INTRODUCTION
A NATION, as Palmerston said, has no permanent allies, only permanent interests. So important, however, are Australia's interests in Papua New Guinea, including our permanent interest in its independence and security, that the maintenance of a close, confident and co-operative relationship with our immediate neighbour is and must remain among the highest of our foreign policy priorities.
The importance of the relationship gives us, in turn, a strong interest in the unity and cohesion of PNG as a state, in its political and social stability and in its economic well-being and advancement. Internal developments within PNG inevitably affect the relationship. We owe to our northern neighbour the same respect for its independence and its freedom to make its own decisions as to any other sovereign state. Yet we cannot ignore or remain indifferent to those decisions and their likely effects upon or implications for our interests. This is not an argument for officious or paternalist meddling in the internal affairs of a former colony. It is an argument for the need for continuing close observation and analysis by Australia of significant developments in PNG and for achieving and maintaining the closest possible working relationship, based on mutual understanding and confidence, in all areas of common interest.
It is for these reasons that Wood & Associates has brought together in this booklet contributions from a wide variety of sources, official and non-official, on the many aspects of the bilateral relationship and the issues and problems in PNG which impact upon it. We are grateful to the Ministers for Foreign Affairs and Trade and for Defence, to the High Commissioner of Papua New Guinea, to the Shadow Minister for Foreign Affairs, to the Australian International Development Assistance Bureau and to Bougainville Copper Limited for the articles they have contributed. These statements of official or formal positions and policies are complemented by independent commentaries and analyses from Sir Anthony Siaguru, a former PNG Government minister writing as a private citizen -- he is shortly to take up the post of Deputy Secretary-General of the Commonwealth; from Professors James Griffin of the University of Papua New Guinea and Edward Wolfers of Wollongong University; and from Messrs Chris Ashton, Rowan Callick and Michael O'Connor.
It has not been possible to avoid a degree of duplication of material between some of the articles: the kind of cutting required would in most instances have deprived individual papers of their balance, cohesion or consistency. Wood & Associates is not, of course, committed to endorsement of any of the positions or views expressed, but an attempt is made in the immediately following paragraphs to identify and comment on some of the main problems and points at issue.
The continuing crisis on Bougainville represents the most serious challenge to national unity and to its economic future which PNG has faced since independence. The origins and development of the crisis, the present situation and future prospects are analysed in Professor Griffin's comprehensive and penetrating article. The history of Bougainville Copper Limited's involvement is reviewed at length and in an objective spirit in a paper by the Chairman of the Board and a Director of BCL.
In this writer's view, the central government was wise not to persist in efforts to solve the problem by military means, but to attempt instead to negotiate with the leaders of the "Bougainville Revolutionary Army". That attempt having failed for the present, the Namaliu government had little option but to respond to the BRA's unilateral declaration of independence by withdrawing financial support and other services from the province and imposing a form of blockade. This will undoubtedly cause hardship and suffering to many innocent and helpless people. But to surrender the North Solomons province to a small band of violent men, who have no representative capacity and have imposed their rule by armed force, would gravely weaken the central government's authority and further damage investor confidence in PNG. Beyond that, as Senator Evans writes, it could "herald the fragmentation of Papua New Guinea itself and thus create the potential for much more destabilising activity in the region". It is significant that no regional government has recognised the secessionist regime, and indeed no other government seems likely to do so.
If the central government holds firm, the BRA leaders will have little alternative over time but to come to the negotiating table. Mr Namaliu has made clear that his government is prepared to offer quite generous terms, including the granting of a special autonomous status within PNG to reflect the distinctive North Solomons personality; transfer of the central government's equity in Bougainville Copper to the provincial government; increased compensation and royalties to the landowners; and a further compensation package to the province. All this is in line with the proposals for a settlement put forward in Professor Griffin's article -- but it is looking a long way ahead.
In the meantime, the Bougainville affair has precipitated a short-term economic crisis in PNG by depriving the central government of the 17 per cent of its revenue and the one-third or more of the country's export earnings which normally come from the Panguna mine. The government responded quickly by devaluing the kina, cutting public spending and public service jobs and appealing for financial aid from the IMF, the World Bank and the Australian government. The responses from donor organisations and governments have been positive. Assuming that investor confidence is maintained -- and the Bougainville outcome will be important to this -- and that other current mining projects go forward successfully, the impact of this short-term crisis should be reduced over time and the present losses offset.
There are other causes of concern for the future of PNG which are independent of the Bougainville affair. These include political instability, deteriorating law and order, corruption and its impact on foreign investment, inadequate economic growth and rising unemployment.
The political system that has evolved in PNG, with its shifting majorities and regular votes of no-confidence, is far from ideal. It distracts government leaders from the business of government and hampers the decision-making process. Even so, it is worth noting that there have been fewer than half the changes of government in PNG since independence than in Australia in the first 15 years after federation; and the system works in its own hobbled way. The risks of a military coup are discounted by most observers. In terms of political stability, PNG compares favourably with most other Third World countries.
Law and order has clearly become a serious problem. As their performance in Bougainville demonstrated, there is a pressing need for greater discipline and better training for both the PNG Defence Force and the police. This is one area in which Australia can help, is helping and should help more. The challenges to law and order spring of course from deeper economic and social causes and can only be dealt with successfully by long-term economic and social policies. But a more efficient, better motivated and better disciplined police force is essential in what most observers consider a deteriorating security situation.
Corruption at both ministerial and administrative levels has grown apace during the 1980's. As Rowan Callick writes, "It is widely stated in the business community that a new foreign investor -- except in mining and petroleum, where the the relevant government department is perceived as professional and straightforward in its dealings -- requires a political 'friend' to negotiate the red tape successfully". It is significant that there has been little or no new investment outside the mining sector in recent years -- and disquieting that the Secretary of the Minerals Department resigned recently, complaining of political interference. We should be hesitant, of course, to apply simplistic judgments to a society in which personal and group relationships are largely based on reciprocal favours and kinship obligations. Even so, the practices that have developed in bureaucracy and business inevitably have a deterrent effect on new foreign investment -- and even on the continuance of established enterprises.
As our AIDAB contributors have noted, "despite large flows of Australian aid to PNG since 1975, PNG's economic performance since Independence has been poorer than expected". Despite its rich mineral resources, the economy was virtually stagnant throughout the 1980s and the prospect is for zero, if not negative real growth as the population continues to increase at between 2.5 and 3 per cent annually. With falling international commodity prices for PNG's main cash crops, the economy will remain heavily dependent on the mining sector. Yet even if all the current mining projects go ahead successfully, the employment openings will be limited and the social consequences will be severe. There is a pressing need for substantial microeconomic reform, for structural adjustment and programs to promote non-mining sector investment.
On the credit side, successive PNG Governments have a good record in macroeconomic management. The country has met all its debts on time, has kept inflation in check and is in good standing with the World Bank and the Fund. It has maintained a parliamentary system which is supported by a healthy indigenous form of grass roots democracy. Human rights and personal freedoms may at times be circumscribed by lawlessness, but not by government decree. PNG has managed its foreign policy, and in particular its relations with Indonesia and ASEAN, with considerable skill. It has achieved more, and still has brighter prospects, than many developing countries.
If only for these reasons, it is too early to conclude, as some observers have done, that Papua New Guinea is a "broken-backed" state, crippled by corruption, maladministration and mounting lawlessness -- or headed ineluctably in that direction. Still less can Australia contemplate any sudden abandonment of its present costly levels of support -- more than $300 million a year -- or any disengagement from the present close relationship.
The present level of Australian aid to PNG is exceptionally high, and the proportion of aid that goes in untied budget support (at present about 90 per cent) is clearly excessive. In the long run, the degree of dependence on Australia that these figures imply is unhealthy for both parties. The Hawke government is right to have embarked on a progressive reduction in aid in real terms and -- notwithstanding the concerns expressed in Tony Siaguru's article -- on a gradual move from the present disproportionate emphasis on direct budget support towards increased program aid, particularly training and project assistance to promote growth and long-term development. Nor need we be concerned if PNG looks for aid to other governments: Australia cannot impose a quarantine on PNG's foreign relations and the country could benefit from a diversification of sources and types of external assistance.
But our own relationship with PNG is simply too important for Australia to stand aside from PNG's concerns. It is, of course, a significant market for our exports, a still promising field for investment, a country in which many Australians live and work. Decolonisation was managed with remarkable harmony and goodwill, and despite inevitable frictions, personal relations between Australians and Papua New Guineans can be cordial and relaxed at every level from government down. In the last analysis, however, it is our strong interest in an independent, secure and viable PNG that engages us in its destiny. In the words of our Minister for Defence, "Papua New Guinea is of fundamental importance to Australia's regional defence interests". The relationship will often be difficult and delicate, and it needs more careful and sensitive handling than it is sometimes given, but for better or worse it is a permanent relationship -- a form of marriage, as Sir Anthony Siaguru puts it -- and we are committed to it.
AUSTRALIA AND PAPUA NEW GUINEA
THE signing of the Joint Declaration of Principles (JDP) in December 1987 -- at Papua New Guinea's initiative -- marked the ending of the immediate post-colonial period in the Australian-PNG relationship. Reflecting that fact, Papua New Guinea's Prime Minister, Mr Namaliu, in speaking of the relationship in May 1989, said that it was Papua New Guinea's closest and most complex, but that it was changing -- and changing quite fast.
Inevitably, both Australia and Papua New Guinea have had to make adjustments as we cope with an often contradictory and emotional mix of expectations and resentments which characterise to some degree or other the end of colonial ties. Particular sensitivities arise because -- unusually, compared with most colonial relationships -- Australia and Papua New Guinea are neighbours, and very close neighbours at that. That geographical proximity is something which won't change. As Papua New Guinea's Foreign Minister, Mr Sornare, said recently, it ensures we are closely tied in the future as in the past. It provides us with shared interests and with opportunities.
The JDP recognised these interests and opportunities, and established guidelines for the future strengthening of bilateral ties through a wide range of bilateral agreements and cooperative activities. At the strategic level, our shared interests are reflected in the commitment of the governments of Australia and Papua New Guinea to consult at the request of either about matters affecting their common security interests. Shared interests and opportunities in other areas are reflected in bilateral instruments such as the Development Co-operation Treaty, the renegotiated Papua New Guinea-Australia Trade and Commercial Relations Agreement, the Double Taxation Agreement, and the negotiation of an investment promotion and protection agreement; and in a wide range of co-operation in almost every sector of government and private activity.
Australia's general approach to Papua New Guinea, as it is to the Pacific island countries as a whole, is one of "constructive commitment" -- in which what we seek is not the perpetuation of an essentially colonial relationship in modern dress, but a genuinely mutually advantageous partnership.
DEVELOPMENTS IN PAPUA NEW GUINEA
Much is written and said in Australia, particularly in the context of the crisis in Bougainville, about the problems facing PNG government and society. This is understandable. Out proximity gives Australia a special interest in Papua New Guinea's national unity, political stability, economic prosperity, and development in the broadest terms.
But one senses sometimes the implication -- both in Papua New Guinea and Australia -- that Australia is responsible for these problems: responsible not only historically or morally because of the colonial administration, but responsible also for taking a lead in solving them. That is old thinking.
Developments in Papua New Guinea affect Australian interests. But first of all, Papua New Guinea's problems affect the interests of Papua New Guineans. The PNG government is well aware of them and of the need to tackle them. We must recognise that Papua New Guinea will tackle them in the way most suited to its own traditions and aspirations.
Prime Minister Namaliu, talking in Australia in May 1989, identified his four main priorities for government action as constitutional reform; law and order; economic growth and job creation; and education and training, including capacity building (i.e. developing more flexible practices and institutions). It became apparent in our discussions at the meeting of the Australia-PNG Ministerial Forum in Port Moresby on 18-19 January, with the problems of Bougainville the centrepiece of the agenda, that while the restoration of law and order, and of economic stability, are now the most immediate priorities for government action, the earlier list is still very much applicable.
POLITICAL STABILITY
One sometimes hears dire predictions about the future of Papua New Guinea's political system, or about a drift into ungovernability. Occasionally, there are calls in Papua New Guinea for more authoritarian forms of government. But Papua New Guinea is committed to democracy.
Papua New Guinea's political system and administration are indeed under strain. PNG politicians face a heavy burden of responsibility towards their people and the nation. The shortage of appropriately qualified people is still a problem for public administration.
But Australian observers need to keep a sense of perspective. Papua New Guinea's political system is still evolving. And that evolution is taking place democratically, within Papua New Guinea's constitution.
Prime Minister Namaliu, and many other leading politicians from both sides, have spoken of the need for constitutional reform to allow PNG governments the opportunity to plan ahead rather than having to defend themselves from motions of no confidence. Australians -- and Australian ministers in particular -- can sympathise, even advise and encourage if invited to do so, but only Papua New Guineans can decide such matters. In this context, it has been heartening to see the development of bipartisan support in the PNG body politic for significant constitutional reform. A parliamentary committee has recently gazetted proposals for amendments to the Constitution.
The PNG government is well aware of the need for reliable national institutions to implement its policies effectively; and to give credibility to, and ensure respect for, its authority. In this area, it has sought Australia's help, and we have responded on a scale of which we can be proud.
Education and training for human resources development have been a focus of our project aid. In the past ten years 1750 Papua New Guineans have taken up scholarships and awards for study in Australia. We are making more places available. We are complementing these programs with increased support to strengthen educational institutions in Papua New Guinea.
On the institutional front, since 1986 substantial Australian assistance has aimed at backing PNG programs to improve administrative infrastructure in taxation and customs, civil aviation, provincial government financial management, and the police.
BOUGAINVILLE
Australians are understandably concerned about developments in Bougainville. In responding to questions about my December 1989, parliamentary statement on Australia's Regional Security, I explained our underlying strategic concern: were the Bougainville situation to disintegrate into a full-scale secessionist exercise, that might herald the fragmentation of Papua New Guinea itself and thus create the potential for much more destabilising activity in the region. While the situation on Bougainville has not to date had any such demonstration effect in the other parts of Papua New Guinea, the danger remains. We are encouraged, of course, that Mr Namaliu and all senior PNG leaders have made clear that secession is unacceptable.
For the early part of 1990, my most immediate concern of course was the safety of the remaining Australians still living on Bougainville. As the situation deteriorated, we had to advise all Australians to leave. Other important concerns have been for a large Australian investment; the damaging consequences for Papua New Guinea's economy of the prolonged shut-down of the mine and the damage to Bougainville's plantation sector; the possible flow-on effects for investment in other large mineral resource projects in Papua New Guinea; and the consequences, if a settlement is not found in Bougainville, for the PNG Government's authority in other areas of the country.
While the militants continued to refuse Mr Namaliu's offer of talks on a peaceful political settlement, the PNG government had little option but to respond with force to a continuing campaign of militant violence. In providing indirect assistance to the PNG Defence Force under existing defence co-operation arrangements, Australia was responding to requests by a democratically elected government seeking to maintain Papua New Guinea's constitutional and national integrity.
Reports of human rights abuses by the PNGDF on Bougainville have been of deep concern to the Australian government. The fact that abuses were committed by both sides does not lessen that concern. Both the Prime Minister and I have spoken with Mr Namaliu, who is also concerned about the reports. The PNG government has undertaken to investigate and has the mechanisms available to take appropriate action.
Australia has warmly welcomed the ceasefire on Bougainville and hopes that the talks, when they take place, will lead to a political settlement. The Australian government doesn't seek a direct role in such talks, but I have made clear our readiness to help where appropriate, and to assist in the recovery process where we possibly can once a settlement is reached.
Prime Minister Namaliu has indicated that Papua New Guinea regards the Bougainville problem as an internal one for Papua New Guinea to settle. That is as it should be. As both the Prime Minister and I made clear, no direct Australian military role on the ground in Bougainville could be contemplated, except in the extreme circumstance that the safety of Australians was immediately at high risk.
LAW AND ORDER
While Bougainville is a particular focus of attention, many Australians -- including Australian businesses -- are concerned about the state of law and order in the country at large. Problems have been evident in the major cities -- Port Moresby and Lae in particular -- in the Highlands and at mining projects. As the PNG government has said, law and order is no less of a concern for Papua New Guineans themselves.
The problems stem in part from social change, uneven economic development, the influx of people to towns, the clashes of cultures that economic developments entail (especially given the importance of land in Papua New Guinea's culture), and rapid population growth. Only a small proportion of the 50,000 young people entering the work force each year can get formal employment.
The PNG Government realises that poor law and order is a constraint on economic and social development. It has made improving law and order a priority.
Australia is helping Papua New Guinea at both ends of the problem. At one end, we are contributing to activities aimed at supporting rural development through coffee and cocoa research projects. These will assist in increasing local output and thereby encourage people to remain in rural areas. At the other end, we began in 1988 a program to help improve the capabilities of the Royal Papua New Guinea Constabulary. In 1989-90, nearly 26 per cent of Australia's project aid is being spent on assistance to the police. Following the Ministerial Forum in January, Australia announced it would provide extra support to help strengthen the police's mobile squads, which deal with outbreaks of public disorder, and to improve police housing.
ECONOMIC PROSPECTS
The previous challenges I have mentioned all affect Papua New Guinea's economic prospects. In 1988, the Bougainville copper mine provided about 17 per cent of the PNG budget revenues, ten percent of Papua New Guinea's GDP and 36 per cent of PNG export earnings. The most immediate economic problem is the impact on Papua New Guinea's balance-of-payments. New mining projects should begin to close the revenue shortfall in the next three to four years. In the meantime, Papua New Guinea will require significant external financing.
Although Bougainville is in many respects sui generis, failure to resolve problems there satisfactorily could affect attitudes of investors towards mineral resource developments elsewhere in Papua New Guinea. And the other main source of Papua New Guinea's foreign exchange earnings -- agriculture commodity exports -- are vulnerable to fluctuations in world prices.
The continued closure of the Bougainville mine will further slow down economic growth. It will also reduce Papua New Guinea's capacity to sustain investment in infrastructure and necessary expenditure on welfare and security. The PNG Government has had to take some hard policy decisions. It has introduced a package of austerity measures and devalued the kina. It has held successful talks with the international financial institutions with a view to obtaining assistance.
The PNG Government has a good record of macroeconomic management and Papua New Guinea has immense natural resources. With the right policies -- and the economic package announced by Finance Minister Paul Pora on 7 January and subsequently elaborated in Papua New Guinea's discussions with the World Bank is a sign that such policies are being put in place -- the medium-term prospects should be good, as new projects come on stream. And the PNG government recognises the need to ensure that the development of the mining sector and revenues from it are used to create a foundation for broad-based growth in other sectors as well.
AUSTRALIAN AID
Australian aid is substantial, and important for Papua New Guinea's economic prospects. In 1989, Australian budgetary aid of $A275 million represented 15 per cent of PNG budget revenues. Australia is Papua New Guinea's single largest aid donor, providing about 70 per cent of Papua New Guinea's total aid receipts. Since independence, Australia has given $A4.0 billion in aid to Papua New Guinea, $A3.7 billion as untied grant budget support.
The Treaty of Development Co-operation signed in 1989 provides for the pattern and level of our aid to change during the next five years. Australia will give $A275 million a year in budgetary support until 1992-93, then $260 million in 1993-94.
So the Treaty envisages a decline in budgetary support in real terms over the period. Increases in project aid will partly offset this decline. Project aid will rise in steps from $20 million in 1989-90 to $A35 million in 1993-94. This plan is in line with agreement between Papua New Guinea and Australia to phase out Australian budgetary aid as revenues from Papua New Guinea's mineral resource developments come on stream in the mind-1990s.
The adjustment is a deliberately measured one which allows Papua New Guinea to plan ahead and to invest more than it might otherwise be able. All the same, the adjustment is not inconsiderable in terms of the PNG economy. By 1993-94, Australian budgetary aid will represent about 10 per cent of PNG budget revenues compared with 27 per cent in the early 1980s.
In light of its current economic difficulties, Papua New Guinea asked Australia to provide extra aid in 1989-90 and 1990-91. Australia is sympathetic to PNG's problems. But before taking any decision, we will need to see the impact of the recently announced austerity measures and developments in PNG's discussions with the World Bank and IMF about its external financing needs, and make some assessment about the extent of the need for bilateral donors like Australia to make up any shortfall. Australia will be attending the World Bank Consultative Group meeting of aid donors on 17-18 May in Singapore where these issues will be discussed.
TRADE AND INVESTMENT
In talking of Australian assistance to Papua New Guinea, some forget the important role of trade and Australian investment -- a role which is mutually beneficial to Papua New Guinea's economic development and to our own economy.
Australian exports to Papua New Guinea were worth $A807 million in 1989. Papua New Guinea is a strong market for Australia and is our fourth largest market for elaborately transformed manufactured goods. The balance of trade is strongly in Australia's favour. This imbalance was raised again by PNG ministers at the recent Ministerial Forum. I indicated, as Australia always does in this context, that the important focus needs to be on global trading balances rather than specific bilateral imbalances. That being said, however, we recognise the importance of encouraging more Australian trade with, and investment in, PNG; and Australian policies are directed to that end.
Total Australian investment in PNG now amounts to $A1.8 billion. Papua New Guinea is Australia's sixth largest overseas destination for investment. Most of the investment is in the mining sector. Total private investment in PNG's mining and non-mining sectors may be as high as $US4 billion in the next five years. Potential Australian investment in resource developments in Papua New Guinea over the same period is estimated at $A2.5 billion -- an exciting prospect for Australian investors and industry, as well as for PNG.
At the Forum, Australia and Papua New Guinea initialled the text of the revised PNG-Australian Trade and Commercial Relations Agreement (PATCRA). And Australian and PNG officials are negotiating an investment promotion and protection agreement, which will help secure a suitable government framework to encourage investment. The Double Taxation Agreement signed in May 1989, came into force at the beginning of the year.
One hardly needs to emphasise the importance of Papua New Guinea's ensuring security and creating a suitable political and economic climate for investment, and that point is very well appreciated these days in Papua New Guinea.
PNG-INDONESIAN BORDER
Papua New Guinea's relationship with Indonesia is an important one. Developments along the border could affect Australia's interests. But I want to say immediately that much of the more alarmist commentary on this matter is based on a misreading of Indonesian interests, capability and intentions and failure to appreciate the effort that has been made by both Papua New Guinea and Indonesia to improve their relationship.
The cross-border activities of the Free Papua Movement (OPM), which opposes Indonesian authority in Irian Jaya, can create complications in the PNG-Indonesian relationship. But the PNG government has shown it is aware of the need to control OPM activities based on its territory. Papua New Guinea and Indonesia have been purposefully building closer links and consulting closely on border management, which is conducted on the basis of two agreements, the Basic Border Agreement and the Treaty of Mutual Respect, Co-operation and Friendship. The Basic Border Agreement was recently revised and extended for a further ten years. Real progress has been made in the past year on bilateral management of border issues. Both countries have an interest in each other's political stability, national unity, and capacity to protect sovereignty.
CONCLUSION
Papua New Guinea is going through a very difficult period -- the most difficult since independence, according to its leader. Given Papua New Guinea's strategic location for us, the course of its development will have significant implications for Australia's security.
Papua New Guinea is responsible for its own future. But we have an interest in continuing to help Papua New Guinea's efforts to tackle its problems. We are committed to go on helping -- as the JDP says, in accordance with the principles of mutual respect for one another's independence, sovereignty and equality. If -- as a recent ANU publication put it -- Papua New Guinea is a friend in need, we have been and will continue to be a friend in deed.
THE PNG-AUSTRALIAN RELATIONSHIP
The relationship between Papua New Guinea and Australia is the most varied and complex of all Papua New Guinea's foreign relationships.
NEW GUINEA and other South Pacific countries, spread amidst a huge expanse of ocean, are diverse geographically. The people are divided into three culturally distinct groups, with political systems that reflect divergent historical backgrounds. Australia's contact with the region is long standing, although somewhat specialised in the areas of trade, commerce, religion and defence.
Of all the countries of the South Pacific, Papua New Guinea and Australia have a particularly close and special relationship. Since Papua New Guinea became independent in 1975, both countries have worked hard at maintaining close levels of contact and friendship, befitting close neighbours who are bound together by historical and security ties. Australia's commitment to Papua New Guinea is reflected by the fact that Papua New Guinea remains the largest single recipient of Australia's overseas aid program.
DEVELOPMENT IN PAPUA NEW GUINEA
In Papua New Guinea, despite abundant natural resources, improvement in economic management and the prospect of a major increase in mineral revenues in the 1990's, the country faces major development challenges in the years ahead.
There are nearly 85 per cent of a population of about 3.6 million still living in villages who continue to be engaged mainly in traditional agriculture. A complex system of customary land tenure and ownership by the people does in some degree hamper the mobilisation of land for development. Adult literacy is low. Social and administrative fragmentation resulting from cultural and ethnic diversity -- over 700 languages or dialects -- and the organisation of the country into 19 self-governing provinces render the task of economic planning and development especially demanding. There is a severe lack of unifying infrastructure and the problem is compounded by the rugged mountainous terrain and wide geographic dispersion of the population, making access difficult and expensive. As well, public administration and the capacity to plan and implement development programmes are constrained by institutional weaknesses and the shortage of skilled national staff, the latter reflected in a heavy though diminishing reliance on expatriates.
Nevertheless wide opportunities for accelerated development exist and can be realised, provided current sound general economic policies are maintained; private sector initiatives are encouraged; planned projects in the public sector are successfully implemented; the supply of skilled labour is increased among nationals and the required levels of external capital and technical assistance are sought and obtained.
Papua New Guinea recognises these difficulties, and efforts have been made consistently by the Government over the years to try to minimise these problems. In my view, Papua New Guinea is determined to overcome these obstacles and it would be a matter of time before we start seeing the fruits of all these efforts in the total development of the country by its people.
FOREIGN RELATIONS
Papua New Guinea is a relatively small country by world standards and will continue to be affected by what happens in other countries around the globe. Our efforts in this area will be to continue to monitor and assess the international environment, particularly within our immediate and adjacent regions, and at the same time to develop a capacity to secure our interests abroad.
Papua New Guinea's foreign policy of "Active and Selective Engagement" enables it to conduct its foreign relations independently and to suit changing situations. This policy also allows for the government to build on those activities it has secured in the past and to formulate new initiatives to meet new conditions.
RELATIONS WITH AUSTRALIA
The relationship between Papua New Guinea and Australia is the most varied and complex of all Papua New Guinea's foreign relationships. Others may be characterised as being predominantly about trade, about investment, about political issues, about security and cultural associations. But it seems fair to say that all of the aspects mentioned are important parts of our relations with Australia. This varied and complex relationship is too important simply to be taken for granted.
The relationship has grown over the years for a variety of reasons. We are immediate neighbours with close traditional and historical ties between our peoples. Australia was the administering power in Papua New Guinea for a long time and the amicable nature of our decolonisation, which led to Papua New Guinea becoming an independent nation in 1975, is recognised in this relationship. Australian servicemen fought side by side with Papua New Guineans during the Second World War in the Pacific on Papua New Guinea soil. Trade, investment and other commercial activities have continued to flourish between our two countries. Many other Australians have served and lived in Papua New Guinea and opportunities are still being offered to Papua New Guineans to study and train in Australia.
We share many common interests. This special relationship has been based and developed on political, economic and strategic considerations. And in the past 14 years since Papua New Guinea attained independence, both countries have relied on this mutual "goodwill" to overcome the pressures of the forces of change, but with full regard for one another's distinct national characteristics.
In the last four years or so, certain developments in our two countries' relations gained more prominence when it was considered necessary to examine the role of aid in that relationship and the role of aid in the government and development of Papua New Guinea in general.
In doing so, Papua New Guinea pursued a course of action which it wanted to achieve a more comprehensive and mature relationship with Australia. Our objectives were to set a definite timetable to achieve fiscal self-reliance; to seek a comprehensive arrangement with Australia, setting out the principles governing the relationship which would give more structure, coherence and direction to the overall relationship; and to seek and secure a development package from Australia comprising aid, trade and investment etc -- and not just another agreement or memorandum of understanding on aid. As readers would be aware, work commenced on these issues during the latter part of 1986 and through 1987. Towards the end of 1987 a draft statement of principles had been concluded and accepted by the Australian and Papua New Guinea governments.
The symbolic signing of the Joint Declaration of Principles (JDP) by the heads of our two governments in Canberra on 9 December 1987 is seen as a milestone in the further development of our bilateral relations.
The Declaration spells out fundamental principles that provide the framework for an active, mature, equal and well-balanced relationship. Papua New Guinea is hopeful that the Declaration will promote mutual interest through co-operative efforts.
BILATERAL AGREEMENTS
Papua New Guinea is encouraged by the manner in which subsidiary agreements have been concluded or are being negotiated under the Joint Declaration of Principles. Up to this point of time, there is now in place a number of agreements between Papua New Guinea and Australia. These include the Development Co-operation Agreement, the Defence Co-operation Programme, the Double Taxation Agreement, and the Torres Strait Border Treaty. The revised Trade and Commercial Relations Agreement is in its final stages and is likely to be signed soon. The guiding principles stated in the Joint Declaration have brought a better and clearer understanding between officials of both countries in their talks and in my view this is a very healthy sign indeed in the conduct of bilateral relations. Papua New Guinea is of the view that when all these subsidiary arrangements are agreed to, they will play a major role in its future development.
Finally the relationship between Papua New Guinea and Australia, like the relationship between many other developed and developing countries, is in some respects an unequal one. Trade between our two countries is much more important to Papua New Guinea's economy than to Australia's.
The balance of trade, even after 14 years since independence, favours Australia. Australian investment in Papua New Guinea plays a larger part in the Papua New Guinea economy than in Australia's. And when it comes to Australia's overseas aid programme and the level of aid provided, it becomes even very important and clear how amounts and issues which are insignificant and unimportant to Australia can affect Papua New Guinea profoundly.
CONCLUSION
Our special relationship will not last unless there is room for an appreciation of the differences between us. Papua New Guinea is a small developing country still in the early stages of its transition from traditionally fragmented village societies to a modern integrated nation. Australia on the other hand is a large modern industrialised nation and by comparison, the biggest in the South-West Pacific region. It is inevitable that our national interests will differ at significant points and this is to be expected. Nevertheless our task as close neighbours in this region is to identify those areas where we can develop our relationship to our mutual advantage.
But different as we may be as countries because of our development stages, we both have some things in common. We are both situated in close proximity to two neighbouring areas -- South-East Asia and the South-West Pacific. While we are developing our own bilateral relations with individual countries around us, we are also involved together in a number of regional organisations which overlap our areas in the world. Internationally, we are both members of the United Nations and its various organisations.
We are both members of the Economic and Social Council for Asia and the Pacific (ESCAP); regular participants at the Commonwealth Heads of Governments Meetings, including the regional meetings of Commonwealth nations, and have the potential for building on the Commonwealth ties we share.
Neither of our two countries belongs to the Association of South-East Asian Nations (ASEAN) but we have both taken a close interest in regular meetings of the ASEAN Foreign Ministers. We both have been given "special observer status" at these meetings.
In the South Pacific region we are again active members of a number of regional institutions including the key one among these, the South Pacific Forum.
In many ways we are interdependent within the region. From a broader point of view, we have to be aware of events taking place elsewhere. At the same time I hope Australia realises that her future could be best served by more substantial growth within the countries of the region. The question is, how best to bring that about?
Australia has already developed close bilateral relations with Pacific Island states and plays a full part in the various regional organisations. But if we are to be truly mutually interdependent and at the same time self-reliant, I wonder whether we do not need to find a better way to restructure relations within the Pacific.
AUSTRALIA/PAPUA NEW GUINEA:
FORGING A NEW RELATIONSHIP
Australia and Papua New Guinea are two adjacent but very different societies, bound together by colonial history. It is a relationship that continues to need combined effort in both our interests.
WHEN Prime Minister Rabbie Namaliu visited Australia in May 1989 he stated that his country had only fourteen years' experience of independence, and stressed the turbulence of adolescence. He also stated that Papua New Guinea governments will occasionally do things which offend Australian values, such as when in March 1989 it temporarily closed access to Bougainville to diplomats and the foreign press. Such decisions -- quickly reversed in that instance -- are made in response to events which would challenge the skill and wisdom of any government, as those who have visited Bougainville, such as myself, can well testify. Although Papua New Guineans sometimes use metaphors of infancy and parenthood, they are themselves quick to detect and resent any attitudes of paternalism.
Papua New Guinea today is facing the inevitable stresses of the modernisation process. In part, these pressures arise from very rapid population growth since the 1950's and the consequences of urban drift, unemployment and tribal fighting over land in rural areas. It was former Coalition Ministers Hasluck, Barnes and Andrew Peacock who, in preparation for self-government and independence, helped develop the democratic institutions which we believe provide the best means to resolve political conflict. Papua New Guineans are not passive clay to be moulded in our image. We must accept that they are still creatively adapting democratic traditions to suit their own particular requirements. As good neighbours we can assist in ways which are acceptable to PNG following its chosen path. It is not good enough to hark back to a past era; to do so ignores both the processes of social change and the tide of history.
Both PNG's domestic stability and foreign policy are of strategic significance to Australia. The presence of 15,000 Australians and our predominant role as a foreign investor also affect our perceptions. Equally important is the effect that any domestic PNG political instability could have upon Indonesia, a country that has a fundamental desire to maintain its sovereign integrity: any fragmentation of PNG might be seen as destabilising Indonesia's own eastern provinces.
We have already seen the ripple effect from disturbances with Irian Jaya. Over 10,000 refugees crossed the border into PNG in 1984, with Australia still providing assistance through the UN High Commissioner for Refugees. A dozen who had managed to avoid police and crocodiles in PNG's Fly River province crossed the Torres Straits into Australia and remain here on renewed temporary residence permits.
It is far better for all parties to encourage an on-going dialogue which may hopefully result in the modification of previously destabilising policies. Certainly since the signing of a Treaty of Friendship with Indonesia in 1986, PNG has succeeded in increasing contacts both with Jakarta and the Indonesian authorities in Irian Jaya. We should continue to encourage these contacts with the aim of reducing potential regional tensions.
In other foreign policy areas we welcome PNG's special observer status in ASEAN, giving PNG a voice in Indonesia's principal regional arena. PNG has also been an active member of the South Pacific Forum and -- with Australia's logistical assistance -- aided the civil power in Vanuatu at the time of the Espiritu Santo rebellion of July 1980.
BROADER RELATIONSHIPS
Outside the South West Pacific region, PNG delayed for years the request of the Soviet Union to open an Embassy, a request now accepted, and is being similarly cautious in fishing negotiations with that country. PNG spurned Libyan attempts to open relations in the early 1980's. It maintains diplomatic links with Beijing, while conducting increasingly close trade relations with Taipei. South Korea is now its fourth most important market after Japan, West Germany and Australia. The European Community is likely to be a growing market for PNG's coffee and minerals. PNG retains good relations with the United States, including military links, albeit on a small scale.
Separating occasionally alarming rhetoric from reassuring reality is as important in Port Moresby as anywhere else. The fact is that taken together, PNG's foreign policies are well considered and cautiously implemented.
THE ASSERTION OF AUTONOMY
A common theme in statements by PNG leaders has been dislike for Australia's frequent proclamation of a "special relationship". This has been perceived in Port Moresby as taking PNG for granted and the expression of an ongoing neo-colonial outlook. At the political level, the easy familiarity of Australian Ministers such as Andrew Peacock, who can claim the extraordinary record of having visited PNG over 50 times, has not been replaced -- yet over the same period PNG's political élite has both expanded and changed personnel.
There are now fewer Australians in key positions in the PNG bureaucracy. The transitional generation of PNG officials trained in Australian bureaucratic cultures has also largely moved on, and bureaucratic turn-over in Canberra has meant that personal connections, essential to diplomacy or business in Melanesia, are largely lost. Such links have to be forged anew by each diplomat posted to our Port Moresby High Commission, which by government decision has no "handover" routine to enable departing officers to personally introduce their replacements to existing PNG contacts. This procedural problem reduces the chance for continuity and confidence in the relationship.
The best known and most spectacular case of PNG's lost faith in Australia and Australia's loss of face in Port Moresby occurred in August 1986. Only six weeks into a new aid agreement, Senator Evans was dispatched to PNG to announce that due to Australian budgetary constraints a further cut in aid had been made. PNG, already coping with substantial budget cuts and falling commodity prices, had been presented with a fait accompli. Australia was seen as having acted unilaterally, almost as if PNG was a part of Australia.
This sorry affair, which reflected poorly on the Hawke Government, has at least had a positive outcome with a PNG assertion of autonomy and a maturing of the bilateral relationship. What Port Moresby wanted was mutual respect and predictability. To achieve this, it requested and negotiated what became the Joint Declaration of Principles Guiding Relations between Australia and Papua New Guinea, signed on 9 December 1987.
The Joint Declaration now provides a framework for co-operation on such matters as aid, trade, investment, border management, crime and defence. The Ministerial forums it prescribes have now become regular mechanisms for consultation and again offer the chance to regain that essential familiarity between the national leaders of both countries.
Earlier this year the two Prime Ministers signed an A$1.5 billion five-year comprehensive Treaty on Development Co-operation. This regularises the aid relationship and will hopefully reduce the uncertainties of the mid-1980's. At 15 per cent of the 1989 PNG budget, Australian aid is still significant for PNG in the provision of basic health, education and welfare services and capital infrastructure investment. It is now far short of the 55 per cent at Independence -- which is in itself a major achievement.
A new mechanism to provide co-ordination between aid donors and the PNG Government was endorsed by the Treaty, namely the Consultative Group chaired by the World Bank, a multilateral framework in which Australia is now able to provide economic advice to PNG for consideration in its budgetary process. The Coalition strongly endorses these measures.
