Sunday, March 25, 2012

MSG Talks In Fiji.

Melanesian Spearhead Group (MSG) Economic Ministers meeting begins in Suva, followed by the Leader's Summit later in the week. The MSG Senior Officials Meeting (SOM) which began over the last few days, had met, to discuss key points of cooperation; as reported by Solomon Star (S.S) article.

The excerpt of S.S article:

MSG meets key cooperation issues

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Senior Officials from the five members of the Melanesian Spearhead Group met key cooperation issues to be presented to the Foreign Ministers Meeting this week.

Chair of the MSG Senior Officials Meeting (SOM), Mrs Saipora W. Mataikabara thanked delegates from Papua New Guinea, Solomon Islands, Vanuatu, FLNKS and Fiji for their contribution and cooperation on addressing these key issues of common interest at the two-day meeting.On the first day, SOM endorsed among other issues the Director General’s Report to the Leaders, Secretariat papers on MSG Properties, Corporate Planning Process and the MSG Secretariat Soft Reforms.  SOM Chair confirmed that the Secretariat papers were to strengthen the organization’s administration arm of the MSG organization.

Mrs Mataikabara said on the second day of meeting the other reports presented to SOM were all endorsed.  She said the members’ endorsements reflected the common interests of the MSG in strengthening cooperation amongst member countries in particularly on cultural cooperation for instance the endorsement of the draft MSG MOU on Cultural Cooperation presented by the MSG Council of Arts & Culture.  She said other issues that will promote more cooperation between member countries include the preparation for the first Melanesian Games in 2013 as mandated by Leaders on 31st March 2011 was also endorsed by the Senior Officials Meeting today.

Mrs Mataikabara said the Special SOM was also able to endorse key recommendations presented by the Subcommittee on Institutional Issues (SCLII) to complete discussions on the Review of the Agreement Establishing the MSG. 

SOM Chair said legal and institutional issues are backbones of MSG as an organization and that is why members felt that careful consideration on the legal and institutional issues will help guide senior officials, foreign ministers and leaders in making sound decisions to strengthen the organization.  A key recommendation that was endorsed by SOM is that SCLII meet in July to further complete important discussions on the Review of the Agreement Establishing the MSG, Reporting Requirements, Membership Issues (Observers & Associate Members) and MSG Visa Arrangements.

Reports from the different subcommittees and technical committees such as Security, Trade and Economic Officials Meeting (TEOM), and the Police Commissioners’ Conference were also endorsed.  The draft MOU for the MSG Skills Movement Scheme and the MSG Trade Agreement on Rules of Origin and principles for enhancing fiscal management in Melanesia were all endorsed this special SOM.
Mrs Mataikabara thanked all delegates for their participation and cooperation in the pre-Summit SOM and confirmed that the SOM outcomes will be presented to the Foreign Ministers Meeting for their consideration this week.

Fiji Times article, quoted from MSG Director General, Peter Forau, who alluded to the absence of "power play" within the MSG; in comparison to the regular undue influence from larger metropolitan countries, in  the Pacific Islands Forum (PIF). Mr Forau highlighted the growing influence of the MSG, which could over shadow the PIF.

Excerpt of Fiji Times article:

No 'power play'

Elenoa Baselala
Monday, March 26, 2012
"This should have happened long time ago," MSG director general and former Pacific Islands Secretariat deputy secretary general Peter Forau said.
In an interview with The Fiji Times, Mr Forau who has been on the job for the past six months said the MSG, made-up of the five big economies in the South Pacific region Vanuatu, Papua New Guinea, Fiji, New Caledonia and the Solomon Islands had great potential to become influential.
In fact, Mr Forau said the MSG trade agreement was the only trade agreement that was working with the Pacific Island Countries Trade Agreement "all over the place".
And while, many see the MSG as a threat to regional unity, Mr Forau said this was not the intention of the MSG.
Mr Forau said unlike PIFS, the MSG members had equal rights and there was not much "power play" or influence from bigger countries.
"If the MSG is seen as a threat that is not our intention, we are just working in the best interests of our members.
"If we are to become influential that is the natural cause of things," Mr Forau said.
Mr Forau, however cautioned, that for the MSG to grow to greater heights it must be united.
And they must do things to international standards to be recognised globally.
"Things are starting to happen. There are a lot of opportunities," he added.
The MSG Foreign Economic Ministers meeting starts today and ends tomorrow. The Leaders Summit will follow on Thursday and Friday.
In a Fiji Village (FV) article, Forau also addressed the need for the MSG countries to bring the benefits to their citizens.

