PM Lee Hsien Loong's Interview with The Australian (Nov 2015)

Mr Greg Sheridan (The Australian): It is the 50th anniversary of Singapore’s independence this year. How do you feel about Singapore’s achievements? What would you attribute Singapore’s achievement to? How do you look ahead of it?

PM Lee Hsien Loong: I think we are very happy to have got here. It exceeds anything we imagined when we started out 50 years ago. It is partly good leadership. A lot of it is the unity and the hard work of the people. Some of it also is benign external environment, not without challenges, but being secure, peaceful, by and large, and one which allows a small country to prosper and to compete on peaceful and equal terms. And so, that has brought us here and I think we rejoice.

We look forward from a strong base, but we know that the terrain is tougher. Our expectations are higher, our new generation. Compared to other countries in a similar stage of development, I think we are better prepared than them for a lot of challenges ahead. But as a small country, we face constraints — population is one, territory is another. The uncertainties in the globalisation ethos which have pervaded the last couple of decades, I think, will pose us many challenges, external as well as internal.

The Australian: Yes, indeed. When you say ‘many challenges’, what do you have in mind there?

PM Lee: First, we need to be able to grow our economy and that means we have got to upgrade our productivity and transform old activities into new and more relevant and competitive ones. That is an arduous task. All the developed countries are facing that. The trends in the last ten years, or at least since the financial crisis, have been negative; productivity growth is slowing down, nobody quite understands why and there are all kinds of explanations, but the fact is it is very hard to lift productivity and we are facing that, too. We have to do it, but it is a challenge. I think that is one big part of it.

The Australian: The Information Technology (IT) revolution has not quite delivered the productivity that we thought it might?

PM Lee: It has changed lifestyles and quality of life but it has not shown up clearly in numbers. Hopefully, eventually, it will show up in performance, whether it is your hospitals getting scans read by a smart programme, faster and more reliably, or whether it is delivering your groceries and your daily necessities, logistics more efficiently. It must show up, but it means changing the way you are doing business.  It is not just doing the same thing a little bit faster and that tough and that means there will be losers and the losers will yell. So, that is one big challenge.

Another big challenge is our population trends. Our birth rates are not where they should be – 1.3 is our Total Fertility Rate – and, we’d hope to push it up a little bit.  But even if we push it up, some, we will need to top up with immigration, we need to integrate a new population and then I think even if we do that, it will not be easy to have a stable, gradually-growing population. It is a big challenge. So, that is a continuing longer-term worry.

The Australian: Are you very worried in economic terms by slowdown in China’s growth rates and the general sort of sense of anaemia in the global economy?

PM Lee: In recent quarters, we are seeing some weakness in our own economy, particularly in manufacturing. It has to do with demand, the export volumes are not growing. But I think for China, my concern is not so much their cyclical ups and downs, but whether they can transition to a stable, steady but lower growth rate than they used to have. They used to make 10 per cent per year and it’s not possible to do that anymore. If they can do 7 per cent for another decade, I think they are doing very well. They need to get structural reforms in order to deliver that 7 per cent meaningfully, rather than just in terms of numbers. You may have the output numbers to add, but maybe empty buildings in the wrong places.

The Australian: What do you have in mind when you speak of structural reforms there?

PM Lee: They have to review their social safety nets. They need pension arrangements; they need medical arrangements, which I think they are paying attention to. They have to deal with tax reforms; they have to deal with reforms for the hukou system, controlling the flow into the cities. And they have to do further changes to their SOEs to make sure that they are productive and not abusing their monopoly positions.  Plus they have got to invest in cleaning up the environment which, in their short term, is a financial cost.

The Australian: Mr Lee, you and the former Prime Minister, Mr Abbott, concluded the Comprehensive Strategic Partnership (CSP). I wanted to ask you a couple of questions about that. How would you rate or describe its significance?

