In May Papua New Guinea’s Prime Minister Peter O’Neill, resigned from power and was replaced by James Marape, the country’s former finance minister. Amidst the growing tensions between Australia and China in the Pacific, this recent change in government has the potential to shift the power balance in the region.
PNG is of high importance to both Australia and China. As the largest country by landmass in Melanesia and the ‘gateway’ to the Pacific region, gaining power and influence in PNG is key to both nation’s strategic considerations.
Australia’s relationship with PNG is an established one, grounded in historical ties and political necessity. As a former Australian protectorate, Australia has always wielded a certain level of power and influence in the nation and has often relied upon this to protect its interests in the country. Foreign relations with PNG have frequently been apathetic, with engagement only increasing when Australia’s interests in PNG and the Pacific have been directly threatened.
The China challenge
The recent rise of China and its growing presence in PNG poses such a threat. Beijing is aggressively pursuing a closer relationship with PNG, with Chinese business interests and investments in the country intensifying over the past few years. This was prominently displayed in 2018, when China was a key partner at the APEC conference in PNG. Beijing is also using its aid program to both gain power and displace Australian influence in PNG. A recent study by Deakin and Sydney University researchers revealed that many in PNG prefer Chinese aid to Australia’s aid program, which was branded as ‘paternalistic’ and over-bureaucratic in comparison to China’s ‘flexible’ and more effective aid. Australia has long used aid to maintain its influence in the region but the growth of Chinese aid is a significant threat to this.
China undoubtedly intends to widen its area of influence to the whole Pacific region, with President Xi Jinping claiming that the quick growth in China-PNG relations ‘is an epitome of China’s overall relations with Pacific Islands Countries’.
Australia on the defensive and has been forced to reassert its influence with its northern neighbour. Notably, on Marape’s first state visit to Australia in July, the two countries agreed to mould their relationship into a ‘comprehensive strategic and economic partnership’. Australia also made a number of significant commitments to PNG, including a $250 million commitment to electricity and internet projects in the country.
Despite these efforts however, the new PNG government’s actions and decisions appear to be aligned with PNG’s best interests. This could result in a weakening of alliances with Australia and from here, create an opportunity for China to increase their influence in the region.
Marape has indicated that while Australia is still a key relationship for PNG, he intends to ‘shift away from traditional partners and reliance on traditional partners to Indonesia, the Philippines, Malaysia and Singapore’. He is also open to engaging the Chinese government as long as it is on PNG’s terms.
‘Taking back PNG’
In response to concerns over Chinese investment on the recent state visit to Australia, Marape expressed that it was ‘inconsequential and irrelevant’ where foreign investment in PNG came from. Indeed, relations between China and PNG seem to be set to continue to strengthen under the Marape administration, with Marape declaring plans to travel to China for a forum on the Belt and Road Initiative (BRI).
Marape has also stated it is his intent to clamp down on foreign resource projects in an effort to ‘take back the economy’ from foreigners. In his first speech as Prime Minister, Marape made it clear he would be ‘reviewing outdated mining and resource laws’.
A clear example of this is seen within Marape’s approach to the the US$14 billion liquefied natural gas (LNG) project that was signed under the O’Neill government with French energy company ‘Total’. The deal has faced intense opposition from landowners and local stakeholders for its alleged lack of transparency and was a key dynamic in O’Neill’s eventual resignation. Marape gave Kerenga Kua, an outspoken critic of the deal, the Petroleum Portfolio and designated him the minister in charge of the deal. Kua is openly committed to modifying the regulatory environment of resource projects and renegotiating the LNG deal to be in the interests of PNG.
Australia is one of the largest foreign resource investors in PNG and this protectionist shift surrounding resource projects will impact Australian companies and business interests in the country. Australian investment in PNG is integral to its influence in the country and Marape’s ‘taking back’ of PNG’s economy could alter this power dynamic.
Beyond this, Australia is wary of China’s growing influence in the region through the BRI. Australia, joined with Japan and the US, has heavily invested in an LNG gas project in PNG as an alternative to the BRI. While it is unclear if this gas project is the same LNG project mentioned earlier, PNG’s clamping down on resource laws could pose a potential hurdle for Australia’s strategic move regardless.
The Marape government appears committed to acting in PNG’s best interests. This has the potential to weaken traditional ties between Australia and PNG enable China’s rapid rise in the region. Australia will have to work hard to re-assert its presence in and influence with PNG and the Pacific if it wants to maintain the status quo in the region.
Sarah Wilson is the Indo-Pacific Fellow for Young Australians in International Affairs.