threats of future tsunamis. But Aceh’s rehabilitation and reconstruction will need to be carried out under conditions of maximum peace. After the tsunami, the Acehnese are simply not interested in conflict. The real “cause” of the Acehnese is survival, reconstruction, and healing. I call on GAM at all levels, wherever they are, to terminate this conflict, to come to permanent peace with dignity, and to work together to rebuild Aceh under the framework of special autonomy. This is what the Acehnese want, this is what the Indonesian Government is offering, and this is what the international community supports unreservedly. The time for peace—real peace, permanent peace—is now. Those who continue to espouse conflict represent not the interest of the Acehnese but only of themselves. They will be sidelined by the people of Aceh. As we prepare for Aceh’s reconstruction, the challenge before us now is not how to marshal resources, but how to manage them—effectively and properly. With all the funds, resources, and manpower, we must make sure that all this assistance is used in ways that empower the people of Aceh. We must make sure that the assistance is aimed at helping the Acehnese get back on their feet, to get their economy moving again, to give them their livelihood back. We must make sure that all the assistance is deployed in a coordinated, transparent, and coherent manner. We must make sure that all the international and national assistance fit into the Indonesian Government’s long-term Master Plan for Aceh’s reconstruction. We need to ensure that Aceh will be rebuilt in ways that respect its unique culture and rich Islamic heritage. And we must ensure that the assistance will be deployed in ways that will lead to the strengthening of peace in that province. The tsunami has also given way to a new phenomenon in international affairs. It generated a tremendous amount of global goodwill and solidarity on a scale that is unprecedented. It allowed military contingents from so many countries to work side by side with the Indonesian military—not to keep the peace between combatants, but to conduct humanitarian operations. It allowed private citizens of various religions around the world to send their volunteers and donations to help a distinctively Islamic society. Perhaps because this is not about war, politics, conflict, the world’s citizens were able to respond to it with a level of compassion that is rarely seen, allowing them to reach deep into their sense of humanity, spawning countless acts of kindness and

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selflessness—from Dili to Darwin; Beijing to London; Kuala Lumpur to Madrid; Singapore to Washington, DC; Tokyo to Tehran. When was the last time we saw such a pervasive act of global kindness, compassion, and solidarity? We need to build on this global solidarity. What we all have done to help the tsunami victims around the Indian Ocean demonstrates new heights of collaboration by the international community. Let it be known years from now that this was a time when the community of nations joined forces with only one ideology binding them: humanity. Let me now say a few words about Indonesia-Singapore relations. I know there is a great interest in Singapore towards Indonesia. Singaporeans read about events in my country daily in a special section on Indonesia in the Straits Times. Let me begin by saying that I value my personal relations with Prime Minister Lee Hsien Loong, whom I respect as an intelligent, visionary leader with a common touch. PM Lee was one of the first foreign leaders to telephone me right after the Electoral Commission declared that I had won the presidential elections. PM Lee also kindly attended my presidential inauguration—the first Singapore leader to do so—and he was also one of the first foreign leaders to visit Indonesia after the inauguration. We talk frequently on the telephone, and it is a sign of our closeness that PM Lee sometimes calls me on the phone with only 10 minutes’ notice. I think the experience in the last few weeks has drawn Indonesia and Singapore closer. It was Prime Minister Lee who called me in early January this year to suggest that ASEAN hold a Special Leaders Meeting on the Tsunami, which my Government gladly organized and hosted a few days later, on January 6th. That meeting not only demonstrated ASEAN’s responsiveness to the worst natural disaster this region has ever seen, but also secured international commitment for the reconstruction of the stricken communities, and a commitment to establish a regional early warning system in the Indian Ocean. Singapore was also quick to help us on the ground in Aceh when we needed it most. I well remember meeting the pilots of Singapore’s Chinooks in Medan and Banda Aceh, and they were particularly helpful with logistical re-supply and medical evacuations from Meulaboh during critical times. Your Landing Ship Tanks (LST), in cooperation with the Indonesian navy, also helped to bridge the gap in supplies on Aceh’s western coasts, and your Hercules C-130s were truly instrumental in transporting much needed supplies to Banda Aceh. This experience of working together between the TNI and the Singapore Armed Forces bodes well for future cooperation, especially in Military Operations Other Than War, which I believe would give substance to the notion of an ASEAN Security Community.

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But our cooperation on the Aceh tsunami tragedy is only part of our special relationship. The purpose of my visit here is to expand and deepen this important relationship. In our talks yesterday, Prime Minister Lee and I agreed to develop a new framework for bilateral cooperation. While continuing to actively deal with pending issues, we will move ahead to find new opportunities of cooperation in various areas of common interest. And I appreciate that PM Lee is sensitive to issues which my Government feels strongly about. During this visit, we were able to made important headways, such as the signing of the Investment Guarantee Agreement, a commitment to discuss cooperation on tourism and air services, and to strengthen cooperation on fighting trans-national crimes, including anti-terrorism and anti-corruption. The bottom line is that our relations are steady and solid, and that we are moving forward in dealing with pending issues. And I hope Singapore will continue to be part of our success, as you have always been. I have come to the end of my remarks. I hope you take all the things I have said to you today not as a “lecture”, but as a friend talking to another friend—well, hundreds of friends. I thank you for listening.

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Japan and ASEAN, Always in Tandem Towards a More Advantageous Win-Win Relationship through My “Three Arrows” Shinzo Abe

Prime Minister Shinzo Abe of Japan delivered the 33rd Singapore Lecture on 26 July 2013. He was the third Japanese Prime Minister to do so. His visit to Singapore was his third to Southeast Asia within the seven months since he took office in December 2012, clearly indicating the importance he accorded to the region. He was introduced by Singapore Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam. The lecture focuses on the Prime Minister’s vision of building a new Japan through his reforms and on Japan-ASEAN relations.

Introduction Deputy Prime Minister, Deputy Chairman Wong Ah Long, Excellencies, Ladies and gentlemen, I am very grateful to have been invited to deliver this Singapore Lecture. I would also like to express my sincere appreciation to everyone at the Institute of Southeast Asian Studies for affording me this opportunity. I consider myself to have been presented with a very timely opportunity today, in two or three senses. Five days ago on Sunday, Japan held an election to select half of the members of our House of Councillors. Today is my first opportunity since the election to deliver a structured talk on the Japanese economy and various other issues. Most importantly of all, the will to change has returned to Japan, and so has strength. The “revolving door” politics with its high turnover for which Japan is now known has disappeared and is now a thing of the past.

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The second sense in which today’s address is timely is that three days ago, Japan made its debut in the Trans-Pacific Partnership Agreement process, joining the negotiations underway in Malaysia, your neighbour. I am intent on Japan expanding the potential of the economy of the Asia-Pacific region further, together with the United States and the other member countries in the negotiations. The third reason is that this year marks exactly the fortieth year of ASEAN-Japan relations. To commemorate this, Japan has invited the ASEAN heads of state and government to Japan in December, when we will hold a special summit. Today is therefore a truly ideal opportunity to consider the future of ASEANJapan relations.

The Significance of Our Victory in the House of Councillors Election In the House of Councillors election five days ago, our party was granted a strong mandate from the Japanese people, a rare occurrence in recent years. The ruling coalition has now successfully attained a majority in both the House of Representatives and the House of Councillors. Over the past few years an anaemic economy in Japan has engendered feeble politics, which in turn weakens the economy further. We have been experiencing a negative chain of weakening that extends to our diplomacy and national security. Ongoing deflation has made people gloomy in their outlook and inward-focused right to their core. In order to overturn this situation, we needed immediately and simultaneously to strengthen the economy while working towards greater stability and robustness politically. I believe that through the recent election, at a minimum we were able to achieve stability in politics. That said, we have still done nothing more than head to our starting point. In the third quarter of 2012, far from expanding, the Japanese economy instead contracted at an annualized rate of minus 3.6 percent. Yet the Japanese economy grew at an annualized rate of 4.1 percent in the first quarter of this year under my economic policy. If the Japanese economy were to continue to grow at this pace for a year, it would be equivalent to the new emergence of an economy the size of Israel’s. Japan has lost as much as US$500 billion in gross national income during the deflationary period of the last few years. This is the same as a country the size of Norway simply disappearing from the face of the earth. Needless to say, our tax base has shrunk accordingly, and we have become unable to maintain our public finances without relying on government bonds.

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Now you can see the picture. Without growth, there can be no fiscal reconstruction. Without growth, we can neither maintain nor enhance our social security system. And without growth, a strengthening of our diplomacy or national security will also be simply impossible. I trust that from this, the situation has become clear to you. All of these are predicated on economic growth. Borrowing a phrase from the late Margaret Thatcher, I have said that these are cases of “TINA”—“There Is No Alternative”. Moreover, a technology- and knowledge-intensive economy like Japan’s cannot enhance its productivity unless it takes advantage of innovation. What we need is the bold reform of our regulatory regime. This will serve as an external catalyst, much like the TPP negotiations. It will create new added value through dynamic competition and cooperation, which will extend beyond national borders to straddle the entire economic area. Achieving this will require robust political power that takes on vested interests. I feel that through this recent election, we now at long last hold in our hands the trigger for pointing both politics and the economy towards a better and then still better direction. All that remains for us is the execution of these plans. We have now reached a state of TINA. Truly, there is no alternative.

Aiming to Catch Up to and Then Overtake Singapore Since I achieved my comeback as Prime Minister at the end of last year, I have been promoting policies known as my “three arrows” to put the Japanese economy on a growth track once more. These “three arrows” are, specifically, monetary policy, fiscal policy, and a strategy for growth. From now on, we will be engaged in firing off the “third arrow” in particular. Implementing reforms will be the first and foremost political issue for us to tackle starting this autumn. We need to fortify the Japanese economy in substantial ways and increase real income. At the same time we must put public finances on a sustainable course. We must not lose our momentum. We will take a decision immediately this autumn on investment tax credits that will strongly incentivize companies. I will convene an extraordinary session of the Diet, aiming to enact in rapidfire succession laws necessary for regulatory reform, laws to facilitate corporate restructuring, and more. In the months and years to come, Japan will transform into a more open economy. We will become an economy that applauds and assists those entrepreneurs that rise to their feet over and over again using their business failures as nourishment, strengthening them for future endeavours. It will be an economy in which those who actively take on challenges will be rewarded.

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We will become an economy that stimulates innovation in order to cultivate Japan’s technologies still further, from basic science to medical care and agricultural technologies. “Openness”—openness to other countries—“challenges”—actively taking on challenges—and “innovation” are the key concepts that will guide our reforms at all times. In order to break through the regulatory regime that has already petrified solid, much like bedrock, we need both a powerful drill and a sturdy drill bit. In a speech I delivered in London recently, I said that I myself intend to become that sturdy drill bit. I will restate here the same point I made then. We will advance regulatory reforms in the fields of electricity, agriculture, and medical services while promoting new services and new industries. From there, we will elicit the vitality of the Japanese economy. I will also push forward with special zones that will serve as showcases for regulatory reforms, capitalizing on indomitable political power to establish National Strategic Special Zones whose progress I myself will supervise as Prime Minister. This summer, Japan’s tourist sites are bustling with visitors from around Asia. We expect the number of visitors to increase to a degree never seen before. Going forward, we will also work together with non-Japanese entities to improve our infrastructure to enable foreign visitors to enjoy Japan’s tourist sites. We have been saying for some time that we want to be the most business friendly country in the world. I wholeheartedly hope for Japan to catch up to Singapore in this regard and, if possible, even overtake Singapore. To those in the audience today, let me say that Japan avidly welcomes your investment. I call this “Invest in Japan,” or “double-I J.” Feel free to repeat it,—it rolls off the tongue. Invest in Japan: “double-I J.”

The Power of Dreams Some say that Shinzo Abe will ultimately be defeated if he takes on the vested interests surrounding agriculture and medical services. However they are wrong in presupposing that there will be little growth in those sectors and as a result the distribution of income should remain zero-sum. But my view is that we could always seek “positive-sum” paths for industries such as agriculture or medical services. We should bring forth new markets and services through innovation and provide growth opportunities. The “Yumechikara” type of wheat flour is just one recent example in which innovation has emerged in agriculture.

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Although we in Japan consume a considerable amount of bread, until now we were unable to produce flour suited for making bread from domestically grown wheat. But recently, we succeeded in making a variety that yields suitable flour, using wheat grown in Hokkaido, at the northern tip of the Japanese archipelago. The direct translation of the “Yumechikara” brand name is “The power of dreams.” This is the same phrase used by Honda Motor in its advertisements worldwide, but this is just a coincidence. This wheat flour will make it possible for us to compete evenly matched with high-quality imported goods. Moreover, by stimulating innovation and seeking markets outside Japan, even agriculture will become an industry that can go forward successfully under this “positive sum” approach, as already happens with our fruit and with wagyu, i.e., Japanese beef. A similar statement can be made about medical services. We will sell our knowhow in hospital operation and management and in medical insurance to emerging countries in package form. The government and the private sector will act in cooperation with each other to achieve this. We aim to start this type of endeavour in the immediate future, with an eye on the countries of Southeast Asia. I have visited thirteen countries in the half a year since I assumed office as Prime Minister. Wherever I went, I learned that there is a great deal of demand for Japan’s agricultural products and Japan’s medical treatment services. I discovered this in Moscow and found the same thing to be true in Abu Dhabi as well. All of this is untapped demand. I myself am spearheading the efforts we recently launched to uncover this limitless latent demand. The task assigned to me and to my administration is to implement these things step by step and point by point.

ASEAN and Japan Are Twin Engines ASEAN will play an enormously important role for the Japanese economy within that context. Over the past decade, the value of Japanese exports to ASEAN has jumped 2.3 times, while the value of imports from ASEAN into Japan has risen to 2.5 times the previous amount. A look at trends over the past decade shows us that we have run a balanced trade with each other. If you plot our trade figures on a graph, you will find that they track each other almost exactly, in superb fashion. An expanding Japan is in the best interest of ASEAN. A growing ASEAN is in the best interest of Japan. Between Japan and ASEAN, we find a state of affairs that affords us the ability to say such things with certainty.

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I believe that the effects of the “three arrows” that I have fired will—and, indeed,—must—extend not only to Japan but also to ASEAN. ASEAN will be the twenty-first century’s champion in fostering the vast middle class consumer market. The land, sea, and air infrastructure now being extensively constructed, including through cooperation with Japan, and the connectivity that will intensify as a result, will cause ASEAN’s “economies of scale” to come into full bloom. Asia has an enormous demand for infrastructure to connect east and west, with ASEAN at the very heart. I would like for Japan’s system technology to be used extensively towards improving the Asian region’s infrastructure, which will require an investment of some US$8 trillion by 2020. Singapore boasts an impressive infrastructure industry and the project creativity and management technology of Temasek and Ascendas. If we can bring these together with the system technology of Japan’s corporations, it would become the strongest “tag team” in the world for building “dream cities,” would it not? Let’s do it. Let’s embark on making that a reality. Japan, which has a long history of direct investment, is a “resident” in ASEAN from way back. Take, if you will, the enormous economic area that is about to come into being through the “confluence of the two seas,” stretching from the Pacific Ocean to the Indian Ocean. If we were to liken that economic area to an airplane, Japan and ASEAN would be like two engines attached to the right and left wings. There is no question that we will be able to fly high into the sky.

Forty Years of Japan and ASEAN Forty years ago, in many countries of the region, the building of a state was viewed as an endless string of thorny challenges. We in Japan have observed closely as ASEAN countries made progress from that era until the present day, including the changes that have taken place in Myanmar in recent years. Tomorrow in Manila I will offer flowers at the memorial to Jose Rizal, the hero of Philippine modernization. Jose Rizal left us the following words: “Without education and liberty, which are the soil and the sun of man, no reform is possible.” The Asia manifested in ASEAN is the Asia that tirelessly moved forward, taking Rizal’s words as its motto. It was precisely by placing value on education and freedom that you have come so far down this long path. Am I correct here? We Japanese are proud to have always proceeded together with that kind of ASEAN, even during the era of the currency crisis that was so severely trying. I think that you yourselves will testify eloquently to what kind of country Japan was during this time.

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You who have been involved with Japan for such a long time are fully aware of the national character of Japan, which embraces the importance of freedom and peace and, never shooting even a single bullet, has never wavered from democracy or the rule of law. In recent years, Singapore and Japan have incorporated India, a great democratic power, into the grand tapestry of the East Asia Summit, and together have attained the tremendous achievement of bringing about a confluence of the Pacific and Indian Oceans. I am delighted that ASEAN and Japan have gone beyond their economic relations to forge a relationship that takes on responsibility for the security of the region, particularly freedom of navigation on the seas. Japan and ASEAN hold in common a highly-developed civil society and an urban culture. We should commend the fact that our relations have progressed to the point where each of us inspires the other in cultural aspects. My administration is currently working out a plan to be announced in concert with the Commemorative Summit at year’s end to enhance the richness of Asian culture even more. I hope you will look forward to this. Now, ASEAN and Japan are unfailingly “in tandem,” not only in economic but also in cultural terms. Ours is a relationship in which we stride forward together. In times both past and present and also into the future, what has guided Asia is not coercion through force. What has linked Asia together is the winds sweeping across the seas. It has been maritime trade, transported by the wind. It has been the blessings of the seas. What has been cultivated is a spirit in which we hold the forces of nature in awe. And yet at the same time we are optimistic to the core, believing that the fierce forces of nature will at some point transform into benign gusts of wind. What guides this kind of Asia is not coercive force. Rather, it is the interchange that takes place in a spirit of mutual respect and of learning from one another. It is the interchange that transpires in the spirit of being lively, warm-hearted, and at ease, in which we want to enjoy light-hearted moments with each other and even sing songs together. I am not saying that because Japan is the country that gave the world the magnificent invention of karaoke. And, I am looking forward to the day when I can have amicable discussions with the leaders of China, an important neighbouring country for Japan, in exactly this spirit of being at ease with each other. As we consider where we have been and where we are going in terms of our relations with the Republic of Korea, we have a relationship in which both Japan and the ROK are allies with the United States and form a foundation for regional security. In light of this, we are reconfirming our view that here too we are “in tandem” with the ROK both economically and culturally.

