Keeping with ISLANDS BUSINESS tradition, our senior writers Samisoni Pareti in Suva and Dev Nadkarni in Auckland give a quick overview of how 2009 may turn out for the islands in the Pacific.
If we had employed the magazine’s late publisher’s traffic light indicators, most islands countries would be displaying green—all good to go—even in the midst of the turmoil in the global market brought about by the financial crisis. But with the exception perhaps of Fiji, always the rebel in the Pacific islands family of nations.
And also if politicians–whether in Waigani or Papeete, Suva or Tarawa–get their act together as our two writers put it, “setting aside their selfish interests and thinking of the bigger picture and working for the national good”.

Papua New Guinea
2009 could be another good year for Papua New Guinea even in the wake of the world financial crisis.
With a marked drop in oil and copper prices, the country’s projected economic growth has been scaled down to around 6% from the 7 to 8% growth it had enjoyed in recent years.
Still this projected growth for 2009 is higher than those of its neighbours to the north and west of the Pacific, even better than much bigger economies like the United States.
Economists though do worry about the huge allocation for district developments in the country’s 2009 national budget, especially on how efficiently the money will be used.
They are also warning that reforms of the public sector needed to be done in order to curtail spiralling public service wage costs and size.
The place to watch though will be PNG’s politics, and it can begin quite early in the new year.
Under the country’s constitution, the ‘honeymoon’ for Sir Michael Somare’s government after securing his second consecutive five-year term in the 2007 general election ends in February.
This means that any member or party can test the strength of the ruling party through a no-confidence motion in parliament.
Will it see the opening of the proverbial Pandora box of revolts and counter-revolts in parliament?
Given the majority Somare currently commands in the 109-seat house, political analysts tend to think a revolt, if any, will have to come from within the prime minister’s ruling coalition, led by his National Alliance Party (NA).
No one in the party has declared interest in the top job, although names like Somare’s son Arthur and current treasurer Patrick Pruaitch are commonly referred to as the party’s ‘power-brokers’.
There are of course able and tested leaders outside the ruling party like the Opposition leader and former prime minister Sir Mekere Morauta and former treasurer and Air Niugini successful executive Bart Philemon.
But in 2009, don’t count out the Grand Old Chief. He was after all the founding prime minister when it got its independence from Australia in 1975 and he has been around longer than many younger than him.
A fighter and survivor and even if he will be 73 this year, anyone who dares challenge Somare will have to come fully prepared.
His uncontested leadership since 2002 had shown PNG and the world what the country’s potential is if leaders in parliament put their own selfish interests aside, think of the bigger picture and work for the national good.

Solomon Islands
Prime Minister Dr Derek Sikua should really use the new year to focus on growing his country’s economy.
Twelve months have now passed since he ousted his predecessor Manasseh Sogavare in a no-confidence motion in parliament.
2009 should provide him the opportunity to show his worth to his country of almost 600,000 people that he has what it takes to be the leader of his island nation.
He should not be bogged down by job-saving manoeuvrings and time-wasting exercise of constantly watching his back to ward off any leadership challenge either from within his ruling caucus or from the opposition, now led by the man he ousted in the no-confidence motion as prime minister.
Despite all that had been said and written about Sogavare, it was under his reign that Solomon Islands recorded the highest economic growth in recent times, a little over 10% in 2007.
It was the highest growth in any islands economy in the Pacific for that year.
Sikua is ably qualified, holding a doctorate in the field of education and before entering politics, was head of the country’s education ministry for many years.
With one of the highest population growths in the region, the man will be well advised to focus his energy on sectors that will give Solomon Islands the impetus for growth; tourism for instance, fisheries, mining and agriculture.
Copra can re-claim its spot as the leading exporting commodity for Solomon Islands if only key stakeholders including Sikua’s ministers respect the decision of the courts and allow the resumption of copra trading at the Russell Islands Plantation Estate Limited. This company operates the largest coconut farm in the southern hemisphere.
Logging has been fuelling economic growth for the island nation in recent years. But there is increasing pressure for sustainable harvesting methods to be employed through value-added and downstreaming processing ventures.
Sikua and other leaders of the Solomon Islands need only to cast their eyes eastward to see how democracy when exercised responsibly could unleash the potential of any Melanesian island that is endowed with lucrative natural resources and an educated labour force.
Hopefully, 2009 will also give the prime minister time to rein in members of his government who go around with excess baggage, and acting like Melanesian “big man.”

