AFA Weekly logo

21 July 2021

With Greg Earl

Telstra’s Pacific step-up

The Morrison government has moved to prevent a possible Chinese takeover of regional mobile phone company Digicel Pacific, pressing Telstra to participate in a plan to buy the company for as much as A$2 billion.

Telstra confirmed on Monday that it was looking at the deal, which includes “financial and strategic risk management support from the government”, but emphasised it only wanted to be the “minor” partner.

The government is reportedly concerned that Chinese ownership of Digicel could provide access to Australian communications in Pacific countries, increasing China’s economic influence in the region.

Digicel operates a relatively old mobile phone network in several Pacific nations, but it is being sold by its Irish billionaire founder because the downturn in tourism has hurt the business.

The potential government-led takeover follows a decision three weeks ago – reported by AFA Weekly – to allow its trade finance agency, Export Finance Australia, to invest in businesses.

A joint venture between Telstra and the EFA to buy Digicel would significantly escalate Australia’s efforts under the 2018 Pacific step-up policy to address increasing Chinese aid and infrastructure ventures in the Pacific.

The EFA was given an extra A$1 billion in new capital in 2018, which would likely be used to fund the Telstra joint venture.

In the latest edition of Australia Foreign Affairs, Anthony Bergin and Jeffrey Wall call for the government to create an even larger institution, with A$4 billion in funding available to compete with China.

Australia needs a revived business presence in the Pacific to parallel the government’s increased aid spending. But it must avoid being trapped into responding to rumours of Chinese investments or projects that are unlikely to happen or are commercially unviable.


Malaysia’s democratic freeze

The Malaysian parliament is due to convene on Monday for the first time since December 2020, after which it was suspended under a state of emergency to deal with COVID-19.

It is the first such suspension since the 1969 race riots, and it has allowed the government of Prime Minister Muhyiddin Yassin to avoid responding to claims that it no longer has a majority in the lower house, known as the Dewan Rakyat.

Malaysia is one of Asia’s longest-standing democracies, though its integrity has been questioned, as power has only changed hands from the dominant party, United Malays National Organisation, once, in 2018.

Muhyiddin came to power after deserting the previous UMNO-led government to take a key role in the 2018 Pakatan Harapan (Alliance of Hope) reform government. He then deserted that government last year to form the current government with UMNO support.

How the country manages a return to normal democratic practice, amid the fracturing of the mostly ethnic Malay support base for UMNO, is important, particularly because democracy is under threat in other parts of South-East Asia.

Malaysia is one of Australia’s oldest security and economic partners in Asia. The bilateral relationship was elevated in January, when the Comprehensive Security Partnership between the two countries was finalised. And the Alliance of Hope government recently sought advice from Australia about how to modernise electoral and government processes.

While the pandemic and political turmoil have disrupted those developments, Australia still has a lot at stake in Malaysia retaining its status as a benchmark for democracy in South-East Asia.


Olympic diplomacy

On Wednesday night, ahead of the beginning of the delayed Tokyo Olympiad, Brisbane is expected to be chosen to host the 2032 Olympic Games.

Australia has already hosted the games twice: in Melbourne in 1956 and in Sydney in 2000. If the 2032 event were held in Brisbane, it would elevate Australia to the highest ranks of Olympic host countries, potentially boosting its diplomatic soft power.

The United States has hosted eight summer and winter games, France five and Japan four. Counting summer games only, 2032 would mean Australia has been chosen as a host three times – as many times as the United Kingdom, and second only to the United States, which has hosted four summer games.

A new International Olympic Committee bidding process is meant to reduce the waste and corruption that has marred the process in the past.

In its Olympic campaign, Queensland has emphasised the perceived success of the Sydney Olympics, as well as its facilities built for the 2018 Commonwealth Games.

But Australia would be taking on the event at a challenging time.

A recent study concluded that, on average, Olympic budgets blow out by 172 per cent. There is also more focus on the social and environmental sustainability of the event, which might see Australia’s record on climate change and Indigenous issues come under scrutiny.

More importantly, from a diplomatic perspective, the Olympics are being drawn back into global politics. The campaign to boycott the Beijing Winter Olympics next February, due to human rights abuses in Xinjiang, has escalated. Critics say the 2008 Summer Olympics in Beijing failed to improve human rights progress in China as some had hoped.

While British and European parliaments backed a diplomatic boycott of the February event last week, Australia is yet to take a stand. If it is chosen to host the 2032 Olympiad, it will need to approach the issues adroitly.


-
-

Chinese state-backed hacking – time to level the playing field and breach the Great Firewall

“The governments that are routinely targeted by Beijing can work together and independently to stand up to China-focused outfits with missions like Radio Free Europe, creating and using capable digital-era approaches to … provide sources of external information and commentary … We know there’s an appetite for this kind of information … from the example of the short-lived Clubhouse app.” Michael Shoebridge, The Strategist (ASPI)

Investment ban a bigger threat than carbon tariffs

“Australia is more concerned at being sanctioned by financial markets, investors and lenders, than being hit with European carbon tariffs, if the nation does not commit to net zero emissions by 2050 … Investors’ sanctions are a real risk, something Reserve Bank of Australia governor Philp Lowe highlighted last month.” Phillip Coorey,The Australian Financial Review [$]

Australia’s China question – four ideal types

“Two relatively straightforward questions should be asked about how present-day Australia should understand and respond to China. First, how much does the character of China’s regime matter? … Second, should avoiding a policy overreaction or underreaction to the threat potentially posed by China be Australia’s first (albeit not only) priority?” Darren Lim & Nathan Attrill, Australian Outlook (AIIA)

-
-

Is non-alignment making a comeback in Asia?

“In a far more globalised and interconnected world, a new movement can serve as a linkage, facilitating interaction between the rival blocs. Already, South Korea and ASEAN members like Vietnam have expressed a desire to mediate between the United States and China.” Shalabh Chopra, East Asia Forum

Myanmar – no light on the horizon

“There is no going back to the Myanmar that existed before the coup … There is a good chance that, for a few years at least, Myanmar will resemble the isolated, bitterly divided and broken-backed authoritarian state seen during the 1970s and 1980s.” Andrew Selth, Asialink

FREE FROM AUSTRALIAN FOREIGN AFFAIRS

The Fix – how Australia can boost business ties with the Pacific

“It’s increasingly evident that our development assistance to the South Pacific isn’t matching, let alone countering, China’s increasingly aggressive intervention in the region ... Australia needs a new partnership scheme between government and the Australian private sector, embracing South Pacific businesses as participants.” Anthony Bergin & Jeffrey Wall,CONTINUE READING

-


Read past editions of AFA Weekly


Sign up to AFA Weekly to get each new edition in your inbox