X-Post- The Diplomat: The Deep Sea Resources Rush

A 2008 SiFM post addressed the rush to mine the seabed in the region. A recent article from "The Diplomat"  follows up on that particular subject.

The entire excerpt of The Diplomat article:

The Deep Sea Resources Rush

Source: The Diplomat

By Gemima Harvey

Exploitation of seafloor minerals appears imminent. But we do really understand the potential impact?

Insatiable demand for minerals and rare earth elements, coupled with dwindling resources on land have stakeholders across the world looking to a new frontier: the deep sea. Advancing mining technologies are making the prospect of exploiting seafloor minerals—including gold, copper, zinc, cobalt and rare earth elements (REEs)—not only possible but also imminent, with commercial licenses to be granted by the International Seabed Authority from 2016.

China has a stronghold on REEs, controlling a staggering 97% of global production. These finite elements and other precious minerals are used in the creation of a massive range of electronics devices, emerging green technologies and weapon systems, triggering a strategic scramble to exploit new sources.

In what has been described as a global race, governments and companies are keenly eyeing this emerging mining arena, eager to get their slice of the next “gold rush” as it’s made increasingly economically viable. In 2010, there were eight exploration licenses, currently there are 17 in the high seas of the Pacific, Atlantic and Indian oceans. There is also significant interest in the ocean’s resources within territorial waters, particularly in the Pacific Ocean, where more than 1.5 million sq km of the seafloor is currently under exploration license. This is an area roughly comparable to the state of Queensland in Australia.

The president of the International Marine Minerals Society, Dr. Georgy Cherkashov, was quoted last year linking the rush for licenses to the reality of “first come, first get,” saying the shuffle to secure the most promising sites represents “the last redivision of the world.”
Three types of deep sea mineral deposits have drawn interest. These are seafloor massive sulphides (SMS), manganese nodules and cobalt-rich crusts. In the Pacific Ocean, currently the most commercially feasible are SMS, which are created by the activity of deep sea hydrothermal vents.

X-Post- 36th Parallel Weekly Analysis: Commodities Boom widens PIF Rift.

In order to understand political dynamics, underlying economic factors often need to be considered. The growing rift within the Pacific Island Forum between the Melanesian Spearhead Group (MSG) and the Polynesian Leaders Group (PLG) is one such instance.

The metals boom preceded the minerals boom, both of which have been paralleled by  ongoing interest in discovering new sources of energy, oil and natural gas specifically. Once metals markets were consolidated, investment flows turned to mineral resource extraction and towards exploring previously inaccessible sources of oil and natural gas. Rising prices for fuel and mineral commodities in an era of technological innovation has pushed capital investment into previously unexploited areas of the globe, including the South Pacific. Under highly competitive market conditions, Asian capital has joined the quest and accelerated the pace of primary resource investment even where it remains a secondary market player. The race to secure market share in these commodities is well and truly on.


Against that backdrop  Commodore Voreqe Baimimarama travels this week to Vanuatu in his capacity as Chairman of the Melanesian Spearhead Group (MSG) , a sub-group of the Pacific Island Forum (PIF) regional organization that encompasses most Pacific Island States, including Australia and New Zealand. Created in 1999, the MSG has recently been rivaled by the 2010 creation of the Polynesian Leader’s Group (PLG), which aggregates eight members of the PIF.

Unlike the PLG, the MSG has an established institutional structure and programmatic agenda, increasingly  dominated by Fiji due to its diplomatic importance and the relative underdevelopment of or political instability in other member states (New Caledonia, Papua New Guinea, the Solomon Islands and Vanuatu).The MSG contains a multilateral trade agreement between the its members, and because of historical investment interest in resource extraction in the sub-group (forestries and fisheries as well as minerals), it has seen the bulk of regional foreign investment in the last two decades. The ExxonMobil-led liquefied natural gas project in the PNG is one sample of that ongoing interest, now pushed into newly exploitable areas.

Polynesia has begun to experience the impact of the global energy and mineral rush. Whereas MSG members have a number of land and seabed mineral exploitation contracts within their Exclusive Economic Zones (EEZs), only recently have PLG nations begun to see significant investment in land mining, and fewer have seabed exploitation agreements (one, Nauru, has secured a license to exploit seabed resources in international waters). Many of the companies involved in developing the PLG region for mineral extraction are already in the MSG, so the economies of scale they bring to negotiations with small Polynesian states provides them with good leverage when negotiating agreements. As in the case of MSG members, these contracts are not bound by regulatory vehicles embedded in regional trade agreements such as PACER and PICTA (on regional architecture, see here).

