Pacific Islands Forum Economic Ministers are asking development partners to provide debt relief, and increase general budget support as island nations struggle with the economic impacts of coronavirus pandemic.
At the end of this week’s virtual Forum Economic Ministers Meeting (FEMM), Ministers and officials also asked for more flexibility in the financing and focus of existing and upcoming donor programs, increased support for social protection systems, and that International Financial Institutions reassess grant and loan eligibility so Pacific island states can fully benefit from their support.
The Ministers say considerable additional investment and resourcing of public health systems will be needed and have committed to diversifying their economies and improving competitiveness, with a focus on the digital economy and investments in digital literacy, trade and innovation in the private sector, including through public private partnerships.
The Ministers have backed the establishment of a regional COVID-19 economic recovery taskforce to look at the socio-economic impacts of the pandemic over a longer period of time, and oversee implementation of regional priorities, including including health, digital economy and connectivity, food security and agriculture, and building resilient and sustainable economies. The taskforce will also engage with development partners on ‘innovative’ financing options.
Pacific Islands Forum Secretary General Dame Meg Taylor says the FEMM also discussed the need for “very strong public financial management systems”, so that members can absorb resilience finance and “address the issues of health and climatic impacts and plan our economies.”
“I think one of the key issues here is that, to note that over the past several years about US$2 billion has come into the region for resilience finance. That's a lot of money .”
As Chair of the FEMM, Tuvalu’s Finance Minister Seve Paeniu said for him, “it all boils down to the resourcing of these response measures that we pursue and how we implement and resource these initiatives.
Paeniu would also like to see “a coordinated set of lessons learnt and experiences by similar countries” so that Tuvalu and other small island states can learn from and adapt to their own circumstances for future crisis response situations.
FEMM has directed that a development partners roundtable be convened to help coordinate donor support for COVID-19 responses.
The Ministers did not discuss travel ‘bubbles’ or labour mobility in depth. Minister Paeniu says this is because in the case of travel bubbles, only a few countries have flagged such arrangements as a possibility. Dame Meg said labour mobility and seasonal worker discussions have largely been handled on a bilateral basis.
Current global forecasts envision a 5.2% contraction of the global economy in 2020 – the deepest global recession in decades. Triggered by the COVID-19 pandemic, this recession will have long term impacts on economies the world over through lower investment, erosion of human capital through lost employment and education and the fragmentation of global trade and supply links.
This global forecast will impact economies in the Pacific region primarily due to the limited capacity for domestic responses available to Small Island States and the pre-existing underlying socio-economic challenges. In reality, the COVID pandemic has exacerbated existing vulnerabilities, like climate change, and generated new ones.
In the Pacific, the region is forecast to contract by 4.3% in 2020 with declining in economic activity across all sectors, especially tourism.
This sets the tone for the 2020 Forum Economic Ministers Meeting on 11 – 12 August 2020.
What has the Pacific done collectively in response to COVID-19?
Recognising the threat of the COVID-19 pandemic, Forum Leaders and Governments acted quickly and decisively to close borders and implement strong measures to mitigate and contain the spread of the virus domestically.
Consequently, 12 countries remain COVID free, and our region’s total number of COVID-19 cases remains relatively low, compared to other regions in the world.
Regionally, Leaders established the Pacific Humanitarian Pathway on Covid-19 (PHP-C) which is designed to facilitate the delivery of medical supplies and equipment to Forum Island Countries (FICs), and at the same time, serve as a platform to share knowledge and experience.
Indeed, I was pleased to witness the first airlift of medical supplies through the PHP-C this last week and look forward to supporting Members in the weeks to come.
The 2020 Forum Economic Ministers Meeting
This weeks meeting of Forum Economic Ministers will focus on the three-pronged crisis currently facing the region – the impact of COVID-19, the devastating effects of climate change induced natural disasters and the fragile economic health of the region as a consequence of inherent vulnerabilities.
The meeting provides a critical opportunity for the region’s economic ministers to have a collective discussion on the impact of the COVID-19 pandemic on their economies. They will discuss economic responses and recovery packages and strategies, whilst keeping in mind the need to ensure and maintain their commitment to strengthening climate resilience in their recovery packages.
The impact on FICs has been devastating. The key issue that sets this crisis apart from other disasters is that the COVID-19 pandemic is impacting all Forum economies simultaneously, thereby impacting the delivery of immediate assistance and aid from traditional development partners.
