Did China influence Pōhiva’s back pedalling on Pacific islands loans?

After pushing vigorously for Pacific Island nations to band together and ask China to forgive their debts, Prime Minister ‘Akilisi Pōhiva did a complete about face on the issue.

Like his sudden decision to not host the 2019 Games, his abandoning of his previous position, came without warning.

After telling the Samoa Observer that Island nations needed to be worried about whether China would seize their assets if they did  not repay the loans, Hon Pōhiva appeared to backpedal, issuing a statement that undermined much of what he had said.

His comments at the Pacific Leaders’ Forum in Apia were picked up by Reuters and Radio Australia.

He said all Pacific Island countries should sign a submission asking China to forgive their debts.

China has already refused a request from Hon Pōhiva’s government to convert the loan into a grant or defer the loan repayment.

Then came a press statement, which was labelled “a further statement of clarification.”

In it he refuted almost everything he had said. Here is what he said, in full:

“Tonga-China relations cover various areas of development cooperation, and concessional loans and development assistance are an important part of that partnership. After the riots in 2006, the Tongan government had sought help for reconstruction from many countries and the People’s Republic of China was the only country that was willing to provide concessional loan on a large scale, which turned out to be crucial for the Kingdom’s economic recovery and maintenance of social stability.

“Over the years, China has been aiding Tonga in different forms including grants for infrastructure, construction of roads, schools, convention center, government buildings, as well as technical cooperation, material in-kind assistance and cash grants. All such development aid has greatly facilitated Tonga’s development in various aspects and helped improve the livelihood of the Tongan people, for which the Tongan government and people are exceedingly grateful.

“Regarding my reported comments, after further reflection, I now believe that the Pacific Islands Forum is not the proper platform to discuss this debt issue. Each Pacific Island country has its particular national conditions and different needs for foreign loan, and it’s up to each government to independently seek solutions through bilateral channels.

“I also wish to clarify that China has never claimed to collect the debts or take the assets from Tonga in any way, and the governments of Tonga and China have maintained contacts regarding the repayment of the concessional loans. Our two sides will continue to engage with each other for proper solutions through friendly consultation.”

Many people will wonder why the Prime Minister changed his mind so quickly. Was this what the Prime Minister really thought, or was he reacting to protests from the Chinese embassy in Nuku’alofa?

The fact is that whatever Hon Pōhiva urged other nations to do, the Tongan government is committed to paying back its debt to China.

In July the Australian Broadcasting Commission reported that the Tongan Government would start repaying the Chinese loans this year.

It quoted Hon Pōhiva as saying his Government would start to repay the principal on two loans worth around $160 million from China’s Export Import Bank.

He said last week his government would have paid off TP$14 million by next month,

Tonga’s total external debt is, equivalent to 41 per cent of its GDP. Nearly two-thirds of that is owed to China’s Exim Bank.

Principal repayments on the two loans mean Tonga’s foreign debt repayments will double this year.

A recent court case in Tonga ruled that nearly TP$50 million of Chinese money paid after a Chinese company appropriated a Tongan orbital slot, had been misappropriated.

For more information 

Tonga to start paying back controversial Chinese loans described by some as ‘debt-trap diplomacy’

Pohiva says ‘slow down’ on Chinese loans

Tonga PM goes cold on collective push over Chinese loans

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