This is a response to Arrian Gottleb and Justine Daniels raising grave concerns pertinent to China’s bilateral Assistance to the Pacific Island states that could triggered fostering of sister city bilateral engagements, published in the Island Sun on August 14.
Over the past four decades Australia and New Zealand were seen as the region’s giant traditional powers, in enhancing Overseas Development Assistance (ODA), to all the Pacific Island states. Despite numerous assistances rendered over a period of 45 years, there is no magnificent structures, neither hospital, no school institution, roads, wharfs, bridges, airports or what so ever, to reflect the nature and magnitude of the billions that have been invested over the years.
Traditional donors such as Australia and New Zealand are focusing too much on Governance, and advocacy over the years, and failed miserably to placed its policy priorities on economic development. Australia’s lame excuse for not investing in economic development is based on the premise that land tenure issues have persistently hampered infrastructure work in the Solomon Islands. And there is also an ongoing need for management and maintenance of infrastructures that requires real commitment from the Solomon Islands Government.
Traditional donors knew that Solomon and other Pacific Island states are countries with untouched natural resources, ranging from gold, silver, phosphate, and other minerals, to prioritise economic development means footing a nation economically in order to accelerate its economic growth, by increasing its Gross Domestic Products (GDP) However, they used the Japanese situation as a case study.
For instance, Japan, following the financial turmoil, initially attempted Keynesian policies such as building roads, and infrastructures to stimulate the economy. These policies were largely unsuccessful and resulted in mounting fiscal debt. So they instead applied technology and scientific advancement for boosting productivity and industrialisation.
By doing this the traditional donors know for sure, that Island states with rigid and fragile economies such as Solomon Islands, Bougainville, Nauru, would be susceptible to doom and vulnerability. They suppressed the poor island states, having dominion over them, control and manipulating powers for over exploitation of their natural resources.
Over the years Australian development assistance (ODA) focused mainly on Governance, so that they could influence legislators, policy makers to create and enact legislation that could safeguard their investments and reap resource owners.
For instance, the Mining Act, Australia influenced the legislators to legislate that 97% goes for their mining company while land owners 1.7% and 2.3% for the state. Australia and New Zealand’s alignment in Governance over the years had caused havoc to the social and socio economic development of nation.
The forestry act – 60% foreigner or investor, and 40% resource owners, instead of taxing both, sig taxed resources owners 25% leaving only 10% for the licensee, and 5 % for resource owners. Foreigners’ alignment in governance with the ministries is a professional method tailored, designed and tabulated over the years for suppressing island states with rigid and fragile economies in which Solomon Islands is one of them.
Their alignment with SOEs in Governance tantamount to NPF’s cessation of NPF Housing scheme for its indigenous Solomon islanders, and allowing Australian South Pacific Oil Company to access 600 million loans without securing any asset for mortgage. Thus includes the likes of Sasape Marine, Tavanipupu Island Resorts, and Coral seas. Their influence articulated to the appointment of an Australian into the NPF Board as a Chairman, regardless of any qualification, experience or what so ever.
They are best architectures in siphoning of monies from the state owned enterprises, they know that NPF’s Economic policies and investment policies are weak, so they tailored mechanisms and create back windows for hijacking the indigenous’ only social security. That’s where Sol Law comes as legal advisors, to remove the NPF 21 million through SIMI Insurance. Although Investigations revealed that SIMI does not have any branches in Singapore and Malaysia. These are the discrepancies of investing a lot in Governance, counterpart know very well our limitation, weakness, and strengths. This is only a few classical examples of what is happening in our state.
Sullivan’s involvement in the former NBSI before BSP take over, 30% shares of all employees tantamount to $30, million SBD, to this very day, no employee of NBSI being a beneficiary in the money that was transferred into a trust Account that only the signatories themselves are the beneficiaries; these are some of the examples of Economic suppression.
