Prime Minister Christopher Luxon says soaring fuel costs, climate risks and regional security are among the major concerns being raised with him by Pacific leaders as they head behind closed doors for the Pacific Islands Forum Leaders’ Retreat in Palau.
Luxon arrived in Koror on Wednesday night and began his first full day with a bilateral meeting with Papua New Guinea Prime Minister James Marape, before joining leaders for what he described as the most substantive part of the annual Forum.
The Prime Minister is spending just under 36 hours on the ground in Palau, having missed the earlier formal plenary and opening stages of the Forum.
Foreign Minister Winston Peters has been in Palau since Sunday representing New Zealand, and Luxon has defended his shorter visit, saying it was always signalled that he would arrive for the Leaders’ Retreat.
Speaking ahead of the retreat on Thursday, Luxon said the immediate concerns being raised with him by leaders went well beyond the geopolitical tensions that have surrounded this year’s gathering.
“The first question is what are we doing about fuel? How are you handling the crisis? What’s happening for you at home? How’s it impacting your people?” Luxon said.
“Then we’re talking about El Niño, you know, because we’ve got El Niño coming, there’s a massive risk around drought and going to be a pretty sporty cyclone season.”
Security is also expected to feature heavily, including the growing movement of illicit drugs through the region and the harm they are causing within Pacific communities.
Luxon said drugs had been a major focus in his conversations with leaders since arriving.
“In a security sense, a big focus; even last night we were talking about drugs again across the Pacific,” he said.
Luxon said leaders needed to consider how the region collectively responds to transnational crime and drug harm.
Climate change, energy security, economic development and the growing influence of outside powers are also expected to feature in the closed-door talks.
Climate and fossil fuels
One of the challenges facing Luxon is reconciling the Government’s domestic energy policy with calls from Pacific climate leaders for developed countries to stop expanding fossil fuel production.
The New Zealand Government has reopened the country to offshore oil and gas exploration, while Pacific nations continue to push wealthier countries for greater action on the causes of climate change.
For Pacific countries, keeping global warming within 1.5 degrees Celsius above pre-industrial levels has long been a central climate demand. The target is embedded in the Paris Agreement and Pacific Islands Forum leaders have repeatedly warned climate change remains the single greatest threat to the region.
Forum leaders have also previously committed to transitioning away from coal, oil and gas in their energy systems in line with pathways to limit warming to 1.5 degrees.
Asked how New Zealand’s position on oil and gas exploration sat alongside those calls, Luxon defended the country’s record, pointing to renewable electricity generation and falling emissions.
He said New Zealand had recorded 96.4 percent renewable electricity in the latest quarter and argued its emissions performance compared favourably internationally.
But the discussion over fossil fuels is happening alongside a more immediate energy crisis across the Pacific.
Luxon said the region had faced around US$1 billion in additional fuel costs since the conflict with Iran, with Pacific economies particularly exposed to changes in global fuel prices.
The United States has announced new support for the region, including funding aimed at helping Pacific countries respond to fuel and energy pressures.
Luxon said the crisis also strengthened the case for greater investment in renewable energy and electricity grids, describing energy security as closely linked to countries’ economic and national security.
Two planes to Palau
Luxon was also challenged over the decision to send two Air Force planes to Palau, after criticising former Prime Minister Chris Hipkins for taking a back-up aircraft on a trip to China in 2023.
At the time, Luxon criticised the decision as wasteful during a climate emergency.
Asked on Thursday how taking two aircraft to Palau was different, Luxon said it was an operational decision made by the Air Force.
“The key thing, just remember, is we’ve taken 14 delegations up here, we’ve got a lot of people to take home on Sunday as well, and we’re taking some home when I go out on Friday as well,” Luxon said.
He said the difficulty of reaching Palau also highlighted a wider challenge facing Pacific countries around connectivity.
Pressed on whether he regretted his earlier criticism of Hipkins, Luxon did not directly answer.
“Well, it makes the case for why we need a good, reliable Air Force plane,” he said.
Geopolitical tensions follow leaders into the room
The other tension hanging over the Forum is the increasingly visible contest for influence in the Pacific.
China has strongly objected to Taiwan’s presence around this year’s meeting, hosted by Palau, one of three Pacific Islands Forum members which maintain diplomatic relations with Taipei.
Luxon acknowledged the Pacific was becoming an increasingly contested strategic environment and said New Zealand had been sharing its own experience of foreign interference with Pacific partners.
But he pushed back on suggestions the China-Taiwan dispute had dominated discussions between leaders.
“Inside the PIF that hasn’t been a focus of conversation actually,” Luxon said.
Instead, he said conversations since arriving had quickly turned to the fuel crisis, climate risks, drought and cyclone preparedness, drugs, investment and economic development.
Taiwan will nevertheless remain a live issue for New Zealand, which will host the Pacific Islands Forum next year.
Luxon was repeatedly pressed on whether Taiwan’s Foreign Minister would be allowed to attend the New Zealand-hosted Forum, but would not commit to a level of representation.
He said New Zealand would return to the long-standing protocols which have governed Taiwan’s participation in the Forum since 1992.
Leaders are also expected to discuss China’s recent ballistic missile launch into the Pacific.
New Zealand was among the countries which strongly criticised the launch, but Pacific countries have not yet reached consensus on a collective response.
Luxon said New Zealand did not want Chinese missile launches into the nuclear-free Pacific to become normalised and would push for common ground among the Forum’s 18 members.
Peters lays the groundwork
Luxon’s arrival follows several days of diplomacy by Foreign Minister Winston Peters representing New Zealand in the earlier stages of the Forum.
Among the most significant announcements was a partnership involving New Zealand, the United States and the Cook Islands to upgrade the port at Tongareva/Penrhyn.
The United States intends to contribute US$50 million to the project, while New Zealand has committed NZ$17.5 million.
Luxon credited Peters with helping secure the agreement, which Peters said was first discussed during meetings with US Secretary of State Marco Rubio and his deputy Christopher Landau in Washington earlier this year.
He described the arrangement as a potential model for Pacific development: larger partners providing significant capital, with New Zealand using its relationships, regional experience and companies to help deliver infrastructure.
The announcement also follows a difficult period in New Zealand’s relationship with the Cook Islands after Rarotonga signed a series of agreements with China.
Peters has made the Pacific a major focus of the Government’s foreign policy and has now visited every Pacific Islands Forum country during this term.
Luxon has also pointed to an inaugural meeting of New Zealand’s Realm leaders held ahead of PIF as part of the Government’s push to deepen its Pacific engagement.
How Luxon wants the Pacific Islands Forum to evolve
The Pacific Islands Forum is the region’s main political body, bringing together 18 members to develop collective positions on issues including climate change, security, fisheries, economic development and regional diplomacy.
But beyond the immediate agenda, leaders are also considering how the Forum itself should operate as competition for influence in the Pacific intensifies.
Luxon wants clearer expectations placed on the Forum’s large group of dialogue and development partners, particularly around where and how they invest in the region.
He has repeatedly pointed to ASEAN as a model for how the Forum could develop a more structured relationship with major external partners.
The discussion is particularly significant for New Zealand, which takes over as host of the Pacific Islands Forum next year.
Luxon said he wanted PIF to become stronger and more effective at projecting a united Pacific voice internationally, while maintaining what he described as the “centrality” of the Forum in determining regional priorities.
The Leaders’ Retreat is expected to work through those issues on Thursday before the Forum concludes with its closing ceremony.
For Luxon, who will spend just under a day and a half in Palau, it is also the part of the Forum he argues matters most.
“The business gets done today,” he said.