FICs are projected to experience a substantial contraction in their economies in 2020, ranging from 21.7% in Fiji, 11.9% in Palau, 3.7% in Samoa to 1.0% in Papua New Guinea. The Forum Secretariat has also conducted a survey of Small and Medium Enterprises (SMEs) in the region which confirms massive declines in revenue, with follow-on negative impacts on the well-being of Pacific communities that depend on SMEs for their livelihood.
Economic Ministers will consider regional policy options and initiatives to support the next phase of recovery. The focus will now shift from protective measures to how best we can ensure our Forum Members can revive their respective economies whilst ensuring the health, safety and wellbeing of our Pacific people is not compromised. In the absence of a vaccine for COVID-19, the global outlook on the pandemic remains uncertain and therefore, so does the regional outlook.
A related consideration by economic ministers at their meeting next week will be the 2020 Biennial Pacific Sustainable Development Report which reviews the region’s progress towards the 2030 Agenda, taking into account the emerging impacts of the COVID-19 pandemic on socio-economic development across the region.
Lessons from COVID-19 for the Pacific region
What is strikingly clear is that the region will operate differently in the post COVID-19 era. A key challenge is the need for access to timely and relevant data to support decision-making during this evolving crisis. The effectiveness of any response measure is based on the appropriateness and agility of our national and regional systems and institutional mechanisms to react promptly – this will only be possible through the availability of relevant and timely data.
Further, the importance of our health infrastructure also comes to the fore. In several FICs, the average public spending on health care per person is US$275 which is relatively low. The prioritisation of short term, medium and long term investments in health infrastructure and services will need to be addressed if we are to have the tools and equipment to respond to COVID-19, particularly as countries assess their readiness to open their borders.
Perhaps most importantly, this crisis has also reaffirmed the importance and value of strengthened digital economies across the Pacific region. Digital economy and e-commerce in particular is an area that remains unexplored and has the potential to become a regional priority with multi-sectoral and political support should Ministers and Leaders determine so. The key impediments so far have been access to cost effective digital infrastructure and how we can come together as region to support this.
Regional cooperation and solidarity through this crisis
Indeed, the COVID-19 pandemic has placed the region in an unprecedented situation. The need to respond to three crises simultaneously has exposed the underlying vulnerabilities of many of our economies. This reality was amplified in April 2020 when Tropical Cyclone Harold left a path of destruction in the region, as countries went into COVID-19 lockdown.
In spite of this, we in the Pacific have demonstrated time and again the strength of our region, when we come together to respond to crises. This time is no different. Indeed, pioneering regional responses, such as the Pacific Resilience Facility, and the PHP-C, show we can deliver innovative solutions to deal with the biggest challenges facing our generation. Such innovative approaches must inspire more multi-sectoral regional cooperation to assist in our efforts to build back our economies and societies. Greater collaboration and meaningful engagement between governments, civil society and the private sector is no longer an option, it is essential.
Pacific Leaders have endorsed the Blue Pacific call for collective regional action, recognizing the economic and strategic potential of our shared oceanic continent. It is important this collaboration continues, to strengthen the resilience of our economies to future shocks and ensure our Pacific people can survive future disasters. Our nations are already rethinking national development and rewriting their strategic development plans. A renewed focus on self-reliance and innovation is surely of value and achieving the 2030 Sustainable Development Goals is more important than ever.
The wellbeing of our people is under threat. We must and will work together to help our nations thrive. We must work together to help our people thrive. If we collaborate as one Blue Pacific Continent, we will emerge from this crisis stronger and more resilient.
Pacific Islands Forum Secretary General Dame Meg Taylor has declined to comment on the negotiations over her successor as head of the regional organisation, saying only “I have a job to do and I’m going to do it right up until the last day which is the 15th of January.”
Dame Meg made the comments in the leadup to the Forum Economic Ministers Meeting next week. Economics officials are meeting this week in preparation for the main proceedings.
Islands Business understands there are currently five contenders for the position of Secretary General; Cook Islands Prime Minister Henry Puna, Marshall Islands Ambassador to the US, Gerald Zackios, Tonga's international civil servant and development economist, Amelia Kinahoi Siamomua; former Pacific Community (SPC) Secretary General, Solomon Islander Dr Jimmie Rodgers and former Fiji Foreign Minister, Ratu Inoke Kubuabola.
The change in leadership will come at a critical time; as Pacific Islands meet the economic, health and social challenges presented by the coronavirus pandemic, manage the sometimes conflicting priorities and activities of development partners in the region, and endeavour to keep climate change action and the “Blue Pacific” narrative at the top of the agenda, all while keeping regionalism alive.
