Singapore's high-wire walk

A prospective trade deal with Taiwan is a balancing act for the Lion City, which wants to assert its independence without alienating Beijing.

Greg Torode reports

The prospect of a landmark trade deal between Taiwan and Singapore - that is acceptable to Beijing - is throwing a spotlight on one of the region's most sensitive triangular relationships.

Given fresh Sino-US tensions over the South China Sea and other military issues in recent weeks, news of a possible Singapore-Taiwan trade deal has attracted little public attention. Yet the potential impact of such a deal is being closely scrutinised across the staterooms of East Asia, reflecting the region's fast-changing strategic landscape.

Washington-based Asia analysts Ernest Bower and Charles Freeman describe Singapore's policy towards Taiwan as an example of the tightrope that Southeast Asian nations must walk with Beijing increasingly determined to assert its "core interests" - Taiwan, Tibet and now, the South China Sea.

But at the same time, it carries both potential benefits and risks for Beijing. A Singapore-Taiwan deal could help tie the island to an economic framework dominated by the Association of Southeast Asian Nations. Beijing would probably prefer that over something under a Western-dominated body, such as the Asia-Pacific Economic Co-operation forum.

If China feels forced to reject a deal farther down the track, however, it could be bruising for its troubled regional ambitions. "Heavy-handedness by Beijing also bears its share of reputational risk for China, which has thrown its weight around a lot lately, raising concerns among its neighbours," Bower and Freeman said in a report for the independent Centre for Strategic and International Studies.

"China may decide to keep its watchful eye on Singapore and Taiwan's trade negotiations hidden from public view. Rest assured, Southeast Asian policymakers are watching this space, as the rights to trade and defend one's country are fundamental to sovereignty."

For Taiwan, the deal represents a major breakthrough after years of being overshadowed by a rising mainland. When Taipei struck its Economic Co-operation Framework Agreement with Beijing in June, it sparked hopes across the region that similar deals could be struck with regional neighbours and Washington - all of which of could help integrate the island's export-reliant economy.

Indonesia, Vietnam and the Philippines are all eyeing similar deals, according to regional envoys.

Beijing, of course, would have to feel comfortable that any such deals fall firmly within its bedrock one-China policy.

When Taiwan and Singapore issued a statement this month announcing talks later this year, mainland reaction was initially reported as a note of concern.

Comments from Foreign Ministry spokeswoman Jiang Yu suggested Beijing would oppose any Singaporean trade deal with Taiwan that appeared to recognise the island's sovereignty.

"Our stance on the economic and trade activities between foreign countries and Taiwan is consistent and clear," Jiang said. "We hope relevant countries continue to adhere to the one-China policy and to prudently handle related issues."

But as the dust settles, there is a widening sense that Beijing was effectively giving the green light - so long as requisite caution was taken.

Bower and Freeman describe it as a "carefully-worded Chinese go-ahead" and "at best a tepid thumbs up".

And in Singapore, too, there is a sense that Beijing has sent an important signal.

Professor Kishore Mahbubani, a dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore, said Singapore-Taiwan discussions would not have gone this far unless Beijing had signalled a certain comfort factor.

Describing the move as a remarkable development that had not got the attention it deserved, he said: "It's actually a very shrewd move on the part of China. It is ultimately about expanding Taiwan's economic space in a way that could be very positive for the region.

"They have to keep Taiwan in a political box, but if they keep them in an economic box as well then that will stifle the people of Taiwan and I'm not sure that is something Beijing wants to do."

Mahbubani said there were risks for all sides but also enough mutual confidence to push ahead.

"We are talking about a very high level of trust between China and Taiwan and Singapore. Singapore is playing a very important role here as a trusted partner."

"The stakes are very high but I think all sides have a good idea where the boundaries and the red lines are."

Certainly the Singaporean government's official position appears calibrated to address Beijing's concerns.

