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International Last Updated: Jan 2, 2021 - 12:09:31 PM


In Papua New Guinea, Political Infighting and Debt Hamper Marape’s Reforms
By David Green , WPR, Dec. 31, 2020
Jan 1, 2021 - 11:11:31 AM

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Nov. 13 began much like any other day in Waigani, the suburb of Port Moresby that houses Papua New Guinea’s unicameral Parliament. Much of the chamber sat empty while Prime Minister James Marape answered questions from the governor of Western Province about the national government’s plans to subsidize rubber production. Suddenly, former army captain Belden Namah, a longtime critic of Marape, swept into the hall to take his seat as opposition leader. He was flanked by a surprising array of senior lawmakers, including Marape’s own deputy prime minister, Sam Basil, and his foreign minister, Patrick Pruaitch—both of whom had expressed frustration with the government’s economic performance, especially its mounting debt.

By crossing the floor, Basil and Pruaitch announced a serious challenge to Marape’s leadership—one that gave Namah sufficient support to seize control of Parliament and suspend legislative sessions until Dec. 1. At that point, the opposition could hold a vote of confidence, as Papua New Guinea’s constitution stipulates that new governments can be toppled in Parliament after 18 months in office. Marape is no stranger to such dramatic shifts in allegiance, having ascended to power in May 2019, after defecting from the Cabinet of his long-ruling predecessor, Peter O’Neill, and winning the support of Parliament to replace him as leader.

Namah’s gambit sparked a procedural jousting match, including a dubious effort by Marape ally Job Pomat, the speaker of Parliament, to reconvene the chamber on short notice and pass a 2021 budget before adjourning until April in order to forestall the planned no-confidence motion. The Supreme Court earlier this month declared that move invalid, dealing a setback to Marape’s hopes to stay in power. In the end, however, the no-confidence vote never materialized, as the opposition coalition fell apart. After Basil narrowly lost to Pruaitch in a secret opposition ballot to nominate Marape’s would-be successor, Basil returned to Marape’s side along with a number of other MPs, allowing the prime minister to wrest back control.

“Marape will now be there until the general election in 2022,” says Jeffrey Wall, an Australian political consultant who has advised Papua New Guinea’s leaders in the past. “Beyond that will depend on how they go economically and fiscally, and it’s grim—they have a shortage of money.”

Marape’s government is in dire fiscal straits partly due to its botched nationalization of the huge Porgera gold mine, which contributes around 10 percent of the country’s exports. It was shuttered in April after the government declined to renew the license held by Barrick Gold, a Canadian mining company. As a result, Papua New Guinea’s Treasury has missed out on a potential windfall from record-high gold prices amid the COVID-19 pandemic, and lost a vital source of foreign exchange reserves.

Now, the Treasury must fund a $1.9 billion fiscal deficit in its 2021 budget, through a mix of domestic borrowing and foreign assistance. “Financing the budget is the primary challenge,” says Shane McLeod, a research fellow at the Lowy Institute in Australia. But financial assistance from overseas is likely to be conditioned on accelerated reforms to state-owned enterprises, particularly in the telecommunications and power sectors, and potentially an unpopular devaluation of the kina, Papua New Guinea’s currency.

Marape consequently faces a slew of challenges as he seeks to fulfil his election promise to “take back PNG” from corrupt elites and foreign interests. He has pledged to secure a greater share of revenue from the country’s natural resource wealth for landowners and provincial governments. But he has little to show for his efforts thus far, and the recent bout of political infighting hasn’t helped his case.

“The prime minister will be aware that his argument of short-term cost for long-term gain is wearing thin, and he needs to deliver tangible economic benefits, jobs and opportunities,” says Paul Barker, executive director of the Institute of National Affairs, a think tank in Port Moresby. “Concern is growing over poor services and rising debt, and yet the government and opposition have just expended considerable resources on costly lawyers, and expensive accommodation in high-range hotels and resorts, despite growing public criticism.”

Marape has little to show for his efforts to “take back PNG” from corrupt elites and foreign interests, and the recent bout of political infighting hasn’t helped his case.

Still, Marape’s ambitions tend to earn high marks from his constituents. “A lot of people across the country support the direction Marape is trying to set,” says Papua New Guinea-based political commentator Deni ToKunai. “Even if it’s not achievable, the way he talks and what he focuses on have not been at the forefront of public discourse before.”

Thus far, Marape’s government has passed amendments to oil, gas and mining laws that accrue greater power to the state in negotiations over the terms of resource projects. However, it remains to be seen whether these laws, which were hastily drafted without much industry consultation, will work in practice. The government also has yet to finalize either of two multibillion-dollar projects to export liquefied natural gas, one likely spearheaded by ExxonMobil and the other by French oil giant Total. Keiran Wulff, CEO of Oil Search, the Papua New Guinea-based partner in both LNG ventures, recently assured investors there was widespread support for sealing the Total-led Papua LNG deal before 2023, the required window to meet an expected jump in demand as major economies like Japan and South Korea seek cleaner alternatives to coal power.

Winning back the confidence of foreign investors will be vital following the missteps over the Porgera gold mine, and a protectionist posture that has alienated potential partners. “The next 18 months should see tangible progress in project preparation in LNG and potentially in mining,” says Barker. In particular, he points to the need to resolve an impasse over how to dispose of waste products at the proposed $5.3 billion Wafi-Golpu gold and copper mine, in mineral-rich Morobe province.

Perhaps the most significant of Marape’s reforms is the passage of a law last month to create of an Independent Commission Against Corruption, with far-reaching investigatory powers. Similar bodies have played a key role in advancing governance reforms elsewhere in Asia, with Indonesia’s Corruption Eradication Commission a prime example. A similarly robust check on the illegal exercise of corporate and political power would be a valuable complement to Papua New Guinea’s commendably independent judiciary.

Marape will confront challenges on a number of other fronts. The newly elected president of the autonomous Bougainville region, Ishmael Toroama, will seek to advance separation talks following an overwhelming referendum last year in favor of independence. Papua New Guinea is also a locus for an escalating regional power struggle between Australia and China, most recently evidenced in a brouhaha following a preliminary agreement for China to build a fish processing facility in the town of Daru. The deal is sensitive, as the town lies on PNG’s remote southwestern coast, close enough to Australia’s Queensland state to cause alarm over potential Chinese intrusions into Australian waters.

The fishing facility may yet fizzle out, and Chinese policymakers are more likely to focus on increasing their financial leverage; China is Papua New Guinea’s largest bilateral creditor, holding nearly a quarter of its total external debt. Papua New Guinea’s total annual repayments for loans related to undersea fiber-optic cables, a telecom data center and other Chinese-funded infrastructure projects are expected to reach about $67 million by 2023. “Payments on PRC loans are already high, and the Chinese will be waiting for an opportunity to step in again,” says Wall, using an abbreviation for the People’s Republic of China.

He adds that it will be up to Australian leaders to step in and ensure that Papua New Guinea doesn’t fall into a debt trap. “Australia has to understand that our closest neighbor needs our help; how we give that assistance is key, and it should be through support for agriculture and fisheries, to lift living standards,” says Wall. “We can’t afford to have a failed state on our border.”


Source:Ocnus.net 2021

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