THE REVENUE TRAP

A little over a year ago, someone contacted a Vanuatu Daily Post staffer, and said they knew where China’s pressure play was going to come from. They predicted that China would arrest a few Vanuatu passport holders, and hold our citizenship by investment programme hostage.

They were right. Their only mistake was to underestimate how far Vanuatu would bend.

Despite fervid speculation by Canberra strategy wonks, there was never any evidence to suggest that China could—or even wanted to—leverage Vanuatu’s rising debt to influence domestic policy.

As the Vanuatu Business Review discovered, the opposite was true. China was actually responsible for boosting national revenues by about a third. Revenues from passport sales, primarily to mainland Chinese, are running so hot that Vanuatu is paying down its debts ahead of schedule.

And that’s where the hook was all along. Those who understand the inner workings of Vanuatu’s political economy have been waiting quietly for an indication that the Chinese government is prepared to use the threat of a sudden loss of revenue to force Vanuatu to cleave more closely to it.

Two weeks ago, it happened.

In a deft stroke, China bent the government of Vanuatu to its will, and did so in a way that waves a prominent middle digit at the notion of a rules based international order.

The government’s decision to treat four passport-holders as non-citizens appears to have been unlawful. Vanuatu law requires a court hearing to determine whether someone’s lied on their citizenship application. It also mandates a 30-day wait before citizenship is revoked, presumably to give the person a chance to appeal the ruling while still a citizen.

That’s not what happened. In a press conference Tuesday, Vanuatu’s Director of Immigration told the media, “Following close contact with the Chinese Embassy, we then cancelled their Vanuatu citizenships.”

These were bad people. Evidence from multiple sources suggests that the six were involved in a massive Ponzi scheme involving as much as VT 300 billion. Their activities were conducted in China and Vanuatu, but aimed almost exclusively at mainland Chinese.

But by summarily stripping them of their citizenship, denying them due process and subjecting them to summary rendition, Vanuatu has shown how susceptible it is to Chinese pressure.

As one Pacific watcher wryly quipped, “Nice revenue stream you’ve got there. Be a shame if something were to happen to it.”

The message in this jurisdictional coup is unmistakeable: If you want to use your Vanuatu (or any other) passport as an expensive bagatelle, fine. Travel to Europe, visit the sunny South Pacific. Enjoy. But if you think you can run away, think again.

Transgress against the state or the Party, and there’s nowhere to hide.

With one deft gesture, China has filliped the western alliance in what it considers its own back yard. It’s shown Vanuatu’s government what’s what. And it’s sent a very loud message to its own citizenry.

It’s possible to be appalled at the implications and still to admire the masterful stroke.

Security experts have often noted China’s willingness to use formal, informal and even illicit resources to pursue the Party’s ends. Some or all of them appear to have been deployed here.

It would not be speculating to say that people working for China’s Ministry of State Security have been present in Vanuatu for some time, working outside the Embassy and off the books.

When they arrived in Vanuatu, Chinese law enforcement provided critical information to Vanuatu police concerning the PlusToken scammers. They not only knew their names, they knew where they lived.

Apparently, this is okay. The government of Vanuatu remains unrepentant at its treatment of people it conveniently considers non-citizens. It appears to believe that due process is negotiable, rather than the right of both the guilty and the innocent. It has shown no curiosity about what the actual charges are against these people, whether they will receive a fair trial, or what punishment they face.

If France, the UK, Australia or New Zealand have expressed any concerns about this, they haven’t done so within the hearing of the media.

They should be worried. They should say so, too. Because this is how the rules based international order breaks down. One state at a time.

(0) comments

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.