January 2014 by Islands Business

January

2014

Vol. 40, No. 1

Contents 35 Courts can’t take Cooks trusts to court Global pioneer in offshore asset protection

Viewpoint

36 Keep fisheries/EPA negotiations separate

Youth

37 Stars of the future to shine bright New framework to bring about changes

Environment

39 Remembering our crew and family as we open the chapter to 2014

Regular Features

6 Views from Auckland 7 We Say

CRYSTAL BALLING THE REGION: What 2014 will bring. Cover report—pages 1630. Computer generated: Dick Lee

12 Whispers 14 Pacific Update 40 Business Intelligence

Cover Report

16 2014 Year of Elections for Melanesia

It will be to the polls for Fiji, Solomons and New Caledonia

20 The outlook for Polynesia

NZ goes to the polls, tourism to boom

24 Sour relations over of US aid programmes

Final 10 years of financial agreement

26 Issues and challenges facing the region’s tuna fisheries What sort of year will 2014 be?

27 New sheriff in town

Tony Abbott transforms aid and climate policies

29 Growth to pick up for region in the new year Small bounce back to 5.4%

30 Big year ahead for island sports

High medal hopes in weightlifting and rugby 7s

Business

32 PACPs firm on ‘variable geometry’ stand An EPA with the EU is still within sight

33 Fiji Airways to expand partnership with Qantas No to alliances

34 Holden pulls plug, hits Samoa exports 200 jobs on the line Islands Business, January 2014 3

Managing Director/Publisher Godfrey Scoullar Group Editor-in-Chief Laisa Taga Group Advertising & Marketing Manager Sharron Stretton Staff Writer Robert Matau Graphic Design Dick Lee Virendra Prasad Main Correspondents

The Pacific’s Best...

Australia Rowan Callick Nic Maclellan

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Column

Views from Auckland BY DEV NADKARNI

Legacies of selflessness in the age of the selfie

South Africa and clearly the people have little or no faith in their present leadership, going by the way they regarded President Zuma at the funeral. Both the present government and the people of South Africa have thrown those qualities of tolerance and patience that Mandela stood for to the winds. That situation is not dissimilar to what is happening in Gandhi’s India. Corruption, nepotism and lawlessness are rife in India, even 65 years after Gandhi was murdered. Like and how that might have a bearing on the future No event in recent memory has seen so many in Mandela’s case, it can be argued that Gandhi, of South Africa and the world at large. world leaders, bitter political rivals, technocrats, while a great freedom fighter, was nowhere as Both Mandela and Gandhi left a laudable A-list celebrities, thousands of media persons and good as a political adviser after the country relegacy, much of which bear great similarities: hundreds of thousands of common folk descend ceived independence. equal respect to all human beings whether friend on a venue in a far off country at such short notice The legacies of both Mandela and Gandhi or foe, the insistence on abolishing any kind of to pay their respects to a departed soul. ultimately prove invaluable to politicians to offer discrimination (for Mandela it was colour; for The attendee list at the event was a virtual lip service to the hapless people of South Africa Gandhi caste), peaceful methods of protest, who’s who of the whole wide world—a list that and India respectively. While people are urged to developing such qualities as patience, tolerance needed no preparation to compile, no invitations strive to live up to their sterling values, the leaders towards the diversity of views, opinions and to be sent and almost no protocols to be followed. carry on entrenching themselves and their family backgrounds that colour people’s positions on Such was the greatness and the charisma of members and minions in positions of power with a host of matters, a strong belief in the ultimate Nelson Mandela, undoubtedly one of the greatest the most unethical and corrupt of means in a most power of peaceful and compassionate persuasion leaders in all of mankind’s history, that the world’s unbecomingly shameless manner. and such other sterling qualities. movers and shakers descended on a stadium in Quite like the parallels in Mandela and GanBut are these ideals realistic or just that—ideSouth Africa without any of the security fuss and dhi’s teachings, their respective nations whose the cloying protocol that always acfreedom they fought for are hurtling companies them. along parallel lines away and away An imposter of an interpreter from those idealistic teachings. Both with a serious criminal conviction to countries have grinding poverty, a his name and who was known to be rapidly widening chasm between of unsound mind was able to stand the privileged and the dispossessed, next to the world’s most protected plummeting quality of life, rising man, US President Barack Obama, corruption, pollution—and most of in full view of billions of viewers all, a new kind of apartheid: not one around the world. of colour or caste but one between Such an incident is unthinkable the haves and have nots. in any other country or venue. And This situation makes one wonder if even if it ever happened, it would the legacies of both those celebrated have caused enough outrage for a men were mere ideals, handy for the dozen heads to roll. use of latter day politicians to ply their Reams upon reams have been dubious trade of promising much and written on Nelson Mandela’s exdelivering nothing—except, that is, traordinarily eventful life—offor themselves and their kith and kin. ten described as the long walk to As in the case of Gandhi and Manfreedom—and his death since his dela’s name, too, statues, institutions, passing last month. The story of his university studies, books and films struggles, his rise from obscurity to The late Nelson Mandela...undoubtedly one of the greatest leaders in all of mankind’s will be made, even branded, around Photo: horseedmedia.net history. one of the world’s most well loved the world. After all, they were the leaders of all times has inspired men of their time who achieved great a generation. Along the way, his things against near impossible odds, achievements—helping make apartheid a thing als? Mandela, though universally acknowledged things no ordinary humans could have hoped to of the past, being his most significant one—have as the man who sounded the death knell of achieve. They were men of exceptional qualities, been celebrated ever since he was set free from 27 apartheid in South Africa, has people divided which leaders of all persuasions seem to find too years of inhuman, solitary incarceration. over whether he made a successful President for hard to emulate, but too easy to spout from their His utterances on cultivating tolerance, comhis country. The ideals he employed during his mealy mouths. Going by South Africa’s current passion and forgiveness for others’ transgreslong walk to freedom to throw off the inhuman state of affairs, its leaders seem to have already sions, even if you have been the unjust victim, yoke of apartheid from the people of his beloved given the go by his lofty ideals. have conferred on him the quality of a political country, those ideals do not seem to have worked Mandela’s legacy, like Gandhi’s, seems doomed saint—not unlike another giant of a previous era: in his avatar as its first black President. to remain firmly in the realm of books and uniMahatma Gandhi. That his successor President Jacob Zuma versity studies as the world’s leaders get along Since much has been written about his exemwas mercilessly booed and humiliated during with the business of running their countries. plary life in the world media in the past month, the funeral service bears testimony to how little The ‘selfies’ that they take of themselves and anything more on that subject would sound Mandela’s legacy has rubbed off on his nation’s their mates at somber occasions like those of repetitive. Instead, it would probably be more government and people. Corruption, nepotism Mandela’s funeral betraying their fiercely narcisworthwhile to look more closely at their legacy and scant respect for the rule of law are rampant in sistic streak. 6 Islands Business, January 2014

WESAY ‘Two of China’s actions over the past couple of months have sent ripples in the geopolitical status quo of the region, raising the hackles in nations around the Pacific Rim and beyond. More significantly, it has dragged major global players into the mix with both Japan and the United States at first reacting vigorously but then retreating somewhat—only to be dragged back with another action the United States has described as needlessly provocative’

hile climate change is warming the seas and oceans around the world and is believed to be the cause of increasingly frequent destructive wild weather events all over, geopolitics seems to be making the seas and oceans in the Asia Pacific region metaphorically hotter at a worryingly faster pace. In the middle of the first decade of this century, realisation dawned on the United States that its deep preoccupation with the Middle East for at least two decades prior had taken its attention off the world’s single largest geographical feature and potentially the richest area with natural resources—the Pacific Ocean, which covers two thirds of the surface of the planet. When it began re-engaging with the region it once considered its bailiwick after World War II and which it largely took for granted, it realised there were several other players that had dug in their anchors all around the region and successfully spread their influence. That realisation morphed into concern and the world’s only military superpower has redoubled its efforts to wrest the initiative back with all sorts of ploys. Its diplomatic and military machinery has been in overdrive this past decade establishing new and scaling up existing facilities across the region. For instance, it has greatly scaled up its embassy in Fiji. It has been in joint naval exercises with allies and partners around the region. It has also deepened its engagement with western regional allies like Australia and New Zealand and spoken about enlisting their help in ensuring security in the region. As for the islands, it has sent larger delegations to events like the Pacific Islands Forum annual meetings and even had its senior most official attend it—as former Secretary of State Hillary Clinton did in the Cook Islands in 2012. It has made public statements of its intentions and firm resolve to deepen engagement in the region. And such statements have come from the offices of the Secretary of State and top chiefs of its armed forces. The pace with which these actions and statements have come are indicative of the fact that the United States has clearly realised that it risks missing the Pacific boat. Not that these have been lost on the Asian powers that have established and nurtured their relationships around the region for much longer than the United States’ re-entry in the past decade.

China, the United States’ most significant rival for the region’s hegemony, has in the past few months begun flexing its military muscle more aggressively backed with its growing financial gravitas in a significant area of the Asia Pacific region. Though not geographically within the Pacific Ocean, its recent actions in the South China Sea, north of the Pacific and not too far from the nearly two dozen islands nations and territories of the region, are an indication of the shape of things to come. Two of China’s actions over the past couple of months have sent ripples in the geopolitical status quo of the region raising the hackles in nations around the Pacific Rim and beyond. More significantly, it has dragged major global players into the mix with both Japan and the United States at first reacting vigorously but then retreating somewhat—only to be dragged back with another action that at least the United States has described as needlessly provocative. The first instance concerns the string of uninhabited islands and rocky islets to the southwest of Japan called the Senkaku Islands by Japan and Diaoyus by China and whose territory is claimed by both nations—an unresolved dispute going back into history. In November last year, the Chinese Defence Ministry issued a map of an “Air defence identification zone” in the East China Sea. The zone includes the airspace above the islands. The announcement was sudden and unilateral, causing great concern in Japan and its ally United States as also other countries in the immediate vicinity. The international community was stunned. The notification means that every flight Sending ripples traversing through that airspace—whether in the geopolitical military, commercial or freight—must identify status quo itself to Chinese aviation authorities, failing which it could face action like being escorted out of the zone. It was careful in not claiming it as its own sovereign space—that would have been an overkill—but sent a powerful message that it meant business in the area and it won’t take kindly to anybody having any ideas around those islands. It was China’s way of killing several birds with a single stone—it cleverly sent a definitive message to Japan and all concerned that it considered the disputed islands as its own, without explicitly saying so. It also sent a message to the United States that it was its own Islands Business, January 2014 7

WESAY master and would brook no interference. It was nothing short of cocking a snook at the world’s most powerful nation, telling it in no uncertain terms that it was no longer a moniker Washington could take for granted. US Vice President Joe Biden said the flight zone had created “apprehension in the region”. Though the United States was scathing in its criticism initially, it backed down in the following days almost as if resigned to facing a fait accompli—which nobody could do anything about. Japan, too, toned down its criticism after initially making some bold noises and sabre rattling. In the following weeks, it went on a charm offensive, announcing a raft of financial assistance packages to smaller nations around the region as well as promises of visits by top leaders in an obvious bid to earn regional support. Aircraft have had no choice but to comply with China’s unilateral regulation. No sooner had the controversy around this event died down than there was another military row that blew up. Last month, a Chinese aircraft carrier cut off a United States guided

missile cruiser operating in international waters in the region, forcing it to take evasive action, avoiding what could have been a major collision at sea. China described the incident as an “encounter” vociferously insisting that its vessel acted according to “strict protocol”. Chinese media accused the American vessel of “harassing” the Chinese aircraft carrier. US Defence Secretary Chuck Hagel described the episode as “irresponsible”, “unhelpful” and “incendiary”. Those are severe words and indicate growing frustration on the part of the United States towards China’s growing hegemonic ambitions in the region. Such incidences will only become frequent, thus plunging the climate security of the entire region into uncertainty. Like the deleterious effects of climate change, which the islands are paying for the sins of the industrialised nations, they will pay the wages of conflict in the region because of the potential action of distant nations like China and the United States.

‘Not documenting children is the starting point of a string of injustices that they will face throughout their entire lives—abuse, neglect, hunger, poor health, lack of education, exposure to crime and a complete waste of the potential with which every child is born to become a productive, responsible citizen’

n this age of instantly accessible news, information and knowledge where it is possible to stay connected with almost anybody on earth from anywhere one might be, it might come as a shock that one in three children below the age of five officially do not exist—simply because there is no record of them. At a time when remotely controlled unmanned space vehicles are probing the detailed soil composition of Mars and roving across the surface of the moon, humankind has no idea whatsoever of nearly a third of its own offspring very much here on the planet we all call home. This is the shocking statistic that is revealed in a new UNICEF report titled “Every Child’s Birth Right: Inequities and trends in birth registration”. The report published on the organisation’s 67th birthday last month presents statistical analysis spanning 161 countries with the latest available country data and estimates on birth registration. Despite billions of dollars spent on improving government infrastructure like computerisation, human capacity building, knowledge management and record keeping over the past several decades, it is appalling that one out of three children under the age of five around the world appear nowhere in official records. In 2012, according to the report, just 60 percent of all babies born were registered at birth. These rates, however, vary markedly across the world’s regions, with the lowest levels of birth registration found in South Asia and

8 Islands Business, January 2014

sub-Saharan Africa. But the Pacific Islands region does not fare too well either. Though some countries do well than others, the overall picture is disappointing. Registration rates of children under five years of age are an abysmal 20 percent in the Solomon Islands, according to the “2008 Child Protection Baseline Report for Solomon Islands”. The figures are marginally better at 52 percent for Vanuatu and 82 percent for Kiribati. The importance of birth registration cannot be overstated—the reasons all being common sense: Children unregistered at birth or without identification documents are bound to be excluded from accessing education, health care and social security. Worse, if children are separated from their families during natural disasters, conflicts or as a result of exploitation, reuniting them is made more difficult by the lack of official documentation. In the words of UNICEF Deputy Executive Director Geeta Rao Gupta, “Birth registration—and a birth certificate—is vital for unlocking a child’s full potential. All children are born with enormous potential. But if societies fail to count them and don’t even recognise that they are there, they are more vulnerable to neglect and abuse. Inevitably, their potential will be severely diminished.” The official further says, “Societies will never be equitable and inclusive until all children are counted. Birth registration has lasting consequences, not only for the child’s wellbeing but also for the development of their communities and countries.”

WESAY What is equally disappointing is that while in some countries where a mechanism for registration exists and is followed relatively better, the documentation process is far from efficient. With the result, one in seven children do not have any official documentation such as a birth certificate. So, even if there is an official record, there is no written proof of the existence of the child either with itself or its parents. In many cases, says the report, this is because governments charge unaffordable fees for documentation or, worse, simply do not have the mechanism to provide any written document. The report rightly points out that unregistered births are a symptom of the inequities and disparities in any given society. The children most affected by these inequities include children from certain ethnic or religious groups, children living in rural or remote areas, children from poor households or children of uneducated mothers. Many of these reasons would apply to Pacific Islands children. In countries like Papua New Guinea, Vanuatu and the Solomon Islands, where people live in remote and difficult to access terrain and on distant outer islands, this may be particularly true. Not documenting children is the starting point of a string of injustices they will face throughout their entire lives—abuse, neglect, hunger, poor health, lack of education, exposure to crime and a complete waste of the potential with which every child is born to become a productive, responsible citizen. When there is no record of a child, how can there be any official mechanism to care for it either through the social security system —if one exists at all—or aid especially in times of natural disasters? Also, the absence of records would never give a true picture of

Where have the babies gone?

the extent of violence against children, exploitation such as child labour, sexual abuse, malnutrition, lack of schoolling and a host of other abhorrent occurrences. The reports that get to the media, though they paint a grim picture, may be only a tip of the iceberg—simply because many of the children subjected to such inhuman injustices, simply do not exist officially as individuals. This unfortunate scenario of 33 percent of children under the age of five who do not exist on paper also gives the lie to a number of other statistics that governments and world organisations put out. This would be particularly true of statistics like those of the Millennium Development Goals (MDG), which calculate the scale of development of a country across several human development parameters like live child births, early childhood education, child nutrition, women’s wellbeing and so on. To ask a fundamental question, if a third of the births are not registered and one in seven has no documentation to speak of, how are these statistics reliable? If the base number is computed erroneously simply because there is no data, how can further numbers be computed and real progress or the lack of it across the MDG indices be truly determined? The first task for governments therefore must be to strengthen the documentation mechanism, hardly a challenge in this day and age of a wirelessly networked world. As well as the report published last month, UNICEF also launched a book, “A Passport to Protection: A guide to birth registration programming”, a document for those working on birth registration, providing background information, general principles and a guide for programming. National governments owe it to the future citizens of their countries to set about doing this basic task right, so each individual of their nation stands proudly counted.

