By Padraic Fallon
In the heart of Singapore lies the Istana, the former residence of the British governor-generals of this tiny former colony. It is surrounded by beautifully landscaped rolling parkland, the model of an English country estate. The entrance to it is on one of Singapore's busiest traffic arteries, around a mile away from the magnificent residence which in turn is guarded by soldiers uniformed in something like the splendour of one of the smarter British regiments. In the modest annexe to the residence is the office of one of the most influential men in the East, the ascetic Lee Kuan Yew, Prime Minister of Singapore.
Lee Kuan Yew, Prime Minister of Singapore
History may judge Lee as the architect of modern, industrial, successful Singapore, as the politician who enjoyed virtually total support from his multi-racial people through the ballot box, who ruled with a rod of iron as the ruthless opponent of Marxism, as the man who re-merged Singapore with Malaysia and then took it away again, as the statesman who threw all the brilliance of his rhetoric into persuading the decaying British Empire into maintaining a military power east of Suez, and lost, and as the leader of a sovereign state that survived confrontation with Indonesia.
It may judge him on more than that. It may judge him as a statesman who enjoyed an influence in the region that was totally out of proportion to the size and power of the state that he ran. Lee is the easterner whom western leaders heed, and he is probably the most enthusiastic proponent of the political and economic grouping known as the Association of South East Asian Nations, a body composed of five states that differ enormously but have one thing in common: unity against communism. That enthusiasm may stem from the possibility that the 224 square miles of his island state are too constraining for Lee’s restless energy and ambition. Or it may stem from the possibility that if he is to protect his country from what he considers to be the unnecessary march of Marxism in the region he must do it by promoting more than the prosperity of Singapore. History will judge that, too, a fact of which the Prime Minister is acutely conscious.
Journalistic profiles of Lee (in the western press in recent years most of them have been unfavourable) commonly refer to two facts about his background: one, that he came down from Cambridge with a double first, and two; his sympathy with Jawaharlal Nehru's remark that he could not speak his mother tongue as well as he spoke English. For Lee appears very British at times, even to the extent of interrupting his interview with Euromoney to pick up the internal telephone to ask for "a spot of tea" before returning to the question. With a distaste for rich living, he is aging in a characteristically Chinese way: into a thin, reflective elder of the family, very different from the press photographs of the 'fifties which show him as an almost burly young politician, standing on platforms in an open-necked shirt, hectoring voters in Malay, English or Mandarin. His outward zest and enthusiasm, but not his energy, seem to have diminished with age and maturity.
The Prime Minister is third-generation Singaporean with a comfortable financial background. Politically he became a devout anti-imperialist which meant being devoutly anti-British in some respects, but only in some respects: he still has a great respect for some British traditions and institutions, probably more so now than he did at the beginning of his political career when, as a young lawyer and trade union advisor, he helped to form the People's Action Party 25 years ago.
Today's Singapore reflects a great deal of Lee's personality. It is increasingly puritanical. It is free of litter. Taxis halt only at taxi stops. Passengers are prohibited from smoking. Cigarette stubs mustn't be thrown on the streets. Those regulations extend into the less mundane world of banking and business. There are those who prefer the society of which Lee is the architect to others in the Far East: but there are those who do not, who say they find the rules and regulations too European, and out of place in the Far East.
In a relaxed afternoon at the Istana annexe recently, Euromoney editor Padraic Fallon explored the attitudes, hopes and fears of one of the world's most unusual politicians.
You have a reputation as a political visionary, but you also appear to combine that with an impatience of criticism, and a taste for what appear to some to be an excess of regulations. How would you describe your style of government?
I do not think anybody can be objective in assessing his own style of government, but he can be subjective in trying to describe what he is trying to do. What I am trying to do is to get an unexpected place like Singapore – unexpectedly on its own in a vastly changed world, politically beyond recognition, and economically transforming itself so fast that it is getting itself into knots – just to keep the place going, to keep the society cohering, to give diverse groups of peoples who were never intended to be brought together into a nation, a sense of common destiny and purpose, and to approach it as practically, and as realistically as possible.
When you say you were left on your own unexpectedly, are you referring to the split with Malaysia?
Yes. This was the heart of the British Empire in south-east Asia. From here the British governors ruled Peninsular Malaya, Borneo, the Cocos Islands, the Christmas Islands. Britain cut us off from Peninsular Malaya, after the war, in ‘45, believing that it was necessary for the sea route from Britain through Suez on to Australia. By the 1960s, after the Suez crisis, Britain had lost interest in Singapore because the route to Australia was not that important. Britain was going into Europe, and so we are where we are.
So, in your view, Singapore's existence is one big, historical, accident?
