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An Arms Deal That Suits Everyone But Beijing


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AN ARMS DEAL THAT SUITS EVERYONE BUT BEIJING

When it comes to dealing with China, George Bush's motto has always been "don't rock the boat." But with his reelection on the line, Texas voters carry more weight than aging Beijing bureaucrats. That's why, in a reversal of a decade-old U.S. policy that's sure to infuriate China, Bush on Sept. 2 approved the sale of 150 F-16 fighters to Taiwan. The $6 billion deal could save thousands of jobs at General Dynamics Corp.'s Fort Worth aircraft plant--and bolster Bush's campaign in the must-win Lone Star State.

For the wealthy island nation of Taiwan, the go-ahead on the sale represents a major political breakthrough. Until now, Western countries have avoided selling advanced weapons to Taiwan for fear of offending China. But the U.S. policy switch "sets a precedent that makes it easier for other countries to sell to Taiwan," says Ron Montaperto, an Asia specialist at the National Defense University in Washington. Besides F-16s, the Taiwanese covet antisubmarine frigates, surface-to-air missiles, and military communications gear. And with $78 billion in foreign currency reserves, Taiwan can afford them.

"Expect the Chinese to be very vocal in their opposition" to the F-16 deal, warns a Western diplomat in Hong Kong. But China can do little of substance to retaliate. Its current-account surplus with the U.S. is expected to hit $15 billion this year, and it faces an Oct. 10 deadline to wrap up sensitive trade talks with Washington. Moreover, China's leaders don't want to queer the reelection prospects of their good friend George Bush, whom they much prefer to Arkansas Governor Bill Clinton. Predicts Jaw-ling Joanne Chang, a research fellow at a government think tank in Taipei: "China will protest, but it will just be for the record. They don't have any leverage with Washington."

That doesn't mean China's hands are completely tied. It may step up its own arms purchases. Beijing already plans to buy 72 Russian Su-27 fighters and 24 MiG-31 fighter-interceptors. Ironically, those very arms deals allow Bush to justify the F-16 sale by invoking the Taiwan Relations Act of 1979, which permits the U.S. to sell weapons to ensure Taiwan's self-defense.

But Bush's change of heart may have more to do with reports that Taiwan was close to buying French Mirage 2000-5 fighters instead. Bush would have taken a political beating had Taiwan bought French. Because of dwindling F-16 purchases (chart), GD said in July it would cut 5,800 jobs at the Fort Worth plant by 1994. Employment there already is down to 19,500 from a peak of 31,000 in 1989. Company officials estimate that up to 3,000 Fort Worth jobs could be saved by the Taiwan order.

The F-16 sale is the centerpiece of Bush's election-year bid to save defense jobs. Other efforts include dropping the Administration's long-standing opposition to the Bell-Boeing V-22 Osprey aircraft. The White House may also bow to Capitol pressure and support a big-ticket upgrade of GD's M-1 Abrams tank.

PARIS PIQUE. The policy shifts are clearly an effort to win votes. Congressional Democrats, with their own reelections to consider, aren't about to object. More than 100 members of Congress signed an Aug. 14 letter urging Bush to approve the sale. Says Senator Lloyd Bentsen (D-Tex.): "The time has come to place our relations with the aging totalitarians in Beijing on a purely pragmatic basis and to develop a new relationship with the new Taiwan."

Taipei may still order some Mirages "to keep the door open" to French purchases, says a Taiwanese official. That will hardly assuage French resentment at losing out to the U.S. at the 11th hour. Europeans will be even more miffed if the F-16 deal paves the way for expected White House approval of a $5 billion sale of 72 McDonnell Douglas F-15 fighters to Saudi Arabia. The thaw in Arab-Israeli relations has defused much of the political controversy surrounding the F-15 sale. A large-scale Saudi buy of F-15s could scuttle a proposed European jet-fighter consortium.

Criticism from Europe and China may be music to the President's ears, though. With voters more concerned about jobs than foreign policy, this might be just the time for Bush to defy both Europe and Beijing.Amy Borrus in Washington, with Joyce Barnathan in Hong Kong and Stewart Toy in Paris


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