As we approach the end of this century, the prospects are good for the region. Regional economies are doing well. Living standards are going up. The region is plugged into the global economic order and the benefits have been tangible. Along with the rise in the quality of life has come greater regional self-confidence. In short, we are on course for better things in the years ahead.

However, we cannot afford to be complacent. The present prevailing happy state of affairs can easily be disrupted. Our relations with our neighbours may be developing well, but our strategic environment extends beyond our neighbourhood. Hence, it is incumbent on us in Singapore to continuously scan the security and strategic environment to gain a better understanding of the changes taking place in the rest of the Asia–Pacific and how they will impact on Singapore.

There are three key strategic developments which can bring about uncertainty in the region. The first is the emergence of China as a key player in the region both economically and militarily. With its growing economic strength and military capability, how China seeks to assert its interests eg. its claim over the Spratlys Islands in the South China Sea will be closely watched by many countries. It is thus essential for us to strive to gain a better understanding of China and the implications for China’s role in the region.

The second key strategic development is the changing mood in Japan. A post-World War II generation in Japan is fast emerging to positions of influence in Japan. Pressures are already steadily mounting for Japan to behave in a manner commensurate with its economic clout. In future, Japan’s interests may not always coincide with those of the US. What will be the pressures, both within and without Japan, that would impel Japan to review her security alliance with the US is a question which many serious-minded analysts of strategic questions are already grappling with.

The third key strategic development is the long term role of the US in the Asia-Pacific. While the 1995 East Asia Strategic Report has been reassuring concerning the US intention to remain engaged in the region, there nevertheless remains reason for concern. For the present, there is unlikely to be significant change in US strategic thinking and deployment in the region. Over the long haul, US domestic and external pressures and national priorities could arise that could change the nature and extent of US involvement in the Asia-Pacific.

Given these developments, the shape of the balance of power in Asia-Pacific will be determined by the net effect of the interplay of internal and external dynamics involving China, Japan and the US. If the confluence of these strategic changes result in a stable balance which is sustainable over the coming decade, the region will continue to prosper even more. But the Asia-Pacific has its share of flashpoints that have the potential for creating regional instability, through triggering clashes of interests among the three big powers.

These strategic developments and the existence of flashpoints around us will dominate the current dynamics of our strategic environment. The establishment of the Institute of Defence and Strategic Studies will enable scholars and students to research and test ideas on the impact and implications of this rapidly changing strategic environment for Singapore’s security. The Institute will also help to develop comprehensive approaches to strategic thinking related to Sins pore’s interests. Such work by the Institute, focussed on academic aspects of research and teaching, will be invaluable to policy makers as they grapple with questions on how best to enhance our security in this time of uncertainties. Through its research and scholarship, the Institute can enhance political awareness of strategic questions which are crucial for the predictability of inter-state relations and reduction of uncertainty and suspicion. This will not only reduce the potential for conflict but also help to strengthen our regional and international bonds, thereby contributing to continued peace and stability in the region.

The activities of the Institute will be overseen by a Board of Governors comprising the Chairman, the Director of the Institute and up to 12 other members. I am pleased to announce that the NW Council has appointed Dr Andrew Chew, Chairman of the Central Provident Fund and former head of Civil Service to be the first Chairman of the Board of Governors. Ambassador S.R. Nathan, who has been appointed as the first Director of the Institute, will concurrently hold the appointment of Ambassador-at-large in the Ministry of Foreign Affairs.

I am also pleased to. announce that the Singapore Totalisator Board has very generously donated $10 million to the Universities Endowment Fund to establish an endowment fund for the Institute. With the Government matching dollar for dollar, the Institute’s endowment fund will have an initial capital of $20 million. The return fi^–om the Institute’s endowment fund will help fund the Institute’s research programmes and activities. The Institute also plans to raise an additional $15 million which, with the Government matching dollar-to-dollar, will in due course raise the Institute’s endowment fund to $50

It now gives me great pleasure to inaugurate the Institute of Defence and Strategic Studies.