‘Amazingly, no one cares about asking the people of Bougainville about their perception if they need foreign intervention from the likes of Australia and the United States. Quite clearly, Australian fear mongering and painting a picture of a security threat on its doorstep is intended to give it a reason to get into the resource-rich island before anybody else’

he pursuit of riches has existed from the dawn of civilisation. Ancient tribes risked their lives by leaving their homes and hearths in search of riches in distant lands. It is the pursuit of wealth and its concomitant greed that led to expeditions across the world, with the more powerful of explorers subjugating vulnerable locals to increase their wealth through all sorts of means—pillaging, sacking cities, overrunning countries and killing hundreds and thousands

of people. This they did with a heady mix of superior weaponry, dubious barter deals, worldly guile—and religion. The new world order post-World War II brought new ideas of equality, human rights and egalitarianism, which effectively put an end to institutionalised colonialism. But colonialism survived the onslaught of the new world order. Only the means changed. Overt became covert, hush money replaced weaponry, dubious aid replaced dubious trade and corruption took the place of good old guile. Islands Business, January 2014 9

WESAY Colonialism became a thing of the past, surviving only with a operations leaving a huge scar on the pristine island and the people prefix like “post” as in “post-colonial” but its spirit has not only to their own fate. survived but continues to thrive in this so called modern age. The island has slowly recovered and restored peace in the years Commentators and perceptive people term this new avatar of the since it was declared an autonomous zone but Port Moresby has not old colonialism as “neo-colonialism”. It is still very much the pursuit done enough to rehabilitate it and help build its economy, leveraging of wealth but is pursued through new channels that are acceptable its many unique natural attributes. to the new world order. Such as aid, trade, investment and ideas like More recently, Bougainville is gaining more recognition as an social and economic development, inclusiveness, capacity building offbeat destination for adventure and nostalgia tourism, given its and, of course, sustainability. Though the ideals look wholesomely pristine landscapes and diversity of terrain, not to mention its many altruistic, and many of them may be genuinely so, scratch the surface onshore and offshore World War II heritage sites. The recent celand you are more than likely to find the hidden hand of big money luloid depiction (Mr. Pip) of an eponymous popular novel authored behind these initiatives. by a New Zealander has Just as big multinaprovided a surge of intertional corporate money est in the tourist industry. continues to influence Bougainville’s resurgovernment policies gence has apparently around trade negotiarekindled Australia’s tions, it forces the hands old desire to step up of governments around its involvement in the geopolitical decisions as substantial island. Last well. And when it does month, it issued warnthat, its only guiding ings that it feared Bouprinciple is the pursuit gainville may be slipping of wealth—it does not back into chaos. matter what it costs in The Australian Straterms of lives, limbs, tegic Policy Institute property of the people (ASPI) has said Bougainconcerned and their enville “could” slip back vironments. The scenario The House of Representatives...in Bougainville. Photo: Paradise into civil war unless “we” is very much from what [read Australia and the hapless people suffered United States] act now. in the days of colonialism. In the newfound love beOnly the means have changed. tween the region’s ANZAC nations and the US, there is a tendency The hand of Big Oil in the decades-long conflicts in the Middle to invite the US to be part of every activity in the region, cocking a East, and more recently, in the African continent, as well as the snook as it were to China. ongoing large scale destruction of rainforests and the habitats of ASPI’s paper reeks of the trappings of classic neo-colonialism. In countless species of wildlife, flora and not least remote human its December report, it says there is a need to flood Bougainville with tribes in Middle and South America, South East Asia and even some human resources to bulwark the political apparatus and economic Pacific Islands are only a few examples of the devastating impact of infrastructure in preparation for independence. big money all over the world. There are suggestions to invite the US to chip in with aid for Corporate big money fuelled neo-colonialism has been a part of Bougainville. The calculation is obviously to send a message to the Pacific, as it has been in other parts of the developing world for China, that the western powers are in first. That’s not all: other several decades now. The race for resources and the emergence of experts are making a case for the reopening of the Panguna Mine new populous countries as growing economic powers has seen it by its owners, mining giant Rio Tinto. rearing its head in the Pacific Islands region again. Amazingly, no one cares about asking the people of Bougainville about their perception if they need foreign intervention from the This is particularly true of the better relikes of Australia and the United States. Quite clearly, Australian Getting into sourced part of the region—Melanesia, to fear-mongering and painting a picture of a security threat on its the resource-rich be specific. Australia has always remained a doorstep is intended to give it a reason to get into the resource-rich Bougainville big player in Melanesia because of both geoisland before anybody else, using the excuse of bringing in aid, graphical proximity and historical reasons and investment, creating jobs and, of course, ushering in “sustainable Australian big business has gained much from the country’s long development” while guiding its activists towards achieving their involvement in Papua New Guinea, Solomon Islands, Vanuatu and ultimate goal of independence from PNG. more recently, in Timor Leste. It is up to the pro-independence activists of Bougainville to see Of these, its involvement in Papua New Guinea and its auAustralia’s offers to get involved for what it is worth without falling for the usual trappings of investment and promises of inclusiveness, tonomous region of Bougainville has been of most significance. Its capacity building, employment and development at the cost of their involvement in the Panguna Mine in Bougainville intensified the real natural wealth and economic independence in exchange for any island’s bitter conflict about two decades ago, where a rebel group promised help in gaining political independence. was aiming to break away from PNG to form an independent nation. The unrest and conflict caused innumerable deaths and unprecedented destruction. The Australians finally suspended mining • We Say is compiled and edited by Laisa Taga. 10 Islands Business, January 2014

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Whispers Deepsea mining, a quick fix? The deepsea mining debate continues. Pacific civil society groups across the Pacific criticise SOPAC and its development of a regional regulatory framework on deepsea mining (DSM). They argue that it facilitates and pre-empts DSM before Pacific Islands communities have had the opportunity to debate whether this is a form of development they want. Dr. Helen Rosenbaum, coordinator, Deep Sea Mining campaign, said, “SOPAC is actively promoting DSM as the Pacific Panacea, the answer to poverty alleviation throughout the Pacific. However, the truth is somewhat different. Many Pacific countries already have significant mining projects but still lack basic infrastructure, good health and education systems. DSM will not be a quick fix for this.”  Diplomatic spat: Remember that diplomatic spat between Fiji and the PNG government over the recall of PNG’s high commissioner in Fiji? Well, Whispers understands the PNG envoy is back and when this edition of islaNds BusiNess went to press, a decision on whether the PNG envoy continues as dean of the diplomatic corps

was yet to be made by the host country. The dean is a ceremonial role normally given to the longest serving head of mission with of course the approval of the host country. However, Whispers was reliably told that the envoy would be relieved of his duties as dean of the diplomatic corps and the Kiribati High Commissioner who is the second longest serving diplomatic envoy will take over as dean.  Drama in Honiara: Well, what really happened in the Solomons during the EU/PACP EPA informal talks in December with all the drama produced by Fiji? Is what we have been told the truth? Or was Fiji just kicking up a fuss after they were told some hard truths by the EU which they did not like?  Eat fat & forget memory: Forget weight gain, long-term spatial memory loss has now been linked to starch and sugar-laden diets as a warning to Pacific islanders over their lifestyle of high fat traditional foods. A gradual shift from

age-old Pacific islands diets relying heavily on backyard-grown foods to imported sugar and refined carbohydrates-rich foods since the 1980s, the region has suffered severely with high worldbeating obesity rates and incurrence of diabetes. A recent New Zealand study also established that a key cause to the problem is when imported refined and processed carbohydrates are added to the diet of the islanders. A diet stacked with saturated fat and sugar could instigate immediate effect on the brain’s cognitive ability and cause memory loss, noted Margaret Morris, head of pharmacology at the University of the New South Wales in Sydney.  Bad news for Pacific lingo: It is not all good news for Pacific languages in New Zealand. The outcome of a parliamentary inquiry into Pacific languages in early childhood education in New Zealand is being called a death sentence for some languages. A majority report by the education and science select committee has found the government has no legal obligation to promote Pacific languages or Pacific-language education. An Auckland University lecturer, John Mc-

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Whispers Caffery, says the report ignores overwhelming evidence of the benefits of bilingual education. He says it also ignores evidence that communities on their own cannot maintain and revive minority languages. “This was the last roll of the dice for Cook Islands’ maori and vagahau Niue [Niuean language], and without urgent government intervention, those languages will cease in this generation, the research evidence on that is very clear. It is a death sentence in essence.”  Airline competition: Competition is a good thing, isn’t it? Whispers hears a new airline intending to set up in Fiji—understood to be from American Samoa—plans to operate charters between Nadi and Shanghai in China. At the moment, no Pacific islands airlines fly to Beijing. Only two regional airlines—Fiji Airways and Air Niugini—fly to Hong Kong. Air Niugini also flies to other Asian destinations including Singapore, Manila, Cebu, Bali and Tokyo.  So what is the agenda, sir? Staff members of a number of government ministries in one of the Pacific islands were treated to a private lunch—thanks to their kind-hearted minister, who is also the head of government. The lunch was hosted in his office. Staff members were curious to find out what the lunch was all about because it is very rare these days to be treated to a free lunch.  Bye Fiji and welcome Bolivia…Fiji hands over the chair of the major United Nations bloc, the G77+ China, to President Evo Morales of Bolivia on January 8 in New York. It comes after a momentous year in which Fiji’s Prime Minister Commodore Voreqe Bainimarama has led this powerful grouping.  Medical checks for future MPs: Future Vanuatu MPs be warned—you have to be medically fit to even contest an election. That’s the word from the Vanuatu Electoral Commission. It wants the country’s political candidates of the future to undergo medical checks, because of the rising number of by-elections caused by MPs dying in office. The government is struggling to find funds for yet another by-election after Internal Affairs Minister, Patrick Crowby, died at the end of December. Chairman of the Electoral Commission, John Taleo, says, “It’s costing government a lot of money which is why we want to change the law so that in future political candidates will have to undergo medical checks, and importantly those medical checks have to be done in Australia,” said Taleo.

 Buai ban illegal: A PNG lawyer has described the ban on betel nut sales in the National Capital District (NCD) as unconstitutional. Lawyer Lawrence Pukali says he intends to file court proceedings to challenge the validity of the ban. Pukali said the ban has restricted the freedom of movement of people into the NCD and prohibited villagers from selling betel nuts, which was a legal cash crop. He has urged NCD Governor Powes Parkop to relax the ban as it severely affected the livelihoods of the people. NCD governor Powes Parkop said he did not see any constitutional issues arising from the ban in the NCD. “The National Capital District Commission as the city authority has powers to allow or disallow any type of business activity within the city limits,” he said.  Speaker seeks new artifacts: PNG Parliamentary Speaker Theodore Zurenuoc has invited the 22 provinces in PNG to donate items of cultural significance to adorn the entrance to Parliament House. They are to replace the wooden carvings he had ordered removed. He said PNG’s diverse cultural background made it difficult to find a common ground for the nation as a uniting force. He said the one common denominator was the nation’s embrace of Christianity. He said this was at the heart of his move to modernise and restore integrity, respect, and credence in the legislature. Enga Governor Peter Ipatas said PNG needed leaders with guts and vision who took bold and decisive actions like Zurenuoc. “Nobody had the guts to do it,” Ipatas said. “If he has done anything wrong, let God punish him.”  Abbott heads to PNG? Will Australian Prime Minister Tony Abbott and his Foreign Minister Julie Bishop be heading to Papua New Guinea this month? All is quiet for now at the largest diplomatic mission in Port Moresby but it could be the calm before the storm!  Tuaman an MP? David Tua went by many nicknames in his two decades in professional boxing; Tuaman, The Terminator (later shortened to Tuaminator). By the end of this year, he may well add ‘Honourable’ David Tua to his list of monikers. The Samoan-born heavyweight boxer has been approached by members of New Zealand’s Pacific community to enter the political arena, and he’s agreed. New Zealand goes to the polls this year. • Whispers is compiled and edited by Laisa Taga. If you have any Whispers, please contact us on editor@ibi.com.fj

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 Pacific Cosmos – 89 Brisbane Street, Oxley Park, NSW, Australia Pacific Supplies – Rarotonga, Cook Islands Yap Cooperative Association – Colonia, YAP, Federated States of Micronesia Motibhai & Co. Ltd – Nadi Airport, Fiji Paper Power Bookshop – Town Council Bldg, Main Street, Nadi, Fiji Suva Bookshop – Greig Street, Suva, Fiji Chapter One Bookshop – Downtown Boulevard, Suva, Fiji Kays Kona Shop – Dolphin Plaza, Suva, Fiji USP Bookcentre – USP, Laucala Campus, Suva, Fiji Garden City Bookshop – Garden City, Raiwai, Suva, Fiji Bulaccino – Garden City, Raiwai, Suva, Fiji Samabula Drugstore – Samabula, Suva, Fiji Kundan Singh Supermarket – Tamavua, Suva, Fiji MH Superfresh – Tamavua, Suva, Fiji Methodist Bookstore – Stewart Street, Suva, Fiji Textbook Wholesalers – BSP Centre Suva, Fiji MHCC – Suva, Fiji Hachette Pacifique – Papeete, French Polynesia Kiribati Newstar – Bairiki, Kiribati One Stop Stores – Bairiki, Kiribati Robert Reimers Enterprises – Majuro, Marshall Islands Pacific & Occidental – Yaren, Nauru South Seas Traders – Alofi, Niue Nouvelle Messageries Caledoniennes de Presse – Noumea, New Caledonia Wewak Christian Bookshop – Wewak, PNG Boroko Foodworld – Boroko, PNG UPNG Bookshop – Waigani, PNG Lucky Foodtown – Apia, Samoa Wesley Bookshop – Apia, Samoa Panatina Chemist Ltd – Honiara, Solomon Islands Officeworks Ltd – Honiara, Solomon Islands National Stationery Supplies – Honiara, Solomon Islands Friendly Islands Bookshop – Nuku’alofa, Tonga Tuvalu Air Travel, Shipping – Funafuti, Tuvalu Trade and Consultancies – Funafuti, Tuvalu Stop Press – Port Vila, Vanuatu A year’s subscription to 12 issues of Islands Business within Fiji costs $50 and includes a complimentary copy of Fiji Islands Business.

Islands Business, January 2014 13

Pacific Update

Micronesian leaders tackle climate change, human trafficking By Haidee V. Eugenio

mid a backdrop of high healthcare costs, eroding coastlines, skyrocketing air transportation costs and what the United States considers either a target destination for or source of human trafficking, nine Micronesian presidents and governors gathered on Saipan from December 4 to 6 for a regional summit that tackled issues of common concerns and options to address them. In the end, they vowed to continue working together, underscoring this year’s summit theme, “With the sea, we are one.” “Hopefully, the industrialised nations would help soon and help fund the islands’ adaptation to climate change before we all sink to the bottom of the ocean,” Yap Governor Sebastian L. Anefal said on the first day of the 19th Micronesian Chief Executives Summit (MCES) in the capital island of the U.S. Commonwealth of the Northern Mariana Islands. Anefal, the longest serving member of MCES, said Yap has started seeing coastal erosion, disappearing atolls, seepage of saltwater into taro patches and coral bleaching. For the past 10 years or so, people have started relocating to the main island because of rising sea level, the Yap governor said. The lack of resources continues to hamper islands’ ability to deal with climate change. “If it takes money to correct some of the problems so be it, but they (developed countries) provide the funding. Now, there are all kinds of funding they talk about, but it’s very hard to access such funding,” Anefal added. The Micronesian leaders’ summit brought together the presidents of the Federated States of Micronesia, Palau and the Marshall Islands, along with the governors/official representatives of Guam, the CNMI, Pohnpei, Chuuk, Yap and Kosrae. Micronesian leaders have high hopes that Guam Governor Eddie B. Calvo’s recent appointment to U.S. President Barack Obama’s taskforce on climate preparedness and resilience would bring to the fore the challenges faced by tiny islands, which bear the brunt of climate change yet the least contributor to the problem. “For two-and-a-half days, we have been listening to presentations on emerging issues within our region. While we have actively discussed our con-

Microneisan leaders...in Saipan in December to tackle issues of common concerns. Photo: Haidee Eugenio

cerns on a host of issues, one of them stands out as the most common concern we share as a region: climate change,” said CNMI Governor Eloy S. Inos, chairman of the 19th MCES. Inos officially replaced Marshall Islands President Christopher J. Loeak as MCES chairman at the start of the Saipan summit held at Fiesta Resort & Spa. The CNMI governor called on Micronesian islands to “continue our partnership with each other to demand action against large carbon emission producing nations devastatingly contributing to climate change and adversely impacting our fragile islands communities.” “We are already seeing significant effects of climate change in our islands, our shorelines and our coral reef ecosystems,” Inos said. Palau President Tommy Remengesau Jr. said “now is the time for the United States to take a strong stand on climate change and begin the process of funding adaptation.”

