Political Status and Development: The Implications for Australian Foreign Policy Towards the Pacific Islands
STEWART FIRTH SSGM DISCUSSION PAPER 2013/6
Introduction Table 2: Pacific Islands Freely Associated Entities Nine in every 10 Pacific islanders live in the independent countries of the region — Fiji, Kiribati, Entity External State Nauru, Papua New Guinea, Samoa, Solomon Federated States of Micronesia USA Islands, Tonga, Tuvalu, and Vanuatu. The remaining tenth — almost a million people in all — live in the Republic of the Marshall Islands USA territories and freely associated states, where formal Republic of Palau USA connections with a metropolitan state offer access Cook Islands New Zealand to its resources and opportunities. In different ways, Niue New Zealand and with different levels of devolution of power to local governments, eight of the Pacific island entities in the Pacific community are territories Geoff Bertram points out, a large body of evidence of external states, and a further five Pacific island now supports the view that there is ‘a negative entities are freely associated with an external state. association between sovereign independence and present-day per-capita income, indicating that Table 1: Pacific Islands Territories while decolonization may have brought political and psychological gains, it retarded rather than Territory External State advanced the material prosperity of the decolonized American Samoa USA populations. The reasons are straightforward: Commonwealth of the USA small island jurisdictions which are sub-national Northern Mariana Islands (that is, retain constitutional links to metropolitan Guam USA powers) get more financial assistance per head, better access for migrant labour, and a wide range New Caledonia France of jurisdiction-related opportunities to capitalize on French Polynesia France non-sovereign status’ (Bertram 2007, 239–40). Territory of the Wallis France In a study that compared 16 dependent with and Futuna Islands 19 independent island entities in the Caribbean Tokelau New Zealand and the Pacific across 25 socioeconomic and demographic indicators, Jerome L. McElroy and Pitcairn Island United Kingdom Katherine Sanborn showed that the dependent entities had much stronger economic performance, Since the 1980s, we have known that the with much lower unemployment, higher life benefits of decolonisation in small island states expectancy, lower infant mortality and ‘greater are more cultural than economic, and that in the progress along the demographic transition from Pacific Islands, independent countries have poorer high to low birth and death rates development outcomes than those that remain that all modernizing societies pass territories or continue to have a constitutional through’. They concluded that the link to a metropolitan state (Poirine 1998; ‘economic linkages afforded by Armstrong and Read 2000; Bertram 2004.) As dependent status are significant.
State, Society & Governance in Melanesia ips.cap.anu.edu.au/ssgm Stewart Firth
They include: preferential trade, migration and Caledonia and Wallis and Futuna became French citizenship arrangements, access to metropolitan citizens under the 1946 Constitution of the French capital markets and specialized labour expertise, Fourth Republic. Many residents of New Caledonia the subsidized provision of key transport and are simultaneously New Caledonian citizens under a communications infrastructure essential for the unique arrangement for that territory. success of the two primary engines of insular eco- American Samoa (pop. 55,519 in 2010) has no nomic growth—tourism and offshore finance …’ status of its own in international law, but has its own (McElroy and Sanborn 2005, 9–10). constitution and elected legislature, and controls This paper revisits this discussion. It confirms immigration and border matters. American Samoa that the disparities between living standards in has a representative in Washington — currently Eni dependent and independent Pacific countries Faleomavaega — the only Samoan in the US Con- remain as large as ever — indeed that they are gress. He serves on committees and sponsors legis- probably growing. It examines the situation not lation but has no voting power. Executive author- only of the territories but also of the freely associ- ity is in the hands of the governor. The American ated states, whose political status lies somewhere Samoans are US nationals rather than US citizens. between dependence and sovereign independ- Originally, the people of overseas possessions of the ence. In particular, the paper asks: what can the United States such as Guam, the Philippines, Puerto independent Pacific learn from the dependent and Rico and the US Virgin Islands were also US nation- freely associated Pacific? How might the favourable als, not US citizens, but the only US nationals today economic circumstances that accompany all cases are the American Samoans. They are free to carry of dependency and some cases of free association a US passport and to live and work in the United be reproduced elsewhere in the region? What are States, but are barred from voting or holding office the policy implications for the Australian Gover- in the USA outside American Samoa. ment’s Pacific policy? Guam (pop. 159,358 in 2010) has been a US Origins of Political Status territory since 1898, and has no status of its own in international law. The Guamanians elect their own The territories governor and legislature, and send a non-voting France acquired New Caledonia (pop. 265,639 representative to the US Congress. They are US in 2012) and French Polynesia (pop. 274,217 citizens and may enter and work in any part of the in 2012) as colonies in the nineteenth century. USA. Like American Samoa, it is an ‘unincorporated France declared protectorates over Wallis and territory’ —meaning that it is not eligible to proceed Futuna Islands (pop. 13,445 in 2008) in the 1880s, to statehood as, for example, Alaska and Hawai‘i annexed them in 1913 and has administered them were able to do. as a French territory ever since. And although The Northern Mariana Islands (pop. 53,883 in changes in New Caledonia and French Polynesia 2010) passed from Japan to the