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How one tiny Pacific nation is getting caught up between the expansion of one superpower and the re-enforcement of another

 

am a Scuba diver. I am a Poli-Sci graduate. I’ve been a blogger for over a decade now. Now, usually only one of these hats is worn at any given time. However, recently all three have come together under what I consider unlikely albeit fascinating circumstances. This story is about that convergence and how it is an examination of a clash of cultures, of superpowers, of the future of our oceans, and a nation caught up in the middle of it all fighting for a future for its people.


Palau is a group of islands about 90 minutes flying time southwest of Guam. It is colloquially known as part of Micronesia though it opted not to join theFederated States of Micronesia (consisting of the states of Kosrae, Chuuk, Pohnpei, and Yap) and instead exists as an independent nation.

 

 

Palau is primarily known for two things. First, as the location of one of the most bloody battles in World War 2’s Pacific Theater. The invasion of PeleliuIsland, which has been historically argued as one of the most pointless invasions in the Pacific campaign in as much as the goal of the invasion — establishing a base to support the eventual invasion of the Philippines and Japan — was never realized due to a strategic shift of focus to the Ulithi Atoll for that purpose, resulted in the deaths of 2,336 American serviceman, 10,695 Japanese soldiers, and the wounding of 8,450 Americans.

One of the bombed out structures on Peleliu Island; a power station the Japanese built in WW 2.

As such, Peleliu is a magnet for WW2 buffs, battle veterans, and families of relatives lost on both sides who come to pay their respects at one or more of the several memorials located there. This is especially true for the Japanese. Just this year the Emperor and Empress of Japan visited the island to commemorate the 70th Anniversary of the end of the War.

View a slideshow from my 2009 visit to Peleliu Island’s WW2 artifacts

The other thing Palau is known for is scuba diving; an underwater Nirvana on every diver’s bucket list…definitely in their top 5. Palau’s location, at the convergence of three of the world’s oceans, places it in the enviable position of boasting an incredible diversity of sea life in numbers few places in the world can surpass in an age where overfishing has decimated once great diving spots and threatened dozens of others.

The quasi ubiquitous Manta Rays that hang out at German Channel

View a slideshow from my 2010 dive trip to Palau

Raja Ampat beats it badly for pure sea life diversity. Cocos beats it badly for pelagics (open ocean sea life such as sharks and tuna). Lembeh Strait and the Philippines beat it badly for muck diving and macro photography. Chuuk beats it (and just about everywhere else) badly for wreck diving. Fiji may or may not beat it for soft corals. But what sets Palau apart from the previously mentioned world class dive spots is they are specialty spots, known primarily for one type of diving interest. Palau, on the other hand, offers the best balance of all of the above categories without the need for an expensive liveaboard ship or going to stay at some (expensive) remote island to get at the quality diving. You can reach most of the best dive spots by speedboat in an hour or less so you can stay on the urban island of Koror in a hotel with the usual modern trappings (the internet is terrible however). You can go out to dinner and sample some of the freshest seafood, especially sashimi, you’re going to find anywhere but not pay the high prices you would for the same level of quality in places like Japan. And Palau, like all of Micronesia, uses U.S. dollars. The only drawback besides the 1999 era speed internet is driving because the cars are mostly left side drivers from Asia but the roads are right side U.S. style. It is the worst of all worlds, a big adjustment to make for drivers accustomed to having a car that’s designed to be driven on the roads that exist in their country.

The once accessible rest stop at Ngmelis island; *the* best rest stop for divers in Palau’s more remote islands. Sadly, a few years back alleged poor treatment of this place by visitors prompted the Chief of Palau, who owns this spot, to close it off from outside access. A real shame. Not far from here Palau erected a tower which is manned 24 hours a day. Its purpose? To monitor the open ocean for signs of illegal fishing.