“I strongly believe that the MCES is still a viable vehicle for the leaders of our region to develop a Micronesian voice, not only in our Pacific region but in the larger international arena,” he added. The Guam governor assured his fellow leaders that he will bring to the U.S. presidential taskforce the pertinent information from Micronesia on climate change. Echoing other leaders’ sentiments, Calvo said Micronesian communities are the least contributors to climate change yet they bear the brunt of these changes—“whether it’s drought, heavy precipitation, rising of seas, warming of seas.” “We’re hopeful the federal government understands what it means to the quality of life to our people,” he added. Human trafficking On the second day of the summit, FSM President Emanuel Mori and Marshall Islands’ Loeak took issue with the U.S. State Department’s 2013

New speaker for Tuvalu in the new year? By Robert Matau

xpect a new speaker for Tuvalu’s parliament if government has its way in the coming byelection. Tuvalu goes to the poll on January 14 to fill the Namuga seat left vacant by the sick former educa14 Islands Business, January 2014

tion, youth and sport minister Dr Falesa Pitoi. Dr Pitoi was away in Cuba on official duties as then Minister for Education in December 2012, when he was taken ill and flown to various locations for medical treatment. He has not returned to Tuvalu since then. Governor-General Sir Italeli Iakoba had to use

his powers again to call for a by-election for the island of Nanumaga. This after he consulted a team of medical officials to look into the year-long absence of Dr Pitoi. Secretary to Government Panapasi Nelesone told Islands Business that preparations have begun for the by-election after the decision was handed

Trafficking in Persons Report that listed their islands under Tier 2 of the watchlist for human trafficking and sex trafficking. They said these labels do not reflect the real situation in their area and hurt their image and economic development. Of areas in Micronesia, both the Marshall Islands and the FSM are listed by the U.S. State Department as under Tier 2 watchlist. It means the country is where “absolute number of victims of severe forms of trafficking is very significant or is significantly increasing,” and where there is failure to provide evidence of “increasing efforts to combat severe forms of trafficking in persons from the previous year.” Loeak challenged the U.S. agency to share information as to who are involved in human trafficking in the Marshall Islands “so we can help solve it.” U.S. Attorney Alicia Limtiaco, who presented on the topic, “Preventing Human Trafficking in the Pacific Region”, said the comments and concerns raised at the summit will be shared within the regional taskforces and coalition on human trafficking. Human trafficking is a form of modern-day slavery whose victims could be girls, women, boys and men. Limtiaco said victims do not necessarily come from another country or island, as she also talked about “domestic trafficking.” Unlike drug trafficking, where a person sells the same drug only once and profits from it once, human trafficking involves selling victims “over and over again” and profit from them as often as they can, Limtiaco said. The U.S. State Department’s report says the Marshall Islands “is a destination country for women from East Asia subjected to sex trafficking. Foreign women are reportedly forced into prostitution in bars frequented by crew members of Chinese and other foreign fishing vessels,” among other things. The same report says FSM “is a source and, to a limited extent, a destination country for women subjected to sex trafficking. Some reports suggest FSM women are recruited with promises of wellpaying jobs in the United States and its territories and are subsequently forced into prostitution or labor upon arrival.” FSM has four states: Pohnpei, Yap, Chuuk, and Kosrae, whose governors and representatives were also on Saipan for the December summit. Besides Yap’s Anefal, also in attendance were Pohnpei Governor John Ehsa, Chuuk Attorney General Sabino Asor, representing Governor Johnson S. Elimo, and Kosrae Lt. Governor Carson Sigrah. Palau was also listed under Tier 2, which means the country’s government does not fully comply with minimum standards but is making significant

down by the Governor-General. He said the date for the polls would be January 14. “On the 28th of December the final list of candidates will be compiled and objections will be received and assessed by the returning officer,” he said. “Barring any obstacles, we should be heading for

efforts to bring itself into compliance with those standards. Besides the CNMI, four other U.S. insular areas—Guam, American Samoa, Puerto Rico, and the U.S. Virgin Islands—have also been identified in the same report as either transit, destination, or source for human trafficking, forced labor and sex trafficking. “It does not make us look good in the international arena, not one to be proud of, but I think we can all agree on trying to curb this,” the CNMI governor and MCES chairman said, adding that the best approach would be to “prevent” it. Sarah Thomas-Nededog, vice president for Westcare Pacific Islands, said those involved in human trafficking look at communities that are “most vulnerable, the most at-risk.” These include communities with sluggish economies and those where people are less educated, making their people more vulnerable to trafficking. “So we come together jointly to say, ‘look, if we make ourselves less vulnerable, less attractive to these international schemers, they won’t come to us,’” she told Micronesian leaders. Healthcare costs, others Micronesian leaders also balked at the high healthcare costs in the region. They continue to look at a regional health insurance plan that they hope would bring down costs and provide needed medical care. Association of Pacific Islands Legislatures president/Guam Speaker Judith Won Pat, along with StayWell Insurance-CNMI operations manager Eric Plinske, briefed islands leaders on ongoing efforts to provide universal health insurance to Micronesian islands. The MCES chairman/CNMI governor also raised concerns on the impacts of the Affordable Care Act or Obamacare on U.S. islands. At the last day of the summit, Inos recognized the efforts of the Micronesia Challenge, and how the region is leading the way in protecting nearshore marine and terrestrial resources “which encompass a large part of addressing the impacts of climate change.” He thanked his fellow Micronesian chief executives, along with the rest of their delegations and other participants, for taking the time to visit Saipan in the CNMI for the summit. The next Micronesian Chief Executives Summit will be held in Yap in the FSM. Other presentations at the summit included those on the Western Interstate Commission for Higher Education, regional transportation, regional energy, regional shark sanctuary in Micronesia, healthcare initiatives, the Regional Invasive Species Council, the Micronesian biosecurity plan, and the Micronesian Challenge.

a January 14 polling date.” Motion Enele Sopoaga’s government is hoping to win the by-election, so that it can have the two-thirds majority required under its constitution to move a motion to remove Speaker Sir Kamuta Latasi.

In an executive session with U.S. Department of the Interior representatives, including the Office of Insular Affairs director Nik Pula, Micronesian leaders expressed concern about the current level of U.S. funding to offset the impacts of migration of an estimated 56,000 citizens from Freely Associated States (FAS) to islands such as Guam, CNMI, and Hawaii. FAS citizens are those from Palau, Marshall Islands, and the FSM’s Pohnpei, Chuuk, Yap and Kosrae. Under the compacts, FAS citizens may live and work in the U.S. or its territories without a visa as lawful non-immigrants or habitual residents. In exchange, these territories such as the CNMI and Guam are reimbursed for the expenses they incur in hosting FAS citizens. Based on the summit’s joint communiqué, the Guam governor “indicated his disappointment in the overall movement of the U.S. government and the Department of the Interior on issues of Compact Impact, especially the failure to develop a template for the measurement of impacts, failure to report in a timely fashion to the U.S. Congress, and the failure to respond to overall healthcare, education, corrections, and other impact issues.” FAS chief executives also recognize that Compact impacts were significant but expressed concern regarding the compilation of data and statistics. ‘Moment of silence’ At the summit, Micronesian leaders observed a moment of silence to pray for and reflect on the lasting legacies of the late South African president Nelson Mandela hours after the anti-apartheid leader passed away at the age of 95. Mandela, who became South Africa’s first black president after enduring 27 years in prison for his role in fighting apartheid, passed away on December 5 (December 6, CNMI time). He was 95. The Guam and CNMI governors said Mandela’s ideals and actions have lasting impacts on islands as far away as Micronesia. Calvo also spoke of Mandela’s fight against apartheid, a policy or system of segregation or discrimination on grounds of race. “It was all about equality and freedom for all people. And as we look at the surrounding membership here, we are [among] the youngest democracies in the world, here represented in Micronesia, fighting for the same cause of individual liberty. “We have some of the youngest member states that have taken full political maturity and as well as American territories still looking forward…to full political self-determination and autonomy,” Calvo said. In his closing remarks, Palau’s Remengesau summed up what it means to be in Micronesia, “The oceans don’t divide us. It unites us.”

Government has been unhappy with the Speaker particularly his handling of parliamentary business. Latasi had refused to entertain a vote of no confidence against then Prime Minister Willie Telavi last year after then Opposition Leader Sopoaga gained a majority in parliament. Islands Business, January 2014 15

Cover Report

Fijiâ&#x20AC;&#x2122;s Prime Minister...Voreqe Bainimarama. Photos: Fijiâ&#x20AC;&#x2122;s Ministry of Informatio

Gordon Darcy Lilo...Solomon Islands Prime Minister. Photo: Islands Business

2014: Year of Elect i

It will be back to the polls for Fiji, Sol o By Samisoni Pareti

2014

W ith the exception of P apua N ew G uinea and Vanuatu, all the other countries that make up What to Melanesia will be going to the polls this year. Fiji, Expect of course, will be the country to watch. After leading his soldiers in a bloodless coup on December 5, 2006, military commander now Prime Minister, Voreqe Bainimarama has promised free and fair elections before September 2014. 16 Islands Business, January 2014

By the end of 2013, no poll date had been announced and Bainimarama was yet to launch his political party. A number of his military officers as well as civilians serving in his interim government had expressed interest in contesting the elections with him. If elections do take place, this will be the first time since it gained independence from Great Britain in 1970 for Fijians to be voting without racial lines. Bainimarama abolished racially-based constituencies in a new constitution his regime enacted in mid-2013. After more than seven years in power, the naval sea master turned army commander is optimistic of winning the elections.

Moana Carcasses Kalosil...Tahitian born Vanuatu Prime Minister.

Peter O’Neill...PNG’s Prime Minister.

t ions for Melanesia

ol omons and New Caledonia in 2014 He had established an anti-corruption commission in an attempt to eradicate graft amongst public officials. He had pushed through major capital projects in new roads and bridges around the country, funded largely through Chinese Government loans and grants. He had shut down the influential Great Council of Chiefs and virtually silenced the vocal Methodist Church. Political parties have tougher rules to meet as well as those working in the legal and media fraternities. His recent 2014 national budget offered huge concessions in education particularly.

Civil servants have also been offered salary increases effective January 2014. Regime-friendly media keeps account of growing expressions of support for Bainimarama from across the country. This has not stopped attempts by existing political parties to hammer out a lose coalition to fight the military commander. With Bainimarama’s new constitution calling for one single constituency in the 50-seat parliament, political opponents like the Fiji Labour Party, the National Federation Party, ousted Prime Minister Laisenia Qarase’s Social Democratic Liberal Party and Islands Business, January 2014 17

Cover Report

Happy to return to parliamentary democracy...Fiji goes to the polls before September 2014. Photo: Islands Business

Mick Beddoes’ United Generals Party hope to oust the military leader through the ballot box. Political pundits say Bainimarama will only go to the polls if he is confident of a win. To lose would jeopardise the immunity provision of the constitution they have brought into force. So much therefore is at stake in Fiji for 2014. It will be a year that may see the restoration of parliamentary democracy after almost eight years in the political wilderness. Bainimarama hopes his 2006 coup was the last in Fiji’s short but turbulent coup-filled political history. PAPUA NEW GUINEA 2014 would also give Bainimarama time to mend relations with his bigger Melanesian neighbour of Papua New Guinea. By the end of 2013, for some yet to be explained reasons, PNG’s long serving high commissioner in Fiji Peter Eafeare returned to Port Moresby for urgent consultations with his superiors. Unconfirmed reports say his host had objected to his continued service as dean of the diplomatic corps in Fiji. Relations between the two countries turned cold sometimes after Fiji hosted its inaugural Pacific Islands Development Forum. Peter O’Neill, Prime Minister of PNG, had initially confirmed to Bainimarama of his attendance only to cancel it at the last minute and flew to New Zealand for a state visit. His offer for a Fijian to head the proposed Pacific ACP Secretariat is also reportedly off the table. But there would be a lot more for O’Neill to worry about in the new year. In PNG, the only predictable thing about its politics is its unpredictability. 2014 gives the Prime Minister time to consolidate unity within the government ranks, reining in wayward members like his parliamentary speaker who went on a destruction spree of cultural totems and emblems found inside the parliamentary 18 Islands Business, January 2014

complex. The economy seems to be his primary focus for now and rundown and ill maintained public infrastructure is a priority. His 2014 budget saw unprecedented growth in investments in capital projects. Budget on infrastructure, education, health and law and order increased by 38% over 2012 levels observes the Asian Development Bank’s December 2013 Pacific Economic Monitor. Proportion of budget allocated to these sectors in the 2014 budget was to increase to 45%. Infrastructure alone got $1.1 billion, the ADB states. The new year should also give him time to work at winning back the confidence of its neighbours in the Pacific. More than 10 years of negotiations with the European Commission for an Economic Partnership Agreement (EPA) was scuttled in 2013 after Port Moresby broke ranks and opted to stick to its interim EPA with Europe. It said it needed to do so in order to protect its tuna exports, although critics say Port Moresby had merely succumbed to strong EC lobbying. O’Neill’s deal with the Australians in housing would-be Australian immigrants on Manus Island would turn one year in mid-2014. Fiji, particularly, was not impressed with the deal and its leader Bainimarama publicly urged O’Neill to scrap the controversial initiative. This year also gives the PNG leader another opportunity to act or not to act on the situation of West Papua. When leaders of the Melanesian Spearhead Group met for their annual summit in Noumea, New Caledonia, last year, O’Neill decided instead to embark on a state visit to Indonesia. SOLOMON ISLANDS His counterpart in the Solomon Islands Gordon Darcy Lilo also visited Indonesia in 2013 but unlike O’Neill, Lilo will be seeking a fresh mandate from voters this year. It will be an opportunity for the people of Solomon Islands to express their endorsement or

New Caledonia..another Melanesian country going to the polls in 2014. Photo: File Photo

otherwise of Lilo as he became Prime Minister only after the previous Prime Minister Danny Philip lost office through a confidence motion in parliament in late 2011. To be able to last thus far as PM is in a way reflective of Lilo’s fighting ability as a shrewd and experienced politician. After serving in a number of governments in senior cabinet positions, this Western Province politician has been able to keep his numbers in parliament. Only time will tell whether he would still have those numbers after the elections. Past election results tell us that only half of the sitting MPs tend to return and while Lilo may have no difficulty winning his seat, retaining the number one job as PM would be his biggest challenge. During his term, Solomon Islands took a lead role in regional negotiations with the Americans over a new multilateral treaty on fishing as well as the Economic Partnership Agreement with the Europeans. Although the EPA talks were scuttled by Europe, the fish agreement with the Americans was successful mainly, observers say, through the able leadership of Solomon Island negotiators like Ambassador Robert Sisilo who until his return to Honiara was the Pacific Islands Forum’s trade representative in the World Trade Organisation in Geneva before he was seconded as Foreign Affairs Secretary in the government of Nauru. Lilo would know whether the people of Solomon Islands shared this enthusiasm during the polls. He is small in built but a giant, critics say, when it comes to politics. Whether that will keep him in the job as PM, the voters will decide. NEW CALEDONIA New Caledonia is the other Melanesian nation that will be going to the polls in 2014. Although not a fully independent nation yet, this year’s elections will determine whether the French territory would become a fully autonomous island nation.

Under the Noumea Accord, 3/5 of the New Caledonian Congress after the 2014 elections will need to endorse the holding of a referendum on the transfer of the remaining sovereign powers of defence, foreign policy, police, courts and currency from Paris to Noumea. Views are divided on this, of course. The indigenous Kanak political party, the Front de Liberation Nationale Kanaka et Socialiste (FLNKS) will go for full independence from France, while antiindependence parties like the RPCR would prefer some French links to be maintained. VANUATU In Vanuatu, the government of Prime Minister Moana Carcasses Kalosil will be looking forward to celebrating its first anniversary in power on March 23. To last this long is rare in Vanuatu politics as many governments and prime ministers have reigned and fell in many confidence motions in parliament. Working at retaining his numbers in government is a constant, continuing efforts for Kalosil who became the first naturalised citizen of Vanuatu to become Prime Minister in March 2013. Although not new in politics, the Tahitian born politician attempted to inject a fresh brand of leadership in his first few days as PM. He launched his list of 68 things he needed to do in his first 100 days in office. Among these were the recognition of West Papua, the return of public land that he claimed was illegally sold by previous governments and stopping the illegal sale of Vanuatu passports. Kalosil, however, needs no reminding that to survive as PM in Vanuatu, he would need to constantly watch his back. Interviewed by this magazine about political survival in Vanuatu politics in mid-2013, Kalosil outlined his survival strategy: “Many times a Prime Minister will form a government promising a few things but when he doesn’t deliver, this is the time backbenchers will move. I don’t make promises. I have a reputation for a yes means yes, a no means no.” Islands Business, January 2014 19

Cover Report

Seeking a third term...New Zealands’s Prime Minister John Key (second from right) is seeking a third term in office when New Zealand goes to the polls this year. Photo: PIFS

