China trade

Will China’s Aid Skew Cook Islands’ Elections?

China’s growing influence over its neighbours has become a major issue in the upcoming 14 June elections for the tiny Pacific nation of the Cook Islands.

Between 2006 and 2016, China has spent $66.3 million on aid to Cook Islands, as reported by ABC.

When you compare that with the $39.3 million spent by Australia during the same period, it seems reason enough for concern.

This aid money has been distributed across 13 projects, in a wide range of areas such as public services, education and the fishing industry.

But the actual uses of the money seem beside the point, with leaders expressing bigger concerns over Beijing’s influence on the nation.

Cook Islands was China’s first partnership with a developed nation — New Zealand — on a foreign aid project. It began aid funding back in 2013.

Tension has now ramped up

The Opposition Democratic Party says it is hearing concerns from the people about China. They say many voters were worried about the impact ‘soft loans’ that come with Chinese aid were having on the economy. The Democratic Party has vowed to freeze all aid from Beijing if it wins the election.

The Democratic Party’s deputy leader, James Beer, said:

‘We are going to put on hold any more lending form China and from the Asian Development bank for more reasons than just the spectre of China on the horizon.’

Tourism makes up 60% of the nation’s economy, according to latest budget estimates. There are more than 140,000 visitors to the island every year.

If this lucrative tourism was to fail, this could mean the country may not be able to service its loans.

Something that would definitely place the country in hot water, according to Beer. He said:

Particularly where there’s been examples around the pacific and in Asia of China taking valuable asserts in lieu of payments or non-payment of loans.

He also mentioned the example of Tonga saying ‘the effect it has on Samoa. And we’ve seen the effect of it over here’.

But Mark Brown, Cook Islands’ finance minister, said the opposition leader was wrong to suggest the country was incapable of servicing its overseas loans.

‘We’d possibly be the best performing pacific country in terms of the lowest level of debt, which is sitting around 25 percent of GDP.’

He also suggested that there was a level of ignorance of the financial position of the country.

…they just have to look at the Asian Development banks latest outlook report on the performance of the Cook Islands in terms of its debt management.

The debate over China’s foreign aid development projects and loans, and the extent to which they are used to buy foreign influence, will continue.

Next month’s elections in the Cook Islands could be seen as a referendum from the people receiving such aid, on whether or not it’s worth the political price tag.

PS: If you think your cash is safe in the bank…think again. Find out what you could do to protect your cash and financial privacy here.

Leah Wallace

The Australian Tribune Editorial

The Australian Tribune Editorial

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