Australia will offer Pacific countries up to A$3 billion ($2.18 billion) in grants and cheap loans to build infrastructure, Prime Minister Scott Morrison said on Thursday, as Canberra seeks to counter China’s rising influence in the region. Australia and China have been vying for influence in sparsely populated Pacific island countries that control vast swathes of resource-rich oceans.
China has spent $1.3 billion on concessional loans and gifts since 2011 to become the Pacific’s second-largest donor after Australia, stoking concern in the West that several tiny nations could end up overburdened and in debt to Beijing.
“The government I have the privilege to lead, is returning the Pacific to where it should be; front and center,” Morrison said in a speech announcing the new Pacific initiative.
“This is our patch. This is our part of the world.” Morrison said Australia will create a A$2 billion infrastructure fund that will invest in telecommunications, energy, transport, water projects.
Australia will also give an additional A$1 billion to its financing arm, which offers loans to private companies unable to secure funds from traditional lenders, to invest in the Pacific.
Morrison said Australia would also expand its diplomatic presence in the Pacific, posting staff to Palau, the Marshall Islands, French Polynesia, Niue and the Cook Islands.
Australia said it will also strengthen defense and security ties with Pacific islands through new joint exercises and training.
While Morrison did not name China in his most detailed foreign policy speech since he become Australia’s sixth prime minister in the last decade in August, few were in doubt as to who the policy was aimed at combating.
“Australia is reacting to what China is doing. Australia needs more tools to engage with the Pacific,” said Jonathan Pryke, a Pacific Islands foreign policy expert with the Lowy Institute, an Australian think-tank.
Ties between Australia and China, its largest trading partner, have been strained since Australia accused China of meddling in its domestic affairs late last year.
“This announcement will be a gauge of whether Australia can improve relations with Beijing while doing things that would have previously annoyed China,” said Nick Bisley, professor of international relations at Melbourne’s La Trobe University. Australia’s Foreign Minister Marise Payne will on Thursday meet her Chinese counterpart in Beijing, the first visit by an Australian foreign minister in two years after bilateral relations soured.
Australia has in recent months earmarked the Pacific for infrastructure spending, driven by national security concerns, but it has been forced to raid its aid budget to fund projects.
In May, Australia said it would spend about A$200 million to develop an undersea internet cables to Papua New Guinea (PNG) and the Solomon Islands amid national security concerns about China’s Huawei Technologies Co Ltd [HWT.UL].
Earlier this month, Australia said it would help PNG develop a naval base, beating out China as a possible partner for the port development.
Diplomatic sources told Reuters Australia was worried the port could accommodate military vessels in strategically important waters.
Japan’s Central Bank Sitting On Assets Worth More Than The Country’s Entire Economy
An epic bond-buying spree by Japan’s Central Bank means it’s now sitting on assets worth more than the country’s entire economy.
Data released by the Bank of Japan on Tuesday show that its total holdings stand at about five-fifty-three trillion Yen that is 4.9 trillion Dollars. The figure is bigger than Japan’s annual Gross Domestic Product (GDP) at the end of the second quarter and more than five times the size of Apple’s market value.
The years of heavy stimulus have warped parts of Japan’s financial markets and left the central bank with dwindling options to juice growth if a new crisis hits. But the splurge is unlikely to end anytime soon.
The US federal reserve’s total assets are about one fifth of the size of US GDP, and the European central bank’s are around 40% of the Eurozone economy.
PDP Responds To Osinbajo’s Debt Claims
The People’s Democratic Party, along with former President Goodluck Jonathan, has broken its silence over comments made last week by Vice-president Osinbajo, assailing the party on the way they handled economy and on alleged corruption.
Osinbajo said on Tuesday that the former president ruined the Nigerian economy and left the country with huge debt and hardship as a result of alleged corruption under his watch.
One of Jonathan’s aides released a statement that such accusations should not come from Osinbajo whom he claims was recently indicted by the House of Representatives for an alleged corruption.
The statement says fingers should not be pointed at Jonathan whom he says is celebrated internationally for his efforts at achieving Nigeria’s best rating in Transparency International’s Annual Corruption Perceptions Index.
He accused the current government of increasing the nation’s debt because it lacked the discipline of the former President.
Mnangagwa Defends “Painful” Economic Reforms
Zimbabwean President, Emmerson Mnangagwa, has defended what he called painful economic reforms. He says the policies are necessary to get the country out of economic stagnation. He said, “yes, the medicine is harsh, but the patient requires it in order to live”.
Mnangagwa says his administration has identified privatisation of state institutions, broadening of the tax base and fighting corruption as key to turning the economy around.
He also defended a two percent levy imposed on electronic transactions which make up around ninety-six percent of all financial transactions. He said, that will enable them to reduce the budget deficit.
He highlighted increasing output in gold mines and privatisation of the agriculture sector as some of the positive developments in Zimbabwe since he came to power.
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