Interest grows in Vanuatu’s great wharf
VANUATU: A Beijing-funded wharf in Vanuatu that is struggling to make money is big enough to allow powerful warships to dock alongside it, heightening fears that the port could be converted into a Chinese naval installation.
Fairfax Media inspected the A$114 million (NZ$120m) Luganville wharf on Wednesday and was told that United States Coast Guard officials and Marines recently visited the sprawling facility and took a keen interest in its specifications.
Some defence experts have warned that the wharf, which is now the largest in the South Pacific and strategically located in the same harbour in which the US based tens of thousands of troops during World War II, has been built with the option of converting it into a naval base.
Fairfax revealed this week that Beijing is looking to establish a permanent military presence in Vanuatu.
The Chinese and Vanuatu governments have strenuously denied that they have discussed a military base, though Fairfax has confirmed with multiple senior sources that Australian national security officials have been aware of the overtures for some time and are deeply concerned.
Luganville harbourmaster Terry Ngwele said US officials had recently visited the 360-metre wharf. The coast guard makes yearly inspections of wharfs that are certified to take international cruise liners. But on this visit, they were accompanied by US Marines.
‘‘[In] February, we had US Coast Guard and the Marines based in Japan . . . They asked me about the depth, and I told them it was 25m. They said, ‘Wow, this can accommodate a US aircraft carrier’.’’
The business case for the wharf’s redevelopment was based on tourism from cruise ships, and on turning the port into a transit hub for container ships. But neither revenue source is meeting expectations.
According to shipping tracking service FleetMon, only four cruise ships have docked at Luganville this year, though Ngwele said the figure was seven.
The wharf was getting two or three container ships a week, he said, though it can take two at a time and container ships on average stay about one day to offload cargo.
Phillip Ryan, the chief executive officer of the wharf’s stevedoring firm NISCOL, said he believed the business case was fundamentally viable. But he acknowledged that neither side of the business was meeting expectations.
‘‘There’s not much here to really excite passengers getting off the ship to wander around.
‘‘The investment in cruise ships hasn’t panned out the way they would have liked it. That’s a pure and simple fact.
‘‘The cruise liners have moved away to other ports. It’s just not working out at this point in time,’’ Ryan said.
The Vanuatu government has taken on significant debt to China, though it appears to have stopped taking out large loans since getting a stern warning on the issue from the International Monetary Fund in 2016.
The wharf was constructed by the Shanghai Construction Company, and opened with great fanfare in the middle of last year.
The Chinese ambassador, Liu Quan, said at the opening: ‘‘This miracle project is testimony to the Chinese companies that they have the highest engineering know-how and technologies, and the most important of all is that once they commit, they honour their commitment and deliver in time and quality.’’
It is unclear whether the wharf loan contract with the Vanuatu government includes a so-called debt-equity swap clause, which would mean China could take over the facility if Vanuatu defaults on its payments. It has recently taken over the major port of Hambantota from Sri Lanka in these circumstances.
A Vanuatu Finance Department official, Letlet August, declined to answer questions on this or to provide the loan agreement.
Malcolm Davis, a defence expert at the Australian Strategic Policy Institute, said it was ‘‘not by accident’’ that the wharf had been built for large vessels.
‘‘My guess is there’s a Trojan horse operation here that eventually will set up a large facility that is very modern and very wellequipped. They’ve done this before in other parts of the world,’’ Davis said.
‘‘Their hope is that the debt of the Vanuatu government will be so onerous that they can’t pay it back. The Chinese will say, ‘The facility is ours for 99 years’, and the next thing you’ve got a PLA Navy Luang III class [destroyer] docking there.
‘‘Clearly the Chinese are serious about establishing a military base in the Pacific, and that fundamentally changes our strategic circumstances,’’ Davis said.
Lowy Institute Pacific expert Jonathan Pryke said the Luganville wharf project was the ‘‘standout one for potential dual use . . . of all the work the Chinese are doing in the South Pacific’’ – referring to a facility that can be turned from a civil installation into a military one.
His Lowy colleague Euan Graham, an expert in international security, said such a facility ‘‘fits the modus operandi elsewhere’’, and noted that China was also involved in the upgrade of a nearby airport, though that is being funded by the World Bank.
He said there was ‘‘no obvious economic case’’ for China to be building a military presence in the South Pacific, and ‘‘that shortens the odds of a strategic motive’’.
But James Goldrick, a former navy officer and now military scholar, said a lengthened wharf didn’t itself indicate military intent, because most naval ships didn’t actually need that much room.
‘‘A wharf on its own doesn’t mean that much unless you’ve got facilities to do deep maintenance, supply facilities, the ability to refuel,’’ he said.
Ryan, a former Royal Australian Navy sailor with 20 years’ service, said he did not believe Luganville would become a Chinese naval base.
‘‘What you will see is there’ll be an increase in diplomatic missions from Chinese navy coming down . . . flying the Chinese flag.’’
He said the commercial performance of the wharf might improve next year.
Cargo movements were also down because prices for Vanuatu’s major exports, copra and cocoa, had fallen, and demand for imported goods among locals had also fallen, Ryan said.
He backed the case that Luganville could become a container ship hub, with ships from South Korea and Singapore offloading cargo to be picked up by smaller ships and delivered around the Pacific islands.
But he added that the Vanuatu government needed to ‘‘get out into the marketplace and find out where our trade routes are where we can go’’.
‘‘Sending out one or two containers of cocoa is not going to make this country money . . . government needs to get their fingers out of their ears and get going on that, because nobody else can do it.’’ – Fairfax