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Given this, I sincerely hope for us to hold candid discussions at the leaders level, or, at the Foreign Ministers’ level.

The Japan I Wish to Create I hold in mind a certain image of how I would like Japan to be. More than anything, I want Japan to be a country in which our young generation, and the generation after that, and the one still after that, are able to nurture a dream for the future and make their way forward, their eyes earnestly fixed straight ahead. I also wish to make Japan a country that offers and promotes peace and stability. Growth and turbulence are inherent in countries and regions, just as they are unavoidable in the case of human beings. In particular, rapid growth sometimes exposes us to risks that we did not face before. There is the possibility that there will come a time when the “public goods” of the sky and the sea, space, and cyberspace, which are by nature to benefit all people equally, come to be seen as the stage for a “zero sum” game. Economic peaks and valleys, changes in political systems, environmental degradation, and the aging of society—these are all great challenges now poised to visit the countries of Asia, which Japan has been working to tackle for some time. These are never-ending issues pertaining to the building of democracy, or the rule of law or the legitimacy of the procedures forming the basis for that democracy. But Japan continues to work to tackle these challenges. In the future, by grappling with these challenges together with the countries of ASEAN, Japan and ASEAN will together be able to carve out their future. Japan must regain an economy that is more powerful. Japan will foster in Asia a dynamic society in which all people, regardless of race, gender, differences in age, or disabilities, can pursue their potential. I pledge that by doing so, Japan will carry out its responsibilities to enable ASEAN to attain greater abundance and Asia to become a place where hope shines for the future of its children. ASEAN, Japan, in tandem. Let us stride forward together, aiming at still greater heights!

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日本と ASEAN · Always in tandem ［３本の矢］で一層のWin-Win関係へ 日本国総理大臣 安倍晋三

はじめに 副首相閣下、ウォン・アーロン副理事長、お集まりの皆様、「シンガポール・レ クチャー」にお招きくださって、有難うございます。東南アジア研究所の皆さん にも、心より、御礼申し上げます。 本日私は、二重、三重の意味で、タイムリーな機会をいただいたと思ってい ます。 5日前の日曜、日本では、参議院議員の半数を改選する選挙がありました。日 本の経済などについて、本日が、選挙の後では、まとまった話をする初めての機 会になります。 何よりもまず、日本には、変革の意思と、力が戻ってきました。入れ替わり に、いまや有名となった、「回転ドア」政治が、消えて、なくなりました。 二番目には、3日前、お隣、マレーシアを舞台にした交渉で、日本は初め て、TPPのプロセスへ入りました。 米国などメンバー国とともに、日本は、アジア・太平洋経済の可能性を、一層 広げていきたい。そう思っています。 三番目に、ASEANと、日本のお付き合いは、今年でちょうど40年を迎えます。 それを記念し、12月には、各国から、首脳を日本へお招きし、特別サミットを開き ます。 ASEANと日本の関係について、未来を展望するにも、本日は、たいへん良い 機会になるでしょう。

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参議院選挙勝利の意味 5日前、参議院選挙で、私たちの党は、国民から、近来稀に見る、強い負託をもらい ました。衆議院、参議院の双方で、連立与党は、過半数を得ることができました。 ここしばらく、日本では、弱い経済が、弱い政治を生み、それが、経済を、 また弱くする。外交・安保まで、弱体化が及ぶという、「負の連鎖」が続いてい ました。 打ち続いたデフレーションが、人々の心まで、後ろ向き、内向きにしてしま いました。 この状況をひっくり返すには、経済を強くすることと、政治を安定させ、強化 する努力を、両方とも一度に、時を移さず、実行することが必要でした。 このたびの選挙を経て、少なくとも、政治の安定を、かちとることができた と思います。 しかし、私たちは、まだ出発点へ立ったに過ぎません。 昨年の第3四半期、日本経済は成長するどころか、年率換算で、マイナス3.6% 縮みました。 私の経済政策で、今年の第1四半期、日本経済は、年率にして4.1%成長しまし た。このペースで1年伸び続けると、イスラエル1国分の経済が新たに生まれるこ とになります。 日本は、過去数年のデフレ期間に、5000億ドルもの国民所得を失いました。こ れは、地上から、ノルウェー級の国家がひとつ、丸ごと消滅したのと同じです。 当然、徴税ベースは小さくなって、国債に頼る以外、財政を維持できなくな りました。 いかがですか。成長なくして、財政再建なし。成長なくして、社会保障制度の 維持や充実なし。 そして成長なくして、外交や、安全保障の強化は、あり得ない、ということ が、お分かりいただけるでしょう。 経済成長は、すべての前提条件です。 マーガレット・サッチャーに倣って、私はこれを、「ティナ(TINA)」、“There is no alternative”だと言ってきました。 しかも日本のような、技術、知識集約型の経済は、イノベーションの助けを借 りないと、生産性を伸ばすことができません。 必要なのは、規制の大胆な改革です。TPP交渉のような、外部からの触媒です。 国境を越え、経済圏をまたいだ、ダイナミックな、「競争」と「協調」によ る、新しい付加価値の創造です。 そしてそれには、既得権益に立ち向かう、強い政治力を必要とします。 今度の選挙で、私たちはようやく、政治と、経済を、良い方へ、良い方へ、 回していくきっかけを、つかんだのだと思っています。あとは、実行あるのみ。 本当に、私たちは今、TINAの状態になりました。

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シンガポールに追いつき、追い越したい 昨年末に首相としてカムバックして以来、日本経済を再び成長軌道に乗せるため、 金融政策、財政政策、そして成長戦略からなる、いわゆる「3本の矢」の政策を進 めてきました。 ここから先、私たちは「3本目の矢」の射込みにかかります。 秋以降、私たちの政治課題は、一にも二にも、改革の実行です。日本経済を 本当に強くし、実質所得を増やすことです。あわせて、持続可能な道筋に、財政 を乗せることです。 モメンタムを失ってはいけません。早速、この秋には、企業にとって強いイン センティブとなる投資減税を決定します。 臨時国会を招集し、規制改革のため必要な法律、事業の再編を進めるための法 律など、矢継ぎ早の成立を目指します。 これから日本は、もっとオープンな経済になります。ビジネスの失敗をむしろ 栄養とし、何度でも立ち上がるアントレプレナーを、讃え、助ける、経済になりま す。チャレンジする人が、報われる経済です。 基礎科学から、医療、農業まで、日本がもつテクノロジーを、もっと伸ばすた め、イノベーションを促す経済になります。 「オープン」、「チャレンジ」、「イノベーション」。常に、私たちの改革を 導くキーコンセプトです。 もはや岩盤のように固まった規制を打ち破るには、強力なドリルと、強い刃 (は)が必要です。自分はその、「ドリルの刃」になるんだと、私は先に、ロンドン で言いました。 もう一度、同じことを言います。電力や農業、医療分野で規制の改革を進め、 新たなサービス、新しい産業を興し、日本経済の活力を、そこから引き出します。 規制改革のショーケースとなる特区も、総理大臣である私自身が進み具合を監 督する「国家戦略特区」として、強い政治力を用いて、進めます。 この夏、日本の観光地は、アジアからやってくるお客さんで賑わいます。訪問 者の数は、これまでにない伸びを示すでしょう。海外の方とともに、日本の観光地 を楽しめる、そんなインフラも整えていきます。 世界一、ビジネス・フレンドリーな国にしたいと、私たちは言い続けていま す。この点、シンガポールに追いつき、できれば追い越したい。真剣に、そう思 っています。 お集まりの皆さん、皆さんの投資を、日本は歓迎します。 Invest in Japan、ダブル・アイ・ジェイ(IIJ)と、申し上げます。皆さんも、復唱 してください。ダブル・アイ・ジェイです。

The Power of Dreams 農業や、医療をめぐる既得権益と戦って、安倍晋三は、結局負けるだろう。そう 言う人がいます。

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こんな言い方に、私はすでに、現状を固定したうえで、利益の配分はゼロ・サ ムになると考えたがる、誤りがあると思います。 私の発想は、常に、プラス・サムです。新しい市場やサービスを、イノベーシ ョンによってつくり出し、成長機会を提供すればいいのです。 「ゆめちから」という小麦粉などは、農業にイノベーションが起きた最近の 例です。 日本人はたくさんのパンを食べるのに、国内産小麦から、パンに向いた満足な 小麦粉は、今までできませんでした。 それが、最近、列島北端の北海道で取れる小麦に、ふさわしい小麦粉をつくれ る品種ができました。 小麦粉のブランド名、「ゆめちから」を直 訳すると、The power of dreamsとな ります。自動車のホンダが、ワールドワイドで宣伝に使うフレーズと同じになりま すが、これは、偶然の一致です。 この小麦粉なら、品質の高い輸入品とも互角の競争ができるでしょう。 さらに、果物や、和牛のように、イノベーションを促し、日本の外に市場を 求めていけば、農業だって、プラス・サムの発想で、やっていける産業になるは ずです。 似たことは、医療にも当てはまります。病院の運営、医療保険のノウハウを、 組み合わせた形で新興国に売る。そのため、政府と民間が協力しあう。こういうや り方を、東南アジアの国々を念頭に、早速始めようとしています。 総理就任以来半年で、13の国々を回った私は、行く先々で、日本の農産品、日 本の医療サービスに、多くの需要があることを学びました。モスクワで、そのこと を知りました。アブダビでも、同じことに気づきました。 みな、埋もれた需要です。限りのない潜在需要を掘り起こす努力を、私が先頭 に立って始めたところです。 これらのことを、ひとつひとつ、着実に実施していくことが、私と、私の政権 に課された課題です。

ASEANと日本はツイン・エンジン そこで、日本経済にとって、とても大事な役割を果たすのが、ASEANです。 過去10年、日本からASEANへの輸出額は2.3倍。ASEANから日本が輸入した額 は、2.5倍になりました。 貿易収支は、10年のトレンドで見て、ずっと均衡していて、グラフに描くと、 ぴったり寄り添い、見事なものです。 伸びる日本は、ASEANの利益。成長するASEANは、日本の利益。確信をもって そう言える実態が、日本とASEANの間にあります。 私が射込む「3本の矢」の効果は、日本だけでなくASEANにも及ぶ、いや、及 ばせなければならない。そう思っています。 ASEANは、21世紀を代表するミドルクラス市場になります。日本も協力し、 精力的につくっている陸、海、空のインフラと、それによって強まる連結性 は、ASEANがもつ、「規模の経済」を、全面開花させるでしょう。

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アジアには、ASEANを真ん中にして、東西をつなぐ厖大なインフラ需要があ ります。2020年までに8兆ドルの投資を必要とするアジア地域のインフラ整備に向 けて、日本のシステム技術を大いに活用していただきたい。 シンガポールが誇るインフラ産業、テマセック、アセンダスが持つプロジェク ト創造力そしてマネジメント技術。これと日本企業のシステム技術が組み合わされ ば、「夢の都市」をつくる、世界最強のタッグになりませんか。やりましょうよ。 そして長い直接投資の歴史をもつ日本は、もともと、ASEANの「住人」です。 太平洋から、インド洋にまたがる、「2つの海の交わり」に生まれようとしている 一大経済圏を、もし飛行機にたとえるならば、日本とASEANは、左右両翼につい た、2つのエンジンみたいなもの。 高く、飛んでいくことができるに違いありません。

日本とASEANの40年 40年前、それは、地域の少なくない国において、国家の建設が、果てしのない難 題に見えた頃。 私たち日本人は、そんな当時から今日まで、近年のミャンマーに生じた変化を 含め、ASEAN諸国が進歩を遂げるさまを、つぶさに見てきました。 明日私はマニラで、フィリピン近代化の英雄、ホセ・リサールの記念碑に花 を献げます。 ホセ・リサールは、こんな言葉を遺しています。 「人の苗床となり、太陽となるのは、教育であり、自由である。それなしに は、いかなる改革も成就しない」。 ASEANが示したアジアとは、リサールの言葉をモットーに、たゆまず歩んだア ジアです。教育と、自由を重んじたからこそ、皆さんは、はるかな道をここまでき たのです。違いますか? 私たち日本人は、そんな、ASEANと、苦しかった通貨危機の時期を含め、いつ も一緒に進んできたのを誇りに思います。 皆さんはまた、この間の日本がどんな国だったか、雄弁に証言してくださる でしょう。 自由と、平和の大切さを奉じて、銃弾の一発とて撃たず、民主主義や、法の 支配を、揺るがせにしなかった日本、そんな日本の国柄を、長い付き合いの皆さ んは、よくご存知です。 近年に至ると、シンガポールと日本は、民主主義の大国インドを、東アジア・ サミットという大きなタペストリーに織り込み、太平洋と、インド洋に、結合をも たらした、偉大な達成をともにしています。 ASEANと日本が、経済関係を超え、地域の安全保障、とりわけ、航海の自由に 責任をもつ間柄となったことを、私は、喜びたいと思います。 高度に発達した市民社会と、都市文化を共有する日本とASEANが、文化面で、 互いに触発し合う関係に至ったことを、慶賀すべきだと思います。 年末の、特別サミットに合わせ、アジアの文化を一層豊かにするプランを、い ま私の政権は練っています。ご期待ください。

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いまや、ASEANと日本は、経済だけでなく、文化でも、常に「in tandem」。共 に歩いて行く仲です。 アジアを導くものは、昔も、今も、これからも、力による威圧ではありませ ん。 アジアをつないだものとは、海を渡る風でした。風が運んだ、海の交易でし た。海の、恵みでした。 培われたのは、自然の猛威を畏れる気風です。半面、猛々しい自然は、それで もいつか、優しい一陣の風に変わると信じる、根っからの楽天主義です。 そんなアジアを導くものとは、威圧する力などではなく、互いに敬い、学び合 い、もっと言えば笑い合って、一緒に歌いたくなるような、快活で、慈愛に満ち、 寛(くつろ)いだ精神の交流でしょう。 これは日本が、あの偉大な発明、「カラオケ」を生んだ国だから、そんなこと を言うのではありません。 そして、まさしくこの寛いだ精神のもと、私は、日本にとって重要な隣国であ る中国の首脳と、親しく話し合える日を期待しています。 韓国については、互いの来し方行く末に思いを致すにつけ、日本とは、共に米 国の同盟国でありますし、地域安保の土台をなす間柄、経済でも文化でも、やはり in tandem だという思いを新たにしています。 こうして、首脳同士、あるいは外相同士、胸襟を開いて、話し合えればいいと 念じています。

こんな日本を作りたい 私には、日本が、こんなふうになったらいいという、ひとつのイメージがありま す。 なにより、日本の若い世代、その次、またその次の世代が、未来に夢を抱き、 ひたすら前を向いて、進んで行くことができる国であってほしい。 そして日本を、平和と安定を提供し、増進する国であるようにしたい。そう、 願っています。 成長と、動揺は、人間の場合にそうであるように、国や、地域についても、 つきものです。 とくに、急に成長することは、従来なかったリスクを、時に顕在化させます。 本来、すべての人々を隔てなく潤すはずの、空や海、宇宙、そしてサイバース ペースといった公共財は、ともすると、ゼロサム・ゲームの舞台に見える、そんな 時期があるでしょう。 経済の浮き沈み、政治体制の変化、環境の劣化や、社会の高齢化。 日本は、それら、いままさにアジアの国々を見舞いつつある難問に、挑戦し続 けてきました。 民主主義にしろ、その、根幹をなす、手続きの正当性や、法の支配にしろ、永 遠の課題です。しかし日本は、挑戦し続けます。

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そしてこれからは、ASEANの国々とともに挑戦することによって、日本と ASEANは、一緒に未来を切り拓いていくことができます。 日本は、より強い経済を手に入れ、アジアを人種や性別、年齢の違い、障害の 有る無しにかかわりなく、すべての人が可能性を追求できるダイナミックな社会と し、我々はより素晴らしい場所に変えていきたいと考えています。 そうすることで、ASEANがより豊かになり、アジアが、子どもたちの将来に希 望輝く場となるよう、日本は、自らの責任を果たしていくことをお約束します。 ASEAN, Japan, in tandem. さらなる高みに向けて、ともに歩んでいきましょう!!

