'Pooled Regional Governance' in the Island Pacific? Lessons from History

PACIFIC ECONOMIC BULLETIN Feature

PACIFIC INTEGRATION AND REGIONAL GOVERNANCE

‘Pooled regional governance’ in the island Pacific? Lessons from history

Greg Fry Director of Graduate Studies in International Affairs, Department of International Relations, The Australian National University

Since mid 2003 the Australian Government Australian push as too heavy handed. The has been attempting to reshape and revitalise Forum agreed not only to action on the regional cooperation in the South Pacific particular cases the Prime Minister had around the concept of ‘pooled regional raised, that of a regional police training unit governance’. The notion was first promoted and an Australian-sponsored study of civil by Prime Minister John Howard in the aviation, but also to a major overhaul of context of announcing his government’s regional arrangements under the auspices intention to lead a regional assistance of the Forum. In some senses the resultant mission to Solomon Islands.1 The Prime Pacific Plan became the embodiment of a Minister argued that the smaller Pacific states broader notion of ‘pooled regional needed to share resources if they were to governance’, not just the sharing of resources overcome the constraints imposed by their and saving of costs in particular sectors but small size and lack of capacity. He illustrated a commitment to a ratcheting-up of the the point by referring to the absurdity of each cooperative effort as implied in the term island country trying to run its own airline ‘regional governance’ as against ‘regional or train its police when these could be done cooperation’ (Eminent Persons’ Group 2004). through a pooling of resources. The Prime Minister also lobbied hard and By August of 2003 ‘pooled regional ultimately successfully to make sure that an governance’ had become a major foreign Australian would be in charge of the policy objective. Prime Minister Howard development of the Pacific Plan. vigorously promoted the concept at the As the concept is currently being Pacific Islands Forum in Auckland. After his developed in the Pacific context certain things discussions he claimed that other leaders have become clear about the parameters had accepted the notion (Howard 2003) within which the participating states envisage although the New Zealand press interpreted future developments. No Pacific leader is these events slightly differently, viewing the pressing for a Pacific Union along the lines of

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the European Union or a regional currency The fact that Australian Governments have (the Australian dollar) despite the publicity made major attempts in the past to promote given to these ideas following the release of precisely this same agenda is important. the recommendations of an Australian Senate Prime Minister, Paul Keating, for example Committee on A Pacific Engaged just prior to attempted in 1994 to create a new regional the Auckland Forum. Both the Australian economic order with ‘pooled regional Government and leaders of Pacific island governance’ in all but name as the underlying states rejected such ideas as premature. But concept and, as now, with airline all seem to be agreed on the need to go beyond rationalisation as a key policy objective (see what is currently in existence either to deal Fry 1994). This is not to mention the first with globalisation, to promote regional decade of the Forum’s history where a security (Australia) or to halt the development narrow conception of ‘pooled regional of a ‘ghetto of conflict and poverty’ (New governance’—that concerned with regional Zealand).2 There also seems to be agreement integration of sectors of the economy that this should be pursued under the including, most prominently, civil aviation— auspices of the Pacific Islands Forum. was pursued as the main objective of But within these broad parameters there regional cooperation and failed. At the risk is obviously ground for political contest over of simplification, I divide this rich history of the depth, breadth, form and purpose of regional cooperation in the Pacific into five future regional governance and the shape of main forms of attempted regional governance institutional arrangements. These are of with a rough correlation with different time course not new questions in a region where periods in terms of their prominence. regional governance in various forms has been attempted for so long. As Fiji’s Foreign Minister, Kaliopate Tavola, said when asked Comprehensive regional about the new notion of pooled regional integration (1971–74) governance in July 2003: ‘Well the concept is not new, I mean, the name Prime Minister The emphasis on regional economic John Howard has given it is new… But the integration in the early years of the Forum concept itself has been the basis of some of reflected the liberal economic and the regional initiatives’.3 development thinking of the time. It In its 34 years of history the Pacific proceeded on several simple premises which Islands Forum has provided a focal point for seemed to have common sense status and several different models of regional which bear a strong resemblance to the governance. It is the starting point for this rationale for ‘pooled regional governance’ as discussion that this experience provides promoted in the current context. They were some useful insights into the issues awaiting that larger units do better than smaller ones particular interpretations of the concept of (particularly very small ones); that ‘pooled regional governance’. While one rationalisation of industry across the region should recognise that there are new global would maximise economies of scale or at conditions and Pacific states are at a very least reduce the diseconomies of scale that different stage of their political development would otherwise occur; that small countries there are nevertheless lessons to be learnt could not each afford a shipping line, a from this history. It is at the very least university, an airline, and a development important to remind some new bank; and that a free trade area would be commentators that there is such a history. trade-creating for the region; and that cost-

