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International

Stopping the cheques

22 November 2013

Australia’s performance at CHOGM and in Warsaw this month will accelerate the decline of its influence in the Pacific, writes Nic Maclellan

Right:

Nauru’s president Baron Waqa with prime minister Tony Abbott at this month’s CHOGM meeting in Colombo.
Robert Schmidt/ AFP

Nauru’s president Baron Waqa with prime minister Tony Abbott at this month’s CHOGM meeting in Colombo.
Robert Schmidt/ AFP



STANDING on the podium in Warsaw this week, president Baron Waqa of Nauru wasn’t mincing his words. “Many of the countries most responsible for climate change are retreating from their moral responsibility and obligation to act,” he said. “Consequently, we are lacking the urgent ambition required to lower emissions in the short time we have to avert catastrophe.”

This year’s global climate negotiations haven’t gone well. The Alliance of Small Island States, or AOSIS, is angry that many developed nations are abandoning pledges to provide financial support for the most vulnerable islands affected by global warming. Speaking on behalf of this forty-three-member bloc, Waqa stressed the vital role of climate finance in responding to the climate emergency. “We are missing the all-embracing idea of human solidarity that underpins the concept of ‘loss and damage,’” he said, referring to the devastation to land, water supply, agriculture and infrastructure caused by delays in reducing greenhouse gas emissions and the failure to fund the necessary adaptation.

Leading the retreat at Warsaw is the Australian government. In December last year, the Coalition’s shadow climate minister, Greg Hunt, said that an Abbott government would not give a “blank cheque” to cover loss and damage. Now, as federal environment minister (“climate” having been removed from the title), Hunt has refused to attend the Warsaw negotiations and is making good on his pledge to stop the cheques.

At this month’s Commonwealth Heads of Government Meeting in Sri Lanka, the Abbott government ditched Australia’s pledge to contribute to the Green Climate Fund, an innovative new funding mechanism for dealing with the effects of climate change. In their final communique, the CHOGM leaders “recognised the importance attached to both the operationalisation and the capitalisation of the Green Climate Fund.” But a footnote recorded that “Australia and Canada had reservations about the language of paragraphs 18, 19, 20 and 21 and indicated that they could not support a Green Capital [sic] Fund at this time.”

Hunt made clear in December last year that the Coalition wouldn’t support this multilateral body. “This is not a fund which we support. We have no control over where the money goes, no control over how it’s used, no control over how much we pay and this is something which we clearly, simply, categorically reject.” At the time, international observers were astounded by the chutzpah of this statement. Australia had played a central role in the creation of the fund, with AusAID’s deputy director-general, Ewen McDonald, appointed co-chair of the Fund’s board for its first year of operation. Australian officials have played a crucial role in determining the Fund’s mandate, operations and policies.

In Warsaw, Australian negotiators also disrupted talks on the “loss and damage” agenda, leading to a walkout by the “G77 plus China” delegates, the 132-member bloc currently chaired by Fiji. As noted climate researcher Saleemul Huq told the Guardian, “Discussions were going well in a spirit of cooperation, but at the end of the session on loss and damage Australia put everything agreed into brackets, so the whole debate went to waste.”

At a time of diplomatic turmoil with Indonesia, these attacks on climate finance, coupled with recent cuts in the aid program, will have long-term strategic implications for Australia’s relationship with Pacific island neighbours. Although Australia remains the major provider of aid, trade and military cooperation in the Pacific islands region, the days when it could use aid to call the shots are long gone. The old relationship is no longer the only game in town: in the same month that Canberra overturned Australia’s policy on climate finance, China announced US$1 billion in concessional loans for the Pacific islands.

Alongside China’s increasing diplomatic influence in the Pacific, a range of other players – from Cuba, Russia and Indonesia to unexpected actors like the United Arab Emirates – are complicating policy in the islands for the ANZUS allies. With larger countries like Papua New Guinea and Fiji taking more assertive regional and international roles, many Australians underestimate the rapidity of change in our region. The latest cuts in aid and climate finance can only accelerate that process.


