Singapore would be "happy" to re-unite with Malaysia if it treated its Chinese and Indian minorities better, Lee Kuan Yew, the founding prime minister of the Southeast Asian city state, said.

Singapore separated from northern neighbor Malaysia in 1965 after two years together in the Malaysian Federation because the city-state's leaders opposed Malaysia's affirmative-action policies in favor of ethnic Malays. The two countries have had an acrimonious relationship ever since.

"If they would just educate the Chinese and Indians, use them and treat them as their citizens, they can equal us and even do better than us and we would be happy to rejoin them," Lee was quoted as saying on the Web site of the UCLA Asia Institute research center.

Singapore is majority ethnic Chinese with a minority Malay population, while Malaysia's ethnic make-up is the opposite.

The two nations have quarreled for decades over the price Singapore pays for its Malaysian water supplies, over air space and railway land, and a bridge that links the two countries.

Many Malaysians are deeply suspicious of Singapore and some resent the economic success of their smaller but richer neighbor. Many Singaporeans, on the other hand, complain about being targeted for crime in the shabby southern Malaysian state of Johor.

"We are a standing indictment of all the things that they can be doing differently. They have got all the resources," Lee was quoted as saying.

Lee, who cried when he announced Singapore's separation from Malaysia in a television broadcast in 1965, had supported a union of the two countries back then because he believed it was difficult for the resource-poor city state to survive on its own.

He sparked a verbal row between the two countries in 1996 when he floated the possibility of Singapore again becoming part of Malaysia.

"When [Malaysia] kicked us out [in 1965], the expectation was that we would fail and we will go back on their terms, not on the terms we agreed with them under the British," Lee was quoted as saying on the UCLA site.

"Our problems are not just between states, this is a problem between races and religions and civilizations."

Singapore opposition politician Chiam See Tong is one of the few supporters of an economic union between Malaysia and Singapore.