The death at the age of 91 of Lee Kuan Yew, founding patriarch of Singapore, marks the end of a chapter, but not yet the end of an era.

The test is whether the small and vulnerable island nation can achieve the transition to a fully fledged country that can keep innovating with rapidly changing times. Lee’s legacy leaves critical problems as well as opportunities.

Lee won praise for turning Singapore from a sleepy entrepot into a glossy modern metropolis and one of the richest places on Earth. The International Monetary Fund puts Singapore in third place in the world with gross domestic product per head in international dollars worth $78,762 in 2013, after Qatar ($145,894) and Luxembourg ($90,333). But his ruthlessness in dealing with critics, like communists, political opponents or tiresome journalists, and the myriad rules of Lee’s “nanny state” have left many younger citizens yearning for fresher freer air.

Singapore gained full independence on Aug. 9,1965, when Malaysia kicked it out of their federation, bringing Lee to weep public tears.

Thus was born the Republic of Singapore, a tiny 581.5 square km of a main island and 62 smaller islets, 75 percent Chinese, but with substantial Malay and Indian minorities.

Eulogies of Lee exaggerate in painting pre-independence Singapore as a backwater. Per capita income was $550, but the city was an important port, financial and trading center and had a British naval dockyard, the basis of Singapore’s later marine and engineering expertise. Its location on the main shipping and air routes between Europe, the Middle East and Australasia was superb.

Nevertheless, it was not an auspicious time for a new country, especially for a tiny Chinese island in a Malay sea, with Malaysia and its 10 million people to the north, and the sprawling archipelago of Indonesia and its 100 million people embracing Singapore to the west, south and east. The new country depended on Malaysia for its fresh water and had to unscramble the former joint institutions, including the currency, stock market, airline and even newspapers. The Vietnam War was raging. Singapore’s immediate neighbors, Malaysia and Indonesia, were engaged in a violent “Konfrontasi” (confrontation) because of Indonesian opposition to the creation of Malaysia.

The People’s Action Party, cofounded by Lee, which took power in elections in 1959, was an uncomfortable marriage of convenience including anti-colonialists, as Lee professed himself, and pro-communists. Lee asserted control of the PAP and then bent Singapore to his vision. He was prime minister from 1959 until 1990, and subsequently kept a close eye on his successor Goh Chok Tong from his Cabinet post as Senior Minister. When his son Lee Hsien Loong took over as prime minister in 2004, Lee became Minister Mentor.

Lee’s many friends claim he was a brilliant reincarnation of Plato’s “philosopher-kings” and evidence that a benevolent dictator offers the best government. He was driven by a Confucian determination to use power for the benefit of the community. He stamped on corruption, partly by seeing that civil servants were well paid, with $1 million plus salaries for ministers and senior officials. Even after a hefty pay cut this year, Singapore’s prime minister is the best-paid leader in the world, earning $1.7 million.

Independent Singapore became a disciplined, green, pleasant place to live, with one of the best airports in the world, streets and water that are safe, services that work efficiently, decisions that get taken swiftly, and a wide range of attractions and economic strength.

Singaporeans have to contend with a string of restrictions on their behavior including: not using drugs; not littering; not spitting; not chewing gum; not scrawling graffiti and remembering to flush the toilet. Walking round their own home naked — decreed to be a form of pornography — is also banned. Infringement attracts heavy penalties, up to death for drugs, and caning or community service for lesser offenses.

Lee’s Singapore was serious, not the American joke that it was “Disneyland with the death penalty.” He exposed Singaporeans to discipline and competition that he relished. He had won a starred first-class degree in law at Cambridge, and taught himself Mandarin Chinese in his 30s. He also could give campaign speeches in Malay and Tamil. His bedroom temperature was set at 18.8 C. His office, where he wore a light jacket that he took off when he went to the nonair-conditioned toilet, was set at 21 C.

