As is typical of situations in which foreign investment is involved, outside nations require government compliance in forging ahead with their designs. China had an easy time injecting itself in the nation when Somare was in charge.
Last spring, Secretary of State Hillary Clinton admonished Somare for getting too close to his neighbor to the north. She warned of a “resource curse,” insinuating that he would fail as leader if he lacked commitment to good governance, transparency, and accountability. ...
(After the trip Clinton said to congressional colleagues)“Let’s put aside the moral, humanitarian, do-good side of what we believe in and let’s just talk straight, realpolitik.”
She bluntly claimed that China is trying to “come in under us” regarding “Papua New Guinea’s huge energy find.” As if there was any doubt, she strongly asserted, “We are in a competition with China.”
According to reports like the Harvard piece above, Clinton did not appear well disposed towards Somare. The public "admonishment" over China and insinuations about Somare's probity seemed quite a personal and inappropriate public attack for the US Secretary of State to make as a guest on an official visit in Prime Minister Somare's country. Particularly while visiting ostensibly to improve relations between their nations.
Beyond admonishing Somare over getting close to China and advising colleagues of China "coming in under us" in PNG, it's hard to find anything Clinton actually did to address the problem of China's economic march into New Guinea.
The US Department of State has long maintained a comprehensive list of "Investment Climate Statements", the core trade related document for each nation US concerns invest or trade in. The 2010 lis is here http://www.state.gov/e/eb/rls/othr/ics/2010/index.htm
Having put PNG forward at the start of 2010 as a priority visit, then with the luxury of 11 months to prepare after cancelling in January, it's surprising that Clinton didn't ask for an "Investment Climate Statement" for PNG. The US didn't have one. In 2010 the US produced the research for nations like Burkina Faso, Zimbabwe, Fiji - even West Bank and Gaza. But US investors couldn't turn to the US State Department for advice about investing in PNG.
It wasn't until late 2012 as Clinton's term was finishing that the first synopsis of trade with PNG was produced - 2012 Investment Climate Statement - Papua New Guinea
It's a thorough, professional document - but it focusses strongly on reasons for US companies not to do business with PNG - crime, corruption, weak contract laws etc.
In Port Moresby in 2010 Clinton was angry enough about China's investments in PNG to admonish PNG's PM. The first US investment climate report for PNG was produced at the tail end of her watch as SEC State:
Bilateral Investment Agreements
Papua New Guinea has bilateral investment treaties with Australia, China, Germany, Malaysia, and the United Kingdom, and is in the process of finalizing one with Japan. Papua New Guinea does not have a bilateral investment treaty or a bilateral taxation treaty with the U.S.
The most recent report produced in 2015 shows that 5 years after Clinton fired up there was still no action on a formal investment relationship.
14. Bilateral Investment Agreements
Papua New Guinea does not have a bilateral investment treaty with the United States.
Papua New Guinea has bilateral investment treaties with Australia, China, Germany, Japan, Malaysia, and the United Kingdom. Papua New Guinea also has bilateral taxation treaties with a number of countries, including ones just completed in 2014 with Japan and New Zealand.
Bilateral Taxation Treaties
Papua New Guinea does not have a bilateral taxation treaty with the United States.
Clinton's angry response about trade was frankly disproportionate to the rounding error damage China was inflicting on broader US interests through its growth in PNG.
Ever since 2010 China's been steadily working up to this with PNG:
The two countries agreed to seize opportunities to synergize development strategies as China follows through on the 13th Five-Year Plan and the Belt and Road Initiative and Papua New Guinea implements the Development Strategic Plan 2010-2030, with a view to achieving win-win mutual development outcomes.
....agreed to strengthen cooperation in such areas as trade, investment, downstream processing/manufacturing, agriculture, forestry, fishery, energy, resources, civil aviation, tourism, construction and infrastructure, transportation and communications, launch a joint feasibility study on a bilateral free trade agreement at an early date, and strengthen cooperation in mineral exploration and development between the Ministry of Land and Resources of China and the Ministry of Mining of Papua New Guinea. China will continue to provide Papua New Guinea with economic and technical assistance to grow the economy and improve people's welfare.
The two countries agreed to expand exchanges and cooperation in education, culture, youth, health and other fields to enhance mutual understanding and friendship between two peoples.
