Darwin is now the epicentre of our spat with China.
I’ve got a bold prediction for you.
Canberra is going to seize the Port of Darwin.
Possibly by the end of this year.
Now I don’t know if you know the back story to this, but I don’t know if anything else points to how quickly things have gone south between Australia and China.
So back in 2015, a Chinese company, Landbridge, was given a 99-year lease on the Port of Darwin.
It was negotiated by Andrew Robb, the coalition Trade Minister who worked on the China FTA and the lease deal, and then three months (not years, months) after resigning from parliament, went to work for Landbridge as a consultant.
Totally not dodgy.
At the time, the deal raised a few eyebrows. The Americans weren’t happy. They were like, you know we have a Marine base in Darwin right?
But $500m is $500m, and in 2015, Australia’s future was looking very Chinese. We were best buddies.
Fast-forward to 2021 and things are looking very different. As Andrew Robb said last week, the trade relationship with China has “gone to custard”.
And the Cabinet national security committee has ordered the Defence Department to review the lease.
As trade tensions escalated last year, China imposed aggressive sanctions against Australia, applying punitive tariffs on products such as wine, beef, lamb, timber and barley.
Cabinet’s national security committee ordered the Defence Department last month to provide updated advice on whether Landbridge should be forced to relinquish the lease on national security grounds, amid souring relations between Canberra and Beijing.
Defence and ASIO raised no objections when the Northern Territory government under former chief minister Adam Giles signed a $500 million deal to lease the port to Landbridge for 99 years in 2015.
However, the deal provoked anxiety in the Obama administration given the large US Marine deployment in Darwin and national security hawks have repeatedly called for it to be unwound.
Of course it should.
China runs with “capitalism with Chinese characteristics.” One of those characteristics is that the state can get involved in pretty much any company it likes. The line between businesses and the Communist Party is pretty blurry.
And if we’re on an irreversible path towards strategic rivalry – which it seems like we are – in what universe does it make sense for the Chinese government to control a major piece of Australian infrastructure?
And the tone in Canberra has changed so much that the lease has very few allies. Even Andrew Robb says, “Canberra had every right to reassess the port lease in light of changing strategic circumstances.”
Landbridge is, of course, saying it will create “sovereign risk” – it will make Australia look like risky place to invest and do business.
But hardly. The logic is pretty obvious. The fact that the lease has survived so long given the deteriorating trade relationship is evidence of how pro-business Australia is.
I don’t think any of our allies or investment partners are going to care.
So I reckon it’s probably going to happen. Canberra will seize back the lease on the Port of Darwin.
And if anyone is still dreaming that thing can ‘go back to normal’ for Australia and China (looking at you, Labor Party), tell ‘em they’re dreaming.
JG
Ruth says
Agree entirely Jon. Does not make sense to keep lease when we have a miliary base there.
Andrew Ayers says
Given the whole reason for the deal was to address the gaping hole in Government revenue, pay off debt and the Top End’s penchant of blowing cash as if they had a large population that needs to compete with other states and territories, $500 million at the time looked all the money in the world. Nowadays they are staring down a 9.1 billion deficit and the “put it on the tab” mentality of the Public Service head honchos is as entrenched as ever. Because they weren’t granted statehood, the prevailing attitude is that the Federal Government will have to bail them out at some point so spending wads of cash on white elephant you beaut ideas that often don’t even get to completion once started isn’t a problem since they don’t consider they are the ones that are going o have to pay for it – the ultimate debt obligation will be the Federal government’s problem (or so the thinking goes). Now as far as Port of Darwin goes, the original idea was to make Darwin a major point of entry for international trade – things have changed in terms of trade with China so the number one trade partner is a diminishing prospect in the volume terms – rendering the whole idea moot.
Dan says
Greece and Sri Lanka now regret having given their port sovereignty to the Chinese “companies” only to find out that all Chinese companies doing business overseas are under the direct control of CCP and must take orders from the all powerful Chairman Xi. Even Tanganyika (Tanzania mainland) which badly needs every Yuan it can get, had to renege the 99-year lease for the Port of Bwagamoyo because the Chinese contract stated that Tanganyika must have no say whatsoever in Bwagamoyo and not develop any other port without written permission of Beijing