Apr 13, 2021 Last Updated 11:41 PM, Apr 12, 2021

December (8)

New Zealand Prime Minister Jacinda Ardern is Islands Businesses’ 2019 Pacific Person of the Year. Just over two years since she took office, events in New Zealand and in her own personal life have catapulted her on to the global stage. One among a new wave of young leaders who were swept to power (Canada’s Trudeau, France’s Macron and Ireland’s Varadkar), Ardern’s positive image has been the most enduring. Islands Business profiles Ardern the Prime Minister and the person – and her work in New Zealand and the Pacific, and brings you a separate, exclusive interview.

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It has been three months since the Bank of Papua New Guinea (BPNG) adjusted the Kina Facility Rate (KFR) for the first time in more than six years. The KFR is intended to serve as the interest rate at which funds can be lent or borrowed overnight between banking institutions. In July, BPNG lowered the KFR by 25 basis points (bps) from 6.25 per cent to 6 per cent and then in August cut the KFR again by 50 bps to 5.5 per cent.

There are two main price indices used to measure inflation in PNG: the quarterly consumer price index (CPI), released by the National Statistical Office (NSO); and BPNG’s own monthly Retail Price Index (RPI). According to BPNG, the first KFR cut in July was motivated by the RPI in the first three months of 2019 indicating an average deflation of 2.3 per cent. However, as shown in Figure 1, prices in the economy measured by CPI during this period registered 4.5 per cent inflation, showing an entirely opposite price trend when compared to the RPI.

Figure 1 Inflation measures CPI vs RPI in PNG

Figure 1: Inflation measures (CPI vs RPI) in PNG (%)

The official explanation provided by BPNG on the second rate cut in August was also puzzling. Governor Loi Bakani’s press release in August stated: “In view of the on-going improvement in economic activity in the second quarter of 2019, with non-mineral private sector activities remaining robust and stability in other macroeconomic indicators, including inflation and exchange rate, [BPNG] decided to further ease its stance of monetary policy.” The statement goes against the standard practice of counter cyclical monetary policy. If economic activity was robust, the central bank should have considered lifting not reducing the KFR (with the aim of making borrowing more costly and thus slowing down economic activity and pushing down prices). 

But does any of this matter? Three months after the first easing, only one commercial bank in PNG, Bank of South Pacific (BSP) has revised its ‘indicator lending rate’ (ILR) downward while other banks have kept their respective ILR and deposit rates unchanged. Moreover, the BSP’s ILR was only revised downward by 10 bps, compared to the 75 basis point reduction in the KFR. 

Why is KFR pass-through so limited? The simple fact is that due to excess liquidity, banks hardly need to access the overnight money market, rendering the KFR impotent as a policy lever. Figure 2 shows the increasingly abundant excess liquidity in the PNG banking system (that is, short-term assets that are in excess of the banks’ liquidity needs).

Figure 2 Excess liquidity and the loan to deposit ratio

Figure 2: Excess liquidity and the loan-to-deposit ratio

The question then becomes, why is there excess liquidity?

Figure 2 also shows that on average, for every 1 kina received by commercial banks as a deposit from 2002 to 2019, only about 0.5 kina is loaned out to the market. The lack of lending in the economy is due to PNG’s structurally low lending environment, underpinned by a large unbanked population and less favourable business environment, although in recent years it has started to show some improvement. Furthermore, there is a massive spread between the very high rates at which funds are lent out by the banks, and the very low rates depositors receive on their accounts. Limited competition in the banking sector in PNG contributes to the persistently high interest spread (Figure 3). Competition in the banking industry has been further curtailed by the acquisition of ANZ Retail by Kina Bank in mid-2018, which  has reduced the number of retail bankers to just three. The spread shown in Figure 3 (that is, the difference between the lending and deposit rate) is in fact one of the highest in the East Asia and Pacific region, which explains why PNG’s banks are the most profitable in the region.

Figure 3 Deposit and lending rates and interest spread 

Figure 3: Deposit and lending rates and interest spread (%)

To get the KFR to work and, more importantly, to deliver economic growth, the government and central bank must reduce the interest rate spread and increase the demand for credit by creating a more favourable investment environment and allowing more competition to take place in the banking industry. Until then, any adjustments to the KFR, whatever the reasons, will achieve little. 



