Lee Kuan Yew stirs it up again

The octogenarian former Singaporean Prime Minister Lee Kuan Yew Monday may have issued a grudging but almost unprecedented personal apology for what have been perceived as intemperate remarks about the treatment of the prosperous Chinese diaspora in Malaysia and Indonesia. Lee Kuan Yew’s “apology” was hardly a climb-down. Here is the text of his bristling letter to Malaysian Prime Minister Abdullah Ahmad Badawi over his controversial remarks at World Banks-IMF meetings in Singapore: Thank you for your letter of 25 September 2006. I made the remarks in a free-flowing dialogue session with former US Secretary of Treasury Larry Summers before many foreign delegates attending the IMF/WWB meeting. To put what Reuters reported into context, I set out the transcript of the relevant passage: "Let me sum it up nicely, why you must have a government in Singapore which is really firm, stout-hearted, subtle and resolute. My neighbours both have problems with their Chinese. They are successful, they are hard working and therefore, they are systematically marginalized, even in education. There are quotas to prevent you. So, you've got to make money to go abroad or go to one of the private universities which are being set up. And they want Singapore, to put it simply, to be like their Chinese, compliant. So every time, we say `No' to some scheme to knock down the Causeway and build a bridge, he says, `Oh you're not cooperative, you're only thinking of yourself'. For no rhyme or reason, we knock down a causeway, nearly 100 years old, which served us well. He wants to build a bridge because it looks pretty and he says ships will sail and his containers can move from the East Coast to the West Coast via this. "But we say no... So, we said, "All right, if you give us commensurate benefits, we'll agree". But you need a government who'll be able to, not only have the gumption, but the skill to say `No' in a very quiet, polite way that doesn't provoke them into doing something silly.” On the bridge and the half bridge to remove the Causeway, you made the position of your government clear that Malaysia respects legally binding agreements and acts in accordance with international law. "This made unnecessary a reference to ITLOS and the International Court of Justice that would otherwise have been unavoidable. This respect for the law is the basis for sound long-term relations between us. I was explaining to a liberal audience of westerners who wanted to see a stronger opposition in Singapore why the republic needed a strong majority government, not a weak coalition that would hamper it in defending ours national interests. Singapore needs a strong government to maintain good relations with Indonesia and Malaysia and to interact with Indonesian and Malaysian politicians who consider Singapore to be Chinese and expect Singapore to be 'sensitive' and comply with their requests. On numerous occasions Umno leaders including Dr Mahathir and many others have publicly warned Malaysian Malays that if they ever lost power, they risk the same fate as Malays in Singapore, whom they allege are marginalized and discriminated against. And from time to time when Malaysian politicians attack Singapore fiercely over some bilateral issue, some of them tell us privately that we should just accept that as a part of Malaysian politics and not to react to those attacks. Singapore understands the reality of Malaysian politics. We have never protested at these attacks on our multi-racial system or our policies, except to clarify our own position when necessary. But we have to explain to our people the root cause of these difficulties in our bilateral relations. Otherwise Singaporeans will believe that their own government is doing wrong either to our own people or to Malaysia. "As for the international audience, with so many foreign embassy staff and foreign correspondents reporting on Singapore and Malaysia, plus tens of thousands of expatriate businessmen working in our two countries, these people will come to their own judgment of the true position regardless of what I say. I have not said anything more than what I have said many times before and in fact I have even said less than what I had written in my memoirs published in 1998. I have no intention to meddle in Malaysia and indeed I do not have the power to influence Malaysia's politics or to incite the feelings of the Chinese in Malaysia. Since you took over as the prime minister in November 2003, relations between both countries have much improved. Singaporeans and, I believe, Malaysians appreciate this. I am sorry that what I said has caused you a great deal of discomfort. After a decade of troubled relations with your predecessor, it is the last thing that I wanted. In his post-script Lee said the fact that Abdullah had written to him had been well publicised and he had been asked about his reply, he had to release his letter to the media after the prime minister received it. But for better or worse, Lee has reminded the world again that the island republic, population 4.4 million, is not only a Chinese island in a Malay sea. It is banker, realtor, tinker, tailor and perhaps spy to both as well. Its tentacles run deeply into both countries, integral as they are to Singapore as its hinterland. The Chinese are burrowed into their economies, both to the countries’ vexation and their advantage.