The outlook for Polynesia NZ goes to the polls, tourism to boom By Dev Nadkarni

2014

One of the more important scheduled political events in the region in 2014 is the three-yearly genWhat to eral election in New Zealand. Though the election Expect will be held in the latter part of the year, political maneuvering is likely to begin as early at the end of the first quarter, around March and April. The two times ruling National Party led government and its leader Prime Minister John Key will seek a third term. Despite some severe miscalculations in gauging the public mood—such as the selling off of a part of state owned assets—the party has a lot going for it. The Prime Minister’s popularity continues to be high, the economy has held on well despite the global financial crisis and severe debt pressure and its main opposition, the Labour Party, is still a long way from catching up after disastrous leadership issues. One of the important electoral constituencies that influences electoral results in recent New Zealand elections is South Auckland. The area is home to a great number of people of Pacific Islands origin, who are traditionally Labour Party voters. Psephologists and poll pundits have often said that the comparatively low physical 20 Islands Business, January 2014

turnout in South Auckland is what has helped the National Party power ahead at the cost of Labour. Labour is desperate to change that. It wants more people to get out to the polling stations come polling day and cast their votes, on the assumption, of course, that most of them vote in favour of Labour. The National Party is aware of this and so it is reasonable to expect a slew of initiatives to woo the Pacific Islands vote in New Zealand. Some of these will undoubtedly be in the area of foreign affairs, given Pacific Islanders’ proclivity to stay closely connected with family and friends in their countries of origin. This will probably result in increased engagement with Pacific Islands countries, particularly in Polynesia, with which New Zealand is far more integrated than Melanesia. Expect more New Zealand government ministerial trips into Samoa, Tonga, the Cook Islands and to a lesser extent to Niue and Tuvalu. Engagement with Fiji could also be stepped up in anticipation of the proposed elections there in September 2014. The National Government will look to reinvigorate the country’s Pacific engagement this year, with more announcements and initiatives in trade, investment and aid for trade. Samoa and Tonga are likely to be the main beneficiaries of these

initiatives in Polynesia. Tonga Tonga has had a few good things going for it on the tourism front in the closing months of 2013. It has been listed as one of the world’s lesser known but more exotic destinations by respected travel publications and websites. It’s revamped cruise strategy and new infrastructure to handle increased cruise passenger landings has begun to bring it more tourists and boosted its tourism industry. Though hotel rooms are a concern, it is on the path to addressing it with new deals to revamp existing hospitality properties and infrastructure. The government has earmarked increased funding for the tourism sector, which would help Tonga set on the road to building its revenue through tourism, a path that neighbours like Samoa, Fiji and the Cook Islands New port facilities...TongaÕ s revamped cruise strategy and new infrastructure to handle increased cruise passenger have successfully embarked on years ago. landings has begun to bring it more tourists and boosted its tourism industry. Photo: Tonga Visitors Bureau On the trade front, Tonga is likely to see increased produce exports both to New formerly bandwidth starved kingdom, will see new possibilities Zealand and to Japan this year. opening up—all of which augurs well for the economy. The country has worked through last year to establish its “Tongan” ProCOMM has been an early adopter of this development and identity on products it exports and also lined up export readiness is already on a growth path having bagged a few good contracts initiatives with compliant packaging, labelling and product identifrom outside Tonga. fication (such as barcoding). Politically, the country is expected to stay the course with no major The country’s new broadband link to the world, which has made scheduled events such as elections forthcoming this year. possible large call centres and back office operations possible in the

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Islands Business, January 2014

Cover Report

Apia...venue of a number of high level meetings this year. Photo: Islands Business

Samoa Samoa, too, does not have any major scheduled political event this year like an election, even if one of its lawmakers has been demanding for an early election. While Samoa will also see some of its general tourism rise this year, tourist numbers will be boosted towards the year-end especially as Samoa is the venue for one of the most important international conferences this year. Samoa has been declared the host country for the global United Nations Conference on Small Islands Developing States (SIDS) in September next year. The Third International Conference on SIDS in Apia is to be preceded by activities related to the conference in late August, also in Apia, Samoa. It will focus the world’s attention on a group of countries that remain a special case for sustainable development in view of their unique and particular vulnerabilities. It would be a great opportunity for Samoa to showcase its pristine tourism potential as well as stake its claim to the leadership of the vulnerable SIDS grouping, which has an increasingly important voice in the climate change discourse. Close on the heels of these globally important events, another major regional conference will also be hosted in the country—the 11th Western and Central Pacific Fisheries Commission (WCPFC) session in December. Major investments in preparing for the conference will boost job numbers and the economy. Transport and conference venue provisions would mean plans to refurbish the Faleata Sports complex national gymnasium in time for the 2,000 delegates expected to attend the UN SIDS meeting. Niue, Cook Islands, Tuvalu Niue has been in the news last year as a possible venue for yet another offshore processing centre for boatpeople landing on Australian shores after such centres in Nauru and Papua New Guinea. Though opinion is sharply divided on Niue’s involvement in this activity, it is likely that Australia might itself go slow on the proposal as indications are that illegal immigration is on the decline, thanks in part to the newly elected Australian administration’s far more stringent strategies to deal with the issue. Niue has, however, emerged as a possible site for reviving beekeeping amidst global fears in the decline of bee populations. Niue offers a relatively quarantined environment for rearing Islands Business, January 2014

bees and establishing new bloodlines for the honey making insect. Though there are plans afoot to establish such a centre, finance is an obvious issue, which if sorted, would turn the island state of 1300 residents into a literally sweet tourist destination. The Cook Islands, which was catapulted to global filmmaking fame thanks to its uniquely creative Film Raro project last year, will look at a repeat this year. The success of the event, which involved filmmakers from all over the world landing up in Rarotonga to make short films using the Cook Islands as a theme, has attracted some big names from the global filmmaking fraternity as well as the New Zealand Government. If it gets its act together this year, Film Raro might well become the single biggest event for the island nation for a long time to come. Connectivity Polynesian countries are likely to benefit greatly from a newly announced initiative in December last year. A communications services provider plans to launch a Ka Band High Throughput Satellite (HTS) to provide enhanced broadband services to 40 million people in the Pacific. Kacific Broadband Satellites, a satellite operator developing a broadband offering, says it uses cost-effective technology and a lean business model to provide better broadband quality throughout the Pacific at significantly less than current retail prices. It uses a satellite specifically designed for this market and using the latest multi-beam and high throughput space communications technology transmitting over the Ka Band. It plans to provide satellite coverage to the majority of the island nations in Micronesia, Melanesia and Polynesia including the Solomon Islands, Western Samoa, American Samoa, Cook Islands, Tonga, Niue, Tokelau, French Polynesia, Kiribati, Northern Mariana, Vanuatu, Marshall Islands, Palau, Micronesia, Nauru, New Caledonia, Papua, Tuvalu, Wallis and Futuna and Guam. Kacific will provide its broadband service via a payload co-hosted on a geostationary satellite. It will operate up to 48 beams, each providing coverage of 700km diameter and up to 400Mbps (duplex) throughput. Beams can be adapted to provide service to remote atolls with low populations without increasing the price of bandwidth in those locations, according to the company.

Cover Report • additional U.S. support for multi-drug resistant TB and Hansen’s Disease prevention; and • U.S. technical assistance to assist FSM and Marshall Islands to develop public health travel guidelines. Complaints issued by leaders from the two islands governments over U.S. funding oversight are usually based on the argument that the U.S. is violating the sovereignty of these islands. But with Managing donor relations is key…Marshall Islands President Christopher Loeak’s government faces numerous challenges managing its donor the health system in the aid and addressing health, education and economic issues at home. Photo: Giff Johnson Marshalls, for example, in disarray, it gives the government less leverage in talks with the U.S. over screening and intervention programs since the TB situation has spiraled out of control, with the Marshall Islands now having the second worst prevalence of TB globally, according to the World Health Organization. The Compacts provide about US$12 million and US$24 million annually to the Marshall Islands and FSM, respectively, for construction. While the Marshalls has done well with the construction of over 130 new classrooms and refurbishment of many outer islands’ health facilities since 2004, construction work in the planning, the two islands nations have chafed FSM has been sporadic, in large part because of By Giff Johnson under the U.S. oversight. “Full Compact grant implementation problems with the government’s T he F ederated S tates of allocations should be an annual allocation and construction project management unit (PMU). Micronesia (FSM) and Mardisbursed with no conditions,” said Marshall The FSM Congress is proposing to shut down What to shall Islands face numerous Islands Foreign Minister Phillip Muller recently. the PMU, and the U.S. government earlier this with the administraThe United States, said Mori, “still treats us year urged the FSM government to contract the Expect challenges tion of their Compacts of Free like one of the territories. My honest view is it U.S. Army Corps of Engineers to manage the Association with the United States as they head is a conflict to follow established rules that don’t annual US$24 million construction program into their final 10 years of the treaty’s financial necessarily respect our sovereignty.” for the four FSM states. Until the construction agreement. management situation is fixed, millions of dollars Meanwhile, the Compact for Palau, despite Key issues in FSM & Marshalls are sitting, unused. approval of its extension by the U.S. and Palau Although health and education have been the President Mori expresses concern that the negotiators three years ago, has yet to gain U.S. focus of the U.S. grant funding the past 10 years, focus of the U.S. funding under the Compact Congressional approval and remains in limbo. neither the FSM nor Marshall Islands has made on health and education has left economic Palau’s booming tourist industry, with over significant strides in producing results, with development languishing behind. “Economic 100,000 arrivals the past several years, coupled communicable diseases such as tuberculosis and reforms, particularly revenue mobilization and with its regional environmental leadership has Hansen’s Disease being major problems, and an public administrative reforms need to be imopened the door to economic opportunities that epidemic of non-communicable diseases battermediately carried out to enhance and support have eluded the FSM and Marshall Islands. ing the island populations. economic growth strategies,” Mori told a meetIn addition, despite U.S. assistance accounting This not only impacts community health and ing of the FSM’s 2023 Planning Committee in for more than 60 percent of their annual budgets government finances in both nations, but plays early December. and most of it focused on health and education, out in relations with the U.S. with an estimated the FSM and Marshall Islands are on track to one-third of Marshall Islanders and Micronesians Long-term view meet just two of the eight Millennium Developnow living in the U.S. A key question for the Marshall Islands and ment Goals—in contrast to Palau, which is on Some American states as well as Guam and FSM is whether trust funds established by their track to implement seven of the eight. the federal government are raising concern over Compacts will be able to match U.S. grants that As the Compacts have reached the mid-point costs to provide health care, education and social end in 2023. in the 20-year term of the aid packages, relations services and this, in turn, is causing some friction Both trust funds are below benchmarks largely between the FSM and Marshall Islands with the in relations between Washington and Pohnpei because funding was not invested the first two United States, their major donor partner, have and Majuro. years of the then-new Compacts in the 2004soured over the details of implementation of the At the Micronesian Chief Executives Sum2005 period when U.S. and global stock markets U.S. aid program. mit in Saipan in early December, U.S. Interior were high. FSM President Emmanuel Mori told me durDepartment officials presented an overview of Global economic volatility in recent years has ing the Pacific Islands Forum meting in Majuro efforts to address the so-called “Compact Impact” produced several bad investment years, includlast September that the FSM’s relationship with in the U.S. and its territories. ing 2011, when the funds lost tens of millions the United States “has been very good. But the Among issues put on the table by U.S. ofof dollars. implementation level is a thorn”. ficials include: The U.S. government has made it clear that As the U.S. has demanded performance re• proposals to develop “screening measures the Compact offers no guarantees—whatever sults from grant funding and FSM and Marshall to reduce migrant reliance on public and social amount is there in 2023 is what the islands have Islands follow through on agreed development services” in the U.S; to work with.

Sour relations over of US aid programmes

Final 10 years of financial agreement

2014

24 Islands Business, January 2014

Cover Report Recently released economic reports on the FSM and Marshall Islands by the Graduate School USA’s Pacific Islands Training Initiative estimates that FSM Compact grants will be $83 million in 2023 and RMI Compact grants will be $38 million. Both countries will be looking to their trust funds to replace this grant funding, with U.S. grants today accounting for more than 60 percent of the government budgets in both north Pacific nations. “Concern about potential CTF distribution levels — which is already intense — will likely grow,” said the Graduate School USA’s ‘FSM FY2012 Economic Review’ released in October. The current sufficiency estimate for the FSM trust fund at the end of FY2023 is $1.68 billion. But based on its current value, the FSM trust fund is expected to be nearly half a billion dollars short of this mark in 2023. The Marshall Islands trust fund is closer to being on the mark. The sufficiency estimate for the Marshall Islands trust fund is $745 million, but is projected to fall short by about $40 million in 2023. An additional benefit the Marshall Islands enjoys is through diplomatic ties with Taiwan, the Taipei government is investing in the trust fund in addition to the annual U.S. contributions. Some initiatives to watch Chuuk state in the FSM faces numerous and difficult fiscal problems that have severely under undermined public services, with budget shortfalls the norm for many years. An “outside-of-the-box” effort resulted in Chuuk establishing an Advisory Group on Education Reform to break the logjam that has

We’ve Got it!

stymied public school improvements. This committee includes U.S. and island government officials, as well as educators from Palau and elsewhere, bringing high-profile attention to the education sector. Since its formation a year ago, the group has broken ground by reviving an education reform agenda. In December, working with local officials, it issued a revised list of 25 prioritized public school sites throughout the state to move forward with professional engineering work and other necessary assessments to determine the need for major renovation or new construction. “We feel we have moved significantly forward in our efforts to overcome a variety of obstacles to building and improving schools here in Chuuk,” said U.S. Interior Department official Tom Bussanich, a member of the group. “It is our hope that these efforts will result in the construction of numerous schools (in 2014) to the benefit of students, teachers and the broader community.” Palau President Tommy Remengesau, Jr. is moving forward with plans to turn Palau’s exclusive economic zone into a “total marine sanctuary” by halting commercial tuna fishing. Palau waters are already a shark sanctuary, as are Marshall Islands waters. Adding to Palau’s already significant reputation for environmental innovation, Remengesau launched in late 2013 the use of drones — unmanned aerial vehicles — to interdict illegal fishing operations in Palau waters. It is the first nation in the Pacific to try drones for fisheries surveillance and if it proves out, this could revolutionize marine enforcement in the

vast western Pacific. “We need to change the phrase that we inherit the environment from previous generations, and revise it to we’re borrowing the environment from our future children,” says Remengesau. “In Palau, our economy is our environment, our environment is our economy. The only way to sustain our islands is to protect our environment for our people and the economic opportunities that come from the environment. We have a responsibility to ensure these are there for the next generation.” Standing out in an otherwise challenging political, economic, health and education environment is fisheries. The membership of these three north Pacific nations in the Parties to the Nauru Agreement (PNA) has seen fisheries revenue skyrocket three-to-four-fold in four years. In the Marshalls, this has taken fisheries from a bit player in the annual budget with a modest contribution of about $3 million to the go-to source of funding with over $10 million generated last year and the figure expected to continue its upward trend. The challenge for all three nations is to reel in bloated government bureaucracies and implement fiscal reforms that aid improved delivery of government services. A key to the future will be finding a way to reinvest the new-found bonanza of fisheries revenue into domestic fisheries and sustainable development initiatives that reduce economic dependence on the United States and other donors. Until then, there will likely be little change in trends apparent in recent years.

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Islands Business, January 2014

Cover Report They can do it as a measure which they can adopt and implement by regulation. Supporting this initiative should be a FAD Tracking and Monitoring Registry. Trials have been undertaken by the PNA Office in 2013, and with the need for a more systematic approach towards FAD set limits, the work on the trials on FAD tracking should be integrated with the work that will be done on FAD set limits. Pacific Islands States should also develop a limited registry for fishing vessels both for longline vessels and purse seine vessels. Any vessel that wishes to fish in the Pacific Islands waters must be on the register. The limited registry will act as an overall cap on the total number of vessels that can be allowed to operate in the region. In order for a vessel to be on the register, it will have to be sponsored Pacific delegates...at the December Western and Central Pacific Fisheries Commission meeting in Cairns. Photo: FFA by a Pacific Islands State. This idea is not new and has been discussed by the PNA since 2010. There will be attempts to address vessel capacity issues in ways that are tilted towards the interest of vessel operators, but Pacific Islands States have the wherewithal to develop a measure that controls the number of vessels operating in their waters if they want. On albacore, Pacific Islands States should develop an albacore management arrangement, similar to the Palau Arrangement. This will have to be spearheaded by one of the Pacific Islands States and should only involve the Pacific Islands States including the French Territories. The participants of such an arrangement could adopt limits and ask the commission vessels that fish on the high seas land their catch to establish compatible limits for the high seas. Dr Transform Aqorau* in a SIDS port. Balancing the costs and benefits Leaving it to the commission to determine of the conservation and management measures limits for parties is a failed approach. 2013 ended with the develin ways that is not tilted against SIDS is going to The PNA countries will be reviewing the VDS opment by the Western and What to Central Pacific Fisheries Com- be one of the issues confronting Pacific Islands after five years through an independent reviewer countries in 2014. supported by the Pacific Islands Forum Fisheries (WCPFC) of a conExpect mission Much of what will have to done or redone Agency. The Review will explore several issues servation and management will be determined by the new information that including governance of the VDS, application measure for skipjack, yellowfin and bigeye tuna will become available from stock assessments in of VDS monitoring systems, setting of the total that will not achieve the objective of removing 2014. This will inform Pacific Islands States of allowable effort (TAE) and the party allowable 100% overfishing of bigeye tuna within three what they will need to do. effort (PAE) and the basis for allocation. years. The measure that was adopted will only The telling lesson from the WCPFC is that The review will inform PNA countries of how remove 71% of overfishing. Pacific Islands States simply cannot rely on a body they can strengthen the VDS, in particular, augWhile the failure to adopt measures to remove like the comment mecha100% of overfishing of bigeye tuna is lamentable, mission to en- Table 1 nisms through there are some positive aspects which if built on sure its stocks which they at the 2014 WCPFC meeting will contribute to are managed can maximise further reducing bigeye tuna mortality. effectively. the value of The key to this is going to be the development A consentheir days. The of mitigation measures to address the disproporsus-based new minimum tionate burden that Small Islands Developing body where benchmark fee States (SIDS)are being asked to absorb in order decisions are of US$6,000 a for the rich developed countries that target bigeye driven by ecoday will come tuna to enjoy their bigeye tuna sashimi and sushi. nomic interests into effect The principle of ensuring the WCPFC does is inimical to on January 1, not transfer a disproportionate burden of consound, effective 2014. servation on SIDS is enshrined in Article 30 of and precautionThe PNA the WCPFC Convention. ary fisheries Source: Report WCPFC10-2013-12: Data Summaries in Support Of Discussions on Economic However, it is the fist time that a conservation management Model develand management measure incorporates this printhe CMM on Tropical Tunas and conservaoped by the ciple. What it means therefore is that additional tion. So what should Pacific Islands States do? PNA Office indicates the minimum benchmark FAD closures that would contribute to further In 2014, Pacific Islands States should develop is actually US$8,300 a day, while the super seiners reducing bigeye mortality in the exclusive ecofurther conservation and management measures can afford to pay US$12,000 a day. nomic zones largely of SIDS would be dependent without waiting for the commission to adopt More effort will need to be made into exploron the WCPFC adopting mitigation measures. them. They should develop plans to have in place ing ways in which the value of the days can be Now these mitigation measures may take FAD set limits which they can allocate by EEZ. better maximised other than through access the form of financial compensation for loss of These FAD set limits can be sold and traded agreements. Ordinary citizens are being deprived revenue to the coastal states because of the FAD like the vessel day scheme. Pacific Islands States of the value of their tuna resources because of closures or they may take other forms such as do not need to ask the commission for permiscompromises that are made as a result of access closing off the high seas to longline fishing, or sion to do this. negotiations. close the high seas to longline fishing unless

Challenges facing the regionâ&#x20AC;&#x2122;s tuna fisheries What sort of year will 2014 be?

