Former Asian Enemies See the Temptations of Trade

A new order of political harmony and economic prosperity is about to be born in the Far East with the Pacific Rim as its cradle. I am glad to be one of the attendants witnessing its arrival, eager to nurture the infant.

“New Order” is a historically chilling term, but the one arising in the East is not rigidly rooted in ideology nor is it a set of theological precepts drawn from ancient texts. The signs in some of the dominant countries and cities of the Far East, capitalist and socialist alike, are that most people increasingly want to live together in prosperous harmony--not to impose their political beliefs and differing ideologies upon each other but to improve their standards of living as much as possible by trade among themselves and, otherwise, to let each other be.

It may not be long, I suspect, before Taiwan will be trading directly with the People’s Republic of China and South Korea will be trading with North Korea. For their standing in international markets and for their people at home, they need each other; and my experience over 70 years in business has taught me that, in the long run, economic necessity always counts for more than ideology.

What is happening in the Far East taxes credulity; the pace of change is so rapid, the tempo of human activity so frenetic that, at times, you doubt the evidence of your own senses.

Last time I was in Seoul, six years ago, six bridges spanned the Han River, connecting the two sides of the city. When I visited last month, I counted 16 bridges and saw two more in construction. In 1982, when I first visited South Korea, the population of Seoul was 7 million. It is now 10 million. What will it be by the end of the century? In Taipei, a senior member of the governing Kuomintang Party joked about the idea that economic aid might be given to Taiwan by China if ever the countries were reunified, saying: “By any measure of truth, any offer of help should be the other way round.”

The foreign reserves of tiny Taiwan stand at $75 billion and, as a distinguished American diplomat told me, “The country is awash in liquidity: It sloshes round your knees when you walk down the street; the banks are discouraging depositors.” The benefits of this prosperity are felt by people at all levels.

Under a liberal new policy, tens of thousands of Taiwanese are now able to visit their old homes and relatives on the mainland. To the amazement of both governments, all but a handfulof those who have made the trip have returned to Taiwan and the benefits of the free-enterprise system. The only ones who remained behind were some aged people who want to be buried in the old country and some entrepreneurs who have spotted financial opportunities under Deng Xiaoping’s “open door” policy.

The Pacific Rim is fast becoming the economic cockpit of the industrialized world (“these countries are production platforms for the West,” an American diplomat told me); but few of us have begun to realize what those countries might achieve if they could break through the old political and ideological barriers that still restrain them economically. On my recent trip, I detected clear signs that breakthroughs may be imminent.

It would be absurd to treat the Pacific Rim as a homogenous economic entity. Singapore, Indonesia and the Philippines all differ from each other and from South Korea and Taiwan. The political problems of those last two countries are exceptional--witness the continuing unrest in Seoul. Yet South Korea and Taiwan have one economic characteristic in common: incredible productive output achieved with, effectively, no raw materials. Meanwhile, across the borders of both countries are boundless reserves of mineral wealth, cut off by twists of history and the consequences of war. Think what South Korea might do if it could gain access to the mineral reserves of North Korea; imagine what Taiwan could accomplish if it had access to part of the mineral surpluses of China.

Such trade would be very much in the interests of North Korea and China. As do all members of the socialist bloc, leaders in Pyongyang and Beijing face deepening difficulties in providing their people with satisfactory standards of living. Their domestic industries are incapable of providing finished manufactured goods in the quantity and quality of finish their people require.

They realize that the solution lies, partly, in friendly trading connections with the old, capitalist, enemies at their frontiers. Skeptics will say that this will not happen to any great extent in the foreseeable future. But I believe that future to be just around the corner.

In Taipei, I had lunch with all the major cement manufacturers in Taiwan. These industrialists buy coal from Australia, South Africa and the United States. They could import coal much more cheaply from China but old barriers prohibit such trade. Not the least of their fears is that they might become dependent upon mainland coal which China could cut off at any time. I offered them an idea off the top of my head, suggesting that they turn to American capitalism to satisfy the needs of both Taiwan and China.

In association with the Chinese government, my corporation, Occidental, has developed one of the biggest open-pit mines in the world at An Tai Bao in Xianxi province. Meanwhile, through its subsidiary Island Creek Coal Co., Occidental is also one of the biggest coal-producers in the United States. “What if,” I said to the Taipei manufacturers, “you bought Chinese coal from us and we guaranteed supply against our American reserves? That way, you would be independent of China.”

The gentlemen around the table, enjoying their shark’s fin soup, greeted my idea with cheerful laughter and applause. They didn’t reject it out of hand as unworkable or immoral. They did not raise ethical objections to doing business with their old enemy. The only inhibition they mentioned was that such an arrangement would require a change of government policy at the top (and then, sotto voce , they added that such a change might be possible).

When men cast in the mold of Chiang Kai-shek can say that they would welcome trade with the mainland, through the intermediary of an American company, then observers may truly reckon that a new day is dawning over the East China Sea.

In Seoul, eager businessmen urged me to try to act as an intermediary between them and the North Korea government in the hope of effecting some trading connection between north and south.

Yet we know far more about Beijing than we know about Pyongyang. I know Deng Xiaoping as well as I know any political leader on earth; no more realistic and pragmatic man is in office in any country. Deng initiated an “open door” policy long before we heard any talk of glasnost in Moscow and, to some extent, Mikhail S. Gorbachev’s reform policies seem to reflect Deng’s campaigns in Beijing. If the authorities in Taiwan will open a window of opportunity, Deng will push China right through it.

Kim Il Sung in Pyongyang is a much less predictable force. North Korea is the Albania of the Far East, one of the most tightly controlled and exclusive societies in all history. The public demeanor of the government appears extremely hostile to the outside world and the political perceptions of North Korean leadership are anybody’s guess.

Everybody is looking to the coming Olympics in Seoul as a vital trial and test of Kim Il Sung’s good faith. If he restrains his followers and the games run their course without disturbance or attack, we may believe that North Korea genuinely wants a new climate of good will; in those circumstances, we may be able to look more favorably on President Roh Tae Woo’s request that the friends of South Korea try to open a new trading relationship with North Korea.

The U.S. government position is unequivocal: hang tough. During a recent visit to South Korea, Secretary of State George P. Shultz reaffirmed support for Roh and confirmed that U.S. troops would remain in South Korea. The day after I saw Roh, U.S. Secretary of Defense Frank C. Carlucci III, visiting Seoul, said the United States was ready to use military force to prevent any terrorist activities by the North Koreans at the Olympic Games.

Firm declarations of American intent give Roh confidence. His most recent public statements sound like he is increasingly willing to initiate an accord with Kim.

If trade were to begin between South and North Korea and between Taiwan and China--eventually leading to open trade in the region and around the globe, we would take a vital step toward a new order in world politics; the 20th Century, so often so bleak and dark for the Far East, might close on a full note of hope, another new dawn in the progress toward world peace.