New Zealand halts Cook Islands funding over China row

Wellington: New Zealand has suspended millions of dollars in budget funding to the Cook Islands, it said on Thursday, as the relationship between the two constitutionally-linked countries continues to deteriorate amid the island group's deepening ties with China.

A spokesperson for Foreign Minister Winston Peters said in a statement that New Zealand had decided in early June to suspend payment of NZ$18.2 million ($11.0 million) in core sector support funding for 2025-26 as this "relies on a high trust bilateral relationship".

New Zealand and Australia have both become increasingly cautious about China's growing presence in the Pacific region and the potential threat it poses to their national security. In January, New Zealand also halted new development funding to the Republic of Kiribati, an island in Micronesia.

We "will also not consider significant new funding until the Cook Islands Government takes concrete steps to repair the relationship and restore trust," the spokesperson said.

"New Zealand hopes that steps will be taken swiftly to address New Zealand's concerns so that this support can be resumed as soon as possible."

The Cook Islands Ministry of Foreign Affairs and Immigration (MFAI) said in a statement the country is committed to restoring its high-trust relationship with New Zealand and appreciated the funding support received from Wellington.

News of the freeze comes as New Zealand's Prime Minister Christopher Luxon is in China and ahead of a meeting with Chinese President Xi Jinping and Premier Li Qiang in Beijing on Friday. Luxon is expected to raise China's deepening ties with the Cook Islands and New Zealand's concerns about Beijing's behaviour in the Pacific region.

A 'gap in understanding'

The Cook Islands is a self-governing country in free association with New Zealand, and Cook Islanders are New Zealand citizens. New Zealand commits to defend the South Pacific nation if asked, and the two countries consult on security, defence and foreign policy issues.

Over the past three years, New Zealand has provided NZ$194.2 million to the Cook Islands through a development programme, according to government data.

In February, Cook Islands Prime Minister Mark Brown visited China and signed a strategic partnership spanning areas from deep-sea mining to education scholarships but excluding security ties.

New Zealand says the Cook Islands did not properly consult on the documents ahead of the signing, thereby breaching the arrangement between the two countries. Brown was told of its funding decision in early June by a letter, New Zealand said.

MFAI said there had been a "breakdown and difference in the interpretation of the consultation requirements" and this was being addressed as a matter of urgency.

"The Cook Islands has consistently stressed that New Zealand remains our closest partner for security and defence and that position remains unchanged," it said.

The two countries have established a formal dialogue mechanism and have met twice, it said, making progress in identifying risk mitigation in regard to the agreements the Cook Islands signed with China.

Peters' spokesperson said the agreements signed by the Cook Islands and China and the lack of consultation with New Zealand illustrated a gap in understanding between the Cook Islands and New Zealand about what their special relationship requires.

"Trust and meaningful engagement are fundamental to free association," the spokesperson said.

Anna Powles, associate professor in security studies at New Zealand's Massey University, said using aid as leverage is "punitive and short-sighted" and will not be regarded positively by other members in the Pacific Islands community.

Previous punitive measures such as sanctions on Fiji following a 2006 coup had little impact, Powles said.

"It also opens the door further for China, and of course China is part of the equation."