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Asia Insight

China seeks to flip nations in Pacific Great Game with US

Taiwan ties and geography give small islands big significance

TAIPEI -- As the Pacific Islands Forum prepared to open in Tuvalu this month, the normally regionally focused event found itself in an unfamiliar position: at the center of the growing strategic competition between Washington and Beijing.

Baron Waqa, president of Nauru, which has a population of less than 10,000, called for greater inclusion of unofficial U.S. ally Taiwan -- which Nauru recognizes -- in international forums. Meanwhile, speculation was rife that the government of the Solomon Islands was preparing to switch diplomatic recognition from Taiwan to China.

For the first time since the island-hopping days at the end of World War II, tiny Pacific states are once again strategic concerns for the U.S. and an Asian power. Both Washington and Beijing are increasingly engaging this long-overlooked region, aiming to increase their diplomatic clout and secure strategic advantages.

Earlier in the month, Mike Pompeo became the first sitting U.S. secretary of state to visit the Federated States of Micronesia, where he received a warm welcome.

"Your small islands are big strongholds of freedom," Pompeo said on the island of Pohnpei, during a visit that only lasted a few hours. Taking a jab at China, he said, unironically, that the U.S. will "oppose any larger nation's attempts to turn the Pacific islands into footholds for regional dominance."

Pompeo's host, Micronesian President David Panuelo, reassured his American guest that his country's relationship with China was limited to trade. "Our relationship with the United States is first and foremost," Panuelo said.

Panuelo was joined by Marshall Islands President Hilda Heine and Palau Vice President Raynold Oilouch. The three island nations are collectively known as the Freely Associated States of Micronesia, or FAS, which were administered by the U.S. after the war and later became independent. Each one maintains close ties to Washington through what are known as Compacts of Free Association.

Spread across an area the size of the continental U.S., stretching from the Philippines to Hawaii and skirting the south of the American territories of Guam and the Commonwealth of the Northern Marianas Islands, the FAS make up a strategically valuable corridor. And under the COFAs, the American military enjoys exclusive access to their land, sea and air routes.

A recent report by Rand Corp. describes the FAS as "tantamount to a power-projection superhighway running through the heart of the North Pacific into Asia."

One of the report's authors, senior defense analyst Derek Grossman, told the Nikkei Asian Review that China is fully aware of the strategic value of the Pacific island nations.

"China is increasingly viewing the Pacific islands as critically important toward complicating U.S. military intervention in a Taiwan, South China Sea or East China Sea contingency," Grossman said. "As a result, in recent years we have seen Beijing focusing on the Pacific through diplomatic and economic means, mainly through the Belt and Road Initiative, to further ingratiate itself with Pacific island countries."

U.S. Secretary of State Mike Pompeo is greeted on arrival in the Federated States of Micronesia on Aug. 5. Micronesian President David Panuelo told his guest that his country's relationship with the U.S. was "first and foremost" and ties with China were limited to trade.    © Reuters

Although the U.S. has long held sway over the region, cracks in its dominance may begin to appear soon. Aid is a big part of the deals with the FAS, and their yearly economic assistance components will expire in fiscal 2023 for Micronesia and the Marshall Islands, and fiscal 2024 for Palau. Grossman said this could create an opening for China.

If Washington cannot find a way to renew the COFAs, or to renew them at the same levels as in the past, he said, Beijing could argue that the Belt and Road can help fill the void.

Grossman noted that one area of particular risk for Washington is Chuuk -- one of the four states that make up the Federated States of Micronesia. Chuuk discussed a secession vote last year but punted to early 2020. If the island does end up seceding, it would break the U.S.-Micronesia COFA and allow China to deal one-on-one with Chuuk, which has a deep-sea lagoon that would be ideal for military operations.

Equally significant, the U.S. would no longer have exclusive access to the massive FAS region.

Regardless of what transpires with the FAS in the North Pacific, China is also looking elsewhere for potential toeholds. The further south, the less the American influence, but the greater the importance to regional power Australia, which is a long-standing defense partner of the U.S. but counts on China as its top trading partner and a major investor.

