Bougainville Referendum: What About Financial Independence?

Bougainville Referendum: What About Financial Independence?

Earlier this month (October 8), the Lowly Institute published an article titled “Bougainville Referendum and Beyond” where it states that majority (3/4) of the 300, 000 people prefer independence, come 23 November 2019 (Bohabe, 2019) – see link to the article below. The Prime Minister’s James Marape prefers Bougainville remains an autonomous region of PNG, but will respect the will of the Bougainville people. Whether voting for independence or autonomy is the easy part. What lies ahead is more challenging. The main challenge is for Bougainville to raise enough internal revenue to sustain an independent Bougainville.

So how much is need to run an independent Bougainville?

According to University of NSW Professor Standish Chand (Chand, 2018), it is estimated that Bougainville will need three times the budget Bougainville has now as an autonomous region to run an independent Bougainville. This calculation is based on population-weight average of neighbouring Melanesian countries of Fiji, Vanuatu, Solomon Islands and Papua New Guinea. 

The total budget for Bougainville in 2016, the year for which data is available, is K286 million (USD 84.6 million). Three times this amount is K858 million. In the same year, revenues collected internally from all sources, including company tax, custom duties and 70% of value added tax, was K23. 2 million. Majority of the budget was funded from outside Bougainville, including a recurrent grant of K41.3 million from the national government (PNG). Read Standish Chand’s article for more on the economic challenge/opportunities – link provided below.

The good news is, fiscal autonomy is not a pre-requisite for independence, that is, Bougainville does not need to demonstrate that it can raise K858 million annually in a sustainable manner to be able to vote for, and become independent as per the Bougainville Peace Agreement. However, as we have experienced in PNG after 1975, if your are not economically independent, political independence does not mean much.

Where would Bougainville raise the revenues needed?

There is no question the abundant resources Bougainville is endowed with. Panguna mine was almost solely responsible for the internal component of PNG’s budget after independence, and it is expected by many to play the same role for Bougainville. However, reopening Panguna won’t be that easy for several reasons. Beyond some of the unresolved issues that contributed to the crisis, it would take US$4-6 billion in construction costs, and if started now, would be ready by 2025 (see Bohane’s 2019, link provided below). It is a mine of staggering US$58 billion worth, from a potential 5.3 million metrics tonnes of copper, and 19.3 million ounces of gold.

Other sources of revenue:

There are more sustainable sources, such as cocoa and fisheries, which, if they consider manufacturing, may provide much needed jobs and benefit more from value added taxes. The National Fisheries Authority reported in 2018 that the fisheries sector in PNG employs about 40, 000 people. Setting up canned tuna manufacturing sector in Bougainville would help with employment. Minning an other extractive sectors, for all its worth, are ‘enclave.’ They MOSTLY employ highly qualified skilled workers, because of the nature of the activities, and with almost a generation of Bougainvilleans’ education disrupted by the civil war, they will become spectators in their own land. Mines will only pay taxes, and nothing beyond. Manufacturing sector, as in cannery, requires massive low skilled labour. Bougainville will benefit more via employment, and and wealth will be more distributed in a manufacturing sector more than mining.

Also in 2018, NFA paid a dividend of K60 million to the government. Estimates shows that Bougainville’s Exclusive Economic Zone (EEZ) is about 30% of the total PNG EEZ. For lack of better formula, let’s assume that 30% of the tuna cught within PNG waters is caught within Bougainville’s EEZ. Calculate 30% of the K60 million (or so) NFA collects in taxes, licenses, rents etc. and give to Bougainville. That would be K18 million. 

Concluding opinion….

I hope Bougainville votes for greater autonomy, and there are numerous cases in the Pacific, which shows it works very well. Take New Zealand and the Pacific Islands for instance: Tokelau is a dependent territory of NZ, and the Cook Islands and Niue are two associated states. In a similar arrangement, Bougainville can use its vast resources to develop itself, and exercise extensive autonomy than it currently has. 

In the future, PNG should consider a federation, as in Australia and elsewhere, where each state is autonomous, but part of a greater whole. States make their own laws, raise their own revenues, have pride in their states (remember QLD Maroons vs NSW Blues?)… We could easily have such arrangement with Southern, Momase, NGI and Highlands regions. One thing is for sure, PNG is a land of 1000 tribes, and a preferable governing option is greater autonomy in a federal arrangement. 

Finally, whatever Bougainville decides, let’s help them. They are our own. God Bless PNG.

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Articles that I referred to in this piece can be accessed here:

For article by (Bohabe, 2019):

https://www.lowyinstitute.org/sites/default/files/Bohane_The%20Bougainville%20referendum%20and%20beyond.pdf).

For article by (Chand, 2018):

Click to access Financing_for_fiscal_autonomy-_Fiscal_Self-reliance_in_Bougainville_.pdf

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The Unchained Dragon Roams the Pacific: Part Two

PART TWO: CHINA, AUSTRALIA, USA, PNG – implications of Solomon Islands Decision to Recognize CHINA.