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cutting could be achieved through bulk South Pacific and the carrier Air Pacific— purchasing. These ideas were implicit in the had already been created in these sectors in early proposals of the Forum, in the tasks the last years of the colonial period. They given by the first Forum to a committee on became controversial in the 1970s as Pacific trade which met in 1971, and in the tasks island leaders outside Fiji began to question given to the new South Pacific Bureau for whether these Fiji-based institutions were Economic Cooperation in its founding adequately serving their interests.4 agreement (South Pacific Forum 1971, 1972). The idea of a regional airline, based on In the event, proposals for an extension of the existing Fiji Airways, was comprehensive regional economic first developed in the late 1960s by the integration—economic union, free trade area British, Australian, New Zealand and Fiji and industrial rationalisation ideas—did not Governments. In 1968 the existing pass initial inspection by consultants and shareholders in the consortium—Qantas, Air committees. They failed largely on the basis New Zealand, BOAC and the Fiji of the supporting arguments as examined by Government—were joined by the Western officials and consultants, rather than Pacific High Commission on behalf the because of political positions of member British Solomon Islands Protectorate, the countries in formal negotiations. Industrial Gilbert and Ellice Islands Colony, and the rationalisation was thought to be premature Kingdom of Tonga. In the following year when an industrial base did not exist in the Western Samoa and Nauru because island countries except in Fiji. Inter-island shareholders and in 1971 Fiji Airways trade was minimal because their products changed its name to Air Pacific.5 By the early were either the same (for example, bananas) 1970s, however, it was evident that it was or, where different, were not the type of only Fiji, among the island states, that was product that other island countries had the keen to further develop Air Pacific as a capacity to process (for example, copper). regional consortium. Despite their While a regional free trade area was judged shareholdings in Air Pacific, the to benefit Fiji’s economic development it independent island countries were clearly would be damaging to the island economies. interested in developing their own national Incorporation in a wider free trade area with airlines. Nauru had already established Air Australia and New Zealand was seen as Nauru in 1969 and Polynesian Airlines, with having similar implications. the Western Samoa Government as major shareholder, was set up in the same year. In 1972 Nauru formally withdrew from the Sectoral integration (1971–78) board of Air Pacific while retaining its shareholding and in the following year the While comprehensive economic integration King of Tonga announced his intention of was effectively removed from the regional establishing a national airline and Air New agenda in the early years of the Forum’s Guinea was established. The lack of activities attention focussed instead on commitment of the other island states to the sectoral integration, particularly in the areas development of Air Pacific was also singled out later by Prime Minister John demonstrated in their reluctance to increase Howard as in particular need of pooled their shareholdings as the metropolitan regional governance, that of education and airlines withdrew. As a result Fiji became training, and civil aviation. Some prominent majority shareholder and the airline became regional institutions—the University of the increasingly identified as a national carrier.

