By Dr James A. Boutilier, President Emeritus, PPP
More than thirty years ago, in October 1985, the defence communities in Washington, Wellington, and Canberra were rocked by the news that the newly independent Republic of Kiribati had entered into a year-long fisheries agreement with the Soviet Union. It was the depth of the Cold War and it looked as if Moscow had just stolen a march on the western allies in the South Pacific. For its part, Kiribati, bereft of revenue from the recently exhausted phosphate mines on the island of Banaba and challenged by the predatory operations of American Tunaboat Association vessels, had pulled off a masterstroke. Although a micro-state in terms of land area, Kiribati was a giant in the oceanic realm; skillfully parlaying its abundant maritime resources to gain leverage – direct or indirect – with the great powers. From the Russians, the islanders obtained assured revenue; from the Americans, New Zealanders and Australians, renewed geostrategic attention.
The same dynamics occur today. The only major difference is that we are now dealing with a far more powerful, ambitious, and globally-engaged player: China. The meteoric rise of China was, arguably, one of the most important global developments in the last quarter of the 20th century. In the process, Beijing embarked on two unprecedented initiatives: it built an ocean-going navy that is, quantitatively, larger than the United States Navy and it embarked on the so-called Belt and Road Initiative (BRI). The BRI is a pharaonic tribute to the power and vision of Xi Jinping, the president of the People’s Republic of China. It envisages two grand commercial arteries, one linking China with Europe across the Indian Ocean and the other linking China with Europe across the heartland of Eurasia. Never before have the Chinese sought to export their influence beyond the Middle Kingdom in this way.
The Chinese leadership has elaborated on the BRI construct since it was first articulated in 2013. They now call for an Arctic ‘Silk Road’ and over the past half-decade they have spoken about a spur line that will extend from Southeast Asia into Oceania. They have already perceived the geostrategic advantages that have accrued to the United States from its privileged relationship with the island polities of Micronesia, a relationship that facilitates an American naval presence in the approaches to the Chinese coast. Why not, Beijing argues, alter the geostrategic balance in the approaches to critical US allies like Australia and New Zealand by targeted development assistance to island states lying across the South Pacific?
Beijing has been extraordinarily adept at exploiting the presence of overseas Chinese communities as a point of entry into these and other societies. In the oceanic context, there were already small Chinese communities, dating back to the colonial era, in key states like Tonga, Fiji, the Solomon Islands, and Papua New Guinea. Regrettably, these communities have been the subject of racist pogroms over the years. More than 25 percent of the Chinese stores in Nuku’alofa, the capital of Tonga, for example, were looted or burned during riots that swept the town in 2006. Similarly, much of the old China Town in Honiara, in the Solomon Islands, was destroyed some years earlier.
Whatever the case, the presence of Chinese citizens legitimized overtures from Beijing and if we look at Fiji over the past decade, when relations between Suva, Wellington, and Canberra were at their worst, we see that the Fijian President, Frank Banimarama, was more than happy, like his Kiribati forerunner, to turn not only to the Russians, but to the Chinese. The Chinese, of course, recognize a good thing when they see it. Small amounts of money, strategically positioned, secure disproportionate amounts of influence, particularly in micro-states. In Beijing’s defence, of course, China as an emerging great power, is doing what all great powers do. However, there has been a good deal of angst about China’s endgame recently. Serious questions have been raised around the world about the economic viability of the BRI, about the potential for BRI loans to become debt traps for recipient states (the inability of Sri Lanka to pay off its loan to China for the development of the port of Hambantota is frequently cited as an example), the theft of intellectual property by Chinese corporations, Chinese espionage activities, Chinese “United Front” activities overseas to influence local opinion and politics, and China’s long-term strategic goals.
