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Australia Federal Government Cancels Victoria Belt and Road Agreements

The Australian federal government has revoked agreements signed by Victoria Premier Dan Andrews, which signed the State into the Chinese Communist Party’s (CCP) Belt and Road Initiative (BRI) debt trap and infrastructure projects because the deals with Beijing are inconsistent with Australian foreign policy. 

In total, two BRI projects were among the four canceled proposals under the federal government’s Foreign Arrangements Scheme legislation. The other two agreements cancelled were signed with Syrian and Iranian entities. The two BRI agreements include a Memorandum of Understanding signed by the Government of Victoria in Oct. 2018 and a Framework Agreement signed by the Victorian government in Oct. 2019.

“I consider these four arrangements to be inconsistent with Australia’s foreign policy or adverse to our foreign relations in line with the relevant test in Australia’s Foreign Relations (State and Territory Arrangements) Act 2020,” Foreign Affairs Minister Marise Payne said in a statement.

“I will continue to consider foreign arrangements notified under the Scheme. I expect the overwhelming majority of them to remain unaffected.” 

The Scheme, which has been in effect since December of last year, requires local government, states, territories, and public universities to notify the Minister of Foreign Affairs of any existing or proposed foreign deals. Payne says that she has been notified of more than 1,000 such arrangements. 

This is the first time that the country’s conservative government has exercised its powers under the legislation.

China has been Australia’s biggest trading partner. Relations between the two nations have been strained since last year after Australia called for an investigation into the origins of the SARS-CoV-2 coronavirus pandemic in China. Beijing retaliated by imposing trade restrictions and additional tariffs on Australian imports such as wine and coal. 

In September of 2020, CCP controlled propaganda rag Global Times chirped that Australia would become the “poor white trash of Asia” as long as it keeps defying the communist regime’s hegemony. However, despite pressure from Beijing, Australian leaders, led by Prime Minister Scott Morrison, have shown no signs of acquiescing to the Party’s demands.

After the Morrison government scrapped Premier Dan Andrews’s BRI projects, CCP propaganda outlets retaliated with warnings of “serious consequences.” 

Hu Xijin, Global Times Editor-In-Chief, spouted off at Australia personally. He dissonantly attempted to question Australian citizens as to whether their country is a so-called “uncivilized rogue,” which “deserves stern admonition and punishment” in a Twitter rant. 

Chinese Foreign Ministry spokesperson Wang Wenbin claimed the decision harms the “mutual trust” between the two nations, and indicated that Beijing would take suitable action in response.

Meanwhile, the Party is working to fuel anti-Australian sentiment inside China amongst netizens of its highly controlled Great Internet Firewall. One Weibo post claimed some countries do not deserve respect, while another account said Australia has no dignity, and that the Chinese government ought to teach them a lesson. 

Albert Zhang, a researcher at the Australian Strategy Policy Institute (ASPI) said in his analysis, the social media posts against Australia were triggered by both pro-CCP propaganda and genuine anger among Chinese people.

“I think the recent sort of withdrawal or cancellation of the trade agreement with the Chinese government might potentially cast a negative portrayal of the BRI agreements around the world,” Zhang said to ABC News. “So I think the Chinese government here is trying to stop that perception before people interpret [the withdrawal] differently.” 

One of the Party’s main organs, the Chinese Youth League (CYL), which has 15 million followers on Weibo, is said to be a leading figure in coordinating the construction the Party’s narrative against Australia on Chinese internet. 

Projects at risk

China’s National Development and Reform Commission (NDRC) recently released a report warning Beijing that BRI projects will face massive challenges over the next five years due to COVID-19 fall out and increasing political risks in participating nations. Some of the most important factors that could affect BRI acceptance include rivalry between China and the United States, changes to trade systems and global governance, and growth in emerging economies.

“Due to the impact of the coronavirus pandemic, the world economy is in recession and under increasing pressure. The foundation of our country’s economic recovery is not yet steady. Some local governments and enterprises have certain difficulties in their economic and financial situation, the resources they can put in to the Belt and Road Initiative will be affected,” the report states.

Debt trap

The BRI found another debt trap victim in the nation of Montenegro. In 2014, Montenegro accepted a loan of 1 billion euros from the CCP to build a highway, linking the country with Serbia. In 2018, the country began experiencing difficulty in repaying the loan. 

To repay the debt, the Montenegro government began freezing public sector wages, raising taxes, and even ending a benefits program for mothers. The loan makes up nearly 25 percent of the nation’s overall debt.

Montenegro approached the European Commission for help to repay the loan. However, the commission rejected the request. At a press conference, European Union foreign policy spokesperson Peter Stano said that they will not get involved in third-party debts. 

“The EU is already the largest provider of financial assistance to Montenegro, the largest investor, and the largest trade partner,” Stano said in a statement. “We continue to stand by them, but we are not repaying the loans they are taking from third parties.” 

“The EU has concerns over the socioeconomic and financial effects some of China’s investments can have. There is the risk of macro-economic imbalances and debt-dependency,”  

  • Jonathan loves talking politics, economics and philosophy. He carries unique perspectives on everything making him a rather odd mix of liberal-conservative with a streak of independent Austrian thought.

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