But an accident of which you must be very glad.
I am not sure. I think we shall leave that for historians to decide. I have a duty to make sure it works.
And how do you see yourself going about that?
Well, you see it here. You see it better than I do. You see it from the outside. I am so busy working it from the inside.
But would you say that one of your basic philosophies of ruling is one of regulating rather than leaving things to work themselves out?
No. I do not think so. I think regulations are necessary if you are to have any order at all. People who work in a factory must start at the same time. Everybody must be in place. The watchman is there the whole night. He opens the gates. The workers are in position before the assembly line begins. We have all got to travel either on the left or on the right side of the road. We have all got to agree that when the light is red, we stop. When it is amber we take heed. When it is green, we go. I am basically the product of transplanted civilization – and mixed at that – of a Chinese extended family upbringing in a British colony.
But does that give you a taste for regulation?
Maybe. Certain forms are necessary. For instance, at mealtimes when you gather together at table, the elder in the family invites you to proceed with the meal. You don't dash to a table and take all the choice bits before your parents have sat down. There are certain forms.
And you see yourself as the elder of the family in that respect?
In a vague, analogous sort of way.
Is that the Chinese influence?
But not the British one?
The British one here was even worse. What the Governor's edict said, went. But here the ballot box is final. So that makes the business of government a complex one.
Let's stay with the ballot box. You run a democratic country, a democratic nation state. But it's been described as the most governed of democratic states.
That is a subjective appellation. Does it work, does it not work? That is the acid test. If the regulations stifle, we will be strangulated, we will perish. If there are no regulations, or not enough regulations, there is chaos, and we also perish. We have got to strike a happy medium.
You appear unduly sensitive to criticism, whether it is in the foreign press or elsewhere. Do you feel that you have had a bad deal from the foreign press?
No, not particularly.
Think of the last ten years.
Not really. It is part of a vogue, a fashion, for western correspondents to take pot shots at people in authority, especially if they are not respectful of press opinions. While I pay due attention to what they say, I pass them over when it is not relevant.
You've seen a lot of changes in the years since the withdrawal of the British. Do you think you have lost a lot of your enthusiasm in that time?
I did think I was filled with burning enthusiasm. I was prodded by a deep sense of urgency.
Let's turn to your own vision of Singapore. Are you motivated by a dream of turning it into an Asian centre of influence, a small but rich country which, while it is unable to control the destiny of the area through power, seeks to do so by influence instead?
I do not think so at all. My original objective was to have Singapore reunited with Peninsular Malaya, and to build a multi-racial corridor, a democratic, stable and prosperous society; not very strong, not very powerful, but one which gives an adequate life to its people. That was not to be. I had to ensure that two million people earned a living on 224 square miles, and fortunately my colleagues and I have not failed them.
Looking at other leaders in the region, recently you have appeared to be on very friendly terms with President Marcos of the Philippines, more so than with any other leader in the region. Would you say that you have a lot in common?
Why do you say that? I get on well with him in the ASEAN context because we share certain ideas in common of how ASEAN should move forward.
Rather than how your own individual countries should proceed?
He has got very different problems from Singapore. He has got a different history of American style one-man-one-vote, a different culture, and many different problems.
What views do you share on how ASEAN should progress? Let's tackle the political side first. Is ASEAN important politically, rather than economically, or economically rather than politically?
Both. They are two sides of a coin.
Let's take the political side. How is ASEAN important politically?
Well, it mutes differences which would otherwise be exploited by those who want to break us up.
Like all those who do not want to see a group of non-Communist countries cooperating, helping each other, propelling each other's economy forward.
Who would you single out in particular? The USSR, or China?
You are not an ignorant man. You read Tass, you read Hsin-hua, you know who supports ASEAN and who does not.
So ASEAN to you is a political grouping as much as an economic grouping?
But can you engineer a mutual defence pact?
You have moved from the political to the defence arena.
The two are very interconnected, aren't they?
They are the rim of the coin, to use the are metaphor. But when we get the two sides of the coin nicely minted, then we can mill the coin later.
So what is on the face of the coin?
On the one side, closer economic cooperation, complementarity of our economies, our industrialization, preferences in food supplies, oil supplies in times of scarcity, and shortages. On the other side, coordination of our views – or rather a greater approximation of our views – on the direction in which the region should go in its relations with the great powers, the kind of arrangements which will enable us, in a largely tri-polar world – quadri-polar if Japan is included – to have the maximum freedom of choice, to choose our partners in economic cooperation, our partners in industrial cooperation, our partners in trade, our partners in progress.
