New Zealand's populist Peters to rise in the gap left by Key

By Charlotte Greenfield WELLINGTON (Reuters) - One big winner from New Zealand prime minister John Key's surprise resignation is likely to be maverick politician Winston Peters, a popular protectionist who rails against foreign investment "lunacy" and plans to obstruct the government's pro-China stance. Peters and his New Zealand First party look set to again play kingmaker as the ruling National Party seeks a fourth term in government next year. Without the charismatic Key, who was replaced this week by his experienced but dull deputy Bill English, National will lose votes and likely be forced to find extra seats beyond its usual coalition partners to hold power in New Zealand's German-style mixed member proportional parliament, political analysts say. New Zealand First currently holds 12 seats in the 121 seat chamber and is confident of increasing its vote in an election expected around September. That will give Peters bargaining power to push a anti-globalisation message similar to those that have found favour in parts of Southeast Asia, Europe and the United States. A lawyer of Maori descent with a pedant-like knowledge of obscure legislative debating rules who has been politically active since the 1970s, Peters is no Donald Trump. But his vocal opposition of Chinese migration and investment makes him an uncomfortable bedfellow for the centre right National Party, which has embraced the Asian giant and is negotiating a free trade upgrade with the country's largest trading partner. "Other parties either have ignored the causes of public anxiety or have tried to milk the issue when they were a part of the problem in the first place," Peters told Reuters in a phone interview. "We've focused on things that ordinary people are concerned about." Peters plans to spend the coming months rallying against many of the policies that National is spearheading, calling for a ban on foreign home buyers and restrictions on China's investment access. This could make it harder for the National government to maintain or deepen its close relationship with China. Under Key's watch New Zealand became the first developed country to join the Asia Infrastructure Investment Bank and New Zealand officials helped to usher in other Western countries to the China-led bank, according to treasury officials. Trade between the two countries has grown to more than NZ$20 billion (£11.3 billion) a year and Chinese President Xi Jinping this year described the relationship as "unprecedented" in its depth. EASY ACCESS Peters has long held a very different take on China. In 2005, he blamed Asian immigration for "imported criminal activity". This year he described a Chinese company taking a majority ownership in a small New Zealand dairy processor as "lunacy" while dairy giant Fonterra's decision to send cows to China was "economic treason." His party has a policy to ban most foreign buyers in the red hot housing market, whose price growth is among the highest in the world, a move National has rejected. To be sure, Wellington's ties to Beijing have developed over many years and under successive governments, including those Peters has been a part of. But with public anguish rising over housing affordability and New Zealand pushing for a free trade upgrade with China, Peters' message is gaining more traction. Under the FTA upgrade, Beijing is pushing for better investment access into the Pacific nation - something Peters vehemently opposes. "There's a dire warning to this country in a resource hungry world, where so many of our resources are coming under foreign control," Peters said. "Frankly the level of access (by China) to the New Zealand market has been a mess. Nearly all of the impediments have been stripped away a long time ago." Representatives from the Chinese embassy in Wellington did not immediately respond to requests for comment. Peters served as deputy prime minister as part of a National-led government in 1996 and foreign minister under a Labour Party-led government in 2005 and has refused to say which party he would favour if called on to form a coalition next year. But with National expected to win the most votes of any party and Peters' mistrust of the left-wing Green Party, observers think a deal with National is likely. English, the new prime minister, acknowledged the relationship with Peters had been "challenging at times" but was not the immediate focus. "The business of worrying about working with NZ First will arise after the election." Don Brash, a former National Party leader who lost the 2005 election after failing to make a deal with Peters saw him in potentially powerful position come election time. "If Mr Peters has let's say 17 seats, which is absolutely possible, then he's in a position to make quite strong demands," said Brash. (Editing by Lincoln Feast)