YAP, Micronesia--This tiny tropical island paradise in the Pacific, which lures divers from around the world to its pristine coral reefs and manta rays, is in uproar due to a major Chinese casino and resort project that carries major security implications for the region.
Two years ago, Exhibition & Travel Group (ETG), based in China’s Sichuan province, submitted the project, which would include eight to 10 hotels with a combined 4,000 guest rooms, casinos and other entertainment facilities in the initial phase.
The project aims to attract tourists from China and Japan on direct flights from the countries by expanding the airport on the island, which has a population of about 11,000. A flight from Shanghai to Yap will take three and a half hours.
ETG, which handles a range of businesses from real estate development to a chain of restaurants, said that the resort would create 10,000 jobs on the island. If a landing fee is assessed, it would generate about $500,000 (or about 48.9 million yen), in monthly revenue to the island, according to ETG officials.
The state government and ETG inked the deal last summer.
But many islanders, who were not informed about the details until the last minute, were enraged when they learned of the proposed development.
They fear that a project of such a massive scale would not only destroy the local ecosystem, including coral reefs and mangrove forests, but also force them to move off their ancestral lands. Others fear the military ambitions of China, which recently added its first aircraft carrier.
On the other side, Manny Mori, president of the Federated States of Micronesia and a fourth-generation of Japanese descent, leads a pack of supporters.
In a letter to Henry Falan, speaker of the Yap Legislature, Mori said, “I have concluded that it is in the best interest of Yap State and the Federated States of Micronesia to allow ETG to continue with the implementation of this proposed tourism investment project. ...”
Yap, the center of the state of Yap, is part of the 138 islands comprising the state.
The islands, which are scattered near the equator, have a turbulent history. Japan occupied Micronesia, then a German territory, in 1914, along with the Marshall Islands and Palau. With the blessing of the League of Nations in 1920, Japan administered the islands by encouraging the migration of Japanese there. The islands later became part of the Pacific theater during World War II.
Today, Micronesia relies on the United States for $92 million in annual economic assistance, 40 percent of its national revenue.
In return, it gives the United States a mandate for the island nation’s diplomacy in defense and national security-related areas under an accord. Palau and the Marshall Islands also have similar arrangements with Washington.
The economic assistance, however, will end in 2023. With Micronesia running a trade deficit with no major industry to bolster its economy, it is eager to attract foreign investment to remain afloat.
Despite Mori's blessing, the ETG project is going nowhere.
Yap’s State Legislature, unhappy about the project, ordered the state administrative authorities to rescind its permit for the Chinese company’s investment in May, only to be ignored. Critics of the project say that they are fighting a losing battle.
An opponent said even if they can turn away ETG, they will end up with another Chinese developer.
Many agree that only China can take such a great risk as investing heavily in a small island nation.
With U.S. aid scheduled to end in 10 years, Micronesian government officials crafting the country’s economic policy are under great pressure to secure new revenue sources.
ETG’s proposal came at a time when Micronesia desperately needed one.
But the project is not the first to show China’s growing presence in the region.
The official residences of the president, vice president and the head of the parliament were built with Chinese assistance.
Some of the money to rebuild the state government building of Pohnpei, one of the states in Micronesia, completed three years ago, also came from China.
The ETG project is not without potential problems, apart from local opposition.
The founder of ETG is allegedly under police investigation for his suspected involvement in a corruption scandal. An ETG official in charge of the Yap project declined an interview request from The Asahi Shimbun over the matter.
A public relations official with ETG’s headquarters in Sichuan province said there is no information about the senior official's behavior, and that the company’s sales have not been adversely affected.
Other island nations in the region are also relying on China’s deep pockets.
In search of natural resources needed to prop up its fast growing economy, China courted those nations in the 1990s to establish diplomatic relations, offering a package of economic assistance.
It expanded its aid to Papua New Guinea, which is rich in nickel and other natural resources, and other resource-rich countries.
According to a think tank in Australia, Chinese economic assistance to Pacific nations shot up from $33 million in 2005 to about $200 million in 2009, making it the third largest aid provider after the United States and Australia. It is double the comparable figure of Japan.
Terence Wesley-Smith, professor of political science with the University of Hawaii, said China’s rising profile in the Pacific comes from its carefully thought-out plan.
