May 2013

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May 2013

Vol. 39, No. 5

Contents Health

33 Food price fears prompt obese future People opting for cheaper, less nutritious food

Banking

35 Tax haven tsunami US$32 trillion hidden in

havens and offshore banks

36 Debt and investment paint sobering picture for Marshalls A challenging situation

Shipping

38 Connecting Solomon Islands by sea An innovative maritime project

Energy SORCERY SAGA: PNG SEEKS ANSWERS. Cover report—pages 16-21.

39 Tapping into a goldmine of energy statistics SPC helps countries benefit from energy data

Cover Report

16 Witchcraft Saga

World condemns murders as PNG seeks answers

19 Sorcery prompts calls for death penalty National ‘haus krai’ on May 15

Trade

22 Roadblocks on PACER Plus talks

No progress over labour mobility & development assistance

Politics

24 Saipan, backdoor into US citizenship for Asian babies?

CNMI wants rules tightened up

25 Plot thickens as politicians join treasure hunt

Now the fight is on

26 Voting rights under challenge

Noumea debates citizenship and elections

28 Cleaning up the foreign ministry Natapei seeks new diplomats

Culture

40 ‘A matai title is an obligation’ So says the only

woman matai in Fusi

Environment

41 Keeping our ocean-going seabirds safe NZ innovation could be the answer

42 Studies on nature ahead of Suva summit Sheppard: ‘There’s so much not known’

43 Water and biodiversity Comerstone of life in the islands

Business

Regular Features

Now PNA says, it could have been a lot more

6 Views from Auckland

30 Complex challenges for PM O’Neill in mining

7 We Say

29 Kiribati’s new tuna deal with the EU Steering govt through rocky rival interests

31 Pension funds eye regional markets

12 Whispers

PNG’s NASFUND and Fiji’s FNPF set new trend

14 Pacific Update

Viewpoint

44 Business Intelligence

32 PNG: Social symptoms of economic advancement

46 RAMSI Update Islands Business, May 2013 3

Managing Director/Publisher Godfrey Scoullar Group Editor-in-Chief Laisa Taga Group Advertising & Marketing Manager Sharron Stretton Staff Writer Robert Matau Graphic Design Dick Lee Virendra Prasad Main Correspondents Australia Rowan Callick Nic Maclellan Davendra Sharma Fiji Samisoni Pareti Dionisia Tabureguci French Polynesia Thibault Marais Marshall Islands Giff Johnson New Zealand Dev Nadkarni Jale Moala Ruci Salato-Farrell Duncan Wilson Niue Stafford Guest Papua New Guinea Baeau Tai P Sam Vulum

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Column

Views from Auckland

BY DEV NADKARNI

Climate science must listen to indigenous voices of the icy fastness that surrounds them. (The One of my most cherishable memories at the yodelling was apparently part of communicating University of the South Pacific is that of a visit among themselves and with their reindeer.) to the journalism students’ newsroom by a small But why were they wearing their traditional group of quaintly dressed people, some of them garb in the tropical heat of Fiji? That’s the only wearing heavy furs and thick skintight leather thing they ever wore, he said. And his team was jackets, rugged blankets and heavy boots. And it proud to wear it anywhere—even was a sweaty 36 degrees on a humid in the 50-degree heat of Death Suva summer day!

Valley. They did not feel the heat The group, which was visiting and the sweat didn’t sap their the university, joined in the celenergy, the team members told us, ebrations the students had hosted proudly, as we wondered at their to welcome me into the journalsheer resolve and the positivity they ism programme. They sang and exuded. When I asked them what danced and yodelled for the better was the secret of their extreme part of an hour with great abandon. tolerance, he said something that I They even joined the students in a still remember clearly: “We adapt meke—all the time looking perfectly quickly and well,” he said. at home in their incongruous garb, Climate change then wasn’t the while many of us were fanning big beef that it is now. We didn’t ourselves with handkerchiefs. quite discuss it during our brief We had heard that they were members of an indigenous people Leader of the Sami people... meeting. But over the years, as the scattered across several countries who visited the University of the issue became more mainstream South Pacific in Suva, Fiji. Photo: and especially relevant for the that girdle the Arctic Circle in the Dev Nadkarni Pacific’s low-lying atolls that are farthest northern reaches of the now known to be threatened by rising tide lines, globe, called the Sami people. But that’s about I’ve now and again thought of the Sami people all we knew about them. It was pre-Wi-fi and and how they might be coping with changes in smartphone days and it was futile googling, what their neck of the woods. And I’ve wondered how with the glacially paced half a megabyte internet they might be adapting to this new unfolding connection that served the university. challenge.

The leader of the group, a tall fit man in his forties who spoke English quite eloquently, told The Sami and a warming world us about the Sami people after the singing and The Sami people were in the news again last dancing, over sandwiches and fruit juices. month with the publicity around New Zealand Many of us have known the Sami as Lapps geologist and filmmaker Simon Lamb’s film, from Lappland, terms they look upon as pejoraThin Ice – The Inside Story of Climate Science. The tives and never use themselves. Like all indigfilm, which took six years to make, features a enous peoples, they are ancient and the extent of number of indigenous peoples around the world their domain predates modern nations. including the Sami. Sami elders, according to the Some 160,000 Sami people are spread across filmmaker, have a wealth of knowledge of climate Finland, Norway, Sweden and Russia today. They change patterns that is valuable to scientists. are one of the few recognised indigenous people “It struck me that people who live close to from Scandinavia. the environment are as good as long term temHe told us that they were on a goodwill tour of perature records at detecting climatic trends and the world, visiting more than 35 countries meetthey are all saying the same thing,” Dr Lamb was ing with other indigenous peoples, exchanging quoted as saying in the media. notes about their cultures, ways of life and how Indeed, I have always believed that indigenous they were dealing with the challenges that the people—some 400 million of them scattered industrialised modern world presented. They told across the planet—need to be involved far more us how they hunted, fished, lived and led their closely in everything that has to do with climate lives the long days and nights of the Arctic Circle, change. Indigenous knowledge, as distinct from the -40 degree winters and the stark whiteness 6 Islands Business, May 2013

scientific knowledge, might not be documented and accumulated following the tenets of the scientific method. But the fact remains that it is a combination of many observed and deduced factors that are vital for a people’s survival. These powers of observation, collation and deduction need to be respected, taken on board and corroborated with climate change phenomena measured with impersonal scientific instruments.

During conversations at the grassroots level with local people in climate change challenged countries like Kiribati, one gets to know how the problem is seen from their perspective. It is quite different from what one might find on online blogs and forums building hypotheses based on all sorts of information ranging from armchair research and opinion, quasi scientific studies to controversial, unproven theories. I have found it far more fulfilling to speak to locals about what changes they have observed and using that input as a starting point of investigations or using it to corroborate other theories.

In 2012, the United Nations Educational Scientific and Cultural Organisation (UNESCO) published a book, Weathering Uncertainty: Traditional Knowledge for Climate Change Assessment and Adaptation. It is excellent, well researched and gives indigenous knowledge the respect and attention it deserves in evolving climate change adaptation measures and strategies. It is important to take on board local knowledge because if they have survived and thrived for millennia in the harshest of circumstances, they must know a thing or two about adaptation and therefore survival.

Indigenous peoples’ voices, however, have not received such attention and respect at climate change jamborees except as news bites passed off as sideshows and protests in between deliberation sessions outside the mega venues. Governments of climate change threatened nations, more particularly those that are deemed ‘vulnerable’, need to institutionalise the participation of indigenous people, especially elderly ones, in all climate change dialogue concerning their nations. Indeed, that is the most sensible thing to do rather than implementing ad hoc measures thought out by ‘experts’ who might never have even visited these environments.

Which brings back memories of the Sami group that visited Suva all those years ago. Their gleeful demeanour and infectious energy in 36-degree heat, while wearing furs and reindeer skins, is a powerful message about their willingness and capability to readily adapt, as their leader had told me. In this case, even if briefly, they had adapted to the warmer climes of Fiji, without even a whimper. They certainly ought to know a thing or two about survival. No two ways about it—climate science needs to listen to indigenous people a lot more.

WESAY ‘....what a great organisation to forge such links with than the powerfully emerging Melanesian Spearhead Group (MSG).

Although New Zealand and Australia are not there yet with the MSG because of their long-standing commitment to the Pacific Islands Forum Secretariat, it will be impossible to ignore its growing gravitas in the coming years. The Forum would do well to take cognisance of the writing on the wall’

F

iji’s high profile mission to Papua New Guinea last month and the outcomes and intentions announced during and after it, clearly indicate that the Pacific islands region’s two biggest economies have decisively come together to form a formidable economic and political bloc never before seen in the region.

Among the raft of major business deals and announcements of cooperation between the two countries is the tie-up between the Fiji National Provident Fund (FNPF) and PNG’s Independent Public Business Corporation (IPBC) which holds majority shares in stated owned BeMobile.

FNPF, Fiji’s only public pension fund, will take up to 40 percent equity and Vodafone Fiji will manage the company. FNPF indirectly owns 51% of Vodafone Fiji.

PNG has shown interest in a number of Fijian industries including the coconut oil business.

The countries seem to have begun working towards a common market by boosting business ties significantly. As a first step, the Fiji government announced the setting up of a Fiji Trade Mission office in PNG to boost Fiji’s economic presence in the growing Melanesian economy.

The two nations are also determined to share human resources and facilitate freer movement of their people across political borders. Plans are afoot to put in place a regime where citizens of both countries will no longer require visas to visit each other, which indeed is the first requisite of true cooperation between the people of the two nations. It must be noted that this would be in addition to the already prevailing labour movement schemes between the Melanesian Spearhead Group countries—also a recent development.

PNG has also expressed willingness to tap into the talent and experience of retired Fijian civil servants to work in PNG in building PNG’s pool of skills in the public sector. Human capacity is always a challenge in developing nations and is especially critical in those nations that are growing at a fast pace. In fact, one of the criticisms of PNG’s success story is that the economic benefits that have accrued to the country haven’t percolated down to the masses because of a number of reasons including poor human capacity, a lack of systems and widespread corruption.

On a wider note, last month’s delegation illustrates the strengthening of traditional binding ties of the Melanesian brotherhood.

These ties have grown progressively stronger over the past couple of decades. The four island countries of Papua New Guinea, Fiji, the Solomon Islands and Vanuatu have leveraged the economic potential of their natural resources to power growth on the back of strong demand from fast growing Asian nations. The growing economic activity in these Melanesian nations has established them as a serious economic grouping in the region.

The whiff of greater economic independence has brought these countries’ leaders together in an ever tightening circle of friendship.

This has resulted in the strengthening of the Melanesian Spearhead Group into a force to be reckoned with in the region. In the past few years, the group has announced several cooperative measures to help one another strengthen their economic and political relationships. One of these is taking steps towards free labour movement.

It has also sought to increase its circle of influence to countries and territories like Timor Leste and New Caledonia.

The success of this grouping is in sharp contrast to the other leaders’ grouping on the Polynesian side of the Pacific Ocean.

The Polynesian Leaders Group, which has been around for a number of years now, has sputtered along with no notable successes. There have been several attempts to kick it back to life, the latest being a day-long meeting of Polynesian leaders on the margins of the Pacific Islands Forum leaders annual meeting in the Cook Islands last year.

For all practical purposes, it has remained a non-starter and the reasons are obvious as daylight: Polynesian countries are sparsely populated, have no natural resources comparable to the Melanesian nations and are too far flung and isolated to offer any viable economies of scale. The odds are heavily against these countries when it comes to economic development on the scale that is anywhere near Melanesian nations.

These countries still heavily depend on remittances and tourism to prop up their economies but it should be noted that remittances are a generational phenomenon. Successive generations living in foreign countries are less likely to feel the strength of the ties that their previous generations had with their original home countries.

The obligation to send back money to these home countries by way of remittances will naturally taper off with succeeding

MSG’s growing gravitas in the coming years

Islands Business, May 2013 7

WESAY generations. This is a fact that the countries would do well to take aboard. That leaves them with tourism, which has its limit. At some point, these countries would have no option but to reach out to the Melanesian nations to build trade and business ties, especially as the wealth of the Melanesian people increases. They will have to fall back on deeper traditional islands ties to forge this links.

The Melanesian economies are beginning to boom and will see impressive growth rates in the coming years, lifting the economic performance of the whole region.

Polynesian countries are beginning to realise there is merit in hitching their wagons to Melanesia rather than trying to boost business links with their traditional trading partners like Australia and New Zealand, where their trade deficits have only been widening over the years. In the next few years, we are more than likely to see far more initiatives to establish and strengthen links with Melanesia,

which indeed will get them better results than any future potential of trade growth with the ANZAC nations.

These moves may already be afoot. There are enough straws in the wind to indicate that some Polynesian nations and their leaders are seriously considering building bridges with Melanesia. These links are likely to begin with trade and commerce and if these are indeed successful with support from better shipping and air links, the links might well grow into political links as well.

And what a great organisation to forge such links with than the powerfully emerging Melanesian Spearhead Group? Though New Zealand and Australia are not there yet with the MSG because of their long-standing commitment to the Pacific Islands Forum Secretariat, it will be impossible to ignore its growing gravitas in the coming years. The Forum would do well to take cognisance of the writing on the wall.

‘…Pacific islands nations are unlikely to follow in New Zealand’s footsteps in a hurry, although the islands’ wedding segment of tourism will quite likely receive a boost with requests from same sex couples wishing to tie the knot in their exotic locales.

The question would then arise if local churches would allow such weddings to be solemnised and if local priests would oblige by officiating at such ceremonies’

L

ast month, New Zealand became the 13th country in the world to legalise same sex marriages. The country’s parliament passed the Marriage (Definition of Marriage) Amendment Bill into law with a two thirds majority (77 votes for and 44 against) 27 years after homosexuality was decriminalised in the country.

The people’s representatives voted across party lines, according to their own personal conviction, without allowing ideologies, religious or traditional beliefs or any other pressure to cloud their thinking that led them to their stand. Interestingly, only a couple of Members of Parliament changed their minds between the bill’s readings in its journey to becoming law.

Although the parliamentary debate over the bill was conducted with much humour and almost no acrimony among the people’s representatives, there were several campaigns in the public domain that sought to stop the bill from becoming law.

One group launched a website to urge voters to warn their local MPs that they will not be voted back to power if they supported the bill. It was a poorly thought out measure because under New Zealand’s electoral system, its people’s representatives are not necessarily beholden to their electorates as much as they are to their 8 Islands Business, May 2013

parties. Needless to say, the campaign that began rather late in the day, proved to be little more than a damp squib.

Groups opposed to the law invoked both religious and ethical tenets to buttress their arguments. While for the religionists it was relatively simple to quote chapter and verse, the appeal to secularists was based on ethical and moral interpretations as well as around definitions. A large proportion of New Zealand’s population do not subscribe to any religion and the number is growing with every successive census.

It is to this growing atheistic, agnostic or “no religion” group that the secular messages against same sex marriage were mainly targeted at. There were messages that said that government forms would need to be changed and the words “husband” and “wife” would have to be changed just to appease a small minority of same sex applicants. Instead, the form would have entries like “Party One” and “Party Two”.

Such fears were quickly quelled when the Registrar of Births, Deaths and Marriages clarified that the words “bride” and “groom” would stay on the forms and new alternative options to accommodate same sex marriage applicants would be introduced in the forms and other official literature.

WESAY The “sacredness” around marriage and the traditional “spiritual bonding” and “sanctity of the re la ti os hip” between spouses in a man/woman marriage as it has been known for millennia, would be diluted and trivialised because of the new law, the non religious, secular opposition to the same sex marriage law proffered. Ultimately, none of it succeeded in creating any kind of wave against moves to pass the law.

Expectedly, the country was divided on the issue along religious lines. Several Christian denominations—Catholics, Baptists and the Mormons—opposed the bill, according to a New Zealand Herald survey after the bill was passed into law. The Presbyterians have no objection to the law and the Methodists have left it up to each local church. The Anglicans have not officially expressed a stand and some priests said that they would marry same sex couples in the absence of any clear direction. While the Hindu religion has not objected to the new law, some Buddhist sects have while others haven’t. Muslims have opposed it.

The law has further cemented New Zealand’s reputation as one of the world’s most libertarian, forward looking nation in keeping with its long tradition of equality and egalitarianism that began with being the first nation to allow women to vote in the general elections. The country has always enjoyed the highest reputation as a champion of human rights, racial equality and non discrimination at all levels of society.

In fact given such reputation, the passing of the law was a foregone conclusion. Anything less—even a delay—would have set the country’s egalitarian reputation several notches back. So would have any attempt to concede to the argument from some quarters that since a law permitting civil unions existed, a law for same sex marriages was superfluous.

NZ legalises same sex marriages

The point missed in this contention is that principles of equality cannot preclude any options that cannot guarantee equal status irrespective of race, sex, sexual orientation or any other attribute.

Therefore, if a case for civil unions exists, so does it for same sex marriages. Whether this has religious sanction or not is altogether a separate issue.

In passing the law, New Zealand has stolen a march over Australia, which is not likely to have a law like this one passed any time soon—especially ahead of a general election scheduled for later this year. In fact, there has been high expectation that same sex couples might make a beeline for New Zealand to get legally married.

Similarly, Pacific islands nations are unlikely to follow in New Zealand’s footsteps in a hurry, although the islands’ wedding segment of tourism will quite likely receive a boost with requests from same sex couples wishing to tie the knot in their exotic locales.

The question would then arise if local churches would allow such weddings to be solemnised and if local priests would oblige by officiating at such ceremonies.

The passing of the new law in New Zealand has demonstrated that modern ideas of non discrimination, equality, equal human rights and absolute freedom and liberty are quite incompatible with traditional religious tenets. In other words, when seen through the prism of equality, religious tenets appear based on strong discrimination based purely on faith and beliefs.

It is small wonder then that countries, which have passed non discriminatory laws of which the same sex marriage law is an example that might be considered extreme in many countries, have a sharply dwindling number of people who call themselves followers of any religion in the traditional sense of the term. The option “No Religion” is increasingly being ticked on census forms around the world, with some countries like wealthy Scandinavia reaching more than 60 percent.

‘While access to food situation is not as bad in the Pacific islands as it is in some impoverished parts of the world, the quality and nutritional value of available food is already a big issue.

This is why there is such a runaway growth in lifestyle diseases. Artificial and processed foods have all but filled the hole left by the scarcity of naturally grown wholesome foods’

T

he worsening problem of global food and water security needs to be dealt with at multiple levels.

Accessing nutritious food relatively easily at affordable prices is becoming a greater challenge with each passing year. The problem is even more pronounced in far flung areas and places that are deficient in fertile soils and

adequate water supply.

Every householder is familiar with the rise and rise of food prices.

In the last decade alone, food prices have more than doubled while grain reserves have plummeted by a third. In poorer nations, as a consequence, people spend more than 60 percent of their incomes on food.

Islands Business, May 2013 9

WESAY In the poorest nations, it is becoming the norm for families to skip food for one day a week to conserve food and make their spending ability go that much farther.

Nations that are known to be traditional food growers are finding it hard to keep up their food production levels because of a number of factors that conspire to raise the real fear of a mass food scarcity in the not-too-distant future.

Some of these factors are dropping water tables, fallow and polluted soils, changing rainwater patterns, pressure on farming land because of urban development and, of course, burgeoning populations. Last but not the least, climate change and warming climes are beginning to take their toll on crop yields.

Many such countries across the world are seeking farmlands in distant nations, especially in Africa, where, ironically hunger already exists but because of other reasons far more complicated by bad politics, lawlessness and violence. China is actively seeking farmlands in many places around the world—in Africa, Latin America and New Zealand.

Last year, Kiribati became the first Pacific Islands nation to negotiate leasing an island from Fiji with the express purpose of growing food for its people.

Kiribati, particularly its most populated atoll of Tarawa, has poor soil conditions, erratic rainfall patterns, little groundwater and water tables and almost no space available for growing crops. It has to depend on food imports and food shortages are known to occur even if a food-laden vessel does not make it to its port on time.

Other atolls also face a similar situation, which has increased their dependence on packaged, processed food imports that are crammed with empty calories, excessive salt, fat and sugars—the singular factor that has made non-communicable diseases (NCDs) like diabetes, cardiovascular ailments like hypertension and heart disease as well as obesity so widely prevalent in islands populations. In fact, obesity and certain other NCDs are already recognised as epidemics in some islands countries.

While access to food situation is not as bad in the Pacific islands as it is in some impoverished parts of the world, the quality and nutrition value of available food is already a big issue. This is why there is such a runaway growth in lifestyle diseases. Artificial and processed foods have all but filled the hole left by the scarcity of naturally grown wholesome foods.

It is fair to say that supply chains of naturally grown foodstuffs have been nearly replaced by foods processed and packaged in factories. Government investments in their countries’ own agriculture sector have dwindled over the years and almost no funding is forthcoming for any kind of innovation in improving the productivity of naturally grown wholesome foods including staples. This has exacerbated the food crisis at the local level, further compounding the aforementioned negative mega-trends like climate change, growing populations, fallow soils and falling water tables.

Small measures starting at the grassroots level going ground up can go a long way in addressing many of these issues at the local and regional levels. Driving home these ideas was a workshop held last month in Fiji which identified the challenges of supply chain management in the agricultural industry in the Pacific islands region.

Ideas to discuss approaches to supply a greater proportion of domestic demand with locally produced food particularly in urban areas were considered. As well as reducing waste and finding markets closer to home, such measures undoubtedly boost agribusiness, putting money into the pockets of local farmers.

Accessing food a challenge

10 Islands Business, May 2013

Honiara market...Nations that are known to be traditional food growers are finding it hard to keep up their food production levels. Photo: Islands Business

Intelligently and efficiently managing value chains at local levels can be key to maximising the fruits of agricultural labour and financial investment in the sector.

Fixing gaps in the chain, helping build, strengthen and maintain relationships between these links while supplying consumers with good, healthy produce is a winsome situation for all stakeholders in the chain right up to the consumer.

In an environment where food and water scarcity threaten hunger and malnutrition around the world and in which deteriorating soil, climatic conditions and exploding populations are presenting even greater challenges, efficiency and deft value chain management are an absolute necessity to ensure maximising resources.

History is littered with events where civilisations have gone to seed because they have not been able to manage their agricultural resources. The Sumerians and Mayans are believed to be two prime examples of such instances.

Innovation is another area that governments need to encourage.

This can happen in a range of areas. Beginning from encouraging and incentivising young people to embrace agriculture, financing their fledgling ventures and helping them build innovative, sustainable and close to natural growing systems to putting in place sensible value chain management infrastructure, systems and practices governments can do much, as some Pacific islands countries such as Fiji are already starting to demonstrate. Another important area that needs to be encouraged is information sharing, as was rightly stressed upon at last month’s workshop.