But, if you ask old timers, they will unanimously state, “You should have dived Palau 25 years ago when the dive sites everyone raves about were significantly better.” I believe them. Overfishing had begun taking a toll. Tourism and diving are the major economic engines for Palau and the nation has reacted to the decline in sea life population, and the corresponding threat posed to their economy by that fact, by establishing the world’s first shark sanctuary in 2009, banning all commercial shark fishing in an area covering roughly 600,000 square miles…though there is a question of effective enforcement given the limited resources the nation can devote to covering an area that size. Long line fishing was banned which has started to show benefits in the recent appearance of Thresher Sharks to the Blue Holes dive site and an increase in the Dogtooth Tuna numbers seen at the world famous Blue Corner dive site. This year Palau established a marine sanctuary of 193,000 square miles which bans all commercial fishing though, again, there is the open question of enforcement viability. There have been some victories on that front, however.

One example of Palau’s conservation efforts. On the northernmost coast of Babeldaub island this sign can be found warning fisherman of the restrictions on fishing when Groupers come to breed.

I have visited Palau four times to dive its riches; in 2009, 2010, 2013 and November of 2015. It is my most recent trip there that is the impetus for this story, for I have noticed some changes taking place there since I last visited in 2013 — not necessarily for the better. What I have seen is dividing the nation, pitting those who want Palau to remain Palauan against those who are profiting off of what Palau is changing in to. There is a simple description for the change: Chinese tourism and Chinese money.

Gray Reef Shark, one of many that can be found patrolling the mouth of the world famous Ulong Channel when the ocean currents are up.

Until very recently tourism was dominated by scuba divers from all over the world, and vacationers primarily from Korea, Taiwan, and Japan. Though Japan’s tourism industry dominated Palau (a visit to most restaurants in the nation’s most populous and urban state of Koror shows menus that are bilingual English/Japanese — in some restaurants the Japanese menu takes precedence), it is over 10 times an order of magnitude smaller than the Japanese tourism that flows through Guam to the greater Marianas Islands, particularly Saipan. The Japanese — Palauan connection is not just historic in nature but also at times strategic. For a long time Palau was one of the few countries not invested in whaling to support Japan’s desire to end the International Whaling Commission’s moratorium on commercial whaling, a position modified only five years ago to support the IWC’s catch quota proposal which has yet to be formally agreed upon.However, starting in 2014 tourism to Palau from China started to explode. How high? In March 2015, arrivals from China skyrocketed by 653% compared to the same month the previous year. This “Chinese invasion” has had a noticeable impact on everything.Flights from China have seen a rapid increase in frequency. Charter airlines like Dynamic Airways, Asian Air, Mega Maldives, and Palau Pacific Airways started flying in to Palau. The impetus for this new tourism influx? Tour packages sold in China. Some Chinese tourists fly in on traditional airlines such as Asiana, Korean, and China Airlines. Higher rollers fly in on private aircraft. By summer of 2015, Palau restricted and scaled back the number of charter flights from China for the near term but its impact on slowing down the new Chinese tourism industry has not gone far enough for many.The tour packages have had a radical impact on the Palauan landscape. New hotels have sprung up on the island, with more under construction or in the planning stages. Some existing hotels have changed hands to Chinese ownership in the past few years.For the uninitiated, though Palau essentially has an economy based almost entirely on tourism and international aid (primarily U.S. aid…something I will get into greater detail later), you won’t be seeing anything remotely like Waikiki Beach’s hotel congestion, even in Koror. The number of big hotels and large resorts could probably be counted on two hands. So when there’s a change that starts occurring to the hotel industry in Palau, its impact is quickly felt across a larger percentage of hotels.Some of these hotels now cater almost exclusively to the Chinese. More than once I heard stories of non-Chinese tourists trying to get a reservation and being denied because they weren’t Chinese. To be fair these stories are anecdotal in nature and cannot be easily verified.What can be verified is the impact of tour operations on at least some of the Palauan hotel landscape. The tours block book out some hotels and resorts well in advance. How far in advance? When I booked my November 2015 trip I started looking at hotels back in April. One hotel, which has changed ownership within the past year, was completely booked out in November. This was a hotel I had previously booked in 2010 and 2013…in 2013 with less than two months notice. Yet I could not find a room for the entire month of November all the way back in April. I checked at least two other hotels and found a similar result. Booked out. This has had an impact on non-Chinese divers finding hotel space.

Want to stay at this resort? I did in 2010 and 2013. But in 2015 I couldn’t find a room in November when I started looking way back in April. It now gets block booked by Chinese Tour companies with big new shiny tour buses that say “Happy Palau” on the side.