PM Lee: It codifies and takes further what has always been a very close friendship.  Australia wants to be connected to the region and we are a like-minded partner for you. We have found Australia very valuable as a friend, as an economic partner. Also our defence and security cooperation, we would like to take that further too. The CSP sets out all the things we are doing together and some of the things which we would like to take further.

The Australian: I think from Australia’s point of view, it really is the most intimate relationship we have with the whole society in Asia, not just government-to-government but across the whole society.

PM Lee: Partly we see the region in compatible strategic perspectives. We have big accounts with China. We are good friends in our case – in your case allies – with the US. We want peace and stability in the region. We are in the region and you want to be part of it; you already are to a considerable extent. That's one part of it. Secondly, I think the ethos of the societies are compatible. We are not as matey as you are but we are informal, open and direct. We cut to the point. We don't beat around the bush and talk elliptically and leave you guessing what we mean. You are like that too ++. So I think we can get along together.

The Australian: When did you say you are meeting Malcolm Turnbull in Turkey?

PM Lee: On Sunday morning. We are having breakfast together at the G-20.

The Australian: That is wonderful. Has he given you any indication that he is himself committed to continuing this partnership?

PM Lee: We had a very brief conversation when first he took over from Tony. I do not think this was the top thing on his mind right at that moment. But I am optimistic that we will take it forward because it represents the interests of the two countries. It is the same party although a different leadership. So I do not expect a fundamental change in the orientation. And Andrew Robb who was overseeing the CSP for Tony Abbott is still in the new cabinet.

The Australian: Are you at all bemused by our constant, rapid rotation of Prime Ministers over these last eight years?

PM Lee: We got on very well with John Howard for a long time. We have got to know quite a lot of new personalities since then. I do not think it is the best solution for you but that is how your politics works on both sides of the aisle. The trouble is your election cycles are so short. Every three years you have a new general election and the government has no time to settle down and get things done. But you cannot change that.

The Australian: That is right, Mr Lee. The people who framed our Constitution made it almost impossible to change. Ninety-nine per cent of the time, that’s a good thing, but on this one, it is…

PM Lee: Indeed. Well, the New Zealanders were different and they changed to your system.

The Australian: Well, they certainly changed their system.

PM Lee: They changed to proportional representation and now, they are not able to change back.

The Australian: You had a very good friendship with Mr Abbott, but as you say, you have had very good relations with a series of Australian Prime Ministers and you have been able to take the relationship forward with all of them, I guess, really?

PM Lee: Well, each Prime Minister has a different personality and perspectives. So, we work with them all, and we work on it on the basis of shared interests and wherever possible also, how shall we put it, a certain kindred feeling.

The Australian: Have you had occasion to meet Mr Turnbull before at all?

PM Lee: I do not think I have met him before.

The Australian: Mr Lee, on another topic completely, are you worried about the degree of strategic rivalry which is playing out between China and the United States in this region?

PM Lee: From a small country’s point of view, we don't want to see a clash between China and America. At the same time, we recognise that in a complicated extensive relationship like that, there are bound to be points where interests do not coincide and there is bound to be some push and shove. That is par for the course. I think overall, both sides want to keep it calm. What is missing is what you would call very loosely strategic trust. Meaning the Americans believe the Chinese want to challenge them in the Asia Pacific. The Chinese think the Americans want to block them and at least slow their growth.

The Australian: Specifically, on the recent freedom of navigation exercises, Singapore issued a statement supporting freedom of navigation in the region and freedom of overflight. Are we right to interpret that as a broad endorsement of the freedom of navigation exercise?

PM Lee: Well, the Americans have to decide what they want to do. If you look at it from the American point of view, they are a power with global interests. They have vital interests in freedom of navigation, not just in the South China Sea, but many parts of the world. They have to decide when this is put into question how they will assert their rights. So, I think it is completely understandable. It is also understandable that the Chinese look at this and say well, you are raising the temperature and why are you coming in from outside of the region?