Vanuatu
Voters in Vanuatu put into office Edward Natapei as prime minister for the next four years following a general election last September.
But whether the new prime minister would even last through 2009, no one really knows.
Just two days after he took over as prime minister from Ham Lini, Natapei got slapped with a no-confidence motion in parliament.
He narrowly won, but had to face three similar motions in the space of two months.
Already the Vanuatu public is restless as many used a radio talkback show on national radio last December to vent their frustrations at the games being played by their elected representatives.
Even George Wells, Lini’s foreign minister and now parliamentary speaker, floated the idea of constitutional changes to inject some form of stability in national leadership.
If such a suggestion is taken up, Vanuatu have two workable options—Papua New Guinea’s 18 months ‘honeymoon’ space offered to any new government during which time no confidence motion is entertained, and Fiji’s constitutional provision that discourages switching of political alliances inside parliament (when parliament is not closed by a coup). Any member who crosses the floor immediately loses his or her seat and a by-election will have to be called.
If politicians get their act together and allow Natapei to concentrate on nation building in 2009, then the island nation will be in for a good run.
Thanks to the able stewardship of his predecessor, Lini, who is now the deputy prime minister, the economy is in good shape although international donors like the Asian Development Bank are predicting a slow-down in growth for 2009.
Tourism is booming thanks to better airline connections through increased seating capacity from Air New Zealand, Pacific Blue, Air Pacific and Solomon Airlines.
These complement the mighty efforts of national carrier, Air Vanuatu, which after being plagued by constant government interference is now flying into bluer skies.
The airline is even talking of another aircraft acquisition to complement its leased Boeing 737-800 series.

Fiji Islands
Ever the rebel in the Pacific family of nations, Fiji might or might not be able to have a general election in 2009.
If military strongman and coup leader Commodore Frank Bainimarama have his way, Fiji won’t go to the polls until 2010.
Already he has told Pacific islands nations that are members of the Pacific Islands Forum —including Australia and New Zealand—that there will be no election this March even though he did promise to have one by the first quarter of 2009 when he met Pacific leaders at their 2007 Forum meeting in Tonga.
Bainimarama has since claimed he was pressured into giving the March election deadline.
Will the threat of being expelled from the Pacific Islands Forum influence Bainimarama to change his position?
This is unlikely given the man’s determination and single-mindedness to enact into law his people’s charter, a document which he is proclaiming as the blueprint that will break once and for all the nation’s coup culture.
He has refused to accept the notion proposed by critics that the key perhaps lies with the very institution he currently leads as its commander.
That charter among other things proposes wide ranging reforms to the country’s electoral system and Bainimarama wants to have a new system in place—specifically a one-man-one-vote system—before the polls are called.
He has already gone on the offensive organising forums for all political parties in Fiji to consider his people’s charter and the need to change the country’s election laws. Just last month, he took his plan before 100 traditional leaders although the forum was boycotted by some of the more senior chiefs who were members of Fiji’s Great Council of Chiefs.
Bainimarama abolished this council in one of the first decisions he took when he removed prime minister Laisenia Qarase in a coup on December 2006.
While Qarase and his supporters continue to criticise and question the initiatives of the military-led regime, Bainimarama can still argue that he and not Qarase has the support of the people because of the absence of any huge and credible demonstrations against his regime.
Is there a chance that Bainimarama may listen to Pacific leaders when they meet in Papua New Guinea this January to discuss Fiji’s membership in the regional body?
The possibility cannot be ruled out altogether and much will depend on the leadership skills and charisma of Sir Michael Somare who will host the talks, and any ‘sweeteners’ Forum members Australia and New Zealand will offer the besieged island nation.
Somare is one of the very few leaders that Bainimarama respects and listens to and the Grand Old Chief might just get the younger Fijian leader to see the merits of holding a general election much earlier than he is planning.

Tonga
2009 should be an exciting year for the island kingdom.
A new king reigns, a constitutional and electoral commission has been appointed and Tonga is well on its way to completing constitutional reforms with an elected parliament in 2010.
The kingdom’s economy has weathered the huge devastation of the riots that destroyed half of the capital’s business districts in 2006, helped in no small measure by assistance from Australia, China and New Zealand.
King-appointed prime minister Dr Fred Sevele and his cabinet with legislators like veteran democracy campaigners ‘Akilisi Pohiva and Clive Edwards have the rare opportunity of carving the island kingdom’s new political landscape.
The hope will be a political system that gives power to the people to elect their own representatives in parliament, and one in which the voice of the masses are heard and respected.
Done haphazardly, Tonga can be doomed to constant instability, a phenomenon which until the 2006 riots was mainly the perceived picture of Melanesia, not Polynesia, of which Tonga belongs.
To the government’s credit, it has appointed a credible and widely respected jurist to lead the constitutional commission, namely Justice Gordon Ward, who was chief justice of Tonga until he moved to Fiji to become president of its Court of Appeal.
Judge Ward resigned after the coup in Fiji of December 2006.
Laying a good and stable political foundation will for the island kingdom take up most of 2009.

