PNG's Bill Skate quits, Taiwan deal uncertain

PNG's Bill Skate quits, Taiwan deal uncertain

PORT MORESBY (Reuters): Papua New Guinea Prime Minister Bill
Skate quit on Wednesday after a deal to recognize Taiwan failed
to rescue his sinking career and angered trading partner China.

His departure leaves the deal -- reported to be greased with
generous support from Taiwan -- in the balance.

The frontrunner to succeed Skate told Australian radio he
would review the two-day-old deal on mutual diplomatic
recognition with Taiwan if he became the next prime minister.

"As a new government I have flexibility to review everything,
including that," Sir Mekere Morauta told Australian Broadcasting
Corporation radio.

"It's something I'd have to be very careful (about) because
it's not just between Papua New Guinea and Taiwan. There are
regional and international implications and I'd have to be
mindful and sensitive to that," Morauta added.

Skate called a news conference at his official residence in
the South Pacific nation's capital to announce his resignation,
which averts a no-confidence vote against him after parliament
resumes next week.

"I want to announce my resignation as the prime minister of
this great nation," Skate said.

"My ministers had not put pressure on me but we have looked at
all the options and I think it is the best decision," he added.
"I am resigning basically to stabilize politics. I am trying to
give investors the confidence that the government does not need
to be changed."

Documents obtained by Reuters earlier on Wednesday revealed
Skate had asked Taiwan for US$2.35 billion in loans in exchange
for dumping long-standing ties with China and recognizing Taipei,
Beijing's diplomatic rival.

Taiwan again denied on Wednesday that any money was to change
hands in return for the diplomatic recognition.

"We did not make any monetary promises. I can guarantee that
with my own career," Foreign Minister Jason Hu said angrily,
dismissing the document as "false".

"If I did such a thing, I have no right to represent the
Republic of China (Taiwan) in the international community."

Both Taiwan and China -- which sees Taiwan as a renegade
Chinese province -- said they were closely watching developments
in Papua New Guinea.

A Chinese foreign ministry spokesman called on Papua New
Guinea to correct its "serious mistake" in recognizing Taiwan.

Australia, whose leaders had criticized the Taiwan move,
reacted cautiously, a spokesman saying Canberra did not intend to
interfere in its neighbor's domestic affairs.

Papua New Guinea government spokesman Chris Hawkins said
Skate's deputy, Treasurer Iairo Lasaro, would be acting prime
minister until a new leader was chosen when parliament reconvened
on Tuesday.

Skate said he had not been put under pressure to quit but
wanted to bring stability to his country of 4.5 million people.

Skate cobbled together an unlikely coalition to take over from
Sir Julius Chan after elections were called after the 1997
Sandline mercenary fiasco -- a failed deal to use mercenaries to
put down a secessionist rebellion on Bougainville island.

Skate adjourned parliament in December as rumblings against
his government grew. He lost his major coalition partner, the
People's Democratic Movement (PDM), 10 days ago after 16 members
of his own PNG First party deserted him to join PDM.

PDM said it could no longer be part of a government it called
dictatorial and incompetent. The PDM claims to control 81 of
parliament's 109 seats.

PDM leader Morauta emerged as the most obvious successor to
Skate, although government sources said opposing camps had
already begun meetings to hammer out deals.