Old Issues, New Solutions

By ROWAN CALLICK

As Papua New Guinea enter its 35th year as an independent country, its options—the risks and the opportunities—are looking surprisingly familiar.

It has, of course, as its leader, the most durable, cleverest politician whom the Pacific region has ever produced, in Prime Minister Sir Michael Somare. He has been prime minister for 16 of PNG’s 35 years.

Still, the succession remains uncertain—both the cause of instability within his own ranks and the wider political terrain and a tool through which he subtly maintains power.

Just as so often in PNG’s past, the country is entering an upbeat period on the crucial economic front, with growth expected to reach eight percent this year, well ahead of the rest of the islands region—except Vanuatu—on the back of the launch of the costly construction of ExxonMobil’s A$16.5 billion liquefied natural gas project.

Tantalising prospects

As before, but in a far bigger way than ever, PNG’s resources are offering the country the tantalising prospect of becoming comfortably well off.

Somare has talked of providing aid to its Pacific neighbours, to which he has begun offering jobs as well.

This story began with Bougainville Copper and continued through Ok Tedi, Porgera, and the opening of the Southern Highlands oilfields.

But in previous times, the resource projects have provided jobs and much better living conditions for those who live in the immediate area around the mines and oil fields, but the bigger portion of the national income—gained through taxes and royalties—has failed to flow to the broader PNG community.

That money has somehow been diverted at the national level and the dreams and expectations have been frustrated.The familiar political setting in which PNG finds itself began with a sudden return to the old game in the parliamentary arena of Waigani. Under Chief Justice Salamo Injia, the five-man bench of the Supreme Court ruled that the Organic Law on the Integrity of Political Parties and Candidates (OLIPPAC) breached constitutional freedoms. This released the 109 MPs to shift their loyalties as they want.

Somare, in parliament for 42 years, was elected Prime Minister after the last national election, in 2007, by 86 MPs. His own National Alliance Party won 27 seats and established a coalition with six smaller parties. The only other grouping to reach double figures was that of Independents.

The OLIPPAC was enacted by the government led by Mekere Morauta, now Opposition Leader, to prevent MPs seeking rewards for their votes, and to stabilise PNG’s unpredictable politics. The law essentially ensured that MPs stayed with the party in which they were elected, during the five-year parliamentary term.

The law, however, meant that it became virtually impossible to dislodge a government once it had formed a coalition enabling it to rule. Suddenly, there was nothing to stop Somare’s former supporters—including those frustrated at their failure to win rewarding ministries—from switching their allegiance to the opposition.

Changing loyalties

Now, however, MPs are free again to shift between parties, and parties are themselves free to shift—and the days of vote-buying and changing loyalties have returned with a vengeance.

Ironically, the ruling thus presented Morauta with a chance to return to power. But other candidates also began queuing for the top job, including Don Polye, leader of the largest regional grouping in parliament, from the highlands.

The gauntlet was first thrown down by Deputy Prime Minister Sir Puka Temu, who led three other ministers out of the cabinet.

He is a medical doctor, a Papuan from Central Province near Port Moresby, who spent six years working at the Royal Melbourne and Royal Prince Alfred hospitals in Australia, before becoming permanent head of PNG’s Health Department.

He joined the opposition, which had set up camp in the tradition of PNG political end-games, this time at a resort near Gaire village on the coast east of Port Moresby.

The MPs who coalesced there came within a handful of the target for toppling a prime minister—55 out of 109 in the parliament, which has two of its five-year term still to run.

But crucially, most of the Highlands bloc stayed with Somare, after they could not agree on a single leader of their own to challenge him.

Somare, now aged 74, is an astute player of this core element of PNG politics, and was able to preserve enough of his formerly dominant majority principally by offering ministries.

In the last sitting, he amended legislation to enable him to appoint an extra five ministers beyond the limit of 27 in former cabinets.

He kept these positions up his sleeve as inducements, and could now add the jobs of the four who defected to the opposition.

The traditional counter to a vote of no-confidence in PNG is to call a motion adjourning parliament. A year ago, Somare pulled this off with little trouble, obtaining an adjournment until November.

This time, he did it again, though with greater difficulty and controversy. Before attending the ‘Engaging with the Pacific’ meeting organised by Fiji’s Prime Minister Frank Bainimarama, Somare swiftly appointed eight new ministers to shore up his majority. Five of them come from the Highlands region, which accounts for 40 percent of the seats in parliament.

Somare appointed long-time supporter Timothy Bonga as the Forestry Minister—usually a difficult but potentially rewarding portfolio—given the controversies that swirl around the sector.

He also gave a ministry, but so far without portfolio, to Moses Maladina, the architect of legislation to curtail the powers of PNG’s anti-corruption agency, the Ombudsman Commission.

The Speaker, Jeffery Nape, also a member of Somare’s party, spurned on Wednesday the louder calls opposing an adjournment, refused to permit a division, and declared the house adjourned until November 16.

