Aus­tralia to set up $2 bn in­fra­struc­ture fund for Indo-pa­cific re­gion

Mint ST - - VIEWS - El­iz­a­beth.r@livemint.com NEW DELHI

Apush­back against China’s am­bi­tious Belt and Road Ini­tia­tive (BRI) may be at work in the Indo-pa­cific re­gion with the con­tours of an al­ter­nate fi­nanc­ing mech­a­nism tak­ing shape among In­dia, the US, Aus­tralia, and Ja­pan—a group­ing also known as the “Quad”.

The Aus­tralian govern­ment an­nounced on Thurs­day that it would es­tab­lish the Aus­tralian In­fra­struc­ture Fi­nanc­ing Fa­cil­ity for coun­tries in the Pa­cific re­gion with a $2 bil­lion in­fra­struc­ture ini­tia­tive “to sig­nif­i­cantly boost Aus­tralia’s sup­port for in­fra­struc­ture devel­op­ment in Pa­cific coun­tries and Ti­morLeste”.

“At the same time, we will de­liver an ex­tra $1 bil­lion in callable cap­i­tal to Efic, Aus­tralia’s ex­port fi­nanc­ing agency. This will com­ple­ment new, more flex­i­ble in­fra­struc­ture fi­nanc­ing power to sup­port in­vest­ments in the re­gion that have a broad na­tional ben­e­fit for Aus­tralia,” said the Aus­tra- lian govern­ment.

The In­dian for­eign min­istry in New Delhi did not com­ment on the Aus­tralian govern­ment’s an­nounce­ment.

It is too early to say whether the present ef­forts at fi­nanc­ing projects in the Indo-pa­cific by In­dia, Ja­pan, the US and Aus­tralia “could be seen as a coor- di­nated move” to take on the BRI, said one per­son in New Delhi who is fa­mil­iar with the devel­op­ment.

The Aus­tralian an­nounce­ment comes against the back­drop of in­creas­ing Chi­nese in­roads in the

Pa­cific is­lands, in­clud­ing the es­tab­lish­ment of mil­i­tary bases in coun­tries such as Van­u­atu, and the bag­ging of con­tracts to set up un­der­sea telecom­mu­ni­ca­tion ca­ble net­works.

Bei­jing had com­mit­ted more than $6 bil­lion in aid, most of­ten in the form of con­ces­sional loans, over the past seven years, mak­ing it the Pa­cific re­gion’s sec­ond largest aid donor, ac­cord­ing to a Fi­nan­cial Times re­port.

There are se­cu­rity is­sues in­volved in Chi­nese firms un­der­tak­ing telecom­mu­ni­ca­tion ca­ble con­struc­tion, which could aid pos­si­ble es­pi­onage by China, ac­cord­ing to re­ports in the Aus­tralian me­dia.

There are also con­cerns about small coun­tries fall­ing into an un­sus­tain­able debt trap.

China’s lend­ing prac­tices re­lated to its am­bi­tious BRI have raised con­cerns that poorer coun­tries will not be able to re­pay Chi­nese in­fra­struc­ture loans with In­dia’s south­ern neigh­bour Sri Lanka be­ing cited as a case of what could go wrong. In De­cem­ber 2017, China had re­ceived a 99-year lease for the strate­gicham­ban­to­ta­portafter Colombo said it would not be able to re­pay loans.

Aus­tralia’s an­nounce­ment on Thurs­day comes days af­ter In­dia and Ja­pan out­lined devel­op­ment co­op­er­a­tion plans in the Indo-pa­cific, with joint projects span­ning in­fra­struc­ture, health, hous­ing, ed­u­ca­tion and elec­tri­fi­ca­tion. Both “will work to­wards es­tab­lish­ing an In­di­aJa­pan Busi­ness Plat­form...to­ward de­vel­op­ing in­dus­trial cor­ri­dors and in­dus­trial net­work in the re­gion,” ac­cord­ing to a joint state­ment.

For­eign sec­re­tary Vi­jay Gokhale told a con­fer­ence in New Delhi last week that In­dia, the US and Ja­pan were co­or­di­nat­ing on con­nec­tiv­ity ef­forts in third coun­tries.

Aus­tralian for­eign min­is­ter Marise Payne (left) with her Chi­nese coun­ter­part Wang Yi in Bei­jing on Thurs­day. The meet­ing is seen as a sign of a thaw in ties be­tween the key eco­nomic part­ners.

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