Hard Truths Of Diplomacy- Bilahari Kausikan

Bilahari Kausikan is a Singaporean academic and retired diplomat. He was the Permanent Secretary at the Ministry of Foreign Affairs and the former ambassador to the UN and Russia.

Before his retirement, Bilahari was the Chairman of the Middle East Institute at the National University of Singapore.

In this episode, he unpacks the dilemmas and challenges that Singapore and Southeast Asia face in an age of intensifying US-China competition.

Keith 01:40:00

Now that our 2025 elections are over, can you give me your hot take?

Bilahari 01:53:00

People talk about this as a vote for safety in the midst of turbulence, and to some degree that is correct, but it's also a vote for trust. Safety comes with trust.

If you had no trust, you might be more inclined to experiment. So you went for a party that had an established record, that you know can deliver things. Now this is not something to be taken for granted, of course.

Because you see in 2020, when we had an election in the midst of the COVID pandemic, in that case the look for safety did not work because it was quite a low percentage, 61% or so I think, a lower decimal point.

Now why was that? That was certainly another emergency, to my mind a more serious one than the things we are facing now, but it did not translate into the same degree of support as today. It's still a bit of a mystery, I think something people have to think about.

Although my own guess is there was a certain degree of just general dissatisfaction because of months of having circuit breaker, having to wear masks, having to check in to go places, numbers being restricted, and so on. Maybe people were just in a bad mood, and the government took the blame for it.

But one very visible part of the government at that time was Lawrence Wong. He was basically fronting a lot of the government communications on the pandemic.

But it was obviously not held against him because he was also fronting this election, and I do think it was a good outcome. We will need this because there are going to be some complicated times ahead.

Keith

With this victory, I suppose the government has more margin for risk in their policy.

You're going to have to deal with a lot of unexpected things because most of the risks that we are going to face in the geopolitical sphere anyway are what the late Donald Rumsfeld called "known unknowns." I mean, we've gone through some iteration of them before, the geopolitical risks, but there will also be "unknown unknowns," and those are more tricky.

Those will probably come from the tariffs, although both sides are pulling back a bit if you have been following the news.

Keith 05:00:00

In 2016, you had this lecture series where you talked about our great transition into a more ambiguous world. Help us understand what do you mean by an ambiguous world?

Bilahari 05:14:00

For most of my life, the international structure or the broad parameters of international relations were defined by the Cold War between the US and the Soviet Union.

In 1989, the Berlin Wall came down. A couple years later in 1991, the Soviet Union imploded and the Cold War was over.

At that time, some people, mainly in the West, thought that this was not just a geopolitical event but something of greater universal significance—the so-called "end of history."

Now that was obviously a ridiculous idea because I don't think history has any particular purpose. It is not a teleological process that leads to some predetermined end. I think even the author of that foolish idea soon realized this.

Francis Fukuyama wrote a whole book to say that history actually ended in his very philosophical idea of the term. But the rest of us, you and me, we were too ignorant or insufficiently erudite to understand it actually ended. And then when nobody bought that particular theory, he decided to write on other things.

But a bit of that idea does linger on, much less today because it was patently obvious that even during that period, which was an important period, there were wars going on, a lot of history in the Balkans, in Africa.

And in the name of the kinds of ideas that Francis Fukuyama put out, the US fought a couple of wars in the Middle East—against Saddam Hussein and then against Assad with the help of his European allies. So it was a consequential period, but it was also an exceptional period.

It's about 10 years or more since I gave those lectures. I think you can see the glimpses of a structure approaching. It's not going to be anything like the old structure. It's not so simple that US-China relations will just replace US-Soviet relations as the defining feature, because US-China relations are far more complex than US-Soviet relations ever were.

And it's not going to be a binary world; it's going to be a multipolar world. But that new structure is still not completely formed yet. At least now, 10 years after I gave those lectures, you can see something forming. Whether it will form exactly the way you can glimpse now, that's another matter because it's still in a fairly fluid stage.

Let me take one step back. We talk a lot—everybody talks far too much—about international order, about rules-based order, or just international order. And we talk about it as if the meaning is obvious, as if like water is wet. But it isn't actually.

First of all, I think it's a fundamental mistake to think of any international order as commanding a consensus. At best it commands a partial consensus, and more often than not, it is contention between different ideas of order that defines the only order we know.

That was certainly the case for the 40-odd years of the Cold War. The Cold War was a four-decade-long competition between two ideas of international order—a Western idea and a Soviet idea. And the only order we knew was that contention and efforts to make it a bit less risky.

It was only that short exceptional period—after the Soviet Union's collapse and perhaps until the outbreak of the global financial crisis, which caused quite widespread disillusionment with American-led globalization, including among many Americans—that the fundamental truth of international relations was obscured. That truth is that conflict and competition are fundamental to international relations; they are never absent.

It was obscured for that short period because of the overwhelming dominance of the United States. Therefore, you could have ridiculous ideas like the "end of history"—only one idea of international order being propagated.

Well, I think what we have come to see now is a much more normal period of international history where again it is the contention that is going to define any order we will have.

We talk about the rules-based order—Western countries talk about the rules-based order, almost every country talks about rules-based order—but I don't think we all mean exactly the same thing by those words. Which rules are emphasized, how those rules are interpreted—these are subject to almost continual debate and redefinition.

So when an Australian says "I support the rules-based order," or a European says "I support the rules-based order," and Singapore or Malaysia says "We support the rules-based order," I don't think we mean exactly the same thing.

For example, Singapore has always been much more committed to the economic rules that govern whatever order we have. And as far as political rules are concerned, the idea or the claim that because certain ideas are universal, that gives you a voice in how I run my country—that we have always rejected. In that sense, our concept is partially closer to that of Russia or even China than to the Western countries.