The reality is America is a power in the Asia Pacific. In the South China Sea, freedom of navigation concerns many countries, not just the claimant states. The claimant states say that freedom of navigation is not an issue, but, of course, there is a difference between sailing on the high seas and innocent passage through territorial waters. So, you need to know which is which.

The Australian: Some American statements have indicated that it was not just free passage, that it was freedom of navigation exercise; in other words, they do not recognise that the submerged feature can...

PM Lee: In the South China Sea many of the participants have been creating facts on the ground. So, a naval power like the US has to decide whether you will just let it pass or whether you do something symbolically to challenge that. But I do not see the US claiming any atoll or maintaining a presence there anywhere in the region. And also, really, it is not just what the US does, but also what the claimant states do. We have been counselling on all the claimant states restraint and peaceful management. Solution of the problem, I think, is beyond our reach but management, we have to try to do our best not to let it boil over.

The Australian: Do you think it would be helpful if other states engage in freedom of navigation exercises as well?

PM Lee: You are thinking of Australia?

The Australian: Indeed.

PM Lee: Well, you have to decide where you stand. Some of your Prime Ministers have said that you are the Deputy Sheriff.

The Australian: Yes. That is a very old statement.

PM Lee: Well, but you remain very close friends with the US and you also see China as your biggest export market.

The Australian: It is kind of a paradox that many nations in the region face, isn’t it? They are close to the US, but their biggest economic partner is China.

[section section_speaker_id="1" section_short_name="0"]It is a reality which has developed and that is why when we talk about US engagement in the region or rebalancing, it cannot just be a security, military thing.  It has to be a comprehensive relationship and economics and trade is a big part of that, which is why Trans-Pacific Partnership (TPP) is a critical thing.

The Australian: Singapore makes a significant contribution to the American presence in the region through the rotation of the littoral combat ships and so forth. How would you characterise that? Is it part of Singapore’s effort to make sure the Americans stay involved?

PM Lee: Our position has for a long time been and has not changed that we see the American presence as a positive for the region. They are a force for stability, for security. We would like to help them maintain this presence. This arrangement came about when they were turfed out of Clarke and Subic and Lee Kuan Yew told Senator Dick Lugar – Lee was then still Prime Minister – that while we cannot replace Clarke and Subic because they are about the size of Singapore, if you would like to have your ships or aircraft come through and stop by in Singapore, we will try and see what we can do to facilitate that. The Americans took up that offer and that is why we have this arrangement. I think it is good; it is helpful to the Americans. At the same time we keep an open house and others who come by visiting, we are happy to host them, Chinese war ships, Japanese war ships, and Australian ships.

The Australian: On the TPP, you mentioned it is important that the US commit to it but how important is it to Singapore and to the regional economy as an actual economic endeavour?

PM Lee: That varies because the countries in the TPP variously have trading arrangements with one another already. We have Free Trade Agreements with nearly all the partners except Canada and Mexico. The Australians, you have partnerships with many of the members as well, certainly, you have got New Zealand. You also have one with America, I think. So, this is on top of that. In our case, we think there is economic benefit because of the way the agreement is constructed: you can accumulate value from things manufactured in many countries and count towards the free trade privileges which they would gain. So, we think it is worth maybe up to $1 billion a year of tariff reductions. But the significance to us is not just economic. The significance is that this is a strategic linking together of countries on both sides of the Pacific, developing and developed, and it was something which we actually triggered with a Pacific 4 (P4) agreement, which was what the TPP grew from. And one day, the TPP can be one of the pathways to the Free Trade Area of the Asia-Pacific (FTAAP). The Chinese have co-opted that slogan, but the idea has been there around a long time. This is the reality now because Doha is not going anywhere. I do not think it is feasible with so many players in the world and such diverse interests to aim for a global deal with any great frequency, maybe once a century or thereabouts.  So, if you want to make practical progress, you have to resort to these second-best impure solutions with some idea of where they lead.

