Cover Story
Australian Dilemma: How To Avert Downward Spiral?
If it fails, the alternative is frightening
Australia’s aspirations to be the South Pacific’s leader will be undermined if it fails to avert the “downward spiral” of Papua New Guinea and other countries of Melanesia into the plight of “conditions common” in mineral-rich but chaotic Central African countries, the analysis of Papua New Guinea by the Centre for Independent Studies warns.
It says while such potential Asian flashpoints as the Korean Peninsula can’t be ignored, “closer to home continuing upheaval in the ‘ arc of instability’ has become critical.
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“The most pressing and seemingly intractable problems are in the four Melanesian islands nearest to Australia: Fiji, the Solomon Islands, Papua New Guinea and Vanuatu.”
In dealing with deteriorating instability in a region vital to Australia’s security, “Australia has an Iraq taskforce when it needs a Melanesian taskforce.”
It is clear, the document comments, that the A$12,000 million Australia has put into Papua New Guinea since independence in 1975 “has not worked”.
In supporting Papua New Guinea (PNG) in future, Australia should be prepared to take hard lines and accept being condemned as being callous and neo-colonial on both sides of the Torres Strait (between Australia and Papua New Guinea) as well as stiff opposition from people with a personal stake in keeping things as they are, it says.
“It would be a tragedy if for lack of imagination or willingness to address hard issues, PNG sank into terminal decline.”
The signals of a “failed state” in PNG “suggests that Australia should rethink its relationship with PNG now to avoid high costs in the future.
“The alternative is the prospect of a Solomon Islands style collapse, but on a much larger scale.”
Why PNG matters
In a section, “Why Papua New Guinea matters”, heavily criticised by the Pacific Islands Forum Secretary-General, Noel Levi, the analysis laments that Australia is too preoccupied with Southeast Asia to have much interest in PNG’s demise.
People-to-people relationships between Australians and Papua New Guineans have faded, it notes. The Australian prime ministerial presence has been absent from a number of Pacific Islands Forum meetings; Australian business is now more focused on affluent stable Asian markets; and fewer journalists cover PNG. But those that do have difficulty getting their stories into newspapers due to “dwindling public and business interest.”
Yet PNG is nearly twice the size of New Zealand, with a population already a quarter of the size of Australia’s that could double by 2025. It is a billion-dollar market for Australia, which supplies 52 percent of its imports.
History and war shows that the security of Australia and PNG is “inextricably linked.”
Large amounts of aid from successive governments “go back to a long-standing policy of ‘strategic denial’: making certain that other countries hostile to Australian interests do not gain a foothold in the territory that stands between us and Asia.”
If PNG unarguably becomes a ‘failed state’, it could attract transnational criminals, people smugglers, drugs and arms traffickers and terrorists.
“PNG can neither effectively monitor its land and sea borders, nor control parts of its territory, making it relatively easy for such groups to slip in undetected and use the country as a base or point to attack Australia.”
At their closest point the two countries are separated by just a few kilometres.
The Torres Strait has been used by illegal third country immigrants to Australia who travel from PNG after crossing the “porous” border with Indonesia.
“These problems are manageable for now, but could change with little warning.
“The risk that Islamist terrorists may use PNG as a haven cannot be dismissed in light of last year’s Bali bombing.
“PNG’s strategic backwater status and institutional instability could provide new opportunities to exploit the weakest link.
“Terrorists could pay PNG’s criminal gangs to assist them with preparations for attacks on Australian soil or against Australian civilians and assets in PNG.
“A cash-strapped PNG government could resort to selling passports and visas to the highest bidder, or terrorists may use PNG as a flag of convenience to register ships that transport operatives and equipment.”
Culture clash
In focusing on PNG, the analysis says that at the heart of the country’s problems is a cultural clash between traditional tribal customs and institutions of modernity.
Nationhood for an exceptionally diverse tribal society of about 800 languages “was always an ambitious goal.”
Politicians have twisted Melanesian ‘big man” tradition of gift-giving and patronage at village level to justify gross corruption and graft at the national level.
“A ‘get rich quick’ attitude pervades in politics and society. Overcoming this political culture, and the opposition to reform from those who benefit from it, is the greatest obstacle to change in PNG.”
