Pacific nations have largely avoided the worst health effects of COVID-19, but its economic impact has been devastating. With the tourism tap turned off, unemployment has soared while GDP has plummeted.
In recent weeks, Fiji Airways laid off 775 employees and souvenir business Jack’s of Fiji laid off 500. In Vanuatu 70% of tourism workers have lost their jobs. Cook Islands is estimated to have experienced a 60% drop in GDP in the past three months.
Quarantine concerns aside, there is economic logic to this. Australians and New Zealanders make up more than 50% of travellers to the region. Some countries are massively dependent: two-thirds of visitors to Fiji and three-quarters of visitors to Cook Islands are Aussies and Kiwis.
Cook Islands has budgeted NZ$140 million for economic recovery, but this will increase the tiny nation’s debt. Prime Minister Henry Puna has argued for a limited tourism bubble as soon as New Zealand relaxes its COVID-19 restrictions to alert level 1. Cook Islands News editor Jonathan Milne estimates 75-80% of the population is “desperate to get the tourists back”.
A Pacific bubble would undoubtedly help economic recovery. But this merely highlights how vulnerable these island economies have become. Tourism accounts for between 10% and 70% of GDP and up to one in four jobs across the South Pacific.
The pressure to reopen borders is understandable. But we argue that a tourism bubble cannot be looked at in isolation. It should be part of a broader strategy to diversify economies and enhance linkages (e.g. between agriculture and tourism, to put more local food on restaurant menus), especially in those countries that are most perilously dependent on tourism.
Pacific nations such as Vanuatu and Fiji have recovered quickly from past crises such as the GFC, cyclones and coups because of the continuity of tourism. COVID-19 has turned that upside down.
People are coping in the short term by reviving subsistence farming, fishing and bartering for goods and services. Many are still suffering, however, due to limited state welfare systems.
In Fiji’s case, the government has taken the drastic step of allowing laid-off or temporarily unemployed workers to withdraw from their superannuation savings in the National Provident Fund. Retirement funds have also been used to lend FJ$53.6 million to the struggling national carrier, Fiji Airways.
Fiji has taken on more debt to cope. Its debt-to-GDP ratio, which ideally should sit below 40% for developing economies, has risen from 48.9% before the pandemic to 60.9%. It’s likely to increase further.
High debt, lack of economic diversity and dependence on tourism put the Fijian economy in a very vulnerable position. Recovery will take a long time, probably requiring assistance from the country’s main trading partners. In the meantime, Fiji is pinning hopes on joining a New Zealand-Australia travel bubble.
Supporting Pacific states to recover is an opportunity for New Zealand and Australia to put their respective Pacific Reset and Step-Up policies into practice. If building more reciprocal, equitable relationships with Pacific states is the goal, now is the time to ensure economic recovery also strengthens their socio-economic, environmental and political infrastructures.
Economic well-being within the Pacific region is already closely linked to New Zealand and Australia through seasonal workers in horticulture and viticulture, remittance payments, trade and travel. But for many years there has been a major trade imbalance in favour of New Zealand and Australia. Shifting that balance beyond the recovery phase will involve facilitating long-term resilience and sustainable development in the region.
A good place to start would be the recent United Nations Economic and Social Commission for Asia and the Pacific report on recovering from COVID-19. Its recommendations include such measures as implementing social protection programs, integrating climate action into plans to revive economies, and encouraging more socially and environmentally responsible businesses.
This is about more than altruism – enlightened self-interest should also drive the New Zealand and Australian agenda. Any longer-term economic downturn in the South Pacific, due in part to over-reliance on tourism, could lead to instability in the region. There is a clear link between serious economic crises and social unrest.
At a broader level, the pandemic is already entrenching Chinese regional influence: loans from China make up 62% of Tonga’s total foreign borrowing; for Vanuatu the figure is 43%; for Samoa 39%.
