United States envoy to Canberra puts Australia on Notice- DO NOT accept or encourage Chinese “Payday Loans”

Arthur B Culvahouse Jr, the new United States Ambassador to Australia has warned Australia not to fall into the Chinese Debt Trap. The United States Ambassador used purposely harsher language describing the trap, going as far as to say the Chinese so-called development loans function more like “payday loans”- known to be a horrific private Banking sector vulture loan practice that prays on vulnerable people and the poor.

This statement comes amid growing tensions between Beijing and Washington.

What Ambassador Culvahouse is implying, is that China is committing to an old left-wing style asymmetric warfare trick, debt trap diplomacy. He stated in the context of his remarks that the Australian government is to stay clear of this trap and assist other countries in securing themselves against this debt fuelled aggression coming from China’s Export Import Bank (EIB). 

It is well reported that China is increasingly becoming more assertive in the South China Sea using its hard power and military tactics, using bullying, threats and intimation to push its weigh around in that maritime zone. But what has gone less published is Chinas expanding soft power capabilities, including its economic, financial and diplomatic tentacles throughout Southeast Asia, the wider Pacific and the Indian Ocean region using its latest tactic, debt trap diplomacy.

The trick is simple. Offer an attractive teaser loan to a poor country, such as Sri Lanka, to use for building vital infrastructure, ports or rail. Make sure the loan is large enough that the government could never repay the issuer (EIB), and when that government defaults on the loan, instead accept payment in land and facilities acquisition. In the case of Sri Lanka, the government defaulted on the loan and was forced to hand over 15,000 acres of land and port facilities for around 99 years to Beijing.

China’s Export Import Bank has been at the head of this new strategy, and many countries are now feeling that their land and sovereignty now might be at risk. A REAL REGIONAL SECUIRTY ISSUE.

In Australia, academic’s such as Graeme Smith from the Australian National University are dismissive and downright sceptical of Ambassador Culvahouse’s warning to Australia. She thinks that his warning should be dismissed as “over the top”, because it’s the World Bank and the Asian Development Bank, which stated goal is to ASSIST countries in their devolvement- not as left-wing nutcases who argue these benevolent loan are somehow part of an ongoing “vehicle of tyranny”, are still the dominant lenders in the region.

Tonga is fighting back against these predatory loans.

All Australians need to listen carefully to Ambassador Culvahouse, and put pressure on Canberra to stand up to this issue.

“I think it’s on us, all of the allies and the western or liberal democracies, to educate people about the dangers of these loans. “The money looks attractive and easy up front, but you better read the fine print.”

Steele Archer

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