Chinese Government provides interest-free loan — via a September 2003 ETCA — for the Aiwo Kindergarten Building Construction Project (Linked to Project ID#37684)

On September 23, 2003, a Chinese Government and the Government of Nauru signed an Economic and Technical Cooperation Agreement (ETCA), which committed a $1 million interest-free loan for three separate projects (1) construction of the Aiwo Kindergarten Building (captured via project ID#64077), (2) rebuilding of the Nauru Community Centre and Indoor Sports Complex (captured via project ID#64078), (3) the Anabar Inland Fish Farming Project (captured via project ID#64079). Then, on February 16, 2004, a protocol was signed between the two countries to begin implementing the ETCA. China Friendship Development International Engineering Design and Consultation Corporation (FDDC) was the contractor responsible for the implementation of all three projects, and on April 15, 2005, the Government of Nauru formed a National Working Group to serve as a counterpart to a Working Group established by FDDC. The purpose of the Aiwo Kindergarten Building Construction Project was to construct a kindergarten building in the District of Aiwo that was designed to accommodate children between the ages of 3 years to 5 years. At the time that the project was approved, the nearest kindergarten to cater to these children is located in the District of Boe; however, due to the constant influx of children, from the neighboring districts as well as the rest of the island, the school was unable to accommodate a large number of children. Therefore the Government of Nauru took the initiative to establish a kindergarten to cater to those in Aiwo and Buada for easy access for parents and their children. However, it is unclear if this project ever reached implementation.

Additional details

The specific amount of funding that was committed through the ETCA for the Aiwo Kindergarten Building Construction Project is unknown. This issue requires further investigation. On July 21, 2002, then President Rene Harris of Nauru signed a joint communiqué in Hong Kong to establish diplomatic relations with the People's Republic of China (PRC). In the document, the Government of the Republic of Nauru recognized that "there is but one China in the world, that the Government of the People's Republic of China is the sole legal government representing the whole of China and that Taiwan is an inalienable part of Chinese territory." The declaration also contained an undertaking by Nauru to close its embassy in Taipei within one month, despite the fact Nauru had never had a diplomatic mission in Taiwan. This move followed the PRC's promise to provide a large aid package. That same day, the Republic of China (ROC or Taiwanese) government issued an ultimatum, demanding that the communiqué be withdrawn within 24 hours or it would take the initiative and sever diplomatic ties. There was much dissension within the Nauruan government over the move by Harris, which the President was alleged to have made on his own initiative. In the confusion, the Nauruan government did not respond to the ultimatum, which was extended an additional 24 hours, and the ROC followed through with its threat on July 23, 2002, breaking diplomatic ties that had existed since 1980. Then, in 2003, the Government of Nauru closed its embassy in Beijing, prompting speculation of an imminent resumption of ties with the ROC. The Government of Nauru ultimately re-established diplomatic ties with the ROC in May 2005. Consequently, many of the PRC-backed development projects that were announced or initiated in 2003 and 2004 were never fully implemented. As this is an ETCA, which is a financing mechanism specific to China's Ministry of Commerce (MOFCOM), AidData has coded MOFCOM as the specific Chinese Government institution responsible for providing this interest-free loan. Since loan terms for the interest-free loan are unavailable, AidData has set maturity period to 20 years by default and grace period to 10 years by default per China's Foreign Assistance White Paper (http://www.cidca.gov.cn/2018-08/06/c_129925064_3.htm) which states that the maturity period of interest-free loans is 20 years, with a drawdown period of 5 years, grace period of 5 years, and repayment over 10 years. AidData treats the drawdown period as providing 5 years of additional grace.

Number of official sources

4

Number of total sources

5