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Forging a Strong Partnership to Enhance Prosperity of Asia Xi Jinping

President Xi Jinping of the People’s Republic of China delivered the 36th Singapore Lecture on 7 November 2015, during his first state visit to Singapore. The occasion also marked the 25th anniversary of the establishment of diplomatic relations between Singapore and China. President Xi was introduced by Singapore’s Deputy Prime Minister and Coordinating Minister for National Security Mr Teo Chee Hean. President Xi spoke as the confident leader of a country whose astonishing development had catapulted it to the second largest economy in the world and with greatly expanded influence. Prime Minister Lee Hsien Loong, Deputy Prime Minister Teo Chee Hean, NUS President Mr Tan Chorh Chuan, Professor Wang Gungwu, Faculty Members and Students, Ladies and Gentlemen, Good morning! I am delighted to come to the National University of Singapore and talk to you as a guest speaker of Singapore Lecture. This year marks the 25th anniversary of the establishment of diplomatic relations between China and Singapore, and it gives me great pleasure to pay a state visit to the garden state of Singapore at the invitation of President Tan Keng Yam. With a history of 110 years, the National University of Singapore is renowned both in Asia and internationally. Many Singaporean leaders such as Mr Lee Kuan Yew, President Tan Keng Yam, Mr S.R. Nathan and Mr Goh Chok Tong, graduated

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from NUS. Indeed, NUS has produced a galaxy of talents and outstanding public leaders for Singapore. NUS champions the vision that there should be no walls around minds, no walls to ideas, no walls to talent and no walls between discovery. Such a no-walls culture embodies the creative, enterprising, open and inclusive spirit of Singapore, an important factor contributing to the success of NUS and Singapore. This year marks the 50th anniversary of the independence of Singapore. In the last 50 years, the hard-working and visionary people of Singapore have endured hardships and succeeded in building Singapore into one of the most advanced countries in Asia and a leading international economic, financial, shipping, and refining and petrochemicals center. Its achievements in national development are widely recognized. As the saying goes, when people only rely on heaven, their rice jars will be empty, but when people make efforts, their barn will be full of grain. This saying vividly reflects the spirit of Singapore, and we would like to express our sincere congratulations to the Singaporean people on their success. Faculty Members and Students, Ladies and Gentlemen, China and Singapore are friendly neighbours across the sea with a long history of amicable exchanges. In the early 15th century, China’s great navigator, Zheng He, called on Singapore several times on his ocean voyages. A full size replica of the treasure boat of Zheng He is on display in the maritime museum of Singapore to honor this historic event. In the late Ming and early Qing dynasties, many people from China’s Guangdong and Fujian provinces migrated to Southeast Asia, bringing with them Chinese culture and skills, and sowing the seeds of China-Singapore friendship. In 1978, Mr Deng Xiaoping visited Singapore, opening the friendly relations and cooperation between our two countries in the new era. At that time, China was embarking on a path of reform, opening up and socialist modernization, and exploring the building of socialism with distinctive Chinese features. Here in your country, under the leadership of Mr Lee Kwan Yew, Singapore succeeded in pursuing a development path suited to its national conditions by combining the Eastern values with an international vision. After seeing first-hand Singapore’s economic achievements, Mr Deng Xiaoping said that China needs to learn from Singapore. China has drawn on the Singaporean practices in addressing tough challenges encountered in its reform and development endeavours. On its part, China’s development has also created tremendous opportunities for Singapore’s development. Today, there are increasing political mutual trust and deepening practical cooperation between the two countries. The Suzhou Industrial Park and the Tianjin Eco City, two cooperation projects launched by the Chinese and Singaporean

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governments, have achieved full success. The third China-Singapore government-togovernment cooperation project, with focus on connectivity and a service economy, will soon be launched in Chongqing, China. China is now Singapore’s biggest trading partner, and Singapore is the biggest source of foreign investment and an important investment destination for China. The financial cooperation between the two countries is booming, with Singapore being one of the key Renminbi offshore trading centers. In addition, cooperation in science and technology, environmental protection, education, people-to-people exchanges, and social governance has delivered fruitful outcomes. The 25 years of growth in China-Singapore relations has closely aligned the development strategies of the two countries as well as China’s development goal and Singapore’s unique strengths, thus creating a new way of cooperation that is in keeping with the times. On this occasion of the 25th anniversary of the establishment of diplomatic relations, China and Singapore have agreed to turn our relations into an all-round cooperative partnership progressing with the times. I am confident that with the concerted efforts of our two peoples, China-Singapore relationship will surely make new and even greater progress. Faculty Members and Students, Ladies and Gentlemen, China and many Southeast Asian countries are connected by mountains and rivers, and China shares close cultural bonds with all countries in Southeast Asia. We have a recorded history of interaction of more than 2,000 years. The Chinese and Southeast Asian civilizations have grown together through mutual enrichment over the millennia. Since the ancient times, we Chinese have valued harmony in diversity and good-neighbourliness, which have much in common with the values of the people of Southeast Asia. The Chinese culture cherishes such values as benevolence, virtue, modesty, self-reflection, learning, and pursuit of excellence. In many Chinese literary classics such as the Romance of the Three Kingdoms and All Men Are Brothers, the protagonists are both loyal and righteous, and these are the qualities that are admired by the Southeast Asian people as well. Similarly, the cuisine, music, architecture, painting and religions of Southeast Asia have also influenced the Chinese culture. In modern times, China and Southeast Asian countries encouraged and supported each other in the cause of independence and liberation, and we have inspired and worked with each other in economic and social development. We assisted each other in overcoming the Asian financial crisis, the international financial crisis, the Indian Ocean tsunami and the devastating earthquake in Wenchuan, China. Today, China and Southeast Asian countries are making new progress in our respective development endeavours.

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The Southeast Asian countries established the ASEAN in the 1960s in an effort to enhance development through unity. For nearly half a century, the Southeast Asian countries have addressed instability and underdevelopment and achieved stability and development, becoming an important force of peace, development and cooperation in regional and international arenas. ASEAN has developed a distinctive ASEAN approach to both its own development and external affairs featuring mutual respect, consensus building and accommodating the comfort level of all parties. This has served the countries in the region well in their efforts to develop their relations, deepen cooperation and enhance integration. By the end of this year, the building of the ASEAN Community is expected to be completed, which will be the very first sub-regional community in Asia. China is committed to developing friendly relations and cooperation with ASEAN. We support ASEAN’s development and growth, its community building endeavour as well as ASEAN centrality in East Asian regional cooperation. Faculty Members and Students, Ladies and Gentlemen, China’s neighbourhood occupies a top priority on its diplomatic agenda, and China has the unshirkable responsibility to ensure peace, stability and development in its neighbourhood. China is dedicated to promoting a more just and equitable global governance system, enhancing democracy in international relations as well as the building of a new type of international relations based on win- win cooperation and a community of shared future for mankind. Efforts to reach this goal should naturally start in its neighbourhood. China is committed to pursuing partnership with its neighbours and a neighbourhood diplomacy of amity, sincerity, mutual-benefit and inclusiveness and fostering a harmonious, secure and prosperous neighbourhood. China champions a vision of common, comprehensive, cooperative and sustainable security in Asia. China endeavours to build a close community of shared future with ASEAN, and a community of shared future with all countries in Asia. The belief in peaceful development is deeply rooted in the Chinese mind, and the vision of harmony and peaceful co-existence underpins China’s neighbourhood diplomacy. The Chinese people, having suffered so much from foreign aggression and internal turmoil in modern times, cherish peace. We will never waver in our determination to uphold peace, and we will never want to see others suffer what happened to us. China is now on the road to development and prosperity, but we reject the logic that a country which grows strong is bound to pursue hegemony. What we in China believe, starting with our forefathers, is that the strong and rich should not bully the weak and poor. And we see great truth in the saying that “a warlike country, however big it might be, is bound to perish.” Some people

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are fanning up the so-called China threat. They may do so out of ignorance about China’s past and present as well as its culture and policies, or they may do so out of misunderstanding of and bias against China. Some may even have some kind of hidden agenda in doing so. Let me be clear: China is committed to peaceful development and pursues an independent foreign policy of peace. This is not an expediency. It is a strategic decision made by China as well as a solemn pledge it has made to the world. Having gone through poverty and turmoil for over a century, China knows full well the importance of development and stability. China has received support from its neighbours in its development endeavours, and China’s development, in turn, has benefitted its neighbours. China hopes that its own development and that of its neighbours will complement each other, and China welcomes its neighbours to board the fast train of China’s development so that they can share more from China’s development. Two years ago, during my visit to Central Asia and Southeast Asia, I put forward the initiative of building the Silk Road Economic Belt and the 21st Century Maritime Silk Road. The Belt and Road Initiative, as it is now called, is about openness, development and cooperation, and it calls for pursuing joint development and sharing benefits on the basis of equality and mutual benefit. The initiative has gained momentum. China has released the Vision and Actions of the “Belt and Road”, a comprehensive document about the Initiative. Over 60 countries and international organizations have expressed interest to become part of the Initiative, and China has reached cooperation agreements with many of them. The Articles of Agreement of the Asian Infrastructure Investment Bank (AIIB) has been signed, the Silk Road Fund has started implementing specific projects. And a number of major multilateral and bilateral projects are well underway. The main partners of the Belt and Road Initiative are China’s neighbours, and they will be the first to benefit from it. China welcomes its neighbours to get involved in the Belt and Road Initiative. Together, we can surely translate the vision of peace, development and win-win cooperation into reality. Faculty Members and Students, Ladies and Gentlemen, The tide of history moves on and we must follow it. We have now reached a new historical starting point to grow China’s relations with its neighbours. The fundamentals of Asia’s economy are sound, and Asia remains an engine driving world economic growth. On the other hand, the Asian economy also faces significant downward pressure caused by both internal and external factors. Asia’s political and social stability contributes to global stability. Yet, the region also faces a host of intricate security issues, particularly the rising non-traditional challenges such

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as terrorism, extremism, cross-border crimes, cyber security and major natural disasters. In response, most Asian countries have sought to settle differences through consultation and negotiation. But lack of mutual trust has given rise to disputes from time to time. The Asian countries are more interconnected than ever before thanks to the accelerated process of regional integration, but they may take different approaches to regional cooperation and security cooperation in the region is out of step with economic cooperation. All these are challenges that we should meet. I have been thinking about how China’s cooperation with the Southeastern Asian countries and its other neighbours can be deepened under the new circumstances to boost our common development. And the following is what I believe we should do together: • We should work together to uphold peace and stability. Upholding peace in Asia is the shared historical responsibility of both China and its neighbours. We Asians should never allow animosity to divide us. We should increase mutual trust, work together to uphold peace and stability in Asia and foster a sound environment that enables us to achieve development and prosperity. • We should form synergy between our respective development strategies. We Asian countries should give priority to development to make life better for our peoples. We should tap into our respective development strategies and engage in mutual assistance to create new drivers of cooperation. We should draw up new cooperation plans and lock in new outcomes such mutually beneficial cooperation delivers. As the pie of cooperation grows bigger, it will lend more momentum to growth in our respective countries. • We should actively pursue security cooperation. As a Chinese saying goes, a single line of silk doesn’t make a thread, and one hand cannot clap. We Asian countries should foster a vision of security suited to Asia and take a holistic approach to handling security issues in the region. We should jointly address both traditional and non-traditional security issues. We should stay committed to peaceful settlement of differences and disputes through friendly consultation, and we should give equal emphasis to both development and security. Together, we can achieve open, inclusive and win-win cooperation among neighbours that is based on mutual respect and mutual trust, and achieved by expanding common ground and narrowing differences. • We should strengthen the close bonds among our peoples. Asia is home to timehonored civilizations which have nurtured the collective Asian values and an Asian identity. We should draw on this valuable asset and encourage peopleto-people exchanges to strengthen the popular support for good neighbourly relations. The traditional Asian value of peace and harmony should continue to guide our exchanges. By doing so, we can ensure long-term harmony and cooperation among the Asian countries.

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I know that people have been closely following China’s policy on the South China Sea. Let me make this clear: The South China Sea islands have been China’s territory since ancient times. It is the bounden duty of the Chinese government to uphold China’s territorial sovereignty and legitimate maritime rights and interests. The starting point and ultimate purpose of China’s policy toward the South China Sea is to maintain peace and stability there. Thanks to the joint efforts of China and other littoral states, the situation in the South China Sea is generally peaceful. There has never been any problem with the freedom of navigation and overflight; nor will there ever be any in the future, for China needs unimpeded commerce through these waters more than anyone else. Although some of the islands over which China has sovereignty have been occupied by others, we have all along advocated a resolution of these issues through peaceful negotiation. China will continue to seek resolution of the disputes through negotiation and consultation with countries directly involved on the basis of respecting historical facts and in accordance with the international law. China has every capacity and confidence to work with ASEAN countries to maintain peace and stability in the South China Sea. We welcome non-Asian countries to make a positive contribution to peace and development in Asia. At present, the most important task facing all Asian governments is to ensure robust and sustained development, which requires a peaceful and stable environment. This is the biggest common interest of Asian countries. Non-Asian countries should understand and respect this and play a constructive role. Faculty Members and Students, Ladies and Gentlemen, I understand you are quite interested in China’s future development. The Communist Party of China has just concluded the fifth Plenum of its 18th Central Committee. This plenum adopted a proposal for the 13th Five-Year Plan for national economic and social development, which is a blueprint for China’s development in the next five years. Our goal is to finish the building of a society of initial prosperity in all respects and double China’s 2010 GDP and per capita income for urban and rural residents by 2020. This is the first of our two centenary goals. To achieve this goal, we will pursue a four-pronged strategy of deepening reform, advancing law-based governance and improving Party conduct in an allround way with the goal of finishing building a society of initial prosperity in all respects. We will pursue development as a top priority, with emphasis on its quality and efficiency. We will accelerate efforts to put in place systems, institutions and development models that boost economic development under new conditions. We will maintain strategic resolve, pursue progress while ensuring stability, and promote

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coordinated development of China’s economy, political system, the cultural sector, society, the environment and the Party. To achieve this goal, we will follow the principles of innovative, coordinated, green, open and inclusive development. To pursue innovative development is to place innovation at the core of our national development endeavour and enable it to underpin all endeavours of the country and become a trend in the country. Coordinated development requires us to promote balanced development between urban and rural areas and between economic and social development, and ensure balanced progress in promoting a new type of industrialization, IT application, urbanization and agricultural modernization. It also means strengthening China’s soft power as well as hard power and overall national development. To achieve green development, we will follow the basic state policy of resource conservation and environmental protection, pursue sustainable development, and promote modernization in a new way that enhances harmony between human development and the preservation of nature. By doing so, we will contribute more to global ecological security. Open development demonstrates China’s commitment to pursue the win-win strategy of opening-up, develop a high standard open economy, take an active part in global economic governance and the provision of public goods, and build a community of extensive common interests. Inclusive development means development for the people, by the people and its fruits shared by the people. It means we must work hard to make all of our people benefit more from such development and eventually achieve common prosperity. To achieve this goal, China will increase cooperation with all other countries, especially its neighbours, and China’s development will bring greater opportunities for the world, particularly its neighbours. We are ready to share these development opportunities with other countries in Asia and work with them to create a better future for Asia. Faculty Members and Students, Ladies and Gentlemen, How time flies! As we look back on the history of China- Singapore relations, we cherish all the more the memory of two great statesmen who forged this relationship, Mr Deng Xiaoping and Mr Lee Kuan Yew. Five years ago on another visit to Singapore, I joined Mr Lee Kuan Yew in unveiling a commemorative marker in honor of Mr Deng Xiaoping on the bank of the Singapore River. Even though both of them are no longer with us, their great achievements will always be remembered by us. The youth represent hope and the future. I am glad to see that the saplings of friendship and cooperation between China and Singapore so carefully nurtured by

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past generations of leaders of the two countries have grown into luxuriant trees laden with fruits. The baton of China-Singapore friendship needs to be passed on to you, the younger generation of the two countries, and it is you who will carry forward this friendship. Last July, several Singaporean college students in their early 20s joined a “Looking China” program to learn about China through taking photographs, a program that took them to Northwest China. There, they captured images of modern China through camera lens and experienced and shared the Chinese culture with others by watching the local Qinqiang Opera, eating Lanzhou hand-pulled noodle and taking a river trip on sheepskin rafts. Two Chinese students studying at the National University of Singapore spent an entire year filming the personal stories and dreams of 50 Singaporeans. I am sure you know many similar anecdotes of such people-to-people exchanges. As a Chinese saying goes, instead of complaining that one’s talents go unrecognized, one should learn to appreciate the wisdom of others. I hope the young people in both China and Singapore will learn more about the history and culture of both countries as well as each other’s personal aspirations. Learn from each other, deepen your friendship, carry forward China-Singapore friendship, and be a new force driving the growth of China-Singapore relations. This is my hope for you. Faculty Members and Students, Ladies and Gentlemen, Looking ahead, I believe that Asia is once again taking the lead in promoting the development of history. Asia is our homeland, and is where our future lies. China stands ready to work with Singapore and other neighbours as well as all the other countries in the world to usher in a new era of all-round cooperation and turn Asia into our beautiful homeland. Thank you!

