New Zealand halts millions of funds to Cook Islands over its China ties

New Zealand Foreign Minister Winston Peters

New Zealand has halted millions of dollars in funding to the Cook Islands over the “breadth and content” of agreements the smaller Pacific nation made with China, officials from the New Zealand Foreign Minister’s office said yesterday.

New Zealand, which is the smaller Pacific nation’s biggest funder, won’t consider any new money for the Cook Islands until the relationship improves, a spokesperson for Foreign Minister Winston Peters told The Associated Press. Cook Islands Prime Minister Mark Brown told lawmakers in Parliament yesterday that the funding was “not halted, it’s paused,” and downplayed the significance of the amount frozen.

Relations between other Pacific islands and their larger regional backers Australia and New Zealand have stumbled over ties with China in recent years as Beijing has vied to increase its Pacific sway. But the latest move by New Zealand’s government was striking because it reflected growing friction between two countries with strong constitutional ties — Cook Islands is self-governing but shares a military and passports with New Zealand — over their diverging approaches to managing relations with Beijing.

Freeze emerges as NZ’s leader visits China

News of the 18.2 million New Zealand dollar ($11 million) funding halt only emerged when a Cook Islands news outlet saw its brief mention in a government budget document. It’s likely to prove difficult for New Zealand’s Prime Minister Christopher Luxon, who is in China for his first official visit and due to meet President Xi Jinping this week.

Beijing has defended its Cook Islands strategic partnership before, saying in February that the deals were not intended to antagonize New Zealand.

In a report tabled in the Cook Islands Parliament this week, the Public Accounts Committee registered “concern” about a reduction of 10 million New Zealand dollars ($6 million) in the government’s purse, the first known mention of the finance freeze. The money was earmarked for “core sector support”, which funds the Cook Islands’ health, education and tourism sectors, with audits by Wellington on how it’s spent.

The money is part of NZ $200 million directed to the Cook Islands by New Zealand over the past three years as part of an almost 60-year-old free association compact. The links demand consultation by Cook Islands leaders with Wellington on agreements with other countries that might affect New Zealand.

The pacts with China were the first serious test of those rules.

Deals prompted dismay in Wellington

The Cook Islands, population 15,000, has a large and lucrative exclusive economic zone, with Brown’s government exploring prospects for deep sea mining activity. Cook Islanders can freely live and work in New Zealand, which prompted alarm about national security in Wellington when officials learned of the raft of agreements Brown signed in February.

The agreements didn’t promise security cooperation between Beijing and Cook Islands, but they did pledge more funding from China for infrastructure projects and educational scholarships. Not all of the documents Brown signed were released publicly.

The spokesperson for New Zealand Foreign Minister Peters said yesterday the agreements illustrated “a gap in understanding” between the governments “about what our special relationship of free association requires,” which included consultation to ensure the preservation of shared interests.

The “breadth and content” of the deals and lack of consultation with Wellington about them prompted a review of funding to the Cook Islands, Peters’ office said.

“New Zealand has therefore paused these payments and will also not consider significant new funding until the Cook Islands Government takes concrete steps to repair the relationship and restore trust,” the spokesperson’s statement said.

Cook Islands PM rejected concerns

Brown said in February that the deals did not “replace our longstanding relationships with New Zealand, Australia and others, but rather complements them, ensuring that we have a diversified portfolio of partnerships.” News of the agreements prompted protests in Avarua led by opposition lawmakers. Yesterday, Brown in Parliament made a pointed reference to Luxon’s China visit, highlighting the New Zealand leader’s announcements of increased trade with Beijing and looser visa requirements for Chinese travelers. The Cook Islands leader said he trusted any agreements Luxon made in Beijing would “pose no security threat to the people of the Cook Islands” despite Avarua not knowing their content.

New Zealand’s latest action was an “entirely avoidable consequence of Cook Islands’ strategic flirtations with China,” said Mihai Sora, analyst with the Australia-based thinktank Lowy Institute.

“It’s a bit cute to sign up to a comprehensive strategic partnership with China in 2025 and pretend there is no strategic angle for Beijing,” given all the mounting evidence of China’s strategic intent in the Pacific, he said. CHARLOTTE GRAHAM-McLAY, WELLINGTON, MDT/AP