For decades Australia and New Zealand’s Soft Economic policies, had attributed to “solomon islands soft landing”, a soft landing is a cyclical slowdown in economic growth that ends without a period of outright recession.
A soft landing is the goal of a Central Bank, when they seek to raise interest rates just enough to stop an economic from overwhelming and experiencing high inflation but not enough to cause a severe down turn. Soft landings is a painless ending to a moderate economic slowdown, especially to a fragile and rigid Economy such as ours in the Solomon Islands. The term implies that our economy has returned to grow without a period of severe recession.
Over the past 45 years during our bilateral ties with Australia, New Zealand, and USA, the Pacific Island Big Brothers soft bilateral policies revolved around Advocacy, andfailed miserably to develop monetary, fiscal and economic policies that could stimulate economic growth, and encourage market opportunities that primarily operate through some controls of supply or demand conditions of the economy.
These soft policies allowed our bilateral partners the audacity to control their Aid monies, provide their own consultants, Engineers, and advisors to suck the Aid monies back into their countries, leaving only 10% of the Aid money served its purpose in the country. While 90% of the Aid package returned back in boomerang form. That’s the reason Why there is no Basic Economic Infrastructures established in the Solomon Islands to reflect the nature and magnitude of the multimillions of dollars spent over the past 45 years in the country. Lack of basic Economic Infrastructures hinders economic development in the state, when those Economic infrastructures are dysfunctional, the chain of production is disrupted.
This disruption hinders development, which causes economic deficit and, in turn, brings low standard of living. The social and socio –economic effect of such poor policies had a long-term domino impact on the state and its citizens.
China is the world’s second largest economy by nominal GDP, behind the United states, and the world’s largest economy in 2016, when measured by purchasing power parity (PPP). China accounted for 19% of the global economy in 2022 in PPP Terms, and around 18% in nominal terms in 2022
China over the past 60 years is aligning its self with the first world countries, for Economic Cooperation and Development, and observed how the Pacific Island big brothers are suppressing the island states with their advocacy programs, and failed miserably to build basic economic infrastructures that could help leverage the island states to access market and services both regionally and globally.
Tropical Tug- of- war: China and the west’s influence battle in the pacific.
The pacific is no tranquil back water, but rather a dynamic frontier of global geopolitics. The recent donation of a presidential building complex by china to Vanuatu and the inauguration of an Airstrip by Australia and New Zealand in the Solomon Islands underscores a growing rivalry that is as strategic as it is symbolic.
Chinas Strategic Benevolence
In March 2022, China and Solomon Islands signed a bilateral Agreement, few months later Chinese Embassy provided a funding of $1.85billion (220million) for the National Stadium, and the Solomon Islands National University Complex. Just only 6 months after the counter parts signing, the physical infrastructures reflect the nature and magnitude of the Aid money spent in the country in just the first year of our bilateral relationships.
As part of Chinas Experience, it allows all the workers from each Ministry to attend short term training programs, look and learn from Chain’s wealth of Experience. So that Island state could learn and adopt from china’s Technological and scientific advancement. A long lasting issue that the two big brothers failed miserably to do, the social and socio-economic consequences of such poor policies resulted in Solomon Islands being a LEAST developed nation to this day.
China’s Bilateral ties with the South Pacific
China’s ties with the South Pacific – development assistance, trade, investment, involvement in the Belt and Road Initiative, and more – have grown substantially since the early years of the new century. Australia and New Zealand (NZ), the traditional dominant powers in this region, have recently upped their game in order to balance Chinese activities.
- The South Pacific, a huge but sparsely populated world region, is no stranger to geopolitical competition. China and Taiwan, jostling for diplomatic recognition, used to be the key protagonists.
- Australia’s and NZ’s regional dominance has been challenged by China’s growing presence. China offers alternative options in terms of funding and policy to Pacific Island countries (PICs). PICs, seeking to increase their agency by diversifying political and economic relationships, generally welcome China’s more intensive engagement.
