Lee: We have a great interest in a successful, stable and peaceful Indonesia, and if it is not like that, there is a penalty we pay, because the whole region is affected.TIME: There are some stories that St John's Island [off the coast of Singapore] is being set up as a refugee holding center.
Lee: There are all kinds of rumors. We worry about a lot of things.
TIME: What is the model for Singapore? Switzerland, Costa Rica?
Lee: There is no model which exactly fits our circumstances. If you look back far enough perhaps you could say Venice provides an encouraging model because it was a small city state with far-flung trade networks that survive a thousand years. In the modern world we are different--you can compare us with Switzerland, but Switzerland is in the midst of a very different region with the EU. You can compare us with former colonies, little ones, but many of them have been reabsorbed--Hong Kong, Goa, East Timor.
There must be a sense of nationhood and a sense of shared identity, even though we are different races and different religions. You need strong roots and strong bonds, but at the same time we have to be an outward-looking, cosmopolitan society, because we make our living doing business with the world, and we are only relevant as long as we are up to date.
TIME: Is change happening because of a younger generation of leaders taking over?
Lee: A younger generation of leaders and a younger generation of Singaporeans. The formative experiences are different. This generation has grown up in stable times, seen progressively improving standards of living, gone to good schools, many gone on to university, good careers, and now in last two years been rather rigorously reminded that this is still rather an unpredictable part of the world. What we need to do is to maintain a confidence, but yet be aware of the vulnerabilities. You have to speak a different language to the younger generation. But the imperatives, the constraints, the things we have to do as a nation have not changed so much.
We would be foolish if we didn't use this opportunity to educate people. You can see it happening in front of you all the time, and not just on television watching riots and demonstrations. But people who have taken temporary refuge in Singapore and you can see them in the shopping centers and the parks at weekends--I think these are salutary experiences, the whole world is not as peaceful and benign as you might think from just looking at Singapore.
TIME: Can you use this sense of crisis to engineer change?
Lee: Not so much engineer change, but inoculate people with certain immune responses that will last them for a long time. Do not assume that what we have got is in the natural scheme of things.
TIME: Singapore has a well thought-out and transparent succession--does that set you apart in S.E. Asia?
Lee: We are not Indonesia, if we had not moved on I think our leadership would have got out of date, and been unable to govern as effectively and make the changes in policy and approach which are necessary.
TIME: You are widely seen to be a candidate for the next prime minister--does it give you some comfort there is no threat of riots if you take over?
Lee: First of all, that is not fixed, it depends on the political sentiments of the people and the confidence of the MP's. But there is a mechanism and there are enough people in play in the leadership that they know they have a team which is competent to lead. That is more important that personalities.
TIME: Would you be prepared to take over?
Lee: If they have confidence in you, then it is your job to do it. It would be irresponsible to say no I don't want for personal reasons. This is not a job really, this is more a vocation.
TIME: Do you have any sense of a timetable. Goh has said he will go through to the next elections, and then start to step back.
Lee: No there is no timetable. I make a contribution where I can be useful, and I think I am useful where I am now.
TIME: Is there any contradiction in the strong political line you still put out and this younger and you hope more creative generation.
Lee: There is a range of views outside. Our job is to try and represent a middle ground and tap as broad a range as possible, as long as they are consistent with the fundamentals, which means you have to be for Singapore and want to build this place up and not tear institutions down. I think there are quite a number of people PAP, Roundtable, even in the opposition--and we will work with them.
TIME: Is the Internal Security Act the type of language you want to speak to the younger generation?
Lee: The ISA is a very interesting case. We have never used it against political opponents, only when it has been for security interests. We have arrested two people in '97 and two in '98 for espionage cases. these games go on all the time and you have to deal with them and it cannot always be by the Queensberry rules. You need the ISA.
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Lee: There are certain lines beyond which you can't go--the lines really are because of race, language and religion, and they are always going to be sensitive issues in Singapore.
TIME: There is a new openness--is that a consequence of a younger generation coming up?