This is part two of three parts series analysing the decision by Solomon Islands to break diplomatic ties with Taiwan after 36 years and recognizing China. This part focuses on the potential implications for Solomon Island’s decision, drawing on experiences in the Pacific region, specifically PNG. To read the analysis on why Solomon Islands switched to China, go to the following sites:

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CHINA

Let’s begin with China. What are the benefits of Solomon Islands switching allegiance to China? As Solomon Islands was assessing its relationship with Taiwan, China promised a $US500 million (AUD $730 million) financial aid by Beijing, far surpassing the financial support offered by Taiwan, according to ABC. Taiwan on the other hand, promised $8.5 million for the Solomon Islands for the period 2019 to 2020. This is just 1.7% of what China promised (Taiwan would get 59 times more money from China than that which was promised by Taiwan). Furthermore, $500 is half of Solomon Islands GDP. China is committing to give Solomon Islands funds that constitute half its GDP, which stood at $1. 3 billion in 2017.

This $500 million money is part of the Belt & Road Initiative. By 2027, China will have spent between $1.2 – $1.3 trillion to about 152 countries. China is moving big. Solomon Islands not the first, countries which recognized Taiwan in the past are switching alliances. Read more about BRI on Part One – see link above.

The downside to this is that, these funds are actually loans (low-interest loans) that Solomon Islands will have to repay. What happens if Solomon does not repay? Read what happened to Sri Lanka in the Part One. It already started. Solomon Island has been pressured to switch to China, this is just the beginning.

Chinese officials released this statement: “China highly commends the decision of the Solomon Islands’ government to recognize the one-China principle and sever the so-called ‘diplomatic ties’ with the Taiwan authorities,” Foreign Ministry spokesperson Hua Chunying said (ABC).

AUSTRALIA

Second, lets look at Australia’s response: Australia is involved in what kids on the streets of Port Moresby call “catchim late bus.” When Scott Morrison visited Solomon Islands this year, it was 10 years after Kevin Rudd visited in 2008. A lot can happen in 10 years – Chinese has stepped up before Australia though of stepping up. Morrison was set to announce a $250m grants program for the Solomon Islands and an easier path for islanders to get work in Australia. This amount is half of Chinese $500 million promised by China.

The good news for Solomon Islands is, $250 million from Australia is a grant – it does not have to repay. This is an infrastructure program that will last for over 10 years. In addition, Australia commits $2.7m over three years to help islanders considering work opportunities in Australia to cover their upfront costs such as passports.

Why is this a “late-bus’? Well, Australia has never been interested in directly assisting in building infrastructures in the Pacific. Whenever Australia got involved, it was through multilateral assistance: contributing to ADB, World Bank etc infrastructure programs. Now with Chinese investments in the infrastructure sector, Australia is now taking a more direct approach.

USA

What about the US? The first bad news is that the planned meeting between US Vice-President Mike Pence and Solomon Islands Prime Minister Manasseh Sogavare later this month has been cancelled after Washington said it was “disappointed” by the Pacific nation cutting diplomatic ties with Taipei to recognise Beijing, according to South China Post. It is not clear how much in monetary terms US spends on Solomon Islands. According to the U.S. State Department, Us intervenes “in improving regional stability, promoting democracy and human rights, combating trafficking in persons, responding to climate change, increasing trade, and promoting sustainable economic development”. 

Some in the US are calling for the government to stop assisting Solomon Islands. US Senator, Sen. Marco Rubio, has taken to Twitter to say these words:

“I will begin exploring ways to cut off ties with Solomon Islands including potentially ending financial assistance and restricting access to U.S. dollars and banking.”

US entrusts Australia to take care of the Pacific.

PNG CASE STUDY

NOW, what does all these mean for Solomon Islands? Will US suspend its help to Solomon Islands? What will Australia do?

Let’s see how they responded to PNG: PNG had diplomatic ties with China since independence, except Bill Skates brief affair with love Taiwan in the late 1990s. Since then, China has been increasing its presence gradually in PNG. Since mid-2018, BRI had 3 main projects in PNG:

1. $3.5 million road projects, using Chinese companies to work on road projects
2. $330 million agricultural park where PNG government signed 99-year land-use rights transfer for 400 hectares in Eastern Highlands in May 2018
3. $32 million water supply in Goroka – feasibility studies in 2017, which will also include turbines to provide electricity.

According to China Morning Post, PNG owes China $1.9 billion in “concessional loans.” According to 2018 PNG National Budget, PNG’s debt to China is about $588 million and compromises about 23.7% of PNG’s total external debt.

Other thing that is of interest is that Huawei was contracted to build underwater cables connecting 14 maritime cables. Huawei is a Chinese company.

