Australia to provide financial aid to Pacific nations in competition with China

Australian foreign minister warns against falling into the trap of a debt-for-equity swap for island nations

Australian foreign minister Julie Bishop (left) and Hillary Clinton (Photo by FB Julie Bishop)

Australian foreign minister Julie Bishop (left) and Hillary Clinton (Photo by FB Julie Bishop)

TAIPEI (Taiwan News) – Australia will seek to assist its neighbor island nations in infrastructure development in a bid to counteract China’s “Belt and Road Initiative” which could eventually jeopardize the sovereignty of these countries, reports said Tuesday.

Australian Foreign Minister Julie Bishop, in unusually blunt remarks, told Fairfax Media in an interview that Chinese construction of roads, bridges, ports, airports and buildings in the Pacific region threatens to leave small nations burdened with tremendous and unsustainable debt and that Australia is concerned that they could fall into “the trap of a debt-for-equity swap and lose their sovereignty,” the Sydney Morning Herald wrote.

According to the report, the Belt and Road Initiative (BRI) is a core of Xi Jinping’s agenda, for which China aims to invest $1 trillion in infrastructure-building programs around the world it deems of strategic value.

Examples include Papua New Guinea, where BRI projects are being implemented in full swing. Vanuatu, Tonga and Samoa have also collaborated with Chinese state-owned companies in development plans – with funding from the so-called soft loans offered by Beijing.

Australia’s fear that the sovereignty of Oceanian countries could be compromised is not ungrounded, argued the report. Among the cases is Sri Lanka, which was forced to hand over control of a port to China in a 99-year lease due to its inability to repay Chinese loans.

Though describing the Belt and Road Initiative as a means for China to advance its strategic interests, Bishop said that Australia would not rule out the possibility of working with China in certain development projects found to be of mutual interest. She stressed, however, Australia wishes to offer alternative options for the island nations, adding that “BRI is not the only source of infrastructure financing available.”