Growing local is good for the local economy because it uses local resources for generating local wealth and wellbeing. It also reduces the dependence on the carbon economy because it removes costly and polluting transportation from overseas from the equation.

Sensible and efficient pathways from farm to plate are the need of the hour in an increasingly food and water insecure world.

• We Say is compiled and edited by Laisa Taga.

Whispers Budget question: Whispers hears that at the recent annual meeting of the OCO (Oceania Customs Organisation) in Tonga, there were many questions raised about its audited account.

One such question was how 30% of its 2012 budget, totalling a little over $1 million, was used for personal expenses without any explanation.

Whispers was told the meeting gave the OCO Secretariat two weeks to provide a break down of how the money was used. OCO has 24 Customs Administrations from the Pacific as members.  Scoping mission…In another incident, a team from OCO went to Kiritimati island for a scoping mission. For background, there are only two customs officers on the island. And guess how many were part of the scoping team? Well, Whispers was told there were five on the team.

Interesting to see how much per diem they were paid and who all made up the team?  Expensive accommodation: Well, PNG is now getting more expensive than ever. Businesspeople who have interests in PNG prefer to conduct their business or meetings outside of PNG either in Brisbane or Cairns because it is a lot cheaper there.

Take for instance the hotel accommodation, a price comparison made by an avid contributor to Sharp Talk, an online networking group, is quite revealing. For Holiday Inn hotels across some major cities around the world, he says the cost of a room per person varies. In Port Moresby, it ranges from K655 to K928; Holiday Inn York, UK, K232; Holiday Inn Birmingham, UK - K200; and Holiday Inn Kensington, London - K380.

The high prices according to Sharp Talk contributors are not only confined to the Holiday Inn, it is also happening in all hotels, lodges, resorts, guesthouses,back packers and rental accommodations in Port Moresby. They have called for a price controlling mechanism to be put in place by government to monitor the prices.  Recruitment process questioned: There are serious questions being raised about the recruitment biases of some tax-free regional CROP organisations in the Pacific. A highly experienced Fiji citizen with impeccable academic qualifications and administrative management experience at a regional organisation got the shock of his life when he applied for a deputy director’s post in one of our CROP organisations: he was not even shortlisted.

The first rejection letter advised him to follow the proper procedures when applying. When queried further, the HR Manager at the other end said sorry, that’s just a general letter we send out to all applicants who are not successful, and 12 Islands Business, May 2013

kept on giving more and more pathetic evasive answers. The head could not even be bothered to reply to such a senior applicant.

This is not the first time an extremely highly qualified regional person has been rejected by this particular CROP organisation.

Several years ago, they rejected a former Fiji citizen, a woman, whose qualifications and experience were unmatched in the Pacific, in favour of a grossly inferior regional candidate, from whom little was expected and little delivered. It has been observed that there is a racist pattern of senior recruitment to some of the CROP organisations.

The top person may be a Pacific Islander, who is happy to have the next level filled by nonPacific Islanders, usually from Australia, New Zealand and elsewhere.

These expatriates make sure they “look after” the interests of the top person without challenging his position, and he (top person) makes sure that no Pacific Islander is appointed at the deputy level, who might be a challenge to him after his six years are up, so he can stay on—and some often do.

The expatriates on the other hand, when their six years are up, either change their classifications and remain in the same organisation, or they move to another tax-free CROP organisation with whose staff they have been socially networking for years (it is a small world here).

There is a long list of such individuals who have moved from one tax-free CROP organisation to another, or stayed at the same one for decades, minting millions.

They also make sure that when consultants are hired to use up the massive Australian and New Zealand donor funds, they hire from their own expatriate cliques in the region and abroad, even if more than qualified Pacific Islanders are available. It is no wonder that they make sure that no qualified Pacific Islander is hired at the top levels who might rock their cosy boat.

The astonishing thing is that these expatriates (and some Pacific Islanders) receive such massive salaries and other benefits (health, education and housing) that their packages are not just higher than all the Prime Ministers in the Pacific, but higher than that received by the Prime Ministers and senior civil servants of Australia and New Zealand. One wonders if the Australian and New Zealand representatives on the selection panels are aware of the recruitment games being played by these CROP organisations?  Keep it quiet: Ssshh, sssshh...there seems to be some hush-hush regarding Fiji’s medical personnel heading to war-torn Syria. If what Whispers is hearing is correct, at least 12 experienced nurses, two doctors and an x-ray technician will be heading to the conflict-ravaged Syria soon.

About 70,000 people have been killed and millions displaced during the two-year-old uprising in Syria, the United Nations says. Civilians have

been cut off from water, electricity and lifesaving medical supplies, especially in rebel-held areas targeted by air strikes and ballistic missiles.

Whispers hopes the Fiji personnel will be well compensated. But what happens to our hospitals which are already experiencing a shortage of experienced nurses and doctors?  Dog diplomacy: The Fijian envoy to Korea and his wife found themselves in the media for the wrong reason. According to the english.chosun.com, they were booked on charges of stealing dogs. Yongsan police said the ambassador and his wife were accused of running off with a Shih Tzu and a Pekingese in February this year after the owner of a bar in Itaewon handed them over for the couple to hold while he closed the venue.

“The ambassador and his wife denied the accusation claiming they thought the bar owner had given the dogs to them,” a police investigator said. The couple are not expected to face criminal penalties because they enjoy diplomatic immunity. Fiji’s foreign ministry sources in the capital, Suva, say the matter was a misunderstanding and has now been resolved.  Baby boom: Is the Solomons facing a baby boom? A midwife at the Solomon Islands’ main hospital says pregnant women are now being forced to give birth on the floor because of a severe bed shortage. The National Referral Hospital in Honiara has recorded a 20 percent jump in births in March—up from 394 the previous month to 474. This month (April) looks to be even higher, with 165 babies delivered at the hospital so far. The midwife says the large number of pregnancies may have resulted from last year’s Festival of Pacific Arts, which was held in Honiara.  Illegal consultancy? Is it true that a certain regional organisation is in the business of giving consultancy work to the expatriate spouse of an expatriate member of staff?

This, despite there being qualified Pacific Islanders who are able to do the work. If this is indeed true, not only is the practice illegal and contravenes the host country’s immigration laws but it also goes against the organisation’s very mandate to build the capacity and better the lives of Pacific Islanders.  Soccer lovers? Real Madrid has displaced Manchester United as the world’s most valuable soccer club in the new Forbes list. This is the first time since Forbes started tracking football team values in 2004 that Manchester United

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PNG on show...Well, top actors and actresses have been spotted carrying PNG’a bilum bags.

But how about this? London marathon runner Andrew Fairclough (pictured) wore a Sepik grassskirt which raised a lot of eyebrows at the international event. According to the ABC, Andrew was born in Wewak, East Sepik Province in 1979 to a teacher and a doctor. The skirt was given to his parents when they worked in the Pacific islands country in the 1970s. As one of the only doctors on the island at the time, Andrew’s father John treated a leper colony and worked in areas where cannibalism was still practised, while mother Sheila taught. Andrew, 34, who was born during their two-year stay there, believes he’s the first person to run the London Marathon in a real, tribal grass skirt. It’s also a nice memory of his parents’ time in Papua New Guinea, he says. Andrew’s father, noted Welsh orthopaedic surgeon John Fairclough, was a 24-year old Caerphilly GP when he and his wife went to work in Papua New Guinea in the late 1970s.

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has not ranked first. Real Madrid, which posted a revenue of $650 million during the 2011-12 season, is worth $3.3 billion. Real’s generated operating income (earnings before interest, taxes, depreciation and amortisation and player trading) of $134 million, are more than any football team and second only to the NFL’s Dallas Cowboys ($227 million) among all sports teams.Manchester United has a $3.17 billion valuation, an impressive increase from 2005 when the Glazer family bought the club for $1.47 billion. In third spot, Barcelona’s value has doubled over the past year to $2.6 billion.  Sex ring in the Solomons? One expat investor who stays in one of the local hotels there has come out with the claim that a sex worker and trafficking ring is operating from a local hotel, which is also a meeting spot for local politicians.

Whispers’ spies on the beat has told of the investor saying there are many “Asian dolls” at the

local hotel offering massage and other services to all men who book in. Wonder whether the local authorities are aware of this?  Bogari dumped: Well, poor Lucy Bogari, has been dealt a severe blow yet again. PNG’s national executive council has revoked her appointment as acting secretary for Foreign Affairs and replacing her is William Dihm, PNG’s High Commissioner to New Zealand. Prime Minister Peter O’Neill said the government was determined to ensure that Papua New Guinea was ready to meet the challenges and opportunities ahead, both at home and abroad. “Papua New Guinea’s foreign relations are at a critical stage and significant changes are occurring in and around the AsiaPacific region,” he said.

Boroko Foodworld – Boroko, PNG UPNG Bookshop – Waigani, PNG Lucky Foodtown – Samoa Wesley Bookshop – Samoa Panatina Chemist Ltd – (Honiara) Solomon Islands Officeworks Ltd (Panatina Plaza - Honiara) Solomon Islands Friendly Islands Bookshop – Tonga Tuvalu Air Travel, Shipping – Tuvalu Trade and Consultancies – Tuvalu Stop Press – Vanuatu A year’s subscription to 12 issues of Islands Business within Fiji costs $50 and includes a complimentary copy of Fiji Islands Business.

Islands Business, May 2013 13

Pacific Update

Kalosil keeps everyone guessing on new moves

By Davendra Sharma

resources to foster the livelihood of its population.

Like the Fiji situation, where indigenous Fijians have been alienated from the mainstream economy f first impressions are anything to go by, Vanuat the expense of residents of Indian and Chinese atu’s new Greens Party prime minister will truly descent, ni-Vanuatu also have similar fears. The new stamp his place in the country’s political hisgovernment intends to implement a 51% partnertory. ship deal between new foreign investors and locals.

Changing and chopping his predecessor’s ap“What we are saying is that we are ready to dispointments—ministerial and foreign diplomatic cuss these issues with the private sector and to find postings—was Prime Minister Moana Carcasses common interests. What is important now after Kalosil’s first moves as he consolidated his support nearly 33 years of independence, is that our popufrom within his new bench in Port Vila. lation should be part of A review of the country’s this economy,” Kalosil was post-independence constituquoted last month. tion is also on his ambitious The Prime Minister agenda—issues similar to said nearly every indepenthose considered in the sevdent islands country suferal changes to Fiji’s constifered similar issues as Vantutions over the last 25 years uatu where jobs, income, since the first military coup profits and dividends were in 1987. These are being being siphoned away from discussed in the corridors of the shores of the islands Vanuatu’s parliament. countries.

Greater power to the NaWhile every country tional Council of Chiefs, has encouraged foreign observing Christian sabinvestment, they have paid bath on Saturdays as well as a price for the foreign inSundays, and enforcing that jection of dollars with the future foreign investors inindigenous population declude indigenous ni-Vanuatu nied their fair share of the in their plans are a range of revenue. “So as a responcontroversial prime policy sible government, we need prospects Kalosil is contemto put in place policies to plating. help everyone be part of After cleaning up his dothis economy.” mestic front, the region and Kalosil will repeal the the world’s first Greens Party prime minister terminated a Prime Minister Moana Carcasses Kalosil…staunch act which established defence cooperation agree- supporter of freedom of Melanesians in West Papua. the Vanuatu Investment Promotion Authority— ment the former leader Sato Photo: www.cigpacific.org charged with monitoring Kilman signed with Indoneforeign investment—and sia. replace it with a Vanuatu Kilman’s alliance with JaPrevention Authority which will ensure greater lokarta was a two-pronged effort—to move Vanuatu cal participation in future new businesses. away from military reliance on Australia and also make a stand on anti-independence for West PapConsult National Council of Chiefs uans. But Kalosil has been a staunch and vocal supMoves are afoot to reward the country’s ancesporter of freedom for Melanesians in West Papua, tral leaders with greater consultative authority on currently held under Indonesia. He announced matters pertaining to land, language, culture and that changes he is implementing are reflective of traditional customs of ni-Vanuatu. what he stands for.

The council which is elected by member chiefs He said in his past 11 years he noticed that new sitting in district council of chiefs has in recent post-election governments in Vanuatu lacked vision past made headlines whilst appealing to the leaders as crucial policy changes were being ignored while of the Pacific Islands Forum and the Melanesian prime ministers engaged in personal agendas once Spearhead Group to preserve ownership of customthey took up office. ary land.

In his own personal unique flair of voicing conChiefs from Vanuatu joined those from Austracerns on just about everything, Kalosil criticised lia, Fiji, Papua New Guinea, Bougainville and the former governments of being dormant and taking Solomon Islands at a Mele Declaration in 2010, too long to implement important policy decisions. to ask regional inter-government agencies to keep “People expect to have a working government, a landownership in native hands. government of action,” he told overseas media in Kalosil believes the role of traditional chiefs in April, a month after displacing Kilman in a parliaVanuatu should not be arbitrary. In changes, he has mentary confidence vote. recommended, the new premier wants “the chiefs Kalosil’s schedule of goals is to achieve as many and council to negotiate with them changes that we as 100 changes and results in as many days. He want to do on anything on land, on custom...and I reckons that after 33 years of independence, the think it is important. former Anglo-French colony is nowhere near being Being a predominantly Christian state, Kalofinancially stable although it possesses abundant

I

14 Islands Business, May 2013

sil wants the country to observe strict sabbath on Saturdays and Sundays. He said businesses and the parliament will be affected by the move but “it’s time to give to God, and on that day we can concentrate on worship”.

Foreign relations Just as Kilman was at loggerheads with Canberra last June when his private secretary Clarence Marae was arrested in Australia over money-laundering claims, Indonesia quickly moved into Port Vila with loads of promise of military and education aid.

Kilman suspended the Australian Federal Police secondments and there were fears future defence ties with Canberra could be jeopardised with the former prime minister reluctant to budge on his Australian stand.

Kalosil has however not made his views on Australia known although it is clear he will terminate the highly-publicised Defence Cooperation Agreement with Jakarta signed by his predecessor.

The treaty was seen as a smack on Canberra’s 1983 Defence Cooperation Programme—under which Australian provides the Pacific Patrol Boat mission around Vanuatu waters.

He is bitter about the brutal killings of Melanesians in West Papua. As Internal Affairs Minister under the previous government, Kalosil warned that Vanuatu was treading on dangerous grounds by allying with Indonesia.

He said as part of his push for West Papua’s freedom and putting a stop to the suppression of Melanesians in the province, he will move to admit West Papua in the MSG (Melanesian Spearhead Group).

“MSG is quite powerful...with 80% of the Pacific population being Melanesian” With a growing number of West Papua residents now living in Vanuatu, the pressure on government in Port Vila is bigger than ever to support the freedom struggles of West Papua.

“Remember the late (prime minister) Father (Walter) Lini making the point at the time that Vanuatu should support the struggle of West Papua and today my government will support this, of course,” Kalosil said in his first public interview after his elevation to the high office.

He said recognition of West Papua as an independent state will gain momentum once the MSG lends an ear to the struggles faced by the nearly three million Melanesians in the province.

While Australia and China have made major inroads into Vanuatu’s commerce, development aid and trade in recent years, Kalosil has not made an official stand on further enhancing or limiting interaction between his governments and the region’s two principal economic powers.

“Everyone is important in the Pacific,” he said when asked about the importance of the Forum of which Australia is a full member and China an observer. But in line with his previous stand on restricting Chinese migrant workers heading to Vanuatu, Kalosil said he intends to move the Chinese Convention Centre from the main Parliament Park.

If unchallenged in parliament, Kalosil would hope to avoid the fate of his predecessors and hold on to power for the remaining four years of parliament’s tenure.

Nauru elections in possible delay

By Robert Matau

Godfrey Thoma explaining the reasons for their absence.

Parliament had sat under new Speaker Thoma auru’s parliament is again in the throes of unon April 30 but it was a brief session as 10 memcertainty as moves within are preventing its bers were absent and the House therefore failed to dissolution, a legal pre-requisite to national elechave a quorum. That was the second consecutive tions as scheduled for this year. parliament meeting that Speaker Thoma, has had The 18-seat institution has been wrought with to adjourn for not having the numbers. political and legal difficulties over the past month Thoma, nominated by former President Marcus as a number of sittings have been characterised by Stephen and supported by 10 votes, replaced Ludabsent members of parliament, preventing constiwig Scotty who resigned on April 18. tutional pre-election processes to take Unhappy over Scotty’s resignation, place.

Government members stayed away from Last month, government members the afternoon session of parliament. Earwere absent from three sittings and govlier in the month, Scotty had tried to disernment sources say this could continue solve parliament but he adjourned the until June 21, when the duration of the meeting before any debate could be held, current parliament ends. a decision that was against procedure.

The last national election in the tiny It was challenged in court and the disnation—where the population is a little solution was declared null and void. over 10,000—was held in 2010 and it was Thoma said when he was elected on one preceded by a similar deadlock that April 25 as Speaker, he followed normal had led to a state of emergency.

In a similar fashion, this year’s event President Sprent procedure by recessing the House to the is looking likely to end up in court, as Dabwido...of Nauru. following day.

Photo: Lisa WilliamsHe further explained that his role as President Sprent Dabwido is said to be Lahari Speaker is to ensure things move forward, considering legal action to force the including, when it becomes possible, to dissolve Speaker to dissolve Parliament. parliament and calling for a general election.

The view from the Opposition is that the However, Speaker Thoma further clarified that Speaker was simply following the law and governin order for dissolution to go ahead, the President’s ment members should mount a legal challenge if advice to dissolve the House must first be referred they had a problem with his decision. to members and members must be given the opporOpposition MP Matthew Batsiua said under tunity to debate it, which has not happened. the constitution, a member could lose his or her Thoma also suggested that those members who seat if he or she is absent from parliament without are insisting that dissolution should have taken efinforming the House. fect on 25th April should consider resolving the Under Nauru’s Constitution, a member is matter in court. deemed to have vacated his seat if he is absent “At its sitting on Friday, April 26, parliament without leave of Parliament on every day on which commenced shortly after 2pm but sat only briefly a meeting of Parliament is held during a period of as nine members did not attend and therefore the two months.

House did not have a quorum,” an official GovernOn both occasions of their absence, Government statement said. ment members have written to the new Speaker

N

“The Speaker read a letter from the nine stating the reason for their absence was their understanding that the life of the 20th parliament had expired the night before (midnight of Thursday, 25th April).

“The nine members cited the president’s advice read out in parliament on Thursday, 18th April, to dissolve parliament.

“However, since the advice has not been properly referred to the House nor have members had the opportunity to debate it, the dissolution cannot yet come into effect.”

The Speaker, according to the government statement, then expressed his disappointment over the absences.

“Thoma said the nine absent members were well aware that the Supreme Court has held ‘that the 7-day time period leading up to dissolution begins to run from the time the debate begins.

“As there has so far been no opportunity for debate, it is clear that parliament could not have been lawfully dissolved yesterday [Thursday, 25th April],” the statement read.

“In any case, Article 41(4) requires the Speaker to take action, at a specific point in time, to dissolve the House. Parliament does not dissolve automatically except when it reaches its full threeyear term or when, following the successful motion of no confidence, parliament fails to elect a new President within 7 days.”

Thoma said it was unfortunate that after weeks of uncertainty and legal disputes over the dissolution, the nine members continued to disregard the supreme law of Nauru which is the constitution.

With the constitution stating that a general election is held two months after dissolution, Nauru at its current pace could be looking at holding an election in August or September.

That is unless Government MPs decide to return to parliament to debate the dissolution of parliament.

Tuvalu waiting on by-election decision

By Robert Matau

T

uvalu is awaiting two important court decisions in relation to a by-election to elect a replacement for the late Finance Minister Lotoala Metia who died last December.

Government officials confirmed last month that they were awaiting the arrival of Chief Justice Gordon Ward in May. Ward will provide government with an opinion on whether the Opposition has the right to challenge the government’s decision to delay the by-election.

As this edition went to press both sides were waiting for their court decisions.

Foreign Affairs Minister Apisai Ielemia told Islands Business government was seeking the Chief Justice’s opinion on the matter whilst the Opposition has taken the matter to court.

The Opposition is saying that the Prime Minister has no powers to delay the by-election.

Whilst the government is saying that delaying the by-election will help solve the tension on Nu-

kufetau island, the Opposition says it is the very reason a by-election should take place.

The vacant seat is right now a hot issue in Tuvalu with one regional official saying confrontations have been reported in the capital city involving relatives of the late Metia and his cousin Enele Sopoanga, who is the leader of the Opposition. Both hail from Nukufetau.

In 2010, despite winning his seat, Metia was not retained as a cabinet minister under Prime Minister Ma’atia Toafa.

Metia’s cousin Sopoanga, a high profile politician having served as a diplomat in New York and being influential in climate change talks, was chosen to be Foreign Affairs Minister and also Deputy Prime Minister.

However, three months later Metia helped current Prime Minister Willy Telavi oust Toafa as Telavi and two other ministers crossed the floor to form a new government.

Under Sopoanga, the new Opposition began attempts to lure the late Metia back to their camp to

try and give and them back the majority.

Ielemia told Islands Business that tension is high on Nukufetau. He claimed that the opposition was trying to rush a by-election through some dirty tactics like ostracising people who opposed them.

“They took some very harsh inhumane sanctions against supporters of Metia like banning them from island gatherings and depriving them of paid jobs on projects implemented by government on the island.”

Ielemia claimed the Opposition has already announced a candidate and told the community that no by-election was needed, which he said was putting voters under duress.

“If we have a by-election soon, people will fight and will be forced to vote under duress. We wrote to the chief of Nukufetau asking him to remove the sanctions and lift the ban.”

However, when asked to comment on when parliament would sit next, Ielemia replied the government decides when it is convenient to hold a parliamentary sitting.

Islands Business, May 2013 15

Cover Report

The image that shocked the world...Mt Hagen mother Kepari Leniata burnt alive on a rubbish heap in front of a mob of hundreds. Photo: Courtesy of Peter Rees

Witchcraft Saga

World condemns murders as PNG seeks answers

A

By Peter Rees

surge in sorcery and witchcraft related murders in Papua New Guinea has drawn widespread condemnation from international groups such as the United Nations and Amnesty International.

A growing culture of insecurity and fear has been blamed and there are concerns it will impact on the country’s economic development.

Women’s rights groups are also up in arms at the disproportionate number of women being targeted. Women are six times more likely than men to be subjected to sorcery-related violence in PNG. Pressure is now on the PNG government to take action against those justifying the killing of innocent people through sorcery accusations.

Moves to repeal PNG’s Sorcery Act, enacted in 1971 while PNG was still a colony, have been made. This comes after a number of women accused of sorcery and witchcraft were murdered in recent months.

