Thu, Sep 06, 2012 - Page 9 News List

Asia-Pacific micro-nations cash in on US-China aid rivalry

Small countries like Tonga are enjoying a windfall of donations that some say stems from competition to carve out spheres of influence

By JAMES GRUBEL  /  Reuters, CANBERRA

Illustration: Mountain People

Small South Pacific island nations are cashing in on the new aid rivalry between China and the US as both powers vie to boost their influence in a vast region of mostly micro-nations.

The recent visit to the tiny Cook Islands by US Secretary of State Hillary Rodham Clinton highlighted the growing significance of the region as the US continues its “pivot” to the Asia-Pacific region, analysts said.

The Clinton visit also underlined a growing Chinese influence as it steps up its aid programs to enhance its standing among the smaller nations.

“It is very significant. It just confirms that the Pacific is becoming of [an area] greater importance, not less,” said Stephen Howes, professor of development policy at the Australian National University.

China’s aid program is difficult to measure, although a report by the Lowy Institute think tank last year found China’s aid was worth about US$200 million a year, with a heavy reliance on soft loans to finance public works.

In recent years, China’s aid and soft loans have helped build sports stadiums in Papua New Guinea and the Cook Islands, a swimming complex in Samoa, a new port in Tonga, as well as extensions to the Royal Palace in the Tongan capital, Nuku’alofa.

China has also funded a new police station and court buildings in the Cook Islands’ capital, Raratonga, and boosted aid to Fiji as Western nations shunned its military government after the 2006 military coup.

During her visit to the Cook Islands, Clinton announced an extra US$32 million in US aid programs for the Pacific, ensuring the US maintains its role as the second-largest aid donor to the region behind Australia.

Clinton also said the US could work with China in the Pacific and played down the China-US rivalry.

The US spends about US$300 million a year on Pacific nations, including about US$100 million a year on military assistance, compared to about US$1.2 billion a year from Australia.

China says it is merely seeking to help the poor and remote nations in the region develop.

“We are willing to make a contribution, along with all other parties, to help with sustainable development in the South Pacific. We are looking for cooperation, not competition,” Chinese Foreign Ministry spokesman Hong Lei (洪磊) told reporters.

In the past, China’s aid flows into the Pacific have been designed to head off potential spending from Taiwan and to try to prevent tiny nations giving official recognition to Taiwan, which China considers a breakaway province that will eventually be reunited with the mainland — and by force if necessary.

However, in the past three years, China and Taiwan have agreed to stop trying to poach Pacific nations to their side.

“At the moment, it is more to do with the United States than it is with Taiwan,” Lowy Institute South Pacific analyst Annemaree O’Keeffe said.

She said China’s aid programs had undergone significant changes as it recognized deeper problems with its traditional “monument projects,” where China might construct a major building, but then leave a country struggling to maintain it.

“It can work against them. You can have a wonderful sports stadium, but if it starts to fall down, you’ll remember that the Chinese built it,” O’Keeffe said.

She said China had begun to work more closely with other countries and the Organisation for Economic Cooperation and Development on the effectiveness of its aid programs.

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