2014

26 Islands Business, January 2014

Cover Report No one knows what else goes on at these negotiations but I have been a strong advocate of their replacement because they are the outcomes of compromises. The proposal to have a joint PNA Fisheries and Finance Ministers Meeting to receive the report of the VDS Review with support from the World Bank is intended to broaden the scope of economic discussions surrounding the value of our tuna resources. Hopefully, this will lay the platform for considerations of other more innovative means of maximising economic outcomes through job creation, contract processing, tendering, auctioning, pooling of days and direct licensing. 2014 will see efforts to conclude a comprehensive Economic Partnership Agreement (EPA) with the EU. Much of this now hinges on agreement on the fisheries chapter. It remains to be seen whether a comprehensive EPA will be concluded by October 2014. The prospects at the time of writing are slim with both PNG and Fiji having withdrawn from the most recent discussions with the EU Trade Commissioner Karel de Gutch in Honiara, Solomon Islands, in December. It is somewhat paradoxical that the EU is insisting on incorporating fisheries conservation and management issues in a trade agreement and insisting on the application of its high standards on illegal, unregulated and unreported (IUU) fishing when its vessels have been fishing in contravention of the limits under which they were authorised to fish under WCPFC Conservation and Management Measure 2008-01. Indeed, a series of reports to the WCPFC prepared by the Secretariat of the Pacific Community (SPC) on behalf of the Western and Central Pacific Commission (WCPFC) secretariat as the contracted science and data provider shows large-scale systematic illegal fishing by the EU fleet in the high seas areas of the Western and Central Pacific. The data is set out in the same report that the EU had used to misinform the EU Parliament as a basis for its fisheries strategy in the Pacific region. What the report to the EU Parliament did not say is that the purse seine fishing effort of the EU fleet in the high seas has greatly exceeded the EU limit since limits on high seas purse seine effort were introduced by the WCPFC in 2006. According to the reports to the WCPFC, the EU overfished its allocation by 318% overall from 2006 to 2012 (See Table 1). This is a very serious case of systematic IUU fishing, depleting resources on which Pacific Islands States depend and undermining conservation and management arrangements in the region. These large vessels have very high catch rates of juvenile bigeye tuna, contributing significantly to the overfishing of bigeye tuna which is a major problem for the WCPFC and Pacific Islands countries who are seeking to develop their domestic longline fisheries targeting bigeye tuna. This is a bit of a damp on EU’s proselytising on IUU fishing! Finally, 2014 will see more MSC certified skipjack tuna under the Pacifical label on the shelves in Europe and other markets. There will be increased production and marketing of PNA MSC Pacifical tuna as the markets take on this fish with a story from the pristine waters of the Pacific. • Dr Transform Aqorau is the CEO, Parties to the Nauru Agreement (PNA) Office.

A team...Australia’s Prime Minister Tony Abbott and Foreign Minister Julie Bishop. Photo: Nic Maclellan

New sheriff in town Tony Abbott transforms aid, climate policies By Nic Maclellan

2014

Since Australian Prime Minister Tony Abbott and his CoaliWhat to tion government won elections September, they’ve hit the Expect last ground running. After just five months in office, Foreign Minister Julie Bishop has been to Bali and Jakarta, New Zealand, Singapore, Japan, Korea and Hong Kong. She made a flying visit to Solomon Islands, Nauru and Vanuatu in December, accompanied by Parliamentary Secretary for Foreign Affairs Brett Mason and the Labor Party’s deputy leader Tanya Plibersek. Bishop also plans to travel to Papua New Guinea in early 2014, stating: “The AustraliaPNG relationship is one of this government’s highest foreign policy priorities.” Even with all this activity, there has been little public debate in Australia about the government’s policy towards the Pacific islands. The Australian media is largely focused on domestic economic issues and the Pacific has only made the headlines with stories about the detention of asylum seekers on Nauru and Manus Island. In spite of this, the Abbott government has already introduced policies that will have significant impacts on governments and communities across the region. There have been sweeping changes to Australia’s aid programme with the abolition of

AusAID as an independent statutory body and the abandonment of pledges to increase aid levels. It’s early days for the new government, but there are already signs that Canberra is making strategic choices that will clash with the interests of neighbouring Pacific countries. With over 50 policy areas under review, including relations with Fiji and future priorities for overseas aid, more changes are likely throughout 2014. The strengthened engagement with Papua New Guinea will not extend in the same way to smaller Pacific states, which will be hit by the new policies on aid and climate adaptation funding. At the same time, the coming year will throw up significant challenges for the new government, with elections scheduled in Indonesia, New Caledonia and Fiji. Revelations of Australian spying on neighbouring governments may also stress relations with Pacific Islands Forum countries. Transformation of aid programme With Foreign Minister Bishop also serving as Minister for International Development Cooperation, the Abbott government is transforming the Australian development assistance programme. Since coming to office, the Coalition has made key changes affecting the level of funding and the management and staffing of the aid programme. A week before last September’s elections, incoming Treasurer Joe Hockey announced Islands Business, January 2014 27

Cover Report Replenishment (to secure financing to combat cuts to the aid programme of A$4.5 billion over A DFAT spokesperson told Islands Business: these diseases in 2014-2016), Australia announced four years, effectively abandoning the bipartisan “Australia’s co-chair term ended on October 10, that it would only contribute $67 million a year pledge to allocate 0.5 percent of Australia’s gross 2013 and it will consider its future engagement over three years, instead of the anticipated $125 national income (GNI) towards official develwith the board in due course.” million per annum. opment assistance (unlike overseas aid, defence Environment Minister Hunt did not attend This decision will weigh on health departments spending is quarantined from government cuts, the November 2013 global climate negotiations across Papua New Guinea, Solomon Islands and with a targeted increase of military spending to in Warsaw, the first time for many years that Vanuatu, which have relied on resources from two percent of GNI within a decade). Australia was not represented at ministerial level. the Global Fund for recent reductions in malaria With the government’s focus on domestic debt During the Warsaw summit, Australian negorates, a disease which kills thousands of people and deficit, more than A$650 million must be cut tiators disrupted talks on the “loss and damage” every year across Melanesia. from the aid programme this financial year, with agenda (the devastation to land, water supply, the Pacific facing significant cuts. agriculture and infrastructure caused by delays No money for Green Climate Fund On December 5, Prime Minister Abbott stated: in reducing greenhouse gas emissions). In opposition, Greg Hunt served as the “Redirecting flagged future increases in spendLoss and damage has been a central focus Shadow Minister for Environment and Climate ing from foreign aid to domestic infrastructure for SPREP and Pacific Islands negotiators, and Change—now in government, Hunt is simply should actually boost our influence in the region Australia’s tactics led to a short walkout by the the Minister for Environment, with the words when it helps to bring about the stronger econ“G77 plus China” delegates, the 132-member “climate change” removed from his title. omy on which our international standing rests.” bloc chaired by Fiji during 2013. A more significant change is the disbandment The final decision on this agenda was a disapof the government aid agency AusAID pointment to negotiators for the Alliance as a statutory body, with the new govof Small Islands States (AOSIS), as loss and ernment merging its functions into the damage will now be listed as part of adaptaDepartment of Foreign Affairs and Trade tion rather than as a separate mechanism. (DFAT). In December, Hunt also gave the goThroughout 2014, this merger will ahead for the expansion of coal export affect the operations of Australia’s develfacilities at Abbott’s Point in Queensland, opment assistance across the Pacific as opening the way for increased coal exports DFAT takes over the responsibility for from the Galilee Basin. the day to day management of the A$5 At a time when AOSIS is arguing that billion aid programme. coal exports should be reduced to limit As a budget measure, the Abbott greenhouse gas emissions, this new policy government has pledged a reduction direction will be an ongoing tension within of 12,000 staff in the public service, so the Pacific Islands Forum, when regional the merging of DFAT and AusAID will leaders meet in Palau next July. involve significant cuts to the number of experienced personnel charged with Strengthening ties implementing the aid programme. Last December, Bishop and her PNG The decision to abolish AusAID as counterpart Rimbink Pato hosted the Papua an independent agency follows similar New Guinea-Australia Ministerial Forum actions by Conservative governments in PNG Prime Minister Peter O’Neill (left)...spying a breach of trust. Photo: in Canberra, attended by 17 ministers from Lisa Williams-Lahari Canada and New Zealand. both countries. Australia is also following the Key Australia is Papua New Guinea’s largest government in New Zealand to reorient trading partner and the two governments This change symbolises a key platform of aid towards economic growth, infrastructure are currently negotiating an Economic Cooperathe Abbott government, as it moves to abolish and trade, with a greater focus on “the national tion Treaty, which will cover trade, investment, the previous ALP government’s carbon tax and interest”. business and development cooperation. Climate Authority. Bishop has announced a renewed commitThe Abbott government will also extend At the November 2013 Commonwealth Heads ment to negotiations for the PACER-Plus free security cooperation with Port Moresby: there of Government Meeting (CHOGM) in Sri trade agreement. are currently 30 Australian Federal Police (AFP) Lanka, the Abbott government ditched Australia’s While larger Pacific countries like Papua New officers working with their counterparts in the pledge to contribute to the Green Climate Fund, Guinea and Fiji will benefit from the focus on Royal PNG Constabulary, and they will soon be an innovative new funding mechanism for dealtrade and infrastructure, small islands states across joined by an extra 20 AFP officers. ing with the effects of climate change. the region faced the loss of significant funding The Abbott government has pledged tens of In their final communique, CHOGM leaders to assist with adaptation to the adverse effects of millions of dollars to implement its policy of “recognised the importance attached to both the climate change. “stopping the boats”, and Peter O’Neill’s governoperationalisation and capitalisation of the Green Non-government organisations in Australia ment in Port Moresby has done well to leverage Climate Fund.” have expressed concern that these shifts in priorfunds from Canberra to host the refugee processBut a footnote recorded that “Australia and ity will diminish a focus on poverty. They have ing centre on Manus. Canada had reservations about the language of also argued that the merger of AusAID into DFAT Offshore processing of asylum seeker applicaparagraphs 18, 19, 20 and 21 and indicated that will lead to the disruption of programmes at a tions has also gained support from the governthey could not support a Green Capital [sic] time when regional governments are preparing ment of Nauru, in spite of the July 2013 riot that Fund at this time.” for the 2015 Millennium Development Goals destroyed much of the camp. This decision has astounded international summit and the 2015 global climate treaty neHowever, conditions in the detention centres observers as Australia had played a central role gotiations in Paris. have brought criticism from non-government in the creation of the fund. AusAID’s former Even though Australia sits on the United Nagroups and the United Nations High Commisdeputy director-general Ewen McDonald served tions Security Council, conservative members sion for Refugees (UNHCR). as co-chair of the fund’s board for its first year of of the Liberal and National Party coalition have Following a visit to the camps on Manus island, operations and Australian officials have played a expressed opposition to the UN and other multhe human rights group Amnesty International crucial role in determining the fund’s mandate, tilateral bodies. released a scathing report in December, stating: structure and policies. This has led to changes in Australia’s commit“The combined effect of the conditions of detenDFAT would not confirm whether Australia ment to multilateral funds, such as the Global tion on Manus Island, the open-ended nature of will continue the same level of involvement with Fund to fight AIDS, tuberculosis and malaria. that detention, and the uncertainty about their the Green Climate Fund and other multilateral As government representatives met in Washfates to which detainees are subjected amounts climate financing mechanisms. ington in December for the Global Fund Fourth to cruel, inhuman, and degrading treatment or 28 Islands Business, January 2014

Cover Report punishment.” UNHCR also issued two reports which documented “harsh physical conditions and breaches of human rights in Australia’s offshore detention centres in Nauru and Papua New Guinea.” According to UNHCR’s regional representative Rick Towle, there was “a sharp deterioration, during the course of the year, in the overall quality of protection and support available to asylumseekers and refugees who come to Australia by boat.” Spying a breach of trust After just five months in office, the Abbott government has become embroiled in controversy over spying on neighbouring governments like Indonesia and Timor-Leste, and the issue is likely to erupt in the South Pacific during 2014. PNG’s O’Neill told Islands Business last month: “We know this might be happening, but it would certainly be a breach of trust. Among friends, this is not necessary. If there are issues to be discussed, all they have to do is pick up the phone and give us a call as they do on many other matters. Under our laws, it is illegal to tap phones, a serious criminal matter.” Documents leaked by whistle-blower Edward Snowden have shown that the Australian Signals Directorate (ASD) was monitoring the personal phones of Indonesian President Susilo Bambang Yudhoyono, his wife and key officials. The government of Timor-Leste has also raised concern over reports that the Australian Secret Intelligence Service (ASIS) bugged government offices in Dili during the 2004 discussions on the Timor Gap Treaty, which governs maritime boundaries and oil reserves in the waters between Australia and newly independent Timor. In December 2013, Australian Attorney General George Brandis approved raids by the Australian Security Intelligence Organisation (ASIO) on the lawyer who is mounting TimorLeste’s arbitration case against Australia before the International Court of Justice on disputed maritime boundaries and oil revenues. ASIO also raided the home of the senior ASIS intelligence officer who was reportedly involved in the bugging of the Timor government offices in 2004, when former Foreign Minister Alexander Downer was in government (today, Downer’s consulting company has a contract with Woodside Petroleum, the transnational corporation involved in Timor Sea oil exploration). Given that Australian intelligence agencies monitor activities in South Pacific countries, the Abbott government will likely face new revelations during 2014 as more of the Snowden documents are revealed. This could complicate diplomatic relations between Canberra and the Pacific capitals—especially with the Bainimarama regime, as Fiji moves towards scheduled elections later this year. Although Australia remains the major provider of aid, trade and military cooperation in the Pacific islands region, there are a number of other new players that are expanding diplomatic and economic relations with Forum islands countries. In the same month that the Abbott government overturned Australia’s policy on climate finance, China announced it is giving US$1 billion in concessional loans for the Pacific islands, with another US$1 billion credit line from the China Development Bank. As the Chinese say, we live in interesting times.

