Papua New Guinea-the Eldorado of the South Pacific is about to be discovered by the rest of the world'. This is the message of those responsible for organising the country's pavilion at Expo '92 in Seville, and is to be found in a full-page advertisement in the November 1991 edition of Pacific Monthly. The publicity goes on to describe the country's participation in the Universal Exposition as a 'bold new initiative' which 'will displace the image of Papua New Guinea as a land of traditional outlooks, projecting a fresh new perception of potential and opportunity in a country with an enormous scope and depth of natural resources. No nation, it concludes, 'is better suited to the Expo theme, The Age of Discovery, than Papua New Guinea'.

Of course, publicity material of this kind is expected to paint the 'product' in as rosy a light as possible. A country's Expo pavilion is its showcase to the world where strengths and not weaknesses are emphasised. In this Country Report, we look at the claims made above for Papua New Guinea and examine the main political and economic issues affecting the country today.

Papua New Guinea, which gained its independence from Australia in September 1975, lies to the north of the former metropolitan power, between the Solomon Islands and Indonesia. It is a large, mountainous country (465 000 square km) with a relatively small population (approximately 3.7 million inhabitants) and an astonishing range of local cultures. While English is the language of administration and business, Pidgin and Hiri Motu are also widely spoken in the north and south of the country respectively. However, there are also more than 700 other languages, which give PNG the distinction of being the most linguistically diverse country in the world.

The bulk of PNG's land area (85%) is on the main island, the western half of which belongs to Indonesia. Six hundred other islands make up the remaining 15%, the principal ones being New Britain, New Ireland, Bougainville and Manus. Port Moresby, the capital, is also the largest population centre, while the other principal towns are Lae, Madang, Wewak, Goroka and Rabaul.

The country is a constitutional monarchy within the Commonwealth, with Queen Elizabeth II as Head of State. Political power is vested in the unicameral Parliament, which has 109 members elected by the simple majority system in individual constituencies. The Prime Minister and Cabinet are chosen from among their number.

The people of Papua New Guinea are principally of Melanesian origin. Until recently, contact with the outside world, and indeed among some tribes within the country, was very limited. As one might expect in these circumstances, traditional lifestyles are still very important, although the effects of so-called 'modernisation' are increasingly widely felt, even in the remoter Highland areas.

The country's formal economy relies heavily on a relatively small number of mining ventures. The principal mineral resources are gold and copper. On the energy side, PNG has considerable hydro electric potential, much of which is undeveloped, while oil will be exploited commercially for the first time during 1992. The forestry and fisheries sectors are also important and the main agricultural products-coffee, cocoa and palm oil-are significant contributors to the economy. In contrast to many ACP states, Papua New Guinea is therefore rich in resources. Its main concern is how they should be exploited in the best interests of its own people.

Contrasts

Among the first impressions one gains of Papua New Guinea, perhaps the most striking are the contrasts. Port Moresby is a modern city with high-rise blocks yet a journey of only a few kiLométres takes one to villages where the traditional lifestyle prevails. The capital's road network is extensive and relatively well maintained but the highways which emanate from it do not connect to other parts of the country and it is not long before the bitumen surface is left behind. People from all backgrounds get around the country by ship or aeroplane and one of the most surprising features is the scope of the scheduled air transport network. With numerous airports, and hundreds of airstrips, PNG has one of the most extensive domestic airline services in the world. Indeed, demand is beginning to outstrip the capacity of the passenger ' terminal at Port Moresby (where new; facilities are soon to be built) and the scene there on an average day would certainly be familiar to the European air traveller.

Of course, in one general sense, Papua New Guinea is not unique in the ACP world. The pattern of local culture and European influence blending together (and from time to time conflicting) is one which has been repeated wherever colonisation of already inhabited territories occurred. What makes PNG different is that in many parts western influences were late in coming and the geography of the area meant that indigenous society was highly fragmented. Indeed, it is inappropriate to talk of a single 'society' -the population of the country belongs to hundreds of different societies, many of which had, until this century, little or no contact with the next valley, far less the world beyond.

