(Text/Observer Network Liu Chenghui)
While the Trump administration is making drastic cuts to foreign aid, the South Pacific has become an intriguing “exception”.
On September 2, the United States and Australia announced during the Pacific Islands Forum that they would allocate a total of approximately 580 million US dollars to Pacific island nations. Of this, the United States will contribute 150 million US dollars, while Australia has pledged to invest 600 million Australian dollars (approximately 430 million US dollars).
The amount of money from the United States is not much, but the timing is quite crucial. Since the Trump administration took office, there has been a continuous reduction in traditional foreign aid, and the U.S. Agency for International Development (USAID) has also been dismantled. Now, the United States is again investing money in Pacific island countries, funding areas such as energy, infrastructure, and illegal fishing.
While cutting aid globally, the United States is also spending money in the South Pacific. What exactly are the plans of the US?
Reuters frankly states that behind the increased efforts by the US and Australia, the factor of China cannot be ignored. In recent years, China has continuously expanded its cooperation with Pacific island countries, and the US and Australia are increasingly worried about their traditional influence in this region being impacted.
Chen Hong, director of the Asia-Pacific Research Center at East China Normal University, told Observer Network that this contrast in the US situation precisely indicates that the Trump administration has cut not all of its foreign investments.
"The reduction in aid is, in a traditional sense, guided by the concept of development, humanism and values, as the core guiding principles of the aid system. " Chen Hong said that the United States is now once again investing funds into the Pacific, in essence transforming foreign aid into a more strategic, commercialized and security-oriented policy tool."
In his view, the Pacific Ocean is becoming a ‘strategic exception’ in the United States’ global aid reduction efforts.
On September 3rd, in Koror, Palau, before the meeting of leaders from the Pacific Island Countries Forum, flags from various countries were displayed at the press conference. Visual China
The United States has pledged $150 million, of which $60 million will be used to address the energy crisis, including increasing fuel reserves and improving grid stability. The United States also plans to invest funds in combating illegal fishing and to encourage more American businesses and private capital to participate in local projects.
Iran-related conflict has triggered turbulence in the energy market, adding pressure on Pacific Island nations heavily reliant on imported fuel. Reuters quotes Lyle Institute Pacific Islands Project Director Oliver Noebau as saying that the energy shock is causing economic slowdown in the region, and governments are now prioritizing the safety of basic public services while also facing issues such as El Niño.
These investments stand in sharp contrast to the Trump administration’s attitude towards the traditional aid system over the past year.
After Trump returned to power, the US foreign aid system underwent significant adjustments, with many traditional development assistance programs being cut or cancelled. The US government repeatedly emphasized that foreign aid should be used more directly to serve American interests.
The South Pacific has clearly been categorized by Washington as a region that “worths spending money” on.
Chen Hong noticed that the US investments involve various fields such as energy, digital infrastructure, illegal fishing, and maritime security. The US Department of State also clearly stated that Pacific aid should be re-oriented towards US corporate and private investments.
"China's factor is not necessarily the only factor, but it is very important." Chen Hong said, stating that the US believes China's growing influence has increased the strategic costs of its exit from the Pacific.
The Trump administration has now realized that the Pacific Ocean, a region that was often overlooked in the past, offers opportunities for making money.
Therefore, he believes that what the United States is doing now is not a return to traditional aid policies, but rather a ‘selective reflux driven by geo-political competition’.
In fact, the United States has re-emphasized its interest in Pacific Island nations, not starting with the Trump administration.
During the Biden administration, the United States has significantly increased its investment in this region. In 2022, the US held its first Summit of the Americas with Pacific Island Countries, and introduced the first "Pacific Partnership Strategy," aiming to reverse the long-standing underinvestment in the South Pacific. Since then, the US has also expanded its diplomatic presence in the region.
After Trump took office again, many of Biden's foreign aid policies were adjusted or even abandoned. However, the Pacific region has not disappeared from Washington's priority list.
According to Jared Mondshain, director of research at a US research center, Reuters reported that China's growing influence in the region has actually forced the United States to take more serious measures regarding the Pacific region.
In recent years, China and Pacific island countries have continuously expanded cooperation in areas such as infrastructure, trade, agriculture, and healthcare. For the United States and Australia, which have long regarded the South Pacific as within their traditional influence, these changes are becoming increasingly difficult to ignore.
The Trump administration can cut down on a large number of traditional aid programs, but logic changes when a sum of money is considered to be directly related to America’s strategic interests in the Pacific.
Compared to the United States, Australia has taken a more aggressive approach, allocating its funds primarily to address a real and challenging issue: drugs.
The Australian government has announced the launch of the “Waqa Moana” Pacific region plan. This plan aims to strengthen maritime and aerial surveillance, share intelligence, train local police, customs, and border enforcement officers, and enhance the ability of various countries to collaborate in combating transnational crimes.
One of the objectives is to intercept drug trafficking vessels traversing the Pacific Ocean, including what is referred to as "drug smuggling submarines."
In recent years, Pacific island nations have become increasingly important in international drug trafficking networks. Drugs from Latin America cross the Pacific Ocean and eventually reach high-cost markets such as Australia and New Zealand. Some island nations have become transit points in this trafficking network.
The problem also remained there.
