COVER REPORT: Wikileaks reveal China?s plan for the islands Pour US$375m as soft loans
Susan Merrell The revelations in the recently-published Wikileaks documents on New Zealand fall well short of being sensational. Even the most widely reported snippets regarding the strengthening of ties between the United States and New Zealand?especially intelligence sharing?Hillary Clinton had leaked it herself last year. Other information such as damage to Pacific relations caused by the ?Moti? Affair is well documented. Yet there were some cables that foreshadowed interesting geopolitics. One cable dated July 12, 2006 on Chinese talks on Pacific Islands issues was written after a visit to New Zealand of the Assistant Foreign Affairs Minister of the People?s Republic of China,(PRC) He Yafei. His country?s intentions towards the Pacific Islands nations included committing $US375,000,000 in ?soft loans?, ?whether or not they have diplomatic relations with China?. But the Chinese assistant foreign minister took a side swipe at Taiwan, warning of ?the ?dangers of Taiwan-dollar diplomacy?. He alleged that Taiwanese bribery in the Solomon Islands was a major reason behind the recent unrest?unrest that involved rioting and burning of Chinese businesses in Honiara after the election of Snyder Rini as Prime Minister. It was widely alleged that Chinese/Taiwanese bribes had secured him the position of PM. He voiced his expectations that New Zealand ?would tell the (Solomon Islands) as you do to others (my emphasis)? that it was in their long-term interest to develop relations with the PRC (China) rather than the province of Taiwan.? New Zealand responded that sovereign nations would make their own diplomatic decisions but New Zealand believed that Taiwan/PRC rivalry would continue to complicate issues in the Pacific. The PRC probably came as close as ever to obtaining their goal in the Solomon Islands in 2007?without the aid of New Zealand. With only the Solomon Islands having diplomatic ties with Taiwan amongst the Melanesian Spearhead Group, by July 2006, there were indications?not mentioned in the cable?that the government was reconsidering its options. Not least of these was the appointment of Julian Moti as Attorney-General. Moti was anti-Australian and he?d openly expressed reservations about the terms of the Australian-led peacekeeping force?the Regional Assistance Mission to the Solomon Islands (RAMSI)?and the new Prime Minister Manasseh Sogavare was simpatco. Moti counselled Sogavare to consider alternative political paths and allegiances even prior to his government?s appointment. Sogavare, who was becoming increasingly concerned by the strings attached to Australian aid and the threat to national sovereignty that this posed, was listening. Sogavare was concerned about Australian interference in the political process, which would eventually see the nation?s Australian police chief expelled and an Australian High Commissioner declared persona non grata during his prime ministership. At the behest of Sogavare in May 2006, Moti travelled to Melbourne for high-level, secret talks with senior members of the People?s Republic of China. His brief was to explore, amongst other things, the Solomon Islands? government?s proposed change of recognition policy on the ?two Chinas?, according to an affidavit sworn by Moti. What transpired at that meeting was hinted at by Patteson Oti, then Solomon Islands? Minister for Foreign Affairs at the United Nations General Assembly in New York in October 2007. In a prepared speech, he expressed concern with the lack of efficacy, constitutional legality and the developing motivations behind RAMSI. He was foreshadowing a radical change of policy.
Alarm bells Oti asserted the right of Solomon Islanders to determine the terms on which the occupation of a visiting contingent would rest. He added: ?Howsoever dressed and rationalised, intervention and occupation allow ?assisting? nations to spend and earn substantial revenue for their supporting businesses and industries.? ?The government was determined not to become ??captive to the fortunes which justify our perpetual retention under siege, ? he stated. These provocative words rang alarm bells amongst those with a vested interest in the status quo. In late 2007, the Sogavare government was ousted after a vote of no confidence?a victory for an Australian government who had moved heaven and earth to destabilise that government. One can only speculate what the political outcome would have been had the Sogavare government not been toppled in late 2007. Yet, in spite of the diplomatic battle for the Solomon Islands, resplendent with its dirty tricks and contrary to the leaked cables, Rodger Baker, Stratfor Global Intelligence?s Asia-Pacific analyst, believes the wooing of Pacific nations goes far deeper than just China/Taiwanese rivalry?it?s also strategic. The free passage of shipping in Pacific waters is important for both China and the US. China?s navy is no match for the US bluewater fleet, so tactically its benign presence in the countries of the Pacific is a safeguard against an-all-out US blockage. Until recently, believing the Pacific was securely in the western fold, the US has neglected the region, deputising Australia to look after its interests. Clinton?s recent visit to the region is a strong indication that this has changed, as indeed was the leaked cable?s revelation of a commitment to sharing of intelligence between New Zealand and the US.