He insisted that schoolchildren learn English and Mandarin or Malay or Tamil. He legislated that workers save money through a national provident fund, to which the government contributed. He developed an urban renewal program with publicly built apartments that people could later buy using their provident funds. He opened Singapore to foreign investment, but also developed Singapore companies in aviation, shipping, technology and investment funds, which could compete globally, so that he propelled the country from third world to first world, he boasted.

Singapore is the world’s biggest port, in the top five for financial services, wealth management, oil refining, exports of electronics and biotechnology. It is also the world’s best place for ease of doing business, according to World Bank tables. In spite of this, Lee was suspicious of private business, fearing greed and corruption.

I saw a letter from a multibillionaire Singapore businessman to Lee trying to get into his good books by setting up a charitable foundation. He was dismissed with a single paragraph from Lee’s assistant private secretary, saying that the prime minister had noted the billionaire’s letter.

Having ousted opponents within the PAP, Lee secured almost absolute power for the party, using lawsuits to pursue opponents to bankruptcy. He admitted being a political street fighter, claiming in 1994: “Nobody doubts that if you take me on, I will put on knuckle-dusters and catch you in a cul-de-sac. If you think you can hurt me more than I can hurt you, try. There is no other way you can govern a Chinese society.”

Local media knew their place and curbed their criticism. Foreign publications that pointed out Singapore’s deficiencies found themselves forced to apologize or see their circulations restricted. Arun Senkuttuvan wrote in the Financial Times that the government dealt with critics by withdrawing the carrots and then, if they persisted, using the stick; he was imprisoned under the draconian colonial Internal Security Act. Ho Kwon Ping, a reporter for the Far Eastern Economic Review, was interned under the same act and suffered the indignity of having love letters he sent when a student at Stanford plastered all over a Sunday newspaper.

Democrats of the West forgave Lee his transgressions of democracy because they saw him as a global statesman. Kissinger called him: “a great man … a world statesman who acted as a kind of conscience to leaders around the globe … he was not a Cold Warrior; he was a pilgrim in quest of world order and responsible leadership.”

China declared that Lee was “a uniquely influential statesman in Asia and a strategist embodying oriental values and international vision.” In a 2007 New York Times interview, Lee claimed, “We are ideology-free … If it works, let’s try it. If it’s fine, let’s continue it. If it doesn’t work, toss it out, try another one.” Lee was confident he had done a wonderful job, claiming that “I know why it works because I made it work.”

Lee leaves a Singapore with problems amid its prosperity. At the 2011 election the PAP won only 60.14 percent of the popular vote, though it took 81 of the 87 seats voted for. Increasing economic dependence on expatriates for highly paid jobs and cheap migrant workers plus low birthrates mean that Singaporean citizens are 63 percent of the 5.4 million population; by 2030, foreigners may outnumber the natives. Income inequality has been rising, and the Gini coefficient reached 46.3 (compared with 30 in the European Union, 33 in Japan and 45 in the United States).

The government needs to boost productivity, spend more on research and development, break up the big government monopolies and encourage new entrepreneurs, especially in areas where it has an edge, aviation technology, biotechnology, energy, health care and software. This is not merely an economic issue: It is immensely political and demands a government with 21st century vision willing to loosen nanny’s apronstrings and trust Singaporeans.

Prime Minister Lee Hsien Loong is a chip off his father’s brilliant block, with a Cambridge first, followed by a military career, where he rose to brigadier general before becoming a politician at the age of 32 and prime minister 20 years later in 2004. Lee junior is regarded as a brilliant over-qualified leader. But that is part of the problem. He may be the best: where are the rest, successors more in tune with modern Singapore trying to keep up in a fast-moving world?

Lee Kuan Yew got his cutting edge through politics, but his ruthlessness in ensuring PAP’s predominance removed political contenders who might one day take over. It’s the age-old problem when a great philosopher-king departs.

Kevin Rafferty was founder-editor of Business Times in Malaysia, just across the Causeway from Singapore.

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