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Prime Minister Lee Hsien Loong sat down for an interview with the Editor-in-chief of Asia Nikkei, Tetsuya Iguchi, for a wide-ranging interview ahead of his trip to Tokyo, Japan.
In the interview, PM Lee discussed various topics, from the war in Ukraine to the competing influence of China and the U.S. in the Asia-Pacific region.
Russian invasion of Ukraine should not be framed as a struggle for democracy
On the unprovoked invasion of Ukraine by Russia, PM Lee reiterated a point he made previously in a dialogue with the editorial board of the Wall Street Journal -- framing the war as a struggle between democracy and autocracy complicates the problem.
One major consequence is that such a stance puts China in the "wrong camp", and dissuades them from denouncing Russian aggression. However, China would be more amenable to an argument based on sovereignty and territorial integrity.
In the Nikkei interview, PM Lee addressed Iguchi's conjecture that the confrontation between democracies and so-called authoritarian countries has become "sharper" since the invasion, and stated:
"I would not put this as an issue between democracies and autocracies. Because what is at stake in Ukraine is the international rule of law, the U.N. Charter, and that's why Singapore is standing.
If you frame this as democracies versus autocracies, you're setting yourself up for an unending war of good against evil. And I don't think that is a wise step to take."
Unacceptable move by Russia
Still, PM Lee said the invasion did not just cause rising tension and anxiety, but also "righteous indignation" that Russia violated the international order, specifically the sovereignty and territorial integrity of another state.
"This is not something which we can just -- countries can just allow to pass. So that's a very serious, ongoing problem," he added.
Singapore was the first Southeast Asian country to take concrete action against Russia following the invasion, imposing export controls on items that could be used as weapons, as well as blocking certain financial transactions.
Maintaining the global rules-based order
To maintain the rules-based order, PM Lee said it is important for countries to hold up existing international frameworks such as the United Nations, World Trade Organization, World Bank and the International Monetary Fund.
He pointed out that these institutions enable countries to work together even if they have disagreements.
"If you remove that, or you undermine that, then you're in the law of the jungle. And in the law of the jungle, it's not only the weak who will suffer. Even the strong will have a rough time because you will be spending all your time fighting one another and dissipating valuable energies."
PM Lee also made the point that countries should abide by international rules like the UN Charter and the UN Convention on the Law of the Sea, even if bigger powers chafe at having supranational bodies having authority over them.
He added that people have to recognise that this is a "real world", and therefore in addition to the rules, there should also be a "balance of power on different forces". In that balance, other countries will be able to "find a perch" and work with multiple partners.
Challenges facing the Asian economies
When discussing the state of the global economy, and of Asia in particular, PM Lee noted that inflation is a persistent problem.
He observed that economic stimulus measures implemented by governments in the wake of Covid-19 contributed to a spike in inflation even before the Russians invaded Ukraine, and commented that they were applied "very generously, I think for political reasons".
With Russia under heavy sanctions, the situation is made worse as energy supplies are disrupted, and food supplies such as grain are also choked off due to Russia's blockade of Ukraine's ports, adding a supply-side inflationary shock.
The need to bring down inflation
PM Lee acknowledged the risk of central banks trying to end high inflation, which is provoking a possible recession.
"The difficulty is that now that inflation is quite high, you need quite drastic measures in order to bring it back down and prevent inflationary expectations from taking root.
It is very difficult to do that and have a soft landing. There is a considerable risk of doing what you need to do but as a result provoking a recession."
However, he said this is a risk which the world has to "anticipate and watch out for", and added, "You will have to take that risk because if you do not act against inflation that will become a very serious problem for the world."
Still, PM Lee feels that the issue of Asia's expanding external debt is "not as severe a problem" as it was before the Asian Financial Crisis of the late 1990s, as a lot of this debt is denominated in domestic currency, not in U.S. dollars as before. Therefore, he feels that an emerging markets financial crisis is unlikely.
However, he warned of rising food and fuel prices causing inflation and hardship.
US-China competition in Asia
As ever, PM Lee was asked about China's growing influence in the Asia-Pacific region, and the possible response by both the U.S. and Japan.
PM Lee said that the growth of China as the biggest trading partner of almost every country in Asia and its systematic engagement with the region has been a "positive development".
"We think that this is positive, because it's far better that China is prospering and engaged in the region than that it be operating on its own outside the rules which apply to everybody else, and not properly integrated and coordinated with the rest of the region, or that it is unsuccessful and poor and troubled, and that can cause a lot of difficulty for the region too."
On the other hand, PM Lee also acknowledged the importance of ties with other powers, including Japan, whom he observed was the "biggest [economy] by far" when compared to other Asian countries excluding China.
U.S. engagement in the region
He noted that the U.S. has a "big stake" in the region with substantial direct investments, and a lot of trade with China actually goes to the U.S. through intermediate goods.
And while the U.S. may not rejoin the Trans Pacific Partnership (TPP), nor join the follow-up agreement Comprehensive and Progressive Agreement for TPP (CPTPP), the new proposal for an Indo-Pacific Economic Framework is a "forward-thinking agenda", if not quite a substitute for the previous trade agreements.
"It is a... valuable sign that the Biden administration understands the importance of economic diplomacy in Asia and so we should support them and hang in.
And we hope one day that the political situation in America will enable them to resume talking about an FTA in some form, and talk about market access. But it may be some time."
The framework also includes items which are of interest to the region, such as supply chains, the digital economy and cooperation on the green economy.
Read more on PM Lee's interview here
Top image from PM Lee's Facebook via MCI.