Search for silver linings but don’t underestimate the reality of the storm

BEING a small nation-state with an open economy has never been easy, and this will only become more difficult amid current trends. Geopolitical risks are worsening and economic realities have become harsher, as Prime Minister Lee Hsien Loong warned in his National Day Rally speech on Sunday (Aug 21).

The challenge for Singapore is not just to seek silver linings in the international storm clouds ahead, but to be both psychologically and practically prepared for the storm itself.

On the geopolitical front, tensions between the United States and China are rising, while Russia’s war in Ukraine also affects security in the Asia-Pacific region, said PM Lee.

Singapore has enjoyed peace and prosperity for long enough – indeed, longer than the lifetimes of many working-age residents – that it can be hard to seriously contemplate the prospect of war in the region. The prime minister’s warnings on Sunday night could even seem alarmist to some younger citizens.

But Russia’s invasion of Ukraine was just as unimaginable until it happened, as PM Lee pointed out: “Can you be sure that things cannot go wrong like that in our region too?”

In uncharacteristically blunt language, he urged the country to “get real” and be psychologically prepared.

Besides taking National Service seriously and keeping its armed forces and Home Team strong and credible, Singapore must stay united, said PM Lee. Tellingly, he warned against divisions “by race, religion, income, social differences, or place of birth” as well as possible foreign influence operations.

Unity in the face of a pandemic does not particularly require re-examination of one’s identity or allegiances. Unity in the face of regional tensions with major players such as China, for instance, could be a more fraught matter.

On the economic front, the recent decades have not entirely been smooth-sailing, with Singapore experiencing multiple recessions. Yet each one was followed by a strong rebound.

Singapore’s repeated success in weathering economic storms might bolster business and consumer confidence, which is itself crucial in any recovery. But the risk is that such confidence could lead to a false sense of security.

After all, past rebounds took place in a much friendlier economic environment. As PM Lee described, globalisation “was in full swing”, trade was growing rapidly, and China was exporting goods at highly competitive prices, helping to keep prices stable worldwide.

But, as he put it in stark terms: “This era is now over.” As some countries raise tariffs and relook supply chains, and as China’s growth and exports slow, inflationary pressures are rising.

Singapore has little influence over this, said PM Lee: “What is within our power is to make ourselves more productive and more competitive.” Similarly, though globalisation is on the wane, Singapore remains a global city and “cannot survive in any other way”.

The exhortations to transform and upgrade are not new, but they take on a greater urgency in today’s economic environment – at least for the government. But will this same urgency be felt by the prime minister’s audience?

In a sense, whether on the economic or political fronts, Singapore might be a victim of both its own success and the government’s long-running warnings of existential threats.

Decades of peaceful flourishing may have cultivated an optimism that is at risk of turning into complacency. Meanwhile, even in more stable times, the government has repeatedly stressed the risks that Singapore faces as a small nation – to the extent that PM Lee’s grim warnings today could be dismissed as more of the same.

Singapore must first recognise and accept the threats of which the prime minister has warned. Then only can optimism and confidence be turned into motivating forces: not fuelling disbelief in the scale of the challenges ahead, but instead powering the belief that Singapore can pull through.

And though the world may be becoming more hostile in some ways, Singapore can shine precisely as a lighthouse in an uncertain world.

As PM Lee noted, countries will still trade, multinational corporations will still invest, and the world will still need its financial centres and hubs of connectivity. In troubled times, Singapore’s reputation for quality, reliability, and efficiency gives it a competitive edge – one that is further honed by its track record in tackling the Covid-19 pandemic.

“All the dark clouds around us have a silver lining,” he said. What’s clear is that Singapore must seek this silver lining. But to do so, it must first accept the reality of the storm.

Click here for the full list of stories from the National Day Rally 2022.