This article appeared first on Devpolicy Blog from the Development Policy Centre. 

Dek Sum is an Associate Lecturer at the Development Policy Centre, based at the University of Papua New Guinea, where he is a Visiting Lecturer and Project Coordinator for the ANU-UPNG partnership.


The Pacific Islands Forum Leaders, at their meeting in Funafuti, Tuvalu, last August, endorsed the development of a ‘2050 Strategy for the Blue Pacific Continent.’ Leaders thus tasked the Secretariat ‘to work closely with Members to prepare a draft strategy for Leaders’ consideration in Vanuatu in 2020.’ It is expected that in due course detailed terms of reference (TOR) will emerge.

However, there are ample references and directions in the Tuvalu Communique that will inform the TOR. Apart from providing clarity, these references and directions are of interest in that they present a mix of conventionality and novelty. Whilst the former is run-of-the-mill, the latter is curious. So much so that it fuels speculations that the format and the architectural configuration of the future Forum, in the context of the new Strategy, is likely to be a radical departure from what has prevailed since the inception of the Forum in 1971.

The first approach agreed to by Leaders is curious. Leaders welcomed the offer by the former PM of Tuvalu to commence dialogue to formulate a new 2050 vision. It would be expected of course that former PM Sopoaga, as the then chair of the PIF Troika, would initiate any action towards realising the Strategy. But this is not stated categorically in the Communique. This fuels speculation that Sopoaga had been hand-picked for other reasons. 

It is general knowledge that Sopoaga has been regularly speaking out publicly against Australia for undermining the Boe Declaration. Recently, he questioned the justification of Australia’s membership of the Forum. Fiji PM Bainimarama added his weight to that viewpoint after the Funafuti meeting. In this general context, Sopoaga proposed the idea of a ‘United States of the Pacific’ (see June 2019 IB Issue) as a forum for Pacific Island Countries (PICs) only “to amplify their concerns about climate change on the global stage.”

Even more curious is the Leaders’ sanction that in envisioning the 2050 vision, Sopoaga needs only to focus on the ‘vision for PICs that recognised the Blue Pacific Continent.’ This is an unequivocal reference to restricting the vision to only a sub-grouping of Forum members without the developed country members of Australia and New Zealand (ANZ).

Furthermore, Sopoaga’s sanctioned TOR also apply to ascertaining how PICs ‘can form an effective union.’ As if that was not clear enough, the Tuvalu Communique then made the link to the SAMOA Pathway and the Boe Declaration as existing platform upon which to build this exercise.

The SAMOA Pathway is the UN-sponsored Action Platform for small island developing states (SIDS Action Platform). In the context it is used, the SAMOA Pathway is acknowledging the Pacific SIDS (PSIDS), a recognised grouping in the UN. PSIDS was also used interchangeably with PICs in the region up to 2016. Since then, two French territories have become Forum members and any continued usage of such interchangeability needs qualification.

It can be envisaged therefore that the provisions of the Tuvalu Communique are intended to ring-fence the PICs and their visions so that they can be prioritised in the proposed 2050 Strategy. The added reference to the Boe Declaration as a basis to build upon, is essentially to ensure framing into the new Strategy PICs’ ‘safe and secure future for the Pacific in the face of climate change.’ Note that the Boe Declaration reaffirms ‘that climate change remains the single greatest threat to the livelihoods, security and wellbeing of the peoples of the Pacific and our commitment to progress the implementation of the Paris Agreement.’ 

The SAMOA Pathway will of course provide directions as to how the PICs’ specific interests should be framed in the new Strategy. The Pathway, like the UN’s ‘The Future We Want’ before it, ascribes the status of ‘a special case’ to SIDS ‘for sustainable development in view of their unique and particular vulnerabilities and they remain constrained in meeting their goals in all three dimensions of sustainable development.’

The status of ‘a special case’ is a critical concept for the formulation of concessions and other forms of special and differential treatments. It can be applied across issues as widely as imagination, innovation and commitment allow. It is essentially a guide intended for global partners particularly on how to package their respective development assistance for optimal utility to the final beneficiaries. 

