September 2013

September 2013

Vol. 39, No. 9

Contents Telecommunications 38 Connecting the Pacific region with the world Supporting ICTs in the islands

39 Fiji’s ATH in FINTEL takeover Buys controlling stake at half price

nvironment E 40 Integrating climate change and disaster risk What does it mean

for communities?

PACIFIC OPEN SKIES: STILL A PIE IN THE SKY. Cover report—pages 16-24.

41 Emerging environment leaders surge ahead

Fishing

42 Is ‘moi’ the real deal for Marshall Islands?

Now generating interest

Cover Report

from Hawaii investors

Why a Pacific ‘open skies’ is still ‘pie-in-the-sky’

Shipping

16 The big PIASA flop

43 Getting our seafarers ready for high seas duties Tuvalu setting

22 Airlines sensitive to external environment Preparing for such shocks

24 Islands discuss aviation gas emissions

the trend

Complying with international standards

Sports

Politics

46 Adams family produces another talent NBA rookie Steven out to

25 Sopoaga’s govt’s big worry

Finding funds to run nation’s affairs

26 US tiny islands for military use?

emulate big sis Valerie’s success

27 Climate change blitz in lead-up to Forum

Regular Features

Mixed reactions to America’s plan

Marshalls wants US Secretary Kerry to attend

28 Breakthrough imminent in Indonesia?

O’Neill launches Initiative to defuse standoff over West Papua

29 Bizarre twist to sunken gold bars Govt, MPs on hot pursuit for treasure

30 Monitoring and mapping the Pacific

4 Letters to the Editor 6 Views from Auckland 7 We Say 12 Whispers 14 Pacific Update 44 Business Intelligence

Raising debates on legality and privacy

32 Why Fiji’s latest electoral system changed?

‘Open’ versus ‘closed’ PR systems

Culture

33 Use of Pacific motifs land global brands in hot water Tuilaepa: ‘It’s our heritage and cultural property’

Business

34 From bankruptcy filing to settlement deal

CNMI pension fund under the spotlight again

35 PNA’s proposal to stop overfishing bigeye

36 Non-mineral exports rise, mineral exports falling But concerns about tax review raised

Islands Business, September 2013 3

L E T T E R S Managing Director/Publisher Godfrey Scoullar Group Editor-in-Chief Laisa Taga T 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

Lost confidence

Anti-Australian bias

I have come to a stage where I no longer believe in an united Papua New Guinea. I have totally lost confidence in our united efforts to correct the many wrongs that continue to divide our country into ethnic divide.

When things go wrong, we use the excuse of “oh, but we are democratic” and we wait for another five years for our opportunity to change the destiny of our country via the ballot box.

Our issues are not corruption, crime, or any weakness within our governance system…our issues are leadership and people; people who are mandated or given the opportunity to manage the affairs of our country but fail to stand up for what is best for our people.

When leaders are not visionary, our people become blinded by the system that those in power use to capitalise on our weakness.

I am gettIng a BIt tIred of the antI-a australian bias from your magazine. If you haven’t got the balls to criticise the biased dictatorship of your own country, then I don’t think you have a licence to comment on anyone else’s.

Dionisia Tabureguci T

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

e —David ephraim Pa u PaP ua a New Gui GuiN Nea Nea

We’ve Got it!

Sam Vulum Patrick Matbob Peter Niesi

Solomon Islands Evan Wasuka Alfred Sasako Tonga Taina Kami-Enoka Vanuatu Bob Makin Islands Business is published monthly by Islands Business International Editorial & Advertising Offices Level III, 46 Gordon Street, PO Box 12718, Suva, Fiji Islands.

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Column

Views from Auckland

BY DEV NADKARNI

edgement nor monetary benefits.

But any legal action is mired in all sorts of difficulties ranging from proving ownership, putting a value to the art form, loopholes in the copyright laws (a certain number of changes from the original design can deem a new design ‘original’, even if it is reminiscent of a traditional style).

Logan also points to the fact that “so many from that community (whether it be elders, chiefs, artists, groups) want the right to claim ownership with the possibility of financial compensation.”

“It stinks of cultural ignorance and arrogance.

It suggests badly run business. These days there is no excuse for not researching the significance of any cultural motifs,” says Marilyn Kohlhase, New Zealand-based director of Akateretere Arts and co-founder of the former Okaioceanikart Gallery, the world’s first Pan-Pacific art gallery.

She is unsparing in her criticism of the copy“Everyone of those curves, lines, and details ists, calling their acts “theft” of cultural treasures. has meaning. They signify our beliefs, our anShe is all for the global media reporting the cestry, our history. It is sad to have these things “crime”. exploited and diluted.

How could indigenous cultures respond?

“I have also had a problem with others wear“Regional bodies could use more of our own ing the bone carvings and tattooing, without the indigenous experts to educate themselves and traditional means of acquiring such things. others of the sacred value of our cultures and their “I do appreciate that people appreciate the economic potential with respectful and lawful use uniqueness and/or beauty of our culture and art, of our motifs,” says Kohlhase. but please educate yourself before disgracing our This is exactly what artist Florence Jankae, traditions,” posted Moana Sitake of Utah Valacknowledged chamley University on the pion of the traditional Nike blogsite. bilum craft from Papua This ‘bad’ news, New Guinea, told me however, has shone during the third anthe spotlight on Panual Maketi Ples event cific indigenous and in Sydney earlier this traditional art ever so year. brightly, that the design Though the Goroka world is bound to sit up Women Bilum Weavand take notice—and ers Association colmore potential violalaborates with Austions could well follow. tralian fashion icon What’s in the limeAlistair Trung to create light is always copied. a range of accessories The success and high with bilum motifs that visibility of the new sell in Australia, Jankae Fiji Airways insignia is wary of going interand such news items of national without the controversies involving safeguards in place. big brands and names “The government adds tremendous val- Fiji Airways...with its bold, unconventional and distinctive needs to do more in ue, though quite in- dark brown traditional masi motifs. Photo: Fiji Islands protecting our copytangible, to a distinctive right on traditional design motif that can design,” she said. She is aversed to exposing be traced to an authentic source. some of the rare designs until such protection Designers are perpetually on the look out for is put in place. new motifs and try to jump on a bandwagon So is there anything that can be done to bring as soon as they get the slightest whiff of its violators to book other than Julian Assange and popularity.

Edward Snowden-style whistle blowing? Not Last year’s global fear of an apocalypse crereally. And even if avenues were to be explored, ated by the Mayan calendar, which supposedly the sheer scale and international nature of the predicted the end of the world on December 21, problems would put costs beyond the pale of brought the world’s attention on all things Mayan most indigenous groups even if they were orand much else that came from the Middle and ganised like corporates.

South American region.

Though the United Nations Declaration on Among the motifs that took off last year in the Indigenous Human Rights has clauses to protect fashion world established a new trend in ‘Aztec’ indigenous arts and crafts, defending it would designs—something the New York designer tried be eye wateringly expensive to most indigenous to pass off last month. groups.

But in this day and age of a highly networked Hard legal slog world, naming and shaming is the name of the American Indian indigenous groups have game. And it is effective, as was seen in last protested against what they consider purloining month’s Fijian and Samoan examples. of their traditional designs with neither acknowl-

Name and shame the plagiarists This year, traditional Pacific art and design have hit the headlines in the media for good reasons and bad.

While good is of course good, bad is good too—there’s no publicity that’s bad publicity; bad news is good news so long as you are in the news, as any astute politician will tell you.

Let’s start with the ‘good’ news. Pacific art blazed into the world’s consciousness earlier this year with the brilliant new insignia on Fiji’s rebranded national airline.

Bold, unconventional and distinctive, the dark brown traditional masi (tapa) motifs on the tails of the airline’s fleet stand out expressively among the blue and red aircraft tails—conventional airline colours—at busy airports.

The airline has done its storytelling around the new designs rather well, too. It has explained every motif and its significance and focused on the traditional indigenous artist and her art.

The new insignia have been well noticed, discussed and appreciated in the branding circles, even outside the aviation industry.

It is undoubtedly a success story—not just for Fijian traditional art but also for the rest of the Pacific.

Now, for the ‘bad’ good news: last month, international brands and fashion designers made global headlines for not acknowledging the source of some of their recent design themes as being inspired by the islands’ traditional indigenous art. It involved both Fijian and Samoan motifs.

In one instance, a New York fashion designer used iTaukei masi or tapa motifs on her dress and passed it off as being Aztec-inspired.

When Pacific art experts blew the whistle on her bluff, the designer acknowledged the motifs as being of Fijian origin and apologised on her website.

In another development, global footwear giant Nike had to acknowledge its boot was on the wrong leg. It was forced to pull a line of sportswear that was based on Samoan designs after an outcry that the designs were culturally insensitive.

The women’s running tights, bodysuit and sports bra in the Nike Pro Tattoo Tech line had a pattern based on Samoan tattoos called pe’a and traditionally reserved for men.

“It’s a pity they didn’t research it properly by making it for women. Bad move,” said Oceania media publisher and editor of Spasifik magazine, Innes Logan.

“The Pacific community should be outraged when a global company attempts to profit from their art and motifs.”

6 Islands Business, September 2013

WESAY ‘…whether the brave new initiative of PIDF will make a real difference to the status quo of regional alignments and the agendas of long established regional organisations will depend on how well the forum takes its initial baby steps, stands up on its own feet and ventures out to achieve its goals. It will also depend on how strong its ongoing funding sources and streams will be.

For the easiest thing in the world is to start an organisation. But keeping it going and building it into a meaningful force to be reckoned with can be extremely daunting’

T

he inaugural Pacific Islands Development Forum (PIDF) held last month in Fiji and the announcement of its secretariat to be located in Suva, manned by senior Fiji officials and initially funded by the Fiji Government, is an event that received wide coverage in the region and beyond.

The formation of the new forum is a significant development for the region and has a range of implications both regionally and globally. It has a bearing on regional and global geopolitics especially in the context of the Pacific’s natural resources and the newly expanded exclusive economic zone boundaries of its sovereign islands nations.

The development will also have a bearing on sub-regional alignments that have polarised the region particularly in the past few years owing to a number of reasons including political partisanship, geographical proximities, cultural, historical and ethnic ties and trade treaties.

The older Melanesian Spearhead Group (MSG) comprising Fiji, Papua New Guinea, Vanuatu, Solomon Islands, FLNKS and Timor Leste, and the more recently formed Polynesian Leaders Group (PLG) by Samoa, Tonga, Cook Islands, Niue and Tuvalu illustrate the rise of sub-regionalism.

MSG has a number of formal and informal cooperative initiatives amongst its member nations in the areas of trade, labour movement and political solidarity. For instance, MSG members have a free trade regime and have been supportive of Fiji’s situation more vocally while members of the PLG have either been silent on the issue or vehemently critical, as in the case of Samoa.

Then, there is the question of how the new PIDF will stack up against long established regional setups, notably the Pacific Islands Forum Secretariat, the premier regional organisation. Though the founding members of PIDF have played down concerns of a challenge to regional organisations, many references have been made on how they envisage it to be different from the existing setup.

For example, there has been pointed talk during the inaugural speeches about the region not needing highly paid staff to run its affairs, rather drawing from within its ranks, which presumably has a better understanding of grassroots issues. It is an obvious

jibe at the large body of expatriates and consultants employed at high wages and remuneration packages in the plethora of regional organisations—many running programmes that seem to duplicate efforts. It also takes a potshot at what is commonly referred to as boomerang aid, where a large part of aid funds go back as payments to consultants from the donor countries But whether the brave new initiative of PIDF will make a real difference to the status quo of regional alignments and agendas of long established regional organisations will depend entirely on how well the forum takes its initial baby steps, stands up on its own feet and ventures out to achieve its goals.

It will also depend on how strong its ongoing funding sources and streams will be. For the easiest thing in the world is to start an organisation but keeping it going and building it into a meaningful force to be reckoned with can be extremely daunting.

Geopolitical alignments were already in plain view at the inaugural forum. Australia and New Zealand were conspicuous in their absence, obviously because of their stand on Fiji, which by all counts is the initiator of the new organisation. But the forum managed to gather around it a mass of powerful and emerging nations around the globe. Reports said some 50 nations were represented at the curtain raiser. That shows the world’s skyrocketing interest in the Pacific region. Going by that, funding for the fledgling organisation does not appear to be an issue, at least in the short-term.

PIDF has crafted itself a primarily developmental agenda and cleverly draws on business and the private sector as much as it does on governments and development agencies.

In that way, as well as appearing inclusive, its planners have covered all bases in terms of potential funding avenues.

With the right mix of leaders with vision, drive and commitment and with enough financial resources at hand, the organisation has great potential to make a difference to the Pacific.

While these factors are a matter of the right human resources, the right implementation frameworks and adequate finances to

New forum a significant development

Islands Business, September 2013 7

WESAY make things work, what will be the biggest challenge to the forum is political unity and the ability of the major regional players in the forum to work together and sing from the same song sheet. That is the single factor that could undermine the very idea of the forum if things go wrong.

The straws are already in the wind. The inaugural meet was not without controversy. Papua New Guinea’s Prime Minister Peter O’Neill stayed away from the proceedings because of prior commitments. The PNG Government’s media manager was at pains to explain through the regional media that there was nothing to the Prime Minister’s absence other than clashing dates.

It is entirely possible that Australia and New Zealand would have influenced PNG’s decision to stay away, citing among other things, the possibility of Fiji’s potential to steal its thunder in the medium term.

If next year’s election goes off well and Fiji ushers in a democratically elected government, it will receive big ticks of approval from the countries and institutions that have put it in the dog house since December 200 and could be a considerable challenger to PNG in terms of attracting investments in the natural resources, services and the financial sectors.

It would be in PNG’s interest to be mindful of this and there is little doubt the ANZAC nations would have played on these fears.

Lastly, the new forum makes the writing on the wall for the premier institution of the region, the Pacific Islands Forum Secretariat (PIFS), even more stark and bold.

In recent years, there have been questions asked about the relevance of the way in which the Forum is structured and the manner in which it works and whether its decades’ old structure and systems are relevant to a rapidly changing Pacific islands region.

A recent review of the Pacific Plan, one of the guiding documents of PIFS in recent years, has said that it no longer reflects the changed political, economic and social circumstances in the Pacific.

By all counts, the new forum has had a brilliant start: endorsements from almost all regional nations, a large slice of the international community and apparent support from development financial institutions. It has even notched an early achievement in being invited to attend the United Nations General Assembly so early in its fledgling life.

PIDF has the potential to make a difference. To what extent it will succeed will be dependent on the political will of regional leaders and their commitment to the people of the Pacific Islands region.

‘What this development signifies, however, is that it is no longer possible to stick steadfastly to tradition when it becomes practically difficult to do so, simply for the sake of tradition. It is to be seen how the country’s rather rigid establishment will contend with the strengthening winds of change that will blow towards it in the wake of faster, better and ubiquitous Internet connectivity and other developments like increased tourism’

T

hese are interesting times in Tonga. Its geographic location on the international dateline, the line that melts yesterday into today and today into tomorrow, is quite aptly metaphorical for its situation at this point in time in its history. It is as though the country is caught up in a time warp between yesterday and today.

The country is unique in many ways—it is the region’s only kingdom; the only country that was never colonised by western powers and a country that has for the past couple of decades tried hard to strike a balance between tradition and modernity—trying to adapt to the rapidly changing world while staying as faithful as possible to its time worn socio-political mores. Nothing better illustrates this than the present version of its political system, which it has evolved with much experimentation and heartburn along the way.

Every new development in the country, therefore, tends to be seen

8 Islands Business, September 2013

against the backdrop of this quaintness. In more recent years, it is beginning to appear as though tradition is increasingly being forced to give way to the inevitability of the trappings of the modern age.

The old guard is being forced to look at developments with a new perspective but strong traditions coupled with conservative religious beliefs, many of which would be deemed anachronistic in other countries even in the Pacific, makes that difficult and puts it in direct confrontation with people with a more modern outlook.

Tongans are among the Pacific’s most highly educated—it is reputed to have the highest per capita PhDs in the world—and many of them who live and work overseas find themselves at odds with many of the old guard’s ways.

Among several smaller happenings, last month marked two landmark events in the country—one that would undoubtedly make everyone happy and the other, which would leave some people,

WESAY especially from traditional mindsets distinctly uncomfortable.

King Tupou VI formally signalled in a new era of high speed broadband into the country at an inauguration ceremony in Nuku’alofa. In the works for about two years, the project involved linking Tonga and Fiji with an 827-km long undersea fibre optic cable system. It will help link some 100,000 Tongans to the transPacific Southern Cross Cable that runs from Australia to the United States, passing through Fiji.

Part of the US$32.8 million Pacific Regional Connectivity Project, the high-speed cable will provide Tonga’s people and businesses with affordable, accessible, information and a range of communication technology services while improving the country’s international connectivity.

Tonga has long lagged behind its neighbours Fiji, Samoa and the Cook Islands in the tourism sector. Until last year, it never projected its destinations as a differentiated product in the highly competitive South Pacific holiday market in the manner other destinations and even tiny Niue has.

Only in recent months has it visibly positioned itself as “the true South Pacific”. However, it is early to say what results the positioning is delivering. The country is also making decisive forays into the lucrative and rapidly growing cruise ship market, investing in infrastructure and preparedness to welcome an increased influx of tourists. The new super fast Internet initiative will undoubtedly help in this regard as also in its efforts to export and do more inter-island trade. But technology is always a double edged sword and this new development will also make the winds of change blow even more rapidly. But whether it will usher in a new era of understanding between the old guard and the newer generation or prove problematic, only time will tell Also last month, two Tongan princesses announced they were breaking with tradition by marrying commoners—something that would have been unthinkable just a few years ago. Princess Salote Luepepau’u Tuita, who is sixth in line to the throne and her younger

Interesting times in Tonga

sister Frederica Tuita, who is tenth in line, are engaged to marry men outside of the family. Their relationship traditionally needs the royal stamp of approval and in the past it was well within the constitutional powers of the monarch to refuse permission and even annul a marriage that broke protocol.

The princesses have said that they will wed even in the face of royal opposition, reflecting changing times and their effect on age old traditions. Even the British royal family also has had to relax its traditions in the case of Prince William and Kate, a commoner before she was anointed duchess.

It is widely believed that it would be quite unlikely that the King will oppose the intention of the princesses—in effect his nieces, being the daughters of his sister—to go into wedlock outside the pale of the royal family. Because even the practicalities of finding grooms within the restrictions of royalty would not only be a hard task but unfair on the princesses if that was against their wishes, particularly in these times.

What this development signifies, however, is that it is no longer possible to stick steadfastly to tradition when it becomes practically difficult to do so, simply for the sake of tradition. It is to be seen how the country’s rather rigid establishment will contend with the strengthening winds of change that will blow towards it in the wake of faster, better and ubiquitous Internet connectivity and other developments like increased tourism.

Tongan society seems to be in a state of ferment as these winds blow. Recently, Tongan police rounded up and arrested 147 students from Tupou College for an alleged attack on students of Tonga College, something that is already beginning to look like an event imported from outside its societal framework.

There is no doubt that Tonga will have to meet these changes head-on and alter its course to flow with them rather than against them. In another metaphorical development last month, the country announced it was updating and refurbishing its biggest hotel property, the iconic International Dateline Hotel. As bidders come in to help raise the hotel’s standards, it is hoped the country will see the straws in the wind and update itself to the modern age.

‘What SPREP got right, which most governments and other organisations don’t, is the power of empowering a willing, able, intelligent group of young people...That is the simple formula that has delivered such sparkling results’

O

ne of the greatest shortcomings of political establishments in most countries is the absence of any efficient mechanism to harness the ideas, energy, enthusiasm and sheer numbers of the younger citizenry of the countries they govern.

Most political establishments the world over are filled to the brim with older people—mostly older men—that are for the most part out of phase with the ideas, ambitions and aspirations of the young

multitudes. Any top-down government programmes directed at young people tend to be unimaginative, providing merely lip service; there is no genuine attempt to listen to their fresh thinking or involve their energy for true nation building measures.

Unfortunately, this continues to be the case when youth unemployment is at an-all-time-high across the world. The global financial crisis, which threw many a national economy into a tailspin, has created some 200 million jobless people worldwide.

Islands Business, September 2013 9

WESAY The unemployment rate in some Eurozone countries is as high as nearly 30 percent. And it is not uncommon to find fresh graduates unable to land jobs for years after completing their qualifications even in our part of the world, which was relatively less affected by the world financial meltdown seven years ago.

Deeply entrenched top-down thinking in governments, large numbers of older men in positions of power and a disregard for the capabilities of the youth conspire to create an atmosphere of frustration and helplessness for the world’s youth. And as is widely known, the bulk of the population in the developing world—in sharp contrast to that of the developed world—is Adolphina Luvongit of Papua New Guinea (right)...uses the classroom to teach children about the marine environment. Photo: SPREP young. Yet it is without a voice loud enough to be heard. Which is indeed concerning because In many cases, cost effective new technologies that can be emit is they that will inherit the legacy of today’s leaders. ployed easily to progress projects faster are not even considered Any measure, therefore, that involves the multitude of youth, because there is neither the willingness nor the know-how and the especially those educated and who have skills to make a difference human capacity to implement them. must be encouraged at all levels. It is good to see that a few orThe PEEL group did exactly the things that governments can’t ganisations around the world are actually embarking on structured, and don’t do: They used every new technology tool now widely meaningful programmes to involve the young in carving out a better embedded in smart phones, tablets and computers—email, social tomorrow for themselves and the world. media and a “buddy system” to encourage each other—to work on One such programme in the Pacific Islands region is beginning their areas of interest. to show encouraging results. The Secretariat of the Pacific Regional With their imagination and these information and communicaEnvironment Programme (SPREP) headquartered in Apia, Samoa, tions technology (ICT), they ran programmes for unemployed put together a project in 2011 that sought to involve young people youth, produced an NGO newsletter, organised a waste manageincluding young professionals in one of the most hotly debated ment programme and wrote policy to address an invasive species topics on the national agendas of many countries around the region issue. So much has been achieved in a mere 18 months. and the world.

While it is a stretch of the imagination to expect governments to In what is indeed an innovative, even inspired move, SPREP sent have anything even remotely resembling these initiatives, non govout a call across the region for early career Pacific islanders who ernment organisations (NGOs) might have been capable of putting demonstrated environmental care and good practice in sustainable together such programmes. These outfits do have imaginative, hard development in their own spheres of influence. It did not matworking and committed people. But few would have ventured out ter what field of work they were engaged in. A diligent selection to do it without being funded. process helped filter down 105 applications to 21 young people They would have written proposals, created documents, tables, and professionals who were invited to attend the Pacific Emerging statistics and all manner of paperwork, with no guarantees of reEnvironment Leaders (PEEL) symposium later that year. ceiving any funds at the end. That process alone would have lasted 12 to 18 months.

