China courts Pacific island states in pursuit of ‘foothold’ as US risks losing influence, Rand report warns

10-Aug-2019 Intellasia | South China Morning Post | 6:02 AM Print This Post

Beijing is challenging Washington’s influence in Pacific island states where the US maintains strategic defence access by offering financial incentives that could lead to “debt traps”, according to a report released on Wednesday by Rand Corporation, a US government-funded think tank.

Beijing has been courting the Federated States of Micronesia (FSM), the Marshall Islands and Palau, aiming to gain access to their strategically important waters, the report said. The US currently claims exclusive rights to these waters under agreements known as the Compacts of Free Association.

“The US seeks to prevent China from obtaining such a foothold through economic and diplomatic overtures to these islands,” said Derek Grossman, a former Pentagon analyst on Pacific security and one of the report’s co-authors.

Under the compacts, US economic assistance to these Freely Associated States (FAS) is set to expire in 2023, creating an opportunity for China to fill the void, Grossman warned.

The report said Beijing could challenge American dominance by “floating economic incentives in exchange for loosened ties with Washington”, and warned these incentives, offered as part of China’s belt and road strategy, could create unsustainable levels of debt in the FAS.

Pacific countries near the FAS including Tonga, Vanuatu and Papua New Guinea have taken out loans from China to fund infrastructure projects. The report cited the example of Tonga, which has asked China to waive debt worth $115 million.

Beijing is already the second-largest source of aid to the FSM, donating nearly $90 million since 2011 four times as much as Australia, the report said.

Analysts claim Beijing considers the island nations a critical part of its belt and road strategy, and views economic support for infrastructure projects as a stepping stone towards increased military presence.

The compacts provide the US exclusive military use of the waters around the FAS, including the ability to deny access to foreign militaries.

Crucially, Palau also forms part of the geostrategic area China refers to as “the second island chain”, which is central to Beijing’s naval strategy. This puts the US’s exclusive control of these waters directly at odds with Beijing’s defence priorities.

According to Liang Jiarui, a researcher at Liaocheng University’s Pacific Islands Research Centre, establishing “strategic fulcrum ports” in the Pacific is also a key aspect of this regional strategy.

“Having a strategic fulcrum port means having an overseas base,” Liang wrote in an article published by the centre. “These ports will make up for the gap between the Chinese navy and the US in the South Pacific region.”

The territorial waters of the FAS span hundreds of thousands of kilometres and contain some of the deepest lagoons in the Pacific, which are ideal for conducting military drills.

As part of its intensified focus on the Pacific as a strategic priority, Washington plans to expand its defence presence in Darwin, on Australia’s far northern coast. Secretary of State Mike Pompeo also visited the FAS last week.

The US seeks to prevent China from obtaining such a foothold through economic and diplomatic overtures

Derek Grossman, report co-author

Coinciding with Pompeo’s visit, Beijing donated $2 million to the FSM’s trust fund, which had until then been supported by the US.

Under the current agreements between Washington and the FAS, US economic assistance expires in 2023 and the states will thereafter be dependent on their trust funds and other sources of financial support. Unless the FAS find alternative sources of financial support, the expiration of this funding could undermine their economies, the Rand report warned.

Confronted by the prospect of losing strategic ground to Beijing, Washington appears to be changing its tune. During his visit to the FAS, Pompeo said the compacts would be renegotiated.

“As of several years ago, it was an open question whether [the compacts] would be renewed,” Amy Searight, the former US deputy assistant secretary of defence for South and Southeast Asia, told the South China Morning Post.

“The US defence ties with these countries have been real and important for the US but there has been a fair amount of benign neglect as the strategic focus of the US shifted to other parts of the world.”

Nicholas Dean the director for Australia, New Zealand and Pacific Islands at the US State Department last month characterised Washington’s ties with the FSM as a “forever relationship”.

But the uncertainty surrounding the future of the FAS compacts offers Beijing further opportunity to undermine the states’ commitment to Washington between now and 2023, the Rand report said.

Despite Washington’s strategic concerns, this “forever relationship” could be further endangered by the Trump administration’s reluctance to support the FAS on their most pressing concern: combating climate change.

“Not addressing the region’s biggest priority is a real Achilles’ heel for the Trump administration’s strategy,” Searight said. “There is a real frustration in the region that the US has walked away from any kind of global leadership on climate change.”

China’s Foreign Ministry spokeswoman Hua Chunying on Wednesday criticised the US for its “cold war mentality” and “zero-sum game” approach to the Pacific islands.

“China provides Pacific island countries with sincere assistance without any political conditions [to promote development],” Hua said, adding that China conducts rigorous economic assessment before approving loans, including the sustainability of the debt and the recipient nation’s ability to repay it.


Category: China

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