Source: Ministry of Foreign Affairs of the People’s Republic of China website www.fmprc. gov.cn/mfa_eng/wjdt_665385/zyjh_665391/t1313923.shtml

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深化合作伙伴关系共建亚洲美好家园 ——在新加坡国立大学的演讲 中华人民共和国主席习近平

尊敬的李显龙总理， 尊敬的张志贤副总理， 尊敬的陈祝全校长， 尊敬的王赓武所长， 老师们，同学们，女士们，先生们 大家好！很高兴来到新加坡国立大学，并利用“新加坡讲座”这个平台，同各 位同学和各界朋友见面。今年是中新建交25周年，我很荣幸应陈庆炎总统邀请，对 有着“花园国家”美誉的新加坡进行国事访问。 新加坡国立大学拥有110年悠久历史，是亚洲乃至世界知名高校。李光耀 先生、陈庆炎总统、纳丹先生、吴作栋先生等新加坡领导人都是国大校友。可以 说，这里桃李芬芳、人才辈出。贵校倡导“人才不设墙”、“观念不设墙”、“思 维不设墙”、“知识不设墙”的“无墙文化”，体现了新加坡创新进取和开放包容 精神。这是贵校乃至贵国成功的一个重要原因。 今年是新加坡建国50周年。半个世纪以来，新加坡人民筚路蓝缕、发愤图 强，凭借勤劳智慧把新加坡建设成了亚洲最发达的国家之一，成为世界上重要的经 济金融中心、航运中心、炼化中心，国家发展取得了举世瞩目的成就。新加坡取得 的成就生动诠释了“靠人粮满仓，靠天空米缸”的道理。我们对新加坡人民的成功 表示衷心祝贺。 老师们、同学们、女士们、先生们！ 中国和新加坡是一衣带水的友好邻邦，友好交往源远流长。15世纪初，中国著名 航海家郑和扬帆远航，多次到访新加坡。新加坡海事博物馆里有一艘按原尺寸复制的 郑和宝船，以纪念这一伟大事件。明末清初，许多来自中国广东、福建的民众漂洋过 海到南洋谋生，带来了中华文化和技术，也播下了中新友好的种子。

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1978年，邓小平先生访问新加坡，拉开了新时期中新友好合作的序幕。当时的 中国正在开拓改革开放和社会主义现代化建设的新路，积极探索中国特色社会主义 道路。在李光耀先生带领下，新加坡兼具东方价值观和国际视野，走出了一条符 合新加坡国情的发展道路。在目睹新加坡创造的经济成就后，邓小平先生表示，中 国要向新加坡学习。新加坡的实践为中国破解改革发展中的一些难题提供了宝贵借 鉴，中国发展也为新加坡带来了巨大发展机遇。 现在，中新两国政治互信不断加深，务实合作深入拓展。苏州工业园区、天津 生态城两个政府间合作项目成功推进，以现代互联互通和现代服务经济为主题的第 三个政府间合作项目即将在中国重庆落户。中国是新加坡最大贸易伙伴，新加坡是 中国最大投资来源国和重要投资目的地。两国金融合作方兴未艾，新加坡已经成为 重要的人民币离岸交易中心之一。双方在科技环保、教育人文、社会治理等领域合 作成果丰硕。中新关系25年来的发展，紧密契合两国发展战略，契合中国发展方向 和新加坡独特优势，走出了一条与时俱进的合作之路。 在中新建交25周年之际，我们一致同意将中国和新加坡关系定位确定为与时俱 进的全方位合作伙伴关系。我相信，在中新两国人民共同努力下，中新关系必将迎 来新的更大的发展。 老师们、同学们、女士们、先生们！ 中国和东南亚山水相连，血脉相通，有文字可考的交往史长达2000多年。中华 文明和东南亚文明千年互鉴共生。中国自古讲求和而不同、敦亲睦邻，同东南亚文 化深度契合。中华文化追求的仁爱尚德、谦恭自省、敏而好学、止千至善，《三国 演义》、《水浒传》等中国文学作品中人物具备的忠义品质，也是东南亚人民所推 崇的。东南亚的饮食、音乐、建筑、绘画等也影响了中国民俗。 近代以来，中国和东南亚国家在国家独立和民族解放的进程中彼此激励、相互 支持，在经济社会发展的历程中相互启迪、通力合作，在应对亚洲金融危机、国 际金融危机和抗击印度洋海啸、中国汶川特大地震中守望相助、和衷共济。时至 今日，中国正同东南亚国家一道，书写着自身发展的历史新篇章。 上世纪60年代起，东南亚国家创建东盟，走上了联合自强之路，并在近半个世 纪中风雨兼程，实现了从动荡贫弱到稳定发展的跨越，成为地区和国际舞台上维护 和平、促进发展、深化合作的一支重要力量。东盟在自身发展和对外交往中，形 成了独具特色的“东盟方式”，强调相互尊重、协商一致、照顾各方舒适度，为地 区国家发展关系、深化合作、推进一体化提供了有益借鉴。今年年底，东盟即将 建成共同体，这是亚洲地区第一个次区域共同体。中国将坚定发展同东盟的友好 合作，坚定支持东盟发展壮大，坚定支持东盟共同体建设，坚定支持东盟在东亚区 域合作中发挥主导作用。 老师们、同学们、女士们、先生们！ 中国始终将周边置于外交全局的首要位置，视促进周边和平、稳定、发展为己 任。中国推动全球治理体系朝着更加公正合理方向发展，推动国际关系民主化，推

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动建立以合作共赢为核心的新型国际关系，推动建设人类命运共同体，都是从周边 先行起步。 中国坚持与邻为善、以邻为伴，坚持奉行睦邻、安邻、富邻的周边外交政策，坚 持践行亲诚惠容的周边外交理念，坚持共同、综合、合作、可持续的亚洲安全观，致 力于构建更为紧密的中国—东盟命运共同体，推动建设亚洲命运共同体。 和平发展思想是中华文化的内在基因，讲信修睦、协和万邦是中国周边外交的 基本内涵。近代以来，外敌入侵、内部战乱曾给中国人民带来巨大灾难。中国人民 深知和平的宝贵，绝不会放弃维护和平的决心和愿望，绝不会把自身曾经遭遇的苦 难强加于他人。中国繁荣昌盛是趋势所在，但国强必霸不是历史定律。中国自古倡 导“强不执弱，富不侮贫”，深知“国虽大，好战必亡”的道理。一些人渲染“中 国威胁论”，这或者是对中国历史文化和现实政策不了解，或者是出于一种误解和 偏见，或者是有着某种不可告人的目的。中国坚持走和平发展道路，坚持独立自主 的和平外交政策，不是权宜之计，而是我们的战略选择和郑重承诺。 近代以来，中国经历了长达一个多世纪的积贫积弱、风雨飘摇的年代，我们比 谁都懂得发展的重要、稳定的可贵。中国的发展进程得到周边国家帮助和支持，中 国发展成果也为周边国家所分享。中国愿意把自身发展同周边国家发展更紧密地结 合起来，欢迎周边国家搭乘中国发展“快车”、“便车”，让中国发展成果更多惠 及周边，让大家一起过上好日子。 两年前，我在访问中亚和东南亚时，提出建设“一带一路”的设想。这是发 展的倡议、合作的倡议、开放的倡议，强调的是共商、共建、共享的平等互利 方式。目前，这个倡议已经形成势头。中国发布了愿景与行动的纲领性文件，60多 个国家和国际组织表达积极参与的态度，中国同很多国家达成了合作协议，亚洲基 础设施投资银行协定已经签署，丝路基金已经着手实施具体项目，一批多边或双边 大项目合作正稳步推进。“一带一路”倡议的首要合作伙伴是周边国家，首要受益 对象也是周边国家。我们欢迎周边国家参与到合作中来，共同推进“一带一路”建 设，携手实现和平、发展、合作的愿景。 老师们、同学们、女士们、先生们！ 时代潮流，浩浩荡荡。当前，中国同周边国家关系站在了新的历史起点上。亚 洲是世界经济发展高地，宏观经济基本面稳定向好，同时受内外因素影响，承受了 较大下行压力。亚洲政通人和、社会稳定，是全球格局中的稳定板块，同时安全问 题十分复杂，恐怖主义、极端主义、跨国犯罪、网络安全、重大自然灾害等非传统 安全挑战增多。亚洲绝大多数国家的政策取向是通过协商谈判处理矛盾分歧，同时 一些国家互信不足、时有纷争。亚洲国家相互依存日益加深，地区一体化进程不断 加速，同时区域合作路径不一，安全合作长期滞后于经济合作。这些问题都需要我 们共同应对和破解。 我一直在思考新形势下中国同包括东南亚在内的周边国家深化合作、共谋发展 的大计，愿在此提出一些想法和主张。 ——共同维护和平安宁。维护亚洲和平是中国同周边国家的历史责任和共同担 当。亚洲各国人民要永不为敌、增进互信，共同守护亚洲和平安宁，为亚洲各国发 展和人民安居乐业创造良好条件。

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——深入对接发展战略。亚洲各国人民要聚精会神推动发展、改善民生，互帮 互助，从各自发展战略中发掘新的合作动力，规划新的合作愿景，锁定新的合作成 果，做大互利合作的“蛋糕”，为彼此经济增长提供更多动能。 ——积极开展安全合作。“单丝不线，孤掌难鸣。”亚洲各国人民要践行亚洲 安全观，协调推进地区安全治理，共同担当和应对传统和非传统安全问题，坚持以 和平方式通过友好协商解决矛盾分歧，坚持发展和安全并重，共谋互尊互信、聚同 化异、开放包容、合作共赢的邻国相处之道。 ——不断巩固人缘相亲。亚洲各国人民要从悠久的历史文明中汲取养分，凝聚 对亚洲价值的集体认同，拓展人文交流合作，夯实睦邻友好的社会民意基础，把 “和”、“合”的传统理念付诸彼此相处之道，把修睦合作的薪火世代传承下去。 一段时间以来，大家都关心中国在南海问题上的政策。我要说的是，南海诸岛 自古以来就是中国领土，维护自身的领土主权和正当合理的海洋权益，是中国政府 必须承担的责任。中国南海政策的出发点和落脚点都是维护南海地区和平稳定。在 中国和南海沿岸国共同努力下，南海局势总体是和平的，航行和飞越自由从来没有 问题，将来也不会有问题，因为首先中国最需要南海航行通畅。尽管中国拥有主权 的一些南海岛礁被他人侵占，但我们始终主张通过和平谈判方式解决问题。中国将 坚持同直接当事国在尊重历史事实的基础上，根据国际法，通过谈判和协商解决有 关争议，我们完全有能力，也有信心同东盟国家一道，维护好南海地区的和平稳 定。我们欢迎域外国家参与亚洲和平与发展事业，为此发挥积极作用。当前，亚洲各 国政府面临的最重要课题是如何实现持续快速发展，这需要一个和平稳定的环境。这 是地区国家的最大公约数，域外国家也应该理解和尊重这一点并发挥建设性作用。 老师们、同学们、女士们、先生们！ 大家关心中国的发展走向。中共十八届五中全会刚刚闭幕，会议审议通过了关 于制定国民经济和社会发展第十三个五年规划的建议，描绘了中国未来5年发展蓝 图。按照我们的规划，到2020年，中国将全面建成小康社会，国内生产总值和城乡 居民人均收入比2010年翻一番，实现我们确定的“两个一百年”奋斗目标的第一个 百年奋斗目标。 ——为了实现这个目标，我们将坚持全面建成小康社会、全面深化改革、全面 依法治国、全面从严治党的战略布局，坚持发展是第一要务，以提高发展质量和 效益为中心，加快形成引领经济发展新常态的体制机制和发展方式，保持战略定 力，坚持稳中求进，统筹推进经济建设、政治建设、文化建设、社会建设、生态文 明建设和党的建设。 ——为了实现这个目标，我们将牢固树立创新、协调、绿色、开放、共享的发 展理念。坚持创新发展，就是要把创新摆在国家发展全局的核心位置，让创新贯穿 国家一切工作，让创新在全社会蔚然成风。坚持协调发展，就是要重点促进城乡区 域协调发展，促进经济社会协调发展，促进新型工业化、信息化、城镇化、农业现 代化同步发展，在增强国家硬实力的同时注重提升国家软实力，不断增强发展整体 性。坚持绿色发展，就是要坚持节约资源和保护环境的基本国策，坚持可持续发 展，形成人与自然和谐发展现代化建设新格局，为全球生态安全作出新贡献。坚持 开放发展，就是要奉行互利共赢的开放战略，发展更高层次的开放型经济，积极参

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与全球经济治理和公共产品供给，构建广泛的利益共同体。坚持共享发展，就是要 坚持发展为了人民、发展依靠人民、发展成果由人民共享，使全体人民在共建共享 发展中有更多获得感，朝着共同富裕方向稳步前进。 ——为了实现这个目标，中国要加强同世界各国特别是周边邻国的合作。同 样，中国发展也将为世界特别是周边国家带来更多发展机遇。我们愿意也期待同各 国分享发展机遇，共创亚洲美好未来。 老师们、同学们、女士们、先生们！ 岁月如梭，光阴荏苒。回顾中新关系发展历程，我们倍加怀念缔造中新关系的 两位伟人，邓小平先生、李光耀先生。5年前我访问新加坡时，同李光耀先生一起 在新加坡河畔为邓小平先生纪念碑揭幕。如今斯人已逝，他们的丰功伟绩永远值得 我们缅怀。 青年代表着希望、代表着未来。令人欣慰的是，中新老一辈领导人精心培育的 中新友好合作之树如今已经枝繁叶茂、硕果累累。中新友好合作事业需要青年一代 传承发扬，两国友谊的接力棒需要两国年轻一代接过来、跑下去。今年7月，几名 新加坡“90后”大学生参加了2015“看中国·外国青年影像计划”，他们来到中国 西北，用镜头记录现代中国，通过秦腔、兰州牛肉面、羊皮筏子等元素了解和传递 中华文化。从中国来到新加坡国立大学深造的两名大学生则用一年时间拍摄了50个 新加坡当地人物的梦想故事。相信在座的同学们身边还有很多这样的事例。 希望中新两国青年发扬“不患人之不已知，患不知人也”的精神，加深对彼此 国家历史文化的了解，加深对彼此人生追求的了解，互学互鉴，增进友谊，共当 中新友谊的忠实继承者、积极参与者、热心奉献者，成为中新关系发展的生力军。 老师们、同学们、女士们、先生们！ 展望未来，亚洲再次站到了引领历史发展的前列。我们生于斯、长于斯，前途 命运维系于斯。中国愿同新加坡一道，愿同周边国家一道，愿同世界各国一道，携 手开创全方位合作新局面，共建亚洲美好家园。 谢谢各位。

Source: http://www.mfa.gov.cn/web/zyxw/t1312922.shtml

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India’s Singapore Story Narendra Modi

Prime Minister Narendra Modi of India delivered the 37th Singapore Lecture on 23 November 2015. He was introduced by Singapore Deputy Prime Minister and Coordinating Minister for Economic and Social Policies Tharman Shanmugaratnam. Prime Minister Modi was the third Indian Prime Minister to give a Singapore Lecture. Elected as leader of India only a year and a half earlier, he was riding a wave of optimism about his bold domestic and foreign policy initiatives. The lecture covers a range of subjects from India-Singapore relations to India’s domestic transformation and to India in East and Southeast Asia. Excellency, Prime Minister Lee Hsien Loong, Excellency, Deputy Prime Minister Tharman Shanmugaratnam, Honourable Ministers, Professor Tan Tai Yong, Distinguished guests, Thank you for the honour and privilege of delivering the Singapore Lecture. I am conscious that I walk in the footsteps of leaders who have shaped modern India and our relationship with this region—President Shri APJ Abdul Kalam, Prime Minister Shri P.V. Narsimha Rao, and former Prime Minister Shri Atal Bihari Vajpayee. Mr Prime Minister, I am deeply honoured that you have joined us here. We have been on the road together in the past few weeks—for the G20 and the ASEAN and East Asia Summits. This tells you how deeply linked the destinies of our two nations are. To the people of Singapore, on 50 years of Independence, I extend the greetings and the good wishes of 1.25 billion friends and admirers.

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In the life of humans and nations, milestones of time are natural. But, few countries can celebrate the first 50 years of existence with a sense of pride and satisfaction that Singapore deserves to. And, I can do no better than to begin with homage to one of the tallest leaders of our time and the architect of modern Singapore—Lee Kuan Yew. To capture his mission in his own words, he gave his life to see a successful Singapore. And, it was with his well-known steely determination that he saw Singapore through to its golden jubilee year. His impact was global. And, in him, India had a well-wisher, who spoke with the honesty of true friendship. He believed in India’s potential at home and her role abroad more than many in India. For me, he was a personal inspiration. From his Singapore Stories, I drew many lessons. The most profound, yet simple, idea was that transformation of a nation begins with a change in the way we are. And, that it was as important to keep your city and surroundings clean as it was to build modern infrastructure. For me, too, in India, the Swachh Bharat campaign is not just a programme to clean our environment, but to transform the way we think, live and work. For quality, efficiency, and productivity are not just technical measures, but also a state of mind and a way of life. So, in my visit to Singapore this March and in the observance of a day’s mourning in India, we wanted to honour a true friend and a very special relationship. Singapore is a nation that has become a metaphor for the reality of dreams. Singapore teaches us many things. The size of a nation is no barrier to the scale of its achievements. And, the lack of resources is no constraint for inspiration, imagination, and innovation. When a nation embraces diversity, it can unite behind a common purpose. And, international leadership flows from the power of thought, not just from the orthodox measures of strength. Singapore has done more than just lift a nation into the highest levels of prosperity within a generation. It has inspired this region’s progress and led in its integration. And, it has made others believe that the possibility of progress is within our horizons, not an unseen and distant hope. Singapore’s success flows not from the aggregate of numbers and the size of investments. It is based on what I believe is the key to success: the quality of human resources, the belief of a people and the resolve of a nation.

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Distinguished members of the audience, It is with the same vision that we are pursuing the transformation of India. People are the purpose of our efforts; and, they will be the power behind change. I do not judge the success of our efforts from the cold statistics of numbers, but from the warm glow of smiles on human faces. So, one set of our policies is to empower our people. The other set is to create the conditions in which enterprises flourish, opportunities expand and the potential of our citizens are unlocked. So, we are investing in our people through skills and education; special focus on the girl child; financial inclusion; sustainable habitats; clean rivers and smart cities; and, access to basic needs of all our citizens—from water and sanitation to power and housing. We will nurture and defend an environment in which every citizen belongs and participates, secure of her rights and confident about her opportunities. And, we are creating opportunities by reforming our laws, regulations, policies, processes and institutions; by the way we govern ourselves; and the way we work with state governments. Together with this software of change, we are also building the hardware of progress—next-generation infrastructure, revived manufacturing, improved agriculture, easier trade and smarter services. That is why we are moving on many fronts at the same time, aware of the linkages that make up a comprehensive strategy. I learnt long ago that Singaporeans are too well informed about India to be burdened with numbers by a visitor, even from India. In any case, for me, the emergence of India as the fastest growing major economy in the world is less important than what is more enduring: the wheels of change are moving; confidence is growing; resolve is stronger; and, the direction is clearer. And, it is spreading across the nation, as the most distant village and the farthest citizen begin to join the mainstream of the national economy. Distinguished guests, India and Singapore have been together at many crossroads of time. Our relationship is written in the pages of history, the footprints of culture, the ties of kinship and the old connection of commerce. We stood together in friendship at the dawn of freedom; and, we reached out to each other in a partnership of shared hopes. Singapore’s success became an aspiration of Indians. And, in turn, India became the hope for a more peaceful, balanced and stable world. As India opened itself, Singapore became India’s springboard to the world and gateway to the East.