But if we take the other example of a similar form of institution, the EEC, the attempts at political unity have tended to grind to a halt because of one factor and another, and yet those countries are far more similar in terms of political institutions, and in terms of their industrial basis than the countries who are members of ASEAN. Don't you think there are immense obstacles in your way?
Of course. And I think it is nothing short of a miracle that we have been able to get so close to each other so quickly.
Where do you think you will go from here?
Painfully, laboriously, fitfully, but together I hope.
What are the main stumbling blocks to becoming more integrated?
More inter-related is probably more apt. The diversity of our different backgrounds, the different stages of economic growth, the different perceptions of our own national aspirations, but we are often brought back to earth by the realities of the common dangers we face, and the awesome alternatives if we do not work together.
Economically speaking, how would you like to see Singapore developing? Is your vision, in this respect, one of turning Singapore into the services centre of ASEAN, or of Asia itself?
The kind of world in which we are living, or in which I find myself living, does not allow me that luxury of painting pie in the sky and predetermining what I want to be. In 1973 came the oil crisis, and one doubted whether there would be such a thing called a financial sector. That crisis is not over yet. The IMF Conference has finished in Mexico City and I read Mr. Witteveen and I hope that what he says will be endorsed and supported, and gradually implemented by all the major parties that took part in it. I hope that the meeting that will take place of the seven major industrialized countries in Bonn will give more confidence to the direction of the world economy than the last meeting in May in London. Against that kind of a world backdrop, to be able to meet the scores of storms and tornadoes that blow our way unexpectedly is a full-time job.
|The prime minister talks with Euromoney|
But you have met them very successfully. For instance, Singapore, in particular, came through the recession, and through the worst year of recession, still, with some growth left. Aren't you taking too pessimistic a view?
In the first half of 1975, I thought we were heading for minus growth. We reached zero, and we would have dipped into minus growth in the second half had Mr. Ford not begun to step on the accelerator for 1976. That was a small plus. But this is an inter-related, interlinked world. We are part of it.
Are you conscious that you are more inter-related and inter-linked than most countries?
Yes. We are plugged into the grid. Our trade in total volume is twice our GNP. So we are really a creation of the new kind of global economy, or a manifestation of the new global economy that has emerged out of World War Two, out of the IMF, Bretton Woods, GATT – all those institutions now under great stress.
Is this why you are so worried about protectionism? Because you recently described a 'protectionist phobia' that was sweeping the world, didn't you?
I do not think it is a phobia. I think it is a reality. Every politician, every political leader in office faced with heavy unemployment, faced with declining industries, facing an election one, two or three more years from hence, has to pay attention to his own constituents, and that means job protection and import restrictions.
Let's look at your attempt to become a major world banking centre, which has been very successful in many respects, but which is beginning to wane in others. Few, if any, would criticize or question the ability, or even the brilliance of some of the people whom you have appointed to promote that concept. But at the same time, some international banks are beginning to prefer the relatively unregulated atmosphere of Hong Kong from which to do their regional business. Does that development worry you?
I don't think we can ignore it, but worry is not the right word. I think Hong Kong and Singapore are in many respects complementary, and in fact Hong Kong, in a way, sets us thinking about where we are perhaps not as efficient as we should be.
That point about complementarity is an argument that a lot of people use, and quite frankly I find it a little difficult to accept. Where regional banking headquarters are concerned, some operations can be carried out between one centre and another, and a lot of them are. But for some banking activities people need to congregate in one place where they can see each other as well as talk to each other on the telephone.
What is the thrust of your argument?
The thrust of my argument is that your banking centre has attracted a lot of foreign banks into Singapore that were very happy to come here and are still very happy. But at the same time, a lot of them are also going to Hong Kong, some of them decidedly in preference to Singapore because Hong Kong is more attractive in some ways, because (a) there is a taxation advantage and (b) there are few regulations in Hong Kong on banks doing foreign business.
First, we cannot be as unregulated as Hong Kong. We start off with that as a fact of life. Hong Kong has not got one-man, one-vote. It has a different style of government, and a different approach to life and business.
There is a distinct disadvantage in being over-regulated. We have looked into this, and the MAS, our monetary authority here, says that we are not over-regulated compared to Frankfurt or London.
Which is true.
They say that in order to maintain our integrity as a financial centre, we must know what is happening. Hence we must monitor enough banking transactions to ascertain figures to notice when safety margins are being ignored. I do not believe that over-regulation is a problem yet.
The problem that we face is tax concessions, or tax-free positions in Hong Kong, and also the fact that the Hong Kong Inland Revenue Department has a different philosophy of life. It is a live and let live philosophy, which we cannot accept because we have to pay for so many things which go into our social system – education, health, social services, the rest. In Hong Kong the user pays for everything. Our users have the vote. This makes us extremely conscious of the fact that we are building something which we hope will last.