Lee: If you compare us with America.
TIME: Liberalizing foreign banks?
Lee: We have to change. We worked the system for a long time, it has worked well, but the financial industry has become quite different and if we want to become a financial center then we have to have world class institutions--that means allowing more competition and getting our local banks to upgrade.
TIME: Was this done because of the economic crisis?
Lee: We really started this before the economic crisis in 1997 because we were becoming progressively dissatisfied. The industry was growing, it was quite respectable, but we were getting feedback from the bankers if you want to take the next step forward you have to loosen up some--it is not something you can lightly do, because if you are in a controlled environment you cannot just let go and expect a 100 flowers to bloom. You have got to manage your transition. We started doing that in 1997 just about the time the crisis began. Then as the crisis deepened we decided consciously to proceed with this rather than slow it down or change course. We did the other parts first, because they were easier--fund management, bond issues, fixed incomes securities market, the stock exchange and the futures exchange. The most delicate one which we took some more time over was the banking sector, which we have now done.
TIME: Not a big bang, more of a tweak?
Lee: It is more than a tweaking, what we want is a series of adjustments which will be cumulatively significant, but not an overnight change.
TIME: It would seem that a couple of foreign banks would become dominant here and you would have two big Singaporean banks--what is your vision for the next 10 years?
Lee: Ten years is very long. We have said we would like to have at least 50% of the market in domestic hands--even if you look at Hong Kong two-thirds is in domestic hands, and they are about as open as you can be.
TIME: As Hong Kong comes more under the control of China, is that an opportunity for Singapore?
Lee: I think we play complementary roles. We are a state, they are not, they are part of China, we are not.
Lee: We have problems, which we have been working out with the Chinese, it is not easy, the Chinese have many levels of government. This is a project which had more than a commercial purpose. It was to be a vehicle where you could try out some of the ideas which worked in Singapore but in the Chinese context. Depending on how that works out you have a model which you might be able to use selectively in other parts of China. But along the way that objective has become diluted.
TIME: Was it a mistake?
Lee: I am not sure it was a mistake, it was an ambitious objective and we didn't realize how ambitious it was.
TIME: Internationalizing the Singapore dollar?
Lee: We are making some changes to the rules, but the fundamental policy of non-internationalization remains. I doubt we will want to do that--how does it help us?
TIME: Singapore shot itself in the foot with the recent revelations of scanning Internet accounts--that would be anathema to IT capitalists looking to set up shop somewhere.
Lee: They shouldn't have done it, we have stated our position that it was a mistake. We have put it right, we are in a learning process--these are new areas where there are no rules.
TIME: You seemed to have licked your illness?
Lee: So far so good. I had lymphoma in 1992, and the doctor said if it doesn't come back in five years you are probably alright. So more than five years have passed--you keep on being watchful.
TIME: You said somewhere one of the lessons from this is there are some things you cannot control. What does that mean?
Lee: There are things you can't predict, you cannot know what will happen. Also you realize your personal limitations, you really can't go and do everything. When you are young you think any problem can be mastered from first principles and you can work on the solutions. But beyond a certain point you realize there are some things you can't and you have to go on advice of people who know better and you have decided to trust, and you work with a team, and not all outcomes can be completely predetermined.
TIME: People say it has made you easier to work with?
Lee: Maybe, I hope so. (Laughs.)
TIME: Any specific goals you have? Your father founded this country, Goh has said he is of a bridging generation, how would you like to see described what you have done?
Lee: I think to have made a contribution to a country which has endured beyond the founding generation and adapted itself and kept its soul. A Singaporean growing up now can go and work in London or Silicon Valley. Singapore, if you are not careful, just becomes one of the options. To make this more than an option, and a place where you belong, I think that is a great achievement.
Partly it is quality of life, but there has to be some emotional attachment, some rootedness in the place.
TIME: This brings us back to where we started, Singapore not yet a nation--this identity crisis that Singapore keeps using to renew itself.
Lee: We are 30 years old, it is not surprising we haven't firmed an identity yet.