China is taking the initiative through what some call “COVID-19 diplomacy”. This involves funding pandemic stimulus packages and offering aid and investment throughout the Pacific, including drafting a free trade agreement with Fiji.
That is not to say Chinese investment in Pacific economies won’t do good. Rather, it is an argument for thinking beyond the immediate benefits of a travel bubble. By realigning their development priorities, Australia and New Zealand can help the Pacific build a better, more sustainable future.
Across the globe, the coronavirus pandemic has prompted countries and governments to become increasingly inward-looking. Australia is not immune to this. One of the effects of this situation has been that the “Pacific Step-up” appears to have dropped entirely off the political radar.
The step-up is – or was – the signature foreign policy of the Morrison government. Although it predates Scott Morrison becoming prime minister, under his leadership it had really come to the fore. We saw an increase in ministerial visits to the region, a ramping up of labour mobility opportunities for Pacific islanders, and the establishment of a A$2 billion infrastructure financing facility.
So, how does the Pacific Step-up need to evolve to help respond to the challenges posed by coronavirus?
It’s important to acknowledge that Australia and the island members of the “Pacific family” share more than just an ocean. They have many common challenges. Addressing them requires sharing resources. The coronavirus response presents an opportunity to move the Pacific Step-Up from something that is done “to” or “for” the Pacific to something that Australia does “with” the Pacific.
It is too easy for the Australian media (and indeed the Australian public) to perpetuate the trope that Pacific people are helpless – chronic victims who need to be rescued from whatever calamity has most recently befallen them. Now is the time for Australian policymakers to step up and demonstrate real respect for their Pacific counterparts.
On top of the increasingly devastating effects of climate change, Pacific island countries are now managing the twin challenges of a potential public health emergency and its severe economic ramifications.
When it comes to the former, the focus has been on prevention. Many countries took swift and significant steps to minimise the risk of the virus entering their communities. Borders have been closed, restrictions on movements enforced and health and medical systems enhanced.
Pacific island countries are also already feeling the economic impacts of the global shutdown. This is particularly evident in those countries that rely on tourism and remittances for revenue, livelihoods and employment.
Several countries have moved quickly and decisively to introduce economic support and stimulus packages to meet some of the most pressing needs of their populations. Maintaining these into the medium and longer term will be a challenge.
In Solomon Islands, Vanuatu, Fiji and Tonga, the impacts of the recent Tropical Cyclone Harold are presenting additional challenges. Reaching Category 5 strength, it caused more than 30 deaths and left large amounts of damage and destruction in its wake. Australia and other partners (particularly France and New Zealand) have provided assistance to government agencies in the region that are charged with responding to disasters of this type.
In the Pacific, and among many Australian commentators, it is widely acknowledged that the step-up is driven largely by geo-strategic anxiety about the growing influence of China in the Pacific islands region. Coronavirus has done little to dilute this angst. In some instances, it appears to have accentuated it. Certainly, China has made it abundantly clear it is ready, willing and able to be a friend in need for Pacific island countries.
A more sophisticated and nuanced Pacific Step-up that addresses the challenges posed by coronavirus provides Australia with an opportunity to demonstrate to Pacific counterparts its ability and willingness to offer something that is different and more valuable than is available elsewhere.
This can take one or more of several forms. First of all, Australia should continue to advocate to the global community the need to provide tailored financial support to Pacific island countries. This must include lobbying for meaningful debt relief to underpin economic recovery.
The IMF has already made some moves in this regard. Australia has also moved quickly in relation to its most recent loan to PNG. When the Pacific Islands Forum’s finance and economic ministers meet online in the near future, this will likely be on the agenda. Australia should look to have something concrete to put forward in support of this, including offers to lobby the G7 and G20.
Recently, New Zealand Foreign Minister Winston Peters raised the possibility of a New Zealand-Australia “bubble” based on low numbers of infections in both countries. He saw this as a basis for reopening the borders to allow for freer movement of people and goods.
