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

Red star rising: China has clear strategic designs on the Pacific Islands region.
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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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The Belt and Road Initiative: China’s vision for globalisation, Beijing-style

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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.

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

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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.

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

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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.

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.

INDONESIA: SHARIA-BASED LAWS CREEP INTO HALF OF PROVINCES

Islamic-based legislation may be a key issue in this year’s elections.

DUBLIN, February 2 (Compass Direct News) – As candidates hit the campaign trail in preparation for Indonesia’s presidential election in July, rights groups have voiced strong opposition to an increasing number of sharia-inspired laws introduced by local governments. They say the laws discriminate against religious minorities and violate Indonesia’s policy of Pancasila, or “unity in diversity.”

With legislative elections coming in April and President Susilo Bambang Yudhoyono likely to form a coalition with several Islamic parties for the July presidential election, such laws could become a key campaign issue.

Although Aceh is the only province completely governed by sharia (Islamic law), more than 50 regencies in 16 of 32 provinces throughout Indonesia have passed laws influenced by sharia. These laws became possible following the enactment of the Regional Autonomy Law in 2000.

The form of these laws varies widely. Legislation in Padang, West Sumatra, requires both Muslim and non-Muslim women to wear headscarves, while a law in Tangerang allows women found “loitering” alone on the street after 10 p.m. to be arrested and charged with prostitution. Other laws include stipulations for Quran literacy among schoolchildren and severe punishment for adultery, alcoholism and gambling.

“Generally the legal system regulates and guarantees religious freedom of Indonesian citizens … but in reality, discrimination prevails,” a lawyer from the legal firm Eleonora and Partners told Compass.

Some regencies have adopted sharia in a way that further marginalizes minority groups, according to Syafi’I Anwar, executive director of the International Center for Islam and Pluralism.

“For instance, the Padang administration issued a law requiring all schoolgirls, regardless of their religion, to wear the headscarf,” he told the International Herald Tribune. This is unacceptable because it is not in line with the pluralism that the constitution recognizes.”

Freedom of religion is guaranteed by Article 29 of the country’s constitution, he added. “Therefore the government must assist all religious communities to practice their beliefs as freely as possible and take actions against those who violate that right.”

While Indonesia’s largest Muslim group, Nahdlatul Ulama (NU), has publicly denounced the implementation of such laws, other groups actively support them. The Committee for the Implementation and Maintenance of Islamic Law (KPPSI) has held several congresses in Makassar, South Sulawesi with the goal of passing sharia-inspired legislation and obtaining special autonomy for the province, similar to that in Aceh.

KPPSI has also encouraged members to vote for politicians who share their goals, according to local news agency Komintra.

 

‘Threatening’ Decision

In February of last year, Home Affairs Minister Mardiyanto declared that the government saw no need to nullify some 600 sharia-inspired laws passed by local governments. His announcement came after a group of lawyers in June 2007 urged the government to address laws that discriminated against non-Muslims.

Moderates were alarmed at Mardiyanto’s decision, fearing it would encourage other jurisdictions to pass similar laws. Last August, Dr. Mohammad Mahfud, newly re-elected as head of the Constitutional Court, slammed regional administrations for enacting sharia-inspired laws.

“[These] laws are not constitutionally or legally correct because, territorially and ideologically, they threaten our national integrity,” he told top military officers attending a training program on human rights, according to The Jakarta Post.

Mahfud contended that if Indonesia allowed sharia-based laws, “then Bali can pass a Hindu bylaw, or North Sulawesi can have a Christian ordinance. If each area fights for a religious-based ordinance, then we face a national integration problem.” According to Mahfud, sharia-based laws would promote religious intolerance and leave minority religious groups without adequate legal protection.

Under the 2000 Regional Autonomy Law, the central government has the power to block provincial laws but showed little willingness to do so until recently when, bowing to pressure from advocacy groups, it pledged to review 37 sharia-based ordinances deemed discriminatory and at odds with the constitution.

Such reviews are politically sensitive and must be done on sound legal grounds, according to Ridarson Galingging, a law lecturer in Jakarta.

“Advocates of sharia-based laws will stress the divine origin of sharia and resist challenges [that are] based on constitutional or human rights limits,” he told The Jakarta Post. “They maintain that sharia is authorized directly by God, and political opposition is viewed as apostasy or blasphemy.”

 

Empowering Vigilantes

A national, sharia-inspired bill regulating images or actions deemed pornographic sparked outrage when presented for a final vote in October last year. One fifth of the parliamentarians present walked out in protest, leaving the remainder to vote in favor of the legislation.

The bill provided for up to 15 years of prison and a maximum fine of US$1.5 million for offenders.

“This law will only empower vigilante groups like the Islamic Defender’s Front (FPI),” Eva Sundari, a member of the Democratic Party of Struggle (PDIP) told reporters. FPI is widely-regarded as a self-appointed moral vigilante group, often raiding bars and nightclubs, but also responsible for multiple attacks on churches.

“Many of the members are preparing for elections and looking for support among the Islamic community,” she added. “Now they can point to this law as evidence that they support Islamic values.”

Although several Golkar Party politicians support sharia-based laws, senior Golkar Party member Theo Sambuaga has criticized politicians for endorsing such legislation to win support from Muslim voters. Several major parties openly back sharia laws, including the Prosperous Justice Party (PKS), the United Development Party, and the Crescent Star party.

 

Key Election Issue

Sharia-based laws may become an even hotter election issue this year as a change to the voting system means more weight will be given to provincial candidates.

Political analysts believe Yudhoyono must form a coalition with most if not all of the country’s Islamic parties in order to win a majority vote against the Golkar party, allied for this election with former president Megawati Sukarnoputri’s PDIP.

The coalition Yudhoyono could form, however, likely would come with strings attached. As Elizabeth Kendal of the World Evangelical Alliance wrote in September 2008, “The more the president needs the Islamists, the more they can demand of him.”

In 2004, Yudhoyono partnered with the NU-sponsored National Awakening Party, the National Mandate Party (founded by the Islamic purist organization Muhammadiyah) and the PKS to achieve his majority vote. Analysts predict PKS will again be a key player in this election.

Few realize, however, that PKS draws its ideology from the Muslim Brotherhood, a group formed in Egypt in 1928 with a firm belief in Islamic world dominance. Crushed by the Egyptian government in the 1960s, members of the Brotherhood fled to Saudi Arabia, where they taught in the nation’s universities – influencing the future founders of Al Qaeda, Hamas, and Sudan’s National Islamic Front.

The Brotherhood took root at a university in Bandung, West Java in the 1970s in the form of Tarbiyah, a secretive student movement that eventually morphed into the Justice Party (JP) in 1998. Winning few votes, JP allied itself with a second party to form the PKS prior to the 2004 elections.

Since then, PKS has gained widespread support and a solid reputation for integrity and commitment to Islamic values. Simultaneously, however, PKS leaders are vocal supporters of Abu Bakar Ba’asyir, leader of the terrorist group Jemaah Islamiyah (JI).

Sadanand Dhume, writing in the Far Eastern Economic Review, says the two organizations have much in common. In its founding manifesto, PKS calls for the creation of an Islamic caliphate. Unlike JI, however, “the party can use its position in Parliament and its … network of cadres to advance the same goals incrementally, one victory at a time.”  

Report from Compass Direct News