36th Parallel Analysis

"Fiji is the strongest partner with the MSG, that antagonism has spilled into MSG diplomacy vis a vis the Antipodean states and has seen the sub-group prioritize its relations with Asian partners as a balance to Western patronage relationships (which is based more on developmental aid than investment).
[...]The sanctions and suspension regime has done little to hurt the Baimimarama regime but have pushed both Fiji and the MSG more firmly into an Asian-centric diplomatic orbit, accentuating the cleavage within the PIF (which the MSG sees as too compliant with Australian and New Zealand diplomatic interests)."

The PIF is an observer of the Trans-Pacific Partnership Agreement (TPPA) negotiations involving the US, Australia, New Zealand, Chile, Singapore, Peru, Brunei, Vietnam and Malaysia.  Japan, South Korea and Canada have also expressed desire to join the TPPA. Should the TPPA be ratified, increased trade volumes within the region are expected to grow even if the PIF does not become a full member itself. However, discussion has begun within the MSG about emphasizing bi- and multilateral trade with the so-called BRIC emerging economies: Brazil, Russia, India and China. None of these are party to the TPPA and yet are among the fasting growing economies in the world. They are, in fact, emerging great powers, gradually supplanting traditional Western powers as the motor force of the global economy.

China already has an established economic footprint within the MSG and its diplomatic presence, the largest in the PIF region, has grown  commensurate to the size of its investments. Russia and Fiji have just signed economic cooperation agreements, and Indian venture capital has made footholds there as well.

This trend has begun to be seen in PNG and the Solomons. Should the move to emphasize trade and investment between the MSG and BRICs lead to higher levels of commerce with the latter, the impact will significantly increase the investment gap between the MSG and PLG. Given its larger membership and smaller resource base, PLG benefits from an eventual TPPA will be much more diffuse than in the MSG with or without the BRIC connection. The more the BRIC-MSG connection comes into play, the less the MSG will need to be part of the TPPA and other pan-Pacific trade agreements. Should that happen, the MSG will begin to outweigh the PLG influence within the PIF, which opens the possibility of  an MSG-Australia/New Zealand confrontation within the PIF because the Antipodean states do not want the PIF to be dominated by Fijian interests.

As a result of the 2006 coup that brought Commodore Baimimarama to power, Fiji is currently suspended from the PIF and Commonwealth, and has been the subject of sanctions by Australia, New Zealand, the US and European Union. In response, Fiji has strengthened its ties to non-traditional partners such as China, something that gives it more flexibility in its foreign relations. Although the US has  softened its stance regarding the Baimimarama regime and its timetable for 2014 elections, the impasse continues with the Commonwealth, EU, Australia and New Zealand. Because Fiji is the strongest partner with the MSG, that antagonism has spilled into MSG diplomacy vis a vis the Antipodean states and has seen the sub-group prioritize its relations with Asian partners as a balance to Western patronage relationships (which is based more on developmental aid than investment).

Respecting the concept of national sovereignty, Asian economic partners are less concerned about Western notions of good governance, transparency, labor market conditions and environmental impact and more focused on returns on investment. This approach has been successfully used by Western companies operating within the MSG. The sanctions and suspension regime has done little to hurt the Baimimarama regime but have pushed both Fiji and the MSG more firmly into an Asian-centric diplomatic orbit, accentuating the cleavage within the PIF (which the MSG sees as too compliant with Australian and New Zealand diplomatic interests).

Against this backdrop, Baimimarama’s inspection visit before the 19th MSG conference later  this month provides him with the opportunity to set the agenda for this year’s discussions and to solidify Fijian interests within the group. Contentious topics such as granting both Indonesia and Western Papua observer status in the MSG (given Indonesian occupation of  Western Papua) are likely to be downplayed in favor of a consensus on strengthening ties with non-Western states and solidifying the MSG’s pre-eminent position within the PIF, at the expense of the PLG (and the much smaller Micronesian States Chief Executives Group).
Consolidating his position as leader of the MSG reinforces Baimimarama’s position at home, where in the face of Western demands that he keep to a timetable leading to open elections in 2014 he can point to demonstrable gains in terms of Fijian influence in regional politics as well as increases in Asian capital investments in that country (even if the country has experienced negligible net growth in the last decade). Bolstered by such events, the Baimimarama regime may feel confident enough to delay or cancel the elections, which will have major implications for the PIF.