In the context of the Tuvalu Communique, the ring-fencing of the PICs by way of consideration of an ‘effective union’ and the specification of their own distinctive visions were intended as tools for envisioning the new Strategy. They cannot be considered any other way. The new Strategy is to be founded on the unity of the current Forum membership. That is implicit. ANZ are foundation members of the Forum; which is not in any doubt. Inclusivity is a fundamental principle of the Forum. The challenge of course is to recognise this prevailing unity which envelops its constituent parts. 

The tools for envisioning the new Strategy above, however, are essentially contingencies for structural review of the Forum’s architecture intended to preserve the unity of the group. Such a review is not just for the sake of another review. It is in the genuine interest of creating an architecture that will transform Pacific regionalism and maximise benefits to its membership, especially the PICs. A possible architecture envisaged would be one that offers space for a PICs-only forum with an overarching link to ANZ’s own forum. The overarching architecture, with its relevant governance structure, becomes the new Forum. ANZ already have their Closer Economic Relations (CER) and they may consider this as the natural component to counterbalance the PICs-only forum under the new architecture.

After 48 years of Pacific regionalism, the Forum drastically needs to demonstrate increased returns on its investment, cost-effective operations, and that the region is coherently integrated – generally and economically, apart of course from its effective integration into the global economy. There is more to be done. PICs have to increase tangible benefits from regionalism. The Forum Secretariat in particular, has to avoid being the whipping boy in the region. 

The idea of a PICs-only forum in the greater context of the Pacific Islands Forum, is not new. Regional commentators, for example, have explored the two-caucus approach that launched the South Pacific Forum as a way forward to increasing the benefits to members, especially PICs. I referred earlier to Sopoaga’s idea of the United States of the Pacific. This was in the context of having a structure that would amplify PICs’ agency on climate change globally. In my chapter: ‘Towards a New Regional Diplomacy Architecture’, in Greg Fry and Sandra Tarte (eds) The New Pacific Diplomacy, I explore the prospect of such an architecture. 

For the Forum, the new 2050 Strategy is intended as a plan, an undertaking and a framework aimed at ‘securing our future in the Pacific.’ The novelty of an approach with which to envision the new Strategy, sanctioned by Forum Leaders, is constructive. It is also a tacit acknowledgement that run-of-the-mill solutions for Pacific regionalism may have seen their heyday. It is time to be innovative. A new reality dawns. I foreshadowed such prospect in my latest article: ‘Death of Pacific Regionalism?’ Propitiously, a sea change for the Blue Pacific Continent beckons.



• The author is a former Fijian ambassador and Foreign Minister and runs his own consultancy company in Suva, Fiji.

Yudha Korwa was just 17 years old when he was attacked by Indonesian soldiers during the Biak massacre on 6 July 1998.

“A soldier used a big gun and hit me hard on the head. I saw them kick my friend,” Korwa testified. “I saw Filep Karma shot. He was shot in the legs. He fell down and said ‘Help me! Help me!’ He was also yelling ‘Free West Papua! Free West Papua!’

“A soldier stabbed me in the chest. I ran…pulled the knife out and threw it away. I was bleeding and just fell down to pretend I was dead. The army kept on shooting. The bullets came from every direction like rain. People were dying everywhere.”

More than twenty years later, a group of musicians, artists and human rights activists from across the Pacific have collaborated to publish ‘We have come to testify.’ This book and accompanying CD share the testimony of survivors of the 1998 massacre on the island of Biak, West Papua. 

At the book launch in Melbourne on 27 November, survivors Yudha Korwa and Mama Babuan joined other West Papuan exiles to remember the assault on peaceful West Papuan protestors, which left scores dead and many others detained and tortured.

“It was a really terrible situation over there,” Korwa said. “The Indonesian military opened fire early in the morning. The fire came from the air like rain, killing more than 100 people under the water tower. 

“We have faced killing, burning, raping from the Indonesian military. But today, we are standing here with a new generation, strongly fight to get our freedom. Today our message is that we will never give up, until we get our own freedom.”


The outlying island of Biak in West Papua has long served as a hub for political protest and Papuan identity. During World War Two, the Koreri movement on Biak resisted Japanese military occupation – today, the West Papuan nationalist movement challenges Indonesian occupation.

The independence movement regards the western half of New Guinea as a unified West Papua. In contrast, Jakarta has sought to divide the growing nationalist movement through plans to carve the region into three – so far, two separate provinces have been created as Papua and West Papua.