Lee kicked off an ethnic storm in mid-September at the sidelines of International Monetary Fund and World Bank meetings in Singapore when he told a reporter that “our neighbors both have problems with their Chinese. They are successful. They are hardworking and, therefore, they are systematically marginalized."

That prompted Malaysia and Indonesia to summon the city-state's ambassadors for an explanation, which in turn led to a climb-down that would have been unthinkable during Lee’s reign as Prime Minister. Lee, now Singapore’s “minister mentor,” apologized in a letter to Prime Minister Abdullah Ahmad Badawi, saying, “I am sorry that what I said has caused you a great deal of discomfort."

The letter was distributed to the media by Lee's press secretary earlier this week. "After a decade of troubled relations with your predecessor, it is the last thing I wanted," Lee said in a backhanded reference to former Prime Minister Mahathir Mohamad, with whom he feuded for decades before Mahathir retired in 2003.

But apology or no, for the most part, Indonesia and Malaysia’s Chinese residents probably agree with Lee, although they are equally certain not to say so despite the fact that they form the economic backbone of both countries.

The ethnic Chinese have plenty of reason for concern. Certainly, statistics show a staggering economic difference between the three countries. Singapore’s nominal US$26,836 per capita GDP is more than five times Malaysia’s at US$5,042 and more than 20 times that of Indonesia at only US$1,283. Unemployment in Indonesia, hit by typhoons, riven by ethnic violence in some areas and smashed by the 2004 tsunami, is at 11.8 percent with 16 percent of its citizens living below the poverty line. Six percent of Malaysia’s citizens are below the poverty line while according to the CIA World Factbook the poverty-stricken in Singapore are statistically uncountable.

Historically nervous if Indonesia even belches, Singapore has a US Navy base at Changi, the better to sleep peacefully at night. That is because occasionally, when Southeast Asia’s economic miracle turns into a debilitating economic collapse, as it did in 1997 and 1998, the search is on for someone to blame. This was most obvious and most horrific in Indonesia, where Suharto's downfall in May 1998 and the ensuing violence severely dented the confidence of the ethnic Chinese community, especially those with business ties in mainland China. Ethnic Chinese Indonesians shifted an estimated US$60 billion to safety in Singapore. Although Malaysia has fared better in recent decades, ethnic tensions do regularly heat up and the disastrous 1969 race riots in which hundreds are thought to have died are referred to constantly as a concern..

Regarded now by Indonesians as Uncle Sam's voice in the Asia-Pacific, Singapore has had a rocky relationship with its worrying neighbor ever since konfrontasi, way back in the mid-'60s, with Sukarno threatening the very existence of the new island state. Yet despite having fought over the formation of Malaysia in 1965 for a good quarter of a century under Suharto, Indonesia still counts as one of Singapore's closest allies in trade, diplomacy and people-to-people ties thanks to Lee's close personal relationship with fellow strongman president Suharto, who like many, were impressed with Lee's transformation of a colonial backwater into one of the richest global economies.

In his second volume of memoirs "From Third World to First: The Singapore Story" Lee describes his friend as a “mega-sultan of a mega-country.” His response soon after Suharto's downfall was to make a series of critical statements about Indonesia, expressing shock that Indonesia was trying to take Suharto to court, criticizing security conditions as hampering foreign investment, and claiming that Malays, including Indonesians, did not have a strong work ethic.

Suharto's successor, interim president B.J. Habibie, angry at Lee's February 1998 remark that financial markets were "disturbed" by his appointment to the vice-presidency, lashed out on his own, saying, "In Singapore, if you are Malay, you can never become a military officer. They are the real racists, not here. You can go and check it out."

Still discrimination

Nonetheless Lee's latest claims about Chinese in Indonesia, a country that persistently refused to accept them as full citizens, have some merit. For their success, the Chinese there are both envied and resented. Hostile sentiment against those of Chinese descent, mainly due to perceived and real economic disparities, is never far beneath the surface. Most Chinese live better than the average Indonesian. The super-rich Chinese attract most attention but the vast majority of ethnic Chinese are small shopkeepers and traders, or, at best, medium sized businessmen.

Anti-Chinese racism was prevalent under Sukarno and deepened under Suharto, who had leading ethnic Chinese tycoons as his financial partners while banning the use of Chinese names and celebrations in public.

