As Australia’s soft power in the Pacific fades, China’s voice gets louder



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China is broadcasting to more than 1 billion people in several different languages, while Australia sits on its soft power reviews.
Screenshot/YouTube

Helen Vatsikopoulos, University of Technology Sydney

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.




Read more:
Lost in transmission: the Australia Network, soft power and diplomacy


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.

The importance of soft power

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.




Read more:
Soft power and the institutionalisation of influence


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.

So, what’s China doing?

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.




Read more:
Soft power goes hard: China’s economic interest in the Pacific comes with strings attached


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.The Conversation

Helen Vatsikopoulos, Lecturer in Journalism, University of Technology Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Yes, Morrison ‘showed up’ in the Pacific, but what did he actually achieve?


Tess Newton Cain, The University of Queensland

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 and security

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.




Read more:
Morrison’s Vanuatu trip shows the government’s continued focus on militarising the Pacific


Fiji and a thawing of relations

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.




Read more:
Fiji coup leader gets the democratic approval he wanted


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.

Broader region

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.




Read more:
For Pacific Island nations, rising sea levels are a bigger security concern than rising Chinese influence


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.The Conversation

Tess Newton Cain, Adjunct Associate Professor, School of Political Science & International Studies, The University of Queensland

This article is republished from The Conversation under a Creative Commons license. Read the original article.

If there’s one thing Pacific nations don’t need, it’s yet another infrastructure investment bank


Susan Engel, University of Wollongong

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.

Looking for a policy to combat both China and his domestic Opposition, the Australian prime minister last week announced a plan involving billions of dollars for Pacific nations.

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?

Chinese cheques

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.




Read more:
Soft power goes hard: China’s economic interest in the Pacific comes with strings attached


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.

Debt concerns

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.




Read more:
For Pacific Island nations, rising sea levels are a bigger security concern than rising Chinese influence


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.

Pacific situation

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.


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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.




Read more:
For Pacific Island nations, rising sea levels are a bigger security concern than rising Chinese influence


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.The Conversation

Susan Engel, Senior Lecturer, Politics and International Studies, University of Wollongong

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Two past coup leaders face off in Fiji election as Australia sharpens its focus on Pacific



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Fiji’s Prime Minister Josaia Voreqe “Frank” Bainimarama speaking at a trade forum in Brisbane in July last year.

Dominic O’Sullivan, Charles Sturt University

Fiji faces a general election on Wednesday, just as Australia’s main political parties devote more attention to the western Pacific, driven by worries about China’s growing influence in the region.

For most Australians, the nation is a handy holiday destination – closer than Bali or Thailand. Last month, its palm-fringed beaches were in the global spotlight when the Duke and Duchess of Sussex took a trip to the former British colony.

Anyone with a longer memory will perhaps associate Fiji with coups – two in 1987 and one in 2006. There was also a putsch – a civilian overthrow of the government – in 2000.

This week’s general election is only the second since Josaia Voreqe Bainimarama, who often goes by the name Frank, appointed himself prime minister after the 2006 coup. He was eventually elected in 2014 and is expected to be re-elected this week.




Read more:
Fiji coup leader gets the democratic approval he wanted


For Australia, the strategic importance of the western Pacific is coming into sharp focus.

Prime Minister Scott Morrison has announced $3 billion in infrastructural spending in the region. He has committed the Australian Defence Force to military training in Pacific nations.

Australia has an abiding interest in a south-west Pacific that is secure strategically, stable economically and sovereign politically.

In a speech to the Lowy Institute last month, Bill Shorten committed a future Labor government to an independent foreign policy with a strong Pacific focus. It would support Fiji, Papua New Guinea and Tonga to develop their military capabilities.




Read more:
Labor is making big promises for a Pacific development bank, but questions remain


On Fiji, he said:

We want to mend the relationship with the RFMF [Republic of Fiji Military Forces], to ensure that the ADF [Australian Defence Force] is best-placed to develop the Fiji military’s professional capabilities and to ensure Fiji’s security needs.

For Fijian voters, the military is never far from politics.

Bainimarama insists the election will be free and fair . However, the electoral system is unnecessarily complicated. Critics argue this is a deliberate strategy to disenfranchise voters.

However, as he disliked the Constitution put to him by an independent review in 2009, Bainimarama decreed his own in 2013. Section 131 (2) of that Constitution gives ultimate political authority to the military:

It shall be the overall responsibility of the Republic of Fiji Military Forces to ensure at all times the security, defence and well-being of Fiji and all Fijians.