Big, brand new, state of the art buses now ferry Chinese tourists to some of these hotels. I saw two parked at one hotel unloading guests. Those buses weren’t here in 2013. It takes deep pockets to bring buses of this quality to a remote-ish location like Palau…buses which would have seemed an unfathomable sight three years ago. Make no mistake, big money is at play here.

This hotel sat unfinished for years. It looked like this in 2009, 2010, and 2013. But when I returned in 2015 it was now completed and accepting Chinese tourists. The reason it sat unfinished for so long was on account of there being no way to run drainage pipes to carry waste water away. Instead, every day a truck has to come and take the waste water away.

I talked with locals who railed about the new Chinese dominated establishments. Their primary beef was these operations are entirely Chinese owned and operated. No locals need apply for jobs working them — the staff is entirely Chinese. Furthermore no locals need apply for jobs building the new hotels and other establishments either. According to the people I talked with the Chinese are bringing in their own labor force to build them. So from these Palauans’ point of view the Chinese are coming in and setting up shop on Palauan turf and locking the local population out of any benefits from them.

Downtown Koror, 2009.

I find this point at least partially disingenuous. After all, the Palauan government must be collecting taxes and other fees from these operations, a financial boon which in theory feeds back into the infrastructure of the country…so there should be some benefit to be had here. But on the subject of increasing employment opportunities, I tend to see their point. If this is true, the Palauan labor force won’t be enjoying the benefits they get from non-Chinese operated establishments.But the collateral damage being caused by the sudden dramatic increase in Chinese tourism doesn’t confine itself to just hotel and construction jobs. It is spilling out all over Palau.

While Chinese tourism has thrived, Japanese, Taiwanese, and Korean tourism has receded. According to figures provided to the Island Times, from Jan-May of 2015 Korean tourism decreased by 12% compared to the same time frame the previous year, Japanese tourism dropped by 18%, and Taiwanese tourism plummeted by nearly 50%. The Taiwanese falloff was so severe China Airlines reduced the number of flights on the route. Worse for Palau, these Chinese tourists so far aren’t pouring money directly into the Palauan economy to the degree other tourists historically have. So not only are the Koreans, Taiwanese, and Japanese pulling back on visiting Palau, the financial falloff experienced by Palauan enterprises on account of their withdrawal isn’t being made up for by the Chinese increase.

Koror’s cityscape is slowly changing in 2015 after many years of remaining relatively the same.

As the demographics of Palau’s tourism makeup have shifted away from historic patterns to the new Chinese dominated paradigm, Palauan businesses have been forced to adjust. In downtown Koror the impact is immediately visible. New establishments are taking on a more visible splashier look with an emphasis on LED/neon style lighting. It’s hardly Times Square in Manhattan but it’s a stark departure from what downtown looked like just three years ago. Restaurants are starting to offer more Chinese style cuisine. Just last week a new Chinese establishment opened with the rather ham-handed name “Chinese Fast Food.” The new Chinese money and tourism is also impacting the housing situation in Koror as some locals are being forced to look outside the state for housing.

At Sushi Bar Mito restaurant; one of the traditional places tourists have gone to experience oh-so-fresh sashimi, including the expensive (but worth every penny) Spiny Lobster sashimi. A personal favorite of mine. Now newer restaraunts are popping up catering to Chinese cuisine to meet the demand caused by the rise in Chinese tourism.

More troubling is the uptick in violations of Palauan law to cater to Chinese culinary tastes, where banned fish like Napoleon Wrasse and Humphead Parrot Fish are served for dinner at some Chinese hotels and restaurants, andHawksbill Turtles as well as undersized crabs and lobsters are taken. Things like this undermine all the conservation efforts Palau has implemented which in turn impacts the quality of the scuba diving in the region.As does the mistreatment of sea life.

At the pricey but very very good Mog Mog restaurant, patrons can choose from the live Spiny Lobsters, Mangrove Crabs, and (super expensive $200) Coconut Crabs available that evening. While places like Mog Mog try to adhere to the size restrictions placed on crustaceans being captured and sold, other restaurants, particularly some that cater to the Chinese, have been busted for offering undersized or outright banned culinary treats.