Thus, when word reached Canberra early in 2018 that the Chinese were eager to build a port in Vanuatu which could be utilized by the Chinese navy, alarm bells went off in western chancelleries. As it happened, both the Ni-Vanuatu and Chinese authorities denied the suggestion resolutely but Winston Peters, the Deputy Premier of New Zealand, spoke out (interestingly enough at the Lowy Institute in Sydney, rather than in Wellington) about the fact that Oceania was now becoming a contested space. Several months later, the Australian Prime Minister, Malcolm Turnbull, warned Beijing not to consider building any military facilities in the Pacific Islands and the Australian government moved to undercut a Chinese bid to lay communications cables from the Solomon Islands and Papua New Guinea to Australia. Indeed, there has been considerable concern in western capitals that Chinese communication firms like Huawei are effectively arms of the Chinese intelligence system and that the utilization of Chinese equipment could compromise western security.
It is important to note that, while Beijing is seeking access to raw materials and markets as well as strategic advantage, the Chinese are playing a parallel game; eroding diplomatic support for Taiwan. Six of the seventeen states that support Taiwan are Pacific Island nations: Kiribati, the Marshall Islands, Nauru, Palau, the Solomon Islands, and Tuvalu. Taiwan is the tenth largest donor in Oceania although there is a critical difference between Taipei and Beijing. While Taipei only gives grants, Beijing gives grants and concessional loans. Loans are where the trouble lies. In the Sri Lankan case, the government’s inability to repay a Chinese loan obliged it to deed the port of Hambantota to Beijing for 99 years.
In the case of Palau, the penalty came in a different form. When Palau hosted the Taiwanese President, Tsai Ing-wen, in 2018, the Chinese set out to punish Palau by cutting off the flow of Chinese tourists. As one news source opined, China had weaponized tourism. There was nothing new in this approach. In 2017, when South Korea sought to protect itself from North Korean attack by installing missile defences, China (alleging that the radar associated with that defence system compromised Chinese security) cut off the flow of tourists to South Korea, thereby inflicting billions of dollars of losses on the republic’s economy. The same has been true in Palau where almost half of the annual influx of 122,000 tourists come from the People’s Republic of China.
These sorts of punitive strategies are frequently counter-productive and the scope and tone of Chinese activities in Oceania have resulted in renewed commitments by Australia and New Zealand to the Pacific Islands in the run-up to the Pacific Islands Forum meeting in September in Nauru. Australia is already the biggest donor in the region although much of that support is earmarked for Papua New Guinea. The Chinese have continued with their grants and loans programme, buttressed by the recent goodwill visit of the Chinese hospital ship, Peace Ark, to Vanuatu, Fiji, and Tonga. The vessel had visited Nuku’alofa in 2014 but this visit coincided with an interesting and murky episode in which the Tongan Prime Minister, Akalisi Pohiva, suggested that Beijing forgive the loans that China had made to Pacific Island nations. Almost immediately, Pohiva reversed himself, whether as a result of pressure from China or Samoa’s prime minister, Tuilaepa Sailele Malielegaoi, the outgoing chair of the Pacific Islands Forum, is hard to say. Whatever the case, the Tongan proposal highlighted, once again, the concern of small, third world states in the Indian and Pacific Ocean areas that deep indebtedness is a significant possibility when taking receipt of foreign loans.
What we can see is history repeating itself, more or less. Kiribati’s overtures to the Soviet Union in the mid-1980s enhanced its budgetary prospects but alarmed the metropolitan capitals concerned about the strategic implications of Soviet activities in the heart of Oceania. Similarly, Chinese activities in Oceania in the opening decades of this century, sharpened by an increasingly pessimistic assessment of China’s global ambitions, have resulted in new aid and security initiatives issuing from Canberra and Wellington. The problem evaporated in the 1980s when the Soviet Union collapse ignominiously. In the 21st century, however, the challenge is likely to grow as China seeks to exert its newfound wealth, authority, and military power around the globe.
