Australia port lease to China sparks tensions inside and out

Reuters News
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Posted: Nov 19, 2015 2:37 AM

By Matt Siegel

CANBERRA (Reuters) - Australian Prime Minister Malcolm Turnbull on Thursday defended the lease of a commercial and military port in northern Australia to a Chinese firm said to have close ties to the Chinese military.

The Landbridge Group, owned by Chinese billionaire Ye Cheng, was announced in October as the winning bidder for a deal to operate Darwin's port in a deal worth A$506 million ($362.65 million).

Australian media said that at the recent G20 meeting in Turkey, U.S. President Barack Obama expressed anger at Turnbull for not having informed him of the deal.

Darwin is a hub of cooperation between a rotation of U.S. Marines, as well as the terminus for a critical underwater data cable.

Turnbull sought to dismiss rumors of a rift with Obama, telling reporters that the deal had not been secret and in no way impacted on either the operation of the Australian military or U.S. vessels moving through the port.

"It was announced publicly early last year. It was very, very well known. The fact that Chinese investors were interested in investing in infrastructure in Australia is also hardly a secret," Turnbull told reporters.

"Under our legislation, under our law in Australia, the Department of Defence or this Federal Government can step in and take control of infrastructure like this in circumstances where it's deemed necessary for purposes of defense."

The Australian Strategic Policy Institute, however, has raised serious concerns about the Landbridge Group, which it called in a recent paper a "front" for China's People's Liberation Army.

Although it is officially listed as a private company, chairman Ye is a delegate on the advisory body to China's rubber stamp parliament, a high-profile but largely ceremonial position handed out to Communist Party backers.

Australia's main opposition Labor Party last week wrote to Treasurer Scott Morrison asking why further attention wasn't applied to the deal under the Foreign Investment Review Board, which scrutinizes purchases by state-owned enterprises.

"It is unclear whether a full Foreign Investment Review Board process was undertaken to assess the impact of the lease arrangement", Shorten said.

Turnbull and the government have defended the lease process.

Myles Caggins, spokesman for the White House National Security Council, declined to comment on whether Obama had expressed concern on the subject during a meeting with Turnbull.

“Australia alone determines its criteria for foreign investment projects related to its infrastructure," he told Reuters.

(Additional reporting by Matt Spetalnick in Manila; Editing by Nick Macfie)