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No one worked harder for it and no one deserved more credit for it than Emeritus Senior Minister Goh Chok Tong. He reconnected India to Singapore and the region. He also opened my eyes to its vast prospects. Today, Singapore is one of our most important partners in the world. It is a relationship that is as strategic as it is wide-ranging. We have comprehensive defence and security relations. It flows out of shared interests and a common vision. Singapore holds regular exercises with and in India. Singapore is the biggest investment source and destination for India in the world; the world’s most connected nation to India; the largest trading partner in Southeast Asia; and, a popular destination for tourists and students. Now, as we build the India of our dreams, Singapore is already a major partner in that enterprise: world class human resources, smart cities, clean rivers, clean energy, or next generation sustainable infrastructure. Starting from the first IT Park in Bengaluru, it now includes the newest state capital in India, Amravati in Andhra Pradesh. Our partnership will expand as our economies grow and the framework of trade and investment improves further. But, I have always seen Singapore in loftier terms. Singapore’s success in overcoming odds leads me to seek a partnership that addresses the challenges of the 21st century—from food and water to clean energy and sustainable habitats. And, in many ways, Singapore will also influence the course of our region in this century. Mr Prime Minister, Distinguished members, This area covers the arc of Asia Pacific and Indian Ocean Regions. However we choose to define it, the underlining theme of connected histories and interconnected destinies stand out clearly. This is a region of expanding freedom and prosperity. It is home to two of the most populous nations; some of the world’s largest economies; and, the world’s most talented and hard-working people. Asia’s re-emergence is the greatest phenomenon of our era. From the darkness of the middle of the last century, Japan led Asia’s rise. It then extended to Southeast Asia, Korea and China. And, India is now the bright hope for sustaining Asian dynamism and prosperity. But, this is also a region with many unsettled questions and unresolved disputes; of competing claims and contested norms; of expanding military power and extending shadow of terrorism; and, uncertainties on seas and vulnerability in cyber space. The region is not an island in a vast ocean, but deeply connected and influenced by the world beyond.

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We are also a region of disparities within and between states; where the challenges of habitats, food and water remain; where our gifts of nature and wealth of traditions feel the pressure of rapid progress; and, our agriculture and islands are threatened by climate change. Asia has seen some of these at different points of its history. But, it has probably never been here before. And, Asia is still finding a path through its multiple transitions to a peaceful, stable and prosperous future. It is a journey that must succeed. And, Singapore and India must work together to realize it. India’s history has been inseparable from Asia. There were times when we turned inwards. And now, as we reintegrate more closely with Asia, we are returning to history. We are retracing our ancient maritime and land routes with the natural instincts of an ancient relationship. And, in the course of last 18 months, my government has engaged more with this region than any other in the world. From a new opening with Pacific Island Nations, Australia and Mongolia to more intense engagement with China, Japan, Korea and ASEAN members, we have pursued our vision with purpose and vigour. India and China share a boundary and five millennia of continuous engagement. Monks and merchants have nurtured our ties and enriched our societies. It is a history reflected in the 7th century journey of Xuanzang that I have had the privilege of connecting, from my birthplace in Gujarat to Xian in China, where President Xi hosted me this May. We see it in religious texts written in Sanskrit, Pali, and Chinese; in the letters of the past, exchanged with warmth and grace; in India’s famous tanchoi sarees; and, in Cinapatta, the Sanskrit name for silk. Today, we constitute two-fifth of humanity and two of the world’s fastest growing major economies. China’s economic transformation is an inspiration for us. And, as it rebalances its economy, and as India steps up the pace of its growth, we can both reinforce each other’s progress. And, we can advance stability and prosperity in our region. And, together, we can be more effective in addressing our common global challenges, from trade to climate change. We have our unresolved issues, including our boundary question, but we have been able to keep our border region peaceful and stable. And, we have agreed to strengthen strategic communication and expand convergences. We explore shared economic opportunities while addressing common threats like terrorism. India and China will engage constructively across the complexity of their relationship as two self-assured and confident nations, aware of their interests and responsibilities.

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Just as China’s rise has driven the global economy, the world looks to China to help advance global and regional peace and stability. India and Japan may have discovered each other somewhat later. But, my friend, Prime Minister Abe, showed me in the magnificent shrines of Kyoto the symbols of our much longer spiritual engagement. And, more than a hundred years ago, as Swami Vivekananda reached the shores of Japan, he exhorted the Indian youth to go East to Japan. Independent India took that advice seriously. There are few partnerships that enjoy so much goodwill in India as our relations with Japan. No nation has contributed so much to India’s modernization and progress than Japan—cars, metros and industrial parks, for example. And, no partner is likely to play as big a role in India’s transformation as Japan. We do more together now. We see this as a strategic partnership that is vital for securing a peaceful and stable Asia Pacific and Indian Ocean Regions. With Korea and Australia, our relationships started with strong economic foundations, and have become strategic in content. And, ASEAN is the anchor of our Act East policy. We are linked by geography and history, united against many common challenges and bounded by many shared aspirations. With each ASEAN member, we have deepening political, security, defence and economic ties. And, as ASEAN Community leads the way to regional integration, we look forward to a more dynamic partnership between India and ASEAN that holds rich potential for our 1.9 billion people. With almost the entire region, India has frameworks of economic cooperation. We want to be more deeply integrated with the regional economy. And, we will upgrade our partnership agreements and work for an early conclusion of Regional Comprehensive Economic Partnership Agreement. In the flux and transition of our times, the most critical need in this region is to uphold and strengthen the rules and norms that must define our collective behaviour. This is why we must all come together, in East Asia Summit and other forums, to build a cooperative and collaborative future, not on the strength of a few, but on the consent of all. India will work with countries in the region and beyond, including the United States and Russia, our East Asia Summit partners, to ensure that our commons— ocean, space and cyber—remain avenues of shared prosperity, not become new theatres of contests. India will lend its strength to keep the seas safe, secure and free for the benefit of all. This is an age of inter-dependence when nations must come together, to realize the promise of this century. We must also do so because our pressing challenges are not from one another, but common to each of us.

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Terrorism is one such major global challenge, and a force larger than individual groups. Its shadow stretches across our societies and our nations, both in recruitment and choice of targets. It does not just take a toll of lives, but can derail economies. The world must speak in one voice and act in unison. There will be political, legal, military and intelligence efforts. But, we must do more. Countries also must be held accountable for sanctuaries, support, arms and funds. Nations must cooperate more with each other. Societies must reach out within and to each other. We must delink terrorism from religion, and assert the human values that define every faith. We are a few days away from Paris, where we must achieve concrete outcome, in accordance with the principles of UN Framework Convention on Climate Change. This is especially important for our region, particularly the small island states. Friends, Ours is a region of enormous promise. But, we know that enduring peace and prosperity are not inevitable. So, we must work hard to realize our vision of an Asian Century. Asia has the wisdom of its ancient cultures and all the great religions of the world. It also has the energy and drive of youth. As Asia’s first Nobel Laureate Rabindranath Tagore predicted on a visit to this region nearly a century ago, Asia is regaining its self-consciousness for realization of its own self. Here in Singapore, where the region’s currents merge; its diversity converges; ideas meet; and, aspirations gather wings, I feel that we are closer to that vision than ever before. And as India pursues its transformation and strives for a peaceful and stable world, Singapore will be a major partner on that journey. Thank you.

Source: National Portal of India, http://pib.nic.in/newsite/PrintRelease.aspx? relid=131821

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The Netherlands, Singapore, Our Regions, Our World Connecting Our Common Future Mark Rutte

Prime Minister Mark Rutte of the Netherlands delivered the 39th Singapore Lecture on 24 November 2016. He was introduced by Deputy Prime Minister and Coordinating Minister for Economic and Social Policies Tharman Shanmugaratnam. He was the third Netherlands Prime Minister to give a Singapore Lecture. His lecture is a robust defence of openness and free trade, especially for small countries like the Netherlands and Singapore, at a time when the forces of nationalism and populism were gaining ground in Europe and the United States of America. Your Excellency Deputy Prime Minister Tharman Shanmugaratnam, Professor Wang Gungwu, Your Excellencies, ladies and gentlemen, students. Thank you for giving me the opportunity to speak to you here today. I’d also like to thank my host, Prime Minister Lee, for inviting me to visit your country. 2015 was a notable year for Singapore. You celebrated fifty years of independence with a parade of 11,000 people, fireworks and 600,000 roses made from recycled plastic bags. For me, those roses are typical of Singapore. Both creative and responsible. Even on a public holiday, you uphold the principles of the circular economy. On 23 March of the same year your country was plunged into mourning by the death of Lee Kuan Yew. He is greatly missed. In the words of his son and your prime minister Lee Hsien Loong, “To many Singaporeans, and indeed others too, Lee Kuan Yew was Singapore.” Lee Kuan Yew’s life ran parallel with Singapore’s transformation from a colony to one of the best-performing countries in the world. He was the architect of the

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republic. In his memoirs he noted, “We had to create a new kind of economy. Try new methods and schemes never tried before anywhere else in the world, because there was no other country like Singapore.” His vision and dedication helped turn Singapore into an economic superpower. With its low unemployment rate, high GDP, low levels of corruption, and wellmaintained public spaces, Singapore has rightly been described as “the little city that could” and “the envy of the world”. So what is your secret? What makes us so jealous when we look at Singapore? I expect you know better than I do. But if I were to hazard a guess, I would say it’s all down to education. Singaporeans make Singapore what it is, and this country invests in its people. You value your human capital. Thanks to ISEAS and other research and education institutions, Singapore is a world-class knowledge hub. Its universities are among the best in Asia and even the world. But it all starts with primary schools and teachers. And they too are among the world’s best. Your focus on education is all part of your focus on the future. On the next generations. On the world in 2020, 2030 and even 2050. Indeed, your unofficial motto is “staying ahead of the curve”. You ask: what will the city look like in the future? How will we live and work together? You don’t say “let’s worry about that later”, because today we sow the seeds of tomorrow’s world. Take those recycled plastic bags. Or your urban environment, where breathtaking architecture goes hand in hand with sustainability. Lee Kuan Yew wrote that there was no other country like Singapore. And that is still true today. But let me ask you to picture a map of the world. It will show that Singapore and the Netherlands are thousands of kilometres apart, at opposite ends of the giant Eurasian land mass. From the Netherlands, Singapore is one of the most distant places you can get to by land. And yet, our similarities are striking. Let me start with the obvious ones: Singapore and the Netherlands are both small in terms of size, but big in terms of influence. Not without pride, you call yourselves “the little red dot”, and I can see why. Singapore may only be a dot on the map, but its influence is out of all proportion to its geographical size. For our part, the Netherlands also punches above its weight. We are slightly bigger than a dot, but not by much. And if you look at the World Economic Forum’s ranking of the most competitive economies, you’ll find Singapore in second place and the Netherlands at number four, and we beat the Germans last year. Both countries also make the top ten in the Global Innovation Index. And what about the “Where-to-be-born index”? Here, too, the Netherlands and Singapore are both in the top ten. How can we explain this? It’s partly to do with our strategic coastal locations. Singapore is the springboard to the big economies of China and Southeast Asia. The Netherlands is the gateway to a continent of over 500 million consumers who have money to spend. So it’s hardly surprising that trade is in our DNA. With airports

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serving millions of passengers a year, and two of the biggest and busiest ports in the world, Singapore and the Netherlands have evolved into logistical hubs. And your ties with the Port of Rotterdam are excellent. A coastal location obviously has many benefits, but it also has a disadvantage. If the polar ice caps melt, both Singapore and the Netherlands are at risk of flooding. But as the late Dutch football legend Johan Cruijff was fond of saying, “Every disadvantage has an advantage”. Keeping back the water has made us creative. It has made us think in terms of opportunities instead of problems. If we don’t have enough room, we make space. By turning water into land. We have created polders and all the same is now taking place at Pulau Tekong. Or by building upwards instead of outwards. This may help explain why Lee Kuan Yew and the Dutchman Albert Winsemius got on so well when they met in 1960. They recognized something in each other. They were both pragmatic, optimistic and forward-looking. Winsemius came to Singapore in 1960 as an economic adviser. His involvement with your country lasted until 1984. In that time he played an important role in industrialization and the development of the port. Albert Winsemius Lane in the west of Singapore bears witness to the lasting impression he made. And this was a two-way process. An article in the Straits Times with the telling headline “Adviser turned friend” noted that Winsemius “became so committed to Singapore’s cause that even members of his own family started calling him a Singaporean”. Albert Winsemius advocated an “open door” policy. For him, the success of small industrialized nations like the Netherlands and Singapore depended on free trade and an open economy. Lee Kuan Yew agreed wholeheartedly with Winsemius on this point. We have to stand up for those shared values of free trade, openness and optimism. The Netherlands and Singapore particularly in these days must form a united front. Especially in today’s world. At a time when support for protectionism and nationalism is on the rise, when the British want to leave the EU, and when unrest is growing on the edges of our continents, it’s important that we think hard about the future. About what matters to us. What will the world look like in 2020, 2030 and 2050? How can we ensure a safe and prosperous future for our people? We have no easy answers to these questions. The trend towards ever growing free trade, which has brought our countries great prosperity, is now meeting with resistance. In Europe, the Brexit vote has created uncertainty. After Ireland and Malta, the Netherlands has the highest percentage of GDP derived from goods and services exported to the UK. Both Singapore and the Netherlands will take a hit due to our positions in the global value chain. And the Netherlands is losing an ally in the EU. For now, little has changed. The UK is still an EU member and still subject to EU rules. It’s up to Britain to take the first step. But the Brexit vote does mean that

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we in the EU have to consider the way forward from here. The bottom line is this: the EU post-Brexit will still number 27 member states that are fully committed to working for jobs, economic growth and the safety of their people. It may not be “business as usual”, but one referendum in one member state will not endanger the Union as a whole. The point of the European Union is to enable us to tackle problems and take opportunities that transcend nation states. Member states each have their own interests, but generally we all want the same thing. We all want growth and jobs. We all want to promote Europe’s stability and security. We all want to do something about the refugee problem. These common interests make up the EU’s sphere of activity. They are the basis for its support and legitimacy. During my country’s Presidency of the EU earlier this year I saw once again what a difference the EU can make. How working together produces results that individual member states could never achieve working alone. The Dutch economy is firmly anchored at the heart of the EU. The Netherlands has the euro, it is part of the Schengen Area and it is one of the Union’s founding members. The EU single market is crucial to our trade position. For a trading nation like mine, with an international mind-set, membership of the EU is vital. It means the Netherlands remains a safe and reliable location for foreign investment, and a gateway to major European markets, served by excellent infrastructure and logistics. But it’s important that the EU continues looking beyond its own borders. We have to stay committed to securing free trade agreements so that the world stays connected. Signing CETA with Canada was an important step. The EU-Singapore free trade agreement is now before the European Court of Justice. It’s high time this agreement entered into force. I appreciate the patience Singapore has shown. The Netherlands stands ready to ratify at the earliest opportunity. Because of our locations and our size, our two countries place a high value on a well-functioning international legal order. The Netherlands plays an important role here, with The Hague as the legal capital of the world. And the eminent lawyer, Professor Tommy Koh, has made a major contribution to the development of international maritime law, whose origins go back to a treatise by the Dutch jurist Hugo Grotius, The Free Sea. The UN Convention on the Law of the Sea, on which Koh worked so hard, has become the standard point of reference for determining the rights and duties of nations in relation to the sea. Ladies and gentlemen, Our era will be defined by how we respond to the forces ranged against globalization, and how we respond to technological change. The consensus behind free trade agreements is perhaps yesterday’s reality. And uncertainty and resistance to agreements may be the situation today. But the solution for tomorrow is definitely cooperation, cooperation and cooperation. We must not retreat into our own countries,

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behind walls, barriers and borders. We need to go out into the world. We need to embrace cooperation and show what it can accomplish. Knowledge and innovation are the engines of future economic growth and the answer to tomorrow’s questions. How can we protect our nations from a rising sea level? How can we continue to provide the world’s growing population with sufficient drinking water, food and energy? How can we deal with demographic aging and climate change? We, the Netherlands and Singapore, have the resources to come up with the answers to these questions. We can innovate together. We both have dynamic and creative economies in which our universities, the private sector and government work together. And we have a solid basis to build on. The Netherlands is one of Singapore’s main trading partners within the European Union. And Singapore is by far the Netherlands’ biggest trading and investment partner in the ASEAN region. No fewer than 1,300 Dutch companies have established a presence in Singapore, in part as a springboard to the fledgling ASEAN Economic Community, for which they have high expectations. They want to be part of ASEAN’s continued development. Our tradition of cooperation and knowledge-sharing goes back to Albert Winsemius and Lee Kuan Yew. Since then Singapore and the Netherlands have continued working together in the sectors that are so important for our countries: water management, biomedicine, transport and urban infrastructure. One example is NUSDeltares, the knowledge alliance between the National University of Singapore and Deltares, the Dutch water research institute. It pools expertise on water management in both countries, so that we can reach new heights. In this way we are helping each other to keep water in check where necessary, and to use water where we can. Cyberspace is another area which presents both opportunities and dangers. The Netherlands and Singapore are among the most connected societies on the planet, but that also makes us vulnerable. A cyberattack could have a major impact, on our own countries and regions, and even on the world as a whole. That’s why in recent years public, private and academic partners from Singapore and the Netherlands have been working together to keep our societies cyber-resilient. Urban infrastructure is another subject that is familiar to both our countries. How do we use limited space as efficiently as possible? Climate change adds a second challenge. How can you build in a way that causes minimal harm to the planet? Singapore is leading the way here. Your City in a Garden is now full of “Green Mark” buildings—I’m honoured you named this system after me, by the way. They meet the strictest requirements for sustainability. In the Netherlands, the Dutch Sustainable Growth Coalition is demonstrating business leadership by anchoring sustainability in business models and practices. And my government aims to have a fully fledged circular economy in place by 2050. Businesses, public authorities and research institutions are working together towards this goal.