Excerpt of FV article:

MSG issues to benefit citizens- Forau  

Publish date/time: 26/03/2012 [11:21]
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The Melanesian Spearhead Group cooperation must bring gains for their citizens at the national level.

That was the message Director General for the MSG secretariat Peter Forau urged regional Foreign Affairs ministers at the opening of the meeting this morning in Suva.

The Foreign affairs ministers will consider political, trade, economic, social and Secretariat organizational issues of interest that have been endorsed by the senior officials last week.

The Foreign Ministers Meeting will then present to the Leaders' Summit to make decisions which will be implemented accordingly.

Forau has encouraged the ministers to discuss and think thoroughly on the issues put forward.

Leaders attending later this week include Prime Minister Commodore Voreqe Bainimarama, spokesperson of the FLNKS Victor Tutugoro, PNG Foreign Affairs Minister Ano Pala,  Prime Minister of Vanuatu Sato Kilman and Prime Minister of the Solomon Islands Darcy Lilo

Fiji's Foreign affairs minister Ratu Inoke Kubuabola officially opened the meeting at the GCC complex in Nasese.

Story by: Sofaia Koroitanoa

Fiji News footage (video below) of the recent discussions among MSG Trade officials.

Club Em Designs

Tuesday, March 13, 2012

X-Post from Island Business: A New Era of Geopolitics In The Region

Michael O’Keefe•

Last month, the Russian Foreign Minister Sergey Lavrov visited Fiji. There has been much speculation about the purpose of the visit, but this needs to be contextualised so we can make sense of its significance.

The extremes of opinion waiver between arguing that the visit heralds a major shift in the foreign affairs of the Pacific to arguing that it was simply routine diplomacy. It was neither. We need to dig deeper. We need to ask Why Fiji [the South Pacific?]? Why Now?

An overarching answer to these questions is geopolitics and strategic change. Geopolitics relates to the intersection of geography and politics. It focuses on shifts in relative power and what we are witnessing is a larger global geopolitical contest being played out in the Pacific.

To-date most discussion of regional strategic affairs has focused on China’s growing interest and whether this equates to influence. This is an issue worthy of attention but not the focus here. Suffice to say, the era of crude chequebook diplomacy whereby China and Taiwan faced off in the Pacific over diplomatic recognition is over.

China is engaging the Pacific at all levels (diplomatic, economic, cultural) and is staking its claim to being a worthy partner, especially in the context of Australian and New Zealand isolation of, and disengagement from Fiji.

Michael O’Keefe

"The political situation in Fiji may provide opportunities for engagement for the Chinese or Russians but for all powers. Fiji has strategic significance beyond its political or economic power.

This is the oft-cited ‘hub of the Pacific argument’. The ‘hub’ argument deserves close scrutiny because it is mentioned so regularly and often without explanation.

The point is that historical trends have been based on geography and have left Fiji at the centre of diplomatic, economic and educational interaction and cooperation in the region."

China’s growing interests in the region have not gone unnoticed in Washington and Canberra (and Moscow).
US President Barack Obama’s recent comments about the renewed US role in the Pacific century have highlighted the potential for strategic competition in the region the likes of which have not been seen since the end of the Cold War in the late 1980s.

Back then the issue was Soviet fishing agreements, which were seen as avenues for access for intelligence gathering in an area of primary strategic concern to the US and to its allies, Australia and New Zealand.
Fears over Soviet penetration in the region were proven to be exaggerated, but they did prompt a diplomatic reaction. The same is happening now but in the lead-up to the visit the Russian Foreign Minister himself highlighted that now it is Russia attempting to balance the US and China rather than being the main strategic competitor.

Why now? The most obvious answer to this question relates to global geopolitical changes. That is, that a rising China is challenging the US and that it is responding. Countries like Russia, South Korea and Indonesia see that their interests could be impacted and are taking action. This orthodox view is dealt with in-depth in the commentary so it won’t be a focus here.

The rest of this article focuses on issues closer to home.

It may also not be a coincidence that political instability in Fiji after the 1987 coup wrong footed the traditional metropolitan powers in relation to local support for protecting their strategic interests. At this stage, it was the potential for Soviet expansionism in an area that had hitherto been Australia and New Zealand’s patch.

Interestingly, at the time China also took note insofar as political change created opportunities for Taiwan to gain some headway, albeit briefly. Now it is arguable that China is benefitting from political change in Fiji and it is not only the Americans and their Australian and New Zealand partners that are taking note.

The political situation in Fiji may provide opportunities for engagement for the Chinese or Russians but for all powers. Fiji has strategic significance beyond its political or economic power. This is the oft-cited ‘hub of the Pacific argument’. The ‘hub’ argument deserves close scrutiny because it is mentioned so regularly and often without explanation. The point is that historical trends have been based on geography and have left Fiji at the centre of diplomatic, economic and educational interaction and cooperation in the region.