China and PNG agreed to enhance bilateral cooperation and coordination in multilateral mechanisms, including at the United Nations, the Asia-Pacific Economic Cooperation (APEC), and the Pacific Islands Forum so as to jointly safeguard the interest of all the developing countries. Both countries support reform of the UN Security Council and maintain that such reform should enhance the authority and effectiveness of the Council and increase the representation of the developing countries, that a packet solution should be sought through full and democratic consultation and consensus-building and that a reform solution that is deeply divided shall not be forced ahead. China will provide support and help to Papua New Guinea for its hosting of the 2018 APEC Economic Leaders' Meeting.
During the visit, both countries signed documents (listed in the attached annex), including Civil Aviation Agreement between the Government of the P. R.China and the Government of the Independent State of Papua New Guinea and Framework Agreement between the Government of the P. R.China and the Government of the Independent State of Papua New Guinea for Developing Cooperation on Production Capacity.
Documents Signed between China and PNG during Hon. Prime Minister Peter O'Neill's Official Visit to China
1. Framework Agreement between the Government of the People's Republic of China and the Government of the Independent State of Papua New Guinea for Developing Cooperation on Production Capacity
2. Civil Aviation Agreement between the Government of the People's Republic of China and the Government of the Independent State of Papua New Guinea
3. Memorandum of Understanding regarding the Joint Feasibility Study on a China and Papua New Guinea Free Trade Agreement between Ministry of Commerce of the People's Republic of China and Department of Trade, Commerce and Industry of the Independent State of Papua New Guinea
4. Framework Agreement On the Provision of Concessional Loan between the Government of China and the Government of PNG on Lae Tidal Basin West Side Industrial Development Project
5. Framework Agreement On the Provision of Concessional Loan between the Government of China and the Government of PNG on Reconstruction and Upgrade of 4 Lane Highway for Keltiga Junction to Kagamuga Airport of Highland Highway Project
6. Preferential Buyer Credit Loan Agreement on PNG National Submarine Fiber Cable Network Project
7. Government Concessional Loan Agreement On Lae Tidal Basin Industrial Development Project
But trade and economic growth never appeared large on Clinton's official agenda as US Secretary of State. Compare China's easy to see strategy and tactics with the US
While China went to PNG to do business, Clinton's official representations in the name of US relations focussed on her hackneyed repertoire of left-wing social issues.
At the start of 2010 Clinton prioritised a visit to PNG. 11 months later when she went, the US didn't even have a research paper on investing in PNG.
Promoting US investment was never a priority for Clinton in her official role. Clinton's official focus as US Secretary of State is accurately recorded here in the official US State Department record of her trip.
Secretary Clinton's Visit to Papua New Guinea Underscores U.S. Engagement with Pacific Island Countries
Secretary Clinton’s visit to Papua New Guinea underscores the value the United States attaches to longstanding and close relationships with the countries and peoples of Papua New Guinea (PNG) and other Pacific Islands nations, where we have significant and growing interests. Our relations with the region are an integral part of our broader engagement with the Asia-Pacific. We have shared interests in freedom of navigation, cooperation on climate change, food security, and biodiversity protection. Pacific nations play an important leadership role on these and other global issues, particularly in the United Nations and in supporting international peacekeeping missions.
- Reinvigorating high-level engagement with Pacific Island countries. Secretary of State Hillary Clinton held her second annual meeting with Pacific Island leaders on the margins of the United Nations General Assembly in New York in September 2010. The United States also sent the largest, multi-agency delegation ever, including key personnel from the Pentagon and Pacific Command, to the recent Pacific Islands Forum meeting in Vanuatu.
- Increasing climate change assistance. The United States understands the importance of climate change for Pacific Island countries and has pledged more than $21.5 million over the next two years, pending Congressional approval, in climate change assistance for Pacific Island countries.
- Protecting the environment. Secretary Clinton’s visit to the Tubuserea Lavadai Mangrove Reforestation project, funded in part by a U.S. grant, demonstrates U.S. support for biodiversity, natural resource management and climate change adaptation. The Unites States also provides support for the Coral Triangle Initiative, which protects marine biodiversity, improve capacity for coastal and fishery management, and supports adaptation to climate change in the Pacific.