Of particular reassurance to Port Moresby is the defence clause 12(d) of the Joint Declaration which states that:
"The two governments will consult, at the request of either, about matters affecting their common security interests. In the event of external armed attack threatening the national sovereignty of either country, such consultation will be conducted for the purpose of each government deciding what measures should be taken jointly or separately, in relation to that attack".
Australian defence co-operation programs provide about a quarter of PNG's defence expenditure. The PNGDF has a strength of 3,500 and there are currently 83 Australian Defence Force personnel based in PNG, compared with 750 at Independence. Most of these provide specialist skills in training, management and maintenance of equipment.
Despite Senator Evans' known reluctance, four Iroquois helicopters were provided to the PNGDF to increase the mobility of security forces on the Western border. Their first use has been in Bougainville at the eastern end of the country, because of the secessionist terrorism faced there. These helicopters, flown by civilian crews hired by PNG, have been used to transport PNGDF patrols enforcing the state of emergency in place since June 1989, and have already helped save the lives of several troops and civilians.
TESTING TIMES
Prime Minister Namaliu has spoken of the "testing" his government has received this year, and not just in the parliamentary arena, where like other PNG leaders, he advocates constitutional reforms to help stabilise the executive government and thereby increase the ultimate viability of the constitutional order. He acknowledged that the testing also extends to the streets of the cities, where there have been major law and order problems, as well as to the mountains and villages of Bougainville, where he acknowledged that the State faced a crisis.
Mr Namaliu argues that the urbanisation problems have causes which will require long term remedies of rural development, employment creation, education and the building up of the capacity of PNG's people. A Coalition Government will ensure that our aid is geared to assist PNG in these endeavours.
In addition to these problems is the future of the Bougainville dispute. The mine, until its closure, provided 17 per cent of PNG's internal revenue and 39 per cent of its national exports. It is thus of critical importance to Papua New Guinea. The ruthlessness of the militant land owners continues to provide an awesome challenge to Port Moresby.
This is an internal affair to PNG but one that has international implications, not least for us with 2,000 Australians on Bougainville. At the national level the 1990 PNG budget has been drafted with the assumption that the mine will reopen, and the government is able to draw funds held in the Mineral Resources Stabilisation Fund to compensate partially for revenues lost during 1989. The course of the conflict could affect the future of several other major minerals and petroleum prospects in Papua New Guinea. These projects, which mostly involve a significant Australian equity and operational role, are at the point of decision. Commitments will no doubt be influenced by the Bougainville outcome, which in turn, will influence the future financial base of the PNG government.
CONCLUSION
The PNG Government has maintained its sovereign integrity by a strategy of negotiated decentralisation to the provinces. Papua New Guinea has adapted the structures bequeathed by Australia and has shown admirable capacity to make the difficult decisions themselves.
In these testing times Australia must continue to maintain close communication with the PNG government, and stand prepared to continue to offer reasonable assistance and political support. A Coalition Government will be an understanding and firm friend.
Events are clearly moving rapidly in Papua New Guinea. As Prime Minister Namaliu said in Canberra in May 1989, the relationship between the two countries is not only PNG's "closest and most complex" but also an "intimate and diverse" one. We must learn to share Papua New Guineans' own perceptions of their autonomy as citizens of an independent state and come to terms with the fact that our role is that of a good, reliable neighbour and not of a parent.
SECURITY AND DIPLOMACY: THE CHANGING
CONTEXT AND CONTENT OF BILATERAL RELATIONS
Almost unnoticed, the Papua New Guinea Government has initiated important changes in the context and the content of the overall relationship with Australia.
THE maintenance of national security requires a great deal more than military protection against the possibility of armed attack.
The theme runs through the Ministerial Statement on Australia's Regional Security (Evans 1989), issued on behalf of the Australian Government by the Minister for Foreign Affairs and Trade, Senator Gareth Evans, on 6 December 1989. It also underlies the emphasis on vulnerability as a key problem of small states in the report on the special needs of such states prepared for the Commonwealth by a specialist group (Commonwealth Consultative Group 1985).
But it has been grasped and applied by the governments of South Pacific island countries for much longer. It has, in fact, informed defence, foreign and other aspects of policy-making in Papua New Guinea since independence (16 September 1975). And it is among the factors which have led successive Papua New Guinea Governments to develop a growing network of commitments and understandings with the governments of other countries in South-East Asia and the South Pacific, including Australia.
That network now extends from Thailand in the North-West, via Australia in the South, to Vanuatu in the South-East -- and, in some respects, even on (through Kiribati in the North) to Cook Islands.
The various elements in the network are not of equal legal force: some are treaties, while others are little more than declarations of political intent. Some are bilateral, while others have multilateral -- regional and sub-regional -- dimensions.
But, taken together, they make a contribution, consistent with successive Papua New Guinea Governments' commitment to "independent and constructive neighbourly co-operation" (Foreign Policy, 1982: 39-43), to stability and security in and around the area where South-East Asia and the South Pacific, including Australasia, meet.
They also have significant implications for both the context and the content of Papua New Guinea-Australia relations, which have not been widely noticed, let alone fully appreciated, especially in Australia.
SECURITY AND DIPLOMACY
Diplomacy has been, is, and, for the foreseeable future seems likely to remain, Papua New Guinea's first line of defence (cf. Dihm 1989: 15; Wolfers 1990). The modest quantity and sophistication of -- often somewhat dated -- equipment, the small numbers of personnel, and the state of readiness, including the discipline and loyalty, of the Papua New Guinea Defence Force (PNGDF) tend to reinforce the point (though Australian aid has been promised to help increase the size of the Defence Force from 3,200 to 3,800). So does the record of the security forces (the PNGDF, Police and Corrective Institutions) in the North Solomons Province from late 1988 until their withdrawal in early 1990.
Papua New Guinea does not face an immediate or short-term prospect of unprovoked armed attack. But the lead-time required to mount a serious armed attack on Papua New Guinea would probably not be nearly as long as the period -- "many years" -- which relevant authorities (Department of Defence 1987: 30; Dibb 1986, p. 32) estimate would apply in the case of Australia.
If an attack were threatened, then, in words which have been endorsed by every Papua New Guinea Government since 1981, the country "cannot rely on armed force -- our own or other countries' -- to maintain ... independence and security" (Foreign Policy, 1982, pp. 46-47).
A growing sense of nationalism (or, at least, potential resistance to foreign interference) and increasing technical skills among Papua New Guineans would make invasion both difficult and expensive. Any attempt to impose sustained military occupation would be even more so.
Other governments might provide some assistance to the government of Papua New Guinea (the key word in the passage quoted above is "rely"). But the most effective means of defending Papua New Guinea is prevention.
Successive Papua New Guinea Governments have, therefore, regarded what the Australian Minister for Foreign Affairs and Trade, Senator Evans (1989, p. 42), has described as "international good citizenship" as a vital key to national self-defence.
As a result, considerable effort has gone into securing recognition of Papua New Guinea's formal (and practical) independence -- in exchange for reciprocal recognition of other countries' independence -- by opening diplomatic relations with the governments of countries in diverse parts of the world and of differing political and defence alignments.
Relevant government and semi-government bodies have joined and actively participated in a wide variety of international -- world-wide and regional; technical, functional, and general-purpose -- organisations (though common membership of such organisations need not constitute mutual, formal diplomatic recognition).
A succession of treaties dealing with border administration has contained explicit assurances that the national government will not allow Papua New Guinea territory to be used as a base for hostile activities directed across the common border with Indonesia (Wolfers 1988a: Appendices I. ii and iv). Similar -- and mutual -- assurances have also been embodied in the Treaty of Mutual Respect, Friendship and Co-operation with Indonesia.
The Papua New Guinea Government has paid close attention to possible sources of instability in near-by areas of South-East Asia and the South Pacific. In the case of the Indonesian province of Irian Jaya, for example, it has made offers, not always well-received, to assist in ensuring that development benefits the indigenous people. It has also helped to bring the unresolved colonial situation in New Caledonia to the attention of the South Pacific Forum [the Forum] and the United Nations.
The prospects for peaceful resolution of any international disputes which might arise have been enhanced by accession to a series of multilateral treaties, and negotiation of bilateral and (sub)regional arrangements, devised for the purpose (see below).
Even major foreign policy statements have repeatedly given "first priority" to domestic policies designed to maintain internal stability -- and so to reduce opportunities for external interference -- by ensuring that development benefits citizens of Papua New Guinea (Papua New Guinea Department of Foreign Affairs and Trade, 1976, pp. 9, 12).
Measures of the kind outlined above cannot substitute completely for military means in preventing or resisting armed attack. But they can help to reduce opportunities or pretexts for unprovoked aggression. They can provide alternative means to the use of arms for resolving disputes. They can make resort to arms politically and diplomatically more expensive and more embarrassing for a potential foe. They can give other governments a greater interest in maintaining the status quo.
Papua New Guinea's geographical location has meant that, like Australia and Indonesia, the country borders -- and has significant interests in -- an area which is conventionally regarded as being divided into more than one region: South-East Asia (with which there was relatively little interaction before independence) and the South Pacific, including Australasia and Melanesia (where there was rather more).
The countries in what might be regarded as the Papua New Guinea region are covered by two main sets of regional general-purpose, inter-governmental organisations: those centred, respectively, on the Forum, and on the Association of South-East Asian Nations (ASEAN).
Apart from bodies with world-wide memberships, like the UN, only a few inter-governmental organisations -- including the UN Economic and Social Commission for Asia and the Pacific (ESCAP) and the Asian Development Bank -- cover both South-East Asia and the South Pacific.
No government has been able -- or has sought -- to join both ASEAN and the Forum (though the suggestion has sometimes been made that the Papua New Guinea Government, in particular, should try to do so).
So Papua New Guinean foreign policy-makers and diplomats have not only dealt with neighbouring countries on a bilateral basis but have had to devise arrangements for dealing with more than one set of regional organisations.
In fact, the Papua New Guinea government has been more successful than any other government in either region in forging close relations with the main sets of general-purpose, inter-governmental organisations in both the South Pacific and South-East Asia. Thus, it has been a full member of the Forum since independence (having been an observer since 1972), and a special observer, privy to the annual Foreign Ministers' meetings, of ASEAN since 1981 (having been an observer, with less privileged access, since independence).
CHANGES IN CONTEXT
Like other members of the UN, the Papua New Guinea Government is bound by the organisation's Charter to assist in maintaining international peace and security, to desist from aggression, and to seek to resolve any disputes by peaceful means. Other arrangements to which it is party do not weaken the government's obligations under the UN Charter (a point which is acknowledged explicitly in Article 17 of the Treaty of Amity and Co-operation in South-East Asia, Article 5 of the Treaty of Mutual Respect, Friendship and Co-operation with Indonesia, and Paragraph 22 of the Joint Declaration of Principles Guiding Relations with Australia, and implied by the reference to the United Nations in Paragraph L of the Agreed Principles of Co-operation Among Independent States in Melanesia).
Again, like other UN members, it also retains a right to individual or collective self-defence against armed attack -- "until", in the rather uncertain terms of the Charter (Article 51):
"The Security Council has taken measures necessary to maintain international security".
The criteria, procedures and authorities for determining whether or not the "necessary measures" have been taken -- or, at least, taken in sufficient time and to sufficient effect -- are not clearly defined in the Charter. But the omission may not be very important in the case of a country like Papua New Guinea, where military self-defence is generally not a practical first-option, and no other government or alliance has been, is, or seems likely to be, willing to underwrite the country's security against external, armed attack.
It remains as true as it was when first written (in 1981), that: "No other government has offered to guarantee the independence and security of Papua New Guinea. Nor ... is one likely to do so" (Foreign Policy, 1982, p. 46).
The government of Papua New Guinea is unlikely to be able to put enough into any formal agreement -- even by providing land or port facilities for military bases (which no other government has actually sought) -- to be certain that even legally binding commitments by other governments would, in practice, be met.
But, even though no legal guarantee exists -- or seems to be forthcoming -- the situation is no longer quite as it once appeared, especially as far as the Australian Government is concerned (see below).
Among the regional organisations to which the Papua New Guinea Government belongs, one, the South Pacific Commission (SPC) -- which is the oldest -- was founded (in 1947) for reasons which initially included a concern for future security in the region.
The so-called "Canberra Agreement" which actually set up the SPC, limited its functions to "the economic and social development of the non-self-government territories within ... [its] scope and the welfare and advancement of their peoples" (Article IV).
It makes no reference to security.
But a previous agreement between the governments of Australia and New Zealand, the "ANZAC Agreement" of 1944, which eventually led to the formation of the SPC, refers to the need "to secure a common policy" among the colonial powers on a rather wider range of issues, including "political development" (Article 31). It links "security, post-war development and native welfare" with one another in calling for the powers with colonies in the South-West and South Pacific to engage in "a frank exchange of views" (Article 34). It also contains an agreement between the two governments that, with the peace settlement likely to follow the end of World War II clearly in mind, they would establish:
"Within the framework of a general system of world security, a regional zone of defence ... based on Australia and New Zealand, stretching through the arc of islands north and north-east of Australia, to Western Samoa and the Cook Islands" (Article 13).
The governments of France, the Netherlands, the United Kingdom and the United States subsequently joined their Australian and New Zealand counterparts in agreeing to set up the SPC. The area covered extended from Dutch New Guinea -- and, after Dutch rule ended in 1962, and the Netherlands withdrew from the SPC, from Papua New Guinea -- in the West, to French Polynesia and Pitcairn Islands in the East.
But the SPC does not have an explicit security role.
The South Pacific Forum was set up in 1971 at the initiative of governments of island countries dissatisfied with the restricted range of issues which could be raised within the SPC. It is, in essence, an annual meeting of heads-of-government (or, if they cannot attend in person, of senior political representatives) from the region. Its agenda is limited only by the agreement of its members.
The executive arm of the Forum, the South Pacific Bureau for Economic Co-operation (SPEC), was formally established in 1973. It did not concern itself with political or security issues until agreement was reached during 1986 to reconstitute it into the Forum Secretariat. Recruitment of staff with relevant skills and experience has followed.
Papua New Guinea Governments were active throughout the 1980s in pressing for reform of existing South Pacific regional arrangements, and, in particular, for the Forum to become the pre-eminent regional institution. The Australian position gradually changed from opposition, through compromise, to reluctant acquiescence. (The Australian government's role as principal financial contributor to both the SPC and SPEC continued throughout.)
The reconstitution of the Forum Secretariat has been one result. The institution in 1989 of regular dialogues, following the annual Forum meeting, between Forum members and representatives of major, outside powers -- Canada, France, Japan, the United Kingdom, the United States and (at least, prospectively) China -- has been another.
The immediate gains for the Papua New Guinea Government -- which has, by far, the largest diplomatic and defence establishments of any Forum island member -- are probably not very great. But, insofar as the changes improve the capacity of other governments in the region to consider, and to make representations to major external powers on, general political and security issues, the indirect gains are, at least potentially, quite substantial.
Other Papua New Guinean initiatives which have been intended to enhance the general security of the South Pacific region have included efforts (which eventually succeeded, despite early Australian reluctance) to bring the colonial status of New Caledonia before the Forum and the United Nations; an expressed willingness to share benefits provided under the Papua New Guinea -- Australia Trade and Commercial Relations Agreement (PATCRA) with other island countries -- in exchange for improved access to New Zealand under the South-Pacific Regional Trade and Economic Co-operation Agreement (SPARTECA); the despatch of Papua New Guinean troops to help put down a rebellion in Vanuatu in 1980; and opposition to suggestions that Australian and New Zealand forces might be sent to Fiji, following the first military coup there in May 1987.
Sir Julius Chan, Prime Minister of Papua New Guinea from 1980 to 1982, has been an outspoken advocate of the case for establishing a South Pacific regional peacekeeping force (cf. Foreign Policy, 1982, p. 48, for a somewhat qualified form of the proposal).
Officials from Papua New Guinea also played an active role in regional efforts to reduce growing difficulties between United States fishing interests and island states through negotiation of a regional Treaty on Fisheries with the United States Government, which was signed in Port Moresby in 1987.
Although Papua New Guinea Governments have repeatedly called for the South Pacific to be declared a nuclear-free zone, they (like the governments of some other island states) have not ratified the South Pacific Nuclear Free Zone Treaty (the "Treaty of Rarotonga") because, they believe, the Australian-sponsored proposal does not go far enough. In leaving existing United States nuclear activities in the region virtually untouched, so some of its critics argue, the Treaty belies its name by giving legitimacy to the United States Government to continue doing exactly what it is purportedly intended to limit or prevent.
Within the South Pacific region, Ministers and officials from Papua New Guinea and Vanuatu have been among the most radical -- or, at least, the most assertive (Wolfers 1988b; Evans 1989, p. 10) -- on many issues. Together with their counterparts from Solomon Islands, they have taken a special, close interest in the political future of the Melanesian Kanaks of New Caledonia.
Beginning in 1986, the three Governments have met at least once a year at Prime or Foreign Ministerial level to discuss matters of common interest, including issues which they propose, or expect others, to raise at Forum meetings. They have called themselves the "Melanesian Spearhead Group".
In March 1988, they signed a statement, proposed by the Papua New Guinea Government, containing a set of Agreed Principles of Co-operation Among Independent States in Melanesia.
Despite fears that the Melanesian states might split the Forum on ethnic lines -- and so far unsuccessful efforts by some Polynesian leaders to promote the formation of a grouping of their own -- the Agreed Principles clearly commit the signatories specifically to "friendship and co-operation with members of ... the South Pacific Forum" (Paragraph L), and generally to "working, where possible, through and with the objective of strengthening wider institutions of regional and international co-operation" (Paragraph 8).
In addition to pledging themselves to consult, to co-operate, and to foster exchanges, they have sought to contribute to the security of the wider region by agreeing to support measures designed to bring about
"Arms control and disarmament, as well as efforts to reduce international tensions, to limit great-power rivalry, to secure human rights, and to ensure the peaceful resolution of disputes" (Paragraph A).
They have resisted pressure from some would-be officials to establish a permanent organisation.
The document containing the Agreed Principles is not legally binding. It is no more -- and also no less -- than a statement of political intent. But its signatories were the respective heads of Government, and where they have been succeeded by others (as the then-Prime Ministers of Papua New Guinea and Solomons Islands have), the principles outlined in the document have continued to stand. The document has remained an important point of reference for members of the Melanesian Spearhead Group.
The Treaty of Mutual Respect, Friendship and Co-operation between the governments of Papua New Guinea and Indonesia is, as its name implies, rather different -- and, at least legally, more important (It is binding in international law, although it may be terminated by either party). It, too, arises from a proposal made by the Papua New Guinea Government (in 1986), which was brought to fruition in 1987 (Wolfers 1988a, p. 205).
The circumstances which led to the proposal were much more difficult and considerably more tense than those which have given rise to the negotiation of any other international agreement to which the Papua New Guinea government is party. The significance of the agreements which it embodies and of the effects of its implementation is accordingly great.
During 1983-84, Papua New Guinea's territorial sovereignty was allegedly violated by an Indonesian road, aircraft and troops. At much the same time, approximately twelve thousand Indonesian citizens of Irianese descent began to cross into Papua New Guinea, and to remain there, without following existing legal or administrative procedures for migration. A series of sometimes sharp and complex diplomatic exchanges followed, including some which took place during the annual meetings of ASEAN Foreign Ministers and the UN General Assembly.
But the Indonesian Government declined to admit to most of the alleged boundary violations, let alone to apologise or to offer reparation for their occurrence. (The road which crossed without permission from Irian Jaya into Papua New Guinea's Western Province was the sole -- undeniable -- exception). Most of the Irianese who had entered Papua New Guinea without meeting the normal legal or administrative requirements continued -- and continue -- to stay there, unwilling to return to their homes. The Papua New Guinea government has lacked the will and (despite public statements to the contrary) the means to force them to leave -- though some have returned to Irian Jaya of their own accord or have been resettled in other parts of Papua New Guinea. During 1984 in particular, the interest which the Papua New Guinea Government took in the underlying causes of the Irianese flight and reluctance to return -- and the proposals it made to deal with the situation (see, for example, Namaliu 1988, pp. 46-49) -- caused senior Indonesian officials to express surprise and offence. Relations between the governments of the two countries were strained. Stalemate followed.
Something of a breakthrough came when the Treaty -- initially called a "treaty of mutual respect, co-operation and friendship" (Wolfers 1988a, p. 205) -- was proposed in early 1986. If nothing else, it provided an opportunity for both governments to look -- and to explore what they might have in common -- beyond the border. Negotiations were quickly agreed to.
In the process, members of each of the delegations seem to have gained new insights into the other's perceptions, policies and action; and each of the governments involved seems to have acquired fresh respect for the other's interests and independence.
Progress was rapid. A draft was signed in Port Moresby in late 1986, and ratification was completed in early 1987.
The Treaty of Mutual Respect, Friendship and Co-operation is not the first -- or the only -- treaty between the two countries (there are others dealing with demarcation of the common boundary, border administration, and technical co-operation -- see Wolfers 1988a: Appendix I for the texts). But it is, by far, the most comprehensive.
Its significance lies not only in the words it contains but in the very fact -- after so much suspicion and periodic tension -- of its existence.
Before independence, Australian officials had encouraged Papua New Guineans to look to the area covered by the SPC -- which, until 1962, included Dutch New Guinea -- insofar as they looked abroad at all. When Dutch rule ended in what is now Irian Jaya, Australian officials, mistrustful of likely Papua New Guinean attitudes towards developments there, encouraged them to look South, East and (to a more limited extent) North.
Even when Irian Jaya had been fully integrated into Indonesia following the Act of Free Choice in 1969, Indonesian contacts with Papua New Guinea and Papua New Guineans tended to be slight. Caution, and even mistrust, were to be found on both sides. So were ignorance and misunderstanding.
The very words employed in the title of the new Treaty -- as well as their order -- offered hope of a fresh departure. Mutual respect was the agreed opening and basis for the future development of relations.
As the two Governments intended when agreeing to open negotiations, the Treaty provides a comprehensive framework and guide for the conduct of all aspects of relations between two countries whose border has traditionally been regarded as among the most likely sources of major armed conflict between governments in the South Pacific and South-East Asian regions (cf. Department of Defence 1987, p. 19; Toohey and Wilkinson 1987, pp. 258-259).
Many of the provisions embodied in the Treaty contain little that was new, even when they were first proposed. They are little more than re-statements of previously existing international law, or reaffirmations of commitments made by the two treaty-partners in earlier communiques and agreements (for which see Wolfers 1988a: Appendices I, II).
What was new was the agreement to restate them publicly in a comprehensive document of the strongest kind possible in international law. So was the emphasis on equality and reciprocity implied by the term "mutual respect".
It also appears to have been important to both parties that the agreement was initiated and negotiated on a bilateral basis without intervention, however well-intentioned, by third parties.
The key to the Treaty is, in many ways, to be found in Article 2, which commits both governments not only to display but to promote respect for the other country's:
- national independence, sovereign equality, and territorial integrity; and
- national identity, traditions, and values, including the Papua New Guinea Constitution, in which Papua New Guinea's National Goals and Directive Principles are contained, the Indonesian State Philosophy (PANCASILA), and the Indonesian Constitution.
In other words, both governments recognise that the two countries are neighbours, with distinctive national interests, values and cultures of their own.
Additional significance may be attributed to the Article because of the timing of the Treaty negotiations -- which were held while the tensions following the alleged boundary violations of 1983-84 were still disturbing bilateral relations -- and also because of what it may imply about the underlying causes of the mass border-crossings which occurred at much the same time.
Other provisions in the Treaty require the two governments to maintain peace, and, if conflicts should arise, to resolve them by peaceful means. They also contain agreements to promote understanding, to engage in co-operation and exchanges, and to consult regularly on matters of common concern.
The changed atmosphere which has followed ratification of the Treaty may be measured by the ways in which previous difficulties in the relationship have been resolved (including resumption of the cross-posting of defence attaches); longstanding issues (such as proposals to open consulates at Vanimo in Papua New Guinea's West Sepik Province and at Jayapura in the Indonesian Province of Irian Jaya) have been resolved; and co-operation and exchanges have increased (leading to reciprocal inspections of government stations on both sides of the common border).
A somewhat ironic light has been cast on these developments by the revelation that the exchange of instruments of ratification of the treaty provided the occasion for the donation of approximately $A200,000 by the Commander of the Indonesian Armed Forces, General Benny Murdani, to the Papua New Guinea Foreign Minister, Ted Diro, to assist the latter in his party's election campaign. (The irony was even more poignant for those who recalled that Diro had been disciplined some years before, when he was himself Defence Force Commander, for dealing illegally with Irianese insurgents opposed to Irian Jaya's incorporation into Indonesia).
More straightforwardly, the changing relationship between the governments of Papua New Guinea and Indonesia helps to explain why the former proposed that it accede to the Treaty of Amity and Co-operation in South-East Asia, and why it was eventually accepted (in 1989, following delays caused by the need for the six ASEAN members to amend it).
The Treaty of Amity and Co-operation in South-East Asia had previously bound the six member-states of ASEAN -- Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand -- to maintain peace and to resolve any disputes by peaceful means. The Treaty of Mutual Respect, Friendship and Co-operation had done the same for the governments of Papua New Guinea and Indonesia. The main effect of the Papua New Guinea government's accession to the former Treaty was, therefore, to extend the geographical range of mutual obligations under both treaties (though whether the Treaty of Mutual Respect, Friendship and Co-operation or The Treaty of Amity and Co-operation in South-East Asia prevails in the event of bilateral disputes between the governments of Papua New Guinea and Indonesia is not quite clear).
CHANGES IN CONTENT
Until independence, the Australian Government was responsible for the security of Papua New Guinea.
From 1951 until independence, Papua New Guinea was also, apparently, covered by the agreement embodied in the Security Treaty between Australia, New Zealand and the United States (ANZUS) that
"An armed attack on any of the Parties is deemed to include an armed attack ... on the island territories under its jurisdiction in the Pacific" (Article IV).
Since independence, Australian aid (most of which has been in the form of unconditional grants for general budgetary assistance) has been provided in order to assist in the development of Papua New Guinea. So has substantial defence co-operation.
Both forms of assistance have had -- and continue to have -- developmental objectives. They have also had -- and continue to have -- political and security objectives, both in Papua New Guinea as well as the wider neighbourhood of which Papua New Guinea and Australia are part.
The same is broadly true of other aspects of official Australian relations with Papua New Guinea, even in areas, such as trade and investment, where private initiatives are crucial, and where government acts mainly to aggregate, to support and to represent private interests, as well as to negotiate legal and other frameworks for business (such as PATCRA).
The defence co-operation program, in particular, has been a source of direct Australian involvement in the maintenance of Papua New Guinea's security. Thus, the supply of weapons and ammunition inevitably involves Australian officials in making judgments about the purposes for which they are likely to be used. The secondment of Australian defence personnel has similar implications.
As a result of the direct involvement of Australian personnel in operations of the PNGDF, the Australian government has insisted on the principle that it be given direct access to relevant authorities in Papua New Guinea when such personnel are likely to become involved in politically sensitive situations. Special agreements were required to cover Australian involvement when the PNGDF (including some Australian personnel) was sent abroad, for the first time, in 1980 -- to assist in putting down a rebellion at independence in Vanuatu.
In fact, the over-all relationship between the two countries is so close, so diverse, and so complex that the Australian government is likely to find itself involved even in situations in which it has deliberately chosen not to play a direct role -- sometimes, as in the case of the crisis in the North Solomons Province in 1988-1990, only to be blamed simultaneously (and sometimes by the same people) for responding to official requests; for doing too much, too little, or nothing at all; or for failing to regulate the conduct of Australian citizens over whom it has little or no control (cf. Wolfers 1976: 130).
The conventional wisdom in Papua New Guinea during the first decade of independence was that the cautious commitment contained in the Joint Statement ... on the Defence Relationship issued by the Prime Ministers of the two countries in 1977 was as strong as the Papua New Guinea government could hope to secure (though the notions that Papua New Guinea was somehow covered by ANZUS -- or that accession to ANZUS could and should be sought -- sometimes surfaced).
The key passage in the Joint Statement:
"Affirmed that both ... governments attached high importance to continuing the close co-operation between their two countries in defence matters. [It] ... acknowledged their ... desire to contribute to the strengthening of peace and stability in their common region. They declared that it was their ... intention to consult, at the request of either, about matters affecting their common security interests and about other aspects of their defence relationship" (Paragraph 2).
A detailed list of areas in which the Australian government was willing to continue to engage in continued defence co-operation followed.
But as the 1980s advanced -- and, especially, as the political and public service leadership in Papua New Guinea changed after the accession of Prime Minister Paias Wingti in 1985 -- so many of the informal links and understandings which had developed during the period shortly before and after independence became weaker. Resentment of Australian paternalism became more strongly and widely expressed by younger Papua New Guineans. A desire to place the bilateral relationship on a more equal basis -- and to find opportunities for reciprocal contributions -- grew.
When the Australian Government unilaterally announced in 1985 -- and not for the first time -- that it would be unable to meet previously agreed aid commitments, Papua New Guinean expressions of lack of faith in existing arrangements with the Australian government became more openly and (because of the significance of Australian aid to the Papua New Guinea budget) more bitterly articulated. Frustration and cynicism about Australian attitudes were fuelled by a sequence of events in which it appeared to Papua New Guinean observers that the timing, management and announcement of the proposed cut in Australian aid were influenced by considerations of political advantage within the Australian (Labor) Government of the day.
If nothing else, the arbitrariness of the cut gave added strength and urgency to previous Papua New Guinean commitments to self-reliance (so much so that Papua New Guinean Ministers have sometimes declined to participate in subsequent aid negotiations, saying that their Australian counterparts should decide on their own what aid levels should be -- as they would, in practice, do so anyway if they chose). It also increased support for the notion that the entire relationship between the two countries should be placed on a new and more equal basis, and that the various aspects of the over-all relationship should be viewed and dealt with as a whole.
The result was a proposal, which -- despite initial reluctance by Australian officials -- developed through protracted negotiations into the Joint Declaration of Principles Guiding Relations between Papua and New Guinea which was signed by the Prime Ministers of the two countries in late 1987.
Like the Treaty with Indonesia and the Agreed Principles for Co-operation Among Independent States in Melanesia, the Joint Declaration has become a widely-cited point of reference for the conduct and development of relations between the parties. It has influenced both official relations -- which seem to have been placed on a more equal and mutually sensitive basis -- as well as non-official exchanges (including the first Papua New Guinea -- Australia Colloquium, which was held under its auspices in 1988). Discussions between the two Governments have become more regular, more wide-ranging, and -- through being held more frequently at Ministerial level -- more acceptable and possibly more productive for participants on both sides.
The Joint Declaration is, emphatically, not a treaty (hence the use of "will", not "shall", in its provisions). But it is more wide-ranging, detailed and precise than previous joint statements or other agreements between the two governments (and than the Agreed Principles of Co-operation Among Independent States in Melanesia) in what it commits both governments to do.
The Preamble acknowledges the historically close ties between the two countries, emphasises equality and reciprocity, and places the bilateral relationship firmly in me context of an ongoing, shared commitment to regional co-operation in the South Pacific and "with other neighbours" (Preamble, Paragraph 5). It specifically affirms a common concern to promote:
"A stable regional environment in which the aspirations of the peoples of the region for security, peace, equity and development can best be realised" (Preamble, Paragraph 6).
The Basic Principles spelt out in the document declare that both governments are committed to maintaining close relations, to viewing the various aspects of the over-all relationship as parts of the whole, and to "mutual respect for one another's independence, sovereignty and equality" (Paragraph 3).
Equality and reciprocity -- or the need for sensitivity and the avoidance of paternalism -- are emphasised in the statement that:
"Co-operation and exchanges between the two countries will be mutually beneficial and based on full participation by both countries, with due regard to the capacity, resources and development needs of both countries, and on mutual respect" (Paragraph 8).
Shades of previous events -- as well as a shared determination to work more quickly and more positively to reduce previous dependence -- are to be found in the statement that development co-operation should take the form of "a wide-ranging combination of agreed measures designed to contribute to development and self-reliance, including capacity building in Papua New Guinea" (Paragraph 9).
The Basic Principles also commit both governments to respect for non-interference in the affairs of other countries -- a point on which Papua New Guineans have been sensitive about alleged Australian conduct; to co-operate in reducing international tensions; and to the peaceful settlement of disputes.
The co-operation provisions outline the principles and procedures to be followed in respect of co-operations, exchanges and consultations in diverse fields.
The general provisions deal with interpretation of the document and the resolution of any disputes.
The defence provision is broadly consistent with the thrust of the rest of the document in the emphasis placed on each Government having "primary responsibility for its own security", and the undertaking given "to maintain and develop their respective defence capabilities" (Paragraph 12 [a]).
It also provides for the continuance of existing arrangements.
However in one aspect, in particular, the Joint Declaration goes one step further -- not as far as ensuring the kind of joint action guaranteed legally in the Warsaw Pact or the North Atlantic (NATO) Treaty, nor as far as guaranteeing the consultations assured under ANZUS -- but further than the conventional wisdom in Papua New Guinea might previously have allowed. It commits both Governments only to "consult, at the request of either, about matters affecting their common security".
But it does not preclude and indeed it explicitly holds out the possibility of more:
"In the event of external armed attack threatening the national sovereignty of either country, such consultation would be conducted for the purpose of each Government deciding what measures should be taken, jointly or separately, in relation to that attack" (Paragraph 12 [d]).
The final wording owes quite a deal to the personal intervention of the Australian Minister for Defence, Kim Beazley.
The commitment it makes at least to consider, albeit to make independent decisions about the possibility of joint action may, from certain perspectives, be consistent with an increasingly militaristic approach which some critics claim to have discerned in the Australian (Labor) Government's approach towards foreign affairs. But from other perspectives, it may appear to provide an additional source of security for Papua New Guinea and so for neighbouring countries -- not so much because of the rather weak obligation it imposes on the parties, as because of the rather stronger message a potential aggressor may discern in the Australian Government's willingness to go as far as the document states.
The Australian Opposition has not suggested that its approach to the relationship with Papua New Guinea would be any different. (If anything, its principal spokespersons are more likely to regard and describe the relationship as "special", the term employed by political leaders from both countries during the 1970s).
The commitments and understandings with other governments discussed above have helped to change the context of the relationship between Papua New Guinea and Australia. The Treaty with Indonesia, in particular, has contributed to reducing tension in an area where armed conflict has been widely judged to be not only possible but (when compared with other contingencies) relatively likely. When taken together, the various arrangements negotiated between the Papua New Guinea government and its counterparts in neighbouring countries have made it easier for the Australian government to contemplate the kinds of risks it has assumed and the kinds of assurances it has provided in the Joint Declaration.
CONCLUSION
Australian officials -- Ministers, public servants, members of the armed services, and other advisers -- have always preferred a close relationship with Papua New Guinea to any likely alternative. Some have gone as far as advocating the declaration by the Australian government of an equivalent of the Monroe Doctrine over Papua New Guinea in particular, and even over the South Pacific in general.
But most Australian governments and commentators on Australian defence and foreign policies have regarded the region -- and, especially, Papua New Guinea -- as at least a potential problem, if not an actual liability: a source of strength if hostile powers can be kept at bay, but a source of weakness because of the difficulties and costs involved.
Certain Australian commentators and officials were at first sceptical about the prospects, patronising about the likely response and effects, and even hostile towards being excluded from negotiation, of the initial proposal which developed into the Treaty between Papua New Guinea and Indonesia. But a number of Australian government statements have since made favourable public reference to the contribution it makes to stability and security in and between South-East Asia and the South Pacific (cf. Department of Defence 1987, p. 19).
The Australian Government is firmly committed to the Joint Declaration. It is an active participant in South Pacific regional institutions (and generally their largest single financial supporter). It also takes part in the ASEAN-plus-one dialogues held annually at Foreign Minister level.
But it seems barely to have noticed how the Papua New Guinea Government has initiated changes in the context -- and so, not only directly but indirectly, in the content -- of the over-all relationship between the two countries.
PAPUA NEW GUINEA'S EXTERNAL RELATIONS
There are two scenarios for Papua New Guinea's relations with the world in the 1990's.
The first scenario sees PNG, now the second most populous country in the South Pacific after Australia, developing a broader role as New Zealand retreats into neutrality.
This sees PNG on the verge of accelerating its international engagements, preparing for the time when, gold and oil rich, it might become a modest donor to its smaller and poorer neighbours, and consequently take on more of a leading position among South Pacific island nations.
The leadership for such an international thrust is in place.
Prime Minister Rabbie Namaliu was from 1982-85 a highly successful Foreign Minister; and the present Foreign Minister is Sir Michael Somare, PNG's Prime Minister for 11 years, and one of the region's best known, and liked, leaders.
Working with them as Foreign Secretary is 37 year old Bill Dihm, architect of a series of treaties that, in less than two years, have effectively formalised PNG's relations with all its immediate neighbours.
The second scenario takes into account the nation's deep trauma over Bougainville and other challenges to the government's authority, and raises doubts as to whether this opening out will transpire -- or whether it will retreat, not so much into neutrality, as into apathy over foreign affairs.
Mr Namaliu postponed or cancelled a number of overseas engagements during 1989, including his attendance at the most important event on the calendars of all South Pacific leaders -- the Forum, held in Kiribati in July. Mr Somare, meanwhile, has travelled extensively to East Asian countries, but frequently in a "private capacity", pursuing private or Pangu Party business interests. He has yet to present a new strategy.
