After an incredibly challenging 2020, what will this year bring? We take a look at the economic and political prognosis and a few key sectors.
Vaccinating for recovery
Timely vaccination campaigns will be key to the recovery of Pacific island economies. The Pacific Community says a handful of Pacific Islands have still recorded no cases of COVID-19 at all (at the time of going to print)—Cook Islands, Kiribati, American Samoa, Niue, Nauru, Tuvalu, Tonga, Tokelau and Palau. Others such as the Federated States of Micronesia, have only recorded cases at the border from returning citizens, while most other island nations have recorded no cases of community transmission for months. Those with more open borders—Guam, French Polynesia and Papua New Guinea—have ongoing community transmission.
The economic outlook
As a region, Pacific Island GDP growth was forecast to shrink to 0.5% in 2020, the lowest rate since 1967 according to the World Bank. While most are predicted to grow by small margins in 2021, the World Bank has outlined a number of risks to these projections. “The pandemic could last longer than expected, the long term damage from last year’s recessions could be deeper than anticipated, balance sheet stress could intensify, or the contraction in global trade could be sharper or longer lasting than envisioned. More countries in the region could experience difficulties with procurement and distribution of the vaccine than currently anticipated,” it writes in its Global Economic Prospects report for this year.
The continued reliance on tourism in many Pacific Island countries and uncertainty over the opening of borders and appetite for travel is one of key risks to economic recovery (see page 16).
For the island region’s largest economy, Papua New Guinea, growth will depend on a strong resources sector, including new investments. There’s some optimism around the construction boom being driven by additional investment into the resource sector and its potential to generate jobs.
“The implementation of new resource projects (Papua Liquified Natural Gas (LNG) and Wafi-Golpu) combined with professional, administrative, and support services needed alongside these projects, could generate formal jobs. There are downside risks, however, such as ongoing disputes over the Porgera mine which could weaken investor confidence,” the World Bank has written.
Work in 2021
In its December 2020 report on COVID-19’s macroeconomic impacts and job prospects, the World Bank said that redeploying workers from hard-hit sectors like tourism to alternative occupations that draw on similar skillsets should be prioritised, and could be supported through re-training.
Globally there has been much hope placed in the digitalisation of work but how does this translate to the Pacific Islands? “Low numbers of ICT job vacancies indicate potential obstacles to the digitalisation of work seen in other regions. Mismatches between demand and supply of skilled labour, which have been exacerbated by the impacts of COVID-19 on labour demand, point to the continued importance of investment in skills development,” the World Bank states.
For Marshall Islands, the Federated States of Micronesia and Palau, critical negotiations over the Compacts of Free Associations with the United States will continue this year. Under each compact, the island nations receive development assistance and visa-free access for its citizens to the United States, and the US in return has a strategic monopoly on the Micronesian states. The compacts also allow the US to test missiles at Kwajalein atoll in Marshall Islands. Palau guarantees the United States the use of certain defence sites in the future under its compact agreement.
The geopolitical tussle for influence continues to play out in the region’s telecommunications sector.
Digicel has indicated it may sell its Pacific operations in Fiji, Samoa, Vanuatu, Nauru and Tonga after a difficult 2020, and says it has been approached by a number of buyers. The company was carrying approximate US$6.7 billion in debt at the end of last year. Digicel won’t confirm if those buyers include Chinese telcos, but it is a prospect that has created concerns in Washington and Canberra. This follows nervousness around reports that Huawei Marine has bid for the Kiribati Connectivity Project, a submarine Internet cable that would connect Kiribati, the Federated States of Micronesia and Nauru to the HANTRU-1 undersea cable which lands in Guam, home to important US military assets.
Many Pacific leaders spent 2020 working to push messages on climate change, even as the world’s attention was swallowed by the pandemic, Brexit and America’s political difficulties.
The damage wrought by Tropical Cyclone Harold in Vanuatu and TC Yasa in Fiji last year highlight the continued urgency of this message.
“This is not normal. This is a climate emergency,” Fiji Prime Minister Voreqe Bainimarama said in the wake of TC Yasa.
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A rare conjunction of events is emerging. The events are both directional and prescriptive. The conjunction’s rarity is evocative. The conjunction provides an opportunity for Pacific regionalism (or the Pacific Islands Forum, PIF) to reinvent itself in order to capture the lost grounds it has frittered away since its genesis.
The calendrical end-of-the-year is synergised by institutional, exceptional and wider regional and global events whose essences can additionally incentivise the creative embodiment of the reinvention so needed.
December 2020 brings to an end the services of the incumbent PIFS Secretary General (SG), Dame Meg Taylor. Her replacement will take office in January 2021. The incoming SG’s terms of reference will be set out in the provisions of the 2050 Strategy, currently being compiled. The institutional processes of PIF will ensure fulfillment of that specific objective.