Tuvalu, as Chair of the Forum, had suggested the vote for the new Director General be deferred until next year, but there seems to be little appetite for that amongst other Forum members. Dame Meg says the Forum Chair is still consulting with members on the matter.
Last week the Coordinator of the Pacific Network on Globalisation, Maureen Penjueli said with Vanuatu’s deferral of the Forum Chairmanship until next year, Dame Meg’s imminent departure and the recent departure of her deputy, Cristelle Pratt for the ACP Secretariat, “we are now operating in a leadership vacuum around who is going to champion leadership in the Pacific.
“I think leadership, visionary leadership is quite critical right now.”
Penjueli says it’s important to understand “where regional leadership lies to deal with a whole lot of issues. Whether its unemployment, whether it’ movement of people, whether its debt, whether it’s financing, where and who will champion the Pacific.”
Most recently, Forum members have cooperated effectively through the Pacific Humanitarian Pathway to move COVID testing kits, personal protection equipment, supplies, personnel and repatriated citizens through the region. Yet the vote for the Secretary General has the potential to raise tensions. Palau’s President Tommy Remengesau Jr has already plainly stated that that ‘it’s Micronesia’s turn’ and last year the Federated States of Micronesia, Marshall Islands, Kiribati, Nauru and Palau all said they supported Ambassador Zackios’ candidacy.
Traditionally a Fijian Secretary General would be an unusual appointment, as Fiji hosts the Forum Secretariat, although Ratu Inoke is well known to regional leaders as a former Foreign and Defence Minister. He represented Fiji at the Pacific Islands Forum leaders meeting in Samoa in 2017, in 2016 in Pohnpei, FSM and in PNG in 2015.
While Dame Meg wouldn’t be drawn on the specifics of the SG vote, she did say that she personally felt “I’ve not driven hard enough about issues on women and public participation of women in public life and also at senior levels of the regional bureaucracies,” noting her two former female Deputy Secretary Generals had now departed. She says unless a woman is elected as Secretary General (and the only female candidate is Tonga’s Siamomua), the organisation will be very much driven by men in the senior positions.
“I don’t believe that I have invested enough in young women that are coming through the organisation. I still have six months left and what I am doing is working closely with our human resources people. It’s not about their training, it’s not about their technical abilities, it’s about confidence. It’s about the confidence to be able to give an opinion and to be able to back it up,” Dame Meg
The Pacific today faces three crises: a health crisis, an economic crisis and the ongoing climate crisis, and Pacific Islands Forum Economic Ministers will discuss all three when they meet (virtually) next week.
As the COVID-19 pandemic has unfolded the scale of the economic impact on Pacific people and communities has become clearer – and Pacific Islands Forum Secretary General, Dame Meg Taylor says for some it is ‘catastrophic’.
Increased hunger, malnutrition and poverty is being reported by civil society organisations. Job losses, business failures and plummeting remittances are telling and industries such as the tourism sector face the prospect of decades in recovery. Governments are scrambling to put in place safety nets and cope with staggeringly bad COVID-related economic forecasts.
Dame Meg says it is time to think out of the box and act regionally.
She understands the tendency by Pacific countries to turn inwards during the pandemic.
“It is only natural when something like this happens,” she told reporters ahead of the Forum Economic Ministers’ meeting.
“We …look at what is happening to myself, what is happening to my family, what is happening to my friends, what is happening in my community, what is happening in my country.
Dame Meg Taylor says the ministers will focus on economic priorities to contain the spread of COVID-19 and recover from the pandemic to build “a strong platform for economic stability and resilience in the long term.”
She stressed the need for new and innovative approaches to development challenges based on self-reliance, pointing to the Pacific Humanitarian Pathway as an example of effective Pacific collective action.
“It is the only region in the world that has done this. And why is this important? Because it is the political space, making sure that the technical assistance can get in, medical assistance can get in, we can ship cargo and customs can be adhered to, that we can repatriate citizens, we can land aircraft, immigration facilities are all in place, and trying to make this work is no mean feat, as you will understand.”
Dame Meg is encouraging Forum members to look beyond their national boundaries, and for development partners to think beyond bilateralism, in order to facilitate “better and deeper coordination and collaboration.”
“It is, I think it is honest for me to say, that the development partners have really approached COVID with a very much bi-lateral approach. And we have watched this, and we have watched the geo-strategic issues play out.”