So these broad terms like "international order" are the subject of contention, and the only order we know is that contention. That's not unusual for someone my age, but it may be more unusual to someone your age because you probably grew up in that short 20-year or so period where it seemed that there was only one concept of order. But even in that period, there were contentions over interpretations of what the rules were, which rules to place emphasis on, and so on.

So we are back to normalcy, actually. Now, that short period was very important. It was the period where globalization took root and grew across the world, where there was truly globalization. It was a period where, because of this globalization, new dynamics of international relations emerged.

Now we are out of that exceptional period. We are back to what is more normal. But I don't think what happened in that exceptional period is going to be entirely reversed. For example, globalization will slow down, it will become patchy, but I don't think it will be totally reversed as some more apocalyptic scenarios seem to suggest.

There's going to be a bit more protectionism around the world, but I don't think you're going to get to a state like the world got in the 1930s, which ultimately led to the Second World War. We can talk about that if you like later.

But it is a more uncertain world. Most of the uncertainties are what I said in the beginning—known unknowns.

If you consider where we are now, Singapore faces many risks. But consider where we were in 1965 when we had independence thrust upon us. What was our geopolitical situation?

Bilahari 14:34:00

We had just been asked to leave Malaysia, and the relationship was fraught with racial tension. Indonesia was still fighting an undeclared war against us and Malaysia after we left, called Confrontation (Konfrontasi).

The Cold War was very hot in Southeast Asia—in the mainland, in Vietnam, Laos, and Cambodia. Malaya, of which the Malayan Communist Party did not recognize the independence of Singapore, was fighting a communist insurgency. So too was the Philippines, so too was Thailand. They all had communist insurgencies supported by China.

In Indonesia, the Indonesian Communist Party was probably the largest party in the world at that time, and it had a profound influence over Indonesia.

In 1965, we were asked to leave Malaysia. Only three years before that, there was the Cuban Missile Crisis where the world almost came to the brink of nuclear war.

I mentioned the Cold War being hot in Southeast Asia, but that was not the only place. As part of the process of decolonization, there were numerous wars throughout the Middle East, throughout Africa, and insurgencies in Latin America.

In '65 we were independent, in '67 the Arabs and the Israelis fought a war, in '73 the Arabs and Israelis fought a war which had a profound impact on the world economy at a time when our economy was not in great shape.

Think of the world now. Is it as bad as that? It's bad. I'm not saying it's not bad, but it's not as bad as that to my mind. And we had much less capability then as compared to now, whether you're talking about economic capability or financial capability or diplomatic capability or ultimately military capability.

So I'm not saying that we should be complacent—that's absolutely not what I'm saying. We do face new risks and so on, but we have gone through worse, and here we are. So we can cope with them.

Keith 17:15:00

It does make sense that I think we are better equipped now. More resources at hand as well.

Bilahari 17:21:00

More resources, just financial resources, more human resources, more networks of connections, more military resources.

Keith 17:28:00

If I were to zoom out a little, if we would look at the US-China relations which dominates much of the discussion of international relations in terms of how we think about great power rivalry, you argue that it's wrong to frame that as a repeat or rehash of what the US-Soviet relation is. Why are they wrong?

Bilahari 17:56:00

Well, they are wrong because they focus on the superficial rather than the essential.

Look at the old US-Soviet Cold War. What was that? That was an existential struggle between two systems, two ways of organizing modern industrial society, to see which was the better way. One organized around the market and a concept of democracy that places emphasis on the individual; the other organized around the planned economy and a concept of democracy organized around the vanguard party that represents the people—doesn't give them much rights, but represents them.

And this competition was existential in the sense of "is your way better or my way better?" There's no compromise. Well, we know the answer to that because the Soviet Union is no more.

The US and China, by contrast—and the Soviet Union never played any major global role except a bit in the energy market and so on—are both vital nodes in the international global economy. And they are connected to each other and the rest of us by a historically new phenomenon, and that phenomenon are supply chains of a depth, of a complexity, of a scope, of a density we have never before seen in world history.

Now, that makes a huge difference. Neither the US nor China are very comfortable with this interdependence because it does make them mutually vulnerable to each other. And they are trying to mitigate it—the US by trying to reorient supply chains either back to the US or to friendly countries and by denying China certain technologies; China by trying to become more self-sufficient in certain technologies and trying to raise the role of domestic consumption in its GDP.

But I don't think either is going to succeed, at least not to the extent that they hope. And if you look at this latest iteration of their trade war, both of them have been quietly exempting certain commodities from each other from tariffs. China and both China and the US.

There will be separation of this system, a very dense web of supply chains, particularly at the high end—semiconductor, high-end semiconductors and so on. I cannot imagine this whole thing bifurcating completely.

And China, much as it wants to rely more on domestic consumption, has been trying actually for more than a decade, in fact if I remember the dates correctly, 15, almost 20 years, with very limited success. They are, I think, stalled out somewhere below 40% of their GDP due to domestic consumption. An economy of that size should be 50% or more, but they have plateaued at under 40%, if I'm not mistaken, at 39% for more than a decade.

Why is that so? There are technical reasons for it, but I think the fundamental reason is there is a loss of confidence in the direction the current Chinese leadership under Xi Jinping is taking China. Loss of confidence not just by foreigners, loss of confidence by the Chinese people and the most productive part of Chinese people—the private sector.

I think you know that many private sector companies are trying to get their money out of China—all over the place, including to Singapore, to Malaysia, all over the place. That's a loss of confidence because they're not sure which direction their leadership is taking the country.

Let me give you one example. The Chinese economy is not doing well; it's fluttering. The measures that they have put in to try to kickstart the economy haven't really worked to the extent that they want because it's a political issue of confidence, not a technical economic issue that can be solved by technical solutions like more stimulus and things like that.

So when was it, end of February, March, I think Xi Jinping called Jack Ma, who has been living in Japan because he got beaten up on the head a few years ago and lost confidence. He called Jack Ma back and other big private entrepreneurs to Beijing and basically said, "We need you, private sector. Please, go and do what you're supposed to do."

