SINGAPORE ON THE EVE OF LEE KUAN YEW'S VISIT TO THE US

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A006000070007-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 12
• Document Creation Date: December 19, 2016
• Sequence Number: 7
• Content Type: REPORT

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Secret
No Foreign Dissem
DIRECTORATE OF
INTELLIGENCE
WEEKLY SUMMARY
Special Report
Singapore on the Eve of Lee Kuan Yew's Visit to the US
1F1/L?GF
Secret
N2 45
6 October 1967
No. 0310/67C
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SINGAPORE ON THE EVE OF LEE KUAN YEW'S VISIT TO THE US
Singapore has come through the first two years
of independence following its explusion from Malaysia
in much better shape than even its own leaders had
expected. Lee Kuan Yew, the able prime minister of
the small island republic, nevertheless foresees po-
tentially serious economic and political problems on
the horizon and is preparing himself accordingly.
Basic to Lee's plans is development of what he
calls a "tightly knit society." This he believes will
better enable Singapore to cope with the deteriorat-
ing economic conditions and attendant political back-
lash expected to result from a labor market expanding
faster than industrial growth and the projected with-
drawal of the British military presence which has
played a substantial part in Singapore's economy. The
government's controls necessary to impose greater dis-
cipline on the people and to assimilate the disparate
elements of the population are leading inexorably to a
more authoritarian one-party, one-leader state.
In the realm of foreign policy, Lee is groping for
new ways to assure the security of his small state, sur-
rounded by Malays and a natural target for Peking's sub-
versive efforts among Singapore's largely Chinese popu-
lation. On his visit to the US this month, Lee intends
to assess American intentions to maintain a stabilizing
presence in Southeast Asia and also to promote Singa-
pore's economic interests.
Background
Singapore's leaders reacted
with shock and dismay to the per-
emptory expulsion of Singapore
from the federation of Malaysia
in August 1965. Lee Kuan Yew had
been an ardent proponent of the
concept of Malaysia, seeing in
it a means for Singapore, with
its large Chinese population, to
avoid isolation. He was also
attracted by the opportunities
that a larger political arena
Page 1
would provide for his own consid-
erable talents and ambitions. Lee
saw himself eventually playing a
major political role and his
People's Action Party (PAP) unify-
ing and championing the urban Chi-
nese proletariat the
federation. Lee,
however, moved too fast. He
fielded PAP candidates in the Ma-
layan elections of 1964 and then
attempted to organize the Malay-
sian Solidarity Convention in May
of the following year as an
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M A L A Y S I A
SInGRP0RE
0
SINGAPORE
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opposition coalition to the Kuala
Lumpur government.
Already deeply disturbed
by the degree to which the local
Chinese community controlled the
economic life of the federation,
Malay leaders feared an early
PAP challenge to the political
supremacy of the ruling Alliance
coalition. The problem was
further compounded by a pro-
nounced conflict between Lee and
Tunku Abdul Rahman, the Malay-
sian prime minister. Returning
from a trip abroad, Rahman pre-
sented Lee with an ultimatum:
Singapore would either withdraw
voluntarily from the federation
or face a communal bloodbath.
The result was a separation agree-
ment and the announcement of
Singapore's independence on 9 Au-
gust 1965.
At the time of separation
there were serious doubts among
Singapore's leaders regarding
the capacity of the small island
republic to survive independently.
Heavily dependent on Malaysia
both for raw materials and mar-
kets and having already lost In-
donesia's lucrative trade be-
cause of Sukarno's confronta-
tion policy, Singapore's economic
viability was seriously threat-
ened. Frictions between Singa-
pore's Chinese and Malay communi-
ties had erupted in communal
riots in 1964 and the potential
for further outbreaks persisted.
Lee was also disturbed by the
tendency of many Malay and Chi-
nese residents of Singapore to
look respectively to Kuala Lumpur
and Peking for political and
cultural guidance.
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Much of the early appre-
hension over Singapore's future
has now dissipated, and has
been replaced by a growing confi-
dence. Singapore's leaders are
now preoccupied with plans for
meeting a new set of problems
that they see emerging in the
next few years.