Because Palau knows its economy depends greatly upon eco-tourism, there is an increased urgency in protecting the sea life that drives it. The state passed its various moratoriums and bans. Local access TV regularly aired PSAs regarding the $5,000 fine for the killing of the rare and elusive Dugong; a creature I have only seen once fleetingly from a distance. Subsistence fishing is gaining traction.PADI Divers have it drilled into their brains during the certification process what not to do underwater. You don’t touch the reef. You don’t mess with the sea life. Anyone who does, even by accident, tends to get verbally reprimanded by the others around them.I prefer to resist using sweeping generalizations. And yet I have seen and heard of more cases of reef violations and sea life mistreatment with Chinese tourists in Palau than I have with other dive groups.

The world famous Jellyfish Lake of Palau, where you can swim with the Jellies because they have evolved to lose their sting. There have been numerous complaints about the treatment of the Jellies by the Chinese who have allegedly run roughshod over the lake as they swim and snorkel under the surface, injuring and killing jellies in the process. It doesn’t take much to kill a Jelly that size. One good fin slap would do it.

Chinese dive groups didn’t just suddenly show up on Palau in 2014. I had seen them here and there on their own dive boats back in 2009 and 2010. It didn’t look like a very enjoyable experience to me as I watched them sitting crammed 12–18 on a boat (for non-divers who don’t comprehend the significance of that…that’s a lot of divers for one boat). This year I saw them underwater. While one group of divers is hardly indicative of any patterns the fact remains that at Ulong Channel I witnessed one female Chinese diver freak out underwater and get dragged back to the group by their Chinese instructor while another Chinese diver literally stood on the reef while holding on to a part of it with his hand. And nobody did anything about it.If that had happened in any of the groups I’ve dived with, the person freaking out would have immediately been taken to the surface and the person standing would have been shooed off the reef quick-time and then chewed out back on the boat. And draping a Chinese flag on an undersea Japanese wreck? Totally disrespectful.This isn’t to say that other groups don’t have their own share of incidents, because they do. But there does seem to be a higher preponderance of reported or anecdotal incidents involving the Chinese. How much of that is because the Chinese are “bad tourists” or “bad divers” and how much of that is really because the higher numbers of Chinese tourists make for a corresponding rise in incidents simply because there are more of them there now and that makes it look worse when the actual percentage is roughly the same as other groups is something that I believe needs to be examined further.

I was talking to a dive boat driver and he said he got fired from a different dive operation after he got into an argument with the dive instructor on the boat. The reason? The instructor had pulled a turtle out of the water for the Chinese divers to hold and take pictures of themselves holding it. The boat driver, who knew better —he said to me “You just don’t do that” — took the turtle away from the instructor and put it back in the ocean. Then the argument intensified and nearly came to blows. The driver — even though he was totally in the right — had no chance of keeping his job when the dive operation didn’t want to jeopardize a revenue stream and put pleasing the Chinese tourists above the traumatization of sea life.I would like to say this was an isolated incident. I would like to say that turtles in Palau aren’t in greater danger with the Chinese there in greater numbers. I have seen Chinese divers show proper care and respect both above the water and below so I know it’s not a universal problem afflicting all Chinese tourists. But a Chinese tour operator giving out leaflets showing pictures of Chinese tourists holding up turtles suggests it is definitely a problem to some extent.Back in March of 2015 I read an Op-Ed in Oceana Television Network. It was the first time I learned of the changes that were taking place in the nation since I had visited two years prior. I’m going to quote part of it here:

A virtual explosion of Chinese tourism is engulfing the nation while the people of the land appear stunned, as if watching a tsunami approach in slow motion. I find myself in a similar state, counting the Chinese restaurants as I drive down the main road in disbelief of what has happened in the last year. How did my quaint island country become little Beijing? Signs no longer contain any Palauan or English, just an unfamiliar character that indicates restaurant, gift shop or massage parlor. But the biggest changes are not the hordes of tourists urinating in Jellyfish Lake, the crowded beaches with trash left behind or dozens of the restaurants serving Maml, undersized coconut crabs and out of season Tiao. No, the biggest changes are to the society and growing gap between the elite class and the rest of us normal Palauans.