SINCE Copenhagen in 2009, OECD nations have pledged funds for adaptation and mitigation initiatives in the developing world. Thirty billion dollars was committed for fast-start financing in 2010–13, and the agreed target for 2020 is an annual US$100 billion of public and private funds.

But many obstacles already stand between these funds and the most vulnerable communities, including the inadequacy of funding pledges, the balance between money allocated for adaptation or mitigation, a lack of donor coordination, the complexity of funding mechanisms and the special vulnerability of small island developing states and least-developed countries – countries that barely contribute to global greenhouse emissions.

“Approved [climate] finance for projects in the region’s most vulnerable countries, particularly the small Pacific island states, has been modest,” reports the Overseas Development Institute. “Fiji, Kiribati, Marshall Islands, Samoa, Tonga, Tuvalu, Vanuatu cumulatively receive only 4 per cent (USD $83 million) of the total amount approved in the Asia-Pacific region, mostly for adaptation activities.” Funding cuts will just make the shortfall more serious for countries like these.

The cuts can’t be justified by arguing that small island states have a limited capacity to manage aid flows. Australian officials and non-government organisations have been working with the Pacific Islands Forum to establish systems to manage resources effectively and avoid corruption and mismanagement. The Forum secretariat has completed a major study on climate funds in Nauru and published reports on better practice in the region, and last year Oxfam published a report (on which I was the lead researcher) examining regional efforts to strengthen governance of climate adaptation finance.

Beyond this, many of the problems in accessing climate finance lie with the practices of key donors and multilateral organisations. Acknowledging this problem, a June 2012 World Bank report pointed out that “the institutional rigidity of donor organisations makes cooperation and partnership more difficult… Joint programming of climate change adaptation and disaster risk reduction activities by donors and implementing agencies is not widespread.”

Since 2010, Australia’s fast-start funding for climate adaptation and mitigation has been drawn from the aid budget. With the aid program expanding in those years, and a bipartisan commitment to increase official development assistance to 0.5 per cent of gross national income by 2015, Pacific governments have been reluctant to criticise Australian policy. (Island officials believe, for example, that climate financing was supposed to be “new and additional” to resources allocated for addressing poverty, health, education and women’s empowerment, but they haven’t chosen to make an issue of the fact.)

The decision to abandon the 2015 aid target began under the Gillard government. Labor foreign minister Bob Carr diverted $375 million of aid funds in 2012–13 – funds for humanitarian and emergency responses, women’s programs, agriculture and rural development – to pay for asylum seeker processing. But the Abbott government is going further and faster. Since coming to office, the Coalition has made three key changes to the aid program: cutting $4.5 billion over four years by reversing planned increases in the aid budget; abolishing the aid agency AusAID as a statutory agency and merging its functions into the Department of Foreign Affairs and Trade; and proposing cuts in the number of experienced staff charged with making sure taxpayer funds are well spent.

Under Kevin Rudd and Julia Gillard, Labor met its target of A$599 million of fast-start climate finance in 2010–13. But our fair share of the global target of US$100 billion by 2020 is estimated at $2.4 billion a year, an amount that would require a dramatic shift of attitude within the Coalition.


RECENT announcements about aid and climate finance come at a time when Pacific regionalism is being transformed. Australia’s long-held influence in the Pacific Islands Forum is being eroded by new trends in aid, trade and investment. Pacific governments are diversifying their political and economic links beyond the regional groupings that dominated islands politics throughout the cold war years.

Today, Forum countries are showing growing interest in South–South cooperation and engagement with new partners. Fiji’s coup leader Voreqe Bainimarama has been a key player in this regional realignment. Bainimarama has argued that Pacific nations need an independent grouping outside the Pacific Islands Forum. “We must insist that our voice be heard and heeded,” he has said. “We will dine at the table; we will not be content to pick at the crumbs that remain on the table cloth after the decisions are made and dinner is over.”