Long-standing West Papuan calls for self-determination were amplified in 1998, following the collapse of the Suharto dictatorship. As Indonesia began tentative steps towards democratic rule, West Papuans began agitating for independence in the period known as the “Papuan Spring.”

The year 1998 was a time of political and cultural ferment across Melanesia. The signing of the Lincoln Agreement in January 1998 brought a pause to the long-running conflict in Bougainville, culminating in the deployment of unarmed peacekeepers and the 2001 Bougainville Peace Agreement. In New Caledonia, the Noumea Accord of May 1998 set the French dependency on its current path to self-determination. Social tensions in Solomon Islands erupted into armed conflict in 1998, exacerbated by the war in neighbouring Bougainville, the spread of weaponry, that summer’s El Nino drought, and a 25 per cent drop in GDP after the Asian economic crisis. 

In West Papua, the long-repressed quest for self-determination burst into public view that year, with protests, rallies and the public display of the Morning Star flag. This banned symbol of West Papuan nationalism was first raised on 1 December 1961 however, early steps towards decolonisation for Dutch New Guinea were thwarted by Cold War politics, and Indonesia’s takeover after the 1962 New York agreement and the 1969 Act of Free Choice.

Indonesian President Suharto resigned in May 1998 in the aftermath of the Asian economic crisis and rising domestic protest. Soon after, there were rallies for independence across West Papua, in towns like Jayapura, Sorong, Wamena and Biak. On 2 July 1998, the Morning Star flag was raised high on top of a water tower overlooking Biak town. During the next four days, hundreds of people gathered to listen to speeches and songs. Leaders such as Filep Karma called for independence for West Papua and recognition of Melanesian land rights in a region facing immigration from Sulawesi and Java.

Police initially tried to disperse the Biak protest with tear gas, leading to clashes with young Papuans and injuries on both sides. Then, after four days, the protest was crushed in a co-ordinated attack. Early on 6 July 1998, many protestors gathered at the water tower were shot and killed by Indonesian soldiers and police officers. Others were detained, with survivors reporting horrific examples of rape and mutilation in prison. 

Survivors also report that some dead and dying were loaded onto Indonesian naval ships to be taken offshore. In the weeks after the assault, at least 33 bodies of men, women, and children some bound or mutilated by torture washed up on the shores of east and north Biak. 

West Papuan and international researchers estimate that more than 200 people died during these events, though numbers are uncertain and human rights violations are denied by the Indonesian government. The police and military forces responsible for the attack have never been held to account by the Jakarta government or Komnas HAM (Indonesia’s National Commission on Human Rights).

Instead, protest leader Filep Karma was charged with treason and sentenced to six-and-a-half years’ jail (later released on appeal). Karma was arrested again for raising the Morning Star flag on 1 December 2004, the anniversary of the original 1961 flag raising ceremony. Karma was sentenced to another 15 years jail for treason and only released in 2015, after a decade in Abepura Prison.

Beyond the testimony of local participants, the events in Biak were recorded by other eyewitnesses. American anthropologist Eben Kirksey was transiting through Biak town at the time of the massacre, and his memories of West Papua are reported in his book ‘Freedom in Entangled Words.’ In 2010, Kirksey testified before the US House of Representatives about Biak and other human rights violations in West Papua. 

Further evidence of the 1998 events was gathered during the Biak Tribunal, a citizens’ investigation of the massacre held at the University of Sydney in 2013. The Tribunal was headed by eminent jurist John Dowd, a former Attorney General of New South Wales. The hearings recorded vivid testimony from eye-witnesses and survivors (available at www.biak-tribunal.org).

Today, ‘We have come to testify’ carries this information to a wider audience through text and song. 


Until his death in June 2019, Ferry Marisan was a central figure in the collective project to memorialise the 1998 tragedy in Biak. Marisan’s death robs West Papua of one of its leading cultural and political figures. Graduating in anthropology from the University of Cendrawasih in Jayapura, Marisan worked with the Institute for the Study and Advocacy of Human Rights (ELSHAM), the leading human rights organisation in West Papua.

