Kiribati re-embraces China

The recent re-election of the pro-China Maamau administration in Kiribati has created opportunities and risks – and it’s not all about the fishing, writes Christopher Pala.

After winning an unexpectedly lop-sided re-election victory in late June and recovering a 24-19 majority in Kiribati’s parliament afterwards, President Taneti Maamau is set to implement an agenda that couldn’t be more different from his predecessor’s – and now holds the promise of considerable Chinese aid.

His predecessor, Anote Tong, switched recognition from China to Taiwan upon his election in 2003. His focus was migration with dignity, and global responsibility for action and adaptation.

However, the June presidential election gave Maamau a strong mandate – 26,053 votes to his pro-Taiwan rival’s 17,866 – to carry out two major campaign promises.

The first was to continue putting more government money in the pockets of his 113,000 constituents as fishing revenue increases have left double-digit budget surpluses for over five years, according to IMF figures. This largesse could change post-COVID when IMF estimates a drop of about 2.3 per cent in GDP.

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Maamau’s second promise was to harness the Chinese aid expected to flow in following his controversial switch from Taiwan back to China in September. Notably, China and Kiribati signed a memorandum of understanding on the Belt and Road Initiative during Maamau’s visit to Beijing in January this year.

Maamau told President Xi Jinping “The Kiribati side… looks forward to enhancing cooperation with the Chinese side in areas including economy, trade, investment, tourism, fishery, education, healthcare and infrastructure. The Kiribati side speaks highly of China’s important role in safeguarding world peace and promoting common development, and appreciates China’s active commitment to advancing South-South cooperation and helping small and medium-sized developing countries such as Kiribati to speed up development and address challenges such as climate change.”

Some observers have questioned whether China’s interest stems from Kiribati’s status as one of the world’s greatest tuna producing nations. In 2016, Kiribati waters were responsible for 16 per cent of the world’s tuna supply, with 435,000 metric tonnes of tuna caught, a figure greater than any other Forum Fishery Agency member country.

The Kiribati Ministry of Finance and Economic Development reports that income from purse-seine fishing rose from $58m in 2012, when the PNA’s ‘Vessel-Day Scheme’ was put in place, to $207m in 2015. However, this dropped to $135m last year, mostly for climatic reasons. While climate change affects the four different types of tuna differently, it is known that in El Nino years, the tuna move with warm waters east towards Kiribati and in La Nina they move west, away from Kiribati.

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Kiribati has shown mild interest for years in increasing its take from the tuna by acquiring a fleet of its own. This is because, whilst 16 per cent of the world’s tuna is sourced from Kiribati waters, it is fished by other nations’ fleets. However this initiative has largely failed; there are only two long-liners, which have been owned by a private Chinese company for years.

Another way Kiribati has looked to increase its revenues is by building more processing plants – currently it has only a very small one in Tarawa, owned by the government. If China or Taiwan had wanted to get into either, they could have, and indeed they still can. But Kiribati is simply too far away from markets to make this worthwhile. Additionally, the PNA scheme has been so profitable that few in Kiribati see the need to process fish domestically.

That said, in an interview I recently conducted with President Maamau, he said he wants to develop fishing by forcing foreign fleets, including Chinese, to increase trans-shipments in Tarawa and unload fish that could either be processed in a future bigger plant or sent whole by plane. This is because one of the linchpins of Kiribati’s development – in fishing as well as tourism – is the two Embraer airliners whose service start has been delayed due to COVID-19.

Moreover, increasing funds from the fishing sector will be crucial for Kiribati’s future development, which has been hamstrung for a number of years because of a combination of a lack of access to finances, strategic planning for value-adding in the fisheries and infrastructure.

Kiribati’s 2019 Gross Domestic Product per capita was $2,275 US dollars in 2019, when adjusted by purchasing power parity that’s just 13 per cent of the world average. This has been compounded by some of the worst health statistics in the world. Additionally, whilst 75 per cent of Kiribati’s revenue comes from fishing licenses for its tuna-rich Exclusive Economic Zone, which is roughly the size of India, it still relies heavily on foreign aid. Yearly the country receives tens of millions of dollars from aid programs, with Australia being the largest donor at A$27 million per annum.

In contrast, Teburoro Tito, a former Kiribati president who served during a period in which Tarawa recognized Beijing and who is currently the ambassador to the United Nations and the United States, told me Chinese projects in the Pacific tend to be in the hundreds of millions of dollars, which he sees as a possible boon for his country.

Despite the geo-strategic risks associated with closer ties to China, Kiribati’s new government believes what Beijing is offering is an opportunity to enhance their development options.