West competes with China over Pacific influence

By Al Mayadeen English
Source: Al Mayadeen English + Agencies
30 Oct 2022 22:24
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Study by Lowy Institute suggests that the competition between the West and China over influence regarding islands in the Pacific has grown after COVID

President Biden with Pacific Island leaders in Washington on September 29, 2022 (NYT)

Regional powers in the Pacific have pumped record amounts into the region's islands during the COVID-19 pandemic to help them cope with the economic fallout as the competition for influence between China and the West intensifies.

According to an annual study published by the Australian Lowy Institute, "financial assistance allocated to the Pacific Islands increased by 47% in 2020 compared to the previous year."

"There has been a massive increase in loans," said senior researcher Alexander Dayant, stating that the total funding rose to $4.2 billion, a record high roughly equivalent to Fiji's gross domestic product.

Dayant added that, "a large part of the new spending was driven by the crisis as tourism and trade declined due to the islands closing their borders to avoid the outbreak of the coronavirus," noting that, "The Pacific region faced enormous support needs and suffered a major economic downturn."

Overall, Pacific island economies shrank by 6.4% in 2020, double the global average, according to figures from the International Monetary Fund.

One of the institutions whose aid has also increased significantly is the Asian Development Bank, which is led by Japan and the United States. A significant part of the assistance also came in the form of direct loans, which eased short-term financial pressures, but problems may reappear in the long term.

In contrast, China's spending in the Pacific declined in 2020, despite Beijing stepping up efforts to strengthen ties over the past decade through large infrastructure projects.

"A decreasing number of countries in the Pacific are getting Chinese loans, only Papua New Guinea and Vanuatu have received new loans," Dayant said.

However, the researcher noted that "two Pacific countries severed diplomatic relations with Taiwan in 2019 in favor of Beijing, and received a boost from Chinese financing," noting that China "invests a lot in the Solomon Islands and Kiribati."

Beijing's relations with the Solomon Islands have increased significantly since 2020, with Prime Minister Manasseh Sogavare increasingly looking forward to partnering with China, as this year Sogavare concluded a historic agreement with Beijing.

It's noteworthy that the US, UK and Australia had formed their AUKUS alliance amid China concerns. The alliance was based on enhancing Australia's nuclear capabilities through advanced technology and nuclear submarines in order to increase the alliance's strength in the South Pacific as China grows more influential in its region.

Solomon Islands PM Manasseh Sogavare had called late in March international criticism of the country's security discussions with China "insulting" and those who leaked the draft security deal "lunatics".

In 2019, the Solomon Islands transferred diplomatic ties from Taiwan to Beijing, which fueled unrest and disturbances in the capital, Honiara, in November.