The candidates were drawn from across The power of The youngsters did all of that in the quickest possible time. They wide ranging disciplines—from climate empowering were driven, energised and encouraged to just go out and do it— change and environmental scientists to lawyoung people not sit waiting around writing proposals, following bureaucratic yers, journalists, government, NGO officials, processes and waiting until the powers that be signed on the dotted teachers, economists, traditional voyagers, and line and gave them the terms of reference, funds and the go-ahead. health and energy specialists.

Such long waits would have sapped their enthusiasm and got them At the end of the symposium that ran across five days, the attendto start off on the wrong footing. ees committed to dedicate their efforts to lead, generate and inspire What SPREP got right, which most governments and other environmental action in the region under the auspices of what came organisations don’t, is the power of empowering a willing, able, to be called the Pacific Emerging Environment Leaders’ network. intelligent group of young people; giving them all the encourageThe group met again in June this year, 18 months after it had ment and the infrastructure and framework to perform and achieve first met to exchange notes and share progress reports. What they what they have set out to achieve. That is the simple formula that have achieved across a-year-and-a-half is indeed impressive and in has delivered such sparkling results. Such initiatives are only to be all probability would not have been achieved by top down governencouraged. ment departments despite the resources and infrastructure at their For the youth are potentially the most useful part of society disposal. because of their energy, fresh approach, technological savvy, street This is because governments and especially older leaders tend to smart and most importantly, lack of baggage. be weighed down by bureaucracy, where most bureaucrats create All they need is some encouragement, empowerment and supextra work and hurdles, merely to justify their jobs and fat salaries; port to achieve tasks that ensure a better world for themselves and impracticably long winded processes and paperwork; and institufuture generations. tional lethargy.

10 Islands Business, September 2013

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Whispers Lilo lashes at Canberra: Well, the Aussies have done it again…this time to Solomons’ prime minister Gordon Darcy Lilo. In an embarrassing reprimand of a senior Pacific islands government official—the second in as many years—immigration and customs officers at Australia’s Brisbane Airport held Lilo on August 17.

Lilo was ordered a ‘random explosives body search’—a process reserved for suspected terrorists or would-be smugglers of banned substances into Australia.

There was a standoff between Lilo’s delegation and the security chiefs at Brisbane, where the Prime Minister arrived for a memorial service, marking 150th anniversary of the arrival of Melanesians.

Lilo said it was ridiculous that he was handpicked and asked to undergo further checks after passing through routine security at Brisbane, the very same airport where Vanuatu’s Clarence Marae, former private secretary of Vanuatu Prime Minister was arrested and taken into custody in 2011 for suspected involvement in money laundering scams.

Papua New Guinea’s former Prime Minister Sir Michael Somare also complained in 2005 when he was subjected to excessive security screening at Brisbane Airport where he was asked to remove his shoes for further testing by immigration personnel Aware of the ill-treatment of Vanuatu leader’s entourage, Lilo was stunned to find himself in a similar fiasco.

“My protocol officers had to react and tell the immigration officers in Brisbane that they are approaching the prime minister and such search is ridiculous.”

Australian High Commissioner in Honiara, Matt Anderson, was instructed to quickly apologise in the local media expressing his regret over the incident, which occurred as Lilo arrived from Jakarta, where he attended an international symposium seeking ways of stopping refugees arriving in regional countries.

Anderson admitted Lilo should have been exempt from aviation security screening involving the random explosive trace detection test at Brisbane International. Despite assurances from Anderson and Foreign Affairs in Canberra, there was a belief in senior government circles in Honiara that his random search could have emanated from orders immigration officials received from Canberra’s ASIO, Australian Security Intelligence Organisation.

In an interview after returning from Bundaberg’s memorial service where recently 129 graves belonging to forced Melanesians labour victims were discovered this month, Lilo admitted the search was based on reports by an Australian intelligence officer based in Honiara—who relayed it to Canberra.

nations? Well, the Solomons did it in 2012 when it refused to renew its fisheries partnership with the EU when it expired in September 2012. It told the EU—no VDS (vessel day scheme), no fishing in our EEZ. “Yes the EU thinks our EEZ is also theirs and wants to fish under its own term,” a Solomon Islands trade negotiator said.

He added: “Concern or not concerned, the EU has always flexed its huge muscles to force us to concede on the VDS and other contentious issues. By giving Fiji a deadline of October 2014 or lose its preferences is a high-handed tactic on the part of the EU. So is their deliberate stalling of the negotiations resulting in a war of attrition.

We are ready to negotiate, they’re not despite all the human resources they have.”

On the EPA, the islands’ negotiator said: “The EPA, if signed, will be a very long-term and legally binding agreement. It will surely outlive you and me, the next generation, and the next. We need to get this right. So why concede? Let’s stand our ground. Walking away is also an option. No agreement is better than a bad one. It’s time we learn to say ‘No’.”  Talking trade…Whispers has been told that MSG (Melanesian Spearhead Group) will soon be losing one of its top trade negotiators to PIFS (Pacific Islands Forum Secretariat. Fiji’s Mere Falemaka Whisperss has been told, is heading to Geneva to be PIFS rep at the World Trade Organisation. Ms Falemaka will heading the Permanent Delegation of the Pacific Islands Forum to the World Trade Organisation in Geneva, Switzerland.

The ‘Geneva Office’ is charged with representing and assisting Forum Islands Countries’ (FICs) WTO members and observers, and to engage more fully with the WTO. At present, there are five Forum Islands Countries who are full members of the WTO (Fiji, Papua New Guinea, Solomon Islands, Tonga and Samoa) while one FIC, Vanuatu, is undertaking final preparatory arrangements to accede to the WTO. Well, MSG’s Peter Forau will be feeling the pinch.  Diplomats on the move…PNG is making a number of changes to its overseas missions.

Heading to Brussels is Joshua Kalinoe, former Petromin managing director, to be PNG’s ambassador to Belgium and the European Union and accredited to the World Trade Organisation (WTO); Fred Yakasa, former deputy police commissioner, to the Solomons; and Rupa Mulina to Washington and also accredited to Canada and Mexico .





Standing up to the mighty: Who says small islands states can’t stand up to bigger wealthier

Legal malpractice? Well, Whispers has been told that there has been some concern expressed

12 Islands Business, September 2013

about a head of a bank’s legal unit in one of the bigger nations in the islands practicing law there without a practising certificate.

The said person has been in that country for over two years practising law without being admitted to the bar of any of country’s jurisdictions. Those in the know say it is a clear breach of that country’s Lawyers Act and what is worrying Whispers has been told is that the lawyers body in that country is aware of this and does not seem to be doing anything to stop this continuous breach of the law.  Majuro meeting big business? Forum meetings are always a big affair and for local businesses in small islands nations—they can be ble to make big money during the meeting. This month, the Forum leaders’ meeting is being held in Majuro, Marshall Islands, and word from there is that New Zealand is bringing across a very large delegation believed to be around 50 with some people suggesting that they have brought in their own generators and food.

And with the Australian delegation constrained by the convention that no new policy initiatives should be taken during an election period, it looks like it’s New Zealand’s turn to play bad cop rather than good cop as one islands delegate wryly remarked.  Solitaire works: PM O’Neill is serious about the work ethics of civil servants in PNG. He’s been reported telling civil servants to pull up their socks. But this might not be good news for him.

A local paper in its ‘The Drum’ section had this to say: “If the PM is really looking at getting implementation out of its government departments , he might have to look to his ICT people and the software they are using. Far too many public servants are stuck using Windows Solitaire, which shows their productivity.

“Our scribe was horrified when he visited one government office the other day to find staff playing with a pack of cards. When asked what they were doing, they said the system is down so we have to do everything manually.”  Be vigilant: Westpac Vanuatu has warned its customers to take extra care against what it says is an increase in hoax emails, phone calls and texts in which callers or senders claim to be bank employees to trick customers to give away their account details.

Westpac Regional General Manager Jeffery Byrne says criminals are becoming more and more creative in finding new ways to commit fraud, so customers have to be vigilant against these types of scams.

Whispers

Advertising & Marketing Manager Sharron Stretton Advertising Executive Abigail Covert-Sokia Islands Business International Ltd. Level III, 46 Gordon Street PO Box 12718, Suva, Fiji Islands.

Tel: +679 330 3108. Fax: +679 330 1423.

E-mail: Advertising: advert@ibi.com.fj Circulation & Distribution Litiana Tokona ltokona@ibi.com.fj subs@ibi.com.fj Sandiya Dass sdass@ibi.com.fj Regional magazine sales agents

Bilum flavour: One of PNG’s most unique items and one you can take away with you is their very own bilum. It is basically a string bag but the design and colour that goes with it makes it so unique and Papua New Guinean. Papua New Guineans have taken their bilum whenever they go overseas and they’ve had some curious stares. Not only that, you can spot some of the world famous stars also carrying bilum bags. Bilum dresses are also taking the world’s fashion stage by storm.

One local blogsite decided to ask its fans which countries they’ve taken their bilums to and guess what? The response, let alone the countries mentioned, was unbelievable. From Australia, China, US, UK to even places like Mexico and Anguilla. Here’s what one fan says: “Mine has been around the world.” Another said: “Love my bilums gifted to me by my sister living in PNG. I have been complimented on my beautiful bilums in San Francisco, Los Angeles, Chicago, Key West and Ocala, FL. In Chicago last fall, a woman asked what New York designer was responsible!” There it goes!

Byrne says Westpac has strong systems in place to protect their customers’ savings and personal information. But he told the Daily Post newspaper it’s vital for customers not to let their guards down as fraudsters may try to contact customers personally to have access to their details.  Fish with a fascination: Blokes, you might want to cross your legs before reading further: A Danish museum is warning men against skinny-dipping after testicle-munching fish were discovered in the waters off Sweden.

A fisherman recently reeled in what appears to be a 21-cm pacu fish, a relative of the piranha that has been known to use its human-like teeth to chomp on men’s most private of areas.

Usually found in warmer climes, the fish was

caught in the strait of Oresund between Denmark and Sweden.

“The pacu is not normally dangerous to people but it has quite a serious bite, there have been incidents in other countries, such as Papua New Guinea where some men have had their testicles bitten off,” Henrik Carl, a fish expert at the Natural History Museum of Denmark, told Sweden’s The Local (http://www.thelocal. se/49558/20130809/).

“They bite because they’re hungry, and testicles sit nicely in their mouth,” he explained. “And its mouth is not so big, so of course it normally eats nuts, fruit, and small fish, but human testicles are just a natural target,” Carl said.

• Whispers is compiled and edited by Laisa Taga.

If you have any Whispers, please contact us on editor@ibi.com.fj

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Islands Business, September 2013 13

Pacific Update

Pacific solution to an Australian political problem

By Satish Chand

A

ustralians go to the polls to elect their next government on September 7.

Prime Minister Kevin Rudd, leader of the Australian Labor Party, has nailed his hopes on being able to stop the boats that have been ferrying an influx of asylum seekers for the past two months.

High on his campaign agenda are concerns regarding the slowing economy, funding for health and education, and that of national security.

Voters will hear earfuls from both sides of the political spectrum on who has more credible solutions to the concerns of the electorates.

Nauru and Papua New Guinea have joined the fray within the battles between the contenders for the position of the next Prime Minister of Australia. And both the Prime Minister of Solomon Islands and Fiji’s Foreign Minister have weighed in on the risks of sending refugees destined for Australia to the Pacific Islands.

The regional resettlement Nauru and Manus (in PNG) have in the past hosted asylum seekers destined for Australia. John Howard during his tenure as Australian prime minister in 2001 instigated the ‘Pacific Solution’.

The policy was dismantled in 2008 when the Australian Labor Party won power and Rudd took over as the new PM. Julia Gillard, who took over from Rudd, reopened the detention centres on Nauru and Manus last year in the face of an influx of arrivals by boat from Indonesia and Malaysia.

Australian immigration authorities run detention centres on both Nauru and Manus where traditionally refugee claims were assessed. The majority of those detained were ultimately granted refugee status and resettled in Australia.

This time round, Rudd’s proposal involves both processing and resettling in PNG and Nauru of those granted refugee status.

On July 19, Rudd and his PNG counterpart Peter O’Neill jointly announced a ‘Regional Resettlement Arrangement’ (RRA) signed on the day by the two prime ministers in Brisbane. Rudd, in a press statement, announced that: “From now on, any asylum seeker who arrives in Australia by boat will have no chance of being settled in Australia as

Islands Business, September 2013

cific Solution. Fiji’s foreign minister Ratu Inoke Kubuabola ripped into Rudd for posting Australia’s domestic problems on the doorsteps of Melanesia.

He argued at the Australia-Fiji Business Council meeting held in Brisbane on July 29 that settling large numbers of refugees in Melanesia would increase the stresses on both the physical environment and social fabric of the fragile societies.

He questioned why Australia with its large land mass was unwilling to host the asylum seekers on its own shores.

Some of those present at the meeting quipped to me in private that PNG and Nauru...part of the Regional Resettlement Arrangement which involves Nauru had the sovereign right to decide both processing and resettling. Photo: US Department of Energy who to host, but Kubuabola anticipating such a response, argued that the Melanesian Spearhead Group was contemplating setting up a free market where asylum seekers, if refugees. Asylum seekers taken to Christmas Island settled in one member, would have the right to live will be sent to Manus and elsewhere in Papua New and work in other member nations. He has a point!

Guinea for assessment of their refugee status. If they are found to be genuine refugees, they will be The politics of RRA resettled in Papua New Guinea, an emerging econAccording to one commentator, the number of omy with a strong future; a robust democracy which people arriving by boat seeking asylum in Australia is also a signatory to the United Nations Refugees in 2012 peaked at approximately 25,000. The real Convention”. tragedy of rickety boats carrying families to AustraNo limits were set on the number of asylum seeklia are those who lose their lives in transit. Some ers PNG was to accept; the lone condition of the 242 either died or were reported missing at sea in RRA being annual reviews by the joint Australia2012 and the total from 2000 to 2012, according to Papua New Guinea Ministerial Forum. one source, stood at 1,731.

Nauru joined PNG in signing a memorandum The cost to the Australian taxpayers for detaining of understanding on August 3, 2013 with the Coman asylum seeker for a year ranges from A$200,000 monwealth of Australia “in relation to the transfer (when kept onshore in Australia) to A$450,000 to, and assessment and settlement in, Nauru”. (when detained offshore).

President Baron Waqa of Nauru and PM O’Neill No doubt these tragic statistics motivate many have been promised large dollops of aid for assisting to seek more humane and cheaper solutions. And Australia. the Australian Government, as much as the OppoAustralian Foreign Minister Bob Carr has cansition, has raised the tragedy of deaths on the sea vassed the option for the Solomon Islands and as a reason for their tough stance on those arriving Vanuatu to join Nauru and PNG as parties to the by boat. There is, however, more to the story on Regional Resettlement Arrangement. the RRA. Solomons’ prime minister Gordon Darcy Lilo Rudd, the architect of RRA, is betting on stoprevealed to the Age newspaper that he had declined ping the boats as a means to convincing the eleca similar invitation. Vanuatu has made no public torate that he has the solution to boat arrivals. announcements yet, but silence is enough of a mesIn promising to disallow asylum seekers refuge in sage in itself.

Australia, he is also sending the message to the Not everyone is happy with the revamped Pa-

traffickers and their clients that the prospects of resettlement in Australia will no longer be available to them.

This would dissuade the economic migrants, which Rudd and his backers believe are in the majority of the boat arrivals. If indeed true, then Rudd may have pulled a rabbit out of the hat in successfully stopping the boats without incurring the costs of housing many thousand asylum seekers.

The real reward would be reaped at the polls, and this requires a lull in boat arrivals until September 7. O’Neill and Waqa would be hoping that Rudd is right as this will mean that both would have reaped large windfalls in aid dollars without having to worry about hosting too many asylum seekers within their nations.

The gamble has huge risks The past processing of asylum seekers shows that the majority (i.e. more than 70 percent) of those seeking asylum in Australia succeed in being granted refugee status. It is hard to believe that the composition of current arrivals in terms of genuine refugees will be any different.

Rudd may be in for a bet that needs to show results by September 7. Should he return as PM, Rudd will have the opportunity to review the deal struck with PNG and Nauru.

If he doesn’t, then the next government has much greater room to revise the RRA. PNG and Nauru, in contrast, have locked themselves in for the long haul. And if large numbers of refugees do turn up on their shores, then both the island governments are likely to buckle under pressure.

The odds are that the RRA, as currently envisioned, will fail. Let me do some simple arithmetic to demonstrate this. Suppose the number of boat arrivals drops to 10,000; that is, 40 percent of the total arrivals for 2012.

Hosting all of them offshore on prevailing estimates will cost $4.5 billion—nearly the entire aid budget of Australia! Furthermore, imagine 70 percent of the above are deemed genuine refugees.

If the PNG government grants residency to just half of these, it will be tantamount to political suicide for them in the 2015 national elections. And Nauru will be in a similar predicament should just a dozen refugees be settled there.

The simpler solution There is, in my view, a much simpler solution and one that I wrote about in the January edition of Islands Business. This is what I called ‘Payment for Service’ where families within the Pacific Islands region could be recruited to host asylum seekers.

The billeting, as I explained last January, could be done following appropriate security checks on both the prospective host and the billeted. Such a scheme can work under existing legislative framework.

Payments could be structured to entice sufficient numbers of hosts to meet demand for the available stock of people requiring billeting. And the costs— likely to be in tens of thousands dollars per refugee per year—would be a fraction of what is incurred currently.

Best of all, innocent individuals and families escaping persecution in their homelands would receive the home and hospitality they desperately deserve. The above would be the Pacific (i.e. peaceful) solution to a touchy Australian political problem.

• Dr Satish Chand is professor of finance at the University of New South Wales, Canberra.

Own up to shame: Aust told

By Davendra Sharma

I

t took 150 years but it now appears that Australia will recognise a damning part of the country’s evil history involving torture and slavery of indigenous Melanesians abducted to work on Australian farms.

State governments in Australia’s two most populous states—New South Wales and Queensland —tabled motions in August to rejuvenate interest in what one prominent politician described as “a shameful part of our history that needs to be publicly acknowledged”.

Estimates of between 50,000 to 60,000 South Seas Islanders were “kidnapped, coerced and subjected to contracts they could not understand” over 1863-1904 from Fiji, New Caledonia, Vanuatu and the Solomon Islands to work under inclement conditions in northern Australian states—Queensland and New South Wales.

Cheap labour from the South Seas region was taken for granted to meet increasing demand from the United States for Australian cotton, followed by sugarcane.

Bundaberg graves Heritage Listed As part of the testimony to the suffering and ill-treatment of the slaved labourers from the region, 29 graves were recently uncovered in the Queensland town of Bundaberg.

Solomon Islands’ Prime Minister Gordon Darcy Lilo and Vanuatu MP Ralph Regenvanu, joined by his country’s tribal chief Richard David Fandanumata of the Council of Chiefs, were accorded with honour in Queensland last month at the commemoration ceremony for the islander graves.

Australian authorities have since made the gravespread farm Sunnyside as Heritage listed, thus preserving the area from future development for commercial purposes. Archeologists predict the graves would be 130 years old, farm owner Brian Courtice was quoted in the local media. “Their story needs to be told,” he said.

Courtice said his family was deeply touched by the marking of the occasion, attended by leaders from the deceased’s home countries. He said this was the first mass grave ever found on the age-old sugar farm that had been Heritage listed.

“It is a part of our history that has been airbrushed out for 130 years,” he said.

Across the border in NSW, the state parliament was told that inhumane treatment of Australian South Seas islanders was not something Australia should be proud of.

Alex Greenwich, a vocal social issues campaigner and NSW parliamentarian, said the plight of the Pacific Islanders on indenture contracts is not well known in modern-day Australia.

“Most people don’t know that Australia has a history of slavery, which began 150 years ago and involved the blackbirding of 50,000 people from the Pacific Islands to work on sugar cane fields in Queensland on 62,000 indenture contracts.

“Islanders were kidnapped, coerced and subject to contracts they could not have understood and which were designed to keep them in servitude,” Greenwich said.

Similar to the horrid conditions subjected to de-

scendants from India who arrived under the British colonial indenture system in Fiji for 40 years from 1874, the ASSI’s also endured tempestuous weather and unfamiliar terrains on Australians fields and farms.

“Arriving here, their lack of immunity to common diseases meant many died, resulting in massive mortality rates—exceptionally higher than their European counterparts.”

Deaths among ASSIs were terribly higher than those European migrants who settled in Australia —74 deaths per 1000 arrivals, compared to nine deaths in 1000 migrants amongst Europeans.

Though such statistics was pretty well known to colonial administrators in Australia then, “the Australian governments shamefully continued the programme for over 40 years,” Greenwich said.

Segregation under White Australia As if the initial sufferings were not severe enough, when the White Australia Policy was introduced, some Pacific Islanders were forced to leave the country despite building families and communities and sometimes not knowing where they came from.

“The policy legitimised already widespread racism and prejudice against the islanders,” said Greenwich.

Just as then prime minister Kevin Rudd apologised to the stolen generations—Australian Aboriginal and Torres Strait Island people—Australian parliaments should today take an opportunity to reflect on the past and talk about moving forward with the nearly 40,000 descendants still living in Australia.

The NSW parliament’s motion in August was told that the social and economic disadvantages of ASSI descendants are comparable to the Aborigines.

“While being defined as a distinct disadvantaged ethnic group, there are no specific programmes and services for Australian South Seas Islanders nor are there official figures on how many descendants there are in Australia,” Greenwich told the NSW parliament.

Build community esteem In Queensland’s sugar milling town of Mackay, where a strong ASSI population resides today, last month was a special time to give recognition to the ancestry of the islander migrants.

“The ASSIs have made the town’s economy what it is today,” one exhibition poster read while other promotion asked locals to wear popular ASSI floral shirt colours on Fridays to acknowledge the region’s heritage links with the islander population.

The Australian Human Rights and Equal Opportunity Commission has recommended that disadvantages imposed on ASSI descendants should be removed so that this unique ethnic community is allowed to blend in with the Australian society.

“This is an historic day for not only the thousands of descendants of the original SSIs that arrived in NSW, but for every ASSI people, including thousands whose families were contracted to work on the sugar plantations and properties in Queensland,” announced Emelda Davis, president of the Australian South Seas Islanders interim national body.

Islands Business, September 2013 15

Cover Report

Airline talk...ASPA members met in Nadi in July and among other things, a report titled ‘Effects of International Air Transport Regulatory Liberalisation on Small Islands States by the

The big PI Why a Pacific ‘open skies’ is still

I

By Dionisia Tabureguci & Robert Matau

f a one-Pacific aviation market sounds too good to be true, then it probably is too good to be true and will never happen.

No matter how many blueprints are designed to catalyse it, the near utopian vision of ‘open skies’ in this part of the world is believed to be an idea that will simply die a natural death.

It’s a view held by those experienced in the region’s aviation markets and at the eve of a review of the existing multilateral Pacific Islands Air Services Agreement (PIASA), the idea it promotes for a free market across the Pacific skies is questioned once again by a new study revealing such liberalisation to be counter-productive to small islands states.