Some drugs have flowed into island countries during the transit process, leading to worsening problems related to drug use, crime, and public health. Local law enforcement agencies, which are already under great pressure due to limited resources, face increasing challenges. ABC reported that in recent years, at least 7 ‘drug submarines’ have been discovered in the Pacific Ocean. Drug trafficking has also exacerbated issues such as police corruption in some areas.
Australia itself is an important destination on this trans-Pacific drug chain. Since the beginning of this year, Australia has seized more than 17 tons of cocaine and methamphetamine, with a total of 5.5 tons seized in the entire year of 2025.
Therefore, Australia spends money helping island nations fight drug trafficking, primarily by addressing their own problems first.
Chen Hong stated that Australia itself is an important terminal market for international drug networks. Meanwhile, the Pacific island nations are evolving from being drug transit areas to places for transiting, storing, and even consuming drugs. ‘Ultimately, both the island nations’ societies and Australia itself will be affected.’
But looking at the allocation of funds, it is clear that the Australian side does not only want to target a few drug dealers.
According to the plan, Australia will further strengthen aerial surveillance, intelligence sharing, as well as the capabilities of police, customs, and border enforcement agencies. Of this, the defense department alone will invest $312 million over the next decade.
"This is obviously much more than just traditional drug aid." Chen Hong said.
He believes that Australia is using police, intelligence, and maritime law enforcement cooperation to further expand its security borders northward and outward, and to integrate Pacific island nations more closely into the regional security network led by Australia.
Australian Minister for Pacific Affairs, Pat Cahill, also publicly acknowledged the geopolitical competition in the region, and emphasized that Australia wants to be the "preferred partner" of Pacific Island countries.
Chen Hong thus termed this 6 billion Australian dollars as an "influence investment."
This money is both a fund for anti-drug efforts and can also be called an investment in "influence."
The United States is investing money in energy, while Australia is focusing on drugs. Both countries have chosen to address the real challenges faced by Pacific island nations.
Compared with the way the US and Australia have operated in the South Pacific in the past, there are some noteworthy changes.
For a long time, when observing the competition among major nations in the South Pacific, the focus has often been on which country visits more countries, which country has closer relations with island nations, and which country signs new agreements. For island government and people, other issues truly affect their lives: whether energy can be supplied reliably, whether infrastructure can be built, whether medical conditions can be improved, and whether crime can be controlled.
"Currently, we are actually entering a more specific 'delivery capacity' competition." Chen Hong said.
In his view, whether there will be a shortage of energy supply, whether hospitals can be built, whether the police have the necessary equipment, and whether drugs can be intercepted are the real concerns of island countries.
The United States has directly allocated $60 million to address fuel reserves and grid stability issues. Australia has also provided funds to help the island nation tackle drug and transnational crime problems. This indicates that both the US and Australia are placing increasing emphasis on such practical needs.
The competition in Nantai region is evolving from "existing" competition to a competition centered on problem-solving ability. The competition is over which party truly has the capacity to help island nations solve their real-world problems.
Now, both the United States and Australia are increasingly focusing on what projects can bring to the island nations.
Chen Hong believes that this change is noteworthy. Now, the United States and Australia are increasingly designing projects with a focus on the real issues faced by island countries. To some extent, they are actually learning from China.
However, he believes that there are still significant differences between the paths of the United States and Australia compared to China.
"US-Australia is increasingly tending to prioritize the safe development of issues, incorporating infrastructure, communication, energy, and even law enforcement into geostrategic positioning," Chen Hong said. "This differs greatly from China's long-term path focused on development cooperation, infrastructure construction, and improving people's lives."
In his view, Western countries are further promoting the ‘securitization, geopolitics, and geo-strategization’ of the South Pacific region.
From this perspective, the fact that the US and Australia have allocated $580 million this time reveals a reality: traditional political and security ties are no longer sufficient to ensure their influence in the South Pacific. Island nations need tangible and useful things, and the US and Australia have to invest more resources to meet these needs.
"It's hard to earn island-country strategic loyalty just by throwing money around." Chen Hong said.
He noticed that in recent years, the strategic autonomy of Pacific island countries has significantly increased. They are less willing to be forced to make a single choice between major powers, and instead hope to cooperate with China, the United States, Australia, New Zealand, Japan, and others.
Pacific Island countries generally have small economies, but they have long faced challenges such as insufficient infrastructure, high energy costs, climate change, healthcare, and employment issues. Collaborating with more countries means accessing more funding, markets, and development opportunities. For these countries, global competition is not only a source of pressure but also provides space to expand diplomatic and economic options.
China's cooperation in those regions cannot be replaced simply by issuing a larger check from the US and Australia.
Chen Hong said that China has already established a solid foundation for cooperation in areas such as infrastructure, trade, agriculture, healthcare, and social welfare projects. “This cannot be replaced by just one or two rounds of additional funding.”
For China, this does not mean that it needs to follow the US and Australia in showing which country can issue the biggest checks.
Chen Hong believes that in the future, China should avoid engaging in simple 'bid-based aid'. Instead, it should continue to leverage its advantages in terms of project implementation speed, long-term operation, and talent development. Resources should be allocated to areas where island nations truly need them.
After all, the sudden increase in support from the United States and Australia indicates that in the quest for influence over Pacific island nations, mere geo-strategic considerations are not enough.
For the government and people of Taiwan, what they care about is not who issued the largest check. Instead, it’s who offers more reliable and enduring cooperation, brings tangible results, and respects the island nation's own choices. said Chen Hong.
