【澳大利亚人报】China's help may harm Fiji

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China's help may harm Fiji
http://www.theaustralian.news.com.au/story/0,25197,25371889-17062,00.html

Fergus Hanson and Jenny Hayward-Jones April 23, 2009                                          

ASChinese leaders like to see it, China gives aid without any politicalstrings attached. But when you suddenly start bankrolling a pariahmilitary dictatorship, does that argument really hold any water?

Inthe year following the 2006 coup in Fiji, Chinese aid pledges increasedseven-fold. That is, from about $US23million in 2006 to a staggering$US161 million in 2007. A lot of that aid was not dispersedimmediately, but what news escapes from Fiji these days suggests Chinahas kept up its commitment to roll out the promised funds. The FijiElectricity Authority and theChinese Development Bank signed a $US70million loan agreement to commence the construction of the NadarivatuHydropower project. Chinese loans are also helping to fund otherinfrastructure projects in Fiji.

The relative weight of China's aid program in Fiji is worth noting.Whereas Australia is still the largest aid donor in the Pacific regionas a whole, its 2008-09 aid program for Fiji is a rather meagre$26.9million. As the interim regime in Fiji has been isolated byWestern nations in an effort to help the people win back theirdemocracy, China has stepped in to fill the donor void.

Although funds from China have yet to make a measurable beneficialimpact on Fiji's economy, the symbolism of Chinese aid is important.While the international community has been shunning Fiji's interimgovernment, Chinese Vice-President Xi Jinping met Fiji's PresidentJosefa Iloilo and interim Prime Minister Frank Bainimarama when hevisited Nadi on a transit stop on February 9.

Bainimarama's regime has been pursuing a look-north policy since hisrelations with Australia and New Zealand fell apart after his December2006 coup. Unlike Australia, New Zealand, the EU and the US, Chinarefuses to comment on the domestic political affairs of other nations.In its dealings with Fiji's interim government, Beijing has notmentioned the importance of democracy nor linked its aid to elections.Bainimarama has portrayed China as Fiji's saviour to his supporters andto Fijians concerned about their next pay cheque.

Fiji's economy deteriorated rapidly in the first quarter of 2009. Aperfect storm of devastating floods in January, the negative impact ofthe global financial crisis on demand for tourism and exports, andongoing loss of business confidence following the coup had already hitFiji before the April 10 abrogation of the constitution made mattersmuch worse. The Reserve Bank of Fiji had already forecast a contractionof the economy; exports and investment were already lower thanexpected. Official foreign reserves have plummeted to just 2.7 monthsof import cover.

Fiji's relative size and strategic importance in the Pacific meanthat the wider Pacific Islands region will suffer from its economicdecline. Preventing the collapse of Fiji's economy is critical not onlyfor Fiji but for the stability of the region. Fiji clearly needsfinancial assistance, and quickly. But it is important that assistanceis provided in a manner that helps the people who need it and does notsimply prop up Bainimarama and his coterie.

China has chosen to step up its aid to Fiji and take on the mantleof major donor. Its track record elsewhere suggests China has neitherthe will nor capacity to assume responsibility for fixing things if thecountry implodes. Australian and NZ officials have realised this andrecently we have seen the question of China's role in Fiji raised withsenior Chinese officials.

If China wants to be taken seriously as a responsible internationalactor, it needs to behave in a mature way in Fiji. Fiji's interimgovernment will almost certainly request more financial assistance fromChina to help it respond to its liquidity crisis. China is likely to bewilling to help.

Beijing knows the Fiji economy is in trouble and, as an investor inthe island nation, will be keen to do what it can to help Fiji avert afinancial catastrophe. The financial assistance Fiji requires, however,is beyond the capacity of any single donor, even China.

Rather than offer more bilateral assistance, China should beencouraged by Australia and others to direct new assistance to Fijithrough international financial institutions. This would be consistentwith the commitments made by the G20 leaders in London to increase theresources available through the international financial institutions sothose institutions can help developing countries cope with the globalfinancial crisis. It would send an important signal to Fiji's interimgovernment that its only option is to deal with the internationalfinancial institutions and adopt the disciplines they recommend tostabilise the economy. And it would fit squarely with G20 leaders'efforts to integrate China into co-ordinated responses.

Looking at China's engagement with other regimes (Sudan's andBurma's, for example), the prospect of it changing its approach mightseem far-fetched, but Fiji is a little different. Relatively, Chinadoesn't have that much to gain from Fiji. China also wants rewards fromAustralia (such as approval for resources investments), which offerssome room for compromise. For China's policy in Fiji, these changeswould have few costs and some important benefits.
China doesn't have to be the bad guy in Fiji. If it chooses todeliver its aid through responsible international systems, it has thechance to have a real development impact in Fiji, enhancing itsreputation in the region while demonstrating a maturity befitting agreat power.

Jenny Hayward-Jones is program director of the Myer FoundationMelanesia Program and Fergus Hanson is a research fellow at the LowyInstitute.

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