OCEANIA IN A CHANGING REGIONAL ORDER
By Dr. Tarcisius Kabutaulaka
This piece focuses on the implications forPacific Island countries. It is descriptive. Not prescriptive.
Oceania in the Indo-Pacific
As statedin a previous article, the Indo-Pacific is an exercise in geostrategic mapping and a response by the Quadrilateral Partners (Quads) – US, Australia, Japan, India – and their allies to China’s growing influence.
Pacific Island countries were not the cartographers in the mapping of the Indo-Pacific. But they were mapped into it; the region became a landscape and seascape on to which powerful countries project their power or use island countries/territories as pieces on their geostrategic chessboard.
Pacific Islands and Islanders are not new to this. Since the mid-16thCentury, they have encountered outsiders, have been mapped, colonized, used for military bases and nuclear weapons testing, drafted as laborers and soldiers, their lands alienated, etc.
But they were not always passive victims. They also had agency and on many occasions used outsiders for their own interests and benefits.
The mapping and competition for control of the region intensified during the Cold War when Oceania became an Anglo/Franco/American lake.
Western countries invoked a “strategic denial” policy aimed at denying the former Soviet Union and other communist/socialist countries access to the region.
There iscurrently a resemblance of that strategic denial mentality in how the Quads and their allies treat China, not only in Oceania, but globally.
This raises the question of whether or not the world is seeing a new Cold War that was engendered byChina’s challenge to the global order that was established and dominated by western countries for over a century.
That, however, is another story. Here, I focus on the Pacific Islands region.
China in Oceania
Beijing’s extensive engagement with Oceania started in 2006 with the first China-Pacific Islands Development Cooperation Forum that was held in Fiji and attended by Premier Wen Jibao.
At that forum, Premier Jibao announced that Beijing would give US$492 million (RMB 3 billion) in concessional loans to the region’s eight partner countries over the next three years.
Since then, China has become a significant donor to the eight Pacific Island countries that it has diplomatic relations with. This had huge impact on these countries despite the fact that aid to island countries made up for only 4% percentage of China’s global aid.
In the decade from 2006-2016 Beijing contributed around US$1.8 billion to the region, overtaking Japan and New Zealand to become the second largest donor, after Australia.
Trade between China and the island countries have also grown, not only with the countries that Beijing has diplomatic relations with, but also with some of the countries that have diplomatic relations with Taipei.
Chinese exports to Pacific Island countries increased twelve-fold, while Chinese imports from island states have also increased significantly. The number of Chinese companies with investments in the region has also increased.
We have seen Chinese investments in infrastructure developments – roads, seaports, airports, stadiums, bridges, etc. – in Papua New Guinea, Fiji, Vanuatu, Samoa, Tonga, Cook Islands and the Federated States of Micronesia.
There is also an increase in political engagements between China and Pacific Island countries.
Between 2006-2016, for example, forty-five high-level Chinese government officials visited the Pacific Islands while 137 high-level Pacific Island government officials visited China. Since 2016, the high-level political engagements have continued.
In the past two decades, Beijing has established itself as a power in Oceania, and embraced the region into the Belt and Road Initiative (BRI), part of the “Maritime Silk Road.”
In June 2018, for example, during a week-long visit to Beijing, PNG’s Prime Minister, Peter O’Neill signed his country on to the Belt and Road Initiative (BRI), which gives PNG access to finance – mostly soft loan – for infrastructure development.
O’Neill said, “for developing countries like PNG, this [BRI] is a great initiative because of the access to capital and infrastructure-building capacities that we are now developing together with China. It is able to open up markets and improve the standard of living for our people. . . The initiative is something that is good for PNG and good for the region and globally it will continue to promote trade and investment for all countries.”
The Threat Narrative
But China’s increasing presence and influence is a concern to the Quads because it challenges the geopolitical and geostrategic dominance that they have enjoyed in the region, especially since WWII.
They view Pacific Island countries as vulnerable to Beijing’s alluring influence, greased by access to credit, infrastructure development, trade, scholarships, professional trainings, etc.
Western governments and media regularly portray China as a threat. Australia and the US in particular have been quick to depict Beijing-funded infrastructure developments as a potential threat because they could be used for military purposes.
The most well known case was The Australian’sApril 2018 allegation that China had approached Vanuatu to build a permanent military presence. At the center of this was the construction of a port in Santo.
Both Beijing and Port Vila have denied this and so far there is no evidence that China used the infrastructures it built for military purposes.
Despite the ‘China threat’ narrative peddled by the Quads, many Pacific Island governments see China as an opportunity; it provides an alternative to the ‘traditional powers.’
Samoan Prime Minister, Tuilaepa Sailele Malielegaoi, says that, “Our partners have fallen short of acknowledging the integrity of Pacific leadership and the responsibility they carry for every decision made in order to garner support for sustainable development in their nations. . . Some might say there is a patronising nuance in believing Pacific nations did not know what they were doing.”
