Tips from the grave from Singapore’s founding father Lee Kuan Yew

(A version of this article, in Croatian, appeared in Tuesday's edition of Jutarnji List, Croatia's largest newspaper.)

An Expat in Zagreb

By Roger Malone

Lee Kuan Yew died Monday. Almost no one in Croatia noticed, but for all of Asia and many other places, Lee’s death is momentous. Lee was the founding father of Singapore, taking control of the country 50 years ago when Malaysia, worried about growing Chinese influence, threw the city-state out of the country. Beyond this, he was an elder statesman whose voice carried throughout Asia.

During my decade in Singapore, his presence was everywhere. The sparkling international airport was built because Lee wanted the island to become a regional air hub. Movies and other media were censored because that fit into Lee’s vision of a harmonious society. Even in his later years, Singapore opened its doors to gambling because Lee eventually acquiesced.

While there is room to criticize Lee’s methods, his success is undeniable. In 1965, when the former British colony gained its independence, the country was still reeling from its occupation by Japan in World War II and the political turmoil that followed. Lee had bet the country’s future on a merger with neighboring Malaya – it became Malaysia by adding an “si” for Singapore – and wept on television as he announced Singapore was on its own.

Against all odds, Singapore today is the envy of most counties. Despite having no natural resources and no history of independence, the city-state became a modern, gleaming metropolis with high-tech industry, top-rated universities, a thriving cosmopolitan culture, low crime and high-end shopping. Its zoo is spectacular, its new casino is a global architectural icon, and public transportation is spotless. GDP per capita is about $62,000, the 7th highest globally, and the country is ranked by one consulting firm as the most liveable place on the planet.  

I never met Lee during my time in Singapore, but I met his eldest son, Lee Hsien Loong, the current prime minister, several times and interviewed him once. And as reports spread of the elder Lee’s deteriorating health, I began wondering whether any part of the Singapore story could be useful to Croatia. The two countries have comparable populations, but Croatia somehow produces more football stars and Singapore more economic stars.

I don’t believe Singapore’s success can be copied anywhere. Like many rising leaders of the time, Lee stifled politicians who opposed his vision. Operation Coldstore in 1962, was an effort by Singapore, Malaya and Britain to put the communist opposition on ice and led to the arrests of more than 100 suspected communists. But unlike other rising leaders, he ruled an island with few places for opposition movements to hide. He ruled as prime minister without real opposition for three decades, and his influence lingered well into his son’s turn at the helm.

The real difference, though, was how Lee used his power. After all, other Southeast Asian leaders also acquired near absolute power, but didn’t create a Singapore. Cambridge educated, Lee had a vision for Singapore, which he set into motion quickly. Speaking of the separation with Malaysia in his memoirs, Lee wrote, “The people … were prepared to do whatever was needed to make an independent Singapore work. I did not know I was to spend the rest of my life getting Singapore not just to work, but to prosper and flourish.” By all evidence, Lee’s efforts were truly an extension of what he believed was best for the country.

Almost immediately after independence, Lee said he was “sickened” by corruption and vowed to eradicate it. Like many countries, he created anti-corruption legislation and institutions, but he also backed these efforts by paying civil servants – from ministers to clerks – enough to make bribery less tempting and imposing harsh penalties on anyone who was still tempted. Things were different in neighboring Indonesia, where President Suharto’s term overlapped with Lee’s as prime minister. Suharto, who left office in 1998 amid anti-government protests, is thought to have stolen up to $35 billion from the country. Despite improvements, the New York Times reports corruption remains endemic in Indonesia.

Lee was also quick to welcome foreign direct investment and make it easy for companies to set up shop in Singapore. In 1968, three years after independence, Texas Instruments signed a $6 million deal to open a semiconductor and circuit board plant in Singapore. By 1974, after about a decade of independence, total foreign investment in Singapore was 20 times greater than in 1963. By 2013, annual foreign investment in Singapore was equal to about 20 percent of GDP. For several years, Singapore has topped the World Bank rankings for ease of doing business.

Without question, Singapore’s economic story cannot be copied, and the next chapter, free of Lee’s presence and driven by young people without personal experience of how far Singapore has come, is unpredictable. Singapore’s astonishing progress over the past decades is a result of a unique combination of power, vision and compassion. Not everyone would agree to the pragmatic trade-offs Lee made as he built his nation, but 5.4 million Singaporeans are better off today than they would have been without him. And some of his measures can serve as lessons for others.

