Fiji for most is a tropical paradise where the water is warm and the weather is always idyllic but Fiji, like some of its Pacific Island neighbours, is sitting on a debt crisis that could have significant geopolitical impact for generations to come. 

The author of this article, Gianpaulo, is based in the South Pacific and is a student of Counterterrorism, Intelligence and Security. Interested in everything related to National Security. 24 News Enthusiast, political junkie and working on his first book ‘Hitchhikers Guide to National Security’.

It’s 11:00am local time in Nadi, the weather is a fine 31-degree celsius and the humidity is sitting around 90%, sitting by the beach its peaceful and not a care in the world can be had about what lies outside of this resort. You can hear the birds chirping and a couple of minutes ago I saw a coconut fall out of a tree, this truly is a tropical paradise.

But since the last coup that Fiji experienced when now Prime Minister Frank Bainimarama took control of the government this tropical home away from home has struggled with a new issue – cash in the region.

When the Fijian Coup of 2006 took place, Australia and New Zealand were quick to denounce the military and pull their High Commissioners from Fiji leaving no presence until they recommitted to diplomatic ties may years later.

The vacuum felt hurt Fiji, not by much as travellers still came from all over but the US cut $2.5 million in aid, the Commonwealth disavowed the government and country and with the government interfering with censorship of the media, free speech was silenced at a time that a free and independent press would be able to challenge the legitimacy of a coup that many condemned domestically and internationally.

This brings in our first act, the People’s Republic of China – there was a vacuum in diplomatic relations and the ability to buy influence. It starts simple, the Chinese enter and offer the government of a nation the ability to build infrastructure with Chinese money (e.g. roads, hospitals, ports).

The government agrees and talks up the potential benefit to local employment.

What the government doesn’t realise at the time is that there is a high probability that they won’t be able to repay that debt but the Chinese government doesn’t worry about that because that is part of the plan. If the foreign government can’t repay the Chinese on time that is when the negotiations start, the Chinese will either want payment in full or something else – usually the infrastructure itself.

Vanuatu, similar to Fiji in its situation, now faces a similar problem. The Chinese government splashed cash to build sporting stadiums, convention centres and even a port that could allow cruise ships to dock and unload hundreds if not thousands of willing tourists to the region.

Now the Vanuatu Government can’t repay the money that they borrowed to build the these expensive luxuries, luxuries that locals believed that the government shouldn’t build and now are within maintenance and, in the case of the convention centre, power.

So where does this leave Vanuatu? Potentially in a void where they are indebted to the Chinese, where their vote at the United Nations belongs to the Chinese and where the port, as a major strategic issue for Australia, could be converted to a dock for Chinese Naval vessels. Whilst the Chinese government and Vanuatu government both deny that this is the case but many analysis believe that it is inevitable.

You might be asking what sort of diplomacy this is– fortunately it has a name, unfortunately it’s a bleak one – Debt Trap Diplomacy.

In simple terms, think of it like the bank approaching you and saying that they will help you build that mansion and buy that luxury car that you have always wanted and all you would have to do is work hard and in five years time they would collect – don’t worry about it today, worry about it later.

The problem is that in five years time, once you’ve enjoyed the luxury the bill for all of it is higher than anything that you could ever afford so you’re stuck and you have two options: give in to the bank and find the money somehow to pay it all back in one hit or become a slave to the bank that put you there, doing their bidding when they whistle. Essentially this is debt trap diplomacy.

With the dispute in the South China Sea and the potential for China to establish military bases in the South Pacific many believe that this type of diplomacy could cause more long term problems for those that simply want to maintain the peace and put a hold on the arms race that is occurring.

Here in Fiji, especially in Suva, apartment blocks are being built and infrastructure erected as part of large Chinese projects that are being painted as modernising Fiji. However when you look closely there are no Fijians working on these projects with import workers being preferred. A tension is rising about how this will go down in the local community when the Fijian government can’t afford to repay the debt that they are racking up.