Last week, Singapore's Ministry of Trade and Industry confirmed that Singapore and "Chinese Taipei" would meet later this year to explore the feasibility of an economic co-operation agreement.

"Singapore maintains a one-China policy. We have always conducted our relations with Taiwan within the scope of our one-China policy and we will continue to do so," it said.

Taiwanese officials have said they would negotiate under the terms of the World Trade Organisation - an institution both Taiwan and Singapore are members of - in a move that potentially clears up nagging issues of sovereignty.

If Singapore is a "trusted partner", it is still one that carries its own complexities into the equation.

As the only ethnic Chinese-majority nation in Southeast Asia, Singapore's leadership, famed for their forward thinking, has long played a special role in helping to foster China's political, economic and cultural integration with the region.

Yet as a proudly independent city state in an unpredictable neighbourhood of much larger countries, Singapore has also sought to balance its vital relationships, as well as its strategic interests.

While other countries - Japan, South Korea, Thailand and Australia - may have military alliances with the US, Singapore remains Washington's strongest and most stable ally in Southeast Asia.

And while many Southeast Asian nations have privately urged the US to re-engage with a region that felt neglected under eight years of former US president George W Bush, Singapore has been the most public.

Lee Kuan Yew, Singapore's minister mentor, captured the mood of many in the region last October when he questioned the transparency of China's military build-up and urged US engagement.

The US risked losing global leadership if it did not "balance" China's rise, he said. "The size of China makes it impossible for the rest of Asia, including Japan and India, to match it in weight and capacity in about 20 or 30 years. So we need America to strike a balance."

The location and timing - a Washington speech just ahead of US President Barack Obama's first mission to Beijing - was not lost on an infuriated mainland online community.

A few months later, Lee expanded on his views to an audience of Singaporean businessmen, according to The Straits Times. While Singapore had forged a good unspoken understanding with China that would serve it well, it must never descend to being a satellite of Beijing or any other power, he said.

Singapore has maintained a discreet military relationship with Taiwan. For 35 years, it has trained its soldiers at infantry, artillery and heavy armour camps in Taiwan - an opportunity that in 1975 few other countries could offer.

Singapore-based security scholar Dr Tim Huxley noted that by the mid-1990s, 150,000 Singaporean troops had been trained in Taiwan's jungles and mountains in its most extensive overseas exchange - exploiting space the city state does not have.

A strategic reserve of Centurion main battle tanks was also kept secretly on Taiwan until the mid-1990s.

And while regional diplomats note that Beijing has increasingly looked askance at the military ties - rarely discussed publicly in Singapore or Taipei - Singapore has successfully stood its ground and maintained the relationship, albeit at a lower level.

It has also significantly expanded defence ties with Beijing, including sending 60 crack counter-terrorism personnel to exercise with PLA counterparts last year.

As sensitivities with Malaysia ease, its tanks - which now include Nato-standard Leopard 2A4s - are kept in Singapore and Australia, according to military attachés.

Examining such strategic flexibility and resilience - a quality some in the region would call stubbornness - leads to questions over what will happen if Beijing suddenly sours on a potential Singapore-Taiwan deal. What would happen, for example, if Taiwanese President Ma Ying-jeou suddenly fell out of favour on the mainland?

Huxley, executive director of the International Institute of Strategic Studies-Asia in Singapore, said Singapore's history of defending its sovereignty would kick in and it would probably find a way to push ahead with the deal even if Beijing attempted to object.

"Trade is its lifeblood and the Taiwan relationship is just too important in economic and strategic terms.

"Singapore obviously wants good relations with China on many different levels but it certainly does not want to be a strategic extension of it in the region.

"Singapore's attitude to China's growing role and power in the region - which was once quite relaxed - has grown markedly more cautious. It has hardened to an almost surprising degree. I detect a real concern in Singapore over China's role in the region.

"In that regard, it is going to be fascinating to watch this play out. There are certainly opportunities and risks on all sides."