That's all very good, but the very next week they had a Politburo meeting, also chaired by Xi Jinping, and the main result of the Politburo meeting was, "We must put emphasis on party security." So you are sending a mixed message. On the one hand, "Private sector, you go"; on the other hand, "My main priority is party security." So if you are an entrepreneur, what would you think? You wouldn't know what to think. Which is the priority?

The answer is actually both. The trouble is they contradict each other. And this is not new. In 2012, quite some time ago, at their 18th Party Congress, the Chinese Communist Party acknowledged in public that their growth model—which had great results in the 1990s and in fact for the first decade of the 2000s—was not sustainable.

That growth model is basically a very heavy emphasis on infrastructure development, heavy infrastructure development led by state-owned enterprises and basically financed by property sales, rather inflated property sales. But sooner or later, even in a very vast country like China, you run out of productive infrastructure to build.

I mean, if you've been to China, every small town has got an international airport, there's a huge network of rails and all that. The question is, do you need all this? Up to a point, yes, you needed it, but now I think it's gone to the point where the productivity return is slower. The return on this investment is slower, and therefore there's a lot of debt building up.

They know this. They're not silly about this whole thing. So this is 2012; they acknowledge this is not sustainable in public. And the next year, they rolled out a plan that promised a more decisive role for the market in allocating resources—in other words, more economic efficiency.

Very little of that plan has been implemented. Why not? Not because they are stupid, not because they are incoherent, but because they do face a fundamental dilemma. Don't forget that China is a communist country, not maybe in its ideology anymore, but in its political structure. It is run by a Leninist party. The Chinese Communist Party is modeled as a Leninist party, and the primary value of any Leninist party is control, whereas more economic efficiency by definition means less control.

If you want more market efficiency, you've got to let go. It's not an absolute choice—you don't have to either let go completely or control everything. What's the balance? They cannot find a new balance, or they did not find a new balance, and they've been struggling with that ever since. On top of that comes Mr. Trump imposing tariffs with gay abandon.

So I don't think they are in a good situation. They're not going to collapse or anything like that, but that's something that adds to our uncertainties.

Now, I don't think either the US or China are eager to fight, whether through trade or anywhere. I was telling somebody the other day, I look at them as two huge MMA wrestlers. They have paid their money to fight and gone into the ring because the "payment to fight"—if I put it that way—is "I put tariffs on you, you put tariffs on me." So they go in the ring and they're standing there shouting at each other, snarling at each other, making threatening gestures, but they're not really eager to rush at each other to come to grips because they know both are going to get hurt.

And in the meantime, both have been quietly exempting some goods from each other from tariffs. They want to talk because they know they must talk, but they don't know how to start that without looking weak, and they don't want to look weak. That's where we are now.

This is a long way to come to why this is not a new Cold War. They are not eager to fight because they know both will get hurt. Why will both get hurt? Because they are bound to each other by this dense web of supply chains.

So they are fighting, they are competing within a system. They are not competing as two systems competing against each other to see which is the only survivor. When you're all one system, you still can compete, and it can be fierce competition, but it is not about destroying the system. It's about dominating the system. It's about maintaining your dominance in the system, preventing your rival from challenging that too much, but it's not existential because it is not about replacing one system with another.

And those dynamics are very fundamentally different from Cold War dynamics. Cold War dynamics is binary—it's you or it's me, your system or mine. We know the answer to that.

Because even China and the US—they are not a pure planned economy, they are not a pure capitalist economy. Both are what economists would call mixed economies, differing only in the proportion of the planned and the market elements. In the West, they like to call the planned elements the "regulated elements"—it comes to the same thing, like state intervention with the market.

So I think this is a fundamentally different type of competition. It is not existential. Now, that is a very important point about understanding contemporary international relations.

For 40 years, the US faced an existential threat from the Soviet Union, because it's your system or my system. That was the fundamental issue. After the end of the Cold War, the US is still engaged in a very intense competition with China, but is it an existential competition? I don't think so.

China is a formidable competitor, but it's not trying to replace one system with another. It may be trying to dominate the system or prevent itself from being dominated by the US, but it's not trying to—it's one of the main beneficiaries of this system. So why should it destroy it?

Russia is certainly an existential threat to Ukraine, but is it to the United States? I don't think so. Ditto North Korea, Iran.

The US does not face any existential threat anywhere. Therefore, why should the US, to paraphrase John F. Kennedy—President Kennedy was inaugurated in 1961 at the height of the Cold War, and his inauguration speech, made in the context of the Cold War, pledged America to "bear any burden, pay any price, fight any foe" in order to uphold international order. But if you face no existential threat, why the hell should you do that?

In other words, it's time to put America first, which every other country in the world does, by the way. So that's how I explain Mr. Trump. Now, it's not going to be pleasant for the rest of us because we got used to an America that was prepared to do certain things for us. Well, it's not going to anymore. That's the fact.

You mapped out some of the dilemmas within China today just now, and now you alluded to some of the transformations or evolution within the US, like they're no longer going to protect our interests as much as they were before. What are some of the dilemmas within America's political system now that they have to grapple with, even as they enter this new era of contestation with China?

Bilahari 31:47:00

That's a good question. There isn't much of consensus, although there doesn't seem to be much agreement in America now.

For a start, the era where America was a supporter of free trade is over. It doesn't mean that they are going to retreat into themselves. They still want to trade with people, but they want to trade with people on terms that are advantageous to themselves.

During the Cold War, America was very generous in opening its markets and so on to the world, not because of sheer altruism but as a weapon of the Cold War to make itself much more attractive than its rival, the Soviet Union. No more Soviet Union, no more existential threat—why should it be so generous?

There is a bipartisan consensus on that. So Biden's policies on that—don't forget the sequence: it was Trump, Biden, and then Trump. When Biden came in after Trump, he didn't change any of Trump's policies on trade. He extended them, in fact, especially the restrictions on exporting certain technologies to China. And Trump will further enhance that, and whoever comes after Trump—this is a new trend. It's quite bipartisan. Not very good for us, but this is a new reality.

