Power Distortions, Marginalised Youth and the Impact of Natural Resource Led Development: The Case of the Solomon Islands Leonard August Rae Smith Bachelor Environmental Management – Sustainable Development (Honours) Master Natural Resource Economics A thesis submitted for the degree of Doctor of Philosophy at The University of Queensland in 2017 School of Agriculture and Food Sciences 1 Abstract The Solomon Islands, a nation rich in natural resources with a large and rapidly expanding youth population, has recently experienced severe social unrest predicated upon ethnic rivalry and property rights. In the actual fighting during the ‘tensions’ on both sides, the Isatabu Freedom Movement and the Malaita Eagle Force youth provided leadership and fighters. As youth numbers grow and educational outcomes decline their livelihood prospects are severely impacted in the nation. These outcomes could be viewed as social manifestations catalysed by a type of ‘resource curse’, which has been widely researched. However, much of this literature is macroeconomic in character and does not deal with the socio-economic dynamics involved. In this thesis these dynamics are analysed in detail by examining the experiences of a youth cohort in the capital city of Honiara. It is there that youths are impacted in the greatest number and studying them provides a detailed understanding of the key factors that drive the disenfranchisement and marginalisation of youth when resource curse dynamics are operative. Such dynamics are not unique to the Solomon Islands. Many resource-based nations experience sub- optimal social dynamics which are underpinned by analogous demographic settings. To understand how these dynamics operate, it is necessary to examine how the political process works in a nation defined economically by rapid natural resource led growth and its impact upon the rights of the youth population. The economic future of a country such as the Solomon Islands is critically dependent upon the extent to which the young have property rights, appropriate education and employment opportunities. The thesis provides an enhanced understanding of the distortionary power dynamics that are operative in the Solomon Islands with lessons for other developing countries experiencing natural resource dependency. The core issue is systemic corruption fuelled by windfall gains, the youth are the generational conduit to such dynamics being sustained. The resource curse literature has highlighted the problem but has been unable to address the localised, social attributes of such effects. A focus on formal institutions and market-based financial prescriptions has resulted in informal cultural realities being largely ignored. The corruption operating in these informal spheres facilitates the manipulation and gaming of formalised legal institutions. There is an expansive literature on the impacts of resource dependency upon developing countries. It is a diverse, interdisciplinary and often disconnected literature. This thesis provides a critical evaluation of this literature and an enhanced perspective derived from this analysis. Additionally, literature on the role of social, political and economic institutions and how they are formed and maintained in different kinds of cultures was examined. It becomes clear when examining this 2 literature that the role of property rights is of fundamental importance and, therefore, the literature was reviewed with relevant insights distilled. Since aid flows and development finance are critical to economic development, the relevant literature was also reviewed in order to discover what kinds of financial models are appropriate for the sustainable development of resource dependent countries, such as the Solomon Islands. The thesis poses a range of specific research questions at both the country-wide level and at a personal level of inquiry. These were guided by the theoretical principles developed and informed by the literature examined. In answering these questions, a mixed methodological approach was applied with the case study of the Solomon Islands employed as an empirical test bed. Given the almost universal absence of adequate data in resource dependent countries, a case study involving the creation of data via survey techniques is essential. Much of the analysis has to be qualitative and where a quantitative technique such as econometrics can be applied to data its only use is to validate the presence of relationships observed in qualitative research rather than in testing hypotheses. The case study involved key informant interviews, round table discussions and data from survey questionnaires. Additionally a database which records all youth in a disenfranchised vocational program in the nation was employed to cross-check the representation of the youth cohort included in the questionnaire. This approach facilitated meaningful data collection and enabled a more thorough understanding of the pivotal factors that drive the emergence of power traps in the nation and more generally. The thesis offers a multi-faceted picture of the negative impacts of resource dependence in the case of the Solomon Islands. There is clearly strong political pressure to undermine legislation intended to protect local cultures and the people’s connection to the land. This is indicative of the presence of systemic corruption that has over-ridden well intentioned formal, codified institutions. This illustrates that without a critical mass of well-educated and informed citizenry, legislative loopholes cannot be defended against. Without a democratic system that can work effectively within the cultural mix that exists, decisions that disempower, marginalise and, in some instances, destroy a people’s culture, cannot be resisted. Not having this democratic input means putting complete faith in unrepresentative actors who lead development projects and, in many instances, have a poor understanding of the cultural damage that is inflicted. The findings of this thesis demonstrate that the young generation is pivotal to the sustainability of a resource dependent developing economy and, therefore, it is their rights in relation to areas such as education, property, health and welfare that are fundamental. Furthermore, these rights must all be embedded within a specific culture that must be fully understood by external agencies providing aid and finance. For example, support for education and project finance has to be delivered in a way that is compatible with the prevailing 3 culture and is carefully designed to protect the rights of the young and negates the corrupting influence of power elites that are supported by foreign resource interests. 4 Declaration by Author This thesis is composed of my original work, and contains no material previously published or written by another person except where due reference has been made in the text. I have clearly stated the contribution by others to jointly-authored works that I have included in my thesis. I have clearly stated the contribution of others to my thesis as a whole, including statistical assistance, survey design, data analysis, significant technical procedures, professional editorial advice, and any other original research work used or reported in my thesis. The content of my thesis is the result of work I have carried out since the commencement of my research higher degree candidature and does not include a substantial part of work that has been submitted to qualify for the award of any other degree or diploma in any university or other tertiary institution. I have clearly stated which parts of my thesis, if any, have been submitted to qualify for another award. I acknowledge that an electronic copy of my thesis must be lodged with the University Library and, subject to the policy and procedures of The University of Queensland, the thesis be made available for research and study in accordance with the Copyright Act 1968 unless a period of embargo has been approved by the Dean of the Graduate School. I acknowledge that copyright of all material contained in my thesis resides with the copyright holder(s) of that material. Where appropriate I have obtained copyright permission from the copyright holder to reproduce material in this thesis. 5 Publications during candidature SIMSHAUSER, P., SMITH, L., WHISH-WILSON, P. & NELSON, T. 2016. Foreign aid via 3- Party Covenant Financings of capital-intensive infrastructure. Journal of Financial Economic Policy, 8. Publications included in this thesis SIMSHAUSER, P., SMITH, L., WHISH-WILSON, P. & NELSON, T. 2016. Foreign aid via 3- Party Covenant Financings of capital-intensive infrastructure. Journal of Financial Economic Policy, 8. Publication citation - incorporated as a portion of Chapter 10 in Section 10.2. Contributor Statement of contribution Paul Simshauser Designed models and formatted data (50%) Wrote and edited the paper (30%) Leonard Smith Designed models and formatted data (50%) Wrote and edited paper (60%) Patrick Wish-Wilson Edited the paper (5%) Tim Nelson Edited the paper (5%) 6 Contributions by others to the thesis No contributions by others. Statement of parts of the thesis submitted to qualify for the award of another degree None. 7 Acknowledgments I would like to thank my supervisors Professor Colin Brown and Emeritus Professor John Foster, and Professor Stein Holden for their wisdom, time, and the energy that they have so generously shared with me during this thesis. Special thanks also go to Professor Paul Simshauser, Dr David Adamson, Dr