As Singapore’s founding father, he served as prime minister for more than 30 years until 1990. He now serves as minister mentor to the current prime minister, his son. At age 86 he is regarded as an elder statesman on the global stage whose views are widely sought. He also received a lifetime achievement away from the U.S.-Asian Business Council. Following is of the interview he conducted with Bloomberg TV:
CHARLIE ROSE: Where are we, do you think, in terms of a world order? We have gone through in ‘89 and ‘90 the collapse of the Soviet Union, the collapse of the Berlin Wall. Then we had the United States engaged in the Middle East in a long war that continues. Then we had the global economic crisis. So many people say what is going to come out of this?
LEE KUAN YEW: I see Iraq and Afghanistan as distractions. That is not going to change the world. Whatever happens in Iran or Afghanistan, the major changes that are taking place is the recovery of China, and to a lesser extent of India, places occupied three centuries ago before western colonization blanketed them.
Three centuries ago, they were, between the two of them, 60 percent of the world GDP, just the population and the production they put out. China’s again on the growth path. She’s now a member of WTO. She knows every year she’s growing faster than anybody else and can do that for another 20, 30 years because there are such an enormous numbers of workers back in the west and the hinterlands. Eight percent, 9 percent, 10 percent, no trouble at all. But after that, they reach a ceiling where their labor is concerned, and they have to increase productivity.
But by then in 30 years they’ll have an economy not per capita but in total terms bigger than the USA, which means they got resources to build up, political, strategic, and other influences. And in fact, in anticipation of that, people already treat her differently, because they know that this is going on a big fellow around the block.
This is a watershed. I mean the world order that we knew was dominated by the Caucasian peoples, Europe. Technology, sailing ships, and aircraft conquered the world, industrialization.
CHARLIE ROSE: Globalization.
LEE KUAN YEW: Well, industrialization first, and then globalization. And America is the extension of Europe with a difference, and that is she’s more embracing of other races. The 20th century was the American century. The first half of the 21st century, a large part of it will still be the American. But I believe the second half you’ll have to share top places with China and also with India, make space for them, too.
CHARLIE ROSE: You have said in a speech I read just today that the relationship between the United States and China, based on what you just said, has become the most important global geopolitical issue of the century.
LEE KUAN YEW: Yes, of course.
CHARLIE ROSE: How do they both handle it?
LEE KUAN YEW: From the Chinese side, in a very pragmatic, almost cold blooded and clinical fashion. On the American side, there’s been some vacillation. First China is a strategic adversary, then China is a strategic partner, then China is a stakeholder, and then China is not carrying its weight.
CHARLIE ROSE: China wants to be, as in the famous words of Bob Zoellick, the president of the World Bank, wants to be a stake holder.
LEE KUAN YEW: Bob Zoellick coined that phrase.
CHARLIE ROSE: In Singapore, I think.
LEE KUAN YEW: I mean, wherever he was, and the Chinese were
wondering what that meant.
CHARLIE ROSE: They didn’t know what stakeholder meant. They now know.
LEE KUAN YEW: Yes, they looked up the dictionary and didn’t get much out of it. They discussed it with friends, and I’m one of their friends. So I said to them, well it means that though you’re not a shareholder in the company, you have an interest in the company because you sell to the company, and if the company goes bust, you got no customer. And if you got no customer, your trade will go down and you have unemployment. So you have an interest in keeping that company going. And they have an interest in keeping you going because you are a good customer. You’re good producer for them — cheap goods, cheap products, and good quality.
CHARLIE ROSE: There’s great hope they will become more of a consuming economy and we’ll become more of a saving economy. You point that out.
LEE KUAN YEW: The Chinese have had 4,000 years or 5,000 years of all kinds of catastrophes — earthquakes, floods, famine, invasions, while the central government failed entirely, and nobody can help you. You got to help yourself. Let me tell you this anecdote. I was having my game left shoulder from golf being massaged by a very superior Chinese master who attended the region, and they sent him down to try to fix my game shoulder and he fixed it in three weeks. So we had a chat, because I’m 25 minutes on the couch, what can I do? So there was a flood up the Yangtze River. So I said you’ve opened up, you get lots relief supplies. And he looked at me puzzled. He said you don’t understand. The relief supplies will arrive in Shanghai. The floods will prevent it from reaching the villages.
And each village knows that’s going to happen from time to time, and up on the little hill they keep the rice, the salt, and all the essentials safe so that they will survive such a calamity. And that habit, just like the Japanese have the kit underneath their beds for earthquakes, that is their habit for surviving. So they keep the money under their pillow because the banks are not trustworthy, or gold…
CHARLIE ROSE: And the habit will not change, that habit of saving?
LEE KUAN YEW: It will take a long time. It will take one or two generations of affluence. It may happen in the cities, but it’s not going to happen in the countryside
CHARLIE ROSE: You say this about America, as well. You talk about the Chinese as having — they have patience and they have persistence and they have discipline and they have organization. But you say America has something special that will be part of the inevitable competition. It is its resilience and, more importantly, its creativity.