- Empowering women. The United States is committed to help empower women in Papua New Guinea and the region. Secretary Clinton announced that the United States will partner with the World Bank Group and the government of Papua New Guinea to host a regional dialogue next year in Port Moresby to discuss how best to empower women, including maternal health and economic empowerment.
- Promoting good governance. Papua New Guinea is richly endowed with natural resources, including gold, copper, oil, natural gas, and other minerals. Development of these resources would be a boon for the PNG economy while helping to meet global and regional demand. Properly managed, the increased revenue derived from natural resource exports could fund improvements in social services and infrastructure, enhancing greatly the country’s regional profile. Responsible environmental stewardship of resource wealth is also essential to protect PNG’s biodiversity. The United States is providing Papua New Guinea a wide range of technical assistance to build institutional capacity to manage its resource wealth effectively and responsibly, while minimizing corruption, waste, mismanagement, and environmental degradation.
She gave one major speech during her brief visit:
SECRETARY CLINTON: Thank you, Ambassador, thank you. (Applause.) Good evening, everyone. It is a great pleasure for me to be here with all of you. I am delighted that I am finally here. (Applause.) We had originally planned to do this last January. But, as you know, I was on my way here when the terrible earthquake in Haiti occurred, and I had to turn around. But I said at that time I would come to Papua New Guinea. And I am so pleased to see you all here tonight. (Applause.)
I want to thank Ambassador Bogari for her remarks, and for guiding me to see these wonderful displays. And, of course, I want to also, in her absence, thank Dame Kidu for the work that she did in helping to prepare this. It’s unfortunate she cannot be here this evening. But I hope each and every one of you will express to her when you see her my deep gratitude for her leadership. She has been an outspoken advocate for women’s rights and political participation. (Applause.) But she is the only woman member of parliament. And one of the very first displays that I saw said it all, I think. “One Woman is Not Enough.” (Applause.) And so, I hope that there will be more women in parliament in the years ahead.
I want to thank each and every one of you who were standing by the displays which, as the ambassador said, very well describe the depth and the breadth of women’s involvement in leadership in your country. The women who I briefly met – and it was much too brief – but I could tell from the descriptions that the women I was meeting are women who are making a difference here in Papua New Guinea.
And I want to thank you all, judges and magistrates, medical professionals, HIV/AIDS activists, farmers, artists, police officers and army officers, the women who are working to advance the rights of people with disabilities, the women who are working with (inaudible), the women who are making such a difference. And I know how you each, in your own way, have helped to pave the way for girls and women to go even farther in the future. And you are helping women be able to make the most of their own lives, and live up to their own God-given potential. So I would like to take a moment for all of us to recognize you, and to thank you for everything you do. (Applause.)
But what you are doing is essential, because no country in the 21st century can advance if half the population is left behind. The talents of everyone must be used, because the challenges we face require all of us. From climate change to child mortality, everything we face is too complex not to get the most out of every single person. And when we invest in women, we’re not just investing in individuals. We are investing in families, and we are investing in the next generation, and we are investing in communities and countries. (Applause.)
Giving women access to education, health services, economic opportunities, and the structures of power is critical to alleviating poverty and disease in every part of the world. The United States is committed to working with you. That is why, next year, the United States, along with the Government of Papua New Guinea and the World Bank Group will bring together senior government officials and business leaders from across the Pacific to discuss how, together, we can expand vital opportunities for women. (Applause.)
Now, that is going to be an important occasion, and I know many of you will be participating. And we want to do more than that. We want to give Dame (inaudible) in the parliament. So the State Department is working with local organizations to help prepare women voters for the upcoming national elections in 2012. And let’s get some more women to run for office in 2012. (Applause.)
Now, we are not only going to be training candidates for office, but we are going to be working very hard to combat violence against women and girls. If a woman or a girl cannot be safe in her own home, or safe in her own family, or safe in her own community, then that woman or girl will not have the chance to make the most out of her life. So we will be working with Exxon Mobil and local organizations on a mentoring program aimed at ending the culture of violence against women and girls in Papua New Guinea. (Applause.)
