A. This is now right at the top of our agenda for the coming Asean Summit, the Asean-plus meetings, the East Asia Summit and the Asean-EU Summit. The world needs a good outcome at the Bali conference. When I was in Brazil recently, I visited the Amazon and received good briefings. The Amazon is the largest expanse of tropical forest in the world.

The second is in South-east Asia. We are similar but different because South-east Asia consists of islands and peninsulas, the greatest archipelago in the world. Here we also have mangrove swamps and coral reefs, all of which are important in the global climate equation.

Last year, which was a minor El Nino year, an enormous area of forests was burnt in Indonesia, and a great amount of carbon sent into the atmosphere. When I was in Brazil, they explained to me the intimate connection between the health of the Amazon and El Nino. Big forces are at play when warm-water bodies move north and south, east and west, in the Pacific, affecting the behaviour of winds and hurricanes.

To meet the challenge of climate change, it is crucial first to bring in the United States because it is the world's biggest economy and the world's biggest emitter of greenhouse gases. That is fundamental. The US must not only come in, it must also take the lead. The recent meeting in Washington was a plus but it should only begin a process. It can't be a one-off event. Then we need to bring in the developing countries which feel that it is not possible for them to cut down carbon emissions when they need the energy to grow.

DIPLOMATIC ACHIEVEMENT (The Chinese) tell us repeatedly that they don't want to do anything which weakens Asean. That is a triumph of our diplomacy - for the major powers to see the strength and influence of Asean as being in their own interests. RELATED LINKS  Click for a full transcript of the interview

When I discussed India's policy with (its external affairs minister) Pranab Mukherjee, he explained India's position, which I found quite persuasive. He called on the developed world to bring down the energy consumed per dollar of GDP. Then let that be a ceiling on developing countries. The more developed countries are able to save energy and bring down the ceiling, the more restrained developing countries would have to be. That's fair for everybody. That is the Indian position.

The Chinese have also been very concerned about this issue. They issued a White Paper in China recently and have become quite preoccupied with the whole issue of environmental protection and sustainable development. India, China and many developing countries are worried that the restraints the developed countries are proposing will affect their ability to develop and stifle their growth. This is a legitimate concern.

What we need are counterpoints of leadership in the developing world to match those of the US, Europe and Japan. I see four major players in the developing world: China, India, Brazil and Indonesia. These countries occupy large surfaces of the planet, either land or sea. And I was very impressed by President Susilo Bambang Yudhoyono's recent speech where he said that Indonesia strives to be, among the developing countries, the most efficient in the use of energy. It is important for Indonesia to take a leadership position on this issue among the developing countries. It was good that Indonesia at the UN convened a meeting of countries with big forests. They take a position which I consider reasonable. The forests that they protect in their countries serve not only themselves but also the larger world. They need assistance to protect these forests.

The coming UNFCCC meeting in Bali under Indonesia's chairmanship is very important to the whole world. Singapore has a vested interest because the environment of South-east Asia envelops us. When the forests burn, we get the haze. If the waters are polluted, they wash onto our shores. If the sea level rises too much, we are sunk. We will work with Indonesia and other countries to ensure good outcomes at the coming meetings in November and in Bali. We will give the meeting in Bali our fullest support.

China and India

I am much more optimistic than that. In the past, whenever there was prosperity in India or China, part of that prosperity extended to us in South-east Asia. In this century, with good prospect of both prospering, our own future is bright, provided we make the adjustments. We will benefit from their growth and their development. In fact, we are really feeling the effects in Singapore. One reason why our growth is so good now, one reason why our real estate is so buoyant, is because of growing wealth in China and India. And this is just the beginning. So provided we don't do the wrong things in Asean, we will boom with them. Of course, if we have a situation like Myanmar, what can we do? But I am optimistic.

Of course, China and India will try to increase their influence in South-east Asia. Will we want to be exclusively tied to one or the other? Of course not. And the Chinese and the Indians understand this. When (then Chinese premier) Zhu Rongji signed the framework agreement with Asean leaders in Phnom Penh on the FTA with China and South-east Asia in 2002, he made a very important remark. He said China does not seek for itself an exclusive position in South-east Asia. He knew that South-east Asia would want to have strong links with America, Japan, Europe, India, Australia and other parts of the world as well. The Indians also understand this and have pressed their claims lightly. It is good that all the big powers are our friends and all of them want us to succeed and become more integrated.

