As the treasurer lauds supply-side economics, a once-controversial recovery theory is gaining traction.This is the essence of modern monetary theory – that government budgeting is nothing like household or business budgeting, for the simple reason that government can create money.
Independence in the South Pacific
The mostly Australian passengers on the cruise ships Pacific Eden and Explorer of the Seas would have noticed, as they disembarked at Nouméa’s Jules Ferry quay recently, a crowd of young people queuing into a building across the road.
The line drew on all the racial communities of New Caledonia – the indigenous Melanesians known as Kanaks, French settlers, others from around the Pacific and South-East Asia – anxious to meet a registration deadline to vote in a referendum in November on the future of this former French penal colony of 269,000 people.
The can of independence has been kicked down the road for 30 years, since the violence of the 1980s, and is coming towards a stop. With the referendum comes a delicate moment in Australia’s relationship with its ring of Melanesian neighbours: do we show faith in their ability to manage their own destiny, or do we still think the guidance of a European power and entrepreneurial white settlers such as us is needed?
Then there is the question of how the New Caledonian vote will influence the referendum in June next year in Bougainville, on whether to stay with Papua New Guinea or go independent as a new small state of 234,000 people. This is another can kicked down the road, following the New Zealand-brokered agreement in 2001 ending an insurgency that claimed up to 20,000 lives.
Though it diplomatically can’t voice an opinion, Canberra wants Bougainville to stay with PNG. When its conflict raged, many New Zealand diplomats felt it too far gone for Bougainvilleans ever to be reconciled with Port Moresby. The accords reached at the Burnham army camp near Christchurch reflect the desperate effort of then foreign minister Alexander Downer and his diplomats to stop PNG being “Balkanised”.
The issue comes to the fore in Canberra next week with the visit of the French president, Emmanuel Macron, before he travels on to Nouméa. Australian leaders will get the full charm of the young president, and be flattered to be included in his disclosures about this week’s meeting with Donald Trump, the Iran nuclear deal, Syria, European Union reform and, of course, the submarines.
Beneath the charisma, however, is a very conventional French conservative politician to whom a wide spectrum directed their votes chiefly because the alternative, the xenophobic and economic autarkist National Front’s Marine Le Pen, was worse. In the election campaign last year, Macron expressed the hope New Caledonia would stay with France. He still needs to guard his right flank.
The attraction of a French presence to help “stabilise” the South Pacific will have grown on Canberra with the expansion of China’s aid and investment throughout the region, leading to the recent scare that a new cruise-ship berth in Vanuatu was a forerunner to a Chinese military base. France keeps a small military presence in New Caledonia, Tahiti and other Pacific colonies.
The question is whether such stability will just disguise a building up of pressure that will eventually erupt, perhaps in an event bigger than the Kanak uprising and settler backlash of the 1980s.
This came as other Melanesians got independence − PNG in 1975, the Solomon Islands in 1978, Vanuatu in 1980 – and ethnic Fijians revolted against their multi-racialist postcolonial system. It culminated in the siege on Ouvéa Island in 1988, when Kanak militants killed four gendarmes, and took 35 police and other French officials hostage in deep caves, demanding immediate negotiations on independence. After two weeks, French commandos stormed the caves, killing all 19 Kanaks and losing two of their own. All the hostages escaped.
Ouvéa shook the Kanaks and settler leaders into the Matignon Accords seven weeks later, proposing a 10-year program of development for the Kanak population. But this moderation led to the assassination a year later, by a Kanak assailant, of the popular Kanak leaders Jean-Marie Tjibaou, a former Catholic priest educated at the Sorbonne, and Yeiwéné Yeiwéné while visiting Ouvéa.
In 1998, the agreement was augmented by the Nouméa Accord, transferring administrative powers to a local congress and three regional governments. France retained the powers over defence, foreign policy, security, the judiciary and finance. It fast-tracked social development and expansion of industry, leading to the referendum at the end of 20 years.
In contrast with the PNG government’s efforts in Bougainville since 2001, reflecting Port Moresby’s fiscal limits and weak capacities, the French have undoubtedly achieved a lot in New Caledonia. Indicators such as life expectancy and education among Kanaks have greatly improved.
To the long-running refinery of Société Le Nickel near Nouméa were added two new nickel refineries run by Vale Inco and Glencore Xstrata, with narrow or near majorities owned by a Kanak holding company, which also took a majority in a nickel plant in South Korea. Small miners shipped ore to Clive Palmer’s refinery near Townsville.