Pacific island countries that have no COVID-19 cases – there are several – should look to be part of a “Pacific bubble” if this conversation goes forward. This would maintain Pacific islanders’ participation in labour mobility schemes.
Australia and New Zealand are also the key markets for Pacific tourism. The sooner tourists can be welcomed back to the resorts and beaches, the sooner island livelihoods can be restored.
The rhetoric of the Pacific Step-Up has been couched in terms such as “Pacific family”. We now need to know what this means for how Australia can and will support Pacific states and communities in the face of coronavirus.
The Australian government has spent the past year promoting its “Pacific step-up” as one of the country’s “highest foreign policy priorities”.
Although there has been some progress on the diplomatic front in the past year – an increase in diplomatic visits, a boost in foreign aid and a new A$2 billion infrastructure financing initiative – there is some way to go to bring balance, mutual respect and a sense of long-term partnership and commitment to our relations with the region.
New research shows people in three of Australia’s closest Pacific neighbours – the Solomon Islands, Fiji and Vanuatu – are concerned Australia does not know how to engage successfully as part of the Pacific community.
Three key messages came through:
the quality of our relationships matter more than the quantity of our aid or trade
our values, norms and ways of doing things are a vital part of how we conduct our engagement with the Pacific
Australia, and its historical relationship, is valued but we are one of many partners for Pacific islanders.
Late last year, the Whitlam Institute at Western Sydney University commissioned a policy research project led by the peacebuilding NGO Peacifica and Pacific specialist Tess Newton Cain. It aimed to understand how people in the three island nations view Australians and the government’s policies in the Pacific.
We conducted focus groups and one-on-one interviews with 150 participants from varying backgrounds, including people from urban and rural settings, women, young people, business people and those engaged in civil society and government. These conversations were then followed by expert seminars in Canberra and Suva.
The full report will be released at the Australasian Aid Conference on February 17.
The participants in our surveys praised Australia’s efforts to empower women, as well as our humanitarian assistance programs, for their effectiveness and impact. But beyond that, the picture was more bleak in terms of whether we have the right policy and diplomatic priorities.
Across the three countries, there was a similar concern of a lack of balance and equality in the Australia-Pacific relationship and a belief Australia doesn’t truly hear the perspectives of its neighbours.
There was also a perception of a certain level of racism and disrespect directed towards people from the Pacific. As one participant said, the relationship is
layered over and stifled by a degree of parochialism that is not only unnecessary, it’s counter-productive.
Our participants pointed to numerous examples of how Australians lack cultural sensitivity in their dealings with the Pacific, especially compared to people from New Zealand and even China. As one participant noted:
China is listening and looking, observing.
They also expressed major dissatisfaction with the contrast between the welcome Australians receive when they come to the Pacific compared to the welcome islanders receive when they come here. Visa conditions were a major part of this concern.
Remove the visa requirement to allow South Sea countries to be able to have access to a region that they helped to develop.
When discussing aid, our participants noted problems with the role of international NGOs working in the Pacific, many of which are based in Australia. Participants were concerned by the Pacific’s over-reliance on international NGOs, the crowding out of local partners and the failure of governments and international NGOs to appreciate and acknowledge the value of local knowledge.
Historical memory runs deep and policy approaches to the region need to take into account colonial histories – including Australia’s own role.
For these nations, the late 19th century practice of “blackbirding” – the kidnapping of South Sea islanders as indentured labour for Australian plantations – is still very much part of the historical framing of the relationship with Australia.
Our participants also took very seriously issues of their own sovereignty, independence and the importance of national ownership of their futures. They reflected a desire for developing long-term and sustainable bilateral relations based on mutual respect and common interest.
One participant said,
as a Pacific islander, these are our countries, this is our place. Whatever countries want to do to help us should be something that is beneficial for us but also creating relationships. That is what our culture is all about, creating lasting relationships, not just to fulfil their own agendas and leave us.