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After the Rarotonga Forum in March conducted largely outside the Forum 1974, Ratu Mara had warned: the ‘Forum will meetings the experience significantly affected stand or fall on civil aviation… Civil aviation the willingness of these states to cooperate will be the real test of Pacific regional on other substantive issues within the Forum cooperation’6. Two months later Ratu Mara in its early years. was saying that ‘Civil aviation is a notable By the end of the 1970s it was clear that failure’ (Mara 1974:13). The idea of a regional Pacific island states were wary of economic carrier was effectively at an end. While integration schemes requiring high capital various proposals for cooperation among outlay, centralisation in one island state, or national airlines, such as rationalisation of a sacrifice of national autonomy. The air routes and cooperation on purchasing of University of the South Pacific and the Pacific equipment would later be countenanced, full Forum Line were the only examples of a sectoral integration in the civil aviation field significant degree of sectoral integration. The was effectively off the agenda until raised University maintained its regional support again by Prime Minister Keating by decentralising the campus. New (unsuccessfully) in 1994 and by Prime campuses and units set up in Western Minister Howard in 2003. Samoa, Kiribati and Tonga and promised at It is worth recalling the main reasons for that time for Vanuatu, went some way to the failure of this ambitious effort at pooled placate regional concerns about the uneven regional governance of the kind recently distribution of benefits (Crocombe and advanced by the Australian Government. Meleisea 1988). The Pacific Forum Line The principal reason was the perception by succeeded because it did not involve high- island states that Air Pacific was dominated level integration. The ‘pooling’ concept, by Fiji. It was Suva based; it had its origins in involving an operating company that would Fiji; Fiji was the main shareholder; Fijians charter ships from member countries, gained most of the employment provided by allowed an identifiable national component the airline; and, it was claimed, Fiji in this regional scheme and kept capital subsidised internal airfares by setting fares outlays to a minimum. In most areas of on certain regional routes higher than they cooperation the emphasis shifted to the should be (Inder 1974). The bitterness that supplementation of national efforts through this issue engendered was not felt only on shared expertise, information and one side. It was clear that Fijian leaders, and coordination rather than a more ambitious particularly Mara, took offence at the rising level of sectoral integration. complaints about Fijian dominance. The South Pacific states were fortunate It is important to note that the failure of that they did not venture far down the path the ‘one regional airline’ concept had of comprehensive or sectoral integration important spillover effects into other areas common in other parts of the Third World at of regional cooperation. The neo- this time. Had they done so the experience functionalist theory of regional integration would have likely poisoned any chance of underpinning European integration moving to the more workable forms of assumed spillover effects in a positive cooperation they later achieved. Their direction; this however was a spillover effect attempts at significant sectoral integration that threatened to take regional integration in tertiary education and civil aviation in the other direction. This was the first major indicated the kinds of tensions that would issue causing division among the Pacific have pulled more ambitious regional island states. Although the negotiations were schemes apart. Regional management

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boards were not like corporation boards in diplomacy looks outward. It is nevertheless the private sector. They were composed of a form of pooled regional governance in the representatives of national interest. The most broad sense in that it seeks to reach a desirable outcome for ‘the region’ was not compromise within the region in pursuit of necessarily the most desirable outcome for a joint foreign policy and trades on the individual states or the politicians running a advantage of pooled diplomatic and state. Despite the assumption of shared negotiation resources. smallness, isolation and product range which Collective diplomacy was already has informed the dominant approaches to evident right from the start of the Forum regional development, there is in fact alongside sectoral and comprehensive considerable variation among Pacific island integration as a major form of regional states on each of these variables. These governance. The Forum employed this differences quickly revealed a serious rift approach for example in relation to between the centrally located, relatively large negotiations with the European Community and well-off Fiji and the other participating over the Lomé Treaty. The Pacific Group, with states over the costs and benefits of sectoral coordination provided by the South Pacific integration (Neemia 1986). Bureau of Economic Cooperation (SPEC), There was not only the issue of equity. successfully represented the interests of There was also the question of whether the Pacific island states. Also in relation to the individual state could have a more cost- Law of the Sea negotiations during the 1970s, effective result outside the regional scheme. they formed the Oceanic group which again There were also political costs. For politicians successfully represented the views of the the visible national venture, however island states particularly in relation to the irrational in terms of economic theory, was rights of archipelagic countries. far more likely to earn local support than the Pacific collective diplomacy came of age regional venture. The recent ‘biscuit war’ in the 1980s when regional integration as a between Vanuatu and Fiji with Vanuatu form of cooperation was on the wane (in the banning Fiji biscuits due to the competition Pacific and across the Third World). In posed to its local industry because of the particular it was the success of the anti- operation of a free trade area suggests that nuclear dumping campaign in turning this tendency is still present. around Japan’s proposal to dump radioactive wastes in the Marianas Trench which first demonstrated the power of Collective diplomacy (1979–90) collective action. This was followed by a series of successful joint diplomatic In the 1980s Pacific regional cooperation campaigns which altered the intended found its strength in the shift in emphasis behaviour of larger states: Japan on drift- from regional integration, whether netting, Australia on its policy approach to comprehensive or sectoral, to collective regional security, and the United States on diplomacy. By collective diplomacy I simply its position on Law of the Sea issues and on mean joint regional action aimed at chemical weapons incineration on Johnston mediating, moderating or denying harmful Island. While the Forum’s campaign to global influences on the region and to support the decolonisation of New maximise the benefits from positive Caledonia did not influence France’s explicit international influences. Whereas regional policy toward that territory, the success in integration looks inward, collective gaining UN support on the re-inscription