Although conditions are better now and the Chinese fare much better than in the Suharto era, the environment remains unsupportive. A long-awaited new citizenship law, passed in July, exempts Indonesian Chinese from having to produce proof of citizenship or undergo naturalization if they were born to Indonesian parents, but some 60 laws and regulations are still considered to be discriminatory toward them.

For years, many were denied citizenship. They were told to keep their religion at home. Festivals were banned in public, and Chinese-language signs and publications were outlawed except for one state sanctioned newspaper. Yet others, a handful of privileged ethnic Chinese, became very rich, benefiting from a string of financial favors including monopolies, state bank loans and special licenses from alliances with the ruling regime.

One of the country's biggest tycoons, Liem Sioe Liong, began his journey from the middle class to fame and fortune through meeting Suharto while he was a colonel in charge of supplies for an army division in central Java. Liem and the other ethnic Chinese tycoons were not a political threat to Suharto because of their minority status.

Although the Muslim elite were wary of the Chinese-Christian block of Suharto and his Armed Forces Commander in Chief General Benny Moerdani, a Catholic linked to Indonesian Chinese magnates, they could do little about it. Seemingly intoxicated with the joy of riding an Indonesian economic tiger in which they controlled as much as 70 percent of all of Indonesia’s business activity, many Chinese did not stop to think that some of the less successful indigenous Indonesians, known as pribumi, might be jealous. Some of these pribumi like the Bakrie dynasty, had conglomerates as big as the ethnic Chinese magnates but they were regarded as Suharto cronies.

Little red dot

Habibie, sometimes called “Indonesia’s mad scientist” for his sometimes bizarre attempts to move the country up the technological ladder, also scathingly referred to Singapore as a "tiny red dot on the map.” In his memoirs Detik-detik yang Menentukan (Crucial Seconds) launched last week describing his short time in office, Habibie claims that what he really meant by that derisive remark was to hold up Singapore as a positive example to young Indonesians.

A network of family members and trusted insiders holds all the political and economic power in Singapore. Despite bouts of paranoia, Lee's dynasty has built an economic powerhouse. Yet many in Indonesia resent Singapore's success and believe it was accomplished partly through the help of Indonesia and its vast resources.

Forbes Asia this month published a list of Indonesia's top 40 richest people. Though their combined net worth is $22 billion, this is someway behind the $28 billion held by the 40 wealthiest in Singapore.

High-profile figures from the Suharto regime and others from the corridors of power are alleged to have been involved in raiding Indonesian sand for years and smuggling it to Singapore to enlarge the coastline of the city-state. Some members of Indonesia's house of parliament, the DPR, even accused the government of treason for allowing Singapore to "expand its territory." Singapore has also been accused of "timber laundering" and cooking the books on bilateral trade figures.

Anti-Chinese sentiments underpin these attitudes and critics say Lee may have handed its proponents a cause on a plate.

Short arm of the law

A close confidante of the Habibie family said at the time that the 'little red dot' comments were meant to "pin Singapore down on race issues, so that it would be easier to justify and force the Singapore government to sign an extradition treaty with Jakarta to get economic criminals and their money back on Indonesian territory."

Many Indonesian businessmen had fled to Singapore following the 1997 regional economic crisis, leaving huge debts to the government. Indonesian officials complained that Singapore was dragging its heels in signing an extradition deal because it does not want to lose billions of dollars allegedly deposited there by corrupt Indonesian businessmen.

Though several Indonesians living in Singapore are wanted by Jakarta on corruption charges, Singapore still refuses to include economic crimes in the draft of an extradition treaty between the two countries, citing vast differences in the two legal systems Jakarta has alleged that Indonesians have transferred illegal funds to Singapore, which has strict bank-secrecy laws and claims to have enough safeguards to prevent the country from becoming a haven for laundered funds.

Singapore, on the other hand, sees the demand for an extradition treaty a ploy to assuage populist Indonesian demands to go after the wealth of Indonesian Chinese believed to be in Singapore. Singapore's economy, after all, needs Indonesian money. The island is a middle-class magnet for Indonesian holidaymakers and shoppers as well as businessmen. Indonesians have been revealed as among the biggest buyers of private real estate there. Lee has said it is important for Singapore to have a government that is "really firm, stout-hearted, subtle and resolute." He could have added, and one that uses the apparatus of government to stifle opposition.