In February, the world was shocked when graphic photographs circulated on the internet of a 20-year old mother being burnt alive 16 Islands Business, May 2013

in Mt Hagen in Papua New Guinea’s northern highlands.

Kepari Leniata had been accused of sorcery (also called sanguma or puripuri) and blamed for the unexplained death of a six-year old local boy.

More horrific incidents were to follow. On March 28, six women and one man were branded with hot irons as part of an Easter “sacrifice” in the Southern Highlands. Their fate is still unknown.

A graphic image was also circulated of a woman from Wa village, outside Mendi town in the Southern Highlands Province.

She was accused of practicing witchcraft and villagers stripped her naked and tortured her. Christian pastors reportedly took part in the torture.

In April, two elderly women were beheaded after being tortured for three days. Four women were also kidnapped—one of them a teacher and women’s rights advocate, Helen Rumbali, was beheaded by a mob in Lopele in southern Bougainville.

PNG prime minister Peter O’Neill condemned the killings as “barbaric” and “unacceptable”. But Shamima Ali, chairperson of the Pacific Women’s Network Against Violence Against Women is calling for more action from the PNG Government including the “immediate disarmament of all civilians, including ex-combatants”.

“This barbaric act is yet another example of the unrelenting violence that women and girls are subjected to in Papua New Guinea.

“Women who stand up against misogyny and violence to try and help other women are being accused of sorcery in order to try and intimidate and silence them,” she explains.

In the same month, two foreign women were raped; a visiting United States academic on Karkar Island in the Madang Province and a Filipino woman in Mt Hagen.

These two cases were not related to sorcery, but it was further evidence that violence against women is endemic in PNG and foreign women were not immune.

The US academic, who was not named, went public about her abduction and rape to promote more awareness about violence against women.

“It should come out in the hope that it empowers Papua New Guinean women to stand up and say no more violence against women in this country,” she told the local media.

The sorcery deaths amplify a society already struggling with unemployment, chronic gender-based violence, HIV and AIDS and tribal conflict.

But more importantly, it questions the nation’s human rights record, credibility as a tourist and investment destination and the place of women in society.

the cultural practices that exist in the villages,” academic Patrick Matbob told Islands Business.

“There’s also the witches, spirit beings, fairies as well as white magic that are practiced amongst the locals.”

When someone dies or gets sick, the question often is ‘who did it’ rather than ‘how did it happen’.

The dominance of men in village affairs makes it easy to blame the most vulnerable members of society, namely women, widows with no male offspring and the elderly.

In such a patriarchal system where domestic violence is treated as ‘normal’ and where brides are bought like animals, women are placed in a vulnerable position.

Even though sorceryrelated killings are common, there are no reliable statistics to quantify that claim because most cases go unreported.

Amnesty International describes the lack of data as a “conspiracy of silence”.

“There is often collusion amongst villagers who punish or kill suspected sorcerers.

“Unless someone reports the killings to the police, deaths remain unknown and accepted by the community as the traditional means of justice in the absence of modern law enforcement process,” explains Matbob.

“Authorities recognise that in many parts of PNG, sorcery operates as a legal sanction against Even health campaigns in PNG...try to dispel sorcery beliefs as seen on this poster. Poster: PNG Govt wrong doing.

“The practice of ‘sorConspiracy cery’ is also done secretly of silence and therefore providing Even with the spread data of cases is impossible and difficult to prove.” of Christianity, sorcery and witchcraft beliefs are still strong in In the province of Simbu alone, the number of witch killings is Melanesia and are more embedded in daily life than in other parts estimated at around 200 a year. of the Pacific.

Even successful businessmen are targeted by resentful competiMelanesian peoples remain strongly connected with the spiritual tors who resort to vigilante methods to eliminate their opposition. world, in spite of modernisation. Belief in spirits is pervasive in This has driven many people away from the rural areas out of fear.

PNG where over 850 languages are spoken by more than 7 million In the Simbu province, it’s estimated that 10-15% of the populapeople. The majority of rural people live as their ancestors did with tion has been banished because of sorcery accusations. little or no influence from the government and churches.

The general failure of health services to curb the growing HIVFinding answers AIDS crisis (4.5% infection rate) had led many rural villagers to PNG government’s move to halt the scourge of sorcery deaths reject Western medicine. faces two stumbling blocks; an ingrained belief in black magic Unexplained misfortune, death, illness and accidents are therefore amongst the masses and the 1971 Sorcery Act, which was enacted blamed on supernatural causes, such as sorcery or black magic. when PNG was still a colony.

“Sorcery as defined in the English language is only one part of Islands Business, May 2013 17

Cover Report The Act of 1971 punishes those practising sorcery with up to two years imprisonment but it also help to reduce penal sentences if alleged black magic was involved.

Proving the legitimacy of black magic is the problem, however.

Black magic is also used to heal as well as kill or bring misfortune.

There is no common law to fight sorcery.

“Sorcery is a curious intellectual object because it cuts across the logic of science and magic, faith and belief as well as tradition and modernity,” says the Secretary to the Constitutional and Law Reform Commission, Dr Lawrence Kalinoe.

The PNG Constitutional and Law Reform Commission has recommended that the Act be repealed and has drafted a bill for parliament.

The commission’s chairman, Benjamin Poponawa, describes the law as “irrelevant and ineffective”.

The PNG Government is also being urged to up-the-ante on its advocacy work at the national level through community education programmes to help debunk black magic beliefs and institutionalise attitudes. But is this going far enough, and will the new legislation even put an end to the killings?

Matbob believes the issue is more complex than people realise and needs to be explored further.

“The topic needs proper investigation to be able to present a fair picture about the situation in PNG,” he says.

Eastern Highlands province’s first female governor, Julie Soso, claims that repealing the Act is not enough and backs a spiritual based solution.

Moana Carcasses Kalosil She wants to make killing an alleged sorcerer a crime and recommends creating more protection for women is the key.

“To repeal or come up with a law to get rid of the practice or exercise, it wouldn’t really help much because the reality is that women are already being killed. Really, we need to do something with the law to really protect the women,” she pleads.

While spiritual beliefs in the supernatural are well embedded around the Pacific, sorcery related violence occurs mainly in the Melanesian group, particularly Vanuatu and the Solomon Islands, rather than in Polynesia and Micronesia. This suggests the violence could be amplified by social problems unique in the region.

A conference on sorcery in the Pacific hopes to find some definitive answers. The conference is being held at Canberra’s Australian National University on 5-7 June and will focus on the Melanesian countries of Papua New Guinea, Solomon Islands and Vanuatu.

It will bring together academics from varied backgrounds including law, anthropology, gender and human rights, as well as policymakers, legal officers, human rights activists, members of church and non-governmental organisations.

Participants will engage in a constructive dialogue to develop practical and workable solutions to the negative societal problems caused by belief in sorcery and witchcraft, and particularly sorcery and witchcraft-related killings.

How the governments of the various Melanesian countries respond to these issues will be explored during the conference through the presentation of a range of comparative case studies.

Speakers will share strategies and interventions used in their own countries.

Among the speakers will be Nanai Puka-Areni (Director Constitutional Law, PNG Constitutional Law Reform Commission); Nancy Robinson (Regional Representative Office of the United Nations High Commissioner for Human Rights); and Nixon Duban (PNG Police Minister).

The lack of authority in the rural areas is a handicap for the PNG government. Police are mostly powerless to stop mobs. They were powerless to prevent Leniata from being burnt alive in front of 18 Islands Business, May 2013

Conversion to Christianity...is seen as a way to combat sorcery, but even Christians have been involved

hundreds of people in Mt Hagen and could only watch helplessly.

There is also no powerful deterrent as once sorcery accusations are fixed on a certain individual or group, it has the power to legitimise its own course of belief and action.

However, the problem is more deeply rooted in the gendered nature of development in the Melanesian region which has reinforced the obstacles facing women.

The relationship between abuse and women’s disempowerment has not been well understood and successive governments have not acted.

The lack of women in governance roles in politics and in the public service also reflects on policy decisions that have failed.

Therefore, recognition that women’s rights need state protection could shed more light on the answers than focusing on eradicating immovable traditional beliefs.

Around the Pacific • New Zealand—Makutu is the Maori version of sorcery—also a spell or incantation. In October 2007, five family members were charged for the manslaughter of Janet Moses.

The 22-year-old drowned during a curse-lifting ceremony in Wainuiomata. Water was forced into her eyes and mouth in an effort to flush out demons they believed she was harbouring. Polynesian in origin, makutu predates the arrival of Christianity in the 19th century.

• Solomon Islands—Sorcery, widely accepted by the locals, is an offence under the country’s penal code. Anyone found guilty, faces a maximum prison sentence of two months or a fine of SB$40

Cover Report

Sorcery prompts calls for death penalty National haus krai on May 15

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have been involved in sorcery attacks. Photo: Greer Family

(US$5). Cases are rare as courts find it hard to prosecute without evidence. Sorcerers are called “Arua” or “Kelema”. In 2009, an alleged pagan priest was stabbed to death for practising sorcery in the Malaita province.

• Vanuatu—Section 151: “No person shall practice witchcraft or sorcery with intent to cause harm or detriment to any other person.”

There has never been a successful sorcery prosecution in Vanuatu state courts, except for the “customary” courts that exist at the village level. In March 2007, tribal chiefs banned the practice of black magic after three people died during a riot in the Port Vila settlement of Blacksands. More than 80% of ni-Vanuatu are Christian but belief in sorcery and animist traditions is deeply rooted.

• Fiji—Consulting the spirit world and using them to influence daily affairs were part of the pre-Christianity Fiji. Fijians attributed all unexplained phenomena to gods, spirits or to witchcraft.

Witchcraft is considered illegal because it’s against ‘public morality’.

• Samoa—Ma’i aitu; means to be possessed by a demon or ghost.

In pre-Christian times, Samoans believed in demoniacal possession.

Mental illness is also blamed on breach of sacred protocol or tapu.

• Tonga—Tongans believe certain individuals possessed powers to curse others such as the Mehikitanga. The Mehikitanga refers to a female of high status on the father’s side, usually the eldest sister or a female.

• Aboriginal—The Aboriginal people of Australia have their own witchcraft such as some chilling methods of magical execution, as well as the concept of Dreamtime, the era of creation, when Ancestral Beings travel across the country.

By Davendra Sharma

t is ironic that at a time when public consensus is gaining momentum for greater women’s rights around the region, men are being accused of horrific crimes and sorcery against hapless women in the region’s most populous nation.

So much witchcraft, brutal gang rapes and torching murders as well as beheadings have claimed lives in Papua New Guinea in recent months that nearly 100 global social welfare groups have condemned and demanded answers from Port Moresby.

Calls have been made for the introduction of death penalty to be enacted although the influential church groups in PNG have spoken against the proposed new law.

Foreign tourists, academics and aid workers have also fallen victim to rapes and sorcery killings—prompting international condemnation and prompting local PNG church leaders to declare a national day of mourning on May 15 to highlight the violence and suffering of women through witchcraft, rape and murder.

A house of mourning or haus krai will be called throughout PNG as well as a sit-in protest at the national parliament to highlight the problem and the suffering endured by women in the country of more than seven million on May 15, American pastor, Stephen Michael Leach told the media in late April.

“The burning of a woman suspected of witchcraft in Mt Hagen shocked us as a nation. Internationally, it shocked the world that this could happen in 2013.

“We thought that was the worst, but over the last few weeks, we have watched as the situation has deteriorated. Violence has escalated at a phenomenal rate.

“The violence has brought such shame upon Papua New Guinea, absolute shame upon this nation.

“It went from there to the killing of an Australian man and the rape of his Filipino friend in Hagen, the rape and murder of a 14-year old girl in Lae, the rape of my American wantok on Karkar Island, Madang and the killing of four women accused of witchcraft on Bougainville,” Leach said.

“That’s why we came up with the idea of a national haus krai. If there is one thing Papua New Guineans can do right, it is mourning.”

Leach was being joined by a chorus of other congregation heads from around PNG in their bid to end the barbaric chapter in the country. “We call on all men and women, not only in Port Moresby but across the country to hold a haus krai for their mothers, their sisters, their wives, their daughters, who are being senselessly slaughtered.

“We will take it to parliament and weep, so that not only the politicians can see that the grassroots are suffering, but also the world can see that we are not all barbaric. Collectively, we as a nation, have blood on our hands and we need to have this haus krai,” noted Leach.

Governor Jim Kas of Madang apologised to the United States in April as an American scientist researching on global warming was repeatedly raped by nine men on Karkar Island. Petitions were lodged with both provincial and national governments seeking stringent laws on perpetrators.

Islands Business, May 2013 19

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Cover Report “There’s no other word to describe this situation, all I can say is I am deeply ashamed and on behalf of my people, I would like to say sorry to America,” Kas said to the victim’s husband who was tied up whilst her attackers raped her.

At protest rallies, some parliamentarians—Ken Fairweather and Anton Yagama—wept openly to show sympathy to the victims and their families. They joined in the calls at rallies for government to change the laws to allow death penalty.

sorcery involved home-made guns, axes and knives in the killing fields in the Porgera area.

Police commander in Porgera Senior Sergeant Simon Mek agreed with Justice Gauli that so many cases of such nature are often unreported as relatives accept their own customary ways of settlement.

“So many such cases are reported but rarely go through to the high court as relatives accept their own customary ways of settlement in the village courts,” Mek said.

The police commander’s comments sparked American outrage a furore among local PNG women’s rights Despite apologies, Washington sounded a groups who said that victims of such sorcerywarning to Port Moresby that only tougher related crimes should not pardon or accept laws would inhibit future incidences of rapes, compensation. murders and sorcery.

“We don’t want compensation payments The United States was willing to assist the for our sister’s death,” said women’s rights O’Neill government address the issue before activist, Pinema Vakai. “We have pigs, we have sexual violence against women and sorcery. money. No compensation can bring our sister “Currently, we have not had such a protest back to life.” from the victims so I guess I would prefer to Justice Gauli said only harsher penalties will protect and respect through privacy and not see a slow demise of the practice of sorcery in comment now although I will say that I very the remote areas of PNG. much welcome the proactive statements made “In my view, some are using sorcery as an by senior officials indicating their concern and excuse to terminate someone’s life though the their desire to improve conditions here,” US suspect may not be a sorcerer.

Ambassador Walter North was quoted as saying.

“We have established village, district and the “Of course, it’s not just to improve condinational court (where they can) bring grievtions for visitors, but improve conditions for ances to be settled rather than taking the law everyone living in this country,” North said. into their own hands.”

Australia has also joined the American protest The debate of pros and cons of a death Tortured...a woman from Wa accused of practising which followed the United States researcher witchcraft was stripped naked and tortured. Photo: penalty world over has always had staunch being raped and had her hair cut to the scalp. Courtesy of Peter Rees opposition from Christian churches.

In PNG, the Catholic Church said the soluDeath penalty tion to sorcery would be to educate offenders and their families and An Australian was murdered and his friend sexually assaulted strengthen police capacity to deal with the crimes. in a separate incident last month—sparking concerns in the crime It said death penalty was a way of “giving in to the same vengeful areas of the country. streak in PNG’s culture that is part of our current problem”.

PNG’s Attorney-General Kerenga Kua warned that attacks on “Those who commit these offences do not believe that they will female foreign tourists was as alarming as violence against local be caught and even less be actually sentenced,” said Archbishop vulnerable women.

Douglas Young in a statement as pressure was growing in Port He said the national government would have to consider bringMoresby to address the issue that is threatening foreign tourist ing death penalty. arrivals and prospective investments.

His department has received more than 100 petitions from human “The major deterrent to crime is not the severity of the punishrights and other groups from around the world. ment but its certainty. Give the clear message, if you do this, you “Those horrific, brutal, gruesome killings of the type that a will be caught and you will be punished. Change cultural norms woman was burnt alive to her death should attract death penalty,” that encourage the protection of offenders,” he said.

Kua cautioned criminals.

“Let’s turn our attention to policies that will genuinely address “Most of the people are ready for it and they want it now as they the plague of violence in PNG, not those that serve only to further are fed up of the law and order problems in this country and they brutalise the nation.” want to see a more liberal use of the death penalty.”

O’Neill declared that perhaps the first step would be to deregCalls by concerned groups in PNG and abroad have won symister the country’s Sorcery Act which gives indirect approval of pathetic ears in Port Moresby as the government admits it’s time the practice. it “did something radical” to arrest the situation before it even “This is to stop this nonsense about witchcraft and all the other escalates further. sorceries that are really barbaric,” O’Neill said in announcing his “My job is simply to do what the people want me to do. I cannot intention in parliament to scrap the law this year. shut my eyes to the people’s request. I’m not deaf, I’m listening; if North Bougainville Human Rights Committee chair, Helen they want it, we will give it to them,” said Kua. Hakena, says it was encouraging that there is genuine political will But under PNG laws, severe offences like treason, piracy and to stamp out sorcery killings. willful murder can attract death penalty but such judgments have “For us women, we are so happy that our country’s leaders—par leaders—parnot been seen since an execution in 1954. ticularly the prime minister—is looking into that because that will Last month, a PNG court jailed a man for 30 years for slaughterreally help to promote and protect the human rights of our people accused of sorcery,” she said. ing his aunt he accused of sorcery.

“And that will help bring justice to those perpetrators who are Justice Mekeo Gauli said the killing was “senseless, barbaric and accusing people of sorcery and killing them.” brutal”. The incident in which two earlier deaths were blamed on Islands Business, May 2013

Trade tory agreements.”

Of all the components of the proposed PACER Plus, labour mobility and development assistance are deemed vitally important to Pacific member countries. In a recent presentation to Forum Islands Countries negotiators, Dr Kessie said the objective on labour mobility negotiations should benefit both parties.

For FICs, labour mobility would relieve social pressure as a result of growing populations and the lack of employment opportunities. It would also provide a ready source of remittances, which is a key source of foreign exchange for many islands economies of the Pacific.

The Vanuatu-based Chief Trade Advisor said participating islands workers would acquire newer and enhanced job skills in Australia and New Zealand, and for the two bigger nations, Pacific islands labour should relieve critical shortages of Australian Prime Minister Julia Gillard (left)...no substantive commitments from Australia and New Zealand on labour mobility manpower in certain key sectors of and development assistance. Photo: PIFS their economies.

Negotiating positions therefore for FICs would be to ask for the inclusion of more sectors under the seasonal workers’ programmes of both Australia and New Zealand, increasing the numbers of workers admitted under them.

FICs should seek further inclusions of four new sectors on a trial basis in Australia namely: sugarcane, cotton, accommodation and aquaculture.

Dr Kessie, who is Ghanaian-born Australian citizen, also advised Forum negotiators to take a position on whether all members of the Forum should benefit from labour mobility arrangements.

For now, Fiji is excluded because of its suspension from the Forum.

The provision of incentives by the two larger Forum members should also be considered as these might encourage their own employers to recruit more Pacific workers. Incentives could be oped or advanced developing countries.”

By Samisoni Pareti in the form of tax incentives, subsidisation of airContacted via electronic mail, Dr Edwini Kesfares and streamlining the recruitment processes. sie, the region’s Chief Trade Adviser, was not as The renewed sense of optimism surrounding Mutual recognition of qualifications could outspoken as the government negotiator we had the start of PACER Plus negotiations between the help and this may include expanding the training spoken to.

Pacific Islands Forum Countries and Australia programmes of the Australian Pacific Technical Dr Kessie admitted labour mobility and deand New Zealand reportedly suffered a bit of a College. velopment assistance were “difficult issues” but setback at their last inter-sessional negotiation Dr Kessie also briefed islands negotiators on was hopeful both parties would be able to sort session last month. the need to have a job re-integration programmes out their differences.

Red flags went up when the two parties tackled in the islands for returnees.

“Of all the issues, I think the two most difficult labour mobility and the development assistance Armed as they were with a very good brief, ones are labour mobility and development assiscomponent of the proposed free trade agreement, Forum negotiators, however, returned home tance. With respect to the former, the FICs would this magazine has been told. disappointed from their recent negotiation seslike to see substantial improvements to the RSE “Without substantive commitments by Austrasions in Port Vila during the first week of April.

(Recognised Seasonal Employer of New Zealand) lia and New Zealand on these two issues, PACER “Our main demands were to have legal cerand the SWP (Seasonal Workers Programme of Plus would turn out to be another conventional tainty and also an increase in the current caps Australia) in terms of an increase in the number trade agreement which would fail to transform under the SWP of Australia and the RSE of New of eligible workers under each scheme and the the economies of FICs (Forum Islands CounZealand and also an extension of the coverage extension of their coverage to areas in which they tries) and put them on the path of economic of the schemes to sectors in which the FICs have a comparative advantage, such as accomgrowth and sustainable development,” one islands have a comparative advantage such as mining, modation, heath care, mining and construction. negotiator told Islands Business in confidence. construction, accommodation and health care,” “Regarding the latter, the FICs would like “The positions adopted by Australia and New said our source.

Australia and New Zealand to assist them address Zealand in the negotiations did not match their “Australia and New Zealand were non-comthe supply-side constraints which have prevented public pronouncements that they viewed PACER mittal as to whether they would accommodate them from taking advantage of market access opPlus as a trade and development assistance agreeour essential interests despite the fact that a robust portunities under the trade agreements. These are ment. agreement will represent a triple win for FIC citidifficult issues and we are working with Australia “For all intents and purposes, the negotiations zens, FICs and also Australia and New Zealand.” and New Zealand to arrive at mutually satisfacwere being conducted as if the FICs were devel-

Roadblocks on PACER Plus talks

No progress over labour mobility and development assistance

22 Islands Business, May 2013

Trade

Good progress so far, says Kessie We had sought an update on PACER Plus negotiations from Dr Edwini Kessie, the Chief Trade Adviser for Pacific Islands Forum Countries based in Port Vila, Vanuatu. Reprinted below are his responses to questions put forward

by Islands Business.

Are you satisfied with the progress made to date?

“We have been making good progress in the negotiations, particularly on the priority issues as designated by Ministers. We have draft texts on all the issues and we are currently going through them to narrow the differences between the parties. There is now a sense of urgency to the negotiations as the parties believe that a development-oriented agreement would assist Forum Islands Countries to achieve robust economic growth and sustainable development.”

Is it accurate to say that currently rules of origin, development and economic cooperation, labour mobility and trade in goods are the most pressing issues in Pacer Plus negotiations?

“We have been focusing on the six priority issues, namely customs procedures, rules of origin, sanitary and phytosanitary measures, technical barriers to trade, development assistance and labour mobility in the negotiations. The chapter on customs valuation has been agreed and we have made substantial progress on SPS, TBT and rules of origin chapters. We have also made some progress on development assistance and labour mobility. Australia and New Zealand

have tabled a draft text on development assistance and the FICs have tabled a draft text on labour mobility. There is greater understanding of the parties’ positions on these issues and hopefully we will be able to find a common ground as far as these two important issues are concerned.

