Cover Story
Oceania Outlook 2002
Cautious optimism, according to ADB. But most countries will still be feeling the effects of last year¹s terrorism attacks
No part of the world is immune from what happened in New York and Washing-ton on September 11. Through 2002, Oceania's 22 independent and partly independent countries and the last few colonies will feel the cost of last year's terrorism attacks, but in varying degrees. In the North Pacific, United States dominated parts of Micronesia and Hawaii quickly became the worst affected territories. Their heavily Japanese visitor dependent tourism industries shrivelled immediately after the September 11 attacks.
In the South Pacific, the impact was much less evident, except in French Polynesia, which is reliant on the United States for half its tourist traffic.
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Other destinations, in particular Fiji, hope for compensation of lost American and European visitor business by the diversion to their shores of mainly Australian, New Zealand and Japanese visitors, who would otherwise head for the United States or parts of Asia having strong Islamic ties. But all the Pacific Islands will bear the load of higher insurance and freight costs that are consequences of the attacks. Airlines, in particular, are worried about the steep climb of aircraft hull insurance and security costs.
Other economic consequences will be felt by island economies that have United States market for garments, agricultural and seafood products. However, the Asian Development Bank (ADB) is expressing optimism about recovery and pointing out that the Asia/Pacific region's growth was slowing down well before September.
What happened in that month will merely delay recovery, it says. The ADB has "cautious optimism" that the region's economic fortunes will pick up by the middle of this year, assisted by lower oil prices. It should be back to "close to potential" in 2003.
January 1, 2002 is the day of the inception of the South Pacific free trade market agreed to by the 2000 Pacific Islands Forum meeting. No overnight impact is to be expected. Trade barriers between participating Forum states will be dismantled over the next 10 to 12 years, a period during which some United States and French dominated economies in the region might also become participants in the experiment, if their colonial bosses let them. Melanesia will remain Oceania's hazard zone in 2002. Violence and political unrest in the Solomon Islands is far from being settled; political instability in Fiji still in the balance; political instability in Vanuatu uncertain; and Papua New Guinea, is a cauldron of simmering political, economic and social unrest.
Papua New Guinea, Vanuatu, Tonga, Niue are due to hold general elections this year. In Papua New Guinea, the replacement of the present government by one less committed to the cause of government and financial reforms and curbing corruption would dismay all who are aware of how close to disaster former disreputable leaders have led the country. Several of Oceania's tax haven countries, notably Nauru, Niue and the Cook Islands, must still convince the hostile, but hypocritical countries of the Organisation for Economic Cooperation and Development (OECD) that they don't deserve punishment in the form of sanctions, for allegedly being money laundering conduits.
All accused countries have bent to the wind by agreeing to pass anti-laundering laws. But the OECD powers are not yet placated. The Pacific Islands Forum Secretariat is itself complaining that while at the 1992 Pacific Islands Forum the 14 island country members promised to enact laws to defer, deflect or defeat attacks on the region by organised crime, few have done so. At this year's Pacific Islands Forum, to be held probably in Fiji, all will be asked for an account as to this obligation. Within their own region and outside it, Pacific Islanders this year will continue to strive to exploit, but also conserve the best of their own advantage, their greatest single natural treasure, their tuna fish stocks. This is a resource eyed hungrily by not only Asian and American, but now European fishermen. HIV/AIDS late last year was given a belated regional recognition as a health threat of potentially disastrous proportions. This year regional health ministries will mount efforts to tap into a new United Nations fund set up to fight the disease globally.
And through this year Pacific Islanders will continue to receive cascades of conflicting and hence confusing information, pertinent or not, to the great climate change and sea level debate. Of this, only one observation by Australian and other Pacific scientists, most consistently and closely associated with researching these issues, appears to be incontestable at present. This is that the Pacific Ocean's average sea level isn't rising by an iota that matters, and that the tiny territories of Tuvalu and the Pacific's other coral communities have no cause to abandon ship just yet.
A country by country report follows:
COOK ISLANDS
Dr Terepai Maoate, the easy going physician who has been the Cook Islands prime minister since November 1999, can expect to keep his job until an election due in November 2004.