Growth to pick up for region in the new year Small bounce back to 5.4% hub of the islands. Then in November, the Cook Islands and Tonga – the latter on the 25th—also hold elections. L ast year has been disap Will the political contenders campaign in the pointing—though by no means usual Pacific manner—claiming to voters that disastrous—one for most econWhat to they can deliver everything without the need and thus for many busiExpect omies, to compromise the maintenance of traditional nesses in the Pacific. life in its entirety, plus all the material benefits In 2012, it seemed the developing world of modernity? had succeeded in slipping away from the “old Some of the politicians certainly know betworld”—Europe and America—that had been ter and might thus be in a position to win a dragging it back since the global financial crisis mandate for a meaningful—meaning slightly began in 2007. self-sacrificial—change. They include Solomons’ But then in 2013, especially as commodity Finance Minister and former Central Bank govprices flattened out—chiefly due to China starternor Rick Hou. ing to rebalance its economy—Pacific islands Business tends to go quiet as elections apeconomies lost ground and growth fell from just proach and investors pause as they await the outover seven percent to about five percent. come before committing themselves. However In comparison, the rate of growth in developmuch cash the campaigns themselves unleash, ing Asia has kept increasing. But the Asian Develthis amounts just to a recycling of funds, of opment Bank (ADB) and other major forecasters course, without adding much, if anything, to are expecting the pace in the Pacific to pick up anyone’s wealth. slightly again in 2014. The economic prosThe ADB anticipates pects in PNG—which a small bounce-back in appears the most stable the islands region to 5.4 of Pacific countries, percent in 2014. with its government Whether this modest led by Peter O’Neill optimism proves justireceiving the support fied, will still depend of 104 of the 111 MPs, on markets, prices and and an election not output, as usual. But due until 2017—seem political factors will also poised. have an especially signifThe country might icant bearing on Pacific at last start to coneconomic prospects for vert resource industry 2014. success into broader For this is a year of based growth, with the elections. On May 4, government ramping New Caledonia holds up spending targets its parliamentary poll, and adopting new prowith a referendum on active Asia-style strateindependence expected gies for promoting the a little later. leadership of stateNext comes the Soloowned enterprises. mon Islands, whose parThe first gas project liament and thus govhas been completed by ernment will be elected Suva...capital of Fiji. Fiji goes to the polls this year. The return ExxonMobil, costing in August. to a democratic and thus potentially more accountable In September, Tu- and stable structure in Fiji would encourage investors both some US$19 billion valu goes to the polls. domestic and foreign, and could lead to a strong boost and production will So does Fiji—in what for the region’s second biggest economy after Papua New start in earnest later this year—defying is expected to be the Guinea. Photo: Islands Business the doomsayers who biggest political event claimed it could never be completed. of the year in the region, eight-and-a-half years The alternative to building on such success and after the last election there. spreading the benefits, is to fall back again, if this The return to a democratic and thus potenfails, to the more typical profile of impressive— tially more accountable and stable structure in seeming but largely jobless growth as investment Fiji would encourage investors both domestic is confined chiefly to resource projects and upand foreign, and could lead to a strong boost for market real estate in Port Moresby. the region’s second biggest economy after Papua The World Bank says that “growth in the small New Guinea—and one that is strategically even Pacific islands economies continues to be quite more important, because of its location as the

By Rowan Callick

2014

Islands Business, January 2014 29

Cover Report volatile in response to economic conditions in remittance-sending countries and tourist markets, natural disasters and the project cycles of donor-funded infrastructure investments.” In particular, the bank says that Samoa, Tonga and Vanuatu are especially vulnerable to economic slowdowns in Australia, New Zealand and the USA since these are core sources of remittances and of tourists. Kiribati and Tuvalu are vulnerable to any decline in global shipping, which would affect demand for their seafarers. Kiribati, Tonga and Tuvalu require continued fiscal consolidation—dependent in part on fishing licence revenues and vulnerable in the latter two cases to electoral splashing out. Samoa, the bank says, needs “to rebuild fiscal and external buffers in the wake of the succession of major natural disasters it has suffered”. It says: “For all the small Pacific islands economies, continued investment in human capital is vital to facilitate labour mobility.” The World Bank warns that for the Solomons, “slower output and revenue growth and tighter investment conditions are expected to continue into the medium term. “Projected growth rates are only modestly above population growth, increasing the importance of the government raising the effectiveness with which it turns its scarce resources into services delivered to the public.” Risks have emerged there about the outlook for logging and for the Gold Ridge mine given the retreat in the gold price internationally. And uncertainty about the mining regulations and the tax regime have helped delay the potentially large nickel prospects, which are in the hands of Chinese corporations. But the bank views the revival in the Japanese economy under Prime Minister Shinzo Abe, with his pro-active “Abenomics,” as potentially balancing out the impact of the halt or restriction—often referred to as the “tapering”—of the US Federal Reserve’s recent policy of issuing huge amounts of government bonds, and of pumping money into the economy. Inflation is expected to remain a challenge through 2014, when the ADB expects it to reach 6 percent, above the anticipated 5.5 percent economic growth. The ADB differentiates its growth forecast for 2014, with the large resource exporters—PNG and Solomons—expected to attain 6.9 percent, tourism-oriented economies—Cook Islands, Palau, Vanuatu—3.4 percent, the relatively diversified economies—Fiji, Samoa, Tonga—2.1 percent, and the others, the smaller islands, just 1.7 percent. Fiji’s government in particular would be hoping for better than 2.1 percent in this election year. The south-east Asian countries, China and India are emerging as “increasingly important trading partners for South Pacific economies”, the ADB says. This is good news, with those countries developing a hunger for Pacific goods and services. And China and the south-east Asian countries are expected to grow strongly, and in an increasingly diversified way, over the next few years. But 2014 will see tumultuous elections in the region’s two biggest democracies—which are also two of the world’s three biggest, along with the USA—India and Indonesia, which may see their performance treading water. 30 Islands Business, January 2014

Clash...Fiji Bati and Toa Samoa will meet in April in a rematch of their Rugby World Cup quarterfinal clash. Photo: Peter Rees

Big year ahead for islands sports High medal hopes in weightlifting, rugby 7s By Peter Rees

2014

P acific islands athletes and teams are set for a huge What to year in 2014 with a number of Expect major regional and international events lined up. The highlight will be the Commonwealth Games held in Glasgow, Scotland, from July 23 to August 3 where the island nations will look to better the nine medals won between them four years ago in Delhi. This year, there are high medal hopes in weightlifting and rugby sevens. No Pacific teams qualified for the Glasgow netball competition as the islands continually struggle to find games outside of the Pacific Netball Series to improve their world ranking. Fiji would have qualified with its 7th world

ranking, but won’t compete due to suspension. The next best ranked teams Samoa and Cook Islands missed out as they were ranked outside of the top 12 nations. Australia and New Zealand’s Silver Ferns, gold medalists in 2010, are favourites once again. There are medal hopes in boxing with 2010 bronze medalist, Uaine Fa emerging as the top prospect for Tonga in the 91kg+ Super heavyweight division. New Zealand’s Patrick Mailata and Australia’s Jai Opetaia are two other boxers of Polynesian descent who are medal contenders in the heavyweight division. In athletics, watch out for New Zealand’s Valerie Adams in the women’s shot put where she is all but guaranteed a gold medal. Weightlifting Like 2010, the weightlifters are again our best

Cover Report medal hopes, although there are some new names coming to the fore to demonstrate the region’s vast depth in the sport. Kiribati’s David Katoatau (105kg men), PNG’s Dika Toua (53kg women) and Steven Kari (94kg men), Nauru strongman Itte Detenamo (105kg+ men) and Samoa’s Mary Opeloge (75kg women) are our best chance for gold after their impressive form at last November’s Commonwealth Weightlifting Championships in Malaysia and Oceania Championships in New Caledonia. Katoatau, in particular, is one to look out for. Ranked first in the Commonwealth with a best total of 353kg, he’s on track to become Kiribati’s first-ever Commonwealth Games medalist. He has improved markedly since stepping up to the 105kg class last year. Toromon Takenibeia is another medal prospect for Kiribati in the 69kg class. Another exciting prospect is Steven Kari from Papua New Guinea, aged just 20, who won gold at the Commonwealth Championships with a massive lift of 352kg “This victory will help his confidence tremendously because he can expect to face the same cast from Penang in Scotland. We have great plans for Kari and hopefully, he will go on to become a medal contender at the 2016 Rio Olympics,” says PNG team manager, Lakani Oala. Rugby Sevens With Fiji’s suspension, their absence leaves Samoa as the region’s best hope of a medal. New Zealand has the favourite’s tag as the current world champion and IRB series number one ranked team. The Kiwis won gold four years ago in Delhi, India. England, South Africa, Australia and Kenya are also in the running in what should be a competitive race to the medal dais. All of the top teams are expected to bolster their teams with some of their stars from the 15s form of the game. Samoa is fielding a young inexperienced team in the current IRB Sevens Series which struggled in the first two legs in the Gold Coast and Dubai, but rebounded to finish third in South Africa. In the women’s sevens, Fijiana are holding their own on the IRB Women’s World Series and are building nicely towards the Rio Olympics in 2016. Last year saw Fiji women’s rugby take giant strides forward with a Bowl win (9th) at the IRB Women’s Sevens World Cup, and making the final of last year’s Oceania Sevens Championships where they upset reigning world champs New Zealand 17-10 in the semis. Rugby Union It’s a busy year in rugby with the IRB Women’s Rugby World Cup, Pacific Nations Cup, Pacific Rugby Cup, Junior World Cup, Junior World Rugby Trophy, the IRB World Sevens Series and the first-ever Aloha World U20 Sevens in Hawai’i. Samoa is the only Pacific islands nation to qualify for this year’s IRB Women’s World Cup in Paris, France, from August 1-17. Samoa qualified from last year’s qualifiers in Madrid and find themselves in the same pool as England, Canada and Spain. As the lowest seeded team of that group, the Manusina are not expected to be a threat. England and New Zealand are the tournament favourites. After missing last year’s tournament to play in the Quad Series in South Africa, Manu Samoa are back for this year’s IRB Pacific Nations Cup lining up alongside 2013 PNC champs Fiji,

Tonga, USA, Canada and Japan. The IRB is set to confirm dates in the New Year. Manu Samoa is confirmed to play England in London on November 22, while Wales hosts the Flying Fijians in Cardiff on November 15. The end of the year Northern Hemisphere tours will be crucial less than a year out from the Rugby World Cup 2015 in England, and based on Samoa, Fiji and Tonga’s poor form in Europe last November, a big improvement is needed. The Cook Islands, on the other hand, are one win away from securing a place at RWC 2015 after defeating PNG 37-31 in last year’s Oceania Cup. They playoff against Fiji later this year with the winner joining Australia, hosts England, Wales and a yet to be confirmed nation in Pool A. The Pacific Rugby Cup will also return this year after being cut short at the end of last year due to financial and logistical constraints. Fiji has won this competition involving second tier national players for the past five years. At the youth level, all eyes will be on Fiji and Samoa’s under 20 national rugby teams as they compete in the IRB Junior World Cup in Auckland, New Zealand on June 2-20. Fiji is in Pool B with Wales, France and Ireland while Samoa finds itself in a tough pool against hosts New Zealand, South Africa and Scotland. Both teams will want to avoid the wooden spoon and being relegated to the IRB Junior World Rugby Trophy, which Tonga will compete in this year on April 7-19. The Tongans are hungry to do better this year after last year’s disappointing fifth place finish as they aim to win this year’s tournament in Hong Kong and earn promotion for next year’s JWC. Rugby League In rugby league, Fiji Bati will play Toa Samoa in Sydney this April for a place in the end-of-year Four Nations tournament with world champions Australia, England and New Zealand. Fiji will go into this ANZAC weekend fixture as slight favourites having got the better of Samoa at last November’s Rugby League World Cup where they made the semis. Retiring captain Petero Civoniceva won’t be there to lead them this time, while Samoa will be determined to rectify that 22-4 quarterfinal defeat.

mother is Samoan, is a veteran of the 2006 and 2010 World Cups and is expected to back for the Socceroos for his third World Cup campaign. The 34 year-old Cahill, currently playing for New York in the US Major Soccer League, is currently Australia’s all-time joint top goal scorer (29 goals), and the country’s first and top goal scorer at World Cups. Australia faces an uphill task in Pool B alongside reigning world champs, Spain, Netherlands and Chile. Potentially the biggest event this year will be when Queensland-based fighter, Alex Leapai challenges world heavyweight boxing champ Wladimir Klitschko for the WBO, WBA and IBF world heavyweight boxing belts. Leapai was confirmed in December by the WBO as their mandatory challenge after Leapai’s upset win over Russian Denis Boytsov last November. The fight promoters are negotiating a date for the fight but it will the first heavyweight title challenge by a Pacific islands fighter since another Australian-based fighter, Fijian Kali Meehan, lost a controversial split decision to then WBO champion Lamon Brewster in 2004. A Tongan ex-rugby player has qualified to compete at this year’s Winter Olympics in Russia on February 6-23, 2014. Twenty five-year old Luger Bruno Banani (formerly known as Fuahea Semi), will be Tonga’s first winter Olympian. Banani qualified after finishing 28th out of 42 competitors at the World Cup Championship race final held in Park City, USA, in December. Tonga has competed at every Summer Olympics since 1984 but never a Winter Games. It includes one medallist among 31 Olympians, 1996 Atlanta Olympic super heavyweight boxing silver medallist, Paea Wolfgramm.

Other sports The FIFA World Cup in Brazil on June 12–July 13, will feature one player of Pacific heritage representing Australia. Ace midfielder Tim Cahill, whose Islands Business, January 2014

Business (European Commission) officials during our meeting with them in Brussels in October that Papua New Guinea has withdrawn from the EPA negotiations, they (EU) suspended the negotiations. PACPs diverse interests “In their official view, we can have either a comprehensive EPA or an IEPA but not both. So with PNG’s withdrawal, there is no point negotiating a comprehensive EPA. “But we the PACPs have always been pushing for variable geometry to cater for such an eventuality since PACPs are diverse with different interests and levels of development, and some are more endowed with resources than others. “But the EC officials would not have any of this and they suspended negotiations. The EU Commissioner actually referred to this as a ‘de facto’ suspension,” said Sisilo, who is also Solomon Islands’ trade Point Cruz Yacht Y Club...in Honiara. The PACP/EU meeting on EPA was recently held in Honiara. Photo: Islands Business negotiations envoy. PACPs have held negotiations with the EU for a decade now but little progress had been made. PNG’s withdrawal had thrown a spanner in the works. Following the de facto suspension in October, PACP trade ministers met again at the request of the European Commission for informal talks, which was subsequently held in the Solomon Islands last month, where PACP ministers met with EU Trade Commissioner Karel de Gucht. “We pushed variable geometry again, this time with EU Trade Commissioner (de Gucht) and his initial reaction was to point us towards signing the IEPA as a stepping stone to a comprehensive EPA,” Sisilo said. lead negotiator for PACP, Robert Sisilo. “From the Solomon Islands seat (my Minister By Dionisia Tabureguci “Variable geometry basically allows those was chairing), I told him I was very disappointed PACPs willing to go ahead and conclude a since it was my understanding that all remaint he p acific trade Bloc of the a fricaN comprehensive EPA with the EU to do so and ing contentious issues will be negotiated in the cariBbean and Pacific (PACP) is expected to others to sign later or sign up to the Interim context of a comprehensive EPA. maintain its “variable geometry” stand when EPA (IEPA, or just walk away,” Sisilo said, after “In fact, when PNG and Fiji initialled the IEPA it returns to negotiations with the European last month’s informal talks with the EU in the in December 2007, the remaining PACPs—which Union for an Economic Partnership Agreement Solomon Islands. did not initial it because there was nothing much (EPA) this year. “You will recall that when we informed the EC in the IEPA for them—were told in no uncertain This was confirmed to islaNds BusiNess by

PACPs firm on ‘variable geometry’ stand EPA with the EU is still within sight

Islands Business, January 2014

Business terms by the EC that all remaining contentious issues will be negotiated in the context of a comprehensive EPA. “That was the process the PACPs and the EC agreed to in December 2007. So by signing IEPA as the Trade Commissioner was suggesting, PACPs will by definition agree to these issues hands down and lose their leverage in negotiating a comprehensive EPA, if this is still going to be negotiated at all,” Sisilo added. Much have been said about these contentious issues, and of the 14 Pacific countries who are members of PACP—they are also the 14 members of the Pacific Islands Forum (PIF). Fiji has gone public to say that it strongly supports a united PACP stand not to accept the EU’s IEPA offer but to go for the full EPA. These issues, according to Sisilo, are on areas like fisheries, development cooperation, infant industry protection, export taxes, Most Favoured Nation clause, Non-Execution clause, circulation of goods, good governance in the tax area and kava. The IEPA, when offered by the EU to ACP countries following the lapse of the Cotonou Agreement at the end of 2007, was to act as a transitional arrangement before the negotiating parties, in this case the individual ACP region with the EU, agree to a full or comprehensive EPA. Only the Caribbean has signed an EPA with the EU while Africa and the Pacific regions have yet to conclude talks. For the Pacific bloc, Fiji and PNG had initialled and signed the IEPA in 2009 but only PNG went on to ratify it in 2011. Fiji had refused on the grounds that the IEPA is riddled with these contentious issues that it said would be detrimental to development in the Pacific. It’s a stand the rest of the PACP had maintained and the stakes are high when it comes to their collective fisheries resource, arguably the only subject of real interest to the EU. But if the EU had hoped to buy PACPs’ fisheries trove with what it’s willing to give in the IEPA, the PACPs are aware of its strategy to push it in the region. “My calculated guess is that if all, or just one or two of the bigger PACPs sign the IEPA, then it’s game over and the IEPA will become the comprehensive EPA,” said Sisilo. “No wonder the EC is pushing us towards the IEPA, which will not be a ‘stepping stone’ but a dead end road. The EC has always told the Solomon Islands to go down that road but we have stood our ground, fully aware that this is just not about canned fish and cooked loins. It is also about export taxes, development cooperation, protection of infant industry, etc. The future “And perhaps more importantly, about securing some policy space for our future generations, the best and brightest of whom I am sure will be more innovative, entrepreneurial and ambitious than us and therefore prepared to take risks. So let’s not shut their future down but give them a lot of options from which they can make informed decisions on which one or a combination of which ones will be best for them,” Sisilo added. PNG’s status of participation in the negotiation, while much talked about, has yet to be officially communicated to both the PACPs and the EU, and both are understood to be seeking consultation with the PNG government on it. “We did impress on the Commissioner that PNG withdrew because of the commission’s insistence to water down in the comprehensive EPA what PNG had already secured in the IEPA. So we should not put the blame on PNG but make the comprehensive EPA a more attractive proposition by building it on the IEPA and thereby, making the comprehensive EPA a better deal,” said Sisilo. “So it remains to be seen what happens if PNG maintains its position. And it was for this very reason that we have been pushing for the concept of variable geometry—to allow those that are ready to move faster to do so (accept the EPA) and for others to join at a later date or just walk away. “This is a fundamental principle that we have already agreed to and it is also provided for in Article 37(3) of the Cotonou Partnership Agreement. As a diverse region with different needs, variable geometry is the only practical way forward.” Following the PACP meeting in the Solomon Islands with Commissioner de Gucht, which Sisilo described as “useful”, both parties agreed to continue negotiations on the comprehensive EPA, with the next round to be held in March and a commitment to conclude this year. “PACPs also agreed to meet internally (this year) to prepare fully for the next round of negotiations with the EU,” Sisilo said. Last month’s Honiara meeting was attended by a number of PACP countries but Fiji had pulled out after accusing the Pacific Islands Forum Secretariat of not acting in the interest of the PACP members.

