In this article, I propose that China is a destabilizing force acting upon developing South Pacific democracies and illustrate this point by examining China’s economic and geopolitical maneuvering with regards to the Solomon Islands. I further examine Australia’s position in this geopolitical struggle and its attempts at consolidating power in the region. I look at Australia in particular because it maintains close security ties to the US and UK. For example, the AUKUS (Australia, US, UK) trilateral security agreement is set to establish a submarine base in Perth, Australia from which US and UK forces will operate. Ultimately, I argue for a more astute, intimate, and broad project of conditional foreign aid by Western nations. Throughout the article, I argue against increased Western military activity in the region. I then examine the efficacy—or inefficacy—of conditional foreign aid and suggest that its issues impel us to devote more time, money, and energy into its success; its failures may be a result of Western apathy rather than an inherent issue with aid itself. 

China’s Presence

Over the past decade, China has dramatically ramped up investment in the South Pacific. As their economy grows, it appears poised to challenge US hegemony in the region. One such indicator lies in China’s relationship with the small island nations of the South Pacific. In 2022, former Solomon Islands Prime Minister Manasseh Sogavare signed a secret security agreement with China, secured by derecognizing Taiwan as a legitimate sovereign state. The agreement states, “China may… with the consent of Solomon Islands, make ship visits to carry out logistical replenishment[,]… stopover and transition…and the relevant forces of China can be used to protect the safety of Chinese personnel and major projects in Solomon Islands.” The Solomon-Chinese agreement is but one signal that the geopolitical playing field is shifting. 

Chinese money flows into the South Pacific through direct aid and investment by State Owned Enterprises (SOEs). The latter are particularly important because, as private enterprises, their conduct has a certain flexibility and plausible deniability that foreign governments do not have. Red flags are raised when a government constructs a military base—but less so when private companies, through bilateral agreement, build infrastructure that could support a military base. For example, in 2023, the China Civil Engineering Construction Company (CCECC) was the sole bidder for a port expansion project in the Solomons. Even though CCECC is an SOE, it was contractually awarded the project, and the port infrastructure it is supposed to construct is not inherently militaristic. At issue is the fact that the port could always be used to host the Chinese navy. Indeed, in the context of the Solomon-Chinese security pact, there is legitimate reason to suspect that outcome. This raises a crucial question: is there enough reason for the West to increase its military presence in order to deter potential Chinese military activity among many small but important island nations of the South Pacific? Or should the West use soft power, like expanded aid flows and its own enterprise investment strategy, to disincentivize collaboration with the Chinese? 

Further militarization of the region by either side could threaten vital shipping lanes, increase tensions, and generate considerable economic friction. Australia, a close US ally, is especially reliant on China as a trading partner. 

At the same time, China’s expansionary initiatives exploit fragmented, developing democracies. In 2021, China agreed to make supplementary payments totalling $2.49 million to the Sogavare government. The discretionary money was distributed to 39 out of 50 Solomons Members of Parliament prior to the signing of the secret security agreement in 2022. This is in a nation where 97 percent of citizens find corruption to be a “big problem.” It must be noted that the dissemination of discretionary funds is a practice which the Western-aligned Taiwan also employed. Nevertheless, China effectively capitalized on the opportunities presented by former Prime Minister Sogavare and the Solomon Islands government. Thus, the issue is twofold: China’s expansion threatens the very basis for democracy in the South Pacific (whose maintenance is geopolitically and narratively important), as well as the security of US allies in the region. 

How might US allies counter Chinese influence in the South Pacific?

Though there are other US allies in the South Pacific, we’ll focus on Australia, since it is the main contributor of aid to the Solomon Islands. However, in general, the actions I propose Australia should take also apply to the US’ other allies. 

In response to Chinese activity, Australia could take a hawkish stance and invite further US security into the region. However, this posture would undermine the West’s critique of an expansionary China, increase chances of conflict, and destroy the autonomy of Melanesian nations; they would become little more than stepping stones for great powers. Given that China’s expansion is conducted, in no small part, by exploiting and perpetuating corruption in existing democracies, Australia must not fight against Chinese authoritarianism, but for South Pacific democracy by aiming to reduce corruption and strengthen democracy using conditional aid. This stance is motivated by the apparent need for positive foreign policy (by positive, I mean policy that “proposes something”) rather than negative foreign policy (policy that negates or “counters something”). 

Hugh White, Emeritus Professor of Strategic Studies at the Strategic and Defence Studies Centre of the Australian National University in Canberra, argues for a “concert of Asia” similar to the post-Napoleonic “concert of Europe.” In this view, powers in a region should recognize each other’s legitimacy and reach a general consensus to avoid broader conflicts. Although anti-corruption conditional aid to the South Pacific on its own would not initiate a paradigmatic shift in relations between China, the US, Australia, and other Pacific powers, it would be a step towards a stable and cooperative Pacific. By countering China through peaceful means, such as promoting democracy and transparency, Australia would be insisting that the people of the South Pacific deserve greater autonomy: the ability to envision and build a future distinct from the machinations of global superpowers. 

Conditional Foreign Aid: Its Efficacy and Workability

I will now grapple with whether conditional foreign aid, money lent with the expectation of improvement in the recipient nation, is a viable policy choice by examining the Solomon Islands’ move towards China and relevant studies on the efficacy of conditional foreign aid. One challenge for this article is to square the status quo under which Australia is operating—the immediacy of countering Chinese expansion—with the legitimate material needs of South Pacific Islanders. Put as a question, should Australia aid the Solomon Islands even if foreign aid is veritably ineffective at, for example, reducing corruption?

What kind of aid, and how much, is Australia providing to the Solomons?  

