The United States and three of its allies on Sunday unveiled a US$1.7 billion plan to provide electricity and internet to much of Papua New Guinea (PNG), the first step of a plan that will counter China’s spending in the region.
Japan, Australia and New Zealand will join the US in funding the programme as reports emerged of tension over the wording of a final statement to be issued at the end of an Asia-Pacific Economic Cooperation (Apec) summit in the PNG capital Port Moresby.
China had its success on Sunday, with a Tongan official saying the Pacific nation had signed up to the “Belt and Road Initiative” and received a five-year deferral on a concessional loan just before it was expected to commence principal repayments.
The Western allies’ plan would see 70 per cent of PNG’s population getting electricity by 2030, from 13 per cent now, and was showcased as a demonstration of commitment to the strategically important Pacific region.
“We trust that this announcement ... is proof that America and our businesses are investing in this region as never before,” US Vice-President Mike Pence told a news conference.
He said it was the first project under a cooperation agreement between the US, Japan and Australia to provide capital for infrastructure in the Pacific amid the West’s concern about Chinese influence in the region.
President Xi Jinping, who arrived in Port Moresby on Thursday, has been feted by PNG officials. On Friday he held a meeting with Pacific island leaders in which he pitched the Belt and Road Initiative.
On Saturday, Pence took aim at Belt and Road in an Apec address, saying countries should not accept debt he said would compromise their sovereignty.
The tension at the summit has created difficulty for Papua New Guinea in drafting a communique acceptable to all members. Australian media reported that Chinese officials demanded to see PNG Foreign Minister Rimbink Pato over the communique, but were denied entry to his office.
Pato did not respond to messages and telephone calls seeking comment.
PNG is home to 8 million people – 80 per cent of whom live outside urban areas and with poor infrastructure. It has emerged as a flashpoint in the competition between the US and China to lock-in alliances in the region.
New Zealand Prime Minister Jacinda Ardern said the power project would cost around US$1.7 billion, while an Australian government spokeswoman said it would contribute A$25 million (US$18.3 million) in the first year.
China has poured investment into development projects in the region, including plans to build a large hydropower generation plant in PNG as part of the Belt and Road deal.
The Western plan came as diplomatic sources said Australia and the US were concerned about the debt burden the Chinese plant could have on PNG.
Belt and Road was first proposed in 2013 to expand land and sea links between Asia, Africa and Europe, with billions of dollars in infrastructure investment from China.
Pence changed plans by staying in Port Moresby on Saturday night. He was to fly in and out from northern Australian but that plan angered the Apec host.
Australia, a staunch US ally, has for decades enjoyed largely unrivalled influence among Pacific nations. China has only recently turned its attention to the region with a raft of bilateral financing agreements to often distressed economies.