During the 1970's, PNG was naturally preoccupied with the process of becoming independent. The first Foreign Minister, former trade unionist and today a successful businessman, Sir Maori Kiki, adopted an anodyne policy of "friend to all and enemy to none". And although PNG was the biggest and newest "kid on the block" among recently independent island nations in the South Pacific Forum, Mr Somare invariably deferred to Fiji and its Prime Minister, Ratu Sii Kamisese Mara, a founder of the Forum and a close friend and golfing partner.
The 1980s, by contrast, was a decade of growing enmeshment in regional affairs, starting in 1980 with the decision of Sir Julius Chan, who displaced Mr Somare as Prime Minister, to send troops to quell Jimmy Stevens' rebellion on Espiritu Santo island against the new nation of Vanuatu, in the first and only such inter-island military mission. (Relations between Mr Somare, who opposed the sending of the troops, and Vanuatu Prime Minister Fr Walter Lini, remain a little strained to this day). Mr Namaliu, when Foreign Minister, accelerated this trend, adopting a strategy of "selective engagement" to make PNG, which had been such a mystery to the outside world until this century, better known and trusted by key neighbours.
This strategy, focussing on areas where PNG stood to gain materially, helped PNG's politicians disengage with less domestic controversy from the lost cause of Irian Jayan nationalism, with which some had become preoccupied.
Although Mr Namaliu, when visiting Indonesia as Foreign Minister, was singularly outspoken about Indonesian failings and transgressions in Irian Jaya, his government was reluctant for fear of upsetting Indonesia to act decisively following the late 1984 shift across the PNG border of 10,000 Irian Jayans, who said they were fleeing from fighting -- either to send them back, or to grant them refugee status.
In the end, it was Mr Wingti, becoming Prime Minister in November 1985, who defused the problem by taking a third route and "internationalising" it, inviting the UN High Commissioner for Refugees to assess the border crossers' status, and to administer their camps. The UNHCR took an inordinately long time to achieve this task, with camps finally being established well inland in the Western Province, where their in-mates could not so readily be involved in destabilising activities. The Namaliu Government of 1989 considered regularising the situation by offering integration and ultimately citizenship to large numbers of the border crossers/refugees, since many were of "ethnic affinity" with Western Province Papua New Guineans and had shown very little inclination to return.
The potential for trouble in this key relationship with Indonesia was demonstrated in occasional reports of incursions by Indonesian troops across the border, and in the revelation in 1988 of the smuggling by Indonesian Defence Minister General Benny Murdani of $US140,000 via the Port Moresby Defence Attache to bolster former PNG General Ted Diro's 1987 election campaign. But overall the relationship has matured, especially since the signing in March 1987 of a Treaty of Mutual Respect, Friendship and Co-operation. This was a treaty initiated by PNG, to the initial perplexity of Indonesia. Its "motherhood" content -- economic relations between the countries remain negligible -- is less significant than the sentiment that it communicated to Indonesian leaders and officials, that PNG had committed itself to understanding Indonesia's ornate, sometimes indirect forms of expression and philosophy.
This maturing of the relationship has reached the stage where Indonesia has accepted (following a personal explanation by Foreign Minister Senator Evans to his Indonesian counterpart Mr Alatas) what might earlier have been seen as provocation, the invitation to Australian army engineers to work over a lengthy period close to the border building a Green River-Vanimo road. Indonesia was, however, continuing to press PNG without success for an extradition treaty, given the continuing concerns about the capacity of Irian Jayan OPM (1) rebels to move back and forth between the countries across the 800 km unmarked border.
In September 1989 the growing closeness of PNG and Indonesia was confirmed by the opening of a PNG consulate in Jayapura, the provincial capital of Irian Jaya. (Indonesia is still considering whether to take up the PNG offer of a reciprocal consulate in Vanimo, adjacent to the border). This occasion was attended by Foreign Ministers Somare and Alatas, who both referred in their speeches to their determination not to permit a mysterious "third party" to come between their mutual respect, friendship and co-operation. This was widely seen as a reference to Australia, the only country with borders with both PNG and Indonesia. If so, it demonstrates the anxiety of PNG to be respected by the ASEAN nations, and especially by Indonesia, as a country with its own mind, and no stalking-horse for Australia.
The signing of the treaty with Indonesia was the first step in the initiative to formalise PNG's relations with all its immediate neighbours. In December 1987, a Joint Declaration of Principles was signed with Australia; in March 1988, Principles of Cooperation with the fellow Melanesian states of Solomon Islands and Vanuatu; and then in July 1989 a Treaty of Amity and Co-operation with ASEAN. (As the only non-member to accede to this treaty, PNG enjoys a closer formal relationship with the six ASEAN nations than does any other country).
In devising these pacts, Foreign Secretary Dihm -- regarded with both reserve and respect by Australian officials, with whom he has not always enjoyed friendly relations -- stressed that he resented the notion of PNG as a "bridge" nation between ASEAN, Australia and the island countries of the South Pacific. "People walk over bridges", he noted.
Sir Michael is ideally placed to develop the institutionalised linkages and personal relationships which add content to these pacts -- if he chooses to do so, and is not distracted like the rest of his government by Bougainville and other domestic crises.
Despite his broader, consensual approach to South Pacific affairs, Sir Michael did not abandon the "Melanesian Spearhead" caucus with Vanuatu and Solomon Islands -- again, developed fundamentally by Mr Dihm. The Spearhead's main impetus had been to promote to some effect, especially inside the Forum, the cause of fellow Melanesians, the Kanaks, in New Caledonia. Largely satisfied with progress promised under the Matignon Accords towards independence there, the Spearhead met again in January, 1989 on Samarai island in PNG, with Kanak leader M. Jean-Marie Tjibaou present, to agree on broad strategy for the Kiribati Forum, and to discuss -- largely without concrete outcome -- increased cultural, trade and educational relationships as outlined formally in the Principles of Cooperation. It was at the funeral of M. Tjibaou, assassinated not long after the Samarai meeting, that remaining misgivings about French intentions were largely put to rest in private conversations between French Prime Minister M. Rocard and Spearhead leaders including Mr Somare, whose daughter Bertha had recently returned from a lengthy period of study in France.
Following the settlement of relations with its neighbours, PNG went on in 1989 to develop its super-power relationships, approving at last the establishment of a Soviet embassy in Port Moresby, the first in the South Pacific outside Australia and New Zealand. Russia had been requesting such a mission since independence; and approval, balancing the super-powers, was a longstanding Pangu party policy. The establishment of a Soviet mission opened up possibilities of trade -- though the advantages to PNG remained undisclosed: PNG sells virtually all its exports, overwhelmingly minerals and tree crops, on international markets at best available prices. Talks were also finally concluded in May with the Soviet Union for a fishing treaty -- though PNG decided, before entering final negotiations, to discuss with Vanuatu and Kiribati why Russia had failed to renew its expired fishing treaties with them. Mr Namaliu considered it important that PNG have the capacity to monitor the new embassy's activities, and consequently asked Mr Hawke for, and received an offer of help for the development of its fledgling -- and faltering -- National Intelligence Organisation. Sir Michael even spoke of the possibility of a PNG embassy in Moscow; though swept up in similar diplomatic enthusiasm, he had in the late 1970s also planned to establish a mission in Tanzania, whose now widely discredited development philosophy had so influenced PNG through the independence period.
PNG in 1989 relaxed its push for a rationalisation of the bodies that embrace its region, the Suva-based South Pacific Forum -- consisting of the independent nations -- and the Noumea-based South Pacific Commission which also includes metropolitan powers with traditional involvements in the region, such as France, Britain and the United States. PNG also played a major role in urging the Forum towards a more prominent position on the world stage, as occurred in 1989 with the Tarawa Declaration banning the use of drift net fishing in any Forum nation's waters, and in its introduction of "dialogue partners" in the style of ASEAN Foreign Ministers' annual meetings with major power non-members, invited to discuss regional concerns with members. Again partly at PNG's behest, the Forum considerably increased its secretariat's capabilities during 1988-89, to include sophisticated economic analysis and a political dimension.
Although Taiwan is foremost among the drift-netting nations attacked by the Forum, this has not prevented Sir Michael from focusing strongly on developing closer links with Taipei. He was admonished by the Chinese embassy in April for the generosity of his welcome to a Taiwanese delegation which discussed, among other matters, the provision of a Kina 15 million loan for the construction of "Somare House", an office block investment for his Pangu Party.
South Korea acquired a bigger profile in PNG when Hyundai won the contract to build the huge Yonki hydro-electric scheme in the Eastern Highlands -- for which it flew about 400 workers to PNG.
The relationship with Japan is also warming, a particular pleasure for Sir Michael, who was first educated at a Japanese school during World War 2 and has a number of close Japanese friends, especially in the business world. Earlier PNG aid requirements for donors to accept its priorities for aid, and for open international tendering, the cause of a singular sense of frustration among successive Japanese ambassadors, were loosened to permit Japan to undertake some major infrastructure projects -- with a focus on maximum political visibility -- in Port Moresby. The annual World Bank consultative meeting of PNG with its aid donors, in Tokyo in May 1989, did not attract any fresh aid donors, but present donors re-committed themselves to continued programmes.
Links with ASEAN nations beyond Indonesia are also developing, with PNG recruiting its first 25 Malaysian teachers for the school year starting 1990; with Malaysian finance house MbF opening a branch in Port Moresby; with a growing Filipino workforce; and with Mr Namaliu paying an official visit to Singapore immediately before the Commonwealth Heads of Government Meeting in Kuala Lumpur in October. However, investment relations with ASEAN countries were plagued during the 1980s by charges of corruption, especially in the timber industry.
Despite its increasing relations with South-East and East Asia, PNG's natural sphere of interest remains the South Pacific. But it has yet to play the leading role among island nations that appears natural, and to some extent it continues to defer to Fiji. It refused to follow Australia's and New Zealand's outspoken criticisms of the 1987 coups, claiming that its different perception derived from its Melanesian roots, and demonstrating its capacity for taking a strongly independent stance on regional issues. Its regional prestige is set to be reinforced by its hosting of the 1992 South Pacific Games, in stadiums now being built in Port Moresby by China and in Lae by the European Community.
Some questions remain about the stability of PNG's foreign affairs strategy through the 1990s: Parliament contains elements such as the Melanesian United Front, formed in November 1989 and led by Utula Samana, who retains a sentimental attachment to the philosophies of Mao's China (and who joined the government in June 1990), and Gabriel Ramoi, once an advocate of the qualities of Pyongyang but more recently of Tripoli, following a visit to Libya in October.
But the power of PNG's bureaucracy, the domestic distractions that keep foreign relations on the periphery of the national consciousness, and the strong anti-communist sentiment of most MPs, would tend to diminish any prospect of PNG's shifting far from its traditional relationships -- with Australia, Indonesia and the South Pacific islands, in that order.
The strategic scope of PNG remains limited at the start of the 1990s by the detachment from the Foreign Affairs Department of the areas most crucial in evolving world plays. Trade has gone to the largely moribund Industry Department and aid has gone to reinforce the power of the heavily World Bank-influenced Finance and Planning Department. PNG is not a member of GATT, nor -- unlike its much smaller Pacific partner Fiji -- of the Cairns Group.
Despite efforts by Mr Dihm and his colleagues in other departments to co-ordinate their functions, the circumscription of diplomatic activity within the Foreign Affairs Department to a narrowly political role, together with the government's paralysing obsession with domestic dilemmas, means that PNG is unlikely to develop a broader role in the 1990s at the same pace as it did with considerable success in the 1980s.
However, relations with the United States were reinforced during the first half of 1990, with the signing in March of a memorandum of understanding on defence co-operation programs to cover training, exercises, search and rescue, planning and conferences and personnel exchanges. It allows for low-level training flights by USAF planes over PNG, familiarisation flights by US Navy surveillance aircraft and port visits and passing exercises by US warships. And in May an agreement was signed in Port Moresby recognising the US Agency for International Development as the body through which the US would provide aid to PNG. Mr Namaliu in the same month visited Washington where he held talks with President Bush, and business leaders in Houston and Dallas.
The key part of the visit, however, was that of the annual meetings of the World Bank and the International Monetary Fund in Washington. Mr Namaliu's government virtually re-focused the government's foreign policy in early 1990 towards these key agencies in securing the funding the country sought through its short to medium-term economic crisis. And it succeeded considerably beyond its original expectations, to the tune of pledges of foreign assistance of more than K500 million per year for 1990, 1991 and 1992 (almost half provided by Australia).
Mr Namaliu, while in Washington, signed the convention of the Multilateral Investment Guarantee Agency, a World Bank affiliate providing comfort to private sector investors in developing countries.
The European Community, courted with finesse by PNG's missions in Europe, has proven another considerable supporter of PNG's economic reform package.
The country's foreign affairs strategies have thus demonstrated a capacity for responding to pressing domestic needs in successfully adjusting international priorities. It remains to be seen whether this skill can be extended to seizing the initiative in issues that affect the South pacific region in a more general sense -- though PNG has succeeded in maintaining the support of regional neighbours when it was most needed. Following the "declaration of independence" of the Bougainville Revolutionary Army on 17 May, not one of the island states approached by the BRA showed a sign of acknowledging the new "republic".
THE AUSTRALIA-PAPUA NEW GUINEA DEFENCE RELATIONSHIP
"Papua New Guinea and Australia are immediate neighbours, with close traditional and historic ties between their peoples which both countries are determined to maintain and strengthen". So begins the 1987 Joint Declaration of Principles Guiding Relations Between Papua New Guinea and Australia, which brought together and formalised the various ties between the two countries. It reaffirms the commitment of both Governments to consult, at the request of either, about matters affecting their common security interests. The defence clauses note, inter alia, that "in the event of external armed attack threatening the national sovereignty of either country, such consultation would be conducted for the purpose of each Government deciding what measures should be taken, jointly or separately, in relation to that attack".
The reaffirmation of our security commitment with Papua New Guinea (PNG) reflects the Government's belief that Australia's defence posture cannot ignore the strategic circumstances of our neighbourhood, and particularly, the strategic importance of PNG to Australia and to the region.
PNG'S STRATEGIC SIGNIFICANCE TO AUSTRALIA
PNG is of strategic importance to Australia by virtue of its close geographic location to Australia's north-eastern coast, and to the sea lines of communication to our north. Because of the potential strategic implications, Australia would be concerned should a hostile power gain lodgement in or control over PNG. Control of PNG by an enemy would facilitate the projection of maritime power against Australia's coast and sea lanes. The denial of PNG for operations by hostile forces thus decreases the problems and cost of defending not only northern Australia, but also the east coast of the nation.
PNG is a major Australian export market and a significant destination for Australian investment. Attendant with activity by Australian-owned, or partly-owned, companies in PNG is the presence of a large number of Australian nationals. PNG's economic development, and the safety of Australian residents there, is dependent to a large degree upon its stability.
PNG has been established from a heterogeneous Melanesian population with diverse languages and customs. With much of the population, first loyalties lie with the extended families or wantoks. The difficulties of national administration in a country of harsh geography and limited infrastructure development are considerable. A pronounced urban drift and resultant unemployment, coupled with the absence of social welfare programs and unrealistic popular expectations, compound the difficulties the central government faces in attempting to promote a sense of national identity.
All of these factors are well illustrated by the current problems faced by the PNG Government in the North Solomons Province. The militants' campaign, which started in December 1988, had the stated objectives of:
- having the security forces withdraw from the Province;
- forcing the permanent closure of Bougainville Copper Limited's Panguna mine; and
- forcing a referendum on secession of the North Solomons Province from PNG.
The militant campaign developed during 1989 such that the Panguna mine was closed in May. After the abortive attempt to reopen the mine last September, it now seems unlikely that Panguna mine could easily resume its previous production level.
Following an escalation in conflict in January 1990 a ceasefire was called on 2 March and the PNG Government security forces withdrew from the island. Negotiations are to be arranged involving the central and provincial governments and the militants. The Australian Government, having always favoured a negotiated settlement to the dispute, welcomes the announcement of a ceasefire and hopes that the proposed negotiations will lead to a peaceful solution.
The situation on Bougainville represents a most serious challenge to PNG's national unity, with implications for the long term relationship between Central and Provincial Governments and for the country's economic future. Further challenges for the PNG Government arise from a growing problem with law and order in urban centres, tribal fighting and the activities of the Free Papua Movement (OPM) in the Irian Jaya border area.
OPM use of PNG territory for illegal operations against Indonesian authority in Irian Jaya has a clear potential to complicate both PNG's relationship with Indonesia, and Australia's relationship with both countries.
AUSTRALIA/PNG BILATERAL DEFENCE ACTIVITIES
Against this context, Australia's cooperative defence activities with PNG have increased in recent years with the objective of maintaining key capabilities in the Papua New Guinea Defence Force (PNGDF).
Australian involvement with the PNGDF goes back to World War II, when the Australian Army raised locally recruited units. Close involvement continued with the post-war Pacific Islands Regiment, now the Royal Pacific Islands Regiment of the PNGDF. Since independence, the Australian/PNG relationship has been characterised by wide ranging and substantial levels of activities, including regular senior level consultations and a program of Defence Cooperation activities.
DEFENCE CO-OPERATION ACTIVITIES
Defence Co-operation with Papua New Guinea has moved from the earlier program based largely on personnel assistance to a more balanced program of activities. Emphasis is now placed on developing capabilities for land patrolling and maritime surveillance, and the development of defence related infrastructure. Australian activity in this regard is complemented by modest levels of assistance provided to PNG by both the United States of America and New Zealand. In recognition of the importance of the relationship, PNG attracts the largest share of our total Defence Cooperation funds.
PERSONNEL AND TRAINING
The nature of Defence Cooperation assistance is evolving as the PNGDF becomes more self-sufficient, but personnel based assistance is still an important component of these activities.
At Independence, there were approximately 690 Australian military personnel in PNG. This number is now reduced to 90. Australian defence personnel currently stationed in PNG continue to be involved in a broad range of activities, although chiefly in supportive or specialist technical roles. These include exchange and loan personnel, who are integrated with the PNGDF in training and technical support positions, and a number of personnel in formed units, principally an Army Civil Engineer Unit at Mendi in the Southern Highlands Province and an Army Survey Unit supporting the PNG National Mapping Bureau.
Further to Australia's personnel and training commitment in-country, a large number of PNGDF personnel undertake training and study in Australia. Australia is, however, looking to increase its contribution to in-country training, to ensure that it is relevant to local conditions and to allow more group and continuation training. As the major infrastructure projects are completed our cooperative defence activities will focus more on in-country training and other assistance to the PNGDF's infantry capabilities.
As our defence relationship with PNG becomes one of greater maturity and equality, we are moving away from the concept of "advisory assistance" and placing increased emphasis on a program of personnel exchanges between the ADF and the PNGDF. An in principle agreement, reached with PNG at last year's Defence Cooperation Talks in Canberra, has seen the implementation of an expanded program of exchanges in 1990.
PROJECTS
In the years since PNG's independence, a major focus of our cooperative activities with PNG has been the development of PNGDF operational capabilities through assistance with equipment acquisition. In the past, Australia has provided aircraft, patrol boats and other vehicles, and equipment ranging from communications and medical equipment to engineering plant. We have also assisted in joint infrastructure development.
The ADF has been involved for some time in engineering infrastructure projects through the Army Civil Engineer Unit deployed permanently to Mendi. This engineer unit participates in the planning, supervision and management of public works construction in the Southern Highlands Province. Two additional major construction projects are the upgrading of Lombrum wharf on Manus Island, the principal base for the maritime element of the PNGDF and the relocation of the Air Transport Squadron from Lae to Port Moresby, which will be supervised by a Joint Engineering Project Management Team comprising personnel from both countries.
Discussions are also under way in regard to the establishment of a joint PNGDF/ADF civil engineering unit to be established in West Sepik Province. Such projects aim at providing long term support for important capabilities and improving strategic infrastructure.
COMBINED EXERCISES
The current program of combined exercises between Australia and PNG involves both land and maritime elements. From Australia's perspective the exercises are an extremely valuable aspect of our Defence Relationship with PNG. They present a unique opportunity for the ADF and PNGDF to work together and enable the ADF to gain valuable operational experience in the demanding tropical environment of PNG. The annual series of combined exercises has been temporarily suspended over the past year due to the unavailability of PNGDF manpower during the deployment to Bougainville. Both sides are, however, looking at the practicalities of restarting the exercises soon.
CONCLUSION
Australia's defence posture cannot ignore the strategic circumstances of our neighbours. The Australian Government considers the development and maintenance of our defence links with our neighbours as an essential aspect of our self reliant defence posture.
Papua New Guinea is of fundamental importance to Australia's regional defence interests. Our defence relationship is managed in an environment of closest possible co-operation with the PNG Government. In many instances their complementary efforts make essential contributions without which our common aims would not be achieved. The priority that the Governments of both PNG and Australia accord the relationship bodes well for its future.
DEFENDING PAPUA NEW GUINEA
The conflict on Bougainville has focused attention upon the PNG Security Forces.
THE BOUGAINVILLE FIGHTING
THE ARMISTICE signed in March between the Papua New Guinea Defence Force commander on Bougainville island and the field commander of the self-styled Bougainville Revolutionary Army has ended the fighting; but a resolution of the dispute between the government and Bougainville separatists is still a long way off.
The fighting began in November 1988. Violence was sporadic and limited mainly to sabotage until the BRA was taken over by Sam Kauona, a PNG Defence Force deserter trained in Australia. Last January, as the PNG government was attempting to negotiate with the BRA, Kauona issued a formal challenge to a trial of strength with the government. In the PNG cultural milieu, the government of Prime Minister Rabbie Namaliu had little choice but to meet the challenge. More than a quarter of the total strength of the PNG Defence Force and police were sent to Bougainville to try to flush out the rebels.
The security forces never had a chance. Bougainville is a large but incredibly rugged island covered for the most part in heavy jungle. Tied to the protection of key installations, the security forces were unable to spare men to search out the rebels. The PNG Defence Minister, Ben Sabumei, admitted early in February that his men did not have the capacity to crush the BRA.
Now both sides, having called a halt to the fighting, are to discuss the whole issue of compensation for the land used by the mine and its supporting infrastructure as well as greater autonomy or independence for the North Solomons Province. Despite a lot of the earnest and sometimes inflammatory rhetoric emanating from the parties and their adherents in both Papua New Guinea and Australia, the whole process is typical of the traditional Papua New Guinea conflict-resolution process. In this system, the initial dispute leads to a lot of extravagant talk and occasional raids, followed by a formal trial of strength in which casualties are held to an acceptable minimum, and then proceeds to formal negotiations and agreement. Generally such agreements are widely respected.
There is little doubt that Papua New Guinea will manage the Bougainville problem according to its own political and cultural processes. It will take time, but experienced observers of the PNG community are confident that a comprehensive and mutually acceptable solution will eventually be found.
DEVELOPMENT OF THE PNGDF
Inevitably, the conflict on Bougainville has focused attention upon the PNG security forces. The Papua New Guinea Defence Force (PNGDF) came into being on 16th September, 1975, with the achievement of Papua New Guinea's independence from Australia. The new force inherited a substantial tradition dating back to World War II.
Early in 1942, the Japanese occupied the whole of the League of Nations mandated territory of New Guinea (formerly a German colony). The Australian territory of Papua was invaded by the Japanese but they were driven out by Australian and United States forces by early 1943. Operations against the by-passed Japanese in New Guinea did not end until their surrender in August 1945.
One infantry battalion was raised in Papua and a further two battalions in the mandated territory. These were used in both conventional and irregular operations against the Japanese and performed well, a significant number of decorations being awarded.
At the end of the war the three battalions were disbanded but in 1951 a new unit, the Pacific Islands Regiment (P1R), was raised as a unit of the Australian Army. It was always envisaged that the PIR would become the army of an independent Papua New Guinea.
The Royal Australian Navy also maintained a small auxiliary unit to man the former United States naval base at Manus Island.
With accelerated progress towards independence in the 1960s, a second battalion of the PIR was raised. At independence, these units became the PNGDF and five Australian Attack class patrol boats were handed over as a sovereign maritime force.
A small air transport element consisting of five DC3s was also provided by Australia, which has also maintained an advisory group, the Australian Technical Training Support Unit (ATTSU) of some ten personnel, and an engineer construction unit employed on civil aid projects in the Southern Highlands Province.
Of no little significance, although not part of the PNGDF, is the Royal Papua New Guinea Constabulary. This national police force was a key element in the exploration and pacification of the country and was always an armed force. During World War II, its members were used extensively on intelligence and guerrilla operations as well as supporting Australian military government operations in Japanese-occupied areas. While it is now a more conventional force, the Constabulary's traditions, coupled with a detailed knowledge of its operating areas, make it a significant element of any defence capability.
There has always been a degree of animosity between the police and the military. The police regard themselves as an underprivileged élite with a longer and prouder tradition than the military. This tension has actually been a stabilising element in the country's political system.
THE PNGDF TODAY
The PNGDF is a totally volunteer force of approximately 3,200 all ranks. It is slightly smaller than the Fijian Defence Force, the only other defence force of any note in the South Pacific.
The ground forces consist of two infantry battalions and an engineer battalion. The 1st Battalion, Pacific Islands Regiment (1PIR) is based at Taurama Barracks in the capital, Port Moresby, while 2PIR is stationed at Moem Barracks, Wewak, with a company detachment at Vanimo on the Irian Jaya border.
The engineer battalion, based at Taurama Barracks, is employed largely on civil aid projects, developing infrastructure.
All the battalions are currently undermanned. While there is no shortage of recruits, financial constraints prevent the upgrading of the force to full manning levels. The Bougainville crisis has led to a decision to recruit an additional 450 troops, with finance and equipment being provided by Australia.
The maritime force comprises four Tarangau class inshore patrol craft (PCI) and two Salamaua class landing craft (LCH). All have been built in Australia and made available under Australia's Defence Co-operation Programme. None of the craft are armed with anything larger than 20 mm. light cannon. The bulk of the force is based at Lombrum, the World War II American base on Manus Island, with one patrol boat and the two LCHs at Port Moresby.
The PNGDF air element has four Australian-built Nomad N-22B Missionmasters fitted with surface search radar, five DC-3 transports and three Israeli-built IAI-201 Arava light aircraft for border patrol. All aircraft are unarmed.
The PNGDF would like to develop a helicopter capability but cost factors have proved a stumbling block. In May 1989, Australia agreed to transfer four UH-1H Iroquois helicopters surplus to Australian requirements to the PNGDF. To date, however, there are no PNGDF pilots qualified on rotary-wing aircraft and contracted civilian pilots have been recruited from Australia and New Zealand.
There are no organised reserve forces but a substantial civilian sea and air transport sector would be available to provide logistic support for the PNGDF.
PNGDF ORDER OF BATTLE
HQ PNGDF -- Murray Barracks, Port Moresby
1 PIR: Taurama Barracks, Port Moresby (Coy detachment at Kiunga)
2 PIR: Moem Barracks, Wewak (Coy detachment at Vanimo)
Engineer Bn: Taurama Barracks
Maritime Element: (300 personnel)
1 Attack class: HMPNGS Madang
3 Tarangau class: HMPNGS Dreger, HMPNGS Seeadler, HMPNGS Basilisk
2 LCH: HMPNGS Buna, HMPNGS Salamaua
Air Element: (200 personnel)
4 GAP Nomad N-22B
5 DC3
3 IAI-201 Arava
4 UG-1H helicopters
WEAPONS
The basic personal weapon of the PNGDF soldier is the Australian-made L1A1 self-loading rifle based on the Belgian FN 7.62mm weapon. Also used are the L2A1 automatic version and the Australian-designed Fl submachine gun.
The PNGDF intends to convert to the 5.56mm Steyr AUG1 rifle being made under licence in Australia and Minimi light machine gun. Both these weapons are currently in production for the Australian Defence Force.
The PNGDF has no heavy weapons larger than the 81mm mortar. Apart from cost factors, the movement of heavy weapons in the appallingly difficult terrain normally encountered in Papua New Guinea militates against the use of artillery or armoured vehicles.
Most weapons and other stores are acquired from Australia under a formal Stores Supply Arrangement. Papua New Guinea expects that, in an emergency, resupply of most items would be readily available from Australia.
COMMAND AND ADMINISTRATION
The PNGDF is subject to the control of the national government through the Minister for Defence, Hon Ben Sabumei. The minister is supported by a Defence Department headed by the Secretary, Mr Stephen Mokis. The Department has two primary branches -- for Strategic and Policy Development, and for Finance and Management Services.
The PNGDF itself is commanded by Brigadier General "Rocky" Lokinap, a professional soldier who first joined the PIR before independence. BGen Lokinap is responsible direct to the Minister for Defence and exercises command through a small headquarters based at Murray Barracks in Port Moresby.
The defence budget for calendar 1989 was 40.86 million kina (US$48.21 million) representing 3.43 per cent of total government expenditure for Papua New Guinea. Australian defence assistance in the same year is estimated to be US$19.2 million (16.7 million kina) or 40.9 per cent of Papua New Guinea's defence expenditure.
COMMAND STRUCTURE
PERSONNEL AND TRAINING
Recruiting to the PNGDF is carried out in all 15 provinces with minimum quotas to be achieved from each province. The quota system is designed to ensure that the PNGDF is a truly national force and that it can never be dominated by any one group in this ethnically and linguistically very diverse nation. If the quota from any province is not met during a recruiting drive, replacement from other provinces is not permitted.
The Force uses a single system of army ranks but Maritime and Air element personnel wear naval or air force uniforms based on Australian patterns.
The PNGDF maintains a basic training establishment at Goldie River near Port Moresby. Specialised and technical training, including officer training, is conducted at Igam Barracks near Lae. Maritime branch personnel are trained at Lombrum. A considerable amount of technical and staff training is provided in Australia while a number of officers have had higher training in Indonesia, Malaysia, New Zealand and the United States.
MISSION
The primary mission of the PNGDF is the defence of the country against external aggression. While the force is small, its capacity to operate in small units with only limited logistic support would make it difficult for any aggressor to overwhelm it completely.
Any invader would face serious problems of movement and logistic support in the very difficult terrain. The PNGDFs concept of operations envisages conventional infantry operations but higher unit training is difficult to achieve in times of financial stringency.
In time of actual danger, it is likely that the PNGDF would be most effective operating as small guerrilla units harassing an invader and interrupting his communications.
The peacetime mission of the Force is to familiarise itself with likely operating areas and to maintain security, especially along the land border with Indonesia. The maritime force is designed to enforce fisheries and immigration laws.
The PNGDF was used in operations in Vanuatu shortly after that country achieved its independence in 1977. Faced with an externally supported dissident movement, and lacking any defence force of its own, Vanuatu sought external assistance, and a small PNGDF force was despatched, using Australian air transport, to restore order.
With the second largest defence force among the island nations, Papua New Guinea could expect similar calls for assistance from its smaller allies in case of problems. This would be particularly true of the Melanesian "Spear Head" group comprising Papua New Guinea, Solomon Islands and Vanuatu. As in the past, Papua New Guinea would look to Australia for logistic support.
On the border with Indonesia, PNGDF patrols conduct surveillance tasks in an effort to limit operations by the OPM. The OPM was established by Melanesian residents of Irian Jaya seeking independence from Indonesia. The organisation is small and poorly equipped, occasionally using bows and arrows against Indonesian police. They have, however, been supported with money, weapons and training from Vanuatu and Libya, as well as by influential groups in Papua New Guinea itself.
After raids into Irian Jaya, OPM guerrillas tend to seek sanctuary inside Papua New Guinea where the border is ill defined and movement by security forces very difficult. The Indonesians have in the past indulged in hot pursuit of the guerrillas and this has led to tensions between the two countries.
In general, however, these have been satisfactorily resolved and Papua New Guinea is taking action to limit the OPM activity, as a good neighbour should. The issue is not currently a serious one and the reduction in external support by Vanuatu and Libya should further reduce tensions.
The Bougainville operations seriously stretched the PNGDF's operational capability in a counter-insurgent role. Even operating with the police, the Force was simply unable to maintain enough men on operations to round up the insurgents.
That said, it was probably never intended that the security forces should crush the BRA. Such an outcome would have made a satisfactory settlement even more difficult. The PNGDF has, however, gained considerable operational experience and will have learned a number of valuable lessons.
RELATIONS WITH AUSTRALIA
Clearly the PNGDF depends heavily upon training and logistic support from Australia. This support has been willingly provided by Australia and the adoption in 1987 by both countries of a Joint Declaration of Principles which formalises the arrangements has been generally welcomed. A former PNGDF commander, Brigadier-General Tony Huai, who objected to the declaration on the grounds that it would give offence to Indonesia, was sacked.
The Joint Declaration basically formalises existing arrangements for co-operation, training and logistic support but goes further by making a commitment to joint consultation in the event of external armed attack on either country.
In the context of co-operation, Australia could expect that, in the event of an increase in regional tension, Australian forces could be granted access to bases, especially airfields, and naval fuelling installations at Port Moresby and Lombrum.
Generally, Australia has been careful to ensure that its relations with Papua New Guinea are not perceived as being in any way neo-colonialist although recent governmental representations in the Bougainville crisis will have damaged that perception.
On the other hand, some Papua New Guinea sources have suggested that Australia has been too sensitive and that relations have in fact been too soundly based for such fears to have any basis. Certainly the political and bureaucratic sensitivities are not replicated at the operational level.
Nevertheless the PNGDF frequently gives the impression that it owes too much to Australian tutelage in its organisation, concept of operations and training. Australia has consciously abandoned its once notable capability for jungle operations using small, lightly equipped and mobile units designed for harassment and ambush of hostile forces. Skill at such operations should be basic for the PNGDF which, however, appears to prefer conventional stand-and-fight tactics, quite unsuitable for a small force in a very difficult environment. The time may have come for the PNGDF to take a more independent and innovative role, especially if it is to play a part in regional peacekeeping.
The Australian response to the Bougainville insurgency has been confused and incoherent. On the one hand, the government has expressed public support for the Papua New Guinea government and has provided a considerable amount of military aid as well as financial assistance to offset the loss of revenue from Panguna.
At the other end of the scale, it has shown a marked sensitivity to vague and unsubstantiated allegations of human rights abuses by the PNG security forces. The Australian Prime Minister, Bob Hawke, has even leaked to the media details of his phone calls to PNG Prime Minister Namaliu in which he complained of the abuses.
At the same time, the Australian government has imposed conditions upon the use of military equipment, especially four surplus UH-1H Iroquois helicopters, demanding in the sort of hair-splitting compromise beloved of diplomats that these not be fitted with fixed weapons for use against ground targets. The Australians, government and media, have attempted to monitor compliance with these conditions in a manner which smacks of neo-colonialism.
From an Australian perspective, the whole Bougainville episode has demonstrated deep confusion about how to treat an independent neighbour which also happens to be a former colony.
At the height of the somewhat limited fighting, considerable media space was devoted to calls for Australian military intervention, nominally to protect and evacuate Australian expatriates on Bougainville. There was little or no discussion of what right Australia had to intervene without the invitation or agreement of the PNG government. Official Australian statements, including the inspired leaks, gave no indication of any sensitivity to the point.
SOUTH PACIFIC PEACKEEPING FORCE
A former Prime Minister of Papua New Guinea, Sir Julius Chan, suggested to a conference in Melbourne in March 1988 that a South Pacific Peacekeeping Force should be organised on a formal basis for service anywhere in the South Pacific region. Sir Julius clearly had in mind the role of the PNGDF in Vanuatu in 1977. Undoubtedly, the PNGDF would play an important role in such a force and logistic support from Australia would be required.
The proposal has not been pursued and indeed it received a cool reception in Australia. Sir Julius was probably premature in airing it publicly. A more traditional Melanesian process would involve widespread private discussions to achieve consensus before making the idea public. Nevertheless, it would be premature to rule out the possibility, particularly as security problems arising from external pressures develop in the region.
CONCLUSION
Since independence in 1975, Papua New Guinea has built a small but highly professional defence force. It depends heavily upon Australian training and logistic support and some critics have suggested that the Australian influence is too great, inhibiting Papua New Guinea from developing a force better suited to operations in its unique environment. Despite allegations of indiscipline and incompetence which undoubtedly will be dealt with, the PNGDF will have learned many lessons from its experience of combat operations in Bougainville. In time, these should generate greater self-confidence in the PNGDF leadership and among the rank and file.
Development of the PNGDF is inhibited by financial stringency but, as a comparatively large force in a region which has few military forces, it can be expected to play a prominent peacekeeping role in the South Pacific and specifically in Melanesia.
PAPUA NEW GUINEA: A BROKEN-BACKED STATE?
"The main concern behind this questioning is the worry that PNG political processes are failing to contain the increasingly exaggerated expectations associated with the much heralded minerals boom. The likely trend is seen as an increase in the frequency and violence of demands being made upon the Government, which it in turn will not be able to satisfy or restrain. One eventual outcome is seen as a broken-backed state, while a less pessimistic view lends weight to the demonstrated resilience and common sense of Papua New Guinean leaders in meeting the challenges of nation-building".
(Department of Foreign Affairs and Trade, August, 1989) (2)
Australia and Papua New Guinea are bound by ties of history and geography, by decades of Australian colonial rule, by past and continuing economic domination of PNG by Australia; by church missions, educational exchanges and inter-marriage, and by common security interests, underlined by the New Guinea Campaign of 1942-45, and the stability and cohesion of the South Pacific as part of the Western alliance. At least 15,000 Australians live in PNG, including many who have adopted PNG citizenship.
Because Australians and Papua New Guineans are so different in culture, race and history, the countries are also poles apart. Since Australian interest in the islands to the north first stirred in the late 19th century, the relationship has been one of patron and client; and despite constitutional independence in 1975, PNG remains a client state. This is as galling to its leaders as it is exasperating to officials in Canberra managing the Australian aid program. But in the short term there is no practical alternative.