We will also be stepping up the fight against HIV by doubling our contribution to fight HIV/AIDS here next year. (Applause.) Papua New Guinea’s HIV rates are some of the highest in Asia. And women are particularly vulnerable. And, as I was looking at the displays, I saw the display and saw the mention of the Clinton Foundation. And my husband is very proud of the work that his foundation is doing here. And we want to really make it a public campaign to try to prevent HIV/AIDS, and to treat and help those who have the disease. We are also ready to work with your government to pass and enforce tough laws against the trafficking of human beings, particularly young girls and young women. (Applause.)
Now, everything I have heard from our ambassador and from others who are much more familiar with your country than I am have told me about how strong and courageous the women of this country are. And, of course, we have a woman of valor, a courage award-winner here, as well, this evening. And I want to assure you that, as Secretary of State for the United States, empowering women, enabling more women to have access to their rights, to take their position in society, to choose what is best for themselves and their families, is one of my highest priorities. And I will do everything I can to assist you. (Applause.)
And I look forward to working with you. And I think it’s next year that one of my top officials, the global ambassador for women, Ambassador Melanne Verveer, will come to Papua New Guinea to follow up on my visit to work with the women here to figure out what else the United States can do, so that we have even more women playing leadership roles in every aspect of your society.
Thank you all very, very much. (Applause.)
After a private meeting Clinton and Somare held a brief press conference. Somare kicked off, clearly having some trouble in pretending to support Clinton's aims:
Papua New Guinea will continue to be a constructive partner in international efforts to combat terrorism, drug trafficking and production and address climate change, which is one of our very important agendas in our development, and gender balance and sustainable development and (inaudible) development and climate change, and we want to be able to sustain the developments that are going on.
In the area of climate change, Madam, I am thankful that the United States Government made a commitment of 21 million dollars to assist the (inaudible) for mitigation purposes. And we are also glad that, with our (inaudible) program, we will be also looking forward to a (inaudible) meeting to reach some understanding on the efforts that we are taking on climate change.
We have always enjoyed a friendly and mutual relationship. When the President (Clinton) was here I had a visit. We would have hoped that you would have spent a day visiting one of our towns outside to really get a feeling of Papua New Guinea, that this is just a – cosmopolitan feeling, but if you had gone out -- outside Port Moresby, you will find that you are really (inaudible) the villages and see the lifestyle of our people, how we live.
We want to thank you once again for honoring us, and you made a commitment that you will return before the year falls, and you have done it. (Laughter.) Thank you so much.
After some opening remarks from Clinton the press asked 4 questions, one of them about Clinton's war on violence against women. Somare's answer can't have impressed her - but then the barbs were two-way between two people who did not seem happy to be with each other.
PRIME MINISTER SOMARE: To answer your question on the violence against women, yes, we have cases where there are these type of happenings, but we know that we have systems through the welfare system who can be controlled and the women also have a right to be able to use our courts and legal system (inaudible) courts if they are treated this way.
But I think overall, we sometimes get a painted picture of how cruel we are with our women, and this is not true. This is a perception from people like yourself and people who write about us. That’s what they like to paint about this country. And I’m telling you that I have been around for a long time and I know that men and the women, sometimes there are fights, arguments do take place, but it’s nothing very brutal about violence against women. There are cases. These are criminal cases. If you are talking about criminal cases, they’re different, but normal way of life, normal way of living; i.e., I can stand up here and vow to you that Papua New Guinea has systems.
I think with more education now, more and more of our people are educated, young men and women are educated, and they understand that violence against women is wrong. And even our civil service and people who are employed in industries, they know it’s against the law to use violence against women. We have cases where people are drunk, which you know might (inaudible) a person who cannot control when he’s under the influence of liquor. And you find that sometimes (inaudible) it takes place in some places. We cannot deny it.
But we are doing everything possible, and through the education system alone and allowing the women to play a very important role in a society. That’s the only way we can overcome this problem. But all in all, sometimes it’s exaggerated by people who write about us. Thank you.
So where did Clinton's impassioned reaction to Chinese investment come from? What drove it? If she was genuine in her belief that China was damaging US interests by its investment program in PNG, one would expect to see some sort of US response to advance US investments in PNG on the trade front.
Her actions don't show much support for the idea she was driven by Chinese damage to US economic interests in PNG.
Was she reacting to having been kicked hard where it hurt the most, right in her ample Clinton Foundation?