Second, I think there is a bipartisan consensus that the main competitor that we face, the main issue that we face, is China.

Thirdly, I think there is a bipartisan consensus that, "I'm not in retreat from the world because I can't—I'm a global power—but I'm going to be very much more discriminating about how and whether I get involved in a particular issue."

"And I will expect, therefore, because I have no existential threat—it doesn't mean I'm going to ignore everything—but I will therefore respect my allies, my partners, my friends: 'You go and take care of this.' You think this is important? Oh, you Europeans, you think Ukraine is extremely important to you? I don't think it's very important to me. But if you think it's important to you, please go and take care. I'll still sell you the arms; I'm not going to give Ukraine arms free. But if you think they ought to have arms, you pay me, I'll give them the arms."

Now, this is not new either. We went through such a moment in Asia half a century ago when the US suddenly decided unilaterally, "Vietnam is not so important to me, so why should I fight a war there? Why are Americans getting killed in Vietnam?" And then they switched their policy: "I'm not going to get involved in the mainland. I'm going to be the offshore balancer." In other words, "I'm going to rely on naval power, air power from bases in Yokosuka and Guam, and to a tiny extent Singapore, where they use the Navy uses our facilities."

And so that was our Ukraine moment in Asia half a century ago. And we got used to it, and we have always spent much more on defense than the Europeans. And we have always kind of structured our relationship with the US on the basis of common interest rather than common values.

It's a delusion having common values. The Europeans happily lived in that delusion of their own creating because the values they thought were common were only common to them. I don't think the Americans ever thought, "You think you have common values with me? Maybe a few, but that doesn't mean I'm going to let you take me for a ride." And they did free-ride on America for security for 30, 40 years after the end of the Cold War.

Now, I don't think we ever made this mistake in Asia. So all in all, I think we are in better shape than other regions of the world because I think the US will still be here as an offshore balancer. We got used to it.

That means we all need the US to be around in order to have an overall balance, and we have all been prepared—all meaning former US allies like Japan and South Korea or Australia, or close US partners like Singapore and others—we've all been prepared to do what we can to help the US be here, much more than the Europeans, who thought it was like a law of nature that the US should be there.

And there has been a sign, as China has become stronger and more aggressive in the South China Sea, in the Taiwan Straits, in the East China Sea, there's been a better appreciation of what has always been a cardinal principle of Singapore's strategic outlook, and that is without the US, there's no balance.

Bilahari 37:05:00

Look at what happened. In the end of the 1980s, a combination of natural disaster—a volcanic explosion—Filipino domestic politics forced the US to leave Subic Bay and Clark Airfield in the Philippines.

And we thought, because we had always been saying that you need the US to maintain balance, we, meaning Singapore, thought it was time to put our money where our mouth is. And we offered the US the use of some of our facilities—Changi Naval Base and some others.

And we—this is 1989-90—we signed the MOU with the US to put this into effect. What happened? All hell broke loose. Our neighbors, in particular Malaysia, Indonesia, reacted hysterically—reacted as if we had conspired with the US to kidnap their firstborn child and sell it to slavery. They put huge pressure on us in order to rescind this. Obviously, we didn't.

So far, this is 1990. Fast-forward to 2019, where the MOU was up for renewal, and we renewed it. And we renewed it not as a secret act. It was a signing ceremony between then-PM Lee and President Trump in his first term in New York during the UN General Assembly.

Anyway, you can't do anything with President Trump quietly—it has to be with full publicity whether you like it or not. Anyway, it was with full publicity. What happened then? Nothing happened. Not a whimper of protest, not a sigh of protest.

And in between, we also signed what we call an SFA, a Strategic Framework Agreement on security and defense with the US that brought our defense cooperation with the US far above that of US former allies in Southeast Asia, which are Philippines and Thailand. Again, nothing, not a whimper of protest.

Now, I wish I can tell you that this is a great triumph of Singapore diplomacy, to win over our neighbors. That would be a lie. However, it is a great failure of Chinese diplomacy that scared them, that scared everybody so much that they began to realize they need the US around. And if Singapore is prepared to do this, it's a regional public good.

And at the same time, Indonesia, particularly when Prabowo became defense minister—you know, he was defense minister before he became president—has significantly improved its own defense ties with the US. Philippines have got a new president and a new attitude. Vietnam, that fought a bitter war with the US, is also doing what it can to improve defense relations.

So there has been quite a sea change in strategic outlooks in Southeast Asia, not so much because of the brilliance of Singapore diplomacy or US diplomacy, but because of the failures of Chinese diplomacy—their aggression in the South China Sea, their aggression in the Taiwan Straits, in the East China Sea against Japan has made everybody realize you need balance, and there can be only one balancer.

Keith 40:49:00

Is that aggression expected in a sense that because they are now—I mean, they've believe that they've come into a place where they perhaps are resuming their status as a great power, and also to make up for the century of humiliation. So is it to be expected that we should just expect more of this, or will we see a change in Chinese diplomacy in the way they interact with the region?

Bilahari 41:15:00

You will see fluctuations in it. The worst excesses of wolf warrior diplomacy have been calmed, but I don't think you are going to see any fundamental change of direction.

Now, I have told some Chinese friends, "I can quite understand why you use this narrative of 'I was humiliated, I'm now being rejuvenated, and I will achieve the China dream.'" But if you are a great power—because you're a big country, you are a great power. You were a weak great power; now you are becoming stronger.

But a great power needs a positive narrative. This is a negative narrative of victimhood. How do you expect other people to accept your victimhood as the basis for your great power role? It's a narrative of victimhood that is a very narrow narrative that, if anything, can only appeal to other Chinese, because why should anybody else care that China was humiliated and rejuvenated itself?

