Postcard from the ‘road to nowhere’

By Dan McGarry

Senator Concetta Fierravanti-Wells, Australia’s Minister for International Development and the Pacific, yesterday fired a salvo across China’s bows.

On Radio Australia‘s Pacific Beat program, the government front-bencher accused China of funding the construction of ‘useless buildings’ and ‘roads that go nowhere’.

She’s hardly the first to do so. In Vanuatu, people have questioned the terms of a raft of loans taken out beginning in 2011, when lobbyists acting for the Asian Development Bank (ADB) succeeded in changing finance legislation, making it possible for ministers to sign off on loans without Parliamentary oversight.

We are right to question the design, implementation and price of some of these projects. The Santo Wharf Project is a striking example, where failure to consult and coordinate with local and industry stakeholders resulted in a drastic reduction in cruise ship arrivals for 2018. The end result has thrown Luganville’s tourism development plans into a cocked hat, and caused millions of dollars of lost revenue.

It will take years to bring cruise ship arrivals back to 2014 levels, let alone to start tapping into the northern port’s full potential.

One of the greatest criticisms lined up against China’s infrastructure projects is the Export-Import Bank of China’s (EXIM Bank) not-so-concessionary loans. The terms are substantially less favourable than those offered by the World Bank or ADB, for example. These issues have been raised with China. In a Beijing meeting with senior Foreign Ministry officials, the Daily Post was assured that “China will not force Vanuatu to pay its debts.”

But a population whose New Year’s Day hangover was sharpened by a 2.5% rise in the Value Added Tax (VAT) is not so optimistic. The nation spent all of 2017 wrangling with the question of how to service our increasing debt load. The issue threatened to split the cabinet and was the …read more

From:: Development Policy Centre – DEVPOLICY Blog

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