USA during World since the 1990s have created a significant degree of War II, and benefited from the considerable US self-government, especially in New Caledonia, the defence spending that followed. Foreseeing gener- relationship with France remains territorial in char- ous US subsidisation, they opted for a form of US acter. Five French overseas entities — Guadeloupe, territorial status in 1976, and their islands officially Martinique, French Guyana, La Réunion, and May- became a Commonwealth of the USA in 1986. otte — are ‘départements’ governed as if they were According to the US State Department, the term parts of mainland France, which is divided admin- ‘commonwealth’ ‘broadly describes an area that is istratively into 96 départements. The remainder, self-governing under a constitution of its adoption including those in the Pacific, are all French over- and whose right of self-government will not be uni- seas territories of one kind or another, with dif- laterally withdrawn by Congress’ (US Department of fering degrees of devolution to local governments. State 2013, 2 ). The people of the Northern Maria- All permanent residents of French Polynesia, New nas became US citizens in 1986 and are free to enter
2SSGM Discussion Paper 2012/1 State, Society http://ips.cap.anu.edu.au/ssgm & Governance in Melanesia SSGM Discussion Paper 2013/6 and work in any part of the USA. Their first repre- Free association in this case is a unique arrange- sentative in the US Congress was elected in 2008. ment between different parts of the same coun- The governor holds executive power and there is a try, endowing the Cook Islands and Niue with a bicameral elected legislature. large measure of self-government and autonomous Tokelau (pop. 1,411 in 2011), a British pro- capacity but not removing them from a ‘single con- tectorate from 1889, formally passed to New Zea- stitutional entity’ known as the Realm of New Zea- land sovereignty in 1948, when its people became land (Quentin-Baxter 2008, 614). Everything else New Zealand citizens. Tokelau is in many respects about free association between New Zealand and self-governing. Tokelau is one of five Pacific island its associated states flows from this fundamental groups still listed as ‘a non-self-governing territory’ fact, which, above all, determines that the people by the UN Special Committee on Decolonization, of those states are New Zealand citizens like any and New Zealand reports to the UN each year on other. At the same time, the Cook Islands and Niue its administration. (The other four are Ameri- remain distinct Pacific ‘nations’, with their own can Samoa, Guam, New Caledonia, and Pitcairn languages, cultural practices and sense of national Island.) Tokelau is in many respects self-governing. identity. For more than a century, the Cook Islands The General Fono (Council), to which authority is and Niue have been New Zealand sovereign territo- given by the village councils of the three atolls of ry, just as Norfolk Island or the Torres Strait Islands Atafu, Nukunonu, and Fakaofo, handles national are Australian sovereign territory. Britain declared issues including shipping, fisheries, and external a protectorate over the Cook Islands in 1888 in co- relations — meaning relations with New Zealand operation with its colony in New Zealand, which, and with regional organisations such as Te Vaka with London’s approval, proceeded to annex the Moana, the Polynesian fisheries grouping. When island group in 1901 as an extension of its terri- the General Fono is not sitting, authority is exer- tory in the Pacific (Gilson 1980, 96–109). Demands cised by the Council for the Ongoing Government. for local government led to the formation in 1947 The Tokelau people have voted in two referenda on of a Legislative Council, which was reorganised as whether to enter free association with New Zea- a largely elected Legislative Assembly in 1957, and land. The referendum question in 2006 and again in the 1960s Cook Island leaders called for internal in 2007 was ‘That Tokelau become a self-governing self-government with the proviso that Cook Island- State in free association with New Zealand on the ers should keep their New Zealand citizenship basis of the Constitution and the Treaty’ but on under any new constitutional arrangement. neither occasion did the vote reach the necessary Niue followed a similar historical path. Declared two-thirds majority — a requirement imposed by a British protectorate in 1900, Niue was annexed by the Tokelauans themselves. As a result, Tokelau New Zealand in 1901 and administered as part of remains a dependent territory of New Zealand. New Zealand until 1974. Like the Cook Islanders, Pitcairn Island (pop. 50 in 2013) is a British the Niueans retained their New Zealand citizenship. Overseas Territory, originally settled by mutineers of Section 6 of the Cook Islands Constitution Act 1964 the Bounty in 1790. It became a British colony in 1838. and Section 5 of the Niue Constitution Act 1974 both provide that ‘Nothing in this Act or in the The freely associated states Constitution shall affect the status of any person The Cook Islands (pop. 10,777 in 2012) and Niue as a British subject or New Zealand citizen by (pop. 1,446 in 2011) are freely associated with New virtue of the British Nationality and New Zealand Zealand. The key importance of free association Citizenship Act 1948’ (New Zealand Government for the Cook Islanders and Niueans is that it 194; New Zealand Government 1974). guarantees them the two benefits they most want The Micronesian islands that now form the from the relationship — the right to live and work Republic of the Marshall Islands or RMI (pop. in the metropolitan state, and an assured flow of 54,200 in 2013), the Federated States of Micronesia development assistance. or FSM (pop. 103,000 in 2013) and the Republic of ips.cap.anu.edu.au/ssgm 3 Stewart Firth
