Enticingly cheap Fiji holidays were on offer this week, just as news seeped out that China will start projects there, focussed on poverty and managing natural resources. Around a quarter of a billion dollars is being spent on ethanol plants, seaweed factories, roads and low cost housing.

The story of China’s freshest Pacific push emerged from New Zealand, which has long had a close, but lately troubled relationship, with the military-run government of Fiji.

It came as NZ, in an otherwise hilarious backflip by its new right-wing National Government, announced it was reinstating knighthoods and dameships (hoods?) because no one gets the Kiwis’ own honours system. This Government is also cutting social welfare and slashing into foreign aid, the latter in a most bizarre way.

Intriguingly it also comes at a time when Fiji’s ethnic Indian population has dropped to 37.5%, or 314,000 out of 837,000 people, down from 51% in 1966.

China Railway First Company signed a $57 million contract with Fiji’s Housing Authority and Public Rental Board to build low cost housing in three Suva suburbs.

The contract comes via a soft loan from China’s EXIM Bank at an interest rate of 2% over 20 years.

Meanwhile, NZ’s new Foreign Minister, the notoriously inept Murray McCully, has unleashed his long-nursed plan to scrap the semi-independence of his country’s aid programme and tailor it more closely to economic and diplomatic interests.

McCully has trashed NZAID’s emphasis on alleviating and eliminating poverty. “You could ride around in a helicopter pushing hundred-dollar notes out the door and call that poverty elimination,” McCully said recently. Even the conservative, National-backing NZ Herald said these comments must be particularly galling to the organisations that deliver the aid, and who have been praised — by the OECD among others — for the value of much of their development work.

Commentator Gordon Campbell, writing on the Scoop website says:

Secrecy and unilateral actions by the Minister have marked the process so far. McCully has chosen not to front up to the Foreign Affairs, Defence and Trade select committee to advise them of his plans for the aid programme. Also, government members on the committee last week voted down a request by Labour and Green members for a briefing by the Minister about his intentions. Amid this lack of transparency, actions are already being taken.

Last week for instance, McCully intervened to axe the $1.95 million annual programme of support for a Pacific aid foundation that assists hundreds of village communities across nine Pacific countries, advising them on issues like conflict resolution, good governance and natural resource management. The ending of this project came in the same week that:

One would have thought some of McCully’s associates might be feeling nervous about his tendency to run his portfolio like a feudal fiefdom. The last time McCully embarked on a process of unilateral decision-making — as Tourism Minister in the late 1990s — he ended up resigning his portfolio and the affair almost cost Prime Minister Jenny Shipley her job.

And how’s this for aid? The NZ Government is spending $US3 million dollars underwriting Air New Zealand’s once-a-week link between Rarotonga and Los Angeles, which brings in visitors who contribute substantially to the local economy. Similarly, in mid February, it was reported that Prime Minister John Key and Murray McCully had written to the Samoan government to indicate their readiness to subsidise the weekly cost of maintaining the Apia-Los Angeles link by Air New Zealand.

Of course, this is good for Air New Zealand, in which the NZ Government has an overwhelming stake.

As Scoop’s Campbell wrote, it is not only sandal-wearing leftists who claim that the poor should take priority in the global crisis. Very recently, the International Monetary Fund handed down a ringing endorsement of the focus on poverty relief that McCully so despises. Given the global recession, aid flows should be increased, according to IMF Managing Director Dominique Strauss-Kahn, who added that spending on targeted social safety-net programmes should be ramped up to protect the poor. “Bilateral donors must ensure that aid flows are scaled up, not trimmed back,” he said.

Last week, in a report called The Implications of the Global Financial Crisis for Low-Income Countries, the IMF authors spell this out:

“Most low income countries [LICs]”, they begin, “have little room for countercyclical policies to address the impact of the global crisis”. So, they continue:

This highlights the importance of donor support, which will need to be stepped up to enable LICs to attenuate the effects of the crisis on poverty. Important domestic policy responses include targeted spending to protect the poor, exchange rate flexibility to facilitate adjustment, and vigilant financial supervision…

Targeted spending to protect the poor? Handouts, clearly. What a bunch of bleeding hearts. Would McCully be quite so willing to criticise the IMF as being in favour of handouts, or of advocating the chucking of money from helicopters? Unlikely. The IMF continues:

In formulating spending policies, priority should be given to protecting or expanding social programs or bringing forward approved investments … Most LICs have pressing infrastructure needs, and protecting or increasing spending in Millenium Development Goal -related sectors such as health, education, water and sanitation, and social protection can help cushion the impact of the crisis on vulnerable households. These countries may also want to reorient their spending composition in favor of programs that stimulate domestic economic activity. Spending that is intensive in domestic goods and services is likely to be more effective in supporting domestic activity…

Not that China would be listening, but the emphasis should be on protecting or expanding social programmes, helping those that support spending in domestic goods and services, not on major infrastructural or schemes that depend on imports.

Military junta head Commodore Bainarama needs to learn a sharp lesson before he cuddles up too close to the repressive Chinese. Cutting all sporting ties with Fiji would be a good start.