“I think the best way of thinking about China’s rise and activities in the region is to think of it as part of a global strategy,” he said. “So, China is developing relations all over the global south, all over the developing world, and the Pacific is the latest chapter in that story. A lot of the activities in the Pacific are very similar to ones in the Caribbean or in Africa.”
Opponents of the ETG project suspect that the reason behind the company’s selection of Yap may have to do with China’s vision to extend its military reach in the Pacific, although the officials cited the “close” proximity of Chinese cities for the project.
They fear a scenario in which Chinese would migrate to the island in large numbers and first build a Chinatown.
The influx of Chinese would lead to a rise in the profile of China there, allowing Beijing to demand the expansion of the airport and port to accommodate more Chinese arrivals.
Those facilities could be eventually used for military purposes, according to skeptics.
Their fear, experts say, may not be totally groundless.
China formulated a plan in the middle of the 1980s to control the waters, including the South China Sea, on the Chinese side of the “first island chain,” which stretches from Okinawa to Taiwan and the Philippines, between 2000 and 2010.
The next stage is to gain possession of the sea inside the “second island chain,” which includes the Izu island chain, the Ogasawara island chain, Saipan, Guam and Indonesia, and build an aircraft carrier by 2020.
China, to some, appears to be steadily making progress on turning its vision into reality.
China has repeatedly held military exercises to venture beyond the first island chain into the western Pacific and back since 2008.
Mei Wen, political commissar with China’s first aircraft carrier, the Liaoning, which went into service last fall, said in January that the first island chain is symbolic, and not something that will put Beijing in chains.
“It is just a designation in the sea,” said Mei, whose rank is comparable to that of the captain of the carrier.
Bonji Ohara, a research fellow at the Tokyo Foundation, a private think tank, said if China intends to establish a mobile operations force around its aircraft carrier, the main area for the deployment must be the Pacific. Ohara, a former member of the Maritime Self-Defense Force, previously served as a military attaché of the Japanese Embassy in Beijing.
Chinese leader Xi Jinping vowed that China will make a full-fledged foray into the Pacific, an apparent attempt to keep the U.S. pivot to Asia in check.
“There is enough space in the large Pacific to accept both the United States and China,” Xi was quoted as saying at the summit with U.S. President Barack Obama in California in June.
In the meantime, the United States appears to be taking ETG’s project in Yap in stride.
“As for the proposed investment in Yap, the United States is not opposed to legitimate investors and investments that would provide long-term benefits to the people of Yap,” said Doria Rosen, U.S. ambassador to Micronesia.
So far, Washington has not shown signs of extending assistance to Micronesia beyond 2023.
Running a huge budget deficit, the United States cannot afford to keep shoring up the island nation, which it views as not trying hard enough to gain financial independence on its own, for many more years.
But it obviously does not want to give up its security interests in the region.
Eddie Calvo, governor of Guam, told U.S. news media outlets that China wants to gain a foothold in Yap because of the island’s strategic significance.
Yap is only 730 kilometers from Guam, a U.S. territory, and the outpost for U.S. forces’ forward deployment to respond in the Asia-Pacific region.
Most of the island nations in the Pacific achieved independence in the 1960s and afterward.
But the United States attached itself to islands in Micronesia, located in the Western Pacific, by forging special ties with them, and let Australia and New Zealand "guide" islands in the South Pacific.
With Washington’s shift to deepen its involvement in the Pacific, announced in 2010, then Secretary of State Hillary Clinton attended a regional dialogue for the Pacific states held in the Cook Islands in 2012, as a show of respect to the region.
A high-ranking Pentagon official expressed concern over the race for jockeying for power in the Pacific between the United States and China, according to a Japanese diplomatic source.
The U.S. official said two years ago that the two powers may clash in the Pacific around 2020, the source said.
But Sheldon Simon, professor of national security in Asia at Arizona State University, is skeptical about the view that China will be a threat to the United States in the Pacific.
“Now, the idea of the two island chains, you hear Chinese strategists talk about that, but I’m not sure what it means,” Simon said. “Does it mean that they are somehow going to control, initially, the first island chain? That’s nonsense, because it includes most of the countries of Southeast Asia. And, much less a second island chain, (not to mention) go after Guam.”
(This article was written by Tokuhiko Saito in Beijing and Makoto Oda.)
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