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With no further waiting, let's get Dr. Vivian Balakrishnan up here as Singapore's foreign minister. Thanks, Lee. Uh, I just... Okay. Um, there was so much that the Deputy Prime Minister said there that that that just made me actually just change all my notes straight away. Um, we have to reconfigure. We have to look at the complexities. There are difficult questions. The systems are more complex. Trusted partners underpinning, we need to look at those. We need to execute clear strategic decisions. Uh, trust has to be built, can't be assumed. All of that, um, relates to foreign policy. How are you reacting to the current situation, sir, and building up those longer-term priorities?
Well, I like to keep things simple. First point, choke points matter. I think what we're witnessing now is a perfect worked example. Choke points, physical delivery, reliability matter. The second way to understand the state of the world is we're witnessing the weaponization of interdependence. Globalization, economic integration, world markets are based on interdependence, on connectivity. What has changed is that that very interdependence, which was supposed to be a source of efficiency, peace and prosperity, in fact has now been weaponized. And that's the second point you need to understand, the weaponization of interdependence. The third point is what you just referred to in in in you when you quoted Mr. Lee Kuan Yew. It's very important to understand what has changed not on a daily tactical basis, but at a strategic level. And I would put to you what has changed since he made that quote is China's position economically, strategically. What has also changed since 2009 is the simultaneous revolutions in AI, biotechnology, and in energy. And we should be focused on the long term, and not just on the short-term vibrations.
Let me pick up on that key point you just raised. And by the way, I'm not ignoring you lot over here, if you don't mind. I'll I'll but I will refer to you all as well. It's a very simple question, but I don't know if you have a simple answer. I'll try. Who is weaponizing that independent interdependence? Because we look at both parties here, and it is not a simple world as perhaps we in the West as incredible countries such as Singapore in Asia would have seen it originally. Who is weaponizing that interdependence? The more important question is why. My theory is that it is domestic discontent with the outcomes of globalization 1.0. >> Yeah. Inequality, jobs, rust belts, prospects for the future that is driving a repudiation of globalization. So, it's not just who, but it's why. I'm making the point that it is domestic politics that is fueling this disruption on a global stage. First point. Second point, there is the old model was underwritten basically by the United States of America. And the superpower that underwrote this has now decided on a more narrow definition of national interests, more short-term, more reactive, that it wants to in fact be the great disrupter of that same system. But it's important in foreign affairs not to engage in personal pejorative labels, but to understand why politicians say and do what they do.
Singapore's foreign policy is built on many tenets. And if I may just go through those briefly, I'm I'm Dr. Balakrishnan knows them, but maybe some of us don't here. Fundamental objectives: protect independence and sovereignty and territorial integrity, secure access to existential essential supplies and keep air and sea lines of communication open, expand economic opportunities, and maintain relevance in the world. Yes. Is it difficult now, given what you just said, primarily about the United States, is it difficult to stick by those three core principles when the guarantor of those principles and now has more narrow interests? It is far more difficult now. But I would make the additional point that it's all the more vital that we double down. Let Let me put some meat on that frame. We're all worried about choke points. Well, it just so happens we are located at a far tighter choke point just south of here, the narrowest choke point for the Straits of Malacca and Singapore is two nautical miles. The Straits of Hormuz is 21 nautical miles. But it is also worth reflecting what you look you see in Singapore is not a choke point, but a hub. Because of our geography, our trade volume is three times our GDP. We are the sixth We are the world's largest bunkering port. We are the sixth largest refining and petrochemical center without a drop of oil or gas. The point I'm trying to make is that in fact our status as a hub is profitable, but more than that, it also has positive externalities for us. For instance, if you think account of all the trade flows, including food, energy, if you think about the manufacturing in Singapore, petrochemical refined pet products, you think about semiconductors, you think about pharmaceuticals. Do you realize we produce and we trade far more than we consume. That's a positive externality to that. Next point is therefore, if we're going to keep this happy story going, do you understand why we invest more than 3% on defense, and why sea and air lanes of communication will be protected, and why we are obsessed with keeping it open. Otherwise, you wouldn't even have this beautiful structure here.