The rift within the PIF  is evident in increased MSG demands that Fiji be included in any PIF trade discussions (such as PACER Plus). Whichever the approach adopted by the PIF Secretariat (inclusion of Fiji on matters of trade or its ongoing suspension), the division between the MSG and PLG is likely to widen in 2012. Boosted by the influx of foreign investment in minerals and energy exploitation, the MSG is in a position to make demands within the PIF that it previously could not. Given the failure of the sanctions regime, the inclusion of Fiji in future trade talks (the next PIF forum is in late August) could be a way of incrementally restoring it to full membership status while allowing Canberra and Wellington to save face (recent reports suggest that Australia and New Zealand are already re-considering the issue of Fijian sanctions). The ball is in the MSG court, with Fiji controlling the MSG play.

Summary PIF stability score is 5 (medium), the MSG score is 7 (good) and the PLG is 2 (low). (Stability score is ranked 1-10 on a range extending from none to full institutional capability and enforceable authority over time).

Futures Forecast: Sharpened differences between the MSG and PLG within the PIF will lead to an institutional weakening of the latter.

Club Em Designs

X-Post-Foreign Policy In Focus: Vacuuming Up the Pacific's Resources

By Arnie Saiki, March 5, 2012

The 11^th round of the Trans-Pacific Partnership (TPP) negotiations is currently taking place in Melbourne, Australia. Although negotiators have agreed to the broad outlines of the TPP agreement, a new trade issue has created a snag in the process: the inclusion of investor-state dispute settlement provisions. Australia has refused to accept the investor-state dispute settlement, and U.S. industry associations are urging President Barack Obama to overcome these objections. These investor-state dispute settlement provisions have been included in U.S. investment treaties and trade agreements with more than 50 countries, and there are over 2,500 of these accords currently on record. These provisions, however, give advantages to large economies and can cripple small island states like Pacific Island nations.

Obama describes the TPPA as a "a trade agreement for the 21st century" that improves on and rectifies the past problems in U.S. trade and investment treaties and trade agreements with more than 50 countries, and there are over 2,500 of these accords currently on record. These provisions, however, give advantages to large economies and can cripple small island states like Pacific Island nations.

Nine countries are currently negotiating the TPPA:the United States, Australia, New Zealand, Chile, Peru, Brunei, Vietnam, Malaysia, and Singapore. Japan is in preliminary talks, and Canada and Mexico are looking to join. Although the negotiations are being held in secret, leaked documents confirm that the TPPA is a “NAFTA on steroids.” Contrary to democratic practice, the documents connected to the negotiations will remain secret for four years after being signed or dismissed.

Arnie Saiki

"For most Pacific Island countries (PICs), trade has been a series of disadvantageous agreements with larger economies that negotiate access to island resources. The PICs have remained economically tethered to larger economies despite attempts at small-island integration by sub-regional institutions like the Pacific Island Forum (PIF) or the more progressive Melanesian Spearhead Group (MSG). Just last year, a new sub-regional group called the Polynesian Leader’s Group challenged the MSG, which had made waves by advocating participation in an alternative economic system."

The United States is leading the negotiations and has a great deal of influence over the outcome of the agreement, which covers a vast range of subject matters, including tariffs on goods, trade in services, labor and the environment, telecommunications, and intellectual property. For Pacific Islands, however, the investor rights chapters may offer the greatest challenge to Pacific Island environmental resources.
The small Pacific Island economies are not formally a part of the TPPA negotiations and yet they are tethered to the larger economies of Australia, New Zealand, Chile, France, and the United States. Pacific Island countries are also not member economies of APEC (the economic regional forum that spawned the TPPA). They participate only as observers through the Pacific Island Forum, which facilitates the neo-liberal economic agenda through a basket of sub-regional agreements like the Pacific Island Countries Trade Agreement (PICTA). Still, larger economies pay considerable attention to the Pacific Island countries because of their resources, like fisheries, precious metals, and minerals, as well as their strategic value as military outposts and waterways.

Pacific Trade

Throughout Oceania, native peoples separated by thousands of miles share similar cultural and often linguistic bonds. Long before contact with the west, Pacific peoples not only were connected by the currents of their ocean homes but had established trans-pacific navigational routes, trade, and for the most part a sustainable relationship with their environmental resources.
For most Pacific Island countries (PICs), trade has been a series of disadvantageous agreements with larger economies that negotiate access to island resources.

The PICs have remained economically tethered to larger economies despite attempts at small-island integration by sub-regional institutions like the Pacific Island Forum (PIF) or the more progressive Melanesian Spearhead Group (MSG). Just last year, a new sub-regional group called the Polynesian Leader’s Group challenged the MSG, which had made waves by advocating participation in an alternative economic system. By joining with a bloc like the BRICS (Brazil, Russia, India, China, South Africa), Pacific Islands might do better than the neoliberal programs advocated by PIF.