Out of the four issues noted above, is there any issue in particular that you find most problematic in terms of getting a consensus amongst FICs and also with Australia and New Zealand?

“The FICs have common positions on all the negotiating issues. Before every inter-sessional meeting, the FICs coordinate their positions with the assistance of the OCTA.” Since there are similar issues that the EU and PACPs are grappling with, is it fair to say that it would have been preferable if the EU/PACPs had sorted these issues well before hand, as it would have saved PACER Plus parties a lot of time?

“While there are similarities between PACER Plus and the EPA, there are also important differences between the two negotiations. The PACER Plus negotiations, for example, cover trade in goods, trade in services and investment, while the EPA negotiations cover only trade in goods.

While fisheries is an important issue in the EPA negotiations, it is not in the PACER Plus negotiations. The FICs regard both the EPA and PACER Plus as trade and development agreements. A pure trade agreement will not help reverse the marginalisation of FICs in the multilateral trading system. They would like to get substantial assistance from their negotiating partners to build

their trade-related infrastructure so that they can take advantage of the market access opportunities provided under both agreements to increase and diversify their exports of goods and services.

OCTA has been following closely the EPA negotiations bearing in mind that some of the solutions reached on the delicate issues could be useful also for the PACER Plus negotiations.”

According to your timelines, when are you hoping to have a draft PACER Plus text ready?

“It is difficult to give a definitive timeframe.

What I can say is that all the Parties are committed to making substantive progress in the negotiations. There is the realisation that time is of the essence and the longer it takes to conclude PACER Plus negotiations, the fewer the benefits that would be derived by the parties, particularly the FICs. “By the next inter-sessional meeting in August, we hope to have draft texts on trade in goods, trade in services and investment.

With a spirit of goodwill and a firm focus on the primary objective of the negotiations, we should be able to wrap up the negotiations as soon as possible.

“PACER Plus is not meant to be a conventional free trade agreement. It is meant to facilitate the full integration of FICs in the global trading system through increased trade and investment. This is the task of the negotiators and hopefully we will be able to come up with an agreement that will fulfill the mandate of the leaders.”

SPARTECA allowed duty-free entry of islands Office of the Chief Trade Advisor posed several Like labour mobility, development assistance goods to Australia and New Zealand, the trade questions Forum negotiators would need to conwas the other key point islands countries had agreement was still deemed ineffective. sider when negotiating development assistance wanted in any new trade agreement with Australia Its rules of origin were too stringent and iswith Australia and New Zealand. and New Zealand.

These included having a relevant chapter Not all FICs could trade immediately, on development assistance or annexing it as so having a development assistance coma work programme, and whether it should ponent would allow these countries to only be about implementation assistance or access help to develop their capacities. extend it to development assistance.

They would thus enjoy the benefits of Would this result in the establishment of PACER Plus as well. a dedicated fund, and if so, would this be Said the regional trade negotiator we new and additional funding or otherwise? spoke to: “Regarding development asThe two Trans-Tasman neighbours could sistance, we were seeking assistance to be asked about the amounts they are each implement our PACER Plus obligations, proposing and also the delivery mechanisms and also more broad assistance to address they would adopt. our supply-side constraints such as weak Should it be done on a bilateral or retrade-related infrastructure which have gional basis, or a combination of both? contributed to our marginalisation in Procedures on how funding is accessed global trade. should be spelt out, Dr Kessie advised and “Australia and New Zealand assured that a monitoring mechanism could also be that they would be providing assistance proposed to ascertain whether the assistance to FICs to implement their PACER Plus given is achieving its objectives. obligations, but they were not as forthIn meeting some resistance with regard to coming on the broader assistance that development assistance and labour mobility would ensure that we, the FICs, are able to take advantage of the entire agreement to Pacific islanders...picking fruits in New Zealand under the country’s in PACER Plus negotiations, our islands negotiators are experiencing nothing new. increase our trade with Australia and New Recognised Seasonal Employer scheme (RSE). Photo: Dev Nadkarni Negotiations with the European ComZealand and the outside world.” mission (EC) for their new Economic Without any development assistance Partnership Agreements (EPA) have also stalled lands countries had great difficulties complying component, FICs feared PACER Plus would be over the same issues. with the agreement’s measures on sanitary and no different to previous trade apparatuses such The EC had countered it has no mandate phytosanitary (SPS), as well as technical barriers as SPARTECA, for example. to negotiate labour mobility and Pacific ACP to trade (TBT).

In his briefing session with FIC negotiators members are complaining that the rhetoric is not On their March Fiji briefing sessions, the held in Fiji in March, Dr Kessie said while Islands Business, May 2013 23

Politics matching the negotiation reality when it comes to the development component of an EPA. Though disappointed with the way their recent inter-sessional negotiations in Port Vila played out last April, the trade negotiator we spoke to remains optimistic, for now.

“I still believe PACER-Plus could be a transformational agreement for the FICs and strengthen regional trade and economic ties with Australia and New Zealand if the FICs are assisted to draw benefits from it, otherwise it would suffer the same fate as SPARTECA, which since its implementation over three decades ago, has failed to reverse their marginalisation in the global trading system.”

The negotiator did report that there was some progress on negotiations on the rules of origin, although no further details were offered.

In his briefing papers last March, Dr Kessie had said that out of the 22 proposed articles plus 1 annex in the Rules of Origin component of PACER Plus draft text, negotiators had reached agreement on 10, secured broad convergence on 6 and 13 remaining articles needed further work.

FICs should seek rules of origin that would facilitate their exports and that the rules must be flexible and take into account the level of processing in these FICs, his brief had pointed out.

Dr Kessie is an expert in trade law and apart from teaching at the University of Technology, Sydney, he also worked at the World Trade Organisation’s Council and Trade Negotiations Committee Division when he took up the Chief Trade Advisor position for FICs in Vanuatu in July last year.

The absence of a roadmap in PACER Plus negotiations concerned him and this was a point that was highlighted by an expert in regional trade negotiations when we sought his views for this story.

“The negotiations will be four years and I understand that there is still no roadmap that is being followed. There is progress in some areas but not in other areas resulting from lack of capacity and also because of efforts directed at other trade negotiations—EPA, PICTA (Pacific Islands Closer Trade Agreement) and MSGTA (Melanesian Spearhead Group Trade Agreement).

“Inter-sessional sessions are now taken up with negotiations but decisions are made ad referendum,” said the expert.

This former trade negotiator believes negotiations would need a roadmap, as well as an agreement on the scope and structure of PACER Plus.

“There would also be a need for convergence on opting in and opting out on certain components of the trade agreement by FICs. “It appears that PACER Plus would be both trade and development. But the negotiations need to firm up on what constitutes development and how this will be realised.

“I understand that many related issues are far from being confirmed, for example the name, structure, scope, funding, delivery mechanism, means of access and monitoring.

“On rules of origin, whilst issues have been identified, the objective is not quite agreed.

“On labour mobility, no legal text has been tabled even though the PICs (Pacific Islands Countries) wanted one earlier on. There are legal texts, however, for ROO, SPS, TBT and Developmental Assistance. These, plus labour mobility constitute the common priority issues,” the trade expert said.

24 Islands Business, May 2013

NORTHERN MARIANAS

Saipan, back door into US citizenship for Asian babies?

CNMI wants rules tightened up

By Haidee V. Eugenio Pregnant Asian ‘tourists’ mostly from China and Korea have been choosing Saipan in the Commonwealth of the Northern Mariana Islands (CNMI) as a good destination to give birth if they want automatic U.S. citizenship for their children.

The CNMI government has asked the United States for stricter border control to prevent the entry of tourists in advanced stages of pregnancy, but any enforcement success remains to be seen.

Babies born in the CNMI, as in other U.S. states and territories, are automatically U.S. citizens regardless of the nationality of their parents.

It is way cheaper to fly to CNMI’s capital island of Saipan in the Western Pacific than to the U.S. mainland. Saipan, compared to the U.S. mainland, is much closer to Asia.

Moreover, the fees being charged by private individuals or companies catering to “birth tourism” on Saipan have become a lot more attractive for mainland Chinese and South Koreans because these charges are cheaper than giving birth in Hong Kong or the U.S. mainland nowadays.

For at least US$10,000, for example, a pregnant Asian tourist can already book a ticket to Saipan, rent an apartment, pay for a U.S. passport for her child, hire an escort or translator, a caretaker or someone who can drive her around including to the grocery store or to the hospital for pre-natal checkups and to give birth. This amount still excludes hospital fees that could also rack up to over US$10,000.

A Chinese businessman giving translation services for pregnant tourists for an average hourly fee of US$30 said many of his clients from mainland China come to CNMI to get around the Chinese government’s “one child policy.”

He said many pregnant Chinese are in the CNMI to give birth to their “second” child.

Because children born in the CNMI are U.S. citizens, the birth tourists won’t have two Chinese children when they go back to their country and they are thus not violating the one-child policy. Other parents want their children to be able to leave China for the United States when they grow up—to study, work and live. These children can then bring their parents to the U.S. with them.

Many of the legal foreign workers who have been in the CNMI for years and decades have expressed frustration that while they could not be granted improved immigration status such as pathways to U.S. citizenship, tourists’ children could automatically become U.S. citizens.

On the upswing Birth tourism is believed to be more pronounced in the CNMI since 2009 when the U.S.

Department of Homeland Security granted a U.S. visa waiver for Chinese and Russian tourists visiting the islands.

Under the visa waiver program, tourists from China and Russia can stay in the CNMI for a maximum of 45 days without securing a U.S. visa.

The CNMI’s borders are now controlled by the U.S. federal government, particularly the U.S. Department of Homeland Security (DHS).

With birth rate among Asian tourists surging, CNMI Governor Eloy S. Inos and the CNMI’s delegate to the U.S. House of Representatives,

Commonwealth Health Center...CNMI’s only hospital. Photo: Ha idee Eugeni

Gregorio Kilili C. Sablan (Ind-MP) asked DHS Secretary Janet Napolitano in April to keep a tighter watch over this.

Women in advanced stage of pregnancy are not supposed to be allowed to board a plane or step foot on the CNMI. Still, many Asian tourists still manage to travel to the CNMI and give birth to their U.S. citizen son or daughter within weeks or a few months.

“We would certainly urge you to encourage Customs and Border Protection agents to deny entry to anyone suspected of attempting to come into the Northern Marianas for this purpose,” the CNMI governor and delegate told the DHS secretary in a joint letter.

Chinese tourist arrivals into the CNMI are expected to grow by 29 percent and there’s no telling yet how many of them are birth tourists.

CNMI’s former governor, Benigno R. Fitial, repeatedly called on the U.S. government to address the matter.

He said there’s been an increase in the number of illegal aliens mainly because of Asian pregnant women who entered the CNMI to give birth to U.S. citizens and have remained on the islands long after their tourist visas have expired.

CNMI Representative Tony Sablan, a former

l. Photo: Ha

Politics

SOLOMON ISLANDS immigration director, said while birth tourism is nothing new, he believes the number of cases was “minimal” when the CNMI was in control of its own immigration.

Sablan said back then, these overstaying nonresidents would have been removed from the CNMI right away. He said many of them overstayed mainly because they were still waiting for their child’s birth certificate.

Economic boost A Chinese businesswoman on Saipan said only rich Chinese women or couple could afford giving birth in the CNMI because, among other things, they wouldn’t be able to get their child’s U.S. passport “without first settling all their hospital bills.”

She pointed to the economic contributions brought by birth tourism—from having paid hospital bills, apartment rentals, car rentals, employment for escorts/translators, food and retail sales, and the like.

Saipan’s parks, beach pathways and apartment areas have become a parade ground for pregnant Asian tourists on certain days and time of day for their regular walk and exercise.

Many of them rent medium to high-priced apartments for a month or two, while waiting to give birth at the only hospital in the CNMI—the Commonwealth Health Center.

At one point, at least three websites were marketing the CNMI among Chinese and Korean women as a good destination to give birth to automatic U.S. citizen children. But media attention and government crackdown have brought these English websites to oblivion, although it won’t be surprising if Chinese and Korean language websites luring birth idee Eugenio tourism in the CNMI still exist.

These former websites showed pictures of the CNMI’s only hospital where clients from China or Korea are supposed to give birth. One of the websites said normal delivery could cost about US$11,000 on Saipan.

Single arrest In March, the U.S. District Court for the CNMI imposed a nine-month prison term against a man tagged by federal agents as behind a scheme to encourage Chinese nationals to come to Saipan to give birth to U.S. citizen children.

The Taiwanese national, Kuanyi Chen, is believed to be so far the only one charged related to birth tourism in the CNMI in recent history.

He was arrested on August 25, 2012.

The indictment charged the man with five counts of encouraging illegal entry of aliens for financial gain, five counts of harboring aliens for financial gain and five counts of illegal transportation of aliens for financial gain. He pleaded guilty to one count of harboring aliens for financial gain as part of a plea deal. The remaining charges were dropped.

It is not known, however, whether others would also be arrested, charged and convicted given that thousands of Asian tourists come to the CNMI only to give birth and avail of the “birth packages” offered by individuals and businesses.

Where is the treasure? Honiara, capital of the Solomon Islands. Photo: Islands Business

Plot thickens as politicians join treasure hunt Now the fight is on

By Alfred Sasako It’s a story that won’t go away.

Like a narrative being developed into a movie, the plot just gets thicker by the day.

The story is about treasure hunt in Solomon Islands. And the chances are that you’ve heard it before. Or read about it somewhere.

It is perhaps not different from what you’ve been told. Public knowledge of it began in the 90s, when a handful of men, aided by some foreigners, began digging at sites in Tulagi, the former capital of Solomon Islands, on Florida Island or Ngela.

According to those who were active in the treasure hunt, they were close to unearthing gold bars worth hundreds of millions of dollars that the Japanese left behind when the Allied forces drove them out of the Solomons.

But a decade later, the hunters were no closer to finding the gold bars. It is not clear whether the dig on Tulagi is continuing.

Stories circulating at the time had it that the Japanese had retrieved the gold cargo when it was operating a tuna cannery on Tulagi. The cannery has since relocated to Noro, in the nation’s Western Province. That was then.

Now, there’s a new twist—instead of one, there are now two groups vying for the loot. It is a silent war, fought every day, with sub-machine guns and high-powered speed boats at the ready 24 hours a day. This is going on without the knowledge of most Solomon Islanders.

It is a plot akin to the movie Enemy of the State, where one group has the resources of the state at its disposal, while the other is trying to negotiate a deal.

In fact, that’s what makes this new treasure hunt story different this time. What gives it the edge is the cast (that is the people involved), who

they are and what drives their involvement.

It’s a colourful cast that can be mistaken easily for criminal organisations such as the Italian mafia, the Japanese Yakusa or the Chinese triads.

In the first group are senior government ministers, senior rogue police officers, ex-militants, known criminals, senior public servants and businessmen supported by overseas divers and others armed with sub-machine guns. These mercenaries were allegedly brought in by the government to find the treasure buried under metres of water somewhere in Solomon Islands.

The second group comprises local Solomon Islanders who have found the loot along with some foreigners, but have refused to show the authorities the exact location unless the government agrees to a 50/50 share in the find, said to be worth about SB$9 billion (about US$1.28 billion) in today’s gold price.

The Honiara government has steadfastly refused to talk, claiming the Admiralty law shall apply in the recovery of the gold bars. The government was quiet about it as it fears the Japanese government may also stake a claim, which could end in lengthy litigations.

According to insiders, the plot is so thick that even foreign law enforcement officers working for the Regional Assistance Mission to Solomon Islands (RAMSI) are involved.

“RAMSI is providing a GPS tracking system of local islanders associated with the treasure hunt, particularly those who know where it is buried,” one insider confided in me.

The story had its roots in the Second World War. In 1942/43 or thereabouts, a Japanese boat, camouflaged as a hospital ship, was plying the seas off the coast of Isabel province.

An American fighter plane on patrol bombed it and it is not clear how many men survived.

Among the survivors was a man from Isabel Islands Business, May 2013 25

Politics Province. He was a cook on the ship, according to one account. The story, kept well away from the public domain, was that on his death-bed, the man told one of his sons to go and have a look at a precise location where the boat sank.

“You will find steel boxes lining the hold of the boat lying in 50-60 metres of water,” the son was instructed.

The son found exactly as his father had instructed. Curiously, he decided to get one of the boxes to see what the contents were. When he did, he could not believe his eyes.

“The container was full of gold bars, each weighing about 12.5kg,” the insider said.

When news of the find caught the attention of the government, the man was lured to Honiara where arrangements were made for him to sell the gold bar allegedly to the Central Bank of Solomon Islands.

“The man was told he would get SB$3 million (about US$395,000) for his discovery. The gold bar was sold alright. That was around September last year. Today, the man is still waiting to get his money,” the insider said.

“What the government is after now is to kidnap the guy and force him to show the exact location of the wreck. We won’t do that unless we get a fair share of the find,” the insider said.

“We actually fear for the man’s life because almost every day, the guy is being tailed sometimes by government vehicles, other times by unmarked cars with heavily-tinted glasses,” he said.

Using a number of public servants, the government appears to have closed all the loopholes.

One officer, for example, recently completed a policy paper aimed at centralising the sale of gold and other precious stones mined or found in Solomon Islands.

It is understood two Australians who recently opened a gold buying outlet in Honiara were behind the idea of a centralised system. The idea is that the duo would be granted the exclusive right as the only outlet to sell gold in Solomon Islands.

Under the deal, the public servant would get 30 percent of all gold sales.

What has this rather wild goose chase cost Solomon Islands taxpayers?

Insiders say that since last December, the government has spent $16 million in the hunt for the treasure. They say the expenditure include the hire of foreign deep-sea divers as well as submachine gunners to protect them.

These people are said to be permanently based on Isabel Province, where the nation’s world class nickel deposit is located.

“They are using the most up-to-date GPS technology to track the movement of local people who know about the location of the find,” according to one source. But even in cabinet, there was a split as well. One group of ministers and politicians are agreeable to sharing the find on a 50/50 basis with the local man who found it in the first place, but the other group including the public servant was deadly opposed to it.

The second group wants only the State and Cabinet Ministers to share it—no one else. In one of their recent briefings, the ministers were so confident of getting the find that a commitment was made to pay the striking teachers earlier this year from the sale of the gold find.

In another, which did not finish until around 4am, Prime Minister Gordon Darcy Lilo had to be called in to break up the squabbling over who gets what. Can you imagine anything so childish?

26 Islands Business, May 2013

Independence activists...mobilise for citizenship rights. Photo: Nic Maclellan

Voting rights under challenge Noumea debates citizenship and elections

By Nic Maclellan As Noumea prepares to host the leaders of the Melanesian Spearhead Group (MSG) in June, there are new divisions in New Caledonia’s leading anti-independence party and debates over voting rights for next year’s crucial Congressional elections.

Since it performed poorly in the June 2012 elections for the French National Assembly in Paris, the largest political party in New Caledonia’s Congress, the Rassemblement UMP (RUMP), has been in turmoil.

For months, RUMP President Pierre Frogier had been challenged by key lieutenants such as Sonia Backes and Gael Yanno, who were critical of his engagement with the FLNKS independence movement.

Backes was RUMP’s acting Secretary-General and Yanno is a senior member of the Noumea town council and former representative in the National Assembly. Both were stood down from their positions last February, but ongoing disagreement with Frogier led to a formal split. On 28 March, Yanno announced the creation of a new conservative, anti-independence party named Mouvement Populaire Calédonien (MPC).

The MPC has called for a ‘Union for France’— uniting all political forces opposed to independence in New Caledonia. However, there is very little unity in the settler community. Beyond Frogier, MPC has expressed clear political differences with other anti-independence leaders such as Calédonie Ensemble’s Philippe Gomes.

In turn, Gomes and RUMP have criticised current President of New Caledonia Harold

Martin of the Avenir Ensemble party, who is currently under legal investigation after allegations of improper land sales.

The leader of France’s National Front, Marine Le Pen, visited New Caledonia in March, calling on European voters to remain loyal to France.

The local branch of the extreme-right movement performed poorly in New Caledonia’s last elections in 2009, losing all their seats in the local Congress. However, at a time of division in the settler community, Le Pen’s visit highlights attempts to unify forces against the FLNKS independence movement, with the National Front politician stating: “We must do everything to avoid fragmentation of those who reject independence.”

Yanno and the new MPC have proposed policies which challenge key elements of the 1998 Noumea Accord, calling for delays in the ongoing transfer of administrative and legal powers from Paris to Noumea and advocating a new division of funding between the three provincial governments (this would reduce finance for affirmative action policies that benefit Kanak-dominated administrations in the Northern and Loyalty Islands provinces).

The MPC has also proposed a revision of voting laws that limit participation in Provincial Assembly and Congressional elections to longterm New Caledonian citizens.

According to Yanno: “For us, there can only be one future for New Caledonia and that’s within the French Republic and within an open society that rejects restrictions on voting rights.”

In response to calls for the removal of affirmative action principles established by the Noumea Accord, elements of the independence movement

NEW CALEDONIA have called for legislation to entrench citizenship rights into law. On 6 April, the USTKE trade union confederation, the Parti Travailliste (Labour Party) and members of the Dynamique FLNKS Sud organised a rally in support of citizenship rights, calling on the government to codify the citizenship principles set out in the Noumea Accord.

Voting rights Under the Noumea Accord and subsequent legislation, New Caledonia has established a complex system of voting registration with three different electoral rolls used for different political institutions.

The full electorate (all French nationals registered to vote in New Caledonia) can vote for French and European institutions: the French Presidency, the National Assembly and Senate in Paris, municipal councils and overseas seats in the European Parliament.

However, voting for New Caledonia’s three provincial assemblies and local Congress is restricted to a special electoral roll for New Caledonian citizens, rather than all French nationals.

To vote for the local institutions as a citizen, the Noumea Accord proposed a requirement for ten years residency. But the text was unclear whether the electoral roll would be ‘frozen’ (restricted to people with ten years residency at the time of the 1998 referendum that implemented the Accord) or whether it would be ‘sliding’, with the ten years’ residency determined by the date of the election.

This uncertainty was finally resolved by a 2007 decision of the French Congress, which determined that there should be a fixed ‘frozen’ 10-year residency requirement for voting and that people should have been registered before the 1998 referendum that entrenched the Noumea Accord into law.

Based on this definition, over 18,000 people living in New Caledonia were excluded from voting at the last Assembly and Congressional elections in 2009, including short-term public servants, soldiers and recent arrivals from France.

To add to the complications, any referendum on self-determination in New Caledonia would use a different electoral roll.

