Cover Story
Vanuatu: Too Little Beef in the Economy
Sela Molisa, Vanuatu's finance minister and a veteran of the campaign to win independence from joint French and British rule, sighs for the heady first 10 years of post independence. "The better years were 1980-1991," he says.
"We had stability. Ever since, we've never had growth because of politics. Our basic problem is political instability."
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Molisa is dwelling on why it is that since 1980 Vanuatu's 80 lightly populated islands, among the least sullied, luxuriously verdant and fertile and animal disease-free in the Pacific Islands, remain locked on a livelihood of copra, a modicum of tourism, a bit of beef, cocoa and kava, and on foreigners who avoid their domestic taxation by patronising an offshore financial centre that antagonistic, rich nations would like to close down.
Vanuatu's political instability doesn't match the heavy events that have ripped its Melanesian neighbours, Fiji and the Solomon Islands, with violent coups and has turned parts of Papua New Guinea into near no-go areas. In recent years there have been a couple of teacup storms in the shape of 24-hour mutinies by some police and a small paramilitary riot squad that regards itself as being an army. These were over before many Port Vila people were aware of them.
What has set Vanuatu back is endless political back-stabbing intrigue coupled with atrocious high level corruption that when exposed is rarely punished.
Politics
Since the onset of the 1990s, Vanuatu has been encumbered with a series of
ineffective, short-lived coalition governments.
Numerous leaders have been too busy attending to personal gain, and engaging in political chicanery to bother much about the advance of a nation of nearly 200,000 people.
Since 1991 not a single coalition government‹they've all had to be coalitions to survive long‹has completed a full four-year term.
Could this be about to change and bring the stability Molisa believes will enable Vanuatu's pace of growth, in recent years negative or barely noticeable, to at last move upwards?
In April, the National United Party (NUP), formed as a breakaway from the Vanua'aku Party a decade ago, dumped its controversial businessman president Dinh Van Than in favour of one of its MPs, Ham Lini, brother of Vanuatu's first prime minister.
Soon afterwards, Lini signed a deal for political cooperation with the governing parties.
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The present government, formed as a coalition in May 2002 after a general election, could become the first to survive a full four-year term.
Just an extra 15,000 visitors a year for the stagnant tourism industry alone would make all the difference, Molisa says. Others argue that it's not just tourism that needs to be got moving.
Vanuatu's political climate of incessant behind-the-scenes rivalry began to settle down after the Vanua'aku Party leader, Edward Natapei, became prime minister in April 2000 by ousting his predecessor, Barak Sope, with a no-confidence vote.
Sope, another independence campaign veteran, in 2002 was convicted of fraud perpetrated as prime minister.
In May 2002 Natapei, generally regarded in Vanuatu as being a decent, steady leader for the ruling Vanua'aku Party (VP), formed a new government in coalition with the VP's old enemy, the Union of Moderate Parties (UMP).
Serge Vohor, the UMP leader, became deputy prime minister. Since then, with the backing of 28 VP and UMP parliamentarians and about half a dozen independent MPs, the government has had no trouble controlling the 52-seat parliament, although from time to time rumours of no-confidence votes surfaced.
In February, another veteran politician and former prime minister, Maxime Carlot Korman, claimed that 27 mainly UMP members intended to vote to topple Natapei. But nothing came of this move.
In April, two events happened that might consolidate Natapei's power. Ham Lini, brother of Vanuatu's first prime minister, Walter Lini, took over the presidency of the National United Party (NUP) from Dinh Van Than, a locally born Vietnamese businessman who for more than 20 years has held a controversial role in politics as a financier for various politicians, including the late Walter Lini.
Dinh, who has extensive property and other business interests, became the chief backer of NUP, formed by Walter Lini as a breakaway from the Vanua'aku Party after he quarrelled with it.
Dinh took over the NUP presidency after Walter Lini's death. Ham Lini, who is about 51, is a builder by trade and was chairman of the Pentecost Island Council for 11 years.
Dinh's ousting at a NUP congress in April appeared to be fomented by a desire to have a ni-Vanuatu president more in touch with grassroots supporters. Dinh is unlikely to fade away, however.