Lee and the ruling PAP have
a free hand in carrying out their
programs. The pro-Communist Bari-
san Sosialis Party (BSP), now rent
by tactical and ideological differ-
ences and largely impotent, is the
only opposition. Assailing Singa-
pore's "phony democracy" and one-
party rule, the five remaining
BSP legislators resigned their
seats in the national parliament
about a year ago and the party re-
fused to participate in the sub-
sequent by-elections to fill the
vacancies. The BSP has been
further weakened and fragmented
by the growing independence of
leftist Chinese students, who
often ignore BSP directives. De-
spite the fact that it was sup-
ported by 30 to 35 percent of the
electorate in 1963, the BSP's
present political impotency is
likely to persist over the fore-
seeable future, barring a severe
economic slump.
Over the long run and in the
continuing absence of meaningful
political opposition, the main
threat to the PAP would appear to
be the development of tensions
and frictions within its own ranks.
Although no significant political
fissures are now evident, within
the PAP they might develop over
how far the government should go
in imposing authoritarian re-
straints on Singapore's politi-
cal life.
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Increased Governmental
Controls
In support of Lee's "tightly
knit society" concept, a series
of laws and executive decisions
has been put into effect over
the past year, greatly increas-
ing the government's control over
the political life of the coun-
try.
A Societies Ordinance,
passed last December, gives the
government almost unlimited power
to control, approve, or outlaw
any organization of ten or more
persons. The registrar of
societies has been authorized
to ban any group that is "likely
to be used for purposes prejudi-
cial to public peace, welfare,
or good order." In mid-March,
parliament passed an Undesirable
Publications Bill which makes it
an offense for any person to im-
port, publish, or distribute
publications prohibited by the
government. On 29 June, magis-
trates were given legal discre-
tion to refuse bail in rioting
offenses.
Parliament also amended the
Criminal Law Ordinance to ban
public utility strikes and
added a trade union amendment
that outlaws political and
sympathy strikes and requires
labor union officeholders to
be citizens of Singapore. These
last two measures merely in-
creased the government's con-
trol of the labor union move-
ment, as it already dominated
the Singapore Trade Union Con-
gress, the nation's largest labor
federation.
Although some of these new
powers have thus far only been
used in selected cases, they
are probably intended for appli-
cation at some future date when
mounting unemployment might lead
to serious political unrest. It
is this future danger, rather
than any existing challenge to
PAP political control, that has
convinced Lee the government must
arm itself before a national
crisis actually materializes.
Loyalty to the State
Lee's efforts to refocus
divided loyalties and to build
a national identity have taken
several forms. Government-con-
trolled news media have been
utilized fully, and the nation's
educational system has been re-
structured to some extent to pro-
mote and cultivate a national
consciousness.
The government's evolving
defense policies are intended
not only to make Singapore the
"Israel of Southeast Asia," but
to produce loyal Singaporeans.
Compulsory military service for
all persons, male and female,
above the age of 18 is required
under an amendment passed last
March to the National Service
Act. Only an "elite" ten per-
cent of those conscripted, how-
ever, will serve for two years
in the regular armed forces. The
remainder will perform part-
time service in one of three para-
military reserve units: the
People's Defense Force, the
Vigilante Corps, or the Special
Constabulary, an auxiliary police
organization.
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Dr. Goh Keng Swee, the for-
mer minister of interior and de-
fense, has stated that the re-
serve training program is more
sociological than military, and
is intended mainly to produce a
"closely knit community." Since
the assimilative process is a
long and tedious one, however,
the government's success will
be largely contingent upon a
relatively stable economic situ-
ation and freedom from serious
external threats.
The Economy
The PAP economic record to
date has been one of impressive
achievement. Singapore's gross
national product has increased by
about 45 percent since 1959 and
the per capita gross income of
US $540 is second in Southeast
Asia only to that of the oil-rich
British protectorate of Brunei.