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issue, despite French lobbying, demonstrated Regional security community what concerted diplomatic action could (1984–89) achieve in international forums. It doubtless contributed to the increased confidence that Alongside these collective diplomacy efforts was evident in later diplomatic campaigns, of the 1980s concerned with the regulation most notably on the drift-netting dispute and of the impact of globalisation (broadly in the lobbying on environmental questions defined) on the Pacific was an attempt at prior to the Rio Conference. another form of regional governance—the Collective diplomacy was strengthened attempt by Australia and New Zealand to by the institutional developments of the late impose a regional security order. This was a 1980s: the reorganisation and enlarging of push by Canberra and Wellington to promote the Forum Secretariat, the creation of a a joint foreign policy orientation among separate agency for dealing with Pacific island states around the notion of the environmental issues, and the acceptance of ‘strategic denial’ of Soviet influence in the a compromise in the long running battle over South Pacific. This was form of collective whether there should be one regional diplomacy, of attempting a joint foreign policy organisation or many organisations. The stance across the region vis á vis matters compromise was to create a cooperative related to the Cold War as interpreted in network of organisations through the Canberra and Wellington. The regional establishment of the South Pacific governance in this case was however Organisations Coordinating Committee. The explicitly hierarchical. The joint foreign decentralised, but coordinated, network of policy orientation expected of the island regional agencies in place by the end of the states was different from the foreign policy 1980s provided focus and commitment in behaviour of Australia and New Zealand. particular issue areas—the environment, This is often represented as a successful fisheries—and allowed several island strategy by Australia and New Zealand on capitals to enjoy the economic and status behalf of the West which somehow kept the benefits of hosting a regional institution, a Pacific states pro-west during the Cold War. departure from the Suva and Noumea- This is not the case. Pacific states were centred regionalism of the 1970s. anticommunist for their own reasons. This A significant outcome of collective attempt at hegemonic regional governance diplomacy has been the establishment of a ultimately failed. The hierarchy could not be series of regional legal regimes which seek sustained. The Pacific leaders did not like to institutionalise the understandings the second-class citizenship given to island reached between island states and the states in the strategic denial formula. They outside world. These include the South could not understand why island states were Pacific Nuclear Free Zone Treaty (1985), the denied diplomatic, economic and cultural Convention for the Protection of the Natural contact with the Soviet Union when the Resources and Environment of the South western powers, including Australia and Pacific Region (1986), and the Convention New Zealand, enjoyed these links. In 1985 for the Prohibition of Fishing with Long Kiribati entered a fisheries agreement with Driftnets in the South Pacific (1989). the Soviet Union. Vanuatu followed suit in 1986. By 1988 it had become clear to the Australian Foreign Minister, Gareth Evans, that Australia’s past approaches to regional security were no longer workable.

