PNG/AUST Aid Tiff Settled?

Is it a deal? Sir Michael Somare with Alexander Downer, Australia¹s foreign minister, in Port Moresby

Whatever had happened in the previous few weeks, "I think it's best to let bygones be bygones. I think wise men do that," he told a Papua New Guinea/Australia Business Council breakfast meeting.

The tiff had origins in the August Pacific Islands Forum meeting in New Zealand at which Australia's leader, John Howard, succeeded in winning general acceptance from Pacific Islands leaders for Australian ideas about improving the honesty and efficiency of their governments. The message was that uncooperative recipients shouldn't count on receiving continuing Australian aid."

After the Forum, Somare told another meeting that he didn't like terms like "failed state" and "weak state" being so liberally and frequently applied by academics, journalists and governments to Pacific Islands countries, including Papua New Guinea. No one had explained what a failed or weak state was, he complained.

Later in August, Canberra, hoping to avoid publicity about the mission sent a senior diplomat, Robert Cotton, to Port Moresby to brief Somare on proposals the Australians said were intended to improve the use of the A$333 million, or 600 million Kina, in aid it supplies Papua New Guinea annually‹about 20 percent of the cash-stricken government's budget.

What infuriated Somare and some other Papua New Guinea leaders was Australia's desire to insert a couple of hundred Australian public servants into the PNG public service, plus 200 Australian police and justice officials, and to have the army cut by around 1500 men to about 2000.

These ideas, plus the Australian Forum initiatives, plus its assumption of control of the decrepit Solomon Islands government, goaded Somare into claiming that Australia hoped to regain control of its former colony, and use Papua New Guinea's dependency on aid as a lever.

"If they want to remove it, remove it for God's sake," Somare told another audience. He said he was tired of hearing about PNG being corrupt. Downer, who was due to follow Cotton, was asked to delay his trip until the matters he wanted to discuss had been "identified and agreed by both government".

Meanwhile, on the eve of PNG's 28th independence anniversary, a high level delegation arrived from China, a country now busily courting good relations with Pacific Islands governments.

The PNG media devoted considerable space and time to local perceptions of the row. Reports critical of Australia claimed that 80 percent of Australian aid went to Australian consultants and contractors.

Downer's eventual September 17/18 talks with Foreign Minister Sir Rabbie Namaliu, went better than he had hoped, while Somare's mood became conciliatory.

Namaliu said what was being offered was a little different from the standing aid arrangement. Australians would be placed in PNG government departments for short periods, he said.

Downer said there would be more stress on macro-economic management, law and order, policing, public service reforms, justice and other government capacities. Two hundred or more Australian police would work in technical assistance, training and forensic roles, mainly in provincial areas, he said.

Downer told the business council breakfast meeting that we want to take our partnership to a new level to help PNG deal with the challenges it has identified and to help secure a prosperous future. That's why we're making various proposals in areas such as economic governance, and law and order.

We are not seeking to impose them on PNG. PNG is a sovereign and independent country and we want it to be. PNG is free to accept or reject Australian assistance.

"But as partners and friends of PNG we don't want to shy away from any of the difficult issues."

Aid management was not for Australia the central issue. A number of people have said that Australia is concerned that there is corruption in the use of aid money in PNG.

"I've never said that, nor has John Howard. What we have said, and it's been said in the general context of all Australian aid whether that be in PNG or anywhere else, is that corruption is an important issue for developing countries and must be addressed."

Downer rejected allegations that most Australian aid boomeranged back to Australia.

PNG citizens account for 65 percent of people employed in the aid programme. Seventy percent of goods and materials used in aid projects are purchased in PNG. In the last two years Australia provided A$140 million for road maintenance with A$100 million going to PNG construction companies. Since the beginning of 2002, Australia has lent over 270 million Kina for infrastructure contracts and only one of these, for 22 million Kina, has gone to an Australian company.

"I just think it is very important to understand those sorts of statistics."