In comparison with other emerging economies, Pacific Islands have poor performance records. Much of the blame rests on the neo-liberalism of regional institutions like the ADB and APEC. Since the late 1990s, an increase in aid-based relationships has not only stunted the development of many island peoples but also provided a dumping ground for overstock and consumer detritus. Although private investment has had some success in developing traditional farm and fishery practices, these projects are dependent on funding from the Asian Development Bank (ADB), the EU, the World Bank, and U.S. and Australian aid organizations.

In a 2006, the ADB examined small island states among the developing member economies, suggesting that isolated and vulnerable economies remain under economic stress as a result of their governments’ inability to guarantee the basic security of their people.

In 2008, as a response to its self-funded study, the ADB worked with international partners to deliver infrastructure services in the Pacific to streamline private-sector investment to industrial sectors like energy, water, waste, security, and telecommunications, as well as mining, cash crops, and fisheries. The Pacific Region Infrastructure Facility (PRIF) is one such organization.
Privatization is the latest vehicle for the exploitation of island resources. But these international investment projects, along with the bilateral investment treaties that support them, have yet to provide any long-term sustainable cultural or environmental benefit to small island economies.

 Impact of the TPPA

Embroiled in a decades-long struggle for independence from Chile, Rapa NuiTPPA that Chile signed in 2005. Since joining the TPPA, Rapa Nui has been fighting a tidal wave of development proposals for mining projects, airfields, ports, casinos, and hotels. These projects, which would irreparably change a UN World Heritage site, primarily benefit the Chilean government and the investment regime. For example, through the transnational Transoceanica Holdings, international investors funded the development of the Hotel Hanga Roa on land belonging to the Hitorangi clan. In 2010, as the Hanga Roa prepared to open, members of the clan occupied the hotel. Rapa Nui erupted in violence when Chilean President Sebastián Piñera sent navy cruisers and hundreds of armed security forces to end the unarmed protests.

In recent discussions around the TPPA, little attention has focused on how a regional “Asia-Pacific” free-trade agreement will actually impact Pacific Islands. But some recent examples of investments in the region are quite revealing. In Papua New Guinea, Canada’s Nautilus Minerals has launched a new deep seabed-mining project called Solwara 1. Large deposits of gold, silver, nickel, copper, manganese, and other rare-earth minerals are buried deep in the seabed, and the method for extracting these minerals – basically vacuuming up the seabed onto a barge – has only recently been developed.

Little is known about the deep seabed, and no conclusive environmental study has been completed. But the life that thrives in this unusual environment is sulfur-based rather than oxygen-based. When the sludge is extracted onto a barge, it is then separated from the commodity metals and minerals and then dumped back into the ocean. The impact of this sulfuric sediment absorbed by fish or reefs is unknown. However, sulfuric changes in the environment negatively affect oxygen-based plants and animals, as people living with vog (volcanic smog) know all too well.

After the International Seabed Authority changed the regulations for deep seabed mineral extraction, Nautilus acquired even more international investment to lease large tracts of deep seabed in Fiji, Tonga, the Solomon Islands, and New Zealand. These changes have prompted other Canadian, U.S., and Australian mining companies to lease seabed areas in the Exclusive Economic Zones of many other Pacific Island Countries. This mining deregulation, which has resulted from agreements like the TPPA, will likely push ocean biodiversity closer to what the International Programme on the State of the Ocean describes as “irreversible, catastrophic change.”

Consider also the case of Endeavor Mining, which recently offered the Cook Islands government a partnership proposal worth $1 billion over three-and-a-half years for mineral and mining rights to the seabed resources. Typically, since Endeavor is also an independent merchant bank focusing on the global natural resources sector, it will likely offer investors a package of financial incentive benefits that will reward investors at the expense of a state whose 2009 GDP was just short of $200 million.

If made responsible for cleanup in the event of accidents, island governments and taxpayers could be liable for any financial losses. As a result, Cook Islanders might find themselves in an ecological catastrophe and mired in debt. Additionally, to qualify for loans to pay back this debt, multilateral lending institutions may well insist on austerity measures that would lead to further deregulation. Locked into a variety of competing investor agreements, the Pacific islands will find themselves in a race to the bottom, both economically and environmentally.

