27 June 2018
In the past three weeks, Prime Minister Malcolm Turnbull and Minister for Foreign Affairs Julie Bishop have conducted a flurry of meetings with leaders of small Pacific island nations, ranging from Palau to Vanuatu.
This diplomatic frenzy contrasts with the limited attention that Australia typically pays to its Pacific neighbours – with the notable exception of when it goes looking for a “solution” to its refugee obligations.
But Canberra appears to have suddenly discovered that there is a panda-shaped shadow rising over the South Pacific. Actually, it is rising everywhere.
The response was panicked, though not surprising. China’s growing wealth and power are affecting the remote corner of the world that is supposed to be Australia’s “patch”, an area that is crucial not only to the nation’s maritime defences but also to its alliances with significant world powers.
Australia receives intelligence and security support from countries such as the United States and Britain but is expected, in return, to keep watch over its own backyard. This includes ensuring that small Pacific countries do not fall under the sway of foreign powers.
Some Pacific nations have been edging closer to China and are at risk of falling out of Canberra’s orbit.
The Solomon Islands, for instance, made a deal with Chinese firm Huawei to connect a high-speed undersea cable to Australia and Papua New Guinea. Australia confirmed earlier this month that it will now provide funding for the project.
Discussing the plan, Turnbull said he was “stepping up” ties with the Pacific but carefully avoided making reference to China. Bishop also refused to name specific nations, but noted: “I want to ensure that countries in the Pacific have alternatives.”
On Monday, Australia switched its attention to Vanuatu following Fairfax Media reports about alleged Chinese plans to build a military base there. Both China and Vanuatu have vehemently denied the reports. In Vanuatu, local commentators said that Australia was obsessed with a “non-story” and had paid less interest to significant issues for Vanuatu such as the consequences of climate change and the effects of Tropical Cyclone Pam, which devastated the country in 2015.
Australian officials evidently believe that China has been seeking to establish defence ties with Vanuatu or may do so in the future. They have good reason: China has been boosting its loans across the South Pacific. Rather than give foreign aid, China tends to prefer to issue loans, often at subsidised interest rates, which recipients can choose how to spend.
The amounts – about $2.4 billion between 2006 and 2016, according to research conducted by the Lowy Institute – are much less than the funds China is disbursing across Africa. Yet all this spending raises fears that countries may fall prey to “debt-trap diplomacy”, in which they take out loans they cannot repay to develop assets that could end up under Chinese control.
In Vanuatu, China has helped to fund a new $100 million-plus wharf and reportedly issued nearly half of the country’s $440 million foreign debt.
Turnbull’s apparent response this week was to host Vanuatu’s prime minister, Charlot Salwai, and announce plans to negotiate a security treaty.
Vanuatu also asked Australia to help pay for an undersea cable, similar to the one being funded for the Solomon Islands. Australia has so far made no commitment (though the recent past suggests that Vanuatu’s best approach may be to have a friendly chat to Huawei on a non-secure line). Australia also increased its Pacific aid in the May budget, despite freezing overall funding.
This is a good start, albeit overdue, for Australia as it tries to keep China from dominating the Pacific.
But China’s loans, and the influence it may wield or the assets it may inherit around the region, could prove difficult to combat. It is still not clear precisely what China’s aims are in the South Pacific – it may want to shore up ties as part of its diplomatic war with Taiwan, it may want to foster trade and other links or it may have grander territorial ambitions. Perhaps it is simply making downpayments for a likely future in which it is in a much stronger geopolitical position and in which current global alliances no longer apply. Some analysts even believe there may be no plan at all, and that China’s various projects stem from individual commercial interests and are not part of a coordinated strategy.
Australia should not wait to find out. Yet the process of fostering closer relations with Pacific nations – and coming to understand their motivations – will be best served by sustained, constant, serious attention and engagement, rather than bouts of occasional panic.