Read more:
Fiji’s media still struggling to regain ‘free and fair’ space


The military has tended to be the arbiter in national affairs since the first coup in 1987.

As Bainimarama put it before the 2006 coup:

[Prime Minister Laisenia] Qarase is trying to weaken the army by trying to remove me … if he succeeds there will be no one to monitor them, and imagine how corrupt it is going to be.

The coups and the putsch were ostensibly statements of indigenous nationalism – indigenous Fijians asserting their rights over the generally wealthier and better educated descendants of Indian indentured labourers brought to Fiji by British colonial authorities between 1879 and 1916.

However, Fijian politics is vastly more complicated than an indigenous non-indigenous binary. The contentious point, according to Professor Brij V. Lal of the Australian National University’s College of Asia and the Pacific, “is not really about having a Fijian head of government,” but rather which Fijian leader would be acceptable to a particular group of Fijians at any given time”.

The prime minister’s main rival clears legal hurdle

Bainimarama’s main opponent is an indigenous former prime minister and coup leader, Sitiveni Rabuka. Bainimarama is also an indigenous Fijian.

Rabuka faced electoral fraud charges that could have seen him declared him ineligible to stand at the election. Rabuka’s acquittal in the Magistrate’s Court was appealed by the Fiji Independent Commission Against Corruption, and dismissed by the High Court only on Monday afternoon. At his campaign launch in 2018, Rabuka ominously remarked:

I am here to do what I can for as long as I ever can for the good of the country.

However, indigenous nationalism and how the right to self-determination might be played out is important. It is interwoven with class, religion and an urban/rural divide to add to the fragility and complexity of Fiji’s conditional democracy.

Just as it did in 2014, Bainimarama’s Fiji First is campaigning on a range of issues including the building of a multiracial society. Practical measures to improve access to education and healthcare are also important to Fiji First.

Land ownership and rental returns are key political issues

Rabuka’s Social Democratic Liberal Party (SODELPA) argues for the restoration of distinctive indigenous voice in public life. It seeks the restoration of the Great Council of Chiefs and of chiefly influence over the distribution of rental incomes.

SODELPA will also begin extensive public consultation on the drafting of a new Constitution.

Ultimately, indigenous prosperity depends on the strength of the national economy. This, in turn, depends on political stability. Contemporary Fiji enjoys neither. While there are signs of improving economic growth, the Fijian people face two obstacles in ensuring that the outcome of Wednesday’s election reflects their collective will.

Firstly, registering to vote then casting a valid and informed vote is difficult. Secondly, as Fiji’s history since 1987 shows, and as the 2013 Constitution confirms, the election’s outcome is ultimately subject to military approval. It may not, then, be in Australia’s best interests to support a stronger Fijian military.

Democratic stability serves Australia’s interests. In Fiji, democracy can be strong only when the military is weak.The Conversation

Dominic O’Sullivan, Associate Professor of Political Science, Charles Sturt University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Morrison to unveil broad suite of measures to boost Australia’s influence in the Pacific


Michelle Grattan, University of Canberra

Scott Morrison on Thursday will announce an extensive suite of military, diplomatic, financial and people-to-people initiatives in a major boost to Australia’s role in the Pacific.

They include setting up a $2 billion infrastructure financing facility to promote development in the region.

The facility – coming hard on the heels of Labor proposing a government-backed infrastructure investment bank to assist the Pacific – would provide grant and loan financing for telecommunications, transport, energy, water and similar projects.




Read more:
Shorten proposes investment bank to help Pacific nations’ development


The military initiatives include an Australian Defence Force Pacific
Mobile Training Team and more naval deployments, while diplomatic
missions will be opened in Palau, the Marshall Islands, French Polynesia, Niue and the Cook Islands.

APEC focuses minds on Papua New Guinea

The Pacific push is against the background of China’s growing involvement in the area. But the government also points to issues of
potential instability in some countries, and the Islamic State terrorism threat in the broader Indo-Asia Pacific region.

The announcement comes ahead of the APEC meeting in Port Moresby on
November 17-18, and it follows Australia and Papua New Guinea agreeing
on a joint redevelopment of the naval base on Manus Island.

In Thursday’s speech at Lavarack base at Townsville, released ahead of
delivery, Morrison says: “My government is returning the Pacific to
where it should be – front and centre of Australia’s strategic outlook, foreign policy and personal connections, including at the highest levels of government”.

Morrison says it is time to “open a new chapter in relations with our
Pacific family”.

“Australia has an abiding interest in a Southwest Pacific that is secure strategically, stable economically and sovereign politically”.