If the investor-rights “chapter 11” provisions in NAFTA provide any clues about how the TPPA will privilege international investor agreements over government regulations, the Pacific Islands will be opened up to tremendous resource exploitation. Environmental regulations are all that protect the fragile biodiversity of the region. And the costs associated with the despoliation will largely fall on the shoulders of Pacific islanders themselves. The corporations will reap the profits; the Pacific Islands will have to pay the long-term bill.

Looking Beyond the TPP

The average GDP of the smaller developing Pacific islands is around $350 million, with the exception of Fiji, whose annual GDP is around $3.5 billion, and Papua New Guinea at around $9.5 billion (for perspective, New Zealand’s GDP is around $125 billion). There is a tremendous gap between the combined GDP of the islands and the value of the resources exploited from these countries.

This gap represents a strategic imperative for Pacific island economies to integrate along the lines of sustainable trade and sensible environmental regulations. The TPPA is certainly not an equitable integration scheme.

Rather, this NAFTA of the Pacific is like tossing a shark in a fish tank. The TPPA will give even less room for PICs to negotiate positive environmental regulations or manage to accrue social or economic benefits from their natural resources.

Pacific Islanders need to be part of the negotiating process to ensure they are at least able to integrate their commodity resources, since they are critically unequipped to develop their economies to scale with the larger economies. They also need to create a regional regulatory agency that can independently manage the various trade and investment agreements. Without democratic input and democratic control, the TPPA will vacuum up all the resources of the Pacific and leave a poisoned ocean in its wake.

Arnie Saiki is the writer/director for Statehood Hawaii/Imipono Projects. He coordinated the Moana Nui 2011 conference in Honolulu with Pua Mohala I Ka Po and the International Forum on Globalization. He is a contributor to Foreign Policy In Focus.

Recommended Citation:

Arnie Saiki, "Vacuuming Up the Pacific's Resources" (Washington, DC: Foreign Policy In Focus, March 5, 2012)

Further Reading :

Pacific warned of hidden dangers in Obama's new TPP push (Radio Australia)

The Trans-Pacific Partnership-A New Paradigm Or Wolf In Sheep's Clothing?

Economists Issue Statement on
Capital Controls and the Trans-Pacific Partnership Agreement

TPP-The NAFTA of the Pacific

 How Brazil Challenged Europe and Won.

Taxonomy of Dolls and Mutants (Radio Lab)

SiFM post on seabed mining:

http://stuckinfijimud.blogspot.com/2008/04/rush-to-mine-pacific-seabed-fiji.html

SiFM post on TPP and America's Pacific Century Pivot:

http://stuckinfijimud.blogspot.com/2011/11/americas-pacific-century-pivot.html

Club Em Designs

The Islanders With A Dragon Tattoo - China's Rising Influence In The South Pacific. (Updated)

Following up on an earlier post titled "Trans-Tasman Reflexivity In South Pacific Geopolitics".

Regarding the issue of geopolitics of energy, a 2008 lecture hosted by Standford University by Michael Klare outlines the new dimensions in that particular arena. (Video posted below).





With regards to the geopolitics of energy as postulated by Klare, the recent and unfathomable effects of the global financial crisis had major implications on geo-political relationships; which was addressed in keynote address by Paul Krugman at the Center for International Security Study's second annual symposium and was held on May 13-14, 2010. (Video posted below)





Coupled with Paul Krugman's ideas, the inability of the U.S to pay its debts (by borrowing more) will have major and irreversible damages to their relationships with other countries including in the Pacific region, and most importantly how the Washington consensus is perceived.

As of this posting, news reports indicate that the U.S Congress had not passed a legislative Bill to raise the debt ceiling and a Bloomberg article highlighted that Australia also seeks to her own debt ceiling maneuver as well. Both countries are currently involved in wars in Afghanistan and Iraq and have spent a considerable amount of treasury and lives in the two-front, open ended conflict.

Australian think tank, Lowy Institute, whose recent blog posting also raised serious concerns about the sacrifices involved. Neither the U.S, Australia nor New Zealand's influence in the Pacific had progressed significantly due to their past, present and  projected war footing; one might even argue that the ANZUS trio's grass roots perception in the region, had taken an un-remediable dramatic turn for the worse.

Undoubtedly, the perceived implications derived from the global financial crisis (GFC) is clearly demonstrated in, the intuition and reactions of the South Pacific region nations and its inhabitants, that have long recognized the incurable symptoms of a life-threatening ailment. The spheres of influence and their competition within the region, are moving from the rather nuanced level, to a more defined and overt manner- like prospective suitors wooing their brides.

