Undermining Australia and New Zealand: Beijing Stirs Up South Pacific Waves

Greg Barns (Political Commentator in Australia)

Australia and New Zealand have worked hard to put the politically unstable and economically marginal nations of the South Pacific on a more sustainable footing over the past decade. But last week's visit by Premier Wen Jiabao to Fiji threatens to undermine these efforts.

Tired of propping up dysfunctional regimes, Australia and New Zealand now attach strings to aid for countries such as Papua New Guinea and the Solomon Islands. But China sees these and other nearby nations as sources of economic resources such as timber, minerals and fish. Beijing is not particularly interested in good governance and economic sustainability, as much as it is in writing out big cheques to acquire fuel for the roaring fire of its economy.

Not that the mainland is alone in this style of chequebook diplomacy. Taiwan has been passing out funds among the nations of the South Pacific for a number of years. That is why six nations didn't attend the inaugural China-Pacific Islands Economic Forum in Fiji's capital, Suva, last week. The six - the Solomon Islands, the Marshall Islands, Nauru, Tuvalu, Palau and Kiribati - are all "clients" of Taiwan.

For Canberra and Wellington, improving the functioning of Pacific island countries is vitally important. If these nations collapse, humanitarian and strategic crises will require the Australian and New Zealand governments of the day to deal with the messy consequences.

That's why, in 2003, Australia led a mission of Pacific island countries, including New Zealand, to assist in restoring political stability and security to the Solomon Islands, a nation of around half a million people.

Currently, Australia spends about A$955 million ($5.38 billion) in aid to Pacific countries annually, and is aiming to increase that to around A$4 billion by the end of the decade. But Prime Minister John Howard says that Australia's aid packages are conditional on the recipients improving governance and transparency. If Pacific island countries don't continue to fight corruption, then Australia won't help them.

Ditto for New Zealand. Wellington, along with Australia, has championed the Pacific Plan, which emphasises "governance, sustainable development, security and economic growth". The Pacific Plan has now been adopted by the South Pacific Forum, a regional grouping of countries that is the main vehicle for diplomacy and economic co-ordination in the region.

So far, the "tough love" approach of Australia and New Zealand seems to be working. Papua New Guinea, a former Australian colony, is experiencing stronger economic growth and political stability, in part due to Australia's insistence that its aid to this impoverished country of 5 million be tied to specific programmes aimed at eliminating corruption and strengthening governance.

But the China-Pacific Islands Agreement unveiled by Mr Wen last week in Fiji might prove very tempting for cash-strapped Pacific island countries.

It provides for US$375 million in preferential loans over the next three years, zero-tariff treatment for goods from the Pacific islands, a cancellation of the debt that matured at the end of last year, and increasing mainland tourism to states with diplomatic ties to Beijing.

While Australia and New Zealand will not want to see China's increasing influence in the South Pacific as a zero-sum game, they will be concerned that countries will opt to cuddle up to Beijing rather than continue to jump through the hoops of Australian and New Zealand tied-aid programmes.

"A lot of Chinese efforts will go into just buying people off," Ron May, an aid expert at the Australian National University, said this month. If that assessment is right, the Australians and New Zealanders might be back to square one with their Pacific neighbours.

(Originally appeared in the April 11, 2006 issue of South China Morning Post in Hong Kong, reproduced here with permission.)