The rise of China

There are always differences in national interests and differences in historical experiences. If you look at Vietnam, for a thousand years Vietnam was part of the Chinese empire - from the Han Dynasty to the Tang Dynasty. Then, since the collapse of the Tang Dynasty, Vietnam became independent but has had many wars with China. Many of the national heroes in Vietnam were those who fought against Chinese dynasties. So it should not be surprising that the relationship between Vietnam and China should be a little complicated because of this history. Today, their relations are very good but certain feelings remain.

If you look at the other countries of South- east Asia, which are more distant from China and have not had the experiences of Vietnam, they still remember the old tributary relationships with China. Sulu, Javanese sultanates, Sukhotai, Ayuthaya, Malacca and others all paid tribute to Imperial China.

And the echoes of those relationships can sometimes be heard in soft reverberations today. But now we have the WTO and we have our links to other parts of the world. The Chinese are very conscious of this. So, when they deal with countries in South-east Asia, they take care to respect the role of Asean. They tell us repeatedly that they don't want to do anything which weakens Asean. That is a triumph of our diplomacy - for the major powers to see the strength and influence of Asean as being in their own interests.

I am not sure how rapid their build-up is. It was a very backward military under Mao (Zedong). When China fought Vietnam in 1978-79, it was ill-equipped. While the Chinese succeeded in achieving their strategic objectives, they took a lot of casualties in the field. Since then, they have made the modernisation of their military an integral part of the modernisation of the whole country. If you watch their recent developments, the major military projects they have embarked on and allocated resources to, all turn on the Taiwan scenario. If they have to fight a war with the US over Taiwan, they need certain capabilities. That is what's driving them.

Of course, once you have the capability, then that capability can be used for other purposes. Intentions can change overnight but capabilities are enduring. For this reason, there have been calls on the Chinese to be more open and transparent in defence matters. And they are responding. This year, at the Shangri-La Dialogue, they had a senior military man come and I believe this will be the pattern for the future. They have good military relations with all the Asean countries. The Chinese are more prepared now to share, to exchange and to assure us of their good intentions.

Many scholars have studied arms races in human history. If you read Sun Tzu's The Art Of War, those who govern a state must understand war. Every country must worry about situations where their sovereignty is endangered. Each country must react to the moves of others, but there is a limit. If you over-arm yourself, your economic development will be affected and that must affect your ultimate military capability.

The Soviet Union devoted so much resources to armament, its economy collapsed eventually. So every country must strike a balance between the resources it allocates to development and the resources it allocates to defence. The balancing and rebalancing never end. Yes, China will react to the US, India will react to China, China will react to India, Vietnam will react to China, and South-east Asia will react to everybody, and it goes on and on.

It is an unending process. What the Chinese do is in itself a reaction to others. It would not be fair to put the blame on China which is itself reacting to others. There are always national aspirations. They don't always coincide. Rivalry is a condition of existence between and among nation-states.

Islam and radicalism

Global Islam is going through a difficult period. Islam is not just a personal religion. Islam is also a religion of how society should be organised. So in societies where Muslims are in the majority, it is very difficult to confine Islam to the personal sphere. That is in the nature of the teaching of Islam itself. In Islam, there is no bifurcation of religion and state. Because of this, Islam today is caught up with a political challenge: how Muslim societies should be organised in response to modern-day challenges. It has not really found a good way to the future.

The collapse of the Ottoman Empire led to different approaches, none of which has been really successful. Ataturk rejected the caliphate and launched Turkey on a different path of development. It gave up the Arabic script, Romanised the language and made Turkey a secular society. That was a revolution still being debated.

Then there was the Nasserite road to socialism during the Cold War. It inspired others like (Libya's) Muammar Gaddafi. It led nowhere.

Then you had the conservative groups - the kingdoms and sheikhdoms of the Gulf. They thought that the best way to respond to modernisation was by going back to old values and tribal arrangements, which meant no democracy.

In South-east Asia, there was a parallel process. Indonesia had the revolution, got rid of all its sultans. There was a big debate about the nature of the Indonesian Constitution, whether it should be Pancasila or something Islamic. That debate continues in Indonesia.