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Lee Kuan Yew once said, “What I fear is complacency. When things always become better, people tend to want more for less work.” Wise words. His warning is especially relevant today. We cannot afford to sit back and take our achievements for granted, as global trends have shown once again. We have to stand up for what we believe in: free trade, an open economy, democracy, and the rule of law. We must not only safeguard the legacy of Lee Kuan Yew and Albert Winsemius, but also update it for the present day. By promoting prosperity and quality of life, while staying mindful of the planet’s limited resources. And we must do so by drawing on all the courage, creativity and cooperative spirit we can muster. These are the foundations on which today’s Singapore and the Netherlands are built. These are the foundations of our success. Later today, I will be talking to young people from Dutch start-ups who are part of the Startup Academy. Something about the Singaporean mind-set drew them here to make connections. They are now planting the seeds which will determine what Singapore and the Netherlands will look like in 2020, 2030 and beyond. They are connecting us to our common future. And that means we can look forward to that future with confidence. Thank you.

Question and Answer Session Question: My name is Møller. I’m Danish, but live in Singapore and work at ISEAS. Mr Prime Minister, a big thank you for underlining the virtues of the European Union, and how indispensable it is for the European nations. There are too few voices saying that truth today. Now, the question: you talked about protectionists, nationalists, Brexit, and you said that we are moving into a new world order. You skirted a little bit by saying you could not predict what kind of world order it would be. But I will not let you off the hook easily. What kind of world order do you want? Rutte: Well, what I would love to have in the future is a clear focus on free trade, on the values which made our societies great—in Europe, and America, and Asia—and to build on those foundations. At the same time, we have to be very open and honest that in our societies, we see this in many countries, in Europe and the Netherlands, we have seen this probably in the American elections this month of November, that, somehow, people have felt let down by the traditional political parties, the parties in the centre of the political spectrum, including my party (which is right-of-centre) and other centrist parties and parties that are left-of-centre. This is not because of

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the Muslim population or because of the refugees—I think they felt let down by the traditional political parties because of their anxieties and worries about the future. Free trade and globalization also have their flipside and that is people can become worried about “what does it mean for me, and my job,” and so on. We have to present the case that we cannot build strong societies and growing economies if we do not embrace free trade, openness, and be outward-looking. But at the same time, we have to be very clear that this does not mean that there will not be more jobs—because we are going to create more jobs. And automation does not necessarily mean fewer jobs. To give you one example, I was visiting a manufacturing plant in Limburg, in the south of Netherlands, which is producing cars for BMW. And this factory had only eleven hundred workers, and now they have five thousand. In the meantime, they also have twelve hundred robots. So we have to make that case for openness, for an international outlook, for free trade, much clearer. And I’m absolutely convinced that if we can do that, whilst at the same time, recognizing the worries that people have, and make clear that we want to care and protect these people, then I am absolutely convinced that people will come back to these traditional values and move away from the more extreme parties. So, my argument is not with the voters, my argument is not even with the parties at the extreme. My argument is with my own party and the other traditional parties who have not, in time, addressed these issues. Question (Professor Tommy Koh): Prime Minister, thank you very much for your inspiring lecture and your very kind reference to the work that we did in the UN Conference on the Law of the Sea. I had very eminent Dutch colleagues: Professor Riphagen, Professor Alfred Soons, and many others. My question for you is this: what lessons have you learnt from Brexit and the recent election in the United States, and how can we resist the prevailing wind in parts of Europe and America which is blowing against free trade and globalization, and towards a narrow-minded nationalism? Rutte: Very good question, and I salute you—I had the opportunity to shake hands with you earlier today, and indeed, what you did, I’m very happy that some of us could help. Back to your question, and to the first question of the Danish professor: how we are going to deal with societal tensions and the fact that people feel left out and not in control of their own lives. Some of us can talk about globalization and openness and international free trade, but again, we have to it make it absolutely clear that it is thanks to international free trade that we are able to create jobs. Take Singapore: this country has almost no unemployment, and it is not despite free trade,

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but thanks to free trade. And the same for Netherlands: we have 10 million jobs in total in the Netherlands, and of those 10 million jobs, 2.1 million are directly linked to our international trade—70 per cent within the European Union, and 30 per cent with the rest of the world, like with Singapore. You are our most important trading partner in Asia. Singapore might be small in size, but not in importance. So again, we have to make clear that by upholding these values, we can create an ongoing flow of growth and job creation, and that even people above 45 and 55 years old can find new jobs. And that if we retreat behind barriers into our own countries, we have to pay a price. And you can now see the price in the UK. The UK has Brexit, it’s now in a constitutional crisis—Scotland, Northern Ireland, Wales may want to leave. It’s in a monetary crisis, the pound has slipped. And it’s in an economic crisis—the growth has now been cut almost by half for 2017 by Chancellor Philip Hammond yesterday. He was saying, literally, “yes, but we are still ahead of Italy and France”. I thought, “well, this is a benchmark”. [Laughter] I mean, “ahead of France and Italy”—I would never have heard a finance minister of the UK compare his finances with France or Italy. He should compare himself with other countries. And the Netherlands is now growing 2.5 per cent each year; next year, we hope the same, maybe a little bit less—2.2 or 2.4 per cent, almost twice the rate of the UK, and this is directly due to Brexit. This is the price you pay. I believe that nationalism is not necessarily a bad thing. I’m a nationalist, I’m chauvinist, I love the Netherlands. I will always stand up for my country and protect what it stands for. Your Prime Minister Mr Lee, he is very chauvinistic about Singapore—but that doesn’t mean it cannot go hand-in-hand with having an open mind and being pro-free trade and pro-openness. We as politicians are there to think about the future; we need a clear view of the future. At the same time, we also are there to protect people, and we can protect people best by having this openness and free trade. Question (Professor Chan Heng Chee): Thank you, Prime Minister Rutte. You talked of loss of jobs, and people being left out, and how this creates a major problem. That’s one basket. But in the same basket, but of a different kind, is the problem of diversity. I think Europe, Britain, and the United States are all facing the arrival of new immigrants, and diversity is a problem. Multiculturalism is said to be dead in Europe. Chancellor Merkel, in fact, said “multiculturalism is dead”. I think it’s a problem in Britain, France and Australia even. How do you see the problem? In Singapore, we believe that multiculturalism must be curated to succeed. DPM Shanmugaratnam said you cannot deal with it with an invisible hand; multiculturalism must have a guided hand. So I invite your comments.

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Rutte: I am convinced that the problem in Europe is not with Islam or with refugees. I think the problem is how the political elites are reacting to the fact that we have a rise of refugees. The Netherlands will typically have fifteen to twenty thousand refugees per year. The population accepts this—this is what we should do as a rich nation, we should be open to people who are running from devastation and war. But last year, we had sixty thousand—three times what we would have normally, particularly from Syria. And when the numbers become too high, people feel that society cannot cope with them. So the first thing we needed to do—and we have been successful in doing it—is to bring down the numbers again by striking an agreement with Turkey and investing in the capacity of Turkey to build the reception capacity for the refugees from Syria. But this is not the crucial part. The crucial issue is that men and women leading the countries in Western Europe and elsewhere have not made clear our values to the people who came from outside. For example, in the Netherlands, we think it is absolutely normal and acceptable for two men or two women to walk hand-in-hand in every street and every neighbourhood. And it is perfectly acceptable that a woman can reach any position in the country—we have had a hundred years of queens, even though currently we have a temporary man, but he has a daughter, so after this, we will have a queen again. So, it is normal for a woman to reach every position in society. But then, when people come from outside with a different cultural background, they have to be very clear about all these values, the history of the country, and what we have achieved together. We want these immigrants to be successful, they can have their faith, because we have freedom of religion, of course. But we also have certain societal values, and we have not made clear enough what these are. And then you get tensions. Some may say “No, these two men should not walk hand-in-hand in every street and every neighbourhood”. I say, “No, they should!” Of course, we will never compromise on this, and people coming to the Netherlands have to accept that these are our values. And if they do not accept it, they have to go. This is not because I’m anti-Islam—no, I’m not. But I am anti-trying to compromise on these core values of the Netherlands. This, I think, is where we made the mistake. And then people start to listen to parties who are saying that the problem is with the refugees or with Islam. But this is the root cause—I always bring this message to the ruling parties in relation to their tasks, and what they did wrong. I’m not blaming others; I’m a politician now for twelve years, so I’m part of some of the mistakes that we’ve made. And we now try to correct it, and we have to do it very quickly. I see a lot of consensus among most parties to do this, in keeping with our role as being a place where refugees can find shelter, and where freedom of religion is upheld as a principle.

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Question: Prime Minister Rutte, it is very nice to see you finally in person. I did my PhD in the Netherlands at Leiden University. Now, I’m doing my post-doctorate here, but I’m Turkish. From what I saw, especially with the rise of the Party for Freedom with Geert Wilders and the rise of nationalism, the people that were voting for these nationalistic parties had never been in contact with anyone but Dutch people. They came from such neighbourhoods. So, my question is, how can you communicate this to people that they must get rid of this closed system, with the nationalistic parties on the rise? Also, I want to point out that the people that are affected by globalization and decide to vote for nationalistic parties, are not thinking about the overall economy, but they see it from a personal point of view: “I don’t have a job, I don’t earn money, I want something to change, and I want something out of the system.” Rutte: This would be two questions. First, on the second one, on losing out on globalization and free trade. Yes, there will be people who lose their jobs because of free trade and globalization. But we have to uphold the belief that thanks to free trade and having a global outlook, at the end of the day, the pie is bigger for all of us. There will be more jobs, more prosperity. And if we don’t do this, at least in the Netherlands, if we were to completely close off the country, we would lose 2.1 million jobs. Second, on integration, we had many people of Moroccan and Turkish backgrounds coming to the Netherlands in the late 70s because many Dutch people were not willing to do some of the work, and we asked people from particularly, Morocco, Turkey—and some of them from the Dutch Antilles—to come to the Netherlands and do this work. They have stayed, and have children and grandchildren, and many of them are doing very well and have started businesses. Some of my friends with Moroccan backgrounds are at the highest levels of McKinsey. But still, at the same time, you are absolutely right: many are still not doing very well. I’m teaching—not for money, but just as a hobby—for two hours a week in a migrant school in the Hague. It is a school for children between thirteen and sixteen years old, in secondary education or pre-vocational training courses. These children are all from neighbourhoods where there are almost no traditional Dutch families living anymore. In that school, there are one or two traditional Dutch children, while most are from Eastern Europe, and most are third or fourth generation with Moroccan, Turkish, or Dutch Antilles background. And you are absolutely right: it is difficult to get integration in such situations. I believe that if we keep the numbers of new refugees coming to the Netherlands down to an acceptable level, as we traditionally did, I am very positive about these young people that I’m teaching because they’re not worried about globalization;

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they just want to have jobs, and they’re thinking about working in industry or the health sector, or whatever they want to do. And, at the end of the day, I believe that the next generation will be more successful. But, we made a mistake by taking so many people in, without thinking through what it means if they stay and get children, and the families grow bigger, and the next generation or third generation comes along—what it means in terms of how this will mix with traditional Dutch society. We did not think that through in the late 70s and early 80s. But luckily, we have no “no-go areas” in the Netherlands like you have in some other parts of Europe; the police can still police everywhere. And, in that sense, integration in the Netherlands is better off than many other countries. But there’s still a lot to do, so your point is well-taken. Question: My name is Termsak and I am from the ASEAN Study Centre. We are promoting the study of community-building in ASEAN. Next year, ASEAN will be celebrating the 50th anniversary of our founding. ASEAN has been observing and learning from the European experience. Lately, we have observed that you have some difficulties: with Brexit, and before that, the euro problem in Greece, and even the migration problem. What can ASEAN learn from the remaining twenty-seven EU governments in coping with Brexit? This will be an important lesson: are we seeing the limit of European integration? Rutte: I think the most crucial thing is that, somehow, the European Union was seen as a project which is marching forward in history, and that if you still love the Netherlands or Germany, that you are something of the past, and that you should be a true European. That is not working. I feel this myself—I don’t feel European, I feel Dutch. I feel that I am someone from the Hague, a particular part of the country, or from the Netherlands, but I don’t feel that I’m a European. I have no identity with Europe; I feel an identity with Netherlands. Europe, for me, is a very pragmatic and practical organization to work together. I don’t think anybody in Singapore will ever feel an ASEAN identity, or that anybody in the region will say “I’m ASEAN”. No, they will say “I’m from Indonesia”, or even from Java, or from Singapore, or whatever part of the ASEAN region. So one [lesson] is don’t present it like a sort of super-state. This was, I think, what we have done too long with the EU, that we are moving towards some sort of super-state, and if you still think in terms of the roles of individual member-states that you were a something of the past. And then people started to get upset and rebel against that vision. So we have changed that, luckily. For me, it was very crucial.

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Secondly, don’t make it into a big bureaucracy. Come to Brussels, I’ll show you the buildings: the Commission—thirty thousand people working there—the European Council, the European Parliament. And they are all fine people working there. They are all there to do the best of their abilities. But there are too many of them. And that creates bureaucracy. You get all these people wanting to do some real stuff. And they tend to work on things which would previously have been left to the member-states. So I’m very happy that the Juncker Commission now has a clear programme, which is to bring back power to the member-states and focus on only three essentials: a strong economy and internal market, a strong currency for the eurozone, and protecting our outer borders. Those are the three things this Commission is focusing on; all the rest is left to the member-states—education, healthcare, how you deal with people who are out of work, pensions, etc.—that is all to the member-states. Defence is to NATO and the member-states. And that is crucial: if it’s seen as a project of the bureaucracy and the politicians who want to become big, and cause it to become bigger and bigger, I think it will fail. And I’m not an expert on Asia, but I cannot imagine—I was in Semarang two days ago—that someone in Semarang feels “I’m an ASEAN”. No, he will say “I’m from Semarang, I’m from mid-Java, I’m from Java, I’m from Indonesia”. And there probably it ends; he will not say “I’m from ASEAN”. And that’s not a problem. ASEAN is a pragmatic project, which makes perfect sense, and you can easily explain why you’re doing it.

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Democratic Transition in Myanmar Challenges and the Way Forward Aung San Suu Kyi

The 43rd Singapore Lecture was delivered on 21 August 2018 by State Counsellor of the Republic of the Union of Myanmar Daw Aung San Suu Kyi. She was introduced by Deputy Prime Minister and Coordinating Minister for National Security Teo Chee Hean. In her lecture Daw Suu, a Nobel Peace Prize laureate, outlines eloquently how Myanmar is dealing with the formidable challenges of national unity, economic development and security, including the problems in Rakhine state. She also spoke about her emphasis on improving education, infrastructure and governance. Let me begin by congratulating the Institute of Southeast Asian Studies on its golden anniversary and by thanking the Director of the Institute for inviting me to deliver the Singapore Lecture. I particularly appreciate the opportunity to speak here today on the challenges and objectives of our democratic transition as Singapore is the Chair of ASEAN this year. Our ASEAN friends have been generous with necessary help and support as we negotiate the passage of an intricate transition. They have demonstrated the value of regional solidarity based on shared experiences and aspirations. The premise that what helps one part helps the whole underpins the consensual, cooperative approach that has played a vital part in making ASEAN one of the most successful regional organizations in the world, despite development gaps between its member states. A transition, to put it simply, is the process of going across from one point to another. The distance that must be covered, and the nature of the terrain that must be travelled define the scope and complexity of the challenges that have to be faced and overcome. Myanmar is crossing over from a long-established, authoritarian system

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to one that we label “democracy”. Our people’s perception, or rather, perceptions of democracy, varied, incoherent and inconsistent as they may be, impact on the transition that our country is undergoing today. During the last three quarters of a century, Myanmar has undergone three major transitions: from colonial rule to independence in 1948, from parliamentary democracy to military dictatorship in 1962, and still in progress today since 1988, still incomplete, is the transition from dictatorship to democracy. The first transition was a straightforward culmination of a hard and costly struggle: a clean-cut change from the status of colonial subject country to that of a sovereign independent nation. The second transition, too, was sharp and clearly placed in time: tanks on the streets of the capital one morning, a crisp declaration on the radio. Our present transition is the most complex, the most challenging, of all. The very beginning was amorphous. There was nothing so definite as the lowering of one flag and the raising of another, no brief, staccato announcement, to mark the completion of one phase and the beginning of another, in the life of our country. Several incidents, each in itself seemingly, at the time, of minor importance, fused together to become the force that launched a nationwide uprising for democracy. The uprising was put down quickly, but nevertheless it opened the gates to the rocky, protean, transit path that we continue to tread today. Democracy in 1988 meant for our people the opposite of all that they had associated with the Burmese Way to Socialism. A passion to slough off the oppressiveness of a one-party system with undertones of military despotism seized the whole country. The people cried out for an end to declining standards, to drabness, to the erosion of individual freedom. In response, direct military rule was speedily instituted and individual freedom further curtailed, but political parties were allowed to sprout, although their activities were severely curtailed, and faltering steps were taken towards an open market economy. From such an unpromising beginning, and after many obstacles and setbacks, including a General Election in 1990 that fanned a brief flickering of hope, we reached the landmark elections of 2015. The National League for Democracy managed to win a majority large enough for us to form a government, within the constraints of the Constitution adopted through a questionable referendum in 2008. When I speak of our democratic transition, I mean a democratic way towards a democratic goal, following a path laid down in accordance with the wishes of the people and maintained with their consent and cooperation. Our people yearn for peace and security, for an end to unrest and strife, for material and emotional security, for a chance to contemplate the future of their children with tranquillity. It was from a desire to see these wishes fulfilled that they accepted the principles of non-violence and national reconciliation on which the NLD was founded in 1988 and, nearly three decades on, voted for the goals set by

