China Looks to Cash In on Gulf Reconstruction

March 10, 1991|By ROBERT BENJAMIN

BEIJING — Beijing.--High-profile Western corporations are not the only ones trying to make a buck out of the post-war reconstruction in the Persian Gulf. China, which made diplomatic hay out of the pre-war crisis but failed to support the allied military effort, is also angling to cash in.

When Iraq invaded Kuwait last August, Chinese construction and engineering firms had 10,000 workers in the two Middle Eastern nations. China estimates the conflict cost it $1.2 billion in suspended payments on projects, deposits looted from Kuwaiti banks and lost machinery after half of its workers were evacuated.

Even before the ground war began, China's top overseas civil-engineering firms -- all among the world's 250 largest international contractors -- were laying plans to return to the Middle East in full force. As Desert Storm's dust settled, the Chinese companies were knocking on the doors of gulf state embassies here, peddling their relatively cheap labor and technical skills.

In this marketing effort, China's carefully-crafted diplomatic stance on the gulf crisis -- it opposed the Iraqi invasion but abstained from the United Nations votes authorizing the use of force and sealing the cease-fire -- will do no harm. China's success at fence-straddling means it is the only nation in the world well-positioned to do business with nations on both sides of the conflict.

It also does not hurt that, as one of the U.N. Security Council's five permanent members, China's financial interests cannot be entirely ignored by any Middle Eastern nation.

In Kuwait and Saudi Arabia, Chinese workers stand a good chance of replacing many of the half-million Palestinians who previously toiled in the two countries and who may no longer be welcome because the Palestine Liberation Organization (PLO) sided with Iraq. This could come about despite China's long-standing support for the PLO.

As for Iraq, Chinese foreign economic relations officials already have acknowledged they would like to be back at work there as soon as possible. At the time of the invasion of Kuwait, China was involved in the construction of two Iraqi cement plants and was continuing to peddle arms to Iraq -- though to a lesser degree than during much of the 1980s when China sold billions of dollars worth of weapons annually to both sides in the Iran-Iraq war.

As the gulf war was winding down earlier this month, a senior Chinese foreign economic relations official, Chen Yongcai, was quick to note that the only drawback China could foresee in future dealings with the Iraqis is whether their payments would be guaranteed.

Chinese officials are not commenting on future arms sales to Iraq. They even will not admit they sold weapons to the Iraqis in the past, though Chinese-made Silkworm missiles were fired on Allied forces in the gulf war. Whether China broke the U.N. trade embargo by more recently supplying Iraq with arms is still unresolved.

But few Asian and Middle Eastern diplomats here believe that China would shy away from the opportunity to profit from rearming Iraq. As one Middle Eastern envoy put it: "China will sell to anyone, angels or devils. It pursues its own interests in a very hard-nosed way."

Once a region in which China had few such interests, the Middle East has become increasingly important to the Chinese in recent years.

Just last summer, for example, China established full diplomatic relations with Saudi Arabia. Trade relations with the Saudis have been growing steadily since the kingdom bought Chinese long-range ballistic missiles in 1986.

Kuwait has given China more than $300 million in low-interest loans since 1982; the most recent loan was announced just last )) December during a three-day visit to Beijing by Kuwait's then-exiled ruler. Chinese firms already have built scores of projects in the emirate, including housing, hospitals and power stations.

And despite its support for the PLO and its recognition of the Palestinian state in 1988, China's need for agricultural and other technologies have recently led it into a diplomatic dance with Israel. An Israeli Academy of Sciences and Humanities office opened here last summer at the same time that a Chinese tourist agency set up shop in Israel -- the first step, some Arab envoys here believe, toward full diplomatic relations between the two nations.

Beyond attempting to use its position to make money in the aftermath of the gulf crisis, though, there remains the question whether China will also attempt to play a mediating role in the vTC search for a long-term solution to Middle Eastern tensions.

Arab, Asian and Western diplomats here predict that China, indeed, can be counted on to try in some way to play that role, particularly given the deep Chinese fear of the Middle East becoming a playground solely for United States' interests. But most of these China-watchers also agree that any such move by the Chinese would be hollow rather than substantive, aimed mainly at improving China's international image and securing its financial interests.

"Anything that China does will only be a diplomatic show as part of its abiding insecurity that it is really just a shallow global player," said a Western diplomat. "Not to play a role would further expose that the emperor has no clothes."

Robert Benjamin is The Sun's Beijing correspondent.

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