The budget usually takes precedence in the November session, making another attempt at a no-confidence motion unlikely until next year—when success would trigger an early election, which most MPs, who stand to lose their seats, usually wish to avoid.

Thus, although the Post Courier newspaper editorialised that the events in parliament comprised “a shameful exhibition”, Somare, a wily, veteran fox of a prime minister, may have cemented his power through to the elections in mid-2012.

Temu told AAP (Australian Associated Press) after the drama in parliament: “They call him the ‘father of the nation’, but he and his family are destroying the nation. They break laws, they treat parliament like a joke. Is this what PNG wants? No, they want an end to this.”

As the resource projects in PNG grow, the money pouring in is driving up prices, especially of housing, and inflation threatens.

The value of the kina is rising, making it more difficult for non-mining sectors including agriculture, which involves most of the population, to compete.

Unexpected threat

Billions of dollars have been pouring into PNG to explore, study and develop massive deposits, chiefly of gas, copper-gold and nickel-cobalt.

But the boom is facing an unexpected threat, exacerbated severely by the government’s over-reaction, which risks dividing the country and turning landowner groups against deals that promised to enrich them.

The core issue is new legislation that seeks to protect resource companies from any challenge to approved projects, including both legal action and protests. This has already been passed by 73 votes to 10 in parliament, but has not been ratified.

The legislation, in the form of amendments to the Environment Act, shelters resource projects from all litigation over the destruction of the environment, labour abuse, or landowner exploitation.

The amendments were driven by China’s Metallurgical Construction Corp, the developer of the A$1.8 billion Ramu Nickel mine, which is 8.56 percent-owned by Brisbane-based Highlands Gold.

Injunctions were won by Ramu landowners to put on hold the completion of the pipeline intended to slurry waste from the mine, once it is operational, out to sea, off Madang.

Mount Hagen-based lawyer Tiffany Nonggorr, who represented the landowners in obtaining an injunction from judge David Cannings said: “There are grave environmental concerns. MCC must find an alternative to dumping the mine waste into the bay. The mine’s proposal is just too risky. This injunction is a massive victory for us, definitely a David and Goliath struggle.”

Goliath fought back, with the support of the Somare government.

Ms Nonggorr responded that, as a result of the new legislation, if an oil company had a catastrophe such as BP’s off the US coast, “they would escape all liability for environmental damage’’.

The amendments give the director of the government’s environment and conservation office wide-ranging discretion to award certificates granting exemptions to resource developers from state requirements.

Somare, defending the legislation, said: “We cannot get mining going while this is in court. The Prime Minister’s Department has been held to ransom by (the judiciary). The government will lose a lot (of money)’’.

Greg Anderson, the executive director of the PNG Chamber of Mines and Petroleum, said the controversial cause of the challenge to the Ramu Nickel mine—its deep sea tailings placement—had already been deployed in PNG by the gold mines at Lihir, Misima and Simberi without arousing controversy.

He said that Ramu Nickel had suffered from “a long, orchestrated campaign” of opposition that now threatens the whole project, on the verge of the completion of its construction.

“It’s really causing major problems for us,’’ he said. “Everybody in the industry is watching the issue with great interest. If such a major project—for which the state has issued the required permits following the proper process—is blocked, that will lead to ramifications for any economic activity in the country.’’

The conflict that caused the closure of the Bougainville copper mine was not, fundamentally, triggered by such environmental issues about the mine itself, Anderson said. And now, the newly elected government of Bougainville is seeking to negotiate the reopening of the mine.

The Ok Tedi mine, whose original tailings dam collapsed, has been operating highly profitably since BHP-Billiton left in the wake of the resulting controversy that mired it in the courts.

The community groups in the area are now voting on whether to extend the mine’s life beyond its planned closure in 2013.

The pipeline from Ramu Nickel’s mine site down to the refinery on the coast is now complete, and ready for commissioning. But concerns about the effects of the challenge on the completion of the Ramu Nickel project are underlined by the size of the other new projects on the move in PNG.

New resources

Besides the A$16.5 billion ExxonMobil liquefied natural gas project under way, piping the gas down from the Southern Highlands to a liquefying plant near Port Moresby, there are promising gas finds in Western Province and an onshore project in Gulf Province, led by InterOil.

The Frieda River copper-gold project led by Xstrata is due to move soon to full feasibility mode, and the Wafi project—also copper-gold—is not far behind, also in Morobe. These are each likely to become A$4—$5 billion ventures. The latter is owned by Newcrest and Harmony, which are commissioning the Hidden Valley gold-silver project.

Marengo Mining is proceeding with a feasibility study at Yandera, a copper-gold deposit not far from Ramu Nickel—for which the most likely solution for tailings, would be to hitch a ride on the Ramu Nickel pipeline, if it is finally allowed to operate.

Anderson said: “All our members are watching the developments over Ramu Nickel very carefully. Deep sea tailings disposal will become a growing issue.’’