Palau (pop. 17,800 in 2013)1 were not under Amer- between 1983 and 1992 before voting to amend ican administration until the last years of World their constitution so as to qualify Palau for free War II. Germany governed the Marshall Islands association status. As a result, Palau did not achieve from 1885 to 1914 and the eastern and western free association until 1994, and its first 15-year Caroline Islands (modern FSM and Palau) from compact period of funding was from 1995 to 2009. 1900 to 1914. When World War I broke out, In accordance with Section 432 of the compact, Germany’s Pacific territories north of the equa- which requires a re-appraisal after 15, 30 and 40 tor fell to Japan, while those south of the equator years, Palau and the USA conducted a review such as Nauru fell to the British Empire. As a con- and agreed on an amended compact in 2010. The sequence, Japan occupied all the former German amended Palau compact still awaits action by Micronesian territories with the exception of Nauru the US Congress in order to pass into law. In the from the end of 1914 and ruled them as a colony meantime, continued funding is reaching Palau in (from 1920 League of Nations Mandated Territory) the form of annual appropriations. until it was driven out by the Americans in 1944. Both sides in Micronesia emerged from the After World War II, the former Japanese islands years of negotiations over free association with became part of the UN trusteeship system. Alone what they most wanted. The Micronesians obtained among the world’s eleven UN trust territories, they free access of their citizens to the USA and aid were a strategic trust, giving the administering guaranteed over lengthy periods. The USA obtained authority the right to conduct military experiments guarantees of strategic monopoly and military use such as nuclear tests. This strategic trusteeship was of a vast area of the northern Pacific: not dissolved by the UN Security Council until • All three Micronesian states conceded strategic after the end of the Cold War in 1990. denial of their islands in perpetuity to any power Free association north of the equator is dif- other than the USA. The RMI permitted the ferent from free association south of the equa- Americans to continue testing missiles at the tor. The transition to free association by the Cook Kwajalein missile range for an initial period of 30 Islands and Niue was largely uncontentious. The years, and Palau guaranteed American military move to free association status by the three Micro- use of certain defence sites for 50 years. nesian states, by contrast, took place over many • The Americans guaranteed aid payments over years and through many rounds of negotiations, initial periods of 15 years, which could then be beginning in 1969. The Compacts of Free Associa- renegotiated (in 2001 for the RMI and FSM and tion were comprehensive and lengthy legal docu- in 2009 for Palau). ments covering every conceivable aspect of future • The Americans gave the Micronesians a unique, relations between the USA and the Micronesian but not permanent, immigration status that states, and at every point in the negotiations the US allows them to live and work in the USA. Department of Defence and the US Congress want- ed proof that the USA was not surrendering stra- The key difference between the Pacific’s two tegic advantages. After successful plebiscites, the kinds of free association relates to citizenship. The Compacts of Free Association with the RMI and Cook Islanders and Niueans share citizenship with FSM became law in 1986. They were reviewed after other New Zealanders. The people of the RMI, the first compact period of 15 years, and amended FSM and Palau were UN Trust Territory citizens compacts for both countries have operated since from 1947 to 1990, and when the trust ended, they 2004. These will expire in 2023. became citizens of their own countries with special Completing the compact with Palau was immigration privileges under the compacts. The delayed for more than a decade by its dispute with people of the RMI, FSM and Palau are not American the USA over its 1979 nuclear-free constitution, citizens, and their free entry to the USA, far from which was unacceptable to the Americans. being a right, is a product of negotiation, contin- The Palauans participated in nine plebiscites gent upon compact conditions that are subject to
4SSGM Discussion Paper 2012/1 State, Society http://ips.cap.anu.edu.au/ssgm & Governance in Melanesia SSGM Discussion Paper 2013/6
Table 3: Membership of international organisations
Country International World Asian United Pacific Monetary Bank Development Nations Islands Fund Bank Forum Cook Islands No No Yes No Yes
Niue No No No No Yes
Republic of the Yes Yes Yes Yes Yes Marshall Islands Federated States of Yes Yes Yes Yes Yes Micronesia Palau Yes Yes Yes Yes Yes change in the future. Far from having to be inferred, it has enabled all three states to become members the terms of the compact relationship with each of the UN. As might be expected, the Micronesian state are spelled out in exhaustive detail in compact freely associated states use their foreign policy free- agreements and revised compact agreements that dom to support the USA. Palau supports the USA were negotiated over periods of years. The RMI, in the UN more than any other country at 96.5 per FSM and Palau were seen by negotiating parties on cent of votes, and the FSM is next, with 94 per cent. both sides as small states entering independence The RMI’s support is at 81 per cent (Island Times 2011). under conditions freely entered into — that is, the Development Outcomes Compacts of Free Association. They conduct their own foreign affairs and are members of the UN. The territories Termination of free association in both cases The people of the Pacific territories are more for- would depend on mutual agreement — an unstated tunate than their counterparts in the independent but inevitable requirement in the New Zealand Pacific in a number of ways. They live in territorial case, and spelled out explicitly in the American extensions of advanced states and therefore metro- compacts with the three Micronesian freely associ- politan standards of efficiency in service delivery ated states. tend to apply. GDP per capita is markedly higher in Participation by the freely associated states in the territories than elsewhere in the region. The people of the territories have access to international affairs labour markets beyond their borders by virtue of The Cook Islands and Niue