Pacific News Minute: Tonga’s PM Calls on China to Forgive Debt, Then Abruptly Changes His Mind

Aug 21, 2018

Akilisi Pohiva
Credit ITU Pictures / Flickr

Last week, Tonga’s Prime Minister called on China to forgive debts on loans, not just in Tonga but around the Pacific. The next day, he changed his mind.

With Tonga now two years overdue on repayments, Prime Minister ‘Akilisi Pohiva told the Samoa Observer that the situation was “very serious.” He said Tonga will send China 14 million dollars this year, though that represents a substantial fraction of Tonga’s GDP, and still leaves the country 146 million dollars in debt. If there was no repayment, he suggested that China would seize Tongan assets. 

Other island nations are in more or less the same situation and Pohiva said they should collectively ask the Chinese government to forgive their debts at next month’s Pacific Islands Forum.

Less than 24 hours later, the Prime Minister reversed his position.

A press release said, “After further reflection, I now believe that the Pacific Islands Forum is not the proper platform to discuss the debt issue.” Each country should seek solutions independently, the statement said, and added that Tonga was exceedingly grateful for the loans and that China had never tried to collect its debts or seize collateral. 

So, why the about face?

Chinese Yuan
Credit Photo de l'auteur / Elyyo / Wikimedia Commons

Both Reuters and Australia’s ABC reported that China complained, but, as the ABC report noted, the force and magnitude of that complaint is not clear.

Graeme Smith of the Australian National University told the ABC that it’s also possible that other Pacific leaders weighed in, reluctant to hold a messy debate on “debt trap colonialism,” when some of them are still looking to Beijing for loans.