This vote would only involve those New Caledonian citizens who are resident in the islands for twenty years (i.e. arriving before 31 December 1994).

Today, to move from the ‘electoral annex’ of excluded voters onto the electoral roll for the Assembly and Congressional elections requires approval of a judge.

In March and April every year, a team of magistrates arrives in Noumea from Paris to update the electoral roll, mostly with young people born in New Caledonia who reach the age of 18, but also people who can show they meet the required years of residency in New Caledonia.

This year, however, the legal scrutiny of voting registrations was hotly contested. A commission of independence activists from the FLNKS and Parti Travailliste had found that more than 1,800 young Kanaks had been registered in the general electoral list, but not on the special roll for the Assembly and Congressional elections—even though as indigenous Kanaks they are clearly New Caledonian citizens.

Since 2008, young Kanaks are automatically registered on both lists, but in April the judge

heading the electoral commission ruled that hundreds of people who registered on the general list before 2008 must now re-register. This must occur before December 2013 to ensure that people can vote in the crucial May 2014 elections for New Caledonia’s local institutions.

In turn, FLNKS representatives on the legal commission scrutinising the voting lists challenged 253 young people born in 1994, who had registered in 2012 on reaching 18 years of age.

The FLNKS scrutineers asked for proof that these young people, mostly with European surnames, were born in New Caledonia rather than France, sparking allegations of “racism” and “apartheid” from anti-independence leaders.

Anti-independence parties have called for the removal of voting restrictions or a return to the ‘sliding’ citizenship qualification. This would add thousands of French voters to the electoral rolls, most of them likely to vote for parties opposed to independence.

For this reason, the FLNKS is seeking international monitoring of voting registration and the 2014 elections, claiming that the French State has failed to uphold the electoral process with appropriate rigour.

On 11 April, members of the FLNKS Citizenship Committee formally wrote to the UN Special Committee on Decolonisation, highlighting a range of concerns over voting registration.

The letter noted: “In 1983, during negotiations at the Nainville-les-Roches roundtable between the French State, representatives of the Independence Front and the RPCR, the people, wanting to exercise their right to self-determination, accepted that we should integrate the ‘victims of history’ into the electoral roll for any referendum on independence—that’s to say, the descendants of settlers, convicts and communards. It’s for this reason that the electoral roll for the referendum on self-determination was enlarged to include those who have grasped the hand stretched out by the Kanaks, to work together to build a country for tomorrow.

“Today again, we state that these procedures are not being respected, and that many Kanaks will not be able to exercise their right to selfdetermination while others are taking their place —even though the Accord does not allow this.

Once again, the Kanaks are being made a minority for the future electoral consultation that will lead to a decision on full sovereignty.”

The debate over voting rights takes on increased importance because the Congress elected in 2014 can decide by a 3/5 majority to proceed to a referendum on a new political status for New Caledonia, in a vote which could be held between 2014 and 2018.

In April, two legal experts visited Noumea as part of a commission that is studying options for the referendum question. This special commission, established in 2010 to consult with leaders on all sides of politics, is trying to clarify the range of legal options for any referendum: retaining the status quo as part of the French republic; moving to full independence and sovereignty; or some form of independence-in-association with France, with the French State retaining some sovereign powers.

A further meeting of the referendum commission will be held in July, then the legal experts will prepare a report for consideration at the next meeting of the Committee of Signatories to the Noumea Accord, scheduled for September 2013.

Politics

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Lift your business with Solomons Magazine Islands Business, May 2013

Politics

Cleaning up the foreign ministry

like a fantasy wish-list for enduring and significant reform. Or a hit-list, at least for the freewheeling diplomatic set that flourished under the previous administration.

First to go was the self-proclaimed “highprofile” Roving Ambassador to Russia and East Europe, Thi Tam Goiset.

Questions had been raised in Parliament alleging that Goiset was seeking a commission on official funding arranged for Vanuatu.

New foreign affairs minister Edward Natapei at first kept a diplomatic spin on reasons for recalling Goiset.

“Her appointment was not in accordance with the standard procedure for appointment of roving ambassadors.

“Another reason being that recipient countries should indicate whether or not they accept an ambassador to their countries. We have not received any agreement from the other recipient countries.”

He was less gentle with the second name to emerge, that of honorary consul to Vietnam, Anh Quan Saken.

“If we look at the different categories, we can say we have difficulties with some appointments, like Saken’s Edward Natapei...scrutinises diplomatic appointments. Photo: PIFS because we did not thoroughly check the background information which they should have supplied us with.

“There are even some CVs provided which are questionable, some provided questionable place of residences and universities attended and for this reason we cannot continue to entertain them.

“We must terminate their appointments and go through the normal process of applications, scrutinise CVs and background information.

“When we are fully satisfied that they meet the requirements, then they can be appointed,” Natapei said.

Another six ambassadors were also quickly sacked, although their names kept private, with Natapei saying that up to 77 of the 99 overseas representatives could lose their jobs.

If that figure is reached, the Vanuatu reset Concerns Monitoring Group, headed by the will represent one of the biggest purges ever of a Ombudsman Office but involving the full specdiplomatic system. trum of Vanuatu civil society.

Signalling they mean business, the Kalosil Returning powers to the Ombudsman also government tabled 23 bills last month for the features in the form of an amendment to the act first ordinary and an accompanying extraordinary to reinstate the authority to lay civil claims against session of Parliament.

MPs accused of misappropriation, with an acAmong them, amendments to three separate companying amendment to the Leadership Code acts—Passports, Immigration and Citizenship Act, removing the need for a criminal conviction laws, and repealing a provision for Entitled to address leadership conduct.

Persons.

Beyond the first 100 days, point 23 of the plan Seemingly a permanent fixture in scandal promises longer-term action: “Establish highheadlines, the Vanuatu diplomatic set may relevel ‘Constitutional Review for Political Reform’ member April as the month their global party Committee and complete consultation with all came to a grinding halt. political parties on the amendment of constitution to reform the political system.”

• With reports from Radio Australia, Vanuatu Daily Digest, Daily Post and Radio New Zealand International.

Taken together, the Carcasses package reads

Natapei seeks new diplomats

By Jason Brown I n the photo , the eyes are blurred out. But the name and passport number on the photo are all too clear: that of the current Prime Minister of Vanuatu, Moana Carcasses Kalosil.

Interesting, because the passport snap appears on a social network in China, called QQ, advertising passports for sale as part of an immigration scheme.

Embarrassing somewhat given that the Kalosil administration last month promised to hold a commission of inquiry into enduring scandal surrounding diplomatic and other passports ending up in strange hands.

Attention on the passport shots came from another social network, Facebook, in an open group called Vanuatu Political Spotlight, with 575 members.

“We have yet to find out who owns the website but sources close to me have confirmed that it belongs to a local Chinese living in Port Vila with connections to some “big man”, wrote one member.

John Shing questioned whether the latest passport scandal was behind the recall of an ambassador.

“Ambassador Dennis Nai reported this website to the Chinese Police and Ministry of Foreign Affairs two weeks ago. This may have resulted in his recall. Could it be a coincidence?”

Nai was recalled by the new government for alleged “extravagance”. Nai had already been given a public warning last December.

Radio Vanuatu News quoted President Iolu Johnson Abil as saying: “Vanuatu passports are very important documents to any ni-Vanuatu citizen and that must be respected at all times.”

Abil said he did not want to hear any more reports of the embassy in China selling Vanuatu passports.

Behind the ongoing passport scandal emerged wider questions relating to reform efforts by the new Vanuatu government.

Administration supporters described the appearance of the prime ministerial passport photos as being part of a “smear campaign” to discredit him and his administration’s ambitious 100-point plan for their first 100 days in office.

The plan includes the establishment of a commission of inquiry into passport sales, and amendments to the citizenship law to “prevent the granting of citizenship without having lived 10 years in Vanuatu”.

Opponents might have good reasons to want to discredit Prime Minister Kalosil, given that the tightening of immigration laws is only part of a wide-ranging package of reforms aimed at fighting corruption.

Overseeing the first 100 days will be a Public 28 Islands Business, May 2013

VANUATU

“Vanuatu passports are very important documents to any ni-Vanuatu citizen, and that must be respected at all times.”

Business

Kiribati’s new tuna deal with the EU Now PNA says, it could get a lot more

“It’s not enough, because the value of the fish that’s being taken out is about $400 million per annum,” he said.

“We want to get at least half of that, but we cannot do so by just continuing to licence.

“We have to get involved in the processing and the next levels of the industry.

“Once we achieve that, we would have all the resources to do a lot of things we need to do, such as building resilience against climate change.”

PNA response When asked whether he thought Kiribati as a PNA member was approaching the EU deal The spokesperson said the new protocol

By Robert Matau with the right attitude, PNA’s Dr Transform does not stipulate the amount paid per vessel Aqorau said PNA gives members the best posfishing day.

Kiribati has secured a US$1.71 million deal sible economic outcomes to fulfill the wishes of “EU will also provide an annual contribution for 15,000 tonnes of tuna per year with the Eutheir leaders. of EUR350,000 to enhance the governance and ropean Union.

“They want the region and in particular the development of Kiribati’s fishery sector,” he said.

Under the agreement, the EU is now able to peoples of this region to get maximum benefits “Apart from the EU contributions, it should deploy four purse seiner and six longline vessels from their resources. be also noted that EU shipowners are subject to in Kiribati’s waters.

“When these values and principles are tested the payment of fishing authorisation fees under Sources within the fisheries industry in the against the returns that are being negotiated, then the current Protocol.” region say the new deal undercuts the high you must wonder whether the people are indeed A recent report on atuna.com (www.atuna. standards set by the Parties to Nauru Agreement and in fact listening to what the region’s political com) states that the EU fleet would be paying (PNA) and Kiribati, a PNA member, should leaders are actually saying.

US$3600 per fishing day under this new deal, reconsider as the Spanish fishing industry will “It is known that the Kiribati-EU agreement which is well below the PNA’s US$6000 per gain immensely compared to what PNA has esdoes not follow the process agreed to tablished under the Vessel Day Scheme. through PNA. This agreement replaces the old “Negotiation by applying VDS as agreement, which expired in September the access and monitoring tool has last year. been followed by all other parties, Under the new agreement: and has reaped considerable dividends • The EU pays an annual amount of with fee rates higher than those deEUR975,000 (US$1.26 million), equivrived through dealings with the EU.” alent to a reference tonnage of 15,000 Dr Aqorau said the negotiation tonnes per year for access to the Kiribati with the EU was also a risk since the EEZ and EUR350,000 (US$453,817) to EU seeks at every turn to undermine support and implement initiatives of the PNA’s sub-regional measures, which Kiribati sectoral fisheries policy. This is are often much more conservationa total of US$1.71 million. minded than those advanced through • Should the total quantity of catches WCPFC. per year by European Union vessels in “The EU has consistently failed the Kiribati EEZ exceed 15,000 tonnes, to adhere to WCPFC measures by the annual financial contribution shall exceeding high seas days and failed to be increased by EUR250 (US$324) adhere to the VDS. per tonne for the first additional 2,500 “What is worse is that the EU tonnes and by EUR300 (US$388.98) New Kiribati/EU deal...will see Kiribati getting US$1.71 million for 15,000 tonnes vessels catch significantly more fish per tonne for any further tonne above of tuna per year. Photo: www.atuna.com per day and fish on Fish Aggregation these additional 2,500 tonnes. These Devices, with no selectivity on preadditional costs shall be borne by the fishing day under its Vessel Day Scheme. adult tunas.

EU with the amount of EUR65 (US$45.38) per Atuna based its calculation on the assumption “This year, the PNA recommended an increase additional tonne and the remaining part shall be that purse seiners catch an average of 32 tons each in the base price rate per VDS to US$ 8,300/day. paid by shipowners; day, so it would take about 469 available fishing “This was on the grounds that fish prices • During the period covered by this protocol, days to catch 15,000 tonnes. had increased by 112%, since the setting of the the European Union and Kiribati shall ensure Atuna.com is the world’s leading website on benchmark and that the main operating cost, fuel, the sustainable use of the fishery resources in Tuna Industry News. increased by 18%. the Kiribati EEZ. Kiribati is a PNA member and the Vessel Day “Had the parties agreed to a rise in the VDS • The parties will undertake to promote Scheme is supposed to reduce catches of tuna rate, this would have resulted in a payment of cooperation at sub-regional level on responsible species, while increasing the rate of return from between US$12,000 to US$16,000 per vessel day fishing and, in particular, within the WCPFC fishing activities of foreign vessels. for the larger Spanish super seiners (equivalent and IATTC and any other sub-regional or interUnder the old treaty with the EU secured to 12%-15% of vessel turnover). national organisation concerned. in 2006, the annual catch was limited to 6,400 He said these are vessels, which individually A spokesperson from the European Union tonnes. generate annual profits of around US$5 million confirmed to Islands Business that the agreeto US$10 million. ment was a done deal, but the formal adoption More involvement “The four EU vessels fished around 812 days procedures are taking place.

Kiribati’s President Anote Tong said his couneach in Kiribati waters in 2011.

“The protocol was signed by the European try wants to be more involved in the industry “Kiribati could have generated an annual Union and the Government of the Republic of itself. income of US$11.3 million from its agreement Kiribati on 9 November 2012 and 15 January He told Islands Business that by involving with the EU. 2013 respectively,” he said. itself in the industry it would get them much “But as I said, countries have their own reasons “The protocol applies provisionally from 16 higher returns than they were currently getting, for doing what they do, but you have to wonder September 2012. The process of adoption by the which is about eight percent of the landed value why in the face of great need by our people, we EU of an international agreement in fisheries lasts of the catch. allow our natural resources to be sold short?” approximately one year from the date of signing.”

Islands Business, May 2013 29

Business

Working together...despite the challenges facing PNG, PM Peter O’Neill (left) is prepared to help islands countries like Fiji. With him is Fiji’s Prime Minister Voreqe Bainimarama during his recent visit to PNG. Photo: Fiji’s Ministry

of Information

Complex challenges for PM O’Neill in mining Steering govt through rocky rival interests

By Rowan Callick Early in the term of Papua New Guinea’s new government—which has ensured, by a constitutional amendment, that it will be in power at least until this time in 2015 – it is facing some complex challenges, especially around the country’s biggest revenue earner, mining.

There’s a common view, even in PNG which has more than a century’s history of the industry, that mining is merely about digging rocks up and shipping them to eager buyers.

But it is as difficult to build and maintain a mining industry as it is easy to lose one.

Independent PNG has been substantially built on its resources, the source of about 80 percent of its export earnings—chiefly, until liquefied natural gas (LNG) starts producing revenue in a couple of years, from minerals.

The big persisting dangers for PNG include: • Spending the money before it’s been earned and thus building debt; • The usual “Dutch disease” challenge of preventing resources from crushing the rest of the economy by inflating prices, especially damaging agriculture which is by far PNG’s chief source of employment and of family incomes, and of course; and • The debilitating battles between rival groups, including elements in various levels of government and within landowner groups, over the 30 Islands Business, May 2013

spoils from mining. The dominant source of such resource revenue—and by far the biggest taxpayer in the country—has in recent years been Ok Tedi Mining Ltd. In 2011, it provided the government with about $US550 million—about 16 percent of its total income.

Recently, the government has banned leading Australian economist and public intellectual Ross Garnaut from entering PNG, even though he was the chairman of Ok Tedi, the country’s highest tax paying company.

It sought, by ratchetting up tensions around the mine and its governance, to place direct pressure on BHP-Billiton, which a decade ago withdrew from the operation due to environmental embarrassments, and set up a trust to run the mine.

Relax rules The government appears to want BHP to agree to change the constitutional arrangements that hold substantial dividends back until the mine closes—now worth about $US1.5 billion.

It also wants BHP to relax the rules that constrain its access to funds available annually for local development.

Garnaut has stood aside this year for former prime minister Sir Mekere Morauta, who now chairs not only Ok Tedi Mining Ltd but also PNG Sustainable Development Program Ltd, the chief shareholder in Ok Tedi, which manages the holding in trust for the people of the mine area

of Western Province and of PNG more broadly.

PNG Finance Minister, James Marape, has recently sought to redirect some of the funds provided annually for local development, which have recently been used to buy boats and aircraft for local use to a new lobby group.

Hundreds of millions of dollars are now coming into play in this dispute, as the government places pressure on Ok Tedi in one area after another—including the ultimate sanction of refusing to allow an extension of the mine after its current approvals end this year.

It is almost unthinkable that the mine would then permanently close. The thriving mining township, Tabubil, is being redeveloped as a centre for training and tertiary education, and for health work and research. But this transformation is far from complete.

In the meantime, Tabubil continues to provide jobs and incomes for large number of families, and local people benefit from spin-offs and infrastructure work.

So despite the mine’s many problems, starting with the collapse of its tailings dam causing mine waste to be flushed down the river system, permanent closure is most unlikely.

The far more probable course, is that the government would invite in a new operator. But from where?

Although copper is today’s most-sought mineral, there is not a long list of aspirants. A Chinese buyer is most likely, given the country’s eager appetite for access to the resources its industrial growth requires. But Ramu Nickel, which recently began production, is operated by Chinese government corporation MCC. And it enjoys a surprising ten-year tax holiday, agreed by the Somare government in the face of opposition from within the bureaucracy.

This would thus mark the starting point in any negotiation with Beijing. It is hard to imagine any other Chinese state owned enterprise accepting less than a ten-year tax holiday—which then raises the question of how this would benefit PNG, especially given the usual practice of Chinese corporations importing much of their own labour for such projects.

Just 100 km from Ok Tedi lies another huge copper/gold resource, Frieda River. But unfortunately for PNG, this is mostly owned by Xstrata—which eventually produced just before Christmas, after some postponements, a feasibility study. But some outstanding work remains.

Xstrata is destined for imminent merger with Glencore, which is a Swiss based resource trading giant. And Glencore will not want a bar of even such a vast, promising resource as Frieda.

Its chief executive Ivan Glasenberg, who will head the merged entity, said recently: “We are afraid of greenfields”—new mines, which are considered risky and sometimes have capital over-runs.”

Glasenberg is a trader not comfortable with waiting for five years for a return. The XstrataGlencore merger is awaiting approval from regulators in China—which could itself prove a beneficiary, with the promising greenfields Frieda project coming into play.

Brisbane-based Highlands Pacific, a minor partner at Ramu and Frieda, and also an explorer with promising assets close to Ok Tedi, is looking on with hope mingled with anxiety.

Meanwhile, over in Bougainville, the prospect of reopening the vast copper mine there—which

Business

Pension funds eye regional markets meaning FNPF’s partnership will filter down to improvement in infrastructure, service delivery An offshore investment made by pension and customer care to the PNG and Solomon Isfunds in the Pacific does not only have to mean lands communities through Vodafone BeMobile diversifying to the more developed Western or PNG and Vodafone BeMobile Solomon Islands.

Asian economies.

But in establishing its footprint in the Pacific reThere are opportunities right here in the region, FNPF is following the trend set by PNG’s gion, and one was witnessed last month in Papua National Superannuation Fund (NASFUND), New Guinea, where the Fiji National Provident who had already shifted some investment capital Fund (FNPF) officially announced its purchase to Fiji and was looking for opportunities in other of 40 percent of the partly state-owned BeMocountries in the Pacific. bile PNG Ltd, a company In 2010, NASFUND and specialising in the provision other strategic partners formed of mobile telephone services. a joint venture with FNPF to It reportedly bought that slice buy, restore and re-launch the for Kina 189 million (F$147 Fiji-based Grand Pacific Hotel million), a big development in (GPH), an icon in Pacific touritself for a pension fund that ism that had been closed since not too long ago was instructed the early 1990s and had fallen to recall most of its offshore to ruin. investments as an emergency A popular meeting place for response for drying foreign foreigners visiting the Pacific, exchange reserves.

GPH during its heydays was While that turned out to be a well known hotel whose a fortunate turn of events for guests included the likes of FNPF, steering it clear of direct writers James Michener and impacts sustained by others Somerset Maugham, aviator during the global financial criSir Charles Kingsford Smith sis, it meant that over the next and Queen Elisabeth II, so its few years, Fiji’s central bank historic value to the Pacific is had to restrict FNPF’s offshore an untapped resource. investments, which confined NASFUND is also part of it to a very limited domestic NASFUND’s Mel Togolo…diversifying another syndicate of PNGinto the Pacific region important for the based investment institutions investment market.

While this gradually eased fund’s members’ benefit. Photo: Dionisia that had bought into other recently, FNPF is not known Tabureguci hotels in Fiji and the preferred to have put investment dollars choice for its investments in in the region and last month’s event was its first Fiji appears to be in the tourism sector, which is step in that direction, where it has diversified doing very well. not only to the PNG market but to the Solomon When in Fiji during a PNG government-led Islands as well. trade delegation visit in October last year, NASBeMobile holds licences to provide mobile FUND chairman Mel Togolo told Islands Busitelephone services in PNG and Solomon Islands, ness that diversifying into the Pacific region was

important primarily for the benefit of the fund’s members and it also made sense as other Pacific countries offered investment opportunities in which participation would help lift the livelihood of Pacific Islands communities and contribute to overall development in the Pacific.

“We already have a joint venture with the Solomon Islands National Provident Fund where we got the Heritage Hotel in Honiara.

“We are also looking for additional opportunities in the Pacific region and we’re looking at Samoa at the moment, where it will be a joint venture with Samoan entities including their provident fund,” Togolo told Islands Business.

NASFUND’s interest in the Pacific’s tourism sector is also reflecting a renewed interest by the PNG government to tap into its own tourism industry, where it is looking to Fiji to help it by way of providing the much needed expertise. Its investment in that area in one of the Pacific’s more advanced tourist markets is expected to complement national plans and help it develop skills in hotels in the region in which it already has investments.

For Fiji’s pension fund, diversifying into Pacific’s telecommunications market is in line with its own heavy involvement in the domestic telecommunications sector, where it owns 58 percent of the publicly listed Amalgamated Telecom Holdings (ATH).

ATH is a conglomerate of what used to be state-owned telecom interests, including a landline business Telecom Fiji Ltd (100 percent), the mobile telephone business Vodafone Fiji Ltd (51 percent), international bandwidth wholesaler FINTEL Fiji (100 percent) and other support services like a telephone directory company, telecom equipment reseller and telephone card company among others.

Buying into BeMobile PNG is an avenue for FNPF to help its subsidiary telecom group diversify into the Pacific, an intention on the agenda for sometime but which has met with little success.

ATH almost succeeded in buying BeMobile in 2002, following the then PNG government’s plans to sell its shares, but the deal fell through.

This time around, it has indirectly succeeded through FNPF, and the management contract for BeMobile PNG has been awarded to Vodafone Fiji, whose experience in the Fiji market is heavily influenced by its competitor, Digicel Fiji.