The study, commissioned by Fiji’s national carrier Air Pacific before it was rebranded Fiji Airways, was carried out by the Brattle Group, a United States-headquartered international consultancy firm that specialises in providing analyses to governments and

16 Islands Business, September 2013

private firms around the world in areas such as economics, finance and regulation.

Fiji Airways’ Brattle Report, titled ‘Effects of International Air Transport Regulatory Liberalisation on Small Islands States’ is said to be a first of its kind to really look at how liberalisation in the airline business would affect small economies such as Fiji and those in the Pacific.

The report is saying what many in the field of Pacific aviation have long suspected to be true.

That deregulation to the extent of a full ‘open skies’ situation will potentially kill national airlines of small islands states and cause instability in their international air services.

“As a test of our dataset and methodology, we first examine anew a question that has already been the subject of extensive research,” Brattle said in its report, a copy of which was obtained by Islands Business.

“Does the deregulation of international airline markets—and in particular, the embrace of full ‘open skies’ policies—lead to an

Cover Report

US consultancy group Brattle was tabled. Photos: Islands Business

ASA flop

‘pie-in-the-sky’

expansion of available air service?

“We find, as other researchers have found, that the shift from traditionally restrictive international airline regulatory policies towards more liberalised and free market policies is associated with significant growth and expansion of services.

“Thus, our research adds to the already large body of work documenting the benefits of liberalisation. However, our much broader approach allows us to focus in on portions of the global aviation market that have not previously received sufficient attention, and to examine the details behind these overall findings.

“When we do so, we find that these benefits are not uniformly distributed. Markets involving small islands states benefit to a much lesser extent. We also find that a disproportionate share of the benefits of liberalisation are realised when a market shifts from a traditionally restrictive bilateral agreement to what the International Civil Aviation Organisation (ICAO) characterises as a ‘transitional’ agreement.

“In contrast, the benefits associated with shifts from a transitional to a fully liberalised agreement are more modest and in some circumstances, negative for small islands states. We find, not surprisingly, that liberalisation of ASAs by small islands states is associated with significant reductions in the stability of international air services.

“Finally, we find that a decision to embrace full liberalisation or ‘Open Skies’ can have substantial adverse impacts on the national carriers of small islands states. Because these carriers are the least likely to withdraw from small islands state routes when conditions are difficult, the problems that open skies can cause for such carriers should concern policy and decision-makers in such states,” the Brattle Report said in the summary of its findings.

The PIASA prescription For the 14 Pacific Islands countries that are members of the Pacific Islands Forum—Fiji included—a full “open skies” would Islands Business, September 2013 17

Cover Report ers including foreign airlines and a number of Pacific airspace, plane-loads of tourists, greater mean a single Pacific aviation market where they international aviation organisations and plane access of local goods and people to bigger markets allow national airlines who are party to the single manufacturers such as Boeing and Airbus. and lower costs of international air transportation.

Air Services Agreement (ASA) that will bind all “The Brattle Report is a very fair report and The reality, however, turned out to be a more of them to fly freely in their airspaces. that’s the only report that I’ve seen that deals difficult thing to achieve.

A treaty that allows such a market structure exwith developing countries,” said ASPA secretaryists in the form of the Pacific Islands Air Services general George Faktaufon.

The PIASA flop Agreement (PIASA), an undertaking that is of“All reports I’ve seen on open skies have dealt If you ask those who have long served in the ficially known to have been developed by Pacific with developed countries—UK, Australia and Pacific’s aviation industry, especially in the private Islands Forum Aviation Ministers in 1998 and Europe. Even countries in Asia haven’t totally sector, they will tell you that PIASA has been endorsed for signature by the Leaders in 2003. embraced open skies. And what you’re seeing nothing but a failure.

As a multilateral ASA, PIASA was to set in now is a lot of bilateral open skies and this is They believe the degree of free market promotion a phased liberalisation of a number of what has been happening in this region. And the moted by this treaty is in fact unrealistic in the “freedoms of the air”, this being certain rights developments that have taken place with low islands because if national airlines here are pitted contained in ASAs that guide the workings of the cost carriers coming in have been achieved by against financially stronger airlines from, say, international aviation industry, partly dictating bilateral open skies.

Australia and New Zealand, they will struggle where airlines may or may not fly. ICAO lists “In other words, PIASA had no role in that and maybe die. nine freedoms of the air and considers the first development, so we don’t need PIASA to see In fact, all the ASAs in the world is no guaranfive freedoms as recognised by international treaentry into the islands because all that was made tee that airlines will fly here because they will only ties (see box on page 19). ICAO deems the sixth possible through bilateral open skies. fly to a destination if there is money to be made. to ninth freedoms as “so-called”.

“A lot of people talk about open skies but “Well, no one has really ventured into using According to a paper on Developments in maybe they don’t know what it means. Open PIASA but just like any other agreement, whether Pacific Islands Air Transport by the Australian skies is like free trade and free trade only works multilateral or bilateral, governments can enter National University, under PIASA, the third, when you have products to trade and fourth and sixth freedoms are liberalised countries to trade with,” Faktaufon in the first phase. The fifth freedoms added. among parties are liberalised in the second phase. Then in the third phase, Under fire the fifth freedoms on routes to nonThe review of PIASA, according members of the agreement are open to to PIFS, is procedural as a lot of all member airlines, subject to bilateral developments have happened since agreements with non-member states. it came into being.

By the time these freedoms are The review is also coinciding with fully liberalised under PIASA, the negotiations surrounding PICTA Pacific—or at least countries that ratify (Pacific Islands Countries Trade it—would have formed an integrated Agreement), a free trade agreement aviation market in the region. Because among FICs. Where PICTA covers the vision in PIASA extended further ancillary services in aviation, it does to invite membership of non-Forum not cover ASAs, which is provided members with airlines that regularly Open skies...will kill national airlines of small islands states and cause instability in for under PIASA. service Pacific routes, there is potential their international air services, ASPA was told..

“The context of the aviation secto increase the number of airlines that tor and air services in the Pacific has service the Pacific and possibly create evolved since the original idea of new destinations for the region.

PIASA was mooted by aviation ministers in the into agreements with any other state but at the The importance of having a treaty like PIASA, late 1990s,” said PIFS (Pacific Islands Forum end of the day, it depends on the airline. with its good intentions and vision, is that it Secretariat) director of economic governance, “If the market is there and there is money to be might be the answer to the plight of many islands Shiu Raj. made, they will operate,” said Vanautu’s director countries in the region that are starved of reliable “It is therefore important to consider all aspects of Civil Aviation, Joseph Niel. international air services because of their small of PIASA, the industry views and the countries’ The fear of losing their national lifeline in a market size. air services needs and make a determination on rigorously competitive market is perhaps the This, in turn, impacts negatively on their tourthe appropriateness of pursuing PIASA. reason why FICs (Forum Islands Countries) have ism business. Some of these islands economies “Of recent,Forum islands countries have been slow to adopt PIASA. are heavily dependent on tourism, and with not completed the negotiation of the PICTA trade in Although it was birthed 15 years ago, it only much else to rake in foreign exchange and create service protocol, which provides complementary came into effect nine years later, when it finally local economic activities, their tourism industries opportunities such as supporting on-ground got the minimum six ratifications needed in order are of particular significance to them. services and repair and maintenance services. to come into effect.

In fact, even until today, the Pacific region is “It is therefore appropriate to undertake a reTo-date (2013), PIASA has attracted 10 sigstill host to hundreds, if not thousands of exotic, view of PIASA. Article 22 of PIASA also provides natories—Cook Islands, Kiribati, Nauru, Niue, far flung, unexplored and literally untouched for regular reviews,” Raj added.

Papua New Guinea, Samoa, Solomon Islands, places mainly because of poor tourism infraASPA, as it has done time and again, has lashed Tonga, Tuvalu and Vanuatu. Ratification though structure locally, and that includes air services out at PIFS, accusing it of peddling a concept in had stalled at six countries since 2007, these beto bring in tourists. PIASA therefore came with the region that will only serve Australia and New ing Cook Islands, Nauru, Niue, Samoa, Tonga a promise to— Zealand’s interest. They have been accused of and Vanuatu.

• Increase airline access to air routes between pulling the strings behind the PIASA idea.

That flurry of activity has failed to translate into FICs; ASPA believes the review exercise is a waste of anything significant and this is partly the reason • Expand and efficiency improvements for money, which could be put to better use in other why PIFS, as technical advisors to FICs, is underFIC airlines; areas of development for FICs. taking a review of PIASA at the end of this year.

• Greater use of codesharing and alliances; Said Faktaufon: “The PIASA initiative was But if the findings of the Brattle study are • Greater connectivity within the region to initiated by us. But we did it for a different reason. anything to go by, having PIASA exist at all is improve its attractiveness to tourists; The reason we asked the Forum to look at the probably an exercise in futility and there is no • Greater cargo options for exporters and ASAs was to see how it could help islands states one more vocal about this than the Association importers; and in their negotiation stages. of South Pacific Airlines (ASPA), a premier • Cost savings to airlines which can be shared “They didn’t have much skills in negotiating body primarily for national airlines in the region with service users. bilateral agreements, so countries like Australia but with membership also of other stakeholdOn paper, PIASA is a prescription for a busy 18 Islands Business, September 2013

Cover Report Various papers written on PIASA recognise development. and New Zealand were taking advantage of our the void created by Fiji’s lack of participation, “Forum Leaders in previous communiqués inability to do proper negotiations. What we primarily as Fiji is centrally located in the Pacific have identified the important role of tourism ended up with in those days were very unfair and is one of the more developed of the FICs. and trade for the economic development of agreements that favoured their national airlines.

Questions sent to its administration on whethForum islands countries and the importance of “For instance, their airlines can come and do er it would continue with that position, now that improved connectively between Forum Islands anything, including fifth freedom traffic out a review of the agreement will be undertaken, was Countries,” said Raj. of our countries. But we can’t do that in their unanswered by press time. But as far back as 2003, “PIASA is one such initiative that seeks to countries. These were the kinds of anomalies Fiji’s view has remained constant. achieve improved air services connectivity we wanted to address and that was why we went “Fiji further recognises the crucial role of amongst the FICs. Also, improved aviation acto the Forum. And when they had the Forum its international air services in the economic cess to markets such as Australia, New Zealand, aviation ministerial meeting, we asked the Forum and trade development of other Pacific Islands Asia and the United States are an important part to see if there is an avenue where help can be countries and, in this regard, Fiji acknowledges of supporting the development of Forum islands provided to Pacific islands to strengthen their the strategic role of the Pacific Islands Forum economies. negotiating skills.

Secretariat in facilitating and promoting the “PIASA acts to encourage and support direct “As it turned out, they turned it into an open broader economic interest of the entire region,” linkages and opportunities for all Forum islands sky agreement and I think Australia and New Fijian trade officials said in a paper they presented countries. Article 3 of PIASA clearly states the Zealand were driving that—to open up the skies. at the 2003 Worldwide Air Transport conference arrangements and Annex 1 of the agreement And the reason was not so much that the airline in Montreal. outlines phased movement to a single aviation could come and do what they want here. They “Notwithstanding already have that. The this however, Fiji placreason was to avoid the es more priority on the need for them to negonational economy and tiate individual bilaterthis effectively means als, which their airlines First Freedom of the Air Sixth Freedom of The Air promoting, not prowould probably never The right or privilege, in respect of scheduled The right or privilege, in respect of scheduled tecting, the interest of use, but we would want international air services, granted by one State to international air services, of transporting, via its international carit. So instead of hav- another State or States to fly across its territory the home State of the carrier, traffic moving rier, Air Pacific (now ing all these individual without landing (also known as a First Freedom between two other States (also known as a Sixth known as Fiji Airways), bilaterals, a multilateral Right).

Freedom Right). The so-called Sixth Freedom as the appropriate veagreement would suit Second Freedom of the Air of the Air, unlike the first five freedoms, is not hicle for ensuring Fiji’s them fine because they The right or privilege, in respect of scheduled incorporated as such into any widely recognised sustained participation will just sign one agree- international air services, granted by one State air service agreements such as the “Five Freedoms in the supply of trade ment and it encom- to another State or States to land in its territory Agreement”. and communication passes the entire Pacific. for non-traffic purposes (also known as a Second Seventh Freedom of The Air lifelines of the coun“From their point of Freedom Right).

The right or privilege, in respect of scheduled try. In this connecview, it’s very conveThird Freedom of The Air international air services, granted by one State tion, the interest of the nient to have just one The right or privilege, in respect of scheduled to another State, of transporting traffic between national-owned carrier agreement covering the international air services, granted by one State to the territory of the granting State and any third remains an imperative whole Pacific so that’s another State to put down, in the territory of the State with no requirement to include on such consideration for Fiji where they were coming first State, traffic coming from the home State operation any point in the territory of the recipiwhen air market access from.” of the carrier (also known as a Third Freedom ent State, i.e the service need not connect to or becomes a potential PIASA, Faktaufon Right). be an extension of any service to/from the home issue in the context of added, had no benefits Fourth Freedom of The Air State of the carrier.

PIASA.” for the airlines.

The right or privilege, in respect of scheduled Eighth Freedom of The Air Fiji’s stand, accord“If anything, it was international air services, granted by one State to The right or privilege, in respect of scheduled ing to ASPA, was ungoing to create a lot of another State to take on, in the territory of the first international air services, of transporting cabotage derstandable as it is headaches because we’re State, traffic destined for the home State of the traffic between two points in the territory of the a case study itself on going to be fighting for a carrier (also known as a Fourth Freedom Right). granting State on a service which originates or terhow competition in very small pie.

Fifth Freedom of The Air minates in the home country of the foreign carrier aviation in this part of “There’s no way the The right or privilege, in respect of scheduled or (in connection with the so-called Seventh the world has ended up pie will increase because international air services, granted by one State to Freedom of the Air) outside the territory of the again at square one—a we have some underly- another State to put down and to take on, in the granting State (also known as a Eighth Freedom near monopoly situaing issues that prohib- territory of the first State, traffic coming from or Right or “consecutive cabotage”). tion where those who ited the increasing of destined to a third State (also known as a Fifth Ninth Freedom of The Air come in can be acthe pie. For instance, we Freedom Right).

The right or privilege of transporting cabotage cused of ‘cherry pickdon’t have proper hotel • ICAO characterises all “freedoms” beyond traffic of the granting State on a service performed ing’, leaving islands infrastructure—that’s the Fifth as “so-called” because only the first five entirely within the territory of the granting State economies in exactly the biggest constraint to “freedoms” have been officially recognised as (also known as a Ninth Freedom Right or “stand the same state they tourism development in such by international treaty. alone” cabotage). the islands.

• Source: http://legacy.icao.int/icao/en/trivia/freedoms_air.htm were in before they embraced competition.

“Apart from Fiji, New ”In the developed Caledonia, Tahiti and world, they don’t need protection of airlines, and market. PIASA is an agreement that the Forum Vanuatu, the islands do not have proper hotel the more airlines that travel to Australia and New Islands Countries agreed to and some proceeded infrastructure. So open skies won’t work because Zealand, for example, the better for them. But to its signature and ratification. And thus, to rethere’s no market there. Why then have open it’s the other way round for us. We don’t want peat, the accusations (against FICs for furthering skies when there’s no market? You’re going to unnecessary competition. We want controlled Australia and New Zealand’s interests) are false,” invite a lot of unnecessary competition. This competition so that it’ll help us in the long run,” Raj added. is the argument we’ve had: the airlines will fly said Faktaufon. where there is a market. The reason why they “The problem with free trade is they come, Fiji don’t fly to certain points is because there is no they mess up the market and they disappear. So Possibly the biggest known downfall of PIASA market, so they’ll be losing money.” our national airlines will have to carry the can. is Fiji’s insistence over the years, even under PIFS, for its part, denied ASPA’s claims that it In fact, in the islands, all the airlines are national the current administration, that it will not be was driving New Zealand and Australia’s agenda. airlines. So who carries the can at the end? It’s part of it.

It insisted PIASA was crucial in the region’s

Freedoms of the air

Islands Business, September 2013 19

Cover Report because of under-developed tourism infrastructhe countries, the taxpayers. This is what we tures across most FICs. want to avoid. We want controlled ASAs so that If Forum Leaders had been enticed by the net our airlines can grow strong and bring tourists. benefit from PIASA to the tune of US$63 million, bring tourists. promised to them by PIFS if they signed on to “Of course it’s a slow process and there are PIASA (the net benefit some disadvantages bewas said to reduce to cause you can bring in US$33.3 million without inefficiencies when there Fiji’s participation), then is no competition. But they will have to look at we have no choice and these monetary benefits this is a better option in a different way. to take rather than free According to ASPA, trade because free trade FICs, especially those can be very expensive with national airlines, are in the long run for the likely to choose bilateral countries, particularly ASAs as a way for them for the tourism industry. to access new destina“In Fiji’s case about 20 tions and also introduce years ago, we had about 12 international airlines Solomon Airlines’ Gus Kraus (left)...at the ASPA meeting competition into their markets. going there. Where are in Nadi in July.

Smaller FICs who do they now? They’re all not own airlines are adgone, because there’s no vised against even considering owning one, as market for all those 12 airlines. So history tells us “that’s the quickest way to lose money”. Their that free trade for airlines doesn’t always work for best option is to subsidise routes so airlines can developing countries,” Faktaufon added. fly to them.

“There’s no other way,” said Faktaufon. “It’s Road ahead better to subsidise a route than to subsidise an PIFS, in last month’s meeting of Pacific airline. If you look at Tuvalu, against our advice, aviation directors, said it has invited the private they went ahead and bought into Air Fiji. And sector for discussions around the PIASA review, the reason was they believe it was the only way to take place within the margins of this month’s to guarantee that service.

Forum Leaders’ meeting in Majuro in the Mar“See what happened? Air Fiji went down and shall Islands.

Tuvalu lost all their investments. We said to them, The experience of the private sector, however, ‘you subsidise the route. There’s no need for you is that PIASA, in its current form, will never see to buy into an airline. Unless you are the controlthe light of day because of the lack of market and

aerosure

Confidence at a higher level

ling interest in that airline, you’re wasting your money. Because the airline will make decisions that are beyond your control and which may not be good for you.’ But I don’t know what happened. They ended up buying shares and they continued to subsidise the route so they ended up paying twice, which made no sense.

“So to me, the only way small countries that don’t have an airline ensure they have access is to subsidise the route. As the route grows, the subsidies should come down.

“Until such a time when you have a balance, then you don’t have to provide subsidies. So that’s the way to go.”

A number of small FICs are already doing it.

Cook Islands, said Faktaufon, is paying Air New Zealand close to NZ$10 million a year for them to operate to Los Angeles through Rarotonga while the Micronesians are known to be talking with a number of airlines, including Air Niugini and Fiji Airways, to fly to their destinations under subsidy arrangements.

This, said Faktaufon, is how aviation liberalisation in this part of the world will play out in the foreseeable future.

“I don’t see the Pacific liberalising to the extent of having something like PIASA. I think we’ll continue to improve our bilaterals and relax a few things in the bilaterals so that we can allow the airlines and our tourism industries to benefit.

“There is no other way around that. But as you know, trade is between two parties so you have to negotiate.

“There’s no straightforward type of bilaterals.

They’re all subject to negotiations and we must ensure that we protect our own interest first and foremost,” he said.

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20 Islands Business, September 2013

what do you

LIVE AND BREATH?

Pacific Regional Tourism C a pa c i t y Bu il ding Pr og r a m m e

© David Kirkland

STRE NG T H ENING PA CI F IC E C ONOMIC I N TE G R ATION T H ROU G H TO UR I SM PACIFIC REGIONAL TOURISM CAPACITY BUILDING PROGRAMME Launched in January 2012, Pacific Regional Tourism Capacity Building Programme (PRTCBP) is a three-year component of the ‘Strengthening Pacific Economic Integration through Trade’ (SPEITT) programme, which is funded under the 10th European Development Fund (EDF) of the European Union. The programme will focus on the development of sustainable tourism by supporting a more conducive enabling environment for regional tourism growth through enhanced policy and capacity development as well as increased productive capacity and improved market access.

BENEFICIARIES The 15 Pacific ACP states (PACPs) of the Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Marshall Islands, Nauru, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Timor Leste, Tonga, Tuvalu and Vanuatu, benefit from the project. Within these countries, the key stakeholders are the National Tourism Organisations (NTOs) and Ministries of Tourism, Port Authorities, other tourism-related public sector bodies, tourism and hospitality training institutes, tourism industry trade association and tourism SMEs.

IMPLEMENTING AGENCIES The South Pacific Tourism Organisation (SPTO), the region’s apex tourism agency mandated by its public and private sector members to market and develop the region’s tourism sector is responsible for implementing this vitally important regional programme. It is designed around the three main result areas: KEY RESULT AREAS • Result Area One – Sector Planning and Policy Development, intended to enhance tourism strategic planning and enabling policies to improve the business environment and private sector growth: • Result Area Two – Market Research and Marketing, aims to increase tourism arrivals and foreign exchange earnings for the region through a market-led approach to tourism promotion and product development; and • Result Area Three – Human Resource Development and Capacity Enhancement, designed to improve human capital and enhance the quality and sustainability of regional tourism products and services.

SOUTH PACIFIC TOURISM ORGANISATION T | +679 330 4177 F | +679 330 1995 E | tourism@spto.org W | www.spto.org

Cover Report

Air Niugini at Port Jacksons International Airport in environment. Photo: Paradise

connected by direct international flights to ten countries outside the region; six of these countries have implemented mechanisms to reduce greenhouse gas emissions in some form.

Given its reliance on aviation for travel and socio-economic development, the Pacific region would be especially sensitive to any foreign-imposed measures to combat aviation emissions.

The focus on emissions reduction is only increasing, and our region must start to work through the issues this raises.

While the impact of Port Moresby...Pacific airlines are sensitive to even minor fluctuations in the external such issues may seem distant and not directly relevant now, it is critical that countries in the region are aware of what may be coming.

By providing broad regional oversight of such issues, SPC is helping to develop safe, secure, reliable and affordable aviation transport services across the Pacific Islands, as per the regional Framework for Action on Transport Services.

This regional oversight is a good starting point, but it is not enough on its own to help Pacific Islands countries and territories meet the challenges of tomorrow. Airlines contribute to a country’s growth through generating employment, tourism and cargo capacity and providing access to international markets. Government decisions cent or US$82 billion. To such shocks we can and policies are important factors in whether add record oil prices, further terrorist attempts, or not countries actively take advantage of these and the impacts of natural phenomena such as economic opportunities. volcanic ash clouds.

While not all events are necessarily predictable, Changes within the industry, including the stakeholders involved in the aviation sector (from growth of the low-cost carrier airline model and governments to airlines and service providers) can an increasing focus on reducing aviation related play a role in helping develop a future-focused emissions, also have major effects. mindset.

