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Former Asian Enemies See the Temptations of Trade

July 31, 1988|Armand Hammer | Armand Hammer is chairman of the Occidental Petroleum Corp

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.

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