INTERVIEW WITH THE PRIME MINISTER, MR. LEE KUAN YEW, BY …

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LKY/1978/LKY0502.DOC

INTERVIEW WITH THE PRIME MINISTER, MR. LEE KUAN YEW,

BY MR PADRAIC FALLON, EDITOR, EUROMONEY, ON 2 MAY 1978

PADRAIC FALLON: 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?

PRIME MINISTER: I do not think anybody can be objective in assessing

his own style of government. He can be subjective, trying to describe what he is

trying to do. What I have been trying to do is to get Singapore -- unexpectedly

independent on its own in a vastly changed world, politically beyond recognition

in the post-empire era. Singapore has been transforming itself very fast to adapt

to a changed role in this post-imperial world. Amongst other things, I have had

to give diverse ethnic groups who were never intended to be brought together

into a nation, a sense of common purpose and destiny. Singapore’s unexpected

problems have to be solved practically and realistically.

PADRAIC FALLON: When you say you were left on your own

unexpectedly, are you referring to the split with Malaysia?

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PRIME MINISTER: Yes. This was the heart of the British Empire in

Southeast 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 vital for the sea

route from Britain through Suez on to Australia. After the Suez crisis in 1956,

Britain began to lose interest in Singapore because the sea route to Australia was

no longer that vital. Britain was going into Europe.

PADRAIC FALLON: So, in your view, Singapore’s existence is one big,

historical, accident?

PRIME MINISTER: Indeed.

PADRAIC FALLON: But an accident of which you must be very glad?

PRIME MINISTER: I am not sure. We shall leave that to historians. My

duty is to make sure it works.

PADRAIC FALLON: And how do you see yourself going about that?

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PRIME MINISTER: You can see for yourself better than I can tell you.

You see it from the outside. I am busy working it from the inside.

PADRAIC FALLON: But would you say that one of your basic philosophies

of ruling is one of regulating rather than leaving things to work themselves out?

PRIME MINISTER: Not necessarily. Regulations are necessary if we are to

have any order. People who work in a factory must start work at the same time.

The workers must be in position before the assembly line begins. We have all to

travel either on the left or on the right side of the road. We have 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 the product of a transplant -- brought up in a Chinese extended

family set-up, in a British colony.

PADRAIC FALLON: But does that give you a taste for regulation?

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PRIME MINISTER: Maybe. Certain forms are necessary. For instance, at

mealtimes we gather 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 to be observed.

PADRAIC FALLON: And you see yourself as the elder of the family in that

respect?

PRIME MINISTER: In a vague analogous way.

PADRAIC FALLON: Is that the Chinese influence?

PRIME MINISTER: Probably, yes.

PADRAIC FALLON: But not the British one?

PRIME MINISTER: The British influence here was worse. What the

Governor’s edict stated cannot be challenged. Now the ballot box decides every

5 years. So that makes the business of government complex.

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PADRAIC FALLON: Let’s stay with ballot box. You run a democratic

country, a democratic nation state. But it’s been described as the most governed

of democratic states.

PRIME MINISTER: That is a subjective appellation. Does it work, does it

not work? That is the acid test. If the regulations stifle, we will be strangled,

and will perish. If there are no regulations, or not enough regulations, there will

be chaos, and we will also perish. We have got to strike a happy medium.

PADRAIC FALLON: But you appear unduly sensitive to criticism, whether it

is in the foreign press or elsewhere. Do you feel that in a sense you have had a

bad deal from the foreign press?

PRIME MINISTER: No, not particularly.

PADRAIC FALLON: Think of the last ten years.

PRIME MINISTER: 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. I pay due attention to what they write, but do not

always change my policies as a result.

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PADRAIC FALLON: 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?

PRIME MINISTER: I think I was filled with burning enthusiasm. I was

prodded by a deep sense of urgency.

PADRAIC FALLON: 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?

PRIME MINISTER: I have not thought in those terms at all. My original

objective was to have Singapore reunited with Peninsular Malaya, and to build

up a multiracial tolerant, stable and prosperous society. It would not have been

a very strong, not very powerful country, but one which could give an adequate

and satisfying life to most of the people. That was not to be. I had to ensure that

two million Singaporeans could earn a living on 224 square miles. Fortunately

my colleagues and I have not failed them.

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PADRAIC FALLON: 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?

PRIME MINISTER: Why do you say that? I get on well with him,

especially in ASEAN, because we share certain ideas of how ASEAN should

move forward.

PADRAIC FALLON: Rather than how your own individual countries should

proceed?