With Fiji suspended from Forum and Commonwealth activities since 2009, Bainimarama initiated the “Engaging with the Pacific” meetings in 2010 as a counterpoint to the Forum. In August 2013, these meetings morphed into the Pacific Islands Development Forum, a new regional summit which provides both a mechanism for debate about sustainable development and an alternative meeting place for governments, business and civil society. Over time, the new grouping may evolve into a venue for inter-island dialogue without Forum members Australia and New Zealand in the room.

These trends are also evident globally, reflecting the growing links between the Forum’s island countries and Asian powers. As relations with Canberra and Wellington have soured since the 2006 coup, Fiji has joined the Non-Aligned Movement, established diplomatic relations with a range of key developing nations, and opened new embassies in Brazil, South Africa, Korea and Abu Dhabi.

In 2011, the Asia Group within the United Nations formally changed its name to the Group of Asia and the Pacific Small Islands Developing States. (With Tony Abbott stressing Australia’s links with Anglosphere partners in Washington, Wellington and Ottawa, it’s worth remembering that Australia is part of the UN Western European and Others Group, rather than the Asia-Pacific group.)

The Bainimarama regime’s repression of trade unions, limits on political parties and delays in constitutional and electoral reform have not hampered Fiji’s regional and international influence. This year, Fiji has served as chair of the G77 plus China grouping in the United Nations, an unprecedented role for an islands nation. As Fiji’s permanent representative to the United Nations, Peter Thomson, said in May, “The G77 is the most appropriate international grouping for countries such as Fiji, Kiribati and other PSIDS” – Pacific Small Island Developing States – “to advance the development of their economic agendas in the global context.”

Papua New Guinea is also playing a more independent role in regional politics, reflecting its size as a dynamic, populous nation near the borders of Asia. It is the only Pacific island nation in the Asia-Pacific Economic Cooperation grouping, or APEC, and is seeking full membership of the Association of Southeast Asian Nations. With major reserves of timber, fisheries and minerals and new projects to export oil and liquefied natural gas, Papua New Guinea has the potential to influence neighbouring atoll nations.

Attending the Pacific Islands Forum in Majuro last September, PNG prime minister Peter O’Neill said his country will embark on a program of regional assistance with various countries in the Pacific. From next year, the PNG government will introduce a special budget allocation to fund a regional development assistance program. In Majuro, O’Neill increased climate funds to the Marshall Islands, Tuvalu and Kiribati, and pledged funds for Fiji’s 2014 elections.

Seizing the moment, China is using loans and investment to expand its diplomatic influence in the region, erode longstanding island ties to Taiwan and blunt US regional influence. According to China’s foreign ministry, “developing friendly cooperation with the Pacific island countries is part of the long-term strategy guideline of China's diplomacy” and “a role model for South–South cooperation.”

Meeting Pacific leaders in Guangzhou on 8 November, the Chinese government announced a range of loans, grants and scholarships for island nations. Vice-premier Wang Yang announced that China will provide US$1 billion in concessional loans for Pacific island nations to support construction projects. (A loans facility will especially benefit Papua New Guinea and Fiji, where major oil, gas and seabed mining projects are proposed.) A further $1 billion in non-concessional financing would be made available by the China Development Bank.

At a time when Australia is abandoning increases in overseas development aid, the Chinese government is stressing its diplomatic commitment to the region: “China is a reliable and sincere friend and a dependable cooperative partner of the Pacific island countries.” It will build medical facilities and send medical teams to island nations, as well as investing in green energy projects. Beijing will also provide 2000 scholarships over four years to add to the 3600 Pacific officials and technicians who have already received training in China in recent years.

Canberra’s fixation on the carbon tax and domestic climate policies, meanwhile, is overshadowing these regional and international developments. Although Australia remains the largest aid donor in the islands region, the Coalition government is fundamentally transforming our capacity to deliver development assistance in ways that address core regional concerns over poverty, infrastructure, water and food security. And as we move towards a global climate treaty and a summit to replace the Millennium Development Goals in 2015, there are plenty of other players who are stepping up to engage with our island neighbours. •

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Right:

Economics entangled with politics: the $7 billion Koniambo nickel smelter in New Caledonia’s Northern Province. Nic Maclellan

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