Um, I was going to bring up the Strait of Malacca and the Strait of Singapore. And I had the same uh statistics. Less than two nautical miles at its narrowest point. Yes. Far more trade, as you all know, goes through the Strait of Malacca It's about than goes through the Strait of Hormuz. Could be a factor of 40%. By multitude. Yes. But you've also just mentioned in one of your earlier answers the rise of China. Yes. And I want to tie those two things to In fact, I want to tie three things together. The US hegemony and perhaps leadership globally stepping back, the rise of China, fact to number two, and your concern that these choke points, these straits, your words, are a right to navigate, not a privilege. Yes. >> If I tie all that together, this could be very concerning for Singapore and countries in the region. It is, but on the other hand, if we ensure that it does not become a choke point. If we continue to ensure that our hub status is protected, that we produce and trade far more than we consume, and the other point is the keyword trust. And let me translate that trust into business terms. Trust is basically a way of lowering transaction costs. Being predictable, being boring, being reliable, being trustworthy has got real value. So, for instance, that's why if someone comes to me and says, "I want to negotiate with you a toll." I'm going to say nothing doing. I'm not going to negotiate with you on that point. But when someone comes to me and say, "I would like to negotiate a legally binding protocol on trade in essential supplies." Well, that's why we just settled with Australia last Friday. That's why we have a same agreement with New Zealand, which we did in October 2025. That's what we are currently working on. So, it's not that I'm not negotiating, but I'm focusing on building up reliability. And as long as you don't panic in a crisis, that's worth far more advertisement and airtime on CNBC. I'll give you one more example. In 1973, the oil embargo, Mr. Lee Kuan Yew called all the oil majors in Singapore. Said, "Look at your storage tanks. We're not going to touch a drop of that. If we need anything, we will pay you full market price. If they're going If there's going to be rationing, we will take our share of rations. Simply not panicking in a crisis is worth a lot, and that is the reason why our refining capacity and petrochemical sector took off. So, I'm also focused on establishing that reputation for not panicking and being reliable and trustworthy in a crisis. And if we get through this, we'll be an in an even better, stronger position.
>> I don't like the if bit of it, so we will get through it, hopefully. So, so we will. Um, but I don't want to be too complacent about Singapore emerging. >> No, I I And look, we were both I hope I'm not being indiscreet. We were both talking to our our teams and looking at our phones and just making sure what the latest news was before we came on because as you know, the US president spoke to CNBC yesterday and said there'll be no extension of the ceasefire. Later on, he posted on Truth Social, we do have an extension of the ceasefire. So, it is a very quick-moving world. But sir, I want to talk about those longer-term trends again and just go back to this Yes. the United States pulling out from their their superpower role, their global policeman role, and the rise of China, and you have trust with all parties, you have partnerships with all parties, you value your independence here in Singapore, but are you being forced into a world where you need to choose between China or the United States? To quote Mr. Lee Kuan Yew, we will refuse to choose. The way we conduct our affairs is we assess what is in Singapore's long-term national interests. And if I have to say no to Washington or Beijing or anyone else, we don't flinch from that. But they will also know that when we say no, it's not at the behest of the other party. We are acting in our own long-term national interest. We will be useful, but we will not be made use of, if you can figure that out. And that's why I come back to our strategy, to how to conduct ourselves in a crisis. Don't just look at the downside. Look at the upside that's also available post-crisis. And make sure we don't do anything crazy. Make sure we maintain trust, reliability, and even saying no is part of maintaining credibility. Sure. And you want to maintain that independence, but you also need to be very robust in the messaging you're sending out because not only what it means in the Strait of Hormuz in the Middle East, and what it means for Singapore and the rest of the world, but what it means for this region. And I'll go back to those key key straits here. Are you concerned that the actions of the Iranians in trying to exact a toll on a passage of ships in the Strait of Hormuz is something that you fear other parties, perhaps in this part of the world, will think, "Hang on a second. These other choke points, maybe we can extract a toll, and actually we'll make it a privilege rather than a right to bring your words back to you?" It's good to highlight that as a risk. Is it a meaningful risk? It is a meaningful risk if it comes to fruition, but let me tell you what we're trying to do to avoid getting to that situation. First, the littoral states of the straits of Malacca and Singapore are Malaysia, Indonesia, and Singapore. We don't have tolls. All of us are trade-dependent economies. All of us know it is in our interest to keep it open. Second, between the three of us, we have a cooperative mechanism not to collect tolls but to keep it open and to maintain that position. The point here is that all three countries have a strategic interest and are strategically aligned in keeping it open. That's not something which you can take for granted in many other places. That's first point. Secondly, with respect to both America and China we have told both of them we operate on the basis of UNCLOS. The right of transit passage is guaranteed for everyone. We will not participate in any attempts to close or interdict or to impose tolls in our neighborhood. You will not choose between those two. >> will not participate in any attempt to close or to interdict or to impose tolls of traffic maritime traffic and overflight in this area.
