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Modi pledges $70 million credit for Fiji sugar industry

Prime Minister Narendra Modi reacts as he speaks to members of the Australian-Indian community during a reception at the Allphones Arena located at Sydney Olympic Park in western Sydney November 17, 2014. REUTERS/Rick Stevens

By Malakai Veisamasama

SUVA (Reuters) - Prime Minister Narendra Modi on Wednesday pledged a multi-million dollar line of credit for Fiji's struggling sugar industry, once worked by thousands of indentured labourers from India under appalling conditions.

Sugar was the mainstay of the island economy under British colonial rule before falling into disarray during decades of political upheaval and racial tension between the descendants of early cane field workers and indigenous Fijians.

India will provide a $70 million line of credit to build a co-generation power plant at a sugar mill, Modi said in an address before the Fiji parliament. He was invited to speak by President Voreqe Bainimarama, who twice seized power in coups before being voted in after a general election in September.

"Let us create an ocean of opportunity marked with a new horizon and a new era," Modi said in an address to parliament.

Modi is only the second Indian prime minister to visit Fiji, despite Indians making up 40 percent of the population, after Indira Gandhi in 1981.

"For Modi, this is really another example of reaching out to the Diaspora, while Bainimarama wants to demonstrate Fiji's role in directing South Pacific policies," said Jenny Hayward-Jones, Melanesia programme director for Sydney-based think tank Lowy Institute.

In 2000, ethnic Fijians held the first Indo-Fijian prime minister, Mahendra Chaudhry, hostage in parliament, where rebels beat his son and amassed weapons pilfered from the military. After being released, Chaudhry tried unsuccessfully to reclaim his office.

Chinese President Xi Jinping will visit Fiji on Friday after stopping in New Zealand.

Chinese officials have said Xi is due to give an "important policy speech" and offer a broad aid package to Pacific island nations at a meeting of allies there, which include the leaders of Fiji, Micronesia, Samoa, Papua New Guinea, Vanuatu, the Cook Islands, Tonga and Niue.

In 1975, Fiji was the first Pacific island nation to establish official ties with China. That gives it a particular status among tiny states of the Pacific Ocean, which have been a source of diplomatic intrigue between China and Taiwan for decades.

China views Taiwan as a renegade province with no right to diplomatic relations of its own, and the number of states with ties to Taipei has dwindled to just 22, six of which are in the Pacific. China and Taiwan have each accused the other of using "dollar diplomacy" to win recognition.

Taiwan's friends in the region - Kiribati, the Marshall Islands, Nauru, Palau, the Solomon Islands and Tuvalu - have not been invited to the Fiji summit.

(Writing and additional reporting by James Regan and Michael Martina in Beijing; Editing by Nick Macfie)