This is a colonial legacy, but one which Fijian leaders from Ratu Sir Kamisese Mara to the present have fostered. The hub may relate to the diplomatic missions that serve many Pacific Islands Countries (PICs), regional organisations such as the Pacific Islands Forum or Secretariat of the Pacific Community, the headquarters of major intergovernmental organisations, such as the UN, or non government organisations in Suva, the University of the South Pacific etc.

The hub also relates to Suva as a major economic hub for exports, the trans-shipment of essential supplies, such as fuel, etc. Economics is often cited as a core strategic issue, but in perspective Pacific trade with any of the interested external powers is relatively small in comparison to their economic interests elsewhere.
Even the most generous predictions would not place the Pacific in the top 20 trading partners for the countries competing for influence in the region.

Furthermore, for the foreseeable future the potential for significant growth may be more illusory than real in all areas (such as mining seabed resources) except tourism which will maintain its traditional position as an area where the potential for growth can be realised. As such we can largely discount the economic angle at this stage, despite much commentary on the bauxite mining and fishing agreements.

However, PICS are right to be concerned over unsustainable economics in relation to mining or fisheries. It is the strategic aspect of geopolitics that provides the clearest explanation for Russia’s recent diplomatic manoeuvring.

Fiji gives a country or organisation access to the Pacific. It is an economy of scale, and for a country rediscovering the Pacific, such as Russia is now, it is essential to be on good terms with the Fijian government to reap the benefits of the hub. As such, the Foreign Minister’s meetings involved the Fijian government, but other PICs were invited to meet and attend diplomatic functions in Nadi.

Fiji’s ‘Look North’ policy has opened the door to greater cooperation. In this context Russia’s advances could be added to a long list of countries that have increased their profiles in the Pacific since 2006, not least of which is China, South Korea, Indonesia, the US and UAE. Discussions with other countries, and organisations, such as the Arab League are also underway.

Suva has also reasserted its leadership role. It has been suspended from the pre-eminent regional organisation, the Pacific Islands Forum, following the 2006 coup. However, it has effectively used the Melanesian Spearhead Group (MSG) whose members include the larger PICs to forward its interests.
The MSG also highlights that there is an alternative to the PIF and one which is more relevant to Fiji’s interests than the other PICs.

During the Cold War the catch cry was “The Russians are coming! Run for the hills”. The concern over Russian diplomacy in the South Pacific is reminiscent of this sort of thinking. But context counts and the South Pacific of 2012 is not the South Pacific of 1980s.

Furthermore, the hub, Fiji, is not the Fiji of the 1980s either. There is a growing confidence in Fijian foreign affairs and the expectation is that the partnership and friendship posed by any country will be closely scrutinised through the lens of Fijian national interests.

The time when any great power would overtly influence Fijian diplomacy may be at an end, with obvious implications for traditional partners or new players on the block. There are dangers and vulnerabilities that come hand in hand with the opportunities to be gained from the greater attention that great powers are showing the Pacific.

Some of the distortions evidenced during the era of checkbook diplomacy come to mind, and this will be the issue in relation to recognition of Abkhazia and South Ossetia. There are already rumours of millions of dollars being spent to influence the votes of some PICs.

Furthermore, Russia’s main competitor in this regard, Georgia, has also been showing interest with increased aid and diplomatic representations. Russia has directly stated that Abkhazia is not the issue and Lavrov did not publicly raise it while visiting the Pacific, but this denial and Georgia’s interest should be treated as a signal of the opposite.

Any PICs building close relations would be factoring this into their engagement, especially considering Georgia broke off relations with Tuvalu over this issue last month. Global geopolitical reordering is playing out in the Pacific. The post-2006 diplomatic standoff has led to diplomatic opportunities. Fijian leaders are showing a new confidence by taking advantage of these opportunities and so too have many foreign powers that have hitherto shown little interest in the region.

Through Fiji’s leadership and role as a regional hub other PICs have also reaped the benefits of these developments. There are benefits and costs involved in this sudden interest, but PICs are showing greater confidence in viewing the benefits of cooperation through the lens of national interest.

Maintaining this focus will be their challenge as this trend intensifies in the years ahead.

• Dr Michael O’Keefe is a Senior Lecturer at La Trobe University & Adjunct Associate Professor at the Centre for Regional Affairs, University of Fiji.

Friday, March 09, 2012

X-Post- 36th Parallel Weekly Analysis: Commodities Boom widens PIF Rift.

