China is pouring billions of dollars in aid and low-interest loans into the South Pacific, and even in the far-flung kingdom of Tonga there are signs that a battle for power and influence among much larger nations is heating up and could exact a toll.
In this April 8, 2019, photo, a Chinese flag flies outside the Chinese Embassy in Nuku'alofa, Tonga.
Dozens of Tongan bureaucrats take all-expenses-paid training trips to Beijing each year, and China has laid out millions of dollars to bring 107 Tongan athletes and coaches to a training camp in China’s Sichuan province ahead of this month’s Pacific Games in Samoa. Graeme Smith, a specialist in Chinese investment in the Pacific, is not convinced China tried to trap Tonga in debt, saying its own financial mismanagement is as much to blame.
“We haven’t seen anything like this since World War II,” said Smith, a research fellow at Australian National University. Other possible explanations, Medcalf said, include the region’s fisheries, seabed minerals and other natural resources, as well as China’s ongoing effort to lure away the few remaining countries that recognize Taiwan instead of China — several of them Pacific island nations.
Some worry that these can become debt traps when nations can’t repay. In Sri Lanka, for example, the government was forced to hand over control of its Hambantota port as it struggles to repay loans it got from China to build the facility — a move that has given Beijing a strategic foothold within hundreds of miles of rival India.
Most Tongans live a subsistence existence in a nation where the king is revered and people take Christianity so seriously that working on Sundays is, with few exceptions, banned under the constitution. The economy relies on foreign aid and cash sent home by Tongans working abroad. Tonga never benefited from the passport money, either. A former financial adviser to the government, American Jesse Bogdonoff, helped place about $26 million into speculative investments and almost all of it evaporated.
Tonga’s immediate financial crisis has been averted, but Fuko thinks the loans have given China the upper hand.An unintended consequence of Tonga’s China loans could be a reduction in foreign investment and withering of the revenues needed to pay them back. “The issue you have got in Tonga is that no overseas companies are keen to go in,” Taylor said. “They’ve cut out investors.”
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