Through the Solomon Islands National Development Strategy (SINDS), which will last until 2035, Australia provided the Solomons with roughly $316 million dollars of bilateral assistance between 2020 and 2022. The plan is comprehensive and provides funds to operationalize the recently established Solomon Islands Independent Commission Against Corruption (SIICAC). One of the pillars of SINDS is to “[r]educe Corruption through improved governance at national, provincial and community levels.” The Solomons have made significant Corruption Perception Index (CPI) gains since 2011, when they ranked 120th out of about 180. However, the worrying fact is that since 2016 with the inception of SINDS, their score has stagnated: they remain in the middle of the pack with a rank of around 80 out of 180. In other words, despite there being a well-funded and structured effort to reduce corruption by both the Solomons and Australia, seven years later there is little evidence of improvement. 

On the ground, Australian aid appears similarly ineffective. Perhaps realizing this, Australia has begun shifting towards infrastructure-centered aid. Australian investment in infrastructure projects in the Pacific has risen 12% since 2012, while less tangible areas like “governance” and “health” have received 3% to  7% cuts. Even so, one Solomons hospital worker interviewed for a Washington Post piece said of Western aid, “we don’t see any of it, smell any of it, taste any of it.” In contrast, China helped build a new stadium for the 2023 Pacific Games and expanded a hospital in Honiara, the Solomons Capital city. Even if we assume China employs less credible investment tactics like debt-trapping through project-specific loans, their aid helps materially improve life for Solomon Islanders. 

Given that Australian aid has not made a significant difference in disincentivizing Chinese collaboration, we should ask ourselves if conditional foreign aid is a viable policy choice at all. In terms of conditional foreign aid’s efficacy in the South Pacific as a soft power tool, the answer isn’t straightforward. The Solomon-Chinese alliance reflects a new, more complicated game where bilateral foreign aid isn’t the only option for Pacific Island nations. In 2022, multinational Chinese corporation Huawei offered a $100 million loan to build infrastructure like mobile towers, and the Solomon Islands gladly accepted. Australia simply can’t match the scale of Chinese enterprise investment. The Solomons’ embrace of China is an indication that conditional foreign aid is becoming less favorable: foreign aid as a percent of the Solomons’ GDP declined from about 26% to 14% from 2012 to 2019, respectively. The other side of the equation is the efficacy of conditional foreign aid in achieving stated goals in recipient nations. 

 The literature on aid disbursement is littered with conflicting reports on its efficacy. Some show that conditional aid is ineffective without positive pre-existing economic conditions and policies. Some show that aid is effective for existing democracies but utterly ineffective and perhaps harmful if disbursed to autocracies. Similar studies show that, with democratic checks in place, foreign aid can considerably increase press freedom, but has an insignificant effect in autocracies. But the South Pacific nations, including the Solomons, are all democracies. What can explain the stagnation or outright failure of current Australian aid? Some studies attribute aid failures to logistical problems like inadequate incentivization, credibility, and engagement by donor countries. For example, in an OECD report on Norway’s relationship with Tanzania, it was found that despite Tanzania’s failure to meet the stipulated goals, Norway still disbursed funds due to a “rigid national budgeting system, and the need to get rid of the money by the end of the year.” Broken incentivization structures and the unwillingness of donor countries to engage in long-term collaborative projects with recipient countries often damage the prospects for success. Other complicating factors include geographical logistical issues (like small remote island chains), a lack of demand and harvestable resources, and fragmented tribal cultures. These somewhat immutable characteristics of the Solomons and similar South Pacific nations hinder the implementation of Western economic and political reforms. Despite considerable challenges of foreign aid in reaching its stated goals, reducing foreign aid to the South Pacific isn’t an obvious decision. This is because Australia’s preeminent concern isn’t the well being of Solomon Islanders, but rather combatting Chinese involvement in the region. Australia reducing aid flows would be seen as little more than capitulating to Chinese influence. 

What should Australia, and the West, do? 

In other words, cutting aid to the Pacific really isn’t an option. The South Pacific’s reliance on China would only increase in response to  a decrease in Western aid, of which Australia provides the majority. Given the complexity of effectively implementing conditional aid and the imperative of limiting Chinese expansion, Australia must continue devoting resources to the region and ensuring the people of the Solomons experience the effects of Australian aid. Australia’s Department of Foreign Aid needs to reinforce current projects by devoting more money and manpower. Australia must become partners with the Solomon Islands; they need to do more than throw money at projects which ultimately don’t or can’t materialize. In addition, Australia must provide long-term, concerted help to the Solomons for projects like SIICAC and SINDS.  The Solomons and similar remote nations need general development, improved infrastructure, and the ability to facilitate economic growth. Improvements in these areas would ostensibly make administering democracy easier, but they won’t occur if developed, stable democratic states simply disburse funds and then neglect to collaborate with the recipients. Indeed, studies show a strong correlation between democracy, liberal democratic freedoms, and efficacious foreign aid. In moving towards a “concert of Asia,” Australia will need to acquaint itself with the ideas that China is a legitimate force in the region, and that fool-proof methods of preventing China from exerting its influence are few and far between. 

Australia has the opportunity to build strong relations with its regional neighbors and offer support to those who stand to materially benefit from it. In this project, Australia should enlist the help of the US, which must be willing to invest in the future of the South Pacific—if not for the people themselves, then for the geopolitical benefits of such an investment. Assuming China’s influence is an attempt at eventual domination in the South Pacific, those geopolitical benefits could be huge. If Australia and other Western nations interested in solidifying democratic norms embark on this project as genuine partners rather than scheming powers, they may just find the region reorienting itself towards the West.