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Political Reviews Political Reviews The Region in Review: International Issues and Events, 2015 nic maclellan Melanesia in Review: Issues and Events, 2015 jon fraenkel, michael leach, howard van trease The Contemporary Pacic, Volume 28, Number 2, 429–488 © 2016 by University of Hawai‘i Press 429 Melanesia in Review: Issues and Events, 2015 New Caledonia, Papua New Guinea, expansion: 4.6 percent in 2013, 3.8 Papua, and Solomon Islands are not percent in 2014, and an expected 4.3 reviewed in this issue. percent in 2015 (adb 2015a; imf 2015). Despite this, Fiji’s gdp per FIJI capita remains below the level reached For the most part, 2015 was a good in 2006 (Chand 2015, 204). Tourism year for the government led by Josaia and remittance earnings have been the Voreqe “Frank” Bainimarama. With main drivers of growth, while sugar 59 percent of the 2014 national vote has continued to stagnate with many at the September 2014 election, and farmers exiting the industry and a con- 32 of the 50 seats in Parliament, the traction of the land area under cane governing FijiFirst Party had a strong cultivation. Visitor arrivals over 2015 mandate. In view of the disarray of were substantially above 2012–2014 the Opposition, FijiFirst had good levels, and capital investment during prospects of winning the next election, 2013–2015 has been sustained above scheduled for 2018. Robust economic 25 percent of gdp—driven upward by growth continued for a third succes- heavy public spending on roads and sive year in 2015, and the government bridges (rbf 2015). In May, Standard sustained its modernizing agenda with & Poor’s raised Fiji’s sovereign credit extensive infrastructure spending as rating from b to b+. In September, well as legal and educational reforms. the Fiji government was able to roll Nevertheless, stability remains elusive. over its 2016 maturing loan, with Sections of the indigenous commu- a fresh f$200 million bond at 6.6 nity are deeply hostile to the FijiFirst percent interest (f$1.00 is equivalent administration. The Republic of to around us$0.46). Public debt has Fiji Military Forces (rfmf) remains fallen from 55 percent of gdp in 2010 determined to clamp down firmly to 49.5 percent in 2015 (adb 2015b, on any potential or perceived threat. 5), excluding the liabilities of state- Efforts by Police Commissioner Ben owned corporations (entailing approx- Groenewald, an expatriate South imately an additional 30% of gdp). African, to bring to justice members The sugar industry remains deeply of the security forces for human-rights troubled, despite some improvement abuses were frustrated by rfmf inter- over 2011–2014. The Fiji Sugar Cor- vention. In November, Groenewald poration (fsc) was suspended from resigned, more in despair than protest. the Suva stock exchange owing to The Fiji economy is growing severe financial difficulties in October strongly. Two sluggish years (2.7% 2009 and was officially delisted in gross domestic product [gdp] growth 2010. It reported negative earnings of in 2011, 1.8% in 2012) have been f$36.8 million in 2009 and f$179.1 followed by three years of more rapid million in 2010, but thereafter showed 449 450 the contemporary pacific • 28:2 (2016) some signs of recovery with operating European Union announced its phased losses claimed to be diminishing from decline, however, actual EU market f$32 million in 2011 to f$14 million prices diverged sharply upward in 2012, f$10 million in 2013, and above the EU reference price over f$5 million in 2014 (Fiji Times, 14 2011–2013 (ec 2015). This assisted May 2015; Narsey 2015a). Accord- Fiji’s sugar earnings, as did the 20 ing to the official figures, the govern- percent Fiji devaluation in 2009 and ment paid f$175 million in 2010 and “Fairtrade” premiums paid by Tate f$36.5 million in 2012 to cover fsc & Lyle. (“Fairtrade” certification is deficits (Fiji Times, 13 Feb 2015). The a device to improve earnings for cane fsc reported assets of f$227 million growers if the industry meets certain in 2014, but its liabilities amounted to standards; see Fairtrade International f$374 million (fsc 2014). According 2015.) Subsequently, over 2013–2014, to National Federation Party (nfp) the EU market price fell to closer to leader Biman Prasad, the number of the official reference price, and as of sugarcane growers has fallen from late 2015 both the EU official price 18,000 to 13,000 over 2007–2015 and the actual market price paid were (Fiji Times, 13 Feb 2015). Many of close to levels on the open world those “farmers” who remain now market (ec 2016). Refiners like Tate cultivate diminished plots solely to pay & Lyle have effectively been restricted their Taukei Land Trust Board (tltb) to supplies from ACP countries by rents but rely on ancillary incomes sizable EU tariffs on non-ACP sugar, for other basic needs. Farmers report thus encouraging a divergence between increasing difficulty recruiting cane the European internal/ACP sugar cutters at