PNG's continuing economic dependence on Australia is underlined by the following:
- 45 per cent of PNG imports are from Australia, compared with 17 per cent from Japan and 10 per cent each from UK and Singapore.
- PNG, by contrast, ranks 13th as a market for Australian exports, accounting for 1.8 per cent of total exports.
- Australian budgetary aid, which has fallen from 39 per cent to 17 per cent of PNG's total budget since 1977, will still account for 10 per cent of PNG's budget in 1993.
- Australia accounts for 90 per cent of all aid to PNG.
- Australia's total aid to PNG since independence, $3.7 billion, is one of the world's largest aid programs on a per capita basis, and is the world's largest untied aid program.
- PNG is sixth largest recipient of Australian foreign investment, estimated at $1.8 billion. New Australian investment over the next five years could be $2.5 billion if mineral and petroleum resource development projects now on the drawing board proceed. (3)
Australian security interests are inextricably linked to PNG's stability as a sovereign state. PNG and its neighbour, Irian Jaya, provide the most convenient landbases from which an enemy could launch a sea-borne invasion of Australia. Daru, the capital of PNG's eastern province, is only 130 kilometres north of the Cape York Peninsula. Australia is seen by the international community, and especially its Asia-Pacific neighbours, as the ultimate guarantor of PNG stability. Canberra tacitly acknowledges that Australian security interests dictate that we accept this role.
The paper that follows focuses on the changes which PNG is undergoing and their implications for Australia. I put the view that PNG is becoming a broken-backed state. That means that while a government will continue in Port Moresby, funded by foreign aid and revenues from resources development projects, its writ outside the capital will recede. Its relations with its provinces will be shaped by fluid, ad hoc arrangements between national and regional politicians holding power, rather than by the over-arching authority of government in Port Moresby.
I also suggest that PNG can look forward to growing inequalities of wealth stemming from the mining boom of the 1990s, assuming it proceeds; to rising unemployment and popular resentment at failure by the government to meet rising expectations; and to intermittent challenges to the central government's diminishing authority by localised groups seeking greater autonomy.
Fourteen years after independence, PNG falls well short of the hopes and expectations of its well-wishers. It is reverting to a frontier society. A revolution is underway, a revolution which is piecemeal and marked with intermittent outbreaks of local unrest reflecting parochial rather than national concerns.
It is a revolution based on hunger for Western consumer culture and infrastructural development, combined with the reassertion of traditional cultural values -- and political power -- against those who have inherited power from their colonial mentors; against politicians who are themselves caught between the traditional and inherited cultures, and lack confidence in imported Western values to govern a 20th century nation-state.
The new generation of leaders lack the will and capacity to hold the line against political instability and civil unrest. The symptoms are growing lawlessness, the paralysis of government and the decline of public sector services to rural areas.
THE POLITICAL CULTURE
PNG's political culture reflects the widespread notion that the royal road to power, privilege and largesse lies in winning in politics. To be appointed a national government minister is the summit of that ambition.
Most ambitious Papua New Guineans, particularly those who lack formal education, aspire to political power. Almost all, it should be added, are male. A population of 3.5 million supports more than 1,600 elected politicians: 109 MPs in the national parliament; 19 provincial parliaments and councillors in more than 100 local government councils. The 109 seats of the national parliament were contested in 1987 by 1,600 candidates. Supporters of those who lost in the volatile Western Highlands and Chimbu provinces vented their disappointment by destroying millions of kina worth of government property, and in violence, including rape, upon government officials, nurses and teaching staff.
Papua New Guineans without political ambition or claims to support by politicians take a jaundiced view of most of their leaders. This applies not only to the urban-based, politically literate, but to subsistence villagers, who comprise 85 per cent of the population. Fifty-seven per cent of national MPs seeking re-election are defeated after a single term.
The idea that party loyalty must be paid for is thoroughly institutionalised. The 1 November issue of The Times of Papua New Guinea reported on page one that in July 1989, the Namaliu Government paid the sum of K575,000 into the trust accounts and business groups of one minister and 13 backbenchers to support the Government. At the time the Opposition was mounting a motion of no-confidence. In the event, it didn't have the numbers and the motion was withdrawn.
The same issue of The Times provides a preview of the 1990 budget, which notes that expenditure on health, education and public works would be cut, while the National Development Fund, otherwise known as the MP's slush fund, would be increased to give backbenchers Kl00,000 discretionary spending in each electorate.
The previous government, led by Paias Wingti, bought political favours quite as openly. David Hegarty, former lecturer at the University of Papua New Guinea, now policy adviser to the Department of Prime Minister and Cabinet, notes:
"The Wingti Government appointed 27 back-benchers to the leadership of statutory authorities, bringing the total number of official, well-paid positions for MPs, (including ministries) to more than half the number of seats in parliament! Cynicism further increased when it was revealed that finance intended for the defence force had been diverted to the MPs' slush fund for expenditure in the electorates". (4)
Both Wingti and Namaliu publicly acknowledge the damage to PNG's political stability of threatened no-confidence motions at six-monthly intervals. The provision was meant to safeguard parliament against minority governments refusing to resign. The practical effect is that both sides of parliament are pre-occupied with holding or taking power by buying backbench support with promises of money and ministries.
The Australian Department of Foreign Affairs and Trade notes:
"Prime Minister Namaliu has proposed constitutional amendments to decrease the frequency of no-confidence motions from six months to 30 months, i.e. halfway through the five-year term of office. The proposed amendment would not come into effect until after the 1992 election ...
"Because of the constant threat of no-confidence motions it is in the Prime Minister's interest to minimise the sitting periods within the constitutional guidelines that parliament should sit for a minimum of at least three times a year, in principle for not less than an annual total of nine weeks. Under these circumstances MPs' working knowledge of parliamentary procedures seems to be diminishing, and only limited use is made of the legislative function of parliament outside the annual budget session". (5)
Legislative business is deferred, the capacity of government to focus national goals is paralysed, but even if the breathing space between no-confidence motions was extended, would it make any difference? I doubt it. The new political culture is now too deeply entrenched to persuade its beneficiaries to relinquish the expectation of largesse in return for party support. The extension of no-confidence motions to 30-month intervals would not by itself change that culture.
None of the above is intended to suggest that PNG exercises a monopoly over political corruption; every centre of power has its own version. What distinguishes PNG, like other tribal societies catapulted into nationhood, is that it remains overwhelmingly a country of subsistence agricultural peasants, in PNG's case with a comparatively low literacy rate of 32 per cent. It lacks the institutional sanctions to deter those caught with their hands in the till.
The print media, the judiciary and the government ombudsman's office play a spirited, even heroic role in exposing abuses by politicians and public servants. But PNG lacks an entrenched middle class, independent of government patronage and willing and able to blow the whistle against such abuses, without fear of retribution by those in power.
Heaven knows these sanctions are fragile, imperfect mechanisms in Western democracies. But in PNG the political will is too weak to put those caught out behind bars, never mind force their resignation from parliament. They survive and prosper, brazenly unrepentant.
THE ECONOMY
It should be said at the outset that since independence there are solid achievements in the management of the PNG economy. It has been praised by the World Bank for its macroeconomic management. (6) Inflation has been lower than in Australia, though above that of leading industrial economies throughout the 1980s. Thanks to income from resource development industries, especially minerals, and Australia's massive aid program, it has enjoyed a favourable balance of payments over the same period. Successive governments have maintained a strong, if over-valued currency, which incurs its costs.
To PNG's credit it must also be said that its physical infrastructure, or that part serving the formal sector of the economy, compares favourably with those of other Third World countries. Its airline, shipping services and telecommunications systems link one of the most physically impenetrable landmasses on earth. You can dial or fax direct anywhere in the world and drink the water out of the bathroom tap. And in the formal sector, both private and public, you find Papua New Guineans -- road engineers, bank tellers, airline pilots, for example -- performing tasks as effectively as their counterparts in the Western world.
But overall the prospects for the PNG economy do not bode well. Outside the mining industry, the economy was virtually static throughout the '80s. PNG's birth-rate is probably three per cent per annum. Outside the formal sector of the economy, population statistics relating to infant mortality, life expectancy, education, health services and income compare with those of the world's poorest countries. (7) Its manufacturing sector is small and weak, hampered by high production costs, especially labour, and the inefficiencies of high protective tariffs at the consumers' expense, against imported products.
The one sector of the economy which manages to transcend these handicaps is mining. Since the Government's renegotiation of the Bougainville Copper mining agreement in 1974, the terms offered to foreign investors in mining, coupled with the abundance of ore reserves identified in the 80s, have exploded in a mining boom.
The World Bank estimates total mineral investment projects for the five years 1989-93 will be US$3.2 billion, compared with US$900 million for the previous five years. Of this some US$2.3 billion will be in gold and $870 million in petroleum production. (8)
The same report estimates that government receipts over that period from minerals, including oil and natural gas, will rise from $161 million to $751 million, and from 19.8 to 35.1 per cent of annual government revenue. But a word of caution: the report was published in April 1989, before Bougainville Copper closed. The report foresaw no interruptions to mining production, and assumed stable world metal prices for the period under review. (9)
PNG's leaders have promised that mining revenues will be a catalyst in an ambitious program of rural development. They have promised that capital works programs and government services will enable subsistence villagers to enjoy the benefits of the cash economy, hitherto largely confined to the urban minority.
No-one could quarrel with this, but the promise begs questions. The capacity of government to provide the rural majority with basic services, whether aid posts, schools or agricultural extension services, has declined in the '80s. The question therefore is whether Port Moresby has the political will and capacity to restore those services, whoever is in power. Or will the public sector, which accounts for one third of all formal employment, soak up most of the increased revenue to support itself? Public service salaries and entitlements account for 35 per cent of government expenditure, compared with 12 per cent for capital works. (10)
Put another way, assuming mineral projects now in the pipeline proceed, despite the closure of the Bougainville Copper mine and the continuing problems of Ok Tedi, will PNG's leaders deliver on their promise to extend to the rural majority what the urban minority now takes for granted? Or will the mining boom exacerbate tensions between those who have access to the spoils and those who have not?
Only 12.5 per cent of the population is formally employed. The workforce remained static in the 1980s. Another 35 per cent earn some income through commercial cash crops to supplement subsistence gardening. (11) Outside the limited, short-term boom in the anticipated mining construction, the workforce could contract in the 1990s.
Why? Because world commodity prices for PNG's principal cash crops, coffee and copra, have fallen to new lows from which there is no prospect of early recovery; because despite the professed commitment of PNG governments that foreign investment is welcome, it remains the bete noire of politicians exploiting xenophobia to their own electoral advantage; and because new investment is inhibited by a variety of formal and informal deterrents. These include the time and cost which must be invested in securing government approvals, especially those involving work permits or the leasing of land for resource development projects.
The frustration of the foreign investor was underlined on 1 April this year by Dennis Buchanan, founder and owner of Talair, PNG's principal third-level airline, when he threatened to close down his $50 million investment, citing the hostility of the PNG bureaucracy to foreign investors.
DECLINE OF THE RULE OF LAW
If the government is unable to establish an environment which can attract new investment to absorb the growing labour market, it will pay dearly. The Australian Department of Foreign Affairs and Trade notes:
"As early as 1990 there will be about 1,300,000 people between the ages of 15 and 65 who will be left outside the formal income earning sector; and on current trends this will increase at a rate of 45,000 persons annually while job creation will increase by only 4,200 annually". (12)
The social cost of PNG's growing army of unemployed is already apparent. PNG school-leavers find themselves in a no-man's land between their traditional communal culture, which many reject, and the Western culture to which they aspire. Most are thwarted because they lack basic literacy and numeracy skills. They are unemployed and unemployable.
The young, and particularly the males, gravitate to urban squatter settlements in search of jobs. They are rejected and congregate in so-called "raskol" gangs. Self-esteem and group identity are asserted in burglary, rape and occasional rioting and looting. "Raskol" gangs "punish" society for rejecting them.
Today there is a palpable sense that the rule of law is in retreat. It shows in the growing boldness of the "raskol" gangs and in some instances that they're being harnessed to political purposes. It shows in high school and university students venting anger over real and imagined grievances by pillaging teaching institutions and harassing staff; in the resurgence of traditional Highland "fight" leaders exhorting young men to rekindle ancient feuds with neighbouring clans; in road blocks to extort cash and valuables; in the commonplace pack-rape of solitary women; in the escalating demands from landowners for compensation payments for tracts of land for which they have already been compensated, and which, as often as not, are leased by government for local development projects.
The police force is unequal to the challenge, as is the arcane judicial system inherited from Australia. The police are under-strength and demoralised, poorly paid, poorly equipped, ill-trained and lacking effective leadership. Their inexperience in court procedure results in most cases being dismissed, regardless of guilt or innocence. Hegarty notes that by the mid-1980s, the annual value of stolen property in PNG as a whole was US$10 million, the recovery rate less than five per cent, while only three per cent of break-and-enters resulted in arrests. (13)
The most conspicuous symbol of the government's impotence has been the closure of the Bougainville Copper mine and surrender of all legal authority to the Bougainville Republican Army.
The losses incurred by BCL's closure underline how dependent the Government and economy were upon it. In terms of corporate taxes, customs duties, dividends and royalties, it was the Government's largest single source of revenue, contributing 19 per cent. In 1988 its net export sales were K430 million, or 36 per cent of total exports. BCL and sub-contractors servicing the project employed over 4,000 people, while another 8,000 were employed in businesses indirectly depending on BCL's custom. Salary payments to BCL employees in 1988 were K32 million. (14) In 1989 BCL was expected to outlay K186 million into PNG's private and public sector. The PNG Government's 1990 budget of K1.2 billion was drawn up on the assumption that the mine would re-open by 1 January 1990.
The Bougainville crisis also exposed the inadequacy of the police and defence force, hampered by conflicting orders from their political masters, in putting down what started as a low-level rebellion. One school of thought in Port Moresby argued for letting Bougainville go its own way because PNG had other mines scheduled to come on stream, taking up the slack caused by the loss of Bougainville Copper.
The flaw here is that landowners elsewhere have been encouraged by the success of militant landowners on Bougainville in demanding the renegotiation of compensation payments for other resource development projects, on pain of otherwise stopping them.
The enthusiasm for mining companies already operating in PNG to develop new mining projects, particularly gold, is undiminished. But the international banking community, on whom they finally depend for funding, takes a more jaundiced view. The fact that the Bougainville rebellion is in certain respects a one-off case, with political, ethnic and historic factors which don't apply elsewhere in PNG, is immaterial. What matters is that Port Moresby cannot guarantee the security of resource projects from its own people.
At the time of writing Port Moresby was trying to settle the ground rules for talks with the Bougainville Republican Army leadership.
Prime Minister Namaliu has declared that secession is non-negotiable. Although Port Moresby lacks the leverage to dictate terms, I suspect the outcome will be an ad hoc arrangement transferring more power to the Bougainville (North Solomoris) Provincial Government, including the terms on which the mine might re-open, if at all, and conceivably, immigration control over non-Bougainvilleans seeking employment on the island.
Just as Bougainville was a role model for other administrative districts in pressing Port Moresby for provincial government in 1979, this will set a precedent for other, (though by no means all) provincial governments to follow suit. The chances of other provinces emulating the Bougainville rebellion are remote, but a handful of other provinces will press for, and receive, increased autonomy, based on future central government arrangements with Bougainville.
Is there no alternative to the broken-backed state which is now emerging, a country of disparate linguistic groups force-fed into nationhood 15 years ago by a metropolitan power anxious to shed the stigma of colonial rule?
Political leaders as disparate as Paias Wingti and the former Governor-General, Sir John Guise, have talked of scrapping PNG's increasingly Byzantine political and administrative structure in favour of four regional governments based on the country's major ethno-geographic divisions: the Islands, the Papuan coastal provinces, the Highlands, including the Markham Valley, and the north New Guinea coast.
The idea has an appeal in the combination of administrative order with the recognition of PNG's ethnic and geographic divisions, while stopping short of surrender to parish-pump pressures for political autonomy at district level throughout the country.
But it won't happen, because no government under the political system which has evolved since independence could win the two thirds majority required in parliament for the necessary constitutional changes. In the unlikely event that it did, the public service lacks the administrative skills to implement such change.
Radical surgery to the constitution, government commitment to strengthening and restructuring the disciplined forces, abolition of provincial government, registration of custom-owned land and an end to extravagant compensation claims are on the agenda of a small group of young turks who are appalled at what PNG has become. They are sophisticated, mostly tertiary educated professionals without political experience. They talk with revolutionary fervour of becoming the dominant force in parliament within ten years.
To transform themselves from a discussion group into a cashed-up political party is a task of Herculean magnitude. Still more daunting is the challenge of persuading two-thirds of Parliament to accept the medicine they propose to cure the country's ills.
But rule out any chance of PNG succumbing to a Mozambican or Cambodian-style civil war. PNG tribal diversity, reflecting an equally fragmented topography of mountain walls and valleys, swamps and islands, will prevent any one region, including the Highlands, from securing ethnic dominance.
Rule out also any prospect of a military coup. Disaffected army elements will continue, as in the past, to defy the government over industrial issues. But it won't go down the Fijian road. The PNG Defence Force reflects the ethnic tensions of the wider community. Its officers lack the Fijian Defence Force's esprit de corps, forged in Middle Eastern UN peace-keeping forces. And where the Fijian police supported their army comrades, there's no love lost between the PNG army and police.
Port Moresby-Jakarta relations will be strained from time to time, as in the past, because Port Moresby cannot prevent the Free Papua Movement (OPM) using PNG as a sanctuary. Nor can it stop Indonesian patrols crossing in pursuit of the OPM cadres. But rule out any prospect of an Indonesian invasion. Jakarta has a track record of invading and absorbing neighbouring territories perceived as threatening its own stability. But like other ASEAN governments, it looks to Australia as the final guarantor of PNG's political stability. Indeed, like its ASEAN neighbours, Jakarta is mystified that Australia doesn't intervene to stem the rot.
Australia is going to have to adjust to a number of irritants in its relations with its nearest neighbour. Carpet-baggers of every nationality, not least Australians, will turn to advantage PNG's lax institutional safeguards and easy access to Australia. PNG is already a conduit for Asian drugs en route to Australia. Shelf companies of dubious legitimacy, other prohibited imports, illegal immigration and organised crime will also pose problems in the future. So will the despoliation of Torres Strait marine life by mineral wastes discharged into the Fly River.
The gravity of what is happening in PNG and its implications for Australia is only now dawning on Australians. Until the Bougainville insurgents forced the closure of the mine and withdrawal of the PNG defence force and police, PNG was regarded as a success story by Third World standards.
The image conjured up by the Australian media was of a country with problems: endemic tribal fighting in the Highlands, urban crime and musical-chair changes of government through motions of no-confidence. But it was also seen as a prosperous economy by Third World standards, (thanks to the Australian aid program and mining revenues) and as committed to Western parliamentary values and regional security interests.
The Australian media, largely beholden to the major British and US TV networks and wire services for its overseas news coverage, gives more time and space to events in Central America, the Middle East and the Soviet bloc than to the South Pacific. Important as those events are in the global context, their impact on Australia, and Australia's capacity to influence them, is negligible. On the other hand political turbulence in PNG does bear directly on Australia's own security interests. And like it or not, Australia is a central player in the economies of PNG and other South Pacific island states and territories.
Yet with the honourable exceptions of the ABC's Sean Dorney, The Australian Financial Review's former PNG correspondent, Rowan Callick, and occasional columns by the Sydney Morning Herald's Peter Hastings, reporting about PNG is confined to news events with little analysis of their significance for PNG or Australia. The Sydney Morning Herald's PNG correspondent is based in the Solomon Islands capital, Honiara. For the Australian media, PNG, like other South Pacific states, is a bit player.
In Canberra policy advisers on PNG affairs to the Departments of Prime Minister and Cabinet, Foreign Affairs and Trade and Defence, impress me as having a keen appreciation of the gravity of PNG events and their implications for Australia. They insist that their ministers share their concern.
What can Australia do? Not much, given political constraints on both Port Moresby and Canberra. If Canberra was Paris and Papua New Guinea was a former French territory, Port Moresby, encouraged by Canberra, would have long ago sought-and received-military assistance to reassert its authority on Bougainville. The former metropolitan power would also supply experienced administrators to rebuild the public service, police and defence force, as France has done for former colonies.
But Canberra is not Paris and PNG is not a francophone nation. Neither Australia nor PNG would contemplate such a remedy. Successive US administrations send in the marines to safeguard American interests in Third World countries deemed part of the US sphere of influence. But apart from rescuing Australians caught up in domestic conflicts, no Australian Government would do so. The electorate wouldn't stand for it. The Australian Way is to appoint a committee of inquiry, generally chaired by a distinguished lawyer, to deliberate at length and make recommendations to throw money at problems.
It doesn't always work. Canberra was throwing money at PNG long before, and ever since independence. It's been untied aid on the grounds that tied aid would intrude on PNG's sovereignty and strain relations between Canberra and Port Moresby. Both governments have paid lip service to moving away from untied aid but until now been reluctant to grasp the nettle. PNG is ill-equipped, to absorb project aid and has barely scratched the possibility of aid from other sources.
Canberra made a rod for its own back. Professors Brian Brogan and Helen Hughes, authors of the submission by the National Centre for Development Studies, Canberra, to the Parliamentary Committee on Australia's relations with PNG, write:
"The benefits of aid are clear. A developing country is able to invest and import more than it could without aid. This is the raison d'etre for the worldwide aid movement. The costs of aid are less well understood. Budget aid undermines the political will to make hard micro-economic decisions that are necessary for growth with equity.
"If aid is on a large enough scale, it has similar negative as well as positive effects as a 'booming' sector. Local currency becomes overvalued because of the balance of payments contribution that aid flows make. Recurrent government expenditures are expanded above levels sustainable without large aid flows. Unless steps are taken to offset these effects, the costs of aid could outweigh the benefits". (15)
Belatedly, untied aid is being scaled down at a modest annual rate of five per cent. Until the Bougainville crisis, the idea was to phase out all budget aid in favour of project aid, by 2005 AD. Unhappily for PNG, incalculable damage has already been done. Profligacy with public money, especially by politicians, and habits and attitudes in living beyond the country's means, are now thoroughly institutionalised.
Central to its new tied-aid program, Canberra has identified lawlessness as its most urgent priority. Rightly so. Over five years $14 million will be spent on a project involving 15 Australian police officers assisting with recruitment, training, management, housing, transport, communications and computer equipment for the PNG police force.
It's not easy. Systems must be rebuilt from scratch. Even the precise strength of the PNG police force was unknown when the project began. Some senior PNG police officers, including expatriates, see their own turf threatened, as in some instances it certainly is, and have tried to spike the reforms.
In its submission to the Parliamentary Committee into Australia's Relations with PNG, the Australian International Development Assistance Bureau itemised the following obstacles to implementing what it called "institution-strengthening projects":
"The (limited) availability of PNG staff motivated to adapt ideas to their own environment; political influence beyond the scope of projects; financial management (agencies are often unable to use all their budgetary allocations), and a perception in some PNG agencies that Australian personnel should occupy on-line positions, rather than advisory roles". (16)
The question this and other elements of the Australian aid program begs is whether the Australian aid dollar is getting an adequate return on investment. Can Australian support for upgrading the PNG police force, for example, make any difference? Maybe it's too early to say, but on the wider issue of Australia's capacity to promote its interests in PNG, or elsewhere for that matter, part of the answer is provided in a speech made by the Minister for Foreign Affairs and Trade, Senator Gareth Evans, to the Bicentennial Conference on the theme, "Australia and the World: Prologue and Prospects", in December 1988:
"It is one thing to define and clarify foreign policy interests but quite another to advance them; interests, in the real world, are not the same as influence ... Actual opportunities for influence in pursuing an interest are, in the diplomatic marketplace, what is left over when capacities are discounted by constraints". (17)
Does it boil down to this? Is the progress towards a broken-backed state now fixed and immutable? Does Australia have no other option than to plug the holes where it can with aid programs, offer public sympathy and privately lament the terminal decline of its only protegé?
I want to suggest that there is another way. Let me pose a hypothesis. Suppose as a result of a meeting between Australian and PNG political leaders and officials, the failure of the system of government bequeathed by Australia to PNG is freely acknowledged. Responsibility for what has happened is shared, but allocation of blame is not the issue here. Canberra and Port Moresby must jointly commit themselves to over-hauling the system with Port Moresby in the driver's seat and Canberra in a supporting role.
Suppose that a government of national unity is formed in PNG, including Prime Minister Rabbie Namaliu and Opposition leader Paias Wingti, under the leadership of Michael Somare, the only PNG leader with authority to rebuild the system of government.
Suppose further that the PNG Governor General suspends the constitution, (itself part of the root cause of PNG's political ills); that the Somare interim government recruits into its service the best and brightest from inside and outside parliament; that task forces are appointed to design, within prescribed time limits, a new constitution and an administrative system reflecting the political and economic realities of PNG and the lessons learnt from 15 years independence; that the Australian, New Zealand and British Governments commit themselves to assisting the reform program, particularly by providing constitutional and administrative advisers; and that parliament be recalled to approve the reforms which will usher in a new order.
Pigs will fly first, you'll say. Vested political interests and constraints will never allow it. Neither in PNG nor Australia is there the political will for such a hazardous undertaking. We can expect the response that we are stuck, for better or worse, with making the best of what is already there.
Quite so. And a year or two ago the notion of free elections in Eastern Europe or the unbanning of the African National Council and the freeing of Nelson Mandela in South Africa were equally far-fetched. The changes which South Africa and Eastern Europe have witnessed since then have no direct bearing on PNG's predicament or its implications for Australia. Except this: that in both instances entrenched political parties produced, improbably, political leaders who realised that commitment to inherited policies would lead their countries into the abyss. Both Gorbachev and De Klerk have shown the courage, resolve and political acumen to consolidate their positions so that they could force through reforms strenuously resisted by conservative elements of their own parties. Port Moresby and Canberra, please take note.
PAPUA NEW GUINEA ECONOMY
The thoughts of Mao Tse Tung are for the best reasons not the most fashionable at the start of the 1990s. Yet his self-justifying definition of power coming from the barrel of a gun has been sustained in, of all unlikely places, the South Pacific.
THE history of the region will record as especially significant two dates in the late 1980s: 14 May 1987, when Colonel Sitiveni Rabuka led away the elected government of Fiji out of Parliament at gunpoint; and 15 May 1989, when Bougainville Copper Ltd was forced by the shotgun ambush of workers' buses to close its mine.
Both events, like those of Tiananmen Square, have been demonstrated by numerous "experts" -- after the event, of course -- as having been eminently predictable. But they were not widely predicted; they came as a shock, and their repercussions are continuing to affect developments in those two key countries in the South Pacific.
Papua New Guinea had enjoyed, until the BCL closure, considerable good fortune and a degree of competent management of its economy.
Since the ousting of Michael Somare in March 1980, Australians have frequently heard of PNG's "political instability". In fact there have been only four changes of government in Port Moresby in the 14 years since independence.
PNG's real dilemmas have been bubbling away, meanwhile, beneath the surface. The much publicised "law and order problem" is a symptom of these dilemmas which are, of course, economic in origin.
While the macroeconomic indicators demonstrated a steadiness unusual in developing countries, the other side of the coin was stagnation. Broad-based economic growth, eagerly sought by PNG's increasingly young population, has to date eluded it. Growth has remained a mirage to be sought in dreams of gold.
PNG politicians have rarely disagreed -- or concerned themselves substantially -- over policy matters. But through the 1980s a single dream did unite them -- of riding the rainbow to what Sir Julius Chan, the then Prime Minister, described at the signing of the Ok Tedi mining agreement in 1981 as "the pot of gold".
All major politicians looked to continuing decline in the real value of Australia's $A275 million per year budgetary aid, and its replacement by resource revenues. A linkage, it was assumed, would then be found between income from mines and oil wells, and boosting renewable industries, primarily agriculture.
As the list of likely major projects began to grow, the real problem looked likely to emerge as locating that elusive linkage.
THE IMPACT OF THE BOUGAINVILLE CRISIS
Then came the closure of the Bougainville mine, throwing many schedules out of the window. For Bougainville Copper Ltd had been seen as a model corporate citizen, with an especially fine record in training. Up to its closure, following which it eventually declared force majeure on a number of contracts, it had contributed Kina 1 billion (about $1.5 billion at that time) to government revenue since opening in 1972.
In 1988, despite suffering brief closures at the end of the year when the conflict with rebel landowners led by Francis Ona began, it provided 17 per cent of government revenue and 40 per cent of total export earnings.
After the mine's closure in May, questions began to be asked about the viability -- and the advisability -- of such a strong emphasis on the resources sector. In the meantime, Finance Minister Paul Pora cut K50 million from the 1989 budget; tightened monetary policy by reducing credit lending targets by two per cent to 8-10 per cent; and began a process of challenging the wage-fixing conventions that had been adopted from Australia. (The Minimum Wages Board meets every three years to set national wage standards, and in the 1989 round awarded a six per cent annual rise, payable by three per cent every six months.)
A committee was established comprising the three top public servants -- Prime Minister's Department head Paul Bengo, Public Service head Wep Kanawi, Finance Secretary Morea Vele and the Governor of the Bank of Papua New Guinea, Sir Henry ToRobert, to plan for a possible long-term closure of the Bougainville mine. In such an event, Pora warned, public servants might all be forced on to a three-day week; access to credit would be further reduced and interest rates increased; force majeure might be declared by the government on all its contracts; all decentralised powers might be returned to Port Moresby; and the IMF might be invited to manage the economy.
As 1990 opened, one or two of these "doomsday" options were triggered.
The Bougainville mine was put on "care and maintenance" from 7 January, with 2,000 staff being retrenched, setting back any possible re-opening to late in 1990. Two days later Mr Pora announced a four-point "crisis package": the 10 per cent devaluation of the Kina, a credit squeeze, K100 million cuts in government recurrent spending involving the loss of 2,000 public service jobs, and a firmer attempt to hold back wage rises.
The Australian Government was reluctant to respond swiftly to a PNG request to adjust its budgetary aid to provide $20 million extra in both 1989-90 and 1990-91, preferring to await discussion at the May meeting in Tokyo of the consultative group of all aid donors to PNG. But the IMF and World Bank sent teams in to consider the rapid disbursement of concessional funds for "structural adjustment" -- the former providing about US$70 million, the latter about US$50 million.
Meanwhile, as the PNG Government, after a year of attempting soft/hard solutions alternately, decided to let the army off its leash in Bougainville, the rebels also accelerated their activities, destroying many government centres and threatening the plantation sector, which produced 45 per cent of PNG's cocoa exports.
In March, the military solution having failed, the government pulled out the troops. On 17 May, the secessionists declared "independence", effectively confirming Bougainville's isolation for an indefinite period.
OTHER MINING DEVELOPMENTS
Despite the central problem of Bougainville, progress was made elsewhere on the resources front. Placer Pacific's K175 million Misima gold mine, in Milne Bay province, poured its first gold ahead of schedule, in May. In its first year it will produce 400,000 ounces per year, and thereafter 200,000 ounces. The agreement for the K800 million Porgera gold mine, at 800,000 ounces per year scheduled to become one of the world's largest producers, was finally signed in late May, after nine months of intense negotiations with landowners in the Enga province; and construction was on schedule early in 1990 for production to start in September.
MIM Ltd at last launched with success its float as Highlands Gold of its 30 per cent of Porgera and its other prospects in PNG, in effect a vote of confidence in the country from one of Australia's largest and best respected corporations.
Porgera, managed by Placer Pacific and jointly owned at 30 per cent each by MIM, Renison Goldfields Corp and Placer, with the PNG Government taking 10 per cent, will prove a prototype in two ways. It was the first agreement to emerge from the Namaliu Government's new "Forum" process through which, at a certain stage in negotiating a mine, all parties -- landowners, developers and national and provincial governments -- meet to discuss problems jointly. It was also the first agreement which directly offered the land-owners and the provincial government equity in the project. The government gave them each 2.45 per cent, out of its own stake, to be funded by foregone dividends -- but on a strictly non-transferable basis and administered through a vehicle, in effect a trust, specially created within the Department of Finance.
PNG's first formal proposal to produce oil was submitted in May 1990 by a consortium led by Chevron for the Iagifu-Hedinia project in the Southern Highlands. Chevron was originally seeking 180-190 million barrels, providing a field with a 10 year lifetime, and has located three-quarters of that. The cost of exploration in PNG is about five times that in Australia, mainly due to heavy reliance on helicopters. The developers are planning to pump the oil 265 kilometres down a pipeline south to the Gulf of Papua. Initial output will be 90,000 barrels per day in late 1992.
British Petroleum confirmed that it will sell gas produced at its Hides field to power Porgera, via an 80 kms pipeline.
Progress also continued towards a formal application to mine at Lihir island in the New Ireland province, where a huge resource, even larger than Porgera, and now majority owned by Rio Tinto Zinc, has been identified handily close to the sea. Porgera depends on a 700 kms highway to the coast.
CRA Ltd, owner of the Bougainville mine, announced that it would mine gold at Mt Kare in the Enga province close to Porgera, in a joint venture with the landowners, following a two-year goldrush at the site. CRA was also planning to proceed with its Hidden Valley prospect in Morobe province.
Meanwhile, however, the Wau, Morobe, alluvial mine owned by Renison Goldfields was scheduled for closure by 30 June 1990, after 57 years of production.
Besides Bougainville, the BHP-managed Ok Tedi copper mine also hit further problems. A conveyor broke down and a landslip forced the relocation of the main workshops, resulting in a K8 million loss in the first half of 1989. Later in the year, South Fly MP, Mr Perry Zeipi, a former Environment Minister, threatened court action over the government's decision to accept the findings of a three year environmental study and permit the continued drainage of waste material from the mine through the Fly river system, with continuing monitoring and a K2.5 million annual grant to riverside people. In January 1990, landowners at the mine site blocked the road to the mill, halting production for a day, to further their request for an enhanced, Porgera-style package. The Government moved quickly to achieve a negotiated solution on this occasion.
Despite those early Pot of Gold hopes, Ok Tedi, which employs about 1,500 people, has yet to pay a dividend or company tax. But in 1989 production reached the daily target of a 70,000 tonnes throughput, and all shipments have been met. It contributes about $55 million per year to national and provincial governments in payroll tax, royalties, excise and other contributions. And about 30 locally owned companies, established in the area since the mine, today enjoy a combined annual turnover of almost $25 million.
This is income, and economic activity, that PNG can ill afford to lose. And remote Ok Tedi, despite being branded as "jinxed" since being abandoned by Kennecott and suffering considerable cost over-runs in construction, is at centre-stage, as is Bougainville at the opposite, eastern extreme of the country. For if environmental factors force its closure or impair its progress into profit, then the whole strategy of a resources based "engine for growth" would be in severe danger of stalling. Both Ok Tedi and Bougainville also point up the tensions between the government's role as both regulator and shareholder.
FUTURE PROSPECTS & THE PROBLEMS OF GROWTH
Investors have acted with considerable coolness in the face of the events of 1989, maintaining their confidence in the value of the PNG resources, with a total K3 billion potential projects well down the pipeline. But an emerging development may see capital raising slow down during the 1990s: the new requirement of country risk insurance.
Preliminary findings from a computer model of the PNG economy jointly developed in Canberra by PNG's Institute of National Affairs and Canberra's National Centre for Development Studies indicate that despite comments from PNG Finance Minister Pora that PNG might become a net aid giver when the current five year aid treaty with Australia ends in mid-1994, it will take until 1998 for new national revenue to begin to compensate for Australian aid, let alone provide additional funds. This presumes Porgera, Lihir and Hidden Valley joining Misima in production, at a US$400 per ounce gold price, plus 92,000 barrels of oil per day from Iagifu-Hedinia at US$15 per barrel. And the PNG Government's intention to take up the equity to which it is entitled under the Mining and Petroleum Acts will require further substantial borrowings.
This conclusion, moreover, presumes resumed production at Bougainville and sustained production at Ok Tedi. If either fails to happen, aid will be needed well after 2000 to maintain government revenue at its present levels.
The budget handed down by Mr Pora on 7 November presumed the resumption of mining at Bougainville by the start of 1990, a prospect that even then appeared remote. It aimed to spend K1.25 billion, an increase of five per cent on 1988, without resort to increased aid or overseas commercial borrowing.
The budget was presented with the remarkable wealth of detail and accompanying documents now traditional, along with the excitement that comes from handing down the budget in betting-mad Port Moresby, on Melbourne Cup day. And, just as PNG's continuing resource developments belie the problems in that sector, so does the country's impressive macroeconomic profile conceal a key failure to foster broad-based growth.
Finance Secretary Morea Vele has stressed how political opportunists and others have made occasional grabs for the steering wheel that guides the economy, but a core group of senior politicians and bureaucrats has to date managed to wrest back control before serious damage was caused. In a highly competitive political environment in which a political career, and the patronage it offers, are considered the fast track to wealth, the temptations are huge.
Although Mr Vele would maintain that the concessions to such greed have been at the margins, the 1990 budget was no exception: the cash doled out directly to MPs under a variety of names over the years, currently the "electoral development program" but generally known as the MPs' slush fund, was doubled to K100,000 per head. (This, said Mr Pora with a straight face, would "provide leaders with the opportunity to be closer to their people").
PNG has an unusually open economy compared with other developing countries. It has a stable and freely convertible currency, now worth about A$1.37. Australian public servants seconded to PNG were offered, at independence, the alternatives of being paid in $A or Kina. Many settled for "security" with the $A, to the subsequent entertainment of their PNG colleagues. (The kina is linked to a basket of currencies, most strongly weighted towards the $US and Yen, in which its export sales are mostly denominated).