>> My my final point on this, and I think it's a very important point as well. Are you under any pressure? And I know you won't choose between those two partners. They they are too important to Singapore to choose between, but do you feel there'll be a a time when they exert more pressure on the countries you just mentioned, including Singapore? They may very well do so. >> Are they doing so now? Not yet. For us. Look, for both when they when we engage the United States, I always remind President Trump, "You have more invested in Southeast Asia, this is American FDI, than America has invested in India, China, Japan, Korea combined. And actually, most of that is here. I remind the president that you've got very healthy returns from your investments in Singapore. I also remind of administration that you've got a significant trade surplus both in against us, both in goods and services. So, do you have skin in the game? I always remind president, you have good skin in the game down here." Flip around to China. And China, if you ask China, "Who is your largest source of foreign investment?" You will find Ask them yourself, and they will you will find Singapore in that short list. So, are we exquisitely exquisitely positioned to take advantage of developments in both America and China? We are. The main danger is if that relationship fractures. If they go to war in the Pacific what you're witnessing now in the Strait of Hormuz is just a dry run. Think about that. So, the biggest if, the biggest variable is not just what happens in the Middle East, but what happens in the Pacific, which links to the other point you alluded to. What has changed? Where is the future? Is the future just more oil and gas? Or is the future the geostrategic relationship between China and the United States, the revolution in AI, the revolution in biotechnology, and the revolution in renewable energy? On all those counts my I would submit to you the real action is in the Pacific. Do you fear that that healthy competition between these two very close trading partners. They are close trading partners. The numbers are enormous. Every person in this room knows that. Do you fear that that healthy competition and very important relationship is on a path though to becoming less healthy more bellicose, and actually be going down a route to war? It is a difficult relationship, but having interacted with the senior leadership the presidents on both sides they may be risk-takers, but they are calculated risk-takers. President Trump's actions you know he pays attention to certain indices. So, that's why this morning as I came here first thing I asked my my my chatbot "What's the American stock market doing today compared to the 27th of February?" Well, it's very close to record I've got my US colleagues here, but I don't need them to tell me what record levels they're In fact, you're doing better than the 27th of February before the war broke out. Next thing, the other thing we know he watches is bond yields. So, I asked the same question. And he says, "Well, they've gone up maybe 32 to 40 basis points higher than it was on the 27th of Feb Feb." "Any inversion of the curve?" No, the curve has not inverted. I think at that level, you're not going to have a very What's You're You're not having a president who's panicking. I want to emphasize that. You Yes, the president may pronounce things in for dramatic effect. It's a great reality show. But there's actually a method to the madness.
>> Is US president looking at the wrong signals then, given what you just said about his looking at the stock market and the bond yields, which have moved up just modestly since this crisis began? Yes. Is he looking at the wrong signals rather than the damage being done by the actions of Iran and the United States? And the point again is to look beyond the current crisis >> [snorts] >> and to see what does this mean for oil and gas markets? In fact, the other uh point which my chat chatbot generated for I I've got a personalized curated chatbot, so it knows my biases. As long as it's not hallucinating, sir. As long as it's not hallucinating, I always make sure my staff check. But if you ask yourself what was the supply and demand situation for oil before the war broke out? And in fact, CNBC or your analysts will tell you in fact before the war broke out people were more worried about supply exceeding demand for oil. The balance between supply and demand for gas was much tighter. But actually the future isn't just about the price of oil and gas because in fact, if you imagine a world at peace. Now, I know it's hard to imagine, but just imagine that the problems in Ukraine are over and the situation in the Middle East is over you will have a world with plentiful oil and gas at least in the short term. All right. So, what I'm saying is look beyond there. Look at what Saudi Arabia is focused at. Even in this crisis, they are more focused on Vision 2030, on diversifying the economy rather than just banking on oil and gas and the and and the short-term perturbations in the price. Look at what my Gulf Arab friends United Arab Emirates, Qatar, you must have had events now. They are all working on a post oil and gas future. That's what Mr. Lee Kuan Yew means when he says you better take a pragmatic and clinical approach to what has changed and the big strategic changes. And that's why I am saying get through these crises don't panic maintain to the best of your ability to be to be able to stand on your own two feet, maintain reliability, trust confidence, don't panic, we'll be all right in long term.
