18 November 2015
by John Kehoe
US 'stunned' by Port of Darwin sale to Chinese
Richard Armitage, a former United States Deputy Secretary of State, said he was "stunned" that Australia blindsided the US on a decision to allow a Chinese company with alleged links to the People's Liberation Army to lease the Port of Darwin.
"I couldn't believe the Australian defence ministry went along with this,"
Mr Armitage said in an interview.
"And I was further stunned to find out that apparently this did not come up in the A-US talks [Australia-United States Ministerial Consultations]."
Mr Armitage's comments come amid growing controversy about the $506 million deal between the Northern Territory Government and the Chinese Company, Landbridge Corporation to lease the Port of Darwin for 99 years. The furore comes ahead of final bids being lodged for the $9 billion purchase of the NSW electricity grid, which also includes the purchase of sensitive optic fibre cables used by the defence establishment.
Treasurer Scott Morrison has conceded that processes were not in place for the Darwin port deal to be properly scrutinised by the Foreign Investment Review Board.
The Department of Defence has publicly said it has no security concerns about the deal, but numerous sources say there is considerable alarm about the deal behind closed doors.
Opposition Leader Bill Shorten has written to Prime Minister Malcolm Turnbull asking for a full briefing on what processes were undertaken by Canberra to assess the deal and its national security implications.
The US navy, which recently conducted a freedom of navigation exercise to challenge Beijing's territorial claims in the South China Sea, has about 1200 marines stationed at Darwin and plans to increase the quota to 2500.
"If the United States and Australia agreed to have more naval activities, the Darwin port would be the natural jumping off place," Mr Armitage said.
"Not to mention we've got marines and exercises nearby."
The tension underlines the growing challenge for Australia in managing relations with its closest security ally, the United States, and rising economic partner, China.
Mr Armitage, who served as a top diplomat in the George W Bush administration and earlier as a senior defence official for Asia, said he understood the Americans were "very much surprised" to learn of the Darwin port lease to the Chinese and that it hadn't been discussed in advance at a senior inter-government level. Mr Armitage is a Republican, but remains active in Pentagon and think tank circles in Washington.
Defence Minister Marise Payne and Foreign Affairs Minister Julie Bishop met US Defence Secretary Ashton Carter and Secretary of State John Kerry at a two-day AUSMIN event in Boston last month.
China's massive land reclamation on reefs and rocks in dispute territory in the South China Sea was a key point of discussions, including US navy plans - since executed - to test China's claims within 12 nautical miles of the artificial islands.
The Financial Review reported this week that the Darwin Port issue was not raised by Australia and US officials only heard about the deal upon returning from the annual AUSMIN talks, according to intelligence officials.
US Defense Department spokesman, Commander Bill Urban, on Monday would not specifically comment on whether Australia had adequately consulted the Pentagon, saying the US and Australia "discuss a wide range of topics".
"Australia alone determines its criteria for foreign investment projects related to its infrastructure," he said.
John Lee, a defence expert at the Hudson Institute in Washington and Australian National University, said Landbridge operates in the port logistics and petro-chemicals, two sectors considered by Beijing to be "important" to national interest.
"This means that there is not just intimate government supervision of all major Chinese companies in these sectors, but also collaboration if and when Beijing sees it in the national interest to do so," Dr Lee said.
In the US, Dubai Ports World in 2006 was forced to sell American ports it had acquired just months earlier, after a political backlash over a lack of scrutiny of the potential security risks associated with the Arab-owned company.
The Committee on Foreign Investment in the United States, an inter-department group led by Treasury and including intelligence agencies, has the power to review and block foreign investment, including on national security grounds.
The Bush administration in 2008 blocked China's Huawei Technologies to purchase a stake in 3Com, a US maker of internet router and networking equipment.
Huawei is banned from bidding for US government contracts because of concerns over espionage and was blocked in Australia for competing for National Broadband Network work, a decision that then communications minister Malcolm Turnbull expressed reservations about.