Mike Pero: An air bridge to the Cook Islands, why not?

COMMENT

The Cook Islands are bleeding a slow financial death, drained of tourist income and facing the unpalatable prospect of seeking economic life support from outside the Pacific neighbourhood.

The Cook Islands Prime Minister, Henry Puna, who put his country into lockdown on March 5, has said it will soon run out of money. Incoming Prime Minister Mark Brown tabled a Budget last month that would support the Cook Islands through to September: “After that we will look at borrowing.”

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The current financial situation has hit Rarotonga and the other 14 islands that make up the Cooks harder than any recent cyclone rebuilding programme. It is matching 1996 proportions when the Cooks were on the brink of bankruptcy. Fletcher Melvin, chairman of the recently formed Cook Island Private Sector Taskforce, warns there is a real risk of history repeating.

As well as New Zealand, China has supported Rarotonga with infrastructure projects and loans. As the tourism-starved Cooks head towards insolvency, will it be forced to turn to China to bail it out?

A Reuters report in 2018 said the majority of China’s financial support comes in the form of concessional loans, while traditional regional players Australia, New Zealand and the United States tend to provide gifts. Some within the current New Zealand Government fear the Cooks will follow Tonga into a reliance on funding from China. China have already paid the Cooks administration millions of dollars for tuna fisheries licences, loaned many more millions for the massive Te Mato Vai water project and there is talk of Beijing funding the development of a deep-water port on remote Penrhyn Island.

Two years ago, Cooks Opposition deputy leader James Beer warned about the effect the “soft loans” that accompany Chinese aid were having on the economy. He said if the tourism industry was to fail, the country might not be able to service the loans.

Yes, we can send them money — New Zealand currently provides about two-thirds of the Cooks’ official development assistance — but it doesn’t want handouts, just tourists. Tourism accounts for nearly 70 per cent of the Cook Islands economy and in June, for example, the Cooks would usually host 16,000 visitors, 11,000 of those coming from New Zealand. Instead, Puna says, the resorts are “empty”.

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