Fiji Airways to expand partnership with Qantas Fiji Airways is looking to expand its partnership with Qantas to include codeshared flights but sees no value in joining any of the airline alliance families such as Oneworld, Star Alliance and SkyTeam. Qantas holds a 46 percent stake in the Fijian carrier and the two airlines currently operate a basic interline agreement for bookings and baggage handling, along with Frequent Flyer partnership and reciprocal lounge access. Fiji Airways CEO Stefan Pichler recently met with Qantas executives in Sydney for what he describes as “a very constructive meeting...hopefully this will lead to an enhanced partnership between Qantas and ourselves”. “They interline with us at the moment but we’d like to enhance that” Pichler told Australian Business Traveller. “What we have to do is look at the partnership, at where can we get additional benefits (and) explore the full potential of that partnership.” But while the former senior executive at Virgin Blue and V Australia chairman has warm feelings for the Flying Kangaroo, he’s giving airline alliances the cold shoulder. “I don’t believe in any of these alliances,” Pichler said. Stefan Pichler...Fiji Airways CEO. Photo: Fiji “I was part of a Star Al- Airways liance team in Lufthansa, it was a good solution in the ‘90s. But now you have to choose partnerships which fit your network (through) codeshare and interline agreements”. Having last year transformed itself from Air Pacific, Fiji Airways is now continuing its ambitious rebranding campaign with the debut of Fiji Link—a new name for the airline’s domestic and regional arm currently known as Pacific Sun. Fiji Link will take delivery of a new ATR-72 turbo-prop aircraft in May next year, Pichler says, which will allow Fiji Airways to commence direct flights between Sydney and Suva by freeing up a Boeing 737-700 for this route. The new service will complement Fiji Airways’ current flights into Fiji’s primary gateway of Nadi, a larger hub which is located on the other side of the island to Suva. The flights will run on a Boeing 737-700 aircraft with eight business class seats and 114 seats in economy. Fiji Airways will also debut a new route between Suva to Samoa (Apia) operated by its subsidiary Pacific Sun, which is soon to be rebranded as Fiji Link . The Suva-Apia services will use the airline’s new ATR-72 turboprop and operate on Mondays and Fridays, while the return ApiaSuva flights will operate in the mornings of Tuesday and Saturday. — Australian Business Traveller Islands Business, January 2014 33

Business

Yazaki Samoa factory...in Apia. The demise of the automotive industry in Australia would have a significant effect on the people and economy of Samoa. Photo: www. constructors.co.nz

Holden pulls plug, hits Samoa exports 2000 jobs on the line By Davendra Sharma As Australia’s car manufacturing took a new twist last month with the announcement of an imminent closure of Holden brand name from 2017, shivers were being sent through to Samoa where a parts manufacturer was weighing up its chances of survival. Not long after the Abbott government began its slash and burn policy of removing protection to ailing industries, Australia’s multi-million dollar United States-owned Holden motor group decided to wind up its operations in three years. In South Australia, 2900 workers would lose their jobs right away when Holden quits manufacturing in 2017, and there are fears that Toyota could follow Holden and Ford and pull out of Australia. But worse still, component manufacturers that supply Holden, Ford and Toyota and who now face a bleak and uncertain future with two of the three car makers pulling out, could create job vacancies as well. Abbott blamed rising Australia dollar hovering at US$0.95 cents and the old Labor government’s policies for the departure of Holden—owned by General Motors of Detroit in the United States. “It is tragic and the last thing anyone would want. All of the workers concerned will be treated generously by their employers. I believe there are fundamental economic strengths in Adelaide and Victoria.” Samoa’s economy biggest hit Soon after Holden’s departure, the Japanese automotive components giant Yazaki Corpo34 Islands Business, January 2014

ration—which supplies parts to Holden and Toyota—warned the economy of Samoa would be decimated without exports to Australia. Yazaki owns Australian Arrow, a large business outfit in Samoa that manufactures and supplies electrical wiring and harnesses to Holden and Toyota in Australia. The Samoa factory makes some of the parts before they are re-assembled in plants in Victoria. Demise of industry In a broad plea and a strongly-worded submission to the Productivity Commission, Yazaki cautioned that its factory in Samoa is the largest manufacturer in that country, employing around 2,000 locals and representing six percent of Samoa’s national GDP. “The demise of the automotive industry in Australia would have a significant effect on the people and economy of Samoa and is a critical aspect of the Australian Arrow operations which is often overlooked,” said Craig O’Donohue, managing director of Australian Arrow. The alignment of Australian Arrow to its parent company, Yazaki, gives the company’s operations in Samoa and Australia an opportunity to draw upon global expertise in design and development whilst applying local innovative practices. The electrical distribution systems and electronics are also exported to parts of Europe and Asia. The exports from Samoa are made under a concessional market-access agreement to Australia, making it one of its four principal trading partners alongside New Zealand, American

Samoa and Fiji. Holden would have maintained its manufacturing business in Australia had the Abbott government not moved to phase out handouts reserved for the country’s car industries. The new government removed A$500 million from the automotive industry assistance previous governments allocated for the sector. The full economic impact of the shutdown will far outweigh the cost of funding the government spends on handouts. Just like Samoa, Australia too will lose the skills and technology used in the component manufacturing once the knock-on impact of the 33 large auto component makers are factored in. Economists and lobby groups in Australia argued that the discounted present value of welfare benefits from the retention of the entire industry in Australia and the Samoa factories are estimated to be around A$21.5 billion. Yazaki Samoa’s business opportunities will continue with supplies to Toyota in Australia and demand from Australian Arrow’s Asian and European importers of electrical distribution systems. Toyota would remain Abbott announced that the Japanese automaker’s future in Australia was secure as the country’s sole car producer after his discussions with Toyota President, Max Yasada. “I certainly hope Toyota can stay. They have a very different business model to Holden. It’s a business model that relies substantially on export and that’s why I think we’ve got good prospects of keeping them,” Abbott told the Australian media last month. “But I want to make it clear that in the end it will be creativity, dynamism and the commitment to running a successful business on their part rather than taxpayer handouts.” Former Treasurer Peter Costello said the highly unionised domestic car manufacturing in Australia could only survive behind a huge tariff wall. The tariff charged on imported passenger cars was 57.5 percent in the late 1980s but it’s been reduced to just five percent—thus reducing the protection of the local industry against imports.

Business

Avarua...capital of the Cook Islands, located on Rarotonga. Photo: Islands Business

Courts can’t take Cooks trusts to court Global pioneer in offshore asset protection By Davendra Sharma New reports emerged in Washington last month with claims that Cook Islands is hiding millions possibly billions in monies secretly moved there by foreign trusts. A prominent United States financial investment lawyer was quoted by the respected New York Times suggesting that real estate developers, healthcare providers, accountants, architects to corporate directors have vested interests in Rarotonga. “You can have your cake and eat it too,” said Howard Rosen, a lawyer who claims to have set up the Cooks trusts for more than 20 years. Anyone with more than US$1 million in assets, his firm promotes, should consider the Cooks trusts for self-preservation. The New York Times claimed the Cooks is a global pioneer in offshore asset protection trusts, with laws enacted to conceal overseas investors’ assets from legal claims stemming from their home countries. While the Cayman Islands, British Virgin Islands and Switzerland claim limelight when international regulators search for money laundering and tax evasion schemes, the Cook Islands seem to dodge investigators. “The Cook Islands offers a different form of secrecy,” noted the New York Times. “The long arm of the US law does not reach there. The Cooks generally disregard foreign court orders, making it easier to keep assets from creditors, or

anyone else.” It is the country’s biggest selling point being used by international investment lawyers to capture a broad swath of affluent Americans and Europeans. The New York Times claimed that Americans are the biggest customers of the Cooks scheme, promoted as ‘a prime choice” on the government’s website. As of last month, there were 2619 trusts under the Cooks Financial Supervisory Commission, offering secrecy on top of legal cover for their clients. Like most similar schemes elsewhere in the world, the Cooks authority does not divulge the value of assets or its owners. But documents obtained by the Washington-based International Consortium of Investigative Journalists (ICIJ) showed that the Cooks held 700 such trusts for Americans—notably from the rich in Palm Beach, Florida, New York and Hollywood. Such findings by ICIJ showed that trust owners include those convicted of Medicaid fraud, the infamous Ponzi schemes and bilking employee pension funds. One such note from the investigation showed that a trust held by Denise Rich, former wife of the disgraced trader Marc Rich, who was pardoned on the last day of the Clinton presidency. Her trust entity contained more than US$100 million in assets such as her yacht. The Cooks trusts facility provides both secrecy and security and consequently makes it unmatched by world standards.

“Asset protection is to provide a layer of insurance for something that cannot be insured – the unforeseeable,” declared Jennifer Davis, chief executive of the Cook Islands Financial Services Development Authority in an article, published by the Australian Financial Review last month. Another revelation that surfaced in the international media is that of R. Allen Stanford, who is serving a 110-year term for masterminding a US$7 billion Ponzi scheme, held in the Cook Islands under a code-name, “Baby Mama Trust”. In an interview with Islands Business last August, Cooks’ Finance Minister Mark Brown denied Rarotonga was being used as a tax haven. “The world is now moving towards issues of tax avoidance, tax evasion and any regulatory compliance measures that we need to undertake,” he said. But for international investors seeking shelter for their funds, the Cooks offers as much attraction as possibly Vanuatu—which has been known to be a pure tax haven since it has no discreet taxation of any kind either on its citizens or resident expatriates. “Studies show the impact of offshore financial centres on PICs’ growth and development is insignificant. The funds do not enter the domestic banking system,” said Dr T K Jayaram, a Professor at the Fiji National University’s School of Economics, Banking and Finance in a paper last month. Such multi-million dollar funds are not used for any government or banking investment purposes. The offshore financial centres customarily transfer funds through such Asian investment hotspots as Singapore and Hong Kong into trusts held in the islands. The United States chose to “name and shame” a number of OFC (Offshore Financial Centres) and it included Niue, Nauru, Marshall Islands as well as the Cooks and Vanuatu. Last year, the Financial Secrecy Index revealed that Luxembourg, Hong Kong, Cayman Islands and Singapore are top-ranked countries which “fare well in terms of strict supervision and regulation,” noted Jayaram. Islands Business, January 2014 35

Viewpoint

Keep fisheries/EPA negotiations separate homes and offices they had not seen for at least two weeks. They flew to Honiara, where the Pacific Islands Forum Secretariat had organised a Pacific ACP meeting of officials, including Fisheries Ministers, hosted by the Solomon Islands Government at the FFA’s Regional Conference Centre. The Pacfic Islands Forum Fisheries Agency (FFA) is not a participant in the EPA. Our role is to support and provide objective advice James Movick...Pacific Islands Forum Fisheries (FFA) Director General. Photo: FFA Media to PACP members of FFA on the fisheries management and development aspects of the Economic Partnership Agreement, or EPA, negotiations. By James Movick* The nature of the agency’s representation in the EPA negotiations may have created an impress Pacific nations left the Cairns WCPFC sion that FFA is under pressure, or is pressuring 10 (Tuna Commission) meeting in early PACPs into signing an EPA. December, some delegates had one more That impression is correct only insofar as the meeting to attend before heading back to the pressure that we are responding to is from FFA member governments and tuna investment stakeholders who want to see increased tuna processing investment and trade in the region. Now, the FFA’s advice in the EPA preparatory process is admittedly sector specific. We recognise there are other issues that also have to be resolved, and that it is the role of regional trade officials to reconcile the various interests and issues to produce an appropriate EPA package. On the trade development and investment side, FFA has reflected its experience assisting PICs to attract, evaluate and implement increased investment and exportation to create employment, government revenues and income generation through the processing of tuna resources. It is a fact that larger

Islands Business, January 2014

scale domestic and foreign investors do place much importance on securing preferential EU market access as a key factor for the viability of initial operations and thus in making their final decision to invest in processing in the region. Some PACPs actually have large and serious investors ready to invest, just waiting for this outcome, and those governments could clearly benefit from the jobs, revenue and income created. Given that the EPA negotiations have dragged on for 10 years now, FFA has strongly urged negotiators to take into account that much has changed, and continues to change, in the international tuna industry. The Pacific Islands Countries are losing opportunities to get actual jobs, income and trade into place before global competition increases further. If preferred fisheries market access and tangible economic benefits cannot be secured in a timely manner for the Pacific ACP, the fisheries sector are well within their rights to ask a pertinent question—why waste more time and money on talks? On the other hand, Papua New Guinea, which entered into an Interim EPA with the European Union in 2008, has attracted significant new investment because of this market access. Already enjoying onshore processing benefits, it has established two new tuna processing plants since 2011, with two more underway. Reports from the PNG National Fisheries Authority put the total number of those directly employed from these ventures at 13,500, with the potential to go as high as 27,000 more jobs through indirect employment. With regard to tuna conservation and management provisions proposed to be included in the EPA, the FFA has made it clear to the EU that FFA members have a long and successful history of tuna fisheries management. This management system, developed by FFA members, based on PIC regional characteristics, has resulted in the Pacific still enjoying the healthiest tuna stocks amongst all of the global regions. Making the most of the venue for the EPA meeting, we were able to give the EC Trade Commissioner an eye-opening tour of the FFA’s Regional Fisheries Surveillance Centre to demonstrate this regional capability. In the EPA negotiations, FFA’s advice has been consistent and clear. Technical conservation and management elements for fisheries should not be detailed in a trade agreement. They are best dealt with in a fisheries context between responsible fisheries officials of the PACP and the EU. This is what I conveyed to the Pacific ACP Fisheries Ministers and Officials in Honiara last month. It will inform our ongoing support to member countries in the ACP. FFA will continue to advocate strongly for the best possible outcomes that utilise the region’s fisheries resources to create jobs, income and economic expansion from which the Pacific people can benefit. It is a founding vision that will continue in 2014 and beyond. • James Movick is the director-general of the Pacific Islands Forum Fisheries Agency.

Youth

Rebecca Solomon (right)…treatment of young people needs to change. Photo: Pacific Youth Council

Stars of the future to shine bright New framework to bring about changes By Mereia Carling & Sean Hobbs* Young people, particularly children, young women and people living with disabilities, have traditionally been marginalised in development processes and hurt by systemic and structural discrimination and inaction. This, according to Rebecca Solomon, needs to change. Solomon, a young woman from Vanuatu, is an active member of the Vanuatu National Youth Council, the Pacific Youth Council and also the Commonwealth Youth Council. On December 7, 2013 she, along with her youthful colleagues, addressed Pacific ministers responsible for youth at a meeting convened at the Secretariat of the Pacific Community (SPC) headquarters in Noumea, New Caledonia. She said it is time for a change so that we can “turn our scars into stars”. She urged Pacific governments to endorse the Pacific Youth Development Framework, which aims to engage youth and work towards securing higher standards of education and training for them, as well as increased employment opportunities, improved health and well-being and environmental stewardship. “My peers and I need to see more of these types of collaboration and coalition for continuous growth and development so that we can be positive citizens,” said Solomon.

Delegates to the ministerial meeting in December responded positively and endorsed the new 10-year Pacific Youth Development Framework that will begin implementation in January this year. The framework reflects the consensus and inputs of young people, youth specialists, government officials and development agencies in the Pacific. “The new Pacific Youth Development Framework is different from its predecessor, the Pacific Youth Strategy,” says Mereia Carling, SPC’s Youth Adviser. “Firstly, and perhaps most importantly, it is informed and prioritised by youth. The participation of young people in the development of the framework, including the most marginalised of young people, has been central and will be the key to its success. “Secondly, there are just four focus areas which young people recognise as having the biggest potential impact in improving their situation— the previous youth strategy had seven thematic components. Focusing on these four areas, the new framework is designed to work deeper, as opposed to broader. “And thirdly, the framework has been reoriented so that the focus is on strengthening the impact at the country level, rather than on investing in cumbersome and resource-heavy regional mechanisms.”