Tourist arrivals are increasing exponentially with the prices of everything rising, but our salaries are staying the same. Our homes are being sold and our land leased for 99 years. Hello, 99 years, that is 5 generations! This means the next Palauans to have access to the property are the great, great, great grandkids, but how about right now? Palauans and long-term residents are being kicked out of their homes to accommodate the rapidly growing Chinese population. A cousin of mine was kicked out of his apartment because Chinese bought the whole building. Now he cannot find an affordable place in Koror to live in. Sure he can move to his family home in Honto but it will cost him 3 hours of pay each day for gas to get to work. And this story is being repeated all over Koror and Airai. What’s even more sad is how much people are getting for their land. Selling for a one-time fee of $50,000 per piece of property that is actually worth millions over the long run. So who is benefiting from this red tide? Surely not the average employee. A hand full of past and present political Uabs are stuffing their pockets with millions from made up fees, bribes and shady deals that bring corruption in Palau to a whole new level. Watch them protest on behalf of their foreign masters as restrictions on charter flights are imposed.

Also consider the lost revenue from massive packaged tourism. When these charter tour companies sell their packages they do so in China. No one in Palau knows how much these tour packages are being sold for because the money never reaches Palau, which means no GRT. We do know that the Chinese package tourists come on the chartered flight to the pre-purchased hotel with the partner tour company and eat in the package restaurants. The customers are bussed to the tour companies gift shops and then go home. These closed loops leave very little money behind. Even the tour guides arrive with the groups posing as tourists at immigration so they don’t have to get a work permit. I have seen this first hand.

This was just one person’s opinion. But it is a recurring one. The local paper Tia Belau had a similarly themed letter to the editor published two weeks ago.

The world famous Blue Holes dive site. Personally I have never felt the hype behind this spot matched the reality of doing the dive. Aside from “Disco Clams” — scallops which flash blue bio luminescence bursts — I never found much there of interest. Then again I’m not certified to do the deep cave part of this dive. Recently, Thresher Sharks have started patrolling the outside area of Blue Holes.

So when I returned in November I wanted to see the situation in Palau for myself vis a vis the Chinese tourism and the influx of Chinese capital to the region. Over the ten days I spent in Palau I talked to many Palauans in different parts of the national economy; boat drivers, taxi drivers, and merchants. While the “Chinese signs” seem to have disappeared, allegedly legislated out of existence by the Palauan government, the talk of the “99 year leases” was ubiquitous among the people I met as was the disbelief in how downtown Koror was changing. People would sarcastically refer to the “instant millionaires” (property owners who either sold their property to Chinese entities — a practice which supposedly has been banned though I have been unable to locate any documentation on the web to indicate that this is in fact the case — or did the 99 year leases). And the resentment of the “Chinese lock-in” — where Chinese dollars are spent on Chinese owned and operated establishments on Palau — is widespread. One merchant who came from Peleliu told me that the state wanted to bring big hotels there but fortunately, she said, most of the property is not owned by the state and most of the locals didn’t want that there. One cab driver sarcastically quipped to me, “Hey at least we’ve got the U.S. to protect us.”This situation has deeply divided the country as those who have not benefited from the increases in Chinese tourism and Chinese property ownership/leases have called for the government to intervene while those who have seen a benefit have opposed anything which would jeopardize the gains they have realized. The two sides could not be further apart.The government is caught in the middle. It obviously wants to increase tourism which is currently the key lynchpin in the Palauan economy. In 2013, I read in a local paper how the then-President wanted to get a luxury resort built with a golf course to cater to high rollers. Setting aside for the moment the weather conditions in Palau which are not conducive for a golf course — high high humidity and heat year round and rain/showers just about every day somewhere in the nation but without the benefit of strong trade winds which temper those factors on other tropical islands like Hawaii — you can get a feel for what some of Palau’s leaders want to do with tourism. But it doesn’t have the infrastructure in place to adequately deal with the recent explosion in Chinese tourism.Ideally the government would want a more diversified economy, one where U.S. aid isn’t such a necessity.