Interestingly, our research shows Australian domestic politics are important to our relations with the region.
It’s not surprising Australia’s climate policies impact how we are perceived in the region, but our policies toward Indigenous people are also significant.
Our participants felt Aboriginal and Torres Strait Islanders were almost invisible in Australia’s relations with the Pacific and this has limited our understanding of – and potential for engagement with – the region.
Repeatedly, the point was made that Australia lacks a clear sense of identity and connection to place and this is hampering our relationships in the Pacific. As one participant said,
Although we are from the same region, the Pacific Islands and Australia rarely speak with one voice … When you see international meetings, Fiji and other Pacific countries are sitting on one side of the table, while Australia, New Zealand and the US are always sitting over there.
While our research shows there is a genuine warmth in the Pacific toward Australia, it also makes clear we could be doing much better.
One perceived flaw of the “Pacific step-up” is that it’s a unilateral Australian initiative for the region, not a shared agenda.
We need to listen more to the national and international aspirations of Pacific islanders. We also need to expand our engagement beyond traditional diplomatic and government links. For many respondents, cultural and faith communities represent international linkages that are at least as important as nation-state relations.
Our report will make a number of recommendations for more effective Australian policy-making. One idea is co-hosting a regional cooperation summit, where a diverse range of regional policy-makers and communities can explore issues that are of utmost importance for Pacific peoples.
And as our research shows, strong Aboriginal and Torres Strait Islander leadership and participation in such a gathering would be essential.
Correction: This article has been amended to correct the time period of blackbirding from the late 18th century to the late 19th century.
Scott Morrison travels to Europe for D-Day commemorations next week. While there, he may also hold talks with leaders such as German Chancellor Angela Merkel ahead of the G20 meeting in Japan in June.
With the UK and US in the midst of internal and international repositioning –otherwise known as turmoil – and with China continuing to flex and grow, safeguarding Australia’s strategic and commercial interests has rarely been more complicated, nor more of a singular Australian responsibility.
Somewhat perversely, this may explain why Morrison’s first stop as a freshly re-elected prime minister will not be London or Washington, or even Berlin, but rather, the Solomon Islands capital of Honiara.
That is significant. Whoever won the May 18 election, the regional “backyard” was set to become a renewed priority for Australia.
Attention now turns to small and micro nations, who suffer in varying degrees from the effects of remoteness, narrow economies, endemic poverty, poor infrastructure, and, most existentially, rising sea levels. These countries are eager for assistance in securing their futures, whether sourced from old friends like the US and Australia, or new enthusiasts like China.
Labor’s new deputy, Richard Marles, has long championed improved development aid and other assistance to Australia’s nearest neighbours, arguing it is Australia’s moral responsibility. That’s a given, but so is the strategic case for a renewed presence. Namely, the expanding diplomatic and strategic reach of Beijing.
Morrison is alive to it too.
China’s influence across the region – particularly as an infrastructure and project financier – is growing. This is seen in Canberra as a serious threat, with both major parties looking for ways to strengthen ties with Pacific nations that had been allowed to fray.
Darwin-based Labor MP Luke Gosling told me he would make the Northern Territory capital the official base for Australia’s renewed regional extension.
“Whether it is responding to earthquake, cyclone, tsunami, or terrorist attack – it should be the hub for humanitarian, emergency and disaster assistance to the region, but more importantly involved in capacity building with our regional neighbours,” he said.
Valid though this is, success will turn not so much on a change of arrangements internally, as a whole new basis to Australia’s regional pitch.
Experts say the key to closer relations is talking to smaller countries about their concerns, rather than the tendency we’ve had to date to talk about ours.
For Morrison, that is a political challenge with distinct domestic characteristics. It means acknowledging the contemporaneous real-world effects of global warming, including the direct contribution to carbon emissions from mining and burning coal.
