SG DAILY: ST: Speech by DPM Lee Hsien Loong at the Williamsburg Conference on 3 March 2000 (fwd)

["M.G.G. Pillai" <pillai@mgg.pc.my>]

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Date: Sat, 04 Mar 2000 23:07:36 +0800
From: Li Lin <lilin@softhome.net>
Reply-To: sgdaily@list.sintercom.org
To: sgdaily@lists.sintercom.org
Subject: SG DAILY: ST: Speech by DPM Lee Hsien Loong at the Williamsburg  Conference on 3 March 2000

SPEECH BY DPM LEE HSIEN LOONG AT THE WILLIAMSBURG CONFERENCE ON 3 MARCH 2000
AT 7.30 PM AT THE RITZ CARLTON MILLENIA HOTEL
US ROLE IN ASIA IN THE 21ST CENTURY
AN ASIA IN RECOVERY

Asia has emerged from the shadow of the economic crisis. Prospects for
the region have brightened considerably and most Asian countries are
seeing growth again. The only country not yet out of the woods is
Indonesia, which has elected a new government, but is still going
through a political transition. But even Indonesia's economy has shown
encouraging signs of stabilising. 

The crisis showed how vulnerable Asian countries were to instabilities
in the globalised economy, and forced them to reform and change.
Different governments have responded in different ways. Thailand and
South Korea have taken the orthodox path to reform, accepting IMF
prescriptions and mainstream economic views. Malaysia has defied this
conventional wisdom, and struck out along its own path. In Singapore, we
have pressed on to further open up our economy. We have restructured and
liberalised key sectors, including banking and telecommunications. Our
policy is to accelerate, rather than delay, our integration with the
global economy, to become more competitive rather than to shelter
ourselves from competition. 

WHAT IS THE US ROLE? 

The US has been a major player in Asia, during the crisis and before. 
Everywhere in the region, the US has affected the course of events,
eitherdirectly through its policy and actions, or indirectly through its
influenceover the IMF and World Bank. In Korea, quiet but deter-mined
American support was crucial in getting creditor banks to roll over
their loans, and giving Korea the breathing space to put its house in
order. In Indonesia, the US has tracked developments closely since the
situation turned grave in late 1997. 

Now that the worst is behind us, and countries are no longer
pre-occupied with crisis management, we can make a more detached
assessment of the future, and in particular the US role in the region.
What is America's part in Asia's economic and political transformation? 

Much depends on how the US defines its strategic interests in Asia.
During the Cold War, these US interests were clearly defined ) to link
up with countries in the region, especially China, to block the
expansion of Soviet influence. Now this overarching framework is gone.
Congress has become more assertive and questioning, and less bipartisan.
More than ever, Congress is reflecting the demands and pressures of
specific domestic interest groups. TV images drive the impulse for
humanitarian inter-vention, in East Timor just as in Kosovo. The result
has been a sense that the US is dealing with Asia as a bundle of
disparate issues without a coherent policy framework.  These trends are
accentuated in an election year. The Administration scrutinises every
policy carefully for its possible consequences on votes in November.
Presidential candidates offer competing visions of their foreign
policies. Each seeks to differentiate his own brand, and feels free to
woo votes with strident statements of high principle, unfettered by the
responsibilities of office. 

But election year static and rhetoric must not cloud important US
interests in Asia - to encourage countries to pursue outward-looking
market-oriented policies that link them to the global economy, to work
with countries that are well-disposed towards the US and the US presence
in the region, and to maintain the regional balance of power. The US
needs to integrate these interests into an overall strategic vision for
the region. 

INTEGRATING ASIA ECONOMICALLY

US prosperity depends on a free and open global economy. The fast
growing economies of Asia, especially China, are a key part of this
global prosperity.  Historically, the US has played a major role in
helping Asia to develop and to integrate into the world economy. This
stretches back to the 19th century, with the Open Door Policy in China
and the opening of Japan, through the Second World War and post war
period, to the Vietnam War that gave the non-communist countries in Asia
a precious decade to consolidate and put their houses in order. 

In the aftermath of the Asian crisis, the worldwide trends of technology
and globalisation continue apace. They present major challenges for
Asia: how can the region stay fully plugged into the global economy? How
can we persuade people in Asia that the benefits of globalisation
outweigh the inherent risks? How can we help less developed Asian
countries adjust to and benefit from globali-sation? What can the US do
to help? 