Singapore's prosperity has re-
sulted chiefly from entrepot trade
and light industry, but the con-
tribution of the British military
bases represents an even larger
share of the GNP.
Government leaders are at-
tempting to promote trade by con-
cluding trade agree-
ments with Communist
countries and seeking
tariff concessions from
other trading part-
ners. Over the past
18 months, trade agree-
ments have been con-
cluded with the Soviet
Union, most of the
Eastern European coun-
tries, and North Korea.
Industrial growth
is being carefully
planned and nurtured,
one result of which has
been the imaginative
Jurong industrial complex. Con-
sisting almost wholly of mangrove
swamps and wilderness until the Lee
government began to develop it in
the early 1960s, Jurong now has a
number of modern factories, a good
harbor, and an excellent transporta-
tion system.
To pursue and enlarge its de-
velopment after the British mili-
tary withdrawal, Singapore will
need an influx of foreign private
capital on an unprecedented scale.
Some of this additional capital
may come in from Hong Kong as a re-
sult of the uneasiness engendered
by the Cultural Revolution. This
capital flow, however, is likely to
be small compared to the amount re-
quired. In addition to the policy
of promoting industrial expansion,
the government is providing low-
cost housing, medical assistance,
improved education, and other bene-
fits through one of the most com-
prehensive social welfare programs
now in existence.
Despite the apparent strength
and vigor of the economy, however,
a number of uncertainties persist.
Hopes for a common market with
Malaysia were largely crushed by
the separation, and trade with
Civil servants parade during three-month military training course.
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Indonesia is not expected to re-
turn to preconfrontation levels
for several years at best. An
estimated 75,000 persons--about
13 percent of the labor force--
are out of work, and the unem-
ployment rate is rising. Singapore
must accelerate the pace of in-
dustrialization and find addi-
tional markets to provide jobs
both for the presently unemployed
and for the 17,000 persons enter-
ing the labor market annually.
The planned phase-out of
Britain's military forces in South-
east Asia by the mid-1970s will
aggravate Singapore's labor prob-
lems. Approximately 36,000 Singa-
poreans are employed at the Brit-
ish air and naval bases, and many
more depend on the bases for a
livelihood. The bases account
for an estimated 20 percent of
the national income, and the
foreign exchange cost to the
British Government of the bases
in Singapore and Malaysia is
some $200 million, most of which
accrues to Singapore.
Foreign Policy
Paramount in Lee Kuan Yew's
thinking about foreign olicy is
his awareness
of bingapore's lonely position
as a Chinese city-state situated
between two ethnically and reli-
giously similar and potentially
hostile states--Malaysia and In-
donesia. As a political realist,
Lee understands that a modus
vivendi with Malaysia is
to Singapore.
Page 7
s or Djakarta, Lee 25X6
as we comed the restoration of
diplomatic and trade re_laitinnc
Singapore does not have
diplomatic or consular relations
with either Communist or Na-
tionalist China, and is likely
to proceed slowly and cautiously
in developing relations with
either. Because of the country's
predominantly Chinese population,
Singapore fears the pressures
that relations with Peking or
Taipei would produce. Moreover,
relations with either, would
make more difficult Lee's ef-
forts to refocus the divided
loyalties of the Singaporeans
and create a national identity.
Yet Singapore leaders are aware
that they must live with main-
land China and that eventually
some relationship must develop.
Lee has permitted the continued
operation of the local branch
of the (Communist) Bank of China,
and supports the admission of
mainland China to the United Na-
tions.
Lee has ambivalent feelings
toward the US but a more posi-
tive attitude is evolving. At
the time of Singapore's expul-
sion from the federation, Lee
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was uncertain of the "staying
power" of the US in Vietnam. He
was also fearful that Washington
would sacrifice Singapore to the
larger and more numerous Malay
states. Moreover, he wanted to
chart a neutralist foreign policy
for Singapore while winning mem-
bership in the Afro-Asian family
of neutrals. Finally, Lee's own
deep respect for Britain and its
conduct in Southeast Asia made
him reluctant to accept the Ameri-
cans as a successor to the Brit-
ish in that part of the world.