Recognising the effective challenge to existing Gordon Bilney, stated that Australian assumptions posed by the it is our hope that we shall be able to concerted actions of island leaders he seize the moment to launch ourselves announced a conceptual shift in policy to a with fresh determination, on the crucial doctrine of ‘constructive commitment’ task of preparing our region for the emphasising partnership rather than agency challenges of a new century (Bilney for western interests, or Australian 1994). hegemonic aspirations, which he saw as Throughout the 1990s the structural dominating past approaches (Evans 1988). reform agenda for Pacific states was managed regionally (Sutherland 2000). A Harmonisation of national donor-led agenda emphasised a regional policies (1994–2003) harmonisation of national regulations and practices concerning privatisation, investment laws, lowering of tariffs, From 1994 there was a concerted effort by accountability, output-based budgeting and th e Australian and New Zealand so on. This harmonisation of national Governments to re-establish leadership in regulations and practices also began to cover regional governance around issues to do with security-related issues such as customs, economic reform, national governance, and drug-running, policing and money small ‘s’ security—drug running, trans- laundering, particularly after September 11. national crime, money laundering and tax This form of regional governance was havens. While this new push initially often contested or quietly resisted by Pacific included attempts to promote a form of what island governments because it was seen as is now termed ‘pooled regional governance’ insensitive to local cultural practices, or (in the form of rationalised airlines and bulk involved political costs for local politicians, purchasing) as well as new forms of collective or economic costs for particular groups in diplomacy in relation to gaining better prices society or because of the way it was imposed for tuna from distant water fishing nations by Australia. For their part Australia and these were not taken up by the Pacific island New Zealand became increasingly frustrated states. The form of regional governance that with the slow pace of regional reform and began to dominate was what we might call the lack of obligation on the part of those who regional harmonisation of national laws, signed up to the regional standards to carry regulations or policies. This was very different out what they had agreed to. This is partly from collective diplomacy and from regional responsible for the push for ‘pooled regional integration of a particular sector. Its focus was governance’ from 2003. initially on creating the conditions for structural economic reform, and for neo-liberal development based on open markets. Like the Lessons from the past regional security community this was explicitly hegemonic regional governance. Certain general points can be distilled from This form of regional governance had its the past experience with regional governance origins in the Keating Government’s attempt in the Pacific which may hold lessons for to create an Australian-led regional this current attempt to build ‘pooled regional economic order in the Pacific. As the 1994 governance’ and regional integration. The Pacific Islands Forum approached the first is that in various ways the history of Australian Minister for Pacific Island Affairs, regionalism in the South Pacific has always

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been about negotiating Pacific engagement between Australia and the Pacific islands. The with globalisation, whether in the form of other major trend in this regard is the tension global trade, investment, colonial control, or between different groups of Pacific islanders the environmental impact or resource over their respective rights and terms of exploitation by larger powers. Regional participation in regional governance. The governance has always had a two edged role regional project has been seen as illegitimate in this negotiation or mediation process. For because it has been too state-centric, too male outside powers such as Australia and New dominated, or dominated by larger countries, Zealand or for the international agencies it is and particularly Fiji. In general terms there seen as a vehicle to promote these globalising has been a tension between those who see the ideas and processes. For Pacific states it has need for an opening up of regional governance often been seen as a shield against such to include civil society, sovereignty movements processes or a way of moderating the impact and non-independent territories, and those as in the multilateral treaties regulating the who support a state-centric regional rapacious activities of the larger powers. community seeing these civil society groups Secondly, implicit in these various as unrepresentative. attempts at creating regional governance Among participating Pacific island over the past 34 years is the creation of states the authority of regional governance particular notions of regional community. has partly depended on how they see their The big lesson of this long history is that the gains and costs relative to other member political authority of regional governance is states. As we have seen the lesson is that this tied directly to the legitimacy, among Pacific becomes very obvious when regional islanders, of the particular notion of regional integration in particular sectors is attempted. community that is being promoted. The early failure of the regional airline and As the main outside force attempting to the underlying tensions between Fiji and the shape regional governance since the mid other Pacific states was noted earlier. Even 1970s Australia has come up against this the regional success story, the integration of legitimacy issue a number of times. As the university training sector in the Senator Evans found in his promotion of a regionally governed University of the South two-tier security community in the 1980s and Pacific has some important lessons in this Prime Minister Keating and Minister Bilney regard. The trend is to an increasingly found in the 1994–95 period in attempting decentralised university and to the creation to set up a new regional economic order what of new national universities. Distance, looks like a successful new form of regional relevance, and local economic and political governance is not sustainable if it fails to gain benefit are all factors in encouraging national legitimacy among Pacific states and peoples. rather than regional institutions in these The lesson from those past failures is that areas of high sectoral integration. the problem lay partly in the hegemonic style The exact shape of regional governance of Australia’s regional community-building under the Pacific Plan is still under (exacerbated by its claim to shape a negotiation. The lessons of the past suggest community of which it was not a member), that serious regional integration of the kind and partly in what was being promoted as attempted in civil aviation is probably not the way the community should live. going to gain the legitimacy it requires for The lessons concerning the legitimacy authoritative and sustainable governance. issue in relation to past regional governance Harmonisation of domestic policies as a form does not solely revolve around a tension of regional governance may also have the

