By Lee Yock Suan
Minister, Prime Minister's Office and Second Minister for Foreign Affairs
Republic of Singapore

Houston, October 28, 2002

Ladies and Gentlemen, Distinguished Guests,

It is a pleasure to be here in the great state of Texas. I thank Asia Society Texas for this opportunity to address you.

The Lone Star State has strong links with my part of the world. Global players such as Compaq and Unocal have been in Southeast Asia and Singapore for decades. ExxonMobil is the single largest investor in Singapore. And Texan exports to ASEAN amounted to US$3.4 billion last year. Developments in East Asia will, therefore, have some impact on you.

This evening, I wish to share my perspective on two key trends in East Asia - one positive, and one negative:

• First, terrorism in Southeast Asia; and
• Second, the trend towards East Asian regionalism.

The whole world watched in horror the tragic events of 9/11. Now, in Bali, terrorists have killed about 200 people and injured many more. Most of those killed were vacationing Westerners.

These two horrific acts show the extent of Al Qaeda's reach, and its evil.

In Singapore, we too, have come face to face with this evil.

We have uncovered a clandestine network called Jemaah Islamiyah (JI), meaning 'Islamic Group', with deep links with Al Qaeda. The JI in Singapore is part of a larger regional network whose base is in Indonesia. The network also has cells in Malaysia, the Philippines and Australia. Their goal is to form a pan-Southeast Asia Islamic state stretching from Malaysia, through Indonesia, to southern Philippines, and including Singapore and Brunei.

We arrested 13 members last December. They were supporting an Al Qaeda plan to bomb American interests in Singapore.

Their plan was to pack 21 tonnes of ammonium nitrate into seven trucks and drive them into American targets, including the US Embassy. When we caught them, these terrorists had already acquired four tonnes of ammonium nitrate. Four tonnes of ammonium nitrate has more than twice the destructive power of the bomb that brought down the Federal Building in Oklahoma City. Thankfully, our security agencies disrupted their plans.

Two months ago, we arrested another 21 Singaporeans for terrorism-related activities. 19 were JI members, while the remaining two were linked to a Philippine terrorist group.

This group's plan was to create an Islamic state in Malaysia through a contrived conflict between Malaysia and Singapore, as a step towards their vision of a pan-Southeast Asia Islamic state. They hoped to develop a situation conducive to overthrowing the Malaysian government. They would blow up strategic targets like Singapore's water pipelines carrying water from Malaysia, and present these as acts of aggression by the Malaysian government. They believed that this would provoke Singapore to retaliate.

The fight between the two countries would then be portrayed as a fight between a "Chinese Singapore" and an "Islamic Malaysia". They believed that this situation would make Muslims respond to the call of jihad, and turn Malaysia and Singapore into another Ambon. Ambon is a city in eastern Indonesia. Christians and Muslims had been living peacefully in Ambon for centuries, until militant Muslims from outside the city came in, and escalated local quarrels into a bloodbath.

We were surprised that a group of terrorists linked to Al Qaeda could be found in Singapore. They were not uneducated, poor or marginalised. They owned homes, and were English-educated and employed. Some had university or technical college education. We found out after investigation, that they had been brainwashed by extremist religious teachers from outside Singapore.

With the recent arrests, we have severely disrupted the JI operations in Singapore. We have crippled their ability to do mischief in Singapore.

Unfortunately, the leaders of the regional JI network, and the JI cells in some other Southeast Asian countries, are still active.

The threat of terrorism in Southeast Asia does not come only from the JI. There are several other terrorist groups in the region, including the Kumpulan Mujahideen Malaysia and the Moro Islamic Liberation Front in the Philippines. They too, have links with Al Qaeda.

A terrorism expert now working in a Singapore think-tank had warned before the Bali bombings that terrorists were shifting their theatre of operation to Southeast Asia, on the following grounds. Thanks to American military action, the Taleban in Afghanistan has been routed. The tough measures adopted by the ruling regimes in the Middle East and Central Asia are also making it difficult for terrorists to operate there. This has driven the Al Qaeda to branch out and establish beachheads in new locations. Al Qaeda believes that Southeast Asia offers soft targets, because of its large Muslim population, and also because the security agencies in some of the countries have not been very effective.

