By Annmaree O’Keeffe*
The condemnation of China last week by Nauru’s President Baron Waqa at the Pacific Island Forum leaders’ meeting may have been bolstered by Taiwan’s substantial investment in that tiny Pacific nation of 13,000 people. Nauru is one of six Pacific countries to have diplomatic relations with Taiwan. But the outburst was timely and apposite. China’s growing influence in the Pacific – including through the exponential increase in its aid investments – has been the topic of extensive analysis and commentary. The latest instance of China’s expanding engagement in the region is its mooted investment in the upgrade of a multi-use port for Papua New Guinea’s Manus Island.
China’s President Xi Jinping will meet Australia’s neighbours before Morrison does.
It is unfortunate that Australia wasn’t represented by its own leader at the Forum last week because it would have given new Prime Minister Scott Morrison a chance to meet the neighbours before the next big regional meeting, the Asia Pacific Economic Cooperation forum leaders’ summit, to be hosted by PNG in November.
China’s President Xi Jinping has already invited Pacific Island leaders of the countries recognising China to a meeting in Port Moresby ahead of the APEC summit. This means that China’s President will meet Australia’s neighbours before Morrison does. Which is regrettable, given the importance Pacific leaders place on knowing their regional counterparts personally.
Indeed, the APEC meeting in PNG has shone another spotlight on the extent of China’s growing influence with our nearest neighbour and the resulting unsubtle competition between China and Australia, PNG’s long standing development partner.
As reported early this year, Canberra’s support to PNG for the summit is seen in part as a way of forestalling China from bankrolling the summit. Australian help includes funding a substantial proportion of the logistics, plus cyber security worth $14.4 million, as well as $5.4 million for police and firefighting services and covering the additional Australian Federal Police presence. Overall, the bill is likely to come in somewhere over $100 million.
But Australia’s generous support hasn’t constrained China from ratcheting up its contribution. This includes a convention centre for the summit and extensive road upgrading around Port Moresby, such as the arguably unnecessary rebuild of the Poreporena Highway linking Waigani and downtown Port Moresby.
This particular example of international rivalry demonstrates the extent to which the total of China’s Pacific aid investments in PNG is increasing. The Lowy Institute’s Pacific Aid Map released last month shows that China’s aid spend in PNG totalled US$20.83 million in 2016, compared to Australia’s $375.96 million. But by 2017, China had increased its spending threefold to $62.97 million. There has been no similar proportional increase in Australian spending.
One of the consequences of this competition, as the authors of the Pacific Aid Map noted, is that China’s rising engagement in the region is giving PNG and the rest of the Pacific options beyond the traditional partners, forcing Australia to lift its game.
But is this aid competition in the recipients’ interest? One concerning aspect is that the majority of Chinese aid is in the form of loans that will have to be repaid, while Australia’s aid is entirely grant aid – no repayments required. The thorn attached to Australian aid is that it insists on conditions needed for good sustainable development. Chinese aid is tied with demands that the Chinese-funded projects be implemented by Chinese firms and workers. So, little to no work goes to locals, resulting in little to no skills transfer, but the PNG government gets a big bill to be paid sooner rather than later, whether it can afford it or not.
Potentially, China has a much bigger purse than Australia, so the question is how far this competition can play out before PNG’s own interests are blighted by the easy but ultimately expensive yuan. It is unfortunate that Australia has to make compromises with its own aid program to keep pace with China’s mercantilist approach. For example, it has been reported that a significant proportion of the funds Australia is contributing for the APEC Summit is coming out of the aid budget.
The sad irony of China’s possible engagement in the development of the port on Manus Island is Australia’s own dismal involvement in the affairs of Manus, off and on, for the past 17 years. The establishment of the asylum seeker processing centre created a festering and distracting ulcer in the bilateral relationship. The local memory of Australia’s heavy handedness in this sorry chapter of Australian-PNG relations has words such as “neo-colonialism” and “re-colonialism” attached to it. Now, China stands in the wings waiting for the word from Port Moresby to help do something positive for Manus. What is Australia going to do about that?
But as these two countries play out their aid-funded geostrategic dance, and PNG Prime Minister Peter O’Neill happily signs on the competing dance cards, his country becomes more beholden to unaffordable debt. This, while basic health and education services in PNG slide perilously backwards. What could be more telling of the breakdown in services than the re-emergence of polio just three months ago in the country that the World Health Organisation (WHO) had declared polio free in 2000.
So something for O’Neill to consider as he decides whose APEC dance card he should sign up to next: in 2017, worldwide, there were only 22 reported cases of polio, according to WHO. Now, in 2018, PNG has already registered 10 cases*, with the most recent one in the capital, and the number continues to rise.
Which of these two donors will be there to help his country deal with this major damning health crisis before the APEC summiteers arrive?
*Annmaree O’Keeffe AM is a Nonresident Fellow at the Lowy Institute. She is also a Research Associate with the ANU’s Development Policy Centre. Previously with Australia’s former foreign aid agency, AusAID, from 1986 to 2009, her various positions included Ambassador for HIV/AIDS and Deputy Director General. She has served as Australia’s Ambassador to Nepal and was Minister-Counsellor for Development Assistance in Papua New Guinea.
Republished with permission of the Lowy Institute