These continuing concerns prompted SPC to One way they can do this is to engage in launch its aviation information paper series in periodic scenario planning exercises in which late 2012 to support a better understanding of alternative views about the future are conceptuemerging issues for air travel before they begin alised and articulated. Such exercises also have to have an impact. the potential to cultivate a management mindset open to considering alternative futures.

Growth of LCC There is no doubt that the aviation industry The first information paper in the new series will continue to be affected by external shocks. It looked at the emergence of low-cost carriers is the nature of the industry and the environment (LCCs) within a Pacific Islands context. it operates in. While we can’t predict everything, The growth of LCCs has been a global, induswe can be better prepared. try-changing phenomenon that continues to have To support this preparation, the aviation work an impact here in the islands. Given the ongoing of SPC remains largely focused on research, interest shown by LCC operators in the region, at regional civil aviation meeting support, data least on higher density routes, it is important that collection and information dissemination. A countries and territories understand the issues partnership agreement signed with the Associainvolved so they can make informed decisions. tion of South Pacific Airlines this year has also SPC’s second information paper considered led to increased collaboration on aviation matters. the issue of aviation emissions, drawing on the Papers produced as part of the aviation incase of the European Union (EU) to extrapolate formation paper series can be found on SPC’s considerations for our region. In this case, the EU aviation website: http://www.spc.int/edd/en/ unilaterally imposed a tax on all airlines operating section-01/transport/aviation. into and out of its borders.

At the time of writing this second paper, in • For more information, contact: Transport Programme, early 2013, the SPC member bloc as a whole was Economic Development Division– email: aviation@spc.int

Airlines sensitive to external environment Preparing for such shocks By the Secretariat of the Pacific Community The global aviation industry—one of the fastest growing industries in the world—is viewed as being relatively resilient despite the severe impacts of external shocks such as the global financial crisis and terrorist threats.

In contrast, the aviation sector in the Pacific region, where airlines operate on thin profit margins at the best of times, is sensitive to even minor fluctuations in the external environment.

Under the regional Framework for Action on Transport Services, the Secretariat of the Pacific Community (SPC) is tasked with supporting the aviation policy, research and information needs of its Pacific Islands country and territory members as well as promoting regional cooperation in a sector that is an important contributor to growth and development.

The International Air Transport Association (IATA) estimated that airlines lost US$22 billion in revenue (compared with previous yearly earnings) following the terrorist attacks in September 2001 and took three years to recover.

The outbreak of severe acute respiratory syndrome (SARS) in 2003 caused the number of scheduled flights worldwide to fall by three percent – equivalent to some 2.5 million seats, according to flight schedule provider OAG. In 2008 and 2009, also according to IATA, the global financial crisis resulted in further losses to the industry, with revenues falling by 14 per22 Islands Business, September 2013

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Cover Report

Islands discuss aviation gas emissions Complying with international standards

By Robert Matau As the world of aviation grapples with how to accept and implement an aviation gas emissions scheme championed by the European Union, three Pacific Islands nations are gearing towards compliance as they intensify their climate change initiatives.

Fiji hosted Nauru and Kiribati to a State Action Plan workshop on reducing aviation related carbon dioxide emissions in Nadi last month where Fiji’s Attorney General and Minister for Civil Aviation, Aiyaz Sayed-Khaiyum reaffirmed Fiji’s commitment to reducing aviation gas emissions.

“While Fiji is clearly not one of the big carbon polluters, we are nevertheless committed to making whatever contributions we can in this regard,” he said.

“Improving the environmental performance of aviation is a challenge we take very seriously.

“The strategies for carbon-reduction in the aviation industry include investments in new technology, more efficient operations—especially

24 Islands Business, September 2013

in terms of air traffic management—better infrastructure and positive market-based measures, or in other words, economic incentives to reduce pollution.”

He said Fiji Airways’ brand new Airbus A330s have Rolls Royce engine that reduced carbon emissions by 40 percent.

“And let’s not forget, reducing emissions doesn’t only help the environment, it saves airlines significant amounts of money; savings that can be passed onto consumers.” .

Fiji’s aviation team roped in the Civil Aviation Authority of Singapore for their ex- Aiyaz-Sayed Khaiyum...improving the environmental pertise on these issues during the workshop. performance of aviation is a challenge. Photo: Fiji’s Ministry of The International Civil Aviation Organi- Information sation (ICAO) forecasts that the amount of carbon dioxide emissions from aviation will proved futile. grow by 3-4 percent annually.

Whilst the superpowers of the world remain Hence, the EU has adopted laws bringing defiant, it looks like more airlines are adopting emissions within an emissions trading scheme the scheme and the principle of reducing and (ETS), which requires all airlines operating into controlling aviation gas emissions, with Fiji being and out of the EU to purchase pollution credits no exception. equal to 15 percent of their carbon emissions Secretariat of the Pacific Community’s Deputy to help address global Director Transport Brian Riches said the Interwarming. national Civil Aviation Organisation (ICAO) These plans faced Assembly (38th session) to held in Montreal stiff opposition from from September 24 to October 4 would discuss the United States, India the matter further on a global level. and China last year.

“During the sessions, ICAO’s complete work They argued it was a programme in the technical, economic, legal and violation of internatechnical cooperation fields will be reviewed in tional law. detail,” Riches told Islands Business.

However, the EU whilst agreeing to delay “Assembly outcomes are then provided to the introducing the scheme other bodies of ICAO and to its member states in has given these nations a order to guide their continuing and future work.

12-month grace period “Environmental issues, including aviation to allow ICAO time to emissions, will be discussed at the assembly.” develop an international On whether the cost would be passed on to agreement. the traveller, he said this would be a commercial While there are no matter for the airline. schemes like the ETS “However, past experience suggests the costs of in the Pacific, as a bloc, any taxes, levies, fees or charges that are imposed SPC member counon airlines over and above the normal operating tries are connected to costs are generally passed onto passengers in the US, China, South the form of higher ticket prices or additional Korea, Japan, Australia, surcharges.”

New Zealand, PhilipAll eyes are focused on the outcome of the pines, Chile, Taiwan ICAO assembly in October. and Singapore.

Riches said if the meeting officially endorses Ten of these nations the development of an open emissions trading have adopted marketsystem for international aviation, it would not, based systems or ETS legally speaking, supercede the European ETS. designed to reduce gas “However, one may consider that in such a emissions or controlsituation, the development of a single global ling them. emissions trading scheme which allows a single Currently, in the Papoint of accountability and avoid small operators cific only Air Tahiti Nui to face overwhelming administrative challenges flies direct to Europe. in complying with a multiplicity of different Efforts to get a comschemes, will be the only suitable market-based ment from the airline measure to be applied worldwide.

Politics

TUVALU

Sopoaga’s govt’s big worry

The former career diplomat who rose to global prominence as Tuvalu’s Permanent Representative to the United Nations in the campaign to address climate change said Tuvalu needed to take up the fight again for small and vulnerable islands states.

He said he would be looking to the new foreign minister Taukelina Finikaso to increase efforts in that area.

Tuvalu’s finances are also sourced annually from the Tuvalu Trust Fund (TTF), an international trust fund established in building local capacity to har1987 by Australia, New Zealand vest our own fish.” and the United Kingdom, with Sopoaga said right now, his support from Japan and South government is focusing on the Korea. delivery of basic and vital serIt is estimated that the fund vices to the people, particularly reached a value of A$77 milin health services and education lion in 2006 and contributed of our children. nearly A$9 million towards the “We are very motivated and government’s budget in 2006. focused on delivering one of Finikaso told Islands BusIthe basic roles of government ness there were funds available which is to create opportuniin the TTF B account which ties for our people—working they could draw from if they on the basis of strength rather needed to offset funds used by than weakness. government.

“We have good resources “But the current state of our in fisheries but we are having finances will not be known problems with management so yet until we get everything in we are looking at developing PM Enele Sopoaga...Ó weÕ re assessing the order,” he said. fisheries to get better returns situationÓ. Photo: Tuvalu Media “When we talk about how the for our people.” last government ran its financial Sopoaga said the government affairs, it was more about the was also looking at opportunities for employment management and bringing it before parliament to overseas for its people particularly seafarers. ensure a smooth flow of operations.”

Finding funds to run nation’s affairs whIle enele soPoaga and hIs party may be rejoicing after taking over government, they have a big challenge ahead of them—finding funds to operate the nation’s operations.

Sopoaga, who was elected Tuvalu’s Prime Minister last month, confirmed to Islands BusIness that the nation’s coffers were in a bad shape.

“We know there is hardly sufficient funds to run the nation’s affairs,” he said.

“The Consolidated Investment Fund (CIF), established out of the Tuvalu Trust Fund’s principal interest, is completely empty and this is a big worry.

“We are assessing the situation and hope to come up with a solution soon.

“We have to secure more economic and revenue payouts from fisheries. The value of returns from bilateral fishing agreements is still very low and incompatible to what we think we should be getting.

“We need to improve, and focus more on

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Islands Business, September 2013

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By Robert Matau

Politics over FDM,” Palacios said in a one-page memo to CNMI Governor Inos.

Apparently, FDM is no longer enough. The military also has to use Pagan, some 200 miles north of Saipan.

CNMI Governor Eloy S. Inos (left)...Commonwealth could initiate talks on US military plans. Photo: Haidee Eugenio

US tiny islands for military use?

Mixed reactions to America’s plan

By Haidee V. Eugenio International tourists would pay top dollars for vacation in farflung tropical islands with U.S. flags flying on them. But the United States has other plans that involve setting up live-fire training ranges and divert airfield on tiny islands in the Commonwealth of the Northern Mariana Islands (CNMI).

The U.S. Department of Defense says it is rebalancing military forces in the Asia-Pacific region.

In line with this, it is proposing to increase its joint military training capabilities by developing live-fire ranges and training areas on Tinian and Pagan, some three-quarters of the way between Hawaii and the Philippines.

Tinian and Pagan’s use will address the U.S. military’s unit-level and combined-level training deficiencies in the Western Pacific.

Training areas in Guam, also a U.S. territory, are already being used to capacity.

The U.S. Air Force is also planning to build a “divert” or alternative airfield on Saipan, CNMI’s capital island.

This will be used in case the U.S. military’s main bases in Guam, for example, cannot be accessed such as when they are targeted by the enemy’s ballistic missiles.

Whether this is part of a plan to encircle China or North Korea with a chain of military bases and ports in the region, the CNMI’s location is once again playing an important role, long after World War II. CNMI Governor Eloy S. Inos said the Commonwealth could initiate talks on these military plans with the U.S. president or his representative 26 Islands Business, September 2013

pursuant to Section 902 of the Covenant that established the political relationship between the United States and the Northern Mariana Islands.

Tiny island as ‘target’ Pagan, a beautiful 10-mile long and up to 4-mile wide island and an ancient home to Chamorro people, would be used for “live fire training” if the military plan pans out.

The U.S. military said Pagan, with no permanent residents because of continued volcanic activity, could support naval gunfire training and aviation ordnance delivery training.

Maneuver space also exists, mainly throughout Pagan’s middle section, which is accessible from the beaches, it said. It added that Pagan’s beaches could also support amphibious operations training.

Some environmentalists fear the tiny island of Pagan would become uninhabitable—not because of the volcanic activity there that forced residents to flee the island—but because of damage caused by bombs, rockets and torpedoes.

In the CNMI, the U.S. military has already been using another tiny island called Farallon de Mendinilla or FDM for live fire training since 1976, pursuant to a lease agreement between the U.S. and CNMI governments. The lease is for 50 years with a possible 50-year extension. And a proposal to increase restricted areas surrounding FDM is already sounding the alarm.

CNMI Lands and Natural Resources Secretary Arnold I. Palacios said this can only be an indication of significant increase in bombings “that will destroy the island and its surrounding reefs”.

“The proposed need to increase restricted area is questionable, unless the military intends to significantly increase bombing and other activities

From business to military interests Throughout the years, Pagan has been drawing interest not only from the U.S. military but also from Japanese, Russian and other foreign investors along with the CNMI government itself because of the island’s pozzolan deposit.

Depending on who one asks, Pagan has thousands or millions of tons of pozzolan, a siliceous volcanic ash used to produce hydraulic cement.

The CNMI would have wanted private investors to mine pozzolan but a court case has stalled an investor’s project for at least seven years.

In 2012, a group of Japanese investors wanted to mine pozzolan on Pagan and ship them off to Japan in exchange for bringing tons of tsunami debris from Japan to Pagan.

Prior to that, former CNMI governor Benigno R. Fitial also offered Pagan and other Northern Islands to Chinese investors for economic development, and strictly not for military purposes.

That was because the CNMI was trying to reinvigorate its local economy, which at the time was still reeling from the death of its once almighty garment industry that used to manufacture clothing for global brands such as Guess, Levi’s, Gap, Calvin Klein, Abercrombie & Fitch and Polo Ralph Lauren.

Lately, Russian investors have been expressing their interest in setting up eco-tourism on Pagan using private aircraft flying from Saipan.

“But we’re holding it [eco-tourism plans] off because of [U.S.] military plans,” one of the Russian investors said.

Jocelyn Kapileo, whose family is originally from Pagan and other Northern Islands, said her family opposes military plans for Pagan at a time when residents want to resettle there.

CNMI Public Lands Secretary Pete A. Tenorio said Pagan could be used for multiple purposes that include military training and eco-tourism.

Leased lands on Tinian The U.S. military’s plan to use Tinian for livefire training ranges, however, is not receiving the same strong opposition compared to Pagan, at least during the initial stages.

In fact, some CNMI officials and residents have been saying that military activities should be concentrated on Tinian, where some two-thirds of the land are already under lease to the military.

Tinian was the launching pad for the B-29 Enola Gay, which dropped atomic bombs on Japan, hastening the end of World War II. But Tinian Mayor Ramon Dela Cruz, after recently touring military ranges in Hawaii, said he is changing his mind about allowing live-fire training on the island because of potential hazards to residents, businesses, civil aviation, tourism, and the environment, among other things.

In mid-August, the U.S. Marine Corps Activity Guam issued a statement that a total of 198 comment submittals were received during the public scoping period for the Tinian and Pagan plan.

Craig Whelden, executive director of the Marine Corps Forces Pacific, said public participation is an important part of the National Environmental Policy Act process.

Northern Mariana Islands

“The strong showing at our public meetings and the large number of comments we received ensures that as we proceed with our analysis, we understand and can address the issues that are important to the citizens of the CNMI,” Whelden said in a statement.

‘Divert airfield’ It’s not only additional live-fire training ranges that the U.S. military wants in the CNMI but also a divert airfield on Saipan despite long-standing call from CNMI government officials to build it on Tinian.

In August, the CNMI governor formally asked acting U.S. Air Force Secretary Eric Fanning to reconsider the Air Force decision to select Saipan as a preferred alternative for a divert airfield.

The plan seeks to find an alternative airfield in the Marianas for the U.S. Air Force in the event that access to Andersen Air Force Base in Guam is limited or denied.

Inos said the CNMI’s long-standing concerns appeared to have been “improperly discounted and disregarded.”

The CNMI governor also told the Air Force that its request for 33 acres of land on Saipan for the next 50 years “is quite an undesirable conclusion as it would impede future commercial development in the area.”

The area includes historic sites such as a prewar Japanese airfield and an old World War II airbase.

Inos said cost consideration as a factor in placing the divert airfield on Saipan instead of Tinian is “unsubstantiated” and “perhaps an indefensible legal position”.

He also said that the adverse environmental impacts and cultural and social costs of building the alternative airfield on Saipan “greatly outweigh” the increased economic costs associated with building it on Tinian.

The governor said the choice to build the divert airfield on Saipan is not at all in conformance with the spirit of the law that the U.S. Congress enacted to guide the relationship between the CNMI and various U.S. military entities.

“Our islands are incredibly small in size and DoD is already in possession of two-thirds of the entire island of Tinian. Military uses on that island can be diversified and expanded if future geopolitical developments so demand,” he said.

On the contrary, the governor said, potential future military uses of land on Saipan are extremely limited because of limited land space and therefore, further expansion on Saipan is impossible.

“By putting the facility at the Saipan International Airport, the Air Force automatically loses 17 percent resiliency and the decision makes no economic sense in the bigger picture of life in the Northern Marianas,” the governor added.

At this point, there is no telling whether the U.S. military will pursue all or portions of its plans for Pagan and Tinian, as well as Saipan.

“But we also don’t want the CNMI to be viewed as anti-U.S. military because we’re not,” CNMI Lands and Natural Resources Secretary Arnold Palacios said.

“CNMI has been sending men and women to U.S. wars against terrorism, and we respect and follow U.S. policies and laws.

“But we also want to balance national security needs with that of our peoples’ way of living, our environment and our livelihood.”

Climate change blitz in lead-up to Forum

Marshalls wants US Secretary Kerry to attend

By Giff Johnson Until a year ago, climate change discussion in the Pacific was driven

by Kiribati and Tuvalu, with both countries gaining widespread media coverage focused on the probability of their ultimate need to migrate to avoid rising seas. In the lead up to this month’s Pacific Islands Forum meeting in Majuro, Marshall Islands leaders have jumped to the forefront of the campaign to get global attention to the plight of low-lying islands, with high-profile media forays challenging the United States and Australian governments to do more to lead action against climate change.

The Marshalls’ aim is to gain the Forum leaders’ endorsement of a stand-alone declaration of action on climate change from the Forum in Majuro. This, they hope, will pave the way to broader global recognition of the need for action by the world’s polluters to forestall the worst-case climate scenario.

To ramp up the level of international attention to the Forum, government officials in Majuro said they extended invitations earlier this year to United Nations Secretary General Ban Ki-Moon and U.S. Secretary of State John Kerry, in the hope he will follow in the footsteps of former Secretary Hillary Clinton, who traveled to the Cook Islands for last year’s Post-Forum Dialogue.

Not getting a positive answer to the Kerry invite, the Marshalls has taken to the media to pressure him to attend.

In the widely read U.S. Internet-based Huffington Post, President Christopher Loeak addressed a blog to Kerry in late July, publicly inviting the US Secretary of State to come to Majuro to launch a “new wave of political momentum to tackle the challenge of our generation”.

After citing President Obama’s recent words recommitting the U.S. administration to address the global threat, Loeak wrote to Kerry: “If the U.S. is serious about rolling up its sleeves and renewing its global leadership on climate change, you will pivot to the Pacific and join us in Majuro.

“Once here, we will want you to support our ‘Majuro Declaration for Climate Leadership’, which we hope will kick off a new wave of political momentum to tackle the challenge of our generation.”

Shortly after the appearance of the blog, which blindsided State Department officials, Minister in Assistance Tony deBrum spent a week in Australia on the climate trail, speaking to numerous groups, garnering wide news coverage, and demanding that the United States and Australia step up to the plate before it is too late for small Pacific islands.

“We feel very strongly that if (Kerry) does not attend (the Forum) it would be a slap in the face and like the United States, we would be reversing its so-called pivot to the Pacific,” deBrum

said while in Australia in a report carried by the French news agency, AFP. While Loeak’s and deBrum’s public expressions of the dire need for Australia and the United States to lead a campaign to reduce global carbon emissions will get no complaint from Pacific islanders, it remains to be seen what impact the media blitz will have on the U.S., considering the Marshalls’ government’s connection to Washington that allows it to obtain face-to-face meetings on this issue with Obama and Kerry through diplomatic channels.

Meanwhile, the Australian election is dominating the agendas of its political leaders, with new policy initiatives on climate change unlikely until the dust settles from the vote the day after the Forum.

Still, the Forum’s theme—“Marshalling the Pacific Response to the Climate Challenge”— ensures the issue will be central to the Majuro meeting, irrespective of participation levels. And while climate change is a central issue in the region, for many islands however, day-to-day problems are worsening: Urban crowding and moribund economies have produced deepening poverty, lack of jobs, and limited educational opportunities; and rampant diabetes and other lifestyle diseases are decimating many of the islands’ urban populations.

The fact that sea levels are rising—in the Marshalls, for example, it is rising at a pace of one-third of an inch (7mm) annually, more than double the global average—and will continue to rise presents the ultimate question of long-term survival of island populations. In the meantime, however, what about the quality of life?

Will the Forum methodically address the lack of substantial progress in many islands on the Millennium Development Goals?

A multitude of locally and donor-produced studies have clearly identified problems and what needs to be done, but the question that remains unanswered in many countries is, who has the political will to tackle largely thankless, but necessary reform?

It’s all in the details: getting more children fully immunized, investing in public recreation spaces in urban locations so residents have exercise options to counter the diabetes epidemic, enforcing accountability in public schools and other government services, developing small scale village-level economic activities. The list goes on.

A review of the Pacific Plan will be presented with proposals for a likely overhaul of the regional initiative.

The Pacific Plan, with its laundry list of “priorities,” gained little traction in north Pacific nations, where it was almost unknown outside of a handful of government officials. The Forum is expected to take action to revitalize its regional agenda.

Islands Business, September 2013 27

Politics

Papua New Guinea greater autonomy.” As an indicator of this, official representatives will participate in the Melanesian Festival of Arts and Culture to be hosted by PNG next year.

He said Indonesia would allow Papua New Guinea communities near the border to draw on its excess hydro power capacity with state-owned enterprise PNG Power buying electricity for its grid from Indonesia, and that the two countries would jointly explore for oil and gas in highly prospective targets that straddle the border.

Indonesia, Pato said, would fund an ambitious paved highway from Merauke on its side of the border in the south, to PNG’s Wewak on the northern coast.

The countries’ leaders signed a total of 11 MOUs during O’Neill’s visit, after which Pato and his Indonesian counterpart Marty Natalegawa began to chart an implementation course.

Working on relations with Indonesia...Papua New Guinea’s Prime Minister O’Neill (right). Photo:

Fiji’s Ministry of Information

Breakthrough imminent in Indonesia?

O’Neill’s plan to defuse standoff over West Papua

By Rowan Callick A breakthrough may be on the way for one of the most intractable conflicts in the Asia-

Pacific region.

Relations between Indonesia and the Melanesian nations, led by Papua New Guinea, have remained awkward ever since the Dutch withdrew from “Netherlands New Guinea,” and the Pacific islands became independent states.

The plight of “West Papua” as it is often called, has prevented Indonesia, the biggest and closest country in South-East Asia, from building the links that might otherwise have been expected, with the island countries to its east—even since it became a liberal democracy 15 years ago.

But the PNG government, led by Prime Minister Peter O’Neill, has recently launched an initiative aimed at defusing the stand-off over West Papua, building the economy of the centre of New Guinea island, and gaining diplomatic spin-offs.

The western half of New Guinea island comprises two Indonesian provinces: Papua, whose capital is Jayapura, and West Papua, whose capital is Manokwari. It has a 750-km mostly mountainous and often in the past fraught and dangerous border with PNG. In 2001, the area now covered by the two provinces was declared autonomous with 80 percent of its tax receipts to be retained for local use.

28 Islands Business, September 2013

But this process has remained only partially complete compared with the more successful governance situation in Aceh, at the other end of the Indonesian archipelago.

O’Neill, who led a delegation to Jakarta for talks with President Susilo Bambang Yudhoyono, said: “West Papua has been a sticky issue for PNG and the western Pacific for quite some time. Our role is to open up discussions.