PNG's exports comprise 45 per cent of its gross domestic product, compared with only 15 per cent of Australia's. Its current account deficit is just below 20 per cent of GDP, and it recorded trade surpluses in 1987 and 1988. It provides a healthy market for Australian exports, expected to reach almost $1 billion in 1989. It is the third largest market for Australian elaborately transformed manufactured products and also for Australian offshore investment -- chiefly due to the resources sector.
Although promised cuts in company and income tax rates were postponed in the 1990 budget, the temptation was resisted to dip into domestic funds. In fact, at K6.5 million the level of domestic borrowing was set to be the lowest since independence, easing fears that government requirements would suck liquidity out of the system. Funds would be sought from Japanese commercial banks to bolster the domestic market, Mr Pora said.
Inflation was anticipated at six per cent in 1990, just below the Australian rate. Repayments on borrowings would reach K254 million. And despite Mr Pora's pledge in 1988 that the government would aim for a balanced budget in the 1990s, his 1990 budget embraced a K144.5 million deficit, financed chiefly by concessional borrowing from the Asian Development Bank, replete with Japanese sourced funds.
PNG has repaid every international loan on time. This record will stand it in good stead if, as seems increasingly likely, the government chooses to seek foreign funds underpinned by an International Monetary Fund "clean bill of health".
Such good housekeeping, however, has not succeeded adequately in increasing the size of the family fortunes.
Growing, if belated, awareness of this has led to a shift in government planning priorities. Too little, and too late, a tiny group of critics has cried out. (Although the PNG media offer healthy and vigorous debate on political and social matters, economic policy has largely survived as sacrosanct; budget debates focus almost entirely on the geographical spread of expenditure).
In the early 1970s, the emergence of Michael Somare's Pangu party coincided with a period of considerable -- and, in hindsight, ill-based -- confidence in the development of a New Africa, inspired by the Ujamaa Declaration of Tanzania's President Julius Nyerere. The onset of the concept of independence for PNG caught most of the Territory by surprise. The then largest grouping, the United Party, was led by planters, with opposition to independence as its raison d'etre. It was left floundering once Mr Somare succeeded in cobbling together a rival coalition to take the country into self-government in 1972.
Into this ideological vacuum slipped the Nyerere formula: self-reliance, equity and distribution of wealth were its pillars, and they formed the basis of the Eight Point Plan which adorned every PNG school and government office through the 1970s. The Plan was chiefly the brainchild of advisers from East Anglia University in England.
PNG had experienced rapid growth during the 1960s, chiefly because it began at a base of almost zero activity. Australian administrators, especially Sir Paul Hasluck, had at first favoured a long-term program of edging PNG into the 20th century, with education advancing on a broad front. Suddenly an elite was sought to take the country into rapid independence. A small group of Papua New Guineans was offered accelerated educational and administrative opportunities, and it is this group which, to this day, retains considerable political power and most of the wealth which is in PNG hands. Ironically, it is also this group which, while continuing to hold up the distributive virtues, has tended to insist on the very centrality of government in every sphere of life which continues to retard growth and the spread of economic opportunities.
In 1982, the then Planning Minister, Paias Wingti, picked up the revised thinking of the World Bank and other repositories of development orthodoxy, and urged -- with the backing of senior bureaucrats and advisers -- that the Eight Point Plan be replaced by a new emphasis on growth, with job-creation given special priority. This was broadly accepted -- or rather, in the PNG style, not stringently contradicted.
It entailed a shift from the cross-sectoral National Public Expenditure Plan mechanism, through which all capital projects and other new areas of expenditure had been assessed annually and costed separately. This four-year plan was rolled over from one year to the next. Its replacement, the Medium Term Development Plan, covered a longer time span and ordered government activities in priority according to sectors. When Mr Wingti became Prime Minister in November 1985, this process was reinforced. Government resources to the "economic" sectors were enhanced, with agriculture leading the way.
But typically, this was effected chiefly by a diversion of government funds to the Department of Agriculture and Livestock. Through the 1980s, tree crop production had increased healthily by five per cent per year (despite falling prices), but mainly as a result of smallholders' own efforts, cushioned by continuing "subsistence affluence". PNG's two major crops, coffee and cocoa, faced uncertainty in 1989, following the collapse of their respective international marketing organisations. (The country had, however, been selling half of its 1.2 million bags of high quality Arabica coffee outside the International Coffee Organisation framework, since it was only given a 640,000 bags quota). The government abolished the Coffee Development Agency, established under Mr Wingti to co-ordinate the fight against coffee rust, a disease recently introduced to the Highlands from Kenya. This was to be replaced by a more comprehensive Coffee Industry Corporation. Because of declining prices the government provided K15 million in April as an interest free loan for the Cocoa Stabilisation Fund to provide a bounty for growers; this was drained by the end of the year, and a further K15 million was provided. Copra and oil palm support funds were also topped up at that time.
When Mr Rabbie Namaliu displaced Mr Wingti as Prime Minister in July 1988, the sectoral divisions were maintained for planning purposes but were more evenly weighted, with spending restored to education, health and law and order. The increased role of the World Bank, co-ordinator of a new annual conference in Tokyo of donors to PNG, which was seeking to diversify its sources of aid, was reflected in the adoption of yet another planning tool, the five year, output-oriented Public Investment Program, which advocates a six-point strategy:
- support for agriculture and development of rural infrastructure
- state investment in education and health
- encouragement of investment
- promotion of the private sector
- institutional reform
- staff development in the public sector.
The government's capacity to pursue these targets simultaneously has been strained by the Bougainville crisis. Moreover the requirement to return to Parliament constantly to renew the two-monthly state of emergency on Bougainville, adds stress by providing the opportunity for votes of no confidence -- or at least the threat of them.
The withdrawal of the troops and the subsequent declaration of independence has, however, taken some of that pressure off, as Bougainville is increasingly "written off" as a short or even medium-term participant in the PNG economy.
The old Eight Aims were predicated on growth in gross national product of seven to nine per cent per year at constant prices. The ghosts of their distributive thrust continue to haunt the economy, despite its failure to achieve anything like seven per cent growth.
For the first six years after independence, real GDP growth averaged only 0.1 per cent annually. In 1982 it was 0.8 per cent; in 1983, during OK Tedi construction, 3.4 per cent; and in 1984, 1.2 per cent. Yet through these years population growth was among the highest in the world, even if conservatively assessed at 2.5 per cent (Mr Namaliu used three per cent in a speech in Canberra in May 1989); and the total is set to reach 6 million in 25 years. Thus the country registered negative growth, although about 50,000 young men and women are leaving school annually. Government in 1988 spent 40 per cent on public service wages, 21 per cent on debt servicing, and only 17.5 per cent on infrastructure development. Yet it is through the latter -- through provision of roads and rural access to electricity for instance -- that government is most directly able to foster employment opportunities. Government spending remains dominant, accounting for 35 per cent of the national cake.
The Australian economists Dr Ross Garnaut and Dr Paul Baxter have stated, in a review of the national accounts, that GDP growth from 1976-81 should be upgraded to 1.9 per cent. (Given the population increase, this still amounts to negative growth).
Both the Finance and Planning Department and the National Statistics Office have upgraded their growth figures for the last five years; the reasoning, and therefore the figures themselves, remain unclear, although a "best guess" at real GDP growth over 1984-88 remains 2.5 per cent (treading water, given population growth), with 1989 falling back to zero.
It is clear that -- as in Australia -- it is in the microeconomic sphere that PNG really falls down, with the resulting distorted dependence on mining and a lack of new job opportunities. This in turn breeds crime and challenges to the government's authority, not only in Bougainville but elsewhere, as at Lae where the provincial government remains suspended following riots, looting and political kidnapping. (It was no coincidence that it was at Lae that the government planned to establish an industrial zone, to open in 1990. This would not offer major tax concessions or subsidies, but would provide an already serviced infrastructure).
If education is taken as an index of skills, then PNG's skills base is too poor to encourage the investment it requires; literacy rates remain low, and only five per cent of the overall labour force has finished high school. "Localisation", however -- the country's most ingrained form of protectionism -- stands in the way of importing skills to compensate for such desperate shortages.
The centrally planned wage-fixing system is based on a welfare concept of wages, not on the market price. Fringe benefits drive up costs even higher, adding as much as 50 per cent to the basic wage. Finance Minister Pora said in March 1989, "Urban wages are very high relative to productivity and compared to wages in neighbouring developing countries. There is a severe constraint on the range of economically viable activities that investors can undertake". Nevertheless, governments failed to take advantage of a prolonged period of trade union weakness to dismantle this system. Now the PNG Trade Unions Congress, under a new, well-educated and ambitious general secretary, Mr Lawrence Titimur, is again in the ascendant and change will only be extracted at a price. The system tends to favour the comparatively few urban workers at the expense of the majority, the rural self-employed, who have no choice but to suffer the inflation thus stimulated.
About 92 per cent of land remains in traditional hands, largely unregistered. Development using such land, which requires external inputs, is hazardous: provincial and national governments are frequently faced with ultimatums for compensation over land use even for schools, clinics or roads; and each new generation tends to re-claim land sold by its predecessors. Even Catholic Bishop Gregory Singkai, generally sympathetic to the aims of the Bougainville rebels, says that until Papua New Guineans come to terms with the use of land for commercial purposes, progress will be limited.
The tax base remains small (indirect taxes account for only 47 per cent), despite efforts by Finance Ministers during the late 1980s to broaden its scope, and despite rapid moves by provincial governments to levy retail taxes. Expatriates continue to contribute more income tax than citizens; and much of the rural population remains outside the tax net, except for the 2.5 per cent export levy on commodities. Rises in import duty, the continued high kina valuation (although on a trade weighted basis it has fallen 16 per cent in five years), and a decline in rural services call into question the effectiveness of the government theory that it taxes the formal sector to spend on rural communities.
While budgetary dependence on Australian aid (to be held constant at $275 million per year until mid-1994) has declined from some 60 per cent at independence to below 20 per cent, the new reliance on aid (in whatever guise, but chiefly as concessional borrowing) to fund the Public Investment Programme reinforces a concern that, overall, aid is so significant for PNG that it forces government to "over-extend itself, spreading its resources too thinly and undertaking inefficient and ineffective activities" (Conrad Blyth, in a study for the PNG Institute of National Affairs). This contributes towards an undue attraction of overall resources to the government sector, which has 69 public servants for every 1,000 citizens, one in four wage earners.
Increasing flexibility of government procedures relating to aid has led to Japan raising its profile through Port Moresby-centred projects, and to an increase in expatriate consultants and advisers.
In 1983 the much esteemed governor of the Bank of PNG, Sir Henry ToRobert, chaired a Government Regulation Advisory Committee which recommended a widely applauded program of cuts in government red tape. It was never implemented. The ironically titled National Investment and Development Authority (NIDA), which regulates any company owned 26 per cent or more by foreign interests, tends to block rather than foster development. The registration of companies can take up to two years in PNG. Non-mining investment was 20 per cent less in real terms in 1987 than in 1981.
It is widely stated in the business community that a new foreign investor -- except in mining and petroleum, where the relevant government department is perceived as both professional and straightforward in its dealings -- requires a political "friend" to negotiate the red tape successfully.
Corruption, in this context, grew rapidly during the 1980s. It has become so politically acceptable that timber companies (chiefly those now locked out of South-East Asia by logging bans), proved through a judicial inquiry to have been guilty of environmental depredation, transfer pricing and bribery, continue to acquire massive new logging permits with hardly a parliamentary murmur despite constant press revelations. Mining companies, which invest substantially in minimising environmental impact, are not amused at the level of public vituperation they attract for alleged damage to river systems.
But through an unusual level of lateral thinking, some of the sting may be removed from this regulatory area by the establishment of a stock exchange, under investigation by five committees with private sector representation, supervised by the Commonwealth Fund for Technical Assistance. The chief benefit would come not from re-directing disposable domestic savings, which remain low, but from creating a fresh regulatory power, out of the control of politicians or bureaucrats. Thus the deleterious impact of NIDA might begin to be neutralised.
While early governments -- chiefly because they did not want to do anything to attract youths to urban centres -- resisted the protectionist pressures of would-be manufacturers, the more recent emphasis on job creation has led to a misguided readiness to grant such concessions, especially in the area of food processing. The result is a higher national cost of living. (PNG's sugar, for instance, is the most expensive outside Eastern Europe, since its domestic producer obtained 100 per cent protection). Their capital equipment and much of their intermediate inputs are imported. Foreign exchange is not saved in such an "import substitution" establishment. Scarce resources are diverted from the truly productive sectors. And yet PNG's Trade and Industry Department continues to argue that it requires further concessions and increased quotas from Australia before the country's secondary industries can expand. It argues perversely that the 4:1 trade imbalance in Australia's favour is in effect "bought" by the $300 million annual aid. (British economist Lord Peter Bauer, who visited Australia and PNG in November, noted that such an argument was akin to suggesting a shopkeeper should hand out cash to passers-by in the expectation that they would patronise his store).
Higher sustained growth in the future, then, would require that the government match its stated intentions with action: to increase labour market flexibility, overcome the shortage of skilled manpower, extend infrastructure, provide more certainty about policies towards foreign investment and access to land, speed up the machinery for project approvals, broaden the tax base, and dismantle protectionist barriers.
For the current dependence on resources as the sole "engine for growth" remains a risky course. Mining already accounts for 15 per cent of GDP and more than 70 per cent of exports. But there is now doubt as to whether today's exploration boom will be transformed into a production boom tomorrow, given the anxieties roused in investors by events at Bougainville and Ok Tedi, the limits imposed by bankers on "country risk", and the continuing volatility of mineral prices.
If minerals revenue does not accrue at the anticipated rate, governments will be faced with trying to match increased expectations with diminished resources. But if a boom does occur as hoped, questions still arise -- such as, at what pace can mineral revenues be absorbed by the economy? Are the mechanisms in place that will enable this temporary windfall to be re-directed to longer term benefit? Or will it merely be consumed in the towns? Other sectors, especially agriculture, will be forced to adjust to compete for scarce domestic resources, especially skilled labour.
Papua New Guinea, it must be stressed, remains a country of extraordinary promise, despite its low base at independence in terms of infrastructure, education and national income. This promise went virtually unrecognised by its coloniser, Australia, which bequeathed it with a cumbersome and -- thanks in part to the advocacy of Mr Bob Hawke, on secondment from the ACTU -- high-cost bureaucracy. Its natural resources are remarkable. Its population is secure by dint of the spread of land ownership to virtually every citizen. Its people have the same potential to excel as other peoples. They are as a whole particularly well disposed to Australians. Its democratic structures remain intact, though encumbered by a complex and over-ambitious constitution.
But the country's economic problems have their roots as much in sentiments and in consciousness as in structures, and are thus that much harder to tackle.
Such distribution of wealth as does take place tends to happen via the "wantok system" of extended families (there is no state-funded welfare program) rather than by government mechanisms. Yet this same system mitigates against the establishment of private capital bases: status is traditionally achieved through generosity rather than through acquisition or savings. There are of course able exceptions but many of those who have acquired considerable wealth tend also to have cut themselves off from their family roots, losing that sense of accountability as they coalesce in a "new class" fuelled by real estate investments, sinecures as "token Papua New Guineans" on boards, privileged access to finance and the cheap acquisition of foreign interests forced out of sectors reserved for Papua New Guineans.
This latter process of "localisation" has falsely been assumed to mark an increase in economic activity. To some extent it has had the opposite effect -- although it may well have been politically unavoidable. (It may be compared with the current process of "Fijianisation" of commerce in Fiji, previously dominated by the Indian population).
Those in the public sector, moreover, misunderstand private sector motivations and methods (though a vocal sector of private industry still encourages government to see protection as a stimulus rather than a restraint to growth). They have overestimated the value of "give-away" incentives and underestimated the importance of stability and predictability. PNG's position as an international "price-taker" is bitterly resented and protection is seen as a type of answer, despite the small and fragmented nature of the domestic market.
Nationalist sentiment is perceived as adequate justification for continuing government investment in private sector activities, such as mining. And despite the carefully phrased policies and set-piece speeches of the core of rational politicians and bureaucrats, foreign investors are constantly reviled by members and aspirant members of the PNG elite, in Parliament and outside it. Miners and oil-men have tough hides, and set their sights on proven resources; many others choose to invest elsewhere. The only major investors in agriculture, for instance, since independence have been two British companies and a Belgian company. Local agricultural floats have been disappointingly unsuccessful (although landowners have become naively excited about the prospect of equity offered in lieu of, or in addition to, royalties in mining ventures which may see profits eaten up in management fees). Naturalised citizens, too, have been treated with suspicion and hostility in a number of attempts to regenerate agriculture through taking over and investing in the plantation sector. The concept of risk in commercial ventures remains foreign, despite the enthusiasm, especially in the Highlands, for "bisnis". Banks (mostly Australian owned) are expected to provide advice, bottomless funding, and in some cases the initial concept for a business.
The medium to large scale private sector remains fundamentally owned and/or managed by expatriates. There is a paucity of professional PNG managers, who consequently command high rewards. Despite the success of a number of Papua New Guineans -- notably Highlanders -- in building their own businesses from scratch, the more common route into "bisnis" has been seen as via politics and political patronage, at the national or provincial level, and thus via leveraged ownership and board membership rather than management or savings.
CONCLUSION
As the 1990s dawned, in the certainty that the Bougainville mine would not reopen for a considerable period, if at all, the possibility also dawned on some observers that if Mr Namaliu, who sees himself above all as a manager of change, can ride out his perverse political challenges, the very size of the Bougainville problem, gaping wide as the pit itself, might yet open some doors. Unusual times call for unusual methods, and if the core group within government and public service can refocus their attention on the main game of generating -- or rather, facilitating the private sector to generate -- broad-based growth, they might "get away" with circuit-breaking changes which in "peacetime" might not be acceptable.
The four major macroeconomic adjustments announced by Mr Pora were a start; but only a start. It will get tougher from here. And the question remains, whether political support can be maintained for such tough measures as these times require.
Mr Namaliu himself had developed a reputation through the 1970s and 1980s as a competent and honest administrator, and an effective and humane politician. But in the face of the final indignities inflicted on this government by the Bougainvilleans he started, almost single-handedly at the political level, to push the levers of genuine change.
He kept the impetus going past the macro-economic reform package announced on 7 January, first through chairing a "Razor Gang" which identified K74 million cuts in government functions, through privatisation, "commercialisation" and simple abolition.
Then he focused his attention on raising the funds required to make good the shortfall resulting from the Bougainville mine closure and the rapid decline in prices for PNG's major agricultural exports -- coffee, cocoa and palm oil (the terms of trade have declined 15 percent since 1988). He flew to Washington during the annual meetings of the World Bank and International Monetary Fund and reinforced their support for PNG's reconstruction program, which raised at the annual meeting of aid donors, in Singapore in mid-May, US$710 million for 1990, US$300 million -- the great majority from Australia, which topped up its giving by A$20 million -- in grants, the rest in concessional loans.
A World Bank statement issued at the conclusion of the meeting, which Mr Namaliu himself attended, said the participants "strongly commended the government of PNG for the prompt and decisive steps it had taken" in responding to its economic challenges.
It said, "PNG's medium term external financial outlook and creditworthiness remained strong as a result of a combination of policy actions by the government and support by the donor community". A Special Intervention Program was announced, to direct foreign aid to new infrastructure projects that would largely be contracted out to the private sector.
Mr Namaliu assured the donors that further growth-conducive microeconomic reforms would be implemented, including the abolition of NIDA (to be replaced by an Investment Board), the redefinition of a foreign enterprise to permit 50-50 joint ventures to operate as local companies, and the streamlining of work permits and visa approvals.
He went on to re-establish a Government Regulations Advisory Committee, with private sector representatives, to recommend to the government how businesses should be regulated, and to "reduce the disincentive impact of government regulations on private sector activity". This came almost 10 years after a previous committee of the same name, chaired by Sir Henry ToRobert, produced widely agreed recommendations that were never implemented.
He announced the reintroduction of five year tax holidays for "pioneer" industries. And he said that, in a parallel program to that introduced to Australia, a two per cent training and localisation levy would be imposed on businesses in PNG, assessed on payrolls but reducible by proven training expenditure.
The latter half of 1990 will prove Mr Namaliu's true testing period. If he can both retain Bougainville within greater PNG arid achieve genuine economic reform conducive to broad-based growth, he will have done more than any Prime Minister in the nation's 15-year history, including Sir Michael Somare.
He has yet, however, to spell out the details to the public of where the public service axe will fall; to identify buyers, in the context of a negative growth credit regime, for the services his government wants to privatise or commercialise; to convince highly sceptical trade union leaders of the merits of his radical program; or to implement measures already announced such as the abolition of NIDA, in the face of fierce opposition from key public service departmental heads who remain in place.
Mr Namaliu stressed in a speech to the Port Moresby Chamber of Commerce on 6 June, "Real and sustained growth ... can only come through a confident, expanding and less regulated private sector". Government spending would decline in real terms by 7.5 per cent in 1990, he said, and would not increase for the next three years, either (though an election intervenes in mid-1992).
The capacity of the PNG public service establishment to stymie what Mr Namaliu called on 6 June his "almost revolutionary proposals" was swiftly demonstrated, however, with the raising of the fees for business visas -- without any compensatory easier access -- to $1,996 for a visit of 22 days or more.
Mr Namaliu still has a long haul if fundamental reforms, delayed by wishful thinking and a few streaks of good luck since self-government in 1972, are to take root. His words are applauded ... will the required actions be successful, and sustained? He not only needs to survive parliamentary challenges before the next election in two years, but to come through that poll with his resolve intact.
Many well-wishers will be cheering him on from a distance, though the initial pain in PNG will be pronounced, but the big test is how many -- apart from miners, oil men and World Bankers -- will be putting their money where their mouth is.
AUSTRALIA'S AID TO PNG: ISSUES AND PROSPECTS
This article reviews the rationale, effectiveness and future of Australia's aid relationship with Papua New Guinea.
AUSTRALIAN aid to Papua New Guinea now amounts to more than $300 million each year. Nearly all of this aid is given as untied budget support. No other donor country allocates such a large proportion of its total aid to a single recipient nation.
Why does Australia provide so much aid to PNG? Has Australian aid been effective? Is the level of Australian aid too high? This article considers these issues and discusses the prospects for Australian assistance.
AUSTRALIAN AID TO PNG
Rationale for Aid to PNG
The extent of Australia's involvement in PNG is best seen in comparative terms. Every year since 1983 PNG has received a total of almost US$100 per capita in aid from Australia alone. Most developing countries of comparable size receive less than half this amount as aid per capita from all donors. For instance, in 1987 the total aid receipts per capita for PNG amounted to $87, whereas for Nicaragua the amount was only $40, Burundi $38, Sierra Leone $18 and Uruguay a mere $6 (Table 1).
TABLE 1: AID RECEIPTS PER CAPITA (US$) FOR COUNTRIES
BETWEEN 1 MILLION AND 5 MILLION POPULATION (a)
| Per Capita (US$) | ||
| Aid (1987) | Income (1987) | |
| Over US$100 Jordan Botswana* Somalia* | 157 136 101 | 1560 1050 290 |
| Over US$50 Mauritania* Costa Rica PNG El Salvador Gabon Congo Jamaica Lesotho Central African Republic Honduras | 95 87 87 86 77 75 70 66 64 55 | 440 1600 700 860 2700 870 940 370 330 810 |
| Under US$50 Nicaragua Burundi* Togo* Benin* Bhutan* Paraguay Sierra Leone Panama Laos Uruguay | 40 38 38 31 31 21 18 18 16 6 | 830 250 290 310 150 990 300 2240 170 2190 |
* Least developed countries
Note: (a) The data refers to total net aid from industrial countries, multi-lateral organisations and OPEC countries. Developing countries with a per capital income of over US$4000 (Israel, Libya, United Arab Emirates, Kuwait, Singapore and Trinidad and Tobago) have been omitted.
Source: World Bank, World Development Report 1989,
Oxford University Press, New York, 1989.
There are several reasons why Australia has provided such large flows of official development assistance (ODA) to PNG. One is that PNG still faces quite daunting development problems. Social and political conditions in PNG, for example, are quite different to those in Southeast Asian nations, a number of which had well-established forms of government for several centuries or more before gaining independence in the 1950s and 1960s. PNG had no such developed governmental infrastructure. This presented Australia in the 1950s, and continues to present governments in PNG today, with a very difficult developmental challenge.
Some commentators have questioned whether Australia, in retrospect, did enough during the colonial era to promote development in PNG. The Jackson Report on Australia's overseas aid (1984), for example, queried whether Australian assistance should have been more developmental.
But the Jackson Report also acknowledged that the constraints of PNG's political underdevelopment, its cultural diversity and the geographic isolation of many communities meant that Australia faced formidable difficulties in promoting social and economic change. Near the end of the colonial era, the Australian Government boosted the level of development assistance, especially in the areas of education and employment generating activities for PNG nationals.
Clear developmental reasons also underlie Australia's aid commitment to PNG. Australia supports the development objectives set out in PNG's Eight Point Plan for achieving self-reliant development. Major projects have been recently included in the aid program to, among other things, help strengthen PNG's government institutions, improve agricultural productivity and assist the development of the health and education sectors.
Another reason for Australia's substantial aid program is purely strategic. The Jackson Committee noted the strategic importance of PNG to Australia as a "major aspect of the relationship between the two countries". A politically stable PNG is in Australia's direct interests.
Size and Mix of Aid
When Papua New Guinea attained Independence in 1975, PNG and Australia agreed that Australian aid would be provided in a relatively generous form. Australian aid would be delivered mainly in the form of untied cash grants as budget support. This approach in an official aid program was unusual. Most aid donors insist that most of their aid be given in specific ways and be closely scrutinised.
The aim of the Australian approach in PNG was to strengthen the PNG government's capacity to determine domestic priorities. Australia would no longer be directly involved with formulating PNG's budget. In 1974, Australia pledged $500 million in aid for the period 1974/75 to 1976/77. In March 1976, Australia entered into a five year aid agreement which provided PNG with $1,060 million in budget support between 1976/77 and 1980/81.
In 1980, the Australian Government reviewed the aid arrangements. Sir John Crawford was asked to prepare recommendations for aid arrangements with PNG after June 1981. The result was the Crawford Report which drew attention to both governments' objectives of achieving a gradual but real decline in aid over the long term. The Report's recommendations led to the introduction of an annual development review process, and a five per cent annual reduction of aid in real terms.
When PNG celebrated the tenth anniversary of its Independence in 1985, another new five-year aid agreement was concluded. Under this agreement the real level of Australian aid continued to decline consistent with PNG's objective of greater self reliance.
Despite this trend in Australian aid flows, Papua New Guinea still receives the largest share of Australian aid. Over the last five years Australian aid to PNG has hovered around the $300 million mark each year in cash terms -- which implies, in fact, a quite marked fall in real terms over the period (Diagrams 1 and 2).
DIAGRAM 1: AUSTRALIAN AID TO PAPUA NEW GUINEA
1974/75 TO 1993/94 (NOMINAL DOLLARS)
DIAGRAM 2: AUSTRALIAN AID TO PAPUA NEW GUINEA
1974/75 TO 1993/94 (87/88 DOLLARS)
The continuing high level of financial support does not mean that Australia's aid relations with PNG are static. In fact, both Governments are seeking to move aid away from the centre of the relationship. A significant change in the relationship between Australia and PNG occurred in December 1987 when the two Prime Ministers signed a Joint Declaration of Principles (JDP) guiding relations between the two nations. Future relations will be characterised less by the post-colonial arrangement of Australia giving aid and advice than by reciprocity and mutual advantage.
Arising out of the JDP process, a new Development Co-operation Treaty was signed by both Prime Ministers in May 1989. The Treaty confirms Australia's commitment to PNG, while continuing the gradual shift away from budget support towards project aid. Under the current program, then, the mix of aid delivery mechanisms is changing in a significant way.
Objectives
The official objectives for Australia's development co-operation with Papua New Guinea are:
- to promote self-sustaining growth with equity in PNG;
- to reduce progressively the overall level of Australian aid, shifting from budget support to "programmed aid" mainly delivered in the form of projects; and,
- to maintain support within Australia for assistance to PNG.
Have these objectives been achieved? Are they sensible? The prospects for future development co-operation should be evaluated with these objectives in mind. The remainder of this article considers the effectiveness of Australian aid to PNG and evaluates PNG's prospects.
EFFECTIVENESS OF AUSTRALIAN AID
PNG's Growth Performance
Despite large flows of Australian aid to PNG since 1975, PNG's economic performance since Independence has been poorer than expected, especially given its potential for growth as a resource rich country. Output growth from 1980 to 1987 has been about three per cent per annum (Table 2), while PNG's population is thought to be growing somewhere between two per cent and three per cent per annum. The result is that real GDP per capita increased only marginally over the period. In 1988, real income per person may have actually fallen (Diagram 3).
TABLE 2: ECONOMIC PERFORMANCE OF SELECTED
DEVELOPING ECONOMIES 1980-1987
| Annual Average GDP Growth 1980-87 (%) | |
| Thailand | 5.6 |
| Singapore | 5.4 |
| Malaysia | 4.5 |
| Indonesia | 3.6 |
| Papua New Guinea | 3.0 |
| Philippines | -0.5 |
Australia's annual growth rate during the same period was 3.2 per cent.
Source: World Bank, World Development Report 1989.
DIAGRAM 3: REAL GDP PER CAPITA -- PNG 1961-1989 (1961 = 100)
Source: AIDAB International Development Issues Paper No. 5, Papua New Guinea: Economic Situation and Outlook February 1989, AGPS, Canberra, 1989. (Graph updated by authors to take account of developments up to November 1989).
This is, at best, a worrying trend. After all, bearing in mind the potential in PNG for productivity growth through technological catch-up alone, it should be possible for PNG to achieve a sustained rate of growth of around seven per cent per annum. This would ensure a rather more healthy rise in average per capita incomes of around four per cent or five per cent per year.
As regards growth with equity, the distribution of incomes suggests that the economy is strongly dualistic in character. About 90 per cent of income recipients earn less than Kina 6.50 per week, whereas only one per cent of income earners receive Kina 150.00 or over per week. There are many inter-related factors which account for this slow output growth and inequity. The effectiveness of Australian aid in promoting economic growth with equity needs to be assessed against this background.
First, the bulk of PNG's population -- about 80 per cent -- still lives and works in the subsistence agriculture sector, which co-exists with an enclave mining sector and a high-wage public sector (Diagram 4).
DIAGRAM 4: COMPOSITION OF LABOUR FORCE BY PRINCIPAL OCCUPATION 1980
Second, the economy is dependent on exports of primary commodities, mainly minerals whose prices are extremely vulnerable to international price fluctuations (Diagram 5). In 1988, 69 per cent of PNG's exports were made up of gold and copper. Although copper and gold prices were relatively strong in 1987 and 1988, the medium term outlook is uncertain. Current projections are for further declines in the medium term. If these projections are correct, the implications for growth prospects in PNG are worrying. Coffee and cocoa prices have also fallen sharply in 1989 to 14-year lows. And the difficulties at the huge Bougainville mine naturally only serve to make things more difficult.
DIAGRAM 5: TERMS OF TRADE 1977-89 (1977 = 100)
Third, skilled and trained people are in very short supply. This has been remarked on by numerous commentators. The Goodman Report, for example, noted:
"In education, significant progress has been made since Independence ... Despite these advances, serious problems remain. The quality of education is widely believed to have deteriorated: at the present rate of progress, the attainment of universal primary education will take half a century; there are divided and overlapping responsibilities for education between the two levels of government and among national government departments; and at the post-secondary level, there are too many small institutions with overlapping programs and high unit costs". (18)
The shortage of skilled labour is evident, for instance, in the agricultural sector in which, according to a recent report published by the Asian Development Bank, there are less than 100 PNG nationals working as scientists and less than 30 expatriate scientists. Moreover, of the PNG nationals, none were reported as having been trained to doctoral level, only 14 had Masters qualifications, and the remainder were qualified to Bachelors level only.
Fourth, development activities are hampered by PNG's difficult geography. The Jackson Report observed that the economy is, in effect, fragmented into several very small regional economies based in Port Moresby, Lae, the Highlands area and the North Solomons. Smaller centres include Rabaul, New Ireland, Popondetta, Madang and, most recently, Ok Tedi. Transportation costs between these regions are very high. Most manufacturing and service activities are concentrated in Port Moresby and Lae. This geographic and economic fragmentation is compounded by the existence of about 400 regional languages and cultures.
Finally, growing social tensions threaten economic development in some regions. The Highlands Provinces are plagued by recurrent tribal fighting, partly because the traditional authority of elders and "big men" has been eroded by processes of social and legal change. One commentator, James Sinclair, has recently observed that delays in obtaining decisions on disputes through the normal workings of the courts have contributed to this declining authority.
Urban crime is also a growing problem. Sinclair notes that one Papua New Guinean judge, Bernard Narakobi, has argued that urban crime in PNG may be the price of the rapid development of recent years, which has produced tension and pressure on a new class of town dwellers ill-prepared to cope with urban existence. (20) Rascal Gangs, as teenage criminal associations are known, have emerged as a serious law and order problem over the last decade in rural and urban areas. One writer, examining the causes of the problem, notes:
"Research carried out on the internal workings and criminal activities of rascal gangs indicate unemployment, lack of educational provision, a lessening of cultural and community identity, and an inability to participate in the economic process were all major reasons for individual participation in Rascal Gang activities". (21)
It has become fashionable in some circles in Australia to say that the PNG Government is failing to face up to these problems. In fact, bearing in mind that PNG is still a young nation with new institutions of government and that the problems to be tackled are immense, governments in PNG since Independence have coped relatively well. Certainly, in an ideal world, the performance of PNG governments might have been better. But we do not live in an ideal world; compared to the performance of many governments in Africa, for example, PNG leaders have managed the first 14 years of independence of their nation well.
While the present Namaliu Government has continued to emphasise economic growth and job creation, it also believes that the long term sustained economic growth needed to benefit the vast majority of the population requires that Integral Human Development be promoted. This entails:
- adequate shelter, food and water;
- educational opportunities for all citizens;
- access to health care and welfare;
- adequate infrastructure; and,
- protection of basic human rights by means of the Constitution and the law.
When visiting Australia in May 1989, Prime Minister Namaliu emphasised the commitment of his government to these development priorities. He observed that his government had prepared amendments to the Constitution which will improve the capacity of all PNG governments to plan ahead. One important aim is to reduce instability within the national Parliament by limiting the frequency with which no-confidence motions can be moved.
Prime Minister Namaliu also listed improvements in law and order and the promotion of economic growth. But his most interesting remarks concerned what he described as "capacity building", which he described as "in many ways the key to all of the other changes to which we aspire". He explained:
"I mean not only more people with some education -- which is itself important -- but more people with better and better education -- and so the development of more flexible practices and institutions. Historically, aid from Australia has played a major part in building capacity in Papua New Guinea -- most obviously, through funding the development of formal education and training in Papua New Guinea and through provision of places in institutions abroad".
In economic management, one key priority for the PNG Government is to make effective use of mineral revenues when they come on stream in the 1990s. To achieve this goal, PNG's capacity to formulate and implement development projects will need to be strengthened. This approach will hopefully lay the foundations for more broad-based growth.
In response to the country's sluggish growth performance in the 1980s, the PNG Government has recently adopted policies which are more explicitly growth-oriented. These emphasise the need for major investments in directly productive sectors such as agriculture, supported by programs in rural infrastructure and institutional strengthening. Consequently, Australia's aid program is being increasingly directed to assist PNG to promote development and economic growth, especially through education, training and institutional strengthening.
It should also be noted that despite relatively low economic growth, PNG has made considerable developmental progress. Australia's development assistance has certainly assisted PNG to achieve worthwhile goals. Since Independence, advances have been made in improving living standards, especially in rural areas. Health standards have improved, infant mortality has fallen, life expectancies have risen and villagers now have greater access to education (Table 3).
TABLE 3: SOCIAL DEVELOPMENT INDICATORS
PAPUA NEW GUINEA
| Social development indicator | 1970 | Most recent estimate | Lower middle income countries | Low income countries | |
| Estimate | (Year) | ||||
| Life expectancy at birth (years) | 49 | 53 | (1987) | 59 | 61 |
| Infant mortality (per 1000 live births) | 125 | 91 | (1987) | 76 | 72 |
| Access to safe water (% of population) Urban areas Rural areas | 49 10 | 55 10 | (1987) (1987) | n.a. n.a. | n.a. n.a. |
| Daily per capita calorie supply (cal) | 1908* | 2145 | (1987) | 2507 | 2327 |
| Daily per capita protein supply (gm) | 46 | 40 | (1987) | 56 | 55 |
| Annual energy consumption per head (kg oil equivalent) | 56* | 235 | (1987) | 51 | 27 |
| Persons per physician | 11630 | 11200 | (1987) | 7500 | 5800 |
| Gross primary school enrolment (%)** | 44* | 64 | (1987) | 104 | 99 |
| Adult literacy rate (%) | 32 | 32 | (1980) | n.a. | n.a. |
| Urban population (% of total population) | 11 | 15 | (1987) | 38 | 28 |
* Figure refers to 1965
** This ratio could exceed 100 percent, because of the possibility of enrolment by persons outside the age group designated as primary school-age population.
