The Australian Department of Defense is looking into scrapping a controversial lease to a Chinese company in the port of Darwin, which is close to a US naval base.
Washington has long expressed concern about the 99-year lease, which was sold by the Northern Territory government to Landbridge in Shandong in 2015 for A $ 506 million.
The review was announced after a sharp deterioration in ties between Australia and China, which led Canberra to sign two Belt and Road Initiative deals between the Chinese and Victorian governments last week.
Peter Dutton, Australia’s defense secretary, confirmed the lease revision in an interview with the Sydney Morning Herald Monday, saying he had asked his department to “come back with some advice” to make sure the government “could take” options. view it in our national interests ”.
New legislation has given Canberra the “last resort” power to act retroactively to compel companies to divest assets when national security risks arise.
But experts said any action against a private Chinese company would be controversial as it could lead to Beijing’s retaliation against Australian companies. It would also invalidate the Australian defense department’s earlier advice that the port agreement did not pose a security threat.
“Australia’s defense and security authorities were unanimous in 2015 that the deal did not pose a national security risk,” said James Laurenceson of the University of Technology Sydney.
He said the assessment did not change in 2018, according to comments made by Julie Bishop, Australia’s then Secretary of State. And despite public unrest by Chinese hawks in recent months, the government had not received advice on potential security risks, Laurenceson added.
Last week, Dutton warned that the conflict with China over Taiwan “should not be disregarded,” prompting Beijing to warn Canberra not to interfere in internal affairs any longer.
Australia’s Prime Minister Scott Morrison said if he got advice suggesting risks, the government would take action.
When Landbridge bought the lease, Ye Cheng, the company’s founder, suggested that the port be part of Beijing’s BRI plan, a centerpiece of President Xi Jinping’s foreign policy.
Mike Hughes, vice president at Landbridge Australia, told the The Washington City Times that the company was aware of the review and was willing to participate.
The deal was initially passed without much investigation in Canberra, which had recently signed a free trade agreement with Beijing. But the tensions between the US and China related to China’s aggressive expansion in the disputed South China Sea prompted Barack Obama to speak directly to Malcolm Turnbull, the then Prime Minister, about not was consulted on the deal.
Since then, Canberra has banned Huawei from its 5G network, tightened foreign investment rules and blocked the sale of various assets to Chinese bidders. Beijing has accused Canberra of targeting its interests unfairly and imposed trade sanctions on a range of Australian goods.
Peter Jennings, director of the Australian Strategic Policy Institute, who has campaigned not to allow Landbridge to keep the lease, said there has been a change in strategic circumstances since 2015.
“China is now pursuing a policy of coercion to induce states to behave in a manner befitting Beijing. The obvious question is, how comfortable can we be that key elements of Australia’s critical infrastructure are in the hands of Chinese companies? “
Jennings said the government should review Chinese or Hong Kong ownership of other important assets, including power grids and port infrastructure in New South Wales and gas pipelines in Western Australia.