Genuine desire “We feel the government of Indonesia has a genuine desire to ensure issues relating to West Papua are managed in a mutually beneficial manner. For the first time in our bilateral discussions, we were able to discuss this openly with the Indonesian government.”

He said he is convinced that Yudhoyono now wishes “to withdraw military presence from West Papua, and allow for more autonomy through economic empowerment of the people.

“We feel this is a good opening for us to engage with the Indonesian government so we can participate in the improvement of the lives of Melanesian people there and of our own people along the border. Our officials are now engaged meaningfully in establishing the cooperation we agreed.”

PNG’s Foreign Minister Rimbink Pato elaborated on the deal that was informally struck: “The Indonesian president will adopt a softer approach to West Papuan issues, allowing them

Extradition treaty They agreed on an extradition treaty—which may ensure that Indonesian businessman fugitive Joko Chandra—wanted for corruption and who obtained PNG citizenship under a process that is being challenged legally—returns to face charges.

Another agreement under final negotiation, will permit planes to fly from Nadi, Fiji, through Honiara in Solomon Islands, then Port Moresby, and on to Bali.

One goal of the warming of relations, Pato said, was to prevent any resurgence of asylum-seekers from the Indonesian side of the border.

About 8,000 refugees remain in PNG, living in camps in Western province run by the UN High Commissioner for Refugees following earlier conflicts, many of them seeking refuge more than 25 years ago.

The discussions between PNG and Indonesia have led to the latter inviting the foreign ministers of the four Melanesian states—Solomon Islands, Vanuatu and Fiji, as well as PNG, who form the “Melanesian Spearhead Group” (MSG)—to visit its Papua and West Papua provinces.

O’Neill flew for talks with Yudhoyono instead of attending an MSG leaders’ meeting held at the same time in New Caledonia. Discussion of West Papuan independence activists’ bid to join the MSG was postponed.

While PNG is helping to usher its fellow Melanesians in towards better relations with Indonesia, Indonesia in return is backing Port Moresby’s membership of the Association of South East Asian Nations (ASEAN). ASEAN has 10 members at present—and PNG feels it is entitled to join it because it has such a long land border with the group’s largest state.

Indonesia is also backing PNG’s bid to host the 2018 summit of the APEC forum—which would bring the American and Russian presidents, among other leaders, to Port Moresby—which will be decided at the next summit in Bali in October.

“It’s important for us to have such a relationship with Indonesia,” said Pato—who points out that in previous years, tensions not only unresolved but not even fully discussed about West Papua had prevented the full development of positive, mutually beneficial arrangements between the countries.

Now a joint committee of ministers from the countries has been formed to tackle the details and ensure the MOUs are implemented, he said— starting with the joint economic projects.

Politics

solomon islands

Golden waters? It is said that gold bars are lying at the bottom of the ocean around Isabel. Photo: Mere Tuqiri

Bizarre twist to sunken gold bars Govt, MPs on hot pursuit for treasure

By Alfred Sasako It’s a story that truly refuses to go away. Like an onion, you peel one layer off only to find another layer and another and another and on it goes.

It’s the story of gold bars, real or imagined, said to be lying at the bottom of the ocean around Isabel, Solomon Islands’ longest island. Those familiar with the story said the gold bars were in crates and were in a Japanese boat, camouflaged as a hospital ship.

It was travelling along the coast of Isabel during the Second World War when a United States patrol spotted it and bombed it out of the waters.

It sank with its cargo. No one knows how many survived. But amongst the crew was an Isabel man, who kept the secret to himself until he was on his deathbed.

Then he told his son, who had since returned from Australia after spending time learning the art of scuba diving, that a Japanese wartime ship laden with crates full of gold was lying on the seabed near their village.

The unnamed man asked his son to have a look. Sure enough it was there—the sunken ship with its golden cargo, or so the story goes. The son allegedly sneaked out a 12.5kg bar. Soon the news of the find had spread and the man was contacted by individuals in Honiara who were allegedly acting on behalf of the Solomon Islands government.

He was told the government would sell his bar and he would get his money.

Those associated with him said the man has not received a single penny from the sale. This

is where the story gets trickier.

There are serious allegations the government wants the man to show them the location of the sunken ship. He had repeatedly refused. It was claimed that his brother has since been detailed by plainclothes policemen for questioning.

“The harassment of our client has intensified since the last article was published,” said an Australian familiar with the story.

There are even more serious allegations linking a top Papua New Guinea politician as well as members of the Australian Federal Police (AFP) serving with RAMSI in Honiara in the hunt for the sunken treasure.

According to the bizarre twist in the story, the a very senior Solomon Islands government official and a PNG politician have been making direct telephone contacts with the Isabel man urging him to show the government the location of the find.

“The senior Solomons’ government official send text messages to our client almost every day requesting that he identifies the location of the sunken gold bars. We need to sell the bars because I need money to pay striking teachers,” the senior official was alleged to have said in one of the text messages.

“Our man has been offered a trip around the world, staying at top hotels with all expenses paid.

He was also offered a 12-month all expenses paid stay at a luxury hotel in Honiara,” the man said.

“Our man has even been offered to travel to Singapore to meet the senior government official and the PNG politician to discuss the matter.

But he has refused because all he’s asking that the find or the proceeds from the sale be shared on a 50-50 basis,” the man who wants to remain

anonymous said.

The story gets even more bizarre.

According to my informant, Australian Federal Police officers who initially were helping the Solomon Islands government to retrieve the gold bar find have shifted their support to the Japanese.

“We estimate the Japanese have so far spent in excess of US$8 million since the hunt for the sunken treasure began. I guess some of the money was to pay for geosatellite tracking systems that the Australian Federal Police (AFP) are using to track down the movement of local people of interest in the Solomon Islands,” he said.

“The other week, AFP officers were using a twin 200-hp outboard motor following up information on the whereabouts of the Isabel man’s relatives in Western Province,” he said.

“The Australian police officers have become very, very nasty. They’ve even put trackers on outboard motor canoes in and around Isabel Province. The other week we removed 72 of these trackers from an outboard motor canoe allegedly stolen from a village in Isabel,” he said.

“As an Australian, I am very ashamed of what our police are doing,” he said.

My informant said the race is truly on to get to the gold find before the story develops into an international crisis involving Solomon Islands, Japan and even China, where it was thought the gold bars had come from in the first place.

Under international law, the sunken golden cargo remains Japan’s property. But China could also stake a claim since the treasure was taken from China after Japan’s victory over China during the Second World War. Given the tense standoff between Beijing and Tokyo right now, there is every chance the Chinese government could weigh in.

If Beijing does, there is little doubt this threeway race could turn ugly down the line. But who is to know where the story leads next?

After all, Japan’s powerful mining giant, Sumitomo, has already established a beach head, so to speak, in Isabel where it is prospecting for nickel and other mineral deposits.

There are other possibilities as well. For example, could Japan be using its interest in the nickel deposit on Isabel as a pretext for gathering intelligence on the whereabouts of the sunken gold bars? And that by the time authorities realised it, the find has disappeared?

There were similar claims in the past when treasure hunters were digging around the old capital, Tulagi, on Florida Islands. At the time, a Japanese-owned fishing company, Solomon Taiyo, was operating a tuna cannery there.

The company made losses year after year for 30 odd years, but never closed down its operations.

It was after straight losses over 30 years that the company finally decided to move the cannery to Noro in the nation’s Western Province after it sold out to a local entity called Soltai.

It was rumoured then that the Japanese had moved camp because they had found what they were looking for—a consignment of gold bars hidden in a cave off Tulagi—and have returned the find to Japan. Could history be repeating itself? That, we shall have to wait for the next twist in this bizarre and intriguing story. But the race to find it, still goes on.

Islands Business, September 2013 29

Politics

Monitoring and mapping the Pacific Raising debates on legality and privacy

By Nic Maclellan When you make a phone call, send an email or use your Facebook page, information that you send across the airwaves or through the Internet can be scooped up by Western intelligence agencies.

In the United States, there has been widespread public debate over government monitoring of telecommunications and the Internet, after a contractor working for the National Security Agency (NSA) revealed programmes that targeted domestic communications as well as foreign enemies.

Whistle blower Edward Snowden fled to Hong Kong and then Russia, leaking documents to the media which revealed surveillance programmes known as PRISM, XKeyscore and Tempora.

In the Pacific region, countries like Australia, New Zealand and France also operate signals intelligence and communications intercept programmes, which monitor diplomatic, commercial or military communications from other nations.

There is growing concern that government agencies and private corporations are also gathering data from citizens at home, raising debates over legality and privacy.

In recent months, this issue has been debated in New Zealand after Prime Minister John Key introduced legislation in Parliament to expand the powers of the Government Communications Security Bureau (GCSB)—New Zealand’s communications intelligence agency. In July, there were rallies in 11 cities around New Zealand to protest the draft legislation, which was still before Parliament at the time of writing.

Australia and New Zealand collaborate in the region under the UKUSA Agreement, which shares intelligence amongst the agencies of five Western allies.

The “Five Eyes” which monitor communications are the NSA and the UK Government Communications Headquarters (GCHQ), supported by Canada’s Communications Security Establishment (CSE), New Zealand’s GCSB and the newly renamed Australian Signals Directorate (The ASD was formerly called the Defence Signals Directorate, but was rebadged in May this year when then Prime Minister Julia Gillard launched Canberra’s latest Defence White Paper).

ASD is Australia’s primary collector of signals intelligence and other electronic data, through the interception and reporting of communications like international phone calls, emails or military radios.

A key task is the interception of military communications from Indonesia and other nations in the region, primarily through facilities at Shoal Bay Receiving Station, east of Darwin. Another Australian interception facility is the Australian Defence Satellite Communications Station 30 Islands Business, September 2013

share this information with the United States and other UKUSA allies.”

Tanter stated that intelligence monitoring programmes can be used to spy on allies as well as enemies.

“We also know from Snowden’s revelations that these facilities were used by Australia for its bid for a seat on the UN Security Council,” Tanter said.

“That would certainly have involved listening to the communications of any Pacific country that was relevant to that voting. It certainly would be used in Australian trade negotiations with Japan and other countries. Assuming these programmes are solely military is underestimating what they’re used for now.”

Last month, Australian media reported Snowden’s revelation that Pr i m e M i n i s t e r Kevin Rudd re ceived information about Asian leaders at the 2009 G20 meeting in London, when British and America n i n t e lligence targeted leaders and officials attending the international conference.

New Zealand bases Over many years, New Zealand researcher Nicky Hager has documented New ZeaSolomon Islands...in the Pacific, communications are monitored by an installation in New land’s role in this Caledonia which came into operation in 2006. Photo: Islands Business UKUSA network, through the satellite communications interception station at Waihopai and radio com(ADSCS), located at Kojarena near Geraldton munications interception station at Tangimoana. in Western Australia.

In the 1970s and 1980s, a key task for the Professor Richard Tanter of the University of GCSB was monitoring communications from the Melbourne, a senior research associate with the French nuclear testing programme at Moruroa Nautilus Institute, says that the 1946 UKUSA and Fangataufa atolls and Russian fishing vessels Treaty originally focused on signals intelligence that ventured south of the Equator. such as radio communications, but this has been Hager’s 1996 book ‘Secret Power’ detailed the expanded through the use of new technology. wider role of Tangimoana in the islands region: “It’s now clearly been expanded to include “The big aerials at the station were right then email and Internet intercepts carried out in difmonitoring nuclear-free Vanuatu, the Solomon ferent technological ways,” Tanter said.

Islands, Fiji and all New Zealand’s other South “In Australia, this is done at the joint defence Pacific neighbours—everyone in the South Pafacility at Pine Gap, near Alice Springs, the cific, in fact, except for the Western intelligence Australian Signals Directorate facility at Shoal allies and their territories. Large quantities of Bay near Darwin and the Australian Defence telexes and Morse code messages sent by longSatellite Communication Station at Kojarena, distance radio in the Pacific region were being which is part of a worldwide system of satellite recorded at Tangimoana and sent to the GCSB communications monitoring known as Echelon.” in Wellington for distribution to select public Tanter told Islands Business that information servants and to the four allied intelligence allies.” gathered by Australian and New Zealand is now Hager also documented how the interception highly integrated with agencies like the US NSA of satellite communications at Waihopai provides and Britain’s GCHQ: “As well as downlinking a much wider treasure trove of intelligence: “Dipdata from satellites, Pine Gap is used to process lomatic communications between embassies and as well as intercept satellite communications, to

PACIFIC their home capitals, all manner of government and military communications, a wide range of business communications, communications of international organisations and political organisations and the personal communications of people living throughout the Pacific.”

In the 21st century, these surveillance programmes are much more sophisticated. Recent Australian-United States ministerial (AUSMIN) meetings have extended agreements covering the new frontiers of space and cyber warfare.

In 2008, AUSMIN ministers signed a Statement of Principles for a Military Satellite Communications Partnership and officials are continuing to develop a US-Australia Combined Communications Partnership. The September 2011 AUSMIN meeting in San Francisco issued a Joint Statement on Cyber Warfare, stating that the ANZUS Treaty’s provisions could also be invoked in the case of cyber-attacks.

The 2011 AUSMIN communiqué declared: “Mindful of our longstanding defence relationship and the 1951 Security Treaty between Australia, New Zealand, and the United States of America (ANZUS Treaty), our governments share the view that, in the event of a cyber-attack that threatens the territorial integrity, political independence or security of either of our nations, Australia and the United States would consult together and determine appropriate options to address the threat.”

Governments justify Internet and satellite monitoring programmes as a crucial element of efforts to track terrorists, cyber-criminals and potential military threats. But critics argue the PRISM programme in the United States or the new GCSB legislation before New Zealand’s Parliament give too much power to agencies to gather information on citizens as part of their cyber security role.

They argue that sharing of data between the five Western powers allows intrusive control of citizens who are not engaged in criminal activities, without accountability to public institutions.

In New Zealand, the opposition Labour Party has come out against the ‘Government Communications Security Bureau and Related Legislation Amendment Bill’. A range of agencies, including the Privacy Commission, the New Zealand Law Society and the Human Rights Commission, have also raised concerns about the effect of the legislation on citizens’ privacy.

The debate heated up after revelations that the GCSB had illegally monitored the phone and internet communications of New Zealand citizens, and the New Zealand Defence Force (NZDF) had access to the phone records of an New Zealand journalist working in Afghanistan.

In July, Privacy Commissioner Marie Shroff called for a delay in the passage of the legislation to allow more time for discussion on oversight provisions, but at the time of writing, the Key government was pressing ahead to pass the bill.

Organisation (DIGO), now being renamed the Australian GeospatialIntelligence Organisation (AGO).

According to the Australian Defence Department, DIGO has a key function of “obtaining geospatial and imagery intelligence to meet the operational, targeting, training and exercise requirements of the Australian Defence Force.”

For more than a decade, DIGO has been involved in programmes of geospatial mapping in Solomon Islands, Vanuatu, Papua New Guinea, Timor-Leste and other Pacific countries. Working with SPC/SOPAC and government Lands Departments, DIGO has conducted mapping surveys using systems which link with Global Positioning Satellites (GPS).

Beyond the value of creating detailed maps of rural and outer island areas that can be used by Pacific governments, these activities have military applications.

DIGO notes that geospatial analysts “can derive information including maps, charts and digital topographic information to support a range of military tasks, such as battlefield analysis, employment of weapons systems and troop movements.”

Richard Tanter of the University of Melbourne notes: “This terrain mapping and visual mapping is highly valued by operational military commanders, not simply in conventional warfare in Afghanistan but in counterterrorism operations and for drone warfare.”

In August 2003, the Australian Army deployed early versions of drones known as Unmanned Aerial Vehicles (UAVs) as part of the Regional Assistance Mission to the Solomon Islands (RAMSI). As well as providing valuable data to the ADF, the first Australian commander of the Combined Task Force in Solomon Islands Lieutenant Colonel John Frewen described them as “a potent psychological tool” in disrupting militia activity.

The five-week trial of UAVs in Solomon Islands was the first time the ADF used pilotless aircraft in an operational environment. The results of UAV operations in Timor-Leste and Solomon Islands were the basis of an expanded programme by the ADF in Iraq and Afghanistan.

DIGO’s website states: “Support to military operations within DIGO also looks at the preparation of products and services for planning possible future military operations in areas where the Australian Defence Force and Australian Federal Police are not yet deployed.”

France’s base in New Caledonia As well as the ANZUS allies, France also monitors satellite, internet and telecommunications from installations in the Pacific On 4 July, the French newspaper Le Monde reported on the signals intelligence programme run by the Direction générale de la sécurité extérieure (DGSE)—the French intelligence service best known in the Pacific for the bombing of the Rainbow Warrior in 1985.

Electronic interception bases are maintained in 20 locations in mainland France and its overseas territories. In the Pacific, communications are monitored by an installation in New Caledonia which came into operation in 2006. This facility is located at the French military’s naval airbase at Tontouta (New Caledonia’s international airport, outside the capital Noumea).

According to Le Monde, “the secret services systematically collect the electromagnetic signals emitted by computers and telephones in France together with the digital flows between France and overseas countries, so the totality of our communications is monitored. Emails, SMS messages, phone calls, access to Facebook, Twitter and more are then stored for years.”

The long-term collection of information in these vast computer databases allows the analysis of “metadata”—the pattern of who called whom, the date, time, frequency, or location of the call.

While the DGSE can legally monitor overseas traffic, the material is gathered in supercomputers at the DGSE headquarters in the Boulevard Mortier in Paris. Without appropriate legislation, it can then be accessed by domestic intelligence agencies, including the military intelligence agency Direction du renseignement militaire (DRM), domestic spy agencies, customs service and bodies concerned with money laundering.

7TH AUGUST 13 - VETERAN’S DAY DAW SERVICE & WWII TOURS

Mapping the Pacific Beyond communications monitoring, another key Australian intelligence agency operating in the Pacific region is the Defence Imagery and Geospatial

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Islands Business, September 2013

Politics Viewpoint

Fiji...going to the polls no later than September 30, 2014. Photo: Islands Business

Why Fiji’s latest electoral system changed?

‘Open’ versus ‘closed’ PR systems

By Jon Fraenkel*

first-past-the-post (1970-1997) or the alternative vote (1997-2006).

Treating the country as a single nation-wide T he electoral system pro constituency makes sense if you have a closed posals in the various draft conlist PR system. Voters are simply confronted stitutions for Fiji have changed with a list of candidates on the ballot paper, and dramatically. In the first draft released in late make their choice. But if you opt for an open list 2012 (put together by the Yash Ghai-led Fiji PR system, you could potentially get a huge and Constitutional Commission), Fiji was to shift to a unwieldy ballot paper. At the 2006 election in ‘closed’ list proportional representation (PR) sysFiji, there were 338 candidates contesting for 71 tem. A ‘closed’ list system is one where the voter seats. If you put that many candidates on a ballot ticks the ballot for a political party and the party paper, it will look like a table cloth. Having just determines which of its candidates sit in parliaescaped from one unwieldy ment. The list is ‘closed’ in the sense that voters have no Closed List System electoral system with a bewildering ballot paper, Fiji may control over which particular A ‘closed’ list system is one where the be about to go for another candidates get selected. voter ticks the ballot for a political elaborate system.

Earlier this year, the govparty, and the party determines which The government’s press ernment ditched that proof its candidates sit in parliament. release mentions that Israel posal, and opted instead for Netherlands have naan open list PR system using ‘Open’ List System and tionwide PR systems, but Fiji’s four divisions as elecAn ‘open’ list system is one where the there are some significant toral constituencies.

An ‘open’ list system is voter, not the party, determines the differences. Israel does have a single nationwide constituone where the voter, not the order of election of the candidates. ency, but it uses a closed list party, determines the order PR system and Netherlands uses what is called of election of the candidates. Voters potentially a semi-open or flexible list and has 18 multiget more control. member constituencies.

In the latest draft constitution, the four conReal world examples of open list PR with nastituencies have been abandoned and instead a tionwide or large constituencies are Columbia’s 50-member parliament is to be elected from a Senate (with a hundred members) and Brazil has single nationwide constituency. But the plan is some districts and state legislatures that use open still to use an ‘open’ rather than a ‘closed’ system. list PR and are around the size of, or larger than, All these systems entail proportional represenFiji’s proposed parliament. tation (PR), in the sense that party percentages of Why has this change been made? It is actually the vote will determine party shares of the vote. pretty ingenious, particularly if you bear in mind Having a PR system, many of us have argued that the Bainimarama Government has for some for decades, is likely to work better for Fiji than 32 Islands Business, September 2013

fiji time been committed to introducing an open list PR system (and of course that had been the National Council for Building a Better Fiji proposal).

The earlier government draft constitution proposal for an open list PR system in four constituencies was probably going to make life difficult for Bainimarama and his allies as they put together a party to contest the next election.

No such party currently exists, and assembling such an organisation from scratch may potentially prove a hard task. The system they initially chose earlier this year was not likely to make that task any easier.

Bainimarama may have accumulated some personal popularity, but none of his ministers are likely to attract a major share of votes at the national level. And the plausible candidates for the government’s as-yet-unformed political party are also not likely to draw sizeable personal votes. It is only Bainimarama himself who may, many argue, has a significant national following.

Open list PR systems potentially strengthen the position of candidates with a strong personal base and minimise the ability of parties to control which candidates get elected. So the four constituency open list system would potentially have made the interim government’s task ahead of the election all the harder.

Under the system now on offer, voters may be confronted with a potentially huge ballot paper with hundreds of names on it. The Prime Minister’s will be one of the most easily recognisable names contesting, and presumably that will be located somewhere near the top of the ballot paper.

His opponents will have more localised support: they would have found campaigning more simple under the four constituency system.

Under the open list PR system, those personal votes Bainimarama is able to accumulate will automatically translate into votes for his party. In other words, he will likely be able to get a host of candidates selected on his coat tails.

Under most open list PR systems, you first tally the votes for the candidate. Then you work out how many votes that entails for each party.

Then you work out how many seats that translates into for each party. And then you work out which candidates within that party have the highest vote tallies and those are the candidates elected to sit in parliament.

So let’s say Bainimarama personally gets 40% of the nationwide vote. Since there are to be 50 seats, his party would then get 20 of these seats.

Those actually elected would be the 20 top polling candidates in Bainimarama’s party. In practice, that party would probably get more than 20 seats because some parties or independent candidates would fail to reach the 5% threshold. Below 5%, parties do not get any seats at all.

We have yet to see what formula is used to distribute seats, but the one chosen may potentially prove yet more advantageous.

• Jon Fraenkel is a Professor of Comparative Politics at Victoria University of Wellington. He was co-editor of From Election to Coup in Fiji; The 2006 campaign and its Aftermath (2007) and The 2006 Military takeover in Fiji: A Coup to End all Coups? (2009).

Culture intellectual property law.

While the Berne Convention for the Protection of Literary and Artistic Works governs copyright for individual artists (such as writers and musicians), it doesn’t cover traditional knowledge and cultural expressions of indigenous communities.

