We Say 2

Alexander Downer... touched by some enlightenment.

No, not all is lost for the Pacific Islands. Believe it or not, many of them, amongst them all those of Melanesia, have the potential necessary for a fine future. Even some Australians are prepared to concede this. One of them happens to be Alexander Downer, the Australian foreign affairs minister, someone who evidently has been touched by some enlightenment'

Great amounts of the ashes of lamentation have been poured upon the heads of Pacific Islanders in the past few years. Some of the stuff has been dropped by the islanders themselves. A great deal more has come from the direction of mostly Australia, where politicians, academics, journalists and various other commentators have whipped up such spectres as the "failed state" and "Melanesian arc of instability" theories of regional disintegration and chaos. Islands Business has engaged in a modest amount of ash-laden lamentation about some aspects of the Pacific Islands condition, but it hasn't plunged to the Doom's Day depths so many Australian commentators have dived to.

The fact is that two or three of the region's countries are grappling with serious difficulties derived from external and internal causes. Some of these are the consequences of prior colonial rule; others are the consequences of the influence of local culture on imported forms of government. Others can be put down to daylight robbery, pure and simple by local politicians, all the way up to prime minister or president, who are blatantly able to get away with it, if not always.

Most of the region's countries are in difficulties, most commonly economic, with which they are coping with as best as they can in the awkward geographic environment they exist in.

Life in the Pacific Islands generally is not idyllic, discounting fortunate folks who can afford a US$1000 a day holiday in some exclusive boutique resort in French Polynesia or Fiji, but it is not generally unpleasant. One recent commentary, again from Australia, remarked that some of the Pacific Islands Forum's smallest members like Tuvalu and Kiribati could never become truly independent and would always require support from Australia and other aid donating countries.

That is an observation difficult to disagree with, but as we have remarked previously, it is possible that small atoll countries can attain a respectable degree of viability and continue to hold up their heads high with a justified amount of national pride if they can maintain the disciplines of frugality, the effective implementation of pragmatic but also imaginative planning, and good governance.

No, not all is lost for the Pacific Islands. Indeed, believe it or not, many of them, amongst them all those of Melanesia, have the potential necessary for a fine future. Even some Australians are prepared to concede this. One of them happens to be Alexander Downer, the Australian foreign affairs minister, someone who evidently has been touched by some enlightenment. He remarked: Some recent media commentary on PNG and the Pacific has presented the view that since independence, development has gone backwards; and that the region is awash with failed states where corruption, poor leadership and lawlessness are endemic.

"This assessment is too simplistic. It fails to recognise that there have been significant development gains in the region and that some South Pacific countries are faring a lot better than others."

He went on: In particular, improvements in overall life expectancy in the Pacific have been substantial, outpacing those in both the Caribbean and Sub-Saharan Africa.

Infant mortality rates have decreased at a rate comparable to that of the Caribbean and are well below rates in Sub-Saharan Africa. However, these social gains have not been matched by economic performance, which has deteriorated, particularly since the mid 1990s."

From here, we will let Mr Downer run on at length. That's because we agree with him.

The region is not homogenous and there are significant disparities between countries in the region. Samoa, for instance, has achieved sustained economic growth of around five percent whilst reducing tariffs and taxes. While on the other hand, PNG, Vanuatu and Solomon Islands have had negative rates of per capita growth and are confronted by very young demographic profiles.

I think we all would agree that despite the advances PNG has made since independence, and they have made a lot, it continues to face considerable development challenges. If current growth rates are maintained, its population is estimated to double by 2025 from the current five million. HIV/AIDS is a major health and development challenge for PNG, affecting about one in every 350 Papua New Guineans.

The resources sector that has in the past underpinned economic development and attracted foreign investment is confronted with an uncertain future. Clearly, the PNG Government now faces a significant challenge to re-establish the foundations for sustainable improvements in living standards.

Improving governance will be critical if the region is to lock in development gains and address recent reversals. Indeed, development experience shows a strong correlation between governance and growth. The Pacific's record on governance including sound policies, the rule of law, mature institutions and accountable systems is mixed.

On the one hand countries like Samoa and Fiji that have diligently and consistently pursued governance reforms clearly show the gains that can be made.

On the other hand, in countries like the Solomon Islands, the quality of core national institutions such as the police has deteriorated, and as a result social and economic prospects have declined.

Political leadership required for reform has proven difficult to sustain, and often been derailed by short-term political considerations and the self-interest of elites.

Lack of capacity, as well as inappropriate institutions inherited from colonial times, have resulted in wasteful public spending. This in turn has undermined reform and the delivery of basic services.

Corruption‹both a symptom and a cause of poor governance‹is another issue to contend with. Countries like PNG still lack the preventative and enforcement capabilities needed to combat corruption.

This raises concerns about trans-national crime. Already some of the small islands states are troubled by business scams, illegal exploitation of natural resources, gun running, and the selling of passports and bank licences to dubious foreign interests.

This sort of corruption is often accompanied by a breakdown of law and order, which further compounds the inability of Pacific countries to attract investment and generate growth. We have seen this kind of vicious circle in the Solomon Islands.

"These are serious and complex issues and I have only scratched the surface. They go to the heart of our Pacific neighbours' development." Here's some other points made by Mr Downer we can't quarrel with. Improving governance will also help regional countries to maximise the benefits of globalisation and open their economies to trade and investment. Greater trade liberalisation, both within and outside the region, can give Pacific countries with sound policy settings a means to finance their future.

New regional arrangements like the Pacific Islands Countries Trade Agreement and the Pacific Agreement on Closer Economic Relations can provide the building blocks for expanded regional markets, greater economies of scale and enhanced foreign investment.

Governance will also play a critical role in ensuring that the resources from remittances are harnessed effectively.

A broad consensus has emerged that aid is more effective in countries with sound policies.

Pacific countries themselves need to take leadership for their own development. They must implement sound domestic policies, create environments for private sector investment, overcome financial mismanagement and corruption, promote stability and provide an appropriate level of service.

Nonetheless, there is also evidence to show that even where policies are weak, aid plays an influential role in encouraging and supporting policy and institutional reform. This debate demonstrates that it is not aid per se that leads to development.

Rather, properly-targeted aid affects outcomes by influencing policies, institutions and processes. Poorly targeted or coordinated aid can, by contrast, has a range of negative effects.

"In some cases, poorly managed aid has damaged rather than improved conditions by propping up unsustainable systems, weakening public sector structures and adding inappropriately to recurrent budgets."

In this regard, the Pacific is no different from any other developing regions. Some Australians will dispute his claim that Australia's aid programme to the region is well targeted and well managed.

But they couldn't deny that, as he says: Clearly Australia is willing to help. But Pacific countries themselves must recognise that this assistance is not a substitute for proper governance and management of their own affairs.

"The international community also has a responsibility to support development efforts by providing sustainable market access for Pacific exports, employment opportunities and investment, as well as aid. But, understandably, the international community will continue to look to Australia to play a leading role in the South Pacific."

Well said, Mr Downer, well said, although you'd agree that there is bound to be some disagreement, in some quarters, with the last of the sentiments we have presented for you here.