Source: Asian Development Bank, Economic Survey of PNG, August 1987; World Bank, World Development Report 1988; World Bank, Social Indicators of Development 1988
Total wage employment also has grown, albeit slowly, since 1982. The employment picture, however, is mixed with some areas such as the North Solomons and Madang experiencing substantial falls in formal employment. (22)
Programmed Activities in Aid
The Treaty on Development Co-operation signed by Prime Ministers Hawke and Namaliu in May 1989 outlined a wide range of development co-operation activities. The Treaty also provided for the gradual expansion of "programmed" activities as budget support is slowly reduced. In the official Australian aid program "programmable aid" includes project aid, technical assistance, commodity aid, training and financial assistance.
Training is important in Australia's programmed activities in PNG. Roughly 25 per cent of the programmable aid funds for PNG in 1987/88 was spent on training about 250 Papua New Guineans in Australia. In 1989-90 the Secondary School Student Scheme, introduced in the previous financial year, will be expanded to enable around 120 Papua New Guinean senior secondary students to complete their schooling in Australia. The new Equity and Merit Scholarship Scheme provides for 50 or so Papua New Guineans to pursue tertiary studies in Australia in 1989-90.
Other major programmed activities will include technical assistance to strengthen key government departments, improve PNG's policing operations and enhance civil aviation. Research and institutional support will be provided to assist PNG's coffee and cocoa industries. Rural development projects will include co-financed activities with international financial institutions such as the International Fund for Agricultural Development (IFAD). Assistance will also be provided to the health and education sectors (Table 4).
TABLE 4: FIVE LARGEST AUSTRALIAN AID PROJECTS IN PNG, 1989-90
| Project | Title | Total Approved Cost ($M) | Description |
| 1. | Royal Papua New Guinea Constabulary (RPNGC) | 18 | Improve the organisation of the RPNGC through providing advisers and improve the quality and relevance of police training. |
| 2. | Civil Aviation Assistance Project | 16 | Improve the PNG Department of Civil Aviation's operational capacity in specialised areas and to upgrade the air navigation system in PNG. |
| 3. | Taxation Office Assistance Project | 10 | Improve the operations and institutional capacity of the Tax Office to enhance revenue collection. |
| 4. | Land Mobilisation Project | 8 | To improve the management of land administration particularly in the Department of Lands and Physical Planning. |
| 5. | Customs Capacity Project | 4 | Improve the capability and operations of the Bureau of Customs and Excise. |
The effect of much of this programmed activity will be to improve the human capital stock of PNG with well-educated leaders. An assessment of the effectiveness of these sorts of aid activities can only be made in the long term, when better trained staff enter the workforce and enhance the efficiency of PNG's industries.
LEVEL OF AUSTRALIAN AID
Is it true, as some suggest, that Australia gives too much aid to PNG? The first thing to note is that the level of Australian aid to PNG has been steadily reduced in recent years. Under the present aid arrangements, budget support is being held constant in nominal terms (at $275m until 1992/93) and will drop to $260m in 1993/94. At the same time "programmed" activities will be expanded from $20m to $35m. The overall effect of these changes over the next five years will be that the total level of aid will hover around $300m each year, which in turn implies a fall in real terms of around five per cent or so annually during the period.
An important consideration in determining the appropriate level of Australian aid is PNG's economic and political stability. Even as staunch a critic of aid programs as Padraic McGuinness (The Weekend Australian, 16 September 1989) acknowledges that a sudden and dramatic cut in the level of Australian assistance "would precipitate a crisis in that country from which no-one would benefit".
Maintaining the level of aid at $300M is a prudent position for Australia to adopt in order to underpin stability in PNG. The Parliamentary Joint Committee on Foreign Affairs, Defence and Trade, in its Review of AIDAB and the Australian Overseas Aid Program (1989), has made a similar point concerning the level of aid to PNG. Noting that PNG is rightly at the top of Australia's list of aid recipients the Committee remarked: "Consideration of further reductions must take into account the effects of such cuts on the political stability and economic and social development of PNG".
Clearly, any decision to reduce Australian aid to PNG from the present agreed levels would need to weigh the possibility that such a decision might be destabilising. This is because the present level of aid to PNG is set not so much by simple budgetary considerations in each country, but within the broader context of the strategic significance of a stable neighbour for Australia.
OUTLOOK
Future Aid Levels
The case for holding the level of aid around the current level of $300M over the next few years is strong. The immediate outlook for PNG's external accounts is uncertain. With the prospect of balance of payments difficulties stemming from the Bougainville mine shut-down and falls in commodity prices, the need for assistance until major new mineral developments begin production in the 1990s remains. Otherwise, central government services and welfare transfers would be placed in jeopardy.
However, whether other donors should not be pressed to play a larger role is another question. A World Bank Consultative Group of donors to PNG now meets on an annual basis. Through this mechanism, PNG is beginning to broaden its network of donors. As more donors join the World Bank Group, there may be an opportunity to further reduce the level of Australian assistance to PNG.
But the economic benefits from such reductions need to be weighed against the political and strategic costs. The prospects for PNG's economic growth and the enhancement of social equity during the 1990s are quite uncertain. The 1989 Budget is based on an assumed growth rate of 4.3 per cent for real GDP in 1989 following on an estimated growth rate of 4.1 per cent in 1988. But the Bank of PNG has observed that most of this growth is attributable to mining and oil exploration activities. Growth in the rest of the economy has been quite low.
Recent World Bank projections are for an average real GDP growth rate of 3.5 per cent between 1985 and 1995, led by strong growth in the mining sector, provided that PNG pursues the development agenda proposed by the Bank. The World Bank also sees growth as being confined mainly to the enclave mining sector, because relatively slow growth (about 2.5 per cent) is predicted in the non-mining economy. The implication of this is that little improvement can be expected in the living standards of the bulk of the population in the early 1990s because a growth rate of 2.5 per cent is barely greater than the rate of population increase. The Bank's analysis therefore suggests that the fiscal linkage between the mining sector and the rest of the economy is not yet strong enough to distribute the benefits of growth widely.
Types of Aid
Apart from the level of aid, another question is whether Australia is providing the right type of aid. Of course, there is no single type of aid which is applicable to all circumstances, and circumstances in any particular country change over time. So what may have been appropriate aid at one time may be inappropriate at another time.
Australia's emphasis on budget support was sensible when PNG needed to bridge the gap between expenditure and revenue shortfalls in the first decade after Independence. It allowed PNG to concentrate on the urgent short-term issues of macro-economic stabilisation, although there was a cost. As the Jackson Report noted:
"This approach was doubtless correct in the first uncertain years after independence, but the cost of the emphasis placed on equity and stability was a neglect of growth oriented policies in rural areas, particularly in agriculture and agriculture-related service sectors". (24)
During the 1990s PNG will need to focus increasingly on the promotion of growth and long-term economic development. For these purposes, budget support will not be as appropriate as programmable aid -- especially training, project assistance and co-financing of projects with the international financial institutions. Particular attention will need to be paid to skills formation. Australian assistance can be useful here, notably in the areas of education, vocational training and secondments for PNG officials to train in Australia.
CONCLUSION
Several themes emerge from the discussion in this article.
- First, Australia has a long history of association with Papua New Guinea. Aid has played an important part in the special nature of the bilateral relationship.
- Second, the governments of both countries agree that the level of aid should be gradually reduced, and that the mix of activities should move away from budget support towards project aid. Furthermore there are strong arguments to support the view that Australia's current level of aid to PNG at around $300 million is appropriate for the next few years -- that is, until sizeable mineral revenues come on stream in the 1990s.
- Third, the fact that Papua New Guinea's economic growth has been slow since Independence should not be taken as evidence of the ineffectiveness of Australian aid. The barriers to PNG's growth are many. Both international factors (such as international price shifts for commodities) and domestic structural imbalances (such as the commodity-dependent nature of PNG's economy, the rural-urban imbalance, and the lack of skilled people) have retarded growth. Australia's aid program will remain an important part of bilateral relations with PNG for many years to come.
TILL DEATH US DO PART?
I SUPPOSE it is natural that I try to fit Australia and Papua New Guinea into a kinship relationship.
For me the most apt analogy seems to be that of the country cousin seeking to make his way in the town with the help of his long-established urban-based kin. The latter is generous with money and advice, anxious that the country cousin now in his own household should not lose face over continuing dependence, but, nevertheless, concerned he should not lose his way in the complexities of town living. The country cousin, however, while acknowledging his debt and dependence, is yet impatient of the constraints of a rectitude and perspective which he feels are frequently not relevant to the composition of his own household and the different problems and priorities he faces.
Of course, the analogy is by no means complete, and most of what I write here will be an attempt to fill in the intricacies of the relationship. Yet the illustration serves to set my position; an impartial one (I like to think) with some appreciation of the perspective from both sides.
I am aided by three advantages in contributing to an informed discussion. Firstly, I once was a politician. Secondly, I am no longer a politician. And, thirdly, for a short while yet, I am a private individual.
To help both the reader and myself, I am organising what I have to say by means of a series of headings. Whether what I have to say will constitute an argument, we shall both have to wait and see.
SENSITIVITIES
The PNG Government is sensitive about its continuing dependence despite its status as an independent nation; the Australian Government is sensitive about the PNG Government's sensitivity. The agonising involved in this can be no better illustrated than by the recent succession of overkills of indignation and reassurance that attended Gareth Evans' recent visit (May) to my country.
My own view of Gareth Evans is that he is a sincere and genuine friend of PNG and very supportive -- not that such a description is very wide of the mark concerning any of the Australian foreign ministers who have treated with PNG. But Senator Evans did make a faux pas.
Presumably with instructions from Mr Hawke (and Mr Keating!) ringing in his ears, the Australian Foreign Minister made some remark about PNG having to tighten its belt, just after he emerged from his plane at Jacksons, and before speaking with Rabbie Namaliu and hearing of the reducing measures Waigani was making.
Such an opportunity to rap our big neighbour on the knuckles at the same time as giving a boost to his own prestige at home was rightly considered fair game by our Prime Minister.
Subsequently, in his official meetings and his tour of the country, including the various mining and oil project sites, the Senator said and did all the right things. But the bogey had been raised. Were we truly independent? What right had Australia to ... etc., etc.
On his return to Australia, Gareth Evans was asked by a reporter for his reaction to the news that PNG had imposed a 50-mile total blockade around Bougainville, banning all ships from these waters. Not unnaturally, since such a move was against international law, the Australian Foreign Minister expressed some disquiet about the rights of international shipping. This triggered off an angry reaction from our own Foreign Minister, who as the founder of our nation, has more right than anyone to be protective about our country and its independence.
The Post Courier (8 May) account read as follows:
"Australia yesterday copped another blast from the Government for its continuous interference and reaction to PNG's domestic issues ... Somare lashed out at his Australian counterpart ... for his comments".
A few days later, Acting Prime Minister Ted Diro quietly rescinded the Government's first Notice To Mariners and issued a new one, this time effecting a 12-mile blockade, that is limiting the blockade to recognised territorial waters.
I hardly imagine that a Minister of Gareth Evans' seniority and competence received another rap on the knuckles, this time from his own chief. But, I am sure it was with a rueful smile he briefed Mr Hawke on his PNG adventures.
And the end of the episode? A weighty speech by Mr Hawke in his own Chamber. A castigation of those Australians with "neo-colonialist" attitudes who treated PNG as a second-class country. "We've attempted at all times to conduct our relations with that country on the basis of recognising firstly that they are sovereign and independent, and secondly that as a result of our historical relationship we have certain obligations towards them" (Post Courier, 11 May).
Shortly afterwards, Canberra announced that Mr Hawke would be visiting Port Moresby before the month (May) was out. Subsequently, Hawke's visit was postponed following the news that he was to enter hospital for an operation.
AUSTRALIAN AID
This is most definitely the area I would advise the doctoral candidates to look at first.
Reading the Joint Declaration of Principles (signed in December 1987) everything seems to be fine, the relationship could not be cosier. Basic Principle No. 15: Development Assistance assures:
"Development assistance will be provided as part of an agreed program of co-operation which contributes to development and self-reliance in Papua New Guinea, allows for forward planning and implementation in accordance with policies and priorities set by the PNG Government, and takes due account of both Governments' policies on development co-operation". (From the agreed text, 17 September 1987).
It is, of course, the last line which turns assurance of accord on its head and provides the arena for disagreement. The major arguments between the Australian and PNG politicians and their officials focus on the relative merits of direct budget aid and tied project aid. Since this strikes at the heart of the issues of how independent PNG really is, the arguments provide the most enlightening of all commentaries on the nature of the PNG-Australian relationship.
On the one hand, we have the determination of PNG governments to fight for the right to determine their own domestic policies, ranged alongside their suspicions of Australian motives in trying to restrict such right. And, on the other hand, we have the Australian concern that a greater discipline and more rigorous ordering of priorities in expenditure could put the PNG economy on a much firmer footing and promise Australia an earlier release from financial demands and security anxieties.
This is not to say the two types of aid are regarded by anyone as mutually exclusive. Rather it is a question of the extent to which tied project aid should be given at the expense of direct budget aid.
The extreme case for raising the proportion of tied aid was recently argued to the Australian Joint Committee on Foreign Affairs, Defence & Trade's Sub-Committee on Australia's Relations with PNG by the ANU-based National Centre for Development Studies. A booklet containing this submission, and coyly inscribed "A Friend In Need" (though this is possibly the NCDS motto -- it is not really clear) was subsequently circulated in Port Moresby.
The Head of the Centre, or 2H2, as she is affectionately known in Empire robot nomenclature in our own corridors of power (= Heavy-Handed Helen Hughes), might have made the argument more effective, if she had rid the text of its many factual errors and made its four recommendations less oriented towards jobs for the boys (the ANU Mafia, as we know them). But, I don't think this should detract in any way from the fact that the argument exists, and that it reflects a very real concern on the part of Australia that PNG is not keeping its house in order. Even if you do not want to take the advice of friends, it is wise to recognise that it is likely to have significance.
The position of PNG governments on an increase in the tied project aid component of total Australian aid has been equally well-founded, and for the most part credible. They have fought it tooth and nail.
Secretary for Finance Vele made PNG's position clear in the February 1989 Australian talks. PNG relied on a continuing long-term and firm commitment by Australia to direct budget aid on a "predictable" basis. As for tied aid, the stress, as always in PNG's resistance to its growth, was on the country's inability to absorb and manage large quantities of project aid. Only three months after Senator Evans was blithely commenting to his counterpart, Michael Somare, that the progressive shift away from budget support to project aid appeared to be a success, Secretary Vele was warning that the decision to introduce an increasingly high level of project aid was proving counter productive.
But already in a letter (9 February 1989) to Evans, Somare had sounded a veiled warning note that tied aid was seen as interfering with PNG sovereignty:
"As far as project aid is concerned, the Government is becoming increasingly concerned about the impact on the Government's priorities and the mis-allocation of resources which PNG is experiencing as a direct consequence of increasing diversity, volumes and complexity of project aid, including that from Australia. The Government is therefore proposing that project aid be set at levels consistent with PNG's capacity to effectively utilise it".
This is the diplomatic language: the tip of an iceberg of surprisingly strong passions and suspicions about Australian motives and intent towards PNG.
In the corridors trod by the Waigani public servants, the idea of Australian altruism is not always readily accepted. Not a few of the senior officers advising Government see the Joint Declaration of Principles as a means for Australia to maintain its domination and legitimise the continued imbalance in the relationship. Australia is taking PNG for a ride, they say. And not a few were quick to point out that the major beneficiaries of tied aid so far were the Australian consultants engaged in the (necessarily) prolonged pre-feasibility, feasibility, and design studies of the target projects.
More effectively for their contention, I think, they also adduced statistics on annual financial outflows from PNG to Australia, e.g. close to one billion dollars in 1985; and on the trade imbalance of about $350 million in 1985, and increasing.
In the diplomatic language of the discussions that ensued, these sentiments and data became translated as: "We believe that Australian budget support should be seen as partial compensation for the many advantages enjoyed by Australia in the PNG economy" (Finance Secretary Vele at the February 1989 talks).
With some skill, PNG turned Australia's arguments on tied aid around. Overflows of project aid, insisted Waigani, were undermining the very objectives Canberra had in mind in pushing the tied aid component in the first place. Financial discipline and economic stability were being undermined! Not only were there the problems of Waigani's incapacity to handle the increased project aid flow, but National Line Departments were seizing on the possibilities offered by project aid to elude the expenditure and directional constraints the PNG government was intent on imposing.
Australia got its way, however, and the project aid component fixed at $20 million in 1989/90 will reach $35 million in $5 million annual increments by 1993/94 (it remains at $30 million for two of these years).
An endeavour to test my own biases in making a judgment on the respective thinking of the two countries is not the purpose of my exercise here. My point is: economistic simplifiers and rationalisers should beware how they handle the relationship of the two countries. I suggest it is the wise commentator who takes into consideration the extra dimension of emotive content in any appraisal of relative merits in the direct budgetary aid/tied project aid trade-off argument.
But I am sure both Government and Opposition leadership in Australia are well aware of the complexities of the situation.
THE AUSTRALIAN SIDE
In discussing the pros and cons and ups and downs of the relationship with Australia, Papua New Guineans, at any rate, commonly assume any changes will be coming from their side. It will be primarily PNG initiatives and momentum towards financial independence and more balanced economic interdependence which will dictate the changing scenes.
But around the world, the new decade has ushered in changes of a degree and kind unimaginable a bare 12 months ago. These are sufficient, to my mind, for Waigani to take stock and consider a little more carefully what it has possibly always taken for granted in Canberra's situation. I'll took briefly at three areas. Since I have just been talking about aid, I'll start with that.
The present understanding between the two annual real reduction, eventually leading to deductions in nominal aid, and finally a total phasing out of budget support by the year 2005. Both sides recognise, however, that the magic year will depend on various mineral and oil projects coming on line and no other major hiccups occurring in the performance of the PNG economy. (The first major "hiccup" has already occurred: Australia has just acceded (May) to a Waigani request for an additional $20 million direct budget aid because of shortfalls resulting from the Bougainville closure).
What is ignored here is any consideration that future Australian administrations might feel inclined, or more likely impelled, to be a little less patient with PNG's struggles for fiscal independence. NCD's little "Friend in Need" booklet is perhaps one manifestation, albeit from a small academic sub-community, of a growing impatience and frustration. An indication by the Opposition in the recent Australian election of a wish to reduce PNG aid is surely another.
But what if the Australian public takes up the matter of PNG aid as an issue?
PNG already receives a very bad press in Australia. Details of horrific incidents, in different senses of the word, of both high-level corruption and of law and order outrages make fairly frequent appearance and provide plenty of fuel for those wishing to portray conditions in the country in as bad a light as possible. Three-year term democratically-elected governments ignore popular issues at their own great risk. Populist moves on aid cuts, especially at a time of recession, might oblige an Australian government to be much more forthright in its dealings with PNG.
Australian Ministers noticeably place law and order issues at the head of their list of concerns about PNG society. Invariably, the concern is phrased in terms of creating a favourable climate for foreign investment, and for ensuring those mining projects do come on and stay on line, and I'm sure there is no reason to doubt the genuineness of that sentiment when one reflects on that billion dollar annual outflow to Australia which is at stake, but there must surely also be some mighty shivers of apprehension of the consequences for Australia-PNG relations of a groundswell of anti-PNG populism. Not least for considerations of Australian security, but I will deal with that below under a separate heading.
What are PNG's options in a serious confrontation with Australia over aid? Not many!
For major bilateral donors, PNG would have to turn to the US or Japan. Her experience of both in the past has not been over-encouraging. True, the first meeting of a PNG prime minister with an American president in May this year was celebrated with the signing of an economic and technical co-operation agreement, but this could hardly be the foundation for the kind of support Australia presently gives PNG.
In an interview given to Pacific (Vol. 9, pp. 62-65) in mid-1984, President Reagan emphasised that US aid to island territories outside its traditional sphere would be only to supplement the large programmes of Australia and New Zealand. There has been no indication that this has changed under President Bush. Indeed, to change policy would undoubtedly bring howls of protest from those US Pacific territories already complaining that Washington was not helping them enough. Moreover, the US has invariably been fiercely protective over trade, the most recent example (April) being its demand that Fiji cuts its exports of nightwear garments which were disrupting the American market. No comparison to Australian open-handedness promised here.
As for Japan, well I have already commented elsewhere on the Janus characteristic of the Japanese. From their Foreign Office, we are overwhelmed with their assurances of help and support and their concern for the island peoples of the Pacific. From their commercial interests, we find out, usually later than sooner, the price to be paid.
No, PNG's only viable option would be to knuckle down and do what it is always asserting that it is seeking to do, and what Australia has always been asking it to do. In the words of our Prime Minister, at the time Foreign Minister: "... we have always maintained that the strongest incentive we can offer (the foreign investor) is an attractive business climate based on sound economic management and political stability" (1983 speech in Port Moresby).
PNG's POLICY TOWARDS INDONESIA: THE AUSTRALIA STICK?
So it would seem. And endorsed only recently by a Human Rights journal exposure.
Tapol, a London-based organisation, in its April issue had an account of an interview with the PNG Consul in Jayapura. The Consul is reported as stating that it was the Australian Embassy in Jakarta which played the dominant role in the handing over of seven West Irianese who had sought refuge in the consulate last year. "... This was the way most major decisions affecting PNG-Indonesia relations were made", he was supposed to have said.
That PNG follows an Australian lead in its relations with Indonesia, I think few of the informed in Port Moresby would doubt. But how much is that big stick in evidence?
There is an undoubted hypocrisy in Waigani's attitude towards Irian Jaya, which is given high profile by its resolute condemnation of French policies in New Caledonia against the interests of the Kanaks.
But the hypocrisy is based on principles, the policies are based on facts. Waigani has no desire to tangle with its 170 million populated giant neighbour. But nor does it want the complications, expense, and further threat to its stability of the presence in its own territory of a Melanesian rebel and terrorist group (which, of course, it has now got anyway, though in the east not the west, but which makes the presence of a second group even less welcome).
The big stick flourished by Australia is then, a more than useful cover for Waigani; one that saves it the considerable embarrassment of having to be more explicit about its relations with Indonesia and its attitudes towards that country's internal policies towards its Melanesian population.
There are some indications of a more determined move in this direction by Australia, despite the embarrassment of its neighbour's brutal ethnic policies. And Canberra has shown itself ready to persevere even at the cost of international unpopularity among the more high-minded. Thus, the recent signing of the treaty with Indonesia for an agreement on oil exploration and exploitation in the seas around East Timor -- which brought crowds of protesters to the High Commission in London, including the British Labour Shadow Minister for Overseas Development.
While PNG need hardly fear that friendly relations between her two big neighbours will provide Indonesia with carte blanche to deal with her as she thinks fit, a consistent PNG foreign policy would become a much tougher prospect. Should those friendly relations continue to blossom at the same time as PNG's own instability grows apace, then possibilities of joint Australian-Indonesian action could become far less unthinkable than they are now.
But there we are back again with Australia's natural enough concern with its own security.
CHANGING SECURITY CONCERNS
Doubtless, there are still many who would agree with the USA's ex-Secretary for Defense Caspar Weinberger's statement in a recent BBC interview that the present situation in Lithuania presented a very real threat to world peace. But to many of us, the sweeping events of the past year have brought conviction to underline the hope that things are changing, that the grim shadow of nuclear holocaust from the confrontation of the two superpowers is fading in the brightness of a new optimism for humankind.
In the islands, we had maybe discounted that shadow more than anyone else, anyway. We had to! How could we worry about American and Russian nuclear bombs on Washington and Moscow, when the far greater threats to our existence were French nuclear tests and Japanese attempts to dump nuclear fuel in our ocean, not to speak of the Asian Tigers' commercial savaging of our environment, American Brigadier Marvin Covult, Deputy Director for Strategic Planning and Policy, US Pacific Command, who came through Port Moresby at the beginning of the year on a swing through the Southwest Pacific, had few listeners and little sympathy for a message that preached containment of Russian military designs, but freedom for Japanese commercial expansion.
But in many ways, we in the Islands were beginning to benefit from the superpower confrontation; for Russian commercial interests in our neighbourhood brought the USA running and willing to please in a way that the maraudings of its friends did not.
Is our loss, our friend's gain?
Australia was and is a certainly not insignificant part of America's grand global strategy for containing Russia. And Canberra must undoubtedly have become concerned at the enhanced interest Russia began to show in the Southwest Pacific and in its courting of the island states with the promise of commercial benefits.
But there are dangers to Australia other than the obvious military ones that she might deem posed to her by Communist or Indonesian influence in PNG. These are the more insidious, indirect threats to her society contained in the activities of international crime, drug syndicates, international terrorist organisations and the countries and their amoral leaders who back them; threats which receive a paragraph all of their own in the Joint Declaration of Principles.
Australia's concern for the setbacks to PNG's progress towards economic independence, which instability and lack of discipline and order are effecting, must be matched by the concern she has for the likely disrupting effects to her own society of the failure of successive PNG governments to rein in on a reckless ride which threatens ruin and disunity to its people.
* * *
I can now answer my own question. While it behoves PNG to take precautions against changes in the relationship coming from the Australian side of the partnership, the constancy of Australia's support is ultimately assured by her own self-interest in a stable and prosperous PNG.
I don't think, however, that is in any way a satisfactory or a safe basis for our relationship. Times can become a lot harder, a lot tougher, for PNG. Even if we can be assured of continued Australian support, we are better off if we have her sympathy as well, as I hope I have demonstrated. The confidence of that sympathy will be very important to us in the trying times we will doubtless have to experience in the hard trek along the road to genuine independence. One of those trying times is with us now.
BOUGAINVILLE: A THREAT TO THE RELATIONSHIP
I am not seeking in any way to deal with the Bougainville problem exhaustively. Clearly, it has had, and is likely to continue to have, serious consequences for PNG's social, political, and economic spheres. The successful armed action to close the Panguna Mine, and the ousting of all proper authority (that of the Provincial Government is now only nominal) by a band of rebels have already begun to incite provincial orators around the country to promises of similar actions if they don't get "for their people" what they are demanding.
What I wish to highlight are the implications of some not-so simple aid "algebra".
Consider the following equations:
- Rest of PNG + Bougainville = X million $Aus aid
- PNG - Bougainville = X + 20 million $Aus aid
- Republic of Meekamui = Y million $Aus aid
- Rest of PNG + Rep. of Meekamui = X + 20 + Y million $Aus aid?
OR
- Rest of PNG + Rep. of Meekamui = X million $Aus aid?
(Australia gave PNG an extra $20 million budgetary aid in May).
It is self-evident that the Governments of Australia and PNG share a common interest in ensuring the Republic of Meekamui is not created, or, at least, not recognised by the international community. (The Bougainville Republican Army declared the establishment of the independent Republic of Meekamui on 17 May, while Prime Minister Namaliu was attending the multilateral World Bank Consultative Group talks for PNG in Singapore).
For Australia, the prospect will be, on the one hand, continuing demands from PNG for higher aid rates to make up for the loss of revenues from the Panguna Mine; on the other, demands from the new republic for a long-term aid program for it to properly establish its government.
While Australia can presently ignore the threats in Sam Kauona's rhetoric of alternative calls for "communist" aid and for a return to the traditional life (in which aid would not be needed), it could not (see the discussion above on its security concerns) leave Meekamui be if PNG recognised its independence. At the same time, it would undoubtedly be political suicide for any Australian administration to propose any kind of double aid package which did not provide support for the new republic at the expense of the PNG aid program
For PNG, the prospect is that she will be informed regretfully enough, maybe, that the Australian aid cake is a fixed one and that it will have to be shared with her newly-created neighbour. In other words, in recognising the Republic of Meekamui and acknowledging the permanent loss of the Panguna revenues, PNG would find herself less well off in aid support from Australia.
The negotiations between Waigani and Canberra to bring about that state of affairs would undoubtedly be protracted and bitter.
THE FUTURE OF THE RELATIONSHIP
I have already indicated my own belief that PNG can run a danger in making assumptions that Australian attitudes towards the relationship will be unwavering. But, equally, the ties that bind Australia to us are strong: moral, historical, geographical, economic -- yet they all pale before the security needs of its society and population against the insidiously disruptive forces of modern times which could find in an unstable, misgoverned, corrupt-ridden PNG a choice breeding ground.
The current magic year of mutually beneficial and equal status economic interdependence is, as I have pointed out, 2005. But there are an awful lot of misgivings about the mining and oil boom; and without its success, that 2005 horizon abruptly recedes into a far distant haze.
The misgivings are nicely balanced over whether, with uncontrolled landowner demands and regional secessionist threats, the projects will, indeed, come on line, and, with the Nigerian example in the forefront of everyone's mind, what will be the impact on an already weak and undisciplined system of administration of the sudden onslaught of mineral wealth when they do come on line.
Stability, discipline, a guiding hand, both firm and fair, these are the qualities that Australia would dearly like to see in a PNG government. But they are the very qualities that most of us in PNG also would like to see in our government.
The Economist tells me (28 April) the Labour Opposition in the UK is preparing a program of constitutional reform (in anticipation of a general election triumph) to legislate against Bagehot's "most dangerous of all sinister interests", a too-powerful Executive. Our problem in PNG is the exact opposite.
Since the reduction of the once all-powerful Pangu Party and the loss of its stabilising effect, we have been infected with a too-weak Executive which is now enshrined in our constitution and which needs two-thirds or three-quarters majorities to be changed. Unfortunately, the backbenchers on both (or rather all) sides of Parliament, whose support is needed for those majorities, constitute the very group which benefits most from the present system and which stands to lose the most from the reform. (Thus the immediate reaction of backbenchers to the mooted Grand Alliance for National Salvation earlier this year was a call for backbenchers of all parties to hold a meeting to oppose and condemn such a dastardly political trick!)
My own attempts when a Minister in the 1982/87 Parliament to introduce a small program of reforms aimed at strengthening the executive without undermining the democratic basis of our nation were all miserable failures. I was defeated by sheer indifference.
In the most unlikely event of Australia ever seeking to interfere in our internal affairs by making her aid conditional on a cleaning-up act, then I would certainly hope her focus would be on the area of constitutional reform. For without doubt, it is here, at the centre, that the roots of our worst troubles are to be traced and their remedies are to be found. And, believe me, while our officials might bare their teeth, and leaders might snarl for the benefit of public consumption, Canberra might be astonished at the support she might receive from ordinary Papua New Guineans in helping the country achieve the overthrow of a political system which has become monstrous in its concentration on numbers games at the expense of considered policy and the health of the community.
But much better that we can manage to do it ourselves. I have not given up hope, and nor have some of our leaders. But please let the reforms come soon.
(I have just heard of the latest Australian academic's warning, at an Otago, New Zealand conference, of the likelihood of a military coup in PNG, a statement, I fear, aimed at publicity rather than truth. It is interesting, nevertheless, to speculate on what exactly would be the feelings of the Australian Government should such a coup take place and establish an effectual military administration. I have strong suspicions that, faced with a fait accompli, those feelings might well be of regret and relief -- but, to be fair, I think in that order).
FINAL WORDS FROM A PRIVATE INDIVIDUAL
I cannot say, in conclusion, that my comments after all make up an argument for or against any particular interpretation of, or direction for, the Australian-PNG relationship. The facts say we have to stick together; sentiments say we are going to stick together.
Perhaps, I should re-draw my kinship analogy. Maybe, we are more like tambu, a marriage relationship, though I will leave it to the anthropologists to draw out the finer parallels that suggests.
Not a traditional PNG marriage, of course. Nor a traditional European one, either, for that matter. Something much more modern, as befits an emergent nation like PNG, which despite its problems and its troubles, still can hold its head high and look for better days ahead. And they are there, and with support and patience and understanding from Australia, we can reach them.
Let's say an open marriage. Till death us do part?
BOUGAINVILLE RETROSPECTIVE
Amid all the debate about the Bougainville crisis, and comments that Bougainville Copper has been the "cause" of it, many people have lost sight of the important factors considered in relation to the establishment and conduct of the mining operation. This paper retraces some of the early ground in an attempt to put recent events more into perspective.
A GREAT DEAL of thought and effort was put into the development of policies and practices for the conduct of the operations, based on the experience of other companies in Papua New Guinea and other underdeveloped countries, and on the studies of anthropologists in Melanesia. It may be that in recent years we came to take things too much for granted, and were not sensitive enough to the changes taking place in the community around the mine, but certainly in 1988 and 1989, events in Bougainville moved much too rapidly for the company to influence them.
Significant copper mineralisation was discovered in the Panguna area by CRA in 1964. During the next three to four years a major program of drilling established that a large deposit of low grade copper-gold mineralisation existed. Engineering and financial studies further established that if the deposit was to be developed, a favourable and predictable fiscal regime would be required in order to raise the huge sums of money required (US$400 million). Virtually all infrastructure would have to be provided by the developing company.
Looking far ahead to the time when Papua New Guinea would be an independent country, CRA in 1965 offered the Administration, on behalf of the people of Papua New Guinea, a 20 cent equity in the development, to be taken up if and when a project was committed. Given that CRA was taking all of the risks on exploration and feasibility, this was an offer unprecedented in mining projects in under-developed countries, and to the authors' knowledge, has still not been matched voluntarily by any other company anywhere in the world. The offer was taken up under the terms of the 1967 agreement, with the Administration subsequently subscribing for its equity at the same value as CRA, despite having taken none of the risk to that time.
THE 1967 AND 1974 AGREEMENTS
In 1967 the embryo Bougainville Copper Pty. Limited reached formal agreement with the Administration of Papua New Guinea on conditions for the development of the Panguna ore-body. The agreement granted leases to the company, fixed a rate of royalty, and defined the tax regime which was to apply. In essence there was to be a tax holiday in the early stages of mine life in exchange for an escalated tax rate in later years. The concept (seen as equitable at the time) was to ensure financial feasibility of a marginal mineral deposit that was expected to become a significant contributor to the country's economy as it approached and achieved independence.
During the negotiation with the Australian Government representatives, Frank Espie (later Sir Frank, the first Chairman of Bougainville Copper) consistently maintained that what he wanted was an agreement which, while providing for a viable operation, would be seen as satisfactory by the first Prime Minister of an independent Papua New Guinea. In both Canberra and Port Moresby, the Government's best forecast was that such independence was unlikely before 1990.
By 1974 the political and economic environments had changed dramatically. Papua New Guinea had become self-governing with full independence imminent. In addition, profitability of the operation was much higher than expected as a result of an unprecedented increase in the world price of copper. (The price was to collapse in the following year, and has not since returned to its 1974 level in real terms, although gold has done better). The result was denunciation of the 1967 agreement in the National Parliament and insistence that the elected Government demand "renegotiation".
The 1974 amendments eliminated the promised tax holiday shortly after it had begun, and placed the company on the normal corporate tax rate, together with an additional profits tax to apply during years when profits exceeded a certain threshold. The renegotiation was conceived and conducted by Papua New Guineans, albeit with some expatriate help. It was widely interpreted as evidence of a new nation's determination and competence.
The amended agreement was widely hailed as a model for developing countries, although it should be noted that had the amended conditions applied in 1967, the finance for the project would not have been forthcoming from the banks, because of the project's marginal economics. A 1974 report by Worldwide Information Resources, Inc. (WIRES) of Washington, D.C. stated, inter alia:
"The BCPL agreement provides a tax holiday and accelerated depreciation in order to encourage risk-capital investment in exploration and mine development. Without these special tax advantages to offset high risk, return on investment would have been unacceptable to private investors and the mine would not have been built".
The amended agreement was passed as legislation by the parliament of self-governing Papua New Guinea, and signed on behalf of the government by the then Chief Minister (Michael Somare).
The changes in the agreement resulted in an immediate increase in the financial return to the National Government, but not for those more immediately affected by the operation (the customary landholders and Bougainvilleans generally).
Company-government relations after the renegotiation remained cordial and cooperative. A valuable initiative -- how valuable has since become apparent -- was the independent government's establishment of the Mineral Resources Stabilisation Fund. Part of the government's revenue from the operation was paid into this in good years, providing a fund which the government has been able to draw on since the closure of the mine.
The 1974 agreement provided for review every seven years "with a view to considering in good faith whether this Agreement is continuing to operate fairly to each of the parties and with a view further to discussing in good faith any problems arising from the practical operation of this Agreement".
The first review was held in 1981. The company argued strongly that the Provincial Government should be a direct participant in the review, since there was much resentment in the province about the relatively small share of income it was receiving from the mine. The National Government, however, was prepared only to accord the Provincial Government observer status. This, plus the fact that there were no (other) major issues between the National Government and the company resulted in no amendments to the agreement.
The second review was due in 1988. However, despite the company indicating on a number of occasions that it was ready to participate in the review, no review was held. Again the National Government indicated that it was not prepared to have the Provincial Government as a participant.
VILLAGE INVOLVEMENT
From the earliest exploration, the company's ambition was to ensure that the people within the Prospecting Authorities on Bougainville benefited from any development which might take place. For this reason a Community Relations Department was established employing people from the surrounding villages, particularly Guava, Moroni and Dapera. These people were used to keep the villagers informed about the company's activities. As operations developed the villagers were offered:
- employment for those who wished to work for Bougainville Copper and had reached the necessary standard of education required;
- access to the company's Business Advisory Service for those who wished to establish businesses that might develop as a result of the company's presence;
- agricultural assistance for those who wished to take advantage of the increase in demand for primary produce.
This service was subsequently extended by the appointment of Village Relations Officers towards the west coast and including Boku and Buin, now for the first time linked to Kieta by the mine road over the central mountain jungle. Emphasis was on regular communication with all villages in the area and this was done either directly, through the various Missions or through meetings of the Local Government Councils.
Employment and training succeeded, as we describe below. The Village Relations Program, which was started with the best of intentions, failed because:
- The Village Relations Officers, even when Bougainvillean, were seen as "spies" and asked to withdraw.
- Many village people employed by Bougainville Copper were successful, moved into company accommodation and not infrequently married outside traditional Bougainville societies. Such people were seen by those left "back in the village" to have forgotten their roots and village obligations.