So what was the response of Australia & US? APEC 2018 has brought all the powers interested in PNG to PNG. PNGeans will remember what happened next for some time. Mike Pence accused China of debt-book diplomacy, and warned the small Pacific Island countries. Australia, NZ and Japan were right behind US. China stressed its mutual benefit arrangements and “no hidden agendas” assistance to the Pacific (Chinese officials stormed the APEC building to get hold of relevant PNG officials).

But at the END OF THE DAY, Australia, NZ, Japan & US signed the Electrification Partnership with PNG with the aims to provide power to 70 per cent of the country’s population by 2030. Currently, only 13 per cent of PNG’s population has reliable access to electricity. All these would cost a total of US$1.7 billion. Australia would begin by investing Australian $25 million in the first year.

Furthermore, in response to Huawei presence in PNG, Australia has started building the internet cable linking Port Moresby to Sydney. When completed this year, it will provide one of the fastest internet speed in the region.

So what is the message: After protesting and reprimanding, the Western countries will come around to investing in the Pacific. They cannot stand by and watch China take over the Pacific.

Should the Pacific Islands therefore embrace China, in the hope of getting the West involved? That’s a bad idea. When these countries are trapped in debt, Australia & US, NZ & Japan will not repay the debt. The little island countries will.

Thread with care.

The final part will look at what will happened to countries that already recognized China, and see where Solomon Islands is headed now.

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The Unchained Dragon Roams the Pacific: Part ONE

Chinese dragon symbol.

Part ONE: Belt & Road Initiative (BRI), Debtbook Diplomacy, Solomon Islands

This is the first of three part articles which will analyze Chinese presence in the Pacific. This week, Solomon Islands switched allegiance from Taiwan China, reducing the number of countries supporting Taiwan in the Pacific from 6 to 5. But Solomons is not the first country to do so. Countries supporting Taiwan has been decreasing. Last year, El Salvador in Central America, Burkina Faso in West Africa and the Dominican Republic in the Caribbean did the same. These series of articles will analyze the motivations for such switches, the implications (+&-), and potential response from the West and their allies. The analysis will also cover PNG. All these switches can be tied to a Chinese initiative called the Belt & Road Initiative (BRI).

Belt & Road Initiative (BRI)

The Belt and Road Initiative (BRI), also referred to as the New Silk Road is a global development strategy adopted by the Chinese government involving infrastructure development and investments, which intends to include 152 countries and international organizations in Asia, Europe, Africa, the Middle East, and the Americas. This initiative was started in 2013 by Chinese President Xi Jinping.

The Belt component covers road infrastructure that China intends to build from China across Asia to Europe, the Middle East and Africa. It roughly follows the trade route that medieval businessmen in caravans used to trade with China, coming from Africa and the Middle East through Asia to China. Under the Han Dynasty of 206 BC to 220 AD, a flourishing trade emerged along these same routes, until the Christian Crusaders and Mongols disrupted it.

The Road component covers maritime trading routes linking the maritime trading ports from China, to Southeast Asia, to the Middle East and Africa. It is the most ambitious infrastructure project ever attempted in by mankind, and China intends to pay for it all… we’ll through loans that recipient countries have to repay.

So who funds these roads and maritime infrastructures?

CHINA!

China uses it’s own money. China gives what it claims as “low interest loans” for countries participating in the BRI to built these infrastructures as opposed to aid grants. China intends to give billions of dollars to about 152 countries that are planned to be included in this network, but here is the catch 22, it’s given as a loan that these countries have to repay. By May of 2019, China had already spent $200 billion, and Morgan Stanley estimates that China will spend $1.2 – $1.3 trillion by 2027.
To date, 60 countries, which account for two-thirds of the world’s population have either signed up to the BRI project or have shown interest.

Why are countries interested in BRI?

Developing countries are drawn towards these infrastructure loans for two reasons: first, it goes to build infrastructures which small poor countries cannot build themselves. And second, the flexible, less transparent nature of Chinese loans appeal to countries where transparency and accountability is weak. Loans from Western countries and institutions come with strong accountability and transparency mechanisms.

Debt book diplomacy

There are many who think BRI is just another initiative of the Chinese government to extend its geostrategic position in the world. This thinking is now called debt-book diplomacy. Basically, China is accused of giving “low interest loans” to poor countries who do not have the capacity to repay, and when these countries default on their repayments, China chancels the debts and takes over strategic locations in these countries as a payment for the debt. For instance, Sri Lanka got $13 billion to build Hambantota Port. By 2018 Sri Lanka’s revenues was $14 billion. With these revenues it could not repay it’s $13 billion loans, so they asked China to reschedule the repayment, but China insisted on long term lease of the port for 99 years in exchange for the forgiveness of the debt. Now, China is into its second year of owning the port, 98 years to go before Sri Lanka gets it back.

