Canberra ‘vetoes Fiji global bank loans’

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by: Rowan Callick, Asia-Pacific editor


From: The Australian

THE Australian government has been secretly vetoing loans to Fiji worth hundreds of millions of dollars from the World Bank and Asian Development Bank, but has doubled to $58 million its own annual aid since the military coup in December 2006.

The move was revealed by economist Stephen Howes, director of the Development Policy Centre at the Australian National University. “I don’t see the rationale for a ban,” he said, adding it “seems hypocritical”.

“Better in my view to have these institutions active in Fiji trying to promote economic reform and development, including through sound lending.”

Professor Howes said “some are worried about Fiji turning to China” – another potential reason for letting the banks operate in Fiji.

A hydropower project for the Fiji Electricity Authority that was to have been supported by $88m from the World Bank is instead being funded principally by the China Development Bank, whose $70m soft loan is contingent on construction by Chinese state-owned corporation Sinohydro.

Professor Howes said Canberra’s influence over the banks was not formal but “like a gentleman’s club – but one in which you have to have influence, which Australia does because of the extent of its support for the banks’ activities in the Pacific”.

Opposition foreign affairs spokeswoman Julie Bishop said she would seek to find out from the government whether it had influenced the banks to suspend loans to the Fiji government.

“It seems incongruous to be secretly preventing other forms of assistance while we have been increasing ours,” she said. “This could be because we are funding health or education directly, rather than in the form of money directly to the government.

“But even if so, that would be a benefit for the Fiji government, which could redirect its spending elsewhere as a result.”

She said if elected the Coalition would review the sanctions that remained in place – chiefly travel and military bans – to ensure they were meeting their declared goals.

“We would seek to re-engage with Fiji and to help it return to democracy and normalise relations as soon as possible,” she said.

Professor Howes said there was also an international cost to having the World Bank and Asian Development Bank impose sanctions on Australia’s behalf. “It reinforces the impression that these organisations are the instruments of rich countries.”

He said the banks’ constitutions instructed them not to be influenced by the political character of members.

A spokeswoman for the Department of Foreign Affairs and Trade said: “The World Bank and ADB are independent institutions with their own decision-making processes.

“Decisions to lend to Fiji are taken independently (of Australia) by both banks. Australia’s support for the banks’ work in Fiji is limited to providing technical advice and grants that directly benefit the people of Fiji, who are experiencing increasing poverty and hardship.”

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