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 this week. This is the first part of the edited transcript.
Asia's role in the international security environment
LET ME start by saying how I see the world.
How does Singapore survive and prosper? Only if there's international order, there's peace and stability in the region and there's growth instead of wars and conflicts. Why has the region grown in the last 50 years? Because there was an American umbrella that provided security.
First Japan, then Korea, Taiwan, Hong Kong and Singapore blossomed. Finally, Mr Henry Kissinger and Richard Nixon went to China and opened the door. Then Deng Xiaoping came to Bangkok, Kuala Lumpur and Singapore in November 1978 to get us to join forces against the Vietnamese when they were about to capture Cambodia.
I think he had a shock because he saw three Third World cities better than Shanghai and probably better than Beijing. What intrigued him about Singapore was that it was orderly, it was clean, everybody had a home. And what was the economy run on? Trade and multinationals. He asked many questions. He realised you can make use of international capitalism, train your people, get revenue and bring about an egalitarian result.
When he left, I told my colleagues at the airport to see him off. His staff must have got a shellacking because the brief they gave him did not live up to his experience. Instead of crowds applauding and waving at him, everybody went about their business. The greatest Chinese leader next to Mao Zedong and everybody said, 'Well, life goes on'.
He decided that same year on the Open Door Policy. It started with about 10 coastal cities (and agricultural reforms). He must have been thinking about all this for a long time: the system was malfunctioning and what he saw in Singapore clicked. Then their good fortune was they had then-US president George H.W. Bush, who invited them to export to America. They are now in the World Trade Organisation (WTO).
They did their sums carefully. Why did these countries develop? How did they overtake China? What is it that enabled them to grow? And I believe they came to the right conclusion: knowledge of the outside world, connections with the outside world, trade, investments, technology and markets. What is it they need? The same.
So slowly, gradually, they moved. Mr Zhu Rongji also came to Singapore, studied us in the 1990s, went back and started his own housing scheme in Shanghai based on our model.
So if I look forward and ask 'what kind of world will allow us to prosper', I think I require first an American pillar with European Union (EU) support to provide the overall ballast. Then as China grows and India grows, Brazil and Russia become more muscular, gradually adjustments take place.
If you watch (the Chinese), you will see that they avoid conflict. You're not going to change them but they're not going to be truculent like the Russians. If you complain about Darfur, they'll send an emissary and try and improve things. You complain about this, they try to ameliorate. But their relentless pursuit of commodities and energy will go on because they know that if that stops, (there would be) trouble at home. If they continue this course, they will be a player within the system. I believe that will hold until a generation that has no experience with the past comes into its own and says 'we have arrived'. Then you might have a different China.
I put this point to them. They said, 'no, no, we're going to make quite sure that it doesn't happen. We need 40 to 50 years'. They know they need to educate their people as we have educated our people. So they have got their students all over the world. I understand Britain has about 75,000 of them in your universities. This is China's Meiji Revolution 150 years after the Japanese - learn from the world, come back. Many won't, doesn't matter. They'll network, bring back knowledge, technology and link up with those countries.
India has also decided it has to open up. I wasn't convinced at the beginning. When Manmohan Singh as finance minister and Chidambaram as commerce minister came in the early 1990s just after the International Monetary Fund (IMF) pressured them to open up, they asked us if we would back them, lend our credibility to their free-market enterprise. We said 'yes'. But when I visited them, Bharatiya Janata Party (BJP) leaders told me India was selling its heirlooms. I said, 'that would be a U-turn'. But (when the BJP assumed power) and the prime minister visited China, when he came back, the next time I saw him, it was full steam ahead. So they realised that if they didn't go this way, they'd be left behind.
If India and China keep on this course, then we're going to have another 10, 20, 30, 40 years of peace and stability in Asia and we will grow. But things could go wrong.
What is the worst-case scenario? China gives up because the world turns protectionist, they got to go their own way and they don't make this kind of growth and they have internal problems. Then what? Then I cannot say that there'll be peace and stability.
At the moment, their approach is: Let's not disturb the world order. I do not see them challenging the international order. They'll play within the rules, not seek spheres of influence, trade, barter, do whatever is necessary within the rules. But the other scenario - if something goes wrong and there are difficulties, if they try to create an East Asia Bloc that leads to regional rivalries - then you'll have an unstable world.
The European Union's response to Russia
I VIEW the EU's lack of unanimity in responding to the Russians as a weakening of the system. Once former German chancellor Gerhard Schroeder wanted a pipeline (from Russia), they got an advantage. I met him after he left office. He said: 'Russia is more important to us than China or any other part of the world. They need us, we need them and Eastern Europe is our sphere.' Chancellor Angela Merkel is not a Russian fan but she has adopted this pipeline, and this gives the Russians a very powerful instrument to split the EU. So whether it's Abkhazia or Ossetia, there will not be a united response. That means a weakened Western position.
You watch the Chinese, they have not recognised Kosovo. They expressed profound concern but no recognition. So the other Central Asian states also withheld recognition. They are going to take a non-combative position.