Apia...under PM Tuilaepa Sailele Malielegaoi, Samoa is a picture of what the Pacific is not.

Samoa
Under the leadership of Prime Minister Tuilaepa Lupesoliai Sailele Malielegaoi, Samoa is a picture of what the Pacific is not.
He will be 66 this year which will mark his 29th year as a member of parliament, 11 of those as leader of his island nation.
For consecutive positive economic growth and successfully reforming his country’s public sector, Samoa continues to be the shining light amongst islands of the Pacific that had to grapple constantly with poor leadership, corruption and instability.
Post-South Pacific Games in 2007, the Asian Development Bank is predicting a slowing down of the economy for Samoa in 2008 and 2009.
But with the impact of the world’s financial crisis, all other countries are experiencing dampened growth and the island nation will be no different.
Although hugely unpopular, the government’s decision to change the road code from having right to left lane driving is perhaps the hallmark of good leadership that is acutely absent in other islands of the Pacific.
Tuilaepa was decisive in the face of public protests and almost single-handedly pushed the changes through parliament.

Cook Islands
Barring any upsets, Cook Islands is not going to the polls until 2011.
Until then, Jim Marurai will be able to use this year and the next to consolidate his position as one of the most popular leaders of the island nation.
His strength is his quiet and unassuming demeanour, people who know the prime minister have said.
Commentators do lament though the virtual non-existence of a media adviser in the PM’s office, someone to keep the profile of Marurai high in the eyes of the public.
Despite the huge cost of cyclone damage in 2005 and the continuing decline in population through rural to urban drift as well as immigration, the Cook Islands economy has not performed too badly.
For its 2008 outlook, the Asian Development Bank was projecting a GDP growth of 3.5% in 2008 and this it says may remain the same in 2009.
But since the island uses New Zealand currency, Cook Islands may not be shielded as much as it would like from the impact of the global financial crisis.
Rapid growth in tourism has been Cooks’ lifeline, ADB added.

Niue
For a first timer, Premier Toke Talagi impressed his Pacific islands counterparts at the way he quickly learnt the ropes when he became chair of the Pacific Islands Forum in mid-2008.
Fiji was the biggest crisis but Talagi took up the challenge and was the voice of reason as the Pacific Islands Forum wrestles with the unprecedented move of suspending the coup-stricken nation from the regional body.
At home, his immediate problem is addressing his nation’s cashflow situation.
It got so worse prior to his country hosting the annual Pacific Islands Forum meeting in August 2008 that Wellington had to pitch in and offer an advance.
Part of the money was used to purchase jet fuel for the many aircraft that were expected to ferry delegates in. But the need for this never eventuated and Talagi now has to find a way to get rid of about NZ$1 million worth of jet fuel.
Restoring the islands’ finances and maintaining its crop exports will be the premier’s priorities for 2009, in between handling Fiji’s membership of the Forum

Nauru
The Asian Development Bank is projecting negative growth due mainly to the closure of Australia’s refugee detention centre there.
But Canberra is still committed to rescuing the island republic from financial bankruptcy, investing about A$1000 per capita each year in Nauru, the ADB says.
Phosphate export has resumed but Nauru’s huge debts accumulated over many years of financial neglect still eat away at any earnings.
Luring a commercial bank to establish operations on Nauru is a priority for Nauru’s finance minister Dr Kieren Keke.
He and his president (former Commonwealth Games weightlifting champion) Marcus Stephen—assisted by an Australian funded financial rescue package—have been able to steer the republic into public sector reforms including pay cuts and downsizing.
Some political stability of sort has descended on the island after a snap election was called on April 2008.
With the military-led regime in Fiji promising to sign a regional air services agreement, Nauru’s Our Airline will be keen to re-open its Nauru-Tarawa-Nadi service in no time.

