A collective Pacific plea to China to forgive debts? Interesting

Last week when Pacific leaders gathered in Samoa for the Pacific Island Forum’s Foreign Ministers meeting, some interesting points were raised by a couple of leaders in relation to an issue that affects many small island countries all over the world.

Given China’s growing influence in aid and status on these shores, the issue of debt and the threat it poses to the populations of China’s debtors is a very real concern. Some leaders are openly concerned about the risks.

So much so they raised an interesting idea. They want all the Pacific countries to beg China to forgive their debts.

Take Tonga’s Prime Minister, Akilisi Pohiva, for instance. He did not mince words when he cautioned Pacific countries to “slow down” in terms of borrowing from China. 

But he did not stop there. He went on to ask for the issue to become a regional matter where the Forum could actually ask China to pardon the debts. Not just Tonga’s debt but everyone – Samoa included.

 “Each of the Pacific Island (states) owes debts to the Chinese Government and this should be an issue on the agenda of the Pacific Islands Forum Leaders meeting next month,” Mr. Pohiva said.

“This should be an issue where the Pacific leaders should dialogue and open discuss ways to deviate from this predicament. We need to discuss the issue.”

“All the Pacific Island countries should sign this submission asking the Chinese government to forgive their debts and to me that is the only way we can all move forward, if we just can’t pay off our debts.”

Well that’s an interesting proposition, isn’t it? 

Why should Pacific leaders discuss issues that are particular to individual independent countries? Since the Pacific Island Forum was never consulted when the debt was taken out by the individual country, why should it become everyone’s problem now? 

It doesn’t make a lot of sense but it’s interesting nonetheless. We suspect Mr. Pohiva will not get far with the idea but then again, if you are in Tonga’s shoes in terms of its debt to China, it’s worth a try, isn’t it?

Now Tonga reportedly owes the Chinese government $160 million with its request for the deferral of the loan repayment or their conversion into grants has been denied by Beijing. During an interview with the Samoa Observer, Mr. Pohiva was quite up front about his fears.

“There are two options, either we pay it or forget about it. And what I mean by that is have the Chinese Government forgive our loans,” he said. “One issue for certain is that we don’t want the Chinese government to take the assets used as collateral for the loan.”

Mr. Pohiva added that he is mindful of the consequences of defaulting on the loan repayment.

“If we fail to pay, the Chinese may come and take our assets, which are our buildings and that is why the only option is to sign a submission asking the Chinese Government to forgive our debts.”

Will Beijing listen though? That is the question. 

We can hazard a guess that it would probably depend on who is asking. Samoa probably has a better chance than others. 

Keep in mind that Mr. Pohiva was not the only one who called for the matter to be elevated to a regional issue. New Zealand’s Deputy Prime Minister Vaovasamanaia Winston Peters also weighed in on the issue.

“The real issue is that can they pay it back,” Vaovasamanaia said. 

“If they can’t there are dramatic serious consequences for a family as it is for a nation. It is good idea the leaders discuss all aspects of this issue about the debt accumulation its purpose for the debt in the first place and the capacity to repay.”

Vaovasamanaia added that converting loans into grants does not work.

“There are consequences of committing ourselves to debt, and it behooves the government to understand that before walking into a loan repayment trap.”

 “All the Pacific Island countries should sign this submission, asking the Chinese government to forgive their debts and to me that is the only way we can all move forward, if we just can’t pay off our debts.”

Well Vaovasa makes an interesting that should not be dismissed and ignored. It comes back to individual governments to do their donkey on what they are getting the country into. What they needed to be reminded time and time again is that there is no such thing as a free lunch. 

China is generous but those guys in Beijing are not stupid either that they will just dish out billions of dollars in aid and not expect anything. The Pacific is only a tiny fraction of their overall goal for world domination. If anything, at least Tonga’s leader is upfront about his fears and humble enough to admit they have a problem.

When will our leaders do the same?

Let’s not wait until it is too late.

Have a great Thursday Samoa, God bless! 

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