PART II. LEE KUAN YEW: To go back. CHARLIE ROSE: Yes. LEE KUAN YEW: Yes, of course.

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1 As Singapore s founding father, he served as prime minister for more than 30 years until 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: PART II CHARLIE ROSE: I met a Chinese delegation recently who was here in the last couple weeks, and I said to a very important member of the government, not at the highest level, but very important, "What are you doing here?" He said "We re trying to get highly educated Chinese..." LEE KUAN YEW: To go back. CHARLIE ROSE: Yes. LEE KUAN YEW: Yes, of course. CHARLIE ROSE: To go back. I said, "Well, what do you say to them?" He says, "I say to them you ll have opportunity, and I say to them, the homeland needs you." LEE KUAN YEW: That doesn t sell. CHARLIE ROSE: What sells? LEE KUAN YEW: What would sell is you can leave anytime you want and allow your children special education facilities, and all of you can keep your American green card or passports? CHARLIE ROSE: And that works. 1 / 7

2 LEE KUAN YEW: Well, I m not sure whether it will work, but they will go back and test the waters, some? But will they go back and stay? Maybe, because the older generation are emotionally tied up. But will your children stay? No. The upbringing has been here, and they go back to China and say, wow, this is a very regimented society. Papa, I m going back. So there s no comparison. They are two, and there is chalk and cheese between the two societies, especially for young children who can see how independent American children are and grow up and become anything if you want, beatniks if you like. CHARLIE ROSE: To use an old expression. LEE KUAN YEW: Or whatever in China, you come out like sausages. CHARLIE ROSE: Yes, exactly. So will the Chinese be able to say -- one of the things that you point to in terms of this relationship between the competition, you say China and the United States will have competition, but they must avoid conflict. LEE KUAN YEW: Yes. No, I think both sides don t want conflict. CHARLIE ROSE: They don t want conflict. China wants to spend time focusing on its internal development, it s economic development. LEE KUAN YEW: China wants time to grow. If there is going to be any conflict, they ll postpone it for 50 years. CHARLIE ROSE: But inevitably at some point, as China grows, it will want to be the dominant nation in the world, because it will have... LEE KUAN YEW: But it is not going back to Tsung China or Hun China where they were the only dominant power in the world. This time they re going back to a world where there are several dominant poles that as inventive and more creative than them. CHARLIE ROSE: So we re looking at a multi-polar world. LEE KUAN YEW: Yes, absolutely. CHARLIE ROSE: We ll never go back to sort of the kind of thing that we have between the Soviet Union and the United States. LEE KUAN YEW: No. There will be the U.S., there will be China, the Indians are going to be themselves, they re not going to be everybody s lackey. They may not be as big as China in GDP. CHARLIE ROSE: And you also suggest they have to develop a manufacturing capacity. LEE KUAN YEW: Yes, of course. You re going to have -- Europe will be an economic force. It will not be a strategic, political, or military force because they can t get together on foreign 2 / 7

3 policy. CHARLIE ROSE: It s inevitable they can never get together? LEE KUAN YEW: I m not saying it s inevitable, but if you look at them, they are still 27 different nations. I mean, they won t accept one language, although they all use English as a second language. But you tell them in Brussels you speak French or English or another language, which is what is actually happening in committees, they absolutely refuse. How long will that take to disappear? I don t know. It may never happen. CHARLIE ROSE: Take Singapore. LEE KUAN YEW: Yes. CHARLIE ROSE: You have said that Singapore has to maintain its relevance. LEE KUAN YEW: Yes. CHARLIE ROSE: It has to be a place that people want to invest in. LEE KUAN YEW: It has to be a place that is useful to the world. Otherwise it wouldn t exist. CHARLIE ROSE: And that s what you had created since the founding of the modern city-state. LEE KUAN YEW: We have made ourselves relevant to the world. CHARLIE ROSE: And how will you maintain your relevancy? LEE KUAN YEW: By keeping on changing. You cannot maintain your relevance by just staying put. The world changes. There are shifts in the geopolitics and the economics of the world. We have to watch it and ride it. You surf with them. As the surf comes this way you ride the surf. We are keeping our links with America, with Japan, with Europe. They brought us to where we are. CHARLIE ROSE: And you don t have to choose sides. No other nation will have to choose sides. LEE KUAN YEW: We absolutely refuse to choose sides. We will not choose sides between America and China or between China and India. CHARLIE ROSE: But I just read today an announcement by your sovereign wealth fund in Singapore of over $1.3 billion in new investments, none coming to the United States, going to China, to India, to Brazil, and I ve forgotten where else. LEE KUAN YEW: That s just $1.3 billion out of $300 billion. 3 / 7