Born in Biak, Marisan was sent as a key human rights investigator in the months following the 1998 massacre, gathering testimony from survivors. He later served as a key participant in the 2013 Biak Citizens’ Tribunal.

But Marisan was also a leading cultural figure in West Papua. His combination of scholarship, performance and human rights activism followed a path travelled by Arnold Ap – the famed cultural leader who formed the band Mambesak with Eddie Mofu and Sam Kapissa in the late 1970s.

These early leaders of the Papuan cultural renaissance are now dead. Ap was imprisoned by the Indonesian authorities for alleged sympathy with the outlawed Organisasi Papua Merdeka (OPM) and was killed in April 1984, supposedly while trying to escape from prison. Kapissa died of “food poisoning” in 2001. Many West Papuans believe he was poisoned by the Indonesian military, like other cultural leaders such as chief Yafet Yelamaken who died of food poisoning in 2002. Chief Theys Eluay, leader of the Papua Presidium Council, was murdered by Indonesian special forces soldiers in November 2001, shutting down the Papua Spring.

The Indonesian government has long attempted to silence cultural expression that doesn’t fit within Indonesian national ideology. But a central feature of Ap and Marisan’s work was to collect and perform songs in local Melanesian languages using music to unite the disparate cultures of a nation with more than two million people. They collected songs that fuelled a sense of West Papuan identity, from coastal and mountain communities, from east and west, songs that celebrate a connection with the land.

After Ap’s death, Marisan continued this work through the bands Black Paradise and Eyuser string band. Their songs tell of the beauty, the culture and the history of West Papua, and the longing for merdeka (freedom) that underlies today’s movement for self-determination.

This tradition continues in the project ‘We have come to testify.’ The book is accompanied by a spoken word and music CD, where testimonies of survivors are combined with original songs produced by Australian musician David Bridie, artistic director of Wantok Musik. 

Bridie told Islands Business that his collaboration with Ferry Marisan began some years ago: “In the early 2000s, we recorded the record ‘Spirit of Mambesak’ and then he took over from John Rumbiak as director of ELSHAM. He was a joint musician and human rights defender. I met him again at the Biak Tribunal and from the beginning of the process, he said ‘let’s turn these words into songs.’ So, Ferry not only wrote songs for this record but wrote some music that sits underneath as a soundscape as the words are being spoken.”

Highlighting regional concern over West Papua, the words and music on ‘We have come to testify’ are performed by a range of Pacific artists. West Papuans Ronny Kareni, Sixta Mambour, Ferry Marisan and Mama Tineke Rumkabu are joined by musicians including Radical Son (Tonga / Kamilaroi), Tio Bang (Vanuatu) and Marcel Meltherorong (New Caledonia / Vanuatu). 

Tragically, Ferry Marisan died as the CD and book were being finalised.

“I spoke to him the day before he passed,” David Bridie said. “The record was about to come out and I was really proud of it and he said he too was really proud. The following day, he passed away from diabetes. His musical legacy is really strong. He always saw himself as following in the footsteps of Arnold Ap. His was a life that ended too short but he left a massive contribution.” 

Today, with agitation for independence in Bougainville, KanakyNew Caledonia and West Papua, remembering the past is an important part of building the future. More than twenty years after the Biak massacre, young people are again protesting in the streets of West Papua. The message of ‘We have come to testify’ resonates even more strongly.



The book and CD can be ordered through Wantok Musik at www.wantokmusik.org


As the world’s first transgender government minister, Audrey Tang is probably resigned to the different kind of reactions she receives when she meets strangers. Like last month when a group of international journalists (including the writer) called on her conference room at the sprawling Executive Yuan in busy Taipei, capital of Taiwan. “I understand you are…. You are the minister?” one of the visiting journalists asked. “Yes, I’m the Digital Minister in charge of social innovation, open government and youth engagement,” replied Minister Tang. “You look very unlike a minister … the long hair …,” the journalist continued. Not missing a beat, Tang shot back: “You have something against long hair,” before she breaks into a smile. Actually, the hair was not the only unusual feature of the cabinet minister. As it turns out, Audrey Tang is not your “usual” government minister. For starters, she was a school ‘drop out.’ Her words not mine.