PRIME MINISTER: His problems are very different from Singapore’s. The

Philippines has a different history of American style “one-man one-vote”, a

different culture, and many different problems.

PADRAIC FALLON: 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?

PRIME MINISTER: Both. They are two sides of a coin.

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PADRAIC FALLON: Let’s take the political side. How is ASEAN important

politically?

PRIME MINISTER: Well, it mutes differences which would otherwise be

exploited by those who want to break us up.

PADRAIC FALLON: Like who?

PRIME MINISTER: 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.

PADRAIC FALLON: Who would you single out in particular? The USSR,

or China?

PRIME MINISTER: You are not an ignorant man. You read TASS, you

read Hsinhua, you know who supports ASEAN and who does not.

PADRAIC FALLON: So ASEAN to you is a political grouping as much as an

economic grouping?

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PRIME MINISTER: Of course.

PADRAIC FALLON: But can you engineer a mutual defence pact?

PRIME MINISTER: You have moved from the political to the defence

arena!

PADRAIC FALLON: The two are very interconnected, aren’t they?

PRIME MINISTER: They are the rim of the coin, to extend the metaphor.

When we get the two sides of the coin minted, we can then mill the coin.

PADRAIC FALLON: So what is on the face of the coin?

PRIME MINISTER: On the one side, closer economic cooperation,

complementarity of our economies, our industrialisation, preferences in food

supplies, oil supplies in times of scarcity and shortages. On the other side,

coordination -- or rather a greater approximation of our views and policies 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 tri-polar world, U.S., USSR,

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China -- 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.

PADRAIC FALLON: 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?

PRIME MINISTER: Of course. I think it is nothing short of a miracle that

we have been able to get so close to each other so quickly.

PADRAIC FALLON: Where do you think you will go from here?

PRIME MINISTER: Painfully, laboriously, fitfully, but together, I hope.

PADRAIC FALLON: What are the main stumbling blocks to becoming more

integrated?

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PRIME MINISTER: More interrelated is probably more apt. The diversity

of our backgrounds, the different stages of economic growth, the different

perceptions of ourselves and our separate national aspirations. But we are often

brought back to earth by the realities of the common dangers we face, the

awesome alternatives if we do not work together.

PADRAIC FALLON: 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?

PRIME MINISTER: The kind of world in which we are living, or in which I

find myself living, does not allow me the luxury of painting a pie in the sky and

predicting what I would wish to be. In 1973 with the oil crisis, there were times

when I doubted whether there would be such a thing called a financial sector, let

alone a financial centre. That crisis is not over yet. The meeting that will take

place of the seven major industrialized countries in Bonn in July this year could

give more confidence to the direction of the world economy than the meeting in

last May. Against this world backdrop, to be able to ride out the storms and

tornados that blow our way unexpectedly is a fulltime job.

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PADRAIC FALLON: 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?

PRIME MINISTER: In the first half of 1975, I thought we were heading for

minus growth. We reached zero growth in the first half but fortunately pulled up

in the second half because President Ford had stepped on the accelerator for

1976. It was a small plus. This is an interrelated interlinked world. We are part

of it.

PADRAIC FALLON: Are you conscious that you are more interrelated and

interlinked than most countries?

PRIME MINISTER: Yes. We are plugged into the grid. Our world trade

value is twice our GNP. We are creation of the global economy, or a

manifestation of the new global economy, that emerge out of World War Two,

out of the IMF, Bretton Woods, GATT -- all these institutions are now under

great stress and in need of reform.

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PADRAIC FALLON: Is this why you are so worried about protectionism?

Because you recently described a ‘protectionist phobia’ that was sweeping the

world, didn’t you?

PRIME MINISTER: I do not think it is a phobia. I think it is real. Every

political leader in office faced with heavy unemployment, faced with declining

industries, facing an election, has to cater to his constituents, and that means job

protection and import restrictions.

PADRAIC FALLON: 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 criticise or question the ability,

or even the brilliance of some of the people whom who have [been] 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?

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PRIME MINISTER: 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. In fact Hong Kong, in a way, makes us think whenever we are

not as efficient as we should be.

PADRAIC FALLON: 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.

PRIME MINISTER: What is the thrust of your argument?

PADRAIC FALLON: 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 no regulations in Hong Kong on foreign banks doing foreign

business.

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PRIME MINISTER: First, we cannot be as unregulated as Hong Kong.

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

overregulated. We have looked into this. The MAS, our monetary authority,

says that we are not overregulated compared to Frankfurt or London.