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our party: rule of law, peace, development, amendments to the Constitution. The degree of progress of our transition has to be measured by the extent to which we are able, together with our people, to realize our aspirations. The Myanmar Sustainable Development Plan, which could also be seen as a roadmap for our transition, identifies five goals, supported by three pillars. Goal 1 is Peace, National Reconciliation, Security and Good Governance and Goal 2 is Economic Stability and Strengthened Macroeconomic Management. These rest on the pillar of Peace and Stability. Goal 3 is Job Creation and Private Sector-led Growth, held up by the pillar of Prosperity and Partnership. The third pillar, People and Planet, supports Goal 4, Human Resources and Social Development for 21st Century Society and Goal 5, Natural Resources and the Environment for Prosperity of the Nation. Goals 1 and 2 are interdependent and impossible to sustain without a solid pillar of peace and stability. Building this pillar we saw as the first task we had to address as we embarked on the path of transition. At the very commencement of our new administration on 30 March 2016, we took steps to implement our plans for taking forward the peace process that had been initiated by the previous government. The Twenty-first Century Panglong Conference seeks to put an end to the armed strife that has ravaged Myanmar since its birth as an independent nation, and to construct a strong democratic federal union founded on a lasting unity created out of diversity. We had learnt from the experiences of other countries that the path of peace processes seldom run smooth and unimpeded. As ours was of unparalleled intricacy, involving more than the common number of players, we were prepared for difficulties and disappointments, setbacks and even breakdowns. But we are determined to persevere because without peace, our transition could not blossom and bear fruit. There have been difficulties and disappointments as anticipated, but incessant negotiations, endless patience, the goodwill of participants and the encouragement and help of our people and our friends have enabled us to keep moving forward. In each of the three Panglong meetings held over the last two years, we made valuable progress: in the First Union Peace Conference, a sevenstep roadmap for peace and national reconciliation was achieved. In the Second Conference, 37 principles were adopted. Before the Third Conference, two more ethnic armed groups signed the ceasefire agreement and during the Conference itself, 14 more principles were adopted. Serious challenges remain and armed conflicts continue to break out between the Tatmadaw and the EAOs, as well as between the EAOs themselves. We are constantly alert to the challenges and we aim to resolve them through dialogue and negotiation, by persevering in the endeavour to build mutual trust and understanding. A sound base for peace and stability has to be broad and comprehensive. Addressing destabilizing issues in Rakhine State was a fundamental part of building our Pillar 1. Within two months of taking on the responsibilities of government, we

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established the Central Committee for Rule of Law and Development in Rakhine and soon after, we approached Dr Kofi Annan, former Secretary General of the United Nations, to head an Advisory Commission that would help us to find lasting solutions to the problems that were jeopardizing peace and progress in a region so bountifully blessed by nature. Please allow me, at this point, to pay tribute to Dr Kofi Annan. His qualities and achievements were myriad but here it is only fitting that I should focus on what he meant to us as we negotiated the path of democratic transition. He agreed to take on the responsibility of advising us on how we might resolve deep-rooted problems in the Rakhine, because his nature was cast in a generous, positive mould. He wanted us to succeed, to reach our goals of peace, prosperity, security and progress for our country. Dr Annan abided by his decision to help us, even after events in the Rakhine brought down severe criticism on Myanmar. His compassion, his integrity and his courage shone through his acts and the recommendations of his Commission reflected his wisdom and his wide experience of the challenges of our times. His approach was constructive and caring. Despite the many demands on his duties, he made time to speak to me on the telephone occasionally, to ask how he might help, to listen, to encourage. One of the last public events he organized was a workshop earlier this year on “lessons learnt” in Rakhine. His life is a lesson we could all learn to our profit. It exemplified the principles and values on which the United Nations was founded, the principles and values that allowed us to hope peace and prosperity might be possible for all in our world. The recommendations of Dr Kofi Annan’s Commission, eighty-eight in all, of which we have to date implemented eighty-one, aim at the establishment of lasting peace and stability in Rakhine. But the challenges there are multi-faceted and require multi-tasking. Resettlement of displaced persons now in Bangladesh has to be effected through the implementation of the Agreement signed between Myanmar and Bangladesh last November. The Government of Myanmar has also signed with the UNDP and the UNHCR an MOU that aims at assisting speedy and efficient resettlement and rehabilitation. We have already mapped out potential sites for the resettlement of returnees. UN officials have been granted access to twenty-three villages in thirteen village tracts, selected as part of a pilot assessment programme and an additional five villages have also been marked out for the resettlement of IDPs residing near the borderline. Involved at various fronts and levels is the Union Enterprise for Humanitarian Assistance, Resettlement and Development in Rakhine. It is an enterprise that brings together peoples and organizations from all parts of the country to work with the government to bring Rakhine into the orbit of our national plan for sustainable development. The Advisory Board for the Implementation of the recommendations of Dr Annan’s Commission, chaired by Dr Surakiart Sathirathai, former Deputy Prime

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Minister of Thailand, submitted its final report last week. I would like to express my sincere thanks to all the members of the Board for a balanced and viable report. On their recommendation, an Independent Commission of Enquiry, led by Ambassador Rosario Manalo, an eminent diplomat from ASEAN, has been established. The Commission met for the first time in Nay Pyi Taw on 15 August and will be commencing their work next week. We share deep sympathy and concern for all displaced persons, especially women and children. There are around four million Myanmar migrant workers and displaced persons at present in Thailand. Our two countries have succeeded in working together to resolve the issue amicably, in the spirit of good neighbourliness. Today, the majority of our workers have been legally registered and both employers and employees have benefitted from the improved arrangements. The return of displaced persons to our country is also working smoothly as a result of close consultation and cooperation between Myanmar and Thailand. Similarly, we hope to work with Bangladesh to effect the voluntary, safe and dignified return of displaced persons from northern Rakhine. We have reached out to Bangladesh by sending Ministerial delegations to Dhaka and, last week, the Bangladeshi Foreign Minister was invited to Myanmar to see at first hand preparations we have made for the resettlement of returnees. During his visit, both sides agreed, inter alia, to deliver on commitments made, to speed up implementation of bilateral agreements on repatriation, and to set up a hotline between the two countries at the ministerial level. We also recognize the crucial role of the United Nations in addressing an issue of this nature. We facilitated the visits of the Permanent Representatives of the UN Security Council members together with representatives of neighbouring countries and the ASEAN Chair, Singapore. We welcome the appointment of Ambassador Christine Burgener as Special Envoy of the UN Secretary-General. She has already opened her Office in Nay Pyi Taw. We believe that our engagement with Ambassador Burgener will be positive and fruitful. The danger of terrorist activities, which was the initial cause of events leading to the humanitarian crisis in Rakhine, remains real and present today. Unless this security challenge is addressed, the risk of inter-communal violence will remain. It is a threat that could have grave consequences not just for Myanmar but also for other countries in our region and beyond. Terrorism should not be condoned in any form for any reason whatsoever. We thank all our friends near and far who are helping us in different ways to resolve the challenges in Rakhine and thus helping our nascent transition to succeed. At this critical time, members of ASEAN and other friends can play a role by helping Myanmar in the implementation of Dr Annan’s recommendations in such areas as strengthening rule of law and strengthening educational and health infrastructures to help promote social harmony and peaceful coexistence.

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We who are living through the transition in Myanmar view it differently from those who observe it from the outside and who will remain untouched by its outcome. For us, it is the broad, all-encompassing map of the future of our country as well as the small details of our everyday life. Our approach has to be holistic and inclusive. We necessarily have to prioritize, but we cannot afford to neglect even low priority issues. The outside world can choose the issues on which they wish to focus and, after Rakhine, the one that is attracting most interest today is foreign direct investment. We place high importance on investment, but within the context of our wider needs. We want Myanmar to be business friendly, an environment where investors can be comfortable and secure and where their interests can merge harmoniously with our development aims. Our new investment and company laws have been carefully crafted to promote best business practices as well as good governance. Procedures have been streamlined to remove bottlenecks and accelerate the implementation process. The new chair of the Myanmar Investment Commission is here with us today and he is ready to assure those who are interested that he is willing and able to facilitate business ventures. I shall not usurp his prerogatives. However, there are certain things he would like me to tell you. ASEAN economic integration, coupled with innovation, free trade, people to people contacts and regional connectivity, presents us with immense opportunities. Myanmar’s recent economic surge is attributable to trade and investment from ASEAN and other East Asian economies. Myanmar and Singapore, strategically located at the crossroads of this economically vibrant region, have a pivotal role to play in ensuring the continued economic growth and prosperity of ASEAN countries. We can combine our comparative advantages to our mutual benefit and to the benefit of this region. Myanmar is the largest country on mainland Southeast Asia and is endowed with both arable land and natural resources, from forest products and minerals to natural gas. It also has a sizeable population and a youthful work force. Singapore on the other hand, is one of the world’s most reputable financial and trading centres as well as a transportation hub. It is well equipped with world-class infrastructure that includes sea and air links and telecommunications. It is not only located in the heart of one of the fastest growing regions in the world, it has a skilled workforce and technical know-how that makes it a leading investment partner in the region. Foreign investment in Myanmar reached US$8 billion last year and more than half of it came from Singapore. The future remains bright as Myanmar and Singapore work to promote trade through a bilateral investment treaty. The investment that is paramount for our transition is investment in our human resources. It is also fundamental to our sustainable development plan. One economist observed that all of Myanmar’s critical economic indicators at this moment are

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either favourable, or stable, or moving in the right direction. But which is the right direction? The right direction, for us, is the one that will lead to an improvement in the quality of life of our people. Among the fundamental infrastructure requirements identified by our new administration in 2016 were roads and electrification, not only because these are among the basic requirements of potential investors but because they are also essential to our investment in human resources. Better roads mean better access to health and education facilities, and lighting provides new opportunities for our people to achieve their potential. Over the last two years, nearly 3,000 miles of roads have been constructed or upgraded, with priority given to least developed regions such as Chin and Rakhine, and government spending on health and education has increased by 1.2 and 2 per cent respectively. Some of the steps we have taken which may not seem significant to observers make a great difference to the lives of our people. For example, the number of midwives appointed by the Health Ministry has increased from two digits to four. In our villages the services of midwives are not limited to childbirth, they provide basic health care. By producing more midwives, and by using modern technology to raise their capacity, we achieve a significant improvement in the health of our rural population, and our rural population makes up about 70 per cent of our total population. On the education front, the recently published report of the Myanmar Living Conditions Survey 2017, the first of its kind, undertaken by the Ministry of Planning and Finance in conjunction with the UNDP and other international agencies, found that literacy has risen across generations, gender gaps in literacy have closed at the national level (the rise in average literacy was predominantly driven by women) and school enrolment rates have been rising steadily. The survey covers population and demographics, energy and electricity, assets and household materials, water and sanitation, technology including mobile phone, computer and internet, education and labour. In its own words “the report documents some stark overtime changes in lighting, education, goods ownership and technology usage—but … progress still needs to be made in some parts of the country where outcomes are lagging.” The Myanmar Living Conditions Report deals with measurables. There are also immeasurables, which are not just indicators of present conditions but also of future prospects. As the time has almost come for me to conclude the lecture, I will just mention one of the most important indicators: perhaps I might even say the most important indicator, which is the potential of our young people. Over recent weeks I have had the opportunity to meet informally with schoolchildren, ranging from primary to upper secondary school level. Physically, they were not as well grown as they might or they should be, reflecting the problem of malnutrition, an issue that the Ministry of Health and the Ministry of Social Welfare are addressing as a priority. But how delightful they were! Bright, polite but

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not shy, eager to show off what they knew but with an awareness that there were still much they did not know. Willing to learn, immensely teachable. What glittering prizes might not such children win for our country? Let us take a look: The First Global Challenge Robotic Competition held in Washington, DC in July 2017. 163 entrants from 157 countries competed and the team of engineering students from Myanmar came out sixth, first among all the Asian countries. It was a triumph of innovation and teamwork. It was an indication of our potential, of how we shall find the resources to overcome the challenges of our transition. The greatest strength of a democratic transition, the involvement of the people, is also its greatest challenge. To weld together the will and purpose of millions into a whole that allows the wonderful diversity of our country to shine through is a formidable undertaking. I believe that our people have the capacity to meet this challenge and to carry the transition to a successful conclusion which will be the starting point of a new, better era for our nation. And I believe that our ASEAN friends will be with us as we continue on our journey. Before I conclude, I would like to invite all our friends to join us in our journey. Our journey is not a simple journey. It is an adventure; an adventure into the unknown future. It is an adventure in which we are all taking part. We have many challenges to face, many weaknesses that we must address. But we have confidence; confidence in the ability of our people, and in the capacity of our people to grow into these challenges. We have mentioned amongst the challenges that we have to face, I have mentioned earlier that amendments to the Constitution is one of the goals of our government and this is something we need to mention here, because the completion of democratic transition must necessarily involve the completion of a truly democratic constitution. This, we have not yet achieved, but we aim to achieve it through negotiations and through evolution. During my time in the legislature, from 2012 to 2015, we discussed amendments of the Constitution. We were of course a minority then, but we put forward our ideas, the parts of the constitution which we believe would have to be amended if we are truly to be a democratic society, but we also made it quite clear that these changes we will bring up, we will bring about through negotiations, always keeping in mind that national reconciliation is one of our greatest needs. A country with 135 ethnic groups, how can we go forward without learning how to live with diverse ideas, diverse customs, diverse aspirations. To do that, we must learn to talk to one another, also to listen to one another. I am very grateful of the opportunity of talking to you today, and I hope that you have been listening. We have often found that listening requires much more than sitting in a room and letting sound flow in. We would like you to listen with understanding, listen with empathy, listen by putting yourself in our place, not the place of the government, but in the place of our ordinary people, of the citizens in the streets of our towns, in the villages, in the fields. If you listen with their ears, and try to see with their eyes, you will have a better idea of what the real challenges of

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our transition are. They are not just the challenges the world sees, but the challenges that each and every one of our people sees for himself or herself. I am confident that ASEAN, better than any other part of the world, will understand our needs, because we have been through the same experiences of colonialism, of nation building, of trying to develop an undeveloped economy, of trying to educate an uneducated citizenship. We have been one of the best-educated countries in Southeast Asia, but now we are trying to rebuild again. We are trying to put our people back again where they were in the days when Myanmar was considered one of the fastest developing nations in Asia. But we are not sitting on our old laurels. That will not do us any good. We want to move forward, and we think we have the capacity to move forward. Leapfrog is the word that is often used today, but I am not always happy with that because it seems to imply that we are following the same obstacle courses others have done before us. Our obstacle course is different from that of others. So instead of leapfrogging, I think I would like to think of perhaps flying over the obstacles. That might be a better help and that might be able to take us quickly to our goals. The democratic transition actually has not been in place for thirty years. That is a long time, and I would like to see the time when we complete it come soon, and come in a harmonious and tranquil manner with the help of our well-wishers all over the world. Thank you.

Question and Answer Session Question (Professor Chan Heng Chee): Your speech has covered a wide range of issues, the different struggles and the different benchmarks in your constitutional and democratic transition. You’ve touched quite a lot on ethnic armed conflict and also Rakhine and the economic problems. My question for you is this: NLD and you have been in government for almost two years now. What has surprised you most in governance in this period? Suu: Well, I have to say nothing has really surprised me. After thirty years in politics, I think you cease to be surprised by anything. We were prepared for what we would have to cope with, and we were well prepared. As I said, thirty years is a long time. But should I say what struck me most, rather than what surprised me most? It was the fact that they would prepare little talking points for me whenever I had to meet a visitor. I thought this is very strange. I’m supposed to go with a little book and talk to my guests out of it, and that I found rather strange. I have to confess that I don’t use these books. But my staff still suggests and prepares them for me.

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Question (Professor Tommy Koh): Your Excellency Daw Suu, I want to begin by telling you that you have many admirers in Singapore. We admire your courage, your love of your country, and your commitment to democracy. I want to ask you two questions. You faced many challenges, but I want to just ask for your comments on two of them. The transition from military rule to democracy is yet incomplete. You said something in your lecture, so could you share with us a few more of your thoughts on how we can complete this journey? My second question is about the economy. As you know, Singapore is the second largest investor in Myanmar and we want to do more, but our business people find your environment very challenging. I hope you will not be offended if I refer to the fact that, in the UN’s list of countries for Ease of Doing Business, you currently ranked 171 out of 190 countries. It’s a rough indication of the many challenges our business people face, so could you please to tell the good people in this audience what reforms you and your colleagues intend to introduce in the months and years ahead, which will attract more investment from Singapore, and more participation in your ambition to grow the economy to build good jobs for your people? Suu: Thank you and I’d like to say how happy I am to see you again. I must tell the audience that Mr Koh and I were perky youngsters together in the United Nations Secretariat way, way, way back. He was the youngest permanent representative there and he’s a very good friend of somebody I used to refer to as my emergency aunt. And I’m very happy to see you again. The two questions—the first one relates to how we complete the transition from military rule to democracy. Well, if you look at the constitution, you will see that 25 per cent of the seats in all the Legislatures— not just the national legislature, but the regional and state legislatures—in all of them, 25 per cent go to representatives nominated by the military. So, we can only contest 75 per cent of the seats. That means, as I always say, that we have only 75 per cent of the rights, but 100 per cent of the responsibilities. So, we’ve got to change that and we have said so. But we shall do that through negotiation, and step by step, keeping in mind our needs for national reconciliation. And there are other parts of the Constitution which are not democratic, and these also deal with the powers of the military. So, all this will have to be discussed and negotiated and changed, but we want to do it in a way that will not hurt our people. We’ve had enough unrest in Burma, we’ve had enough trouble in our country. Our people have suffered enough. We do not want to lead or encourage the kind of revolution that turns the country upside down. We will be patient, but we will be persistent. We will do it within the framework of the rule of law.