- Others who were successful in business enterprises went their own way, and were also looked on with envy and resentment.
The situation was further aggravated by the necessity to re-locate people from Moroni village and Dapera village. Every effort was made to persuade both groups to move out of the Valley to a neutral area because the company recognised the effect of continued and increasing disruption. Unfortunately, the village people could not be persuaded to move, with the result that they felt more and more the impact of the mining operation as time went by.
COMPENSATION
Policies for compensation for land use on the scale required had to be established in a virtual vacuum with little precedent to call on throughout developing countries and virtually none within a Melanesian environment. Acquisition of land from the local people was solely the responsibility of the Administration, and expatriates were explicitly excluded by statute from such transactions.
The influences operating on the compensation issue during the exploratory phase have been summarised by H.F. King (1978) as follows:
"The landholders who fear that their land may be utilised for the benefit of others without any benefit to themselves.
"CRA, with a large exploratory investment in the area, anxious that land acquisition should not leave a sense of grievance.
"The Administration, refusing to consider that any part of the income from minerals, e.g. royalty, should go to the landholder, but wishing to amend the compensation provisions in favour of the local people".
The Mining Ordinance was amended in 1966 to give effect to occupation fees during exploration and mining, and compensation for damage to crops and economic trees, loss of surface rights and consequential damage. In fact the rates subsequently negotiated for these and additional forms of compensation were substantially higher than those set by the legislation and have remained so ever since.
Insistence by the Administration that land acquisition was a matter solely for them (a policy which had been designed to prevent exploitation of local people) changed when Rorovana villagers in 1969 offered resistance to acquisition of land for the port, and received Australia-wide media coverage. Thereafter the company was allowed to become more active in compensation and land acquisition matters, as it had consistently sought, though still under government supervision.
Compensation was comprehensively renegotiated, extended and increased in 1979-80, and incorporated in an agreement with landholder representatives which provided for escalation of compensation payments in line with inflation, and which was subject to renegotiation every five years. The 1979-80 agreement also provided for part of the increased compensation money to be paid into a trust fund (the RMTL Trust), administered by landholder representatives, aimed at securing the long term prosperity of the community rather than the short term affluence of particular recipients. By 1989, compensation payments were at the rate of K2.1 million per annum, and had totalled K21 million since 1969, exclusive of landholders' share of royalty (K3 million).
EMPLOYMENT
The company, the Australian Administration and later the Papua New Guinea Government saw Bougainville Copper as an operation which was established for the benefit of the country as a whole. For this reason it was felt that employment opportunities should be available for people throughout the country and that generally speaking people would be offered employment according to their qualifications irrespective of their district of origin. However, it was also recognised that as the company was located on Bougainville, there would be a higher proportion of Bougainvilleans than anyone else. What this proportion would or should be was not known, but early in the recruitment campaign an arbitrary objective was established of 40 per cent Bougainvilleans and 60 per cent other Papua New Guineans in the local workforce. In the event, by normal recruiting criteria, employing the best person available, the percentage worked out to be in the range 30 to 40 per cent Bougainvilleans.
The rapid localisation of the BCL workforce which occurred as a result of the company's extensive training program was, at the time, unique in the annals of mining enterprises in developing nations. By late 1973, only 18 months after commencing production, 76 per cent of employees were Papua New Guineans (WIRES report). Over the years the proportion of national employees averaged about 80 per cent, and by 1989 had increased to 83 per cent. In addition, a number of service activities manned entirely by nationals were spun off as private businesses, so that in reality the degree of effective "localisation" was higher than the statistics suggested.
It should be stressed that in the pre-independence period, BCL was seen by many expatriates as both un-wise and over-optimistic about the ability of PNG nationals to acquire and continue with complex work skills. The company did not share that view and of course its judgment has been vindicated.
TRAINING
From the very early days of exploration and from studies made in other developing countries, it was realised that the key to the localisation program lay in proper training. For this reason, special efforts were made to have an effective training schedule for every new employee. Some training programs might last a matter of days, others weeks and some months or even years. The most effective on-site training applied to tradesmen of whom some 80 to 90 were turned out each year. Of these, approximately one third after a period left the company to start up their own business or to seek employment in other areas of the country; one third proceeded with additional training within the company, either as supervisors or technicians; and one third were retained as tradesmen. As there were up to 800 expatriate tradesmen working for the company, it was recognised that the effective one-to-one localisation rate would be slow. For this reason, additional training courses were introduced to train people on various specific maintenance jobs such as truck maintenance, shovel maintenance, etc. Although these people were not as fully qualified as expatriate tradesmen they were able to undertake specific high-skill tasks and thus continue the handover process.
Altogether the company has provided training for more than 12,000 Papua New Guinea citizens. Of these, approximately 1,000 have completed full trade apprenticeships and some 400 have completed graduate and post graduate studies under company sponsorship.
The training and employee development budget averaged about 12 per cent of payroll costs, and some 80 to 100 trainers were maintained at the mine's training college and operator training centre. Ten per cent of expatriate employees were employed full time in training.
As might be expected with the normal turnover of people, many Papua New Guineans who passed through Bougainville Copper's training establishment are now employed all over the country. It is commonly said that every driver on the Highlands Highway has been through Bougainville Copper's driver training school. This loss of trained personnel is recognised, but is seen by the company and recognised by many responsible members of Parliament as one of the company's major contributions to the country. In fact, the training effort was planned, at the start of the project, to be without any "strings", and to release a flow of trained workers to the national pool.
Former BCL scholarship-holders now make up an important proportion of the cadre of PNG professionals in government, the professions and in other major industry.
EDUCATION
In 1966, Papua New Guinea followed the New South Wales curriculum for both primary schools and high schools and so it was decided to follow what was then best practice for overseas employers. The company selected two students from Rigu at the end of Form 2 and sent them to Marist Brothers, Campbelltown, New South Wales. They were both successful students and completed their matriculation satisfactorily. However, their long period away from Papua New Guinea created a cultural gap which was never to be closed (they had elected to take their holidays with fellow pupils in Australia rather than return home). For this reason it was decided that in all future cases the company would provide education in Papua New Guinea to the maximum level available. If, on the completion of their training in Papua New Guinea, students showed outstanding ability they could then be sent overseas for post-graduate studies. It was thought that by leaving overseas education to a later stage both a potential "brain drain" and cultural disorientation would be minimised.
As is common in newly-independent countries, PNG departed from Australian education curricula in 1973 and introduced one thought more appropriate to local needs. The company has in turn needed to adjust its systems to ensure that national -- and especially more senior national -- employees attain skill levels which are internationally competitive in a number of technical fields.
BUSINESS DEVELOPMENT
Early in its operations, the company set up a business advisory service to help Bougainvilleans develop their own businesses and to help them take advantage of business opportunities presented by the company's activities. The 1974 agreement contained the following clause:-
"The company shall conduct its business advisory services under the general policy direction of a steering committee to be established by the Bougainville Provincial Government and the company shall, if such general policy direction requires, make its said business advisory services available on as widespread a basis as is reasonably possible to all areas of the Bougainville District".
The Provincial Government did not set up its steering committee, although consultations were held from time to time with the Provincial Planner.
Despite the lack of "general policy direction" from the Provincial Government, the company put considerable effort into encouraging landholders and other Bougainvilleans to provide business services to the mining operation. There were many disappointments along the way, with local business ventures failing financially or not winning work due to uncompetitive performance. There was also reluctance by local landholders to accept manual contracting work. As a result there was a gradual decline in the activity of the company's business advisory services over the years.
Despite this, however, there were over 200 businesses providing services to the company before the crisis. In 1988 the value of work awarded to nationally owned companies was approximately K30 million, of which K10 million went to Bougainvillean and K1 million to landholder owned businesses.
Not all business opportunities were within the management or capital capability of local or community groups, and provincial planners incorporated Bougainville Development Corporation (with provincial and community government shareholding) to develop middle sized ventures, often in joint venture with off-shore expertise -- e.g. commuter air services, steel fabrication, catering, furniture manufacture and lime burning.
In the early years people were encouraged to produce food for the company messes and for purchase by employees and their families. An agricultural extension team was employed, and an agricultural experimental station was established. Cattle, pig and poultry projects were started but subsequently failed because of the inability of the people involved to maintain the standards required to produce disease-free product.
Much greater success was achieved by village cash cropping (particularly cocoa) as the mine access road and other associated roads provided a means for the produce to find its way to market.
THE BOUGAINVILLE COPPER FOUNDATION
In the early days of development much thought was given to how Bougainville Copper could contribute to business, cultural, and sports development throughout the country. It was recognised that the company was already providing significant financial assistance to the Papua New Guinea Government through the payment of taxes, import duties, etc. but these would be used for the construction of roads, schools, hospitals etc.
How could the company assist with these other activities?
It was decided to establish a Foundation, initially with the grant of Bougainville Copper shares, to make donations and development money available. This Foundation was to be a benefit for the country as a whole, although with some emphasis on Bougainville itself. It was arbitrarily agreed that donations should be one-third to the Panguna/Kieta Sub-district, one-third to the North Solomons Province, and one-third to the rest of the country.
The finances of this Foundation were also to be developed by the establishment of a retail outlet to cater for the needs of the community. In early exploration days Bougainville was the "end of the line" in retail commodities as it was in education and health care. Villagers, even when they had cash money, had only the most limited access to staples such as rice, tinned fish and kerosene -- let alone other commodities. Variety was minimal, shortages common, price through both local "trade stores" and expatriate firms frequently exorbitant. The company was determined that should change, both in effective wholesale distribution and by a supermarket open to all -- not just to employees.
The intention was that once this supermarket was running satisfactorily, the Foundation would make 60 per cent of the shares available to Bougainvilleans and to national employees of Bougainville Copper. In the event, when shares were offered the local people acquired only around 20 per cent and subsequent efforts to encourage more local participation met with little success. Because of the poor response from Bougainvilleans, the offer of shares in Arawa Enterprises was made available to Papua New Guineans as a whole, but the response was still disappointing.
Despite special efforts to inform the people of Bougainville and Papua New Guinea generally of the true function of the Foundation, it received antagonistic criticism from the beginning. An effort was made to correct this problem some years ago by the appointment of a majority of nationals to the Executive, but this did little to overcome the criticism. The local national representation had the effect of increasing the level of donations to the North Solomons Province and reducing the donations to the other parts of the country. More recent moves to establish an Agricultural Foundation and a Medical Foundation, both of which were established for the benefit of nationals as well as expatriates, were also met by antagonism and misunderstanding. Clearly, in trying to put something in place to be of help in both the present and the future, in the form of the Foundation, we got it wrong. The large scale projects in particular were resented.
One of the common misconceptions about the Foundation is that BCL has drawn income from it. In fact the reverse is true -- the Foundation belongs to Papua New Guinea, and in addition to the original gift of assets, BCL has been subsidising it by up to K500,000 per annum by providing all the administrative services (until very recently) free of charge. Under the Articles of Association of the Foundation, it is not legally possible for funds to flow from the Foundation to Bougainville Copper.
INDUCTION
The training of the company's employees was extended to wives of both nationals and expatriates in the induction program. National wives were made aware of the problems of living in an urban environment, using electricity and budgeting for regular purchases from the supermarket. In some cases they had to be made aware of the method of cleaning an expatriate-style house because they had the habit of hosing everything out which, of course, rotted the timber floors. Expatriate wives were told of the accepted behaviour in the Papua New Guinea environment and were given basic training in pidgin which was useful for employing local village people or for buying goods at the local markets.
All company employees were put through an induction program, and tradesmen and front-line supervisors were taught pidgin. This was found desirable because, although most nationals employed could speak English, they felt more comfortable with pidgin if problems arose. It was, of course, essential for all those dealing with the village community to be completely fluent in pidgin. Some thought was given to the desirability of learning the Nasioi language, but as this was not a written language it was decided that this was impractical and that when necessary we would make use of Nasioi employees.
SHARING OF INCOME
Since the commencement of operations, the project has generated K1754 million cash for its "stakeholders" (apart from the repayment of bank loans which helped fund the original development).
This money has been paid out as follows:
| K million | % | |
| Govt. of Papua New Guinea | 1078 | 61.5 |
| Govt. of North Solomons Province | 75 | 4.3 |
| Landholders | 24 | 1.4 |
| Non-Government Shareholders | 577 | 32.8 |
| 1754 | 100.0 |
The Government of Papua New Guinea received its income from the project as corporate income tax, customs duty and other miscellaneous taxes, dividends, dividend withholding tax and employee income tax; the Government of North Solomons Province as royalties, taxes and non-renewable resources fund; the landholders as compensation and five per cent of the royalties; and the non-government shareholders as dividends.
CRA, the original project sponsor and the principal non-government shareholder, has received 22 per cent of the cash generated, from its equity interest of 53.6 per cent.
A NATIONAL PROJECT
Right from the beginning the Administration saw Bougainville Copper as a project for the whole emerging nation, a view which was endorsed by the House of Assembly, and later the Parliament of Papua New Guinea. This national orientation was retained by Parliament in the 1974 amended agreement and again by the Government in the 1981 review of the agreement. In the early years, in fact, the project was seen as a way of giving the emerging nation the economic and financial viability (together with continued Australia aid) to enable it to achieve independence.
The Bougainvilleans have always had a different view, seeing the project as principally for their benefit. This issue -- how the benefits should be distributed -- is at the heart of the Bougainville problem. By way of illustration was the debate in the House of Assembly about who should receive the royalty from the mining operation. Sir Paul Lapun, the member for Bougainville, argued that it should go to the province as a whole. The people in the Kieta sub-district argued that it should go only to the people in the Kieta sub-district, and the people from the Panguna area argued that it should go only to people in the Panguna area.
In 1982 the North Solomons Provincial Development Study showed that the lion's share of the economic benefits from the operation, apart from taxes and dividends, remained in the province, but this did not lessen demands from within the province for a greater share of the direct income from the mine.
CONCLUSION
The area covered by the company's leases for all purposes totals approximately 13,000 hectares. Of this, nearly 5,000 hectares has been used for the mine, waste dumps, tailings disposal, roads and towns. This is equivalent to about 0.5 per cent of the total area of Bougainville.
The population of the landholding families in the lease areas is estimated at approximately 5,000. These are the people whose lives and heritage have been most affected by the mining operation. Probably the most important single issue in the Bougainville problem concerns the impact on these people, and adequacy of the benefits they have received from it.
Development has been thrust on them, and its effects have been vast, even traumatic in some cases. There have been benefits for the landholders, in the form of educational and income-earning opportunities, access to health services and roads. On the other hand, some of them have lost land forever, and have had to live with the intrusion of the mine into their lives, with its consequent social and environmental impact.
This is the dilemma of all social change and all economic development -- there are gains and losses. The challenge is to balance the gains and losses as equitably as possible in the eyes of as many people as possible, over a period of time. That is the task for which democratic governments are elected.
REFERENCES
King H.F. (1978) -- "Discovery and Development of the Bougainville Copper Deposit" -- company report.
Espie, F.F. (1973) "Taim Bipo Taim Behain" -- The Julius Kruttschnitt Lecture, Aus. IMM, Brisbane.
"LOGIC IS A WHITE MAN'S TRICK":
THE BOUGAINVILLE REBELLION
IN AUSTRALIA'S high colonial days, when he assumed magisterial control of the portfolio of Territories (1951) and proclaimed that the Territory of Papua and New Guinea would not be ready for independence for at least 100 years, Paul Hasluck had little patience with the so-called "African analogy". He was to irritate students of comparative colonial systems and history by his insistence that TPNG was unique. (It was also not a colony but a territory -- and then only one, not two territories, although one was held in sovereignty and the other in trust).
Contemplating the last 18 months' events on Bougainville island in the province of North Solomons, (26) some observers, including a few of my African colleagues, are inclined to think Hasluck was right, even if he could not have anticipated that a "Melanesian Way" of approaching dire disputes would within two decades be introduced into modern statecraft. For example, secessionist flags were raised in Port Moresby itself and in the North Solomons in the months before Independence (16 September 1975). (27) In spite of advice from such authorities as the renowned Ugandan political scientist, Professor Ali Mazrui -- i.e. smite secessionists swiftly and severely! -- there were no treason trials, no lost lives and only minor violence on Bougainville.
I mention this at the outset of this article to emphasise my own Europoid fallibility in interpreting or even relating significant events and to caution readers that Melanesians may well think that any scepticism here is unconsciously based on quite ethnocentric, even reactionary, assumptions. Understandably they believe they are the best versed in their modes of communication and this partly explains why the most articulate ideologue of the "Melanesian way", now Papua New Guinea's Minister for Justice, Bernard Narakobi, demanded that Australian academics and other opinion-makers should mind their own business and leave his government and people to solve their own problems. Of course we Europeans know that in the media's global village this is impossible -- even for Papua New Guinea -- and in the zealous networks of international relations, transnational investment, environmentalism and human rights it is also regarded as undesirable.
As I write this in late May 1990, Papua New Guinea appears to have lost control of its richest province, North Solomons, where there has just been on 17 May a unilateral declaration of independence as the Republic of Bougainville. The accompanying "public holiday" for the province was easy to observe because its economy and public service have collapsed. Not only the emergency forces (army and police) but even the normal police contingent was withdrawn in late March. Probably at least 200 people have been killed. Except for eight hours on one September day last year the gigantic copper-gold-silver mine of Bougainville Copper Ltd (BCL) has been closed since 15 May 1989, its staff almost all stood down or dispersed into other branches of the parent firm, Conzinc Rio Tinto of Australia (CRA). The flag of the Bougainville Revolutionary Army (BRA) flies over the mining townships and the four square kilometres by 300 metre deep crater.
The mine may never reopen under BCL, which raised, at current prices, some A$2 billion to put it into operation. At the time of closure it was producing K450 million (Kl then equalled A$1.40) or 30 per cent of Papua New Guinea's annual export earnings, K315 million or 11 per cent of gross domestic product, 10 per cent of all goods and services produced, and direct and indirect taxes of K184 million in a K1.25 billion national budget. Directly or indirectly it employed 12,000 people in a slack labour market. A similar number have been trained, including 1000 tradesmen, and 300 graduates sponsored by the company in Papua New Guinea and overseas, without the obligation of remaining with the company. Since it began production in 1972, BCL has generated an income of K1.754 billion of which K1.17 billion (67.2 per cent) has gone to the government of Papua New Guinea (61.5), the provincial government of North Solomons (4.3) and landholders (1.4). Non-government shareholders, of whom relatively few would be Papua New Guinea residents, have received K577 million (32.8). From its equity interest of 53.6 per cent CRA has received 22 per cent of cash generated. (28)
Not only loss of income but damage to the mine and urban installations, looting of plantations and general vandalism have brought losses to hundreds of millions. Income from minerals will not be the only loss if secession holds, as the North Solomons produced 45 per cent of Papua New Guinea's cocoa, was the second highest producer of copra and a minor exporter of logs.
In January 1990 the economic straitening that had to follow caused a 10 per cent devaluation of the kina. The still buoyant budget of late 1989 has been partly submerged; loans and more aid have been sought; without extended aid the squeeze that is being felt at the moment would have developed into a partial asphyxiation by the end of the year, with added social and political problems for a country with only 10 per cent of its manpower in the modern sector labour force and only 12 per cent of its school leavers getting jobs at present. And this is just as the country seemed on the edge of a resources boom.
Meanwhile the morale of the security forces has been sorely damaged, and blame is laid on political interference for their failure to destroy the rebel leadership. The Papua New Guinea government's record on human rights has been sullied through the indiscipline of the forces and atrocities committed against civilians. Australia's increased military aid, which, in a clearly just cause, would be seen as routine, has led to charges of complicity in these abuses. In particular the loan of four helicopters flown by expatriates which, it was specified, were not to be used as gunships, conjured spectres of Vietnam. In its frustration, and last-ditch faith in "Melanesian" compromise, the government accepted the good offices of Amnesty International. A professor of Conflict Resolution from the University of Upsala, Sweden, arrived with a reputation for having investigated "88" relevant cases, none of them, apparently, in Melanesia. (29) There was no verbal datum on the number resolved but his successful efforts to organise a cease-fire did give the BRA its first taste of international standing. This no doubt contributed to the expectation that its UDI would find support elsewhere.
The security forces, however, were not withdrawn to an enclave in the province, such as the Arawa and Kieta township coastal strips, (30) but to mainland bases. Contrary to Cabinet's instruction not even the normal custodial police were retained on Bougainville. The Police Commissioner, Paul Tohian, who was overall commander of operations, withdrew them too, partly from pique no doubt, but also from a reasonable fear of a massacre, and he took his men out days before the ceasefire was to take effect. The last batch left on the same plane as brought in a group of rather astonished and then unguarded international diplomats who, according to one partisan eyewitness, were visibly moved that many of the weapons handed in (a few sophisticated rifles, second world war material, homemade shot guns, bows and arrows) were garlanded with ribbons and flowers. One can make a not over-shrewd guess as to where those neutralised arms are now, but certainly a more reliable one than about where the mediators thought the arms would go once the security forces were withdrawn.
Back in Port Moresby on the night of 20 March, Mr Tohian during a wassail is alleged to have rather bombastically radioed his officers that he was going to arrest government leaders. An alert sent them smartly to various sanctuaries. The army leaders stood firm as did Tohian's deputies. The Prime Minister declared an all-clear next morning and dismissed Tohian. Tohian had been drunk, he said. Tohian's intimates in the force were dispersed to the provinces. He was weeks later put on a charge of treason but, against the Public Prosecutor's representations, was allowed bail. There were cynics who thought Tohian's precipitateness had defused something more potent which was being planned by the army. There has been no evidence of this and with the elevation of Papua New Guinea's inaugural commander of the Defence Force, Ted Diro, to the Deputy Prime Ministership, soldiers and police may feel that their interests are amply represented now. There were intimations of an intent to reinvade and reclaim morale with troops landed on Nissan atoll within the North Solomons province but 250 kms north of BRA headquarters. If implemented, there would most probably have been a "Bay of Pigs" debacle and, worse, a rallying of even BRA's opponents in the province to the Bougainville colours. On 18 May it was clearly announced that the government would not seek a military solution. However, "selective economic sanctions" have been initiated and the public and business sectors have come to a near halt.
The government cogently made the point that the BRA had not genuinely sought a negotiated peace. Negotiations had stalled because an acceptable venue could not be found. Papua New Guinea had suggested Honiara in the Solomons Islands but the BRA, the North Solomonese premier, and the Catholic and United Church bishops until too late had fatuously adhered to Panguna, the minesite town, because it was the "epicentre" of the dispute -- a word that some observers thought betrayed a European amanuensis. What the BRA and its supporters had wanted was simply a conference of "equals" in which they might ease the government into accepting a fait accompli, their "non-negotiable" intent to secede. On 17 May the Prime Minsiter was in Singapore, the Foreign Minister Michael Somare, in Taiwan, and the Justice Minister, Bernard Narakobi, in New Zealand. During the first UDI in 1975 Mr Somare had played golf.
HISTORICAL BACKGROUND
Civil disobedience, inter-ethnic friction and secessionist sentiment in the North Solomons today do not simply date from the arrival of CRA in 1964. They were there already and no doubt would still be there without BCL, which has, however, catalysed them into something of greater dimensions and greater danger to the Papua New Guinea state. The self-image of North Solomonese had already been forged by ascription and colonial history.
The distinctive jet black colour of North Solomonese, which spills over into the western province of the Solomon Islands Republic, does not denote a different "race", as is too commonly believed in Papua New Guinea. Melanesia is characterised by a diversity of skin colours as well as a diversity of customs and languages. Inevitably, however, colour becomes a subject of jokes which turn into alienating pejoratives in times of tension, as the liberal usage by operational police of "black bastards" on Bougainville showed last year. "Redskins" is the local riposte. The assumption of the name "North Solomons" at the UDI of 1 September 1975 indicates the sense of being naturally a part of the Solomons archipelago. This is especially so in South Bougainville where relationships across the straits are maintained. The retention of "North Solomons" at the reconciliation of 1976 bespoke a determination to cleave to this identity and a wariness of integration and internal colonisation.
Not only do articulate North Solomonese speak resentfully of having been sundered from other Solomonese by colonial horse-traders in the 19th century, but they have an apparently unshakeable conviction that they were once under British sovereignty before being transferred to German control (followed by Australian and Japanese and Australian again and, finally Papua New Guinean). This is quite false, although it has credence among Australian commentators (31) and some North Solomonese seem to believe it may make a cogent point about the abuse of their rights before an international court of justice. Following the raising of the German flag in the Bismarck Archipelago and on the north coast of New Guinea, and the British flag on the south and south-east coast, both in November 1884, an Anglo-German Declaration in 1886 divided the Solomons into respective spheres of influence. The German sphere extended southeast of Buka and Bougainville islands in the Bougainville Straits to Ontong Java, Choiseul, S. Isabel and the Floridas. The British Solomon Islands Protectorate (BSIP) was proclaimed in 1893. The two powers adjusted their territories under the Samoa Conventions of 1899 when the Solomons was re-carved at the Bougainville Straits leaving only Bougainville and Buka Islands and their satellites within German control. (32) Thus, on this point of grievance, only the Floridas, S. Isabel etc have more cause for complaint than other parts of the region as to changes of overlordship. It is pertinent, however, that so much is made of it.
Because of their distinctiveness, North Solomonese were used from early contact days as plantation bodyguards, labour line leaders, police and trusted domestics. The relative superiority imputed to them (33) was absorbed into their self-image, but with it came deep resentment as men returned from labour abroad with only their trade boxes and no prospect of autonomous development. In the 1930s Buka Island, which is narrowly separated from North Bougainville and had supplied much of the early "overseas" labour, was seething with cultism and anti-European resentment.
When the Japanese arrived in March 1942 they were generally greeted as liberators until disillusion set in. The 20 per cent of Methodists and Seventh Day Adventists in the province adhered strongly to Australia during the war, but on Bougainville Catholics responded variously, no doubt influenced by whether their missionaries were German, Vichy French or American. (34) The Marist order of priests had no other missions in Papua New Guinea but had derived from the Solomons and Oceania. They had not inculcated a sense of loyalty to the Australian Administration. The mission generally could feel that they were the de facto government of the province because the Administration used its resources on more needy and "unpacified" areas of Papua New Guinea. Until the 1960s the missions supplied all the schools as well as most of the welfare. Competitiveness among them and outside resources created a larger proportion of Catholic mission personnel to population than in most other mission fields.
Because the war harrowed the North Solomons worse than most other parts of Papua New Guinea, the people generally withdrew their labour from foreign-owned plantations but, in spite of well-intentioned government sponsored co-operatives schemes, development was slow. The lack of conspicuous inputs from Port Moresby embedded a sense of neglect. The fact that the people enjoyed so-called "subsistence affluence" did not allay their frustration. In 1962 the United Nations mission was publicly asked to withdraw the mandate from Australia and give it to the USA.
In the same year the Hahalis Welfare Society on Buka Island, having declined to participate in local government, refused to pay head tax. Its permissive sexual ideology was a rejection of the Catholic Church for failing to consider the people's material as well as spiritual welfare, as well as signifying a revived sense of communal autonomy. The riot squad was sent in, a minor "battle" took place, and hundreds were arrested only to be released on a legal technicality. This moral victory was followed by government action to build a trans-Buka road which contributed greatly to local prosperity and obviously should have been built before. The Hahalis protest had at least three effects: it shocked the Catholic Church into greater concern for the material welfare of its flock; it alerted the mission to the need to assume the mantle of "justice for the people" lest, in schism and shame, it lost a jewel in its crown to cultists; it began a North Solomonese conviction that Port Moresby would act on their behalf only if its authority was threatened.
1964: Enter CRA, uninvited, into the Guava division of Central Bougainville, a quiet but cultic area where small-scale gold fossicking had occurred since 1930 with negligible benefit to villagers. CRA did not have to seek their permission to prospect and would have been discouraged from doing so by the authoritarian Administration. Police were needed to safeguard the company's surveyors who were told to leave. The arguments over mining have been different in the North Solomons. Elsewhere in Papua New Guinea the issue is one of who gets what rather than whether the transnational corporation should be there or not. The compensation to be paid to villagers was minimal: recompense for damage and inconvenience and, until 1966, not even occupation fees at five per cent of unimproved capital value.
Utterly incomprehensible to villagers in 1966 was the visit by Hasluck's successor, Charles Barnes, who crassly denied that villagers had any claim on sub-surface minerals, and stated peremptorily that this extraordinarily rich mine would be developed for the emergent nation as a whole and that locals were lucky because they could enjoy the multiplier effects. This ran counter to traditional notions of landownership. The American Catholic bishop and some of his more vocal priests, unused themselves to the rule of eminent domain, supported the villagers. A vigorous campaign by Paul Lapun, MHA for Bougainville, wrung five per cent of the 1 per cent royalties out of the government for the landowners against bitter Administration opposition. The Administration, however, would not relent when coastal villagers refused to accept the small compensation offered for the resumption of their land for town and port facilities in 1969. Another physical confrontation ensued. Again the villagers won, thanks to the media, Australian public opinion and BCL's fear of continued obstruction and even loss of face. (35) But the villagers were not reconciled to mining.
Meanwhile secession was advocated at a meeting of North Solomonese parliamentarians, public servants and students in Port Moresby in September 1968 and a corresponding nation-wide society was formed called Mungkas, after a North Solomonese vernacular word meaning "black". In April 1969 a secessionist political movement, Napidakoe Navitu, developed from the very area where the future president of the new "Bougainville republic", Francis Ona, found his first refuge. Rapidly it acquired members. (36) However, because a period of calm followed the favourable settlement of the coastal land struggle, it was blithely assumed by many officials and observers that secessionism had withered, particularly when Michael Somare incorporated all four North Solomonese MHAs into his National Coalition in April 1972. No serious consideration at the official level was given to the idea that the North Solomons could constitute a threat to the emergent state. The BCL mine was to be the pathfinder to economic viability and even its physical vulnerability was denied by its public relations officers. To treat the province in any special way was held to be dangerous and likely to fragment the new nation. For an observer with close connections with North Solomonese to state that even with decentralisation, the North Solomons might remain unreconciled unless Port Moresby was able to meet increasing demands, was to invite ridicule or even a charge of "stirring". (37)
However, at Christmas 1972 the chance payback killing of two North Solomonese public servants in the Highlands, following a car accident for which they were culpable, united the whole province in a call for secession from "uncivilised" mainlanders. Even then, however, Fr Momis was, as de facto chairman, steering the Constitutional Planning Committee towards decentralisation. During 1973 Somare had no choice but to put a tolerant face on the political mobilisation of the province led by the University graduate and former seminarian, Leo Hannett, and, faced with a threat of secession, he conceded an Interim Provincial Government which first met in January 1974. Given the lead in extemporising Papua New Guinea's second tier of government, the North Solomons demanded, in addition to a standard budgetary grant, the full mining royalties in acknowledgment of its special contribution to national revenue. They symbolised, for North Solomonese, some proprietorship over the minerals anterior to that of the modern state. The capacity of the Government to meet such a demand was greatly enlarged when the BCL Agreement of 1967 was most favourably renegotiated in 1974 and a surplus profits tax built into the new arrangements. This was a unique triumph for a Third World country and was to yield some two-thirds of BCL profits to Papua New Guinea up to 1989. Again there was symbolic value for the North Solomonese, this time in the humbling of what one of them called "the merciless intruder". (38)
Unfortunately, not only did a government preoccupied with the transition to independence and unstable coalition politics have difficulty with delivery, but there was obstruction in Port Moresby from officials who feared the prospect of provincial government and the North Solomons precedent. To expedite its claims when the royalties did not arrive, the North Solomons had threatened closure of the mine (e.g. by cutting off the water in December 1974). Finally, in April 1975 conflict over resourcing an interim government that was buoyant with plans and effective performance led to an impasse and then, in May, to a declaration of an intent to secede which was to be "non-negotiable". The unilateral declaration of independence for the Republic of North Solomons duly occurred on 1 September 1975. (39) The secessionist leaders did not seek arms from abroad, nor accept the offers made, although -- futilely -- Fr Momis, a reluctant participant, went to the United Nations to seek "self-determination". Hannett proclaimed his government non-violent and the mine was not attacked. In fact, he suggested a deal with the Papua New Guinea government over it.
In spite of "hawkish" advice in and out of Cabinet, Somare pursued a Fabian or "Melanesian" course. Eschewing shouts of "treason", he sought mediation and compromise. He took no military action against the rebels, concentrating on police action against breaches of law and order. The "rebels" would wither from inanition. It was an effective strategy. Some minor violence had to be whipped up on Bougainville in early 1976 to arrest the decline in local enthusiasm. Somare had not wanted to inaugurate the new nation with bloodshed and perhaps elevate the Defence Force to a menacing position in politics if it won, or relegate it to demoralisation if it lost. Public confidence was essential to foreign investment. It was also clear by then that the security of the mine could not be guaranteed. Former friendships and activities between leaders in both camps facilitated reconciliation, as did the preference of Momis and Hannett for unity, and the North Solomons was reintegrated with an elected provincial government in 1976.
It may be salutary to point out how unnecessary this conflict was. In spite of the clear omens, there was a failure to accept how deeply secessionist feelings ran on the one hand, and the weakness of the state on the other. The blindness of modernising and nation-building theoreticians (whether writing from the perspective of classical liberalism, Marxism or organic-statism) in assuming that ethnonational aspirations would be homogenised in those processes, had its impact on politicians and their opinion-makers, academic and otherwise. At the operational level, the matter was hardly considered by Australia, and Gough Whitlam apparently had the North Solomons within the same spectrum as East Timor. It should also be noted that the failure to regard the North Solomons as a special case led to the belief that provincial government on similar terms had to be granted uniformly throughout Papua New Guinea, whether individual provinces had the capacity and preparedness or not. (40) Consequently, waste, ineffectuality and corruption are rife in at least half the provinces today. However, this has not been true of the North Solomons. Today's crisis will not be resolved without treating the North Solomons as a special case. Had this been recognised in 1975, Port Moresby might have monitored signs of discontent and forestalled direct action by discreet and face-saving concessions.
POST-INDEPENDENCE DEVELOPMENTS
In the elan and development that followed the consolidation of provincial government, the festering discontent of mine site residents seems to have been obscured. Momis, Hannett and the first premier, Alexis Sarei, the three dominant provincial politicians, were then all committed to the integration of the North Solomons into Papua New Guinea, albeit on decentralised terms. Hannett and Momis became fierce rivals, with Hannett, as chairman of directors, successfully guiding the provincial government's business arm, Bougainville Development Corporation, into entrepreneurial activities, while Momis, a distributist more than a socialist, criticised him for following "the capitalist road" and neglecting the villagers' needs. Hannett's election to Premier over Sarei in 1980 spurred the organisation of Momis's radical Melanesian Alliance Party (MAP) which incorporated all four provincial MPs elected in 1977 and swept them to a further victory in 1982. (41) MAP was seen by North Solomonese as their ethnonational party but, dominated by Momis, it enlisted support across the country and promoted a broader nationalism. It also succeeded in toppling Hannett in 1984. What has not been satisfactorily explained for this period is why a seven-year review of the 1974 mining agreement did not occur in 1981, although there is epistolary evidence that both Hannett and Momis separately sought it and Momis was a senior figure in the Chan government. BCL was at the time willing to make some further compensatory concessions.
The felt inadequacy of the complex compensation provisions which had been set up had become clear in 1979 when the Panguna Landowners Association (PLA) was established to deal with them. Failing to win recognition from BCL, a demonstration was held at Panguna (the minesite headquarters) and the company supermarket was looted by locals who averred they were recouping only what was morally theirs. Compensation had been paid for matters ranging from resettlement to loss of crops, loss of fish in polluted streams, loss of hunting tracks, damage from blasting, recreation facilities etc. Perhaps 4000 people were eligible for compensation up to 1974. Payments totalling K21 million had been made during 1969-89. Payments last year were at the rate of K2.1 million per year, exclusive of landholders' five per cent share of the 1.25 per cent royalties (K3 million). (42) However, it was unequally distributed and often once-off, many payments being negligible. Another factor was population growth, one of the highest rates in the world, approximately 3.2 per cent per annum for the province. BCL agreed after the demonstration to review its compensation, and a new agreement set up a Road Mine Tailings Lease Trust Fund (RMTLTF) to clarify and consolidate what could be claimed and to provide greater equity. However, at the same time BCL ran down its Village Relations Office and this, plus a degree of ineffectuality in its localised personnel, caused a lack of communication between company officials and mine site residents and, with it, a failure to redress genuine problems. Some BCL officials have acknowledged that during the 1980s neither the compensation nor their concern had been adequate. A few senior personnel seemed quite out of touch. It must also be noted that the provincial government did not step in to bridge the communications gap with villagers. (43)
Problems also arose between the PLA of 1979 and the directors of RMTLTF, on the one hand, and younger, educated clansmen on the other. The latter accused the "old guard" of using the funds for their own benefit and being complacent about the needs of the less fortunate. Publicity that the Panguna lode would be exhausted by approximately 2005 AD, pressure from BCL to have the moratorium on prospecting (imposed in 1974) lifted, and the realisation that landowners in other parts of Papua New Guinea were to get much more generous deals from transnationals, led to a more radical appraisal of local deficits. So Bougainville really had been the milch cow for the new nation! The other provinces had approved the lower levels of compensation when only the Panguna mine existed, but now with the prospective boom ...? And within 20 years the land-owners in Guava would be left with that yawning crater and a polluted Jaba River that might take half a century to reclaim.