Negotiations for an international convention on intellectual property and genetic resources, traditional knowledge and folklore have been taking place at the World Intellectual Property Organisation now for a number of years.

“There is also a misconception that traditional cultural expressions are part of the public domain,” says Elise Huffer, Cultural Adviser at the Secretariat Aztec dress and Nike Tattoo Tech collection...in hotwater for using Pacific motifs. Photos: fb.com/nanettelepore.fb and nikeblog.com of the Pacific Community.

“They aren’t, they are specialised forms of knowledge that have not been protected by Intellectual Property rights because Intellectual Property was not conceptualised to cover knowledge that belonged to communities and was transmitted orally.

“Traditional cultural expressions are very much linked to place and historical context and people of the place and their custodians need to be fully acknowledged,” she adds. “Often those wishing to make them more known across the world through music or other art forms for a range of reasons, do not ensure consent from all the traditional owners or do not provide adequate compensation.

“Traditional cultural expressions are intellecof sports bras, leggings, jumpsuits and singlets for

By Rajan Sami tual property and need to be treated as such by women, saying in a statement, “The Nike Tattoo all those using them.

Tech collection was inspired by tattoo graphics.

Hell hath no fury like a Samoan scorned.

“Moral and economic rights of holders of traWe apologise to anyone who views this design At least that’s what global sportswear behemoth ditional cultural expressions are regularly violated as insensitive to any specific culture. No offense Nike discovered in early August when it released by misrepresentation or misuse,” says Huffer, was intended.” q photos of women’s workout gear bearing the citing French duo Deep Forest’s 1992 hit song Questions to Nike asking whether Samoan pe’a—the traditional Samoan men’s tattoo.

Sweet Lullaby as an example, which used a lullaby communities had been consulted in the design Within a matter of days, a global backlash sung by a specific clan on Malaita in the Solomon process were not returned. ensued as Samoans around the world took to the Islands, but which was originally attributed to the Around the same time, another internet storm internet to vent. pygmies of West Africa. was brewing—this one to do with the use of Fijian “I find Nike’s blatant disrespect and profit over Pacific Islands countries are beginning to adkesakesa motifs by New York designer Nanette my culture’s way of life shameless and irreverdress traditional knowledge issues at the national Lepore on dresses she labelled the ‘Aztec’ range. ent,” wrote 37-year old Samoan-American Siimoa level. In April, Solomon Islands launched its This drew the ire of Fijians around the world, Galoia on a change.org petition calling for the first ever National Culture Policy, which aims who took to the brand’s Facebook page to protest. removal of the range. “The tatau is thousands of to develop the cultural sector whilst safeguarding While the designer apologised for the gaffe years old with a tradition of honour and you have the country’s cultural resources from misapon Facebook, writing: “I am truly sorry for misreduced it to $80 spanx [women’s underwear]. propriation. naming the Aztec Dress. I respect local artists Remove at once!”

Several other countries in the region including everywhere and I apologise for any offense this On August 18, Samoan Prime Minister TuiCook Islands, Fiji, Kiribati, Palau, Papua New has caused”. laepa Sailele Malielegaoi weighed in, telling the Guinea and Vanuatu currently have draft policies It was unclear at press time whether the dresses Savali newspaper, “Those are our Samoan measina or legislation covering traditional knowledge but were still being sold. Questions sent to Lepore (cultural treasures). It’s our heritage and our culare yet to be passed into law. went answered. tural property. We should all be protective of it. It For now, the battle is being fought on moral Closer to the islands, Fiji’s rebranded national should not be randomly exploited for commercial grounds, with the global Pacific Islands diaspora airline Fiji Airways has also hit a similar snafu use as it has been in this case. Especially when (and supporters) taking their plight to the interwhilst trying to trademark the kesakesa motifs in we are getting absolutely nothing from Nike.” net. Speaking to Radio Australia regarding Nike’s its new logo. Communal groups (who have longThe Samoan newspaper reported that Malielfaux pas, Galumalemana Alfred Hunkin, a senior used the designs) are contesting the application, egaoi has instructed the Ministry of Commerce lecturer in Samoan Studies at Victoria University which is currently before the trademark office. and Industry to look at how best to protect Saof Wellington said: “The apology is good and And it’s a scenario that’s likely to reoccur moan traditional designs. withdrawing is even better.” because of a long-standing loophole in global Spurred by the uproar, Nike pulled the range

Use of Pacific motifs land global brands in hot water

Tuilaepa: It’s our heritage, cultural property

Islands Business, September 2013 33

Business told the governor in an Aug. 16 letter that in her view, the settlement deal is “unconstitutional, illegal, and a breach of fiduciary duty” to the CNMI people and the Fund members.

Press secretary Angel Demapan said the administration “recognizes the constitutional issue” that the lawmaker brought up, that is why retirees can choose to opt out of the settlement deal with its proposed 25 percent pension deferment.

“This is a critical time in our history, there’s simply no room for political posturing or bickering. At this point, the settlement is the best way to go,” Demapan said.

CNMI pensioners...urged not to opt out of the settlement deal. Photo: Haidee Eugenio

From bankruptcy filing to settlement deal Pension fund under the spotlight again

By Haidee Eugenio Over a year after the Commonwealth of the Northern Mariana Islands (CNMI) Retirement Fund became the first public pension agency on American soil to file for bankruptcy on April 17, 2012 but was later dismissed, it is once again on the spotlight.

A U.S. court has tentatively approved on August 6, 2013 a historic settlement agreement that the parties in the case believe would prolong the pension agency’s lifespan beyond March 2014.

After three years of litigation, the Betty Johnson case is nearing its end. Or at least that’s what the parties are hoping for.

It all began when retiree Johnson sued the CNMI on behalf of a proposed class of members in the U.S. District Court for the NMI. Johnson alleged the CNMI failed to pay the amounts that it was required by law to pay to the Retirement Fund since 2005. As a result, the Retirement Fund is expected to run out of money

by March or June 2014 and will no longer be able to pay any retirement benefits.

Three years later, Johnson agreed to a proposed settlement with the CNMI, the Retirement Fund and other defendants including Governor Eloy S. Inos.

On August 6, U.S. District Court for the NMI designated judge Frances Tydingco-Gatewood preliminarily approved the settlement agreement 34 Islands Business, September 2013

in Johnson’s class action suit.

The judge said that plaintiff Johnson’s claims merit class action treatment and the settlement agreement itself appears to be fair, reasonable, adequate and in the best interests of the settlement class members.

The governor said that “it’s the best deal the CNMI government could enter into,” considering its finances.

The governor actively participated in the negotiations to come up with the proposed settlement agreement.

He pointed out that the consequences of not entering into the agreement would be “more devastating”.

“I think it is better that we enter into an agreement now knowing what will happen when things happen, as opposed to not entering into an agreement. We know that if we don’t enter into an agreement, the money in the Fund would be gone in about a year, a year and a half, and nothing left from that point on. So we felt that this was the best deal that we could enter into considering the circumstance that we’re in financially and so forth,” the governor said in a news briefing a day after the deal’s tentative approval.

He added that the government is committed to paying the last retiree.

Of the 29 lawmakers, at least one disagrees with the governor on the settlement deal.

Representative Janet Maratita (Ind-Saipan)

Sacrifices The settlement deal brings with it sacrifices, including a 25 percent “deferment” or temporary cut of retirees’ pension as early as Oct. 2013 if the settlement deal gets final court approval.

Retirees are guaranteed to receive at least 75 percent of their full benefits.

Under the tentatively approved settlement deal, the government is required to make minimum annual payments to the settlement fund to sustain payments of 75 percent of retirees’ pension.

In the fiscal year 2014 that begins on Oct. 1 for example, the government is required to remit US$25 million to the Retirement Fund and US$27 million in FY 2015, representing employer’s contribution to the pension agency.

If the CNMI’s financial conditions improve, the government is required to make greater annual payments to the Retirement Fund. For example, US$30 million in FY 2016 until it peaks to US$42 million in FY 2021 and start coming down in FY 2022.

The governor said the bigger task ahead is “to make sure that we meet the payment requirements.”

If the government does not meet its obligations under the settlement deal, there is a stipulated judgment of US$779 million that will be enforced.

“That’s money that the CNMI government doesn’t have,” Inos said, referring to the CNMI government’s budget for FY 2014 of US$123.4 million, which is the same level as that of a decade ago.

The CNMI government has some US$320 million in unpaid employer contribution to the Retirement Fund, and that’s a major factor in the pension fund’s ongoing crisis.

The class suit brought together attorneys near and far. Johnson’s lawyers include Margery S. Bronster, Robert M. Hatch, Bruce Jorgensen and Stephen Woodruff, while the CNMI government also brought with it a pool of lawyers including assistant attorneys general Reena Patel, Teresita Sablan and Gil Birnbrich. Fund trustee ad litem Joseph C. Razzano, meanwhile, was represented

Business

PNA’s proposal to stop overfishing bigeye In the PNA Secretariat proposal, the Western A fresh proposal to stop overfishing of high seas pockets will be closed and purse seine bigeye tuna in the Western and Central Pacific fishing in other high seas areas will be capped.

Ocean, has been put forward by the Parties to FADs will be banned in the high seas by 2017, the Nauru Agreement (PNA). and foreign purse seine and longline fleet sizes The proposal which was presented to a critiwill be frozen. cal working group of the Western and Central Dr Transform Aqorau, PNA Pacific Fisheries Commission Chief Executive Officer, said: held in Tokyo, Japan, last month “Our proposal is a solution to the also ensures that Small Islands problem we face in the Western Developing States (SIDS) do not and Central Pacific Ocean—overbear a disproportionate burden of fishing of bigeye tuna. conservation.

“This is largely due to the high The draft Conservation and catch of foreign longline fishing Management Measure calls for vessels and the reliance of the foreign longline fishing countries industry on FADs, which leads to to reduce their bigeye catches bycatch of undersized tunas. by 30%, along with a freeze on “The advice from the PNA foreign longline and purse seine Secretariat is this—let’s cut FADs, fleets, and measures to reduce put a freeze on the number of large the use of FADs because of the boats and gradually cut longline bycatches, especially of juvenile fishing to bring fishing of tuna back bigeye tuna.

While skipjack tuna (com- Dr Transform Aqorau...reduce to sustainable levels.”

There is support for extending monly canned) is fished sustain- bigeye catches by 30%. Photo: the FAD closure but this must ably, advice from the WCPFC PNA Secretariat come as part of a package that inScientific Committee is that cludes a reduction in longline catch and effort, fishing of the larger bigeye tuna (a sashimi fish) high seas limits and FAD closures in the eastern needs to be cut by 30% to bring fishing back to high seas where bycatches of bigeye tuna are high. sustainable levels. by attorney Joyce Tang.

‘More work ahead’ The Executive Branch and the Legislature have said they will work together to pay the deferred 25 percent retirees’ pension.

This, according to the governor and lawmakers, will be addressed by coming up with revenue-generating bills and creating conditions for a much improved economy.

An account separate from the settlement fund will be created by the Legislature. That separate account will be where the payment for the 25 percent cut will come from so the better the revenue-generating bills and the economy perform, the better it is for retirees waiting to be made whole on their pension.

That special fund will also be a source of interest payments for active members of the Retirement Fund now seeking a refund on their contributions.

Representative Mario Taitano (Ind-Saipan), chairman of the CNMI House of Representatives’ Special Committee on the Retirement Fund, said besides revenue-generating legislation that needs to be pushed, the Legislature also has to “cut the fat” from what is still believed to be one of the most generous pension system on American soil.

“It’s not too late to still reform the Retirement Fund. We can cut excess fat now to help prolong the Fund’s lifespan,” Taitano told Islands Business two days after pre-filing a bill that would remove “special” retirement benefits including that of future CNMI governors and lieutenant governors.

Representative Lorenzo Deleon Guerrero (Ind-Saipan) said entering into a settlement

agreement is the only way “to sustain retirees and active members.”

“The major challenge is the 25 percent acrossthe-board pension cut and the payments to the Fund,” he said, adding that the worst-case scenario is placing the pension agency under federal receivership.

Among the revenue-generating legislation now before the Legislature are the legalization of casino gaming on Saipan, allowing electronic gaming at hotels with at least 100 rooms and video lottery terminals. The governor said he does not see imposing new taxes as the way to go, but rather, a new revenue base.

‘Opt in or opt out’ But first things first, the governor said. If the U.S. District Court does not grant final approval or if the settlement deal fails, the parties will return to litigation of the Johnson case as it was on June 26, 2013 and proceed as though there were never a settlement agreement.

A retiree himself, the governor hopes that retirees will not opt out of the settlement agreement.

He said the decision rests with the retirees.

“We’re asking them to basically make that decision and hopefully the decision that they make is the right decision.

“Right now the only certainty is the settlement and the fund that would be provided under the settlement, provided that the government meets the minimum contribution requirements on an annual basis,” he said in a news briefing.”

The governor has been holding town hall meetings on Saipan, Tinian and Rota to make the public understand and hopefully support the tentatively approved settlement agreement.

He hopes that nobody opts out of the settle-

The proposed rules are: CUT LONGLINE BIGEYE CATCHES BY 30% • A 30% cut in longline bigeye catch by 2017, to be achieved by staged 10% cuts.

NO MORE NEW FISHING VESSELS FOR FOREIGN FLEETS • No increase to the number of foreign purse seine vessels.

• No increase to the number of distant water longline vessels.

ADDITIONAL FAD MEASURES TO REDUCE BIGEYE BYCATCH • No FAD fishing in the high seas by 2017.

• Extend the FAD closure up to 5 months or equivalent reductions in FAD sets.

• A Fund will be created to compensate Small Island Developing States for the costs imposed on them by the FAD measures which benefit developed longline fleets, mainly operating outside SIDS waters.

IMPOSE HIGH SEAS LIMITS • Purse seine high seas fishing to be limited to 2010 levels.

The proposal will be discussed in meetings leading up to the annual session of the WCPFC in December where a decision will be made on a new conservation and management measure on tuna.—PNA Tuna News ment class. If the people who exclude themselves from the settlement class—or opt out—have benefits equal to or exceeding 10 percent of the full benefits payable in FY 2014, the settlement agreement will be void.

Moreover, those who opt out will not have any right to payments from the settlement fund.

They will also have to enforce their rights at their own expense.

The U.S. District Court will hold a hearing on Sept. 30, 2013 at 9am to consider whether to approve the settlement. After the final approval, that’s when the 25 percent pension deferment or temporary cut will begin.

Because it’s a class action suit, all class members will be treated the same. This means the 25 percent pension cut will be across-the-board, whether the member receives the minimum US$6,000 in annual pension or US$80,000 or US$100,000 or more.

The governor, however, said once the Legislature identifies and appropriates funds for this, those who are receiving the least amount of pensions will be the priorities when it comes to paying the 25 percent deferred pension, while those at the other end of the spectrum would be the last on the list of priorities.

But the governor also reminded pensioners that while the Retirement Fund is a priority, there are also other priorities—public healthcare, education, public safety and security and utilities, to name a few.

“I understand not everybody would be happy with this. People would feel that they were being cheated…but we tried our best. I just hope that we have no opt outs,” the governor said.

“For your information, I am staying in. I think that’s the best thing to do.”

Islands Business, September 2013 35

Business ing Papua New Guinea—even though PNG’s non-mineral exports have also risen, by an average 6 percent per year, over the last decade. But the prices of PNG’s major export commodities have been falling this year—gold by 13 percent, copper by 9 percent, and oil by 5 percent, for example.

The US$19 billion liquefied natural gas project is in its final stages of construction by ExxonMobil—with Oil Search, Santos and the PNG government as other major stakeholders. It will start producing in 2014.

However, as Port Moresby-based Kina Funds management says in its latest market outlook: “Other mega projects around mining appear likely to be shelved for some years.”

Greg Anderson, the widely respected veteran executive director of the PNG Chamber of Mines and Petroleum, said that as a result, “there’s a big divergence”.

He said: “The resource industry, which has for some years been heading in the same highly positive direction, is now splitting into a two-speed phenomenon—gas and oil, still growing rapidly; and mining, which has hit some hurdles.”

Prime Minister Peter O’Neill said: “Resource development is going quite well, particularly in petroleum and gas, and I believe current negotiations between Interoil and PNG LNG plus others will give a very strong possibility of a five train LNG project”—the same as Australia’s North West Shelf this year, and a massive boost for the country, with the key capital costs already covered.

He said he welcomed back Kelly Taureka, who has been a senior manager with Chevron at head office and a range of countries including China, Thailand and Indonesia, “with his global experience.”

Lihir mine...Newcrest has invested heavily in improving its performance there and expanding output, and the resource is massive. Photo: Paradise

Non-mineral exports rise, mineral exports falling But concerns about tax review raised

By Rowan Callick C airns international air terminal in Queensland had on a typical day recently, three check-in counters open: one for Port Moresby, 36 Islands Business, September 2013

one for Moro, the gas-and-oil hub in Papua New Guinea’s Southern Highlands, and one named Newcrest—for the fly in-fly out workers heading towards its Lihir mine, also in PNG. There’s little doubt which industry is dominat-

Ok Tedi issue Taureka has taken a top job with Interoil, which controls access to large reserves of gas in the Gulf province, and which is likely to provide the resource for one of those further PNG LNG trains.

O’Neill said: “It’s good to see many of our experienced people in this sector returning to PNG. That enables us to build capacity within the industries.”

In the mining sector, he said, his government’s first priority is “to get the Ok Tedi (ownership) issue out of the way before we embrace other projects.

“Ok Tedi is tied to arrangements with BHP. To unravel that, involves some complex issues that need to be dealt with, including ensuring continued operation of the mine and dealing with landowners and with the provincial government.

“We are in very positive discussions on all these issues. It is our opportunity to correct the mistakes of the past.”

He said about the US$5.6 billion Frieda River copper-gold project, for which 81.82 percent owner GlencoreXstrata has been looking for buyers: “We understand the owners do not wish to develop any greenfields projects.

“We also know that the government at the same time needs to intervene to ensure the project continues to be developed, so it can reach full production potential.”

But the government will consider its involvement in Frieda River later, after the issues swirling around Ok Tedi, where the government has intervened strongly to challenge the policies and ownership structure of the controlling trust, the Sustainable Development Programme, have

Business been resolved. O’Neill said: “There is no point in jumping ahead of ourselves.”

Chiefly as a result of the cooling of mineral prices, Anderson said “the explorers are shutting up shop. Since about a year ago, the bourses—including Canada’s—became risk averse to junior explorers.

“Since then, they’ve been trying to live on their wits and many are on their last million dollars or so. Some are going to fold. And the number of tenements being held will contract. People often don’t hand them back in when they run out of money to work them, they walk away at the end of their term.”

Major companies such as Australia’s Newcrest, which holds about half its total assets in PNG, have also been in some stress, cutting both staff and contract workforces, although production surpassed expectations in the last quarter, providing the beleaguered management with some relief.

O’Neill said earlier: “When a company as big as Newcrest faces serious problems, we have to be concerned at the possible impact on our resource sector and our economy generally.”

Canadian Barrick Gold’s Porgera mine, now underground, is producing about 550,000 ounces of gold a year, and employing 1,300 people directly and 3,000 contractors. But it is pulling back from exploration. The Canadian gold giant says it is re-evaluating the mine, along with half its global operations, after writing down its assets by US$8.8 billion and slashing its dividend by 75 percent.

Newmont has pulled out altogether, although Vale is still there. Ramu Nickel, operated by Chinese giant MCC, began production this year, moving towards full output by the end of 2014, and providing a timely boost for the government budget as LNG construction has wound down—

90 percent complete—and other mine output has disappointed, in both price and quantity.

Ramu has also impressed and surprised some observers, said Anderson, with the quality of its community programmes.

Anderson points to three advanced prospects being put on hold this year: Frieda River, because Glencore has stressed since taking over Xstrata that it is not interested in greenfields developments and has failed to find a buyer; Yandara, a copper-gold target near Ramu Nickel’s mine, controlled by Perth-based Marengo; and Wafi, owned 50-50 by Newcrest, the operator, and Harmony, which plan to spend US$10 billion on development over the next 10 years.

Improved performance Newcrest’s Hidden Valley, 70km to the south, has improved its performance of late with the long conveyor belt there now back up and working—but the cash cost of production has at times reached US$1900 an ounce.

Although PNG is replete with great resources, Anderson said “a lot of companies paid too much for their properties,” causing pain as prices slide.

Lihir is an example, but Newcrest has invested heavily in improving the performance there and expanding the output, and the resource is massive.

Nautilus, a pioneering undersea mining project that intends to begin operating on the seabed near New Ireland, appears set to start operating now that the government has committed itself at last to contributing its share of capital. This is essentially a technology-based company, which Anderson believes “has a serious chance of changing the face of mining”.

St Barbara last year acquired the assets of Allied—both Western Australia based—and is operating its mine at Simberi in New Ireland,

while Australia-listed Kula Gold is developing its prospect on Woodlark Island in Milne Bay. Brisbane-based Highlands Gold has handy stakes in a number of ventures including Frieda River, with a steady cash flow now coming from its 8.56 percent in Ramu Nickel.

Anderson said: “Every time there’s a major project, people say it won’t be realised, and then it happens.”

For instance, Oil Search and French company Total are drilling for oil and gas offshore to the south of PNG, the first offshore action for many years, Anderson said. While the results of two wells have not been stunning, it’s been sufficiently encouraging to trigger a third later this year.

In the Western province, approaching the 750km land border with Indonesia, Canada’s Talisman has big acreage for oil and gas exploration and is starting a second drilling campaign this year.

Australia’s Horizon, also searching for oil and gas, has attracted Osaka Gas as a partner, while Talisman has brought in Mitsubishi.

The steadily increasing prospects for the revival of the Bougainville copper mine, still owned by Rio Tinto, depend on all the disparate players on the island agreeing on the terms—within the context of a countdown towards a referendum there about independence.

On the broader, political front, the debate about shifting ownership of resources from the state to the landowners, initiated by Mining Minister Byron Chan—son of former prime minister Julius Chan, who is still an MP—has grown quiet for now, without apparent support from O’Neill.

But the chamber is concerned, said Anderson, to ensure the comprehensive tax review now under way—led by former tax chief Sir Nagora Bogan—does not shake up what has become a stable and successful resources tax regime.

Solomons, the in-flight magazine of Solomon Airlines, is a high quality full colour magazine published every three months and is the only magazine placed in every seat pocket on Solomon Airlines international flights. It is also available at all Solomon Airlines offices and given away free to major business houses in the Solomon Islands.

Each edition of the magazine is carefully designed to include a range of interesting articles about the Solomon Islands, personalities and developments of interest to both tourists and business travellers.

So if you want to become a high flyer with Solomon Airlines why don’t you contact us today and guarantee your seat on the next flight by advertising in our inflight magazine.