4 CHARLIE ROSE: But none to the United States, mostly going to all the... LEE KUAN YEW: Yes, but the United States at the moment is in somewhat of an unstable state. Is the dollar going to decline? Yes, it is cheap, but supposing you buy and the deficits grow and Ben Bernanke is unable, your federal chairman is unable to draw enough liquidity out of the market and you have hyperinflation. Wow. You go down and you lost money. So everybody s hedging, and it s a very... CHARLIE ROSE: They re hedging by looking at other places, too? LEE KUAN YEW: Yes, but where? You tell me. CHARLIE ROSE: Tell me where. If not the United States, there s nowhere to go now. LEE KUAN YEW: We go to parts of Euro. We re not going to -- very little to Japan, Australia and New Zealand. The RNP, the Chinese Yuan in highly controlled. They can make you go up or make you go down and you re not sure which way it s going to go. Whereas in the U.S., you can look at the figures and can read the federal reports every time they make a decision and you can make your guess. CHARLIE ROSE: You also said China and the United States both have to change their mindsets. LEE KUAN YEW: Yes. CHARLIE ROSE: What do you mean by that? LEE KUAN YEW: For the Americans, you have got to cease to think in terms of the Chinese as they are today. The Chinese as they are today are people who have been suffering for a very long time, especially under Mao, and who feel that the world is cruel to them. And therefore they re very edgy. They are -- if you talk to Chinese leaders now, those over 60, they are with Russian as their second language. In 20, 25 years time, they re going to meet a generation who are now in the lower ranks who have been to America and Britain and Europe and will be English-speaking and have different models in their minds. And they will know that they re not going to be the sole power in the world. Not ever again, because this is a globalized world, and they know that they re dependent on the world for their growth. The resources that... CHARLIE ROSE: So they ve got to be part of the world. LEE KUAN YEW: Yes. Before, I mean up to the time when the British and the others colonized them in a partial way, everything grew within China. Whenever they needed they captured with the military. CHARLIE ROSE: Then they found global markets. 4 / 7

5 LEE KUAN YEW: George H. W. Bush invited them to South America. He was a U.S. representative before they had ambassadors. And he had a liking for them. They were good to them. So he said you sell to us. And they sold, and it succeeded. And they said this is the way to get out of our poverty. CHARLIE ROSE: That was your friend Deng Xiaoping that said that? LEE KUAN YEW: Yes. Then they got into the world trade center as a member, WTO. I just met Bob Rubin today, and he Henry Kissinger and I, told him that Clinton turned down China for this WTO. So we said to him it s a great mistake, because if you turn them down, all they will do is they ll reverse engineer all your patents and you find generic products, imitations on the market. If you bring them in, get them to observe the rules. CHARLIE ROSE: Well, that s a big if. You have to get them to observe the rules. LEE KUAN YEW: They are going to have to observe the rules, and they will. CHARLIE ROSE: And they understand that? LEE KUAN YEW: Because they re making patience of their own now. CHARLIE ROSE: They want to open markets around the world and be a part of the global economy. LEE KUAN YEW: No, no. They re doing research almost in every sector now, including life sciences. CHARLIE ROSE: Here s -- which is something that Singapore got involved in very much with stem cell. Why did you do that? LEE KUAN YEW: We figured there were smart fellows around and so many of them, whatever we do they will do in time and better. But there are some areas where they will take a very long time to be able to do what we re doing, and that s to change the system from opacity to transparency, from no protection from copyright to protection of copyright and rule of law. There are two rules of law in China, one for the ordinary citizen and the other for 76 million members of the Communist Party. And the judges will do what they know what the leaders require to keep the country stable. So would you -- look, we got all the big Pharma companies in Singapore. CHARLIE ROSE: Yes, because you have protection and you have rule of law and you have protection of patents. LEE KUAN YEW: Yes. And we re doing joint research with them on the effect of these new drugs on various racial types of the population. 5 / 7

6 CHARLIE ROSE: Can you make an argument that a country who leads in technology and science, it will go a long way in terms of their place in the world? LEE KUAN YEW: Yes, of course. That s why I think the U.S. will still be a very powerful and considerable inventor and creator of new products. CHARLIE ROSE: When you look at the U.S. and its relationship and its concern about oil and its politics in the Middle East, do you think it s a distraction? You think that... LEE KUAN YEW: No, I m not saying the Middle East is a distraction. I think trying to make a country out of Afghanistan is a distraction. There was no country for the last 30, 40 years. There s just been fighting each other since the last king was chased out. CHARLIE ROSE: Right. LEE KUAN YEW: How on earth are you going to put these little bits together? It s not possible. CHARLIE ROSE: So therefore you do what? LEE KUAN YEW: I m not an expert, but in my simple mind it strikes me that you won in Iraq, you won in Afghanistan not because you fought the Taliban, but because you got the Northern Alliance to fight them, and you provided the Northern Alliance with intelligence and the capabilities to bomb them and target them. And they captured the south. CHARLIE ROSE: Yes, but they have governance problems there, too. LEE KUAN YEW: That s all right. But that s their problem. Why do you want to make it your problem? CHARLIE ROSE: So what do you do? Would you pull all the troops out and let whatever happens to Afghanistan, happen to Afghanistan? It s not that threatening to the United States, is that the argument? LEE KUAN YEW: I don t know about that, because I think it cannot be more difficult for the United States to have their troops stuck there. The Russians are a brutal, ruthless lot of army people, and 120,000 of them were there, but they had to leave. CHARLIE ROSE: And we helped that because we supported the Mujahideen. The Mujahideen had a lot of support from around the world who wanted to see the Soviet Union take it. LEE KUAN YEW: But whether or not the Soviets helped to get the Americans out, I think the Americans and the NATO troops -- the NATO members are very skeptical of the outcome. CHARLIE ROSE: Even to the point of not wanting to send their troops to certain kinds of 6 / 7

7 combat areas. LEE KUAN YEW: Quite right. Yes, of course, because then you get shot for nothing. CHARLIE ROSE: But those who argue if Afghanistan is abandoned -- first of all, the world will say or people will say, look, you left Afghanistan once before after the Soviets left, and now you re leaving again. The United States has to stand for something and it has to show it s prepared to stay. You don t buy that at all? LEE KUAN YEW: No. CHARLIE ROSE: You must have a wonderful conversation with your friend Henry Kissinger then? LEE KUAN YEW: No, no. CHARLIE ROSE: Where do you and Henry Kissinger differ on the look or view of the U.S. role in the world? LEE KUAN YEW: I don t think we have any difference. CHARLIE ROSE: Is that right? How would you define it then? 7 / 7