Ever since Palau opted not to join the Federated States of Micronesia and instead go it alone as an independent nation, achieving independence in 1978, with its own individual relationship with the U.S., there has been an uneasy alliance between the two with the bulk of the unease on the Palau side.Palau agreed to a Compact of Free Association with the U.S. in 1986 but some of the terms that Palau would have to contend with slowed its ratification until 1994. It basically boiled down to the military aspects of the compact. Under the deal, the U.S. military was granted access for 50 years. In 1981 Palau became the first country with a nuclear free constitution. Anything nuclear was prohibited on the island. The Compact is security based as well as strategic and financially based; the U.S. is responsible for the defense and security of the nation. But during the 1980s, at the height of the Cold War, there was a very real fear that the U.S. would violate Palau’s nuclear free constitution because the Compact specifically provided for the option of bringing nuclear powered ships to Palau’s waters and the storing of nuclear weapons on the island if the U.S. chose to. Palau would have no say in the matter. Nor would it have a say if the U.S. opted to build a base somewhere in the island nation.The fears of a nuclear Palau never materialized because the Cold War ended and the U.S. began a decades-long initiative to shutter bases all over the world. But even as late as 2013, the notion that the U.S. will set up a base on the nation continues to exist. That example was a local paper writing about a visit by U.S. military officials to the islands and how rumors were circulating that the military was evaluating the use of Angaur island, one of the southern most islands in the chain — you can see it looking south from Peleliu island — as a base.Palau was one of only eight nations to vote against a UN resolution to fly the Palestinian flag at the UN. One other of the eight was the Federated States of Micronesia which, like Palau, is about as far from Middle East geo-politics as you can get and, also like Palau, does have a financial incentive since the FSM are interested in negotiating a new Compact with the U.S. to replace the one which expires in 2023, though there’s been talk that Chuuk may opt to do a Palau and negotiate independently of the FSM with the U.S.

For many years travel outside of Koror, particularly around Babeldaub island, was on dirt or crushed coral roads. Asphalt paved roads are a relatively recent appearance. Paving is expensive and when a section of the main road that circles Babeldaub unexpectedly washed out, the easier and less expensive solution was to build a sloppy bumpy bypass around the washout until Palau could get the funding to fix the road.

Between that vote and Palau’s historic support for Japanese whaling rights, I think one could make a circumstantial case that the nation can be persuaded to take positions on issues which one would normally consider counter-intuitive, in order to preserve good relations with key partners. Will China become one of those key partners? And how would that work given the current U.S. Compact with Palau?


Since the end of World War 2 there have been essentially two paradigms in the Pacific. The first was the legacy empires (Great Britain, Portugal, Spain, France, etc) retreating from the area, granting independence to their former holdings. The second — the one still functioning today (though a few legacy empire holdouts in the Pacific still exist) — is how the rest of the Pacific fell under two spheres of influence; that of the United States and that of Australia and New Zealand.

The US sphere basically covers the central Pacific from the California coast all the way to Guam (you could make an argument for the Philippines as well…though they wouldn’t like being included) and as far south as the United States Minor Outlying Islands.

Quick show of hands…who knew about the United States Minor Outlying Islands?

Thought so.

While that part of the Pacific Ocean beyond the 12 mile limit is essentially International Waters and open to anyone, most of the territory above water either belongs to the U.S. outright, is being bankrolled by the U.S., or otherwise influenced by the U.S.

In the Southern Pacific it’s a different sphere; that of Australia and New Zealand. We’re talking an area north of Australia stretching from Papua New Guinea all the way out to the Cook Islands and north to Kiribati.

Another show of hands…who knew about Kiribati?

Thought so.

Most of these islands are independent nations and neither Australian nor New Zealand territory. But the influence of the two Commonwealth giants is present. In fact it’s downright needed at times. Tonga has a riot which it can’t handle? Australia and New Zealand send in police to help restore order. Vanuatu gets devastated by a Typhoon? Australia and New Zealand send in aid.

These two zones have essentially existed unmolested for decades with no challenge to the established order. Until recently. Guess who is upsetting the apple cart?

While the multi-multi-nation dispute in the South China Sea has taken the bulk of the headlines and TV news reports with everyone from the Philippines, Korea, Vietnam, Brunei, Japan, China, and Malaysia laying claim to some island(s)…and even then its been in the news only because of thisoccurring right now in the Spratly Islands, something else has been going on much much further afield in the Southern Pacific.

