May 8, 2018 / 9:21 AM / 5 months ago

New Zealand hikes foreign aid budget with eye on contested South Pacific

WELLINGTON (Reuters) - New Zealand will ramp up foreign aid spending by nearly a third, Foreign Minister Winston Peters said on Tuesday, as the country seeks to pour money into the Pacific in part to counter the rising influence of China.

New Zealand's Prime Minister Jacinda Ardern speaks as she stands next to Winston Peters after their meeting in Wellington, New Zealand, October 24, 2017. REUTERS/Nicolaci da Costa

Prime Minister Jacinda Ardern and Peters, who struck a deal in October to form a coalition government, have promised a ‘Pacific reset’ to woo neighbouring countries at a time when China is dramatically increasing its presence in the region.

Peters said an extra NZ$714 million ($498.94 million) will be set aside for aid over the next four years in the new Labour-led government’s first budget, set to be announced on May 17. This compares with the current annual aid budget, set under the previous centre-right National government, of NZ$647 million.

“The South Pacific has become an increasingly contested strategic space,” Peters, who is also deputy prime minister, told reporters and officials in Parliament on Tuesday.

“Our voice has been weakened during the past decade at the same time as Pacific nations face a myriad of challenges they are not, in many cases, well equipped to tackle.”

The additional aid would “primarily” be directed to the Pacific, Peters added, but he gave no specific details.

New Zealand and neighbouring ally Australia have long enjoyed near unswayed influence in the Pacific, including acting as protectorates over Pacific nations such as Papua New Guinea. But their dominance is being challenged with the world’s second biggest economy turning its attention to the region.

Chinese economic aid to the region is growing, according to Australian think-tank the Lowy Institute, with an estimated $1.78 billion spent in the decade to 2016.

China has denied Australian accusations that Beijing is using its aid programme to exert influence in the Pacific.

“Does New Zealand need to focus more on the Pacific and to think about its delivery of aid?” said Robert Ayson, a strategic studies professor at Victoria University in Wellington.

“The China factor does encourage New Zealand to think more about that.”

Other nations have expressed similar concerns about China’s growing influence. French President Emmanuel Macron this month called for the creation of a new strategic alliance between Australia, India and France to respond to challenges in the region and China’s assertiveness.

Peters raised the issue with Britain’s foreign secretary, Boris Johnson, at a meeting in London in April. Later Johnson pledged Britain’s “scaled up presence” in the Pacific, a focus analysts say was probably prompted by the Asian giant’s rise.

Reporting by Charlotte Greenfield; Editing by Darren Schuettler

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