A recent visit from Australian Prime Minister Scott Morrison, the first prime minister to visit this country in two decades, was done as a good will trip to show that Australia valued Fiji, that the two countries have a long history together that can’t be changed but the fact remains, as the Fijian Attorney General Aiyaz Sayed-Khaiyum put it when asked by 60 Minutes Australia about this type of diplomacy ‘you left and the Chinese came’.

Debt trap diplomacy is here to stay and if Australia and New Zealand want to counter it in their region, the ensuing cash splash will have to be quite vast, meaning they may not be able to keep up with China.

20 COMMENTS

  1. If the host countries are gullible enough to fall for this I honestly don’t know what we’re supposed to do. Idiots will do idiotic things. They’ll either have to learn to say no or learn to do whatever China says.

    • No, I do not think so. The UK will not be in debt to China for these projects as they are effectively commercial projects. Also the contracts will be pretty tight. If they go bust they go bust and China will be the ones shouldering the debt. If they pull out then we will be left with the power stations. Not that the Chinese involvement does not make me feel uneasy, but just to say that it is not the same thing as what is happening elsewhere.

  2. Wouldn’t mind diverting some of the aid budget to get any at-risk counties out of the trap. It may be their own fault, but nothing should be allowed to further Chinese imperialism. In the long run, our own security might be involved here.

    • Indeed. However we are never going to offer enough money to these countries compared to China. It is like someone going to a Regulated Money Lender compared to a Loan Shark. The Loan Shark will likely offer more credit… obviously at a significant cost though…

      The worrying thing is that Chinas intentions are only just being realised by those in power for some reason (it has been known for some time among other experts). They practically own 25% of Africa and are moving in to South America and the pacific. Basically if you are a slightly dubious government leading a country that needs funds then China are all over you like a rash! And we all know how many of these countries there are in the world!

      • If they offered a little money at first to entice a country, then we might have been able to nip it in the bud (with other allies chipping in when needed). If it was a huge lump sum all at once, then you’re right, we wouldn’t have been able to do anything.

        I’ll never understand why it took some so long to see what China’s been doing. I could see it 10 years ago, and I’ve the political awareness of a blind snail.

        • Possibly a little money might have done the job. However we then have the issue that they were given money but then became dictatorships… We then did not want to be seen to be financially supporting a dictatorship that restricts freedoms etc… We are in a no win situation. I see it a bit like our fight against Islamic extremists etc. Basically we have rules of engagement that forbid us shooting people unless they are holding a weapon, we also refuse to use human shields, child soldiers, chemical weapons etc. However our enemy has no such rules and will use all of these tactics against us. If we however use any of those tactics then we would suddenly become attacked from everyone for being inhumane (rightly so).

          We would support these countries on the basis of them providing a better future for the country as a whole. China does not care about the countries future and would happily see it and its people forced into poverty and desperation (in fact they are pretty much banking on that happening) as long as China got what it wanted in the end.

      • You missed out the middle east also, the amount of infrastructure they are building in the region is surprising, heard rumors its all being built free of charge but have to pay it back within 25 years……..

  3. We should be protecting ex British islands like Fiji…… the queens still head of state. Dam UK government,New have the money!

    • How do you out bid China? Especially when they are willing to lend at all costs as they know they will end up practically owning the country a few years down the line.

    • Interestingly, Fiji is a republic and the Queen is not Head of State there.

      However their PM, Frank Bainimarama, is extremely pro-Monarchy and has been quoted as saying he would love to see Fiji return to Commonwealth Realm status with the Queen as Head of State. He even keeps a portrait of her and the Duke of Edinburgh above his desk. That would bolster the number of the Queen’s realms from 16 to 17

      • The people there overwhelmingly wish they were still a monarchy, its only due to a coup in 1987 that they’re a republic. They changed the flag at this time but in the 90s they reverted back to the colonial flag, which proves their opinions on the British. They even still feature the Queen on their money I believe.
        I believe there are movements, including the current PM to revert to being a realm and it is a definite possibility for the future.
        Also Fijians are one of the largest overseas recruits for the British Army.
        If we can help them in anyway, financially etc we should!

