WASHINGTON — When former President George Bush announced during his 1992 reelection campaign that he was permitting the sale of F-16 warplanes to Taiwan, he justified it as a way of enhancing Taiwan's security. The fact that the $6-billion deal kept General Dynamics factories running in Texas didn't hurt either.
And the sale had a third, less obvious purpose: American officials and trade representatives hoped that the military deal would give U.S. firms the inside track in landing some big commercial contracts in Taiwan, including the multimillion-dollar job of building a nuclear power plant.
"If we didn't get a nuclear contract, it would be a bitter pill," David N. Laux, president of the U.S.-Republic of China (Taiwan) Trade Council, observed in the wake of the sale of the jet fighters.
France, which had itself sold Mirage jet fighters to Taiwan, also had its eye on civilian contracts, including its own bid for the nuclear plant. But Laux said that the Americans figured: "Let the French have the high-speed rail contract. We want the nuclear project."
The U.S. and French maneuvering for contracts in Taiwan illustrates one of the most important but often overlooked points about arms sales in the new era of post-Cold War economic competition: For countries such as the United States and France, arms exports are economically important not only in their own right but also as a lever for landing purely civilian contracts.
During the Cold War, arms sales were usually linked to ideology; the United States sold arms to countries that would help in the struggle against the Soviet Union and communism. Occasionally, Western allies competed with one another for arms sales, but such clashes were moderated by the broader concerns of the Cold War.
Now arms deals, still a tool of foreign policy, are increasingly linked to commerce and civilian exports. The nation that sells the guns has the chance to sell the butter too: to build the dams, lay the subway rails and fire up the nuclear plants.
These connections influence both the selling and the buying nations in arms deals. Exporting nations offer high-tech weaponry partly in hopes of winning commercial business, or they throw in commercial contracts to land an arms deal. Purchasing nations dangle the prospect of civilian contracts to get good deals on the weapons systems they want to buy.
The linkages between arms and commerce can be found throughout the world. In the Middle East, for example, President Clinton recently intervened with King Fahd to make sure that Saudi Arabia bought commercial aircraft from the United States, its main protector and arms supplier.
In Southeast Asia, the Russian government not long ago offered to accept up to $1 billion worth of Malaysian palm oil, a commodity increasingly hard to sell in the diet-conscious markets of the United States and Western Europe, if Malaysia would buy Russian MIG-29 jet fighters. The deal has not yet gone through.
Nowhere is the connection between arms sales and commerce more evident than in Taiwan.
With about $87 billion in foreign-exchange reserves, Taiwan is one of the world's wealthiest governments. And with the Chinese People's Liberation Army, the world's largest, poised on the mainland nearby, Taiwan believes that it has a continuing need for advanced weaponry.
At the beginning of this decade, Taiwan unveiled an eye-catching $300-billion, six-year public works program. The shopping list included $7.1 billion for a nuclear plant; $13 billion for a highway; $11.9 billion for a high-speed railroad, and two mass-transit systems worth $7.4 billion and $6.2 billion.
It was, observed Laux, "the biggest single infrastructure program in the world." American companies were interested, and the Commerce Department quickly began lobbying in Washington to win active support from the U.S. government.
The lure of $300 billion in contracts attracted interest from other companies as well--particularly in Western Europe, where Taiwan had long been treated as an American preserve.
"Businesses go where the money is," noted a French business executive in Taiwan. "And the money is here."
Taiwan's big spending program began to spur foreign policy changes in a number of European capitals.
France had kept Taiwan at arm's length since 1964, when President Charles de Gaulle established diplomatic relations with Beijing. But three years ago, France altered course by dispatching a Cabinet-level minister to Taiwan at the head of a large trade delegation.
Other European countries soon dispatched their own high-level officials to Taiwan and subtly signaled a new willingness to do business. Even former British Prime Minister Margaret Thatcher--who while in office had courted Beijing with a vigor from which her successor, John Major, has retreated--joined the parade to Taiwan, talking as if the British government had always encouraged trade with the island.
