Singapore’s billion-dollar advantage has a catch

Standing atop Singapore's Marina Bay Sands hotel on a clear day, one can observe the city-state's prosperity and vulnerabilities simultaneously. The ships anchored in the foreground serve as a reminder of Singapore's rich history as a free port, strategically positioned to capitalize on global trade routes. On the distant horizon, the coastline of Indonesia looms, a country with nearly 50 times Singapore's population and 2,500 times its landmass.

This proximity is a stark reminder of the city-state's dependence on its larger neighbors for maintaining its economic success.

Currently, these dependencies are under scrutiny. A haze has obscured the view from Singapore for weeks, originating from wildfires in Indonesia's Borneo and Sumatra islands. In response, Singapore enacted laws to address this recurring public-health crisis. However, enforcing these laws has proven challenging due to obstruction from Indonesian authorities.

Just days after Singapore announced measures against 10 Indonesian companies linked to the blazes, Jakarta unexpectedly halted the supply of natural gas to Singapore. The reason behind this move remains uncertain, but it could be a strategic response to Singapore's growing preference for liquefied natural gas (LNG) over piped energy imports from its neighbors.

The affected gas exports account for less than 2% of Singapore's daily demand, hinting at the potential impact of such disruptions.

This episode highlights the vulnerabilities underpinning Singapore's economic success. For over two centuries, the city-state has thrived as a free port, serving as a crucial node in emerging commercial networks. From oil refining to container shipping and long-haul aviation, Singapore's strategic location has been instrumental in its growth.

Nevertheless, the city has remained acutely aware of the chokeholds wielded by its larger neighbors. The political separation from Malaysia in 1965 raised concerns about potential water supply disruptions, leading to a costly desalination, recycling, and reservoir-building program to ensure near-self-sufficiency.

In contrast, energy security presents a more complex challenge. While Singapore can easily access LNG supplies, these could be disrupted through a naval blockade, which poses a significant risk. Nuclear power has been considered but faces challenges of its own, such as the limited space available within the 20-kilometer evacuation zone established following the Fukushima Daiichi disaster.

Efforts to install 4 gigawatts of solar panels by 2035 could provide some diversification, but even this ambitious plan would only meet around 10% of electricity demand. Additionally, plans to develop renewable energy projects and transmission lines extending to neighboring countries like Vietnam, Laos, Cambodia, Malaysia, Indonesia, and Australia could further decentralize electricity suppliers.

However, these connections could still be severed abruptly, leaving Singapore reliant on a single switch.

This vulnerability is not unique to Singapore; it is a common challenge faced by small maritime republics. The rise of chokepoint maximizers seeking leverage over critical resources and trade flows could pose a significant threat to these economies. As the world becomes increasingly polarized, with great powers vying for control over key resources and strategic assets, free ports like Singapore find themselves in precarious positions.

The conflict over the Strait of Hormuz serves as a cautionary tale, demonstrating the potential consequences of a breakdown in international law and order. In such a scenario, even the wealthiest maritime republics could be left vulnerable, facing the specter of starvation akin to Venice's fate during the Age of Revolution.

Despite these challenges, Singapore's founding father, Lee Kuan Yew, held a glimmer of hope. He believed that small maritime republics could thrive as nodes for global commerce and capital, following the model established by Venice for centuries. However, the current geopolitical landscape presents a stark contrast to that vision.

The brewing great-power conflict and rising barriers to commerce, migration, and capital could render Singapore and similar cities as lonely islands in a turbulent sea. As Lee Kuan Yew warned, "If there were no international law and order, and big fish eat small fish and small fish eat shrimps, we wouldn't exist. A siege? Control of sea lanes? We'll just starve."

Lee Kuan Yew's successors must hope that the current conflicts are merely passing storms, rather than the beginning of a permanent shift in the global climate. The success of Singapore's model depends on the stability and cooperation of its neighbors, as well as the broader international community. As the city-state continues to navigate these complex challenges, it must remain vigilant and adaptable, ensuring that its unique position as a maritime republic remains a source of strength rather than a vulnerability.