The region is “where Australia can make the biggest difference in world affairs” – but too often had taken its influence for granted.

Defence to tie Australia to the Pacific

Morrison says that in future the Australian Defence Force, which already has a pivotal role, will play an even greater one with partner countries in training, capacity building, exercises and on “building interoperability to respond together to the security challenges we face”.

The proposed rotational ADF Pacific Mobile Training Team will be based in Australia, travelling to places in the Pacific, when invited, to undertake training and engagement with other forces.

Work with regional partners would be in areas such as disaster response, peacekeeping, infantry skills, engineering and logistics.

Morrison says the Navy will be deployed more to the Pacific to conduct
training and exercises with other countries. “This will enable them to
take advantage of the new Guardian Class Patrol Boats we are gifting
to them, to support regional security”.

Ties with Pacific police forces are to be strengthened, with a new Pacific faculty at the Australian Institute of Police Management that will help train future police leaders.

More regular in-person contact

To deepen people-to-people links with Pacific security forces, there
will be annual meetings of defence and police and border security
chiefs.

A security alumni network will be set up to maintain connections with
those who have taken part in the Defence Cooperation Program over
decades.

Military sporting engagements will be expanded, as will general
sporting links with a new sports program.

Announcing the new diplomatic posts, Morrison says “this will mean
Australia is represented in every member country of the Pacific Islands Forum”. He stresses also that the government wants “our best and brightest, young and experienced diplomats alike, working on the Pacific”.

As well as the infrastructure financing facility, Morrison is announcing that the government will seek parliamentary approval for Australia’s export financing agency, Efic, to have an extra $1 billion in callable capital and more flexibility to support investments in the region that benefit Australia’s national interest.

More investment in the Pacific

This would “enhance Efic’s ability to support Australian SMEs to be
active in the region. Private capital, entrepreneurialism and open
markets are crucial to our mutual prosperity,” Morrison says.

He says it is estimated the Pacific region will need US$3.1 billion
annually in investment to 2030.

Morrison says the government will work with Australia’s commercial media operators to enable people in Pacific countries to have “access to more quality Australian content on TV and other platforms.

“This will include lifestyle programs, news, current affairs, children’s content, drama and potentially sports. This is an initial step towards providing more Australian content that is highly valued by the Pacific community,” he says.

On 2GB Morrison on Wednesday had to defend Pacific countries from broadcaster Alan Jones’ attack on them as “rent seekers”.

Not rent-seekers after all

Jones lashed out after Morrison gave the importance of the Paris climate agreement to these countries as one reason for Australia not leaving the agreement.

“Do you think all these rent-seekers in the Pacific should get money that you’ve said you’re not going to contribute to Paris. … They’re
rent-seekers, they just want money,” Jones said.

Morrison replied: “I don’t think that’s very respectful to the Pacific
Islands, Alan, I really don’t, and I don’t share that view. They’re
part of the world in which we live here and we’ve always been doing
the right thing by them and we think back to Papua New Guinea, they
did the right thing by us when it came to our Diggers.

“So we have a very special relationship with the Pacific and we need to, for our own interest as well as that it’s part of the community and family of nations we live in in this part of the world. We do the right thing by them, they’ll do the right thing by us.”

Postscript: bid for gas piplines blocked

Treasurer Josh Frydenberg has effectively blocked a $13 billion bid by the Hong
Kong-based CK Group for the Australian gas pipeline company APA.

The decision complicates the current visit to China by Foreign
Minister Marise Payne.

Chinese approval for the Payne trip has been hailed as an important
sign of the improving relationship between the two countries after a
period of frostiness, which included tension over the federal
government’s legislation against foreign interference and the ongoing dispute over China’s build up in the South China Sea.

Foreign investment decisions rest with the treasurer, who takes advice
from the Foreign Investment Review Board. Frydenberg said he had
decided the proposed acquisition would be “contrary to the national
interest”

“It would result in an undue concentration of foreign ownership by a
single company group in our most significant gas transmission
business.”

Frydenberg said the board had been “unable to reach a unanimous
recommendation, expressing its concerns about aggregation and the
national interest implications of such a dominant foreign player in
the gas and electricity sectors over the longer term.”

His “preliminary decision” – which under the usual process will be
finalised a fortnight – reflected the size and significance of APA
Group. It was not a reflection on the CK Group, he said.

“The APA Group is a unique company, widely held amongst investors with
significant Australian ownership and management,” Frydenberg said.