John Gihenu, who is PNG's Minister for Trade and Industry and comes from the Highlands, stressed in an interview with The Courier the importance of 'nation-building'. The more one discovers the diversity of this country, the more one appreciates the scale of the challenge. On the positive side, the fact that so many groups exist may help to prevent dominance by any single one, and the shifting alliances which characterise national politics would certainly tend to bear this out.

Politics

The governmental system of PNG provides a fascinating case study for students of political science. Modelled on Westminster (although there is only one legislative chamber), the focal point of political power is the 1 09-member Parliament. It would be a mistake, however, to assume that politics have followed the same route as in the original metropolitan power (the UK). The most significant difference is the weakness of the party system. There are a number of parties but the allegiance of voters tends to be more personal (or familial) than ideological. Until recently, elected Members have 'crossed the floor' with monotonous regularity, undermining government majorities and generally contributing to an atmosphere of instability. Parliamentary motions of no-confidence hang, like a Sword of Damocles, over the head of every Prime Minister. From time to time, the sword descends, dispatching the hapless incumbent to the opposition benches. There, in all likelihood, planning for the counterstroke will immediately begin.

On the positive side, this situation ensures that Parliament is no rubber stamp, but truly a sovereign institution, as it is intended to be in political theory. The disadvantage is in the effect on political stability and, perhaps more seriously, in the amount of effort required to put together and sustain a working majority. A Prime Minister who has to spend a large amount of time keeping his supporters on board will have less time for the economic and social policy issues which must also be tackled. It should be noted that the current Prime Minister, Rabbie Namaliu, whose astuteness is widely recognised in PNG, has successfully stayed in office for three years (although an election is due in May/June 1992).

Map

One further aspect of the PNG political set-up is worth noting. In the absence of strong parties, and given that the job of Member of Parliament is highly sought after, each constituency contest attracts large numbers of candidates. The author Sean Dorney records, for example, that in the 1987 election 45 hopefuls presented themselves to the electorate at Kerowagi in Simbu province. The winning candidate was an independent who polled 7.9% of the valid votes! Countrywide, only a very small proportion of the total ballots cast actually contribute to someone's election, and this leaves a large pool of potentially disgruntled electors whose votes have no real value. Perhaps the task of nation building would be made easier if Papua New Guinea moved to a preferential system of voting.

In any election, about half of the incumbents are defeated and the importance of retaining the support of one's own electorate certainly leads to some extreme manifestations of 'pork-barrel politics'. (The expression is peculiarly appropriate to PNG, since the pig features highly as a peace-offering or gift in ceremonial exchanges, particularly in the Highlands).

For many years, reforms to the political system have been promised, aimed at strengthening the parties, reducing the number of candidates and generally stabilising the system of government. In the 1992 election, several such reforms are due to be implemented, including one which requires each candidate to lodge a deposit of K1000 (ECU 1200). Only the winning candidate will have the deposit repaid. It is hoped that this will discourage 'frivolous' candidates with little chance of election.

While most of the political power in Papua New Guinea rests with Parliament in Port Moresby, mention should also be made of the system of regional government which has been set up. Although the country has under four million inhabitants, there are no fewer than 19 provincial governments as well as a devolved authority to look after the capital territory. This has led to suggestions that PNG is overgoverned. It is certainly true to say that they have a large number of legislators but, on the other hand, with so many different cultures and groups to accomodate, it is difficult to see how a centralised unitary structure could work effectively without creating tensions in the provinces. This is particularly the case when one considers that Port Moresby has no overland links with the majority of the population living in the highland, northern and island provinces. The strife in Bougainville, where a secessionist movement (the BRA) has been fighting a guerilla war against Government forces, is evidence enough of the centrifugal forces which could threaten the unity of the country. Decentralisation is an acknowledged strategy for defusing problems of this kind.