The expressed intent is to integrate change in current development programmes rather than encourage a proliferation of stand-alone youth programmes. In other words, the aim is work deeper by dovetailing a focus on youth into existing development objectives that are already resourced and where expertise is already present. The framework’s flexibility in responding to national policy objectives and priorities for youth, rather than imposing a onesize-fits-all approach, appealed to the government ministers and officials who attended the meeting. SPC has been appointed to provide regional coordination for the mechanism and Carling says the intention is to keep it lightweight and nimble, without compromising on efficiency or effectiveness. The commitment made by ministers and development partners to provide resources and support the implementation of the framework is very encouraging, she says. There are many challenges in trying to achieve results and development outcomes from investing in and implementing regional development frameworks and strategies. The 2011 review of the 2005?2010 Pacific Youth Strategy highlighted several challenges, as it revealed that governments, youth stakeholders and young people themselves had not engaged as much as was hoped with the youth strategy, and there were few results to be seen. With a new approach, the framework is designed to involve more young people in policy and agenda setting. This is desirable, given the burgeoning youth population statistics across the region and the clear need to cater for more people in terms of infrastructure, health, education and employment services. The process will emphasise engaging traditionally marginalised groups and minorities in society, including young girls and women; young people with disabilities; young people living in rural areas; young people who are not in education, training or employment; and young people of diverse sexuality and gender orientation. As implementation begins in 2014, technical agencies, including the Secretariat of the Pacific Community and youth organisations, will move towards formalising their commitment and costing partnerships to coordinate and deliver technical assistance to Pacific countries and territories, in order to maximise the potential of all citizens and their contributions to Pacific Islands development. • Mereia Carling is SPC’s Youth Advisor and Sean Hobbs is SPC’s Climate Change Communications and Information Officer. Islands Business, January 2014 37

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Environment

SPREP with David Sheppard

Remembering our crew and family as we open the chapter to 2014

would like to wish all islaNds BusiNess readers all the best for the year ahead. There were many challenges for our Pacific environment in 2013 and SPREP has worked closely with Pacific islands countries and territories to address them. SPREP’s focus is managing and protecting the environment as a healthy environment is the cornerstone of sustainable development for the people of our region. Many people and organisations contribute to ensuring a healthier and safer Pacific environment. In this article, I would like to pay tribute to them and also to some of our own “environment champions” who passed away during 2013. I firstly acknowledge environment and natural resource ministries in Pacific countries and territories, whose hard working staff, often working in difficult conditions, make a real difference for a better environment and the livelihoods of our people. Non Government Organisations (NGOs) and civil society play an important role in our region in protecting our precious biodiversity and often in holding us all to account for our actions. The SPREP Secretariat family in Apia has at all times strived to support Pacific islands countries and territories in their environmental efforts. I would like to pay tribute to the hard working and dedicated staff at SPREP and thank them sincerely for their efforts in 2013. 2013 also saw the loss of several great members of our wider Pacific team—people who achieved so much for our Pacific environment, people whose legacies will live on in the environmental policies and the work they did for us all. In this environment field, we work closely with our Pacific members and spend so much time with others who work in different spheres of our environment that they become much more than just colleagues, they become our friends and an extension of our Pacific family here at the secretariat. Those we lost in 2013 must be honoured and remembered for their conservation work and we continue to miss them, both for their friendship and valuable work. In 2013, we bid farewell to Ratu Aisea Katonivere, the paramount chief of the most populous province—Macuata—in Fiji’s Northern Division. Katonivere worked with his people to kick -off a conservation crusade which has seen the development of management plans to protect the Great Sea Reef in the Macuata Province of Fiji, which is the third largest barrier reef in the world covering an area of 78,242 square miles. He worked with four other chiefs to establish the 32-square mile Macuata Marine Protected Area Network. His work has since been commemorated with the Ratu Aisea Katonivere Award for Excellence in the recently launched Pacific Islands Environment Leadership Awards.

Conservation and Protected Areas. He was honoured along with the late Mauigoa Lui Bell, another turtle warrior who passed away in 2012. More recently, we lost another environment colleague, crew member and environment warrior in the passing of Taule’ale’ausumai Laavasa Malua, Chief Executive Officer of Samoa’s Ministry of Natural Resources and Environment. His sudden passing is still a shock to us all. Taule’ale’ausumai was a keen supporter of our work at SPREP and was well known for his dedication to environmental management and protection in Samoa. He most recently participated in the 9th Pacific Islands Conference on Nature Conservation and Protected Areas held in Suva, Fiji at which he showed his usual passion and drive through his active involvement throughout the week and support and encouragement to our SPREP family. We will miss these environment champions and our deepest condolences go out to their families. They will continue to live on in our Pacific region through their environment legacies and we are grateful for their contributions to nature conservation in our region. They will remain as inspiration to us all. People are at the centre of conservation efforts and we must honour, embrace and celebrate our environmental champions. With this in mind, I end our first column for 2014 by commemorating those who were awarded the inaugural Pacific Islands Environment Leadership Awards in December last year: • Congratulations to Ian Karika of the Cook Islands who won the award for The Pacific P Islands Environment Leadership Awards A Élaunc hed Excellence in National Leadership in Envito honour champions of conservation in our region. Photo: SPREP ronmental Sustainability and Conservation. • Manuai Matawai of Papua New Guinea won the Individual Category of the Ratu Aisea Katonivere Award for Excellence George Petro, winner of the International Sea in Community Leadership in Environmental Turtle Society Champion Award in 2012, also Sustainability and Conservation. passed away in 2013. Involved in turtle conser• The Nguna-Pele Marine and Land Protected vation for over 15 years through his work with Area Network of Vanuatu won the Community/ Wan Smol Bag, Group Category of the Ratu Aisea Katonivere Petro has helped reduce the traditional turtle Award for Excellence in Community Leadership harvest in the Maskelyne Islands from 300 to less in Environmental Sustainability. than 50 each year. Petro was a significant catalyst • The President of Palau, President Tommy in the negotiations with the local communities. Remengesau, Jr won the Pacific Champion It was his turtle conservation awareness work Award. throughout villages in Vanuatu that led to a • Lifetime Achievement Awards were given network of over 500 Village Turtle Monitors, to Audrey Newman, Hawai’i; Professor Randy now called Vanua-Tai Resource Monitors, and Thaman, Fiji; and Dr Bill Aalbersberg, Fiji. covering over 80% of the country. Thank you all for your contribution towards a We remembered the late Petro in a special healthier Pacific environment. With best wishes ceremony where satellite tagged Hawksbill for a peaceful and enjoyable 2014. turtles were released in Suva, Fiji, at the end of • David Sheppard is the Director-General of the Secretariat the 9th Pacific Islands Conference on Nature of the Pacific Regional Environment Programme. Islands Business, January 2014

Business Intelligence

Cook Islands axes unpopular tax By Dionisia Tabureguci

ook Islands has announced it will remove the unpopular withholding tax this year as part of new measures to be introduced following the recent review of its taxation system by a team from the International Monetary Fund. The new changes, outlined by Minister for Finance Mark Brown, are to be legislated over two sessions of Parliament, the first was last month and the second in a proposed session in February 2014. Cook Islanders pay 15 percent withholding tax on their bank interests and revenue collected goes to the payment of the Cook Islands government’s obligation to Toa Petroleum, a private fuel business in Rarotonga that the government had tried to nationalise but failed. In a long-standing entanglement with the company that eventually led to a court case in 2009 and the issue now widely known in the country as the “Toagate” debacle, Cook Islands is obliged to guarantee that Toa Petroleum achieves a profit of NZ$1.2 million in a given year.

Tourism-related taxes have also come under the knife. In another major move, the government will tax non-commercial international routes that it underwrites, so airlines under contract with the government to service those routes will pay tax in the new year. Currently, the Cook Islands government underwrites Air New Zealand’s non-stop services between Los Angeles and Rarotonga to the tune of NZ$7.7 million and Air New Zealand’s non-stop services between Sydney and Rarotonga NZ$4.4 million a year. A recent governmentfunded analysis by New Zealand research company Covec Ltd into these underwrite agreements showed the Los Angeles-Rarotonga deal to have a net positive contribution to the island nation’s economy while the Sydney-Rarotonga subsidy had a marginally negative contribution.

Tourism important Tourism is an important industry for Cook Islands and it estimates total visitor arrivals of 127,000 in its 2013/14 year, a growth of Toagate 2.1 percent. If Toa Petroleum fails to Travellers into the counMark Brown...Cook Islands’ finance make that target, the Cook Istry will, under the new Photo: File photo minister. lands government must top up changes, enjoy an increase Toa’s profits to reach NZ$1.2 in personal duty-free allowmillion. ances, from the current To fund that, the government had introduced NZ$250 to NZ$750. the withholding tax on bank interest in 2011, “The limit has not increased in a number of which it now confirms it will remove. Interest years and this action will bring us into clarity income will now be included as personal income. with New Zealand, reducing the confusion of “This will reduce our revenue by NZ$600,000 travellers to the Cook Islands,” said Brown. in 2013/14 and by NZ$1.2 million in 2014/15,” “This will reduce revenue by about NZ$37,500 said Brown when announcing the list of possible in 2013/14 and by NZ$75,000 per annum theretaxation changes in Parliament last June. after.” “I acknowledge that this has not been a popuChanges being revenue neutral, increases in lar tax but it was necessary to allow us to finance other areas will stem the outflow and help rethe Crown’s legal obligation to provide NZ$1.2 cover the giveaways. million profit guarantee to Toa.” From July, departure tax will increase from Since the court ordered the government to the current NZ$55 to NZ$65 as well as a further provide that guarantee, it, according to Brown, 33 percent increase in tobacco levies plus a two has paid Toa Petroleum NZ$7.3 million. percent increase in levies on soft drinks and alChanges generally are expected to benefit lowcohols. income earners, although overall, Value Added Other tax measures according to the Ministry Tax will, from April this year, increase from 12.5 of Finance will be announced as changes take percent to 15 percent. place over the next few months. Income tax threshold has increased from Cook Islands’ tax review focused on key areas NZ$10,000 to NZ$11,000 while government will of revenue performance and policies. The last slightly increase welfare payments in all categories major amendments to its tax laws were made in beginning in February. 1996.

40 Islands Business, January 2014

The Tongan vani ll By Dionisia Tabureguci

wo major vanilla buyers in Tonga are locked at the horns over price-related issues, igniting a trans-Tasman friction that is being played out in the plush greenery of Vava’u Islands, Tonga’s vanilla growing centre. New entrant Queen Fine Foods, in committing local farmers to a long-term contract to supply it with vanilla beans, has irked rival company Heilala Vanilla, whose higher buying price led some of Queen’s farmers to break camp and sell their beans to Heilala. This in turn has angered Queen, which is reported to have threatened legal action against Heilala on the grounds that the latter’s inflated price is encouraging some of its farmers to break their contracts. Heilala, a Tauranga-based family-owned business that built its fortunes on Tongan vanilla, has been operating in the island kingdom for over 10 years and according to it, the price it pays has always been above market. It accuses Queen of anti-competitive behaviour by creating contract terms that will not benefit Tongan vanilla farmers in the long-term. Queen Fine Foods is an Australian family-owned business that specialises in the development and distribution of vanilla products in Australia and New Zealand. When it set up in Tonga early this year, it introduced contract farming, where farmers who joined its project were bound by their contracts to sell their vanilla beans to the company. Queen’s part in the agreement was that it would invest in the rehabilitation of vanilla farms, most of which had been neglected over the years. To get farmers interested in reviving their abandoned vanilla plantations, Queen earmarked Tonga Pa’anga 500,000 for rehabilitation works in these farms, training of farmers as well as a number of incentives. Farmers who join the Queen’s project enjoy a rehabilitation payment 3 Pa’anga per vine and they are also locked into a five-year supply contract where they are guaranteed 13 Pa’anga per kilogramme of green beans or up to 125 Pa’anga per kilogramme for cured A Grade beans. Queen’s project quickly gained popularity in Vava’u where many farmers who had abandoned vanilla are now returning to it. When this edition went to press, 270 growers had joined the project, according to Tonga Vanilla Growers Association president Sione Lolohea. The contract they have with Queen, however, has triggered the controversy. Under the contract, growers are paid 13 Pa’anga per kilogramme of green beans, compared to the 20 to 28 Pa’anga a kilogramme that Heilala is paying. “Heilala has always paid above market price and this year, we paid between 20 to 28 Pa’anga per kilogramme for green vanilla which is in line with global markets,” Heilala’s co-founder and owner Jennifer Boggiss told Islands Business. “In addition, Heilala has been in Vava’u for over 10 years now and has a high level of trust with growers who know that we have a long and established record of supporting vanilla growers with above market rates for vanilla.

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It accused Heilala of acting only for its own interest and not that of the industry. “They were just buying beans and pollinating flowers on other people’s farms and doing nothing to develop the industry,” said Sam Himstedt, managing director of Queen Fine Foods. The reasoning behind the contract with farmers, he said, was to protect the investments made by the company and to ensure that the project achieves its aim to put Tonga’s vanilla industry on a sustainable footing, where farmers can take ownership of the program and move it forward whether or not Queen was there. “Our programme is not just about buying vanilla, it’s about rehabilitating the industry,” Himstedt told Islands Business. “We knew all about what was going on even before we went there. We knew that for them (farmers) to get engaged and build a sustainable industry and be able to look back five years from now with a sustainable platform whether or not Queen is there, we had to get them interested in making that platform so that’s what we’re doing. “We have a prepayment and post payment of harvest so effectively, our prices are very attractive by international standards. In fact, significantly more than what the other companies are paying for green beans. “In the last five years I was there (in Tonga), the growers were being paid an average of 8 Pa’anga a kilogramme. That’s not even funny, that’s just ridiculous and that’s what they were doing.” Heilala for its part says it works with a number of key growers in Tonga and the neglect of vanilla farms over the years was not Heilala co-founder John Ross...on Heilala’s vanilla farm in Vava’u. because of them but because farmers cultivated other cash crops when vanilla prices Photo: Heilala Vanilla. went down. “Growers will grow what is the most lucrative crop, what will provide the best return for their Queen has a contracted and fixed price for 13 labour and provide for their families. Vanilla is like Pa’anga per kilogramme with growers which we feel coffee and cocoa and goes through global pricing does not reflect the true market value to the growers cycles. Over the last eight years, the vanilla price and therefore is not beneficial to farmers,” Boggiss has not been high enough to encourage farmers to added. look after their vanilla plants and they have instead According to her, Heilala has sought the Tongan grown more cash crops like kava and copra, with government’s intervention in what it calls “antimuch shorter lead time for a return and more profcompetitive” behaviour by the newcomer. itable for them,” said Boggiss. “We have met with the Tongan Government “Queen is welcome to work with farmers who members as we do see this new competitor who has have left their vanilla vines over the last five years introduced both a fixed term and fixed price conand I would hope the Tongan farmers do continue tract as anti-competitive and, even more significant, their commitment with vanilla. However, we have is a disadvantage for Tongan vanilla growers based been a part of the Tongan community for over 10 on the current global pricing for vanilla. years now and have a great amount of respect and “Globally in other vanilla producing countries, understanding of their culture and growers will not contracts are not used for this reason as they are not continue supporting Queen if they do not pay marbeneficial for growers. ket rates,” she said. “In addition, the Tongan Fruit and Vegetable Queen, who expects to see the project through in Act states all vanilla must be purchased through the Tonga, opted to revive neglected farms and wait for auction system so that quality and pricing can be at least a year before a reasonable harvest. monitored and this is the system that we are more Apart from assisting farmers with rehabilitation, comfortable with. Queen will also see the development of a curing cer“We are confident we have a long and trustwortification course to help Tongan farmers produce thy history in Tonga and being a Tongan brand will world class standard vanilla beans. ensure we have the support of the Tongan vanilla Heilala, on the other hand, has its own farm on growers in years to come,” said Boggiss. Vava’u and also buys from the few growers that it Queen, on the other hand, believes its project, works with. It has been the major exporter of vanilwith its emphasis on rehabilitation of abandoned la from Tonga over the last 10 years and its products farms, is what Tonga’s vanilla industry sorely needs are distributed in Australia, USA, Brazil, Denmark, and to an extent, the project has only “exposed the Singapore, Hong Kong and very recently, Japan. negatives of what was going on”.

Ship worry

oncerns are being raised over possible environmental damage from a Chinese mother ship that ran aground on a reef in the Federated States of Micronesia (FSM) in December. FSM Vice President Alik Alik confirmed the ship ran aground on December 11 on the Nankepinparam reef in Pohnpei and that the Pohnpei State and government were working together to look into the matter. He referred further comments to the Justice department. Secretary of Justice April Dawn M. Skilling referred all comments to the official government’s public relations officer, who when this edition went to press was yet to respond. The vessel is owned by Jiang Hai Ping of Zhejiang province, China, but registered in Kiribati. It is understood there was no fish on the vessel. Conservation Society of Pohnpei says the Chinese mother ship Ping Da 7, ran aground on December 11 on a reef in northern Pohnpei. “Pohnpei State Government has reached out and has been arranging for agencies with the capacity to remove the ship from our barrier reef,” CSP Marine Programme Manager Jorg Anson said. “There is one tug boat owned by a private company here in Pohnpei that has been trying to pull the ship off the reef. “Local weather conditions are becoming worse. The forecast for this week and throughout next week are really bad so our marine team cannot do full assessments on the impacted site. “The ship has scarred the reef. The full extent of the impacted site has not been quantified.” Anson told Islands Business the site where the ship was grounded is home to an area of high biodiversity and abundance of fish, coral and other reef-related organisms. “Ship hulls are also painted with anti-fouling paints. Such paints are usually composed of copper, lead, tributyl-tin and other contaminants. “Research has shown that recovery, growth, and survival of recruiting corals and other invertebrates are almost impossible to occur when such contaminants are present in the water. “We really do hope that the ship is removed as soon as possible so full assessments can be conducted.” Anson said they were looking forward to conducting a full study on the damages caused by the ship. “We will make sure we have site documentation and reef valuation with strong data that will be able to hold up in court,” he said. Anson said the ship’s captain was brought in by FSM officials with a 3rd mate (translator) on December 18. He is understood to be in custody whilst investigations continue. Eyewitnesses said the swells in the area were quite high, reaching the deck of the ship. —Robert Matau Islands Business, January 2014 41

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Pacific Regional Tourism C a pac i t y Buil ding Pr og r a m me

STRE NG T H ENING PAC I F IC E C ONOMIC I N TE G R ATION T H RO UG 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