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The Supreme Court in Nauru has handed down jail terms to a group of men and one woman—including former politicians— in connection with a political protest that turned violent four years ago. Details of the sentences were unclear when we went to press as temporary Supreme Court judge Daniel Fatiaki handed down the sentences late on 19 December. At least one leader of the group, former politician Mathew Batsiua, was jailed for 11 months. Others got shorter sentences. levitra

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I was impressed by the words of Vice-Chancellor, Professor Pal Ahluwalia, during the USP’s Emalus Campus graduation ceremony in Port Vila when he said: “Continue to live by the values of your University in all that you do; embody excellence, embrace innovation, uphold the highest ethical standards and operate with integrity; be respectful, and celebrate diversity.” I recalled enrolling for my first university courses after college in 2010 at the USP Santo Campus. My dream started with a little and tiny piece of hope because I never thought I would ever continue to the end, given that only the lucky ones were given an opportunity for scholarship to travel to Suva where most of USP’s face-to-face courses are offered. After nine long years my dream came true: I finally walked up the stage to receive my certificate, graduating with a BA majoring in Journalism and Politics on 29 November 2019.

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The Supreme Court of Papua New Guinea (PNG) has this week declined to answer questions asked of it regarding the SIM card registration regulation of 2016. The direct impact of this court hearing is that unregistered SIM cards currently in use in mobile phones around the country will likely be deactivated in coming days. A recent news article suggested that 40% of SIM cards in use are unregistered. Unless the regulator, the National Information and Communications Technology Authority (NICTA) grants the users of these unregistered SIM cards additional time, these people will find themselves no longer able to make phone calls, send text messages and so on.

A full bench of the Supreme Court heard the case on Wednesday 18 December 2019. The five judges sitting were justices Salika, Kandakasi, Cannings, David and Hartshorn. They did not reach a decision as such. Instead, they declined to give an opinion regarding questions asked of the court by the Ombudsman Commission.

The court proceeding was Supreme Court Reference 1/2019, which was instigated by the Ombudsman Commission early in 2019 as a special reference pursuant to section 19 of the constitution. In essence, this means that the Ombudsman Commission questioned the constitutionality of mandatory SIM card registration. The deactivation of SIM cards was on hold for most of 2019 whilst this matter was awaiting resolution.

The SIM card regulation stemmed from the NICTA Act, as the enabling or parent act. The Commission tried to argue that the regulation restricts certain freedoms enshrined in the constitution and therefore such a regulation should have to go through parliament. The Commission’s first question of the court did not specify any act or regulation, but instead asked the court to consider whether or not a regulation which impacts upon freedoms should be passed by a majority in parliament even when it is linked to an act which has been through the same process. Two further questions were submitted by the Commission to the court, but these were not discussed in detail because judges interrupted the Commission’s presentation to ask about the express rights being infringed.

Lawyer Charles Kaki from Kawat Lawyers was representing NICTA. He said that the first question was too general and stated that the second and third questions stemmed from the first question. He said that the submission was incompetent and suggested that perhaps the court could direct the Ombudsman Commission to re-frame the questions. Lawyer Tauvasa Tanuvasa Chou-Lee, the Solicitor General of Papua New Guinea, suggested that the court should decline to answer the questions raised by the Ombudsman Commission.

The judges conferred amongst themselves and then announced that they had decided to decline to give an opinion on the three questions put to them. They said that the questions have no immediate relevance to circumstances in PNG.

The outcome of this court hearing could have a very real impact on the many people who live in rural and remote communities across PNG, where mobile phones provide the only available form of communication. There is now no legal impediment to NICTA imposing the regulation, which means that telecommunication companies will face large fines if there are unregistered SIM cards in use. Deactivation of SIM cards in the days before Christmas seems likely. I hope that NICTA will choose to grant additional time for SIM card registration. Ideally, financial resources could be mobilised so that additional efforts can be made to promote registration and explain the reasons for registration. To effectively reach the remaining users, registration teams would need to travel to remote areas, which would obviously be a costly and time-consuming process. At this time though, with the PNG economy struggling and government coffers stretched towards their limits, it is difficult to imagine where such resources would come from.


Thank you to UPNG tutor Mr Joseph Pundu for his assistance. This article appeared first on Devpolicy Blog from the Development Policy Centre.

Dr Amanda H A Watson is a Research Fellow with the Department of Pacific Affairs, Australian National University

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