“It is by far the largest gas transmission system owner in Australia,
owning 15,000 km of pipelines representing 56 per cent of Australia’s
gas pipeline transmission system, including 74 per cent of New South
Wales and Victorian pipelines and 64 per cent in the Northern
Territory.

“It also supplies gas for part of all mainland capital
cities’ consumption, gas-fired electricity generation assets and
liquefied natural gas exports.”The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Labor is making big promises for a Pacific development bank, but questions remain



File 20181030 76402 to298d.jpg?ixlib=rb 1.1
Locals in Kiribati building a sea wall to protect the low-lying Pacific island from rising sea waters.
Elise Scott/AAP

Matthew Dornan, Australian National University

This week, Opposition leader Bill Shorten used a major foreign policy speech at the Lowy Institute to announce that, if elected, a future Labor government would establish an infrastructure investment bank for the Pacific islands.

The announcement comes at a time of increased public scrutiny of Australian aid to the Pacific, driven by concerns over China’s heightened presence in the region. Many have argued that Australia’s “benign neglect” of the region has led Pacific governments to seek more assistance from China.




Read more:
Soft power goes hard: China’s economic interest in the Pacific comes with strings attached


Nowhere is this more evident than in infrastructure. China is believed to have a comparative advantage over Australia in infrastructure lending in the region, given its own rapid development in recent years. Infrastructure lending is also at the heart of the new China-led Asian Infrastructure Investment Bank, or AIIB.

Australian aid, by comparison, has been criticised for focusing too heavily on governance projects instead of infrastructure investments. The Vanuatu government, for instance, has justified the construction of a China-funded wharf and roads by saying:

No donor was willing [to] help provide assistance on these projects although the economic benefits [are] huge.

A shift in Labor policy

Though not entirely a surprise, Shorten’s announcement does represent a change in Labor’s approach to aid. In February, Shadow Foreign Minister Penny Wong gave a speech outlining Labor’s future aid policy that focused on health, education, gender and climate change, but made no mention of infrastructure. Then, in July, she shifted tone, calling for greater emphasis on infrastructure in the Pacific.

The Coalition has also responded to rising Chinese influence in the region, committing to the construction of underseas internet cables to the Solomon Islands and Papua New Guinea to head off earlier bids by Chinese companies.

A dilapidated road in Vanua Levu, Fiji.
Matthew Dornan, Author provided

Australia has for many years effectively delegated infrastructure lending to multinational development banks: the World Bank and Asian Development Bank (ADB). Shorten is now flagging that under a Labor government, Australia will itself provide concessional loans for projects like this on a bilateral basis.




Read more:
For Pacific Island nations, rising sea levels are a bigger security concern than rising Chinese influence


None of this is to suggest that Australia has been completely absent from the infrastructure sector in the past, though its focus has traditionally been stronger in other areas, such as education and disability projects.

Australia has also invested heavily in “soft” infrastructure in the Pacific, or the technical and managerial expertise and institutions needed to manage new infrastructure projects, such as bridges, roads and ports.

Such support is important, even if outcomes are difficult to measure. Without managerial or technical expertise, as well as appropriate institutions, infrastructure projects often fall into disrepair. A stark example is the tragic account of the decline of a village in Papua New Guinea following the deterioration of its airstrip.

A new reliance on concessional loans

Australian aid has been used on occasion for infrastructure projects in the Pacific, mainly through grants to complement World Bank and ADB loans. But Australia has not been in the business of providing its own loans for infrastructure development. That much is clear. And in this respect, Shorten’s announcement is significant.

If Australia is determined to move more firmly into the infrastructure game to counter Chinese lending in the region, it makes sense to fund such projects with loans.

Grants are ill-suited for infrastructure projects for which there is a strong commercial case (such as the Solomon Islands internet cable). They distort market incentives and divert scarce aid resources away from other priorities.




Read more:
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There are clearly potential benefits for the region from a new infrastructure bank. The Pacific suffers from an enormous infrastructure deficit, particularly in remote rural areas. There is also considerable evidence that points to the importance of infrastructure for economic development and poverty alleviation.

China Exim Bank loans, though concessional, are generally not great value for money, with higher interest rates and shorter repayment periods than those offered by other lenders, including presumably any new Australian infrastructure bank.

A large number of unanswered questions

Having said that, we should put the hubris in Shorten’s speech to one side. It makes no sense to aspire, as he said, for Australia to become the Pacific’s “partner of choice” for infrastructure projects. We can only finance a small fraction of the region’s needs, and Pacific nations will have good reason to look to other infrastructure providers, such as China. We’re not that special.

