S.-E. ASIA AND VIETNAM ECONOMIC AND POLITICAL EFFECTS IF THE WAR ENDS

Press, Volume CVIII, Issue 31658, 19 April 1968, Page 12

S.-E. ASIA AND VIETNAM ECONOMIC AND POLITICAL EFFECTS IF THE WAR ENDS

(By

the Hong Kong

correspondent of the "Financial Times”. London!

(Reprinted from the "Financial Times" by arrangement)

. When Hanoi replied positively to President Johnson’s peace initiative, the political implications for the South-East Asian nations which have been fighting the Viet Cong—South Vietnam itself, Thailand the Philippines, South Korea, Australia and New Zealand—and for those which have supported the American role—Japan, Malaysia and Singapore became enormous.

One has every sympathy with Thailand’s Foreign Minister, Tbanat Khoman, who emerged from the South-East Asian Treaty Organisation meeting in Wellington which had been discussing the implications of Britain's withdrawal from East of Suez to be asked his reaction to the possibility of a rundown of the American commitment. He replied glumly: “I hope you will give me a night to think it over.” The despondency created in Bangkok and Saigon is finding echoes in many Asian capitals. Boom In Thailand But the fears aroused by the prospect of peace are not entirely inspired by military and political anxieties at the prospect of an American withdrawal; the cessation of the war could have serious economic repercussions on the region, as many of its economies have benefited directly or indirectly from the demand created by the war. Thailand has over the last few years enjoyed a balloonlike boom which a peace might easily puncture. Although solid progress has been registered in industrialisation, the American presence in the country has generated most of the capital which has financed the new factories and has encouraged overseas investors (particularly Japa nese and Americans—the latter alone putting in SUSIIOm last year) to set up shop in Thailand. An American withdrawal would turn off these two taps very suddenly. At present about 45,000 United States troops are stationed in Thailand in Army and Air Force bases. Apart from an annual sum of about SUS6Om received from the United States in aid, Thailand has seen Washington spend nearly SUS3OOm in the last two years on the construction of bases. Free Spenders In addition to the income generated by the personnel on these bases, up to 1000 United States troops arrive in the country every day on “rest and vacation” trips from Vietnam. These free spenders have created the most unhealthy aspect of the Thai boom—the thousands of bars and brothels whose garish neon lights in Bangkok anrt other Thai cities provide a savage contrast with the surrounding poverty of the countryside, and which explain the strong undercurrent of anti-Americanism which flows under the skin of many smiling Thais. : Of course, much of this

expenditure was created not only by Vietnam but by the continuing Communist insurgency in the northern provinces. But many Thais are asking themselves whether America would continue to fight subversion so generously in a nation often described as “the second Vietnam” if the United States suffered 1 a defeat at the hands of Hanoi. S. Korea Benefits Another United States ally. South Korea, has benefited from the war. Her exports to South Vietnam rose dramatically to nearly SUSI4m in 1966, but fell back after the imposition of a stricter “Buy American” policy in 1967. But sales to the two main markets—the United States and Japan—have continued to soar, and it is thought that many of the goods sold to the latter are for trans-shipment to Saigon. South Korea, however, would be cushioned from the effects of an end to the Vietnam war by the Pueblo incident, which resulted in an increase of military aid from the United States to total SUSI6Om as a result of the conflict. Hong Kong, for exaffiple, sold 40 per cent more garments to the United States in 1966 and her total exports to America increased by nearly 30 per cent last year to reach over s4oom. The Philippines has won economic concessions from Washington in return for the United States-financed contingent Manila has sent to Vietnam. American purchases from Singapore have doubled over the last few years, while its port facilities have been kept busy repairing ships feeding the Vietnam war effort. The Greatest Losers The export-oriented industries of Taiwan, Hong Kong, the Philippines, Malaysia and Singapore have all found heathily-growing markets. Malaysia, already struggling against catastrophic drops in the price of natural rubber, will face a further drop in demand should the war end, while her exports industries would suffer and she would lose the small amount (about SUS2m) she earns from

United States troops on “rest and recreation.” The greatest loser in the region, however, would undoubtedly be Japan, whose bankers have estimated that at least SUSIOOOm worth of her exports every year are generated by the war. Direct off-shore purchases by United States military agencies in the last financial year totalled over SUSIOOm and about SUS6SOm worth of Japan’s sales to the United States itself are indirectly due to Vietnam. Japan, too, profits from “rest and recreation.” An end to the war could mean that Japan’s already serious balance of payments deficit would rise to over sUSlooom—and the sooner I the war ends the more harmful would be the impact on I Japan, which is at present going through a recession expected to last until the spring of next year. Impact On China Finally, the impact of peace on China, itself, must not be forgotten. A “fraudulent” negotiated settlement would cause her a great loss of prestige and the departure of the Americans would deny her a threat which Peking has used to great effect in unifying the squabbling country against the danger of United States “imperialism.” I The cessation of supplies of aid to Hanoi, on the other hand, would ease the strain on her badly disrupted transport system. The main question remains unanswered: How would America react to the defeat which any conceivable negotiated settlement would represent for its policies in Asia? If the United States decided never again to risk such an involvement in Asia, the economic losses discussed above could be chicken-feed. Perhaps President Johnson will repeat the offer which accompanied his attempt at de-escalation a year ago: of SUSIOOOm in aid if North Vietnam joined with the rest of South-East Asia in joint development projects. If he did not make some such gesture and decided to get out, the gap the United States would leave could make the “domino theory” come true after all.