The Government of Vanuatu recently had a one day visit by the US Assistant Secretary of Defense on a round trip tour of the Pacific Island nations to pursue the strengthening of bi-lateral ties between the United States and Pacific Island countries.
It was obvious from reported discussions as to the reason for the visit not only to Vanuatu but other Pacific nations as well – China and its expanding influence in the Pacific region and its militarization initiatives in the South China Sea.
In recent years there has been rapid growth of influence of China in the Pacific countries – a region not only considered to be a “western” aligned region but also an important strategic region dividing the East and the West.
The big question that should be asked is how, why and when, the majority of the Pacific countries – many being former colonies of the British Empire and where English is a national language and also a common language amongst the countries, started to look east.
To truly appreciate the geopolitical changes, one must go back in time through history and be aware of the “foreignization” of the Pacific.
In ancient times, before European explorers discovered the Pacific, Asian and Chinese traders were already foraging out into some of the Pacific Islands close to Asia in and around 1200 AD.
There is even the historical discovery of the Lapita people who journeyed across the Pacific as far to the Eastern Pacific as Hawaii and the Marquesas Islands of French Polynesia with remnants of their distinct pottery designs providing proof and identifying the locations of their presence. This was reported to have occurred on or around 1500 BC.
It was during the second millennia in or around 1500 AD that European explorers started to venture into the Pacific led by their big maritime trading companies to seek new territories and expand their influence in what was then an unknown region. Unfortunately for them, the Pacific was not a region affluent in resources such as the African colonies and therefore maintaining the “control” and maintenance of these colonies became an expensive and unprofitable exercise.
At that time the vast resources of Papua New Guinea were relatively unknown and have only featured in the country’s development and economic boost in recent times after its independence.
And then we had the major event known as World War 2 which was in the Pacific basically a fight between the Japanese in the East and the West being United States, England, Australia and New Zealand with the Pacific countries in the Western Pacific being caught in the crossfire. Vanuatu which was then known as the New Hebrides became a major military base in World War 2 and was one of the major bases in the South West Pacific for the Americans in World War 2.
The French did not feature much in the Pacific at that time as France was occupied by Hitler and the Third Reich and therefore was itself, temporarily a colony of Germany. After the war France became its own country again and was again a force in the Pacific with its colonies of New Caledonia, Tahiti, Wallis and Futuna and also the New Hebrides – Vanuatu which it shared with Great Britain.
Of course the French discovered nickel resources in New Caledonia and have exploited that resource to the present day which is why New Caledonia is unlikely to ever achieve its independence as has been seen in the referendums held to determine the will for independence. The indigenous will has been very much watered down and dominated by foreign colonization, social benefits support programs, a high cost of living supported by a high income rate, and boosting of migration to weaken the indigenous political influence.
France also discovered manganese in Vanuatu on the island of Efate and established a large manganese mine on the island of Efate which was closed just before the new nation of Vanuatu achieved its independence despite the fact that there are still reported to be significant manganeseresources within the mined area and surrounding areas.
At that time, Vanuatu then known as New Hebrides also saw the establishment of a tax haven and offshore finance center by major western banks which is still in operation today with very little evidence of the presence of its founders.
In the aftermath of World War 2, with many Pacific countries achieving their independence, many aligned themselves with what were seen as the big brothers being Australia and New Zealand, maintained relations with Great Britain and established relations with France and many other countries, both east and west, however the alignments were more western than eastern.
In time as global geopolitical priorities took center stage, the Pacific region was not considered a priority and it was left pretty much to Australia and New Zealand to monitor, administer and assist the development of the Pacific Region with the European Union and countries such as Japan playing a significant role and the United States concentrating its efforts in other spheres.
The emphasis of many donor partners to countries in the Pacific was to assist the Pacific’s smaller countries to get economically independent and be able to sustain themselves.
This worked well for a while until Pacific Islanders picked up some bad habits and realized that the benefits to their nations could also work hand in hand with personal benefits which has proven to be the downfall of many a nation’s social and economic development and resulted in a tightening up of assistance and aid and the procedures for delivering such aid for some countries.
As the aid pickings became lean, Pacific governments started to look elsewhere and at other initiatives. Many of the countries of the Pacific looked at options such as offshore finance centersamongst other things. With the increased emphasis on measures to curb money laundering and the use of such centers to store monetary wealth in offshore locations and competition from already well established centers, these did not achieve their intended benefits.
Then there was the establishment of the FATF (Financial Action Task Force) as an agency established by the G& Group of countries to combat money laundering and with a later mandate to combat terrorism financing, this was the nail in the coffin of many newly established offshore finance centers.
With the global economic and financial strength of the G7 countries, the measures and policies implemented as a result of FATF recommendations have severely affected and impacted on small
Island states struggling to keep up with new demands and requirements proposed under FATF and implemented by many global banking systems.
Vanuatu is one of these countries adversely affected with financial institutions in advanced economies being sensitive to the risks of correspondent banking which is an essential component of the global banking system especially for cross border transactions. As a result of these sensitivities, many global financial institutions have terminated their corresponding banking relationships with Vanuatu banks.