And it's almost purely negative. What do you stand for in a positive way? They don't have an answer. And actually, that narrative drives some very aggressive behavior.

Think of it this way. You say South China Sea—I just use that as an example. "All these little specks were mine since time immemorial. They were only stolen from me when I was weak. So I am just reclaiming what is mine."

Bilahari 42:44:00

First of all, that is a very simplistic narrative, but let's assume that it is at least partially correct. What does that mean? If I am only reclaiming what was stolen from me when I was weak, why should I compromise with you? Because it's mine, what you stole from me. I just take it back. So why is there any need for me to compromise with you? Why should I not be aggressive against you?

And more importantly, if I compromise with you, what will my people think of me? Because I've already told them this was stolen from me.

Now, obviously the facts of the case are much more complicated because there was no concept of sovereignty back when they say it was stolen. China was an empire, not a state. And sometime in the 19th century, after contact with the West, they just took a pencil and drew a line around where the Chinese empire was then and said, "Henceforth, this will be China." Which has caused a lot of problems for them to this day because within that line there are a lot of Tibetans and Uyghurs and other people who don't think—who have a different view. But that's another matter.

So it does drive this very assertive behavior, which shades into aggressive behavior sometimes. It does make compromise difficult except as a temporary tactical expedient. And that's the root cause of a lot of Chinese behavior that has caused a reaction, that has caused the formation of the Quad, countries taking a different attitude to what Singapore is able to do, doing things themselves with the US to bolster their defense relations.

I don't, however, think this is all going to lead to war because of something that we very seldom discuss in this part of the world, which is nuclear deterrence. The US is a nuclear weapons state. China is a nuclear weapon state—at a rather primitive level, but rapidly modernizing its nuclear force, as it should, as it ought to.

And nuclear deterrence has been proven since 1945, when the first and only time nuclear weapons went off in anger against Japan. Nuclear weapons states do not go to war with each other. It's just too dangerous.

The risk is they may find proxies, countries stupid enough to be proxies for them. I think that's very unlikely in our part of the world.

The bigger risk is an accident getting out of hand—two planes collide or something, and then emotions get riled up. It has happened before. In 2001, you may remember, a Chinese fighter jet collided with an American surveillance aircraft. The Chinese pilot was killed; the American plane managed to crash-land on Hainan Island. And after a couple of weeks of hoing and hoing, they came to an agreement and sent the American servicemen and the wreckage home.

But in 2001, the internet was in its infancy. It hardly existed in China. These days, if something happens, I don't think it's possible to contain it because of the emotions. You can't keep it secret. It will be all over social media within seconds. That will make it much, much harder to contain because people will get riled up, and then the government will have to respond to the people's feelings.

So it is a more complicated world. That's the danger. The danger is not they're going to go to war with each other.

But my main point is US-Soviet competition was one between systems, and you can at least conceive of it coming to a clear denouement. One or the other will be proved to be the better system. We know what the answer to that is.

Now, competition within a system is much more ambiguous. It's not binary, it's complex, and is much less likely to come to any clear-cut end. There will be high intensity, low intensity, and hopefully sooner or later they will cut some kind of deal with themselves.

I think they both want a deal that will mitigate some of the worse restrictions on trade between them, which affect all of us. But I don't think we're anywhere close to that, although it's become clearer they don't really want to fight with each other. They want some sort of deal.

Keith 47:52:00

There is a thesis that as Trump turns inwards or more material in the way he goes about his business internationally, that China is now maybe stepping up or trying to improve its diplomatic efforts to be seen as maybe a protector of free trade.

Bilahari 48:13:00

It's a bit ridiculous. China is still a very largely closed system. How can it be protector of an open system?

Secondly, China is not itself doing well. I don't doubt that China makes small reputational gains because of the reason you mentioned, but it's no replacement. It's no replacement.

First of all, its economy is no replacement for the American economy. Its economy is also doing badly. It needs the American economy. If things go really bad, you could have something like 12, between 12 to 20 million people unemployed in China or underemployed, and that's a huge threat to social stability. It's a nightmare for them. It's not near there right now.

On the other hand, America could be deprived of all kinds of goods, inflation may be driven up, and so on. And there's really no substitute for each other.

There are marginal gains in reputation and so on, but okay, Xi Jinping came around Southeast Asia not so long ago—Vietnam, Malaysia, and Cambodia. What did he get, really? He got a good reception, but we would have given him a good reception in any case. He's the head of state. You've got to receive him with a certain degree of respect.

Perhaps only Malaysia went a little bit overboard, and I'm told because Anwar Ibrahim was so upset with the Americans over Gaza that he went overboard. But look—in concrete terms, what did he get? Even if he got a lot, is it a substitute for—can Malaysia, Vietnam, and Cambodia, which are not all very big economies, make up for the US market? I don't think so.

He needs certain things from the US market that he can only get from the US market, which are certain high-end chips and so on. He needs exemptions, he needs things, and it is still the biggest market. I think the US market is about 15% or so of Chinese exports. I heard it was 16%, 15-16%, okay, so I'm not too off. That's quite a lot. I don't think Malaysia and Vietnam are going to make up for it.

And neither is the Global South in general going to make up for it. I think they will come to a deal, and I already see them not wanting to rush at each other. They're in no hurry to rush at each other. They've got into the ring because they didn't know how to get out of the ring because they don't want to appear weak. Now they are standing there, insulting each other, shouting at each other, but they don't really want to fight too much.

Keith 51:28:00

You previously mentioned Gaza, so I'd like to talk a little bit about it because I think it affects Singapore in a very political sense. I think it affected this election to some degree, not as much as some people feared. So if you look at something like Gaza today, and maybe we can use this to talk a little bit about Singapore's interest on the international front, but back then in the 2000s when Israel was having its attacks in Gaza, you didn't have social media, so you hear of it or you read about it, but it's not as widespread. But nowadays, you kind of literally get daily war updates on social media, so naturally it inflames certain emotions.