Turning from rhetoric to policy, more detail is needed before we can determine conclusively whether such a bank would be positive for the region. Shorten’s speech only indicated that Labor would:

…actively facilitate concessional loans and financing for investment in these vital, nation-building projects through a government-backed infrastructure investment bank.

That leaves a lot of questions unanswered.

Should the new bank lend to governments or the private sector, or both? To what extent will projects be selected on the basis of rigorous benefit cost analysis? How will “bankable” projects be identified? Will loans be available to all Pacific island countries, including those currently in debt distress? Will concessional loans come at the expense of existing aid priorities, including Australian funding for “soft” infrastructure?

The answers to such questions are important. After all, it is Australia’s overall approach towards infrastructure that will ultimately drive long-term impacts.The Conversation

Matthew Dornan, Research Fellow, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Soft power goes hard: China’s economic interest in the Pacific comes with strings attached



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Red star rising: China has clear strategic designs on the Pacific Islands region.
Shutterstock

John Garrick, Charles Darwin University

China’s economic expansion into the Pacific Islands region raises critical questions for both the islands and Australia. What happens if infrastructure loans by Chinese banks and authorised state enterprises to vulnerable Pacific Island nations cannot be repaid? What consequences of default can be anticipated? Are there military dimensions?

The Pentagon has warned of the “potential military advantages” flowing from Chinese investments in other countries. China rejects this assertion. But if it does ever want access to foreign ports to support naval deployments in distant waters, it is laying the ground work to get it.

Belt and Road moves on the Pacific Islands

China’s grand plan to more closely link countries across Eurasia and the Indian Ocean through trade deals and infrastructure projects is known as the Silk Road Economic Belt and 21st Century Maritime Silk Road (“Belt and Road”). The plan includes Pacific pathways.



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Along with Australia and New Zealand, seven Pacific Islands nations officially recognise the People’s Republic of China (PRC). Another six recognise the Republic of China (Taiwan). China’s strategy is both to counter Taiwan’s influence and further its own interests. It wants Pacific nations to support it in international forums. Vanuatu, for example, was the first country to support China’s claims to island territory in the South China Sea disputed with the Philippines.



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The number of Chinese companies operating in the Pacific region has greatly increased since Xi Jinping came to power in 2012. Trade between China and Pacific Island nations has ballooned to more than A$10 billion.

While its influence is still not as great as that of the US or even Australia, China’s growing investments cover mines, hydro-electricity projects, fishing, timber, real estate and services. Over the past decade it has also lavished the region with $US1.8 billion ($A2.4 billion) in foreign aid, including $US175,000 worth of quad bikes for Cook Island parliamentarians.

The soft power of money

China argues Chinese investment is “tactful” – that it helps developing nations build needed infrastructure with “no-strings-attached”. It contrasts this to Western aid models that require governance measures and other performance indicators to be in place in relation to aid funding.

But the credit Chinese state banks are extending to impoverished developing nations also looks a lot like a form of “debt colonialism”. The fear is that China is using the loans as leverage to expand its military footprint.




Read more:
Why China’s ‘debt-book diplomacy’ in the Pacific shouldn’t ring alarm bells just yet


The Chinese loans typically offer a period of grace before an interest rate of 2-3% over 15-20 years is imposed. In Tonga, for example, China deferred loan repayments for a period after the International Monetary Fund warned it was at risk of debt distress. Repayments started again in 2018, reportedly at a higher rate than before.

Sri Lankan lessons

If Tonga and other Pacific Island nations default, China can enforce contractual conditions as a pretext to advancing wider strategic aims.

This is precisely what happened in Sri Lanka.

The Sri Lankan government had high hopes for the Hambantota Port Development Project, built by China Harbour Engineering Company, one of Beijing’s largest state-owned enterprises, and mostly funded by the state-owned Export–Import Bank of China. When the port failed to generate anticipated revenues, the government ended up owing China at least $US3 billion with no means to pay.

The Chinese then demanded a Chinese company take a dominant equity share in the port. The Sri Lankan government was also forced of hand over 15,000 acres of land around the port for 99 years.

Now China owns an Indian Ocean port strategically placed on one of the busiest shipping routes in the world.

Pacific interests

China has clear military interests in the Pacific. In 2014 Xi Jinping personally visited Fiji to sign memorandums of understanding including for greater military cooperation.

Australian intelligence sources allege China has been secretly negotiating to build a military base in Vanuatu. Both nations deny this. Such a base would give China a foothold for operations to coerce Australia and outflank the US and its base on Guam.

China’s “soft power” is being better resourced to influence foreign nations.
Its moves in the Pacific means the geopolitics of the region are hardening up.