So, for the time being, all is well but if this meltdown takes place and leads to a different kind of world, then I cannot say. The world will stay like this as long as the Chinese believe this is the way they will modernise and catch up.
The risk of the 'Finlandisation' of South-east Asia in response to a rising China
THAT'S already happening. Anything discussed within the 10 members of Asean, you can be sure the Chinese embassies in three countries will be informed: Laos, Myanmar and Cambodia - and they know exactly the position of each Asean country. What is it you want? Facilities for a summit in Laos? I'll build you a conference hall, I'll build you a hotel, I'll provide you with the facilities. The way they exercise soft power goes back to a very traditional Chinese way.
One and a half years ago, they decided to hold a meeting of Asean leaders in Nanning, in Guangxi province. It was a very backward province and they demonstrated that they have changed Guangxi. The place was splendidly decked out. They put on a show depicting the culture of each Asean country. One leader of a big Asean country said: 'Now we know it's not democracy that makes you grow; it's stability and order.'
(Asean leaders) went back fully conscious that this is an unstoppable rise. And the Beijing Olympics had the same effect. It's not that they have arrived, but they assure you of their potential. They're not a new power; they're an old power that's reviving.
Only they can stop themselves. They have the manpower, they have more than adequate intellectual capabilities, they sent a man into space all on their own.
With the bomb, you can say that one eminent Chinese scientist came back from America and helped them. But this one, nobody helped them. I watched a programme on CCTV4 explaining how they arrived at this one astronaut. They started with 1,500 candidates three or four years earlier. Three months before (lift-off) they reduced it to 50 candidates. Then the final three weeks, they reduced that to five candidates. Then the last day, they chose one and President Hu Jintao flew in and wished him Godspeed. And off he went. But I thought to myself: 1,500 to choose one?
What will happen in the (next) Olympics? They're now taking up cricket. You may not believe it but they are. They've got Australian and Indian trainers to produce a cricket 11. And why not?
So I see all the signs of a power already on the ascendant without having to use physical force. You take Singapore. We've helped them in so many ways. But when then-deputy prime minister Lee Hsien Loong visited Taiwan, there was a lot of publicity which the Taiwanese foolishly thought would help them. Beijing decided to show us that this is wrong. They froze everything. A free-trade agreement which was on the cards just got held back. Now finally it's on the cards and settled, will be signed in October - but after we've learnt what not to do when their core interests are involved. It has already happened.
So I start off with the major premise: Let's have a world order, the one I'm accustomed to, (hope it) still obtains.
The problems of extremism, fundamentalism, terrorism
TO SOLVE these problems you must have, first, good intelligence - block their finances, break up their cells, and counter it. Force must be prevented from being exercised before it does you harm. But how do you prevent the radicalisation of these jihadists?
You would have thought peaceful Singapore (wouldn't have these problems). We've broken up the Jemaah Islamiah cell, about 32 individuals. And lo and behold, (we find) a chap self-radicalised on the Internet. It's already all on the Internet. It's all worked up.
You've got to solve the Palestinian- Israeli problem or you're giving them a drum to beat. But how do you solve that? Everybody is rooting for Senator Barack Obama - a great breakthrough. But Mr Obama said that Jerusalem shall be the undivided capital of Israel. So he's already disqualified himself from ever having a two-state solution. That means he'll postpone it for another eight years if he wins. So the thing drags on. I'm not very optimistic.
The environmental consequences of China's rise
AS THE climate change drama unfolds, I hope in five, maybe 10 years, the Chinese will realise that it's closer to midnight than they think. When they suddenly find rivers going dry or there are large movements of people looking for arable land, I think they will start doing something. At the moment, their attitude is: Compare our per capita income to America's and you're telling me that I'm the cause of this? I don't think it's helpful but that's their position.
They went to Bali. Both the Indians and they took that position. I think they will stick to that position at all conferences until they realise they are caught in this too. They're building two coal stations every week. The Beijing Olympics and the Paralympics are over and the smog has come back to Beijing. To clean up Beijing permanently is a very big cost.
We had the Guangdong party secretary coming down recently. He wants us to start an eco-city project in Guangdong. But how's he going to get rid of all the factories and power stations that he's built? So he now talks about clean and green. But how do you get there?
We faced a problem of constraint of space. So as we industrialised, we recognised right from the word 'go' that if we did not do it the right way, we would ruin our lives. We had enormous troubles when we built the petrochemical station complex with Sumitomo. They wanted Japanese standards. We said 'no, we want world standards'. So we had Germans, Americans vetting each stage of the construction process. But the net result is, you go to Jurong, you're near the petrochemical wells, there's no odour. It was worth the effort.
So greenness for us was a matter of survival. But it wasn't for (the Chinese). Just go for growth. Now they're switching to another yardstick: sustainable growth. But between the indicators they impose and the execution are many long years.
The second part of the transcript will be published on Monday.