That's if he wishes to, if his shaky health doesn't let him down, and if foes like Norman George don't make a comeback. Last July, Maoate sacked George from the deputy prime minister's job after learning that the National Alliance Party leader was trying to take over from him The break left the prime minister with 14 supporters in the 25-member parliament, enough to carry on comfortably in power, but not so many as to guarantee immunity from attacks on his position. The Cook Islands continues to make headway with recovery from its dire foreign debt and vastly overstaffed government troubles of the mid 1990s, though progress in all sectors of "restructuring" is not as fast or thorough as donors would have liked.
On the surface, the Cook Islands is doing outstandingly well from tourism and cultivated black pearl exports. Tourism hit a record 72,000 arrivals in 2000, and was heading for another record in 2001 until the terrorism attacks in the United States affected visitor arrivals from North America. It caused the collapse of Canada 3000, a charter airline that had been expected to deliver several thousand tourists during a five-month season of flights that should have begun in November.
It's hoped tourism will pick up extra Australia and New Zealand business from visitors not wishing to risk travel to the United States or Asia. The country is suffering from a shortage of hotel rooms. But on the main island of Rarotonga, there is debate about how many more tourists can be absorbed without overtaxing water, sanitation and other environmentally related services.
A serious problem is depopulation. Since the economic crisis six years ago the population had dropped from 22,000 to now only 13,900 due to migration to New Zealand and Australia by people whose businesses or jobs were lost in hard times. Now hotels and other businesses are desperate for any staff at all let alone trained, and experienced hands.
The government appointed a relocation taskforce to persuade Cook Islanders to return home. But this hasn't so far achieved much, if anything. Another problem is the assault on the country's offshore financial service (tax haven) centre, said to generate eight to 10 percent of GDP, by the Organisation for Economic Cooperation and Development, which would like to strangle it and the Pacific's other tax havens.
FIJI
The months of February and March will be a crucial time for Fiji. In February, the Fiji Court of Appeal is expected to rule on whether the cabinet named by Prime Minister Laisenia Qarase after his unquestionably proper election to power last September is constitutionally proper. Opposition Labour Party leader Mahendra Chaudhry, deposed by a coup in May 2000, argues that it is not. Many local lawyers agree with him. According to the constitution, Chaudhry's party is entitled to seven or eight places in Qarase's cabinet. Qarase insists that political differences with Labour would make such a cabinet unworkable. A lot of Fiji Islanders agree with him. Qarase says he will accept the court decision. But if he's forced to accept Chaudhry and his party into cabinet, he will resign. Such a departure could revive the ethnic tensions that ripped Fiji apart after the May 2000 coup by civilian-led thugs and a subsequent army takeover. The consequences could be disastrous, perhaps more so than those of 2000.
But there is scope for hope. In November, Qarase and Chaudhry, who previously hadn't been talking, met for two days of "Talanoa" (a form of open Fijian discussion) sessions facilitated by Dr Sitiveni Halapua, of Hawaii's East-West Center. A communiqué afterwards suggested that differences be resolved by "inter-party and multi-ethnic dialogue." However, there is speculation that the trial of coup leader George Speight and some of his conspirators, also due to begin in February, could produce revelations about the identity of Speight's behind-the-scenes backers. This could arouse more insecurity, as possibly could a court martial, now underway, of army mutineers involved in a November 2000 plot to kill army commander, Frank Bainimara, and apparently install a Speight supportive government. Bainimarama still has to contend with small pockets of army opposition to his command. Should Qarase and Chaudhry reach a clear détente, leading to a steady evaporation of distrust between indigenous Fijian and the Indian communities, Fiji could begin to recover quite swiftly from the heavy economic penalties that deferred investment in its core manufacturing, tourism, mining, forestry and fishing industries. But the country has other pressing matters to urgently address, such as the resettlement of thousands of tenant farmers whose leases of indigenous Fijian tribal land are expiring, and the rescue, if this is possible or even desirable, of a failing sugar industry that once was the central prop of the economy.
Qarase claims the land lease crisis, affecting thousands of mainly Indian farming families, will be solved by mid 2002 by the enactment of appropriate land management laws. The difficulties of sugar, which accounts for more than 30 percent of the country's Gross Domestic Product, pose daunting political, social and economic challenges that some of the industry's disparate sectors appear to lack the will to cope with.