- In the face of China’s growing regional engagement, Australia and NZ have reenergized their relations with PICs, increasing aid and diplomatic efforts. Australia’s in particular are driven by a strong security imperative.
- The unwillingness of Australia’s conservative federal government to move away from coal remains a strong irritant for PICs, while NZ under Prime Minister Jacinda Ardern has made climate policy a defining strand of regional policy.
- Australia’s and NZ’s planned COVID-safe travel zone could potentially be extended to PICs. Such a move would help PICs cushion the effects of the pandemic on their economies and become an exemplar of regional leadership.
Policy Implications
The South Pacific is facing greater geopolitical competition. Yet the region is not really on the radar of European foreign policy establishments, despite the European Union being an important cooperation partner. Increased exchanges with governmental and non-governmental actors in Australia and NZ can help foster greater understanding of the complex dynamics in the South Pacific. Such activities are, however, no substitute for deep, sustained engagement with PICs themselves.
China’s Growing Regional Engagement
Concerns among the region’s traditional powers, Australia and NZ, about external forces are nothing new. In the 1980s there were worries about the Soviet Union’s increased interest in the region. The Soviet threat, real or imagined, disappeared in the late 1980’s however; concerns about Libya’s romance with the postcolonial regime in Vanuatu and the independence movement in French New Caledonia had also largely dissipated by that time. What remained was the rivalry between the People’s Republic of China (PRC) and Taiwan, the key protagonists of geopolitical competition. Decolonization in the South Pacific, starting with Samoa in 1962 and ending, for now, with Palau in 1994, provided Beijing and Taipei with opportunities to boost their international legitimacy by befriending countries that would recognize them diplomatically.
The emerging marketplace for diplomatic recognition saw Taipei engage in chequebook diplomacy, offering development aid – presented in the case of the PRC as “South-South cooperation” – in exchange PRC provided USD 1.62 billion in aid to PICs between 2011 and 2019, making it the largest donor behind Australia and ahead of NZ. Well over 70 per cent of Chinese overseas development assistance (ODA) has taken the form of concessional loans, thus having to be repaid at some point. What also sets Chinese ODA apart is that there is a huge difference between funds committed and funds spent. In geographical terms, China’s ODA is concentrated on the more resource-rich Melanesian PICs, with PNG receiving one-third of funds.
The PRC has by now a fairly extensive diplomatic presence in the region. Since 1989 it is an official dialogue partner of the PIF. The PRC has thrice convened the China-Pacific Island Countries Economic Development and Cooperation Forum, a “multi-bilateral grouping” in which China engages with its diplomatic partners and announces aid packages. China’s rising regional profile has also been marked by two visits in recent years by President Xi Jinping.
Apart from the competition with Taiwan, there have also been other factors behind Chinese engagement in the region. Business opportunities and broader economic motivations have clearly played a role. Some scholars emphasize the strategic nature of it, seeing such engagement as part of China’s longer-term plan to become the leading power also in this part of the Pacific.
Australia’s tug of war with China over the Coral Sea cable system, resulted in it being constructed by Vocus Communications and Alcatel submarine Networks over 18 months with the intention that Australia will meet the costs. However Australia reversed the bill of 150 million for SIG Government to meet, luckily NPF meet the costs, that is a classic example of how the Big Brothers suppressing small island states.
The government in Canberra likes to emphasize that the initiative is not directed at any one country but constitutes a positive contribution to the region – Australia’s “Pacific family.” Yet, it is clear that the Step-up seeks to balance China’s growing engagement there. Australian governments had long liked to believe that is was possible to enjoy the best of both worlds by benefitting from China’s economic rise while also being allied to the US. Under Morrison’s predecessor Malcolm Turnbull, Canberra finally came to the conclusion that it needed to push back both against Chinese interference in domestic politics and public life and against China’s growing influence in the region – which might undermine PICs’ sovereignty. The domestic pushback, culminating in the “Espionage and Foreign Interference Act” of 2018, and the Pacific Step-up are thus two sides of the same coin.