In that context, could you help us understand how should we frame Singapore's relationship with Israel and to what extent should Singapore be kind of politically involved in that conflict?

Bilahari 52:30:00

That's a good question, and I'll answer it.

First of all, this is the fifth conflict between Israelis and Hamas, and incidentally, it is the biggest, too. It is the longest conflict in Israel's history with any Arab entity.

But Gaza presents a series of paradoxes. It is the longest conflict in Israel's history with any Arab entity, and it is one of the bloodiest. However, in a sense, it is and remains a subregional conflict.

Every other war that Israel has fought against its Arab neighbors—in '67, in '56, in '73—the concern was that that war would spark a larger conflagration, a global war. The risk of that becoming a larger global conflagration, the risk of this Gaza war is zero.

Why? Soviet Union—I mean, there's no Soviet Union. The Russians are tied down in Ukraine. They're holding their own. China's strategic policy in the Middle East is largely performative. Nobody listens to them. It is an economic actor in the Middle East; it's not a strategic actor. It is performative.

They got together a whole bunch of pro-Palestine factions in Beijing a few months ago last year, and they all signed a declaration saying, "We'll take a common position against Israel." That thing was forgotten immediately before the ink was dry. Nobody takes it seriously, even those people who signed it.

So China is in no position, Russia is in no position. Who is left? Only the US. US sends two aircraft carriers there, bombs Houthis. It's the only one that can act there.

So the risk of this spreading outside Middle East is zero for the first time in an Arab-Israeli conflict. You look at the price of oil throughout the last two years. I was tracking it until the last month or so, and I got fed up because I didn't think it would move. The price of oil throughout this two-year war, which is usually a good indicator, has always not moved much. It's hovered in the mid-70s US dollars for Brent crude. And that's not high. Once or twice it spiked up to 80 and then came down. The oil markets don't think this is going to be a big deal war.

Even the disruptions to global supply chains because of the Houthi bombings—are they disrupted? Anything? There's no shortages anywhere because the shipping companies, having had two years of disruptions during the pandemic, which were much more serious disruptions, learned to make their supply chains more agile.

Secondly, that's the first paradox of this war—the longest, one of the most vicious, but in terms of global strategic consequences, none.

Second, the Palestinian issue is once again, as you said, center stage, but the prospects of there being a two-state solution have never been lower.

First of all, I think people in Singapore don't recognize how traumatic October 7th, when Hamas attacked Israel, how traumatic that was to Israeli society. I go to Israel very often, at least once a year, and I was surprised last year when I went. The whole society has moved rightwards because of the trauma of October 7th. There's almost no support—it's not just the Israeli right wing; the whole damn country has become right-wing. There's very little support for a two-state solution.

And who is going to be that two-state solution? Hamas is destroyed as a coherent force. The PA that runs the West Bank has been exposed as even more ineffectual and useless than it really was. So who are you going to have a two-state solution for?

You must keep the idea of a two-state solution alive because without that idea, there will be perpetual conflict. So you must. There's no prospect of it being implemented anytime soon. That's the hard fact. But you have to keep it alive.

In other words, the second paradox is the Palestinian issue has never been so prominent in international discourse, but the prospects of a two-state solution have never been so dismal. And that was one fierce, bad miscalculation by Sinwar when he attacked Israel on October 7th. I don't think he expected this outcome.

A third paradox: Israel has never been, in a way, more strategically secure. Hamas is destroyed as a coherent military force. I don't think they will ever let it reconstitute itself—ceasefire, no ceasefire. If they see a target, they'll go and kill it anyway.

Hezbollah has been destroyed as a coherent military force—still dangerous, but not in any coherent way. That pager attack basically destroyed all their command and control structure. I was in Israel when it happened.

What the Israelis were very worried about, what everybody was very worried about, because Hezbollah has something like 200,000 rockets, missiles, projectiles of various kinds, they were afraid that there would be these coordinated attacks against Israel, waves and waves that would overwhelm any air defense system. It never materialized. It never materialized because I think they have destroyed the entire command and control apparatus, literally with the pager attack, then killing all the leadership and killing any new leader that comes up, and destroying at least 80% of their stock of these projectiles. Still dangerous, but not in any coordinated way.

These two, Hamas and Hezbollah, were the forward defense of Iran. Iran shot something close to 600 projectiles at Israel. What damage did they cause? One Bedouin girl, 10 years old, badly injured, although I heard that she has recovered, thankfully. Two old Israeli women who probably couldn't get to the shelter in time, slightly injured. Some damage to one or two Israeli airfields that were, I mean, within an hour, at most, repaired. And one Bedouin man that was out in the wrong place at wrong time got killed.

That's 600 of their best rockets. In retaliation, Israel went and assassinated the political leader of Hamas in the middle of Tehran, knowing what exact room he was in. What does that mean? It means your entire system is penetrated.

And in retaliation for something else, the Israeli air force went and destroyed all the best, the most advanced Iranian air defense systems, which were all located near their nuclear facilities. In other words, "You cannot defend yourself anymore, and I know where your stuff is." Stop that.

So Israel has never been more secure. Because of this, and by the way, Israel took the opportunity to go and destroy what was remaining of the Syrian army's stocks. And there's no more supply route to Hezbollah or Hamas—land supply route—because Syria is not in hands friendly to Iran anymore. And the Israelis have taken part of the Golan Heights because that's their buffer, and other people have buffers.

On the other hand, Israel has never been more internationally isolated. Now, mind you, I think they don't particularly care because after October 7th, the issue to them was an existential one: "I must restore deterrence, not just against Hamas or Hezbollah, but their master, which is Iran, because that is an existential issue to me. There's no cost you can put on me that will deter me from doing this."