In order to understand political dynamics, underlying economic factors often need to be considered. The growing rift within the Pacific Island Forum between the Melanesian Spearhead Group (MSG) and the Polynesian Leaders Group (PLG) is one such instance.

The metals boom preceded the minerals boom, both of which have been paralleled by  ongoing interest in discovering new sources of energy, oil and natural gas specifically. Once metals markets were consolidated, investment flows turned to mineral resource extraction and towards exploring previously inaccessible sources of oil and natural gas. Rising prices for fuel and mineral commodities in an era of technological innovation has pushed capital investment into previously unexploited areas of the globe, including the South Pacific. Under highly competitive market conditions, Asian capital has joined the quest and accelerated the pace of primary resource investment even where it remains a secondary market player. The race to secure market share in these commodities is well and truly on.

Against that backdrop  Commodore Voreqe Baimimarama travels this week to Vanuatu in his capacity as Chairman of the Melanesian Spearhead Group (MSG) , a sub-group of the Pacific Island Forum (PIF) regional organization that encompasses most Pacific Island States, including Australia and New Zealand. Created in 1999, the MSG has recently been rivaled by the 2010 creation of the Polynesian Leader’s Group (PLG), which aggregates eight members of the PIF.

Unlike the PLG, the MSG has an established institutional structure and programmatic agenda, increasingly  dominated by Fiji due to its diplomatic importance and the relative underdevelopment of or political instability in other member states (New Caledonia, Papua New Guinea, the Solomon Islands and Vanuatu).The MSG contains a multilateral trade agreement between the its members, and because of historical investment interest in resource extraction in the sub-group (forestries and fisheries as well as minerals), it has seen the bulk of regional foreign investment in the last two decades. The ExxonMobil-led liquefied natural gas project in the PNG is one sample of that ongoing interest, now pushed into newly exploitable areas.

Polynesia has begun to experience the impact of the global energy and mineral rush. Whereas MSG members have a number of land and seabed mineral exploitation contracts within their Exclusive Economic Zones (EEZs), only recently have PLG nations begun to see significant investment in land mining, and fewer have seabed exploitation agreements (one, Nauru, has secured a license to exploit seabed resources in international waters). Many of the companies involved in developing the PLG region for mineral extraction are already in the MSG, so the economies of scale they bring to negotiations with small Polynesian states provides them with good leverage when negotiating agreements. As in the case of MSG members, these contracts are not bound by regulatory vehicles embedded in regional trade agreements such as PACER and PICTA (on regional architecture, see here).

36th Parallel Analysis

"Fiji is the strongest partner with the MSG, that antagonism has spilled into MSG diplomacy vis a vis the Antipodean states and has seen the sub-group prioritize its relations with Asian partners as a balance to Western patronage relationships (which is based more on developmental aid than investment).
[...]The sanctions and suspension regime has done little to hurt the Baimimarama regime but have pushed both Fiji and the MSG more firmly into an Asian-centric diplomatic orbit, accentuating the cleavage within the PIF (which the MSG sees as too compliant with Australian and New Zealand diplomatic interests)."

The PIF is an observer of the Trans-Pacific Partnership Agreement (TPPA) negotiations involving the US, Australia, New Zealand, Chile, Singapore, Peru, Brunei, Vietnam and Malaysia.  Japan, South Korea and Canada have also expressed desire to join the TPPA. Should the TPPA be ratified, increased trade volumes within the region are expected to grow even if the PIF does not become a full member itself. However, discussion has begun within the MSG about emphasizing bi- and multilateral trade with the so-called BRIC emerging economies: Brazil, Russia, India and China. None of these are party to the TPPA and yet are among the fasting growing economies in the world. They are, in fact, emerging great powers, gradually supplanting traditional Western powers as the motor force of the global economy.

China already has an established economic footprint within the MSG and its diplomatic presence, the largest in the PIF region, has grown  commensurate to the size of its investments. Russia and Fiji have just signed economic cooperation agreements, and Indian venture capital has made footholds there as well.

This trend has begun to be seen in PNG and the Solomons. Should the move to emphasize trade and investment between the MSG and BRICs lead to higher levels of commerce with the latter, the impact will significantly increase the investment gap between the MSG and PLG. Given its larger membership and smaller resource base, PLG benefits from an eventual TPPA will be much more diffuse than in the MSG with or without the BRIC connection. The more the BRIC-MSG connection comes into play, the less the MSG will need to be part of the TPPA and other pan-Pacific trade agreements. Should that happen, the MSG will begin to outweigh the PLG influence within the PIF, which opens the possibility of  an MSG-Australia/New Zealand confrontation within the PIF because the Antipodean states do not want the PIF to be dominated by Fijian interests.