Several commentators and publications have outlined that particular seismic shift in the Pacific rim area, in terms of the diminishing American Lake versus China's growing influence, including Cleo Paskal whose Nov. 2010 article-"Why the West is Losing the Pacific To China, the Arab League and Just About Everyone Else" highlighted the friend option (in a social media analogy), which many South Pacific nations including Fiji, have systematically used:

Geopolitics as it is -- Looking for new friends 

The problem is these sphere-of-influence policies are a based on a Cold War-era model, in which the traditional allies are the only game in town and so can decide policy in a relative geopolitical vacuum. 

Those days are long gone. In an increasingly multipolar world, all sorts of new foreign policy options are available, especially as the enormous value of the island nations of the Pacific becomes increasingly clear.
From a geopolitical perspective, the nations of the Pacific offer (among other things):

• Sea-lanes and ports in relatively calm waters (increasingly important as China, in particular, increases trade with South America);

• Access
 to fisheries (something increasingly important as the Atlantic is fished out);

• Agricultural exports (especially important as concerns over food security increase in countries such as China);

• Unknown but potentially valuable underwater resources;

• Geostrategic military basing sites;

• Crucial votes in international fora (Pacific Island countries represent around a dozen votes in the UN - a substantial voting block).

Given what is at stake, other nations are understandably keen to take advantage of discontent with traditional partners in order to advance their own position in the Pacific.

Steven Ratuva, somewhat echoed  and seemingly repeated the sentiments of Cleo Paskal, in a May 2011 article that appeared in a NZ centric magazine- Steve Ratuva's opinion article in "The Listener.

The excerpt of the Ratuva's article:

The Chinese lake 

By STEVEN RATUVA | Published on May 7, 2011 | Issue 3704 
| Tags: China, Feature 
PrintEmailShare

As China’s expanding influence in the Pacific rekindles Cold War rhetoric and America’s fears play out, do we have good cause to be afraid? 

Getty Images

US Secretary of State Hillary Clinton was blunt: “We are in a competition for influence with China. Let’s put aside the humanitarian, do-good side of what we believe in. Let’s just talk straight realpolitik. We are in competition with China.”

Steven Ratuva On China's Growing Influence

"Fiji is now fully entrenched in the Chinese camp, cemented by millions of dollars of aid, intensified military exchanges, increased investment and trade, and enhanced political and diplomatic links. What Clinton fears is already happening.
One of the grave concerns is that China might set up a military base or even a minor military establishment in Fiji. This would redefine the regional strategic balance of power in a significant way, since Fiji is the regional hub and crossroad for South Pacific nations."

Clinton then added, “We have a lot of support in the Pacific Ocean region. A lot of those small countries have voted with us in the United Nations. They are stalwart American allies, they embrace our values.” 

In her speech to the Senate Foreign Relations Committee in March, Clinton was not only drawing a “them” versus “us” line of demarcation in the middle of the Pacific Ocean, but making claims to political and ideological support on her side of the line. This is classical Cold War political psychology and a sign we may be witnessing a rebirth of this type of rhetoric as the US and China vie for influence in the Pacific.
Her recent visit to the area was partly to reconsolidate the US-Australian-New Zealand strategic links, which the three countries are keen to maintain following the demise of the old Australia New Zealand United States defence alliance, Anzus. 

The increasing acceptance of the Chinese by the Pacific Island states is not because of any ideological preference but rather a response to the growing demand for development aid by the poor Pacific economies. Despite Australian and New Zealand aid over the years, Pacific economies have continued to decline and policy planners have started looking for alternatives. 

Australian aid in particular has been singled out as the most problematic because it is based on the paternalistic assumption that it is possible to replicate Canberra-based models of governance and ethics around the Pacific by sending out “experts” to change institutions and associated modes of behaviour. This social-engineering-type approach has provoked charges of cultural insensitivity, neo-imperialism and self-serving economics. 

More than 70% of the “boomerang” aid goes back to Australia and very little benefit trickles down to its “backyard”, a term used often by Australian leaders to refer to the Pacific. Recent revelations about fraudulent practices within the Australian aid regime have made a mockery of its own professed philosophy of aid for “good governance”.
Furthermore, Australia’s policy towards the Pacific has provoked unease. The Pacific Islands Forum has been seen as too biased towards Australia (most directors of programmes are Australians), causing leaders of small Pacific Island countries to seek an independent adviser for regional free trade under the Pacific Agreement on Closer Economic Relations (Pacer plus). They are also thinking of taking the advisory role for the Economic Partnership Agreement with the European Union away from the Pacific Islands Forum for the same reason. 