For low-lying island countries including Kiribati, with a population of just 110,000, and Fiji, this is no abstract debate but rather one of life and death, here and now.
“It’s their top security priority,” Michael Wesley, Dean of the College of Asia and the Pacific at the Australian National University, told Sky News “whereas our top security priority in the Pacific is China”.
“Pacific leaders have made it very clear that they don’t see China in the Pacific as a threat, so we’ve got an immediate mismatch of what we perceive to be the problems between us and the Pacific Islanders.”
Wesley described global warming as an existential concern “happening to them right now”.
“We have to be extremely sensitive about how things like the Adani coal mine, [and] a new coal-fired power plant perhaps being opened, will play out in the Pacific, it goes down like a lead balloon.”
As with Mr Morrison’s visit to Honiara, the order of things matter when communicating internationally.
Fiji’s Prime Minister Frank Bainimarama was among the first to congratulate Morrison on his surprise election win. The pair had struck up a warm relationship when they met earlier this year. But now, as then, the Fijian used the opportunity to seek stronger climate leadership from the region’s wealthiest economy.
His longer post on Facebook provided the kicker:
In Australia, you have defied all expectations; let us take the same underdog attitude that inspired your parliamentary victory to the global fight against climate change. By working closely together, we can turn the tides in this battle – the most urgent crisis facing not only the Pacific, but the world. Together, we can ensure that we are earthly stewards of Fiji, Australia, and the ocean that unites us. Together, we can pass down a planet that our children are proud to inherit.
It was a similar message from Samoa, where Prime Minister Tuilaepa Sailele Malielegaoi welcomed the election result, but noted in an interview with The Guardian that “[Australia] has been lagging behind,” regarding the need for action on the climate emergency.
And it’s a fair bet the content will be the same in Honiara.
The finer points of diplomacy have not been a strength of Morrison, who, even after his recent electoral endorsement, is still less than a year in the top job.
A plainly cynical suggestion made during the Wentworth byelection of moving the Australian embassy in Tel Aviv to Jerusalem caused nothing but embarrassment. More recent comments depicting the US as our friend and China as merely our client raised eyebrows in Beijing.
But a desire to succeed, a personable nature, and an avowedly conservative disposition, suggest the Australian prime minister does not envisage significant direction changes in Australia’s stance on either regional or global affairs. That is a reality likely to prove disappointing to Pacific Island leaders looking for a lot more than kind words as their citizens face inundation.
This week, Department of Communications and Arts secretary Mike Mrdak told a Senate hearing our Pacific neighbours will soon experience “the full suite of programs available on Australian networks”. This means the region will see some of our most highly rated reality shows such as Married at First Sight and The Bachelor.
This is all part of the government’s Pacific pivot and the A$17 million package to broadcast commercial television throughout the region announced by the prime minister last year. It’s also part of Australia’s “soft power” strategy, a branding that enables it to influence other countries and have its voice heard.
Australia’s soft power attraction in the Asia Pacific has been in free fall for the past few years. The government is sitting on two major reviews. First is the Soft Power Review – a strong recommendation of the 2017 Foreign Policy White Paper – for which the consultation period ended in October 2018. Second is the Review of Australian Broadcasting in the Asia-Pacific, the consultation period for which ended in August 2018.
The second review was established in 2017. This was the first time the government addressed the issue of soft power in the Pacific since axing the ABC’s Australia Network in 2014. The Australia Network broadcast to the region with redistribution partnerships to 30 countries.
The ABC charter states it has responsibility “to transmit to countries outside Australia broadcasting programs of news, current affairs, entertainment and cultural enrichment” that will “encourage awareness of Australia and an international understanding of Australian attitudes on world affairs”.
In other words, the ABC is already enabled as Australia’s soft power tool. Despite this, the government is giving money to commercial televisions to do the work. At the Senate hearing this week, Mrdak denied this was in breach of the ABC charter because it did not involve broadcasting but purchasing content made by Australia’s commercial broadcasters for distribution to regional broadcasters.