In Malaysia, a different accommodation was found between the old and the new which continues to present itself as tensions in society. In southern Philippines and southern Thailand, separatism is an additional complication.

The Muslim Brotherhood offered an alternative approach. It saw in a return to the pure values of Islam the way to order human society. It encouraged a return to the pure teachings of Islam. That is the best way to transform individual countries and indeed the world. The thinking of the Brotherhood evolved into a number of variations. Some took the path of revolution which met crackdown and imprisonment in Egypt. A number were executed in Egypt. Others were put away.

The Muslim Brotherhood almost came to power in Algeria until the military intervened.

We see a new variant in Hamas. The Brotherhood also inspires the PKS in Indonesia and PAS in Malaysia. This is a continuing debate.

In a multiracial society, that kind of thinking frightens non-Muslims. In the recent Jakarta elections, the PKS candidate had to assure the Chinese and the abangan Muslims that they are not extremists. But many people are still suspicious. In Malaysia, PAS says it stands for multiracialism. But the non-Muslims are not so sure.

These are the different strains in the world. Along the path of evolution, one strain mutated into jihadi terrorism. It is in fact against the teachings of Islam and against the teachings of the mainstream Brotherhood.

We can't solve this problem by ourselves in Singapore because we are part of a much larger phenomenon affecting the entire Muslim world. But we must understand the forces at play. It will be very wrong of us to paint all Muslims or all members of the Brotherhood with the tar of terrorism. The key is to work with the good to fight the bad. And the more we understand the elements in detail, the better we will be able to address the problem, minimising the side effects. It's like if you have a precision instrument, then you can be very accurate in dealing with the problem. But if you have a blunt instrument, when you act against the problem, there will be a lot of collateral damage. The only way to be accurate is to understand the nature of the problem, which is why I went back to the history.

Terrorism is a malignant mutation of a particular movement in Islam. How did that mutation come about? It is partly frustration, partly provocation. We need a deep understanding to tackle the problem effectively. At one level, we can take precautions, catch people who are trouble- makers and defuse bombs. But it also involves winning over the larger community and fighting wrong ideas. To a certain extent, we also need to insulate ourselves from negative external influences. We can't avoid a complex response. It has to be a multi-faceted response. If we simplify the response, we will be making mistakes.

Singapore's outlook

My biggest fear for Singapore is the effect of globalisation on our social cohesion. It is clear that the majority of Singaporeans are benefiting greatly from the success of our policies. We are now becoming an international city with multiple links to all the centres of growth and development in the world. So Singaporeans are finding opportunities everywhere. Some have become very wealthy. We have many Singaporeans now doing well in New York, London, Shanghai and elsewhere. Our standing as a country has gone up. Many developing countries now hold Singapore up as a model.

But there is a group of Singaporeans, and they are not an insignificant number, who are not able to take advantage of all these opportunities either because they lack the education or are in poor health or suffer bad luck. We must make sure we don't become two Singapores. If we become two Singapores, there will be resentment, there will be opposition to doing the right things and we would not be able to seize the new opportunities before us. For this reason, many of our policies are now directed towards making sure we do not become two Singapores.

Asset enhancement, CPF reform, the subsidising of work especially for older Singaporeans, educating the young to the maximum of their potential, job retraining are all part of this. Our subsidy of health, education and housing enables every new generation to be brought to the starting line of global competition. We must make sure of this. Government alone cannot solve this problem. It has to be a part of our instinct and value system to stay one family.

We can't allow a second Singapore to emerge by neglect or by insensitivity. That to me is the single most important challenge before us. It is a political, economic and cultural challenge.

In MFA, we have a tradition of recruiting a small number of disabled people. I inherited this policy. It showed that senior foreign service officers and HR managers in the past had the sensitivity to help the disabled. And if each one does his bit, then there is no problem. But if everyone says it is not his problem, then a small problem becomes a big problem for society. Private philanthropy is critical. I am not only talking of big acts of giving such as those of Bill Gates and Warren Buffet, but of everyone doing his part, making social action a part of his daily life.

Everyone can be a volunteer. If we can make this sensitivity to others a part of our culture, we will stay one and react to challenges as one. Then our future will be very bright indeed.