Australia and PNG relations bind despite some problems

Australia and PNG relations bind despite some problems

Papua New Guinea's relationship with its former colonizer Australia suffers a 20-year itch. Kunda Dixit of Inter Press Service reports.

PORT MORESBY: The ties between Australia and its former colony, Papua New Guinea, sometimes resemble the relationship between a mother kangaroo and her joey.

At other times, the love-hate relationship between the two Pacific neighbors is more like a stormy marriage as verbal brickbats fly across the Torres Strait in both directions.

On Sept. 15, it will be 20 years since PNG got its independence from Australia, but the country's ailing economy remains in the shadow of its big neighbor to the south.

Most of PNG's trade is with Australia. And Canberra is by far PNG's largest donor, giving the country US$200 million a year -- with no strings attached -- as direct monthly contributions to the budget.

But these donations are being phased out. By the year 2000, PNG will only get program assistance for specific projects. Says a recent Ausaid report: "The new partnership ... with Australia will assist PNG to achieve its goal of self-reliant nationhood."

People here value this help, but also resent the over- dependence on a former colonial power. The lingering dominance of Australian companies here, and the patronizing negativity with which Papua New Guinea is portrayed in the Australian media is proof to many Papuans that their country is in a sense still a colony.

When Port Moresby got independence in 1975, Australia and Papua New Guinea vowed to remain "friends forever". These days, however, television commentator John Eggins asks: "On the 20th anniversary of our independence, is it still friends forever, or friends falling out?"

Australian diplomats here, ensconced in one of their sprawling, barbed-wire ringed residential complexes, will use surprisingly undiplomatic language to tell you the country is self-destructing, how the superb infrastructure, the efficient bureaucracy and the crime-free country they left 20 years ago has gone to pot.

Indeed, the economic statistics are alarming. Papua New Guinea is the size of France, but has only four million people. It has the world's largest copper mine, is brimming with gold deposits, has huge reservoirs of oil and gas and vast virgin jungles. Yet the country is nearly bankrupt.

The International Monetary Fund (IMF) and World Bank are dangling a luscious US$215 million rescue package, but say they will not give it unless Port Moresby heeds advice to cut spending, liberalize investment policies for the private sector and stop destructive rainforest logging.

The PNG currency has dropped in value by up to 35 percent in the past year, and inflation is said to be twice the official figure of 6.5 percent.

Desperate, PNG Premier Julius Chan in April requested an advance of US$100 million on Australian aid. Canberra gave some small change. This brought a sharp rebuke from the PNG High Commissioner in Canberra, who accused Australia of abandoning its friend during an hour of need.

Chan, who is half Chinese, then began cultivating Taiwanese business connections much to Beijing's consternation. But Port Moresby's `look north' policy has also irked the Australians who resent how Malaysian, Indonesian and South Korean businesses moving into what used to be Australian turf -- even though Canberra itself is trying to similarly woo East Asian business.

Malaysian firms now control three-forth of Papua New Guinea's log exports and have interests in mining, fisheries and media.

Another sore point in Australia-PNG relations has been the ongoing civil war in Bougainville. The root of that conflict was the dispute between the Australian operators of the Panguna copper mine there and islanders over compensation claims for land and environmental damage.

Canberra has been trying to restart peace talks and was involved in training a South Pacific peacekeeping force in Bougainville. But Australian media coverage of the PNG blockade of Bougainville in 1989-90 and the suffering that caused raised hackles here.

Last year, 6,000 PNG villagers living downstream from the Ok Tedi gold mine filed a $2.8 billion damage suit against Australian mining giant BHP for killing the river with ore residue and destroying their livelihood.

Things have not always been so bad for Papua New Guinea. In 1993, fired by large new investments in mining, the country registered a scorching 14.4 percent growth -- the highest in the world for that year. By 1994, the growth rate had plummeted to one percent.

PNG officials still seem to be hoping that they do not have to give in to the IMF-World Bank conditions for the rescue package and that other eager Asian donors will bail them out.

A slew of new mining and petroleum ventures that will soon come on line, they hope, will bring in a flood of revenue. The Australian-financed Lihir gold mine is one, and the country hopes to be one of the major suppliers of oil and natural gas from the Kutubu and southeast Gobe fields to Asian markets.

The new cash, PNG planners hope, will help them replenish hard currency reserves that have fallen to an all-time low of US$55 million, bring more balance to the budget and shore up the kina.

Diplomats here say this may be hoping for too much. Notes one: "Unless you can address the structural problems of over-spending, corruption, capital flight ... You are not going to solve anything."

For the time being, Papua New Guinea is compensating for the scaling down of Australian budgetary support with a growing reliance on Asian investments. And that may finally cut the umbilical cord with its colonizer.

-IPS