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Australia unveils $2.18 bn Pacific fund to counter China's sway in region

Australia and China have been vying for influence in sparsely populated Pacific island countries that control vast swathes of resource-rich oceans

Reuters  |  Sydney 

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will offer Pacific countries up to $2.18 billion in grants and cheap loans to build infrastructure, said on Thursday, as Canberra seeks to counter China's rising influence in the region.

and have been vying for influence in sparsely populated countries that control vast swathes of resource-rich oceans.

has spent $1.3 billion on concessional loans and gifts since 2011 to become the Pacific's second-largest donor after Australia, stoking concern in the West that several tiny nations could end up overburdened and in debt to

"The government I have the privilege to lead, is returning the Pacific to where it should be; front and centre," Morrison said in a speech announcing the new Pacific initiative.

"This is our patch. This is our part of the world."

Morrison said will create a two billion Austrailian dollars infrastructure fund that will invest in telecommunications, energy, transport, water projects.

Australia will also give an additional one billion Australian dollar to its financing arm, which offers loans to private companies unable to secure funds from traditional lenders, to invest in the Pacific.

Morrison said Australia would also expand its diplomatic presence in the Pacific, posting staff to Palau, the Marshall Islands, French Polynesia, and the

Australia said it will also strengthen defence and security ties with through new joint exercises and training.

While Morrison did not name in his most detailed foreign policy speech since he become Australia's sixth in the last decade in August, few were in doubt as to who the policy was aimed at combating.

"Australia is reacting to what China is doing. Australia needs more tools to engage with the Pacific," said Jonathan Pryke, a foreign policy expert with the Lowy Institute, an Australian think-tank.

Ties between Australia and China, its largest trading partner, have been strained since Australia accused China of meddling in its domestic affairs late last year.

"This announcement will be a gauge of whether Australia can improve relations with while doing things that would have previously annoyed China," said Nick Bisley, relations at Melbourne's Australia's will on Thursday meet her Chinese counterpart in Beijing, the first visit by an Australian in two years after bilateral relations soured.

Australia has in recent months earmarked the Pacific for infrastructure spending, driven by national security concerns, but it has been forced to raid its aid budget to fund projects.

In May, Australia said it would spend about 200 million Australian dollar to develop an to (PNG) and the amid national security concerns about China's Huawei Technologies Co Ltd.

Earlier this month, Australia said it would help PNG develop a naval base, beating out China as a possible partner for the port development.

Diplomatic sources told was worried the port could accommodate military vessels in strategically important waters.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, November 08 2018. 11:47 IST