When China is not taking over ports like in Sri Lanka, it goes for other geopolitical advantages such as trapping Solomon Islands to drop its diplomatic relations with Taiwan and formally switch to China with promises of constituency funding.

Now that you have an understanding of why nations would prefer Chinese funds, and the debates surrounding it, let’s look at why Solomon Islands decided to break its 36-year recognition of Taiwan to recognize to accept Chinese position.

Solomon Islands Choose China

There are only 17 countries left in the world that recognizes Taiwan as an independent nation, and 6 of those nations are in the Pacific. Among the six nations in the Pacific, Solomon Island is the largest with a population of 660, 000. Now that Solomon Islands has broken diplomatic relations with Taiwan to recognize China, there are only 5 countries left in the Pacific, which recognizes Taiwan as an independent nation.

Basically, Mainland China and Taiwan issue goes back to 1949 when, after a Civil War, the Chinese Nationalist Party (Kuomintang) fled to Taiwan, and the Chinese Communist Party took control of the mainland. For years after that these two parties claimed to be legitimate rulers of both Taiwan and Mainland China. Taiwan has over the years scaled down this claim and instead decided to position itself as an independent nation. China on the other hand, regards Taiwan as part of Mainland China.

To be able to access these BRI funds, Solomon Islands had to choose China over Taiwan. This is despite the fact that Taiwan promised $8.5 million dollars for the Solomon Islands for the period 2019 to 2020. $8.5 million was less than the amount China would give. How much China promises/promised is unclear, but Chinese officials promised to bankroll funds for Solomon Islands if the Pacific Island country switched allegiance.

A taskforce was set up to assess the Solomon Island-Taiwan relationship in April after Sogovare returned as the PM. Their recommendation was for Solomon Islands to switch to China. The parliament and cabinet voted to recognize China, ending their 36 years diplomatic relationship with Taiwan which started in 1983.

Solomon Islands is not the only country that switched to recognizing China, last year, El Salvador in Central America, Burkina Faso in West Africa and the Dominican Republic in the Caribbean switched allegiance to Beijing.

Did Solomon Islands make the right decision? What are the possible implications? These will be covered in the next article, drawing on PNG and other countries experiences in dealing with China.

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Salasia Camp: Australia’s 50 Year Old Refugee Processing Centre in Manus

A less common known fact is that the Lombrum detention center built in 2015 is not the first Australian refugee-processing center; the first one was built 50 years ago! 

“Australia’s first refugee camp on Manu still stands, forgotten in time…. A handful of rusty, corrugated iron houses on bare concrete slab…” writes Stephen Armbruster of SBS. This Camp is the home of third generation West Papuans, who were sent there by the Australians in the 1960s. They fled Indonesian occupation of West Papua in 1962.

Among the first refugees were two West Papuans named Clemens Runawery and Willem Zonggonau. Their story is interesting. They were forced off the plane headed for New York and sent to Manus. These two men were on their way to the United Nations in 1969 to report that Indonesia got about 100 West Papuans and coerced then under gun point in a locked room to vote in favour of Indonesians control of West Papua. This event is know as Act of Free Choice which West Papuans to this day claim is not legitimate. It is not legitimate because the Dutch granted them independence in 1961, so there was no need for a referendum (Act of Free Choice) in 1962, and even those chosen were not “free” to vote. They were intimated. Had they got to the UN, they would have reported these facts.

Australia knew of these facts, but refused to acknowledge it. The 1960s were the heydays of the Cold War, where the world was practically divided between the Communists led by Russians and the Chinese, and the Democratic nations led by US. Indonesia was among the last frontiers of communist advancement towards the Pacific. They were supported by the West to resist communism. It was in the best interest of Australia (and her patron the United States) to keep Indonesia happy. Australia did not want to have to deal with repercussions from the Indonesians.

But why sent the West Papuans to Manus?

Well Australian leaders though that if they kept the West Papuans in the then Territory of Papua and New Guinea mainland, they would influence Papua New Guineans to assist their cause, and also cross the artificial boarder to fight the Indonesians. Many of the first-generation refugees were either fleeing for safety, or were active rebels from the group Operasi Papua Meradeka (OPM). OPM was a rebel group fighting against the Indonesians. 

What was PNG’s response to the first West Papuans in Salasia?

A young political activist and member of the second House of Assembly, after hearing of the news that West Papuans were placed in camps next to police stations, said that this act …

“could be compared with Second World War when Jews were placed in concentration camps.” (Quoted by Stephen Armbruster of SBS, 2017)

This young leader’s name is Michael Somare. He is now the retired former Governor of ESP and former Prime Minister Grand Chief Sir Michael Somare. 

What is Australia doing now for the West Papuan refugees in Salasia and West Papua in general?

After independence of Papua New Guinea, Australia claimed that West Papuans in Salasia are PNG’s case to deal with. They stopped supporting West Papuans in Salasia. This seems to be a re-emerging Australian strategy: send refugees to Manus, and leave it to PNG to deal with the mess.