are states in internation- having metropolitan citizenship. Those of Guam al law with the capacity to conduct their own for- and the Northern Marianas are American citizens eign relations. Internationally, there are reservations and the American Samoans are American nation- about their sovereignty, and as a result they have less als. All of them are free to work and live in any part international capacity than Palau, RMI and FSM. of the USA, and many have done so. The economic The governments of the RMI and FSM ‘have boom in New Caledonia is leading to migration the capacity to conduct foreign affairs and shall do between the French territories in the Pacific. French so in their own name and right, except as otherwise Polynesia is an exception among Polynesian coun- provided in this Compact’ and ‘have the capacity to tries in not having a large proportion of its popula- enter into, in their own name and right, treaties and tion living abroad. A small number move take up other international agreements with governments opportunities offered in New Caledonia, but few and regional and international organizations’ (Com- move to mainland France. New Caledonia is not pact of Free Association, Section 212(a) and (c)). losing population by migration but gaining it as Similar language applies in the Palau compact, and people move there from the other two French ter- ips.cap.anu.edu.au/ssgm 5 Stewart Firth
Table 4: Estimates of GDP per capita in the French francs) or AUD$1.9 billion for a population American and French territories, 20132 of about 256,000. This amounted to AUD$7,515 per capita — a level of government expenditure far Territory GDP per capita (US$) above that of any independent Pacific island coun- Guam 28,232 try and somewhat greater than for the New Zealand Northern Marianas 13,288 freely associated states. The Cook Islands budget provided for expenditure of NZ$112,690,000 in the American Samoa 12,662 2012–13 budget or AUD$86,771,300, which was New Caledonia 38,973 about AUD$5,784 per capita (Cook Islands 2011, French Polynesia 24,669 29). In addition to the territorial budgets, there is considerable expenditure on public servants who are Wallis and Futuna 13,220 employed by government departments in France. Not until 2012, for example, were secondary school ritories, especially from Wallis and Futuna, more teachers paid from the New Caledonia budget rather than half of whose people live outside their home than from the budget of the French Republic itself. Total government revenue, including public islands (Hayes 2010). The World Bank Database transfers (primarily from France) is equivalent to shows that over the 2007–11 period, net annual some 40 per cent of GDP in New Caledonia and emigration from French Polynesia was around 400, around 45 per cent in French Polynesia. In both while net annual immigration into New Caledonia cases, grants comprise some 64 per cent of total was over 6,000. government revenue (Lagadec and Ris 2010; Poirine The French territories spend far more per 2010). In other words, the French territories are capita on health care than do the freely associated massively subsidised from Paris, and on a scale that states. In New Caledonia in 2008 it was $US3,399, dwarfs development assistance to the independent and a similar figure applies in French Polynesia. Pacific. If the level of French subsidies to its Pacific The World Health Organization (WHO) reports territories were to be replicated for Solomon Islands, a ‘well-functioning mother and child health pro- which has a similar population of around 550,000, gramme’ in New Caledonia with high rates of vac- development assistance there would multiply 13 cination coverage, including for Hepatitis B. As times, from less than AUD$300 million a year to in other Pacific countries, there are periodic out- AUD$4 billion. breaks of dengue fever, with about 40,000 people infected in 2009, but the major disease burden The freely associated states resembles that of an advanced Western country — Development outcomes in the five freely associated cancer, heart disease, diabetes, and kidney disease. states are more diverse than in the territories. The The WHO’s assessment of French Polynesia is that three with the smallest populations — the Cook it has reached ‘a high level of health and socioeco- Islands, Niue, and Palau — have standards of living nomic development’ with a rise in non-communi- that compare favourably with the developed world, cable diseases and a fall in the incidence of com- but development in the other two — RMI and FSM municable ones. Almost the entire population has — is more like that in the independent Pacific. access to quality health care, while infant mortality The Cook Islands and Niue receive official and maternal mortality rates are low. As in Western development assistance, which comes from a vari- countries, heart disease and cancer are the major ety of donor states and international organisations. causes of death in French Polynesia (WHO 2011a). About a third of the Cook Islands’ aid comes from The size of the French territorial budgets has non-New Zealand sources. The harmonised aid more in common with those of advanced indus- program funded by New Zealand and Australia is trialised countries than with those of its Pacific the country’s largest source of assistance but it also neighbours. New Caledonia’s 2012 budget pro- receives multilateral aid through membership of the vided for expenditure of XPF188 billion (Pacific Pacific Islands Forum, and from the Asian Devel-