FRENCH POLYNESIASince last May French Polynesia's 70-year-old president since 1991 (and with a break also before that), Gaston Flosse, has been secure in his fifth term of office. Only his personal decision or his demise could remove him from being the overwhelming dominant figure he is.
While he opposes independence from France so as not to lose massive amounts of aid, Flosse is progressively pushing for something just short of it. After the election, Oscar Temaru, leader of the main pro-independence party, called for a referendum on independence and complained that the large number of resident European nationals were allowed to vote in local elections. Since they were people not inclined to risk their place by supporting independence, they added to the impossibility of giving local people full freedom in deciding their own political future, he said. Late last year, a Paris court ruled that the territorial government was free to open a foreign affairs department instead of relying on the French foreign office, since Paris had given it competence of hand in various extra-territorial matters.
Flosse now wants Paris to allow him to control immigration so that he can curb inflows of unwanted foreigners.
Last year, the French courts in other rulings removed the stigma of corruption charges he'd either been convicted or accused of. By 2004/05 Flosse expects France to have enacted legislation to confer French Polynesia with a status similar to self-governing New Caledonia. But not one that could bring independence, which is what New Caledonia's indigenous Kanaks want.
The territory is moving to more than 50 percent economic self sufficiency based on exports of cultured black pearls and tourism, together worth US$500 million, and now tuna fish, of which it hopes to be landing 30,000 tonnes a year within the next five years. But tourism took a 25 percent visitor arrival hit after the September attacks on the United States.
Flosse, at the end of last year was succeeding in winning Paris traffic rights and more flights to Japan for the national airline, Air Tahiti Nui. He had also won loan money for the purchase of a second Airbus wide-bodied jet needed for the Paris service.
KIRIBATI
Kiribati's 41 parliamentary seats are due to be contested in an election to be held by November.
The last election in 1998 became a bitter and personal feud between President Teburoro Tito, who has held office since 1994, of the Maneaba Te Mauri Party, and Dr Harry Tong, of the National Progress Party. Tito got 52.3 percent of the votes and Tong 45.8 percent. Tito can't be sure of a re-election. At Tarawa, talk around town is that the present government is somewhat repressive and reacts angrily to criticism. Kiribati's first president, the greatly respected Ieremia Tabai, has tried for three years to obtain a licence for a commercial broadcasting station, which is installed ready to go.
But he got charged with "importing telecommunications equipment without a permit" and fined US$25. Tabai later started a newspaper to provide an alternative to government media that tends to get gagged. Kiribati's 94,000 people subsist on exports of copra, seaweed, substantial fishing licence revenue and remittance of around US$5 million a year from seamen recruited as crew for foreign vessels. The budget is supported by interest from a national investment fund of more than A$700 million. Japan is slowly moving towards the construction of a space station at Christmas (Kiritimati) Island. Last year, Tito offered to help Australia by accepting 500 Afghan refugees at Kanton Atoll. But it seems Australia won't take up the offer.
Late last year, Kiribati decided to take a costly plunge by leasing an ATR 72 prop-jet which it will operate from Tarawa to the Marshall Islands, Tuvalu, Fiji, and perhaps one or two other ports of call. It is prepared to accept a reasonable operating loss as the price of having a reliable air service, after deciding that links with Nauru and Fiji, operated by Air Nauru, were not reliable enough.
NAURU
All the sea around Nauru is troubled. Weak and financially reckless rule by a succession of governments (eight changes since 1996), and their spendthrift style since independence in 1968, led to the squandering of nearly all the wealth derived from phosphate mining. This is expected to end in about five years with the exhaustion of what little is left to be mined. Nauru is reckoned to have foreign debts of US$400 million to US$500 million and has just borrowed more to pay interest due on its loans, putting up as collateral the last of its Australian and American properties. Critics say the government won't be able to meet its debts, and its property portfolio will have dwindled to almost nothing.
Nauru is reckoned to have squandered in the region of A$2 billion in the past 10-15 years, according to a new political party, Naoero Amo (Nauru First). The party was formed last year by young activists determined to halt financial, economic, and even political ruin of the country. The next election is due in 2004. But going by the recent record, there could have been several more changes of government by then due to constant infighting among the 18 mainly oldtimer politicians who form the parliament and who get elected mainly on family votes.