And in fact, the more the United Nations and other people shout at me, the better for me, because I never forgot what one of my Israeli friends long ago, not vis-à-vis this war, he said, "Bilahari, you are very fortunate in Southeast Asia. You can deter people by signaling. But we live in a region where the only signal they understand is periodic shedding of blood. And if you deal with barbarians like Hamas—it is a terror organization that murdered infants, murdered children, murdered old people on October 7th—then the fact that I am prepared to do whatever I need to do, even though the whole world is shouting at me, helps restore deterrence."

But they are isolated, and they will pay a price for that. But not now, because when you are faced with an existential threat, first you deal with the threat, and then you worry about everything else. You can't do everything at once. That's a fact of policy life.

The third paradox of this whole thing is that Iran has been totally exposed as ineffectual, which I for the reasons I explained just a moment ago, but Iran has never been more dangerous. Because if I'm an Iranian general, "Oh my God, all my conventional weapons, my best conventional weapons don't work. I'm totally penetrated. My air defense systems are all destroyed, the best ones. What is my conclusion? How do I ensure there's no regime change in my country?" Because I'm a Revolutionary Guard general, my fundamental mission is to prevent regime change. "I must have nuclear weapons." That's the only possible conclusion.

You want to negotiate with us and so on—that may be okay. I'm prepared to delay this some years. So whether it will work or not, I don't know.

I am quite convinced personally that there will be, sooner or later—I don't know when—a big war in the Middle East. But that war will be fought over the issue of Iranian nuclear weapons, not Palestine.

Palestine is, in fact, not very important to most Middle Eastern countries, particularly the Arab Gulf states. It is for them a domestic political issue that they have to manage because their people are upset. But I don't believe the governments are so upset. Hamas and Hezbollah are equally threats to the regimes in Riyadh, in Abu Dhabi, in Cairo, in Jordan, in Amman—in fact, maybe bigger threats.

So I don't think they're crying themselves to sleep that the Israelis have gone and killed these people. Their only concern is how do I manage the emotions of my own populations? Because my priority is not the Palestinian issue. My priority is how do I remake my economies after the Arab Spring to make them more viable. And how can the Palestinians help in that? Palestinians are irrelevant to that. Only Israel could possibly help because Israel is a technologically advanced country.

No Arab country that recognize Israel has broken diplomatic relations over this war. And the Saudi Arabians were on the verge of recognizing Israel, and I think that's one of the reasons why Hamas attacked on October 7th—to derail that. I don't think it has derailed that, but I think—I've told my Israeli friends and I have told some Saudis—what you need is a Palestinian fig leaf, some kind of arrangement that will allow the normalization process to go forward. And it will go forward sooner or later.

Now, all this is a very complicated issue, but in this part of the world, not just Singapore, I think Southeast Asia, it has been over-reduced to a very simple humanitarian issue. And it is a humanitarian issue, no doubt, and we do provide humanitarian aid and so on.

I was asked in a different podcast some time ago when this thing first started, "What would you say to a young Singaporean who is very upset, rightly so, about what's happening in Gaza, so many civilians being killed and so on? What would you say to them?"

He said, "You know, we should break relations with Israel so that we'll be on the right side of history."

I thought a bit, and I'll tell you what my answer then was, and it's still my answer. My answer was: First of all, grow up.

I would break—let's say I have the power to do it, I am the dictator of Singapore—I would break diplomatic relations with Israel like that, in a heartbeat, provided you guarantee me that the day after I break diplomatic relations with Israel, the Israelis will stop doing whatever upsets you in Gaza. That they take notice, that the Israelis say, "Oh my God, the Singaporeans broke relations with us! I never thought of that. I better stop doing all these things." Is that viable? It's nonsense. That's why I say grow up.

If you just break relations, you will feel good about yourselves for five minutes, if that long, and then you will start thinking, "What have I lost?" What have you lost? There's a lot of cooperation we have with Israel, not just in defense, in research and development, our universities, and so on. Is this how adults behave?

We don't think that everything Israel does is good, and we make our views known at the UN, bilaterally. We tell them, "We think you have gone too far." But they don't take any notice of us. They don't take any notice of anybody. They only listen to one country, which is America. As long as they have American support, they will do what they need to do.

We can make a gesture and break diplomatic relations, but we are really just cutting off our nose to spite our face without achieving anything real. So that's what I tell people.

I can understand why people, young people, whether they are Muslim or non-Muslim, are upset because it's always upsetting to see people being killed. But why are so many civilians being killed? Yes, Israelis have been a bit careless—that's true—but also because Hamas has deployed its military assets in the middle of civilian infrastructure as a tactic, in hospitals, in schools, in mosques. It's a tactic. This is a very vicious war.

Keith 01:09:45

If we were to zoom out and use that as a case study, how then do we understand what Singapore's interests are?

Bilahari 01:09:52

Our interests are to maintain relationships with both sides if possible—with the Arabs and with the Israelis. I never hear any Arab country telling us to break relations with Israel, because they haven't themselves. I only hear some Singaporeans saying, as a moral gesture, we should. But moral gesture to achieve what?

Keith 01:10:17

So we should be cool and calculated in the way

Bilahari 01:10:24

That is what foreign policy is about. Foreign policy is not about feeling good; it's about doing good and doing good to your own people.

There are—I'll just mention—we do R&D with our universities, for example, with Israel. Why should they do it with us if we break diplomatic relations with them? There are all kinds of things that we can do.

So I can understand the emotion. I perfectly sympathize with the emotion. In fact, that's why I said if you guarantee me that the day after we break diplomatic relations with them, they will, you know, they will come to their senses and say, "Okay, we better stop fighting in Gaza." Never mind they killed so many of our people also. Come on, get real.

Then how do we define Singapore's core interest globally, not just like—maybe because I think, for example, this issue came up again in our local politics.

Bilahari 01:11:26

Yeah, yeah. It didn't work as well as those rather mischievous people who brought it up had hoped, because it's an issue that people can—everybody should have a view on this, can have a view on this—but we must not forget what our national interests are.