On West Papuan case in general, Australia maintains its 1960s position that West Papua is Indonesian territory. Back then it was the communism threat. Now its Australian mining company Rio Tinto’s Freeport Mining in West Papua. Australia recognizes Indonesia’s control of West Papua partly because Rio Tinto operates in West Papua. Australia also exports mostly agricultural products to Indonesia, beef been one of the largest exports. Indonesia is the largest Muslim country in the world, and Australia courts this lucrative market, exporting halal beef.

Australia’s Aid to Indonesia is only second to that given to PNG (at other times exceeds that given to PNG). And Australia trains and gives military equipment, which some argue, Indonesians use on West Papuans. Despite this unethical use, Australia continues to support Indonesia Military. 

What is PNG doing about West Papuans?

This is where I let you write your own story. What are you doing about it? What am I doing about it? I hope we write a story that our children and grand children will read and be proud of our contribution in defense of humanity, and our Melanesian brothers, and for some of you, your relatives.

Pruaitch vs Marape: And Many More Unanswered Questions…

Pruaitch has been criticized on social media for seeking Supreme Court interpretation of the legality of O’Neil’s withdrawal as nominee for the PM post after it was closed on the 30th of May, subsequently led to the election of James Marape as the Prime Minister. As this matter is before the court, we cannot say anything until SC deliver their opinion.

But when you look at it, there are so many issues that need clarification. Whether a vote of no confidence should follow the majority requirement after national elections, whether MPs switching between parties at will is helping PNG at all, whether the MPs who resigned from PNC and the coalition followed procedures set in the Organic Law on the Integrity of Political Parties and Candidates (OLIPPAC)? etc. These are recurring issues, and won’t go away anytime soon unless we deal with it. Read below.

1. Only 3 MPs followed the procedure for resignation when they resigned en-mass from PNC & PNC coalition.

Procedures for resignation from a party is set under the OLIPAC: Procedure is for the MP to render his resignation letter to the Registrar of Political Partie & Candidates (RPPC). Announcing that you’re resigning if not sufficient, and not even recognized by the RPPC. You need to have it in writing, signed and delivered. Only then can the RPPC change your status. And if you intend to join another party, there much be a letter of acceptance from the party you’re joining. More than 20 MPs changed parties between April and May 2019, but according to the Registrar, only 3 MPs followed this procedure before new government was formed (Ipatas and two others who followed him). Technically, the others were still MPs of the party they resigned from when the new PM & government was formed.

2. OLIPPAC section 63: This section requires that after the national elections, party with the largest numbers of winning candidates are invited to form the government by the GG. This provision has been followed without fail since 2002 when it was enacted. However, the same provision doesn’t apply for the election of the PM during a vote of no confidence or in the case where PM resigns/dies and there is a vacancy. This inconsistency doesn’t help. Michael Somare’s NA had the majority to form the government in 2007, but was removed and Peter O’Neil with only 5 MPs in his PNC party became the PM. PNG Party has 25 MPs in the same coalition, the largest, when they replaced Somare. In the recent political crisis, Marape was nominated as opposition candidate for PM even though he did not belong to any party after announcing is resignation from PNC. If he were elected, he would have been the first PM without a political party in PNG, but I assume the world as well (though he was technically PNC MP even after resignation as he did not tender his resignation to RPPC – which would have been interesting because you would have had a PNC MP as PM leading the other side of the government – supported by other parties).

3. Fluidity: when you look at the MPs who change sides during political impasses like the one between April & May 2019, you begin to wonder if the Supreme Court has helped by declaring provisions of the OLIPPAC in 2010 invalid. Under the OLIPPAC, MPs were restricted from moving from one party to another like yo-yos. The court relied on ss. 50 of the Constitution that says individuals are free to run for office, vote, be elected etc., and that the OLIPPAC was restricting these movements. But what you have now as a result of this is, MPs moving at will, killing innocent animals in the process, and all these yoyo is legal, its constitutional. Imagine this, the Sohe MP moved sides 5 times under one month. Counting the fact that he moved from opposition to government after elections, that’s 6 movements before half his term in parliament is up.

I understand that the SC ruled to protect the MPs rights. But what about the rights of voters. Reason why voters voted out PNC MPs in Morobe was because they did not want any association with PNC, but Sam Basil led his 15 MPs, most of whom replaced PNC over to the PNC led government after government was formed. According to Supreme Court interpretation of ss.50 of the Constitution, these 15 MPs had the right to do that… But what about the rights of the voters who didn’t like PNC in the first place? Once you become an elected MP, you’re a custodian of your people’s rights, you have forfeited your individual rights….and the courts should treat the MP as corporate person and not necessarily an individual. Even if he wants to move sides, because of the voters rights invested in him, he should be restrained, unless the voters consent, maybe through a referendum of some sort.