But let me assure you that we have no intention of allowing Southeast Asia to be turned into a theatre of operation for terrorists. Individually, countries like Singapore, Malaysia and the Philippines have taken tough action against terrorists. I believe, after Bali, that Indonesia will also begin to take tough action. At the regional level too, ASEAN countries have strengthened their efforts to counter terrorism. For instance, ASEAN has implemented practical measures to enhance counter-terrorism co-operation, including the sharing of intelligence and working with external partners to counter the threat.

In working with external partners, the role of the US is especially critical. Whatever happens in Southeast Asia will have an important impact on the US-led campaign against terrorism.

In this regard, I am pleased that in August this year, ASEAN and the US signed a Joint Declaration for Cooperation to Combat International Terrorism. The US has also been sharing counter-terrorism intelligence.

But terrorism is a global problem which we need to fight not just with guns, but bread and butter as well. Investors have a role to play. Terrorism feeds, among other things, on impoverished grounds, while economic progress contributes to social stability. We hope you will continue to invest in Southeast Asia as we in ASEAN work with the US to eradicate the terrorism problem. If you do not come to Southeast Asia, we will fall into the trap of these terrorists. They will be more difficult to defeat.

You should also not allow the spectre of terrorism to cloud your view of positive transformations in wider East Asia. You must look beyond the negative headlines to see the region's true potential.

This brings me to my second subject of East Asian regionalism.

One of the positive effects of the 1997 financial crisis was to stimulate a nascent sense of East Asian regionalism. It brought ASEAN as a grouping closer together, as well as Northeast and Southeast Asia. Intra-East Asia trade as a share of its total trade has increased significantly, from 42% in 1990, to 50% last year. The emergence of China as an economic dynamo in the region has also quickened the pace of economic restructuring in East Asia in general, and ASEAN in particular.

ASEAN was seen to be ineffective in dealing with the 1997 financial crisis. However, after some initial stumbling, ASEAN has now gotten its act together. Rather than back-pedal on economic reform and liberalisation, ASEAN has accelerated the pace of economic integration and co-operation.

For example, the ASEAN Free Trade Area (AFTA) will come into effect on 1 January 2003, five years ahead of schedule. Tariffs on 95% of goods entering the original six signatories of ASEAN (Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand) will be lowered to between 0 and 5%. ASEAN has resolved to move even further in the liberalisation of the goods trade. The ASEAN-6 has committed to remove all tariffs on intra-ASEAN trade by 2010. ASEAN has also moved forward on many other integration and co-operation initiatives like the ASEAN Investment Area (AIA), which binds ASEAN countries to eliminate barriers to intra-region investment. These initiatives are bringing ASEAN closer together as a single market.

Externally too, ASEAN has been active. It has been strengthening its economic and strategic linkages with major trading partners in East Asia. Last year, Japan and Singapore concluded a free trade agreement (FTA). Several other East Asian countries are engaged in exploratory talks on bilateral FTAs, including Thailand and the Philippines with Japan.

And last November, China and ASEAN agreed to pursue an exciting initiative - the ASEAN-China FTA. When realised, it will create the single largest FTA in the world in terms of its combined population of 1.7 billion. It will have an aggregate GDP of almost US$2 trillion, and two-way trade worth US$1.2 trillion.

Also, early next month, Japan and ASEAN leaders are expected to endorse a recommendation to start negotiations on an ASEAN-Japan Comprehensive Economic Partnership (CEP), which includes elements of an FTA.

There is more. The competitive dynamics arising from China's and Japan's courtship of ASEAN is spurring Korea to consider how to deepen economic integration with ASEAN. And in recent years, there has been more active discussion of a Northeast Asian FTA and a wider East Asian FTA, even though these ideas are still a long way off from materialising.