Last year, a Fairfax Media report claiming China was aiming to establish a naval base on Vanuatu raised eyebrows in Canberra. Such a base could, in theory, enable the People's Liberation Army Navy to deny Australia's navy direct access to the Pacific Ocean. Substantial media coverage led to major pressure on Vanuatu's government, which subsequently vowed it would not allow any country to have military facilities on its territory. Other potential sites of similar value, such as Fiji or Tonga, remain.

Beijing's regional ambitions are undeniable, but at this point they remain inchoate, with the possible taking precedence over the preferred. "I think that China is being opportunistic at this stage," said Jonathan Pryke, director of the Pacific Islands program at the Sydney-based Lowy Institute.

Some countries are more geographically strategic than others, he said.

"Just looking at a map you can tell that Palau has more strategic interest than Tonga, but China can't be too picky when it has so few allies and opportunities to establish strategic and military footholds," he said. "Australia and America's interests do align in the Pacific in preventing China from achieving its potential ambition of setting up a military base, so for us it's less about securing a 'prize' than [about] preventing China [from establishing a regional military presence] -- it's essentially a game of whack-a-mole."

Taiwan President Tsai Ing-wen and Marshall Islands President Hilda Heine review a guard of honor at a welcoming ceremony in Taipei in July 2018. The island nation is one of only 17 countries that has diplomatic relations with Taiwan.   © Reuters

China is using its economic clout to engage Pacific island nations, and its Belt and Road undoubtedly appeals to some leaders, including Manesseh Sogavare, who took over as prime minister of the Solomon Islands in April. The country is in dire need of infrastructure upgrades, and China has been willing to provide loan assistance for projects in the region, including the $87 million wharf project in Vanuatu, an $85 million road development project in Papua New Guinea and a $136 million road development project in Fiji.

The Guardian reported in early June that Sogavare's foreign minister, Jeremiah Manele, told Australian Prime Minister Scott Morrison that his government would decide whether to break ties with Taiwan in favor of China within 100 days, which would mean before mid-September at the latest.

Sogavare has brushed aside warnings from the U.S. that Chinese loans could land the Solomon Islands in a debt trap, saying he was aware of the risks. He need not look far for potential examples of those risks -- the International Monetary Fund has already warned Samoa, Tonga and Vanuatu regarding their debt to China and associated repayment burdens.

Including the Solomons, six of the 17 countries that still have diplomatic ties with Taiwan are Pacific island nations, and Washington is increasingly leaning on those countries to maintain their official recognition of Taipei, fearing a South China Sea-style militarization of the region by Beijing.

W. Patrick Murphy, the U.S. principal deputy assistant secretary for East Asian and Pacific affairs, in late May pushed Pacific islands to stick with Taiwan, describing Chinese attempts to peel away countries that recognize Taipei as "heavy handed" and adding that Beijing's approach to the region "gives rise to tensions by changing the status quo, and then the possibility of conflict."

Beijing has dismissed criticism of its intentions in the Pacific as the product of "Cold War thinking." Last November, when Washington and Canberra announced assistance for expanding Papua New Guinea's Lombrum Naval Base, Chinese foreign ministry spokesman Lu Kang had words of his own for Beijing's regional rivals, saying, "The Pacific island countries should not be the sphere of influence of any country."

Keeping countries onside with Taiwan is indeed one of the primary regional objectives for both the Donald Trump administration and Taiwan's president, Tsai Ing-wen, who visited allies Palau, Nauru and the Marshall Islands in March. Tsai was joined by her minister of foreign affairs, Joseph Wu, who has been both a staunch advocate for Taiwanese and American interests in the region and a critic of Chinese intentions.

"At the time when China is expanding its influence into the Pacific, Taiwan maintaining its diplomatic allies would ensure an aid model of democratic governance and sustainable development, rather than a model of debt trap," Wu told the Nikkei Asian Review. "From a strategic point of view, Taiwan keeping its diplomatic allies would also help maintain a free and open Indo-Pacific."

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