Tuvalu
Two factors expose Tuvalu more to the global financial crisis than its bigger neighbours; its use of the Australian dollar and the trust fund (which at the end of 2007 Asian Development Bank says had a market value of A$100 million) that is invested offshore.
The island economy has been recording modest growth ranging between 2 to 3% of GDP in recent years, helped somewhat by rising fishing licence fees.
Dividends from its offshore fund and the leasing of its internet domain name (.tv) has been dropping over the same period, the bank said.
After constant removal of prime ministers through no confidence motions in parliament, Apisai Ielemia has been the exception.
Since assuming office on August 14, 2006, the man has been largely left unchallenged and seems poised to serve his full four-year term.
Remarkably for an island of its size, Tuvalu has been a giant in world climate change talks, thanks mainly to the immense knowledge and skills of its Australia-based climate change expert Dr Ian Fry.
Prime Minister Ielemia and Dr Fry used last December’s United Nations negotiations for a new climate change convention in Poland to champion the cause of small, vulnerable islands nations like theirs.

Kiribati
Red flags began to be waved by international donors in 2008 over the state of Kiribati’s economy and President Anote Tong should 2009 to re-position and re-consolidate his island’s finances.
In particular, the Asian Development Bank in its 2008 economic outlook for Kiribati expressed concern at the constant draw-downs from the country’s reserve funds (invested offshore) to finance its budget deficit.
The largest withdrawal the bank says was in 2007, when the Tong Government draw-down A$45 million.
“While the RERF (reserve fund) remained above an informal benchmark of the real per capita level in 1996, the increase in draw-downs since 2003 could undermine the fund’s capacity to fulfill its role as a permanent source of budget support,” warned the ADB.
“Weaker global equity market returns will necessitate much lower draw-downs, likely requiring a more prudent approach to government expenditures in 2008 and 2009.”
Things have not been going Tong’s way on the political front as well. After a lull of some years, he had to stave off a confidence motion in the island’s parliament last December.
Some critics also labelled Tong’s policy on climate change in which he advocates relocation as an option as too defeatist and something an economics graduate from the highly esteemed London School of Economics should not be advocating all too easily.
To stay the course until the next election in 2011, Tong would need to come to grips with the poor performance of the economy, including sinking money into the country’s deteriorating infrastructure as well as advocating a better policy towards urban development and overcrowding.

French Polynesia
This French territory is proof that the so-called arc of instability is not the exclusive domain of Melanesia.
In the space of four years, French Polynesia has had eight governments with not a single one lasting its full mandated term of five years.
As 2008 closed, incumbent territorial president Gaston Tong Sang (pictured) was clutching to stay in power after his majority in the territorial assembly was reduced to a mere one seat.
Bidding for time and waiting to pounce any moment are his political nemesis—pro-independence campaigner Oscar Temaru and a politician who wouldn’t just go away, Gaston Flosse.
Concerned at the constant change in leadership and the adverse impact this has cost the territory’s economy, Tong Sang held a conference of political leaders late last month.
Political instability is the last thing French Polynesia would need right now as more pressing economic challenges beckon in 2009.
The world financial crisis will hit hard at one of its largest industries—tourism. Territorial leaders would need to come to grips with life after Mururoa when French testing on the atoll was actually the main driver of the economy.

New Caledonia
2009 will be an important year as provincial elections will be held in April.
The pro-independence Kanak party—FLNKS—is hoping for a good showing especially in the crucial South Province where Noumea, the capital, is.
Key FLNKS member and president of New Caledonia’s Northern Province—Paul Neaoutyine—told this magazine last December his party would do well if only it remained united.
The economy is looking good for the territory, thanks to the massive US$4 billion new Koniambo nickel mine, up in the north of the main island.
Our correspondent Nic Maclellan sees the project, which is scheduled to operate in late 2011, producing 60,000 tonnes of nickel a year as a major economic and social rebalancing for New Caledonia.
Until Koniambo in Neaoutyine’s Northern Province, Noumea in the Southern Province has been the economic powerhouse for the French territory.
French president Nicolas Sarkozy wants to pay a visit to the island territory later in the year and the new French leader had already pledged his administration’s commitment to the implementation of the Nouméa Accord.
That agreement outlines the political future of New Caledonia with the transfer of power from Paris to Noumea and possible self-determination.

Wallis & Futuna
With the islands’ two kings as co-rulers, nothing dramatic is expected from the Pacific smallest French territory this year.
King Kapiliele Faupala was installed last year as the new traditional head of Wallis Island and he is one of six members of the territorial assembly.
The economy of Wallis and Futuna comprises mainly subsistence farming with massive injection of French funding, fishing licence fees from Japan and South Korean fishing boats and remittances from family members working in New Caledonia.