The claim that they sought their people’s approval and they agreed is bullshit. You campaign the breath and length of your electorate over a month during elections but you get their views overnight? And what kind of people would change their views 6 times in one month?

PNG’s fluid politics: Winners & Losers from O’Neil to Marape

What determines ministerial portfolio allocations in PNG? Do MP numbers per region matter? Why do parties with big numbers allocated few portfolios or no portfolios? Winners and losers in from O’Neil to Marape.

Click the link below to read.

Dear Mr Prime Minister, As for me and my house……

This I promise, As for me and my House…..

Dear Prime Minister James Marape, congratulations on you ascension to Prime Minister position. I share your dream of transforming this nation. So I promise you this:

I will go to work tomorrow, on time!

I will let the mother and her daughter get on the bus ahead of me. 

I will get my morning coffee, and let the young girl keep the change.

I will take yesterday’s trash out and throw it in the bin as my first chore.

I will not chew buai whilst at work, and make sure my assistant follow.

I think my wantoks who come to my office to charge their mobile phones is wrong, including my uncle who uses the office machine to print his land appeal papers.

I’ll pay the full bus fare fee, and pay the bus fare for the high school student who rides on the same bus I get to work.

I promise to get home early to help my child with his math assignment.

My pick for the position vacant in our organization is the young graduate who has volunteered for NGOs for two years, even though my nephew graduated this year with the same qualification.

I will refund the extra change the trade store down the road gave me last Wednesday (I need the money but I guess its not fair to cheat a fellow Papua New Guinean, right?)

I can go on, but to put it in short, Mr Prime Minister, the challenges ahead are tough, so I promise you this:

As for me and my house, we will do the little things right

As for me and my friends, we will be transparent,

As for me and my organization, we will be accountable,

As for me and my church, we will love and care for the widow and the orphan,

I think we have given enough advise to the PM, so my fellow Papua New Guineans, “Ask not what your country can do for you, but what you can do for your country” JFK.

God bless PNG

How Great Was The Fall! Part Two

Politicising the Public Service, Non-payment of LNG shares, & High-profile Corruption

This is a continuation of the series “How Great Was the Fall! The Rise & Fall of Peter O’Neil.” To read Part One, click on this link: https://academicnomad.home.blog/2019/06/12/how-great-was-the-fall-the-rise-and-fall-of-peter-oneil/?fbclid=IwAR25iydn-iq5lVQBajmRwHgb8C_62mo_l6dw5sdaXQCGZl23dAhjyDs9c0c

When Part One was published, there were comments suggesting that this posts make Peter O’Neil look smart, that he is a __________. That was not the intention of the posts. Not only did Peter O’Neil hang onto power loner than his peers, second only to Somare’s 2002 – 2011, in the history of PNG politics, but he defeated a vote of no confidence. This is a series attempting to explain why he was able to stay that long, not whether the strategies he used were legal or not, moral or corrupt, smart or manipulator of the dumb and the glutton.

There are questions we are not asking as all get caught up in euphoria. Questions like: Would Marape have resigned if the Supreme Court did not rule the amendment which extended the grace period to 30 months invalid in 2016? If the Supreme Court failed to do that, we would have to wait until February 2020 to start talking about vote of no confidence, not February 2019. Would the MPs have resigned enmasse if the DSIP/PSIP remained at K10-15 million and not slashed to K2 million in 2017? Would the PM fire and hire departmental heads to remain in power if the Supreme Court failed to rule the amendment to the Public Services Commission Act (2014) invalid early this year (2019). Under the amendment, the PM controlled Ministerial Executive Appointment Committee called the shots. We should be concerned about these features not repeating itself in any government in the future. These series are an attempt to remind us of what the government can do (any government), and not let them move the same posts again in the future.

So, Part One dealt with (1) Constitutional Amendments, and (2) Executive’s control of DSIP/PSIP funds, disciplining and rewarding MPs. Now we look at another three factors.

3. Politicisation of the public service 

Since 2012 the O’Neil government secured controlof appointments of senior positions by replacing the role of the Public Services Commission (PSC) by the Ministerial Executive Appointment Committee, by amendingthe Public Services Commission Act (2014). Usually, the Public Services Commission, an independent body makes the recommendation to the National Executive Council as per the Public Service Commission Act. As in a patron-client relationship, appointments to senior positions were made with the expectation that the appointee would support the government. This factor featured prominently with the dismissal of then Police Commissioner Toami Kulunga in 2014 when he approved the warrant of arrest of Prime Minister Peter O’Neill in relation to alleged illegal payments made to Paul Paraka lawyers. Geoffrey Vaki was appointed as the Head of Police. When Vaki became embroiled in a contempt of court case for conspiring to prevent the arrest warrant being served on the Prime Minister, Gary Baki was appointed as the Police Commissioner. Gary Baki prevented the arrest of the Prime Minister by vettinghigh profile cases. Similar accusations were made for departmental heads in the country.

