Part 1 of 2: The challenge of security for the world economy

Susilo Bambang Yudhoyono, Santiago

It goes without saying that security and prosperity are two sides of the same coin. But since Sept. 11, the dynamics between them are changing. The demands for greater security are affecting economic activities and business costs like never before. The world economy, particularly APEC economies, must now strive to find the right balance between security concerns and open trade.

I think all of us here today concur on the basic objectives that we seek for the world economy. The bottom line is that we want a stable, safe environment conducive for the international economy.

A conducive environment means the maintenance of security at all levels -- national, regional and international. A conducive environment demands a healthy climate for investment and trade. We all want our productive forces to inter-connect, grow and expand, so that the incomes of our citizens can also grow.

And a conducive environment requires a secure and efficient flow of goods, peoples and services within and across borders. The problem is that, for now and the foreseeable future, our economies must function in an international system which is fraught with threats and turbulences.

Terrorist groups continue to prey on our economies, seeking to strike a damaging blow to us with minimal resources. Non- traditional security threats are becoming prominent. Trans- national crimes are growing all its aspects, from narcotics trafficking to money laundering, people smuggling to illegal logging.

This is compounded by the increasing disparity between the haves and the have-nots, between developed and developing countries. And the specter of conflicts, be they old and new conflicts, inter-state conflicts or intra-state conflicts, continue to cast a worrying shadow over us.

The sum of all this is an unsettling sense of global insecurity. Yes, some of us can talk proudly of successful elections, or of great military victories, or about phenomenal rises in GDP, or about export growth, or about expanding and integrating markets, or about outstanding human development index. Still, these things do not erase an uneasy feeling which many of us feel about the present and future state of international and national security.

We see this unsettling sense of global insecurity in many developing countries, which are falling farther behind the developed countries. We detect this jitteriness in many developed countries, which are becoming increasingly worried about public security and terrorist threats. We notice it in the restlessness felt throughout the Islamic world. We see it being reflected in the travel warnings to many nations across the globe. We see it in the rising flow of illegal migrants between borders. And we feel it in the phenomenal rise in the price of oil recently.

This situation presents great challenges for the world economy in a variety of ways. Allow me to highlight at least six security challenges for the world economy which in my view require the attention of policy-makers and business leaders.

First, is the challenge of striking a satisfactory balance between security concerns and open trade. Our economic infrastructure needs to be guarded and well-protected against terrorist attacks but not at a cost or burden to business in such a way that trade flows will cease to exist. It is not an easy matter to balance the need for increased security and our goals to reduce transaction cost in the APEC region by 5 percent by the year 2006.

Second, is the challenge of building a greater resilience. The economies of the world must develop a capacity to withstand the devastating effect of terrorist attacks and rebound quickly.

In the last three years, we in Indonesia were hit by three major bomb attacks: The Bali bomb in 2002, the Jakarta Marriott bomb in 2003, and the Kuningan bomb this year. All of them were devastating -- the worst being the Bali bomb which killed over 200 people of various nationalities. But we recovered much better after each attack. And for each attack, it took less effort to rebound than the previous one. Look at our political stability, our stock market, our exchange rate, tourism industry, flow of travel, and the economy in general. All indices bounced back much more quickly following each terrorist strike.

Ultimately, resilience is the responsibility of each government. But any country experiencing distress will still need a helping hand from its international friends. Gestures of support and solidarity can go a long way in strengthening resilience. Hard working Indonesians in the service industry have complained that the travel warnings on Indonesia badly hurt their livelihood, and many of them think they are being unfairly, though unintentionally, punished for what the terrorists are doing.

But we were also touched by the sympathetic gesture of a number of foreign residents who decided to stay in my country no matter what. That display of solidarity is not only appreciated by Indonesians, it also sends a strong signal to terrorists that they will not scare us into changing our way of life.

The third challenge is evolving the right kind of security cooperation. While terrorism has been around for a long time, fighting modern-day terrorists today is a new experience for all of us. To deal with it, we need to change the way we think about national and international security. During the Cold War, governments ensured their national security by keeping intelligence from each other. In the post-Sept. 11, post-Bali, post-Riyadh, post-Madrid world, we can ensure our security only by sharing our intelligence with one another.

To fight terrorists who ignore borders, governments must evolve a different security culture. Our police, intelligence, immigration officials must be able to work together extensively. The community of nations must evolve a new global security culture where the norm is for all law enforcement agencies to cooperate with one another. This is what Indonesia and Australia did when we co-sponsored a number of regional conferences on people's smuggling, money laundering and counter-terrorism.

This is an abridged text of a keynote address given by President Susilo Bambang Yudhoyono at the APEC CEO summit in Santiago on Nov. 20, 2004.