Lowy Institute

By Meg Keen, Alan Tidwell 

31 January 2024

Source: https://www.lowyinstitute.org/publications/geopolitics-pacific-islands-playing-advantage

Competition among development partners in the region needs to be harnessed to lift standards and development outcomes.

Executive summary

Traditional donors — Australia, France, Japan, New Zealand, and the United States — now compete with China for geopolitical influence in the Pacific Islands. Pacific Islands leaders worry this competition could lead to militarisation or “strategic manipulation”. 

Leaders are refusing to choose between major powers and are claiming to be “friends to all, enemies to none”. This allows Pacific Islands Countries (PICs) to leverage strategic competition for political and national advantage, as well as maximise aid.

But there are limits to the “friends to all” rhetoric — not all friends share compatible values or governance systems. Some PICs, such as the US Compact states and French territories, have associations that limit their security engagements. Others, such as Papua New Guinea, have a clear preference for traditional partners to assist with security.

Australia and the United States rarely work with China in the region. Yet China’s presence is permanent, and guardrails are needed to deter the erosion of democratic institutions and improve accountability for aid projects.

Pacific regional leaders’ declarations repeatedly call for greater donor coordination and a stronger focus on local priorities. But PICs have few mechanisms to push donors to coordinate aid, and often lack political will to forego the economic benefits of competition. In some PICs, systemic corruption militates against stronger accountability.

The challenge for traditional partners is to align with Pacific priorities and play to their own strengths without compromising strategic interests. They can do that independently, but regional and multilateral partnerships can achieve greater scale and impact, and respond to PICs’ desire for more cooperation and streamlined processes. 

Concerted regional actions also help set development norms, and raise standards for aid quality and accountability, but require shared goals and greater integration of administrative systems.

The desire for influence and project oversight means most aid is given bilaterally. However, regional initiatives can maximise “situations of strength” among likeminded partners by increasing the reach of activities, reshaping critical institutions for development effectiveness, and bolstering regional frameworks based on shared values.

A push by traditional partners for higher aid standards via multilateral agencies can come at the expense of speed and ease of access to finances, which are often the primary selling points of Chinese and other non-traditional donors’ engagement.

The challenge is to streamline processes and tailor programs to the contexts of PICs, with the aim of achieving efficiencies and responsiveness. Offerings made by traditional donors should be sustainable and consistent with core shared values supportive of aid accountability and long-term Pacific prosperity and stability.

[Editor’s note] The full paper can be accessed from the url above.