A court ruling last November led to the election of four MPs, including former president, Bernard Dowiyogo, and the finance minister, being declared null and void due to irregularities.
Naoero Amo intended to contest the by-elections due to have been held on December 8. These should give some idea of what support the small party has and the impact it has made locally with revelations of government waste, scandal and questionable practices, revealed in a political publication it produces, and which the government tries to suppress. Nauru last September agreed to temporarily accept about 800 Asian illegal migrants not wanted by Australia, in return for A$20 million, a sum which the near insolvent government, which now regularly fails to pay civil servants on time, was in desperate need of. But the presence of the Asians, kept guarded inside a wire fenced camp, was arousing local opposition by the end of the year.
The government was so short of cash that Australia reportedly used part of the A$20 million to pay a shipping company which refused to land food and other supplies in November, until it was paid for them. As the ship waited offshore, desperate locals reportedly stormed empty food shops in vain. This year, work is expected to begin on a long awaited 10 to 15-year project to rehabilitate ruined and mined out phosphate fields which cover about 90 percent of the island's surface. The money was supplied by former colonial beneficiaries of cheap phosphate ‹ Australia, Britain and New Zealand.
NEW CALEDONIA
New Caledonia had a rough year last year with a four-month building industry strike that caused serious disruption, and then towards the end of the year splits in the main Kanak pro-independence party that could affect political stability this year and further ahead.
Last June, the anti-independence RPCR (Rally for New Caledonia in the French Republic) president and founder Jacques Lafleur was re-elected party leader for another five-years by the party's first congress since 1991.
Re-election was a test for Lafleur, who had been running into hostility in some quarters. He was the only candidate.
In contrast, in October Roch Wamytan, the head of the Kanak multi-party pro-independence movement, was replaced as president of his own party, the Union Caledonienne, by his deputy Pascal Naouna. Naouna took 174 votes to Wamytan's 74 after an internal political squabble. Wamytan remained president of the Kanak Socialist Front for National Liberation (FLNKS), a pro-independence movement, of which the Union Caledonienne is a key player.
Naouna was elected from the north of the country, where most people favour independence from France. They had criticised the Union Caledonienne for not having a strong political role.
Wamytan was accused of weakening the party because of his dual role as Union Caledonienne and FLNKS presidents.
In November, the FLNKS failed to elect a new president because of a leadership struggle between its two main factions, the Union Calédonienne and Kanak Liberation Party (PALIKA) The FLNKS congress decided that until a December 22 meeting its political bureau would take care of the interim leadership. But there were hints of a permanent rift between Union Caledonienne and PALIKA. Wamytan warned that there was a danger of the Kanak independence movement splitting and losing its link with the people.
In another ominous development, the FLNKS, angered by a French state council decision to strip it of one of three ministerial positions in the territorial government, which the anti-independence RPRC dominates, warned that it might withdraw from the government entirely. During 2000, two Canadian nickel mining companies confirmed plans to proceed with billion-dollar nickel joint venture projects with local partners. The investment will be an enormous boost for the economy, although at the end of last year this was suffering because of a cyclical depression of nickel prices.
Tourism was also suffering at the end of the year due partly to the effects of the September terrorist attacks on the United States, but also because of uncertainties about the security of air links with France. The local airline, Air Caledonie, announced that it was insolvent. The international airline, Aircalin, was granted concessionary loans by France for the purchase of wide-bodied Airbus jets to preserve and improve tourist traffic from Japan, Australia and New Zealand.
A local newspaper reported that French aid for New Caledonia last year totalled US$2.24 billion.
NIUE
Niue is to hold a general election by March. Given the fickle nature of the island's politics, there's no way of accurately predicting whether Premier Sani Lakatani will sink or swim.
Reliant on limited air services operated from Tonga with a small aircraft by Royal Tongan Airlines in place of a former direct jet link to New Zealand, and watching its population seep away to New Zealand, where 17,000 Niueans live, the island's remaining 1600 people don't really know what the future has in store for them.
The more realistic of them say it's down to a question of whether Niue can survive as a viable self-governing entity, and that the size of parliament should be cut from 20 MPs to 14.