Islands Business, September 2013

Telecommunications

Connecting the Pacific region with the world

These reforms in Solomon Islands and elsewhere in the Pacific are being undertaken by legal experts engaged by ADB’s Private Sector Development Initiative (PSDI); co-financed

by ADB and the Governments of Australia and New Zealand.

PSDI is supporting efforts by ADB’s 14 Pacific developing member countries to encourage private sector-led, sustainable economic growth.

To promote ICT enabled improvements in public and social service delivery, ADB together with its development partners are supporting ICT in the education sector by developing and trialling ICT plans that will enhance communication geographically isolated with poor access to marBy Xianbin Yao* between schools and provincial governments. kets and services.

The uploading of school data, reporting of The cable project will improve the country’s A new era in communications and service teacher absenteeism, and recording of school connectivity to the rest of the world, reducing delivery arrived in Tonga last month when high grants and assets inventory are just some of the communication costs and offering new domestic, speed broadband access was delivered to Tongan areas that will be explored through ICT-enabled regional and global economic opportunities. households via the click of a mouse by the King applications.

It is important to note, however, that the of Tonga, Tupou VI. ICT devices and applications will also be piinstallation of submarine cables and access to King Tupou, in the presence of Tongan Prime loted to support improvements in teaching and high capacity bandwidth do not automatically Minister Lord Tu’ivakano, commissioned the learning through increased access to instructional result in better internet connectivity or economic new service from the Tonga Cable Limited Stamaterials and aids, teacher support, and distant opportunities. tion in Sopu, Tongatapu. learning applications.

The benefits of the ICT infrastructure investGovernment officials, representatives from There is great potential for ICT to transform ment may be realised by: Introducing ICT regulaTongan Communications Corporation (TCC), the landscape in the Pacific, including economic tory frameworks that allow for competition and the Asian Development Bank (ADB), the World diversification supported by private sector. open access, investing in ICT applications in the Bank Group, media, and others attended the To realise this potential, ADB works very social services and business sectors, supporting event. The project continues ADB’s firm comclosely with a variety of partners, including the ICT related capacity development and raising mitment to supporting Pacific innovation, incluWorld Bank, national and local governments, awareness about the development potential of sion and integration. commercial banks, private sector, regional groups, improved connectivity.

Launched in January 2012, the US$32.8 miland civil society organisations.

In tandem with infrastructure investment, lion Pacific Regional Connectivity Project coIn collaboration with the World Bank, financed by ADB, the World Bank, and ADB is exploring support to other potenTCC connects Tonga via an underwater tial submarine cable projects elsewhere in fiber optic cable system to the Southern the Pacific, such as in Samoa, the FederCross Cable, the main trans-Pacific link ated States of Micronesia and the Palau. between Australia and the United States.

ADB also provided some advisory The establishment and operation of the support to Cook Islands, in the form of a 827-km submarine cable system, which feasibility study on a possible investment runs from Tonga to Fiji, will provide in broadband infrastructure, and the Tonga’s population of 100,000 with fast, preparation of a draft ICT policy. affordable access to the internet and other At the same time, we are also supportinformation and communication technoling the Pacific ICT Regulatory Resource ogy (ICT) services. The project was comCenter (PIRRC) in Suva which seeks pleted ahead of time and under budget. to support the strengthening of ICT The arrival of high speed broadband is regulatory bodies in the region and raise the latest milestone for the project, which awareness on the importance of better will lift Tonga’s international connectivity.

ICT regulations.

High speed internet will help business ADB is also working with the Unito expand, creating jobs and improving versity of South Pacific in supporting the access to remote health and education King Tupou VI (right)...gets to see what high speed broadband access can delivery of ICT-enabled distance learnservices. TCC is the first internet service mean to Tongan households. Photo: ADB ing programmes to satellite campuses in provider to sign up to use the fiber optic Kiribati and Solomon Islands. cable.

ADB believes these cable projects are ADB is working right across the Pacific extremely important for the future of Pacific ADB is assisting Solomon Islands to improve with its developing member countries to enhance countries, as better connectivity could address the environment for doing business through an regional integration, foster innovation and reduce Pacific countries’ fundamental constraint in extensive program of business law reforms, and is poverty through inclusive economic growth. terms of ‘remoteness’, bridging both the physical helping introduce ICT enabled improvements to For example, ADB is also working with the and digital divide that currently separates these public service management and delivery.

Solomon Islands Government to boost internadeveloping counties from regional and global Solomon Islands’ innovative online company tional connectivity through the Solomon Islands prosperity. registry, Company Haus, is an ADB-supported Broadband for Development Project, approved Improved access to information and commubusiness law reform which embraces ICT. in 2012. nication connectivity will allow Pacific countries The registry enables citizens to register a comThe project will help deliver affordable, acto keep pace with the region, explore many new pany, update company details, or make a company cessible ICT services which in turn will improve opportunities, and more effectively deliver social search through a simple online interface, accesthe delivery and access to essential health and services. sible from any computer in the country—services education services.

As the Pacific connects with Asia and beyond, that once required physical travel to government The project will also increase the frequency improved information and communication conoffices in the capital Honiara to access. and quality of communications among Pacific nectivity is no longer a luxury, but a necessity.

The impact on improving the environment for countries, boosting regional integration and credoing business has been remarkable, with time to ating economic benefits by connecting Solomon start a business in Solomon Islands reduced from Islands to larger markets.

• Xianbin Yao is the Director General of the Asian Development Bank’s Pacific Department. more than 40 days to less than two days.

Many areas of the Solomon Islands remain

Supporting ICTs in the islands

38 Islands Business, September 2013

Telecommunications

Fiji’s ATh in FiNTEl takeover Buys controlling stake at half price

By Dionisia Tabureguci fIj I I’s PuBlIcly lIsted telecommunIcatIon grouP ath (a amalgamated Telecom Holdings) landed itself a better deal in last month’s takeover of the country’s partly government-owned international carrier FINTEL (Fiji International Telecommunications Ltd.).

ATH revealed it had acquired the Fiji Government’s 51 percent in FINTEL for F$9 million, a huge discount compared to the F$18 million it paid 18 months ago when it bought 49 percent of the company from the UK-headquartered Cable & Wireless Communications (CWC). Last month’s purchase is funded by the Fiji National Provident Fund, which owns 58.2% of ATH. Now the new sole owner of the troubled carrier, ATH consolidates its position as a substantial and influential player in Fiji and the Pacific’s telecom market, as the acquisition means it now controls the management of the Fiji gateway to the Southern Cross Cable Network (SCCN), a trans-Pacific submarine communication cable network that links Fiji to mainland USA, Australia and New Zealand.

“In today’s environment, especially with the growth in traffic, we are witnessing with the broadband and Internet growth the desire of even our Pacific islands neighbours to secure international sub-sea cable connectivity, with Tonga launching its connectivity via Fiji—a number of other countries are keenly interested to secure good international telecommunication,” ATH said in a statement last month when announcing the purchase.

“It is even more important that we ensure that such a strategic asset which provides critical access continues to facilitate the improvement of delivery of end-to-end telecommunications services in Fiji so that the benefits to end users are improved.”

In recent times, Fiji’s position in the SCCN network has been the subject of much interest for some Pacific Islands countries (PICs) who do not have international cable access. Increasingly, considerations have been made by them to link to Fiji in order to get international connectivity through cable, an option that is now being seen as more cost-effective as data needs begin to rise with increasing Internet usage in the Pacific.

Whereas satellite links were traditionally the means of international connectivity for these countries, maintaining it as bandwidth needs rise has become more expensive and just last month, Tonga became the first Pacific islands country to link to SCCN through Fiji.

It did that by connecting to the FINTEL gateway and there are prospects of more nearby PICs doing the same with Vanuatu being the next on the list as revealed by ATH chairman Ajith Kodagoda in the recently released ATH 2013 annual report. But while this increases FINTEL’s prospects, it has been a struggling business ever since the Internet brought new media that saw data taking over voice-based means of communication.

Revenue from FINTEL’s core voice business has been on the decline in the last decade and has quickly spiralled downwards following the deregulation international telecommunications services in July 2009, a market where FINTEL previously held a monopoly licence.

“FINTEL’s revenues declined by 36.9 percent for the reported year largely due to the loss suffered from its international voice services after the deregulation of the market. Although costs of sales declined as well, it was not enough to nullify the impact of the declining revenues, hence the reduction of net by 23.2 percent, Kodagoda revealed in the ATH 2013 annual report.

“The company also impaired its assets totalling F$7.9 million due to unfavourable market conditions. Some improvement is expected with the completion of its cable links with other Pacific countries and the completion of its restructure,” he added.

FINTEL’s poor financial performance during the year contributed to an overall after-tax loss of F$15.9 million for ATH, although the telecom group did record an eight percent increase in group sales revenue, which brought its full year revenue to F$270.4 million.

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Environment

integrating climate change and disaster risk

dress their specific needs,’ says Napat.

“The national governments and CROP (Council of Regional Organisations in the Pacific) agencies all need to have a similar understanding and make sure they’re on the same page.”

“The Pacific Islands Forum meetings have been discussing these issues and the Melanesian Spearhead Group is also beginning to discuss them. When the governments buy in and make a commitment, working smarter.”they take ownership of the (super national) decisions and play a part in the changes that are happening.”

Samuel Maiha, Director of Papua New Guinea’s National Weather Service, highlighted to be hugely difficult. It is important to address the importance of the different government the commonalities and approach these issues departments and agencies working in a coordiwith a single voice as a region, which makes our nated fashion and indicated there are lessons to voice a lot stronger and louder. It has the support be drawn from meetings such as this and from of some of the most influential political players the experiences of other countries such as Vanuin the region and that is the finance ministers atu, which have already developed an integrated of our Pacific Islands countries. They are right strategy to address disaster risk management and behind this.” climate change.

Climate change adaptation and disaster risk He says, “at the end of the day we want to management share a common focus on reducsave resources. We want to make prudent use ing vulnerability and increasing the resilience of of the limited resources that we have, whereby communities and infrastructure. This common the benefits, especially focus often results in from donor funds, are overlap between the actually realised”. He two disciplines, which highlighted that the aim can lead to duplication is to enhance in-country of efforts. The overlap, capacity to source, abwhile considerable, is sorb and utilise donor not absolute. Some funds. The challenge, hazards bear no relahe says, “is to better tion to climate change. coordinate and increase Combining the focus capacity so that we can of these two disciplines make use of resources”. is considered a rational Samiu Kuita Vaipulu, approach to eliminate Deputy Prime Minister duplication and leverof Tonga, says an added age better use of avail- Tonga’s Samiu Vaipulu V and Vanuatu’s V Jotham Napat... benefit of integration at able resources. important to integrate at regional level. Photos: SPC regional level is the fur“It’s important to ther sharing of knowlalso integrate at the edge and resources. “If we can make a lot out regional level and consolidate efforts,” says of what there is, then the benefit goes direct to Jotham Napat, Director-General of Vanuatu’s the people. Take building a seawall for example. new Ministry for Climate Change Adaptation, This project can come from our interactions Meteorology, Geo-hazards, Environment, Energy with bigger organisations and this can have a and Disaster Management. very good impact.”

Vanuatu has been a leading light among Pa“There is an inter-relationship between cific Islands countries combining their national disaster risk and climate change,” says Brown. climate change adaptation and disaster risk man“Significant interventions by government in these agement efforts. areas make a huge impact on communities. We “It’s important to integrate at the regional level need to better utilise the resources we have—it’s to address the duplication of efforts and ensure about working smarter.” better institutional arrangements. The regional organisations and other agencies need to combine • Sean Hobbs is SPC’s Climate Change Communications and Information Officer (seanh@spc.int). their human resources to help the countries ad-

What does it mean for communities?

By Sean Hobbs* the regIon Is movI mov ng towards the develoPment of an overarching integrated strategy and framework for disaster risk management and climate change by 2015.

A major step in this process was the highprofile joint meeting that took place at the Sofitel in Nadi in July.

The meeting was the first occasion for two principal regional conferences—the Pacific Platform for Disaster Risk Management, on the one hand—and the Pacific Climate Change Roundtable, on the other—to come together and discuss the integration of these two fields of practice, which overlap on many fronts.

But what does all the talk at a high-brow regional function actually mean for the communities? Will it affect the services they receive?

Will it make any difference to the lives of ordinary people?

Mavis Depaune, National Project Coordinator for Nauru, thinks it will. “Countries have bilateral arrangements with donors for climate change and disaster risk management responses, but what happens when your bilateral funding cannot cover certain things because it is focused specifically on this or that?

“The regional organisations need to have a holistic climate change and disaster risk management joint plan so that the donor funding that comes through the regionals helps to address the gaps at national level. This is how it can have an effect on service delivery in the countries,” she says.

Mark Brown, Minister for Finance and Economic Development in the Cook Islands, shares a similar view: “Countries are taking an integrated approach, so it makes sense to take an integrated approach at the regional level. It makes us—as a region—a lot easier to deal with for global donors and international partners when it comes to securing funding and accessing resources.

“If we take a fragmented approach, it is going

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Environment

SPREP with David Sheppard

Emerging environment leaders surge ahead

L

eadership programmes are fast becoming a common place in our region. And it is no different in the environment arena.

The Pacific islands region has long grappled with the challenge of building an environmentally aware and committed citizenry, capable of making informed decisions to ensure sustainable development.

SPREP and many of our partners have focused on education that targets youth and children on the premise that they are the leaders of the future.

Over the years however, we have learnt that somewhere between leaving school or university and joining the workforce, the inspiration and drive of youth tends to fade in the wake of the realities of earning a living. Furthermore, youth are a dynamic group, with many often pursuing further education or careers, often reflecting their commitment and drive.

A mechanism was needed to provide space for early career youth where they could continue their aspirations for environment conservation and sustainable development, within the context of their “new” lives and commitments.

In 2011, SPREP put out a region-wide call for early career Pacific islanders who demonstrated environmental care and good practice in sustainable development in their own spheres of influence—regardless of their area of work.

It was a competitive call with 21 spaces available for participation in what would be the inaugural Pacific Emerging Environment Leaders’ (PEEL) symposium.

One hundred and five applications were received and a four-person panel had much difficulty in narrowing down the selection to the 21 who would attend the symposium, which was held in Samoa in October 2011.

These young professionals hailed from a wide range of disciplines that included climate change and environmental scientists, lawyers, journalists, government and NGO officials, conservationists, teachers, economists, traditional voyagers, and health and energy specialists.

Following the five-day symposium, which focused on self-assessment, visioning and careful planning, the Pacific Emerging Environment Leaders’ network was born.

The members of the network committed to “lead, generate and inspire environmental action in the Pacific region”.

That was 18 months ago. In June this year, members of the network met again for the second time. And it fast became evident that over the 18 months since its inception, PEEL has proven its

Leadership through action...PEEL members who have gone out and done things.

Left: Adolphina Luvongit of Papua New Guinea teaches children about the marine environment. Through her organisation, Mahoina Da Dari, which translates to ‘Guardian of the Seas,’ she is teaching teachers about marine conservation so that they can teach their students a sustainable way forward. Photos: SPREP

worth.

Using email, social media and a “buddy system” to encourage each other, members have continued to work on their areas of interest—be it running a programme for unemployed youth, producing an NGO newsletter, organising a waste management programme or writing policy to address an invasive species issue.

PEEL members feel that the knowledge that they are part of a larger unit has kept them motivated and focused and given many of them the confidence to go ahead and make things happen.

They have also inspired each other by sharing their own experiences and ideas.

It is worth quoting an observation by Rennier Gadabu of Nauru, who attended the second PEEL forum in Nadi last June: “They have just gone out and done things…they did not wait for funded projects or sit around waiting for someone else to do something—they have just taken the initiative and done what was needed.”

This indeed seems to be the mantra of this new generation of leaders—leadership through action…just do it!

In June this year, PEEL invited students from the Pacific Centre for Environment and Sustainable Development (PACE-SD) of the University of the South Pacific to participate in the Nadi fourm.

With funding assistance from the Australian Government’s Future Climate Leaders’ Programme (FCLP) and the Pacific Leadership Programme (PLP), PEEL and PACE-SD participants met to forge a working relationship

that will continue the vision and mission of PEEL and nurture confidence, skills, knowledge and understanding among young Pacific islands professionals on environment and sustainable development.

PEEL has been recognised by members of SPREP as an important initiative and mechanism through which SPREP can strengthen capacity of young emerging leaders for environment in the region.

Having met some of these young leaders and been privy to their work, I am convinced that PEEL is integral to our efforts in the pursuit of environmentally sound and sustainable development.

The PEEL Initiative and Network represents a real opportunity to nurture the next generation of Pacific leaders who will be well-informed, educated and appreciative of environment issues.

The interdisciplinary nature of PEEL encourages cross-sectoral professional links and friendships that will go a long way to fostering Pacificwide cooperation, and serve as a think tank and for addressing issues of long-term environmental protection and livelihood security.

The way forward now is to build a network of young professionals throughout the entire Pacific who share the commitment to the environment as do these young people. I also acknowledge the vision and support of the British High Commission (Suva), the Commonwealth Foundation and the Government of Australia for their support in this undertaking since 2006.

• David Sheppard is the director-general of SPREP and is based in Apia, Samoa.

Islands Business, September 2013 41

Fishing

Fish farming cages...lagoons in the Marshall Islands are an aquatic farm for growing “moi” for export to the Hawaii market. Photos: Isaac Marty

Is ‘moi’ the real deal for Marshall Islands?

It’s generating interest from Hawaii investors

By Giff Johnson Want to eat Chinese, Japanese, American, Mexican or island food?

No problem, Majuro has plenty of restaurants with flavorful fare to keep customers happily sated.

Need cheap transportation around the island?

Again, no problem. Stand on the roadside and within seconds a taxi pulls over to give you a ride.

Need food, clothing or birthday supplies? No problem there, either: There are over 100 retail stores in the two-mile (3.2km) strip of land that is Majuro’s downtown.

While Majuro businesses—at one time mostly run by Marshallese, but lately mostly driven by Asians—have successfully developed a service industry based on the largesse of government and its thousands of employees, coming up with developments that bring in new money through exports has been elusive.

Certainly, there is a growing field of unique handicraft products that are now making their way into international markets. But in fisheries and aquaculture, the recent history of the Marshall Islands is littered with failures, both government and private sector.

A pilot fish-farming project in Majuro, with its first harvest successfully completed in early August, has pretty much thumbed its nose at the country’s dismal domestic fisheries history as it prepares for major expansion.

Sponsored by the Rongelap Atoll Local Government and its energetic Mayor James Matayoshi, the fish-farming project has been in operation 42 Islands Business, September 2013

in Majuro for a year.

Following the small harvest, Matayoshi says Hawaii buyers and investors are so enthusiastic about the first-year results, that equipment for a commercial-level expansion are now on the way to Majuro for deployment.

The project has targeted fish known as “moi” in Hawaii and commonly as “Pacific threadfin” which is prized in Hawaii’s market.

While moi is not a fish widely eaten locally, it is known in Hawaii as ‘fish of the king’, says Matayoshi.

Matayoshi and the local government staff have partnered with several Hawaii businesses and entities, including Hukilau Foods, Diamonhead Seafood Company, and the Oceanic Institute, as well as the Marshall Islands Marine Resources Authority and the College of the Marshall Islands, to develop the fish-farming.

United States and Taiwan government grants have also supported development of different parts of the project.

Matayoshi credits Ryan Murashige of Hukilau Foods for guiding the project and training local staff to manage the project since last year.

The day after the small harvest was air-shipped to Honolulu last month, Matayoshi reported: “Very pleased to receive word that ‘all systems are go’ on the moi project.”

US investors have now shipped a nursery/ hatchery building, sea-cages and other equipment, he says.

In terms of the jump from a pilot project to commercial level farming, Matayoshi says, the operation is at the “point of no return. This is

Giving a push to fish-farming...Rongelap Mayor James Matayoshi’s energetic entrepreneurship is spearheading fish farming in Majuro, which is soon to expand to commercial levels.

the real thing, putting the Marshall Islands on the map for coastal fisheries export.”

Long-term, Matayoshi’s goal is to expand fish-farming to Rongelap and other outer islands.

Developments have been positive for the Majuro fish-farming project since late last year when moi eggs produced a survival rate nearly double the rate of moi farming in Hawaii.

The project has also successfully used locallyproduced fish products to make fish feed.

“The temperature of the water, the water flow in the lagoon, the protection of the reefs make Majuro perfect for fish farming,” says Matayoshi.

“An atoll is like a huge ranch in Texas. We’re an aquatic ranch.”

Matayoshi says fish-farming fits with the Marshall Islands. “Our people are fishermen,” he said.

“The science is clearly established and conditions in Marshall Islands are better (than Hawaii).”

He also points to another reason that Hawaii companies are showing so much interest in the development: “Moi is well established in Hawaii but the growing costs there are really high,” Matayoshi said.

“The support we are getting from Hawaii experts is helping make the project successful.

They really like what we’re doing.”

If the fish growing continues to demonstrate success as it has to-date, “there will be hundreds of jobs when we expand”, says Matayoshi.

Currently, about 10 men have been working on the project. As he looks to the future, Matayoshi sees the possibility of raising half a million fish per year for export to Hawaii, with the goal of exporting 6,000 pounds of fish per week.

Matayoshi’s step-by-step development could be the solution to reversing years of fisheries and aquaculture failure in the Marshall Islands.

Shipping

Getting our seafarers ready for high seas duties Tuvalu a trailblazer

By Robert Matau

“We have seafarers working on overseas ships and if we do not make the changes, it will jeopardise our opportunities on overseas ships,” Paeniu said.

“Legislating STCWS 2010 is important for our seafarers as well as for those other foreign seafarers serving on Tuvalu flagged ships.”

He added that a lot of families in Tuvalu rely on remittance from their seafarer relatives to meet essential expenses such as school fees.

Remittances from seafarers form approximately 30 percent of the gross national product of Tuvalu and in some families a single sailor’s wage can support 25 family members.

It is estimated that A$4 million in remittances are sent back each year to Tuvalu by sailors and Tuvaluans employed overseas.

“Because piracy is considered a plague by the international community, states involved in the regulatory process handled by the International Maritime Organisation (IMO) like Tuvalu, which is a member of this organisation since May 2004, agreed on the necessity of giving seafarers the appropriate skills to face such violence,” Riches said.

“Data from naval forces operating in highrisk pirate zones indicate that if crews of vessels transiting in such zones provide effective counter measures, there is significantly less chance that ships and their crews will become victims of pirates.

“But it should be noted that even if seafarers are well trained, the role of the shipping companies which hire them is also crucial,” he said.

In April 2009, 24 crew members of MV Hansa Stavanger, a German container ship, were capPowers on boats tured by heavily armed Somali pirates.

Riches said seafarers were still prohibited from Unarmed and no match for the pirates the handling weapons on board. sailors were held in captivity for four months They are instead trained to contribute to the with a ransom of US$15 million demanded for enhancement of maritime security (watchkeeptheir release. ing and enhanced vigilance), recognise security However, four months later, they were released threats, undertake regular security inspections after the ship’s owners agreed to pay US$2.75 and properly use security equipment and systems. million.