PNG is now struggling to survive as a viable nation, the analysis says.
“The economy has stagnated and the outlook for growth is bleak.
“Windfalls from gold, copper, oil and natural gas and generous foreign aid have caused waste and corruption.
“Transport and communications lie neglected, roads in rural areas where 85 percent of where the people live, have become impassable, and basic education and health services outside the capital have collapsed.
“Less than 10 percent of the population is employed and the number of jobless young people is ‘appalling’.
“As far as rural villagers are concerned, anecdotal evidence suggests that many believe that their quality of life is now worse than it was 20 or so years ago.”
High level organised and sophisticated corruption has invaded the whole process of policy and decision-making and nepotism is entrenched at the highest levels, the analysis says.
“The deteriorating state of the nation is a far cry from the more optimistic expectations at independence in 1975. Today, some older Papua New Guineans look back nostalgically on the colonial period as a time when government was stable, progress was steady and infrastructure worked.”
It says that in August 2002 by again electing PNG’s first Prime Minister, Sir Michael Somare, people appeared to be hoping to return to the early post-colonial period when the first Somare government inherited institutions that were to be the basis for development.
“But the ‘father of the nation’ faces an enormous task to pull the country back from the brink.”
Financial crisis
PNG is on the verge of another financial crisis, the analysis comments.
“Like many of its predecessors, the new Somare government faces a budget blowout and the country has lost international credibility. Interest costs take more than half the development budget and debt repayments are looming.”
With most of its debts in US dollars, PNG’s currency, the Kina, is trading in the low 20 cents range compared with more than US$1 in the early 1980s.
The decline began after the 1990 closure of the Bougainville copper/gold mine and the 1994-95 macroeconomic crises that led to the Kina’s float.
The government’s past ability to manage its way out of the fiscal crises is declining since mines are closing, few new projects on the horizon, oil output likely to cease within the next decade and copper and gold output falling.
Bloated civil service
In the short-term, another financial crisis can be averted by cutting the size of the “bloated and inefficient” public service, the analysis says.
Civil servants are about half the total formal workforce and cost about 40 percent of the total government spending. Of an estimated 75,000 civil servants, 10 to 15 percent are “ghosts” who cost up to A$45 million a year.
They are people who are dead, who move from department to department collecting multiple paychecks or who enter the civil service under several different names.
Employment
Employment is PNG’s most pressing problem. “The country faces a demographic time bomb.” While population growth of 2.5 percent annually is not an intrinsic problem, since it can foster development, economic growth can’t cope with it. There are not enough jobs for the 50,000 or so young people entering the labour market each year.
Crime
In urban areas, with no jobs to go to, many turn to the so-called “raskol crimes” to do better than subsistence economy.
Port Moresby, the capital, accounts for nearly half of all reported crime—from murder, grievous bodily harm and sexual assault to robbery and drug offences. In a 2002 ‘hardship’ survey, it ranked the worst place to live in of the 130 cities surveyed worldwide.
Positive features
In this very depressing picture, there are a few important positive features. So far, PNG has remained intact, avoiding the worst of the internal conflict that has blighted development in parts of Africa.
“In contrast to many post-colonial states it has also maintained a record of formal democracy since independence. Changes of government have been regular, relatively peaceful and constitutional. A free press means some exposure of corruption. The judiciary is independent, and PNG’s constitution guarantees basic civil and political liberties.”
Significant caveats
Yet “significant” caveats are required for each positive. Civil war in Bougainville cost about 10,000 lives and closed the Panguna mine, while present trouble in the Southern Highlands indicate other challenges lie ahead.
The army has twice violently challenged the authority of the state in recent times, recent elections featured defective rolls and blatant vote rigging, intimidation and violence, and elections produce unstable governments and parliaments.
Damning reports of corruption produce few arrests or prosecutions and the authority of the lower courts is eroding.
Australia has a responsibility to help PNG and is best placed to do so, the analysis concluded. “If current trends continue, PNG will sink further into chaos and poverty. Australia will not be able to quarantine any fallout.”
PNG’s leaders must also address the country’s plight and arrive at policies and reforms that will turn things around, it says. “The alternative is frightening.”
