The Pacific Islands are the world’s most aid-reliant region, according to a new survey, as geopolitical competition for influence fuels record levels of development assistance.
Between 2008 and 2021, the Lowy Institute Pacific Aid Map found that the Pacific Islands received more than $40bn in development assistance, with development finance playing a more significant role in these economies than any other part of the world.
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Australia is the largest donor to the islands, providing about 40 percent of total development finance or $17bn between 2008 and 2021.
China is the next largest donor country, providing about $3.9bn.
Direct budget support to Pacific Island governments surged in 2021 to 40 percent of all development finance.
In 2021, the most significant transaction recorded by the Pacific Aid Map was Australia’s $466 million Australian-dollar ($297m) loan to Papua New Guinea.
“Pacific Island countries are home to some of the smallest, most remote, and internally dispersed populations in the world, posing significant challenges to realising more traditional development pathways”, said Alexandre Dayant, Deputy Director of the Lowy Institute’s Indo-Pacific Development Centre.
Economies among the Pacific Islands draw on a range of income, from tourism, fishing licences, commodity exports and overseas labour mobility, and climate change impacts – including rising sea levels and extreme weather events – threaten livelihoods, Dayant said.
The report released on Monday found that about 39 percent of all aid pledged to the region in 2021 was climate-related, but said climate financing is still below the levels needed.
While Australia and Japan significantly increased development support in 2021 after the COVID-19 pandemic, China shifted to “downsized, more politically targeted” aid, directing $241m to countries it had recently formed ties with, the report said.
Between 2013 and 2019, Chinese projects in the region “significantly decreased” from $40m to about $5m.