(Bloomberg) -- Lee Kuan Yew, the founding father of Singapore, was a canny politician, an extraordinary statesman and an astute analyst of geopolitics. At times it was hard to tell which hat he was wearing.
That seems to have been the case when, speaking to the press in 1996, a little more than three decades after his city was ejected by Malaysia and forced to become a nation-state, Senior Minister Lee boldly speculated on the idea of a re-merger.
Let politicians across the causeway that links the neighbors drop race-based discrimination, giving the Chinese and Indian minorities the same rights as the majority Malays, and a reunion wouldn’t be impossible, he said.
While the comment annoyed Malaysian politicians no end, Lee made a similar remark in a 2007 interview. Only in 2013 — two years before his death — did he concede that being thrown out once was enough. Economic ties, which were even then strengthening in the form of Singapore’s investment in Malaysia’s southern state of Johor, were the way forward, he said.
But guess what. The latest Malaysian election, with its big upset, offers a reason to reconsider Lee’s 1996 and 2007 optimism. Maybe the analyst in him was right all along.
Once Anwar Ibrahim is out of prison and in the Malaysian prime minister’s seat, and once he starts taking apart the system of state-sponsored racism that has existed there since 1971, the difference between peninsular Malaysia and Singapore will be of living standards. In fact, with a shared heritage of British-inspired common law and parliamentary democracy, the difference will be even less than it is between Shenzhen and Hong Kong.
Even if you believe that it’s too late for unification, given the investment Singapore has made in forging its independent identity, a “one country, two systems” arrangement is entirely possible.
Such a proposal was on the table even in the run-up to the separation, as Janadas Devan, currently the Singapore government’s information czar, noted in a 2015 speech. Under the plan, Malaysia would have handled defense and external relations for both parts of the confederacy, and there would have been a common market. Singapore politicians, including Lee, balked at the unfairness of having to pay taxes to Kuala Lumpur without political representation. That, plus the Malaysians’ insistence that Singapore stay out of the lives of its own Malay minorities, made the idea a non-starter.
That was then. Much better institutional arrangements are possible now, taking a leaf perhaps out of the Greater Bay Area that Beijing wants for Hong Kong, Macau and Guangdong province. If the agglomeration proves to be an economic success for Hong Kong, it would again put pressure on Singapore to find the one thing it doesn't have: a hinterland.
A hinterland, and babies. Almost 25 percent of Malaysia’s 32 million population is below 14 years of age. For aging Singapore, where the figure is 15 percent, the neighbor’s demographic dividend — if harvested well by Anwar — is a valuable resource. Defense savings, should the two countries agree to share resources, are an added attraction.
The fate of a high-speed rail link between Kuala Lumpur and Singapore may have become more uncertain now that Mahathir Mohamad is back on the scene. As Malaysia’s prime minister between 1981 and 2003, Mahathir took a hard stance on sales of raw water to its neighbor; He also obsessed over replacing the existing causeway with an S-shaped crooked bridge. Now that Mahathir has wrested power from his protege-turned-foe Najib Razak, whom Mahathir never forgave for not proceeding with the bridge, old tensions could flare up.
Still, don’t forget Mahathir is 92 years old, and is only standing in for Anwar, 70, who needs to come out of jail and get elected as a lawmaker before he can take over from his old boss.
Mahathir is too wedded to the status quo to move the needle on race relations. But if Anwar does manage to plant the seed of equal opportunity and rules-based competition while clearing out the weeds of rent-seeking and cronyism, a mutually beneficial economic union with some sharing of the defense burden is possible.
None of this will occur tomorrow. The shock election result has increased the odds of a loose confederacy from zero to, say, 10 percent over the coming 30 years. Still, that’s a start.
©2018 Bloomberg L.P.