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Which country gives the most aid to Pacific Island nations? The answer might surprise you - China power
8:27 pm GMT+12, 08/08/2018, Australia

By Pacific affairs reporter Stephen Dziedzic
 
There are plenty of heated arguments and unanswered questions about aid in the Pacific, especially when it comes to China's role.
 
Now foreign policy think-tank the Lowy Institute has got some answers. It's crunched the numbers and put together an interactive map which charts a comprehensive ebb and flow of aid dollars around the vast region up until 2016, and includes the limited available data for 2017 and 2018.
 
It paints a fascinating picture of where aid money is going — and the way development assistance is changing.
 
Some of the findings might surprise you.
 
Big brother Australia?
 
When it comes to aid in the Pacific, Australia comes first.
 
Between 2011 to 2017, Australian governments poured at least US$6.5 billion into aid projects across the region. The final figure will likely be even larger because Lowy is still gathering data for 2017.
 
That dwarfs the contributions of every other country.
 
The second and third biggest aid donors in total over the last few years have been China and New Zealand.
 
Both those nations gave roughly U$S1.2 billion to Pacific Island nations over the same period — roughly one sixth the amount Australia donated.
 
It's a striking statistic.
 
Jonathan Pryke from the Lowy Institute said it proves Australian aid is "critically important" to the Pacific.
 
“We are, by a long margin, the largest partner to the region,” he said.
 
“Our foreign aid equates to roughly about 3 per cent of regional GDP.
 
“And our engagement is stitched into the fabric of these countries, in governance, in health, in education, in humanitarian support. You name it, we're probably involved in it."
 
Australian aid money also flows to every nation in the Pacific, although unsurprisingly our larger neighbours get the lion's share.
 
For example in 2016 Papua New Guinea (population 8 million) got the largest amount of Australian aid, at US$376 million.
 
Tiny Palau (population 20,000) got $US1.9 million).
 
But what about China in the Pacific? The answer is complex
 
China's rise in the Pacific has been a red hot debating point in Canberra.
 
In January, Australia's International Development Minister Concetta Fierravanti-Wells stirred controversy when she accused Beijing of building "roads to nowhere" in Pacific Island nations, saddling them with unsustainable debt.
 
Australian officials have been watching China's Pacific moves warily, while Chinese officials have boasted that more and more nations in the region are turning to them for support.
 
But the Lowy Map paints a more complex picture.
 
China not only lags well behind Australia, but at times it lags behind other countries too.
 
For example the Lowy Institute estimates in 2016 it was actually only the fifth largest aid donor in the Pacific.
 
New Zealand and Japan — yes, Japan — actually spent more.
 
So why is everyone talking about China?

 
One reason is that China invests in projects which draw plenty of eyeballs.
 
“China has stood out so much because they focus on really select, high status infrastructure projects,” Pryke said.
 
“These are very large projects that really stand out.”
 
How large? Well, here's another startling statistic — on average, Chinese aid projects are about ten times more expensive than Australian projects.
 
And an ambitious Chinese plan to construct, for example, a mammoth government office building in Tonga, or a sprawling new court complex in Samoa, will always generate more attention than dozens of small scale health and education initiatives rolled out by Australia.
 
'A nice piece of leverage China can hold over the Pacific'
 
Does that mean China is only a paper tiger in the Pacific? Not really.
 
China might not spend vast sums in the Pacific, but it's still been a disruptive force.
 
Lowy estimates that 70 per cent of Chinese aid money comes in as cheap loans which are used to fund the big projects Beijing favours.
 
The Australian Government worries these countries will get caught in “debt traps” which will be exploited by China as it scours the region, looking for new assets which could be converted to military bases.
 
Pryke said he doesn't believe any Pacific leaders have got in over their heads but he said there are still risks.
 
“This lending helps solidify ties with China because these countries do have to pay back a lot of these loans, so it's a nice piece of economic leverage China can hold over the Pacific.”
 
And don't expect that China will always lag on the raw numbers.
 
In the last few years it has made some big ticket promises in the Pacific which could see it rocket up the charts.
 
For example it's pledged an eye watering US$3.5 billion dollars to build a new road network in Papua New Guinea.
 
That money hasn't yet started to flow, so it's not captured by the Lowy Map.
 
But if projects like this get off the ground then Beijing may quickly close the gap with Canberra.

Raining cash? Not really, as total aid to Pacific declines
 
You might think that with the competition for hearts and minds in the Pacific heating up, there would be a big increase in the amount of aid actually being sent there.
 
But you would be wrong.
 
Lowy has found that aid to the region is actually dwindling, not sky-rocketing.
 
In 2011, donor nations gave US$2.36 billion in foreign aid, and in 2016 total aid to the Pacific was US$1.9 billion.
 
Australia may be the most generous donor, but has become less generous over time — the total contribution fell from US$1.25 billion in 2011 to US$800 million in 2016.
 
And some other countries which used to make substantial investments have also cut back.
 
For example, Lowy estimates that in 2011 the United States gave the Pacific aid worth US$233 million. In 2016 that figure it was only US$66 million.
 
In 2011, the European Union gave US$105 million. In 2016 it gave US$74 million.
 
“They are all stepping back,” Pryke said.
 
And he points out that some of the countries which have been tightening their purse strings are the same nations urging Australia to muscle up to Beijing in the Pacific.
 
“If this is a new hotly contested geostrategic space, well, it's time for countries to start properly re-engaging and not just talking about it,” Pryke said.

SOURCE: ABC PACIFIC BEAT/PACNEWS


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