Similarly, Vanuatu’s Foreign Affairs Minister, Ralph Regenvanu, says that,“China is a great partner, I think far more respectful of us as government-to-government diplomatic representatives than Australia. They don’t presume like Australia. They can be just as forceful, but Australia has got the gold medal for that one.”
Underbelly of Relations with China
But there is an underbelly to Pacific Island countries’ relationships with China, which the Quads consistently point to.
Central to this was the accusation that Beijing had used predatory lending to create debt trap that it could subsequently use to leverage influence. This is what is referred to as the ‘debt book diplomacy.’
Proponents of the debt book diplomacy narrative point to the fact that China’s aid to island countries has largely been through concessional loans that these countries need to pay back.
For example, currently about 60% (US$115.5 million)of Tonga’s foreign debt is owed to China. TheVanuatu Government’s total foreign debt is US$353 million, including US$168 million (48%) to China. The Samoan Government’s debt to China was $410 million in 2017, an increase from $315 million in 2013. This was 36% of the Samoan Government’s total debt.
It should be noted however that the debt trap accusation is often a generalization.
A recent study by New York’s Rhodium Group found that in most cases, “debt renegotiations usually involve a more balanced outcome between lender and borrower, ranging from extensions of loan terms and repayment deadlines to explicit refinancing, or partial or even total debt forgiveness.” Tonga is a case where the loan repayments were deferred.
It should also be noted that western-based international financial institutions such as the World Bank and the International Monetary Fund (IMF) have created debts in Third World countries, including Pacific Island countries, long before China came to the scene as a lender.
Another issue is Chinese investors’ reputation for ignoring or blatantly breaking the host country’s laws, especially those relating to environment, labor and immigration. Generally, Chinese companies have a poor environmental record, poor job conditions for workers, and employ mostly Chinese citizens, therefore depriving locals of job opportunities. They are also known to produce lower quality products.
Classic examples include the Ramu Nickle mine in PNG where employees have long complained about poor working conditions and the operation’s environmental record is dismal. Another case is Freesoul Real Estate’s proposed resort development on Malolo Island, Fiji, which was halted and the company’s permits revoked because it allegedly failed to follow environmental regulations thereby causing environmental damage.
These are important issues that Pacific Island countries must seriously consider in their relationships, especially with China.
But to be fair, Chinese companies are not the only ones with poor environmental records in the region. Mines such as Pogera, Ok Tedi and Bougainville (when it was in operation) in PNG, the nickel mines in Nauru and Banaba (to name a few), also have a history of poor environmental records. They were or are owned by companies registered in western countries, although a Chinese company,Zijin Mining Group Company Limited, now has a 47.5% share in the Pogera Gold Mine.
The Blue Pacific
At the regional level, Pacific Island Forum (PIF) countries, as a response to the renewed interest in the region, are drawing their own map: the “Blue Pacific,” which was endorsed at the PIF meeting in 2017. It serves as both a concept and a strategy.
As a concept, the Blue Pacific enhances regionalism through, “a common sense of identity and purpose, leading progressively to the sharing of institutions, resources, and markets, with the purpose of complementing national efforts, overcoming common constraints, and enhancing sustainable and inclusive development within Pacific countries and territories and for the Pacific region as a whole.”
As a strategy, the Blue Pacific uses the renewed interest in the region to promote climate change as the most fundamental security issue.
It also highlights the responsibilities and misbehaviors of industrialized and industrializing countries that are major emitters of greenhouse gases. These include the Quads and China.
At the PIF meeting in Nauru in 2018, the leaders “requested the UN Secretary-General to appoint a Special Adviseron climate change and security” and “called on the UN Security Council to appoint a special rapporteur to produce a regular review of global, regional and national security threats caused by climate change”
This was further highlighted in the Boe Declaration, which declares that, “climate change remains the single greatest threat to the livelihoods, security and wellbeing of the peoples of the Pacific and our commitment to progress the implementation of the Paris Agreement.”
Mapping a New Regional Order
It is obvious that Pacific Island countries accept that China is here to stay, for now as a political and economic power. The island countries therefore have to figure out how to deal with Beijing, just as the do with the ‘traditional powers.’
The challenge for Pacific Island countries is managing these relationships, including that with China, which comes with a large volume of financial assistance that could potentially produce debt. The island countries need to establish and strengthen political and legal institutions that handle high volumes of political and economic engagements, including the effective vetting of projects to ensure they generate positive returns.
President Xi Jinping’s speech to the Belt and Road Forum in Beijing two weeks ago demonstrates that Beijing is aware of the challenges associated with it re-emergence as a global power and the need to slow down the rush to lending.
In my next article I will focus on the implications and impacts of these global developments for Solomon Islands.
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