But the stress on the new resource projects, especially on the LNG deal, has helped build a climate in which corruption appears to be viewed by some beneficiaries merely as booking private spending against future national earnings that are expected to be bottomless.

At the same time, government services have been declining, putting increased pressure on aid, especially from Australia, which is increasing this year to A$457 million.

While visiting New Zealand, Somare told the University of Auckland that the LNG project would “increase our revenue to an unprecedented level and transform PNG”, and that as a “big brother” to other Pacific islands nations, PNG would be “in a position to provide development assistance within our region”.

But the country has been suffering widespread outbreaks of cholera during the past nine months, with more than 2600 cases so far, including 56 deaths, indicating poor sanitation and inadequate access to safe drinking water. Sales of fresh seafood have plummeted as people grow nervous of the disease, which has hit 573 people in Port Moresby.

Recently, life expectancy has begun to decline and infant mortality to rise. Yet Health Minister Sasa Zibe has committed $9 million towards a new high-end public-private Pacific Medical Centre in Port Moresby.

A recent survey of nine local government districts in PNG has found that apart from the immediate vicinity of the local MP’s core support base, most services and new projects are provided by churches, non-government organisations and aid donors, but not by the government.

Anticipated wealth

The country’s chief road artery, the Highlands Highway that links the most populous region to the coast at Lae, is in dire straits.

Bafinue Roika, managing director of a 14-vehicle trucking firm KK & Sons, says: “If nothing is done to fix the highway, we may head for disaster because the only thing to do is to shut down operations.”

Former PM Morauta has told Parliament: “People are tired. People have lost faith. People are sick of secret deals. People are craving for services.”

At the same time, he said: “The government and many people have been intoxicated by the anticipated wealth and opportunities of LNG. The nation is now feeling the effect of the early stages of the project. The domestic cost structure has increased markedly. Many bad side effects will flow from the LNG-driven price inflation. Poverty will intensify, leading to other social problems.”

Many people have flown to Port Moresby from the Southern Highlands, where the main gas field is located, seeking cash from various grants available from the government.

Self-styled consultants are eagerly signing up such clients and representing them to government agencies, for commissions.

“There are enormous expectations,” says Anderson, who stresses the need to manage them carefully.

“There are dangers this could emerge as a huge cargo cult in the minds of many.”

Government funds are already confirmed as a successful cargo cult that keeps on giving, with little downside for the beneficiaries.

Mowana Ugwalabu, general secretary of the PNG Teachers Association, said recently the teachers’ payroll list contains thousands of ghost names whose pay are going to outsiders while teachers struggle to get paid at all.

In March, Somare tabled in parliament the 818-page report of a separate commission of inquiry into corruption at the top levels of the bureaucracy, which was chaired by retired PNG judge Maurice Sheehan, a New Zealander, with fellow commissioners Cathy Davani and senior PNG businessman Don Manoa.

But an injunction was granted banning the report’s publication and implementation as soon as it was tabled. And extraordinarily, the government has not sought so far to have the injunction lifted.

Sovereign Fund

Paul Barker, executive director of the Institute of National Affairs, PNG’s independent think tank, says: “The few reformers within the government seem to have inadequate political and bureaucratic backing to push through the massive changes needed for government to contribute rather than be a dead weight to a productive and inclusive economy and society.”

One of the crucial reform elements now under discussion, is the introduction of a sovereign wealth fund—where some of the windfall earnings from the resource boom are kept locked away from political interference.

How this is established, has become of vital importance. The models of Norway and Kiribati are under close examination.

Last year, trust funds were mostly emptied by the government—which has recently been criticised by the Asian Development Bank for doing so. Many of these issues are familiar ones, not least to John Momis, who was a priest from 1970 to 1993 and remains a devout Catholic, and who has recently been elected overwhelmingly as the new president of Bougainville.

He will now have to steer the province—still recovering from the 12 years of civil war that ended a decade ago—through crucial challenges. These include a push, championed by the previous provincial government, to re-open the Bougainville copper mine, still 53 percent owned by Rio Tinto, which helped trigger the civil war, and a referendum on independence that is likely to be held in 2015.

Momis says his first priority will be to search out and dispose of the large numbers of weapons still circulating in the province since the war. He was a key drafter of PNG’s constitution, and was elected to the national parliament in 1972, becoming deputy prime minister 25 years ago. He quit five years ago to contest the Bougainville presidency, but lost the election, and then served as ambassador to China.

If Bougainville opts for independence—it has the right to vote on such a move, as does New Caledonia—it will become, with a population of about 200,000, the fifth-largest of what would be 15 islands nations in the Pacific.

But Momis is not only a strong supporter of decentralisation, he is also a staunch PNG nationalist. His parliament includes familiar Bougainville faces such as Alexis Sarei and Leo Hannett.

Old issues, new solutions, the mix in PNG as it celebrates its independence again is as fascinating—and familiar—as ever.