Dame Meg says the Forum and other regional organisations are also looking at digitalisation as a priority; to survey what infrastructure is in place or coming online plus prices and accessibility, and then explore how it can support the digital economy, health, education and other development goals.
“ I think that it is an opportunity that we need to look at. I know that development banks like the Asian Infrastructure Investment Bank (AIIB) are looking at this through Southeast Asia and other countries. We have asked them to have a conversation with us in terms of what can be done in this region.
“But everything costs money and everything that we get from banks, unless it is coming from the International Development Assistance in the World Bank, everything will one day have to be paid back. This is the big issue for us in the region on how we are going to be able to service this debt over time.”
A paper on the Pacific’s own climate-infrastructure fund, the Pacific Resilience Facility, —with added content on the COVID pandemic—is also going to ministers. The Facility aims to raise US$1.5 billion and fund small projects through the interest generated.
“It is really important that we start thinking of how we can help ourselves, “ Dame Meg says.
“I think that there is a huge tendency in the International Development space every document that you pick up is about how much the Pacific relies on everybody else to do things for them.
“You know I am really sick of that! I'm sure that a lot of you who have worked around this are also tired of it too. It is not as if we are people who do not know how to look after ourselves but wherever they have been good ideas put forward, it is amazing how people think that ‘oh why did you think of that?’ And this is exactly the kind of resistance that we got on this from some of the development banks; we are doing that so why would you want to do it?
“We have got to start helping our countries get systems in place in countries where we can maximise funding that comes in so that countries can help themselves.”
Dame Meg acknowledges that thinking outside the box and building on the regional identity of the ‘Blue Pacific’ continent - launched by leaders in 2017 - is not always easy.
Sharing of experiences of individuals and of countries is important.
“I hope that this is what Forum Economic Ministers will do – to discuss and share their experiences and support each other,” she said.
Forum Economic officials meet this week, with the Ministerial due to open on Tuesday next week.
Globalism is being threatened in the post-Covid-19 global order. However, there is still ample common sense around to counter such a threat. Those engaged are still at an early stage in their coordinated countermove. They are likely to attract reinforcements to ensure some semblance of the familiar multilateralism in the interest of global orderliness and of humanity in general. During this period of enforced unsettledness, regionalism, e.g. Pacific regionalism (Pacific Islands Forum – PIF) will need to be strong, active and react as effectively as is possible, to avoid any major setback in members’ economic, social and geo-political status. This is critical given that the majority of PIF members are vulnerable, small island developing states - globally characterised as developing or least developed countries.
The US under President Trump, with its nationalistic and autarkic ‘Make America Great Again’ is leading the charge for the disintegration of globalism. Its newest trade armament, brought about by COVID-19, straddled new heights of aggressive protectionism. So much so that a new trade lexicon has been coined to mark its undignified entrance. ‘Sicken Thy Neighbour’ relates to US’s export restriction (and even diversion) of medical products to deserving importing countries for, inter alia, protectionist reasons. The new lexicon joins its equally nefarious ‘Beggar Thy Neighbour’ to take autarky and protectionism to a new level.
The counter-movers to recapture lost grounds from globalism have globalisation and multilateralism at heart. Despite the downsides of globalisation, they believe that a multilateral approach to solving humanity’s challenges, including existential threats like climate change, can only be effectively addressed at the global level. A number of great world thinkers share the same view. Historian Yuval Noah Harari, for example, believes that the three challenges he identified for the world, viz: ecological collapse, technological disruption and nuclear war, can only be resolved at the global level.
For PIF members, especially the 16 Pacific Island Countries, Pacific regionalism is a critical pathway and an effective collective tool linking them additionally to the multilateral framework. Strong, active and effective regionalism will complement national initiatives to benefit through regional outputs and outcomes. Further, through Pacific regionalism, PIF members can aspire to increasing levels of integration amongst them and PICs especially can effectively exercise their collective innate agency on global issues that matter to them. At the multilateral level, they would benefit from, inter alia, the articulation of reasoned, effective and efficient advocacy of critical global issues.
For Pacific regionalism, therefore, it is now a critical time for self-analysis. PIF needs to step up its game in order to raise its levels of aspiration. The post-COVID-19 new normal demands this. Apart from the propitiousness of timing, PIF also needs to critically think about its own strategy given the disunity that reigns within. There is disunity in PIF’s stance on climate change. There may also be disunity as regards PIF’s stance on the disintegration of globalism. Australia, for instance, is known for having attacked the UN last year, speaking against ‘negative globalism’ and ‘unaccountable international bureaucracies.’ PIF needs the global pathway. It should be its core geostrategy.