A constitutional review committee suggested that last year. But politicians who would lose their seats in consequence, Lakatani included, appear to have shelved the idea.
Another line of thought is for integration with New Zealand, the former colonial power, which would be the end of Niue as an independent political entity.
In November, Lakatani announced that a United States company would enter a deal for a satellite service with the island to become an international call centre. This could create scores if not hundreds of jobs, he said. Skeptics said it was just another of the premier's pie in the sky ideas floated as a vote catcher.
Air service troubles last year gave Niue its worst-ever year for tourists; it entertained more people from cruise yachts.
Lakatani asked China to fund a jet airliner for the island. But it was unlucky with that proposition.
However, at the end of last year, there was serious hope that Kiribati might operate an ATR 72 aircraft to Niue, possibly from Fiji, from early this year. The 70-seater would be a godsend for tourism and the island generally. Lakatani plans to set up a database in New Zealand for sounding out all Niueans living there about their skills and views about returning home. Niue is another of the Pacific tax havens being hounded by the Overseas Economic Co-operation Development. Last year it hired American lawyers to try to persuade two United States banks, Chase Manhatten and Bank of New York, to lift bans on transferring about NZ$1 million to Niue from a Panama business registry it uses as an agency for its tax haven activity.
PAPUA NEW GUINEA
Papua New Guinea's population passed 5 million in mid 2001. The difficulties besetting Oceania's largest and richest country grew with the population This year is election year for Papua New Guinea, with voters due to go to the polls by the end of June. Like before the outcome is unpredictable. But most observers agree that the pace of the decline of the country's fortunes will accelerate unless Sir Mekere Morauta, prime minister since July 1999, remains in office.
In May 2001, Morauta claimed the backing of 70 of parliament's 109 members, an unprecedented amount of support. But a few months later, four parties said they were swinging behind his discredited predecessor, Bill Skate, the subject of criminal investigations.
Papua New Guinea's parliament represents about nine parties and 37 independents. Past prime ministers led coalitions kept together by pay-offs. Morauta's tough anti-corruption line in tackling the country's grim list of political, governance, economic and social difficulties have inevitably caused some erosion of his political support, due to defections by politicians hoping for personal pickings from alliances with tainted political leaders who would like to take over as prime minister. Morauta's sacking last year of 1700 civil servants, with more to go this year, his privatisation policies, and a host of other unpopular but inevitable reforms needed for the repair of the country's dismal state of affairs, are damaging his support.
On the other hand, large numbers of Papua New Guineans, disillusioned by the games of too many past leaders, regard him as the country's only hope. That perception is shared by the international community. Papua New Guinea was forecast to slide into deep recession last year after a respectable growth in 2000 due to a combination of low commodity prices, diminishing income from mining and oil revenues that were 70 percent of government income, and the deterioration of foreign investment confidence. This has caused the stalling of mineral exploration. However, there are good prospects in palm oil and fisheries development, and revenue from a multi-billion dollar scheme for the pipeline delivered sale of gas to Queensland from about 2006.
One huge relief for Papua New Guinea is the end of the bitter nine-year secessionist war in the island of Bougainville with a peace agreement due to be capped at the end of last year by the enactment with bipartisan support of the Bougainville Peace Act.
SAMOA
Samoa has a deceptive appearance of calm and a strong culturally imposed order. Prime Minister Tuilaepa Sailele Malielegaoi, re-elected last March for a five-year term, is a business-like economist and shrewd politician who enjoys a fine reputation regionally and internationally. He appears to be secure domestically for a full term in office as leader of the Human Rights Protection Party. But Samoa's political life remains scarred by events two years ago culminating with the conviction of two corrupt cabinet ministers for the murder of another minister.
The trial revealed that they'd planned to kill the prime minister and chief justice too. This dark side of Samoan culture was manifested again late in 2001 when the head of a family expelled from their village, for daring to vote for a parliamentary candidate village leaders didn't approve of, died in the destruction of his house by fire.
Samoa Times publisher, Sano Malifa, himself an election hopeful, wrote afterwards that he had no doubt that the death was in fact a political murder.
