Darwin | Australia and Japan have agreed to jointly fund infrastructure projects in the Pacific in yet another move by regional allies to try to contain the influence of China on the eve of what promises to be a hostile APEC summit in Papua New Guinea.

In a highly symbolic and historic meeting on Friday, Scott Morrison and Shinzo Abe, the first Japanese prime minister to visit Darwin since World War II, signed a series of MoUs and advanced talks on a more substantive agreement, which would facilitate larger and more regular joint military exercises.

Following a week of posturing and increased tensions at the East Asia and ASEAN summits in Singapore, 21 regional leaders will descend on Port Moresby this weekend for an APEC summit, which will be dominated by the rival superpowers and their allies jockeying for influence with Pacific nations.

Mr Morrison and Mr Abe, both of whom claim they are not trying to choose between the US and China, signed in Darwin an MoU on infrastructure in which they take aim at China’s practice to extend influence by using infrastructure as a form of debt entrapment.

“The MoU will support sustainable regional infrastructure investment that is needs based, transparent and avoids unsustainable debt burdens,” they said in a joint statement.


“Australia continues to welcome all investment into our region from all partner nations where it meets these criteria.”

The agreement is between Japan’s Nippon Export and Investment Insurance and Australia’s Foreign Affairs Department and Export Finance and Insurance Corporation (Efic). Two weeks ago, Mr Morrison boosted Efic’s funding by $1 billion as part of the Pacific pivot, which also included $2 billion for a stand-alone regional infrastructure fund.

The partnership with Japan will complement both this fund as well as the trilateral infrastructure deal involving Australia, Japan and the US established to rival China’s Belt and Road initiative.

Projects under this trilateral initiative related to communications and energy could be announced at APEC where Chinese president Xi Jinping is also expected to announce a major aid and investment package for nations including Fiji, Vanuatu, Samoa, Micronesia, the Cook Islands, Tonga and Niue.

“China will work with Pacific island countries to brave the wind and waves and set sail for a brighter future in their relations,” Mr Xi said in an article for local PNG media.

Already this year, Australia has intervened to fund an undersea internet cable linking the Solomon Islands to PNG and Australia, rather than let Chinese telco Huawei build it. And Mr Morrison has promised to fund the upgrade of the Lombrum naval base in Manus Island, PNG.

Mr Abe told reporters later that Japan and Australia had moved from being enemies 70 years ago to strong partners with shared values of freedom, democracy, human rights and the rule of law, a reference to China’s militarisation of the South China Sea. 

He said all countries in the region, regardless of size, were entitled to an Indio-Pacific with a “solid rule of law” and “free and open waters and skies”.

US Vice-President Mike Pence, who has been raising the temperature with China all week, will use a speech at APEC on Saturday to rally allies to use infrastructure funding as a bulwark against encroachment by Beijing.

He will urge Australia and other countries in the region to ensure any major investments are transparent and don’t represent “empire and aggression”.

Despite the posturing, Mr Morrison again insisted Japan and Australia were trying not to take sides.

“We both have a similar outlook when it comes to managing relationship with two important partners,” he said.

“Japan has a very important strategic partnership with the United States, as do we. They also have a significant trade relationship with China and a broader relationship, as do we.”

Two other agreements signed by Mr Morrison and Mr Abe on Friday were an MoU on shared research into energy resources, and a statement of intent on civil maritime security starting with increased cooperation between Australian Border Force and the Japanese Coast Guard.

There had been a chance they would sign a reciprocal access agreement, which would lead to larger and more joint military exercises but Mr Morrison said this needed more discussion to ensure Australian defence force personnel were not put at undue risk.

“You need the arrangements to be right and Australia will ensure that we have the arrangement, which best protects and services the needs of Australia’s defence force personnel,” he said.

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