As a result of the 2006 coup that brought Commodore Baimimarama to power, Fiji is currently suspended from the PIF and Commonwealth, and has been the subject of sanctions by Australia, New Zealand, the US and European Union. In response, Fiji has strengthened its ties to non-traditional partners such as China, something that gives it more flexibility in its foreign relations. Although the US has  softened its stance regarding the Baimimarama regime and its timetable for 2014 elections, the impasse continues with the Commonwealth, EU, Australia and New Zealand. Because Fiji is the strongest partner with the MSG, that antagonism has spilled into MSG diplomacy vis a vis the Antipodean states and has seen the sub-group prioritize its relations with Asian partners as a balance to Western patronage relationships (which is based more on developmental aid than investment).

Respecting the concept of national sovereignty, Asian economic partners are less concerned about Western notions of good governance, transparency, labor market conditions and environmental impact and more focused on returns on investment. This approach has been successfully used by Western companies operating within the MSG. The sanctions and suspension regime has done little to hurt the Baimimarama regime but have pushed both Fiji and the MSG more firmly into an Asian-centric diplomatic orbit, accentuating the cleavage within the PIF (which the MSG sees as too compliant with Australian and New Zealand diplomatic interests).

Against this backdrop, Baimimarama’s inspection visit before the 19th MSG conference later  this month provides him with the opportunity to set the agenda for this year’s discussions and to solidify Fijian interests within the group. Contentious topics such as granting both Indonesia and Western Papua observer status in the MSG (given Indonesian occupation of  Western Papua) are likely to be downplayed in favor of a consensus on strengthening ties with non-Western states and solidifying the MSG’s pre-eminent position within the PIF, at the expense of the PLG (and the much smaller Micronesian States Chief Executives Group).
Consolidating his position as leader of the MSG reinforces Baimimarama’s position at home, where in the face of Western demands that he keep to a timetable leading to open elections in 2014 he can point to demonstrable gains in terms of Fijian influence in regional politics as well as increases in Asian capital investments in that country (even if the country has experienced negligible net growth in the last decade). Bolstered by such events, the Baimimarama regime may feel confident enough to delay or cancel the elections, which will have major implications for the PIF.

The rift within the PIF  is evident in increased MSG demands that Fiji be included in any PIF trade discussions (such as PACER Plus). Whichever the approach adopted by the PIF Secretariat (inclusion of Fiji on matters of trade or its ongoing suspension), the division between the MSG and PLG is likely to widen in 2012. Boosted by the influx of foreign investment in minerals and energy exploitation, the MSG is in a position to make demands within the PIF that it previously could not. Given the failure of the sanctions regime, the inclusion of Fiji in future trade talks (the next PIF forum is in late August) could be a way of incrementally restoring it to full membership status while allowing Canberra and Wellington to save face (recent reports suggest that Australia and New Zealand are already re-considering the issue of Fijian sanctions). The ball is in the MSG court, with Fiji controlling the MSG play.

Summary PIF stability score is 5 (medium), the MSG score is 7 (good) and the PLG is 2 (low). (Stability score is ranked 1-10 on a range extending from none to full institutional capability and enforceable authority over time).
Futures Forecast: Sharpened differences between the MSG and PLG within the PIF will lead to an institutional weakening of the latter.

Club Em Designs

Bob Carr and Australia's Foreign Policy 2.0

News of the constitutional consultations have prompted many view points. One such perspective from Jenny Hayward Jones, speaks of the alignment of stars:
For the first time in some years, the stars may be aligning for a change in the relationship: Bob Carr's appointment as Australian Foreign Minister and a constructive and positive announcement from Commodore Bainimarama this morning on a constitutional consultations process create an opportunity.
Bob Carr was alluded to have "softened Australia's stance on Fiji", in an article by News Corp owned, Adelaide publication- "The Advertiser"

The excerpt of article:

Carr softens Australia's stance on Fiji

Bob Carr will extend an olive branch to Fijian dictator Frank Bainimarama, above, during talks in New Zealand. 
BOB Carr will begin to reverse six years of hard-line Labor policy against the government of Fijian dictator Frank Bainimarama.
Mr Carr will offer an olive branch to the military strongman, who seized power in the small Pacific island nation after a military coup in 2006.
The new Foreign Affairs Minister will travel to New Zealand tomorrow to meet NZ Prime Minister John Key to discuss Fiji's banning from the Pacific Islands Forum in 2009.