Read more:
Fears about China’s influence are a rerun of attitudes to Japan 80 years ago


Globally, China’s rise has profound implications for international law and trade.

China naturally prefers bilateral relationships to leverage its power and advance its interests. It has steered away from multilateral dispute resolution, especially since the South China Sea arbitration, which ruled unanimously in favour of the Philippines. It has simply ignored the verdict and gone ahead turning the disputed rocky shoals into military outposts.

If China can ignore the legitimate claims of the Philippines, it can ignore the rights of the smaller and more fragile Pacific Island nations. Its actions flag its challenge to the international order Australia has long championed – one based on rule of law and political and economic liberalism.

Its influence is unlikely to promote democratic principles. Those holding those principles dear need to help the Pacific Island nations resist the lure of soft-power “incentives” promised with no strings attached.

There are definitely strings attached.The Conversation

John Garrick, Senior Lecturer, Business Law, Charles Darwin University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Why China’s ‘debt-book diplomacy’ in the Pacific shouldn’t ring alarm bells just yet


Michael O’Keefe, La Trobe University

Talk of Chinese “debt trap” diplomacy is nothing new, but a recent report by Harvard University researchers has resurrected long-held fears that China’s debt diplomacy poses a threat to Australian interests in the Pacific.

The crux of the report is that Pacific island states like Vanuatu and Tonga, as well as other nations in Southeast Asia, are at risk of undue influence from China due to unsustainable loans they’ve received for infrastructure projects.

The Australian Financial Review quoted the report as saying that while Papua New Guinea in particular has “historically been in Australia’s orbit”, it’s been “rapidly taking on Chinese loans it can’t afford to pay and offers a strategic location in addition to significant LNG and resource deposits” for China.

The story follows a well-trodden path from speculation to suspicion to alarm. Last month, another media report emerged saying China had approached Vanuatu about building a permanent military presence in the South Pacific – an assertion Vanuatu quickly shot down.




Read more:
Response to rumours of a Chinese military base in Vanuatu speaks volumes about Australian foreign policy


The latest report by the Harvard researchers comes with interesting context. A classified version of it was allegedly produced for the US Pacific Command last year, but the version leaked to the Australian Financial Review was written by graduate students, purportedly for the US State Department.

Interestingly, the students were supervised by Professor Graham Allison, who wrote the book Destined for War: Can America and China Escape Thucydides’s Trap?. The “Thucydides’s Trap” in the title relates to whether the US as a hegemonic power can accommodate China’s rise without resorting to war.

But this so-called trap does not necessarily point to historical inevitability. Therefore, a thorough analysis of the dynamics in the region is needed to fully understand China’s motivations, and what can be done to avoid conflict.

China has long been accused of using “chequebook diplomacy” to gain favour with nations around the world. The implication of the new “debt-book diplomacy” in the Harvard report is that China is using unsustainable loans to gain influence with Pacific island states that aren’t able to repay them.

Suffice it to say, this form of leveraging takes influence to a different level.

Historical fears

There is a long history of alarmism in Australia over the activities of strategic competitors in the Pacific. During the second world war, Japan was widely believed to have been poised to invade Australia from bases in the Pacific islands. This threat was later discredited, but the legacy of this fear of invasion from foreign powers lingers to this day.

During the height of the Cold War, Soviet fishing agreements with Pacific countries were also perceived to be a threat to Australian interests. These agreements were widely seen as strategic threats that could lead to military bases and/or spying arrangements, but nothing significant ever came from them.




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The constant in Australia’s geostrategic view of the Pacific is that the region is viewed simultaneously as both a buffer and a potential location of threats.

In the second world war and the Cold War, perceived encroachments by strategic competitors led to a “strategy of denial”. This involved creating a buffer through forward defence initiatives, such as the Pacific Patrol Boat Program, in which Australia donated 22 vessels to Pacific island countries at the same time the Soviets were negotiating their “fishing agreements”.

It might not be a coincidence this program has been reinvented with a new Pacific Maritime Security Program that will see 21 vessels delivered to Pacific island nations from 2018-2021.

Reassessing Australia’s role

Australia has also been the largest aid donor to the Pacific region, a position that has withstood recent increases in Chinese aid. Furthermore, this development assistance to the region was prioritised in the latest federal budget.

This is significant considering the relative sizes of the two economies and the relative ease with which China can allocate resources (without transparency and without regard to a domestic constituency scrutinising its actions). Presumably, China could very easily overtake Australia as the largest donor if it wanted to, and the fact that it has chosen not to is telling.