Perhaps one of the most significant developments was Fiji’s chairmanship of the intergovernmental Melanesian Spearhead Group, despite Australia’s attempt to thwart this; of interest is how Fiji – considered the “pariah state” of the Pacific – might use this new-found power to get back at Australia.
Worse still, Fiji is now fully entrenched in the Chinese camp, cemented by millions of dollars of aid, intensified military exchanges, increased investment and trade, and enhanced political and diplomatic links. What Clinton fears is already happening.
One of the grave concerns is that China might set up a military base or even a minor military establishment in Fiji. This would redefine the regional strategic balance of power in a significant way, since Fiji is the regional hub and crossroad for South Pacific nations. If this happened, it would certainly vindicate Australia’s naval expansion in recent years to counter increasing Chinese naval presence.
So far, China has made aid commitments of about US$600 million for infrastructure, technology and agriculture to the Pacific. According to a report by ANZ Bank, trade between China and the Pacific Islands has risen from US$180 million in 2001 to US$1.5 billion in 2010. 

There are many sides to the growing international interest in the Pacific. Economic opportunities abound from the growth in land and sea mining in Papua New Guinea, Solomon Islands and Fiji. In Papua New Guinea, US oil giant ExxonMobil has started a US$15 billion natural gas project, and Australian and Chinese companies are scrambling for a share of the country’s abundant minerals. A Chinese company has been granted a bauxite mining licence in Fiji, and more are queuing up to take advantage of any future mining boom there. 

The Pacific Ocean holds the world’s largest seabed mining potential, with countries like Tonga, Papua New Guinea, Cook Islands, Fiji and Kiribati eager to provide prospecting licences to potential investors. In addition, Pacific Island states collectively own the world’s largest exclusive economic zone per land area, a big attraction for fishing nations such as China, Japan, Korea, the US, Canada and Russia.

The Pacific Island states also own an important political asset – their votes in the United Nations and other inter­national forums. China and Taiwan have been competing over this for years; recently, the Arab League and others have made either bilateral or multi­lateral approaches hoping to secure voting allies among the Pacific states. Clinton’s speech raised concerns that the US might lose these votes. For Australia, a few votes may have already been lost – China stands to be a winner.

Although China may consider it’s making forays into the Pacific basically for economic reasons, this is not how the West sees it. China is viewed through dual – and, in fact, hypocritical – lenses. On one hand, the US sees it as an economic saviour for propping up the economy with US bond purchases and preventing a collapse, Australia sees it as its biggest market and New Zealand sees it as its third-largest trading partner. On the other hand, China is viewed with suspicion because of its huge military spending for no articulated purpose, and because it is seen as a sometimes difficult, vicious and conspiratorial competitor whose infectious influence on small Pacific Island states should be curbed.

Getty Images/Listener photo illustration

As in the Cold War, the view often held by the US, Australia and New Zealand is that small Pacific states are too timid and unsophisticated to deal with the big bad Chinese dragon, which has taken the place of the big bad Soviet bear.

Australian politicians, think tanks and scholars have taken turns condemning Chinese aid in an array of moralistic denunciations: “non-transparent”, “corrupting” and “debt-generating”. This was a typical Cold War technique meant to confer the moral high ground on the West while painting the adversary as morally corrupt.

The anti-Soviet propaganda may have worked during the Cold War but the anti-China rhetoric is definitely not working today, as Pacific Island states realise they need to move on as mature global citizens and look for alternative alliances outside their immediate post-colonial circle controlled by Australia and New Zealand. Country after Pacific Island country – Fiji, Tonga, Samoa, Cook Islands, Papua New Guinea – have accepted Chinese aid with open arms.

This is transforming the future developmental and political trajectory and reshaping the regional geopolitical architecture of the Pacific in a significant way.

Unlike in the Pacific Cold War, when the line of demarcation was clear, today the line is blurred, except in the rhetoric. What we have is a hodgepodge of interests by a variety of actors, some more powerful than others. The US and China are just two of those actors, although the most powerful economically. They depend on each other: the US provides the market for Chinese goods, and China’s economic surplus helps pay for US debt. For the Pacific Island states, China is not really the big bad dragon with fiery nostrils but, rather, a golden panda whose Midas touch is most welcome. Australia and New Zealand also welcome China’s ­foreign investment, but both are wary.

China’s emergence as a major power, just as American influence appears to be on the wane, has significantly changed Pacific geopolitics in recent years. The South Pacific is rarely central to major international affairs, but at the height of the Cold War between the Soviet Union and the US, the Pacific was not spared ideological brinksmanship and manoeuvring.