The Australian: Indeed, that is a pretty universal characteristic of human life, isn’t it?

PM Lee: Well, for a few decades after the war with the General Agreement on Tariffs and Trade (GATT), you were able to make significant progress on tariff reductions and on a multilateral basis, starting with the Kennedy Rounds in the 1960s and up to, I suppose, the early 1980s. Even the Uruguay Round came to some kind of a conclusion, but the Doha Round, which started in 2001, is now 14 years old and has delivered very little.

The Australian: Are we still to be worried that the deal will need to be ratified in the US Congress?

PM Lee: Yes, that is a perpetual worry. Look at the mood in Congress, both the Democrats as well as the Republicans. I think that will be a nail-biting exercise and there is very little time.

The Australian: You would expect that it would need to be passed by June or something if it is going to happen this next year?

PM Lee: Hillary, who was part of it, is now against it and so is Donald Trump. So, that is the way US politics plays out.

The Australian: Is there something of a problem in Western politics that the blocking power of popular sentiment, the ability of minorities to stop things from happening and the increased salience of populism in Western politics seems to be making it harder and harder and harder for Western democratic nations simply to produce sound policy and implement it?

PM Lee: The gridlock is particularly a problem in America because of the way their system of government works. David Cameron has less of a problem with gridlock or the Australian government although you have an issue with your Senate from time to time. But with the Europeans and the Americans too, I think their problem is people are disillusioned or disappointed with what they see happening in their lives.  They are disillusioned with the political leadership and then they opt for what they think are pristine solutions. So, in America, everybody claims to be against Washington while campaigning, even those who came from there. And in Europe, you have all kinds of parties which are not the traditional political leadership class. I think it is partly a weakness of the leadership, but it is also a recognition that the system is not delivering and people do not feel that they have an interest in what the system is doing for them. You promised, but in the end, you cannot deliver. That is a challenge.  

In our case, we have been lucky, what we promised we have been able to deliver and so, it has built us credibility. But that is a different economic situation and now, we are going forward and we have to learn how to live with the economy growing two to 3 per cent a year instead of 6 to 7 per cent a year and what that means in terms of the rate at which your quality of life improves, your incomes go up, the bounce in the economy and the society, the sense of optimism, the jobs which are available. These are trade-offs which we will have to accept and learn to live with. It is not easy and it is very seductive for an opposition who's just trawling for votes to say, ‘Vote for me, I will reduce the taxes and soak the rich’. Fortunately, in this last election, some of the opposition pitches were so shrill that the population wisely took counsel and decided that there was a real risk.

The Australian: I would like to congratulate you on that election result. Were you yourself a little surprised at how strong it was?

PM Lee: Yes, we were surprised. We had worked hard. We knew that the mood was good. Many things have gone our way this last term, not all, but we had made progress on issues and we hoped that the electorate would recognise that. But we did not expect to see this 70 per cent vote.

The Australian: Is there anything you would attribute it to in particular?

PM Lee: I think it is a range of things. One, the realisation after my father died, that this did not happen by chance and we have a lot to be thankful for. Secondly, because it is an SG50 year, there's a certain feel-good factor. Thirdly, I think the government as well as our Members of Parliament have been working very hard, both on the immediate issues on people's minds as well as on setting out a longer-term idea of what we could do looking forward. So, although we have not really solved all of the problems, people could see that we were working at it and things were getting better and that was very helpful. They gave us credit for trying. The opposition, of course, took the line that, they are trying so hard because we exist. So, you must make us exist more and they will try harder.

The Australian: Do you have a slight problem with success now that next time, it is going to be very hard to sustain?

PM Lee: Every election is different. I do not work on the basis that this is the baseline for the next election. We have to work very hard to maintain our support and consolidate it. By the next election, you’re talking about another 100,000 new voters or 150,000 maybe and a corresponding number, nearly, who will have passed on or no longer be voting this time. So, each election is different.