Samoa's economic growth has declined from a heady six percent rate to a steadier three percent. But it is still enjoying growth for tourism and tuna fishing.
Massaged by the arrival of two long range Boeing 737-800 jets, just acquired by Polynesian Airlines, tourism is poised for more growth. At last there is serious investment in more hotel rooms including at least one 100 to 150-room upmarket resort hotel.
Tuna fishing, which in five years has leapt from almost nothing to exports exceeding 50 million tala, is growing at the price of more than 30 fishermen lost at sea aboard small inshore craft never meant for deepwater fishing. In November, two survivors were picked up near Papua New Guinea after a four-month drift from Samoa; two companions died. The government is clamping down on small boat fishing and developing an engineering policy to bring much larger seaworthy vessels into the business. Migration maintains Samoa's population growth at zero or even a negative level. But despite the growth of the economy and stagnant population growth, unemployment and accompanying social pressures continue to be of concern. Attempts to improve agricultural output are of limited success save for the restoration, with especially bred disease resistant plant varieties, of the taro harvest destroyed by taro blight disease in the 1990s. Samoa is developing closer trade, economic and political relations with its close neighbour, American Samoa, a United States territory. But it is irritated by American Samoan's bureaucratic attitudes to the presence of Samoan workers without whom the United States territory's tuna canneries and some other businesses would founder.
SOLOMON ISLANDS
Solomon Islanders were due to go to the polls on December 5, to elect a government they hoped might be capable of retrieving the country from the quagmire of corruption and mal-administration it slid into after the June 2000 removal by a coup of the government of then prime minister, Bartholomew Ulufa'alu.
Elections went smoothly and a new coalition government was expected to be in place on December 17, led quite likely by Ulufa'alu, who easily retained his Malaita constituency seat.
After his re-election he spoke of leading a coalition of three or four parties, and of immediately embarking on reforms to extricate the country from grave political, economic and social difficulties. The general outlook for recovery was doubtful, and there were grounds for reservations about any new government's ability to establish itself as the uncontested stable power in the country.
The Solomon Islands has had a number of coalition governments since independence in 1978. This led to jockeying, double-dealing, influence buying and intrigue and the chaotic state of governance, with the country now on the point of economic collapse.
One of the several new parties was led by Sir George Lepping, a former governor-general and respected civil servant, who with a small band of other candidates of good standing, hope somehow to be positioned politically to weld the country back together as a cohesive unit that aid donors are willing to help.
Former prime minister, Ulufa'alu was a candidate as was his successor, Manassah Sogavare. The poll was bound to be a bout of frenzied political dealing by the main successful parties hoping to be part of a coalition government.
The prospect before the next government is utterly dismaying. All the country's main industries have collapsed or are moribund. At the end of November, the civil service hadn't been paid for two weeks and many government services and departments were not functioning or barely. The Reserve Bank said the National Provident Fund would be drained of all money by February.
Yet, the financially broke government was still giving away millions of dollars borrowed from Taiwan as "compensation" to meet claims, many of them suspected, were made by politicians and supporters of the combatants in the civil war between the Malaita Eagle Force and Isatabu Freedom Movement. The Malaita Eagle Force resisted efforts by the Isatabu Freedom Movement to expel thousands of Malaitan settlers from their island. Relations between the two warring factions remained shaky, despite a 12-month-old peace treaty, with many militants having failed to surrender arms as required by the treaty, and with more killings reported in October.
TOKELAU
Tokelau's 1445 inhabitants this year, like last year, will advance quietly to a greater degree of self-government from New Zealand and eventually free association with it.
The territory's three atolls ‹Atafu, Nukunonu and Fakaofo ‹ to the east of Samoa, earn cash from the sales of copra, postage stamps, handicrafts, and get some money from fishing licences from foreign fishing vessels. New Zealand subsidises the territory at a cost of about NZ$2.8 million a year. As with Niue, more Tokelauans are settled in New Zealand and Australia than at home.
TONGA
Tonga will have a general election by the middle of this year. But the only uncertainty is whether support for the nine MPs elected by popular vote shows more or less support for the country's pro-democracy movement. The Legislative Assembly is dominated by 12 cabinet ministers appointed by the monarch, King Taufa'ahaua Tupou, invariably supported by nine representatives appointed by the Tongan nobility. Last year, Tonga's Pro-Democracy Movement got no response from the government in its quest for a constitutional convention for agreeing on political reforms including a fully elected parliament and government. It says it will hold one this year anyway, with or without government support.
