Flat White

Money well spent? Australia's aid in the Solomons

18 April 2022

9:00 AM

18 April 2022

9:00 AM

The Solomon Islands’ deepening involvement with China has focused attention on the Pacific and Australia’s role in the area.

In recent years, Australia’s foreign aid budget has moved from a worldwide perspective to concentrate on the needs of our neighbours. The original concept of aid was exactly that, to help another nation out of difficulty; that purpose seems increasingly distorted as politics, corruption, influence, and big business interfere with good intentions.

With an annual budget of over $4 billion, Australia’s per capita spending compares favourably with major aid donors. Over the last few years, the Overseas Development Administration (ODA) has moved its budget closer as ‘charity begins at home’, with reduced aid to Africa, the Middle East, and West Asia while maintaining aid to South East Asia and increasing aid to the Pacific region, where estimates for 2020-21 show an rise from $1.25 billion in 2018-19 to $1.45 billion last year. The latest figures show a slight decline in aid to Papua New Guinea (PNG) and the Solomons, with a 14 per cent increase totalling $855 million for other Pacific nations, particularly Vanuatu, Samoa, Tuvalu, and Tonga. An extra $300 million has also been allocated to the Pacific Nations in response to the Covid pandemic.

Rather than handing over cash, this money is now allocated to projects to improve health, education, training, job creation, stability, and budget support. The Solomons, with its population of 700,000, received $156 million last year, down from $176 million the year before.

In combination with The World Bank, a major project started in 2021 will build a hydro project on the Tina River to supply 65 per cent of the electricity demand for the Capital, Honiara; Australia’s specific role will be in road and transmission line construction. The political turmoil in the country has added to costs of this and other projects, with an extra $320 million allocated by Australia since 2018.

Political instability has been a regular problem in the Solomons, dating back to their independence in 1978, with regular outbreaks between 1998 and 2003. Based on domestic island and ethnic rivalry, this resulted in the need for an international peace-keeping force to maintain order, finally leaving only in 2013. Despite their presence, major rioting occurred following the general elections in 2006 with local concerns that Chinese businessmen (who dominate all the major industries) had paid bribes to fix the result. The MPs, who themselves also each have a significant discretionary funding, have made little attempt to deal with endemic corruption or surging youth unemployment. A steady influx of Asian immigrants acquiring land and businesses has further inflamed tensions.

Rioting once more broke out in 2019, following Prime Minister Sogavare’s re-election for a fourth term. Again, it was suspected that the vote had been rigged with Chinese money; multiple Chinese businesses were burned down. After 36 years, the prime Minister then cancelled the political recognition of Taiwan, substituting Mainland China in its place; a rumoured figure of $500 million in Chinese aid had been suggested as an incentive.

The latest rioting and arson, in late 2021, has again resulted in an Australian and Pacific Island Police detachment being sent at the request of Sogavare to keep the peace. The recent announcement of a possible security pact with China, including establishment of a naval base, has brought out further tensions. The prospective legislation would also allow the government to request Chinese armed police and military personnel to maintain social order.

Underlying this long-standing tension is a contest between the more numerous Islanders on Malaita, who continue to support Taiwan, and the Island of Guadalcanal with its Capital, Honiara. The democratic process continues to be undermined by parliamentary vote-buying, while Prime Minister has discretionary access to a China-bankrolled National Development Fund; the opposition leader has described votes for cash, at election time as well as in the Parliamentary voting.

America contributes $35 billion to world aid, Germany $25 billion, UK $18 billion, the other big donors include other European countries and Japan, totalling around $120 billion annually. Despite having a large military budget of over $50 billion, 22 nuclear reactors, and a $2 billion space program with regular satellite launches, India is the largest aid recipient at around $4 billion annually. A similar amount is paid to Turkey by the European Union, to ‘assist’ their control of refugees attempting to reach Europe. Other recipients are primarily in Asia, the Middle East, and Africa; African aid, at an estimated $50 billion annually, has produced no discernible change to the continent, apart from resulting in uncontrolled population growth.

China gives an annual $6 billion aid internationally, with half that amount in no interest or low-interest loans, and the increasingly apparent potential for debt diplomacy (as is the suspected outcome seen in Sri Lanka, with a port acquisition); the World Bank and International Monetary Fund have been similarly accused because of their interest rates, but do not take over assets as compensation. Many have moved to Chinese debt finance as an alternative source of revenue, currently 32 countries in Africa have accumulated debts of $140 billion. Russia, by comparison, is more realistic about the benefits of aid programs, with a token contribution which, by 2017, had increased to $1.2 billion annually; the current events in Ukraine confirm their different concept of helping a neighbour!

It is not only Australia and New Zealand who are disturbed by these events, fellow Pacific Islanders, Fiji, and PNG, are also anxious as an aid bidding war develops. The Solomon Island’s Prime Minister has commented that ‘when a helpless mouse is cornered by vicious cats, it will do anything to survive’.

After decades of financial support, amounting to $50 billion to the Pacific, this attitude does not bode well, and raises questions about the purpose of aid donation. What it should not do is undermine democracy, particularly when it bites the friendly hand that has fed it.

The forthcoming sitting of the country’s next parliament is awaited, with increasing regional concern on the outcome.

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