Incentives for Fiji are likely to include lifting some of the "sticks" against the regime, including the forum's ban on the junta - and some reversal of Australian sanctions set up in the wake of the coup.
These include a blanket ban on the supply, sale or transfer to Fiji of arms and related material, the provision of technical advice, assistance or training, a financial service or financial or other assistance to Fiji related to military activities or  any activity that involves the sale or supply of any export-sanctioned goods to Fiji.
The package also bars entry or transit through Australia for Fijian citizens declared by the Foreign Minister, such as members of the military junta, their families and other supporters of the Fijian regime.
The New Zealand talks would focus on common regional interests in the Pacific Islands Forum, the Regional Assistance Mission to Solomon Islands and Pacific maritime surveillance.

In the span of several days and since meeting the New Zealand Foreign Minister, Murray McCully, the conciliatory approach many expected from Carr, has since reversed as reported in a Radio Australia article. 

The excerpt:

Carr rejects talk of softening Fiji stance

Posted March 09, 2012 20:26:46

Foreign minister designate Bob Carr has rejected media reports that he is planning to soften Australia's hard stance against Fiji. Mr Carr was speaking in Auckland after holding informal talks with his New Zealand counterpart Murray McCully.
Mr Carr said he had noted Friday's announcement by Fiji's military leader Frank Bainimarama about planned public consultation over a new constitution. Both Mr Carr and Mr McCully greeted the announcement with caution and said time would tell if the Fiji's rulers were truly moving towards democratic elections.

The former New South Wales premier also says he will be seeking more information from the ACTU about the human rights situation for workers in Fiji. Mr Carr says he wants to further investigate claims that any union official who speaks out against the interim government still risks life imprisonment. "Certainly one of the tests we'd consider in the future is the right of organisation in the workplace," he said. "That's a fundamental human right. I'd expect to have more conversations with unionists, in particular the ACTU."

Mr Carr said his hour-long discussion with Mr McCully about the region was wide-ranging and helpful. He will meet prime minister John Key on Saturday morning. It is his first overseas trip since being named the replacement for Kevin Rudd. He is due to be sworn in as a senator and foreign minister on Tuesday.

It is becoming increasingly apparent that many observers waiting for Bob Carr to change policy on Fiji were in for a major disappointment. Since becoming Foreign Minister, Carr has demonstrated a unique ability to flip-flop, like his initial opposition to the R2P operation in Libya, brokered by his predecessor Kevin Rudd.

Many that had withheld judgment on Carr ever since his appointment as Foreign Minister, will be soon making  up their minds. SiFM is among them. 

Club Em Designs

Monday, March 05, 2012

X-Post-Foreign Policy In Focus: Vacuuming Up the Pacific's Resources

The 11th round of the Trans-Pacific Partnership (TPP) negotiations is currently taking place in Melbourne, Australia. Although negotiators have agreed to the broad outlines of the TPP agreement, a new trade issue has created a snag in the process: the inclusion of investor-state dispute settlement provisions. Australia has refused to accept the investor-state dispute settlement, and U.S. industry associations are urging President Barack Obama to overcome these objections. These investor-state dispute settlement provisions have been included in U.S. investment treaties and trade agreements with more than 50 countries, and there are over 2,500 of these accords currently on record. These provisions, however, give advantages to large economies and can cripple small island states like Pacific Island nations.

Obama describes the TPPA as a "a trade agreement for the 21st century" that improves on and rectifies the past problems in U.S. trade and investment treaties and trade agreements with more than 50 countries, and there are over 2,500 of these accords currently on record. These provisions, however, give advantages to large economies and can cripple small island states like Pacific Island nations.

Nine countries are currently negotiating the TPPA:the United States, Australia, New Zealand, Chile, Peru, Brunei, Vietnam, Malaysia, and Singapore. Japan is in preliminary talks, and Canada and Mexico are looking to join. Although the negotiations are being held in secret, leaked documents confirm that the TPPA is a “NAFTA on steroids.” Contrary to democratic practice, the documents connected to the negotiations will remain secret for four years after being signed or dismissed.
Arnie Saiki

"For most Pacific Island countries (PICs), trade has been a series of disadvantageous agreements with larger economies that negotiate access to island resources. The PICs have remained economically tethered to larger economies despite attempts at small-island integration by sub-regional institutions like the Pacific Island Forum (PIF) or the more progressive Melanesian Spearhead Group (MSG). Just last year, a new sub-regional group called the Polynesian Leader’s Group challenged the MSG, which had made waves by advocating participation in an alternative economic system."