The government must move quickly with its reviews and their recommendations, and articulate its policy responses before the next election, if Australia’s standing in the region is to be restored. Because other powers, especially China, are fast filling the gap we’re leaving behind.
Soft power is a term coined by Harvard Professor Joseph S. Nye in the late 1980s. He referred to soft power as the ability of a country to gain influence and power through attraction and without coercion. Soft power leads to nation branding or the reputation a nation enjoys in the world.
This is what business academic Yin Fang defines as:
… the total sum of all perceptions of a nation in the minds of international stakeholders, which may contain some of the following elements: people, place, culture/language, history, food, fashion, famous faces (celebrities), global brands and so on.
The 2018 Soft Power 30 Report showed Australia had fallen four places in four years. The report is a measure of the influence of international nations. We are 10th in the overall soft power index but are marked as moving downward: 7th in culture, 6th in education, 9th in government and completely absent from the top ten in the areas of digital, enterprise and engagement.
In the alternative, and hipper, Monocle Soft Power Index, Australia sits at number 8. But the report also warns it “… is in need of a shakeup if it is to remain an attractive proposition”.
It praises the country for committing to an official review of its soft power but adds “it’s unclear if that will now be a priority”.
In addressing a seminar on the future of Australia’s broadcasting and soft power in the region, veteran broadcaster and former head of the Australia Network Bruce Dover said:
Where once Australia was a brand in Asia, people knew what the Australia Network was, they knew what Radio Australia was, it’s lost – it’s gone…
He then added that the axing of the Australia Network by the Coalition government “… was for more political reasons about whacking the ABC than a considered view on the worth of soft diplomacy or having a voice in the region”.
The ABC isn’t entirely free from blame. It abandoned the most needy of its audience in Asia and the Pacific by switching off its shortwave radio service in 2017. Citing outdated technology, the ABC was trying to make the most of its severe funding cutbacks by prioritising digital services. And that’s when China moved in and took over the shortwave frequencies.
The government’s Pacific pivot is about waking up and finding China has expanded into the region, and not just in infrastructure projects but in broadcasting. A recent ABC investigation reported China’s Central Global Television Network (CGTN) is broadcasting to 1.2 billion people in Chinese, English, French, Spanish, Russian and Arabic and is expanding to create 200 international bureaus by 2020.
This may be, as the ABC suggests, “informational warfare”, where the soldiers may actually be Westerners working for the other side. This year alone, more than 2,200 people lost their jobs in the Australian media.
Edwin Maher was one of the first Australians to work for CCTV, as CGTN was then called. He was a weatherman when I worked in the ABC’s Melbourne newsroom in the late ’80s, but for over a decade he has been a presenter on China’s television. There will be more like him in future.
China is actively recruiting Westerners to front its programs. Australian faces will likely present news on on CGTN, while Australian voices broadcast in English to Pacific Islanders on shortwave.
In the competitive world of nation-branding and soft power, who will know the difference? The new Edwin Mahers will be telling the same stories as Australia, but with a China focus. In 2016 President Xi Jinping announced that the media must serve the party and directed them to tell China’s stories that reflect well on the ruling party and its policies.
This is the reality of informational warfare. The Morrison government must release its two crucial soft power reports and announce a policy framework that will determine our standing, influence and power in the region.
Vanuatu’s Daily Post has welcomed the news Australia will provide entertaining programs to the Pacific. But the opinion piece also says:
Pacific islanders aren’t likely to be very fussy about how that comes about. But if the goal is helping Pacific islanders know more about Australia — and helping Australians know more about the Pacific – then a different approach is needed.
Australia’s soft power is too important to be determined by vengeful payback to the ABC, or by currying favour with commercial television barons. It is about statecraft.