No one spoke about the elephant in the Clinton/Somare room during Clinton's whistlestop visit.
The Pacific Medical Centre had been big news in Port Moresby for months.
The project was hugely controversial and the local medical profession had run a highly organised and very public campaign against Somare's government over the issue.
Since April there'd been solid and consistent reporting of Somare's visit to New York where he'd secured support for the project from the prestigious William J Clinton Foundation. It was public knowledge that Bill Clinton was going to announce the project in New York that October.
The silence on the issue when Hillary was there would have been deafening.
Neither Clinton nor Somare said a thing, but the tension was palpable.
Somare later tried to distance himself from the project after the Clinton announcement failed to materialise. Somare painted his Health Minister as a lone wolf on an ill-fated frolic.
This is the story of the ill-fated frolic those grown men, including Bill Clinton, had been up to.
April 2010 and the project was greenlighted by Bill Clinton and the Foundation
Prime Minister Somare, PNG's Ambassador and another Minister met with Bill Clinton in April 2010 to discuss PNG's LNG contract revenues and the Pacific Medical Centre project.
All of the PNG attendees at that meeting sent various letters, emails and other documents recording what Clinton said at their meeting. Much of that found its way into the local press - like this published account made by PNG's health minister:
Clinton had people in PNG and at no stage did he correct or deny the reports about his support for and involvement in the project.
The PNG government proceeded in the belief the Clinton Foundation support was locked in.
After allocating $20M to the project in November 2009 (money for some sort of facilitation or establishment fee - the destination for that money is the subject of ongoing investigations) the PNG Government made no further budgetary allocation in the 2010 budget.
By April things were firming up. The PNG Ambassador to the US report the April meeting and its follow up with Clinton and his staff:
President Clinton indicated he would be making a major announcement of his support – and the Clinton Foundation’s support – for the PMC project in late September 2010 in New York City during the annual meeting of the Clinton Global Initiative.
President Clinton’s support for the Pacific Medical Center project would also see him reach out to other western governments and corporate leaders to support the PMC as a major healthcare initiative for our entire nation and other Pacific Islands nations; this would include President Clinton’s outreach – on PNG’s behalf – to the leaders of other nations that provide PNG bilateral development assistance, founders/CEOs of major foundations in the U.S. and CEOs of major corporations that have various business interests in PNG and other major prospective partners to get them involved in supporting the PMC project would as well.
While the high profile public announcement from Clinton had been locked in, funding had not. Somare instructed Departments to work together to prepare budgets that made provision for building the hospital in the 2011 year. The health ministry was tasked with making sure the project was financed. Somehow.
There must have been a flurry of activity in June in PNG health!
The Minister, Sasa Zibe was apparently headed off on 24 June.
On 23 June 2010 a paper setting out the Health Department's capital funding requirements and the source of funds was ready for submission by the Minister to the Cabinet meetings leading to approvals for the PNG Government 2011 budget.
The proposal was for funding by means of a Chinese Government loan for construction of 4 new regional hospitals. Other ministries beyond health had roles to play. The loan would also cover replacement and upgrades of dilapidated hospital system plant and equipment.
Bora, Popendetta, Nonga and Jiwaka hospitals were all cactus - if it wasn't the ocean inundation it was volcanic eruptions. The arguments for the urgent and unavoidable spending of about 800M Kina were impeccably presented. There wasn't a spare Kina left and everything in the submission absolutely positively unavoidably just had to get funded and done!
There it was, perfectly written, funding by a loan from China of 800M Kina for 4 new hospitals and upgrades to plant and equipment in hospitals that were way, way overdue. No brainer. Just needed the Minister's signature.
Minister Zibe or someone on his behalf wrote "Mark, please see changes inside to the submission, amend the corrections accordingly ASAP before I depart tomorrow for...."
I can imagine the reaction as the person responsible for this perfect submission saw the first hint of changes needed.
Oh, that's interesting, we're adding one Pacific Medical Centre and subtracting housing for workers at provincial centres. Right. Wonder how they'll justify that.
There's the justification, "Pacific Medical Centre is an initiative of the national government to provide a specialised tertiary treatment and full service training facility". Right. Well that's that then.