In 2006, the government of Fiji was overthrown in a military coup, the third coup in a 20 year period. As Fiji was part of the Commonwealth and had historic and strategic ties to both Australia and New Zealand, both countries sharply condemned the coup and the fact that the military was in control of the government.

Thus began a very protracted period of bad blood between Fiji’s military backed government and Australia/New Zealand, who wanted civilian government restored. Sanctions, embargoes, and various other actions against Fiji were initiated. The country was suspended from the Commonwealth of Nations in 2006. It was suspended from the Pacific Islands Forum in 2009 on account of further fallout from the 2006 coup; the Fiji courts ruled the coup was illegal and the President responded by dissolving the court, dissolving the constitution, reappointing the military Prime Minister the courts had tried to force out, putting curbs on the press, and increasing police powers.

Meanwhile, while all this was going on between Fiji and Australia/New Zealand, China inserted itself into the crisis. It gave financial assistance to Fiji during the staredown with Australia/New Zealand, undermining both countries’ efforts to bring Fiji back to civilian rule as well as planting its flag in a spot in the world not accustomed to its presence. To say that Australia and New Zealand were non-plussed by China’s maneuvers would put it mildly.

Of course Fiji was thrilled to have the Chinese support…and a new ally. Fiji returned to free elections in 2014 and the Commonwealth and Pacific Island Forum suspensions ended.

But the damage was done. China, by supporting Fiji, had disrupted the status quo and permanently altered geopolitical relations in what had been previously the near exclusive domain of Australia and New Zealand. The repercussions are still being felt.

I’m going to quote from this article in Pacific Scoop by Mads Anneberg…

The money from China has made the government able to keep up the infrastructure investments across the country. It has built roads and at the moment is financing the completion of the new Navua Hospital.

By turning to China, Fiji has not experienced the fully intended consequences of the embargoes by countries such as New Zealand and Australia, and it has not felt pushed to hold the elections in 2009 as was originally planned.

But there is a downside to the Chinese cash flow. First of all, loans from China are more expensive than the ones from multilateral development banks.

Secondly, Dr Schmaljohann says, the projects financed by Chinese money tend to be carried out by Chinese workers instead of locals.

“In fact, Fiji often doesn’t see the money because it goes directly to the Chinese contractors who buy the materials in China and then go and build the project. So we don’t see overspills in the domestic economy,” she says.

Those last two paragraphs should sound eerily familiar to Palauans.

Fiji got what it wanted…a means to spurn Australia/New Zealand efforts to exert pressure for civilian elections and China got what it desired, increased influence in a region it had a lot less of prior to the dispute.

The South China Sea, The Spratlys, Fiji…China is expanding its influence all over the Pacific. This isn’t just a dispute about a few spits of sand and a handful of shipping lanes. I’m not going to get in to a detailed accounting of China’s maneuvers in the South Pacific. If you want to learn more, I suggest reading the book China in Oceania: Reshaping the Pacific, edited by Terence Wesley-Smith and Edgar A. Porter for a truly deep dive into China’s overtures in the region. I happened to come across it when I was about 3/4 of the way through writing this article.

Given all that’s going on in the Pacific with regards to China there should be little wonder why the Obama Administration announced its oft-maligned, yet-to-be-fully-realized pivot.

With Palau, China is limited in its options. There currently are no official diplomatic ties between China and Palau although overtures have been made. And then there is the Compact with the U.S. which gives it a lot of avenues to stifle the Chinese there if the U.S. wanted to do so.

So far China hasn’t done much more with Palau other than try and get it hooked on Chinese tourism money and buying up Palauan real estate. It hasn’t tried to pull a Fiji and outspend the U.S. and others on the aid front. Yet.

The state capitol of Palau located in the interior of Babeldaub island, far from downtown Koror. It was built primarily using grants from the Republic of Taiwan. Eco-tourism may keep Palau afloat but big infrastructure projects require outside aid apparently.

But will the U.S. do anything in response to all this? Though a new Compact was agreed upon between Palau and the Obama Administration in 2010, as ofearlier this year it continued to languish un-ratified in Congress. The old Compact gives the U.S. military access for decades still, so the desire may not be there. The U.S. has enough financial concerns in the region as it is. A report came out in the Guam newspapers a couple of weeks ago that Guam was running a billion dollar deficit and probably wouldn’t be able to afford building out the infrastructure needed for the new Marine Corps base that the U.S. is intent on building there as part of the pivot.