Candidates for the SG’s job and their respective proponents are active at their respective lobbying and public relations drives to get the nod at the final tape. Tongan candidate, Ms Amelia Siamomua has woven her own talanoa into her promotional public relations. I have put this down to an exceptional event, in the context of this article. Her rallying call of ‘Lalaga’ or weaving to resetting the Blue Pacific is built upon what she calls as the 4Cs – coordination, cooperation, commitment and care.
Other exceptional events are contributing to the conjunction.
I explored Dr Transform Aqorau’s ‘Imagining a new post-COVID-19 international economic order’ in the November 2020 issue of this magazine. I situated that scenario in the context of Pacific regionalism and cautioned a degree of hindsight to learning from what had happened in the past. That, however, is not to decry in anyway the relevance of post-COVID-19 events in this conjunction.
Being a regional champion himself, Dr Aqorau has just released his latest book: ‘Fishing For Success’ – Lessons in Pacific Regionalism. His philosophy of ‘applying limits to create scarcity and then be innovative about the opportunities for economic development’, is a rallying cry for all sectors of operation in Pacific regionalism going forward.
Non-governmental organisations, like the Pacific Theological College’s Institute for Mission and Research, is also getting into the act. Its ‘Reweaving the Ecological Mat (REM) works towards establishing an ecological framework for development.
An exceptional event but very much guided by the PIF Secretariat at the institutional level is work on climate change and sea level rise, directed at ensuring that members’ maritime zones are set in perpetuity once delineated. This work is critical for the sustainable future of the Pacific Island Countries (PICs), especially the Smaller Island States (SIS).
Two events – first within PIF and the second, at the Pacific rim to the east, add particular significance to the conjunction. New Zealand’s recent elections have seen the emergence of Hon Nanaia Mahuta as its first woman Foreign Affairs Minister. Maori herself, she will be able to view and regard her country’s ‘Pacific Reset’ programme in the region compassionately and with accustomed astuteness. The region anticipates from her due respect for PICs’ agency on all regional and global issues and proper exercise of political economy and geopolitical influences that unite rather than those which divide.
Moreover, the exciting and new US Presidential team, in Joe Biden and Kamala Harris will add compelling prospects and a more consultative approach to the conduct of the Indo-Pacific geostrategy. But more so, the team offers a welcome support for the US return to the Paris Declaration on climate change. This, with a bit of luck, may compel Australia to properly honour and respect the climate change provisions under the Boe Declaration.
The conjunction is special and specific in the life of Pacific regionalism. The opportunity it connotes should not be wasted. PIF has to take huge strides, reinvent itself through the provisions of the 2050 Strategy. This is an opportunity, inter alia, to make good where it had failed in the past.
On regional cooperation, the 2012 ‘What Can We Learn Symposium’ concluded that the whole process was both cost ineffective and cost inefficient. The new normal, post-COVID-19, with greater use of information technology for on-line meetings, for example, is a good start in terms of cost effectiveness. Moreover, PICs particularly have got to better rationalise their attendance at these meetings. Prioritisation on the basis of anticipated benefits and minimisation of opportunity costs has to feature prominently in their decision-making.
Efforts at regional integration in the past – of member country themselves and of their various regional organizations have been undermined through, inter alia, costly duplication. The 2005 Regional Institutional Framework report had relevant recommendations to resolve this concern. However, some recommendations were irrationally politicised. The full impact of those expedient recommendations was thus undermined. PIF needs to do better next time around.
When it comes to regional economic integration, the regional experience is nothing to be proud of. The idea of an economic union for the PICs was conceived way back in 1971, 49 years ago. The Pacific Island Countries Trade Agreement (PICTA), an essential building block for such a union, only came into force in 2001, and today – 19 years later, only 50% of its signatories are implementing the agreement.
In 2018, the First Quadrennial Pacific Sustainable Development Report (FQPSDR) listed seven challenges for the region, one of which was: “Economically, whilst we see trends of sustained growth, it is often inequitable.” But that is only part of the story. PICs have remained as one of the highest aid recipients in the world on a per capita basis. PIF has to turn this around.
When it comes to regional pooling of resources, PIF cannot be proud of its past record in the areas of regional shipping and regional aviation. Even its current record, through the shenanigans at USP, is nothing to write home about. Better management of its exercise of sovereignty transfers from members is called for. Members themselves have got to impose restraining orders when it comes to exercising their influence on other members and on the conduct of regional organisations, including the Forum Secretariat. This is particularly pertinent in the consideration of political economy and geopolitics.
Any work on revitalising Pacific regionalism has to include a frank review of its structure. Pacific regionalism is voluntary regionalism. Members are not legally bound to the decisions they make. In this day and age, when leaders are increasingly being called and pressured to be accountable and deliver, the PIF system seems antiquated.