A week after his departure, NUP signed an agreement with VP that by late April was expected to be cemented by the appointment of three NUP parliamentarians to cabinet posts, possible at the expense of UMP politicians, which could be expected to affect VP/UMP relations.
Ham Lini is understood to have gone from the congress to see Natapei after securing the removal of an old policy decision not to ever co-operate with the VP.
Whether the VP/UMP/NUP marriage works is cause for speculation. It is opposed by NUP ex-VP politician Willy Jimmy, the official Opposition Leader, and closely aligned with Dinh. Jimmy says the NUP's existence is threatened.
The life of the reshaped coalition is cause for speculation, going by the record since 1991 and the easily diverted loyalties many MPs have. Whether the new union will bring long-term stability that could impact positively on the somewhat fickle quality of government is also open to speculation.
A seasoned ni-Vanuatu holder of high public office told Islands Business: "I can't help being cynical. Natapei and Vohor spend 70 percent of their time keeping each other happy to do much about running the country properly."
A great trouble with government, the official said, is while ministers usually attend cabinet meetings, few can be relied on to attend development and numerous other committee meetings with civil servants and advisers that attend to the nitty-gritty of getting policies effectively implemented.
Other public servants tell the same story of inertia, saying their political masters do almost nothing to get policies implemented or developed, and that the present coalition is just for the sake of having a government.
One former MP and former prime minister is trying to recover his parliamentary seat, which he forfeited after being jailed for fraud as prime minister.
In 2002, politician Barak Sope got a three-year sentence after his conviction on counts of forgery while in office. On November 13, after serving just over three months, Vanuatu's president, Father John Bani, in a decision condemned by the Natapei government, ordered Sope's release on the grounds of health. Sope was said to be suffering from diabetes.
Sope claims the president's pardon entitles him to have his parliamentary seat back. But Chief Justice Vincent Lunabek ruled that the pardon affected only the length of his imprisonment and did not, as Sope claims, annul the conviction.
Economy
Sope in April announced he's hired overseas lawyers to appeal against the
ruling.
Finance Minister Molisa told Islands Business: "We feel sure that Barak is barred from returning to parliament by a 10-year rule which will keep him out from standing in the general elections in 2006 and 2010."
The Natapei government's passage of office isn't an entirely smooth one.
There is considerable public opposition, with talks of an impending demonstration against the new taxation on some imports and a new tax on bank account withdrawals set by a government desperate for revenue.
Natapei is said to feel that he is being undermined by at least three of his older, more experienced cabinet ministers Vanuatu's economy wallows in its customary manner, with no growth in 2002 (-0.3 percent last year, according to the latest Reserve Bank estimates).
Many people in Port Vila complain that business is at a record low, with many mainly tourism dependent enterprises struggling or closing.
The value of imports continue to exceed the value of exports by rates of four to one, and the government is haunted by successive heavy budget deficits.
Copra
There's been trouble with the core copra industry due mainly to political
interference, and the Vanuatu Financial Centre, like other tax havens, is
combating efforts to cripple its business by the powerful Organisation for
Economic Cooperation and Development (OECD) group of industrial countries.
Tourism
Tourism is in difficulties, although there are some positive trends in the
way of additional hotel rooms and hope that an Australian airline, Virgin
Blue, will be boosting tourism from the end of this year with flights that
could bump tourist traffic up by several thousand more visitors.
Kava
Another serious blow felt is the collapse of a multi-million-dollar kava
export boom due to European claims that kava-based pharmaceuticals are a
health hazard.
Beef
But Vanuatu's beef industry has made an important landing in Australia with
exports of "organic" beef. And that's not all‹soaring world cocoa prices are
encouraging a recovery of local production, and French investors are
interested in fostering vanilla production.
Fishing
A Chinese company plans to build a base in Port Vila Harbour to service 60
of the 98 Asian longline tuna boats Vanuatu has licensed to fish in its
200-mile economic zone.
There's mixed success with the implementation of a comprehensive reform package pressed on Vanuatu four years ago by the Asian Development Bank and other financial institutions.
One success is the repair of the now profitable National Bank of Vanuatu. Finance Minister Molisa says Vanuatu's finances have never been under closer management and the budget deficit is being brought down significantly.
"Since January, at the end of every month we get together with our revenue and expenditure people and discuss it."
