U.S think tank Center for Strategic and International Studies (CSIS) recently produced publication titled: "Strengthening Governance and Development in the Pacific" highlights the American pivot to the Asia Pacific region and also attempted to frame the issues of Good Governance and Developments in the South Pacific.
Strengthening Governance and Development in the Pacific
By Gregory Poling and Elke Larsen May 4, 2012
As the United States focuses its energy on engaging the Asia-Pacific region, it has a growing interest in promoting good governance practices in Oceania. More than just democratic values and respect for human rights are at stake, as important as those are. The Pacific population is set to reach 18 million by 2050 and unemployment rates are already alarmingly high. The best means of ensuring regional stability is for economic development to truly take root. But it is difficult to attract capital to a region where poor governance means there is often high risk associated with investment.
It is therefore in the interests of the United States to promote good governance as the key driver of economic development in this region. Isolation is often blamed as the primary disincentive to investment in Oceania. Isolation undeniably remains an important consideration, but investment can be attracted to even the most isolated islands if good governance is practiced.
A case in point is Mauritius, which lies in the Indian Ocean 1,242 miles off the coast of Africa. Nobel Prize laureate James Meade claimed in the 1960s that Mauritius would likely become a failed state because of its isolation. And yet by 2000 Mauritius’s economic rise was being hailed as a “miracle.” In reality, though, Mauritius’s development was not miraculous, but rather the result of calculated good governance practices that transformed the island into an attractive destination for investment. Since the 1970s, there has been a consensus in Mauritian politics to promote growth via sound economic policies, export zones, respect for property rights, and zero tolerance for corruption. Mauritius currently ranks 23rd among the 183 economies in the World Bank’s “Ease of Doing Business” index. With a population of approximately 1.3 million, Mauritius in 2011 had a per capita GDP of $15,000.
In contrast, the most diversified Pacific economy, Fiji, with a population of 890,000 people, had a 2011 GDP per capita of $4,600. Recent developments underscore the negative impact that governance issues can have on development and help explain why the economies of the two most populous Pacific Island countries, Papua New Guinea and Fiji, contrast sharply with those of states like Mauritius. For example, Papua New Guinea’s Esso Highlands Ltd. liquefied natural gas (LNG) project, a joint venture project operated by Exxon Mobil, is expected to create local employment and increase Papua New Guinea’s GDP by 15–20 percent. However, land ownership issues caused serious delays in 2009 and again this year as landowners used threats of violence in attempts to extract rents.
The absence of the rule of law in the Highlands region became apparent with numerous events that stopped work in March and April on the LNG project, and violence by illegal miners near the Porgera Gold Mine prompted the government to deploy troops in January and again in late April. Former military commander Major General Jerry Singirok said of the latest deployment, “It’s important that the investors see the government is concerned about the major investments…it’s an act of deterrence.” Despite the government’s moves to protect foreign investments, however, the highly publicized difficulties faced by Exxon Mobil and other companies will serve as a cautionary tale to potential investors. Papua New Guinea is also facing political turmoil at the national level.
The judicial and legislative branches have been deadlocked over a March 28 Judicial Conduct Bill giving the parliament the power to remove judges. The bill would have lasting implications for Papua New Guinea’s separation of powers and political stability. This will affect how risky the country looks to foreign investors. Papua New Guinea is already ranked 101 out of the 183 economies in the “Ease of Doing Business” index. Tellingly, its poorest indicator on the index is the enforcement of contracts, on which it ranks 163rd. Undermining judicial independence will only make that indicator worse.
One finds further evidence of the importance of governance on investor confidence in Fiji. According to an International Monetary Fund report released in February, Fiji’s 2006 coup coincided with a severe decline in economic growth. From the 1990s until the 2006 coup, economic growth averaged 2.75 percent per year. It has dipped to less than 0.25 percent per year since, well below Fiji’s potential considering the economic boom elsewhere in the Asia Pacific.
A 2009 World Bank survey found that the greatest barrier to firms investing in Fiji was political instability. The country is presently ranked 77th in the “Ease of Doing Business” index. There are some bright spots. On March 9, Fiji began a consultation process for a new constitution, and it looks as if the country may be on track for a return to democracy. The military regime headed by Prime Minister Commodore Voreqe Bainimarama has announced that elections will be held in 2014 and will be open to all candidates. These steps toward better governance and political stability have already resulted in greater investor confidence. For instance, U.S.-based Gibson Guitars on April 20 announced plans to open a mahogany processing factory by 2013 that will create 2,000 jobs.
The geopolitics of Oceania are changing, providing the Pacific Islands with an opportunity to break out of their relative isolation. Lying as they do within the vast expanse between Asia and the United States, the Pacific Island countries offer investors largely untapped economic opportunities: mineral resources to meet Asia’s booming demand, the world’s richest tuna fisheries, and vast tourism possibilities, among others. If properly developed, these nations have the potential to link their economies to the massive Asian and North American markets. But tapping this potential depends on improving governance practices and reducing risk.