Chinese largesse Chinese aid, loans and investment in the Pacific are refreshingly unconditional when compared to the political strings attached to aid from Australia and New Zealand. China was first to recognise the independent government of Timor Leste and it has been pouring aid into that country and Fiji. It also built the headquarters of the Melanesian Spearhead Group and has made significant investments in the Pacific, the largest being the Ramu Nickel mine in Papua New Guinea, that is 92% owned by the Chinese government. The PNG Prime Minister, Sir Michael Somare, returned triumphant from Beijing in 2004 with a signed deal for this nickel mine, the largest Chinese investment project in PNG to that date. The nickel mine is 75 miles south west of Madang with a pipeline carrying ore to Basamuk Bay on the Rai Coast in Madang province. It will also carry waste tailings, which it will dump in the ocean. It is not yet operational and there is a court injunction preventing its operation, pending the outcome of the court case by landowners that seek to stop the dumping of tailings. While the mine is potentially an economic bonanza, it also has the potential to be a social and environmental powder keg. And while Chinese investment carries no political strings, there are usually economic ones, such as the 10-year tax-free status the mine enjoys. What?s more, as the Wikileaked New Zealand diplomatic cable noted, it is usual for the Chinese to supply their own labour for the building and operating of infrastructure projects. This often extends to the import of foodstuff and other supplies, which leaves little opportunity for enterprising locals; thus triggering resentment. With Chinese nationals arriving to work in the mine in great numbers, some illegally and with no English or Tok Pisin skills, integration and cultural harmony is virtually non-existent. Added to this, the Papua New Guinea workers employed at the mine tell of apartheid where Chinese workers enjoy better working conditions and wages. It?s a recipe for unrest that has descended into violence. Responding to questions on Chinese investment and other issues surrounding the Ramu Nickel mine, Somare in an interview in late 2009, told the interviewer that the project needed Chinese workers because they had strong work ethics that were lacking in Papua New Guineans. He dismissed the anti-Chinese sentiment and violence with the response: ?People like throwing stones.? There are also individual landowner issues that arise surrounding the new industry?PNG land is not state-owned?like the aforementioned pending court case involving the dumping of tailings in the ocean, off the Rai coast. It is feared the ensuing pollution has the potential to dwarf the environmental catastrophe that occurred at the Ok Tedi mine when a tailings dam broke. Nevertheless, Somare made his position very clear when he told an interviewer that: ?No country can refuse investment such as Ramu Nickel, especially PNG.? With part of the risk assessment process for a mining company, or any extractive industry, being ease of operation, the PNG government is mindful that if PNG is seen as too difficult a country in which to do business, mining companies will abandon the project and go elsewhere?and at this juncture that might not only affect Ramu Nickel but also jeopardise the nascent LNG project as well?a project which is widely touted as the economic saviour of PNG. This could be why a controversial legislation was rushed through parliament that protects resource companies from any challenges of approved projects. It also protects these companies from litigation over environmental damage, labour abuse or landowner issues. It could also be why plaintiffs (landowners) opposing the deep-sea dumping of tailings by Ramu Nickel went missing in questionable circumstances only to turn up at the last minute, having had a complete change of heart. The presiding judge described the circumstances as ?suspicious?. It would be convenient for the government if this litigation would go away. The accusation that interference with the original Ramu Nickel plaintiffs was orchestrated by Port Moresby lawyer, Peter Pena, who was identified as being close to the government and acting on its behalf clandestinely, has had a considerable airing in the PNG press. Has this assertion any merit? Is Pena running interference for the government? The question remains moot as Pena has neither confirmed nor denied it?but then neither have his accusers presented any tangible evidence to back up their series of assertions. However, there is no evidence linking Pena to Ramu or mines minister John Pundari. Yet one can?t help but wonder that when Pena?s accuser is a family member, then perhaps she has some insider knowledge. But, be that as it may, two staff members of the Chinese government owned company that owns Ramu are awaiting trial on contempt of court charges for harassment and intimidation of the second lot of plaintiffs. When the stakes are this high, the game gets dirty. And the stakes are set to get even higher with some conjecture that the Ramu Nickel litigation is not about potential environmental damage at all but a ploy by US interests to thwart this large Chinese investment in PNG by encouraging and funding the landowners, some NGOs and their lawyers in vexatious litigation. Earlier this year, Pundari was accused of ordering an audit on the accounts of the landowners and their lawyers to trace their source of funding. There was an outcry and the minister vehemently denied this was ever his intention. Deep-sea tailings disposal entail deep-sea moorings for Chinese ships?not a welcome scenario for the US in the Pacific.
Chinese as leverage Apropos to Chinese investment in PNG, Somare denied in an interview in late 2009, that he was using Chinese investment to counter Australian influence in PNG, although Bart Philemon, one-time treasurer in Somare?s government and now on the opposition benches, stated to Al-Jazeera the exact opposite. He said that Chinese investment was a bargaining chip to play against other aid donors, particularly Australia. And so the plot thickens. China/Pacific relations are no simple matter, they contain but are not limited to geopolitical, socio-economic and environmental issues. So as interesting reading as the Wikileaked cables might be on China in the Pacific, there are legions that they just don?t contain.
HIG Price at posting:
42.0¢ Sentiment: LT Buy Disclosure: Held