harvesting time. price and the world market price, but Partial stabilization over 2012– preferential access to the European 2014 occurred with assistance from market will end in 2017, after which US-owned refiner Tate & Lyle, which fsc Chief Executive Officer Abdul continues to purchase the bulk of Fiji Khan anticipates a 30 percent price sugar for European markets. The relief decline (Fiji Times, 18 July 2015). Tate is likely to be temporary. Fiji sugar & Lyle’s 2015 decision to cancel the prices had widely been expected to Fairtrade premium (around 15%) paid decrease over 2009–2015 in tandem to Fiji growers eliminated another with the 36 percent phased decline important lifeline for the industry (Fiji in the European Union’s officially Times, 11 Aug 2015). declared “reference price.” In ear- The 2015 budget set out ambitious lier years, the European Union (EU) targets for privatization, with earnings reference price had fluctuated around anticipated to reach f$507 million two or three times the price paid for over the year (imf 2014; FijiLive, 21 raw sugar on the open world market. April 2015), but the most significant Until 2010, the price actually paid divestments have been to the coun- by European refiners for sugar from try’s main pension provider, the Fiji the African, Caribbean, and Pacific National Provident Fund (fnpf). In (ACP) countries (including Fiji) closely November, government announced a tracked the reference price. After the f$100 million partnership deal for 59 political reviews • melanesia 451 percent of the shares of the hitherto reliance on greater sourcing from Fiji’s wholly government–owned Fiji Ports biggest industry. Regular switches in Corporation Ltd, with the fnpf to government policy and absence of con- purchase 39 percent and Sri Lankan– sultation with stakeholders are often based company Aitken Spence to seen as harmful to commercial con- acquire a 20 percent stake (Fiji Sun, fidence, but Fiji business leaders—as 10 Nov 2015; Fiji Government 2015). well as offshore companies operating In 2013, Aitken Spence had acquired in Fiji—remain mostly supportive of 51 percent of Fiji Ports Terminal Ltd, the Bainimarama-led administration. which manages the Suva and Lautoka The projected 2015 budget deficit was international ports, with government a modest 2.5 percent of gdp (Dornan retaining a 49 percent share (Fiji Sun, 2014), but the government split its 3 Feb 2015). In December, the govern- roads and infrastructure expenditure ment sold half of its remaining stake to spread the load over 2015–2016. in Amalgamated Telecom Holdings The results of the 2014 polls indi- Group (ath) for f$89 million, mostly cated an electoral calculation likely to the fnpf (Fiji Times, 23 Dec 2015). to be sustained over the medium term ath subsidiaries include Telecom Fiji (see Fraenkel 2015a, 2015c). With Limited, Internet Services Fiji (Con- proportions of the population now nect), Fiji International Telecoms (fin- tilted around 62 percent/34 percent tel), and, since July 2014, the 100 in favor of i-Taukei (as indigenous percent locally owned Vodafone Fiji Fijians are now called under the Ltd (ath 2014). Major state assets, 2013 Constitution) compared to Fiji such as the Fiji Electricity Authority Indians, the 2014 outcome turned and Airports Fiji Ltd, have proved on the ethnic Fijian vote, which was more difficult to sell. The fnpf, which split between Bainimarama’s FijiFirst faces heavy restrictions on foreign Party and the major Opposition party investment, owns f$4.5 billion in sodelpa (better known by its acro- net assets, most of which have been nym than by its full title, the Social transferred from government entities Democratic Liberal Party. sodelpa (fnpf 2014). is the largely indigenous Fijian party The 2016 budget reduced the value- of the government that was deposed added tax (vat) from 15 percent to in the 2006 coup. It was forced by a 9 percent, reversing a rise signaled in decree abolishing Fijian party names the 2011 budget. At the same time, to stop calling itself Soqosoqo Dua- the zero duty on some basic food- vata ni Lewenivanua and then by stuffs and medicines was removed. So another decree to drop the acronym the net effect does not entail a major sdl. It opted for “sodelpa” to retain reduction in government vat earnings. the publicly well-known initials sdl). To boost revenues, the Service Turn- The Fiji-Indian vote for FijiFirst is over Tax was doubled from 5 percent much more assured and unlikely to go to 10 percent, and a new 6 percent to any other party. With some justifi- “Environment Levy” was imposed on cation, Bainimarama could claim that tourism operators, entailing a major “under my Government, the iTaukei shift in government taxation toward [sic] are more secure, have more 452 the contemporary pacific • 28:2 (2016) opportunities” and he could point to ties against the Speaker, Jiko Luveni state delivery of “better roads, better (Fiji Sun, 22 May 2015).
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