Fr Momis, during his 1987 election campaign, responded to this by formulating his Bougainville Initiative. Under the heading, "The Wild Pig Cannot Now Hide From The People", Momis demanded from BCL "a fresh start ... for self reliance and dignity" in the form of three per cent of its gross income or four per cent of net sales revenue. This could easily be saved if BCL were more efficient, he thought. This arrangement was to occur "outside the scope" of that between the national government (a 19.5 per cent equity holder) and BCL (whose shareholders were also apparently irrelevant). Momis accused BCL of transfer pricing, of "salting away K60 million a year [to] ... return to the smelters who buy our copper", although no informed commentator has ever, to this writer's knowledge, thought this possible. (44) BCL was also accused of inappropriate philanthropy -- here Momis was on surer ground -- through its business foundation which fostered "dependency" and deterred small-scale business. It is generally agreed that "the Bougainville Initiative" raised local expectations among people like Francis Ona. Further allegations were made by landowners in 1988, that BCL was selling on the black market gold which had been scraped from the bottom of the ball mill every three months and exported to Melbourne in specially chartered ships. BCL could only deny such charges. When Momis and MAP, by supporting Somare and Pangu Pati, failed in 1987 to gain a place in government, a redress of grievances must have seemed to Ona impossible.
Of marginal significance was the resignation of Sarei as Premier in late 1986, ostensibly because of ill health, but in reality, it would seem, to contest the provincial seat in 1987. He had become very critical of Momis and was expelled from the MAP before being trounced with only 17.6 per cent of the vote to Momis's 70.8. His deputy, Joseph Kabui, who comes from a tailings area and speaks the same vernacular as Ona, became premier in June 1987 and was confirmed in this position at the general election by a province-wide vote in 1988. His opponents were Hannett and a former MP from MAP. (Something of a trimmer, Kabui was beaten up in 1989 by both the BRA and the security forces. He is currently Minister for Justice in Ona's Interim Republic of Bougainville government).
In August 1987 a younger group from the mine site formed a New Panguna Landowners Association (NPLA) and set about trying to depose their elders whom they saw as failing to employ trust funds in the general interest. They were supported by Kabui. Two PNAs were then in existence. In March 1988 about 300 people petitioned BCL for more benefits for both the provincial government and the landowners. On 5 April, a week following a meeting convened at BCL's request, at which representatives of the Wingti government did not turn up, the NPLA wrote to the Managing Director demanding K10 billion compensation, 50 per cent of all future profits and the ownership of BCL to be transferred to landowners and the people of the North Solomons within five years. Frustrated by lack of response to such impossible demands, villagers blocked access roads to the mine for 12 hours on 12 May until blocks were removed by police.
On 4 July, the Wingti Government was replaced by that of Rabbi Namaliu, in whose cabinet Fr Momis became once again Minister for Provincial Affairs, and another MAP member Minister for Mines and Energy. Soon after, they visited Panguna at the request of the landowners and provincial government and commissioned an independent review. On 18 November the Applied Geology Associates Limited of New Zealand reported its preliminary views to a seminar in Arawa. Without minimising the environmental damage, which was greater than could have been conceived by villagers in the 60s, (45) it nevertheless could find no evidence that chemical pollution (which villagers can smell) had depleted wildlife or horticulture or that it was the cause of medical problems, some of which (e.g. obesity) stemmed from a change in lifestyle. (46) To Francis Ona, secretary of the Landowner Executive, this was a "whitewash". Obviously there would be no compensation on that front. He stormed from the meeting and three days later resigned as a surveyor with BCL. The security incidents which had grown in October swelled into full-scale arson and terrorism in an attempt to close the mine. The AGAL's scientific review, instead of being an irenic gesture, deepened the villagers' sense of a conspiracy against them. "Logic is a white man's trick", remarked one.
VIOLENCE AND THE MAJOR INSTITUTIONS
Ona took refuge in the Kongara mountains, not far from Panguna, with the enduring Bauring cargo cult. With its own "fifty toea" government, the cult had declined to acknowledge either the national or provincial governments. It had also opposed CRA/BCL, had perhaps 1,000 supporters, and was the font of Napidakoe Navitu in 1969. Ona was not explicit about secession for some time but the omens and rumours (not to mention history) were there to be interpreted. The fact that he was married to a "redskin", as was his "cousin-sister", Perpetua Serero, the matrilineage spokesperson for the NPLA, was no guarantee that he was not dedicated to the general removal of non-North Solomonese from the province. They were held responsible for most law and order problems, for squabbling and for depriving North Solomonese of jobs. 21 Demands escalated to 50 per cent of BCL's revenue since 1972, as well as its expulsion and the K10 billion compensation for environmental destruction. A referendum in the province on secession was also demanded. This lack of realism should always have called into question Ona's preparedness to negotiate.
The Prime Minister, however, who was Somare's adroit troubleshooter in 1975 and who was sympathetic to the villagers' concerns, was generous and inventive in his efforts to effect a compromise. In May 1989, he offered a peace package in which the government's equity in BCL was offered to the provincial government, the landowners were offered more compensation and an increase in royalties to 20 per cent, and a compensation package of K200 million was to go to the province over three years. The Security Forces, however, did not relish Namaliu's tentativeness in prescribing limits to their search-and-destroy strategy. They believed that on several occasions they had the BRA leaders in their clutches but were foiled by Cabinet directions. There was criticism of the half dozen separate committees that were established to find solutions -- and failed lamentably. Moreover, Momis and MAP members were in government, votes of no confidence were threatened by the Opposition, and MPs could hardly have expected to win favour by advocating punitive action. In any case the security forces, understandably frustrated in a frightening guerrilla war amid an unfriendly population, could not resist suspecting and ill-treating civilians. They revealed a disturbing degree of indiscipline and even lack of co-ordination at higher levels. Any chance of winning hearts and minds perished as a list of atrocities grew and with it the sense that "Bukas" (as all North Solomonese are generally known) and "redskins" really were incompatible. Non-North Solomonese gradually fled the province.
The Opposition proved barren. The most that Wingti, normally a decisive Highlander, could say by October was that the Defence Force should be withdrawn and that the matter really had in the first instance been only a law and order problem, and had been mismanaged. There was not only an understandable reluctance but an inability to recognise the nature of the North Solomons problem. Opposition member Utula Samana, the most articulate radical in the country, believed in mid-November that a referendum should be held in the North Solomons because it would register against secession. People from his mainland province resident on Bougainville, however, had to request that Samana cease expressing sympathy for Ona because they feared for their lives. Ona had became a cult figure, with radical elements assuming that he was initiating a national struggle against dependence, inequality and corruption. John Kaputin, with Momis a "father" of the national constitution and once a radical spokesman of the Tolai Mataaungan Association, called Ona "a national hero". Ona's elusiveness and mystery, for so little was known about him, created a Ramboesque reputation among insecure and footloose youth -- and the romantically inclined, disillusioned not-so-young.
This was given some credibility on 2 November when, in breach of the National Broadcasting Commission Act which forbids the "entertainment" of rebels, a voice purporting to be Ona's rejected Namaliu's peace package as "rubbish and dust" from BCL and just part of the "white mafia's" rip-off of national resources. Even Momis and Kabui were "blind" and in the coils of the multinational. The white mafiosi, Ona said (as do many other disgruntled Papua New Guineans), cannot gel jobs elsewhere, suck the country's blood and have made Papua New Guinea "a dumping ground". Australia had deliberately set up a dependent economy. The peace package did not address the country's basic problems because it would benefit only a few people and not, in general, the "have-nots". The tape, as broadcast, said nothing about secession and could credibly have been a statement by the University-based Melanesian Solidarity Front. Today, however, it could appear naive to believe that Ona was saying anything more than: "Our two separate 'nations' have similar problems". The North Solomons will provide an interesting case study in ethnonational literature, especially in relation to the predispositions of observers and analysts.
Throughout the 1980s the Provincial Government itself had not addressed the villagers' grievances, probably in the hope that they would provide better leverage in dealing with the National Government. Premier Kabui and his government, many of whom were secessionists but feared the consequences of Ona's rebellion, wanted to accept the Namaliu peace package. A provincial Select Committee recommended in May 1989 inter alia:
- that Papua New Guinea adopt a Federal Government system and that State Governments be granted "full powers to manage all political, administrative and economic affairs including finance, taxation, foreign trade, police, registrations, laws and all public services except defence, currency, foreign exchange and foreign policy";
- that provinces retain 75 per cent of all revenues generated in the province through direct and indirect taxes;
- that the "sovereignty" of clans over their territory should be recognised and prospecting authorities issued only with the consent of landowners and their provincial governments and only to acceptable persons or companies;
- that there be no foreign ownership of land in Papua New Guinea;
- that BCL can continue mining provided the present agreement is renegotiated "in favour of the land-owners and the province and is seen as an agreement between landowners, the provincial government and the national government";
- that BCL's prospecting authorities be cancelled and mining continue only if controlled by the provincial government;
- that BCL should not be involved in business activities that compete with local people and a timetable, say five years, should be set for localisation of management positions;
- that some compensation be paid in lieu of the K10 billion kina demanded;
- that squatter settlements be abolished; non-North Solomonese not be recruited or processed for employment within the North Solomons; legislation be enacted to control freedom of movement;
- that a separate public service and police force be established for the province. (47)
As the basis for a settlement, this was not given a chance, especially as the provincial government declared itself against secession. The intent of the BRA should have been clear, by September when John Bika, the Chairman of that select committee, himself a provincial minister, was assassinated in his home in front of his wife and children by BRA henchmen. If they had not gone already, many moderate North Solomonese prepared to go into exile. In 1990 not even the MAP MPs could go home.
In the middle of such atrocities one might have expected moral leadership from the diocesan Catholic Church which has held such influence in the province. However, at the obsequies of John Bika, Bishop Gregory Singkai was more remarkably non-committal than even his previously even-handed attitude to the fifth commandment ("Thou Shalt Not Kill") would have suggested. If there is one achievement for which the Christian missionaries have been generally commended, it is their contribution to peace. There is, in fact, a Catholic Commission on Peace and Justice in the North Solomons. However, one spokesman appears to be an American priest who last year mendaciously pronounced that BCL had actually killed hundreds of people. BCL challenged the statement; there was no reply. Another American priest, noted for his opposition to BCL's presence in the '60s, assured a journalist that the BRA were not really shooting at people but at the mine! The Justice and Peace spokesman asked recently whether the government would "take responsibility for the destruction of the K900 million worth of mining equipment and assets of BCL" if fuel shipments are halted, because it would then be impossible for the BRA to protect it! (48) Singkai has always been a secessionist. Something epical was suggested in June when his portly elderly frame struggled into the mountainous Kongara allegedly to preach peace to Ona. One account has it that there his life was threatened. His report to the Prime Minister recommended an amnesty for Ona and, it is said, statehood in 18 months and independence in five years. After that, his main plea was the withdrawal of the security forces. Singkai was offered the Education portfolio; in Ona's Interim Government it has been deputed to a Catholic Church nominee. Understandably, in view of the feudal structure of the Church, the Conference of Papua New Guinea bishops has only fraternal influence. But until recently it has seemed unnecessarily reticent in remarking on the North Solomons violence. The metropolitan, Sir Peter Korongku is, however, himself North Solomonese. The Bougainville Diocese is now protesting that a total blockade is "in-human" and contrary to charters of human rights. "Peace-loving, peace-seeking persons who want a negotiated settlement ... can only despair" it says, but while conjuring spectres of starving and deformed children, there was no mention of the suffering of the unemployed or the actions of the BRA in expelling "redskin" parents and "mixed race" children, while refusing to allow "Buka" spouses to leave the province. (49)
THE FUTURE
It is almost certain that no state will recognise the Republic of Bougainville. The Solomon Islands Prime Minister has expressed his opposition and warned of the dangers such a republic poses to his own country, whose Western province people are black-skinned and have such traditional connections that at least in the seventies many called themselves "Bougainvillean". (50) Vanuatu came to independence in 1980, harassed by a secession movement on Santo Island which the Papua New Guinea Defence Force helped to put down. The Melanesian Spearhead Group should therefore remain coherent on this issue. While Indonesia is sensitive about secessionism -- equating it with communism in 1975 -- it is unlikely to be too perturbed unless Papua New Guinea collapses in anarchy -- which is a different issue. If the Organisasi Papua Merdeka in Irian Jaya were to reassert itself vigorously, Indonesia could conceivably insist on the concession of hot pursuit into Papua New Guinea from a state with an even further weakened defence force. Yet if the OPM, with more international sympathy, attracts little support, there seems little likelihood of support for North Solomonese whose behaviour will seem more libertarian than liberating.
However, it is tempting to speculate as to who might find an interest in a drawn-out struggle. As the Fiji coup of 1987 showed, awkward outsiders (and arms dealers) can be attracted to such spots. But where are they? Taiwan? North Korea? South Korea? Libya? (51) India? France -- to point to the dangers of premature devolution in New Caledonia or French Polynesia? Would the prospect of getting mining concessions in a Republic of Bougainville be a snare? It could also be a delusion if Papua New Guinea shows that it has the negative capability to enforce a blockade now that a military victory seems impossible without outside help and the spectacular brutality which has damaged its international image. With the economy reduced and the Defence Force somewhat demoralised, there appears to be no choice but to sit out the crisis.
There is always the possibility, however, that the Namaliu government could fall and that a new Prime Minister could order an invasion. The irrepressible Australian media are always alert for some commentator to claim there will be a coup (52) and, I daresay, no such contingency can be ruled out altogether; but it would mean chaos, not a more effective regime. For the former imperial masta there is no winning position. In the event of further military action, lack of Australian support would appear to many Papua New Guineans to be a withdrawal from commitment to the Joint Declaration of Principles of 1987. To give support would leave Australia open to the charge already made of spilling blood for her multinational company. To leave a vacuum for another country would be unnerving. There are plans afoot to increase Defence Force strength from 3,800 to 5,200 men within the next few years. Presumably Australia will be asked to pay some of the bill, although this will not necessarily ensure gratitude on Papua New Guinea's part. Aid from the former metropole is not necessarily seen like that.
Namaliu's return, laden with grants and loans, from the third meeting of the World Bank-sponsored Consultative Group for Papua New Guinea, held in Singapore on 18 May, forestalled any imminent debacle in the economy. The efficacy of the US$710 million support was, however, predicated on the strong commitment of the government to a structural adjustment program which would improve public resource management and promote investment in the non-mining private sector. (53) In such a volatile community, economic rationality is not all that has to be considered in such a process. Holding the numbers in a loose multi-party system with little populist support is crucial to the stability of any reform program. Some Pangu Pati leaders are reverting to talk of a one-party system. There are constitutional reforms that must be put in place by a two-thirds majority (when attainable) before the run up to the 1992 election, but they have been mooted since 1987-8. Yet there is some optimism that that puzzling demiurge, political will, has been stimulated by the Bougainville crisis.
This writer would hope that no Papua New Guinea government will imagine that even a successful blockade will provide more than a short-term solution in the North Solomons. However disillusioned the bulk of North Solomonese may become with the Rambo initiatives of the BRA leaders, their hostile memories of the misconduct of the security forces will be long. The unpalatable fact is that the sense of alienation among North Solomonese cannot be eradicated by a weak state with little capacity for inspiring hearts and minds. The important issues are to find a solution that does not result in recurrent challenges, and to make the North Solomons productive again. Without increased autonomy, which, however, cannot be extended to other provinces, (54) it is difficult to see this happening. Fears expressed by the Australian Foreign Minister, Senator Evans, and by most commentators, that this will lead to further fragmentation of the rest of the state are based on a failure to distinguish an ethnonational from a basically law and order problem. An atlas, together with some awareness of Papua New Guinea's history and demography, may show that, for example, problems surrounding the Porgera mine in Enga province will not be of the same order as those emanating from Panguna. (55) The fact that non-North Solomonese (the "redskin" problem) have now fled the province may assist reconciliation if tactful means are devised for curbing un-productive migration in the future.
For a satisfactory settlement, the following proposals could be considered:-
- A special territorial status be granted to the North Solomons to meet its aspirations.
- The former provincial government -- but by no means the BRA -- be regarded as the legitimate authority with which to begin peace negotiation. North Solomonese in "exile" to be guaranteed a safe return. Fresh supervised elections to be held for representatives to a constituent assembly for the province.
- The Namaliu mining package of 1989 to be reaffirmed as a basis for appropriate compensation.
- An enquiry to be held into the operation and conduct of BCL to test allegations made against it and to demarcate clearly its functions and responsibilities. In return for reopening the mine it would be advisable for BCL to make a conciliatory symbolic, but not token, gesture such as the provision of a tertiary institution for the training of North Solomonese.
- A restoration of custodial national police, supplemented by recruitment of a North Solomonese reserve including some former BRA.
- A review of the status of the North Solomons within Papua New Guinea be set down for, say, the year 2000 AD to ascertain how appropriately the new arrangements have worked and, if not, to consider alternative arrangements not excluding confederation or even secession.
To achieve such a settlement will require a more persuasive public relations authority than Papua New Guinea has so far created. Among institutions which must be targeted for co-operation are the three churches, particularly the Catholic Church, a few of whose foreign personnel have shown lack of political maturity. There appears to be some need for re-education in the principles of a just war and the rights of Caesar. In November last year, Bishop Singkai was claiming that moral force and prayer were bringing Francis Ona to the negotiating table. A sodality of candle-earning, rosary-reciting Rainbow Volunteers was set up for the purpose. Among them we were told were reformed "rascals". Unfortunately, we now know what the bishop meant by "negotiation": bonhomous capitulation by the state. Charismatic Christianity in the immediate future, however, will have to incline more to the Melanesian Way as it was practised in 1975-6, if it is to be politically efficacious. There is a fundamentalist verse which aptly points to the alternative:
God gave Noah the rainbow sign,
No more water, the fire next time.
JOINT DECLARATION: GUIDING RELATIONS
BETWEEN AUSTRALIA AND PAPUA NEW GUINEA
Australia and Papua New Guinea are immediate neighbours, with close traditional and historic ties between their peoples which both countries are determined to maintain and strengthen.
Australia and Papua New Guinea have many common interests which both Governments seek to advance with full regard for one another's distinct national characteristics.
Both Governments respect and seek to build on existing bilateral, regional and other mutually beneficial arrangements in accordance with their shared commitment to independent and constructive neighbourly co-operation and to co-operation between developing and developed countries.
Both Governments uphold the United Nations Charter.
Both Governments are strongly committed to regional co-operation in the South Pacific and to co-operation with other neighbours.
Both Governments are committed to promoting a stable regional environment in which the aspirations of the peoples of the region for security, peace, equity and development can best be realised.
- The Governments and peoples of Papua New Guinea and Australia reaffirm their commitment to the maintenance and strengthening of close and friendly relations between their two countries.
- The various elements which make up the overall relationship between the two countries should be viewed together, and each of the elements should be conducted with due regard for the relationship as a whole.
- Relations between Papua New Guinea and Australia will be conducted in accordance with the principles of mutual respect for one another's independence, sovereignty and equality.
- Both Governments are committed to peaceful settlement of international disputes and to non-interference in the internal affairs of other countries.
- Both Governments seek to avoid, reduce, contain and, where possible, to remove the causes of, international tensions.
- Citizens of either country will be accorded fair and just treatment in the other in accordance with law.
- The maintenance and strengthening of close and friendly relations between the two countries is an integral part of both Governments' independent foreign policies.
- Co-operation and exchanges between the two countries will be mutually beneficial and based on full participation by both countries, with due regard to the capacity, resources and development needs of both countries, and on mutual respect.
- Development co-operation will comprise a wide-ranging combination of agreed measures designed to contribute to development and self-reliance, including capacity building, in Papua New Guinea.
Promotion of Understanding
Both Governments will seek to promote knowledge and understanding of the other country.
Diplomatic Co-operation and Consular Representation
The two Governments will seek to co-operate in pursuing shared national, regional and global interests through diplomacy and will assist one another in consular representation as far as practicable.
Defence
Recognising that each Government has primary responsibility for its own security, the two Governments undertake to continue to maintain and develop their respective defence capabilities.
Conscious of their unique historical links and shared strategic interests, the two governments will continue to engage in defence co-operation through consultation and in such areas as agreed exchanges, consultancies, combined projects, military training and combined exercises as would be decided by them from time to time.
The two Governments reaffirm the existing agreement and arrangements between the two countries covering the status of Service personnel from either country present in the other, the provision of supply support and consultations on politically sensitive situations in which Australian loan personnel might be involved.
The two Governments will consult, at the request of either, about matters affecting their common security interests. In the event of external armed attack threatening the national sovereignty of either country, such consultation would be conducted for the purpose of each Government deciding what measures should be taken, jointly or separately, in relation to that attack.
Trade, Investment and Private Sector Co-operation
Both Governments desire to strengthen trade, investment and private sector co-operation between the two countries.
The two Governments recognise their commitments under the agreement covering trade and commercial relations between Papua New Guinea and Australia.
Trade between the two countries will be on at least most-favoured nation terms and as free of both tariff and other restrictive regulations of commerce as may be consistent with both countries' domestic requirements and international commitments.
The two Governments will consult on ways in which Australian investment can contribute to the development of Papua New Guinea. The two Governments will accord to Papua New Guinea and Australian companies and individuals resident in either country investment treatment no less favourable than that accorded to those of any third country.
The two Governments will encourage co-operation between the private sectors of their two countries in trade, investment and related areas.
Financial, Transport and Other Services
The two Governments will, in accordance with the laws and policies of both countries and having regard to Papua New Guinea's development needs, co-operate to encourage the efficient supply of financial, transport and other services between the two countries.
Development Assistance
Development assistance will be provided as part of an agreed program of co-operation which contributes to development and self-reliance in Papua New Guinea, allows for forward planning and implementation in accordance with policies and priorities set by the Papua New Guinea Government, and takes due account of both Governments' policies on development co-operation.
Communication and Travel
The two Governments will seek to promote and facilitate communications and travel, including tourism, between the two countries, with due regard for one another's national interests and policies.
Border Administration
The two Governments will reinforce their co-operation under the Torres Strait Treaty in the administration and development of their common border area, with due regard for the rights and interests of the traditional inhabitants and conservation of the natural environment.
Legal Co-operation
The two Governments will co-operate, in accordance with their international legal obligations and respective laws, in the area of law enforcement and seek to increase co-operation in other areas of the law, including taxation law, business law and family law.
Crime, Terrorism and Smuggling
The two Governments will co-operate, in accordance with their respective laws and international obligations, to prevent, detect and prosecute crime, terrorism and smuggling, including, especially, illegal drug trafficking.
Exchanges
The two Governments will promote educational, scientific, cultural, sporting and other exchanges between individuals, groups and public office-holders with common interests.
The two Governments will facilitate exchanges which contribute to the development of human resources, research capacity and technology in the public and private sectors.
Consultations
The two Governments will establish a Ministerial forum to meet regularly, under arrangements co-ordinated by the two Ministers responsible for foreign affairs, alternately in either country.
The two Governments will endeavour to consult promptly and at an appropriately high level of representation at the request of either.
The two Governments will hold such other consultations as may be agreed.
Resolution of Disputes
Disputes between the two Governments will be settled peacefully through consultation, negotiation, or such other means as may be agreed and are consistent with the United Nations Charter.
Other Arrangements
Commitments made under existing arrangements between the two countries will be respected and developed in accordance with this Joint Declaration.
The two governments will endeavour to interpret and implement agreements and arrangements between them in the spirit of the principles and commitments contained in this Joint Declaration, without prejudice to commitments entered into under existing agreements between Papua New Guinea and Australia.
The two Governments may give effect to this Joint Declaration in such further agreements and arrangements as may be agreed.
Review
The two Governments will review the operation of this Joint Declaration at intervals of not more than five years.
BASIC PRINCIPLES
CO-OPERATION
GENERAL PROVISIONS
Signed at Canberra the ninth day of December 1987.
R.J. HAWKE
Prime Minister of Australia
PAIAS WINGTI
Prime Minister of Papua New Guinea
PAPUA NEW GUINEA: SOME BASIC STATISTICS
Total land area: 461,690 sq km
Population: (est. 1989) 3.7 million
Birth rate (est.): 2.5-3 per cent
Proportion of population engaged in subsistence agriculture: 80 per cent
Number of languages spoken: approx. 400
Capital: Port Moresby
Independence granted: 15 September 1975
Prime Minister: Mr Rabbie Namaliu (since 1988)
Currency: Kina (1K = $A1.26)
ECONOMIC INDICATORS
Real GDP: K1.774 billion (1989)
GDP (current prices): K3.34 billion (proj. 1989)
Real GDP per capita: K471 (1989)
Annual average GDP growth: 3 per cent (1980-87)
Annual average GNP per capita: 1.7 per cent (1987)
Exports: K1,081 million (1987)
Imports: K962 million (1987)
AUSTRALIAN TRADE WITH PNG (1987)
PNG exports to Australia: $A154m
PNG imports from Australia: $A727m
Australia Aid to PNG: $A300 million p.a.
Major Exports: Gold, copper ore and concentrates, coffee, cocoa, palm oil, timber, copra and coconut oil, fish products, tea.
Major Imports: Machinery and transport equipment, manufactured goods, mineral fuels and lubricants, food and live animals, chemicals and chemical products.
Main Trading Partners (1986): Australia 27.7, Japan 21.7, West Germany 18.8, USA 6.4, UK 4.0, Singapore 4.0, New Zealand 2.7
Exports (1985): West Germany 30.0, Japan 22.5, Australia 10.3, UK 7.5, Spain 4.7, Netherlands 4.3
Imports (1985): Australia 40.5, Japan 17.5, Singapore 10.1, USA 9.4, New Zealand 5.7, UK 3.0
ENDNOTES
1. Organisasi Papua Merdeka, or Free Papua Organisation.
2. Department of Foreign Affairs and Trade, "Australia's Relations with Papua New Guinea", submission to the Joint Committee on Foreign Affairs, Defence and Trade (Sub-committee on PNG), Parliament House, Canberra, August 1989, p. 403, Vol. 2.
3. Australian International Development Assistance Bureau, "Australia's Relations with Papua New Guinea", pp. 304-312, Vol. 2.
4. David Hegarty, Papua New Guinea: At the Political Crossroads? Strategic and Defence Studies Centre, Research School of Pacific Studies, ANU. Working Paper No. 177, April 1989.
5. Foreign Affairs and Trade, ibid. pp. 432-433, Vol. 2.
6. World Bank Report, Papua New Guinea: Opportunities and Challenges for Accelerated Development. Report No. 7707-PNG, April 1989.
7. Australia's Relations with Papua New Guinea, National Centre for Development Studies, ANU, Canberra. Submission to Joint Committee on Foreign Affairs, Defence and Trade, September 1989. p. 3.
8. World Bank, ibid. p. 25.
9. World Bank, ibid. p. 38.
10. World Bank, ibid. p. 45.
11. World Bank, ibid. p. 4.
12. Foreign Affairs and Trade, ibid. p. 458, Vol. 2.
13. Hegarty, ibid. p.8.
14. Foreign Affairs and Trade, ibid, p. 456, Vol. 2.
15. National Canter for Independent Studies, ibid. p. 15.
16. AIDAB, ibid, p. 355, Vol. 2.
17. Minister for Foreign Affairs and Trade, Senator Gareth Evans, Address to the Strategic and Defence Studies Centre Bicentennial Conference, "Australia and The World: Prologue and Prospects", ANU, Canberra, 6 December 1988, pp. 6-7.
18. Goodman, R., Lepani, C. and Morawetz, D., The Economy of Papua New Guinea: An Independent Review, ANU, Canberra, 1985: 14-15.
19. Table 5, International Development Issues Paper No. 5, Papua New Guinea: Economic Situation and Outlook, February 1989, Canberra, AIDAB/AGPS, 1989: 31.
20. James Sinclair, Papua New Guinea: The First 100 Years, Sydney, Robert Brown and Associates, 1985: 171-172.
21. Graham G. Mills, "Youth and Community Development in Papua New Guinea", in Community Development Journal: An International Forum, Vol 24, No. 4 (Oct 1989): 256-263.
22. See International Development Issues No. 5, Papua New Guinea: Economic Situation and Outlook February 1989, pp. 7, 38.
23. Ibid., p. 59.
24. Ibid., p. 156.
25. Report of the Committee to Review the Australian Overseas Aid Program (Jackson Report), Canberra, AGPS, 1984: pp. 163-165.
26. Before Independence BOUGAINVILLE was a district consisting of Bougainville Island (208 kms by 32-64 kms wide), Buka Island (56 kms by 14.5 kms) with a few inhabited offshore islets and five atolls (two Melanesian, three Polynesian). The total area is 8788 sq kms, the atolls 192 sq kms. Mountains reach to 2600 metres. The southernmost area, Buin, is some eight kms from the Shortland Island in the Republic of the Solomon Island. At the 1980 census the population was estimated to be 128,890 and, with a 3.2 per cent growth rate plus immigration, it may have been well over 160,000 at the end of 1988. The districts were changed to provinces at Independence and in 1976 ther province became officially the North Solomons. I have endeavoured to use the official terms but a certain interchangeability is unavoidable particularly as the Catholic diocese is Bougainville, the UDI specifies a Republic of Bougainville and almost all BRA action has been geographically there.
27. For a narrative of events see J. Griffin, H. Nelson and S. Firth, Papua New Guinea: a political history. Richmond, Vic, 1979, 150-4, 209-17, 236-9.
28. Figures from Post Courier [PC], 27 October 1989, which were based on the Minister for Finance and Planning's submission to Cabinet of 15 September; and from D.S. Carruthers and D.C. Vernon (BCL) Bougainville Retrospective, 12 April 1990 (mimeo).
29. The academic was Professor Peter Wallensteen and the liaison in the North Solomons was provided by the director of the North Solomons University Centre and the Catholic Church.
30. At the 1980 census the population of Arawa and its port was 13,906, of Kieta 3,445 and of Panguna 3,487. In this linked urban complex -- Kieta is 10 kms from Arawa -- 35 per cent were non-citizens. There would have been an increase since then, both natural and immigrant from other parts of Papua New Guinea.
31. E.g. Mary-Louise O'Callaghan in Sydney Morning Herald and Melbourne Age (27 January 1990) in which she traced "the genesis of the crisis now tugging Bougainville away from Papua New Guinea ... first to the incorporation of the island into German New Guinea in 1899" after its having previously been under British rule. Neither paper would print the correction sent by this writer.
32. W.P. Morell, Britain in the Pacific Islands, Oxford 1960, 308-10.
33. E.g. H.H. Romilly, The Western Pacific and New Guinea, London, 1886, 7,: "at Buka ... they are the fiest specimens of humanity in the South Seas ... Whenever he goes, and whatever natives he mixes among, a Buka man will always become a leader. Romilly was Deputy Commissioner for the Western Pacific and Special Commissioner for New Guinea.
34. See J. Griffin, "Paul Mason, planter and coastwatcher", in Griffin (ed), Papua New Guinea portraits: the expatriate experience, Canberra, 1978, 126-68. On the Catholic mission, see H. Laracy, Marists and Melanesians, Canberra 1976.
35. J. Griffin, "Bougainville", Australia's Neighbours, Fourth Series, 68, January-February, pp. 7-12.
36. See J. Griffin, "Napidakoe Navitu", in R. May (ed), Micronationalist movements in Papua New Guinea, Canberra 1982, pp. 113-38. The bibliography in this book should be consulted for work by E. Ogan, an American anthropologist, on the Nasioi language group of this area and their initial responses to CRA/BCL.
37. J. Griffin, "Bougainville-occultus sed non ignotus", New Guinea quarterly, 10, 4, 1976, pp. 44-51.
38. A phrase of M. Togolo's, later provincial planner. See J. Dove, T. Miriung and M. Togolo, "Mining bitterness", in P. Sack (ed), Problems of choice: land in Papua New Guinea's future, Canberra, 1974, 181-9.
39. See J. Griffin et al, 1979, op. cit.; and J. Ballard "Policy-making as trauma: the provincial government issue", in J. Ballard (ed), Policy-making in a new state: Papua New Guinea 1972-1977, St Lucia, 1981, 95-132.
40. See R. May (ed) Provincial Government in Papua New Guinea, Canberra (forthcoming). A chapter by J. Griffin and M. Togolo on North Solomons is to be included.
41. J. Griffin with S. Kawona, "North Solomons", in M. Oliver (ed), Eleksin: 1987 National Election in Papua New Guinea, Port Moresby, 1989, 225-244.
42. Carruthers and Vernon, p. 8.
43. R. Bedford and A. Mamak, Compensation for development, Christchurch, 1977; Applied Geology Associates Ltd [AGAL], Environmental, socio-economic and public health review of Bougainville copper mine, Panguna, January 1989.
44. The "Bougainville initiative" was actually written by a certain Gabriel Lafitte, Fr Momis' press officer for a few months before the 1987 elections. He had had no prior experience of Papua New Guinea. In February 1990 he was a convenor of a protest meeting at the Uniting Church, Melbourne, billed as "Bougainville -- Our New Vietnam". The brochure stated Gareth Evans had increased Australian military aid to Papua New Guinea without any concern for "human rights abuses" [but see restrictions placed on the use of helicopters] and asserted that the Hawke government was not interested in evacuating Australian citizens from a danger zone but only "in protecting BCL's profits". Lafitte describes himself as "a prominent Buddhist". He is currently manning a Melbourne-based Bougainville Information Service sponsored by Community Aid Abroad. The BIS is to become eventually part of a Melanesian Information Service whose task will be "to call for Australians to re-think their relationship with Melanesian nationalism". He thinks Bougainville people are "fairly unsophisticated", Times of PNG, 17 and 24 May 1990. Students of exhibitionism will note the extraneous purposes to which another people's tragedy can be put. It is interesting to compare Lafitte's view of the nobility of the BRA rebellion with his former employer's views. Fr Momis, minister for Provincial Affairs, describes the BRA as "a minority isolated armed gang controlling Bougainville only through the power of the gun and bullying intimidation". The Australian, 28 May 1990.
45. AGAL, op. cit.
46. North Solomons Provincial Government, Provincial Select Committee Report on the Bougainville crisis, 17 May 1989.
47. My source here is Sean Dorney, ABC representative in Papua New Guinea, to whom I am indebted for information and stimulating discussion on current issues in Papua New Guinea.
48. Diocesan Newsletter, 3 May 1990; Times of PNG, 10, 17 May 1990.
49. J. Griffin, "Papua New Guinea and the British Solomons Islands Protectorate: fusion or transfusion?" Australian Outlook, 27, 3, December 1973, pp. 319-328.
50. Libya and Colonel Gaddafi have been extolled by Papua New Guinea's only self-confessed Marxist-Leninist MP, Gabriel Ramoi, who was minister for Communications in the Wingti government. He now supports the Namaliu government. There is no evidence that Libya is interested in Papua New Guinea. However, a curious feature of the Bougainville Declaration of Independence is the invocation: "In the name of God the merciful father, ruler of nations and lord of the universe". I am informed that the original idea was to invoke the Trinity, naturally enough. A small group of Moslem converts (perhaps 100) apparently exists on Bougainville. It has been suggested that the more monotheistic invocation is a sop to putatively potential supporters.
51. See various reports of a seminar paper by Dr P. King of the Department of Government and Public Administration, University of Sydney. Its contention that Papua New Guinea, was "the most politically unstable country in the South Pacific" and in danger of a military coup was rejected by the Deputy PM, formerly Brigadier-General Diro, as "ill-informed academic nonsense" and similarly by a Post-Courier editorial, 14 May 1990.
52. Post-Courier, 24 May 1990.
53. Argument on whether provincial government should be abolished continues with the Governor-General, Sir Serei Eri, a former president of the Deputy Prime Minister's Papua Action Party now leading the critics, while Fr Momis and leaders of other islands provinces are vehement that it be retained. A forthcoming publication, R. May (ed), Provincial Government in Papua New Guinea, Canberra: ANU, should deal with the issue comprehensively and contains a chapter by this writer and M.T. Togolo on the North Solomons.
54. This view is contested by a colleague at the University of Papua New Guinea in the department of Anthropology/Sociology. Colin Filer contends that "Panguna is perhaps unique -- at least it is unusual, not because Bougainvilleans think of themselves as a race apart, not because they have special memories of colonial oppression, but because of some simple geographical fact which affected the crusading abilities of militant landowners. The Panguna mine occupies a central location within the North Solomons Province -- it is not tucked in some remote and inaccessible corner like Ok Tedi, nor on a small offshore island like Misima or Lihir ... which is almost perfect for the conduct of an armed insurgency ... The most important thing which distinguishes the North Solomons from the other 18 provinces of Papua New Guinea in historical, political, cultural, social and economic terms is nothing other than the massive hole in the middle of it ... There is also evidence to suggest that the leadership of the new PLA have come to think of themselves as the actual or potential leaders of a national movement of mining landowners, and in this sense at least had certainly moved beyond the confines of Bougainville nationalism ... the old secessionist demands were notable by their absence from the agenda of the Panguna Landowners in the course of 1988". These quotations from a paper by Dr Filer at the UPNG seminar (8-9 September 1989), "The North Solomons situation: issues and options" are in turn from a paper by J. Griffin, "Bougainville is a special case", to be published in R. May (ed), The Bougainville crisis and its broader implications, Canberra: ANU, proceedings of a seminar (5 April 1990). Filer's paper was entitled "The Bougainville rebellion, the mining industry and the process of social disintegration in Papua New Guinea" and will also be published there. It is quoted here in conclusion because, in this writer's opinion, this attitude shared by the former Australian Administration officers, social darwinists, marxists, and "nation builders" of various ideologies constituted a major obstruction to dealing with the Bougainville problem in its early stages and obviously will obstruct a solution in the future. A corrective to the underlying assumptions is the work of Professor Walker Connor of New York State University.