PADRAIC FALLON: Which is true.

PRIME MINISTER: 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 over-regulation is a problem, yet. The

problem we face is in tax concessions, the tax-free position in Hong Kong, and

also that the Hong Kong Inland Revenue Department has a different philosophy

of life. It is a live and let live philosophy, which we cannot afford because we

have to pay for so many things in 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 that we must build something

which will last.

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There are two aspects of a financial centre. One is a

postbox, a situation, a tax-free haven, a booking centre. The other depends not

just on the tax concessions, but more on a geographic imperative, that it serves a

certain area, that it is linked to the other world money markets, financial centres,

that it has built up banking and financial expertise and it is a plus for the

international financial network. 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.

There is an advantage, in a floating exchange rates regime, of settling accounts

on the same day, and not waiting for London to open.

You will notice that the Asian currency unit, or the

Asian dollar, is largely based or collected in Singapore. However, the

syndication of the loans has tended to be more in Hong Kong recently. There are

two reasons for that. First, the tax advantage in Hong Kong for syndication, and

secondly, most of recent loans have been to borrowers in South Korea, in

Taiwan, or in the Philippines, where Hong Kong enjoys a geographic advantage.

The geographic advantage we can do nothing about. In fact Hong Kong and

Singapore will complement each other. For instance, before Pertamina’s

troubles, most syndications were done in Singapore because one could get to

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Djakarta in 1½ hours, to Kuala Lumpur in 45 minutes. Bangkok is two hours

away and so on.

The long-term test will be just how much relevance we

have to the economy of the world, and the world network of financial centres,

and secondly, how much banking expertise we shall develop and provide. That

is the crux of the matter, apart from the infrastructure of good communications,

legal facilities, 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.

PADRAIC FALLON: One of the criticisms is a lack of legal expertise in

Singapore, particularly in relation to banking. Do you see this as a disadvantage?

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PRIME MINISTER: Yes and no. First of all, all former British colonies are

beneficiaries of the British legal system, and British lawyers who are qualified to

practise in Hong Kong are qualified to practise in Singapore. I do not see any

disadvantage or advantage there.

PADRAIC FALLON: But the fact is that the big London law firms, who

specialise in this sort of work, have tended to go to Hong Kong rather than

coming here.

PRIME MINISTER: That will depend on the work. If the work is here, then

the lawyers will come here. This is the age of the telex. Before you switch off

for the night in Singapore, you can leave something on the telex so that your

London solicitors or counsel are working on the problem when they go to office

and whilst you are asleep. 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 any litigation or argument over what a

phrase in a document means. That is not a major problem.

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PADRAIC FALLON: 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?

PRIME MINISTER: By the early 1980s, assuming that there is no

catastrophe and that we grow at say, 4 to 6%, which in turn depends on how the

OECD countries are growing, then we would be above US$3,000 per capita.

Several problems will then arise. A younger generation entering the labour

market seeking jobs -- it has begun to show -- that has not known poverty.

Attitudes to some types of work may change. I am not sure, but I am fearful. I

have already seen signs of these job preferences -- preferences decided not by

rewards but by working conditions, job status and so on. So we have had our

share of guest workers, not because “heavy or dirty” jobs are ill-paid but because

the young has been through an educational system influenced by teachers and

reinforced by the mass media to consider certain jobs desirable and others

undesirable. This means that our work force won’t be as flexible. Our

manpower planning may have to take this factor into their calculations, that there

will not be the same flexibility and adaptability in getting workers to move from

one job to another, something which has been a great plus factor so far.

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PADRAIC FALLON: This was something you stressed in you May Day

speech.

PRIME MINISTER: Yes, Nobody could have predicted that electronics

would give so many lucrative jobs, that ship repairing was going to thrive, then

stall after the oil crisis and now recover, that we would become a major centre

for oil refining, that we would go into petrochemicals from oil refining. These

developments were not inevitable. And the flexibility and ease with which our

workers moved from job to job enabled this to happen. Now we are getting a

touch of calcification, set social attitudes. At about US$3,000 per capita per

annum, with "one-man one-vote", our workers may be able to impede our economic

development by their job preferences.

Every industrialised nation with the exception of Japan

has had to face this problem. We have been underdeveloped. We have got to

take this adverse factor in our calculations, when projecting our further

development.

PADRAIC FALLON: Do you think most developed countries did not take

this on board?