Lee's more positive present
attitude may be attributed to
several factors. US policies in
Southeast Asia have a significant
bearing on his own aspirations
for Singapore, particularly his
need for time in which to build
a stable, cohesive society. The
US has greatly increased its com-
mitment in Vietnam since 1965,
which leaves Lee much more hope-
ful regarding Washington's deter-
mination to maintain a protective
presence in Southeast Asia. Al-
though he has sometimes criticized
US tactics, particularly the
bombing of North Vietnam, he in-
sists that a continuing US pres-
ence in Southeast Asia is essen-
tial to regional security. The
pragmatic prime minister is also
aware that about 15 percent of
Singapore's national income de-
rives from US procurements in
Singapore for Vietnam.
Britain's military phase-out,
moreover, will leave a vacuum and
add to Singapore's security prob-
lems unless the US remains in the
Page 8
region. Lee's reliance upon the
US for regional security stems in
part from the excesses of Mao Tse-
tung's Cultural Revolution and
its implications for Singapore's
predominantly Chinese population.
Finally, the "myth" of the Afro-
Asian "third force" has become
apparent to Lee and has convinced
him that it is incapable of con-
tributing to Singapore's long-
term security needs.
After much hesitation, Lee
has also become more amenable to
the concept of regional coopera-
tion, having earlier rejected it
as being incompatible with Singa-
pore's neutralist stance. Singa-
pore is a founding member of the
Association of Southeast Asi-an
Nations (ASEAN) , which was es-
tablished last August. Singa-
pore's leaders are convinced that
ASEAN must focus initially on
economic, rather than political
and military, cooperation if it
is to win general acceptance and
serve a useful purpose. It might,
they think, come to serve a secu-
rity purpose but they are not
sanguine of this prospect.
Lee's Visit to the US
Lee's principal purpose in
visiting Washington this month
will be to make a first-hand as-
sessment of long-term US inten-
tions in Southeast Asia. He also
hopes to obtain a more fundamental
personal knowledge of this coun-
try and its leadership, as well
as to secure a sympathetic under-
standing and appreciation of the
problems confronting Singapore
as a fledgling nation.
S EC R EA'
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Lee probably intends to ex-
plore the prospects of attracting
some American commercial interest
in Singapore's naval facilities
and air bases after the British
departure. He can be expected
to make a bid for expanded markets
in the US while trying to lure
American investment capital to
Singapore. He probably also will
wish to emphasize Singapore's po-
tential role in regional affairs,
while at the same time seeking
assurances that the US will not
favor the Malay states over tiny
Singapore.
Outlook
Unless a serious economic
crisis develops, it appears likely
that the situation in Singapore
will remain basically unchanged
for a good many years. The trend
toward authoritarianism will be-
come even more pronounced as
Singapore tightens its belt un-
der the Lee regime in order to
sustain itself in the uncertain
years ahead. Opposition leftist
elements at this time give no
indication that they have either
the capacity or inclination to
close ranks and offer an accept-
able substitute to the ruling
PAP government.
The most serious problems
confronting the Singapore Govern-
ment focus chiefly on Britain's
planned military withdrawal and
the eventual termination of US
procurement for Vietnam, which
together account for 40 percent
of Singapore's national income.
A loss of both within a short span
of time would have a severe im-
pact on the economic life of the
country.
Britain plans to provide some
economic assistance following with-
drawal, however, and it is assumed
that the base facilities will be
converted to commercial use. Singa-
pore's leaders are also hopeful
that industrial and commercial
growth will provide jobs for the
many workers who will be thrust
upon the job market in the years
ahead. Nonetheless, if the eco-
nomic situation were to reach
critical proportions, consider-
able pressures probably would
be exerted to follow a more radi-
cal course. In essence, Singa-
pore's future as a viable politi-
cal and economic entity is by no
means assured, and will be deter-
mined by forces and events largely
beyond Singapore's influence.
(SECRET NO FOREIGN DISSEM)
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