6SSGM Discussion Paper 2012/1 State, Society http://ips.cap.anu.edu.au/ssgm & Governance in Melanesia SSGM Discussion Paper 2013/6 opment Bank, as well as UN agencies, Japan, and Table 5: Estimates of GDP per capita in the the European Union. A similar pattern of aid flows freely associated states, 20133 applies to Niue. The consequence is to relieve New Freely Associated State Zealand of the full cost of aid to these freely associ- GDP per capita US$ ated states. US funding under the Compacts of Free Cook Islands 15,447 Association financially underpins the Micronesian Palau 11,164 freely associated states, which also receive aid from Niue 10,358 elsewhere, including Australia. US federal funding accounts for 14 per cent of GDP in Palau, 41 per RMI 3,910 cent in RMI and 55 per cent in FSM (O’Connor FSM 2,205 and Casey 2011, ES-2). Like the people of the territories, those of to the USA, but also has more than 6,000 foreign the freely associated states have access to labour workers in a total population of about 21,000. markets beyond their borders, and the right to The three best-performing freely associated migrate to certain metropolitan states. About states have health outcomes and life expectancy 56,000 ‘compact’ migrants from the RMI, FSM, that are superior to those of the independent and Palau were living in the USA by 2011 — Pacific. Cook Islanders, for example, have a life about a quarter of the total population of the expectancy of 80 years. The Cook Islands has an Micronesian freely associated states. Of these, impressive health record. The maternal mortality about 30,000 were living in Guam and Hawai‘i. rate is low, and was zero in the decade 1996–2005. The Cook Islanders and Niueans, as New Zealand The immunisation rate is 100 per cent. Under the citizens, can migrate to Australia as well as New Cook Islands Health Specialist Visits Programme, Zealand. About 63,000 Cook Islanders were living the Ministry of Health funds medical specialists in Australia and New Zealand in 2006, and 15,000 from Australia, New Zealand and elsewhere to in the Cook Islands. The equivalent figures for provide services not available in the public hospi- Niueans were 23,000 and 1,600. tals in Rarotonga and Aitutaki or the clinics health The US Census of 2010 showed an estimated centres on the outer islands (NZAID 2011). Niue 22,400 Marshallese to be living in the USA. Nine has good health outcomes. The WHO reports that mainland US states had compact migrant popula- ‘in general, health indicators for Niue are good’ tions of more than 1,000 in 2011 (GAO 2011a). with communicable diseases largely contained, 100 One of them is Arkansas, which has attracted a per cent vaccination coverage and good maternal large number of Marshallese to work in the chicken and child health care (WHO 2011b). Palau has industry. There were 4,324 Marshallese living in the made progress in improving the health of its citi- state in 2010, and another 4,000 are estimated to zens. According to a 2012 report on MDGs, Palau live in Costa Mesa, California (Riklon et al. 2010). devotes ‘by far the highest proportion’ of its health RMI maintains a consulate in Springdale, Arkansas, expenditure to preventive and public health of any and runs a Citizens Orientation Program there for country in the Asia Pacific region (UNESCAP, newly arrived Marshallese migrants in order to ‘ease ADB & UNDP 2011, 60). The WHO reports great and lessen the burden of culture shock to our citi- progress in improving maternal health in Palau. zens, but more importantly, to enable our citizens to The health situation in the worst-performing assimilate into their new homes in the United States freely associated states — RMI and FSM — is less as contributing members of that society’. (Zedkaia positive. ‘Health indicators vary across Micronesia’, 2010). As in the Cook Islands and Niue, the con- according to a 2010 Hawai‘i study that focused on tinuing migration of Micronesians to the USA is the RMI and FSM, seen by some, probably a minority, as undermining development at home in the islands. Palau, the most but in general are quite poor with high rates successful of the compact economies, loses people of chronic and infectious disease. Infant mor- ips.cap.anu.edu.au/ssgm 7 Stewart Firth
tality and life expectancy are poor when com- What about the freely associated states? They pared to US standards. Tuberculosis, Hepati- too are characterised by levels of economic and tis B, and Syphilis are endemic in Micronesia. administrative integration not found in the inde- Outbreaks of Cholera and Dengue fever are pendent Pacific. The US government, for exam- not uncommon. Hansen’s disease [leprosy] is ple, provides all three Micronesian states with still commonly diagnosed. Malnutrition and ‘compact-authorised’ services whereby the relevant Vitamin A deficiency remain serious prob- US government agency extends its services to the lems in many of the outlying areas … Obesity Micronesian states. There are compact-author- is a significant problem affecting half of all ised services for weather, aviation, and the post. men and women. Type 2 Diabetes rates are The US Postal Service, for example, conveys mail alarming affecting half of the people over 50 between the US and the freely associated states; years of age (Riklon et al. 2010, 7). the Federal Aviation Administration provides en- On the other hand, the people of the RMI and route air traffic control from the US, together with the FSM can freely enter the USA and seek better technical assistance; and the National Weather health there, and many do. More than a hundred Service reimburses the Micronesian states for con- FAS Micronesians are on dialysis in Hawai‘i, for ducting weather observations. US Federal Discre- example, and 130–160 are receiving chemotherapy. tionary Programs substantially augment compact Sick people in the RMI and FSM have options that funding (GAO 2006, 58). Discretionary funding sick people in independent Pacific countries do not amounted to about a third of all US funding of usually have. Palau 1995–2009, and is expected to account for Standards of service delivery differ from coun- half of it during the second compact period to try to country. The Cook Islands, Palau and Niue do 2024 (GAO 2011b, 17.) very well; the RMI and the FSM, especially the FSM, The amended compacts, which provide for do worse but still better than, say, Papua New Guinea funding of US$3.5 billion to the RMI and FSM or Solomon Islands. For example, the Cook Islands, from 2004 to 2023, involve considerable US gov- Palau and Niue show 95 per cent or more of births ernment supervision of fiscal transfers and island attended by skilled medical personnel and the figure budgets. US government agencies closely moni- is between 85 per cent and 90 per cent in the FSM. tor and oversee the spending of compact funds This compares with a minority of births in PNG. in