"The basis of a nation just was not there.
But the advantage we had was that we became independent late," Lee recalled in a wide ranging interview with the IHT published this week.
"In 1965, we had 20 years of examples of failed states.
So, we knew what to avoid - racial conflict, linguistic strife, and religious conflict. We saw Ceylon."
"Thereafter, we knew that if we embarked on any of these romantic ideas, to revive a mythical past of greatness and culture, we'd be damned."
Lee was prime minister from 1959 to 1990 when he stepped down. Sri Lanka gained independence from Britain in 1948.
Lee said the team that ran Singapore made a deliberate decision to use English as a working language and not focus on Chinese. At the time Singapore had Chinese, Malay and Indian schools in separate language mediums.
The British had also set up English schools to produce clerks, storekeepers and teachers.
"Had we chosen Chinese, which was our majority language, we would have perished, economically and politically," Lee told the IHT.
"Riots - we've seen Sri Lanka, when they switched from English to Sinhalese and disenfranchised the Tamils and so strife ever after.
"We chose - we didn't say it was our national language - we said it was our working language, that everybody learns English whatever language medium school you go to. Which means nobody needs interpretation to read English."
Lee said 20 percent of Singapore's population now finished their education abroad, while 50 percent traveled in and out of the country.
The country's foreign and defence policy was shaped on the realization that it could perhaps only hold out for two weeks against a foreign invasion.
Singapore was therefore in favour of creating a world order based on rule of law and a respect for international borders.
It is grappling with the possible outcomes of economic and political might of China and India in the next four decades.
While Sri Lanka is still bogged won with issues such as exchange rates, inflation, fuel subsidies and political ideology Singapore is thinking far ahead, even to issues such as the effect of global warning on a low elevation island nation.
He says other countries do not focus on such matters because they are not 'election issues'.
"You know maybe 50 years, a 100 years, most of us would be dead. Leave it to the next president," Lee said.
"…we are too vulnerable. If the water goes up by one meter, we can have dikes and save ourselves. If the water goes up by three, four, five meters, what will happen to us? Half of Singapore will disappear! The valuable half - the seafronts!
"Well, let us say, it has gone up to one meter and we have protected ourselves. But our neighboring islands have disappeared!
And then Indonesia may not have 30,000 islands - many will be under water."
Singapore has started to talk with the Dutch about building dikes, Lee said.
Earlier this month a retired Thai diplomat, Sompong Sucharitkul, said Singapore opposed the entry of Sri Lanka to Asean when it was founded in 1967 because the country was viewed as unstable.
In 1967 the Sri Lanka was run by Prime Minister Dudley Senanayake in a shaky coalition with the Federal Party. His attempts to solve the ethnic question failed when proposals to devolve power was withdrawn amidst opposition.
Sompong said a discussion was held on August 06 and two ministers from Sri Lanka (then Ceylon) were in an adjacent room.
"I remember one was an economics minister.
He waited there anxiously for a signal to join the discussion; but it never came," Sompong told Thailand's The Nation newspaper.