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PRIME MINISTER: No, I don’t think they did. That is one of the problems

why the developed countries are facing such persistent unemployment. In

America, if you play golf you cannot get a caddy. In a hotel you find difficulty in

attracting the attention of waiters. In a hospital nurses are not that abundant.

Yet, the unemployment shows 6 or 7%, that black unemployment of teenagers is

about 40 %. So I ask why are these jobs not being done? These are man-made

problems, or society-made problems.

PADRAIC FALLON: 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 economy is your complete and utter detestation

of communism in any shape or form. Obviously your brushes with the

communist movement have left very deep impression on you. Can you describe

those impressions?

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PRIME MINISTER: I was in a united front with them for many years, from

1950 onwards. 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

organisation -- a framework designed for the seizure of power by stealth, by

force, by every means. The degradation of all human values, the destruction of

all humane relationships, are all justified by men who initially must have believed

in the sanctity of human life to have had the dedication to want to uplift the

human being from the misery of poverty and exploitation of the old colonial

society.

PADRAIC FALLON: 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?

PRIME MINISTER: It might have been. But I believe I would have gone

with them the whole way. Had Britain not handed over power the way she did,

had there been a shoot out, I probably would have been on the other side, too

involved, and more deeply involved day by day ever to be able to extricate

myself. It did not happen that way.

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PADRAIC FALLON: Did the results of the war in Indochina ever lead you

to believe that the march of Marxism throughout Southeast Asia was inevitable?

PRIME MINISTER: 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.

PADRAIC FALLON: Will ASEAN help you to prevent that?

PRIME MINISTER: Undoubtedly. Otherwise why should it be attacked so

vehemently?

PADRAIC FALLON: Do you think that detente is now an empty vessel, in

view of what has been happening in Africa?

PRIME MINISTER: Detente, to describe a state of equilibrium in strategic

arms 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 for the world.

But, it is absurd to expect that detente, because it has been called detente by the

Americans and not by its Russian name, includes what Giscard d’Estaing has

asked of Brezhnev, ideological detente. Brezhnev rejected it. He believes in the

class struggle and that history is predetermined with victory to the working

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classes led by the Communist party, fighting by all means, short of nuclear

exchange. And the sacred duty of the Communist Party of the Soviet Union is to

help history and bring about the establishment of the dictatorship of the proletariat

in all countries in the world. Therefore, although they intend no nuclear war

between the super powers, they will contest for the control of hearts, minds,

lives, property and territory of other countries, whenever and wherever the

opportunity presents itself.

PADRAIC FALLON: But that is not what President Carter believes.

PRIME MINISTER: I do not know what President Carter believes.

PADRAIC FALLON: But you know what you read, the same as I do.

PRIME MINISTER: 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.

PADRAIC FALLON: Does the Carter-Brzezinski view alarm you?

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PRIME MINISTER: I always take 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 I must take that seriously at face value. It is his intention

to help history. I have never allowed myself to be bemused to the contrary.

PADRAIC FALLON: Do you think that China under Chairman Hua will now

seek to push out beyond its borders?

PRIME MINISTER: It has not done this. I do not think it is in a position to

do this even if it wants to.

PADRAIC FALLON: Does it want to?

PRIME MINISTER: No, I do not think so. At the same time, it does not

want to see American influence in the countries along its periphery, particularly

in South and Southeast Asia, displaced by Soviet influence. Hence the flurry of

activity by China. A new constitution has been promulgated. A new leadership

has barely settled its domestic rearrangements before leaders are off on visits to

Cambodia and Burma, Nepal and the Philippines.

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PADRAIC FALLON: You mean it is launching a diplomatic offensive?

PRIME MINISTER: They had been too preoccupied by the Gang of Four,

and had neglected their neighbourly relations. It must have been time and energy

consuming with all the internal feuding.

PADRAIC FALLON: Do you think there will be an American pull-out of this

area?

PRIME MINISTER: The position today is distinctly different from that

when President Carter first announced the withdrawal of all ground forces in

Korea by 1981. Then it appeared to be a dramatic off-the-mainland posture.

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 from

Asia. The United States understands that if there is a fundamental shift in their

position which imperils or jeopardizes the Japanese security, then there will be a

shift in the Japanese own position. And that could alter the balance of power of

the whole world.

PADRAIC FALLON: Which would be very serious?

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PRIME MINISTER: Which would be disastrous. I am convinced that

America has every intention of maintaining a capacity to project their naval task

forces into the region from Pacific to the Indian Oceans, and that they intend to

stay in the Philippines for this purpose.

______________________________

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