LEE KUAN YEW: Yes, of course. It’s not just American talent that gets you here. You’re just 300 million people and they have 1,300 million and very many more able people. But you are attracting all the adventurous minds from all over the
world and embracing them, and they become part of your team. Now I don’t see two million Indians and half a million other peoples, Japanese, Koreans, and others, becoming part of China. I mean, first the language is so difficult. Secondly, the culture is not embracive. How do you fit in?
CHARLIE ROSE: What should the United States do as it looks at the inevitable growth of China as a dominant player. What would be a wise foreign policy? Because you have two or three decades before it reaches the full strength.
LEE KUAN YEW: Even in three decades it won’t reach its full strength. In three decades its per capita is still about one-third of America.
CHARLIE ROSE: It’s gross domestic product.
LEE KUAN YEW: For it to reach America’s standard of living and standard of technology will take more than 100 years.
CHARLIE ROSE: So what should the United States do while it has the position it has now?
LEE KUAN YEW: I think make sure that they feel that they are accepted at the top table.
CHARLIE ROSE: Make sure that China feels accepted at the top table?
LEE KUAN YEW: Yes. There are places waiting for you when you make it, but you have to play by the rules of the game. And the key really is whether the next generation — this generation understands it. They know that they have no chance competing against the west, America especially, in technology and especially military technologies. There’s absolutely no chance. Let me build an aircraft carrier to protect shipping lines while they carry oil and other materials. This is the first time where the Chinese are growing but dependent on the world for resources.
CHARLIE ROSE: But they’ve gone around the world signing up contracts in Iran and Africa and…
LEE KUAN YEW: Absolutely. But before that it’s all within the Chinese empire. They don’t have to worry about the rest of the world. This time they have to worry with the rest of the world because without the resources, the oil, the nickel, whatever, their growth will stop.
CHARLIE ROSE: Will they be able to create the domestic demand that’s necessary as they find exports reduced?
LEE KUAN YEW: Slowly. But in the meantime they’re keeping the economy by an enormous expenditure on infrastructure in the west — high-speed roads, high-speed railways, airports, telephone lines, bringing water from the south up to the north where it’s arid and dry, huge, enormous, mammoth projects. That keeps it going.
CHARLIE ROSE: Will India have an advantage, some argue, because it’s a democracy and China is not?
LEE KUAN YEW: Let me put it this way, if India were as well-organized as China, it will go at a different speed, but it’s going at the speed it is because it is India. It’s not one nation. It’s many nations. It has 320 different languages and 32 official languages. So no prime minister in Delhi can at any one time speak in a language
and be understood throughout the country. You can do that in Beijing.
CHARLIE ROSE: So, in the end, do you think the system will change in Beijing?
LEE KUAN YEW: I think it will have to change as the people get more organized. Today it’s 40 percent urban or less than 40 percent urban, and more than 60 percent rural. When you reach the tipping point and 60 and 70 percent are urban with mobile phones, PDAs, and you can download anything you want, send any messages you want — it’s already had its effect. The Szechuan earthquake — in the old days nobody would know about except seismologists who saw that an earthquake took place. Here immediately all the Chinese knew the world knew, and they had to go public. And the prime minister took a plane full of pressmen and went there and tried to comfort them and assured them that there would be…
CHARLIE ROSE: So you are saying that communication and technology and the flow of information will have an impact.
LEE KUAN YEW: And the urbanization. If you’re in the countryside that’s different, you can be isolated. But when you’re together in the urban center and they’re planning 10 urban centers at 40 million people each, that’s the plans on the greater scheme of things, 40 million people in four mega-cities all with — you know, you can call a meeting anytime you want. You can have a riot any time you want.
So it’s a different world. Therefore you have to pay attention to what people think. And today they’re watching the Internet very carefully, because they know what the average person in the cities are thinking.
CHARLIE ROSE: What are they afraid of? What is there fear of?
LEE KUAN YEW: They’re not afraid. They just don’t want to lose control.
CHARLIE ROSE: So they’re afraid of control.
LEE KUAN YEW: No. They’re afraid that they will lose control in the situation. In the old days, way back in Mao’s days, everybody was dependent on the state. The state is the only employer and everybody has what you call a Huku. A Huku is a residence permit. And if you lose your job because you’re anti-government or whatever, you’ve had it. There’s no other employer. But today there are multiple employers, all…
CHARLIE ROSE: So people have options.
LEE KUAN YEW: Yes, absolutely. And that means the government has lost control over the people. They can be entrepreneurs. They run their own businesses, shops, whatever it is.
CHARLIE ROSE: But are they moving toward some form, not a western form, some form of more participation in the political process?
LEE KUAN YEW: They are co-opting all the successful people into the government system.
CHARLIE ROSE: That’s a smart policy.