Last year was a bad year for the government and monarchy, culminating with the revelation that about US$24 million earned from passport sales to mainly Asian buyers had been lost, possibly through fraud and bad investments in the United States.
The king's controversial daughter, Princess Pilolevu, acting as Princess Regent in the absence from the country of the king and the prime minister, her young brother, responded to the crisis by sacking the deputy prime minister/attorney-general and the education minister, who was finance minister at the time of the bad investment. The affair damaged the standing of the monarchy and government.
There were also reports of friction between the princess, who is reportedly a multi-millionaire, thanks to business concessions, including a satellite monopoly, extracted from the government, and her elder brother, Crown Prince Tupouto'a, who prefer to remain free to run his business interests rather than succeed his father as king.
The health of the 83-year-old monarch was cause for alarm at the end of the year after a bad reaction he had to a new heart treatment. Tonga's particularly fragile economy, dependent on pumpkin exports, a bit of fishing and tourism, but mainly on aid and money sent home by expatriate Tongans, is a constant worry. The cost of imports typically exceeds export revenue by 10 to 1.
The highly regarded finance minister, who hopes to be allowed to begin serious structural reforms this year, expressed alarm at the end of last year about a decline of remittances from Tongans abroad due to international recession and the impact of terrorist attacks on the United States, where thousands of Tongans live.
TUVALU
Tuvalu's 9500 people will be asked this year in a referendum whether they want to carry on with their present way of government or change it. No date for it has been fixed yet. A general is likely by June. Since the country became independent of Britain in 1978, it has a Westminster type parliament and has retained the British monarch as its head of state, represented locally by a local governor-general. There have been past moves to adopt a republican government headed by a president.
This is likely to be the outcome of the referendum. A parliamentary committee is touring the country's eight populated atolls to explain the purpose of the referendum.
The present parliament has just 12 elected members and a government comprising a Prime Minister, elected by parliament, and a small cabinet of other MPs as his ministers.
In December, a change of government happened after four MPs withdrew their support for prime minister Faimalaga Luka, who took over following the death earlier in the year of his predecessor, Ionatana Ionatana. A parliamentary vote replaced Luka by with Kolou Talake.
For years one of the poorest of Pacific Island states, Tuvalu is now enjoying prosperity of several millions of dollars a year revenue from the licensing of its dot-tv domain to a North American Internet company, from foreign fishing licence fees, and interest from a growing national investment fund.
Revenue is being used to fund roads and a range of other infrastructure projects, and to improve the country's education system. Many young people are being sent overseas on higher education scholarships. It recently bought half of a company which controls more than 50 percent of Air Fiji, an airline which operates domestically within Fiji, and internationally to Tuvalu and Tonga.
It has also inquired about buying land in Fiji for the resettlement by some of its people to ease pressure on the 27-square kilometre country's limited land and as a long-term hedge against the day, if it comes, that large areas of Tuvalu are threatened by sea level rise. Scientific evidence at this stage shows this not to be the case.
VANUATU
A general election for the 52 seats in the Vanuatu Parliament is due in March. The prospects for the return of Prime Minister Edward Natapei to power seem quite good, but are not certain.
Natapei, leader of the Vanu'aku Party, became prime minister in April 2000 by removing his predecessor, Barak Sope, with a vote-of-no-confidence. The political future of the controversial Sope is doubtful since in October he appeared in court in Port Vila charged with alleged fraud while he was prime minister. The case was related to the issue of two government guarantees.
Two businesspeople, including a Thai, who gave the Sope government what he claimed was a US$175 million ruby as security for borrowings, were reported to have used at least one guarantee to ask for a bank loan. Sope has denied the charge. It appeared the case would be deferred until after the election in which the former prime minister is expected to stand for the small party he leads. As a former prime minister, he was some years ago named by the Vanuatu Ombudsman in a report about the issuing of bank guarantees to an Australian businessman, who was subsequently jailed. Nataipei's government, which is a coalition with another party, the Union of Moderates, has restored stability and confidence in a country that had run through several weak administrations.
