Vila Times

Australia will compete with China to ensure the Pacific states retain their sovereignty: Bishop

Australia will compete with China to ensure the Pacific states retain their sovereignty: Bishop
Australia will compete with China to ensure the Pacific states retain their sovereignty: Bishop
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Foreign Minister Julie Bishop said the Turnbull government will compete with China’s infrastructure development spree in Australia’s neighbourhood to help ensure small nations are not saddled with debt that threatens their sovereignty.

Making some of the frankest remarks by an Australian politician about the swift expansion of Chinese construction of roads, bridges, ports, airports and buildings in the Pacific region, Ms Bishop said Australia needed to ensure countries in the region had choices and were not stuck with opaque development offers, Sydney Morning Herald reports.

Ms Bishop, in an interview with Fairfax Media about China’s signature infrastructure-building Belt and Road Initiative, said Australia was concerned about the economic viability of small Pacific nations and did not want unsustainable debt burdens imposed on them.

“They are sovereign nations,” she said.

“We want to ensure that they retain their sovereignty, that they have sustainable economies and that they are not trapped into unsustainable debt outcomes. The trap can then be a debt-for-equity swap and they have lost their sovereignty.”

Asked specifically whether Australia should be worried about countries in the neighbourhood being vulnerable to a loss of sovereignty to China, Ms Bishop said: “We’re concerned that the consequences of entering into some of these financing arrangements will be detrimental to their long-term sovereignty.”

“That would be the case with any country,” she added.

“Russia comes and plays in the Pacific every now and again … We want to be the natural partner of choice. We recognise we’re not the only partner, but we would like the Pacific to see Australia as providing them with the kind of support that maintains their sovereignty, maintains their economic stability and doesn’t become an unsustainable debt burden.

“That’s what Australia aims to provide and we encourage others to do the same, including China.”

The Belt and Road Initiative is one of Chinese President Xi Jinping’s signature policies – a massive infrastructure-building program valued by some estimates at more than $1 trillion to develop trade and strategic corridors linking China to much of the world.

Papua New Guinea has some significant BRI projects completed or underway. Vanuatu, Tonga and Samoa have all had major projects built by Chinese state-owned companies and paid for by so-called soft loans from Beijing, though these have not been badged as BRI.

The trap can then be a debt-for-equity swap and they have lost their sovereignty.

So-called debt-for-equity swaps by China have been seen elsewhere in the world, notably in Sri Lanka where a large port was handed over to the control of a Chinese company for 99 years after the Sri Lankan government was unable to meet debt repayments. Such swaps fuel fears that China is building a network of strategic assets that could in future be converted to military facilities.

Ms Bishop described the BRI as a vehicle for China to further its strategic interests, though she said there would be times when Australia’s interests in particular projects aligned with China’s and the two countries could work together.

She said a hypothetical highway in Papua New Guinea built as an Australia-China partnership must not be “a highway to nowhere but a highway to somewhere useful”.

“Where BRI projects are in our sphere of influence, we want to ensure that they meet appropriate standards … But as I keep saying, this is China’s vehicle, so China will also be determining what it believes is in its strategic interests as China looks for greater political and strategic influence in the region.”

The neighbourhood needed alternatives to BRI both because of the huge infrastructure requirements and so that countries didn’t feel they had no option but to sign up to a Chinese project.

“What we can do is offer alternative options for countries beyond BRI. BRI is not the only source of infrastructure financing available,” Ms Bishop said.

Asked whether Australian-led alternatives would be competitive or complementary to what China was doing, she said: “They are both. They are complementary in the sense that we recognise that there’s a need for infrastructure investment in the Pacific and we’re encouraging it, competitive in the sense that we want people to have options – they don’t have to only accept one outcome.

“What we don’t want is for countries to have no other options … And Australia should take a very proactive part in that.”

She said she had discussed with British Foreign Secretary Boris Johnson the possibility of co-operating on projects but also advising small nations on “what would be an appropriate sustainable investment for them”.