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Darwin Port: Beijing anger at prospect of lease being stripped from Landbridge

A video shows a Chinese company’s intentions for a vital Aussie port. Now it’s at the heart of a new tussle between Beijing and Canberra.

A seemingly innocuous port in the Northern Territory is fast becoming the next flashpoint in the deteriorating relationship between Canberra and Beijing.

There are fears that a deal inked in 2015 to grant a Chinese firm a 99 year lease on the Port of Darwin could have disguised a plan by Beijing to keep a close eye on Australia and its ally, the US.

It’s led to growing calls for Chinese firm Landbridge, which paid $506m to the Territory Government for the lease, to be stripped of control of the port.

In a glossy video, Landbridge has lauded its Aussie asset as a “pivot” to China.

But Australian defence watchers have said Darwin is now a “strategic location” in the Asia Pacific and it’s an anomaly having Beijing control northern Australia’s pre-eminent port.

China has retorted that the port has “no military purpose” and the firm has denied it has anything other than strictly commercial intentions for its investment.

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On Monday, the Defence Department said it was seeking security advice on Landbridge’s custodianship of the port.

“If there is advice from the Defence Department or our security agencies that change their view about the national security implications of any piece of critical infrastructure, we have legislation now which is dealing with critical infrastructure,” Prime Minister Scott Morrison.

That new legislation gives Canberra the power to cancel agreements between foreign powers and individual states and territories.

It used the new law to rip up Victoria’s agreement with Beijing on the Belt and Road initiative – a move that enraged China.

Now Landbridge’s Darwin Port deal is looking like it could suffer the same fate.

Controversial decision to hand Darwin to Chinese company

Darwin Port had been a drain on the coffers of the Territory Government so when Landbridge came along in 2015 with half a billion dollars in cash it seemed like a win-win.

The port would be upgraded, a luxury hotel built and all at no cost to the taxpayer that would eventually get the infrastructure back.

Six short years ago relations between China and Australia were on a more even keel – but even the, the NT’s decision was controversial.

Yet worries were dismissed as mere “fearmongering” and Chinese firms could be persuasive – at the time – in saying they had few links to the Communist led Government.

Moreover, the facility was unconnected to Darwin’s compact military port.

But things are different now.

Peter Jennings from think tank the Australian Strategic Policy Institute has said a “strategic change” has occurred since the port changed hands.

“Xi Jinping’s China is on an aggressive course to dominate the Indo-Pacific, supplant the US as the region’s leading military power, weaken its allies and brook no dissent against Beijing’s wishes,” he wrote in The Australian.

Mr Jennings said last week’s announcement by the Federal Government that it was to spend $747 million beefing up training ranges in Northern Australia meant the port’s role was more crucial than ever.

“Just about every litre of fuel, every round of ammunition, every piece of military equipment used at those training ranges will be offloaded at the Port of Darwin.

“Darwin is emerging as a strategic location not just for Australia, but for our allies and partners. Control of the port matters even more now than in 2015.”

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How independent is Landbridge?

Landbridge has insisted it is a purely commercial enterprise. But there are questions over how truly independent any company can be in China.

Images from 2014 have emerged which appear to show links between Landbridge and the People’s Liberation Army. In August of that year, pictures showed the formation of a company armed militia to support the military in emergencies or even military manoeuvres.

Darwin’s role in Belt and Road

In a slick video produced by Landbridge in 2019, the company extolled the role Darwin would play in the Belt and Road initiative

Darwin, the video said, was now a crucial part of an “important maritime co-operation pivot for the One Belt and One Road to contribute to China a more powerful port strength”.

Language like that is no longer music to the ears of the Morrison Government.

Belt and Road is the controversial and very expensive Beijing strategy to tie nations into its economic success. The only overt Belt and Road Deal in Australian with Victoria, has now been axed by the Federal Government.

There have been claims that it is little more than “debt diplomacy”. The criticism is that China lends vast amounts to nations to build new infrastructure, like ports, which countries can then struggle to pay back leading Beijing to take over the potentially strategic international asset.

John Garrick, a senior lecturer of business law at Charles Darwin University said that wouldn’t be the outcome in Darwin.

“Landbridge has bought the lease, rather than a Chinese bank lending funds to the Northern Territory government to develop the port,” he wrote on website The Conversation in 2018.

“If Landbridge was to default, it would lose its money. Any attempt by Landbridge to use the port as security to borrow money from a Chinese bank would trigger renegotiation of the lease.”

If Australia had stumped up the cash to upgrade the port, Mr Garrick said, the lease might not have been so eagerly sold.

Darwin southern flank of US operations

But while Landbridge can’t hold onto the port indefinitely, for now a Chinese company with opaque links to Beijing does have a foothold in a city increasingly at the centre of a defence ramp up.

Scores of US soldiers, on rotation in the Northern Territory, are regularly within a few kilometres of a Chinese controlled installation.

“Darwin is important because it is the southern flank of US operations in the Pacific” Mr Garrick said.

China bats away any criticism of Landbridge’s lease and accuses the Government of raising the issue “to follow in the US’ footsteps”.

That’s the view of the Global Times, a newspaper closely linked to thinking in Beijing.

It said the deal was a boon to Australia and key to turning the “vastly underdeveloped” region of northern Australia into a manufacturing and energy base.

“The lease did not change, but the international environment has,” said the paper in an editorial this week.

It cited a research fellow at China’s Liaocheng University, Yu Lei, who said fears around Beijing were trumped up.

“China poses no threat to Australia’s national interests and it has no political ambition to interfere in Australia’s affairs.

“The Darwin Port lease is a pure business deal with no military purposes.”

Such soothing words are unlikely to placate concerns in Canberra. Indeed, Beijing appears to be gearing up for the lease to be taken away from Landbridge.

Such a move might bring a sigh of relief to defence watchers. But it will almost certainly send China-Australia relations even further into the deep freeze.

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