It’s true China is becoming more active in the region. Australia appears to be responding through development assistance, defence cooperation and emergency disaster response with its Pacific neighbours, even if there is speculation the US doesn’t believe it’s doing enough.

But if there is a genuine Thucydides’s Trap in the Pacific, what’s needed is a coherent analysis of China’s interests in the region, rather than a quick and almost reflexive interpretation of their intentions as aggressive. (One angle worth exploring its China’s ongoing conflict with Taiwan over diplomatic recognition for the self-ruling island, as six of Taiwan’s 19 supporters are in the Pacific.)

Of equal importance for Australia would be to understand the motivations of Pacific island nations. What’s missing is any examination of why Pacific states might be welcoming China with open arms, or even whether they are simply begrudgingly welcoming them.




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This opens a Pandora’s box. Could Australia’s (benign) neglect and perceptions of neo-colonialism actually be part of the problem? One that exists independently of China’s intentions?

This is certainly the case with [Australia’s sanctions against Fiji]from 2006-2014, which led to Fiji’s suspension from the Pacific Islands Forum and the creation of alternative forms of Pacific regional arrangements, such as the Pacific Islands Development Forum, which are supported by China.

The ConversationAustralia sees threats coming through the Pacific, and not from the Pacific, and this should be the foundation of its Pacific diplomacy. If Australia continues to reflexively see threats in China’s diplomatic moves in the Pacific, it may close off just the sort of creative diplomacy needed to escape a Thucydides’s Trap.

Michael O’Keefe, Senior Lecturer of International Relations, La Trobe University

This article was originally published on The Conversation. Read the original article.

Trump’s tour of Asia-Pacific is vital for the stability of the region



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From an Australian perspective, Donald’s Trump Asian tour could hardly be more important.
Reuters/Yuri Gripas

Tony Walker, La Trobe University

Not for several presidential cycles, and perhaps not since Richard Nixon’s visit to China to initial the Shanghai Communique in 1972, has a visit to Asia assumed such significance – and one that is potentially fraught.

US President Donald Trump leaves Washington late this week for a 13-day tour of Japan, South Korea, China, Vietnam for APEC, and the Philippines before returning home via Hawaii.

In these two weeks, Trump will be exposed to an Asia-Pacific – or Indo-Pacific – that is undergoing a wrenching transformation against a background of risks to a “long peace”. It is one that has survived more or less intact since the end of Korean War, leaving aside Vietnam.

From an Australian perspective, the Trump Asian tour could hardly be more important, given Canberra’s challenge of balancing its security and economic interests.

An American wrecking ball in the region is the last thing Australia needs, especially one that risks mishandling a North Korean nuclear threat to regional security.

In this regard, Trump’s every utterance, including his contributions to social media, will be scrutinised over the next two weeks by a nervous region.

What is striking about this latest period is the velocity of a geoeconomic shift that is challenging long-held assumptions about US authority in the regional power balance.

Seemingly, the Asia-Pacific region can no longer take for granted a US stabilising role.

As China’s power rises, so does US leverage ebb. This is not a zero-sum game.

The question is how pieces of a kaleidoscope will settle, if indeed they do.

Trump’s Asia tour will enable an assessment of the extent to which the US will remain a reliable regional security partner and a participant in various regional forums.

Former president Barack Obama talked about a “Pacific Century”, involving as it did a US “pivot” to the Asia-Pacific. Trump has not used such terminology.

Indeed, one of his first executive acts was to undo work that had been put into US participation in a region-wide trade initiative – the Trans Pacific Partnership (TPP) – aimed partly at countering China’s geoeconomic dominance.

This was a hasty, ill-considered decision that sent all the wrong signals about US commitment to building an Asia-Pacific trading and security architecture.

The other 11 TPP signatories, including Australia, are pressing on with attempts to finalise the trade liberalising protocol, but US absence significantly lessens its weight.

It may be unrealistic – given Trump’s bellicose “America First” pronouncements on trade – but Washington would do its regional credibility no harm if it reversed itself on TPP.

On a visit to Australia last month to launch the first volume of his memoir – Not For The Faint-Hearted – former prime minister Kevin Rudd warned of the risks of the end of a period of relative stability.

His warnings were based on a paper produced by the Asia Society Policy Institute – Preserving the Long Peace in Asia – of which he is president.

In a contribution to the East Asia Forum, Rudd asked the question: how can we save Asia’s “long peace” in light of North Korea’s attempts to develop a ballistic missile nuclear capability?

