Stay nimble to survive, says Singapore's former Ambassador-At-Large

Shifting Sino-US relationship will make geopolitical environment more tricky to navigate: Former top Singapore diplomat

The world is in for a rough ride ahead with volatile relations between US and China, but an all-out armed conflict is unlikely to break out, said Singapore’s former Ambassador-at-Large Bilahari Kausikan.

“Strategic competition is heating up but it won’t go so far as war,” said Mr Kausikan at a recent closed door session with Economic Development Board officers.

The Sino-US relationship will settle into a new normal, marked by increasing tensions, changing norms and rising uncertainties. This will make it difficult for smaller countries like Singapore to navigate the shifting geopolitical landscape, he observed.

For companies, the political tensions are already spilling over into the business arena. US President Donald Trump, for instance, blocked the sale of semiconductor manufacturer Qualcomm to Broadcom over security concerns.

During the two-hour session, Mr Kausikan tackled a range of foreign policy issues, from the rising tensions between US and China, the trade war and Southeast Asia’s prospects.

He painted a picture of a shifting geopolitical global order that was no longer predictable but moving into a more dangerous, unpredictable and complex era.

For the US, staying engaged in Asia in this new world order will remain a priority. But it will not be as generous as it used to be.

“I think they will remain engaged, no doubt. But it will no longer be as generous as it used to be in the past. They will demand more from us,” said Mr Kausikan, who was also previously a former Permanent Secretary of Foreign Affairs.

He cited the US’s demands on its European allies to spend more on their national defence in the North Atlantic Treaty Organization alliance as evidence that the US has become more calculating.

He also highlighted America’s aggressive trade stance towards China, noting that it was not simply the result of a temperamental US President.

The US levied trade tariffs of US$34 billion on China in July, with US President Donald Trump unleashing another round of tariffs on US$200 billion of Chinese imports in early September (2018).

In a tit-for-tat exchange, China fired back with duties on US$60 billion worth of US products in July, followed by another US$60 billion to match the US in September.

Some analysts believe this reflects a US President eager to please his domestic political base but Mr Kausikan said that the moves are motivated by a general sense of unfairness in the US business community.

China’s rise is not without problems

While China is growing in strength, it is unwilling and unprepared to replace the system that the US has put in place.

Even China’s Belt and Road Initiative, a massive project that aims to connect multiple continents through China-financed infrastructure, is unlikely to become a firm alternative to the US and the institutions it has set up, noted Mr Kausikan.

At the same time, China is also facing internal domestic pressures including having to deal with a resurgent Muslim minority and ensuring that the Chinese Communist Party maintains its primacy in Chinese society.

Against this backdrop, small countries like Singapore are squeezed in between. Choosing sides is not an option as both the US and China are important partners.

“It was a simple choice for us when it was the Soviet Union and the US (during the Cold War). But in the future, it’s not so simple,” he noted.

But even in today’s scenario, Singapore’s ability to stay nimble and navigate the politics of the superpowers remain its biggest strength in the international arena. This, in turn, has allowed it to stay a safe haven for companies looking for a stable investment destination.

Turning to the role of Association of Southeast Asian Nations (Asean), Mr Kausikan was more optimistic.

The bloc has maintained peace and stability in the region since it was formed in 1967. On the economic front, the region continues to have good fundamentals, including good growth and favourable demographics.

The region is also on the path to economic integration, but he warned that forming a common market is likely to take much more time.

Asean has set out the Asean Economic Community Blueprint 2025, where it hopes to create a deeply integrated and cohesive regional economy.

So far, it has achieved much to enable free trade and movement of people, goods and capital. For instance, nearly 96 per cent of tariff lines are at zero per cent.

The easy parts have been completed, but he stressed that the next and final lap is likely to be the most difficult one to finish.

“I don’t think the second stage of economic integration will fall apart, but it will move very slowly,” he said.

“If you want to have a common market and common production platform, you have to deal with the intrinsically difficult issues. You have to deal with labour issues, services and non-tariff barriers, which are all very difficult to handle.”

While Singapore faces steep challenges ahead, Mr Kausikan believes Singapore can continue to thrive, given its comparative advantage ”in the totality of our business ecosystem”.

At the same time, the key to Singapore’s survival remains the ability to learn how to deal with complexity and unpredictability, and therefore stay adaptable.

More importantly, Singaporeans must continue to maintain social cohesion and stay united in the face of such challenges, he added.

“We live in an age where the Singapore identity is a fragile one, where different types of identity are being asserted on us. That’s our biggest challenge. If we can solve that, I’m confident that the external things can be tackled,” he said.