Because East Asia had been successful for so long, the crisis was a
profound political and intellectual shock. The severe punish-ment it
visited upon countries, totally out of proportion to their sins, could
easily have caused a backlash against globalisation, a turning inwards
that would have impoverished the countries and weakened the region. But
fortunately this has not happened. All the countries continue to seek
foreign investments and trade, including Malaysia which rejected the IMF
orthodoxy, and continues to express serious doubts about global-isation.
They have seen how free trade and investment flows fuelled the Asian
miracle, and are loath to give up the upside from being plugged in. 

But not all those swept along by the tide of globalisation are
enthusiastic converts. Nationalism remains a powerful force.
Globalisation also brings disorientation, new insecurities, and a sense
of loss of control. Some countries that are opening up their economies
to more foreign ownership and participation are doing so out of
necessity more than conviction. 

Economic historians have noted parallels between today's world and the
highly liberal economic environment of the 19th century, which was
nevertheless succeeded by the First World War and disastrous
protectionist policies of the Great Depression. I do not believe any
such a disaster is imminent, but the debate over globalisation is far
from settled. 

As a major economic partner of all Asian countries, the US plays an
important role in encouraging East Asian countries to persevere with
economic liberalisation and opening up. US participation is also crucial
in building an international framework for co-operation. 

No other country can substitute for the US in this role, and not only
because of America's economic capacity or political clout. The US
provides the common intellectual framework and experience for the Asian
elite. So many Asians have studied and worked there. US products and
services have been the most dominant, not least Hollywood's popular
culture. Whether it is banking, the military, Internet and multi-media,
entertainment, healthcare or aerospace, many of the terms and concepts
are US in origin. Our common language is English. This softer aspect of
American influence is in some ways even more profound than its hard
power. 

Globalisation must therefore be led by the US. The US economy has long
been the most open in the world, and in the 1990s it has been the most
dynamic and innovative. The US needs to continue to keep its own markets
open and demonstrate by example that it is prepared to take politically
awkward steps to uphold free trade. After all, this is what the US
rightly asks other countries to do. 

The failure of the Seattle WTO meeting was a major setback for the cause
of free trade. It showed that a small but vociferous group of NGOs could
hijack the agenda, sidetrack US trade policy, and scuttle a deal that
would have benefited many countries, including the US. They were helped
by the reluctance of the Clinton Administration, in this election year,
to offend any special interest groups, particularly the unions. It will
take some time, and much effort, to get the WTO process started again.
But I hope that getting trade talks moving will be an early priority of
the new Administration next year. 

Equally important is the structural reform of the inter-national
financial system, and the definitions of the roles of the IMF and World
Bank. Several international groups are examining this, including the
G20, the G22, and the Financial Stability Forum. In this matter too, the
US is such a major player that no scheme can succeed without its
support. 

It is not yet clear what changes to the global financial architecture
are necessary or possible. But we cannot afford to assume that the
existing system is too flawless to need improvement, and that the Asian
crisis was simply an unavoidable mishap that was bound to happen from
time to time.  One symbolically significant aspect of the reforms will
be the way the leadership of the IMF and World Bank are chosen. If all
countries are to have a stake in these institutions, and if the actions
of these institutions are to have legitimacy, then their leaders have to
be chosen by an impartial and open process. Up to now it has been
convenient simply to have the World Bank and IMF posts divided up
between the US and Europe, but in the long term this arrangement is not
tenable. 

Thus in the current contest for the IMF Managing Director's post, Japan
put forward Dr Eisuke Sakakibara as a candidate. It is a sign that the
Japanese are unsatisfied with the existing arrangements, and want a look
in.

Singapore sympathises with this view, and supports Japan taking the lead
to do this. We believe that the best candidate should be chosen for the
job, regardless of nationality. We hope that members of the IMF and
World Bank, including the US, will support such an approach. 

In promoting economic liberalisation, however, the US must bear in mind
that while it must take the lead and encourage, it cannot compel Asian
countries to change. Each country must find its own way forward. 

To be sure, Asian countries need to make political and economic reforms. 
The globalised world demands certain standards of governance and
economic management. Domestic policies can no longer be entirely off
limits to the international agenda. The distinction between the
"domestic" and the "international" has become blurred. But this does not
mean that countries have a free hand to intervene in one another's
domestic affairs, or that it is easy to turn good intentions for another
country into good outcomes. East Timor's travails have shown this
vividly. 