January is an odd time for high level visits to the Pacific. But Prime Minister Scott Morrison’s decision to focus on the region at the start of the year indicates he listened to the criticism of his failure to attend the Pacific Islands Forum meeting in Nauru last September.
This visit began and ended with security. The Vanuatu leg of the trip provided a clear illustration that, when it comes to security, what Canberra understands (and wants) does not necessarily line up with the needs of Pacific island countries.
Vanuatu is seeking support for domestic security issues, such as increasing its police force. This is more of a priority than a security treaty with Australia, as Canberra had proposed during the Vanuatu prime minister’s 2018 visit to Australia – it was rejected at the time. Ahead of Morrison’s visit, Vanuatu’s foreign minister, Ralph Reganvanu, reiterated there was no appetite in his government to enter into an exclusive security agreement with any country.
Vanuatu’s longstanding membership of the Non-Aligned Movement (formed during the Cold War by states who did not wish to be aligned with either of the then superpowers) is part of what informs this position.
Something like the Australia-Solomon Islands security treaty – which envisages rapid deployment of Australian troops (subject to consent by both governments) – would be highly problematic for most people in Vanuatu, a country that places high value on its hard-won independence and sovereignty.
The visit to Fiji was particularly significant given strained relationships between the two governments since the 2006 coup. Some in Australia’s foreign policy community believe the freeze pushed Fiji’s Prime Minister, Frank Bainimarama, to build relationships with China, Russia, and others to the detriment of Canberra in terms of influence.
That’s why securing the Black Rock redevelopment deal last year – a site that’s to become a regional hub for training of defence and security personnel – is a success for Australia. Having Morrison there to break ground on the project may indicate all is now forgiven on both sides.
However, a visit by the leader of the region’s largest democracy and the apparent credibility it gives to Bainimarama’s government will be a disappointment to those who have ongoing concerns about human rights and democratic governance in Fiji.
The Fiji trip unveiled a Fiji-Australia Vuvale Partnership, touted as elevating the relationship beyond diplomacy. The agreement includes a commitment to annual leaders’ meetings, something that already exists between Australia and Papua New Guinea. Other than that, we have yet to see what it will look like in practice.
Further to last year’s announcement of the creation of an Office of the Pacific in the Department of Foreign Affairs and Trade (DFAT), Morrison used this trip to announce Ewen McDonald (currently Australia’s High Commissioner to New Zealand) as its head.
McDonald will work on ensuring Australia’s engagement with the Pacific informs the work of all relevant government departments. This will include Fiji’s joining the Pacific Labour Scheme and steering the revisions of import restrictions on kava that were announced in Port Vila. Currently, the maximum amount of kava that can be brought in to Australia is 2kg per adult due to concerns about substance abuse in Australian Indigenous communities.
What was said (and just as importantly what wasn’t) during this week’s visit to the region indicates Australia needs to do more listening and learning. For too long, people in the Pacific have felt their voices have not been heard when it comes to how Australia engages in the region.
In Vanuatu, Morrision demonstrated particular tone-deafness on the issue of ease of travel. Across the region, people are frustrated about the difficulties they face in getting visas to visit Australia.
The Australian government announced a frequent traveller visa card on the margins of last year’s APEC summit. This is intended for politicians, sports people and business leaders. But its narrow scope doesn’t cut it as far as people in Vanuatu are concerned. Officials transiting to attend international meetings or families visiting students at Australian universities, for instance, aren’t included.
Morrison also isn’t listening when it comes to Australian broadcasting to the Pacific. He announced A$17.1 million dollars to fund TV content for broadcast to and in the region. This money is to be funnelled to commercial providers via Free TV Australia, snubbing the established Pacific expertise of the ABC and SBS/NITV. Not to mention their reputation in the region.
This ignores specific representations from the Pacific which have stressed time and again what they want is high quality content to raise the level of public debate about the issues they care about.
Scott Morrison did “show up” though, as he had planned. It’s a first step. Whether Australia-Pacific relationships are now on the right path, we have yet to see.
