Asia Pacific: Don’t Encourage Regional Financial Wooing

Australia and China are reportedly neck and neck in establishing closer ties with Asia Pacific countries. First, China is attempting to develop an economic pact with the Pacific Islands as a “good brother” with more trades and investments; then, Australia’s Foreign Minister Penny Wong is rushing to reassure their relationship as a Pacific “family.” At the same time, Australia’s Prime Minister Anthony Albanese hurried to establish closer trade ties with Indonesia. Other countries are doing the same, too, with the G7 planning to have a $600 billion fund for developing countries.

It is highly undesirable to frame the diplomatic situation as a race of ‘who spends more gets more friends.’ Yet, Australia seems to have already obliged itself to spend more as a response. For example, the “Labor’s Plan to Build a Stronger Pacific Family” will increase financial assistance by $525 million over the next four years. They will also finance more climate-proofing infrastructures. Given that Australia promises not to impose “unsustainable financial burdens” for its help to the Pacific, the potential flip side is that the usually not-so-profitable climate finance could be a stranded deal.

By contrast, New Zealand has taken a relatively non-reactive approach to China’s increasing ties with the region. Not taking action does not necessarily mean concession or apathy. Instead, it can be strategically wise. Being reactive could force everyone to devote even more resources. This is unsustainable because it is financially impossible to keep up with the benefits offered by other countries. An expert on the Solomon Islands pointed out that “there is an assumption that China will do more.” Would it be realistic for Australia and New Zealand — so is China — to always provide more?

Looking at the figures, New Zealand is already committing 60% of its foreign aid budget to the Pacific. The amount stands at NZ$590 million for the 2021-22 year, compared to last year’s NZ$524 million — which is already a significant rise of 19%. New Zealand is not apathetic, given that “Australia, New Zealand, and Japan had the biggest aid and development spend in the Pacific.” However, were New Zealand to participate in the action-reaction force, the amount would have to be increased non-stop, which is untenable.

Moreover, new capital spent to influence the regional balance will not necessarily lead to any unique strategic benefits, as it will simply put one back to the original position.

In other words, the current focus often rests on whether a country should spend more as a response to whenever another country introduces something new. This is not a healthy diplomatic path for the region. Instead, the emphasis should be on people’s engagement to sustainably promote regional understanding, peace, and multilateral trade.

Australia and New Zealand have unrivaled proximity to Southeast Asia and the Pacific.  Yet, there has been an inadequate emphasis on facilitating physical, accessible cultural exchanges. For example, Lindsey and Mann have proposed that (1) the Australian embassy in Jakarta could be transformed into a cultural center for in-person visits, and (2) the government should re-start funding the training in the Indonesian language. When comparing this type of engagement to Labor’s Plan to spend $8 million each year on broadcasting TV and media content to Indo-Pacific, the latter alone seems inadequate, as remote mass communication can equally be done by any country irrespective of the distance.

Besides, the Labor Plan does not include strengthening educational exchanges as one of the major strategies. For example, the New Colombo Plan — an existing initiative that sends Australian undergraduates to study and undertake internships in the Asia-Pacific region — could have been refined and expanded to focus more on the Pacific. Work and educational exchanges cultivate in-depth connections. At the same time, it benefits Australia by training more experts in the Pacific region.

In response to the recent bilateral agreement between China and Samoa, Australia’s Foreign Minister Penny Wong specifically visited Samoa with a partnership offer and donation, which means incurring another expenditure. Instead, more should be done via the New Colombo Plan. For example, in 2022, the New Colombo Plan’s Mobility Grant tabulated only one project to Samoa with AUD$19,800. In striking contrast, the 2021 report of the Plan listed 19 projects for Samoa with total funding of AUD$990,000. A similar drop can be seen for other Pacific Islands (e.g., 14 listed projects to Fiji in 2022 and 58 in 2021). However, this is not observable for different destinations (e.g., 18 to South Korea in 2022 and 16 in 2021; 48 to Indonesia in 2022 and 49 in 2021).

Similarly, China could do more to foster educational and cultural exchange. For example, in the latest official statement, China promises more scholarships for students from Pacific Islands, which is a highly encouraging development.  But China could refer to the New Colombo Plan and foster the sending of Chinese students to the Pacific Islands to do research and learn. After all, cultural and educational exchanges are a two-way street.

While significant financing or partnerships certainly have a wow effect, people’s engagement in culture and education are equally important and cherished. The close interactions build up understanding, trust, and confidence — something that cannot be easily replicated by merely investing a large sum. 

[Photo by David_Peterson]

Martin Kwan is a foreign policy strategist. The views and opinions expressed in this article are those of the author.

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