Within the Department of Provincial Affairs in Port Moresby, the official view is that the system of provincial government works quite well. The Department is involved in training for both provincial officials and Assembly members and it provides advice and assistance in a variety of other areas. On the other hand, the powers of various provinces have had to be suspended from time to time because of mismanagement, and doubts remain in some quarters about the effectiveness of this layer of government.

Constitutional crisis averted

In any contemporary discussion of PNG's political system, mention must be made of recent events which tested the robustness of the country's constitution. The situation arose out of a scandal involving the Deputy Prime Minister, Ted Diro. Mr Diro was an important political figure as the leader of the People's Action Party (whose main power base was among the Papuans in the south of the country). In such a diverse nation, preserving a regional balance in the administration is considered to be important. In 1987, the Barnett Commission of Inquiry into Aspects of the Timber Industry issued a damning report on alleged corruption and mismanagement in the forestry sector. Mr Diro was one of the principal figures identified in this process and, although various at tempts were apparently made to prevent charges being brought, the legal system ultimately prevailed. Thus it was that in September 1991, Mr Diro was found guilty by the country's leadership tribunal on 81 charges of corruption, bribery and misuse of office.

The constitutional problem arose when Governor-General Sir Serei Eri, a fellow Papuan, refused to sign the dismissal instruments. As the monarch's representative in Commonwealth countries which maintain their allegiance to the Crown, the Governor-General should play only a formal role in the political process. By convention, he will 'follow the advice' of his Ministers and avoid becoming embroiled in political controversy. In the case of PNG, recommendations of a leadership tribunal are actually binding on the Governor-General and his refusal prompted the Cabinet to take drastic action. They agreed to recommend to Queen Elizabeth that the Governor General be dismissed and it was only at this point that Sir Serei and Mr Diro tendered their resignations. For some time, there was concern that the imbroglio might provoke a backlash among the Papuan population, but in the event this did not happen. For Papua New Guinea, the outcome was particularly significant because it demonstrated the robustness of their constitutional system. Unlike many countries in Africa, the country's political arrangements have not been substantially altered since independence, and this element of stability, notwithstanding the rough and tumble of day-to-day politics, is seen by outsiders as important for investment purposes. Accordingly, there is quiet satisfaction in official circles in Port Moresby that the Constitution has survived this test.

Stability

Although Papua New Guinea has never been tempted to experiment with socialist or one-party systems of government, it would be exaggerating somewhat to describe it as a paradise for the investor, whether domestic or overseas. The two most significant impediments, in this regard, are the lack of infrastructure and the security situation. The first is a problem which PNG shares with many developing countries, although in some regards it is more acute. There must be few mainland capitals in the world which are so isolated from the rest of country in terms of overland links. Electricity supplies and other services are limited to a few urban centres and a lot more progress is also needed on the educational front. It would be unfair to be too critical of this situation, however, since in all these areas PNG has moved forward very substantially since independence.

The security situation is rather different. Although high and increasing crime rates are the scourge of urban areas in industrial and developing countries alike, the problem appears to be particularly acute in Papua New Guinea. Many inhabitants of Port Moresby have taken to living behind high security fences as robbery and violent crime have grown. Even in rural areas, violence is relatively commonplace, although here it is more often due to traditional rivalries or feuds between neighbouring 'wontoks'.

The situation is exacerbated by tensions over land rights. The traditional system of land tenure, with its emphasis on community ownership and its complex pattern of rights and obligations, may have certain attractions, but it does not lend itself readily to economic development. In the past, large-scale projects by overseas companies have had a major impact on the land, with local owners not necessarily seeing much benefit - this is particularly true of mining and forestry exploitation. Tensions have built up and violent acts have been carried out. Indeed, it has been argued that the catalyst for the secessionist movement in Bougainville, whose guerilla activities led to the closure of the Panguna Mine, was resentment over the despoliation of traditional tribal lands (opencast mines inevitably change the landscape) combined with a belief that the local people most affected had not received a fair share of the financial benefits.