the freely associated states. A fiscal procedures agreement is meant to ensure that accountability Explaining Development Outcomes and conditions in compact spending match those The territories are all characterised by economic that apply to US federal grants to the states. An and administrative integration — in varying office for monitoring compact assistance, based in degrees — with advanced states. This integration Honolulu, tracks compact spending in the islands, gives the Pacific territories a flow of resources and and joint economic management committees a strong administrative capacity which does much consisting of high level officials from both sides, to explain their comparative well-being. The best make decisions about compact spending, These outcomes in the Pacific Islands for the MDGs, are known as JEMCO (Joint Economic Manage- health, education, standard of living, financial ment Committee) in the FSM and JEMFAC (Joint accountability and human security are in the Economic Management and Fiscal Accountability American and French territories. Large subsidies, Committee) in the RMI. coupled with the authority and standard-setting On the other hand, US policy towards the capacity of national governments in Washington freely associated states is to remove the financial and Paris, ensure that political instability in burden they place on the US government and the territories, if it occurs, has little impact on create self-sustaining island economies. Com- government administration that is highly efficient pact funding is specifically designed to remove by Pacific standards. the dependence of the freely associated states on
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US assistance. The amended compacts for RMI having growth potential — fisheries and tourism and FSM include a mechanism by which annual — face significant barriers to expansion because of decreases in US grant funding are paired with the FSM’s remote geographic location, inadequate equivalent increases in US contributions to trust infrastructure and poor business environment’ funds: ‘The decrement in grant funding is depos- (GAO 2008, 2). A similar pattern applies to RMI. ited into the FSM’s and the RMI’s trust funds. The highest net migration rate from any of these The RMI’s annual decrement of $500,000 began countries and territories is recorded in the poorest in 2004, and the FSM’s annual decrement of one — the FSM — where it was -21 per thousand US$800,000 began in 2007.’ (GAO 2006, 4). The in 2010. Palau, by contrast, had a positive net American intention is to end compact funding for migration rate of 0.86 per thousand, and the RMI RMI and FSM by 2023, and for Palau by 2024 in -5.3 per thousand. In other words, people leave to the expectation that trust funds and locally gener- find a better life but stay if development is taking ated revenue will pay for the island governments place, or else, as is happening in Palau, they leave after that. As the American Ambassador to RMI, but are replaced by others in a successful economy. Martha L. Campbell, said in speech at the Col- Findings lege of the Marshall Islands in 2010: ‘I can say with all certainty at this point in time that there is no First, subsidisation of one kind or another charac- intention on the part of anyone anywhere in gov- terises all Pacific Island economies, whether territo- ernment of the U.S. to extend Compact funding rial, freely associated, or independent. Indeed the past 2023’ (Campbell 2010). most striking feature of modern political economies For the Cook Islands and Niue, free association in the region is the unevenness of that subsidisation ‘involves a commitment by the New Zealand — massive in the territories and smallest, despite Government to continue its financial support of the aid dependency of the Pacific, in the independ- the associated State’ (Quentin-Baxter 2008, 615), ent Pacific countries. and since 1974 this support has been channelled Second, the high degree of economic and admin- through the aid budget. Some official observers istrative integration found in Pacific territories guar- refer to the Cook Islands, Niue and Tokelau as antees development and brings them into the ranks the ‘Realm responsibilities’. Those who devised of the advanced world, even though stark inequali- free association saw it as an arrangement reached ties, political divisions, and hopes for independence between different groups of New Zealanders, and remain in some territories, such as New Caledonia. one that might evolve over time in the same way Third, the lesser degree of economic and admin- that New Zealand’s relationship with the UK had istrative integration of the kind found in the freely evolved earlier, with increasing autonomy for the associated states does not guarantee development, Cook Islanders. but may play a part in delivering it where conditions After the territories, the Cook Islands and favour investment, such as the Cook Islands and Palau emerge as the most successful economies in Palau. Free association, when combined with tour- the Pacific, due for the most part to their tourism ism and economic growth (Cook Islands, Palau), industries. The Cook Islands records a surplus on or massive subvention (Niue) produces a highly current account — $NZ85 million in 2010, despite favourable effect on improving people’s standards of a trade deficit of $NZ105 million — and Palau living and opportunities as measured by the MDGs. has imported thousands of workers (Neves 2012). Fourth, free association combined with little The RMI and FSM have few sources of income economic growth, as in RMI and FSM, merely from abroad apart from aid and fisheries licences. averts the worst MDG outcomes. Yet if we make According to expert testimony to Congress in individuals and families, rather than states, the 2008, ‘The FSM’s budget is characterized by ‘subject’ of development, free association, even limited tax revenue and a growing wage bill, and in FSM and RMI, offers people the opportunity the two private sector industries identified as to do better for themselves somewhere else. The ips.cap.anu.edu.au/ssgm 9 Stewart Firth number who have done so suggests that, measured Under these conditions, what