At the practical level, PIF needs to double and treble its efforts at integration and especially economic integration. I have written at length about the delayed economic integration amongst the Pacific Island Countries (PICs) as regards Pacific Island Countries Trade Agreement (PICTA). The same scenario can definitely be said about integration between the PICs, on one hand, and Australia and New Zealand (ANZ), on the other hand, under the PACER Plus trade agreement. This trade agreement is yet to be implemented. However, the demand on its deliverables for economic integration has intensified under current circumstances to warrant immediacy of action. And I believe that the opportunity desperately beckons.
When the collective negotiations on PACER Plus were declared concluded to facilitate signing, Fiji opted to continue negotiating. There was no dissension on this matter. Fiji was upfront as regards its intention to improve some aspects of the ‘agreed texts’. The bilateral negotiations thus ensued and have yet to be declared closed.
This article endorses the need for greater economic integration within PIF to raise its profile in addressing the disintegration of globalism. Therefore, PIF needs to sanction the continued negotiations on PACER Plus with the view of attributing the trade agreement with all the concessions, special and differential treatments, waivers and derogation possible to render maximum benefits especially to the PICs. This can all be done with the requisite dosage of political will, by both Australia and New Zealand, the two developed country members of PIF.
The opportunity should also be taken to effectively engage with Papua New Guinea (PNG) in the extended negotiations. PNG had opted out of the earlier negotiations. In the context of Pacific regionalism, there is just no logic to having a trade agreement with ANZ without the biggest economy of all the PICs involved. From statements released from Port Moresby, it can be appreciated that the issues of concern to PNG are similar to those that Fiji had highlighted.
Additionally, Vanuatu’s concern about lost tax revenue resulting from hasty and hefty tariff reduction, can also be addressed with more concessionary tariff reduction scheduling. This may require, firstly, reviewing the contents of Vanuatu’s allowable schedule of protected goods and services. Secondly, it may also need increased tolerance level as regards the definition of ‘substantial part of the trade’ – to be subjected to trade liberalisation under the agreement.
The renewed negotiations can therefore focus on these specific issues with targeted outputs. It has to be made clear at the start that new improved agreed texts should be merged onto previous texts to benefit all PICs, parties to the negotiations, including those who earlier signed the then existing agreement.
The various issues raised by Fiji, if addressed fairly and objectively, can result in greater economic integration amongst PIF members and offer more solid bases of economic growth and development. The infant industry clause, for instance, can be improved through strategic choices of industry to be protected and with appropriate liberalisation timelines.
The mandatory ‘most favoured nation’ (MFN) clause can also be subjected to concession and derogation. As it is, the MFN clause requires that any concession obtained by a party to an agreement would necessarily apply to the other party. However, this can be avoided through a waiver. The waiver, for instance, could be formulated to say that the MFN clause (on the PICs’ side) will only apply to concessions obtained from developed countries or a group of developed countries. It will not apply to concessions obtained from developing or least developed countries or a group of these countries.
Fiji was also not happy with the provision on Labour Mobility. As it is, Fiji believes that it is really nothing to write home about. Merely providing a forum for annual talkfests is hardly the stuff for considered and enhanced regional economic integration.
Another concern raised is the need to enjoy the security of the market access provided for by the agreement. Essentially, this is an oblique reference to unsupervised and unjustified non-tariff barriers (NTBs) imposed by the importing markets, ANZ in this case. On the plus side, it has to be said that both ANZ are ably addressing this matter through provisions of relevant systematic processes and training of PIC exporters with joint ANZ-funding provided for under the PACER Plus for Aid for Trade. Pacific Horticultural and Agricultural Market Access (PHAMA), an initiative by ANZ, is leading the charge on this matter.
In the first place, Fiji’s concerns were about the lack of balance and the loss of policy space for PICs in the texts of the PACER Plus agreement at that time. If improvements, as discussed above, are finally incorporated into the legal texts, they would certainly render the agreement a more consolidated basis for determined regional economic integration. Pacific regionalism would then grow from strength to strength. It, moreover, would be better placed to address its inherent disunities and contradictions. The flow-on effects from there would have positive implications on multilateralism and on PIF’s/PICs’ agency in the global scheme of things.
The author is a former Fijian ambassador and Foreign Minister and runs his own consultancy company in Suva, Fiji.