SINGAPORE Just as a child has no choice over its parents, Singapore is rocking from another painful reminder that a country cannot pick its neighbors.
A prosperous, mainly Chinese island state of less than four million, Singapore has much in common with north Asian tigers Hong Kong and Taiwan.
But geographically it finds itself at the heart of much poorer Southeast Asia, a strait-laced island of stability in politically volatile waters whose two main neighbors, Malaysia and Indonesia, happen to be largely Malay.
"Singapore is a nice piece of real estate in a lousy neighborhood.
It's in the wrong location," said Friedrich WU, head of economic research at DBS Bank in Singapore.
Indonesian President Abdurrahman Wahid brought home the awkwardness of Singapore's position on Saturday with a vitriolic attack on the city state as aloof and money-grubbing.
"Basically, Singaporeans despise Malays, we are considered nonexistent," Wahid told a gathering of Indonesians living in Singapore. "They just look after themselves, all they just look for are profits." If the barbs stung, Singapore did not show it.
The pro-government press refrained from commenting and Prime Minister Goh Chok Tong, marking his 10th year in office this week, waited 72 hours before issuing a "clarification" of Wahid's comments that was conspicuous by its measured tone.
Writing in the Business Times newspaper on Wednesday, columnist Yang Razali Kassim said Goh was right not to get into a slanging match. "Sometimes, the wisest response is not necessarily the most vigorous," he said.
Raw Nerve But Melina Nathan of the Institute of Defense and Strategic Studies in Singapore said Wahid had struck a raw nerve because the island is very much aware that its economic success and racial make-up does indeed set it apart from its neighbors.
"It's these two things that make it an irritant. If Singapore was predominantly Chinese and was not doing so well, it wouldn't matter so much," she said. "But there is this sense of resentment and it's been growing ever since the crisis struck in 1997." Nathan was referring to a financial crisis that plunged most of Asia into a deep recession. But not only was Singapore spared, it rankled with Malaysia that currency traders based in the city state were betting against Malaysia's currency, the ringgit.
Similar grumbles have been heard recently out of Jakarta, which feels Singapore should do more to share its wealth.
Faced with these pressures, Goh has pursued a twin-track strategy: Striking out alone by forging free-trade deals with like-minded countries such as New Zealand while showing solidarity with economic laggards like Indonesia that are fellow members of the Association of Southeast Asian states (ASEAN).
Goh performed this balancing act last week when he chaired ASEAN's Annual Summit. He held out the prospect one day of a free trade zone with China, Japan and South Korea but said ASEAN's 10 members had to focus first on opening up their economies.
Otherwise, Goh admitted, ASEAN risked being eclipsed by its more dynamic neighbors. "If you put ASEAN members together with the east Asian grouping up north, economically we pale by comparison," he said.
Unwelcome Nationalism Diplomacy prevented Goh from saying so, but the bigger risk for Singapore is that, if underachievers like Indonesia and the Philippines do not copy its recipe for success, it could be dragged down as investors shun Southeast Asia and flock north.
Singapore, a manufacturing platform and regional business hub for many multinational corporations, has so far not been tarred with the same brush. The economy is set to grow by 10 percent this year and investment intentions remain strong.
But that is no guarantee for the future. If growth in Southeast Asia slows further, Singapore will feel the pinch.
"The fear is that those investments could taper off in the next year or two if ASEAN cannot pull itself out of this hole," said WU of DBS Bank.
There are already warning signs.
ASEAN has been rattled by a big shift in foreign direct investment flows in China's favor in recent years, a trend economists expect to accelerate when Beijing joins the World Trade Organization, probably next year.
Daniel Gay, an analyst with local business research group strategic intelligence, says Singapore's stability is an increasingly prized asset for multinational firms unnerved by seemingly perpetual crises in the Philippines and Indonesia.
But he said Wahid's comments were an unwelcome taste of the nationalism regional leaders might try to unleash against a prosperous neighbor to deflect attention from their own policy blunders.
"It's a nasty sign of what could come should there be a sharper economic slowdown across the region," Gay said.
(Reuter)