The Australian: The terrorism threat in Southeast Asia or around the world has been really persistent and strong and ineradicable and a bit protean, really. The world keeps changing. I understand there are about 700 Southeast Asians who have gone to Syria to fight for extremists. Is this Syria imbroglio making the terrorist threat that your society and that we all face more acute?

PM Lee: Yes, I think so. It is the latest incarnation of the problem. It has been there with us since before 9/11, but in this ISIS form, it has crystallised, it has got territory, it has got a place you can actually physically go to. It is not just an amorphous idea. People get seduced and led astray and actually go and do this. And as you say, hundreds from Southeast Asia and a few from Singapore, close to a dozen, have tried to go there. Luckily we have stopped most of them and headed them off but some got through.

The Australian: Do you see overall that the threat, difficulty or problem is growing simply because people keep going to Syria and so forth?

PM Lee: The problem is very serious. Look at Malaysia. They are not just talking about random individuals going. Military servicemen have been going. They have just arrested two commandos; they had nearly a dozen military personnel earlier. You really do not want to be training guys like these. In Indonesia, it is also very serious. A few hundred may be a small proportion of the population, but it is a big enough number to cause you a lot of trouble. Also, there are parts of Indonesia which are remote from centres of government, like Poso in Sulawesi, and if they set up a little base camp there and call that ISIS in Southeast Asia or some such title, then that is another physical focal point which can attract activists to go to as a kind of Mecca.

Then you have the problems with the terrorists who are nominally in jail. The first problem is that even while in jail, they can do spectacular things such as hold press conferences and formal ceremonies to pledge allegiance to ISIS, which Abu Bakar Bashir did, complete with group photograph. The second problem is when their terms of imprisonment are completed and then, they are released back out — it's not at all clear that they are less dangerous now than they used to be. And several hundred have their terms due to run out this year and next. I think the Indonesians are taking this very seriously, but it’s a very difficult problem for them.

The Australian: Because you are so much in the middle of the region, that sort of has a kind of a flow-across effect on Singapore?

PM Lee: Yes, just last week, we sent back two guys who tried to enter Singapore. They were on their way to Turkey and Syria. Yesterday, I read another report that there was a Batam official in their Investment Coordinating Board who has gone off. He took leave and he disappeared and then emailed his boss, ‘I am in Syria, please tell my family.’

The Australian: The two you sent back, they were from Indonesia?

PM Lee: Yes, they came by boat on the ferry and our officer, a lady, was alert. She spotted it and questioned them and discovered that, in fact, they had tickets to go to Turkey. We sent them back, and the local police questioned and then released them!

The Australian: We have all been grappling with this now for a long time. Fifteen years since the 9/11 and Jemaah Islamiah (JI) plot to blow up the embassies here in Singapore.  What explains the persistence of this ideology? Why is it so difficult to counter that away? What does it entail?

PM Lee: It is a very difficult problem. It is not purely religion and yet it is not unrelated to a certain warped view of religion. Some people genuinely persuade themselves that this is the way to Heaven and so they pursue this perverted path. Others know very little about religion or doctrine. Something has gone wrong with their life and this is their way to hit out at the world or at their society. Some of them are young people who are just misled. They are at the soul-searching stage of their lives and they stumble across this and then, get led deeper and deeper in and then, it is too late.  We have picked up students who are like that. They are in school and did not belong to any network. It is not that they had radical friends but somehow they became interested in this and it was lucky that we discovered them.

The Australian: We do not seem to have been altogether successful in convincing people that this is really a futile and mistaken ideology?

PM Lee: I think that some of them are pretty hardcore. We have got cumulatively about 70 whom we have detained since the JI plot, for this jihadist sort of thing. We have released, I think, three-quarters of them. Most of them have stayed clean, one has relapsed so far. But there are a few whom I do not know how we will ever release them, or how we will release them for a very long time because they are very hardcore. You look at the Americans grappling with Guantanamo Bay. The first thing Obama did when he came into office was to sign an order, to close the place, but they have not been able to do that.

