Canberra is not ready to give up



China is vigorously building cooperation with small Pacific states, thereby encouraging them to cut ties with Taipei. Australia does not like this, as it is the leading regional player in the struggle for influence over the islands

Two years have passed since Australian Foreign Minister Penny Wong took up her post and toured the Pacific Islands. In May 2022, not only Wong, but also her counterpart from the People’s Republic of China, Wang Yi, visited the islands. The plot developed quite colorfully: simultaneously both ministers tried to interest small states in the most favorable conditions for cooperation. Time has passed and we can already summarize the results: whose proposal was more attractive?

Pacific islands and large states, namely the USA, China and Australia, have mutual interest. The island states have a huge demand for infrastructure development, they need preferential loans and investments, which are provided by the “senior partners”. And sometimes they simply need help in case of natural disasters. For example, in 2015, the island of Vanuatu lost 70% of its GDP due to Cyclone Pam.

In turn, neighboring Australia and the competing U.S. and China are interested in the islands’ favorable strategic location and political rapprochement with them.

For Australia, relations with small Pacific countries are of particular importance, as they allow it to maintain its role as a regional power. In recent years, Canberra has been increasing its aid, which is set to exceed 2 billion Australian dollars (AUD) ($1.32 billion) by the end of the 2023–2024 fiscal year.

This time, the struggle for influence is taking place on a territory of 26 km2 and with a population of less than 12,000 people.

During her visit to the island nation of Tuvalu on May 8, Wong announced that 110 million AUD ($72.27 million) of its national budget would be allocated to it. This is unprecedented generosity on Canberra’s part — last year’s amount was just 17 million (US$11.17 million).

Most of the money will go to infrastructure projects: 50 million will be invested in the first undersea telecommunications cable, 19 million in a land reclamation project to protect the coastline, and 15 million in the construction of a national security coordination center. The remaining 10 million will go to Tuvalu’s state budget.

It should be noted that it is not by chance that Australia is so interested in infrastructure deals. The fact is that in recent years China has firmly settled in this niche. It has already become the largest creditor of island countries in the construction of such facilities as ports and wharves in the Pacific Ocean. Naturally, this contributes to the growth of Beijing’s authority in the region.

The Middle Kingdom has more than a hundred projects in its portfolio, such as the water supply network on Rarotonga Island (Cook Islands), the national stadium for the 2023 Pacific Games and the runway at Honiara Airport (Solomon Islands), a tugboat and barge for the Kiribati National Shipping Line, and others.

And that is why the recent trend is to sever diplomatic relations with Taipei and establish one with Beijing. This is exactly what the world’s smallest independent republic, Nauru, next to Tuvalu, did in early 2024. It happened after China completed the construction of a port and promised to increase aid to Nauru, which prompted the republic to take this decision.

As for Tuvalu, this tiny country is a kind of exception to the general trend. The fact is that it remains one of 11 countries in the world that recognize an independent Taiwan. Back in 2019, the Tuvalu government rejected a Chinese proposal to build artificial islands that would have protected the island due to rising sea levels. Foreign Minister Simon Kofe attributed this to a desire to maintain strong ties with Taipei.

Pro-Taiwan supporters then had fears that the Tuvalu elections in January would be won by Seve Paeniu, who intended to follow Nauru’s example. However, this did not happen, and Feleti Teo became the island’s prime minister, announcing a commitment to a special relationship with Taiwan and a refusal to get closer to mainland China.

For Australia, this is also a matter of considerable importance. In addition to competing for infrastructure funding in the Pacific Islands, Canberra is also trying to keep up with Beijing in the security sphere. In November 2023, the countries entered into the bilateral “Falepili Agreement”, which gives Australia the right to veto Tuvalu’s security treaties with any other country.

In fact, Canberra has been given the power to control any deal from telecommunications to the deployment of armed forces. In return, Australia provides Tuvalu citizens with a “mobility program”. Under it, 280 Tuvaluans can immigrate to Australia each year for employment or education.

The agreement is still subject to ratification by the parliaments of both countries, so it remains the subject of intense debate. Tuvalu’s opposition has called the document neocolonial and beneficial only to Australia. But the country’s new Prime Minister Teo has promised to get it through parliament, which is not surprising since he was one of its drafters.

During Wong’s visit, the parties released an explanatory memorandum to the Agreement. It stated that there was only a “narrow range” of circumstances in cooperating with third parties that could give rise to concern and trigger Canberra’s control clause. Separately, it noted that Tuvalu would not need to consult with Australia on any security measures it undertakes with other Pacific Island nations. If you read between the lines, this clarification could be interpreted as “as long as you do not recognize China or enter into any treaties with China, we promise not to interfere in your foreign policy”.

Tuvalu ended up being one of the few island nations that opted for Australia and Taiwan. There is every reason to believe that the “Falepili Agreement” will be ratified if the memorandum can “pacify” the local opposition.

However, most of the islands are still inclined to cooperate with the PRC, signing lucrative infrastructure deals and security agreements with Beijing, as well as consistently severing remaining diplomatic ties with Taiwan. But it is also premature to talk about China’s victory in this race. Judging by the diplomatic efforts and funding flow, Australia has no intention of giving up.