Monday, September 29, 2008

The centre must hold

Sep 29, 2008

Minister Mentor Lee Kuan Yew had a dialogue with 200 diplomats and academics during his visit to the International Institute for Strategic Studies in London last week. This is the second part of the edited transcript of his remarks. The first appeared on Saturday.

US financial crisis

IN THE nature of the free market system and the way in which it operates in America - inventive minds working out derivatives, hedge funds and so on - from time to time, you're going to get this kind of a problem. You're never going to solve the boom and bust cycle.

Once you have a loss of trust and banks do not lend to each other, the system freezes up. How do you get it unfrozen? You have got to restore confidence. How do you restore confidence?

The extreme view is you do what the Chinese did - all the bad debts, nationalise, and then the banks restart. Now they got have some sound banks with foreign partners. What will that cost? Many trillions of dollars. What has Mr Hank Paulson proposed? US$700 billion (S$1 trillion). And he's having trouble with Congress. But eventually, they'll pass (a package) or they'll be blamed for big crash. Whether it will meet their situation, I don't know.

But let's say there's a complete collapse and you're back in 1929. Is that the end of the world? Have we learnt nothing from the last Great Depression? Everybody has read Charles Kindleberger (Manias, Panics And Crashes), what shouldn't be done the next time. I think (the US economy) will pick up again. But does that mean the end of all crashes? No.

Nuclear proliferation, North Korea, Iran

I NEVER believed the Chinese would get the North Koreans to give up the bomb. The North Koreans may be prepared to put the bomb in a glass box - and break (the glass) only in emergencies - provided you pay them a handsome fee. But to give up (the bomb) - no, because that's regime survival. They have seen how China abandoned them and went to South Korea because China wanted South Korean technology and investments. The North Koreans are not going to trust China.

As for Iran, it's a very dangerous game the Russians are playing. I would have thought that if ever there was fissile material in Iran, there will be fissile material in Chechnya. Mr Vladimir Putin knows that, but he believes that the Americans will do something about it, they will carry the can. So it's a game.

I do not think it is likely that Iran will stop its nuclear processing. The best solution is to get the Russians (on board and impose) really serious sanctions. But you have got to pay a price.

If you want to get the Russians on your side, was it wise to expand Nato in this aggressive fashion? I mean, are you going to war over Ukraine or Georgia?

I don't know what Saakashvili (Georgian leader) thought. He may have been cheered by whatever the Americans told him. But the hard facts should have told him (otherwise). I'd rather not say anything more because I've got some very strong views on the stupidities of leadership.

Can Singapore allow more freedom of expression?

I START off from first principles. What was it that I had to do to get this improbable country to become a country and eventually a nation? We were a disparate people, rioting against each other just a year before independence because Malay extremist forces stirred up problems.

So let's work from first principles. I have got to have a stable, peaceful society. How do I achieve that? I had strict laws against inciting racial or religious problems. At the same time, I made quite sure that everybody's treated equally. Your religion's respected.

We also got everybody mixed up in the (housing estates), no longer in enclaves. Every constituency has its quota of the less successful. Everybody has the same chances in education and we chose a neutral language - English.

Malaysia threw out English and went with Malay. The Chinese and the Indians decided to have their own schools. Now they have got a divided society.

So these are basics which you have got to get right: level playing field, meritocracy, regardless of race, language or religion. That's part of our national pledge.

Now we've arrived, why not we run a liberal democracy? Why should we? I get a clear mandate. The lowest score we ever had was 60 per cent of the electorate. Why?

Oh, because the press is controlled. The press is controlled? Everything's reported but no crusading on anything is allowed. The Internet is there. You can do what you like. But we try to prevent ourselves from being sidetracked.

Now we've got a coherent Singapore. Do we want an incoherent Singapore and have the whole thing come to bits? Think about it very carefully. At every election time, I tell them, think carefully. Next five years, do you want your homes to be worth more or less? A taxi driver, the smallest hawker, has a home worth $150,000. He's a stakeholder. You vote the wrong government in, property prices drop, you are in trouble. You produce the right government, more infrastructure, roads, underground trains, more connectivity, better environment, clean water, drains become little rivulets, you improve your asset. Why should we change that? Because the Western media and political scientists say that's wrong. Is it?

I have any number of testimonials, unsolicited, from visitors saying 'I love your place. I'm going to settle here'. Look at the people who are coming in to settle. We have in the last few years 30,000 Indian professionals who have taken up residence. We welcome them. We have (thousands of) Chinese and Indian companies. Why have they come? Because we are a liberal democracy? It is because we offer them a platform from which they can market their wares throughout South-east Asia and on to China and India. Do we want to risk that?

Ministerial salaries

OUR Law Minister (Mr K. Shanmugam) gave up a practice worth $4 million - he was a top litigator - to serve as minister for $1.2 million.

Look at who's wives are dripping with gold and diamonds. We are the poorest of all the ministers in Asean countries. Do you want that to change? Am I not worth a million dollars? I can get $100,000 to $200,000 for an appearance somewhere, to talk to a group of bankers who had brought their clients together.

At every election, (ministerial salaries) are an issue. We don't fudge this. We justify it. As long as we have clean, honest, effective government, it will hold. The day we become dishonest, ineffective, incapable, we are out.

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