Once opportunity, chokepoints are now a threat

• By David Fickling / Bloomberg Opinion

• • Add TT as Preferred Source

  • 

  • 

  • 

Stand on a clear day atop Singapore’s Marina Bay Sands hotel, and you can see the city-state’s promise and peril in a single glance.

In the foreground, a flotilla of ships lies at anchor, a physical reminder of how Singapore grew rich servicing the immense volume of global trade squeezed through the chokepoint of its narrow strait. On the horizon, you can just make out the coastline of Indonesia, a country with almost 50 times Singapore’s population and 2,500 times as much land. Its proximity is a reminder of how dependent that prosperity remains on good relations with Singapore’s much larger neighbors.

Such issues are top of mind right now. For weeks, the view has been obscured by a pall of haze drifting across the water from wildfires on the Indonesian islands of Borneo and Sumatra. Singapore passed laws a decade ago to combat this recurring public-health catastrophe, but has struggled to enforce them amid intransigence from its neighbor. Just days after the city announced measures against 10 Indonesian companies over the blazes this month, Jakarta started cutting pipeline supplies of natural gas to Singapore.

The decision might have a perfectly innocent explanation. Singapore has shifted aggressively toward liquefied natural gas (LNG) and away from Malaysian and Indonesian piped energy in the past few years, anticipating that its neighbors would use more of their own supplies as their economies expand. A key link allowing Indonesia to divert gas locally was completed just weeks ago, and the affected exports represent less than 2 percent of daily demand.

However, comments from Jakarta’s energy distribution minister do not inspire confidence. He warned neighboring countries to “be careful” about annoying Indonesia if they do not want their exports cut off.

The whole episode is another unpleasant reminder of the vulnerability underlying Singapore’s prosperity. For more than two centuries, it has thrived as a free port, in a world where chokepoints to trade have been progressively dismantled. The city was established by the British to bypass the Dutch stronghold in Java, and its most important nation building projects in the 1960s and 1970s repeated the model by making it a key node of emerging commercial networks, from oil refining, to container shipping, to long-haul aviation.

However, throughout all that Singapore has remained acutely aware of the chokeholds its larger neighbors control. Political separation from Malaysia in 1965 raised fears of water supplies being cut off. A costly program of desalination, recycling, harvesting and reservoir-building would allow near-self-sufficiency in a crisis.

The same cannot be said for energy. Even LNG supplies could be severed easily by a naval blockade. Nuclear power has been considered on and off for years, but comes with its own challenges: You could fit almost the entire nation inside the 20km mandatory-evacuation zone established after the Fukushima Daiichi disaster. Plans underway to install 4 gigawatts of solar panels by 2035 could leave about 5 percent of the country under silicon, and still meet barely a tenth of electricity demand.

Separate plans to develop renewable projects and transmission lines stretching to Vietnam, Laos, Cambodia, Malaysia, Indonesia and even Australia would at least diversify electricity suppliers. However, those connections could, in theory, be cut off with the flick of a switch. Singapore’s driving role in establishing the power grid taking shape across the Association of Southeast Asian Nations can best be seen as an attempt to spread the risk across a web of mutual dependencies.

That is the hopeful vision. In a world of multilateralism, peace and trade, small maritime republics can grow fabulously wealthy as nodes for global commerce and capital. Venice, an inspiration to Singapore’s founding generation, followed that model for centuries.

The worrying part is what came afterwards. As Europe’s commercial order gave way to an age of revolution, mass armies and nationalism, Venice’s wealth proved little protection against the larger powers surrounding it. Napoleon extinguished the thousand-year republic in 1797, and it was traded back and forth like a bargaining chip between France and Austria for decades before being subsumed into the modern Italian state in 1866.

We could be entering a similar moment. The rising force in international relations is the chokepoint maximizer, looking for leverage over computer chips, critical minerals, intellectual property and trade flows to subdue its rivals. This year’s conflict over the Strait of Hormuz is a prime example. With barriers rising to commerce, migration, and capital, free ports such as Singapore are in lonely waters.

“If there were no international law and order, and big fish eat small fish and small fish eat shrimps, we wouldn’t exist,” founding father Lee Kuan Yew (李光耀) mused in a 2007 interview. “A siege? ... Control of sea lanes? We’ll just starve.”

Lee’s successors must hope the great-power conflict brewing today is a passing storm, rather than a permanent shift in the global climate.

David Fickling is a Bloomberg Opinion columnist covering climate change and energy. Previously, he worked for Bloomberg News, The Wall Street Journa and the Financial Times. This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.