Our first national interest is to maintain social cohesion. Then there are more tangible issues to preserve the R&D and so on.

But I think we have done well, because, you know, look, as I said, I have not met a single Arab country or friend or diplomat who has said that you must break diplomatic relations with Israel. It's only our own people who think so, and some extremely capable people across the causeway who are trying to influence our election that way.

So I think people should grow up. And these people who are trying to influence us—outside people—do not have our own interest at heart.

Keith 01:12:29

If I may, could you help me understand a little bit more about what makes Singapore so exceptional, not in the sense of like the economic data or the GDP numbers, but in terms of like its DNA as a country?

Bilahari 01:12:46

Remember that Singapore did not think it could be independent by itself. Lee Kuan Yew, Goh Keng Swee, all these people are on record—the first generation. So they sought independence within Malaysia as part of the creation of Malaysia. It didn't work out. It didn't work out. Why? It didn't work out because our idea of how Malaysia should be organized was very different from the idea of how the Malay Malaysian politicians thought it should be organized.

They thought it should be—the Malay Malaysian politicians thought that it should be organized on the basis of Ketuanan Melayu—Malay political dominance—enshrined in the Malaysian constitution. And from that, many things followed: the Bumiputra policy, preferential education admission, and so on—affirmative action, preferential access to capital for Malay entrepreneurs, for example.

Whereas we believe, perhaps very naively at that time, that Malaysia should be organized on the basis of multi-racialism, where all Malaysians, regardless of ethnicity or religion, should be equal.

Well, these two ideas—Ketuanan Melayu and multi-racial, meritocratic Malaysia—proved to be totally incompatible, and we had to leave. Otherwise, there could have been bloodshed.

Now, having left, the road was very perilous. We had no military capability except two battalions—light infantry battalions, 1 SIR and 2 SIR. And to our horror, we found that at least half, if not more, of the soldiers were Malaysians—they ran off. We were totally dependent on Malaysia for water, and we had no military to defend the water. And our whole economy was based on being an entrepôt for Malaysia. And they thought, because of these three things, we'll come crawling back on their terms this time.

Well, it didn't work out that way. We built an armed force quickly with the help of the Israelis—something not to be forgotten. And that secured us water, because water is life and death. And then we plugged ourselves into the global economy, even before there was a global economy. And then our relationship with Malaysia became one of interdependence, not dependence.

And all that was done with some degree of luck but a lot of good leadership, and the government and people working together as a cohesive force.

Now, I think the challenges we face ahead are not going to be so drastic, but they are going to be bad enough. And again, we need to have a cohesive Singapore—government and people. Don't have to agree on everything, but agree on certain basic things.

You saw what happened in our election. Three PASIR parties were telling one part of Singapore—Muslim Singapore—should vote against the PAP because they are Muslims. More or less, that's what they were saying wrong.

Lawrence Wong had to stop his own campaign and come out and make a speech and say that we will have to decide these things ourselves. We do live in an Asia of identity politics. There is a long, strong current of opinion in China that all overseas ethnic Chinese—not Chinese citizens—should support Xi Jinping's version of the China dream. There are certain kinds of evangelical Christianity that say this is a higher commitment.

And you can find any kind of thing. This is an age of this kind of identity politics. You can't get away from it. You can't draw a line, build a wall around Singapore to insulate ourselves from it. So you have to deal with it. And that is essentially a domestic political problem.

If you can deal with this domestic political problem—and I think so far we have dealt with it, we have the instruments of POFMA and God knows what else will come out—we can deal with it.

Then we can deal with the external environment. If we can't deal with this, then everything gets much more complicated and may even get our heads.

So that is our fundamental national interest.

It is actually a domestic interest—the social cohesion and the idea of social cohesion based on the idea of multi-racial meritocracy. Because you can have social cohesion, in principle, based on hierarchy, or one religion, or one ethnicity, or one something.

Keith 01:17:56

Advice For The Young.

My last question for you actually is: given the context of this transition into an ambiguous world that we're living in, what will your advice be to young folks like myself who are just maybe entering into the working world?

Bilahari 01:18:08

Take an interest in the world. Read widely. I don't mean by "read" just Google and see what came up first, or use ChatGPT. It's a useful tool, but it's only a tool. Read widely, read history, keep yourself alert to what goes on.

Try to diversify—I know this is a counsel of perfection—try to diversify your sources of information beyond social media and beyond the usual search engines. Read books, because it's a different experience at all.

I do find, even in myself—because I read most newspapers now online, I subscribe to a lot of newspapers, but I read them online, simply because it's easier to carry around with you instead of a whole sack of newspapers—but I do find that the more you read things online, the shorter your attention span becomes. I find it as a physical phenomenon.

So I often wonder—and I still read a lot of books—if it happens to me, what does it happen to younger people whose main consumption is that? So read widely through a variety of mediums, and just keep yourself interested and think about what you read.

I think definitely you would not fall into that trap, but I'm constantly surprised at how many ostensibly well-educated people come and tell you something or some version of this: "You know, it must be true; it was on such and such platform." No, sorry, it might not be true because it's on such and such platform. It might be true, but so you counter-check sources.

But keep interested. You will only do all these things, take this trouble, if you are interested in a subject. And remember, even if you're not so interested in international affairs, sooner or later, international affairs is going to take an interest in you.

Keith 01:20:18

True words. Then now I have to ask, what's the one book you recommend?

Bilahari 01:20:25

It sounds very partisan, but it isn't, because it is a good book, and it helps you understand Singapore. You have to understand your own country to have some kind of yardstick to understand the world. The second volume of Lee Kuan Yew's memoirs, "The Singapore Story." If you can read another book, go and read his "Hard Truths to keep Singapore Going"

Books are international, hundreds and thousands, most of them a waste of time.

Speaker 1 (Keith) 01:21:04

All right, with that, thank you for coming on our platforms once again. Thank you.