Just as this article was being drafted, the Pacific Islands Forum (PIF) was taking place in Nauru. The PIF was, in many ways, a perfect metaphor for Pacific Islands’ dynamics. The host nation, Nauru, enjoys diplomatic relations with Taiwan and the Nauruan authorities reportedly refused to allow the Chinese delegates to enter the country on their official passports. At the same time, concern about the extent of Chinese activity in Oceania ensured a fairly high level of diplomatic representation from the United States and Australia. Ironically, neither of these governments is enthusiastic about climate change initiatives, something which is of crucial importance to Pacific Island nations. In fact, five years ago, Christopher Loeak, the president of the Marshall Islands, noted that “the Pacific [was] fighting for its survival.” He spoke just after a freak tide had inundated the capital, Majuro, and flooded the airport runway.
The PIF proceedings were marred by a diplomatic contretemps in which the Nauruan president, Baron Waga, refused to allow a Chinese delegate to speak out of sequence and the delegate stormed out of the room (in a building constructed with Taiwanese aid money!) The Nauruans were offended by what they considered to be the bullying and arrogant behaviour of the Chinese delegate and alleged that they would seek a formal apology from the People’s Republic. In the interval, the newly-appointed Australian Foreign Minister, Senator Marise Payne, (barely a week in office after a change of prime ministers in Canberra) broke with her party in promising climate change support for the islands and the US government issued a statement enumerating the array of initiatives undertaken by American agencies in Oceania. For more on this story, see Taiwan News, 7 September 2018, https://www.taiwannews.com.tw/en/news/3524503.
September 2018 articles with fast-breaking news around this theme:
“Tides of change in the South Pacific,” 8 September 2018, East Asia Forum, http://www.eastasiaforum.org/2018/09/08/tides-of-change-in-the-south-pacific/
“… Increasing Chinese activity across the region is well documented. Beijing has usurped the United States as the region’s second largest aid donor and is funding projects across the South Pacific. Fijian Prime Minister Frank Bainimarama has said that Fiji’s cooperation with China ‘reminds [Canberra] that countries like Fiji have options’.”
“ADB ramps up Pacific presence as aid donors jostle for influence,” 17 September 2018, Reuters Business News, https://www.reuters.com/article/us-pacific-debt-adb/adb-ramps-up-pacific-presence-as-aid-donors-jostle-for-influence-idUSKCN1LY09Z
“… The Asian Development Bank said on Tuesday it is expanding its presence in the Pacific islands, at a time of competition for influence there, opening seven new country offices and expecting its loans and grants in the region to top $4 billion by 2020.”
“Chinese Tourists Are Beijing’s Newest Economic Weapon,” 26 September 2018, Foreign Policy Magazine,
“… Due to its unique ability to control outbound tourists, China can use tourism as a tool of pressure, giving it a new form of soft power never seen before on the global stage. And the country is beginning to use it. Last year, it was directed at South Korea. Today, the target is tiny Palau due to its ongoing diplomatic recognition of Taiwan. Tomorrow, it could be Japan, Thailand, Indonesia, the Philippines, or any country that gets into a geopolitical spat with China.”
“U.S. to counter Chinese internet bid in Papua New Guinea: diplomat,” 27 September 2018, Reuters World News, https://www.reuters.com/article/us-pacific-debt-huawei-tech/u-s-to-counter-chinese-internet-bid-in-papua-new-guinea-diplomat-idUSKCN1M800X
“… The United States is working on a counter-offer to stop Chinese telecom giant Huawei Technologies Co Ltd from building internet infrastructure in Papua New Guinea (PNG), its top diplomat to Australia said on Friday.
“The bid comes two years after Huawei first agreed to build a network there, and as the United States and its allies mount a vigorous campaign to check China’s rising influence in the region by deepening their own diplomatic ties and boosting aid.”
“Questions over huge Chinese funded PNG power project,” 28 September 2018, Radio New Zealand, https://www.radionz.co.nz/international/pacific-news/367475/questions-over-huge-chinese-funded-png-power-project
“… China is said to be pressuring Papua New Guinea to sign a huge hydro electricity deal before the APEC summit in November. … The project is linked to Beijing’s signature Belt and Road Initiative through the Shenzhen Energy Group, which would finance, build and operate the plant for its first 25 years.”