If Scott Morrison was looking for a way to prove Australia is a good neighbour to Pacific nations, he could hardly have chosen a worse option.
Billions of dollars in loans, that is.
He promised A$2 billion for an Australian Infrastructure Financing Facility for the Pacific to invest in projects focusing on the telecommunications, energy, transport and water sector. And another A$1 billion to Efic, Australia’s government-backed Export Finance and Insurance Corporation, for concessional credit to Pacific projects.
The plan is driven in part by a desire to combat China’s economic diplomacy in the Pacific. There is concern that island nations will end up indebted to Chinese creditors.
So why would Morrison want to offer Pacific Island nations even more debt?
The AIFFP has rightly been called a response to Chinese development finance in the Pacific. This is mostly from the Chinese Development Bank, not the Asian Infrastructure Investment Bank (AIIB), which China initiated in 2013. Fiji, Samoa and Vanuatu are the only Pacific island nations that have so far joined the AIIB, and they have not received any loans. However, the Cook Islands, Papua New Guinea and Tonga have expressed an intent to join.
As with many initiatives, the devil is in the detail of the Australian response.
Morrison has already indicated there will be no increase in Australia’s already stingy aid budget. Given his criticism of multilateral organisations as “useless”, it seems likely the AIFFP’s A$2 billion will come from diverting contributions that would have gone to United Nations agencies or other programs for low-income countries not in the Pacific.
While a greater focus on the Pacific is welcome given the region’s needs, it should not come at the expense of other countries with equally pressing challenges. Further, the shift from grants to loans is not welcome news.
Apart from an interest-free loan to Indonesia following the 2004 Indian Ocean tsunami that killed about 170,000 Indonesians, Australian aid has long been fully grant-based. That has been one of its key strengths.
It has left debt-based development financing to the multilateral development banks it helps fund, in particular the World Bank, the Asian Development Bank and the new AIIB.
The World Bank and International Monetary Fund’s joint Development Committee warned about debt concerns for developing nations last month. Debt vulnerabilities risked “reversing the benefits of earlier debt relief initiatives”, it said in a communique from the annual meetings of its parent organisations held in Bali last month.
At the meetings, it was clear the IMF was more concerned about debt than the World Bank. Indeed the World Bank and its affiliates were successful in gaining a very large capital increase – US$13 billion in paid-in capital from member states, with the aim that it increase lending to US$100 billion a year by 2030.
The World Bank also had a large capital increase after the 2008 Global Financial Crisis, as did other development banks. These increases were not just in response to the crisis but also underpinned by concerns about competition from China and other emerging powers.
With the AIIB and the New Development Bank (established by Brazil, Russia, India, China and South Africa in 2015), there are now about 27 multilateral development banks.
Further, many countries have development finance institutions like Australia’s planned AIFFP, and export-import banks like Australia’s Efic. On top of that, private finance is at record highs.
The case for more debt-based development financing is just not there.
Of 13 Pacific island countries, six are already considered at high risk of debt distress. In a couple of cases is that due to Chinese finance. In other cases the multilateral development banks are the biggest creditors. Four other countries are at moderate risk of debt distress.
Adding to those debts is not a wise or decent thing for Australia to do. Even the government’s former minister for international development and the Pacific, Concetta Fierravanti-Wells, has warned about debt.
Most Pacific island communities have limited potential to develop along standard capitalist lines. Debt-based development requires projects with substantial economic rates of return and strong cash flows, which is difficult in small island states. Large hard infrastructure projects are risky, as Australia has learned in Vanuatu, and need to be climate change proofed.
The AIFFP reflects a new global mantra focused on replacing aid with lending money for infrastructure. It is not responding any demand from the Pacific. Core parts of the Sustainable Development Goals like health, education and climate sustainability are being ignored. It remains to be seen if anyone in the region embraces it.