[Follow Roger Malone on twitter at @ExpatinZagreb or at www.expatinzagreb.blogspot.com]

Croatia’s populist movement distracts from country’s real woes

(The Croatian version of this article ran in today's Jutarnji List, Croatia's largest daily newspaper.)

An Expat in Zagreb

By Roger Malone

During Croatia’s presidential campaign, I couldn’t look at Ivan Sinčić without seeing Seneca Crane, the creepy game master in the first Hunger Games movie. They are both bearded showmen who manipulate reality.

Fortunately, I don’t think Sinčić can conjure up a pack of bloodthirsty wild dogs to bring his show to a spectacular end. Instead, he has to conjure up a populist image of a world where loans are forgiven and newly printed money falls from heaven like gumdrops.

The populists’ appeal is easy to understand. Croatia has suffered six years of economic malaise, and its economy is 12 percent smaller now than it was in 2008. Politicians are not ready to join together to start a recovery that will create jobs and lead to sustainable public financing. A fresh, young voice ready to break the rules can be very tempting. As an added bonus, he’ll stick it to those evil corporations.

But the rise of a populist movement that offers the wrong easy answers to a difficult reality will only delay Croatia’s recovery further.

Economic rules are not broken with impunity. Print more money to cover government debt, and you get soaring inflation and a central bank that finds it more difficult to keep the kuna stable against the euro. Let the kuna devalue, and every import from iPhones to cheddar cheese will cost more. Also, most mortgages in Croatia are linked to the euro, the wailing when those payments rise will make the Swiss franc-loan protests seem like tea parties in comparison.

You can just forgive all private loans. Good for me, of course, but not so good for anyone who needs a mortgage or a car loan anytime soon. Why would any bank offer credit in Croatia if it can’t get its money back? It is a personal tragedy when someone loses their home because they can’t meet their mortgage payments. It is much more tragic to deny a generation access to mortgages and loans because of an ill-conceived populist act. Human walls and activists detained by police make good press, but little else.

For perhaps 17 minutes, I thought there might be a sinister plan behind this populist rhetoric. The economic ramifications are so apparent, the only true purpose of such a platform must be the utter destruction of the Croatian economy. That makes a certain amount of perverted sense: Croatia’s economy is like a beautiful, but derelict house. The supports have been buckling for more than six years, and the owners have done little to fix it. Populist policies amount to setting the house on fire. Then, perhaps, someone will call in the fire department, in this case the International Monetary Fund, to save the house. The harsh measures needed to keep the house from burning to the ground could be blamed on the IMF, and everyone would carry on under the new regimen.

The populists are not that clever, though, and that’s the scary part, especially if they can carry their momentum into this year’s parliamentary elections.

Populist political movements rely on emotions for support. They feed on public dissatisfaction and point to a common enemy as the cause of the problems. The scapegoats for most major populist parties in Europe are immigrants – especially eastern Europeans – but for Sinčić and his followers, it’s the capitalists.

Excessive capitalists are indeed evil. Over the past decades they have developed a cult of greed with no room for social or community responsibility. Driven by personal greed, they brought down the global economy in 2008. On a smaller scale, they care little about worker conditions, the environment, or the future.  And governments everywhere have failed in controlling these excesses.

But to label all capitalists as evil, as the populists imply, is like saying all Muslims are terrorists. It sounds good and strikes a populist chord, but both assertions are blatantly and absolutely false. Capitalists built today’s modern economies from Beijing to London, largely by balancing profits with social responsibility. As with all systems, there has always been sickening outliers, but these are countered by people like Henry Ford and Bill Gates, capitalists who understand the importance of community. And credit – that wicked weapon wielded by these capitalists – is a cornerstone of economic growth. I suspect if Sinčić lent someone his beard trimmer, even he would want it back eventually.

By presenting capitalists as the bogeymen responsible for all of Croatia’s problems, Sinčić and his populist movement distract the country from the real work of fixing the economy. The 16 percent who supported his crash-and-burn agenda underline the urgency of solving these problems, not the solutions themselves. There is still time to let the economy grow before Croatia really has to worry about excessive capitalism.

[Follow Roger Malone on twitter at @ExpatinZagreb or at www.expatinzagreb.blogspot.com]