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