Embargoed until 15 September 2014 00:01
Pressure on Fiji from Australia and other Western countries to return to a democracy after the 2006 military coup, which included sanctions, opened the door to increasing aid flows from China, says new report by the Overseas Development Institute (ODI) – the UK’s largest think tank on development issues.
Since 2007, non-traditional aid to Fiji has increased by 340% - from US$14.3 million to US$63 million. China is responsible for 75% of this development assistance.
Sanctions imposed on Fiji by Australia and other Western donors included travel bans for members of the interim military government, and development aid being redirected away from government ministries.
Australia and New Zealand also convinced the multilateral banks – the Asian Development Bank and the International Bank for Reconstruction and Development – to halt new lending to Fiji, leaving the government strapped for cash. Because of this, between 2007 and 2012 lending from China’s Exim Bank to Fiji increased sharply.
“As Fiji prepares to vote on 17 September in the first democratic election since the 2006 military coup, Australia and the multilateral banks are eager to reengage with Fiji,” said ODI researcher and report author Maya Schmaljohann.
“Sanctions were designed to push Fiji back into democracy, but what they actually did was provide room for China to increase its presence in the Asia-Pacific region, but that has not necessarily been to Fiji’s advantage,” added Ms Schmaljohann.
Chinese aid projects in Fiji in 2014 alone include completing the Navua Hospital, a hydro project in Taveuni and the building of several sports complexes. However, the report notes that China’s aid is ‘tied’ to certain projects conducted exclusively by Chinese contractors, and the lending rates from China’s Exim Bank are more expensive than those from multilateral banks.
Although middle-income and not aid dependent, Fiji is susceptible to natural disasters and climate change risks, and relies on aid to support health and education.
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To read the report or to interview ODI researcher Maya Schmaljohann please contact ODI's media officer Clare Price on +44 (0)7808 791 265 or email [email protected]