More recently, an arson attack on the Mount Kare gold mine in mainland Papua New Guinea, which has closed the operation altogether, has raised further worries, particularly among foreign investors. Finance Minister Paul Pora plays down the significance of this attack. Speaking to The Courier, he suggested that it was an isolated criminal act and he pledged that those who were responsible would be brought to justice. He was also keen to underline the Government's commitment to overseas investors revealed in their recent decision to join a multilateral, international insurance guarantee scheme.

Also on the plus side, it must be acknowledged that the Government has pursued extremely prudent economic policies and this is reflected in the strength of the Kina and the relatively healthy state of the foreign reserves and government finances. The traditional images conjured up by the term 'structural adjustment'-radical restructuring of the civil service, large scale rationalisation and privatisation of parastatals, huge cuts in government expenditure and so on, are inappropriate here. The measures which had to be taken in PNG involved some inevitable discomfort but the underlying position was sound.

Notwithstanding the problems of infrastructure and security, there is no doubt that many entrepreneurs do see it as a country of opportunity. There have been successful ventures, particularly in the mining sector (the Porgera Gold Mine is thought to be one of the largest and most productive in the world) and there is clearly a great deal of untapped potential.

The social dimension

What of the people of Papua New Guinea? In talking of investment opportunities and of opening up the country to foreign investors, there is a danger of failing to take account of local people's feelings. It may seem perilously close to sacrilege, in a world where the free market has triumphed, but could it be that local people would prefer some of the untapped potential to remain untapped, at least for the present?

It would not be surprising if PNG's experience in the forestry sector gave rise to this attitude. The country's forestry resources have been heavily exploited by overseas logging companies and inquiries (notably the Barnett Commission whose report was mentioned above in the context of the Diro scandal) have shown that through a variety of corrupt practices and massive transfer pricing, the financial benefits to PNG have been minimised. The Government is committed to remedying this situation with a variety of environmental measures, firmer controls on the activities of logging companies and the adoption of a tropical forestry action plan.

Despite worries over the effects of resource exploitation on the natural environment, the problems and challenges which face the majority of the population are likely to be more prosaic. Unemployment appears to be on the increase although it is impossible to come up with a meaningful figure for those out of work since, in common with many other developing countries, PNG has a very large informal sector. According to the most recent complete figures available (for 1983) only 10 to 15% of the economically active population were in formal employment (although a marked increase has been recorded in some individual sectors since then). The bulk of the remainder are engaged in agriculture either as smallholders or on a subsistence level but a significant proportion will certainly be underemployed, if not wholly without means of support.

The 'duality' of the economic system is reflected in the education system. From a very low base at the time of independence, education in Papua New Guinea has made enormous strides and this should be acknowledged. However, it still fails to reach a substantial proportion of the population and there is clearly a lot still to be achieved. Primary enrolment is currently estimated at 70% of the eligible age group (60% twelve years ago). Wastage (ie dropping out) between grades 1 and 6 amounts to 30-35%. Owing to limited resources a selection process in grade 6 is necessary and only 35% of those who complete primary education can be offered a secondary place. The haemorrhaging of young people from the education system continues at the tertiary level and only a very small number have the opportunity to go on to degree studies. The Government is well aware of the need to improve and expand educational opportunities. Trade Minister John Gihenu sees this as the most important factor hindering economic development and strongly emphasises the need for practical instruction. His views are echoed by many others in the government services.

Potential and opportunity?

So has the image of Papua New Guinea as the 'land of traditional outlooks' been replaced-as the Expo publicity would have us believe - by the 'land of potential and opportunity,? Is such an image change in fact desirable ? It is clear that there is potential and opportunity in PNG which is expressed in the vibrant private sector. Overseas investors have always been welcome and those willing to take risks can reap big rewards. But Papua New Guinea is more than merely a wealth-generator for entrepreneurial outsiders. Its people have their own concerns and interests as well as their own unique cultures. If the traditional and modern aspects clash, as they have done from time to time, then the future development of PNG will always be constrained. If, on the other hand, ways are found to reconcile existing cultural values and the modern world which laps at its shores, the people of this fascinating country should be able to look forward to a brighter future. Simon HORNER