The Pacific was used as testing ground for nuclear weapons and the US had military bases, spy installations and communication posts dotted around the ocean. To reinforce this strategic architecture, the Anzus alliance was formed, based on the “strategic denial” doctrine to keep the Soviet influence out of the “American lake”, a term often used in the 1980s to refer to the Pacific Ocean. New Zealand, as a result of its anti-nuclear policies, withdrew from Anzus in the mid-1980s.

Part of the strategic denial approach was to ensure that small Pacific Island states were to be kept away from Soviet influence through the three countries providing aid. The paternalistic perception, which still persists, was that only the big powers could deal with the ­Soviets effectively.

At the end of the Cold War in the 1990s, Soviet power in the Pacific diminished and no longer posed any threat to US hegemony. As a consequence, the Pacific lost its strategic value. The US closed down it USAid office in Fiji, and the UK withdrew from the Secretariat of the Pacific Community and closed its High Commissions in Kiribati, Solomon Islands and Tonga. The Pacific became a forgotten “backyard”.

Responsibility for the Pacific was left to Australia and New Zealand, which liked to imagine themselves as mini-imperial regional powers of sorts. During the period of the “war on terror” (in which New Zealand once again withdrew support from the US-led coalition of the willing), Australia – as Washington’s “sheriff” – used the Pacific as a buffer for its own national security. One way of doing this was to cast the Pacific as an “arc of instability” consisting of “failed states” that needed to be fixed, as they were potential breeding grounds for terrorists.

Then suddenly, as a result of China’s intensive involvement, interest in the Pacific began to increase. China is not as ideologically or politically imposing as the Soviet Union was, but its expanding economic influence, at the cost of the old Anzus allies, means the Pacific is living, as the old Chinese proverb suggests, in interesting times.

Steven Ratuva is a political sociologist and a senior lecturer in Pacific studies at the University of Auckland.

Although, the interesting times in the Pacific as alluded to by Ratuva, has become much more acute amid the new mania to mine the seabed; this situation has created an awareness among the various Pacific island nations to re-look, re-define, reclaim interest with their economic exclusive zones (EEZ) with much vigor, but unfortunately viewed through the prism of a dollar sign, at the very expense of environmental concerns and community consultations, as pointed out by NGO's in a Fiji Times article.

The excerpt of the Fiji Times article:

Mining problems appear in Pacific

By IOANE BURESE
Thursday, June 02, 2011

PACIFIC rights groups have called for a moratorium on deep-sea mining until individual nations have decided where they stand on the controversial new activity.

According to AAP South Pacific correspondent Tamara McLean, the call comes ahead of a regional meeting in Fiji next week to map out the future of ocean mineral mining, a potentially lucrative but as yet unexplored industry.

The PNG government granted the world's first commercial lease for deep-sea mining in January to Canadian-based Nautilus Minerals, which is set to extract gold and copper from the sea floor 50km off PNG's north coast.

About eight Pacific nations have been granted licences for the new industry, however, there are few regulation guidelines to manage it.

The Deep Sea Minerals Project, funded by the EU and administered by the Pacific Islands Applied Geoscience Commission, aims to fill that void.

The project's team leader, Akuila Tawake, said the Fiji meeting would provide a much-needed framework which would take shape over the next four years.

"The purpose of the workshop is to help representatives of those countries participating in the project to better understand issues related to seabed minerals and mining," Mr Tawake said in a statement.

However, an advocacy group has spoken out strongly against the meeting.

Maureen Penjueli, coordinator of Fiji-based Pacific Network on Globalisation, said individual governments needed to consult their citizens about ocean mining before the discussion went regional.

"It doesn't seem right to be having regional talks when countries haven't had the discussion with their people," Ms Penjueli told AAP.

"The public perception among educated people is that we really don't know what we're getting ourselves into.

"We've had a terrible time with land-based mining so people are very weary.

"Jumping ahead with a framework for how to do it suggests we've already said we're happy about it, but we most certainly haven't."

She said the issue had to be very carefully managed as multi-million dollar leases were a "terrible temptation" for relatively poor Pacific governments.

"It would be easy for the environmental and cultural concerns to be overlooked due to the huge economic interests," Ms Penjueli said.

She called for a moratorium on activity and regional talks "until the basic issues are dealt with".

Fifteen Pacific nations will be involved in the meeting, to be held in Nadi from June 6.

Australia and New Zealand will be represented and 15 of the world's leading industry experts will be present.

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