Singapore Senior Minister Lee Kuan Yew rarely pulls his punches on trips overseas. In Hong Kong in late October he raised a ruckus by saying the territory's legislature wasn't working. Taking time out for a wide-ranging interview with the REVIEW, he spoke to Senior Editor Frank Ching about Indonesia's new government, the regional roles of China and the United States, and how a new generation in his own country is trying to loosen up. Excerpts of their conversation appear below.

Loosening Up:

Many observers have commented that there is a loosening-up in Singapore. Is this a sign of greater self-confidence on the part of the government?

I don't think we ever lacked self-confidence. The loosening-up is more in the economic sector. In the political sector, a younger generation of ministers with different backgrounds is liberalizing to absorb into their ranks a younger generation of voters . . . The younger leaders are different from me, and they have to lead a generation that is younger than they are.

Do you envisage in Singapore the emergence of a two-party system?

We do not set out to create two parties or three parties; at present there are seven or eight parties. Our job is to win the most number of seats, no matter how many parties are contesting. I said at my last speech at the old parliament building that I would not be sad to see the PAP [the ruling People's Action Party] out of power if it grows soft and effete. Then it would deserve to be defeated.

But right now there's no political party that can really challenge the PAP.

That's right. That's because we're not foolish enough to give them key issues that will enable them to become a credible alternative.

Your son, Lee Hsien Loong, is expected to become prime minister some day. When that happens, will you continue to be senior minister?

I don't know how long I will live. I don't know when he's going to be prime minister--if he's going to be prime minister. I do not plan my career that way.

What I mean is will you be willing to serve in a cabinet headed by your son?

In principle if I can be of help to Singapore in any capacity, I will. I've spent my life building up the place and it would grieve me to see it messed up, whoever is in charge.

Indonesia's New Leaders:

Can you talk about Indonesia?

Indonesia I am prepared to talk about but in a guarded fashion. You know how President Habibie [former President B.J. Habibie] was chafing at Singapore all these past 18 months, because I said if the market had no confidence in the next vice-president, the rupiah would drop . . . And it dropped. He held that against me.

What are your views of the new president and the new vice-president?

It is the best in the circumstances. It is not the most democratic outcome but given the developments since the elections in June, there could have been many other worse results. In fact, it may be a good outcome in the longer term. If Ms. Megawati [Vice-President Megawati Sukarnoputri] had won the presidency, she would become immediately responsible for the government of Indonesia and how it performs. Now she will have some breathing space, to see and learn how the Indonesian government has to work in a complex and fractured political set-up, and she will not be held accountable for what may go wrong in the first year or so.

Indonesia has decided to allow East Timor to be independent. Do you think there's a danger of further fragmentation in Indonesia?

Yes, of course, otherwise there would not have been that intense concern in the Indonesian armed forces over what could happen in Aceh, Ambon, the Riau islands and Irian Jaya. A precedent has been set. Of course, it isn't really a precedent because East Timor was never part of the Dutch East Indies, to which Indonesia became the successor state.

Nevertheless, you can see from the reaction of the people in Aceh that they have become more resolute, more determined in calling for a referendum. I believe unless there is a good political settlement, there will be many problems.

China, Taiwan and America:

How do you see US-China relations developing?

It's on a switchback, with its ups and downs. The China issue has become a political football between the Democrats and the Republicans. Developments this year heightened animosities, and sentiment built up against China. When the reality of the costs involved sinks home, a more realistic policy results.

It will be the swing of the pendulum. We'll get used to it, provided it doesn't go over the edge, as it will in the case of Taiwan.

Can you expand on that?

The Chinese have repeatedly said--and each time they say it they're upping the stakes for themselves--that if Taiwan makes an open move toward independence, they will act. If they don't act, they are a paper tiger, and they can't afford that. On the other hand the United States media and some parts of Congress have allowed the Taiwanese to believe that if they are democratic, fellow democratic countries like the United States will come to their rescue. If Taiwanese really believe that, something dreadful may happen and the United States may have to go to their rescue.

Do you think there is a danger of the US turning isolationist?

At this moment? The US is on top of the world, why should Americans go isolationist? They're making the world comply with what they want.

What would be the impact on Asia if the US were to withdraw its military forces from Asia?

There would be great disorder. You can imagine the Japanese rearming themselves, maybe even going nuclear. The Chinese would react with alarm, and build up their armaments as quickly as possible before others preempt them. We'll have great instability. Therefore I favour the US presence in the West Pacific.

Is Chinese expansionism a threat to the region?

What do you mean by Chinese expansionism? I don't envisage their coming down to Southeast Asia to capture us. I see them wanting to reunify Taiwan, and later start drilling for oil and gas in the Spratlys. But they will not go into the Philippines, Thailand or Vietnam. They've said they would abide by the Law of the Sea, so these problems should not be insurmountable.

Colonialism's End:

In December, Portugal will hand Macau back to China and for the first time in several hundred years, no part of Asia will be under European rule. Do you see this as a significant moment?

No, not really. It makes no difference. India got Goa by marching in troops in 1961. What difference did it make to India or to Asia? These are symbolic milestones which do not mark any turning points in the trend of events.