All these FTA initiatives will make ASEAN an integral part of a larger East Asian economy that is envisioned to have a combined GDP of more than US$3 trillion by 2010, exceeding that of the EU.

At the political level too, ASEAN has institutionalised links with Northeast Asia through the ASEAN+3 process. Leaders of ASEAN now hold annual Summit level meetings with their counterparts from China, Japan and South Korea.

These are some of the regional integration initiatives underway in East Asia. We will see more as China, Japan and Korea entrench their interests in Southeast Asia, and continue to build more positive relationships between themselves. Slowly but surely, we are seeing the emergence of an East Asian community.

The US should play a leadership role in this East Asian regionalism. It is, in fact, a strategic opportunity for the US.

The US has a long history of engagement with East Asia. After World War II, the US constructed and maintained the post-war international order that allowed East Asia to flourish. The US maintained an 'open-door' to China, twice transformed Japan, and spilled blood to hold the line against communism in Southeast Asia.

For more than half a century, the US military presence helped to underpin regional stability, creating the conditions for growth. US investments into the region contributed too, in no small measure, to our growth and prosperity. The US has had a profound and positive impact on the development of East Asia.

Today, America's status as a key ASEAN dialogue partner and critical player in the ASEAN Regional Forum entrenches the US presence in the region. The US also has a solid economic presence. ASEAN, for instance, is the third largest overseas market for the US after NAFTA and Japan.

Looking towards the future, ASEAN can provide the strategic foothold for the US in the emerging East Asian regionalism. The first step towards this strengthening of the US position in the region has already been taken. I am referring to the US-Singapore Free Trade Agreement (USSFTA). Negotiations are in their final stages. There is a good chance that the deal will be wrapped up soon.

You may wonder about the significance of an FTA with Singapore. Singapore may be a tiny country but we are not insignificant as an export market for the US. Tiny Singapore with a population of just 4 million buys more from you than Italy, Australia, Brazil or Chile. We are your 11th largest trading partner.

But the real significance of the USSFTA goes beyond economic benefits. In the light of the strategic trends I sketched earlier - terrorism in Southeast Asia and East Asian regionalism - concluding the USSFTA sends an important signal that the US intends to remain a dominant player in East Asia.

Strategically, the USSFTA complements ASEAN and your treaty relationships, giving the US an institutional foothold in the emerging East Asian regionalism. This will place the US in a unique position to influence East Asian events and developments, as well as opinions and attitudes.

Moreover, by demonstrating the benefits of stronger trade relations, the USSFTA could lead to more FTAs between the US and ASEAN countries. Thailand, the Philippines and, I believe Malaysia also, have expressed interest in concluding similar agreements with the US.

In this regard, just a few days ago, at the APEC Leaders' Meeting in Los Cabos, President Bush announced the launch of the Enterprise for ASEAN Initiative (EAI). The ultimate objective of the EAI is a network of bilateral US-ASEAN FTAs. Viewed against the ASEAN-China FTA and ASEAN-Japan CEP, this US initiative will complete the triangular equation of strategic balance between the three powers in Southeast Asia. It will also give a major boost to ASEAN's outward-looking strategy of pursuing deeper economic integration, including through closer linkages with its major trading partners.

Let me conclude.

In the immediate term, Southeast Asia will inevitably assume a prominent role in the global campaign against terrorism. The US and East Asia must co-operate to root out terrorism.

This war against terrorism will be a long-drawn fight. It may last many years. But it is my strong conviction that the terrorists will not win. They do not have the same wherewithal as the US and its counter-terrorism allies. In the short term, they can cause problems for us. But in the medium and long term, we will win.

In the meantime, we must not allow these uncertainties to blind us to opportunities arising from other positive trends, in particular, East Asian regionalism.

The US has played a critical leadership role in East Asia for the last 50 years. We in Singapore want the US to retain this active leadership role. To do so, the US must continue to constructively engage the region. This will position the US to ride the wave of East Asian regionalism, and benefit from the opportunities and prosperity that will arise.

Thank you.