Tonga PM fears asset seizures as Pacific debts to China mount

WELLINGTON/ SYDNEY: Pacific island nations are holding talks which could lead to a coordinated request that China forgive mounting debts in the region amid concerns Beijing may start seizing strategic assets, Tonga’s Prime Minister ‘Akilisi P’hiva said.

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.

“If we fail to meet the requirements and conditions set out in the agreement ... we have to pay the cost for our failure to meet the conditions.”

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 US$115 million debt to China was accumulated, said the region should negotiate as one. — Reuters