US, allies counter China with $2.3b plan for power, Net services in PNG

(From left) Australian Prime Minister Scott Morrison, Japanese Prime Minister Shinzo Abe, Papua New Guinea Prime Minister Peter O'Neill, New Zealand Prime Minister Jacinta Ardern and US Vice-President Mike Pence at the signing of the joint electricit
(From left) Australian Prime Minister Scott Morrison, Japanese Prime Minister Shinzo Abe, Papua New Guinea Prime Minister Peter O'Neill, New Zealand Prime Minister Jacinta Ardern and US Vice-President Mike Pence at the signing of the joint electricity deal. PHOTO: EPA-EFE

PORT MORESBY • The United States and three of its allies yesterday unveiled a US$1.7 billion (S$2.3 billion) plan to provide electricity and Internet services to much of Papua New Guinea (PNG), the first step of a plan that will counter China's Belt and Road spending in the region.

Japan, Australia and New Zealand will join the US in funding the programme in PNG, as reports emerged of tension over the wording of a final statement to be issued at the end of the Asia-Pacific Economic Cooperation (Apec) summit in the capital, Port Moresby.

China had its success yesterday, with a Tongan official saying the Pacific nation had signed up to the Belt and Road Initiative and received a five-year deferral on a concessional loan just before it was due to commence principal repayments.

The Western allies' plan would see 70 per cent of PNG's population getting electricity by 2030, from 13 per cent now, and was showcased as a demonstration of commitment to the strategically important Pacific region.

"We trust that this announcement today, and the part of the United States of America in this joint announcement, is proof that America and our businesses are investing in this region as never before," US Vice-President Mike Pence told a news conference.

He said it was the first project under a cooperation agreement between the US, Japan and Australia to provide capital for infrastructure in the Pacific amid concerns over Chinese influence in the region.

Chinese President Xi Jinping, who arrived in Port Moresby last Thursday, has been feted by PNG officials and stoked Western concern on Friday when he held a meeting with Pacific island leaders where he pitched the Belt and Road Initiative.

 
 
 

On Saturday, Mr Pence took direct aim at the Belt and Road in an Apec address, saying countries should not accept debt that compromised their sovereignty.

The tension at the summit has created difficulty for Papua New Guinea in drafting a communique acceptable to all members.

PNG is home to eight million people, four-fifths of whom live outside urban areas and with poor infrastructure. It has emerged as a flashpoint in the competition between the US and China to lock in alliances in the region.

New Zealand Prime Minister Jacinda Ardern said the power project would cost approximately US$1.7 billion, and an Australian government spokesman said it would contribute A$25 million (S$25 million) in the first year of the initiative.

China has poured investment into development projects in the region, including plans to build a large hydropower generation plant in PNG as part of the Belt and Road Initiative.

The Western plan comes as diplomatic sources said Australia and the US were concerned about the debt burden that the Chinese plant could have on PNG.

Australia, a staunch US ally, has for decades enjoyed largely unrivalled influence among Pacific island nations. China has only recently turned its attention to the region with a raft of bilateral financing agreements to often distressed economies.

REUTERS

A version of this article appeared in the print edition of The Straits Times on November 19, 2018, with the headline 'US, allies counter China with $2.3b plan for power, Net services in PNG'. Print Edition | Subscribe