ISLAND BUSINESS - What 2009 holds for Pacific Island nations

[Stacey King]

Excerpt from Connecting the Pacific NEWSROOM
07 January 2009

In keeping with Islands Business tradition, our senior writers Samisoni Pareti in Suva and Dev Nadkarni in Auckland give a quick overview of how 2009 may turn out for the islands in the Pacific.

Fiji Islands

Ever the rebel in the Pacific family of nations, Fiji might or might not be able to have a general election in 2009.
If military strongman and coup leader Commodore Frank Bainimarama have his way, Fiji won’t go to the polls until 2010.
Already he has told Pacific islands nations that are members of the Pacific Islands Forum —including Australia and New Zealand—that there will be no election this March even though he did promise to have one by the first quarter of 2009 when he met Pacific leaders at their 2007 Forum meeting in Tonga.
Bainimarama has since claimed he was pressured into giving the March election deadline.
Will the threat of being expelled from the Pacific Islands Forum influence Bainimarama to change his position?
This is unlikely given the man’s determination and single-mindedness to enact into law his people’s charter, a document which he is proclaiming as the blueprint that will break once and for all the nation’s coup culture.
He has refused to accept the notion proposed by critics that the key perhaps lies with the very institution he currently leads as its commander.
That charter among other things proposes wide ranging reforms to the country’s electoral system and Bainimarama wants to have a new system in place—specifically a one-man-one-vote system—before the polls are called.
He has already gone on the offensive organising forums for all political parties in Fiji to consider his people’s charter and the need to change the country’s election laws. Just last month, he took his plan before 100 traditional leaders although the forum was boycotted by some of the more senior chiefs who were members of Fiji’s Great Council of Chiefs.
Bainimarama abolished this council in one of the first decisions he took when he removed prime minister Laisenia Qarase in a coup on December 2006.
While Qarase and his supporters continue to criticise and question the initiatives of the military-led regime, Bainimarama can still argue that he and not Qarase has the support of the people because of the absence of any huge and credible demonstrations against his regime.
Is there a chance that Bainimarama may listen to Pacific leaders when they meet in Papua New Guinea this January to discuss Fiji’s membership in the regional body?
The possibility cannot be ruled out altogether and much will depend on the leadership skills and charisma of Sir Michael Somare who will host the talks, and any ‘sweeteners’ Forum members Australia and New Zealand will offer the besieged island nation.
Somare is one of the very few leaders that Bainimarama respects and listens to and the Grand Old Chief might just get the younger Fijian leader to see the merits of holding a general election much earlier than he is planning.

Kiribati

Red flags began to be waved by international donors in 2008 over the state of Kiribati’s economy and President Anote Tong should use 2009 to re-position and re-consolidate his island’s finances.
In particular, the Asian Development Bank in its 2008 economic outlook for Kiribati expressed concern at the constant draw-downs from the country’s reserve funds (invested offshore) to finance its budget deficit.
The largest withdrawal the bank says was in 2007, when the Tong Government draw-down A$45 million.
“While the RERF (reserve fund) remained above an informal benchmark of the real per capita level in 1996, the increase in draw-downs since 2003 could undermine the fund’s capacity to fulfill its role as a permanent source of budget support,” warned the ADB.
“Weaker global equity market returns will necessitate much lower draw-downs, likely requiring a more prudent approach to government expenditures in 2008 and 2009.”
Things have not been going Tong’s way on the political front as well. After a lull of some years, he had to stave off a confidence motion in the island’s parliament last December.
Some critics also labelled Tong’s policy on climate change in which he advocates relocation as an option as too defeatist and something an economics graduate from the highly esteemed London School of Economics should not be advocating all too easily.
To stay the course until the next election in 2011, Tong would need to come to grips with the poor performance of the economy, including sinking money into the country’s deteriorating infrastructure as well as advocating a better policy towards urban development and overcrowding.

Nauru
The Asian Development Bank is projecting negative growth due mainly to the closure of Australia’s refugee detention centre there.
But Canberra is still committed to rescuing the island republic from financial bankruptcy, investing about A$1000 per capita each year in Nauru, the ADB says.
Phosphate export has resumed but Nauru’s huge debts accumulated over many years of financial neglect still eat away at any earnings.
Luring a commercial bank to establish operations on Nauru is a priority for Nauru’s finance minister Dr Kieren Keke.
He and his president (former Commonwealth Games weightlifting champion) Marcus Stephen—assisted by an Australian funded financial rescue package—have been able to steer the republic into public sector reforms including pay cuts and downsizing.
Some political stability of sort has descended on the island after a snap election was called on April 2008.
With the military-led regime in Fiji promising to sign a regional air services agreement, Nauru’s Our Airline will be keen to re-open its Nauru-Tarawa-Nadi service in no time.

Tuvalu
Two factors expose Tuvalu more to the global financial crisis than its bigger neighbours; its use of the Australian dollar and the trust fund (which at the end of 2007 Asian Development Bank says had a market value of A$100 million) that is invested offshore.
The island economy has been recording modest growth ranging between 2 to 3% of GDP in recent years, helped somewhat by rising fishing licence fees.
Dividends from its offshore fund and the leasing of its internet domain name (.tv) has been dropping over the same period, the bank said.
After constant removal of prime ministers through no confidence motions in parliament, Apisai Ielemia has been the exception.
Since assuming office on August 14, 2006, the man has been largely left unchallenged and seems poised to serve his full four-year term.
Remarkably for an island of its size, Tuvalu has been a giant in world climate change talks, thanks mainly to the immense knowledge and skills of its Australia-based climate change expert Dr Ian Fry.
Prime Minister Ielemia and Dr Fry used last December’s United Nations negotiations for a new climate change convention in Poland to champion the cause of small, vulnerable islands nations like theirs.

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