Foreign Affairs

NZ walks the talk in the Pacific

New Zealand is walking the talk on its commitment to the Pacific, and Winston Peters says the rest of the world is starting to notice. Laura Walters reports why the US-China conflct may be a positive for New Zealand.

The Government says the strategic rivalry between the United States and China has countries looking at New Zealand with fresh eyes.

The comments from Jacinda Ardern and Winston Peters come as they join Asia and Pacific leaders for APEC in Port Moresby.

Tensions between the two superpowers is rising, with a tit-or-tat trade war and powerplays within the Asia-Pacific region.

But Peters says the rising tensions may not necessarily be to New Zealand’s detriment, as more countries are looking towards New Zealand as a prospective partner in the region.

Western nations have been working to counter China’s growing influence, building sub-alliances within the region, and on Sunday New Zealand made a symbolic announcement with the US, Japan and Australia to build Papua New Guinea’s electricity capacity - a project worth $1.7b.

As the US ramps up its work with Japan, and Australia, Ardern says New Zealand doesn't form exclusive sub-alliances, but would work with other countries where values are aligned.

Opportunity out of chaos

On Thursday, Peters said as a small country, “collateral fallout” from the struggle between superpowers may not be New Zealand’s “destiny”.

“We may be advantaged by it, we don’t know,” he said.

On Saturday, the foreign minister expanded his comments, saying growing tensions presented an opportunity for New Zealand.

The “uncertainty and potential economic chaos” stemming from the conflict between China and the US, presented “enormous opportunity”, and countries were looking at New Zealand with “fresh eyes” as a result.

This increased interest in New Zealand as a more viable partner in the region had been “seriously recent”.

“Going back 10 years ago, none of that would have happened the way it’s happening now.... It’s seriously recent, and it’s seriously encouraging, whilst it’s also very worrying,” he said.

“I put that down to changed economic geography that’s happening - so out of disorder, I think we’ve got order coming,” Peters said.

“I think it offers us an enormous opportunity to have a far more profound influence in the shape of the Pacific.”

Peters said New Zealand’s character and integrity in the Pacific was unrivaled.

“Without being boastful – we’ve got the knowledge, we’ve got the experience;,we’ve got the DNA.”

Other countries knew New Zealand did not have a “hidden agenda” when it came to its aid and development work in the region.

The comments from Peters come the same day as Vice President Mike Pence warned Asia-Pacific leaders about accepting loans from China, calling the terms of those loans “opaque at best”.

The projects the rival superpower supported were “often unsustainable and of poor quality”, he said. “And too often, they come with strings attached and lead to staggering debt. Do not accept foreign debt that could compromise your sovereignty.”

Beijing is pushing back, saying no country should obstruct its "friendship and cooperation" with Pacific nations that have already received US$3 billion (NZ$4.4 billion) in Chinese investment.

As Jacinda Ardern touches down in Papua New Guinea, an Air China plane waits on the runaway. In Port Moresby, buildings, roads and bus stops bear the country's insignia. Photo: Laura Walters

Countering Chinese influence

The issue of the region’s indebtedness to China has been a sub-plot of this week’s East Asia Summit in Singapore and APEC in Port Moresby.

China’s presence is strongly felt in Papua New Guinea’s capital, Port Moresby, with high-rise buildings under construction bearing Chinese logos, China Aid emblems on bus stops, and the aptly nicknamed “road to nowhere” - a six-lane highway leading to Parliament - is lined with Chinese flags.

But with record debt, there have been concerns raised about the country’s rising indebtedness to China – a theme throughout the Pacific, and one Peters has raised consistently since his Pacific Reset earlier this year.

In the 10 years to 2016, China transferred at least US$2.2 billion to Pacific nations, according to the Lowy Institute, with that money partly by way of gifts, but largely in the form of concessional loans.

In 2016, China gave US$113.92 m across 32 projects. And 28 percent of that was given as loans. It committed a further US$277.44 m.

From 2012 to 2016, China made up 10 percent of total spending in the Pacific, with New Zealand still ahead on 11 percent. Australia was still by far the biggest donor on 39 percent. Most of China's development came as loans (90 percent).

New Zealand, Australia, the US and Japan – as well as some European nations – have moved to counter China’s rapid growth in spending.

Last week, Australian Prime Minister Scott Morrison unveiled a $2 billion infrastructure fund for Pacific telecommunications, energy, transport and water projects, and Peters said Australia’s refocus on the Pacific was “seriously encouraging”.

Ardern’s comments have been softer, saying each country’s relationship and dealings with Pacific states was up to them.

Jacinda Ardern has been talking to APEC leaders about climate change and women's representation, but growing geopolitical and trade tensions continue to dominate the rhetoric around this week's summits. Photo: Office of the Canadian Prime Minister/Supplied

Walking the talk

New Zealand has talked a big game on its Pacific focus.

At the start of the year, the Government announced its Pacific Reset, and followed that with a $714.2 m increase in aid and development spending – focused on the Pacific.

During the week, Ardern and Peters have made four significant announcements.

On Sunday, New Zealand announced a $1.7 b partnership with the US, Australia, Japan and Papua New Guinea to help fulfil the country’s goal of getting power to 70 percent of its population by 2030. Currently, about 13 percent of the country of 8 million people has power.

New Zealand was already spending about $35 m on rural on-grid extension and town electrification investment programmes.

The project signalled a strong commitment to work together to pool resources and technical expertise to support Papua New Guinea’s goals, Ardern said.

She made the significant and symbolic announcement alongside Pence, Japan’s Shinzo Abe, Australia’s Scott Morrison and Papua New Guinea Prime Minister Peter O’Neill.

Earlier in the day, Ardern opened the redeveloped Gordons Market – the largest fresh produce market in the Pacific.

New Zealand spent about $7 m building a two-storey roofed market, with open sides. The site also has showers, toilets and running water. As many as 2000 people work in the market, with the vendors and buyers being predominantly women. About 80 percent of the country’s population earns its living from selling wares and produce at markets across the country.

On the same say, Peters announced up to $10m for general vaccinations. This included help of up to $3 m to counter the resurgence of polio, which has led to at least one death.

Peters made the announcement at the St John’s operations centre in Port Moresby. Over the past year New Zealand has given $1.3 m to help build ambulance capacity for APEC, out of $15 m of total spending for APEC 2018.

And earlier in the week, Peters announced a joint cyber security project with Australia.

New Zealand’s approach to development in the Pacific was markedly different to China’s roads, buildings and bridges – things you couldn’t necessarily stick a flag on.

Ardern said New Zealand tried to listen to the people and the government, and help them achieve things that aligned with their goals, and New Zealand’s values.

Projects included things like health, education, and wellbeing projects, as well as governance and capacity building.

“And sometimes those are softer things that are a little bit harder to see,” she said.

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