lessons might we in terms of individual life chances rather than draw from the disparities of Pacific development national economic statistics, it has development for the effective use of aid? What are the policy potential. A 2012 survey of Marshallese living in implications for major donors such as Australia? Springdale, Arkansas, found half were satisfied The implications are of two types: the first with their employment prospects even in the apply to Papua New Guinea, Fiji, Samoa, and midst of a recession, and that 63 per cent had Tonga, as well as Solomon Islands and Vanuatu, health insurance compared with 38 per cent for and concern access to Australia’s labour market. an equivalent population of Latino migrants. In most respects, Papua New Guinea cannot Some said they had moved to Arkansas because be compared with Pacific territories and freely it offered educational opportunities. While the associated states. Papua New Guinea has the largest Marshallese of Springdale face many challenges, population in the Pacific by far (7.4 million), their children will enjoy opportunities in education the highest economic growth rate, the lowest and employment that they would not have had at development performance, and the greatest inflow home in the Pacific (Jimeno and Rafael 2013). Free of development assistance in absolute terms. But association has made those opportunities possible. Papua New Guinea would nevertheless benefit from a sizeable expansion of Australia’s seasonal Conclusion labour scheme, and from new and different forms Development assistance to independent Pacific of labour mobility to Australia. states is here to stay. Donors such as Australia, The same applies to Fiji, Samoa, and Tonga — New Zealand, Japan, and the USA will continue to the most successful countries of the independent see aid as contributing to regional stability. China Pacific Islands region. The foundations of effective has graduated from minor to major donor: at the states and bureaucracies there were stronger at 2013 China–Pacific Island Countries Economic independence than elsewhere in the region, and Development and Cooperation Forum in notably stronger than in western Melanesia, and Guangzhou, Vice Premier Wang Yang offered the years since independence have done little US$1 billion in concessional loans for infra- to change that difference. On the UN Human structure development to Pacific countries that Development Index for 2013, Fiji, Tonga, and recognise the People’s Republic — Fiji, Cook Samoa rank almost together as countries with Islands, Micronesia, Niue, Papua New Guinea, what the UN calls ‘medium human development’. Samoa, and Vanuatu (RNZI 2013). And with the Through temporary and permanent migration, coming of new players such as the United Arab these countries have benefited from years of access Emirates and Russia, more donors are offering to the labour markets of the advanced world in assistance to the Pacific than ever before. In any New Zealand, Australia, Canada, and elsewhere. case, the idea that small island states can rapidly Here again, Australia could nevertheless do more progress to rapid economic growth simply by to encourage labour mobility. adopting free market policies seems discredited, Solomon Islands is at present emerging from even if particular initiatives work, such as opening a decade of development intervention under the up mobile phone markets.4 As Francis Hezel has Regional Assistance Mission (RAMSI), and is pointed out, ‘It may be misleading to think ... of making the transition to conventional, bilateral Pacific Island nations as possessing small economic relationships with donors. RAMSI itself remains engines that with proper overhaul or fine-tuning, in diminished form as a mission to strengthen can deliver maximum performance and carry the Solomon Islands police force. Under RAMSI, each nation where it needs to go’. Development Solomon Islands has experienced the enhanced assistance might well be ‘a long term fixture’ of flows of aid and administrative expertise that the relationship between advanced countries and characterise Pacific territories and freely associated Pacific states (Hezel 2012, 27). states, while, for the most part, lacking a key
10SSGM Discussion Paper 2012/1 State, Society http://ips.cap.anu.edu.au/ssgm & Governance in Melanesia SSGM Discussion Paper 2013/6 element of their relationship with the outside Australia will eventually need a policy answer to world — access to overseas labour markets and an emerging problem of climate refugees in its own remittance flows. Here too, and in Vanuatu, which neighbourhood. is benefiting considerably from its labour access to New Zealand, Australia should consider increased Author Notes access to its labour market as a non-aid way of The author acknowledges the assistance in the prep- assisting development. aration of this Discussion Paper of Sophie Mackin- The second kind type of implication for non, Department of Foreign Affairs and Trade. Australia’s policy applies to relations with the Stewart Firth is a Visiting Fellow at SSGM. smallest independent island states in Micronesia He has taught at the University of Hawai‘i and and Polynesia — Nauru, Kiribati, and Tuvalu the University of the South Pacific, Fiji. He is (combined population about 120,000). The investigating the historical legacy of the colonial American free association model preserves the period in the Pacific Islands, especially the legacy of sovereignty of Palau, the RMI, and FSM by basing the state itself. His publications include Australia in the relationship on treaties freely entered into International Politics: An Introduction to Australian between sovereign states. The Micronesian states Foreign Policy, 3rd ed., Allen & Unwin, 2011. have no constitutional relationship to the USA and are members in their own right of the UN. Endnotes This kind of ‘sovereign free association’ suggests a way forward for Australia’s relations with the 1 These are the estimates given by the Secretariat of the Pacific Community in its National Minimum smallest island states. Australia could enter into Development Indicators at
Campbell, M. 2010. Compact 2023: What Next? Speech the U.S. Stands at 96.5%.