Um, let me ask you a couple of very quick questions if I may. Your time is very valuable. So, make it a difficult question. Are you speaking to your counterpart in Iran at the moment and what is that conversation looking like if you could just let us into that? Well, I've asked to speak to him, but he's got more important more acute pressing issues to resolve first. So, I'm going to give him the time and space to do so. Look, for Singapore, we are boringly predictable. So, you know what I'm going to have to tell him. We do not agree to closure of the Strait of Hormuz because we do not agree that that should ever happen even in our neighborhood, which is in fact even tighter than yours. You know that I will have to tell him. In fact, he already knows. I can't pay you any tolls. So, it's not personal. It's a matter of principle. That's just the way Singapore operates. But we have had a good relationship with Iran. In fact, the last time the foreign minister of Iran was in Singapore was in 2018 to sign the Treaty of Amity and Community with ASEAN. And we had wonderful conversations together. They are a civilizational state. They've been around for thousands of years and accomplished, proud, and very capable people. Don't count Iran out. I'll just squeeze in one or two more quick ones if I can. Um you mentioned the 3% plus defense spending of Singapore as well. Yes. In reaction to everything we are seeing in the world at the moment do you need to get that to a more significant level? Do you feel that actually not only in Europe, not only in the Middle East, but also in Asia Pacific that there is a rearmament going on that you need to take more seriously? We are not a reactive country. We have invested between 3 to 6% of GDP on defense for six decades. Second, we have our budgets generally have been in positive territory for those six decades. Even if we are criticized for poor marksmanship, it's often because we are too conservative in our figures. We have sovereign wealth funds. In America it spends about 3% of GDP servicing debt. If you look at the most recent budget in Singapore, we get more than 3% of GDP in dividends a positive entry into our budget. So, do you understand why we can afford we we need a realistic assessment appreciation of situation. But can you understand the source of quiet confidence? We'll get through this. Yes, inflation will be an issue and that's why the bond yields have gone up. And my final question >> for it, but we will have the fiscal firepower. We have already done the military and more important, the social cohesion and the willingness to take the heat when the temperatures rise and to get through this together.
I'll I'll just try and round the circle on this entire conversation and just take you back to the point you said that you think a lot of these factors and why the United States is leading in the way it is on a global basis is because globalization has failed many Americans or domestic people as well. Do you fear what comes post globalization? I don't think globalization has failed. I still think globalization was a great formula for peace and prosperity for the last 80 years. Unprecedented peace and prosperity. I think where the political problem, particularly in the US, but not confined to the US is to make sure that growth is distributed that the majority of the population feels that there are good prospects for jobs and wages. And we need to focus that same attention to the revolutions which are going on now. Let's take AI for example. If AI is used to generate a jobless but blustery growth rate you're going to have a political revolution on your hands. It's the same thing with free trade, you see. The most important duty of a free trade over trade negotiator is to understand your domestic economy. If you make this deal who wins? Who loses? What compensatory mechanisms do you need to have in place? How do you restructure your economy to take advantage of technological changes and geostrategic changes? Without that homework and your domestic sector falls apart you can't pursue globalization. So, for instance, in Singapore we used to be criticized for you know industrial planning. Nobody criticizes us that for that anymore because we do believe in an interventionist state. But this is an interventionist state that operates on market principles. We price everything fully. No subsidies, but at same time we make sure that everyone, especially the lower income families have enough fiscal firepower in their wallets, which we will give to them in cash or cash-like instruments. So, it's that combination of market discipline being prepared to intervene where markets fail preparing for a rainy day paying your insurance premium and paying it regularly and paying it over decades. And then maintaining that reputation for honesty, integrity, reliability Come back to what my my Deputy Prime Minister said, trust. Yeah. Trust is the coin of the realm and trust lowers transaction costs. And if we can create a high trust environment, it's good for society, it's also good for businesses and I expect to see more of CNBC and your subscribers active and actively engaged and invested in Singapore. So, that's my elevator pitch. Also, um I trust I'll be here many times in the future as well and I'm I'm thoroughly enjoying the conversation with you as well. Um we'll be able to go back to our teams and our phones in a few moments time to see if the world has changed in the 30 minutes we've been up here, but hopefully not, sir. I'm sure it is. But I'm asking you take the long view. Take the strategic view. And even if I'm boring in, you know, maintaining a certain posture that's appropriate for us. If America is flipping look beyond the actions and the words, understand why they are doing that and understand his script. So, if you're saying boring, I'm saying stability. I think we could all do with more stability along the lines of which you just mentioned. Um Dr. Vivian Balakrishnan, thank you very much indeed for your time, sir. Well, that was my