Prior to World War 2, 60,000 Palauans lived on the island. By war’s end, that number had crashed to 4,000. It is now up to around 21,000. The last figures I saw several years ago said nearly 100,000 tourists come to the nation each year; most of them divers. Obviously, this was before Chinese tourism went through the roof.

Palauans are a friendly people. I always would be greeted with a smile wherever I went. They are kind and helpful. They just want what we all want — a chance at a better life. Well…that and internet access from the 21st century.

But I worry for them. The Palau I saw this year is becoming divided. The haves are having more, and the have nots are sometimes being forced to make due with less. And with a population of 21,000 in a country that is doing everything it can to drive tourism to itself, you have to wonder just what percentage of the total population is Palauan at any given time and whether that percentage is still a majority.

I worry for the future of Palau’s seas. They can set up zones banning fishing but enforcement remains a nagging concern. Palau is looking at drones as one way to cover the greatest area as economically as possible. They will need every edge they can get. Overfishing is not going to go away, it’s only going to get worse, particularly when Asian countries whose demand for the most, and in many cases the rarest, seafood continues to drive the overfishing which has areas of the Pacific fisheries on the verge of collapse.

Meet the single greatest threat to the Caribbean reefs behind coral bleaching caused by sea temperature rise; the Lionfish. As a result of a combination of human stupidity and (probable) global hitchhiking on ships, the Lionfish is running around the western Atlantic and Gulf of Mexico breeding unchecked and devouring reef fish because there are no natural predators. However out in the Asia-Pacific region where natural predators do exist, Lionfish like this one seen at Blue Corner are part of the natural ecosystem and live in balance with everything else.

The country is caught in a tug of war between superpowers: one expanding its influence in the greater Pacific, the other looking to shore things up. Admittedly, Palau would be far down the list of both countries’ priorities. For China, its on the other side of the Philippines which remains a far more immediate concern because of that country’s proximity to The Spratlys. For the U.S., the bases in Guam, Okinawa, and the Philippines are a higher priority.

And so Palau presses on, continuing to thread a needle whose hole is closing.

Update (01/27/16) — Some new information I thought I would pass on. The tourism stats for 2015 are now out. Last year China represented 53% of the Palau tourism market with Japan dropping by 18%, Korea by nearly 16%, and Taiwan by 52%. U.S. tourism stayed the same with a .23% drop

The overall visitor arrivals increased tremendously over 2014 but the market dynamics changed with PRC becoming the biggest sourcing market representing over 50% of the total market share. According to PVA, they will continue to recommend action plans for declining markets to recover visitors from key markets.

One of those action plans, apparently, is a bill that is making its way through the Palau legislature

The House of Delegates (HOD) has passed in the second reading the proposed law that will require that the operation of hotels with fewer than fifty rooms be reserved exclusively for Palauans and business enterprises in which citizens have an ownership interest.

Such requirement, according to the Bill’s author, will guarantee that Palauan citizens benefit from the increasing number of tourists coming to the Republic of Palau.

It’s a tricky balancing act that the legislature must master…

In its legislative findings, the Bill states that “the Olbiil Era Kelulau finds that the Republic of Palau currently experiences an unprecedented influx in tourism and foreign investments.”

“While the Olbiil Era Kelulau is convinced that foreign investment can be beneficial for the Republic and the development within the states of the Republic, it is also aware of the risks and challenges associated with foreign investment,” it says.

The findings add that one of the challenges this Act seeks to address is that small local businesses are driven out of business by foreign investors, particularly in the hotel industry.

Update (5/2/16) — It’s not just Palau that is facing the pressures of Chinese tourism. The Micronesian state of Yap is divided over plans to build a mega resort on the island. I’ve been to Yap. Such a resort would stick out like a sore thumb. Read this article to learn more. I find it intruiging that the Yapese would probably prefer to have a closer relationship with the U.S. but it doesn’t seem too interested. That has opened a window of opportunity for the Chinese to take advantage of. The end result could be decreased U.S. influence in a region the U.S. once took for granted.

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