Traditional donors — Australia, France, Japan, New Zealand, and the United States — now compete with China for geopolitical influence in the Pacific Islands.

Leaders are refusing to choose between major powers and are claiming to be 'friends to all, enemies to none'. This allows Pacific Islands Countries (PICs) to leverage strategic competition for political and national advantage, as well as maximise aid.

But there are limits to the 'friends to all' rhetoric — not all friends share compatible values or governance systems. Some PICs, such as the US Compact states and French territories, have associations that limit their security engagements. Others, such as Papua New Guinea, have a clear preference for traditional partners to assist with security.

The challenge for traditional partners is to align with Pacific priorities and play to their own strengths without compromising strategic interests. They can do that independently, but regional and multilateral partnerships can achieve greater scale and impact, and respond to PICs’ desire for more cooperation and streamlined processes. Concerted regional actions also help set development norms, and raise standards for aid quality and accountability, but require shared goals and greater integration of administrative systems.

Key findings:

• Pacific Islands Countries are leveraging geopolitical rivalries to maximise their development options. But unmanaged competition for influence among key development partners can compromise good governance and privilege geopolitical posturing over local priorities.
• Australia, the United States, and other traditional donors can capitalise on areas of strength, such as social inclusion and regional and multilateral initiatives. Joint efforts along these lines and the pooling of resources would scale up impact and set higher accountability standards.
• Despite the risk that higher standards will open gaps for non-traditional donors with less burdensome criteria, there is much long-term value in traditional development partners collaborating in a 'race to the top' in meeting the region’s needs.