“However, such equipment and systems are Amongst the crew traumatised by the experinon-lethal such as distinctive alarms, weather ence were 12 Tuvaluan sailors and a Fijian. deck lighting, rear facing lighting, search lights, Islands Business managed to interview them kevlar jackets and helmets available for the bridge in 2009 upon their release and arrival in Fiji before team, security glass film, coating gunwales, razor heading to Tuvalu. wire barrier, water spray and or foam monitors, Most of the sailors interviewed relived how citadel, etc,” Riches said. swift the pirates carried out the attack and subSPC for safety Riches said under the amendment, new redued any efforts of retaliation within a short SPC’s Deputy Director of Transport Brian quirements for security training as well as properiod of time.

Riches said the development is in line with SPC’s visions to ensure that A year later, the seafarers are trained to Convention on cope if their ship comes Standards of Trainunder attack by pirates ing Certification and have been adopted and Watchkeeping for entered into effect in Seafarers (STCWS) January 2012. undergoes an amendHe said the amendment relooking at seed legislation passed by curity standards. the Tuvalu government The convention last month allows the was the first to esstate to keep domestic tablish basic requirelegislation updated and ments on training, therefore, comply with certification and international laws and watchkeeping for standards governing seafarers on an interthe award of certificates national level. required for seafarFast forward to July ers who wish to take this year, the Tuvalu Government, assisted Tuvalu sailors…who were taken hostage by Somali pirates. They were released after their employer agreed to pay up work on merchant US$2.75 million. Photo: Islands Business carriers internationally. by the Secretariat of “Under this new set the Pacific Commuof standards, security nity, became the first endeavour to ensure safe, efficient and affordable awareness training is required for all seafarers Pacific Islands nation to pass the amended legislaregional maritime service. even without any designated security duties on tion addressing the 2010 amendments to STCWS “It is part of SPC’s mandate to provide techniboard,” he said.

Convention which was first enacted in 1978. cal assistance to countries in maritime transport, Earlier this year, SPC also updated the Pacific The Secretariat of the Pacific Community and it will certainly help countries in becoming Islands Maritime Laws (PIMLaws)—a collection (SPC), with funding assistance from the Internacompliant with international laws and, of course, of model legislation and regulations that countries tional Maritime Organisation (IMO), assisted the to ensure that countries remain on the IMO can use to enact their national maritime laws.

Tuvalu Government in updating this legislation.

White List,” he said.

“SPC recognises that translating international Tuvalu is the only country in the Pacific region Riches said the aim of this convention is to instruments into law is challenging, especially for that has legislation reflective of the 2010 STCWS give seafarers from all nations working on board small islands states. amendments. seagoing ships, an internationally harmonised set “So we sought funding assistance from IMO of skills needed to observe high standards of comto engage a consultant to update PIMLaws and Tuvalu benefits petence and duties. And although the 2009 case of help countries in adopting the updated model Tuvalu Maritime Training Institute (TMTI), the Tuvalu sailors did highlight the concerns and regulations,” Riches said.

Chief Executive Officer, Iefata Paeniu, who was vulnerability to such security risks, the legislation SPC will now move on to assist Kiribati and instrumental in amending the Tuvalu legislation, was in line with international development of the Federated States of Micronesia in updating said this development would have a positive laws and standards. their STCW legislation. impact on the Tuvalu economy.

Islands Business, September 2013 43

Business Intelligence FNPF no interest in PNG

Fiji’s pension fund, the Fiji National Provident Fund (FNPF), has no immediate plans in Papua New Guinea, after it withdrew from a telecommunications deal involving PNG-based bemobile.

Chairman Ajith Kodagoda, says as of now it has no emerging interests in Papua New Guinea, despite earlier indications the superannuation fund was in talks with the Independent Public Business Corporation.

Air NZ confirms job cut proposal

Air New Zealand has confirmed it plans to cut 180 jobs in Auckland but denies union claims it’s closing a large maintenance facility. The airline has confirmed it has entered into consultations with staff at the Auckland Technical Operations engineering base about plans to cut 180 jobs. It says the changes reflect an expected fall in future demand for wide-body maintenance services from within Air New Zealand and from external customers.

100% cigarette-tax hike in CNMI

CNMI House Floor Leader Ralph S. Demapan has pre-filed a bill that will impose higher taxes on every pack of cigarettes to fund the group health/ life insurance of government employees.

The government needs US$8 million to fund the group’s health/life insurance that will be administered by the Department of Finance due to the looming demise of its retirement fund.

LNG project 90% done

The PNG LNG project operated by ExxonMobil made excellent progress throughout the first-half of this year and remains on track for deliveries, said Oil Search managing director Peter Botten. Botten said the project is now at the 90% completion mark and should start delivering gas from the oil fields to the LNG plant to support commissioning.

Botten said: “The project is on track for first deliveries in 2014 and costs incurred to-date are consistent with the US$19 billion (K43 billion) capital cost outlook provided in November 2012.”

Logging loopholes

Logging companies are exploiting a loophole in Papua New Guinea’s ban on exporting natural timber logs, according to a new report. The Oil Palm and Deforestation in PNG report, co-written by Australian and PNG researchers, has found some companies are using the Special Agricultural and Business Leases (SABL) as a cover for logging operations. Under SABL, land can be cleared and logs exported, if the purpose of the clearing is to plant palm oil plants.

Runway opens in Solomons

An international runway in the Solomon Islands, one of three major infrastructure projects which New Zealand has dedicated $25 million to, has been opened.

Foreign Affairs Minister Murray McCully opened the Munda runway—New Zealand’s biggest single aid project—during an official visit to Munda, in the Solomons’ Western province last month.

McCully said: “We wanted some big transformation targets that might create jobs and economic growth.

“This project... really commended itself because it opened up the whole of the Western Province, as well as bringing national benefits to the Solomon Islands as a whole.” — Reports by PACNEWS 44 Islands Business, September 2013

Micronesia explores new air links, proposes new airline

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new airline, to be named Fly Micronesia, when the two airlines merged last year. United is being proposed by the three Compact doesn’t service any routes to the South and the states in the North-West Pacific. GovernFSM government is still ironing out contract isment officials are already looking at either leasing sues with the airline surrounding its contract. or buying two Dash 8 aircraft to launch the airBut it wants to push for air links with the line’s services into Asia.

South, not just for traffic but also as a means of This was confirmed to Islands Business last getting stranded passengers across to the two U.S month by Francis Itimai, minister for transport, ports as flights by United are usually full to capaccommunication and infrastructure for the Federity. For the latter, the FSM may be exploring the ated States of Micronesia (FSM). He was in Fiji to option to subsidise these routes. It is hoped this attend a meeting of Pacific aviation directors. would stir competition and bring air travel costs Itimai said the directive of a new airline was down. handed down by the presidents of the three coun“We’re getting to finalise our arrangements tries—FSM, Palau and the Republic of Marshall with potential airlines that want to service FSM. Islands(RMI)—after their annual summit in July, Air Niugini is one of them. Fiji Airways is also where the need to improve their international air looking into that. We also approached Delta and links was recognised as urgent.

Hawaiian Air but they don’t want to “The three presidents had met in Pacompete with United because it’s a U.S lau in July and approved for the three carrier,” said Itimai. countries to pursue this undertaking “So we really want to establish this and this is to connect the Northern PaNorth-South connection, first to bring cific to the Asian markets,” he said. us closer to the South and second, “So our country is looking at buybecause they can pick up some passening or leasing Bombardier Q400s out gers on route to their destinations. of Canada and we’re working with our “For instance, Fiji Airways now flies consultants to see how we can acquire Nadi to Honolulu. So it can land in two and provide air services from Singaour airport to pick up some of our pore into Palau and into FSM.” passengers that are stranded because The proposed Fly Micronesia will the sector from Majuro (RMI) to Hoalso fly into the Philippines.

F r a n c i s I t i m a i … nolulu is always full. And we’re always The Micronesians want to set up exploring our options. having stranded passengers in between hubs in these two Asian countries to di- Photo: islands Business Majuro and parts of FSM. rectly carry tourists from the Asian mar“For Air Niugini, let’s say it’s interkets into their islands, instead of them ested in picking up the route to land having to go through either Guam or Hawaii in Chuuk, part of FSM, because they’re flying where they go through US immigration/customs Port Moresby to Narita. The flight on United is requirements before finally reaching their Microalways full between Chuuk to Guam so passengers nesian destinations. are always stranded in between. So if Air Niugini “Right now, the hub is Guam in the West and can service Chuuk, they can pick up some of those in the Eastern route, the hub is Hawaii, which are passengers and make a quick landing in Guam to two US ports. And that’s a disadvantage to us bedisembark and then make its way to Narita. We cause we have a lot of tourists from Asia and from will need to help Papua New Guinea with U.S air Europe who want to come directly to us but they service agreement with Guam in order to do that, have to go through US customs requirements,” but those are the possibilities we’re exploring.” said Itimai.

“If the deals are sealed with the South, they FSM is said to be taking a major stake in the would also bring huge relief to frequent travellers new airline while the rest to be shared by RMI and from Micronesia into this end of the Pacific. The Palau. only link there at the moment is through Nauru’s “So we’re looking at an investment of US$6.5 Our Airline, which operates fortnightly flights million for the new airline and the (FSM) presifrom Majuro to Nadi. Otherwise, travellers from dent has asked us (transport ministry) to form a there are forced to take longer routes. taskforce to look into this and present a report “It’s very cumbersome, especially when we have to him by next this month. So let’s say we come meetings in Fiji, because it’s centrally located and up with that money by September. Within eight in order for our government officials or any othmonths, we will have that airline flying. So that’s ers to go to Fiji, we have to take the long route the primary option we’re looking at now and it through Korea, Japan, Philippines or Singapore. will codeshare with SilkAir, which is owned by For example, when I came here to Fiji for this Singapore Airlines,” Itimai added. meeting, I had to go to Korea.

“I waited 14 hours there to catch the plane to North-South gap to close come to Fiji. And on my way here, I fly over MiEfforts are also being put into improving air cronesia on a 10-hour flight. It doesn’t make sense, links with the South Pacific and the FSM is in so we want to have that North and South connectalks with a number of airlines from the South tion,” Itimai said. which are interested in providing the service.

FSM, he added, is also in talks with Our Airline The only airline currently providing services to see if it can extend it service to Majuro to also into FSM is United Airlines, which had taken over include some points of entry within FSM. — By Dionisia Tabureguci routes operated there by Continental Airlines

Sisilo: Still far apart on labour mobility & help

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ustralia, New Zealand and the Pacific countries are still poles apart when it comes to two issues that matter the most to islands countries.

The issues are labour mobility and development assistance.

In a PACER-Plus negotiations in Port Vila last month, Robert Sisilo, Solomon Islands Trade Negotiations Envoy and Lead Negotiator for Forum Islands Countries (FICs), said: “While we made some progress on second-tier issues such as technical barriers to trade and sanitary and phytosanitary issues, very little progress was made on the two issues of utmost importance to us, namely development assistance and labour mobility.

“The FICs would like Australia and New Zealand to provide them with both implementation and development assistance but they (Australia and New Zealand) have only committed to assist FICs in the implementation of their obligations in PACERPlus.

“FICs strongly believe that implementation assistance will not necessarily enable them to take advantage of PACER Plus given the structural weaknesses in their economies. They need development assistance to build their capacity to trade.

“Without development assistance, we will not be able to take advantage of the PACER-Plus agreement to increase and diversify our exports.

PACER-Plus will therefore risk being just another

free trade agreement which would not facilitate the integration of our countries into the global trading system,” Sisilo said.

On labour mobility, Sisilo said the main demands by FICs are to have this as an integral part of PACER-Plus so that it becomes legally binding. The FICs would also like Australia and New Zealand to increase the number of eligible workers under their labour schemes and also extend their coverage to include as many sectors as possible to give FICs ample opportunities to derive significant benefits in terms of remittances and enhanced skills for their citizens.

“While the FICs will be making legally binding commitments in trade in goods, trade in services and investment, Australia and New Zealand do not want to make legally binding commitments on development assistance and labour mobility.

“We want the same treatment for all issues and will not accept merely voluntary commitments as being proposed by Australia and New Zealand. It is simply not fair,” Sisilo said.

Sisilo was adamant that unless Australia and New Zealand give substantive concessions on these two issues, the talk that PACER-Plus would be a different agreement that would assist the FICs to achieve economic growth and sustainable development would be mere rhetoric with no substance to it. —PACNEWS/Solomon Star

Fiji drives Coca Cola dollars

By Davendra Sharma

F

iji drove profits for Coca Cola Amatil’s Pacific operations up by a giant 6.5% the past half financial year to June. But the drinks bottler suffered a setback in Papua New Guinea due to a slowdown in demand for its products in the mineral resourcesdependent country.

The world’s leading soft drinks manufacturer was basking in glory with its recent acquisitions and expansion in Fiji, paying dividends beyond expectations.

“The Fiji alcoholic beverage business is performing ahead of plan and has established an export business for the beer and Fiji rum portfolio, and we are well advanced in the development of a portfolio of Australian premium and craft beers,” group managing director, Terry Davis told media last month.

With its earnings grouped alongside that of operations in New Zealand, Fiji contributed $A34 million to Coca Cola’s coffers after tax for the six month period, an impressive 6.5% jump in comparison to the same period last month.

Davis noted that the dollar exchange with Fiji, selling at $F1.72 in June, also provided impetus to the bottom line in Coca Cola’s Fiji operations.

He said “solid earnings growth” in Fiji and New Zealand was the mainstay for the bottling company’s 2013 operations to June.

Unlike PNG, Indonesia also returned huge earnings for Coca Cola.

“The positive for the half was the outstanding performance of the Indonesian business which de-

livered double-digit volume and earnings growth whilst improving on its return on invested capital.”

The Indonesian and PNG region delivered a volume increase of 11.8% and EBIT growth of 12.5% but the profitability for the two populous nations combined could have been significantly higher had it not been for a slowdown in PNG. ”After nine consecutive halves of double-digit earnings growth, PNG experienced a decline in volumes and earnings due to a slowdown in economic activity caused by falling commodity prices, reduced mining activity and increased unemployment levels,” noted Davis.

The PNG economy grew rapidly in 2012-13 with experts estimating above that of most of leading Asian nations.

But the effects did not flow on to sales demand of Coca Cola Amatil products as the distributor blamed its lack lustre performance in the country to unemployment and following commodity prices, on which PNG is heavily dependent.

Its earnings in Australia has also been sluggish, largely as a result of “difficult trading conditions in the Australian grocery channel”, which pointed to a 10.1% decline in Australian beverage earnings.

Davis said Fiji has shown resilience on both fronts—absorbing Coca Cola’s Australian brand names as well as the production of beverages and liquor at local plants.

It predicts that Fiji, Indonesia and New Zealand should continue to outshine Coca Cola’s Australian and PNG operations in the second half of 2013.

Tuvalu wants to maintain LDC status Tuvalu has successfully deferred its graduation from a LDC (Least Developed Country) status to a developing country to 2015. But it wants to remain as an LDC for as long as possible.

It was to have graduated to a developing country in 2012. PM Enele Sopoaga, happy about the deferment, said it is an opportunity for Tuvalu to work harder to maintain its LDC status.

According to Sopoaga, it is important at this stage for all sectors as well Tuvalu missions abroad to work on keeping Tuvalu from becoming a developed country. “Once Tuvalu graduates to a developed country, it will not be considered for funding assistance for climate change adaptation programmes like NAPA, which only goes to LDCs,” Sopoaga said.

Deputy PM Vete Sakaio will deliver Tuvalu’s plea to further defer its graduation from LDC when he addresses the United Nations General Assembly in New York this month.

Shark fin decline linked to China corruption crackdown Conservationists have attributed a dwindling demand for shark fins to China’s crackdown on corruption which has forced a decline in lavish banquets.

“We are seeing a reduction in demand from China. Hong Kong is also showing a significant decline in consumption,” said Angelo Villagomez, a shark specialist with the US-based conservation group the Pew Charitable Trusts.

Villagomez was in the Marshall Islands to discuss shark sanctuaries with leaders at the Pacific Islands Forum, the annual summit of Pacific heads of state.

However, he said the decline in shark fin demand over the past year was not directly linked to increasing shark protection by Pacific islands governments.

Instead, it was related to the Chinese leadership’s crackdown on graft and opposition to extravagance.

“It’s not to do with conservation. It’s related to a Chinese government anti-graft crackdown, which has cut back on dinners where shark fin soup was featured on the menu,” Villagomez said.

“The culture is (also) changing in Asia among younger people. They aren’t eating shark fin soup as much.”

Historically, high demand in the Asian market has fuelled shark-finning by fishermen on commercial tuna vessels in the Pacific. But finning is slowly being shut down as the number of islands legislating shark sanctuaries grows.

Villagomez will meet with Pacific leaders to discuss extending the number of shark sanctuaries.

“The Pacific is leading the world in shark conservation,” he said. “Pew is working with islands that have sanctuaries on enforcement, implementing best practices, and conducting research.”

The nearly 300 purse seine fishing boats now plying tuna grounds in the Pacific are required to have independent observers on board and with “100 percent observer coverage, enforcement of shark bans is as good as it will get,” Villagomez added.

“The islands now have eyes on the water and in the ports.”

Since banning shark fishing in its waters in 2011, the Marshalls has arrested two foreign vessels for having shark fins on board and fined them more than US$100,000. —PACNEWS Islands Business, September 2013 45

Sport

Adams family produces another talent NBA rookie Steven out to emulate big sis

By Peter Rees A combination of their parents’ English and Polynesian genes is credited for the Adams family sporting achievements.

Hailing from Rotorua, New Zealand, the family has been a production line of athletes over the years.

Father Sid, an English seaman who migrated to New Zealand and ended up with 18 children from five different wives, was an imposing man standing 6’ 9” (2.05m) tall.

He passed away in his mid-seventies in 2006 but not before seeing his children excel in the sporting arena. Blessed with size and athleticism, on average, the males in the Adams clan stand about 6’10” (2.08m), and the women, 6’3” (1.90m).

Sons Rob Tuilave, Ralph and Warren Adams all represented New Zealand in basketball in the 1980s and 1990s. But it is Sid’s two younger children from his latter marriages to Tongan women that have gone on to international success.

Daughter Valerie Adams, 28, is already a household name around New Zealand as the current Olympic and world champion in women’s shot put. In August, she added her fourth straight world title at the IAAF World Champs in Moscow, making her the first woman in athletics to reach that milestone.

She is seen as having the prototype thrower’s body; standing 6’4” (1.93m) tall and possessing raw power and amazing mental strength.

Now the torch has been passed on to the youngest of the Adams clan, Valerie’s half-brother Steven Funaki Adams who is destined for stardom in America’s rich NBA (National Basketball League). He may be the youngest but he is the tallest, dwarfing Valerie at 2.13m and wearing size 19 shoes.

Steven, who turned 20 in July, became the first Tongan and New Zealander to be drafted in the first round of the NBA Draft on June 27 this year.

The annual draft sees the top 60 players pooled from America’s best college players and foreign talent. Steven was selected by the Oklahoma City Thunder with the 12th pick overall—making him an instant millionaire.

In his first year in the NBA, he will earn a cool NZ$2.2 million ($US1.7 million).

He’s fiercely proud of his New Zealand and Tongan heritage (his middle name “Funaki” is tattooed on his right forearm like many Pacific young males in the diaspora are doing) and showed that to the international media after being drafted.

“It feels amazing, eh—I’m pretty much doing it as a Kiwi, always,” he said.

It was cause for celebration for the Adams family to see both Steven and Valerie in the news headlines on the same day. Earlier, Valerie had 46 Islands Business, September 2013

Steven Adams...in the uniform of his new team, the Oklahoma City Thunder. Photo: Courtesy of Peter Rees

won the shot put at the Golden Spike meet in Ostrava, Czech Republic, with the world’s best throw this year of 20.88 metres.

“I got ‘Adams Day’ off to a good start, I’ve done my bit, now it’s Steve’s turn,” a smiling Valerie remarked. Valerie was full of praise and had plenty of words of wisdom for her younger sibling.

“I’m super, super happy for him,” she said.

“It’s amazing, he’s done the family very proud and I wish him all the best. I hope he takes every opportunity that comes to him and he looks after himself, first and foremost.

“I want him to enjoy what he does, have a smile on his face and be happy playing basketball. Being the best he can be will make his career successful.”

She could not explain the family’s sporting success only saying it was in their genes.

Steven grew up in the Rotorua suburb of Owhata with his three siblings, Gabriella, Lisa and Sidney.

But life began to go pear shaped when his father died when he was just 13. His Tongan mother had not played a big part in his life up until then.

“When I lost my dad, that was a big hit for me,” he said. “I didn’t have that parental guidance, and I kind of took advantage of it because I was a stupid idiot. I decided not to go to school a couple of times, go when I felt like it.”

By 2008, he was hanging out with gang members on the tough streets of Rotorua. That was when older brother Warren came up and took Steven down with him to live in Wellington.

He went to live with a family friend, Blossom Cameron, a personal trainer who is now Steven’s legal guardian.

She looked after Steven and put him through school at Wellington’s prestigious Scots College, paying his annual NZ$10,000 tuition fees. He was introduced to basketball coach Kenny McFadden, who had played with Warren.

After only a year of training, Kenny knew Steven was headed for the big time. His size and freakish athleticism would go far in America.

Steven had arrived semi-literate and rough around the edges. But with Blossom and Kenny mentoring Steven, his life began to turn around.

“He (Steven) was the hardest worker I had ever seen,” McFadden said. “He had just been missing discipline and an education before.”

After graduating from Scots College in 2011, Adams enrolled at Notre Dame Preparatory School in Massachusetts. His talent and size quickly got noticed and by the end of the year he was ranked in the top six high school players in the country.

Adams got a scholarship to the University of Pittsburgh where he played during the 2012–13 season. During his freshman season, his field goal percentage ranked 1st, blocks 2nd and rebounds 6th amongst first year players in Pittsburgh’s history.

He was set to have a breakthrough sophomore year but Steven decided to try for the NBA. At first he was criticised for his decision to go early because he was only 19.

“My family didn’t ask me to come out. It was strictly a personal decision,” he explains.

For Steven, it was always about family. They came first. “It’s quite sad to see your family struggle,” he shares.

“I thought, you know what, it’s time for me to help my family. That’s been the plan ever since I started off, just to help my family financially.

“The other reason I declared for the draft is that they’ve got the best coaches in the world in the NBA, so I figured I might as well get the best coaching I can while I’m young.”

Experts are backing him to go all the way if he works at his game, hence the reason he went so high in the draft. They see the potential. But Steven’s feet are firmly on the ground and he knows what he has to do to make it in the world’s toughest basketball competition.

“I’m a high-energy player. I like transition… also just being physical. I’m working on my post game. When it comes around, I really think that’s going to be a strength.”

Although he’s the first Tongan, expect more Pacific islanders to make their mark in the NBA like what happened in American Football’s NFL.

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