The United States is leading the negotiations and has a great deal of influence over the outcome of the agreement, which covers a vast range of subject matters, including tariffs on goods, trade in services, labor and the environment, telecommunications, and intellectual property. For Pacific Islands, however, the investor rights chapters may offer the greatest challenge to Pacific Island environmental resources.
The small Pacific Island economies are not formally a part of the TPPA negotiations and yet they are tethered to the larger economies of Australia, New Zealand, Chile, France, and the United States. Pacific Island countries are also not member economies of APEC (the economic regional forum that spawned the TPPA). They participate only as observers through the Pacific Island Forum, which facilitates the neo-liberal economic agenda through a basket of sub-regional agreements like the Pacific Island Countries Trade Agreement (PICTA). Still, larger economies pay considerable attention to the Pacific Island countries because of their resources, like fisheries, precious metals, and minerals, as well as their strategic value as military outposts and waterways.

Pacific Trade

Throughout Oceania, native peoples separated by thousands of miles share similar cultural and often linguistic bonds. Long before contact with the west, Pacific peoples not only were connected by the currents of their ocean homes but had established trans-pacific navigational routes, trade, and for the most part a sustainable relationship with their environmental resources.
For most Pacific Island countries (PICs), trade has been a series of disadvantageous agreements with larger economies that negotiate access to island resources.

The PICs have remained economically tethered to larger economies despite attempts at small-island integration by sub-regional institutions like the Pacific Island Forum (PIF) or the more progressive Melanesian Spearhead Group (MSG). Just last year, a new sub-regional group called the Polynesian Leader’s Group challenged the MSG, which had made waves by advocating participation in an alternative economic system. By joining with a bloc like the BRICS (Brazil, Russia, India, China, South Africa), Pacific Islands might do better than the neoliberal programs advocated by PIF.

In comparison with other emerging economies, Pacific Islands have poor performance records. Much of the blame rests on the neo-liberalism of regional institutions like the ADB and APEC. Since the late 1990s, an increase in aid-based relationships has not only stunted the development of many island peoples but also provided a dumping ground for overstock and consumer detritus. Although private investment has had some success in developing traditional farm and fishery practices, these projects are dependent on funding from the Asian Development Bank (ADB), the EU, the World Bank, and U.S. and Australian aid organizations.

In a 2006, the ADB examined small island states among the developing member economies, suggesting that isolated and vulnerable economies remain under economic stress as a result of their governments’ inability to guarantee the basic security of their people.

In 2008, as a response to its self-funded study, the ADB worked with international partners to deliver infrastructure services in the Pacific to streamline private-sector investment to industrial sectors like energy, water, waste, security, and telecommunications, as well as mining, cash crops, and fisheries. The Pacific Region Infrastructure Facility (PRIF) is one such organization.
Privatization is the latest vehicle for the exploitation of island resources. But these international investment projects, along with the bilateral investment treaties that support them, have yet to provide any long-term sustainable cultural or environmental benefit to small island economies.

 Impact of the TPPA

Embroiled in a decades-long struggle for independence from Chile, Rapa NuiTPPA that Chile signed in 2005. Since joining the TPPA, Rapa Nui has been fighting a tidal wave of development proposals for mining projects, airfields, ports, casinos, and hotels. These projects, which would irreparably change a UN World Heritage site, primarily benefit the Chilean government and the investment regime. For example, through the transnational Transoceanica Holdings, international investors funded the development of the Hotel Hanga Roa on land belonging to the Hitorangi clan. In 2010, as the Hanga Roa prepared to open, members of the clan occupied the hotel. Rapa Nui erupted in violence when Chilean President Sebastián Piñera sent navy cruisers and hundreds of armed security forces to end the unarmed protests.

In recent discussions around the TPPA, little attention has focused on how a regional “Asia-Pacific” free-trade agreement will actually impact Pacific Islands. But some recent examples of investments in the region are quite revealing. In Papua New Guinea, Canada’s Nautilus Minerals has launched a new deep seabed-mining project called Solwara 1. Large deposits of gold, silver, nickel, copper, manganese, and other rare-earth minerals are buried deep in the seabed, and the method for extracting these minerals – basically vacuuming up the seabed onto a barge – has only recently been developed.

Little is known about the deep seabed, and no conclusive environmental study has been completed. But the life that thrives in this unusual environment is sulfur-based rather than oxygen-based. When the sludge is extracted onto a barge, it is then separated from the commodity metals and minerals and then dumped back into the ocean. The impact of this sulfuric sediment absorbed by fish or reefs is unknown. However, sulfuric changes in the environment negatively affect oxygen-based plants and animals, as people living with vog (volcanic smog) know all too well.