For a while, when the metal’s price reached $US50,000 a tonne in 2007, it looked like New Caledonia might become the Norway of nickel, with talk of setting up a sovereign wealth fund to conserve the proceeds for the future. Those hopes were dashed by a price slump in 2015, to the point where the new refineries became unprofitable, dividends vanished, and Palmer went bust.
New Caledonia remains highly dependent on transfers from France, equivalent to $A2.25 billion a year, which cover half the cost of the administration and form about 15 per cent of its gross domestic product. Booming cruise-ship activity is a shallow substitute for tourism based on local stays, and causes ecological damage at some landing points such as the Isle of Pines.
Fast-tracked development has brought the communities together. About two thirds of the population live in and around Nouméa, partly resulting from urban drift by Kanaks. Visitors will see young Kanaks breaking up baguettes and dipping into tinned pâté de foie gras, or descendants of labourers from Tonkin and Java playing boules.
It’s not always a happy confluence. Short-term contract workers on high salaries live the high life alongside unemployed young Kanaks. Rising crime and drug and alcohol abuse have followed.
This Kanak “crime wave” is being exploited by some parties ahead of the referendum as a pointer to what might follow independence, suggests Philippe Gomès, a lawyer leading the Calédonie Ensemble party, which advocates staying with France. Gomès is himself the son of “Pied-Noir” settlers evicted from Algeria in 1962. “Political parties need to show a sense of responsibility,” he told a local newspaper. “It is always easier to speak to people’s fears or frustrations rather than to their hopes.” Yet at the same time he warned of a rising risk of violent outbreaks, and said the population was “exasperated”.
For now, a vote against independence seems likely. The common roll for the referendum augments the Kanak voice by including only those settled in New Caledonia 10 years before 1998 and their descendants. But with 39 per cent of the population, the Kanaks are outnumbered by other populations – led in number by Europeans, at 27 per cent – and tend to have lower turnout rates.
Limited polling suggests a 60–40 vote against independence. But the question will not vanish. “Beware, if the anti-independence parties want to go into extra time, they will breed generations of radicalised Kanaks,” said Paul Néaoutyine, a founder of the Parti de libération Kanak and current president of the northern regional government. “We shall never give up. We shall push forward until we access full sovereignty.”
Moderates on both sides are hedging their positions. Analysts such as the Lowy Institute’s Alexandre Dayant see use of the term “full sovereignty” rather than independence as designed not to scare off voters. “[It] clearly communicates the fact that Kanak separatists do not advocate for a ‘strong break’ with the metropole, such as the one France applied to Algeria in 1962,” he says. “Rather, they call for independence in ‘partnership’ with France.”
They can’t say that outright, though, for fear of meeting the same fate as Tjibaou, with a radical Kanak group, the Rassemblement des Indépendantistes et Nationalistes, urging a boycott of a referendum they see as including uninvited outsiders.
A narrow result would raise the chances of a second referendum after two years, and even a third in 2022, as the Nouméa Accord allows if requested by a third of the territory’s congress. Sonia Backès, who leads the loyalist Républicains Calédoniens, told The Saturday Paper there should be “a permanent right to self-determination” so that in the future, whenever they felt financially prepared to become independent, the question could be put again. But for now “independence would only bring poverty to us all,” Backès said. “France gives us the hope to construct a Caledonian identity, while being under the protection of a great world power.”
Thus kicking the can further down the road would suit Canberra, if a Kanak backlash is avoided. “Our preference is for New Caledonia to remain – the economic transfers they benefit from do afford the territory the highest development indicators in the region,” says the Lowy Institute’s Pacific Islands program director Jonathan Pryke. “But regardless of the outcome, more has to be done to define a post-referendum society that is inclusive of all parties, especially indigenous Kanaks.”
Canberra must be wishing this was the case in Bougainville. “New Caledonia is an important precursor for the Bougainville referendum next year,” Pryke said. “Australia is looking to it with far more anxiety with respect to the preparedness of the process, the potential for conflict, and what the unpredictable outcome could mean for dynamics in the region.”
Sentiment on the island seems to favour going it alone. Mining companies dangle reopening the massive Panguna copper mine – the cause of the island’s civil war – and developing new copper-gold strikes elsewhere, to finance an independent state. The referendum is final, but as PNG’s prime minister, Peter O’Neill, recently pointed out, his national parliament has to endorse the result. It could all end suddenly in tears and renewed conflict later next year.
This article was first published in the print edition of The Saturday Paper on Apr 28, 2018 as "Pacific ire lands".
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