The United States has reiterated its commitment to the region’s development and has backed up that commitment with actions: sending the largest-ever U.S. delegation to the Pacific Islands Forum last September, opening a new USAID regional office in October, and supporting Vanuatu’s and Samoa’s accession to the WTO this year, among others. It therefore has a proven interest in promoting good governance as a critical part of helping the Pacific Islands maintain stability and reach their economic potential.
(This Commentary first appeared in the May 3, 2012, issue of Pacific Partners Outlook, http://csis.org/publication/pacific-partners-outlook-strengthening-governance-and-development-pacific.)
Gregory Poling is a research assistant, and Elke Larsen a researcher, with the Pacific Partners Initiative at the Center for Strategic and International Studies in Washington, D.C. Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues.
A useful counter point to the sentiments raised by the CSIS publication can best be addressed by Non Governmental Group (NGO) Action Aid., whose 2009 report titled "IMF Policies and Their Impact On Education, Health & Womens Rights in Kenya- The Fallacies and Pitfalls of the IMF Policies" [www.actionaid.org/sites/files/actionaid/aaik_imf_policies.pdf]
The above mentioned CSIS publication stated: "According to an International Monetary Fund report released in February, Fiji’s 2006 coup coincided with a severe decline in economic growth. From the 1990s until the 2006 coup, economic growth averaged 2.75 percent per year".
The cascading effects of the 2008 Wall Street implosion, gives readers pause for thought, regarding the correlation and causality of any decline in economic growth in Fiji, let alone the world economy.
More so, it calls into questions the inability of the IMF or the World Bank to have prevented the Global Financial Crisis in the first place and dampen the damaging ripples of the financial Tsunami still unwinding in Europe.
The taglines "rule of law" and "good governance" are ostensibly used in many academic reports to point out short falls in a certain nation's state policies, in tackling corruption related problems. Or the lack of political will to reform plagued institutions.
The question that begs to be asked, is whether think tanks like CSIS are equally capable of reporting the shortcomings of governance in Pacific regions, as well as the glaring control frauds occurring in Wall Street or actively point out the revolving door between financial regulators and K- street lobbyists.
PBS Frontline documentary "Money, Power & Wall Street" does provide yeoman's work in examining the timeline and events prior to the Global Financial Crisis.
Episode 1 (below)
Watch Money, Power and Wall Street: Part One on PBS. See more from FRONTLINE.
Episode 2 (below)
Watch Money, Power and Wall Street: Part Two on PBS. See more from FRONTLINE.
Episode 3 (below)
Watch Money, Power and Wall Street: Part Three on PBS. See more from FRONTLINE.
Episode 4 (below)
The above listed Frontline documentary is exceptionally adept in addressing the timeline of events, it rather avoids calling for prosecution occurring for criminal acts within the financial system. The perpetrators in this sense, aided and abetted by politicians, have formed a cartel that controls the levers of power.
Bill Moyers articulated this revolving door syndrome in a TV segment (posted below).
Dr. Bill Black,addresses those in grained flaws, in a podcast (posted below) that is fittingly titled:"Our System is so Flawed, Fraud is Mathematically Guaranteed".
CSIS publication ends with the following sentence: "[The U.S] therefore has a proven interest in promoting good governance as a critical part of helping the Pacific Islands maintain stability and reach their economic potential".
It is increasingly obvious, that the "good governance" and "rule of law' in the U.S is in fact crony-capitalism, thinly veiled in democratic ideals. Given that resources are presently being exported from the region, readers should be concerned whether the CSIS, is actually advocating the same crony capitalism model for the Pacific, as a means to reach their economic potential.
Club Em Designs
Bill Moyers articulated this revolving door syndrome in a TV segment (posted below).
For years, high-ranking administration officials have spun through the revolving door between the White House and American big business. But how have they influenced the regulation and reform of industries from which they came, and American democracy as a result?
Dr. Bill Black,addresses those in grained flaws, in a podcast (posted below) that is fittingly titled:"Our System is so Flawed, Fraud is Mathematically Guaranteed".
CSIS publication ends with the following sentence: "[The U.S] therefore has a proven interest in promoting good governance as a critical part of helping the Pacific Islands maintain stability and reach their economic potential".
It is increasingly obvious, that the "good governance" and "rule of law' in the U.S is in fact crony-capitalism, thinly veiled in democratic ideals. Given that resources are presently being exported from the region, readers should be concerned whether the CSIS, is actually advocating the same crony capitalism model for the Pacific, as a means to reach their economic potential.
Club Em Designs
