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By Kalinga Seneviratne

SINGAPORE (August 16, 2000 – Inter Press Service/Asia Times)---An assertive and confident China is rapidly expanding links and influence with the cash-strapped island nations of the South Pacific.

In recent months, China has increased technical and military links with South Pacific islands, offering Papua New Guinea millions of dollars in technical, trade and military aid and building sports stadiums in Fiji and Kiribati. It is also offering a new sound system to Fiji's parliament, building a satellite tracking facility for Kiribati and spending more than US$ 4 million to upgrade the International Dateline Hotel in Tonga.

The Chinese government has also pledged $3 million over five years to establish a China-South Pacific Cooperation Fund to expand trade between the region and China. Last year, China gave an unsolicited grant of $120,000 to the Apia-based South Pacific Regional Environment Program, which was in addition to $100,000 Beijing gave the organization earlier to help upgrade their headquarters building.

China began its development aid-focused push in 1999, when Taiwan, which Beijing considers a renegade province, made a concerted attempt to buy influence in the region. This Taipei did by giving cash and easy credit to island nations that were facing severe economic problems and decreasing aid from its traditional sources like Australia, New Zealand and the United States.

In July 1999, a near bankrupt Papua New Guinea decided to forge diplomatic relations with Taiwan, when the then prime minister Bill Skate negotiated a large financial assistance package from Taipei. The Chinese government immediately condemned the move in the strongest terms, describing Papua New Guinea's action as a violation of Chinese sovereignty. But in May this year, during a visit to Beijing, current Papua New Guinea Prime Minister Sir Mekere Morauta warned that Taiwan's efforts to gain influence in the Pacific is a threat to regional stability. For that, Morauta was rewarded handsomely by the Chinese. During his visit, China agreed to give Papua New Guinea a one-off cash grant of $130,000 and to provide $4 million for projects under a cooperative agreement.

In addition, China agreed to renew a concessionary loan to promote trade between the two countries. And in February, the Peoples' Liberation Army of China came to the aid of the medical unit of the Papua New Guinea Defense Force by providing it better diagnosis machines and medical training.

After his visit to Beijing, Morauta told Papua New Guinea's The National newspaper that he went there not to beg for money but to establish a long-term relationship. "I went with a view that rather than always asking, it's important that we graduate above that and try to look at some other ways of developing that relationship and consolidating it and that is through trade," he said.

The Sydney Morning Herald newspaper claimed recently that in the last year China's development aid to Papua New Guinea has increased by 72 percent to $155 million. That is close to Australia's aid to Papua New Guinea of about $166 million.

In addition to aid, China-Papua New Guinea trade is expanding. China is Papua New Guinea biggest buyer of forestry products, a trade worth $98 million a year. Bilateral trade has grown from $5 million in 1991 to more than $233 million last year. China imports timber, oil and sea products, while Papua New Guinea imports from China textiles, shoes, bags, bicycles, toys, electrical goods, canned food and building materials.

This growing economic and military relationship is now beginning to worry Papua New Guinea's former colonial power, Australia. In a recent editorial, the Herald warned that China's push into the Pacific to counter Taiwanese influence in the region would have long-term implications for Australia's clout. "The South Pacific is the only area in international diplomacy where Australia is regarded as something of a predominant power. Yet the area has become increasingly strife-torn and is ripe for new players seeking to exert influence," it said.

China's aid to the region comes untied, compared with Australia's, whose assistance has been closely tied to implementing policies usually prescribed by the International Monetary Fund and the World Bank. Pacific leaders have deeply resented this for many years, as these policies have not helped solve the region's economic woes.

China is skillfully exploiting South Pacific nations' distaste for those structural adjustment policies and free trade push brought on by the international lending agencies. Beijing is offering these nations much-needed aid and grants without the overt political and economic policy strings attached by Australian and other western donors.

Not too far away, Beijing is also asserting its political influence in the region by opening up a dialogue with the separatists from Indonesia's eastern-most province of Irian Jaya, which shares a common border with Papua New Guinea. China has yet to say whether it supports independence for the province, but the Irian Jayan independence movement's spokesman Franzalbert Joku has recently said that they would like to give Beijing the first option in diplomatic recognition. Otherwise, he has hinted, they would go to Taiwan for financial help.

But rather than Taiwan, it is Australia that stands to lose influence in the region if Beijing gets closely involved with the Irian Jaya independence movement. During this week's visit to Indonesia, Australian Prime Minister John Howard was currying favor with the new government of President Megawati Sukarnoputri by publicly endorsing Indonesia's sovereignty over the province.

Yet, if China recognizes the independence movement, Jakarta would be forced to woo it to keep the issue under control. China's recognition of the Irian Jaya independence movement is believed to be conditional on the group getting the support of the South Pacific Forum at its meeting in Nauru this week.

Nauru, which has diplomatic links with Taipei, has been given $5 million by Taiwan to help host this week's conference of South Pacific leaders. Significantly, Nauru this week cancelled visas for four Irian Jaya independence leaders who were due to attend the Forum meeting. Nauru's President Rene Harris said he would not grant the visas to members of the Papuan Council Presidium because too many different factions from Irian Jaya were lobbying his government.

In response, the Irian Jayans accused Australia of working to keep them away from the Forum. Joku has accused Canberra of playing the same game it played with Indonesia over East Timor -- giving assurance to Jakarta of not supporting the independence movement in return for closer economic relations with its giant neighbor.

Last year, with the support of Nauru and Vanuatu, Joku and his supporters scored a major win when the final Forum communiqué mentioned Irian Jaya. But Nauru seems to have backed out at the last moment this year from supporting the Irian Jaya cause. As host, Nauru needs to play a neutral role in the regional power play between Australia, China and Taiwan. This is believed to be the reason for its cautious stand this year.

For additional reports from the Asia Times, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/Asia Times Online: Oceania.

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