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With regard to the difficulty of doing business in Myanmar, as I said the chairman of our Myanmar Investment Commission will be very, very offended—he’s smiling, of course, but I’m sure he’s not really very happy about it. Let me just say this: there’s been a change in leadership in the economic sphere in our country over the last couple of months, and we are speeding up the process. I think our chairman will promise you that any serious investor—any serious potential investor—will be given all his attention and all his assistance. And also, our rules and regulations have been changed to facilitate business. I know that it is not easy to go from a new legislation immediately into its implementation very quickly, but we are doing our best. And I think—how many rungs can we climb up in the Ease of Doing business ladder in a year, do you think? From 171 to where shall we climb up to? Or climb down, I suppose? U Thaung Tun, Chairman of Myanmar Investment Commission: We’re going to climb up, we don’t climb down. We can’t be held responsible for the sins of the past administrations , but I can tell you: 171 is not something that we’d like to see, so we are working on it. The first thing we have done is that since the first of this month, we will allow companies to register online and pay online, and that’s going to move the Ease of Doing Business in Myanmar by ten digits or so. And we are going to have new laws—we already have constituted new laws—which will make it easier for the investor. So please try me out, Singapore, and see if it’s easier, thank you. Question: I’m V.K. Rajan, I’m a retired civil servant. There are not many people who are not moved by the suffering of the so-called displaced people, the Rohingyas. And it is unfair to say that you yourself are not moved. But many of your critics—well-meaning though they are—seem to suffer selective amnesia in not addressing similar and graver situations elsewhere. And also among those innocent people, extremists are embedded who have perpetrated similar abuses on people of other faiths. Now, my question is, Your Excellency, what is the time frame of your government in solving this very pressing issue, which is very important for economic development? Suu: It’s very difficult for us to put a time frame on it by ourselves, unilaterally, because we have to work with Bangladesh in order to do that. So, a time frame can be decided only by our two countries working together. The IDPs (Internally Displaced Peoples) have to be sent back by Bangladesh. We can only welcome them at the border. That is part of our agreement, so it’s not for us alone to set a time frame.

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I think Bangladesh would also have to decide how quickly they want the process to be completed. We have been ready to receive them since the 23rd of January, in accordance with the MOU that was signed last November. Question: I am the President of the Society of the Myanmar Civil Engineers in Singapore. I have two questions. First, what is the biggest challenge obstructing the implementation of the rule of law in Myanmar? Second, what are the challenges and the ways to attract more foreign investment in Myanmar’s industrial and infrastructure projects? Suu: I think the biggest obstruction to the establishment of rule of law is really the perception of our people of the rule of law. When I was in the legislature, I once met a group of law students who had come to study what was going on in our legislature. And I asked them: what do you think the law is for? They thought very hard, and then they said to me, “to punish wrongdoers”. I said no, that’s not how I see the law. As far as I’m concerned, the law is there to protect the harmony and stability of society. And this is a basic concept that we all need to grasp in our country. And, by the way, I must explain that when we say rule of law in our own language, it sounds much better than it does in English, because we say the rule of just laws. There are laws that are unjust, there are laws that are bad, but we always say the rule of just laws. And if we could understand that just laws are there to bring harmony and stability and peace to our society, we can all work together to establish rule of law. Now I think your second question is more or less what was asked earlier by Mr Koh, so I don’t think I need to answer it again, about how to facilitate business, how to make it easier for investors.  Question: My name is Tin Maung Maung Than. I’m a Myanmar national and Associate Fellow at the ISEAS – Yusof Ishak Institute. Your Excellency, I think the civil service is very important in the transition, and in the past, we used to joke that it is neither civil nor gives service. I know that there have been reforms going on, but I think it would take a long time for our civil service to become top-notch like in Singapore, and I hope that you will press on that further. Suu: Well, we’re trying very hard—we know that there’s a lot that we need to do to make our civil service civil and efficient. And also, we want a civil service that is

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people-friendly. Now, the problem is that our education system was really not up to standard over the last thirty or forty years, which means that we’ve lost about two generations. Before we contested the elections in 2015, I made a very simple calculation and I came to the conclusion that the best educated people would have retired from the civil service by the time our government came into office, and this is exactly what had happened. So this is a big challenge. But, on the other hand, I find that our people have the ability to learn quickly and to adapt to new situations. We still have those who are clinging on to old values and old ways, and teaching them to behave differently, to think differently, is not easy, but we’re trying all the time. Singapore has been helping us in our venture to raise the capacity of our civil servants, along with other friends as well, including other countries and international agencies. But, as I said earlier, our hope is in our young. Our young are quick to learn and they want to progress. They do not want to be left behind by the rest of the world. And I do want to take the opportunity to thank all the civil servants who have worked so well for us since we came into office. It has not been easy—there have been some bad ones, but the good ones have tried to make up for that. And I, myself, cannot complain of the staff of my Ministry of Foreign Affairs, so you can take heart from that. Question: Your Excellency Daw Suu, thank you very much for the lecture. I’m Ryan, a student from Eunoia Junior College. Now, in spite of all the great achievements that the NLD has achieved in these past few years, many critics still say that there’s one power that you cannot control and that is the military. And you yourself have alluded to the considerable influence the military continues to wield to this day. So, with that in mind, how likely do you think another military coup is? [Laughter] Suu: Well, actually, you know, this is a question that you should ask the army rather than ask me. I would have thought they would be in a better position to answer such a question. [Laughter and applause] But let’s put it this way: I don’t worry unduly about such matters. Everything is a possibility in political life, as you know, but I think we have to be pragmatic and our relationship with the army is not that bad, you know. You shouldn’t think that it’s as bad as all that—don’t forget that we have three members of the cabinet who are in fact military men—generals—and they’re all rather sweet, the three of them. Moderator (Teo Chee Hean): That’s a very charming reply.

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Question: I’m a lawyer working in Yangon. Your Excellency, and Mr U Thaung Tun: last Saturday, I registered a company. I paid 215,000 Myanmar kyat. On Sunday, one day after, I received the certificate of incorporation. Even during weekend, they were working. I was very impressed, so I would like to share this with all the participants here. I think there is one question that all the investors, all the people here, will be interested in: another election will come in 2020, what will be your prediction on the results? Suu: I’m not an astrologer, but I think if you want this business efficiency to continue, you’d better root for us. Question: I’m Mandy and I’m from CHIJ St. Nicholas Girls School. Recognizing that the repatriation of Rakhine refugees has already begun, there is still some social stigma against the Internally Displaced People in the Rakhine state. In this case, how does Her Excellency seek to reintegrate them into society, specifically, could they be used to boost foreign investment and economic development in Myanmar? Suu: I don’t think “stigma” is the word, I think it’s prejudices and misunderstandings. These will have to be removed. But we all want to work together to make the Rakhine a prosperous and peaceful region. You know, it’s one of the most beautiful regions in the whole country. Very few people have been to Rakhine and the foreigners who have been there have often told me that the beaches there are more wonderful than any they have come across in the whole wide world. There is great potential there. I think we should bring the people there together through development, through the kind of programmes that will help them to prosper together. And I’m glad that you’ve asked this question because you are young, and it is young people who can overcome the prejudices that have divided their parents, their forefathers, so I would like to invite you to take part in our venture to bring together the peoples of the Rakhine. There are many different communities in the Rakhine. I think I would like to take this opportunity to tell you that they are not just the Muslims and the Rakhines, as most people think. There are Hindus there, there are Mro, there are Thet, there are Dainet—these are small ethnic groups, and I particularly would like you to take an interest in the small ethnic groups, because some of them are disappearing very quickly. They are down to four figures; they live in their own traditional ways, they are very peaceful, they are people who are content with very

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little, but we must do everything we can to help them to preserve their culture, their traditions, and to help them to prosper and to join the rest of the country in our development plans. Question: I’m an ASEAN Scholar from Myanmar from Eunoia Junior College. After studying here for about four years, I realized that there are a lot of areas in which our education system can improve. So, my question is, in your list of priorities, where do educational reforms rank? And how can youths like us who haven’t graduated— how can we take small steps to contribute as our country overcomes the obstacles? Suu: Where does educational reform rank? Very, very high. I said earlier that our real investment is in our people, and that means health and education. When I was going around the country, everywhere I went, I would ask the people “what are your greatest needs?”. The first was water in places where there was not enough potable water. Secondly, roads. Thirdly, electrification. And fourth: always education, before health. They thought that education was more important than health because education was a way to ensure their children’s future. So educational reform is very much a top priority. It’s not just teaching our children how to think, or catch up technologically with the rest of the world. It’s also to create a balanced society. One of the issues that I find very challenging is that of making sure that our boys do as well as our girls. I am surprised that other countries, which are facing the same problem of girls doing considerably better than the boys, are not worried. I’m worried because I don’t want our boys to be drop-outs sitting in tea shops and being fed by the women. I want to readjust our education system in such a way that boys and girls will have an equal opportunity to display their talents and to realize their potential. The talents of boys are not the same as that of girls. I want to introduce certain subjects into our curriculum for which boys have special talents. For example, in art and music—the boys do very well. They don’t do so well in subjects where you have to learn everything up by rote. Even when it comes to something like poetry—I think the men here will agree with me—the boys like to memorize the poems because they mean something to them. The girls memorize the poems that will help them to pass the exams. One of the things I was discussing earlier with your education minister was vocational training and also language skills. One of our big weaknesses is the fact that very few of our civil servants have adequate language skills, meaning that their English is not up to the mark. So we want to improve their language skills to enable them to engage with the rest of the world. And we want to concentrate on vocational training, because that is another area of which I’m very hopeful of

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and very proud in our country. Our people are taking to vocational education in a way in which some Asian countries are not. I think, in many Asian countries, the perception still is that vocational training is second-class education and I don’t want that in our country. And I’m very happy because vocational training has taken off in Myanmar. People understand its value and we are making a special effort to channel our young people into the vocational training schools.

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The Singapore Lecture Series Inaugural Singapore Lecture 14 October 1980 The Invisible Hand in Economics and Politics by MILTON FRIEDMAN Professor of Economics, University of Chicago 2nd Singapore Lecture 30 October 1981 American Foreign Policy: A Global View by HENRY KISSINGER Former US Secretary of State 3rd Singapore Lecture 2 December 1982 Peace and East-West Relations by VALÉRY GISCARD D’ESTAING Former President of France 4th Singapore Lecture 10 November 1983 The Soviet Union: Challenges and Responses as Seen from the European Point of View by HELMUT SCHMIDT Former Chancellor of the Federal Republic of Germany 5th Singapore Lecture 8 November 1984 The Future of the Western Alliance and Its Implications for Asia by JOSEPH M.A.H. LUNS Secretary-General of the North Atlantic Treaty Organization (NATO)

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6th Singapore Lecture 5 December 1985 Deficits, Debts, and Demographics: Three Fundamentals Affecting Our Long-Term Economic Future by PETER G. PETERSON Chairman of the Blackstone Group 7th Singapore Lecture 25 November 1986 Trends in the International Financial System by RAYMOND BARRE Former Prime Minister of France 8th Singapore Lecture 27 November 1987 The Challenge of Change in the Asia-Pacific Region by BOB HAWKE Prime Minister of Australia 9th Singapore Lecture 14 December 1988 Regionalism, Globalism and Spheres of Influence: ASEAN and the Challenge of Change into the 21st Century by MAHATHIR BIN MOHAMAD Prime Minister of Malaysia 10th Singapore Lecture 15 October 1989 Trade Outlook: Globalization or Regionalization by BRIAN MULRONEY Prime Minister of Canada 11th Singapore Lecture 3 April 1991 International Economic Developments by R.F.M. LUBBERS Prime Minister of the Netherlands 12th Singapore Lecture 4 January 1992 US Policy in the Asia-Pacific Region: Meeting the Challenges of the Post-Cold War Era by GEORGE H.W. BUSH President of the United States of America

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13th Singapore Lecture 8 September 1994 India and the Asia-Pacific: Forging a New Relationship by P.V. NARASIMHA RAO Prime Minister of India 14th Singapore Lecture 17 January 1996 Australia, Asia and the New Regionalism by PAUL KEATING Prime Minister of Australia 15th Singapore Lecture 14 January 1997 Reforms for the New Era of Japan and ASEAN: For a Broader and Deeper Partnership by RYUTARO HASHIMOTO Prime Minister of Japan 16th Singapore Lecture 6 March 1997 South and Southern Africa into the Next Century by NELSON R. MANDELA President of the Republic of South Africa 17th Singapore Lecture 30 November 1999 China and Asia in the New Century by ZHU RONGJI Premier of the State Council of the People’s Republic of China 18th Singapore Lecture 14 February 2000 Global Values: The United Nations and the Rule of Law in the 21st Century by KOFI A. ANNAN Secretary-General of the United Nations 19th Singapore Lecture 27 November 2000 Peace on the Korean Peninsula and East Asia by KIM DAE-JUNG President of the Republic of Korea

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20th Singapore Lecture 14 January 2002 Japan and ASEAN in East Asia: A Sincere and Open Partnership by JUNICHIRO KOIZUMI Prime Minister of Japan 21st Singapore Lecture 9 April 2002 India’s Perspectives on ASEAN and the Asia-Pacific Region by ATAL BIHARI VAJPAYEE Prime Minister of India 22nd Singapore Lecture 6 July 2002 EU-Asia Relations: Sharing Diversity in an Inter-regional Partnership by ROMANO PRODI President of the European Commission 23rd Singapore Lecture 13 May 2003 Investments into the Future: State and Economy at the Beginning of the 21st Century by GERHARD SCHRÖDER Chancellor of the Federal Republic of Germany 24th Singapore Lecture 30 April 2004 Global Challenges in the 21st Century: A View from Chile by RICARDO LAGOS President of Chile 25th Singapore Lecture 16 February 2005 Indonesia: The Challenge of Change by SUSILO BAMBANG YUDHOYONO President of the Republic of Indonesia 26th Singapore Lecture 21 April 2005 Africa’s Season of Hope: The Dawn of a New Africa-Asia Partnership by THABO MVUYELWA MBEKI President of the Republic of South Africa

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27th Singapore Lecture 1 February 2006 Evolution of Enlightened Societies on Our Planet by A.P.J. ABDUL KALAM President of the Republic of India 28th Singapore Lecture 11 April 2006 Asia-Middle East Cooperation: Opportunities and Challenges by PRINCE SULTAN BIN ABDUL AZIZ AL-SAUD Crown Prince and Deputy Prime Minister of the Kingdom of Saudi Arabia 29th Singapore Lecture 12 August 2008 Australia, Singapore, Our Region and the World by KEVIN RUDD Prime Minister of Australia 30th Singapore Lecture 23 October 2009 Towards New Global Partnerships: Economics, Governance, Values by JAN PETER BALKENENDE Prime Minister of the Netherlands 31st Singapore Lecture 2 June 2011 by ANGELA MERKEL Chancellor of the Federal Republic of Germany 32nd Singapore Lecture 13 March 2012 The Importance of Governance for Sustainable Developments by HELEN CLARK Administrator of the UN Development Programme and Former Prime Minister of New Zealand 33rd Singapore Lecture 26 July 2013 Japan and ASEAN, Always in Tandem: Towards a More Advantageous Win-Win Relationship through My “Three Arrows” by SHINZO ABE Prime Minister of Japan

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34th Singapore Lecture 22 April 2014 The Future of ASEAN by HIS MAJESTY SULTAN HAJI HASSANAL BOLKIAH MU’IZZADDIN WADDAULAH Sultan and Yang Di-Pertuan of Brunei Darussalam 35th Singapore Lecture 29 June 2015 Our Common Challenges: Strengthening Security in the Region by TONY ABBOTT Prime Minister of Australia 36th Singapore Lecture 7 November 2015 Forging a Strong Partnership to Enhance Prosperity of Asia by XI JINPING President of the People’s Republic of China 37th Singapore Lecture 23 November 2015 India’s Singapore Story by NARENDRA MODI Prime Minister of India 38th Singapore Lecture 30 August 2016 Strengthening Partnership for Regional Sustainable Development by TRAN DAI QUANG President of the Socialist Republic of Vietnam 39th Singapore Lecture 24 November 2016 The Netherlands, Singapore, Our Regions, Our World: Connecting Our Common Future by MARK RUTTE Prime Minister of the Netherlands 40th Singapore Lecture 27 March 2017 France and Singapore: Strategic Partners in a Fast-Changing World by FRANÇOIS HOLLANDE President of the French Republic

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41st Singapore Lecture 21 August 2017 Turkey–Singapore Relations: Building a Smart Strategic Partnership by BİNALİ YILDIRIM Prime Minister of the Republic of Turkey 42nd Singapore Lecture 13 July 2018 ROK and ASEAN: Partners for Achieving Peace and Co-prosperity in East Asia by MOON JAE-IN President of the Republic of Korea 43rd Singapore Lecture 21 August 2018 Democratic Transition in Myanmar: Challenges and the Way Forward by AUNG SAN SUU KYI State Counsellor of the Republic of the Union of Myanmar 44th Singapore Lecture 13 November 2018 Pursuing Open and Integrated Development for Shared Prosperity by LI KEQIANG Premier of the State Council of the People’s Republic of China

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The Editors Malcolm Cook is Visiting Senior Fellow at the ISEAS – Yusof Ishak Institute, Singapore. Daljit Singh is Senior Fellow at the ISEAS – Yusof Ishak Institute, Singapore.

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