Why did O’Neil fall:On the 2ndof April 2019, the Supreme Court ruledthat the amendment to the PSC Act was unconstitutional and therefore invalid. This removed the influence the prime minister had over selections of key individuals, and potentially removed the fear for these individuals to follow instructions from Peter O’Neil. Though this factor may not have featured as prominently as other factors in O’Neil’s downfall, it was an indication for those MPs in the government and the ruling party that the prime minister was no longer invincible, and they began to reign en masse.  

4. Dissatisfaction among resource rich provinces

Since 2012, Peter O’Neil had the backing of MPs from the resources rich provinces of the Highlands. Specifically he had the support of MPs from Hela and Southern Highlands provinces where the LNG project is located, and Enga province, where the Pogera Gold Mine is located. James Marape is MP for Tari-Pori Open, a district within Hela Province. He resigned as Minister for Finance and member of PNC on the 11thof April 2019 following the signing of the USD 13 million Papua LNG gas agreement on the 9thof April 2019 that allocated only allocated 2% to landowners which is located in Gulf Province. As he resigned, he specifically mentioned the lack of honoring existing resource project agreements such as the 4.25%shares from Kroton, a subsidiary of the state entity Kumul Consolidated participating in the existing LNG project, for Hela and Southern Highlands. Fourteen of the forty-two MPs who either resigned or left the coalition were from the Highlands region, including the governors of Southern Highlands, Hela and Enga Provinces. Seven other MPs from Morobe Province, a coastal resource rich province, also moved to the opposition camp. They were members of the Pangu Pati in the coalition government led by Peter O’Neil. Morobe Governor had taken the government to courtover the signing of the Waffi Gold Mine in early 2019, which he claimed did not benefit the people of Morobe and the landowners.

What Caused O’Neil’s Downfall: The dissatisfaction of the MPs from resource rich Highlands provinces and Morobe Province can best be described as the trigger, for the fall of Peter O’Neil. This is because not all MPs who moved to the opposition side in an attempt to topple the prime minister were necessarily from the resource rich areas. But the movement by MPs from the resource rich provinces was a major crack in the coalition. 

5. UBS Loan, Parakagate, and Corruption

There Ombudsman Commission’s report implicatingthe prime minister for breaking at least 15 laws of the country was leaked via social media in the lead up to the change of prime minister. When the parliament met on the 7thof May 2019, the opposition camp had 50 MPs, six short of the majority in parliament, and could not stop the government from adjourning the parliament to 28thof May 2019. After the UBS report was leaked, the numbers of the opposition increased to 63 MPs, six more than the required majority to change the government. The prime minister authorised UBS loan of AUD 1.239 billion to purchase shares from Oil Search on behalf of the state. However, the report showed that the prime minister’s actions amounted to misconduct in office as he failed to comply with relevant legislations, including the failure to get both the National Executive Council and parliament approval. Parakagate is another high level corruption case against Peter O’Neil. In 2014, an arrest warrant was granted for Peter O’Neill in relation to alleged illegal payments made to Paul Paraka lawyers by removing police commissioners at his convenience to avoided arrest. 

What Caused O’Neil’s Downfall: The leaked UBS report was devastating. This report was the first from Ombudsman Commission directly implicating Peter O’Neil for corruption, and for breaking the laws. This may have contributed to more MPs resigning from the party and coalition. 

It is difficult to pinpoint one factor as the main cause for Peter O’Neil’s downfall. It can best be described as an accumulation of factors discussed above. A more important question is: why did MPs start resigning in April 2019, and not earlier. After all, all factors discussed above precede 2018. Peter O’Neil got himself into a situation where, all it required was a crack, and it came from dissatisfaction from MPs from resource rich provinces

In Part 4, we will look at how the emphasis on Districts and Open MPs, and the amendments to the Organic Law on the National and Local Level Governments in 1995 weakened and marganilized the provincial governors. And how they resigned in droves when the crack started. We will also look at how O’Neil rejected advise of his own ministers and dealt directly with the departmental heads. It was the resignation of ministers Marape and Davis, the two senior ministers, who have become PM & Deputy PM, that led to the change of the downfall of PO.

How Great Was The Fall! – The Part One.

Part One: Constitutional Amendments & Discretionary Funds

While many people are happy to see O’Neil go, it is important to assess how this one man became almost invincible. Many seem to forget that he is only the second PM to ever complete a full 5 year term in parliament, and successfully defeat a vote of no confidence in 2016. But the cost is a K20 billion loan, weakened legislature to the extend best described as “legislature on her knees”, and great deal of loss of confidence in the public sector. As we get caught up in the ascension of Marape and the hope of better PNG ahead, we must not forget the lessons we must avoid. So how did O’Neil become alsmot invincible? This is first of three parts, investigating factors that gave rise to O’Neil’s rise, causes for his fall, and challenges ahead.