Digicel’s entry into the Pacific had somewhat shook incumbents, including BeMobile. Vodafone Fiji’s experience in taking on the might of Digicel is expected to help improve the BeMobile brand and profitability in PNG and the Solomons.

revenue stays in the province and doesn’t come through Port Moresby.

Besides these tangles, PNG is fortunate in having landed the firm focus of Melbourne-based Newcrest, the world’s third largest gold miner.

Half of Newcrest’s resources now lie in PNG and the company has the technical and strategic skills, the capital, and crucially, the combination of commitment and understanding of how PNG operates, to realise those assets steadily.

And Mines Minister Byron Chan wants to change the laws to give the lion’s share of mining revenues directly to the landowners—although rival landowner groups frequently challenge each other over “true” ownership, when the unique

opportunity arises to realise their core asset, access to their land.

The bottom line for PNG is that its government has to understand that, despite all the zeroes on the kina figures anticipated from LNG alone, success in managing a massive resources sector is not guaranteed, and that those revenues can dwindle almost overnight, leaving it with no obvious replacement.

Prime Minister Peter O’Neill thus still has to steer his ship of government through dangerous seas full of rocky rival interest groups.

His core challenge is to help create, preserve and invest the wealth released by resource exploitation, rather than simply dividing up the spoils.

PNG’s NASFUND, Fiji’s FNPF set new trend

By Dionisia Tabureguci

....From page 30

featured at the centre of the decade-long civil war from which the autonomous province is still steadily recovering—hangs over any consideration of economic rejuvenation.

President John Momis is calling on his considerable experience to urge all sides to take this prospect slowly. Any rapid change in the position on reopening the mine—which is still mainly owned by Rio Tinto Ltd—would play in to the referendum on Bougainville’s future that is due in a couple of years.

But Bougainville will seek to insist, whatever happens constitutionally, that any future mine

Islands Business, May 2013 31

Viewpoint

PNG: Social symptoms of economic advancement

By Sean Jacobs*

cial cooperation does not imply greater selfishness or departing from family commitment altogether, rare known fact about Papua New Guinea but reconciling cultural and professional respon(PNG) is that, over the past ten years, sibilities—an activity many Papua New Guineans it has been one of the fastest growing have balanced for some time. economies in the world. Thanks largely to a These benefits will be difficult to capture protracted mining boom and what appears to be in economic charts and tables. Indeed, many a decent future in Liquefied Natural Gas (LNG), demographic and economic indicators will, on optimism surrounds PNG’s economic outlook. face value, undermine the case for continued Less appealing, however, are the social chargrowth and increase the perception of resource acteristics of this economic success. In transiting sector isolation. economic change, it is not difficult to see that Estimates show, for example, that only 5 PNG’s social fabric is under tremendous strain. percent of PNG’s population earn a wage in the High crime rates, the transition from commuformal economy: a statistic that creates an advernally-held to privately-owned land, a breakdown sarial picture of growth. But non-resource sectors of the traditional family or ‘wantok’ kinship and even PNG’s informal sector, do not stare with structure, and ongoing tribal violence, all point to their noses pressed against the resource-store a disruptive near-term window, untouched future for PNG. by its economic acAlongside the tivity. prevalence of vice and As PNG Treasurer health problems arisDon Polye recently ing from an increased noted, resource expanintake in processed sion drives “spin-off ” food, many Papua activities that, when New Guineans—and measured properly, the NGOs that claim see increased activto speak on their beity in manufacturing, half—are left quesconstruction and agtioning the benefits ricultural sectors. of economic growth.

While the social side In attempting to of economic growth untangle these conwill have benefits for cerns, one must first PNG in the long-run, acknowledge that not all are convinced. these signs of stress The NGO Jubilee are common—even in Australia, for examwell-developed econple, recently predicted omies. PNG’s contorthat the colossal $30 tive characteristics, In the name of culture...Tolai men distribute shell money in Matupit. Photo: Paradise Magazine billion LNG Project when taken broadly, in PNG’s Southern are part of a social Highlands will “very ‘unravelling’ that nalikely exacerbate povtions endure while transiting economic change. erty, increase corruption and lead to more vioincreasing number of professionals injecting Francis Fukuyama, for example, in The Great lence in the country”. into new industries, pursuing their own cultural Disruption, has shown that economic leaps forWhile instances of poverty, corruption and identities and securing commercial and profesward, like the United States from the mid-1960s violence will be common to PNG in the comsional opportunities. to the early 1990s, have come part-in-parcel ing years, it is difficult to see how an alternative Second, one might see greater social coopwith higher incidences of family breakdown, a low-growth or stagnant economic environment eration emerge across PNG’s 800-plus cultural scepticism of institutions, a decline in trust and will be any more beneficial for the country in groups. Continuing the high-growth economic an increase in crime. the coming years. trajectory will see an undermining of kinship or Brink Lindsey, in The Age of Abundance, records The Australian Productivity Commission’s ‘wantok’ loyalty as the economy demands the similar trends, adding welfare dependency, aborDean Parham recently described Australia’s best person for the job (merit) over one being tion, single parenthood and divorce, as symptoms productivity decline as an “adjustment” rather from the right tribe or kinship group (nepotism). of the social malaise that arrives with economic than a “crisis”.

As the political economist Samuel Ricard success.

Similar language would be useful in describobserved in 1704: “Commerce attaches men to So what grounds does PNG have for optimism ing PNG’s social challenges as it navigates rapid one another through mutual utility…through amid the social upheaval? As both Fukuyama economic growth in the coming decades. PNG’s commerce, man learns to be honest, to acquire and Lindsey point out, while norms and tradieconomy is clearly changing and shaping the namanners, to be prudent and be reserved in both tions break down, new ones regenerate and take tion’s social landscape. talk and action. their place.

While the outcomes of this appear unsavory, “Sensing the necessity to be wise and honest The United States, for example, emerged from commercially-oriented social benefits—namely in order to succeed, he flees vice, or at least his its social decline in the 1990s with new moral greater individualism and social cooperation—are demeanour exhibits decency and seriousness so sensibilities as more tolerant, less absolutist and worth observing as PNG grows into the future. as not to arouse any adverse judgment on the part less grounded in traditional belief structures. of present and future acquaintances.”

• Sean Jacobs has worked with all levels of government in Traditional values do not simply die out, it seems, Commercially-oriented individualism and soPNG. He currently lives in Canberra.

A

32 Islands Business, May 2013

but reawaken and find a place within the new economic landscape. Elements of a good civic life—trust, a strong commitment to family and decent work ethic—have not simply vanished but, in Lindsey’s words, “come back into vogue” What new norms could emerge in PNG as the economy rapidly expands in the coming decades? There are two broad predictions. First, a new individualism will likely emerge in PNG, driven largely by greater economic liberty and the professional opportunities arising from economic growth. As much as social disruption is part of life in PNG, so too is consumption.

Mobile phone ownership is breaking records, supermarkets are crowded, the nation’s ports are working overtime and airports are busier than ever. PNG’s market economy will see an

Health nation. Non-communicable and obesity-related diseases are claiming 70-75 percent of adult mortalities.

The World Bank is concerned that nations with malnourished population are rapidly increasing globally as food prices coupled with oil costs are making it harder for the low-income people to make healthy choices in their meals.

“Millions will continue to suffer from poor nutrition, whether it is hunger, under-nutrition or obesity which can cause premature deaths,” the bank’s latest six-monthly Food Watch report stated.

It said that in 2008, the number of overweight adults was 1.41 billion of which 508 million were obese in the world.

The statistics with recent trends point to 2.16 billion being overweight and 1.12 Honiara market...islands populations considered amongst the most overweight and obese in the world. Photo: Islands Business billion obese by 2030 across the regions but especially in Asia/Pacific.

Despite the gravity of the problem, low-budget governments in the poor countries were not doing enough to reduce obesity.

“Responses to the obesity epidemic have ranged from doing nothing to trying to promote healthier behaviours through taxes, bans or restrictions on certain foods and awareness campaigns,” the bank report expressed.

In boosting its efforts towards enforcing governments to create means of educating people about better health, the bank will embark on a UN high-level post-2015 Millennium Development Goals meeting—offering an unprecedented

By Davendra Sharma opportunity for integrated global and national lations around the region. It discovered that junk collective action to fight all forms of malnutrition, foods combined with lack of regular exercise was Just as the World Bank released a report from stunting to obesity, Canuto said. suffocating the future of Vanuatu and that of the alerting how malnutrition and obesity were In its previous findings over the last four other islands nations with similar diet habits. gripping parts of the poor countries, Vanuatu’s years, published by the Forbes magazine, islands It noted that 50 percent of the people in the own health department voiced concerns of the populations were considered amongst the most country are overweight and “obesity, though alarming state of health in the backyard of Pacific overweight and obese in the world. small in comparison to the overweight figure, is islands region.

Nauru, ranked first where 94.5 percent of nevertheless found in all ages and is higher in the People are opting for cheaper and less nutripopulation were overweight; Samoa 91.1%, the 45-54 age group”. tious food to feed families due to rising food Federated States of Micronesia 90.9%; American “It is an alarming status of the health of the prices in the impoverished nations, a study by Samoa 90.8%; Niue 81.7%; Tonga 80.4%, Palau people of the country,” the ministry’s authorithe World Bank showed last month.

78.4% and Kiribati 73.6%. tative survey on NCD (non-communicable In its damning report, it found that persistently In 2011, the United Nations sponsored a diseases) reported last month. high and volatile food prices influence hunger Pacific Food Summit where islands countries As islands nations replace their traditional and under-nutrition as well as obesity in low and territories endorsed a framework for action meals with cheaper imported junk foods, the income countries like those in the region. on food choices. occurrence of such diseases as high blood sugar “Unhealthy food tends to be cheaper than But as Dr Colin Bell of the World Health and cholesterol have also dramatically increased. healthy ones, like junk food in developed counOrganisation’s Western Pacific Regional Office The shift to unhealthy foods was contributing tries. When poor people with some disposable asserted in his assessment, collaborative efforts to to cardiovascular diseases and stroke, diabetes, income in developing countries try to cope with bring about behavioural changes in food choices cancer and chronic pulmonary respiratory high and increasingly volatile food prices, they cannot be achieved in the region in the face of diseases. also tend to choose cheap food that is high in climate change “and other threats”.

In Vanuatu, 21 percent of the population have calories but without much nutritious value,” Ironically, it was at the Vanuatu Summit where high blood sugar and about 30 percent suffer from noted Otaviano Canuto, World Bank Group’s islands governments agreed to enact new laws to high blood pressure. About 36 percent of all ages Vice President for Poverty Reduction and Ecobetter regulate the food industry. have high cholesterol, although the figure is 50 nomic Management.

“There isn’t a lot of clarity in regulating the food percent in the 45-54 age group.

Vanuatu’s Ministry of Health seems to confirm industry, which is saying it wants a level playing The findings indicate that the prevalence of the World Bank fears that obesity was seriously field. For example, food labels vary as much as the these risk factors point to “a health burden in threatening the future health of the islands’ popucountries the food comes from,” said Dr Bell. years to come” in the predominantly-Melanesian

Food price fears prompt obese future

People opting for cheaper, less nutritious food

Islands Business, May 2013 33

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Banking

Cooks Islands...featured in the tax haven exposes. Photo Cook Islands Tourism

Tax haven tsunami US$32 trillion hidden in havens, offshore banks

By Jason Brown twO mOnths agO, sitting OVer a bOttle of toddy, an offshore source sums up industry insider forecasts: “They know the writing is on the wall.”

Overhead, coconut tree fronds rustle above us in brief summer breezes.

One month ago, that breeze turned into a global gale force wind, history’s biggest expose sweeping like a hurricane through tax havens around the planet. That expose triggered off rule changes of earthquake proportions for tax havens.

“Seismic”, reported the Guardian, an English daily.

“Gigantesque” exclaimed La Libre, a French weekly.

“A game changer”, commented the Tax Justice Network. “...a virtual [Mount] Everest of data ...” said Die Spiegel, a German daily These were just a few of the tsunami of headlines from the news media around the world, delving into 2.5 million leaked files uncovering the hidden world of more than 100,000 people and companies.

Files came in the form of a hard drive posted to an Irish journalist working long-term in Australia, Gerard Ryle, who a few weeks later went on to head the ICIJ, the International Consortium of Investigative Journalists.

Immediate comparisons were made with Wikileaks, famed for publishing a quarter of a million diplomatic cables leaked from the US

State Department. More recently, Wikileaks published thousands more files in what it called the Kissinger files.

Wikileaks’ cables show government secrets, including behind-the-scenes deals. ICIJ offshore files exposed people and companies behind corruption of those governments.

Those named as using the havens include powerful politicians, US dentists, Wall Street traders, Russian executives and international arms dealers.

Estimates of offshore wealth hidden in tax havens and offshore banks go as high as US$32 trillion.

Many news headlines featured coconut tree logos, a visual signpost pointing towards what the French media describe as “fiscal paradises”.

Focus fell heavily on the role of the Cook Islands’ offshore finance centre as the origins of a global network, Portcullis Trustnet.

Authorities in the Cook Islands confirm they are monitoring suspicious accounts and transactions.

“Since 2002, when the first legislation came into force requiring disclosures, 298 suspicious transaction reports were been filed with the FIU by reporting institutions,” Paul Heckles, Commissioner of the Financial Supervisory Commission (FSC), told islands business.

FIU stands for the country’s Financial Intelligence Unit which, according to Heckles, cannot share details of individual cases with the FSC. This means that the FSC has not discussed any of the individual cases raised by the ICIJ exposes.

However, Heckles, in a response to follow-

up questions sent by islands b usiness , gave a breakdown of actions taken on the reports: • 7 led directly to investigation, or played a major part in an investigation, ending in successful prosecution.

• 58 passed on to local law enforcement agencies for investigation.

• 111 forwarded to foreign FIU counterparts.

• 69 related to accounts closed by financial institutions because owners were not satisfactorily identified.

•129 no direct action.

Of those with no action, “they will of course have been evaluated and researched by the FIU and filed in case further intelligence becomes available which will enhance their status,” says Heckle.

“Some [of the 1290) will have been investigated by the FIU and found to have legitimate explanations for the reported activity.”

Along with the Cook Islands, Samoa and Vanuatu also featured, with a single mention of a Fiji national. But attention also fell heavily on the role of New Zealand with its lax company laws allowing fake directors.

FIU in New Zealand is run by the police, which last month gave notice it was seeking input from “reporting entities…that are likely to be affected by the proposed guidelines”.

It is not clear what took so long for these guidelines—first called for legislation dating back to 1996—to be put in place.

In 1994, TrustNet founder Mike Mitchell memorably blasted New Zealand when asked about his company in the Cook Islands: “You’re meddling in something you don’t understand.

“There’s enough corruption in New Zealand.

You keep out of Cook Islands business. Concentrate on the arseholes in Beehive and leave us alone.”

Mitchell, who worked as the Cook Islands Solicitor General in the early 1980s, sold the company in 2004 to Singaporean interests, a lawyer who merged it with another overseas company—Portcullis Group. Today, it is headquartered in Singapore with offices at other locations including the Cook Islands and Samoa.

Taken alone, the tax haven exposes and rule changes might not achieve the enduring change many called for. But the coincidental signing of new EU agreements forcing greater transparency in extractive industries spell a perfect storm for the way the world does business, including the Pacific.

What may kill offshore banking is the realisation that it does very little to benefit host nations. Results of a 2011 survey of 15 Caribbean countries show that the offshore banking sector does have a positive effect on economic growth in host countries.

“However,” writes survey author Leo-Rey Gordon, “the growth benefits of housing an offshore sector are small”.

Coconut trees may disappear from the front pages soon enough, but questions about the benefits—and costs—of tax havens look set to endure.

Islands Business, May 2013

Banking

Marshall Islands government headquarters...large loans stress nation’s budget, while questions about trust fund linger. Photos: Giff Johnson

Debt, investment paint sobering shot of Marshalls A challenging situation

By Giff Johnson the leVel V Vel Of marshall islands’ OffshOre loan debt is impressive—over US$120 million— for a country that had revenue of only US$107 million for the fiscal year 2011.

The 13 loans the country obtained from the Asian Development Bank have left it owing over US$73 million, while state-owned enterprises (SOE) owed another US$50 million, mostly to a U.S. government lending agency.

The annual loan payment due to ADB is increasing each year and will peak at US$3,548,289 in FY2016. Coupled with the SOE debt, the government is shelling out around US$7.5 million annually for debt servicing on top of subsidizing nearly all of its SOEs. Barring any new loans, ADB debt is due to be cleared by FY2037.

Soaring fuel prices in the late 2000s pushed the government’s power utility company into near bankruptcy, forcing it to secure a high-interest loan to pay for fuel.

The loan nearly crippled the SOE. The power

utility gained support of the ADB as the company launched a recovery plan in 2010. ADB lent funds to the government to pay off the higher interest commercial bank loan to give the Marshalls Energy Company financial breathing room.

While some of the country’s long-term debts to ADB are from loans that were poorly planned or should not have been issued in the first place, the power utility loan has been a key factor in the company’s resurrection as a functioning entity.

In part because the utility company is pursuing an aggressive improvement plan, it was able to negotiate a two-year loan payment deferment with the U.S. Rural Utilities Services, relieving it of having to pay US$2.2 million and gained a US$2.3 million grant from the same U.S. agency to rebuild one of its large power plant engines, which will, when completed, reduce costs by cutting the amount of diesel consumed and further stabilize power service.

Overall, however, loan debt represents an ongoing challenge for the national government.

While the national government was able to halt its

delinquency to ADB several years ago and keep payments current, the National Telecommunications Authority and the government, which guar guaranteed NTA’s more than US$40 million in loans to the U.S. Rural Utilities Service, have struggled to make the US$200,000 monthly payments.

“Debt service now represents eight percent of the (local revenue) General Fund and annual subsidies and capital transfer to the troubled stateowned enterprise sector represents 19 percent of the General Fund,” said Finance Minister Dennis Momotaro in his Budget Statement to the Nitijela (parliament) earlier this year as part of the supplemental budget.

Momotaro also pointed out that the nation’s retirement fund faces a shaky future because it has been forced to withdraw investment funds in order to cover the increasingly large gulf between tax revenue and benefits to thousands of retirees.

With few new jobs created over the past halfa-dozen years, tax revenue for the retirement fund has remained flat at about US$12 million annually, while benefit payments are approaching US$16 million.

Marshall Islands Social Security Administration officials have been asking successive governments over the past four years to address legislative changes needed to stabilize the fund for the long-term. Draft legislation remains under review by the cabinet. “It is clear,” said Momotaro, “that the Social Security Administration’s financial health is precarious.”

Added to the challenging debt situation of the national government, personal debt continues to spiral. The two banks that service the Marshall

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Islands Business, May 2013

Banking

Regional bank comes of age in Micronesia

W

ith all eight United States-affiliated islands in the Micronesia area Key for the bank’s future is “positioning the bank for further growth,” now members of the Pacific Islands Development Bank, the regional Palik said. lender is looking to expand its role in financing development projects in Currently, the regional bank does not have the money to meet the the sub-region. demand for loans in the US-affiliated island region. “CapiThe Marshall Islands was the last to join, signing up in talization is our greatest challenge,” he said.

2011, and continuing to incrementally pay the $1 million “Once we are fully capitalized, we can increase our loan membership fee that enables the bank to offer its lending assistance. The demand is huge, but we don’t have the program in each member country. The bank’s Board of capital to meet it now.”

Governors held its annual meeting in Majuro for the first time As a regional bank, and particularly now that all the U.S. in April, bringing governors, speakers and other high-level affiliated islands in the north are members — Palau, Guam, officials from around the Micronesia region.

Northern Marianas, the four states of the Federated States “This is an historic meeting for Majuro,” said bank presiof Micronesia, and the Marshall Islands — PIDB may have dent Aren Palik, who is from Kosrae and based in Guam, leverage to secure financial resources from donor countries where the bank is headquartered. It is the first time we’ve and agencies. This is an area that PIDB is actively pursuing held this annual meeting here.” Finance Minister Dennis to address the shortfall in resources, Palik said.

Momotaro and Speaker Donald Capelle are the Marshalls’ The bank has been providing a range of consumer and representatives on the board. commercial loans in the islands that it serves. Although loan Palik, who worked for Bank of Hawaii before taking over services have only been available to the Marshall Islands as President of PIDB in 2002, said the bank has significantly for a few months, it has already committed $800,000 in improved its loan program, averaging fewer than two perloan capital to consumer loans and some business loans.

PIDB President Aren Palik... cent in delinquent loans over the past six years.

It is Palik’s hope that the bank will move to focusing capitalization is our biggest Before he came on board, the bank was experiencing a challenge. more of its capital on longer-term, larger business-related 45 percent rate of delinquency on loans. projects. “I’d like to see the bank stimulate regional develop“Many people in the Marshall Islands may not have heard ment in air service, health and fisheries,” he said. “I’d like of PIDB because it was a struggling bank (in the past),” he said. to leave local financing to local banks so we can focus on larger loans “We’ve done well in improving the quality of the loans.” with regional scope.”

Island —Bank of Marshall Islands and Bank of Guam—reported in April a combined US$62.4 million in loans for a population of 53,000.

Most of this debt is consumer loans and a majority of government employees’ biweekly paychecks now go to service loans from banks or allotment payments to local stores.

The Marshall Islands received some good news on the investment and banking front with the delivery in early April of its annual trust fund report.

The Marshall Islands Trust Fund had its best year ever in 2012, producing investment gains of US$25.5 million—a 16.9 percent rate of investment return that, along with contributions from the U.S. and Taiwan governments, bumped the fund to US$165.5 million at the end of FY12 on September 30 last year. \Continuing strong performance of the stock markets and U.S. and Taiwan contributions increased the value of the fund to US$190 million as of February 28. It is a remarkable turnaround from 2011, when the fund lost money.

Since it was established in 2006, the trust fund has managed to earn an average of 4.5 percent annually, experiencing a rollercoaster of losing and winning years.

But the health of this trust fund is essential to the economic survival of the Marshall Islands post-2023 when U.S. grant funding is scheduled to end.

Currently, U.S. grants underwrite about 60 percent of the national budget.

“The low overall growth rate can largely be attributed to the fact that the funds were not fully invested until FY2006 and investment performance has been weak given the negative or low U.S. and global equity market performance mainly in FY2008 but also in FY2009 and FY2011,” said the annual report on the trust fund that is managed by custodian State Street Bank of Massachusetts and investment advisor Mercer Investment Consulting, Inc. of New York.

A key question government officials are asking is whether it will be able to replace the approximately $30 million in grants the U.S. will provide in 2023, the last year of the Compact of Free Association financial package?