The country is heavily reliant on copra exports, tourism and revenue from its Port Vila tax haven business, which with Oceania's other tax havens is battling to stave off being choked out of business by the Organisation for Economic Cooperation and Development (OECD). It claims that all are lax about being used for white-collar crime and money laundering purposes. Tourism has crept up to exceed more than 50,000 mainly Australian visitors. But a reputation for being expensive is beginning to erode the country's attraction as a holiday destination.
Recent positive trends include the purchase of a very large failed cattle ranch on the island of Espiritu Santo by an Australian company, Edgewater Holdings. It asked for a 15-year exclusive right for the export of live cattle at the rate of 10,500 tons a year. Another Australian company recently bought the Iririki Island Resort at Port Vila, for which substantial development is intended.
Another Australian company, WDPT Investments, has signed an agreement with the Shefa Provincial government to open a mini oil refinery at Teouma Bay, Efate, with the intention of exporting petroleum products to Melanesian countries. Another Vanuatu hope is for the establishment of Internet gambling businesses in Port Vila by at least 15 to 20 foreign companies, including the Australian Packer and Waterhouse gambling organisations. The government would collect licence revenue and a small cut of gambling revenue.
WALLIS AND FUTUNA
France in December announced renewed economic aid for Wallis and Futuna, some to be delivered through a new European Union package for Pacific territories. Aid is vital since Wallis and Futuna exports little or nothing, and doesn't bother with tourism. Eighty percent of the population engages in agriculture and four percent work for the government. Projects include upgrading the airstrip in Futuna island, a new training centre and a sports stadium.
The European Union said its assistance to Wallis and Futuna would be doubled to 11.5 million Euros with the main benefit to go to improving port facilities and other structures.
Still in question is the future of the 20,000 Wallisians living in New Caledonia (with 15,000 still in Wallis and Futuna). The progressive implementation of New Caledonia's autonomy process could have repercussions for the employment of Wallisians there since New Caledonia's policy is to give job priority to locals and restrict immigration.
This is a major cause for worry for the Wallisians, who are regarded with hostility by many of New Caledonia's indigenous Kanaks. Negotiations for an agreement between New Caledonia and Wallis and Futuna on the matter are in progress and could be finalised this January. Local politics tend to be parochially volatile. An election is due in March for the legislative assembly, where 20 members sit for a five-year term.
WEST PAPUA
West Papua, the Indonesia colonised and exploited other half of New Guinea, continued to grow as an abscess through 2001, and will undoubtedly do so through 2002.
Last year, as in previous years, there was a steady stream of reports of killings and other repression of Melanesians by the occupying Indonesian army in response to activities by West Papua independence fighters. For a while it looked as if there might be some easing of the West Papua plight when earlier in the year the then Indonesian president, Adurrahman Wahid, promised that the territory, claimed by the Indonesian as one of its provinces, would be given more autonomy, and that West Papua independence activists would no longer be persecuted for flying their banned Morning Star independence flag.
But Wahid was removed from power in Jakarta, and despite her initial assurances, his replacement, Megawati Sukanoputri, was soon obvious in her determination to avert any possibility of the loosening of Indonesia's grip on the mineral, timber and fisheries rich territory. On November 11, Theys Hijo Eluay, the moderate chairperson of the Papua Presidium Council, was found dead in his car near Jayapura, the West Papua capital. He was murdered after apparently being kidnapped after a dinner he attended at the army's special force headquarters. The murder provoked riots.
But since Eluay was on good terms with the Indonesians and took a conciliatory line in relations with them, he may have been killed by disapproving Papuans.
Papua New Guinea, with Australia, anxious to appease Indonesia, continues to follow a policy of blocking the movement to its territory of Papuan refugees from Indonesian ruled West Papua and forcing the return of those who do make it across the border.
The 2000 Pacific Islands Forum meeting uttered a formal expression of recognition of Indonesian rule in West Papua and did so again at last year's meeting, from which Papua independence seekers were barred. Indonesia is expected to open an embassy this year in Suva, where the Pacific Islands Forum is headquartered, probably with the priority of ensuring that the Forum's policy of appeasing it is preserved.