To understand what led to Peter O’Neil’s downfall, first you have to know why he succeeded in completing a full Parliament term, from 2012 – 2017. O’Neil is only the second prime minister to complete a full parliamentary term since independence in 1975. The other prime minister to have completed a full term is Michael Somare, from 2002 to 2007. All other prime ministers since the first post-independence in 1977 were removed either through a vote of no confidence, or resigned as vote of no confidence became eminent. The success of Peter O’Neil can be attributed to several factors explained below, and the undoing of the same factors may help explain his downfall. 

  1. Amendments to the Constitution to prevent vote of no confidence

Peter O’Neill used his numerical majority (MPs) to increase the grace periodafter elections in 2012, from 18 months to 30 months. Grace period is the set period after elections and before the next election where a vote of no confidence is not allowed. Since there are 60 months within the five-year term, 42 months or three and half years (30 months after 2012 elections and 12 months before 2017 elections) were covered by grace periods, leaving only a short 18-month or one and half year window where the prime minister could be challenged. In addition to that extension of grace period, the minimum parliamentary sitting days – mandatory number of days the parliament must meet in a year – was reduced from 63 days to 40 days.

After the first 30 months grace period was over, the O’Neil government used the reduced sitting days to avoid a vote of no confidence. They spread the limited sitting days over 2015 to mid-2016, and would adjourn whenever the opposition seemed to push for a vote of no confidence. As the 12 remaining months before the issue of writs in July 2016 for 2017 elections drew near, parliament was adjourned to 2ndof August 2017. The next parliamentary sitting August was scheduled to fall well within the grace period (12 months before 2017 elections), eliminating any chance of a vote of no confidence. The Supreme Court ruled this adjournment and amendment invalid in 2016 and ordered the parliament to re-convene to dealwith the vote of no continence. The parliament met but the prime minister successfully overcame the vote of no confidence, and a few weeks later, the next 12 months grace period before the 2017 elections started.

Why did O’Neil fall:The Supreme Court ruling that the amendment was unconstitutional is a very important factor, because after the return of writes in 2017 elections, the grace period would only last for 18 months, 12 months less than the grace period in 2012. The grace for 2017 post-elections ended in January of 2019, and though parliament was adjourned twice to avoid vote of no confidence, first on 1stJanuary 2019 and again on 7thMarch 2019, the MPs began resigning from Peter O’Neil’s People’s National Congress (PNC) and the coalition in general. On the 29thof March 2019 the prime minister did not have the numbers to adjourn the parliament any more, and he resigned. James Marape was elected as the new prime minister on 30thMay 2019, five months after the grace period expired. 

2. DSIP/PSIP funds 

Electoral development funds (the same is referred to as discretionary funds) played a big role in maintaining O’Neil in power. Though these funds were around since 1984 (K10, 000 back then), the amount given to MPs increased exponentiallyas a result of high commodity prices after the 2000. By 2013, K10 million was allocated per year for each of the MPs representing the 89 open electorates/districts through the District Services Improvement Program (DSIP) funds; and K5 million per electorate for each provincial MP through the Provincial Service Improvement Program fund (PSIP), that is, K5 million multiplied by the number of electorates in a province. The Administrative Guidelines 2013 governing these funds do not state the specific dates and amounts to be given to the respective MPs. The government has been accused of exploiting this vacuum by deliberately withholdingthe DSIP and PSIP funds belonging to MPs in the opposition, while releasing the funds to MPs who support the government. For instance in August 2016, the governor for Oro Province, Gary Juffa, who was critical of the government decisions, claimed that the national government only released K1 million for Oro Province instead of K10 million (K5 million each for the two open electorates in Oro). Sam Basil, the MP for Bulolo Open, Belden Namah, the MP for Vanimo Green Open, and others made similar claims as they missed out on their K10 million DSIP components. A month after Peter O’Neil formed government in 2017; Sam Basil led 14 other MPs from Pangu Pati to cross over to the government side. As Pangu joined the government, Basil explained this decision as being driven by his MPs’ need to be able access DSIP funds, which he claimed may have been denied had they stayed in opposition. 

Why did O’Neil fall:As the country ran into high debts (officially K20 billion), and low commodity prices affected the country’s budget, the government decided to cut these funds to K2 million per MP starting in 2017. There was no official announcement on whether this decision has been changed. This may have removed the motivation for supporting the government, as well as the fear MPs had of risking moving to the opposition as in the previous term.

Part Two will look at the Politicization of Appointment Committees, Marginalization of and Grievances of Resource Rich MPs & Corruption Scandals

Read Part Two, Clink here: https://academicnomad.home.blog/2019/06/14/how-great-was-the-fall-part-two/

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