After the International Seabed Authority changed the regulations for deep seabed mineral extraction, Nautilus acquired even more international investment to lease large tracts of deep seabed in Fiji, Tonga, the Solomon Islands, and New Zealand. These changes have prompted other Canadian, U.S., and Australian mining companies to lease seabed areas in the Exclusive Economic Zones of many other Pacific Island Countries. This mining deregulation, which has resulted from agreements like the TPPA, will likely push ocean biodiversity closer to what the International Programme on the State of the Ocean describes as “irreversible, catastrophic change.”

Consider also the case of Endeavor Mining, which recently offered the Cook Islands government a partnership proposal worth $1 billion over three-and-a-half years for mineral and mining rights to the seabed resources. Typically, since Endeavor is also an independent merchant bank focusing on the global natural resources sector, it will likely offer investors a package of financial incentive benefits that will reward investors at the expense of a state whose 2009 GDP was just short of $200 million.

If made responsible for cleanup in the event of accidents, island governments and taxpayers could be liable for any financial losses. As a result, Cook Islanders might find themselves in an ecological catastrophe and mired in debt. Additionally, to qualify for loans to pay back this debt, multilateral lending institutions may well insist on austerity measures that would lead to further deregulation. Locked into a variety of competing investor agreements, the Pacific islands will find themselves in a race to the bottom, both economically and environmentally.

If the investor-rights “chapter 11” provisions in NAFTA provide any clues about how the TPPA will privilege international investor agreements over government regulations, the Pacific Islands will be opened up to tremendous resource exploitation. Environmental regulations are all that protect the fragile biodiversity of the region. And the costs associated with the despoliation will largely fall on the shoulders of Pacific islanders themselves. The corporations will reap the profits; the Pacific Islands will have to pay the long-term bill.

Looking Beyond the TPP

The average GDP of the smaller developing Pacific islands is around $350 million, with the exception of Fiji, whose annual GDP is around $3.5 billion, and Papua New Guinea at around $9.5 billion (for perspective, New Zealand’s GDP is around $125 billion). There is a tremendous gap between the combined GDP of the islands and the value of the resources exploited from these countries.

This gap represents a strategic imperative for Pacific island economies to integrate along the lines of sustainable trade and sensible environmental regulations. The TPPA is certainly not an equitable integration scheme.

Rather, this NAFTA of the Pacific is like tossing a shark in a fish tank. The TPPA will give even less room for PICs to negotiate positive environmental regulations or manage to accrue social or economic benefits from their natural resources.

Pacific Islanders need to be part of the negotiating process to ensure they are at least able to integrate their commodity resources, since they are critically unequipped to develop their economies to scale with the larger economies. They also need to create a regional regulatory agency that can independently manage the various trade and investment agreements. Without democratic input and democratic control, the TPPA will vacuum up all the resources of the Pacific and leave a poisoned ocean in its wake.
Recommended Citation:
Arnie Saiki, "Vacuuming Up the Pacific's Resources" (Washington, DC: Foreign Policy In Focus, March 5, 2012)

Further Reading :

Pacific warned of hidden dangers in Obama's new TPP push (Radio Australia)

The Trans-Pacific Partnership-A New Paradigm Or Wolf In Sheep's Clothing?
Economists Issue Statement on
Capital Controls and the Trans-Pacific Partnership Agreement

TPP-The NAFTA of the Pacific
 How Brazil Challenged Europe and Won.

Taxonomy of Dolls and Mutants (Radio Lab)

SiFM post on seabed mining:

SiFM post on TPP and America's Pacific Century Pivot:

Club Em Designs

Friday, March 02, 2012

Bob Carr and Australia's Foreign Policy.

Bob Carr looks at Julia Gillard [Image source: ABC]

Babasiga post highlights the appointment of Bob Carr as Australia's Foreign Affairs Minister.

Radio Australia article suggests that the new incumbent will focus on the Pacific region, after being neglected by Carr's predecessor.

Lowy Institute's blog "The Interpreter", addressed the content of Bob Carr's blog and some of the perceived view points, the nascent Foreign Minister holds with regards to Foreign Policy.

All things considered, it would be naive at best for the Pacific region to expect a sudden change in DFAT and its abysmal track record under Rudd's tenure. WSWS article underscored Rudd's uncanny ability to self promote:
US Ambassador McCallum wrote a scathing cable, describing the APC idea as “hastily rolled out, with minimal consultations.” He continued: “Rudd seems to be in a hurry not only to demonstrate Australia’s regional influence as a ‘middle power’, but also to begin to establish his legacy
SiFM also addressed the same concerns in a numerous posts- here , here and here.

The capability of Carr is not in question, however, the Pacific region will soon determine whether a new chapter in Australian Foreign Affairs has indeed been opened.