Transcription
A replay of the depression of the 1930s, which led to World War II, would be ruinous for all. All major powers in the West share this responsibility for not repeating this mistake.
In 1985, standing before a joint session of the US Congress, Lee Kuan Yew delivered a warning that now looks like a prophecy. Today, in 2026, America is at war with the rest of the world. From slapping sweeping tariffs on every major economy on the planet to asserting direct territorial interests in Greenland, the signals are everywhere. We're seeing a massive naval buildup in the Middle East that's fueling international fears of an imminent strike on Iran. While behind the scenes, active discussions are already surfacing about the annexation of America's own G7 ally, Canada. And if you needed proof that the era of diplomacy is over, you only have to look at Venezuela, where last month US forces physically entered the country and removed Maduro from power.
To the casual observer, this looks like pure chaos. A series of unhinged decisions with no underlying plan. But 40 years ago, this is exactly what Lee Kuan Yew warned the world would happen. But to understand Lee's perspective, we first have to understand history.
In frightening similarities to today's events, the global economy's collapse before the Second World War was triggered by a series of events, most notably the imposition of tariffs. You see, in 1930, the US passed the Smoot-Hawley Tariff Act, a seemingly simple fix to protect American farmers that became the trigger for a global breakdown. It ignited a wildfire of retaliation that caused world trade to plummet by 65% in just four years. Across the globe, the great powers retreated into closed trade blocks. The British, the French, and the Dutch reorganized their trade along colonial lines. And for industrial powers like Germany, Italy, and Japan, this was an existential trap. Starved of oil, iron, and rubber by these trade barriers, they began a desperate scramble for self-sufficiency. Japan swept through Southeast Asia and Germany drove east, trying to seize the resources the colonial powers refused to sell.
Lee, who himself lived through the Japanese occupation of Singapore, understood this history better than almost anyone. He warned, "Once America alters the rules of international trade, the resulting conflicts will lead to wars. It will mean a return to the old-fashioned, if historically traditional, method of creating bigger markets and improving living standards. It is expansionism or colonialism through spheres of influence or satellites or colonies."
Now fast forward to today in 2026. We are watching Lee's warning play out in real time. America's first move was exactly what Lee Kuan Yew predicted. A desperate economic shakedown by enforcing tariffs on the global market. The message was simple. Get in line. Cut a deal on Washington's terms or face the consequences. It's the classic behavior of a declining empire desperately trying to tighten its grip on a world it can no longer lead. And the very opposite of what Lee advised them to do. The answer to job losses is more, not less trade. America can upgrade her declining low value added industries or they will continue to decline whether America goes protectionist or not. Just as the ancient agricultural societies of pre-industrial China and Japan with a self-sufficient subsistence economies based on buffalo and manpower had to change with the advent of steam and the industrial age.
However, with these global tariffs, China and the rest of the world are quickly diversifying trade relationships and building a parallel world to bypass Washington entirely. You see, Lee understood that the US cannot enforce its dominance through economics alone. Not when there are so many alternatives. So, at a certain point, it'll eventually use physical force. Lee put it bluntly. America will find that putting up tariff barriers is not enough. She will have to go one step further. She will have to be the policeman to enforce order over her sphere of influence.
When you look at what's happening right now through that lens, it suddenly makes sense. Greenland, for example, isn't a random territorial obsession. It holds the rare earth minerals that power every missile and microchip in the US war machine. Canada with its vast minerals, freshwater, and Arctic access is being targeted as the potential 51st state. Additionally, the US has recently moved to secure the Panama Canal by forcing out Chinese operators, handing control of this global shipping choke point back to Western hands. Similarly, with the capture of Maduro in Venezuela gives them access to one of the largest oil reserves in the hemisphere and the ongoing Iran situation. Remove Iran from the equation and America gains dominant leverage over the entire Middle Eastern oil supply. The same oil that a still growing China desperately depends on.
Iran is a special case. Iran gots oil and gas. The Chinese desperately needs they need oil and gas. What if the United States would find another partner, another supplier of energy for Iran? [laughter] No, in place of Iran. Yes. Where do you find that? Well, in the Middle East, in Saudi Arabia, in Not possible. Not possible. But I had a Chinese diplomat say to me that they would be they would welcome that. That if in fact they did not have a necessity of needing Iranian oil, they would go along with sanctions because they don't think... they need Iranian oil. They need Arabian oil. They need Nigerian oil. They need Angolan oil. They need They need all the oil they can find anywhere. Yes, of course. For the to fuel the economic growth that they at 8%. Absolutely.
But here's where Lee's 1985 prediction gets truly alarming. He predicted that an economically cornered China would lash out to protect its interests, stating, "If the US cuts down China's growing trade, then China has to rethink her economic strategy. If she cannot get enough alternative markets to make up for the loss of America, her modernization will slow down. She will become restive."
Fast forward to today, and Lee's predictions are no longer theory. Take semiconductors, the oil of the 21st century, by banning the sale of high-end Nvidia Blackwell chips. The US has moved to systematically isolate China from the global supply chain, effectively blockading their future growth. While China is sprinting towards self-sufficiency, pioneering its own chips, advancing domestic AI, and forging a parallel trade world through bricks, Lee's warning is reaching a boiling point. If pushed into a corner, Beijing will stop negotiating and start dominating. We are seeing aspects of this today. In an unprecedented move, a Chinese naval task force recently circumnavigated Australia, punctuating the voyage with live fire drills in the Tasman Sea. While a full-scale conflict has yet to erupt, this is precisely the endgame Lee feared. The kind of geopolitical pressure cooker that mirrors the desperate scramble for resources before World War II.
In Lee's final published book from 2013, he repeated his genuine fear for the world's survival. He warned, "We will always be just one protectionist wave away from a slowdown. We must never forget that the Great Depression was worsened by isolationism. If America's politicians decide to impose prohibitive taxes, there will be retaliation. Once you go down that route, other partners, Europe, Japan get pulled into the conflict. Then the whole system goes down. The world ends up poorer overall."
As the US continues down this path in 2026, the question remains, will Washington find the strength to navigate a graceful exit from the top, or is it determined to go out in a blaze of glory and take the global order with it? But America's is the primary responsibility for she is the anchor economy of the free market economies of the world. In your hands therefore lie the future of the world. Thank you. [applause]