Pacific island nations fear China after Sri Lanka debt crisis

Pacific island nations are discussing working together to lobby China to forgive mounting debts amid concerns Beijing may start seizing strategic assets, Tonga’s Prime Minister ‘Akilisi P?hiva said on Thursday, according to Reuters.

Tonga, one of eight island nations in the South Pacific carrying significant debt to China, is due to start repaying loans next month after borrowing heavily in the aftermath of deadly riots in 2006 that destroyed large parts of its capital.

China’s possession of a Sri Lankan port as Colombo struggled with a spiralling debt crisis meant asset seizures could not be ruled out, P?hiva told Reuters in a phone interview from Tonga.

“If it happens in Sri Lanka, it can happen in the Pacific – so it is entirely an option for China to consider,” said P?hiva, who did not identify any specific assets at risk of being seized.

China’s Foreign Ministry did not immediately respond to a request for comment on Thursday. It has previously said there was no evidence China was responsible for creating unsustainable debt and that it retained good relations with Tonga.

In April, media reports suggested China wanted to establish a military base in the Pacific island nation of Vanuatu after funding a wharf big enough to handle warships. Both China and Vanuatu denied the reports.

P?hiva, who came to power after the bulk of Tonga’s $115 million debt to China was accumulated, said the region should negotiate as one.

“It is no longer an issue for individual countries because there are small countries who borrowed from China and we have problems with that and the option is to collectively work together to find a way out.”

Regional leaders are due to gather at a Pacific Islands Forum early next month in the island nation of Nauru where P?hiva said they will progress plans to ask for their debt to be forgiven.

China, which has a status as a ‘dialogue partner’ in the grouping, has sent an envoy to the event since 2007. (Colombo Gazette)