This has been a crisis long in the making, beginning with the Soviet training of North Korean nuclear scientists and engineers after the second world war, the north’s expulsion of International Atomic Energy Agency inspectors in 2002, and the subsequent series of ballistic and nuclear weapons tests.

The uncomfortable truth is that for the last quarter of a century, the international community has simply been kicking the can down the road. And now, at one minute to midnight, everyone is scrambling on what to do about it.

In Rudd’s view, the Asia-Pacific needs to develop a security understanding – like the Helsinki Accords in Europe – to deal with security challenges, including North Korea and, more broadly, territorial disputes that threaten regional stability.

His preferred option is to bolster the East Asia Summit (EAS) as a regional forum to promote peace and stability. He makes the valid point the EAS has, potentially, the regional heft to undertake such a stabilising role.

Disappointingly, Trump is not planning to stay in the Philippines an extra day for this year’s EAS gathering. It might have been time well spent.

Membership, including the ten nations of the Association of South East Asian Nations, plus China, South Korea, Japan, India, Australia, New Zealand, Russia and the US, means all the main Indo-Pacific players are participants.

This is how Rudd puts it:

The EAS has the mandate to expand its activities in the security domain. The Kuala Lumpur Declaration of 2005 is clear about this. Furthermore, members of the EAS have all signed the Treaty of Amity and Co-operation, which commits partners to peaceful dispute resolution. Moreover, the EAS uniquely has all necessary players around the table.

What is required in all of this is American leadership, but as things stand there is little sign of Washington possessing an overarching vision of where it might take the region in the next stage as China continues to expand its power and influence.

In this regard it is hard to disagree with a Lowy Institute paper – East Asia Policy under Trump. It identified a serious case of drift in American engagement with the region under a president whose knowledge of – and interest in – the Asia-Pacific appears limited at best.

US policy on East Asia is thus on autopilot, which presents two distinct risks. First that of a crisis, whether created by the president or events.

The US faces challenges to its economic leadership from Beijing’s Belt and Road Initiative, a program of massive infrastructure investment that will enmesh the economies of China and its Asian neighbours, challenges from Chinese attempts to shape regional institutions to its advantage, and to shape a narrative of the region’s future that puts Beijing at its centre.

It also faces challenges from an increasingly capable Chinese military. All this in a region that is becoming increasingly illiberal – and doubtful of US staying power.

This is a fairly bleak assessment of a US ability to engage the Asia-Pacific constructively in this latest period. In fairness to Trump, he remains on a steep learning curve. How all this will play out is anyone’s guess.

What is the case is there is no more important stop of Trump’s itinerary than his visit this coming week to China to engage the newly reinforced ruler Xi Jinping.

The China talks, in the lead-up to APEC in Vietnam, are the linchpin of Trump’s Asian foray. The two leaders exchanged a visit in April this year when Xi visited Trump in Mar-a-Lago.

On that occasion, a novice American president was feeling out his main rival for global leadership. This was a getting-to-know-you opportunity.

However, on this occasion more will be expected of a Trump-Xi encounter on issues like North Korea, concerns over China’s mercantilist behaviour, and its assertiveness in the South China and East China Seas.

While it would be unrealistic to expect a “grand bargain” to emerge between the leaders of a new bipolar world, what is needed is some clear guidance about US priorities amid the confusion that has accompanied Trump’s nine months in the White House.

Laying out some sort of vision for US engagement in the region should be a minimum requirement at a time of considerable uncertainty.

Elizabeth Economy of the Council on Foreign Relations put it this way in a CFR blogpost:

The president can allay regional fears that the United States is commitment-phobic, by reinforcing at each step Washington’s allies and partners are the cornerstone of US engagement in the region. Reiterating the US commitment to freedom of navigation, free trade, and political freedoms will also reassure regional actors that it still makes sense to buy into a regional order underpinned by a US alliance system. Of course, this trip is only the first step in putting the United States on firmer ground in Asia, after many months of confusing signaling and disruptive initiatives.

The ConversationExpectations for Trump’s engagement with the region may be low, but the same could not be said for the stakes at a time of considerable uncertainty and risk.

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

This article was originally published on The Conversation. Read the original article.

Australian Politics: 29 July 2013


The ALP asylum seeker policy appears to be a winner with Australian voters overall, with Kevin Rudd now being favored over Tony Abbott to deal with asylum seekers. However, the Pacific region isn’t impressed.

For more visit:
http://www.theaustralian.com.au/national-affairs/immigration/arrogant-png-solution-a-shock-to-pacific-nations-says-fiji/story-fn9hm1gu-1226687594296