There are two aspects of a financial centre. One is a kind of postbox, a situation, a tax-free haven, a booking centre. The other depends not just on the tax cessions, but more on a geographic imperative in that it serves a certain area, it is linked to the other world money markets, financial centres, and it is convenient for international trade. Tokyo is three hours ahead of us. We are seven-and-a-half hours ahead of London. Bahrain is three hours ahead of London. New York is nearly twelve hours behind us. Hong Kong is half an hour ahead. So there is an advantage, particularly since floating exchange rates, of settling one's account and doing one's business on the day, and not waiting for London to open.
Secondly, you will notice if you see the banking activities, that the Asian currency unit, or the Asian dollar, is largely based or collected in Singapore, but the syndication of the loans has tended to be carried out more in Hong Kong recently, and there are two reasons for that. One, the tax advantage in Hong Kong for syndication, and two, most of the loans done recently have been to enterprises or to corporations in South Korea, in Taiwan, or in the Philippines, where there is a geographic advantage. Now, the geographic advantage we can do nothing about, and in fact Hong Kong and Singapore will complement each other. For instance, before the Pertamina troubles, most syndications were done in Singapore, because you are over in Djakarta in 1 hour 30 minutes, you are over in Kuala Lumpur in 45 minutes. Bangkok in two hours and so on; the advantages are obvious. The ultimate long-term test will be just how much relevance we have to the economy of the world and of the area, and second, how much real banking expertise we develop. That is the crux of the matter. That's apart from the infrastructure of good communications, good legal facilities, good printing facilities, confidence in money moving in and out freely. If we can build up that expertise, attract the money and have the bankers and brokers who know how to put it to good use, then we shall stay as a financial centre.
One of the criticisms is a lack of legal expertise in Singapore, particularly in relation to banking. Do you see this as a disadvantage?
Yes and no. First of all, all Crown colonies or former Crown colonies are beneficiaries of the British legal system, and the lawyers who are qualified to practise in Hong Kong are qualified to practise in Singapore. I do not see any disadvantage or advantage there.
But the fact is that the big London law firms who specialize in this sort of work, have tended to go to Hong Kong rather than coming here.
That will depend on the work. If the work is here, then the law firms will come here. This is the day of the telex. Before you switch off for the night here, you can leave something on the telex so that your London solicitors or counsel are faced with the problem whilst you are asleep, and you will have the answer when you wake up first thing tomorrow morning. You can be out in Concorde – I hope in the not-too-distant future – in nine hours, if there is litigation or argument over what a phrase means. I do not see that as a major problem.
Let me turn to the economy. Your per capita growth has more than doubled in a decade, and is now the highest in southeast Asia. But when you recently indicated a target of about US$3,000 per head by the early 1980s you added, "and then the real problems will start". What did you mean by that?
By the early 1980s, first assuming that there is no catastrophe between now and then and that we grow at an average of, say, 4% to 6%, depending on how much the OECD countries are growing, then we would clear US$3,000 per capita. Then several problems will arise. A generation would be entering the market, or would be seeking jobs – it is beginning already now – that has not known poverty. Attitudes to work may change, I am not sure, but I am fearful. We have already seen some signs of these job preferences – no longer being decided just by rewards but by working conditions, job status and so on. So we have had our share of guest workers, not because they are ill-paid jobs but because the educational system is tuned by teachers and by the mass media and so on to consider certain jobs desirable. This means that we won't be as flexible. Whoever has to do our manpower planning must take into account the fact that there isn't the same flexibility in getting workers to move from one trade to another, which has been our great advantage so far.
This was something you stressed in your May Day speech.
Yes. Nobody could have predicted that it was in electronics that we would find so many lucrative jobs, that our ship repairing was going to thrive and prosper, that we would go into petrochemicals from oil refining, that we should become such a major centre for oil refineries. These were not predictable. And the flexibility or the ease with which our workers moved from job to job enabled this rapid growth. Now we are getting a bit of calcification, set social attitudes, and at about $3,000, with one-man one-vote, they will demand social benefits and job preferences. That will present problems.
Every developed nation, with the exception of Japan, has had to face it. We have been under-developed so far. Now we shall move into a different phase. And I think we have got to take this on board in our thinking, that we do not have the same flexibility any more.
Do you think most developed countries did not take this on board?
