|PHOTOS: APEC 2009 site|
Speaking at the last session of the Leaders sessions at the APEC, Singapore’s Minister Mentor Lee Kuan Yew gave his candid take on the countries of the world after the global crisis. During the 45-minute discussion, the Minister Mentor spoke frankly on the issues various nations are going through. Moderated by TIME magazine’s International Editor Michael Elliot, MM Lee took questions from the multinational APEC audience and even shared anecdotes from his own experiences.
What has changed after the global crisis?
When asked what he thought were some key changes in the world after the global crisis, MM Lee said that he expected a shift of economic weight from the Atlantic to the Pacific, though how quickly this would happen is uncertain. However, he did say that he would not expect consumers in Chinese and Indian consumers to replace the American consumer. “Chinese consumers spend one eighth of the American consumer and the Indians, one sixteenth.” The differences in magnitude are too large to make up in the short term, he believed. He did emphasized that the manner in which the USA exits the crisis will still have crucial implications for global geopolitics. If America could keep the dollar as the dominant currency, and to maintain confidence, the world order would remain stable, and probably be better off. But “if Americans allow their deficits to grow and grow without provisions to make up the deficits”, Lee warned of the dangers of fundamental changes, uncertainty, and potential collateral damage. But he chose to suspend his verdict until things became more apparent on how the country was dealing with the economic crisis.
Is the US a declining power?
Talking about the US’ role in the Asia Pacific, MM Lee commented that its presence had decreased, and the country had had to reengage or risk losing the “economic race”. He said that the reason was that America had been preoccupied with Iraq, Afghanistan and Iran so much that it had left its relations and affairs with East Asia fallow. For example, the USA had so far only ratified one FTA (with Singapore), while the only other signed FTA with Korea was still incomplete in Congress. In contrast, China extended a free trade agreement to all of Southeast Asia, strategically extending “early harvest” benefits. Moreover, “if the US continues this anti-free trade, anti-outsourcing [practice], its economic interest in the Pacific Asia and also in the Indian Ocean will decline,” he warned. The administration has the right priorities but populist sentiment and the nature of the democratic system makes it unlikely that any pro-trade legislation will pass Congress. He also expressed belief in the current Chinese government, that they are very capable, and have an admirable long-term focus. He mentioned the constant flow of well-educated, increasingly sophisticated leaders, not decided by the “whims of election.” When Elliot mentioned China’s stand on democracy, MM Lee replied candidly that China was not looking to catch up with the rest of the world. Rather, he felt that the Chinese people were more interested in having lives like the ones they are seeing in Hong Kong and in Singapore, than they are in having voting rights or free speech.
Will India grow as fast as China?
MM Lee felt that India’s enormous bureaucratic impediments would be a major hindrance to growth and business. “India is going at about 60 per cent of China’s rate of change. Can they go faster? Yes they can. How? They need to change the system. Can they change the system? [This is] very difficult. Their system is set in stone and very difficult to change,” he says. However, he added that India, unlike China which is made up of a population with 90 per cent Han Chinese, is a multiracial society, and that their current system helped to keep it in one piece, though some speed of their growth would be sacrificed for the sake of that unity.
How does he see the greater interaction of Russia in Asia?
Relations in Russia are strengthening, with increasing investment in Vladivostock in particular, but that would take effort and time. He felt that the infrastructure in Russia’s east is not as developed as it is in western parts, for example Moscow. But he felt that Russia was keen to build on these areas.
What is the future of ASEAN?
“It is what we make of it,” said the Minister Mentor. He explained that the ASEAN as a collective of Southeast Asian countries provided a common market that was at the least comparable to India, a goal that was not possibly to pursue if the countries operated merely on an individual basis.
Is North Korea the greatest uncertainty to East Asia?
Lee said, “I do not think it is the greatest uncertainty in terms of how Asia will develop. The uncertainty merely lies in whether they choose to make a nuclear weapon.” He felt, however, that China’s relationship with North Korea would help it to keep a more balanced stand as he felt China would not want them to make a nuclear bomb, but at the same time, China would also look out for the interests of North Korea and not want it to disintegrate. He spoke of a recent piece of news in which Chinese Premier Wen Jiabao went to visit the grave of Mao Zedong’s son who was killed in the war. He felt that it was a sign from China saying to North Korea: “We have spilled blood for you, we will not let you go down, so please listen to us and be reasonable.”
What is his take on the future of smaller economies like Vietnam and Taiwan?
Lee described Chinese Taipei’s current position in the context of what he sees as years of missed economic growth that occurred in the 1990s and 2000s as Taiwan tried to stem the flow of investment to the mainland. He felt the current policy position of the Taiwanese government would be more conducive to growth, which if achieved would ease political friction in the country. He spoke well of Vietnam, calling it the most dynamic of all ASEAN countries. He spoke of his experience with Vietnamese students who come to Singapore and “are the most serious, score high marks, and go back to build Vietnam.” In 20 years Vietnam will be a “big tiger or a small dragon,” he said.
For Asia’s recovery in the financial crisis, will it depend on the government or on enterprises?
The Minister Mentor said that governments must ultimately carry the main burden of recovery. Only then would private enterprises pick up and carry on. He also cautioned against overzealous government policies like limiting salaries and bonuses, which could affect the the nature of the successful American system of rewarding the people who make the companies successful. He finally ended by giving America the benefit of a doubt.
“Suspending judgment, I’m waiting to see what emerges out of America.”