Apart from that, PIF membership is atypical. The dichotomy between the PICs and the developed countries of Australia and New Zealand has created its own challenges. There may have been a tendency in the past to over-emphasise their differences. Given the collective and the unifying rallying call of the Blue Pacific continent, the regional planners are obligated to unite and bridge the dichotomous chasm that exists. The unity so formed needs to be reflected at all times and at different levels including at the multilateral level.
The Forum Secretariat and its operations to effectively and efficiently deliver to the Leaders their annual meetings, especially their Retreats, seem to be over scrutinised and analysed. The Secretariat really needs to just pick up the gauntlet and start putting the fine recommendations that have been proposed in various reports over time. These include measures relating to its meeting processes and strategising for the most productive use of Leaders’ time at their annual get-togethers. Of particular consideration also is the provision of technical assistance to deserving members which is currently lacking.
A contributing event to the conjunction is the appointment of the new PIFS SG. The underlying problem is the existence of what is referred to as a ‘gentlemen’s agreement.’ To mark a new departure - a new dawn for Pacific regionalism, such an agreement can be critically reviewed; and, if justified, can be documented as future guide.
The author is a former Fijian Ambassador and Foreign Minister and runs his own consultancy company in Suva, Fiji.
A new report on the impact of the COVID-19 pandemic on the Pacific’s tourism industry and recovery strategies has recommended immediate wage support, microgrants to industry operators and changes in the tax regimes as key to helping the industry to rebuild.
The Pacific Tourism Organisation (SPTO) commissioned the report, which looks at the impact of the virus on tourism in Cook Islands, Niue, Tonga, Samoa, Solomon Islands, Vanuatu and Fiji.
SPTO Chief Executive Office, Chris Cocker says while one size doesn’t fit all, the report aims to give the industries a framework so they can develop individualised recovery plans.
“I am telling you now that I think most of them either wouldn't have a clue how to develop the recovery plans because this is the first time. We've never experienced anything like this in the world, and in the Pacific, to the magnitude of a crisis like this.”
Cocker says while economic stimulus packages in some nations have responded to the needs of the industry, there are also some actions that can be taken regionally, such as digital marketing.
“Scenario planning could be done sub-regionally, because for example Micronesia has the same source markets which is Asia and also North America. Then you have the Polynesian ones where New Zealand is very strongly focused. Melanesia has Australia as their source market.”
The cruise ship sector has also been decimated by the pandemic, as a number of ships acted as incubators for the virus. The Ruby Princess for example has been linked to almost 700 cases of COVID-19 across Australia, and 21 deaths, after it docked in Sydney in early March after a cruise to New Zealand.
Cocker says the cruise industry has “thrown the ball back in our court.”
“It all depends on the member countries in the Pacific opening their borders and how well they will be able to handle things like hygiene, and also preventive measures and protocols in this case. I think that is another shady area that a lot of our members will still be cautious in approaching.”
As for lobbying to include Pacific Island nations in the so-called Australia-New Zealand Pacific travel bubble, a stepped approach is best.
“I'll be frank… as a regional organisation, in terms of economic recovery [we] definitely would welcome the Australia-New Zealand-Pacific bubble to bring in tourism revenues etc.
“But from our perspective I see it as a complicated situation because we've got 20 Pacific Island countries who are very diverse…It will probably be on a sub-regional basis in this case but I also think from my position our goal is to provide advice and guide them. So our position is we welcome it, but in a cautious and incremental way in this case. The health and safety of our people is top priority and paramount.”
Building quality infrastructure in the Pacific means going beyond a narrow focus on hard assets, to thinking about the ways that new infrastructure, and accompanying services, will contribute to lasting development outcomes. This requires sustained engagement with island governments, and with Pacific civil society and the local private sector, in the design, construction and management of infrastructure. Ultimately, there is no shortcut for quality.
Our new report, Building Together: seven principles for engaging civil society to deliver resilient, inclusive and sustainable infrastructure in the Pacific islands, argues competition to finance infrastructure projects in the Pacific islands should lead to lasting development outcomes, driven by local priorities. It also suggests civil society should be considered a key partner in the design and delivery of Pacific infrastructure.
Released last week at the Australasian AID Conference in Canberra the report is based on extensive research and consultations in Australia and the Pacific. It sets out seven key principles for policymakers to follow when designing new infrastructure. It is hoped that by adopting these principles, new infrastructure investments in the Pacific will grow local employment, support skills development, promote gender equality, and create more accessible infrastructure for people with disabilities.
