That the USA has recently stepped up its engagement in the South Pacific has caught the attention of many. For Vanuatu the implications are complex and tied to a range of competing, converging or overlapping interests of the major global blocks of power at work in the region.
The immediate neighbours of significance to Vanuatu are Australia and New Zealand – however France has an indirect interest via near-neighbour and French Territory, New Caledonia, whilst the European Union (EU) also has an interest in Vanuatu due to the latter’s wildly successful Citizenship by Investment Program (known as the Development Support Program or DSP), which has recently come under scrutiny by the EU Council – the main decision-making body of the EU.
China has its own interests in developing a diplomatic and economic footprint across the region and, with its generosity to countries such as Vanuatu has made considerable progress. China now boasts a sizeable Embassy in Vanuatu’s capital Port Vila, and is involved in a wide range of projects which have made a visible impact to the country’s development.
Into the mix is now added the US – with an agenda seemingly aimed at countering or otherwise “balancing” the effects of China’s regional influence in the South Pacific.
Overall, Vanuatu stands to gain from the situation. A proudly non-aligned nation, Vanuatu engages with all countries on a more-or-less equal footing. This does not mean however that it can exist insulated from the geopolitical manoeuvres around it. A country with few scalable income streams, Vanuatu is generally regarded as having an over-reliance on its Citizenship Program which, particularly during Covid when, Tourism the other notable pillar of inward receipts was reduced to a trickle, has been a primary reason why the country has not plunged into deep negative fiscal territory.
Although the EU’s decision to temporarily suspend Vanuatu’s visa-free access to Europe is apparently driven by concerns over Vanuatu’s administration of the DSP, it is viewed by some as unnecessarily harsh given the paucity of Vanuatu’s options for generating income. By weakening the attractiveness of Vanuatu’s passport, the EU is indirectly imposing a financial penalty on Vanuatu – which may not be in the interests of other countries who seek to create a counter-balancing pool of goodwill in the country.
Better might be for the EU to expend its resources on collaborating with Vanuatu to understand the real, rather than perceived threats the program poses, and achieve a Citizenship by Investment Program that meets a sensibly framed set of requirements.
It can be argued that Vanuatu should be applauded for its success in creating a way to remain financially independent and self-sufficient – surely better in the global security architecture than another failing, destitute island nation – with all the accompanying risks and suffering this embodies.