What few people in Vanuatu appreciated is that the environment created by these sorts of sanctions has a direct impact on commercial progress and economic development and also on a nation’s integrity and investment climate in the eyes of investors and does very little to boost investor confidence.
In the aftermath of the recent global financial crises, the most severely hit would seem to be the so called western economies which has directly or indirectly affected the availability of donor assistance and investment potential available to smaller island Pacific economies.
With the growing requirement for social and economic development to meet the increasing demands of growing populations in the smaller island states of the Pacific, Pacific governments not able to fulfil their needs from traditional donors have been forced to look elsewhere and of course many have looked East towards the welcoming arms of the Eastern tigers and especially the biggest one of them all – China.
China of course is a country with such a population size that it needs to expand productivity beyond its borders not only to meet the needs of its growing population but also to use some of its vast financial reserves to further grow and bolster its interests in many global spheres with much investment in regions whose countries are rated as developing countries hence its vast investments in Asia, Africa and its growing investments through development assistance and economic investment in the Pacific.
China is now replacing the Western traditional geopolitical players in the Pacific and with its enormous wealth and economic base is doing this quite successfully. Hand in hand with this is also the potential expansion of China’s military presence in a region long considered to be a province of western jurisdictions.
Hence the visit of the United States Assistant Defense Secretary – Mr. Randall Shriver to Vanuatu and the Pacific countries to raise the concerns.
So this brings us to the key question, what can the United States do for Vanuatu to counter this growing Chinese sphere of influence?
The alternative question would be what sort of response did Assistant Secretary Shriver receive from the authorities in Vanuatu and other Pacific countries?
The answer should be very simple – help Vanuatu and other countries in the Pacific to be less reliant on China or any other country for major development expansion.
The United States dollar is the main currency of over 70 per cent of global financial business therefore it is an instrumental currency. The United States Government could assist to facilitate a banking environment that will promote private sector investment in Pacific countries to facilitate growth in Pacific economies by utilizing the resources within these countries.
Currently banking restrictions and sanctions being imposed by international financial institutions on countries like Vanuatu are severely affecting investment opportunities and day to day commercial business which in this day and age is no longer domestically restricted but because of a heavy reliance on imports, is intricately tied to global financial systems.
Send US expertise to help countries develop systems which can be compatible with and work cohesively with standardized international systems to help reduce Vanuatu and other Pacific countries as a security risk in money laundering and terrorism financing.
Money laundering or terrorism financing are foreign imports to Pacific countries, for which countries like Vanuatu are paying a hefty price for being small and insignificant economic factors in the global scheme of things.
Vanuatu is in a time where corruption is becoming the byword in the public and political sector with the recent identification and arrests of senior public servants on corruption related issues and drastic evolutionary changes in Vanuatu’s political environment whereby politicians have been jailed and there are now serious legal cases that will have a lasting impact on the nature of Vanuatu politics.
Assistance in the form of technical expertise such as good forensic auditors and investigators and retired federal prosecutors to assist and advise the auditing of government and statutory institutions and provide international standard professional training of state prosecutors will go a long way towards helping rid the country of its corruption image. If one needs proof of the effectiveness of the US national monitoring and judicial systems, one only has to watch CNN and the never ending saga of US politics.
There is a lot that the United States can do to help Vanuatu with its economic development and national social progress however Vanuatu is not taking advantage of its relationship with the United States which was cemented in its time as the New Hebrides in World War 2 and temporarily reinforced with the US Millennium Efate Ring Road and Santo Road Projects and the existence of an active US Peace Corps presence helping out many rural communities in Vanuatu and small aid and assistance projects.
With over 100,000 US troops based in Santo and Vila during World War 2, there is now probably millions of their descendants who might consider taking the opportunity to visit where James Michener wrote his literary classic – Tales of the South Pacific and where their grandfathers or great grandfathers stood together and rallied forth to fight against the Eastern invasion at that time. A potential untapped tourist market.
The development of a Ni-Vanuatu seasonal worker program for the United States which is an extension of the current seasonal worker programs being run successfully with Australia and New Zealand with over 7,000 Ni-Vanuatu participating is going to be very helpful to the Ni-Vanuatu.
However such programs do not contribute to developing and strengthening domestic economic development and in the long run could have an adverse effect on the country’s economic growth when with increased commercial and economic progress, there will be a need for a greater labor force.
The Pacific countries are small economies in the global scheme however the impact of China’s expansion in the Pacific has now changed the geopolitical priorities and this provides openings for opportunities for greater things and a greater opportunity for the United States and its partners in the Pacific being mainly Australia and New Zealand to reestablish and reinforce their role in the Pacific.
For the small sovereign island nations of the Pacific, the best way to counter domination is to facilitate diversification and this requires serious help and assistance from others and if that help and assistance is not forthcoming then they have very little option but to pursue options that will assist them to realize their national aspirations in these dynamic and changing times.
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