Each Asian country must decide for itself how best to meet the
globalisation challenge, given its own specific circumstances.
Persuading those already disoriented by globalisation and technological
changes requires skilful diplomacy and the careful balancing of
competing interests. After all, even developed countries like the US do
not find it easy to override domestic political constituencies and
sensitivities, in the name of national interest. 

The US has played a uniquely benign and constructive role in the region. 
Still its overwhelming pre-eminence has provoked resent-ment, and raised
suspicions and apprehensions about a unipolar world. The US therefore
needs to take care not to act unilaterally, but instead create a
consensus by persuasion and encouragement. Well-informed and intentioned
as the US is, it still has to be sensitive to the nuances and subtleties
of each region and country, which may not fit into a single view of the
world. Maintaining the Regional

Balance

America's economic role in Asia is inextricably linked to its role in
the regional balance of power. Such a balance is needed to create a
stable and peaceful environment in the Asia Pacific, which in turn is
essential for Asian countries to focus on economic reforms and
development. The key to the stability of Asia lies in US-China-Japan
relations. And it is the US-China side of the triangle that is most
crucial for the region. 

The US has taken a major step in putting relations with China on a sound
footing, by concluding the deal last November to admit China to the WTO.
It thus salvaged its misjudgment and missed opportunity in April, when
Premier Zhu Rongji visited the US and left empty handed. This momentous
move has profound positive strategic implications, well beyond the
economic sphere. It will give China a vested interest in playing by the
rules, and a strong incentive to continue reforming and opening up its
economy. It will greatly reduce the risks of instability and conflict,
and accelerate the ferment which is already transforming Chinese
society. 

The US must now follow up by granting China permanent Normal Trade
Relations (NTR) status, an integral part of its WTO deal with China.
This will remove the irritant of the annual ritual of Congressional
review of China's NTR status, and in any case it is the standard basis
on which WTO members trade with one another. The US must do this as soon
as possible, regardless of transient ups and downs in the bilateral
relation-ship, because having China in the WTO is in America's own
profound interest, and in the long term is indeed the best way to keep
relations on an even keel.  Congress has not yet passed the NTR
legislation, and the issue is inevitably entangled with US domestic
politics. Fortunately the US Administration is strongly supporting the
measure, and understands what is at stake. All of Asia hopes that the
Administration's formidable powers of persuasion will be adequate to the
task. 

Another key issue in US-China relations is Taiwan. The idea of a unified
China is deeply embedded in the Chinese psyche. After President Lee
Teng-hui's policies to expand Taiwan's international space, and to
redefine Taiwan's relations with the China, reunification has become an
urgent issue for China. No Chinese leader can afford to be seen to
accord a low priority to this issue, and to take the risk of losing
Taiwan, without severely undermining his domestic standing. The timing
of the release of China's recent White Paper, just ahead of the
elections in Taiwan, must be seen in this context. 

The US must be clear about its fundamental interests in its relations
with China and Taiwan. It sees an obligation to stand up for a
democratic Taiwan, but it has an equally powerful motive not to collide
with China, especially over a neuralgic issue which China considers
vitally important. It is good that the US has reaffirmed its concern
that the Taiwan issue be resolved peacefully, as well as its support for
one China, as opposed to two Chinas or one China one Taiwan. 

In this year of elections in both the US and Taiwan, it is important to
keep cross-strait relations on an even keel. An escalation of tensions
would be disastrous, especially at a time when the region needs
stability to sustain its economic recovery. This calls for restraint on
both sides of the straits. There will continue to be differences between
the US and China, but they should not lead to enmity or hostility. 

While focusing on relations with China, the US should not neglect its
relationship with Japan. Japan too is going through a period of domestic
stress and change. It is asking questions about its international role,
and the future of its relationship with the US. 

Japan is keen to play a role in the region in keeping with its economic
strength. This is a legitimate aspiration which the US and Asian
countries should support. During the crisis, Japan was active in helping
countries in difficulty. Over the longer term, Japan can act most
effectively in the context of a strong US-Japan security alliance. 

CONCLUSION

The US therefore remains a key player in Asia. By staying constructively
engaged, it will not only help Asia's long term progress, but also
protect and further its own interests. 

The financial crisis marked the end of a bubble, but not of Asia. Asia
is picking up. As countries press on with rebuilding and putting things
right, the recovery will strengthen. Major challenges still lie ahead,
but the fundamentals that supported high growth before the crisis have
not disappeared. The US will benefit immensely from a stable, growing
Asia which contributes to global peace and prosperity. This is a vital
goal that both the US and Asian countries should strive to achieve
together. 


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