In an extract from their new book, two Northern Territory writers tell how the NT’s leader Adam Giles hoped to use the leasing to get ‘off the teat of Canberra’. Instead his move thrust his government into the centre of Asia-Pacific tensions

Wander down Mitchell Street, Darwin on any Friday night in the dry season and the US marines are easy to spot: clean-cut, huddled in small groups, and practising their best behaviour amid hordes of sunburnt European faces.

Just a few hours later, the Parap Markets simmer with sweet spices, tropical fruits and wares sold by the descendants of immigrants from China, Thailand, Malaysia, Indonesia and Cambodia. Few but long-term locals understand the extent to which Darwin is a tropical south-east Asian city, linked to the north by climate, lifestyle and hundreds of years of history.

Darwin’s oldest families are Chinese, descendants of migrants from the mid to late 1800s, who panned for gold at Pine Creek and worked in town as tailors, bookmakers, chefs and hairdressers. Many locals remember the first boat arrivals from Vietnam in the 1970s and stories abound of people shouting “Welcome to Australia” as fishing and refugee boats crossed paths.

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In the 1940s Darwin became an important staging point for US sailors fighting in the Pacific; the USS Peary was sunk in Darwin harbour during the Japanese bombing on 19 February 1942, killing 88 Americans on board. The Top End has remained welcoming of American troops, and is now home to more than 1,000 US Marines who rotate through each year.

Adam Giles’s government made little secret of its intention to lease the port of Darwin. But the transaction to a Chinese company sparked a diplomatic incident in late 2015, in particular straining links between Darwin, Canberra and Washington.

For Giles, the lease was a statement of defiance in the face of 14 consecutive denied requests for federal funding to upgrade facilities at the port. “This is about getting off the teat of Canberra, becoming less and less reliant on money from Canberra,” a senior government figure told the NT News at the time to sum up Giles’s motivation for flogging the port to the Landbridge Group. The deal was a good one for the Territory: the price of A$506m was better than expected, it opened the door to significant trade opportunities, and on that basis the NT News was relatively supportive.

When Landbridge emerged as the most serious bidder, a call went back to China. Within a couple of days, the billionaire behind Landbridge, Ye Cheng, was sitting on the 14th floor of NT House on Mitchell Street, staring out over the tropical working port from behind a modest wooden table.

“We had wanted to eyeball him,” a public servant conducting probity on the bids told us at the time.

Forbes lists Cheng as the 206th richest man in China, personally worth an estimated A$1.77bn. His deal to buy the Brisbane-based gas producer WestSide Corporation in 2014 was witnessed by then-prime minister Tony Abbott and Chinese president Xi Jinping.

The port contracts signed, Giles went public and walked into the centre of a geopolitical tussle. Notwithstanding the long history of welcoming Asian people to the Top End, the idea the NT could link more meaningfully with foreign investors than the Australian federal government did not sit well in some quarters. Talkback radio and letters to the editor were dominated by angry comments that the Territory had been “sold to China”.

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It wasn’t until some of the clamour had died down that the real problems emerged. The US and China had been shadowboxing in the South China Sea and the port of Darwin was the southern flank of the US operations in the Pacific. Defence experts came out of the woodwork to question whether the deal would have serious security implications; some even suggested it could act as a front for Chinese “espionage or sabotage” of US Navy vessels in the port.

It seemed the Department of Defence only gave the deal a passing glance when the proposed sale was sent to Canberra for review. The US government was angry at not having been consulted, and Malcolm Turnbull, Abbott’s successor, told Barack Obama that he could have learned about the deal by reading the NT News.

Then reports emerged about Landbridge operating a “people’s militia” at its home base of Rizhao. The US State Department secretly started polling Australians about their view of the deal.

The Australian government moved quickly to change foreign investment laws that would have blocked the lease. The New York Times sent a reporter to investigate what the hell was going on in Darwin, where a “pissy little port” and a scandal-riddled provincial government had been thrust into the centre of tensions in the Asia-Pacific.

Months after the port sale made international headlines, Christopher Walsh (the co-author of Crocs in the Cabinet) and Amos Aikman from the Australian newspaper went to a briefing with senior staff of the NT’s Department of Chief Minister and Cabinet. There they told the journalists about the care and due diligence that went into choosing Landbridge as the winning bidder, and spoke about the select committee that viewed the five final proposals and made the ultimate decision.

One of the members of that committee, they said, was “Captain John”. They couldn’t recall his last name then, just that he had a say in a decision with far-reaching geopolitical implications. Subsequent emails asking for Captain John’s surname were ignored.

The espionage or sabotage argument barely held water and was, undeniably, overblown by pro-US military hawks who seemed to doubt a place like Darwin, with deep-rooted ties at both ends of the Pacific, could exist in the zero-sum game of international relations. A Chinese port worker would logically have no more access to US state secrets than a Chinese restaurant worker who lined up for the public open days every time a US Navy ship docked in Darwin. Given the number of times underhanded political moves had been discussed at Darwin’s Chinese restaurants, the restaurant worker might be a more effective spy.

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Regardless, the port issue hurt Giles. He had doubled down on the dissent that began when he sold the Territory Insurance Office, which was undeniably the point where Territorians turned their backs on his government. His polling numbers never recovered after that.

Giles also doubled down on Landbridge, handing the company waterfront land to build a new six-star hotel, and starting plans for a new cruise ship terminal nearby.

The second half of his term became like a soap opera, with destructive political scandals coming never more than three months apart. While the situation was not terminal when TIO was sold, the government needed to spend its remaining time rebuilding a relationship with Territorians. Each drama and misstep – the bungled midnight coup, the port lease, the attempt to roll the NT Speaker, attorney general John Elferink’s “slap” comment, the Palmerston hospital hole cover-up and everything else that was still to follow – simply cemented in people’s minds the impression that this government was arrogant and out of touch.

Extract taken from Crocs in the Cabinet by Ben Smee and Christopher A Walsh, published by Hachette Australia