The Australian: It is a problem that is going to be with us for a while. Mr Lee, last couple of questions. Singapore was once the centre of the Asian values debate. That term has sort of disappeared from public discussion but it always seemed to me that the underlying idea of the Asian values debate was that societies like Singapore and other East Asian societies could become 100 per cent modern, successful, economic and contemporary societies but still retain the norms that emerged out of their Asian cultures and so forth; in other words, not become replicas of Western societies. Is that a fair statement? How would you reflect on that?

PM Lee: The core of the idea is that if we become replicas of Western societies, we will perish. Therefore, what is the formula which will help us not to perish and also to retain a sense of identity and pride in our heritage, in our place in the world? The most natural way to do that is to say I have a long history, and a deep culture. It has to adapt to the new world, but it is something which you should not lightly jettison just based on the fads and passions of half a generation, even in a rapidly changing world. If you look at it today, societies are all rapidly changing. If you look at Taiwan, Hong Kong or South Korea, in some respects, old habits die hard; in other respects, they have considerably jettisoned old norms. Sexuality, homosexuality, taking care of parents, having children, these have all changed very rapidly and not in any way changing under anybody’s control, it is just happening to them.

Some of these things are happening to us, too. These are trends you can influence but you really cannot determine them. And I think that if you look at it today and ask, if I switched and I became like Australia, do you think that we can stay a successful Little Red Dot in Southeast Asia? I do not think that is possible. So how do we keep it different and what parts can we keep different which will help us to succeed and have survival value in this world? That is our challenge.

The Australian: Are you worried about the slowness of economic reform in Indonesia and are you worried about the slowness of the return to democracy in Thailand?

PM Lee: I am not sure that the Indonesian government would describe their priority as economic reform. They are trying to bring investments in. They have taken a more nationalist approach and the public mood is also a nationalist one. So if you look at their measures, whether it is enforcing against illegal fishing boats, or protecting their local rice farmers, or having local content rules for handphones and things like that, there is a certain characteristic perspective to what they are trying to do. We wish them well, but these are very difficult trade-offs to make.  

In Thailand, you say ‘return to democracy’, but Thai society shows you how difficult it is to become a Western-style polity. You can have the forms of it, but the way they operate is very different. You say ‘return to democracy’, what do you mean by ‘democracy’? If it is just ‘one man, one vote’ and the majority in Parliament determines — what happens to the aristocracy? What happens to the royalty? What happens to the whole pyramid of society which is structured that way? They have tried before and it had not worked, before the war. Then they had leftist elements who went into the jungle, and tried to make a revolution in the 1960s and 1970s.  That did not work either. Then you had Thaksin, he won according to the rules and, therefore, he failed. That is just the way society is. How would you govern it? You cannot govern it without Bangkok and yet you cannot govern it just in the old way anymore.

The Australian: There has got to be a unique solution for every country I suppose?

PM Lee: There was an American scholar, Robert Tilman. He wrote a book about Southeast Asian countries and he said that in the whole of Southeast Asia, if you go by the definition of a nation – a people with a shared language, culture, history, sense of identity, willing to fight for one another and cohesive – the only place is Thailand. Even there, you have to make an exception for the South because the Southern Thais, they are different. They are Malay, they are Muslim and they speak the Malay Language. They do not speak Thai and are not Buddhist. But it is the most “nation-state”-like country in the whole of Southeast Asia whereas all the other countries are unnatural ones, including Singapore. But if you look at Thailand today, that sense of identity and cohesion is changing.

The Australian: What is your reaction to the Myanmar election outcome?

PM Lee: I think many people expected it. I believe the Army or military also expected it.  Now, the challenge is to make a new government which will have some accommodation with the military which has to be part of the solution.