Asia Territory Spats Pose Danger to Trade, Singapore Warns

The risk of territorial disputes

damaging trade in Asia is “very real” and the region must

focus on shoring up economic links as well as security ties,

according to Singapore Defence Minister Ng Eng Hen.

“It’s completely artificial to think that there are

somehow firewalls between trade and security,” Ng, 55, said

yesterday in an interview at the Ministry of Defence. “We

shouldn’t from a security point of view be dominating headlines

every few other days and I don’t think it’s necessarily a

positive if this continues for the region. At some point it may

impact trade and our real economies.”

Ng was speaking after a weekend forum of defense ministers

and military leaders in Singapore, where the U.S. and China

openly criticized each other over their agenda in the region and

China’s claims over large parts of the East China Sea and South

China Sea dominated discussion. The meeting highlighted the

growing pains in Asia as China emerges as a military and

economic power, challenging decades of U.S. dominance.

“China’s rise is a fact,” Ng said in the interview.

“China needs to articulate its own vision, and its own position

in this new, revised world order. Our approach has been that

dialogue is essential, inclusivity is important.”

‘Destabilizing’ Actions

U.S. Defense Secretary Chuck Hagel used a May 31 speech at

the Shangri-La Dialogue in Singapore to say China has in recent

months “undertaken destabilizing, unilateral actions asserting

its claims in the South China Sea,” while Japanese Prime

Minister Shinzo Abe said Japan did not welcome dangerous

encounters by jets or warships. Lieutenant General Wang

Guanzhong, the deputy chief of general staff of the People’s

Liberation Army, broke from his prepared remarks to the forum to

call their speeches “unimaginable.”

“If China and Japan got into a war, that would be a real

problem,” Norman Boersma, Bahamas-based chief investment

officer of Templeton Global Equity Group, which manages $130

billion in assets, said in an interview in Singapore. “These

are two big economies and they would have a fundamental

impact.”

The U.S. comments follow Vietnamese Prime Minister Nguyen Tan Dung’s appeal for a “stronger voice” from the U.S. against

China after clashes between coast guard and fishing vessels near

an oil rig China placed in contested waters off Vietnam’s coast.

The Philippines, dwarfed militarily by China, has sought support

from the U.S. and the United Nations against China’s

encroachment into shoals off its coast.

Quite Strategic

Ng, a medical doctor who previously served in the education

and manpower portfolios, said given the current tensions, the

proposed Trans-Pacific Partnership trade pact and other

multinational deals are “quite strategic, not just good to have

but a must to have.” The U.S.-led 12-nation TPP, which would

cover an area with about $28 trillion in annual economic output,

doesn’t include China.

“You certainly don’t want a scenario where your frameworks

are weighted towards security,” Ng said. “From Singapore’s

point of view we would not be upset if for example there were no

big issues to discuss at the Shangri-La Dialogue. That’s not a

bad outcome for us.”

Under President Xi Jinping, China has taken a more

assertive approach to territory. It claims much of the South

China Sea under its “nine-dash line” map, first published in

1947. The map extends hundreds of miles south from China’s

Hainan Island to equatorial waters off the coast of Borneo,

taking in some of the world’s busiest shipping lanes. Brunei,
Malaysia and the Philippines also claim parts of the sea, while

Singapore is not a claimant.

Self-Restraint

The 10-member Association of Southeast Asian Nations on May

12 called for self-restraint on the territorial disputes. The

statement did not mention China by name and Asean does not take

a position on the actual claims. China is Asean’s biggest

trading partner.

Asean is seeking a code of conduct for the waters, although

talks have made little progress since China agreed in July to

start discussions, and China introducing fishing rules in

January requiring foreign vessels to seek permission before

entering waters off its southern coast.

“To those accusations that we haven’t moved resolutely or

quick enough on the code of conduct, Asean and China should say

agreed, mea culpa,” Ng said. “There has been progress. Our

foreign colleagues will have to work quicker, sharper and

smarter to have tangible outcomes.”

Magic Contrivance

Tackling some aspects individually may be best, given the

difficulty of addressing sovereignty, he said. “It’s easier to

break it down into smaller pieces and not expect some magic

contrivance that suddenly removes all disputes and removes all

historical baggage. That’s just completely unrealistic.”

Singapore urges Thailand to move quickly toward elections,

Ng said. The country’s military leaders seized power on May 22

after six months of debilitating anti-government street

protests, the 12th coup in eight decades.

“We are concerned — all countries are — that the longer

the period of military rule, the farther any country deviates

from civilian rule and democratically-elected governments, and

greater the risk for autocracy and the abuses that can come.”

The U.S. and Australia have suspended military cooperation

with Thailand. Singapore carries out training in Thailand,

“which they have kindly said we can continue and our troops are

still safe there,” Ng said. “Things are so fluid that

articulations of deeply held positions may not be productive at

this time.”

Defense Spending

Singapore defense spending will remain fairly steady, he

said. The city-state allocated S$8.6 billion ($6.8 billion) in

2004, and increased spending to S$12.2 billion last year, he
said in Parliament earlier this year.

“We don’t want big dips or big jumps because we feel

that’s the most disruptive for your militaries,” he said

yesterday. “We’ve kept pace with real growth, or inflation.”

Turning back to the regional territorial disputes, Ng said

they “need not be intractable”. “Neither do they need to

precipitate outcomes which would be detrimental to the great

promise that Asia holds,” he said.

“This is the region of greatest promise, and greatest

performance in the past decade or so,” he said. “The question

I suppose to ask is, what are we fighting about?”

To contact the reporters on this story:

Rosalind Mathieson in Singapore at

rmathieson3@bloomberg.net;

Linus Chua in Singapore at

lchua@bloomberg.net

To contact the editors responsible for this story:

Rosalind Mathieson at

rmathieson3@bloomberg.net

Linus Chua, Andrew Davis

Asia Territory Spats Pose Danger to Trade, Singapore Warns