  4. ‘What the government doesn’t realise at the time …’ I imagine those at the top of the pecking order did, getting a little something out of the permissions to build; but then they’ll come out of it with a tidy stash whatever.

  5. Debt is a wider problem.
    China owed $2 trillion dollars in 2000. Now it is 40 trillion dollars. China has built amazing high speed rail, a vast motorway network, but also vast numbers of empty buildings.
    The USA is running a $1 trillion a year deficit. It may soon be that the interest payment is more than the defence budget.
    The European Central Bank, spent over 2 trillion euro on corporate & government bonds. They paid full price. They could only sell them at a large discount. No one knows how much they have lost, but probably at least 700 billion euro.
    The UK took 200 years, Napoleon, 2 world wars, 1930s slump + 1970s oil shock to hit £400 billion national debt. Since 2007 it has shot up to 1.7 trillion & will hit 2 trillion pounds before we get it under control. Its not as if we have fought WW3, or built a new motorway or high speed rail network or a new fleet of nuclear power stations, to show for it.
    Debt may yet prove to be the biggest global threat.

    • That is a different type of debt though. The debt the UK is in and that China is in etc is like a loan from a bank. The debts china is putting these poor countries in is more like a loan from a mafia boss.

      But yes I agree global debt is a major issue. But then if we try to fix it people moan about the Government not spending enough money at which point a new government gets elected and spends all the money again and gets us into more debt… Not sure how we fix it.

    • On Debt:
      Debt only truly becomes a issue in several circumstances.
      For one if it outpaces the rate of population growth and economic growth. If the nations population and economy or both continue to expand at sufficient rate a country is essentially treading water with it’s debt which only has to do for the life of each bond. As long as it insures that wages for the workers increase (hence the amount collected by the tax) along with the total number of taxpayers they out pace the rate of interest on the debt. As long as the country’s economy is innovative and growing it can stave off the loss of taxes to debt payments without actually harming social services by making the total pie bigger. If the country fails to grow economically and in population then the smaller pie and austerity argument becomes valid.
      The second way it can become an issue is if a country is one that angers the countries the banks reside in (Russia) and they respond by sanctioning their major industrial concerns and making it difficult to service their debt while also making harder to issue more bond sales. However if the country has vast natural resources and doesn’t NEED to truly import anything. They are then able to maintain stability at home because people are only buying stuff from each other in your fiat currency. It only becomes an issue when the country needs to buy something from the US, Germany, Japan, or the UK.
      If a country is incompetent however (Venezuela, Nicaragua) they have no ability to turn to their internal market. Because the money they borrowed was used to deliberately sabotage the in economy in the name of cronyism and retention of power.
      The issue with debt is you have to be able to draw a distinction between the Government and the Private Sector. That way the government can deal with periodic recessions and booms without having much blow back. If the Government is to involved in private business like say China it will buckle if it experiences sustained economic downturns. Like Venezuela which was over leveraged and depended entirely on the government owned oil industry.
      The final way debt can kill an economy is if it was made artificially high (such a by a treaty imposing indemnities) and could only be paid by walking a tightrope, wholly dependent on outside forces Wiemer Republic post WW1.
      So no the biggest global threat isn’t debt it is the triple mistakes that so often exist together: Transnationalism, Moral Relativism, and Pacifism which have the side effect the weakening of the Nation-States. Destroying their ability to take action on any issue without hobbling them to the gain of globalists and their agent provocateurs.

      • The IMF said recently that global debt has hit $184 trillion, or $86,000 for every person on the planet.
        If the world is not careful, we may hit the point where it cannot pay the interest, let alone the capital.

  6. So when it all goes to ratpoo, cheap retirement properties in the sun? Where do I sign up, god bless bent 3rd world leaders and their greed and China’s empire building!

    On a serious note, its sad that it’s the people that will suffer ( isn’t it always) for a few greedy bent politicians who have nice bulging bank accounts and a string of hookers, sorry female companions.

    • Who says that hookers have to be only females? This is the 21st Century, so equal opportunities to both sexes and LGBTs!

      Hmm… I think it’s time for me to stop posting…

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