And there in glorious handwritten scribble is the detailed budgetary submission for the financing of PNG's Pacific Medical Centre unequivocally supported by President William J Clinton after his customary due diligence.
Add 230,400,000 Kina for one Pacific Medical Centre
Take away all the medical equipment replacement for all provincial hospitals for 2011 to 2013
Take away all static plant replacement program for all provincial hospitals for 2011 to 2012
Shit, still way over budget. Right.
Take away all housing for all provincial workers and can the Health Nationwide Institutional Housing Program. No one will notice.
Total - 800 million Kina. Hot diggety.
So the money for the Pacific Medical Centre had been found. It was coming from Covec Ltd, a Chinese State Owned Corporation based in PNG.
The US had no official reaction to China funding New Guinea's borrowings for hospitals. The US was by then itself a substantial debtor to China with its own huge fiscal deficits to fund. When the official US climate investment report for PNG was produced its first few lines noted:
Openness to, and Restrictions Upon, Foreign Investment
The Government of Papua New Guinea (Papua New Guinea) welcomes foreign investment and the country has a liberal investment regime. The government has made considerable progress by creating policies and systems to streamline the regulatory and administrative requirements for foreign investors. This has included the establishment of the Investment Promotion Authority (IPA) which is mandated by an Act of Parliament to promote and facilitate investment and act as a one-stop-shop facility for investors.
A US Secretary of State would find it hard to justify criticism of either the PM of PNG for the policy or China for responding to it.
In the context of continuing revelations about the overtly corrupt practices of the Clinton Foundation and its early central involvement in the PMC hospital development, I think it's useful to look at the Clinton Foundation and its interests as the possible source of Hillary's antipathy towards Somare.
In June 2010 The Australian newspaper carried this heartbreaking story by Rowan Callick. Still the Clinton Foundation pressed on with its preparations for the PMC and broader engagement with Somare and his gangs of thieves.
Rowan Callick / The Australian
Good governance has fallen hostage to elements of the elite who siphon off vast sums of public money
PAPUA New Guinea’s assistant Auditor-General Gordon Kega has discovered $2 million was paid to 87 people “for unknown services” out of relief funds given to Oro province following cyclone Guba in November 2007.
His investigation urges criminal charges against those who “fraudulently and illegally paid themselves”, often simply by shifting money from the relief funds into their personal bank accounts.
A further $800,000 was paid to businesses and other organisations for goods and services that were unverifiable.Those involved included “disaster officials, senior government officers, bank officers”.
A few days ago, Oro’s provincial administrator Owen Awaita urged AusAID to build a permanent bridge in the province after its predecessor was washed away by cyclone Guba, since temporary alternatives have also collapsed. “The sooner AusAID steps in, the better it will be for the bulk of the population who depend heavily on the bridge,” Awaita said.
The connection is palpable. PNG has been undergoing a transition through which an extraordinary proportion of public funds have been purloined by members of the elite, while 40 per cent of Papua New Guineans live on less than $US1 ($1.19) a day. This gap is being accelerated by the prospect of instant wealth around the corner from ExxonMobil’s $16.5 billion liquefied natural gas project, still four years from operation. The stress on the LNG deal has helped build a climate in which corruption appears to be viewed by some beneficiaries merely as booking private spending against future national earnings that are expected to be bottomless.
At the same time, government services have been declining, putting increased pressure on aid, especially from Australia, which the Rudd government is increasing in the next financial year, to $457m. The Rudd government meanwhile has cancelled the annual ministerial forum with PNG, due to limitations on ministerial travel in election year.
PNG Prime Minister Michael Somare, lionised globally as a Third World champion against climate change, a fortnight ago attended a conference on that issue in Norway. Last month while visiting New Zealand, he told the University of Auckland that LNG projects would “increase our revenue to an unprecedented level and transform PNG”, and that as a “big brother” to other Pacific island nations, PNG would be “in a position to provide development assistance within our region”.
But the country has been suffering widespread outbreaks of cholera during the past nine months, with more than 2600 cases so far, including 56 deaths, indicating poor sanitation and inadequate access to safe drinking water. Sales of fresh seafood have plummeted as people grow nervous of the disease, which has hit 573 people in Port Moresby.