The key driver of renewed investment in Pacific infrastructure is growing geostrategic competition in the region. However, there is also no doubt that Pacific states do have significant infrastructure needs. The Asian Development Bank estimates, for example, the Pacific will require US$3.1 billion in infrastructure investment each year until 2030. Pacific island countries also have unique infrastructure needs. Being among the most isolated states in the world, and especially vulnerable to the impacts of climate change, investments in resilient infrastructure can help mitigate intractable constraints on growth in the Pacific.
In recent times, major infrastructure initiatives have been announced. The United States, Australia, Japan and New Zealand have, for example, initiated a major investment in rural electrification in Papua New Guinea. The Australian government is financing new telecommunications infrastructure for Papua New Guinea and the Solomon Islands, and has committed to a ten-year $250 million bilateral infrastructure program in the Solomon Islands. Australia, long the region’s largest provider of development finance, has also established a multi-billion-dollar infrastructure bank dedicated specifically to Pacific island countries. The Australian Infrastructure Financing Facility for the Pacific, which uses a mixture of commercial loans and grant financing, represents a significant change in Australia’s aid program to the region.
Taken together, these new initiatives represent an opportunity to consider, and promote, shared standards for quality infrastructure. Our report is intended to stimulate thinking about best standards for infrastructure investment in the Pacific.
The Australian government has focused on involving the private sector in delivering new infrastructure in the Pacific. The Minister for International Development and the Pacific, Alex Hawke, has, for example, suggested it is time for Australian businesses to step up in the Pacific. In addition to the private sector, our report suggests there should also be a focus on engaging and supporting civil society groups. Working with Pacific civil society in the design and implementation of new infrastructure is critically important for ensuring transparent decision-making; including in tendering and monitoring infrastructure. New infrastructure projects are also an opportunity to stimulate economic growth in the Pacific directly, through the creation of local employment opportunities, skills transfer and capacity development, and through partnerships with local businesses and civil society groups. Given their closeness to communities, civil society organisations can facilitate the engagement of people with disabilities, and women, in infrastructure planning and delivery, helping to ensure that priorities – and design features – are based on local need, minimise risks to marginalised groups, and benefit these groups in their delivery and beyond.
Typically, it is the actions taken by island governments themselves to manage projects, and to develop robust policy frameworks governing the use and maintenance of infrastructure, that are a key determinant of positive outcomes. This means development partners should be supporting the strengthening of infrastructure governance, the ‘soft infrastructure’ that accompanies construction of hard assets. Often this also requires support for collaborative decision-making that includes Pacific civil society groups at regional, national and project levels. The Pacific Islands Association of Non-Government Organisations (PIANGO) was one of the partners consulted for this report. PIANGO executive director, Emeline Siale Ilolahia, told us it was critically important that new projects be driven by local priorities. “If we’re not careful these projects will be driven by the needs of the people proposing them, and the only beneficiaries will be the companies building them”, said Ilolahia.
“Building Together: seven principles for engaging civil society to deliver resilient, inclusive and sustainable infrastructure in the Pacific islands” was initiated by the Research for Development Impact Network (RDI Network) and co-produced by RDI Network and Pacific Connections (Australia). The report was co-authored by Wesley Morgan, Rebecca McNaught, Sally Baker, Fulori Manoa and Jope Tarai.
This article first appeared on the DevPolicy blog.
Times of Israel/Pacnews: Israel’s President Reuven Rivlin has told Pacific Island leaders in Fiji that he hopes they will stand with Israel against what he claims is a strong anti-Israel bias on the United Nations Human Rights Council.
Rivlin met leaders from Fiji, Papua New Guinea, Samoa, Vanuatu, Tuvalu, Tonga and Palau at the first summit of its kind this week.
“Today Iran and its proxies are threatening Israel while spreading terror throughout the region, and around the world,” Rivlin said in a media conference after the meeting. “Israel will do all that is necessary to defend its citizens from the Iranian threat, and we will continue to work with international peacekeeping forces to ensure that our borders remain quiet.
“We were also happy to support Fiji’s election to the UN Human Rights Council, and your presidency of the UN’s Climate Change conference,” Rivlin said. “We hope that Fiji will stand with Israel against the gross anti-Israel discrimination at the UN, especially at the Human Rights Council.“
Last week the council published a blacklist of 112 companies it says are active in Israeli settlements in the West Bank.
Israel had reacted angrily to the publication of the blacklist, with politicians from across the political spectrum denouncing the UN Human Rights Council for compiling it and vowing to protect Israeli financial interests.
President Rivlin announced the establishment of 100 new scholarships for Pacific Island students of agriculture to train at the Arava International Center for Agricultural Training in Israel, and the opening of a centre for excellence and innovation at the University of the South Pacific.
Thanking Rivlin for what he termed a “historic” visit, Bainimarama said “This summit is very important to us as another stepping stone in strengthening the relations between us. Fiji will continue to pray for the peace of the Middle East region.”