For weeks, the open-air coffee shops and gleaming office towers of this multiethnic city-state have buzzed with tales of suspicion and fear.
Chinese businessmen have wondered if they should fire all of their Muslim workers; Malay men, who are predominantly Muslim, tell one another that wearing sarongs and other forms of traditional dress could get them stopped by the police; and Chinese pensioners whisper that Singapore's Malays secretly approve of Osama bin Laden.
It doesn't matter that most of the stories aren't true. They are a symptom that Singapore's prized racial harmony has been damaged by terrorism. The January announcement that 13 Al Qaeda "sleeper" agents, all Muslims, had been arrested here served to expose and widen the fissures between its ethnic groups.
The atmosphere since has awoken memories of 1964, when race riots between the majority Chinese and Malays, who are predominantly Muslim, threatened to overwhelm the fledgling nation.
That year shaped the thinking of Singapore's founding fathers more than any other, and the government has considered stable race relations to be the foundation of its economic success ever since.
The "episode has worrying implications for our multiracial and multireligious society,'' Prime Minister Goh Chok Tong said last week. "We cannot afford a repeat of the panic and irrational fear that led to segregation of the races after the two riots of 1964."
Yet even as Mr. Goh's government seeks to build racial ties, it is also dealing with a rare instance of civil disobedience: A 6-year-old girl was suspended from school yesterday for wearing a Muslim headscarf, and another girl was threatened with suspension, in the latest installment of a dispute that has been major news in Singapore.
The government has portrayed the dispute as simply about applying the same dress code to all students, but it has caused resentment among some of the city's Malays. In neighboring Malaysia, which is predominantly Muslim, politicians and some government officials have criticized Singapore's stance as insensitive to Islam.
A small but vocal Muslim group called Fateha, which is coming under fire from the government as well as other Muslim groups, is a strong advocate of the headscarves. They have criticized the government's position on headscarves, saying it lacks a desire to understand the Muslim community's concern.
Singapore's population is roughly 75 percent Chinese, 15 percent Malay, and 10 percent Indian. Almost all of the Malay's are Muslims. The way the race issue is being tackled now speaks volumes about how this tightly controlled society has been built in the 35 years that it has been a republic: With heavy doses of social engineering.
A flurry of formal and informal government initiatives followed Goh's speech. The bully pulpit of the state-owned press began cranking out articles on Malay-Chinese cooperation and hasn't stopped; daycare centers have started taking Chinese children on visits to Malay homes; and millions of dollars of government funds have been mobilized to encourage racial cooperation.
Goh made no bones about his concerns. "For example, some Chinese companies may shun employing Malay/Muslims henceforth. This would be terribly wrong," he told business leaders. "I would like them to make greater efforts than before to ensure that there are no such discriminatory attitudes among employers."
Many Malays privately claim they are discriminated against when they apply for jobs in the civil service, and many Chinese frequently dismiss Malays as lazy.
Though Singapore isn't at any risk of violence, analysts say the reactions of the majority Chinese and minority Malays are proof that underneath this country's famously placid surface there are reserves of enmity between the races.
"The government should tackle these issues, but they also have to admit that this is about more than perception - many Malays do feel that they're second-class citizens here,'' said one Malay community leader, who requested anonymity. He pointed to frequent government campaigns that stress the importance of Chinese having more babies, or encouraging citizens to speak Chinese, as thorns in the sides of many Malays.
At Singapore's Housing Development Board (HDB) buildings - stumpy government-built structures - the faults lines are in clear view.
Historically, the races in Singapore were strictly confined to ethnic enclaves in the buildings - and even within the Chinese community, residents segregated themselves by dialect.
In 1989, alarmed by the HDB segregation, the government passed a law that required the buildings' demographics to reflect Singapore's racial balance. It is one of the plainest state-mandated attempts at fostering race relations.
Yet the atmosphere in a typical HDB doesn't reflect a mixing of the races so much as cohabitation.
"I don't really know any of my Muslim neighbors,'' says an ethnic-Indian woman who lives in a cluster of roughly 250 HDBs. "Yeah, the different races don't mix too much,'' agrees a Malay man on the same floor.