problems of legitimacy it experienced in the Fry, G. 1994. ‘Climbing back onto the map? 1990s unless Australia and New Zealand The South Pacific Forum and the new engage more fundamentally with Pacific development orthodoxy’, Journal of perspectives on the governance and security Pacific History, 29(3):64–72. issues they seek to influence. Howard, J., 2003. Transcript of the Prime Minister, The Hon John Howard MP, Doorstop Interview, Carlton Hotel, Notes Auckland, 15 August. Inder, S., 1974. ‘Up front with the Editor’, 1 Interview with the Prime Minister, 22 July 2003. Pacific Islands Monthly, June:3. 2 ‘The United States of the Pacific’, The Sydney Mara, Ratu Sir Kamisese, 1974. Regional Morning Herald, 17 March 2004:12 Cooperation in the South Pacific, 3 ABC Online, AM, Fiji’s Foreign Minister Talks address delivered at the University of about Pooled Regional Governance, 23 July Papua New Guinea, Port Moresby, May. 2003, http://www.abc.net.au/am/content/ Neemia, U., 1986. Cooperation and Conflict: 2003/s908328.htm costs, benefits and national interests in 4 The dissatisfaction with the University of the South Pacific is examined in Crocombe and Pacific regional cooperation, Institute of Neemia (1983). Pacific Studies, University of the South 5 Based on author’s interview with Captain P. Pacific, Suva. Howson, former Chairman of Air Pacific, New Zealand Ministry of Foreign Affairs Sydney, 19 July 1976. and Trade (MFAT), 2004. ‘Pacific 6 ‘Forum co-op wanted, not a talking shop’, Cooperation: Voices of the Region’, The Pacific Islands Monthly, June 1974:3. Eminent Persons’ Group Review of the Pacific Islands Forum, MFAT, References Auckland. South Pacific Forum, 1971. Final Bilney, G., 1994. Australia’s relations with the Communiqué, Wellington, 5–7 August. South Pacific—challenge and change’, South Pacific Forum, 1972. Final address to the Foreign Correspondents’ Communique, Canberra, 23–25 Association, Sydney, 15 June. February. Crocombe, R. and Neemia, U., 1983. ‘Options Sutherland, W., 2000. ‘Global imperatives in university education for the Pacific and economic reform in the Pacific islands’, Pacific Perspective, 12(1):5–17. island states’, Development and Change, Crocombe, R. and Meleisea, M., 1988. 31(2):459–80. ‘Achievements, problems and prospects: the future of university education in the South Pacific’, in R. Crocombe and M. This article is based on a paper presented Meleisea (eds), Pacific Universities: at the International Workshop on Pacific achievements, problems and prospects, Governance and Regional Integration, Institute of Pacific Studies, University of held at The Australian National the South Pacific, Suva:359–71. University, Canberra from 8–9 June 2005. Evans, G., 1988. ‘Australia in the South The support of the Australian Agency for Pacific’, address to the Foreign International Development for this Correspondents’ Association, Sydney, workshop is gratefully acknowledged. 23 September.

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