The Step-up consists of measures ranging from the redevelopment of the Manus Island base to the promotion of people-to-people exchanges. Main activities include:
- substantially raising ODA to the South Pacific, reaching AUD 1.4 billion (around EUR 850 million) in the 2019/2020 financial year;
- building an ODA-financed underwater Internet cable linking the Solomon Islands and PNG to Australia (outbidding China’s Huawei telecommunications company);
- establishing the Australian Infrastructure Financing Facility for the Pacific, which can draw on AUD 1.5 billion in loans and AUD 0.5 billion in grants. To better compete with China on infrastructure the government has also made available AUD 1 billion for Export Finance Australia, whose remit got extended to overseas infrastructure projects;
- introducing a new Pacific Labour Scheme which allows low- and semi-skilled persons from the South Pacific to work for three years in rural Australia;
- launching the Australia Pacific Security College, devoted to the training of mid- and senior-level officials from the region;
- making available a semi-mobile infantry unit and, in the future, a large-hulled vessel for humanitarian and disaster-relief missions in the region;
- new diplomatic posts in the region and a new coordinating “Office of the Pacific”;
- significantly intensified high-level visit diplomacy.
Solomon Islands (SLD) And Australian Trade, revolves around the following: – main product that Solomon Islands exported to Australia were gold, (16.4m) sawn timber wood (2.58m) and oil seeds flowers (764k) over the past 5 years.
In return Solomon Islands imported rice alone from Australia valued at $976, million per annum. Our bilateral ties with Australia did not base on Trade and investment. But rather on spoon-feed diplomacy.
Many of Chinese activities in the region in recent years include the building of a new terminal at Samoa’s international airport, have been carried out as part of China’s Belt and Road Initiative (BRI). When Xi visited Fiji in 2014, he invited the PICs to participate in the “21st Century Maritime Silk Road” – that is, the maritime part of the BRI. By early 2019, nine PIF members had signed Memorandums of Understanding regarding participation in the BRI. Generally, China’s greater presence has been welcomed by PICs. The emergence of China as a major player in the region has endowed PICs with greater agency, and helped them to reduce their dependence on traditional development partners.
Australia “steps up” its regional engagement
Australia and NZ worry that China’s more opaque and unconditional financial support undercuts the good-governance approach of their own ODA programmes focused on the region. Other perceived problems include the mixed quality of some of the Chinese infrastructure projects there, the lack of maintenance of existing facilities, and the fact that it is mostly Chinese workers who participate in these projects. Finally, and perhaps most importantly, as mentioned there are also concerns that the debt burdens of individual PICs will become unsustainable and that China might transform its leverage in this regard into political capital or even use it as a pretext for the seizure of assets in the PICs (some of which might ultimately be used for military purposes).
This leads to the heart of security and geostrategic concerns that have animated relevant discourses in Australia. The South Pacific is far away from current or potential trouble spots in the Indo-Pacific and is unlikely to become a new hotspot for militarized confrontation. The region matters, however, in strategic terms in the increasing geopolitical competition between China and the United States (and its regional ally, Australia). The ability – or presumed inability – of PIC governments to remain free of Chinese influence has emerged as a significant concern for strategic circles in Australia. This is connected to earlier, long-standing concerns about state fragility and internal security issues in the PICs and their ramifications for Australia. These concerns led to a number of Australian-led “cooperative interventions” from the late 1980s – usually jointly with NZ – in places such as the Bougainville region of PNG or the Solomon Islands. Australia’s “age of intervention” in what has been called an “arc of instability” only came to a close in 2017 with the end of the multibillion, 14-year-long Australian-led Regional Assistance Mission to the Solomon Islands (RAMSI), an initiative to stabilize the country and to rebuild key state institutions here.
*To be continued
Pr Everest Edgar Kairi
Seijong National University,
Center for Asia Pacific
