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  • Writer's pictureRobbie Sutton

Episode 10. Foreign Aid (Australia's Pacific Strategy)

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Foreign aid is one of the most misunderstood parts of any nations budget, why would a country give money to another country when they have hungry people at home? What people may not realise is that that 0.22% of your budget may be the only thing standing between you and your enemy setting up its armed forces in your backyard.



Matt McDonald

  • Senior Lecturer in International Relations at the School of Political Science and International Studies at the University of Queensland

Dr. Tess Newton Cain

  • Former Lecturer of Law at the University of the South Pacific

  • Adjunct Associate Professor and Project Lead for the Pacific Hub at Griffith Asia Institute

  • 20+ years of experience working in the Pacific Islands region

Dr. William Clapton

  • Senior Lecturer in International Relations at the University of New South Wales in Sydney, Australia

  • Author of “Risk and Hierarchy in International Society: Liberal Interventionism in the Post-Cold War Era


Part 1: Soft Power (1:05)

  • Foreign Aid forms a key part of Australia’s approach to Foreign Policy in general, particularly in the Pacific Region. In practical terms this takes the form of ‘Direct Contributions’, made to a nations treasury, or ‘Tied Aid’, where specific programs or infrastructure is invested in, or perhaps more controversially the funding of consultancy work in developing states or the integration of neighbouring states into Australia’s Asylum Seeker management system.

  • With Matt McDonald we explore how Australia engages with Foreign Aid in the Pacific Region, how it conceives of and justifies its approach politically, and what is it trying to accomplish strategically. The main recipients are Papua New Guinea and Indonesia and its other immediate neighbours.

  • Even for issues such as health, this can be seen as an investment in the general stability and capacity of nations to grow as maintain their populations and thus their economies, as well as preventing the spread of disease to Australia via trade and tourism links.

  • Direct ‘Tied Aid’, can also involve the employment of Australia corporations and be undertaken with an eye to benefitting Australian consumers/markets (for example the funding of a factory which would produce goods more cheaply than Australia could), though this is commonly critiqued as a way to more subtly fund or subsidize companies. Infrastructure is often seen as a more visible (both literally and politically) evidence of how Aid money is spent, and frequently becomes more desirable to governments.

  • Even more controversially, ‘Military Aid’, is the transfer of weapons, equipment and vehicles to countries. In effect, this is way of ensuring that smaller nations can handle more local security issues like piracy, smuggling and terrorism, removing the need for direct intervention by larger regional actors (“Military Governance Capacity”).

  • Promises of Aid (or perhaps the threat of its removal) can also be linked to particular bilateral negotiations or quarrels. Australia’s provision of Aid to the region also has the pleasant side(?) effect of keeping many Pacific states aligned with or at least not aligned with our geopolitical rivals.


Part 2: Island Hopping (18:53)

  • In general, Australia's closest regional relationships are with the ‘Melanesian’ islands (South-east pacific), while the US has more influence in ‘Micronesia’ (East-central pacific), and New Zealand with ‘Polynesia’ (South-central pacific). China is also increasingly establishing its own economic and diplomatic relationships with various Pacific Island countries, and there is growing competition for influence amongst the small nations.

  • With Dr Tess Newton Cain we discuss regional geopolitical dynamics, namely Australia’s so-called “Pacific Step-Up”, a regionalized policy initiative intended to build stronger relationships with members of the ‘Pacific family’, strengthening the economic and security outlook for the region.

  • According to Dr Cain, this is often perceived within the region itself as being principally reactive to the increasing presence of Chinese diplomacy and investment, to restore Australia’s image as an important regional benefactor and guardian.

  • China has supported its increasing footprint in the Pacific rhetorically through appeals to “south-south cooperation”, arguing that both parties are developing countries, and that China has learned various lessons in its efforts to modernise and to eliminate poverty, which can be shared. Chinese development assistance has notably included “concessional finance” (in effect low interest loans).

  • We also explore how Foreign Aid is provided. While Australian Foreign Aid has usually been almost entirely in the form of grants, the establishment of the Infrastructure Financing Facility, which is a $3 Billion AUD fund for regional investment (which would be considered debt), has blurred that distinction between Chinese and Australian Aid.

  • Additionally, China operates outside of global and regional frameworks like the OECD and Cairns Compact, which sets its Aid outside the usual channels and makes it harder to track.

  • While Australia’s Foreign Aid is sometimes unpopular at home, mainly due to poor perception of its actual scale and activities, abandoning it would effectively abrogate its responsibilities within the “5 Eyes” alliance, and more or less cede any hope of influencing the regions geopolitically,


Part 3: The Mosaic (2:50)

  • With Will Clapton we examine the strategic goals that Australia (and other states) seek to achieve through the use of Foreign Aid and other forms of ‘Soft Power’. Foreign Aid is a tool for boosting Australia’s prestige, reputation and diplomatic influence within the governments and populations of target countries, and those targets will be chosen according to some national strategy. Australia’s security concerns relating to the south Pacific are an important motivator in the Aid it provides to these nations.

  • Aid can also be provided to relative enemies, for example the American Aid provided to North Korea, which is often the result of negotiations with the North Korean government in order to draw down its controversial nuclear weapons program.

  • In the immediate post-9/11 era, Australia, fearing that ‘state weakness’ or ‘state failure’ could provide launching pads for terrorist action against Australia if left unchecked, and in the modern day, this general fear has remained, albeit expanded to encompass a ‘hostile foreign power’ leveraging its relationships and standing in the region in order to act against Australia’s interests (for example the fears in late 2018 of China establishing a naval Base in Vanuatu).

  • Clapton argues that there is a clear desire for Australia to possess in effect a local “bulwark” whereby no other powers have any significant influence with its neighbours.

  • Australia’s relationship with East Timor shows a good example of Aid being used as a way to effectively purchase access to natural resources, exchanging $1.7 Billion AUD for the right to extract natural gas from East Timor’s Exclusive Economic Zone to the tune of $7 Billion, “giving with one hand and taking away with the other.”

  • This can highlight the potential contradiction between the desire to use Foreign Aid to bolster neighbouring states and ensure regional prosperity and stability, and the tendency for states to pursue their own prosperity at the expense of those neighbours.


The Red Line's Foreign Aid Reading List:

We’ve put together some further reading for those of you looking for more resources to help you get across the geopolitics of Foreign Aid, particularly concering Australia and the Pacific.


Risk and Hierarchy in International Society: Liberal Interventionism in the Post-Cold War Era

Dr William Clapton



For episode transcripts, monthly geopolitics Q&A’s, member-only videos and to support the show, check out our Patreon here:

This episode is dedicated to Patreon member Zaki Moosa.


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