America plays catch-up with China in South Pacific

As China outlays a debt trap for Pacific nations, the U.S. is trying to bridge the gap with large amounts of cash and the influence of Pacific allies, writes Patrick Dennan.

CHINA IS STRENGTHENING its ties in the Pacific through increased aid, development, diplomacy and security cooperation.

These aid agreements often require recipients to deny recognition of an independent Taiwan. Moreover, this aid comes with other “fish hooks”, predominantly heavy reliance on Chinese loans, known as the debt trap.

An Associated Press analysis of a dozen countries most indebted to China, including Pakistan, Kenya, Zambia, Laos and Mongolia, found paying back that debt is consuming an ever-greater amount of the tax revenue needed to keep schools open, provide electricity and pay for food and fuel. These countries, in turn, are beholden to Chinese import and infrastructure companies.

In Sri Lanka, a Chinese company gained control of a major port, obtaining a 99-year lease. This sounds insidious, but the United States pursued similar policies in Latin America in the 1980s.

Between China and America, we chose the wrong friend

While the Australian Government panders to America's every whim, China continues to be a progressively dominant power in the Pacific.

So, how have Pacific nations been affected?

Tonga took out a $120 million loan with a major Chinese bank in 2008 and is now struggling to repay it. This amount is about a quarter of Tonga’s GDP. The loan repayments are effectively being paid with donations from the International Monetary Fund, Australia and New Zealand.

The consequences of Tonga not repaying the loan are unclear. However, the most telling feature of the debt is that while it is a minor amount by Chinese banking standards, it refuses to renegotiate the terms.

The Solomon Islands went further than Tonga, sounding alarm bells in the U.S. In 2019, it signed a deal that allowed Chinese police on the main island of Guadalcanal. Chinese businesses and a $71 million stadium were also built on the island.

However, these positive outcomes were not spread equally to other islands in the Solomons group. Opposition parties claimed governmental corruption. In late 2021, riots broke out and many Chinese businesses were burnt down. Order was re-established by peacekeepers from Australia, New Zealand and Fiji.

However, in April 2022, Manasseh Sogavare, Prime Minister of the Solomon Islands, doubled down by signing a clandestine deal with China which re-enforced its local privileges. Western countries are watching the upcoming elections in the Solomon Islands with interest.

China has also invested substantially in Fiji. China arranged a ‘Strategic Partnership of Mutual Respect and Cooperation’ pact with Fiji in 2014. There are currently about 10,000 Chinese living in Fiji (although many are Cantonese and Taiwan supporters). Fijian students study in China. Joint fisheries and tourism businesses have been established.

However, re-elected Fijian Prime Minister Sitiveni Rabuka has long been a China sceptic. While welcoming the investment, he recently dismissed Chinese police officers from the Fijian police force while continuing to train Fijian police officers in China. Like many Pacific nations, Fiji delicately balances its international interests.

Most Australians in favour of neutrality

Recent polls have demonstrated Australia's desire to break our toxic alliance with the U.S. and implement a policy of neutrality.

French Polynesia presents a major strategic interest for China. It is a pivotal maritime space of 118 islands between Asia and America, covering an economic zone of nearly 4.5 million square kilometres. Its southern position also makes the territory suitable for all types of space observation and modern forms of connectivity (aerial, extra-atmospheric, navigation and telecommunications).

France is one of the few colonial powers still actively engaged in the Pacific. While many French Polynesian citizens are Francophiles who enjoy political and citizen rights, underinvestment in the islands has many looking to China. A leaked document revealed that New Zealand has been lobbying French Polynesia on behalf of Western interests.

New Zealand is a small trading country with long-term ties to China. It has been criticised by its Five Eyes partners for being ambivalent towards Chinese expansion. It has a significant Polynesian population, including the indigenous Māori. New Zealand is respected in the South Pacific, not only because of its cultural and sporting ties but because it is often the first responder to natural disasters in the region. Other Western countries should recognise the value of its soft power.

Australia has tried to lead in the South Pacific, but its communications and development plans have had mixed responses, especially from the Micronesian states like East Timor and Papua New Guinea.

Corruption in these nations has led to violent street riots. Australia recently signed a defence and climate deal with Tuvalu. However, Tuvalu has concerns about handing its sovereignty over to Australia. Instead of defence alliances, Australia might be better at promoting local industries like the burgeoning cocoa (coffee) bean industry in Papua New Guinea.

Australia needs wartime government to confront global crises

Australia needs a war time government but instead we’re collectively sleepwalking through parochial denial about the growing rise of multipolarity and its consequences.

After years of apparent indifference, the U.S. is playing catch-up. It is rushing to open embassies in the region, including in the Solomon Islands, and is renewing Compacts of Free Association with the Federated States of Micronesia, the Republic of the Marshall Islands and Palau.

America recently signed a controversial defence agreement with Papua New Guinea. The U.S. also has offered $810 million in new funding to Pacific nations over ten years, mostly targeting regional initiatives such as maritime security and climate resilience. A further commitment of $200 million was made at a 2023 summit. Much of this funding is dependent on congressional approval.

Climate change is a very real issue for Pacific nations. Rising seas are destroying coastlines. Western countries would be more popular if they built the million-dollar sea walls needed, rather than signing ambiguous agreements. On the other hand, sea walls are vulnerable in the hurricane-prone Pacific and there are complex social issues in coastal communities to contend with.

The United States, China and others must understand that dealing with Pacific Islanders is not all about money. It is about face-to-face contact and long meetings. It is about mana, which means respect, influence, status and much more.