The answer is anyone’s guess and depends on the health of U.S. and international investment markets.

Investment managers are cautious in their assessment with 10 years left to go on trust fund investments. “An analysis by the Investment Advisor estimates that if the Fund manages an average five percent return annually to FY2023, and assuming a six percent payout from the fund, the distribution from the estimated assets for FY2024 would probably provide revenue equivalent to the FY2023 Compact of Free Association grant level,” the report said.

A recent analysis by the International Monetary Fund said the fund was likely to be able to replace only about half of the U.S. grant funding

in 2024—which would spell economic calamity—and the IMF urged the Marshall Islands to annually invest additional money—up to US$9 million a year—to increase the fund corpus. The government, however, has been able to invest significantly because of its inability to produce budget surpluses for reinvestment.



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Fiji is the hub of the South Pacific and offers a low corporate tax rate of 20%.

• • • • • • •

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Islands Business, May 2013

Shipping community. Now it takes two days.

“The trip to Honiara by ship is affordable and saves time,” he says.

MV Invader…part of an innovative maritime project aimed at improving the safety and efficiency of domestic maritime services. Photos: ADB

Connecting Solomon Islands by sea An innovative maritime project is improving the safety and efficiency of domestic maritime services, spurring rural development in Solomon Islands and it is shaping up to be a model for similar projects in the Pacific region as Sally Shute-Trembath* reports.

It is 7:30 p.m. and Point Cruz Wharf is surrounded by a sea of people carrying building materials, bags of clothes, and canned goods, waiting to board the M.V. Invader II, a ship bound for Avu Avu on the southern side of Guadalcanal—the main island of the Solomon Islands.

“If the weather is kind, it will take four days to get to Avu Avu Port, with eight stops along the way,” says Robert Smith Koveke, captain of the M.V. Invader II. Avu Avu is remote, and the route would not be financially viable without government help—financed in part by a grant from ADB (Asian Development Bank).

For passenger Jim Kalia—a frequent traveller on the Invader II, and a science teacher at Avu Avu Secondary School—the new shipping service means considerable financial savings. He used to fly to Honiara, the capital, to go to the market, do his banking, or see a doctor, but the airfare cost $SB800 ($110)—four times the price of the boat fare.

Bringing remote communities together The country’s nearly 1,000 islands have always had trouble staying physically connected with the capital, Honiara, especially the outer islands. This has left many of the country’s remote islands with limited access to goods, social services, or markets for their produce.

However, the Domestic Maritime Support Project—financed by the government, ADB, the Australian Agency for International Development (AusAID), the European Union and the New Zealand Aid Programme—aims to correct this imbalance between the center and the periphery, so that all Solomon Islanders can benefit from the country’s economic and social development.

Under the project, the government has established a franchise shipping scheme, in which the government subsidises private sector shipping 38 Islands Business, May 2013

Community leader Jasper Atilei…trip to Honiara by ship is now affordable and saves time.

operators, who dispatch ships like the Invader II to eight remote areas in Solomon Islands—the Shortland Islands, the Guadalcanal Weathercoast, Temotu, the Makira Weathercoast, Sikaiana, Ontong Java, Rennel, and Ulawa. Without this scheme, these remote islands would not have any boat connection to Honiara.

The scheme is bringing new business opportunities for Solomon Islanders. Esther Negoa from the Weathercoast, on the western side of Guadalcanal, now travels frequently to Honiara to sell betelnut at a roadside stall. The money she makes helps pay for school fees for her children, food and clothing.

Jasper Atilei, a community leader from Aona Village on the Weathercoast, also often comes to Honiara aboard the Invader II to visit relatives. He is building a school in Aona and uses the trips to buy cement and other materials he needs. Before the new route was established, it took about a week to transport the building materials by foot from Honiara across Guadalcanal Island to his

Shipping essential services The franchise shipping scheme also means people from remote islands can more readily get the health care they need from hospitals in the bigger towns and cities Niel Ishihanua is managing director of S.I. Shipbroker Company Limited, which services the Honiara–Temotu route. “Once a month we bring people who need medical treatment to Honiara,” says Ishihanua. “Pregnant women are also regular clients.” A round trip takes about 15 days.

Peter Boyers is co-director of Concrete Industries, Solomon Islands—a shipping company in the scheme that serves the Guadalcanal Weathercoast. “Just recently, we transported 40 blind people from Avu Avu Port to Honiara so they could utilise services at the National Referral Hospital,” said Boyers.

Many of them had cataract removal surgery to improve their vision. “Two weeks later, the same 40 people, their sight restored, boarded the vessel back to Avu Avu. The franchise shipping scheme made that possible.”

The scheme is also helping remote islanders access markets and services in Honiara or other larger towns. “No longer are these areas marginalised, and they can take advantage of the services Honiara has to offer,” says Kyaw Min Soe, managing director of Pacific Ace Shipping, which runs a route to the Shortland Islands area in the far west of the country.

Access to shipping services The Domestic Maritime Support Project is also constructing and rehabilitating rural wharves and jetties, making it possible for boats to dock more safely. Niumara in Central Province, for example, previously had no wharf, which made it difficult for many vessels to berth there and dangerous for passengers to get on and off boats.

Muriel Tuma, a teacher from the nearby Siota School, remembers how unsafe it was to carry babies and infants on board. People struggled to load their copra and other agricultural products, and it was dangerous trying to board larger vessels using ladders on the beach at Boromole.

The newly constructed Niumara Wharf opened in January 2013. Says Belaga resident Laisa Mapena, “The new wharf will allow us to get our copra, taro, melons and other crops from the garden to the market in Honiara.”

ADB project officer David Ling calls the shipping scheme a “win-win” for private sector shipping operators and the people of the Solomon Islands, many of whom are taking advantage of shipping services for the first time. And its success in the Solomon Islands is providing a template to improve sea links elsewhere in the Pacific too.

The Vanuatu Inter-island Shipping Project, co-financed by ADB, the Government of New Zealand and the Government of Vanuatu and recently approved by ADB, will provide similar services. But for Joy Ishihanua, also of S.I. Shipbroker, the benefit of the improved shipping services is best seen at festival time. “The holiday periods are the busiest for us,” she says, “when people are travelling all around Solomon Islands, visiting family and friends.”

• Sally Shute-Trembath is Senior External Relations Officer, Asian Development Bank

Energy biofuel standard has been adopted and the country’s fourth coconut biofuel plant was commissioned at Gau in the Lomaiviti group last month. Five more mills will soon be commissioned on the islands of Moala, Matuku, Rabi, Vanuabalavu and Lakeba.

With funding assistance from the European Union Energy Initiative-Partnership Dialogue Facility, SPC established energy security indicators for 14 Pacific islands countries (using 2009 as the baseline year)—Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Marshall Islands, Nauru, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu.

The SPC country energy security indicator profiles....generated a great deal of interest at the SPC booth during the 2013 Pacific Energy Based on the indicators, Summit showcase in New Zealand. Graph: SPC SPC published country energy profiles for each of the 14 PICTs in 2012.

Tapping into a goldmine of energy statistics

SPC helps countries benefit from energy data Do you know what percentage of the population in your country has access to electricity?

Do you know how dependent your country is on fuel imports? Do you know what the energy consumption level is in your country? Do you know what the carbon footprint of your country is?

The energy team at the Secretariat of the Pacific Community (SPC) has answers to these and many other questions relating to energy and development in the Pacific.

SPC has a mandate to review and strengthen the national capacity of Pacific Islands countries and territories (PICTs) in gathering, collation, management, dissemination and analysis of energy data to better inform national and regional energy planning and policy choices.

With valuable expertise in a wide range of sectors and a broad membership in the region, SPC is uniquely placed to do this.

The statistics, data and information available from SPC are nothing short of a goldmine for policy-makers who rely on high-quality data and statistics to formulate effective energy policies/ plans and aid delivery.

Building on its strength in this area, SPC played a key role at the Pacific Energy Summit (held in New Zealand in March 2013), where SPC Director-General, Dr Jimmie Rodgers was moderator for two sessions and a panelist for a third.

SPC’s message to the delegates was clear—a comprehensive analysis of energy supply and demand dynamics is crucial for improving

understanding of the sector and for attracting more investment in clean, affordable and reliable energy services.

Dr Rodgers presented to the meeting some facts relevant to energy policy that SPC has brought to light through its broad multi-sectoral approach.

He noted that the population of the region is expected to double in the next 20 years, greatly adding to its already increasing demand for energy.

He pointed out that government revenue from fisheries will be influenced by changes in tuna migration due to climate change.

Changes in the levels of revenue from this key source could complicate the Pacific Islands’ ability to invest in energy infrastructure. And he explained that climate variability may affect the potential of renewable energy resources such as solar and wind energy and hydropower, increasing the uncertainty relating to these energy sources.

Petroleum SPC’s analysis of the energy sector across the region has shown that most (estimates say at least 75%) of the fossil fuel imports in the Pacific Islands are used in transportation, indicating that efforts to reduce fossil fuel reliance in Pacific Islands countries must involve the transportation sector.

Some countries are already taking steps in this direction. For instance, in Fiji, a national

Access to electricity While some of us take access to electricity— and its availability at the press of a switch—for granted, SPC’s investigation showed that 7 million people out of the region’s 10 million still do not have access to electricity and that electrification rates around the region vary enormously.

The lowest electrification rate is seen in Papua New Guinea, where only 12% of the population has access to electricity. Closely following are Solomon Islands at 14% and Vanuatu at 28% (see graph for statistics on other countries).

A regional energy data repository The key challenge in undertaking a comprehensive analysis of the energy sector is the sharing of data.

While the commercial sensitivity of some data is understandable and should be respected, it will help everyone if remaining data are readily available from a central location.

According to SPC’s Deputy Director (Energy), Solomone Fifita, “currently, data on renewable energy resources are available from numerous sources such as the International Renewable Energy Agency, the World Bank, the Secretariat of the Pacific Regional Environment Programme and SPC. “Moreover, reports on feasibility studies and energy supply and consumption data are held by many partners and are therefore located in different places. Petroleum and power utility information and statistics are also stored in various locations,” he said.

However, work is well underway at SPC to establish a Pacific Regional Energy Repository, building on existing SPC web portals such as PRISM, GeoNetwork and the Pacific Hydrological Cycle Observing System, and linking to other sites where Pacific energy data and information are stored.

• For more information, contact Avnita Goundar, Policy and Research Adviser, SPC, Suva, Fiji (Tel.: +679 3379 281; email: AvnitaG@spc.int) or visit the SPC website: www.spc.int Islands Business, May 2013 39

Culture

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Each edition of the magazine carries a range of interesting articles about Papua New Guinea and Air Niugini’s destinations. They cover Papua New Guinea people, places, business and culture. The magazine is enhanced by the calibre of advertisers it attracts.

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Ta’iai Tufue Pisa (middle)...first woman of Fusi to be bestowed the chiefly title. Photo: Merita Huch

‘A matai title is an obligation’ So says the only woman matai in Fusi

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Lift your business with Paradise Magazine 40 Islands Business, May 2013

Born and raised in New Zealand, Ta’iai Tufue Pisa received a typical Kiwi upbringing where she was involved only in the faa-Samoa through church activities and within her family.

She never thought she would be taking up a role as a matai in her family.

The chance came when her father who still lives in New Zealand asked her to take up the title at his village in Fusi Safata.

“When my father asked me to take up a matai title from his family, I was in shock…I couldn’t feel my knees. For the first time, I was speechless.

“The title is Tualii, a tamalii, and one the faalupega of our village takes pride in. Like any daughter who loves her father, I asked him, dad are you sure? Dad, do you think I am ready and am I worthy of such a blessing? I hung up the phone, got on my knees and asked for confirmation of what my father and the village was asking me to do.

“This is surreal, it was out of the norm and something I definitely didn’t think it would happen at this time in my life.

“I was born, raised and educated in New Zealand, and served my church in Australia. I am young, I am single and one who is almost like a social butterfly, but through prayers, I felt a warm feeling and sound mind and my heart felt aligned for the first time in a long time.

“I knew it was right and I knew I needed to do this despite the many challenges I would face.

The Heavenly Father, my father and the village will help me through.

“The day was beautiful, I received the blessing from the local ministers and it was an eye-opener.

I knelt in front of the ministers, and then they placed their hands on my head. I felt that warm comforting feeling knowing that this is from God, with Him all things are possible.

“When it was time for the ava ceremony, I knew this was my chance to speak, my thoughts were personal, as I thanked God, thanked the village and my family for entrusting me with this authority, and that I vowed to work my hardest and will always seek the advice of my elders.”

She found out that she is the first woman of Fusi to be bestowed a chiefly title.

“There were efforts by other women in the past to get titles and they went as far as the bestowment before their names were removed and there had never been a woman in the village council,” says Tai’ai’s uncle, Maugaga’i Solomona, one of the family chiefs .

“Our families all agreed after many court cases to hold this bestowment and it had taken six years to ensure there was consensus from the whole extended family and anyone connected to this name before we could move forward and endorse these titles,” Maugaga’i adds.

It cost $3000 per high chief on the bestowment day and to Tai’ai, who is now the holder of the Tu’aalii title, this was worth every penny.

She also knows that this was just the beginning of many other contributions expected of her and her family and she vows to help out in any way she can.

“I know many people see bestowments as a way to lure money into the family activities but who else can help but family?

“In fact, it is an obligation every Samoan must take up if they have any wish to live in Samoa and be part of a growing community,” she says.

Environment

Keeping our ocean-going seabirds safe NZ innovation could be the answer islets. But when Melanesians, then Polynesians fanned out across the Pacific, they feasted on the Each week from November to July, ornibirds, which have no innate fear of predators and thologist Eric VanderWerf drives from Honolulu remain, even today, easy to catch. to this sandy nature reserve on Oahu Island’s “The Hawaii kitchen middens (piles of disnorthwestern peninsula to count seabirds chicks carded bones) had more seabird bones than any and check his rodent traps. other kind of animal except shellfish,” says Helen Last year, the 20-hectare point was separated James, the curator of birds at the Smithsonian from the rest of Oahu by a high-tech fence—the Institution in Washington, D.C., who has excafirst in the United States—with a mesh so fine vated such middens. even baby mice can’t get through. All predators Species not prized by the first colonizers were removed, effectively returning it to its prewere quickly decimated by the dogs and rats human state some 800 years ago, when the island they brought with them, until nesting colonies had no land mammals and millions of seabirds were restricted to smaller and ever-more-remote flocked here to breed undisturbed. islands. Then came the Europeans, who slaughThe fence, developed in New Zealand to tered millions of seabirds for the feathered-hat protect the flightless Kiwi from rats and dogs trade and introduced cats, mongooses and bigger introduced by Polynesians, is becoming a tool rats to the islands the Polynesians had missed in of choice for those trying to stem the decline of the Pacific, as well as to islands in other oceans. ocean-going seabirds like albatrosses, petrels and Meanwhile, the postwar development of shearwaters whose industrial fishing has numbers have been accelerated the dedeclining faster cline, which a justthan any other catcompleted study by egory of birds. the University of The most accesBritish Columbia sible islands have estimated at 25%— had their alien about 250 million predators eradicatseabirds—since 1950, ed over the past few according to co-audecades, and today thor Michelle Palecconservationists zny. are turning their Another study sights either topublished this year wards much bigger reports that 75% of islands or towards the threatened blueslices of coastline water seabirds species like Kaena Point. are affected by invaAfter examining sive predators where the last of his 150 they nest while traps, the tall, deep- Ornithologist Eric VanderWerf...holding an albatross at Kaena 41% suffer losses at Point, Hawaii. Photo: Christopher Pala ly tanned ornitholsea, when they ofogist remarks on a ten drown trying to recent afternoon, snatch baitfish from “We’re sure there’s no more predators—that’s hooked lines set out by tuna boats. rats, mice, cats, dogs and mongoose. Once in a “Populations of these seabirds, particularly while, though, one gets around the fence, but albatrosses and petrels, are diminishing faster we’ve caught it every time so far.” than other birds because they’re hit both where As for the birds, he says the point’s colony of they feed and where they nest,” says co-author Laysan albatrosses—majestic birds with a wingStuart Butchart, Global Research Coordinator at span of 7 feet)—had increased by 15 percent to BirdLife International of Cambridge, England.

400 since the fence was finished in March, 2011.

In addition, industrial fisheries have reduced And the number of wedge-tailed shearwater the amount of fish available to seabirds. Scientists chicks who survived and flew off tripled to 1,775. have analyzed the chemical composition of their “They were being decimated by rats because feathers and eggshells and concluded that many they’re much smaller,” he says. Shearwaters are seabirds are eating smaller and less nutritious prey beloved by tuna fishermen because they congrethat require more energy to catch. gate when schools of tuna feed by pushing their Finally, a recent study in the magazine Science prey to the surface. Blue-water seabirds, unlike found that populations of seabirds that depend their continental cousins, evolved by nesting on on small fish like anchovies and sardines tend to the ground in islands free of mammals, some as shrink when the biomass of the fish populations large as Hawaii or New Zealand, others mere falls below 1/3 of its pre-fished size.

By Christopher Pala

“Given that most commercial fish stocks are exploited beyond that level because that’s where the theoretical maximum sustainable yield lies, a lot of seabirds are effectively being starved,” says lead author Phillipe Cury, director of the Mediterranean and Tropical Fisheries Research Center in Sète, France.

“That means we should leave one-third for the birds, which is not what we’re doing now.”

Still, the Smithsonian’s James points out that falling population numbers are rarely followed by extinctions. In Hawaii, for instance, while the fossil record shows that there were 107 species of birds before it was colonised by Polynesians, only two of the 77 that are now extinct are seabirds.

“Seabirds have choices, they can nest somewhere else,” says James. “And they can rebound quite fast.”

Midway is a case in point. When the American military started fortifying it in 1940, more than 500,000 Bonin petrels were showing up to nest, says Beth Flint of the U.S. Fish and Wildlife Service in Honolulu.

But accidentally introduced rats reduced their numbers to 5,000. Less than two decades after the rats were eradicated, more than 300,000 fill the evening skies. Meanwhile, the albatross colony grew to 1.5 million birds, the largest in the world.

The density is of 1,000 birds per acre, making nesting season an amazing spectacle.

Lindsay Young, who did her PhD at the University of Hawaii on the Ka’ena albatross colony, said it could theoretically grow to more than 10,000 birds. “I certainly expect it to reach 1,000 in 10 years,” she says.

Albatrosses have perfected the art of flying just above rushing waves while barely moving their wings, even literally sleeping on the wing.

But on land they walk like toddlers with flippers, and they are catastrophic navigators in crowded spaces. One day in Midway, one knocked this writer down a fraction of a second after it flew into my frame as I was taking a picture. When I recounted this to the director of the island, he recalled how an albatross had crashed head-on into a tall building, landing dead at his feet.

While invasive species that affect seabirds range from crazy yellow ants to goats to macaque monkeys, “the rats are still the biggest killers,” says Alex Wegmann of Island Conservation.

Still, he says, by now most of the easiest islands have had their invasive predators eradicated, a total of about 300 islands since the 1970s.

“The ones that are left and that have a lot of endangered species like Gough and South Georgia in the Atlantic are bigger, complicated and will be more expensive,” he says.

The alternative is the Kaena Point model: parts of large islands like Fiji, Hawaii or New Zealand that can be fenced for, in the case of Kaena Point, as little as $290,000.

“Seabirds rebound much faster than other birds because immigration is added to reproduction,” says Tim Day of Xcluder of Rotorua, New Zealand, the company that built the Kaena Point fence. “It’s like taking the hand brake off when you’re driving.”

One advantage of the fences over remote-island extirpation is that funding is easier to obtain, Day says, because the predator-free zones can be set up near human habitations like Kaena Point, which affords the world’s only easily accessible and unsupervised albatross colony, just 30 miles from Honolulu.

Islands Business, May 2013 41

Environment

Studies on nature ahead of Suva summit

ExxonMobil’s $20 billion PNG LNG project, buoyed by backing from such multinationals as Japan’s JX Nippon Oil, Oil Search and Santos is the largest of its kind in the South Pacific region.

It involves transporting natural gas from PNG’s highlands to the coast with an estimated revenue prospect of around $30 billion over the years.

‘There’s so much not known’: Sheppard

By Davendra Sharma A s global experts prepare for a world conference on nature conservation in Fiji in December, the region’s peak environment body claims enough is not known about the Pacific’s biodiversity to make long-term decisions on the region.

Ideally called, Building Resilience for a Changing Pacific, the ninth Pacific Islands Conference on Nature Conservation and Protected Areas will attract 800 delegates at the Suva summit with a view to laying a new platform for environment protection in future.

The Secretariat of the Pacific Regional Environment Programme (SPREP), co-ordinating the event, expects to produce a strategy for nature conservation and biodiversity in the Pacific over 2014-2018.

But experts ask the question, how could the December conference make informed decisions when we are ill-equipped with research knowledge about the state of affairs of our oceans and land mass?

Islands governments or agencies like SPREP are inadequately resourced to examine or fund such research of the region’s seabed—where there appears to be an abundance of mineral deposits like gold, cobalt, silver, copper and manganese.

“There’s so much that isn’t known,” says David Sheppard, SPREP director-general. He said recent indications are that at least a third of the species in our oceans are actually new to science.

“So it’s likely the more studies undertaken, the more (likely) new species will be discovered.”

If the state or nature of the vast resources is not fully comprehended by government departments or experts in the region, then the potential environmental impacts of future mining can’t be appropriately managed.

Conference calls to “preserve Pacific way of life” While analysts and environment experts have painted a mixed picture in terms of benefits and Major investor mining companies should long-term environmental effects of the PNG finance such research but the studies need to be LNG project, the revenue outcome is expected independent of the private companies as they to outweigh the negative consequences from should be sanctioned by agencies like SPREP. the project.