Recently, the Papua New Guinea Post-Courier newspaper reported the pathology section of the main Angau Memorial Hospital in Lae, the country’s second city, is on the verge of collapse. Francis Bannick, the doctor in charge, describes the situation as desperate.
Lae has been unable to buy equipment needed urgently to enable pathology work to be carried out there — costing about $500,000 — replacing obsolete or broken machines. And medical specimens and biopsies instead sent to Port Moresby General Hospital for analysis have not received any response since September last year.
Recently, life expectancy has begun to decline and infant mortality to rise. Yet Health Minister Sasa Zibe has committed $9m towards a new high-end public-private Pacific Medical Centre in Port Moresby.
“The government, and many people, have been intoxicated by the anticipated wealth and opportunities of LNG. The nation is now feeling the effect of the early stages of the project. “The domestic cost structure has increased markedly. Many bad side effects will flow from the LNG-driven price inflation. Poverty will intensify, leading to other social problems.
“Many people have flown to Port Moresby from Southern Highlands, where the main gas field is located, seeking cash from various grants available from the government. Self-styled consultants are eagerly signing up such clients and representing them to government agencies, for commissions.
“There are enormous expectations,” says PNG Chamber of Mines and Petroleum executive director Greg Anderson, who stresses the need to manage them carefully. “There are dangers this could emerge as a huge cargo cult in the minds of many. “Government funds are already confirmed as a successful cargo cult that keeps on giving, with little downside for the beneficiaries.
Mowana Ugwalabu, general secretary of the PNG Teachers Association, said recently the teachers’ payroll list contains thousands of ghost names whose pay is going to outsiders while teachers struggle to get paid at all.
In March, Somare tabled in parliament the 818-page report of a separate commission of inquiry into corruption at the top levels of the bureaucracy, which was chaired by retired PNG judge Maurice Sheehan, a New Zealander, with fellow commissioners Cathy Davani and senior PNG businessman Don Manoa. But an injunction was granted banning the report’s publication and implementation as soon as it was tabled. And extraordinarily, the government has not sought so far to have the injunction lifted.
The government, however, has moved rapidly to pass legislation sheltering resource projects from all litigation over the destruction of the environment, labour abuse or landowner exploitation. This follows the growing anxiety of China’s Metallurgical Construction Corp, the developer of the $1.5bn Ramu nickel mine, about the effect of injunctions especially, recently, those granted to halt its construction of a pipeline to slurry tailings into the sea.
Deputy Opposition Leader Bart Philemon, a former treasurer, says the new legislation protects the interests of investors at the expense of the resource owners and the environment. Port Moresby Governor Powes Parkop says it delivers “almost absolute power to the government” on such matters.
Philemon says Somare is “dangling five carrots before the eyes” of backbench MPs to secure their support. Parliament last week approved the establishment of five new ministerial portfolios, thus bringing to 32 the cabinet positions, out of 109 MPs. Somare this week justified the new legislation, however, saying: “We cannot get mining going while this is in court. The Prime Minister’s Department has been held to ransom by [the judiciary]. The government will lose a lot [of money].” This is even though he has granted the Ramu project a 10-year tax holiday.
A clamour had arisen demanding the suspension of National Planning Minister Paul Tiensten over claims of corruption. Tiensten returned to his constituency. But Somare then sent the government’s Falcon jet to bring Tiensten back in triumph to Port Moresby.
The Supreme Court chalked up a win over the government recently, however, in insisting on the suspension of Treasurer Patrick Pruaitch following his indictment by the Ombudsman Commission for corruption. Justice Nicholas Kirriwom said in awarding the decision against Pruaitch — overturning an earlier stay order — that “for a leader to remain in office when he has been referred [to a leadership tribunal] is a mockery of the constitution”.
Legislation to water down the powers of the Ombudsman Commission, which polices corruption, has been backed by the government. But it was postponed to later in the year following mass demonstrations.
Morauta warns: “If the Ombudsman Commission goes, there is no country.” Somare says there is no intention to remove the commission, describing the demonstrators as “ol long long” (they’re mad).
Paul Barker, executive director of the Institute of National Affairs, PNG’s independent think tank, says: “The few reformers within the government seem to have inadequate political and bureaucratic backing to push through the massive changes needed for government to contribute rather than be a dead weight to a productive and inclusive economy and society.