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  New York Times 16 Mar 07
Neighbor Leaves Singapore Short of Sand
By Wayne Arnold and Thomas Fuller

SINGAPORE — Some countries have strategic oil reserves; others stockpile rice or wheat. The island nation of Singapore has emergency reserves of imported sand. The sand is there to secure Singapore’s insatiable demand for concrete, a reminder of its vulnerability as a nation without a hinterland to supply it with vital resources.

The government is now being forced to tap its sand hoard after its usual supplier, Indonesia, abruptly banned exports in February, citing the impact of a recent Singaporean construction boom on Indonesian beaches and island environments.

The ban touched off the latest in a string of disputes between Singapore and its neighbors over water, land reclamation, satellite concessions, corporate takeovers and the flight patterns of the Singapore Air Force, just to name a few.

A Malaysian politician has blamed Singapore for worsening floods. A top politician in Indonesia has sought the recall of Singapore’s ambassador there. The general in Thailand who led the coup there last September has accused Singapore of tapping his phones.

Tiffs between Singapore and its neighbors are nothing new, and analysts say the latest ones are unlikely to seriously harm relations.

But the analysts say the recent quarrels highlight the rifts that continue to thwart Southeast Asia’s ability to compete collectively against the economies of India and China.

If Singapore and its neighbors cannot agree to share basic resources like sand and water, they say, the dream of a single market by 2015 — the stated goal of the 10 member countries of the Association of South East Asian Nations — may be illusory.

“They’re more competitive with each other than natural allies,” said Robert Broadfoot, managing director of the Political and Economic Risk Consultancy in Hong Kong.

The disputes also raise questions about Singapore’s drive to expand its investments in the region. Singapore’s advances appear to be aggravating what may be described as a personality conflict between one of the world’s richest countries and its much larger but much poorer neighbors.

“We see Singapore in two ways,” said Drajad Wibowo, an Indonesian legislator. “On one hand as a role model for development; on the other hand, many see Singapore as an arrogant economic giant, which is prepared to use its financial muscle to undermine neighboring countries.”

Singapore’s problems with its neighbors are as old as the country itself, which became independent from Malaysia in 1965. Singapore’s leaders took advantage of their city’s historic role as a trading post to lure investment and manufacturing, vaulting it to the ranks of the world’s most affluent nations within 20 years — and breezing past Malaysia, Indonesia and Thailand along the way.

In his memoirs, Singapore’s founding prime minister, Lee Kuan Yew, said his goal “was to leapfrog the region, as the Israelis had done.” With its predominantly Chinese population in a mainly Malay region, Singapore has become a magnet for ethnic Chinese talent and wealth from around Southeast Asia.

But while part of the region, it often seems to be apart from it. In a part of the world where politics are ruled by nuance and consensus, some people in nearby countries say, Singapore can be self-servingly rational, legalistic and seemingly tone-deaf to local sensitivities.

“Singapore doesn’t really care about the opinion of its neighbors,” Mahathir Mohamad, the former Malaysian prime minister, complained to a Thai television station in January. “Singapore believes the most important thing is what profits Singapore.”

Mr. Broadfoot said, “Their values and their efficiency don’t export well.”

Singapore’s officials, for the most part, are not apologetic. “For Singapore, the rule of law and the protection of property are absolutely important, from the days we were established as a trading post for the British East India Company,” Foreign Minister George Yeo said in a written response to questions. “Why else would this piece of rock, amidst thousands scattered in the archipelago, flourish?”

In Singapore’s Parliament, legislators recently complained that the country was being picked on unfairly. One member blasted efforts by neighbors to make it a “scapegoat for their own domestic troubles.”

But as the disputes accumulate, there are also voices here calling for a change of approach.

A March 12 staff-written column in Business Times, which like all Singaporean newspapers is state controlled, proposed that the government’s investment arm, Temasek, create a charitable foundation.

While that might not eliminate “nationalistic responses” to Temasek’s activities in the region, the column read, “giving back rather than merely extracting profits, legitimate though that may be, yields a huge payoff for companies in terms of building good will, respect, networks, and in the end, profitability.”

What brought the ban on sand exports from Indonesia is unclear. The official explanation is damage to the environment there. Indonesia began restricting exports of sand in 2002 after reports of entire islands disappearing as Singapore expanded.

But Indonesia’s maritime affairs minister, Freddy Numberi, later said the ban was also aimed at pressing Singapore into signing a longstalled extradition treaty. Wealthy Indonesians, particularly ethnic Chinese, have long used Singapore as a haven from their country’s periodic strife. Indonesians are the leading foreign property owners in Singapore, and wealthy Indonesians keep as much as $87 billion in Singaporean banks, according to estimates by Merrill Lynch. Many Indonesians suspect Singapore of harboring white-collar criminals, though there have been no publicized cases of fugitives living here.

Indonesia’s foreign minister denied the maritime minister’s claim, but Singapore bristled, calling the mixed signals “puzzling and disappointing.” Singapore says the two countries have already agreed that the extradition treaty will be negotiated, together with a military cooperation pact. Foreign Minister Yeo told Singapore’s Parliament recently that an agreement was near.

The confusion over Indonesia’s policy is only growing, though. In late February, the Indonesian Navy detained 13 tugboats pulling barges full of granite, used in concrete, saying it was were searching for smuggled sand. The speaker of Indonesia’s Parliament, Agung Laksono, then urged the recall of Singapore’s ambassador, “in protest against that country’s unfriendly attitude,” according to Indonesia’s state news agency, Antara.

Now, with the price of sand nearly triple what it was before the ban, Singapore is drawing down its sand stockpiles while looking for new suppliers. “From time to time we must expect other countries will pressure Singapore in the hope that we will then give way to their demands,” Mr. Yeo told Parliament. “Singaporeans know that if we give in to such pressures we would only invite more such pressures.”

Wayne Arnold reported from Singapore, and Thomas Fuller from Bangkok. Wayne Arnold reported from Singapore, and Thomas Fuller from Bangkok.

Correction: March 17, 2007 An article yesterday about disputes between Singapore and its neighbors referred incorrectly to an article in the newspaper Business Times that proposed that the government create a charitable foundation to go with its investment activities in the region. The article was a bylined column by Vikram Khanna, associate editor; it was not an editorial representing the views of the newspaper.
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