“The companies need to allocate money for Like Ok Tedi and other mining projects in independent scientific studies of the biodiverPNG’s Highlands districts, numerous such sity and the environment in the deep sea, and investments by foreign firms have highlighted particularly the impacts that may be associated. the need for greater environmental “So this is an area that is lagging impact studies before projects are behind exploration of mineral undertaken to avoid landowner resources, but it is important—it issues. does need more attention,” ShepThe Suva conference will be the herd noted. largest regional conservation forum of its nature ever to be held in the ExxonMobil floats South Pacific – involving a netto search offshore work of NGOs, donors and peak Inspired by its success in Papua resources agencies like SPREP, New Guinea, the mega-internaIUCN Oceania and the Wildlife tional oil giant, ExxonMobil, anConservation Society. nounced in April that it has plans “This major conference is an for a large floating LNG (FLNG) ideal opportunity to showcase the project in the region’s gas fields. successes, best practices and lessons While its final decision on the learnt from all member countries precise area of exploration will not be known until next year, the plans David Sheppard...agencies and territories in our efforts to were revealed as other Australian like SPREP are inadequately preserve our unique environment and the Pacific way of life,” says energy investors contemplate off- resourced. Photo: SPREP Sheppard. shore gas processing as a more Climate change, a topic of continuous discuseconomical alternative to piping the gas onshore sions at regional meets in recent years, will also due to rising costs. feature at the conference—which was first held in There is potential to produce six to seven milNew Zealand in 1975 and has grown in participalion tonnes every year. “We’ve gone into the ention every five years it has been called. vironmental referral process but it doesn’t mean Organisers of the 2013 meeting hope to crethat we’re necessarily set on FLNG,” ExxonMobil ate a broad coalition of expertise to improve spokeswoman told the media in Sydney in April. knowledge and management of the Pacific and A target start-up date is expected in 2020-21 its resources. with a production life of between 20 to 25 years “The aim would be to get key stakeholders and a mobile-on-board workforce of around 200. and that include civil society, environmental The project could generate billions of dollars experts and also people that are knowledgeable in revenue for the country or countries wherever in this area.” it is stationed in the region.

www.islandsbusiness.com Taking the Pacific Islands to the world For more than 25 years Islands Business has been the leading news and current affairs magazine of the Pacific islands region. Now with islandsbusiness.com, we take the islands to the world.

Accessed in 80 nations besides the Forum islands countries, islandsbusiness.com is fast emerging as the leading online medium with the latest news and in-depth analyses of Pacific islands’ issues presented in the same high standard of journalism that Islands Business has come to be associated with. islandsbusiness.com now offers exciting opportunities to advertisers to take your message not just throughout the region – but to the world.

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42 Islands Business, May 2013

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Environment

Unveiling of the Tuvalu community water tank...a PACC project. Photo: Loia Tausi

Water and biodiversity Cornerstone of life in the islands

By David Sheppard* Biological Diversity or ‘Biodiversity’ refers to the variety of all living things on Earth—all species, genetic resources and ecosystems, and how they function and interact. Biodiversity is the cornerstone of life in the Pacific—our plants, animals, and ecosystems are essential for livelihoods of Pacific people. It has helped shape our culture and traditions.

In our region, it is becoming increasingly clear that biodiversity, associated ecosystems and the services they provide, is one of the best “frontline” responses to a changing climate and rising sea levels.

Biodiversity is important for the protection of important ecosystem services such as the provision of clean water, which is the most vital resource on which all life on earth depends.

Due to its wide-ranging importance across all sectors of society, the United Nations has declared 2013 as the Year of Water Cooperation—recognising that partnerships are vital to the ongoing protection and management of water resources to satisfy both human and developmental needs.

However, it is increasingly obvious that water is one of the major limiting factors for our life in the Pacific. In 2011 and 2012, we saw dramatic droughts and water shortages in our region, resulting in the declaration of a State of Emergency in Tokelau, Tuvalu, and the northern islands of the Cook Islands.

Climate change is likely to make this situation worse. Our scientists predict that convergence

zones—the zones where flows of weather meet and interact—will shift northwards, resulting in less rainfall and more unpredictable rainfall patterns throughout much of the Pacific.

It is thus essential that we in the Pacific better value, better manage and better conserve our wetlands and water resources. Management of biodiversity affects the supply and quality of water resources. For example, removal of forests from steep slopes will cause land to degrade as there will not be enough forest cover to protect the land from erosion, which in turn can cause multiple poor water quality and limited water supply for human consumption.

We need to better understand the relationship between water and biodiversity, in particular the role biodiversity plays in the overall water cycle process. This will better inform policy, planning and decision-making processes regarding the management of water resources.

What does this mean for our region? Pacific Islands environments are fragile and vulnerable to a variety of natural and human-made threats and our leaders have noted that climate change poses the major challenge. Our biodiversity and water resources are highly susceptible to these threats, as well as to contamination from pollution.

A number of activities led by the Secretariat of the Pacific Regional Environment Programme (SPREP) addresses water and biodiversity issues in the Pacific.

SPREP works closely with the Ramsar Convention to identify and manage important wetlands in the Pacific. There are many outstanding Ramsar sites in our region, including Lake

Lanoto’o National Park in Samoa, Upper Navua Conservation Area in Fiji and Lake Ngardok in Palau.

Pacific Ramsar sites protect important watershed areas for our towns and cities and demonstrate the values and importance of water and wetland areas for our survival.

The Pacific Adaptation to Climate Change (PACC) project, a joint initiative between SPREP and UNDP, is assisting countries with the installation of water tanks in Tuvalu and Niue to cope with water issues caused by drought.

SPREP also promotes ecosystem-based approaches to ensure a holistic approach to the sustainable use and management of water and biodiversity, taking into account other critical factors and threats such as those posed by extreme events and climate change.

Earlier this year, on February 2, World Wetlands Day was commemorated throughout the world and in our region.

The theme for this day was ‘Wetlands take care of Water’, highlighting the important role of wetland ecosystems in controlling and mitigating flooding and the storage and provision of water for the needs of our societies.

SPREP supported the Samoan Government’s national activities for World Water Day, which focused on Water Cooperation. Associated activities emphasised that all levels of society must work together to address problems of water scarcity, water quality and unnecessary wastage in our islands environments.

Similarly, on May 22, the Convention on Biological Diversity (CBD) will celebrate its International Day for Biological Diversity (IDB) and the theme is “Water and Biodiversity”, highlighting the important role of water in sustaining healthy and resilient species and habitats which in turn, provide vital ecosystem services upon which humans depend.

SPREP will continue to promote the conservation and management of the biodiversity of the Pacific to ensure water is available to sustain life and livelihoods of our peoples.

• David Sheppard is SPREP’s director-general and he is based in Apia, Samoa.

Islands Business, May 2013 43

Business Intelligence

By Dionisia Tabureguci

Y

early, the cost of fuel to run Fiji’s economy gets steeper and there have been some serious efforts lately to explore renewable energy sources to complement national power production.

Last month, just days after the Pacific Energy Summit in New Zealand, Fiji’s Department of Energy and its central bank held a public discussion forum to discuss this critical service, revealing the urgency to review the country’s National Energy Policy adopted, and with measured success implemented, in 2006.

Fiji, like all Pacific Islands Countries (PICs), has found it increasingly tricky to keep its fuel bill steady against a stagnant and modest export income. Not only has domestic demand grown, the skyrocketing fuel price over the years have badly hit hip pocket nerves for governments and consumers alike, and the story is the same everywhere in the region.

In the New Zealand meeting held at the end of March, there was strengthened commitment

by PICs present and their development partners to advance energy security in the Pacific especially since with the exception of Papua New Guinea, none of them are net producers and they all rely on imported fuel.

Again, they re-emphasised in their discussions the need for “greening the blue economy” through clean and affordable energy and this would require they diversify into other sources of energy, abundant in their islands countries and which are clean and cheaper.

Fiji, at its national energy talk held a week after the New Zealand summit, indicated it would head quickly in that direction, to lessen its dependence on fossil fuel and put more money and policy support behind the development of renewable energy production.

It is something that each PIC is expected to work on—and development partners have also thrown their weight behind this—considering how heavily reliant they are on imported fuel. And not just that, fossil fuel dependency in the global context is said to be a threatened reliance with global reserves dwindling, pushing the small Pacific economies to dangerous territory because as price takers, they are forced to compete with the preferred

Fiji tackles energy cost bigger volume buyers and buy at steeper prices.

A secondary but serious concern too, especially for the smaller atoll-based PICs, is how global fossil fuel consumption is affecting the earth’s natural climate and for some of them, the tiny degree of changes are translating into very real issues like food insecurity, population displacement from rising water level and increased exposure to natural hazards.

One concern on behalf of the isolated PICs was expressed last month by Nauru’s Permanent Representative to the United Nations Marlene Moses, in her speech at the UN General Assembly on Global Economic Governance. In it, she drew a parallel between the recent Global Financial Crisis (GFC), based as it was on a “mortgage bubble” and the potential natural climate collapse to which the world is now heading if it continues to promote, unchecked, a “carbon bubble”, where the unsustainable misuse of fossil fuel and mandatory fossil fuel reserves will simply do damage that will, like the spillover high food and fuel price impacts from the GFC, hurt smaller economies the most.

Smaller Pacific economies, concerned too on the effect of global fuel consumption on climate change and its consequences on their wellbeing, have become increasingly aware of the need to find alternative sources and help set the pace for a cleaner world.

Statistics, however, is indicating the huge task ahead. As revealed at the New Zealand meet, the Pacific region is still heavily dependent, as it meets around 80 percent of its electricity energy needs from imported fossil fuel and countries on average spend over 10 percent of their Gross Domestic Product (GDP) and 25 percent of their import spend on diesel alone.

“They (PICs) considered that with most Pacific countries working from a less than 10 percent renewable energy base and in a region with abundant renewable energy resources, including hydro, solar, wind, biomass and geothermal, they needed to do better,” a text of the New Zealand summit discussions said.

“Participants noted, in an era of increasing climate change concern, investments in renewable energy and energy efficiency should be a key part of the Pacific’s response to climate change. They called

for leadership to deliver solutions, overcome process and maximize outcomes in the shortest time possible. They agreed more effective partnerships were needed to work together, fast and holistically to close the investment gap.”

In Fiji’s case, its annual import bill is heavily dominated by its fuel spend, according to latest data from its Bureau of Statistics.

In 2006, its annual fuel bill hit over F$1 billion for the first time and since then, it has hovered over F$1 billion annually on average.

In 2008, mineral products, under which fuel is classified, cost the country F$1.2 billion and this against a total import bill of F$3.6 billion and a total export income of just F$1.4 billion.

This has been the scenario every year.

Provisional figures for 2010 saw fuel imports costing Fiji around F$1.13 billion, against a total import bill of F$3.4 billion and total export earnings of F$1.6 billion.

Not only is that steep on export income, it has a huge bearing on a country’s external financial position.

Fiji’s Balance of Payment (BOP) with its major trading partners is significantly in deficit with Singapore, where it sources its fuel imports.

In 2008, it recorded a trade deficit of F$1.2 billion with Singapore, a deficit of F$762 million in 2009 and a deficit of F$1.13 billion in 2010.

These against total trade deficits of F$2.13 billion in 2008, F$1.57 billion in 2009 and F$1.86 billion in 2010. Figures after 2010 are yet to be released by Fiji’s Bureau of Statistics but they are expected to follow existing trend as the country has not made significant progress towards weaning its economy from fossil fuel dependence.

Its state-owned and major power producer the Fiji Electricity Authority (FEA), whose demand make up the bulk of total fuel imports, still struggles to meet national demand, which has busted the capacity of its 80 megawatts major hydro facility on mainland Viti Levu.

Its increasingly costly import bill has seen FEA slowly diversify into other renewable sources where it has tapped into more hydro power, wind power and biofuels. Independent power production is still slow to take off due to lack of incentives, with FEA still the cheaper source, discouraging commercial

Two mega economies deepen ties

By Dionisia Tabureguci

P

apua New Guinea (PNG) and Fiji have again put pen to paper to seal deals that will see them strengthen bi-lateral relations and expand the Pacific region’s biggest free trade area.

Following a Fiji trade mission to PNG last month, the two countries have emerged deepening market integration they committed to as members of the Melanesian Spearhead Group (MSG), allowing for free movement of goods, services and capital across borders.

Fiji’s national provident fund rounded off months of negotiations with various shareholders in PNG’s partly state-owned mobile telephone company BeMobile, inking a 40 percent ownership in it, as well as a related agreement involving Vodafone 44 Islands Business, May 2013

Fiji, in which it indirectly owns 51 percent, to manage what is now known as Vodafone BeMobile.

The two countries also signed a joint communiqué for stronger cooperation in development, with a visa waiver element being the recent highlight.

This is a step further from the activation of a Memorandum of Understanding (MOU) for a Skilled Mobility Scheme (SMS) among MSG countries when MSG leaders met in Fiji in March last year.

The SMS encourages a free movement of skilled labour across MSG member countries and is still a pilot scheme at this stage, capped at 400, covers a number of specific skilled professions and depends on shortages identified by the requesting country.

The commitment that Fiji and PNG sealed last month will now allow the free movement of re-

quired skilled labour both ways on visa-on-arrival basis.

For its part, PNG took a small step in demonstrating its potential to be a donor country, especially to its smaller Pacific neighbours, by pledging Kina 50 million (F$40 million) as grant to Fiji to help with preparations for next year’s national elections.

PNG’s minerals-driven economic wealth has stirred interest in some quarters, including in PNG, of the possibility of its role as a donor to smaller Pacific nations, an idea Prime Minister Peter O’Neill also shares.

For Fiji, it was a chance for its manufacturers to showcase their goods, stir the interest of the PNG market and help increase the momentum of twoway trade between the two countries, which had gradually albeit marginally increased under the

Tourists to salvage islands economies

independent power production.

There are expectations of major changes when the National Energy Policy of 2006 is reviewed and the Fiji Government had put out an expression of interest at the end of last year, which will be complemented by feedbacks from the recent public discussion in its capital Suva.

At that forum, Fiji’s Prime Minister Voreqe Bainimarama talked about Fiji and the Pacific’s need to reduce dependency, even linking it to sovereign vulnerability as they are at the mercy of outside forces that influence fuel production and prices.

“Energy insecurity does not exist in isolation, it is not a sector problem, it is a threat to the security of our economy, it is a threat to the fabric of our society and our sovereignty as an independent state,” Bainimarama said.

There were calls by Fiji’s Reserve Bank for commercial banks to lend more to this sector, especially in projects that focus on power production using renewable energy sources.

Policy support in Fiji include fiscal incentives for renewable energy power production, among them a 10 year tax holiday for a tax payer undertaking a new activity in processing agricultural commodities into biofuels from 2009 to 2014 and VAT exemption from for items necessary for biofuel and renewable energy production.

At the New Zealand energy summit—attended by heads of governments from Cook Islands, Federated States of Micronesia, French Polynesia, Kiribati, New Caledonia, Niue, Samoa, Tokelau and Tonga, as well as representatives from American Samoa, Nauru, Fiji, Guam, Papua New Guinea, Marshall Islands, Palau, Northern Marianas, Pitcairn, Solomon Islands, Tuvalu, Vanuatu and Wallis and Futuna—significant financing commitments were made by development partners.

Australia, Japan, New Zealand, the United Arab Emirates, the Asian Development Bank, European Union, the World Bank as well as other multi-donor trust funds have reinforced their support for financing renewable energy projects in the Pacific.

Of the 79 renewable energy projects from the Pacific presented at the summit, over 40 are expected to be fully financed through a NZ$635 funding envelope announced by co-hosts New Zealand and the European Union.

oaring tourist revenue will salvage islands economies from a further decline in 2014 as the region recovers from devastation incurred in the aftermath of tropical cyclones and floods of the last two years.

Economic growth in the Pacific islands region slumped to 7.3% in 2012 and this is expected to dip deeper to 5.2% this year. But there is hope of revival in 2014 as islands governments launch aggressive tourist campaigns to woo the muchneeded foreign dollars.

Engaged in several major infrastructure projects around the region, the Asian Development Bank anticipates that “a modest uptick of 5.5% in 2014” is eminent as the tourist numbers grow and exports of fisheries and mineral resources pick up.

The decline in islands economies in 2013 is largely due to the slow growth in the region’s large resource exporting economies, Papua New Guinea and Solomon Islands, but new developments like the A$20 billion Liquefied Natural Gas will provide fresh impetus to those economies.

Along with growth in the islands economies, there will be a resulting inflation rise from 5.3% last year to 6.1% this year and could jump even further to 6.3% in 2014.

“To promote strong growth, smaller Pacific islands economies must work to improve their connectivity and attract private investment into their tourism, fishing and other productive sectors,” said Xianbin Yao, Director General of ADB’s Pacific Department.

Cook Islands, Fiji, Vanuatu, Tonga and Samoa have had strong tourist arrivals in 2012 despite the floods and tropical cyclones.

“Aggressive tourism marketing campaign appears to have attracted more visitors.” In Samoa, discounted accommodation rates have paid off for the hoteliers and airlines after the cyclones last year as tourism receipts have pushed economic growth.

Amidst campaigns to lure tourists to their shores, some islands governments have found that they are at times competing with other countries in the region for the tourist dollar.

Fiji’s new tourism chief Rick Hamilton last month deterred operators in his country from

participating in the annual Bula Fiji Tourism Exchange this month because Fiji stood to lose potential holidaymakers to other islands states because of a regional participation at the event.

His call for boycott follows registration of representatives from the Cook Islands, American Samoa, Tahiti, Tonga and Vanuatu for the May showpiece—aimed at luring Australians to the Pacific islands.

“We believe it is difficult enough (for local operators) to win business with local competition, let alone have to compete in this forum against the rest of the South Pacific,” cautioned Hamilton.

Fiji is the seventh most preferred overseas travel destination for Australians heading abroad, behind New Zealand, Indonesia, the United States, Bangkok, England and China.

Last year Australians accounted for nearly a third of all tourist arrivals to Fiji—32,000 Australians visiting Fiji. The number is a remarkable jump from 128,000 in 2002.

The ADB expects that while tourism injects loads more incomes in the middle-sized economies of the region, fisheries is still important for nations like Kiribati and Tuvalu.

“Tourism and fisheries have shown some capacity to support growth in even the smallest economies, contributing to both job creation and government revenues.”

In the smaller islanda economies of Kiribati, Nauru and Tuvalu—where tourism is not a big dollar spinner—growth has been promoted largely due to new construction works from development aid and improving fisheries performance.

Nauru has seen a remarkable boost in phosphate exports over the last two years and the trend is anticipated to continue in 2014.

In the Northern Pacific, the economies of Marshall Islands and Palau will continue to grow although the GDP of Federated States of Micronesia will shrink by 1% as recent projects are wrapped up.

“Palau’s tourism arrivals continued to grow, albeit at a lower rate than in recent years, and will continue to fuel economic growth.”

The Marshall’s reliance on tourism and fisheries has been spurred on with an expected completion of infrastructure projects like the upgrading of Majuro’s airport.

MSG Trade Agreement (MSGTA).

The vision of the two leaders—PNG’s PM O’Neill and his Fijian counterpart Voreqe Bainimarama—that deeper integration and regular exchange between the two countries will get things going not only for other MSG countries but the entire Pacific.

“Fiji’s trade with other Pacific Islands countries has grown from less than 1 percent of total trade in 2000 to around 4.5 percent in 2010.

“Most of that is with the other MSG countries,” Bainimarama said in his opening address at the FijiPNG Trade Investment seminar at Port Moresby’s Gateway Hotel.

“In dollar terms, Fiji-PNG trade in 2012 amounted to F$23 million, which accounts for 20 percent of total trade with the Pacific region.

“We expect major growth in the trade figures for

2013 and 2014, especially with the removal of most duties by PNG under the MSG Trade Agreement.

More broadly, the Fijian and PNG Governments, along with our respective private sectors, share a bold vision, which is a truly integrated Pacific, pursuing common goals that grow our economies, increase our regional and global influence and benefit all our people.”

Together, PNG and Fiji form the Pacific’s biggest free trade area, a huge opportunity at the doorstep of the smaller economies in the region.

Combined, their duty free area gives the rest of MSG and the entire Pacific a market size of roughly 7.94 million people or 85 percent of population within the Pacific Islands Forum (PIF) trade bloc, which has 14 Pacific member countries.

At last year’s March meeting in Fiji of MSG

leaders, PNG followed up on earlier commitments by immediately lifting tariffs on more than 400 items—with the exception of three—covered under the MSG Trade Agreement (MSGTA).

It had these items on its negative list as goods that had attracted high tariffs, and these were mostly linked to its protected industries.

It became the second country to do so, following Fiji’s lead in 2005 as a duty free destination for all MSG originating goods.

Now with the two bigger PIF Pacific members expecting to deepen integration by holding annual bilateral talks at various government levels, it spearheads a re-invention of sorts within Melanesia and promises to be a new catalyst for economic development across the Pacific.

By Davendra Sharma

S

Islands Business, May 2013 45

RAMSI Update

Members of the PNGDF...deployed under RAMSI at their farewell parade. Photos: RAMSI Public Affairs

PNGDF completes RAMSI duties The Papua New Guinea Defence Force has completed a 10-year stint under the military component of the Regional Assistance Mission to Solomon Islands. Johnson Honimae reports on the farewell of the PNGDF.

A

fter deploying 600 personnel since mid2003 to the Regional Assistance Mission to Solomon Islands, the final PNG Defence Force contingent was farewelled at a ceremonial parade at the RAMSI Headquarters in Honiara on 1 April.

“After 10 years of continuous deployment, I would like to say a special thank you to all the troops from Papua New Guinea who have served with RAMSI over the past decade.

“Your input has been vital to the success of the mission and a testament to regional cooperation and fellowship,” said Wayne Higgins, RAMSI’s Acting Special Coordinator, during the farewell parade.

Speaking on behalf of the PNG Defence Forces, Joint Force Commander, Colonel Gilbert Toropo who travelled from Port Moresby for the ceremony, said apart from its domestic duties, PNGDF “has maintained RAMSI as a priority deployment among its international and regional obligations. We have always strived to provide our best possible officers and servicemen and women for RAMSI duties.”

46 Islands Business, May 2013

Colonel Toropo said: “PNG believes RAMSI has achieved its mandate and PNG is happy to be part of the troop contributing nations to assist in restoring normalcy to Honiara and the rest of Solomon Islands.”

At the same time, the RAMSI exercise has been of great benefit for the PNG servicemen and women.

“PNG Defence has benefitted a lot from the RAMSI experience. We have witnessed improvement in our servicemen’s individual performances,” said Colonel Toropo.

He thanked the Australian and New Zealand Defence Forces for their leadership, friendship and experiences which have been a key cornerstone in the success of RAMSI so far.

To Solomon Islands, Colonel Toropo said: “As Melanesian neighbours and importantly as we share the common sea border, PNG has always desired to have law and order and security in our respective countries for we have seen the effects of the Bougainville crisis and the tension in Solomon Islands on our common border.”

Like the New Zealand platoon that left in

Colonel Gilbert Toropo...RAMSI a priority deployment.

November last year, the PNG departure is part of the phased withdrawal of the military contributions to RAMSI. PNG has been replaced by a contingent from the Tonga Defence Service.

RAMSI’s military contingent will retain its current strength as a three-Platoon Company through to 30 June after which it will cease operations. From 30 June, RAMSI will be a police-focused mission.

The RAMSI Participating Police Force including police officers from PNG will continue its capacity building work with the Royal Solomon Islands Police Force. RAMSI’s current development programme will transfer across to bilateral and other donors.

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