Guam
Guam has been in the news in the past couple of years because of the relocation of the United States military base from the Japanese island of Okinawa.
Infrastructure facilities on Guam and surrounding neighbourhood including the Commonwealth of the Northern Marianas will cater for some 8000 troops who will be stationed there.
The project is believed to be the biggest infrastructure project the region has seen and is expected to cost US$15 billion that will be put up largely by the United States and Japanese governments.
Work has already begun and is expected to continue until at least the middle of the next decade.
While the project offers immense opportunity to the Pacific islands and beyond, the global financial downturn has begun to take its toll.
A delay has already been announced and work is expected to slowdown affecting the growth projections of several involved companies as well as on the local economy that was widely expected to benefit from the ongoing activity over the next several years.
The announcement of the delay will slowdown Guam’s economy this year and the financial downturn is also likely to affect tourist numbers as in the rest of the region.
Meanwhile, a few smaller infrastructure projects will keep the economy ticking through the year. One of these is the plan to build a new territorial prison with a capacity to house 1000 inmates.
Estimated to cost US$55 million—about a third of the funding would likely come as a loan from the United States Department of Agriculture.
Work on a new US$20 million landfill to replace the present landfill in Guam is also expected to start this year after Governor Felix Camacho avails of the amount to meet the January 5 deadline set by the Federal Court for depositing the amount committing to the new project. Lawmakers approved the borrowing last month.
In the recent elections in the Guam Legislature, Democrats won a “super majority” giving them the ability to over-ride vetoes by the territory’s Republican governor—something that is bound to create tensions in the coming years.

Northern Marianas
Further to the announcement of a federalised immigration system in 2007 wherein the immigration processes to the Commonwealth of the Northern Mariana Islands (CNMI) will be taken over by the United States federal authorities, CNMI fears the erosion of its gross domestic product (GDP) by as much as 44 percent, according to a recent study commissioned by the governor. Changed immigration systems will also mean the likely loss of 60 percent of its jobs, many of them held by overseas workers from the Philippines situated a mere three hours’ flying time away.
These effects are to be felt through to year 2015, starting this year, according to the study.
Nearly 10,000 overseas Filipino workers (OFW) are employed in various businesses and industries in the Northern Marianas and their continued immigrant status is likely to be jeopardised by changes in the immigration system.
This will greatly affect the economy particularly sectors that employ OFW in large numbers.
Business and industry in the Marianas has also been severely affected by the problems with its utilities company because of capacity constraints causing rolling brownouts and blackouts.
This scenario is likely to continue this year with a rather bleak outlook for the economy because of these local problems as well as the global financial crisis, which is seeing credit in all sectors drying up.
The Guam military base buildup is expected to bring increased activity to the island of Tinian—but none of that will happen this year.
Though there is no timeline given for the projects especially given the delay in the entire project because of the global financial crisis, it has been announced that there are plans for a training centre and residential barracks on the island whenever the project gets going.
The military is still in the process of building its master plan for the Northern Marianas, which is also likely to include the island of Pagan.
Meanwhile, as the financial downturn begins to bite in its more prosperous neighbourhood, tourist numbers are expected to fall in 2009 because of recessionary trends in Japan and a weakened South Korean currency.
These two countries are the Northern Marianas’ traditional tourism markets. That situation may be somewhat offset by a strengthened Japanese yen this year, but then other tourist destinations in the region like Guam are likely to compete for the Japanese tourist sector.
There was news late last year that Asiana Airlines plans to increase flights between Saipan and Incheon to cater to a possible increase in tourists.

Palau
Palau’s compact with the United States comes for review in October this year. The compact entitles the island to receive up to US$700 million in US aid until 2009.
But the island territory hopes that aid will continue even after the review, without which it will find it difficult to meet its budget.
But last year, it has seen the value of its compact fund plummet sharply because of the financial crisis that has hit the globe.
Nearly 40 percent of its value has been wiped off with the fund dropping from US$168 million to just US$120 million.
Palau’s authorities were expecting the fund to rise to US$300 million by the time of next year’s review. This is bound to be a significant challenge for the new government led by President-elect Johnson Toribiong this year in the run-up to the review.
Palau’s tourism potential too is expected to take a hit this year owing to the financial downturn in its traditional market of Japan.
Palau will have to come up with its own new strategies for its economy in the face of the review of its compact with the United States.

Marshall Islands
Like the rest of its neighbours in the Northern Pacific the Marshall Islands and Federated States of Micronesia have their hopes pinned on the US$15 billion military base that is to revitalise economic activity in the next decade and beyond.
But the delay announced because of the global financial meltdown will affect these countries’ economic plans at least for this year as they grapple with problems of overcrowding and environmental issues.