LEE KUAN YEW: Jiang Zemin calls it the three representatives. So whether you’re an artist or you’re a businessman, whether you’re an activist, anybody who has got the extra drive to contribute to a greater China, come and join us.
CHARLIE ROSE: Coming out of the global economic crisis, even though the United States is the dominant country, it is forced to look to build and to engage and build coalitions on a whole range of big issues, and there is never now a guarantee of unanimous support. It’s hard to put together, for example, sanctions against Iran.
LEE KUAN YEW: Iran is a special case. Iran has oil and gas. The Chinese desperately need oil and gas. Russia’s playing a game with Iran. Russia doesn’t need oil and gas, but Russia wants to cut the U.S. down to size and remind the U.S. you need me to run the world.
With the Chinese they are doing their calculations. I think in exchange they must know if they buck the word — once the Russians say, all right, we agree, I would bet 50/50 the Chinese will also say…
CHARLIE ROSE: So if the Russians say we’ll engage in sanctions, the
Chinese will follow.
LEE KUAN YEW: They would not want to be the odd-man out and be held responsible.
CHARLIE ROSE: What if the United States finds another partner or another supplier of energy for Iran?
LEE KUAN YEW: No, in place of Iran?
CHARLIE ROSE: Yes.
LEE KUAN YEW: Where will you find…
CHARLIE ROSE: Well, in the Middle East. In Saudi Arabia and — not possible?
LEE KUAN YEW: No, not possible.
CHARLIE ROSE: But I had a Chinese diplomat say to me that they would welcome that, that if in fact they did not have a necessity of needing Iranian oil, they would go along with sanctions, because they don’t think…
LEE KUAN YEW: They need Iranian oil, they need Arabian oil, they need Nigerian oil, they need Angolan oil…
CHARLIE ROSE: They need all the oil they can find anywhere.
LEE KUAN YEW: Yes, of course.
CHARLIE ROSE: To fuel the economic growth at 8 percent.
LEE KUAN YEW: Absolutely.
CHARLIE ROSE: Tell me about Russia and how you see Russia today?
LEE KUAN YEW: Well, look, I’m doing a little bit of business in Russia.
CHARLIE ROSE: Yes.
LEE KUAN YEW: I’m also a member of the board of governors of Skolkovo Business School, invited to join it by Medvedev, who is now the president. So I speak as one who is a semi-Russian colleague. I would say they would do enormously better if they could get their system right. Their system is not functioning and not as functional as it should be because it has gone haywire. They’ve lost control over the various provinces, and they’re trying to bring it back to the center, but it’s difficult.
CHARLIE ROSE: What do you think of the relationship between Putin and Medvedev?
LEE KUAN YEW: Everybody knows that Mr. Medvedev is a very good friend
of Putin and also knows Mr. Putin is a very powerful fellow. And Mr. Medvedev is working through very powerful men called Silovikis, who are all from the FSB.
CHARLIE ROSE: Which is the former KGB.
LEE KUAN YEW: Yes. Now, Mr. Medvedev is a highly intelligent man. He’s a good friend of Putin, and he sees no reason why he would want to clash with Putin.
CHARLIE ROSE: And Mr. Putin will return to be president another day?
LEE KUAN YEW: I would say the probabilities are high.
CHARLIE ROSE: but you also said in a speech I read that the capabilities of Russia are limited.
LEE KUAN YEW: Well, they’ve got enormous nuclear arsenal, but what else? Their army is a very different army now. The air force — they’re building new fighters, but, I mean, their navy — and their population is declining — AIDS, alcohol, drugs, and pessimism. I mean, every year more Russians die than Russians are born because people are not optimistic. In America people are optimistic and say I’ll bring a child into the world. But when your life is so harsh, and from time to time it gets better when the oil price goes up, but that’s momentary, you have a different view of the future, so what’s the point of this?
CHARLIE ROSE: What about Japan — back to Asia?
LEE KUAN YEW: I think the Japanese need an overhaul.
CHARLIE ROSE: In terms of their political system?
LEE KUAN YEW: Yes, and in terms of their acceptance of immigrants. Their birth rate — their fertility rate is just slightly higher than ours. We’re 1.29 and they’re 1.30. They are shrinking. But we are a small population so we can make it up with numbers from young bright Indians and young bright Chinese, young bright Malaysians, and all the people around the world, and some middle easterners. We now have Ukrainians serving in the army.
CHARLIE ROSE: Ukrainians in Singapore?
LEE KUAN YEW: Yes, of course, Russians too, east Europeans, and British who married our local girls, and British women who married Singapore men. But Japan does not want immigrants, so they’re stuck. Today they have 3.2 working persons to support one adult. In 2055, they’ll have 1.2 persons to support one adult.
CHARLIE ROSE: And immigration has been America’s strength?
LEE KUAN YEW: Absolutely. But mind you, immigration of the highly intelligent and highly-hard working, very hard working people. If you get immigration of the fruit pickers, you may not get very far.