No, I don't think they did. That is one of the problems why the developed countries are facing such persistent unemployment. If you go to America, if you play golf you cannot get a caddy. If you go to a hotel you find it difficult to attract the attention of the waiters. If you go to a hospital you do not get nurses. But if you read the unemployment reports you know that there is 6% or 7% unemployment, that black unemployment of teenagers is about 40%. So ask yourself, why are these jobs not being done? I think these are man-made problems, or society-made problems.
You also made a reference in your May Day speech about getting every Singaporean involved in what you termed 'Nation Building', if the situation that existed here in 1945-1961 was never to recur. One of the many outstanding facets of your personality is your complete and utter detestation of Communism in any shape or form. Obviously your brushes with the Communist movement have left very deep impressions on you. Can you describe those impressions?
I was in a united front with them for many years, from 1950 onwards, and I was dabbling with Marxism as a student before that. But the practice of Leninism and Maoism by the Malayan Communist Party is completely different from the theoretical ideals of Marxism. It is a heartless creature. It is a heartless organizational framework designed for the acquisition of power by stealth, by force, by every means. And in the process, it has led to the degradation of all human values, by men who profess, and initially must have believed in, the sanctity of human life and the desire to uplift the human being from the misery of poverty and exploitation of the old colonial society.
Your form of "dabbling" as you call it, do you see it in retrospect more as a form of anti-imperialism than a pro-Marxist creed?
It might have been. I would have gone with them the whole hog. Had Britain not handed over power the way it did, and had there been a shoot out, then I think I would have been on the other side, and too involved, and more deeply involved day by day ever to extricate myself. But it did not happen that way.
Did the results of the war in Indo-China ever lead you to believe that the march of Marxism throughout south-east Asia was inevitable?
I did not believe it then, and I do not believe it now. These results were determined by men. And they could have been the other way.
Will ASEAN help you to prevent that?
Undoubtedly. Otherwise why should it be attacked so vehemently?
Do you think that detente is now an empty vessel, in view of what has been happening in Africa?
Detente, as describing a state of equilibrium in the arms stockpile, especially the strategic arms stockpile of the two super powers and a common desire to avoid mutual destruction, is the only sane and rational basis on which we can plan the future of the world. But, it is absurd to believe that detente, because it has been called detente by the Americans, and not by its Russian name, carries with it what Giscard d'Estaing has asked of Brezhnev, an ideological detente. Brezhnev rejected it. He believes that history means a relentless working out of the class struggle by all means, short of nuclear exchange, which will bring about the establishment of the dictatorship of the proletariat in all the countries of the world. Therefore, within the framework of no war between the super powers, there will be many contests for the control of hearts, minds, lives and property, of many new countries.
But that is not what President Carter believes.
I do not know what President Carter believes.
But you know what you read, the same as I do.
The American view of detente has changed from President Nixon in 1970-72 to Ford in election year '76, to Carter in '77 shortly after inauguration, and to Carter-Vance '78 and Carter-Brzezinski '78.
Does the Carter-Brzezinski view alarm you?
I always believe in taking a Communist leader at face value. If he tells his people, in his official organs, his press, his radio, his books and his publications, that the world will become Communist because it is the inevitable march of history, then you must take that at face value. It is his intention that he helps history, and I have never allowed myself to be bemused to the contrary.
Do you think that China under chairman Hua will now seek to push out beyond its borders?
It never has done. I do not think it is in a position to, even if it wants to.
Does it want to?
No, I do not believe it does. But at the same time it does not want to see the American influence in the countries along its periphery, particularly the south and south-east periphery, being displaced by Soviet influence. Hence the flurry of activity in China at the moment. The new constitution has been promulgated and a new leadership has barely settled its domestic arrangements before leaders are off on visits to Cambodia and Burma, Nepal and the Philippines.
You mean it is launching a diplomatic offensive?
I think that they thought that they had been too pre-occupied or they had neglected their neighbourly relations, because of the Gang of Four. The internal feuding must have taken a lot of time and energy.
Do you think there will be an American pull-out of this area?
The position today is distinctly different from the position when President Carter first announced the withdrawal of all ground forces in Korea by 1981. First, it is apparent to everybody that it is not the dramatic off-the-mainland posture that people feared it might be.
Congressional deliberations have sorted out the fears this policy was thought to mean. I am convinced by what the President and his principal aides have said, and by the interaction between them and Congress, that this is no pull-out of Asia. The United States understands that if there is a fundamental shift in their position which imperils or jeopardizes Japanese security, then there will be a shift in Japan's own position. And that could alter the balance of power of the whole world.
Which would be very serious?
Which would be disastrous. And I am also convinced that the Americans have every intention of maintaining a capacity to project their naval task force into the region, into the Indian Ocean, into the south Pacific, and that they intend to stay in the Philippines for this purpose.