12SSGM Discussion Paper 2012/1 State, Society http://ips.cap.anu.edu.au/ssgm & Governance in Melanesia SSGM Discussion Paper 2013/6
Zealand? University of Victoria Wellington Law US Department of State 2013. 7 FAM 1120 Aquisition Review 39:607–34. of U.S. Nationality in U.S. Territories and Riklon, S., W. Alik, A. Hixon and N.A. Palafox 2010. Possessions
ips.cap.anu.edu.au/ssgm 13 Stewart Firth
14SSGM Discussion Paper 2012/1 State, Society http://ips.cap.anu.edu.au/ssgm & Governance in Melanesia SSGM Discussion Paper series 2009–2013
2009/1: Elizabeth Reid, Interrogating a Statistic: HIV 2011/6: Mosmi Bhim, Stifling Opposition: An Analysis Prevalence Rates in PNG of the Approach of the Fiji Government after the 2006 Coup 2009/2: Michael Green, Fiji’s Short-lived Experiment in Executive Power-Sharing, May–December 2006 2012/1: Tobias Haque, The Influence of Culture on Economic Development in Solomon Islands 2009/3: Peter Coventry, The Hidden Mechanics of Solomon Islands Budget Processes — Under 2012/2: Richard Eves, Christianity, Masculinity and standing Context to Inform Reforms Gender-Based Violence in Papua New Guinea 2009/4: Hank Nelson, Mobs and Masses: Defining the 2012/3: Miranda Forsyth, Tales of Intellectual Property Dynamic Groups in Papua New Guinea in the South Pacific 2009/5: Nick Bainton and John Cox: Parallel States, 2012/4: Sue Ingram, Building the Wrong Peace: Parallel Economies: Legitamacy and Prosperity Re-viewing the United Nations Transitional in Papua New Guinea Administration in East Timor Through a Political Settlement Lens 2009/6: Robert Norton, The Historical Trajectory of Fijian Power 2012/5: Henry Tadap Okole, A Critical Review of Papua New Guinea’s Organic Law on the Integrity of 2009/7: Alan Rumsey, War and Peace in Highland PNG: Political Parties and Candidates: 2001–2010 Some Recent Developments in the Nebilyer Valley, Western Highlands Province 2012/6: Patrick Vakaoti, Mapping the Landscape of Young People’s Participation in Fiji 2010/1: Asenati Liki, Women Leaders in Solomon 2012/7: Jane Anderson, ‘Life in All Its Fullness’: Islands Public Service: A Personal and Scholarly Translating Gender in the Papua New Guinea Reflection Church Partnership Program 2010/2: Nic Maclellan, Under a New Flag? Defining 2012/8: Michael Leach, James Scambary, Mattthew Citizenship in New Caledonia Clarke, Simon Feeny & Heather Wallace, Attitudes 2010/3: Polly Weissner, Youths, Elders, and the Wages of to National Identity Among Tertiary Students War in Enga Province, Papua New Guinea in Melanesia and Timor Leste: A Comparative Analysis 2010/4: Stephanie Lawson, Postcolonialism, Neo- Colonialism and the ‘Pacific Way’: A Critique 2012/9: Sarah Logan, Rausim!: Digital Politics in Papua of (un)Critical Aproaches New Guinea 2010/5: Jon Fraenkel, Oceania’s Political Institutions 2012/10: Nicholas Coppel, Transition of the Regional and Transitions Assistance Mission to Solomon Islands 2011/1: Justin Haccius, The Interaction of Modern and 2013/1: David Chappell, Recent Challenges to Nation- Custom Land Tenure Systems in Vanuatu Building in Kanaky New Caledonia 2011/2: Colin Filer, The New Land Grab in Papua New 2013/2: Simon Feeny, Lachlan Mcdonald, May Miller- Guinea: A Case Study from New Ireland Province Dawkins,Jaclyn Donahue and Alberto Posso, Household Vulnerability and Resilience to Shocks: 2011/3: Michelle Kopi, Rachael Hinton, Sarah Robinson, Findings from Solomon Islands and Vanuatu Sylvia Maiap, Yanny Guman, Insecurity in the Southern Highlands: The Nature, Triggers and 2013/3: Debra McDougall, Spiritual Capacity? Overseas Consequences of Violence in Hela Region Religious Missions in RAMSI-era Solomon Islands 2011/4: Elizabeth Reid, Reading Generalised HIV 2013/4: Rochelle Bailey, Ni-Vanuatu in the Recognised Epidemics as a Woman Seasonal Employer Scheme: Impacts at Home 2011/5: Jaap Timmer, Compensation and State Avoid- and Away ance in the Bugis Frontier of the Mahakam 2013/5: Diana Glazebrook, Asylum Policy in Papua New Delta, East Kalimantan Guinea
For a complete listing of SSGM Discussion Papers, see the SSGM website ips.cap.anu.edu.au/ssgm 15 ISSN: 1328-7854
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