Opinion & Commentary
The causes of upheavals in the Solomon Islands
Trouble in Timor Leste (one million) and the Solomons (450,000) is not coincidental, It has been brewing since the Australian Armed Forces took the lead in swiftly pacifying these two small states, because in neither has there been economic follow up. The bureaucrats responsible for rebuilding the economies in both countries have focused on semblances of representative government and bureaucratic structures such as ministries and central banks but have failed to lay the grounds for the revival of agriculture and other production. The majority of people therefore remain desperately poor, unemployment and underemployment prevail and hordes of frustrated and angry youngsters drift into towns.
In Timor Leste the U.N., the World Bank and the International Monetary Fund, assisted by other multilateral agencies, bilateral aid staffs and their hordes of consultants have been the architects of the economic debacle that is the cause of civil strife. Living in a luxury liner moored in Dili aid bureaucrats have created large government but the only jobs are in the petrol stations that service their air conditioned four wheeled drives, restaurants, supermarkets and other ‘services’ The resulting deep resentment is hardly surprising.
In the Solomon Islands the UN can not be blamed for joblessness. Although the dimensions of 20 years’ of economic stagnation were well known, RAMSI had no growth focus.
The Solomons islands had a gold mine and tropical timber was being torn out by expatriate companies with the connivance of rural ‘big men’ and their parliamentary allies, but most people lived off subsistence agriculture. Land was becoming short as population grew at 3% per annum, one of the highest rates in the Pacific and, indeed, in the world. A swollen parliament of 50 (one for less than 4,000 voters) and a cabinet of 20, each Minister with a car, secretary and a complement of Ministry staff, absorbed most of the generous aid that flowed to the Solomons.
No wages or salaries had been paid for months when RAMSI arrived. The central bank was bankrupt. Instead of confronting the ills of bad governance, the Australian bureaucrats put all their effort into reconstituting it. They underwrote the entire budget. The Solomons could have replaced the corrupt central bank by a simple currency board. It would have been cheap to pay out ineffectual public servants and politicians. But Australia even paid the charges on non- performing Asian Development Bank lending that would have been written off if that organization had, indeed, been a Bank.
The exploitation of timber appears to be the only industry that is thriving in the Solomons. In the political musical chairs games being played in Honiara , it is not surprising that Mr Einfeldt has been chosen to by-pass the courts. And having missed the opportunities to help the Solomons improve their government and the public service, consultants continue to blather about ‘governance’ to no effect.
The parallel economy created in the Solomons by Australian bureaucrats, the World Bank, the Asian Development Bank together with continuing funding for a large government sector, as in Timor Leste, fed restaurants, shops, service stations and even a Casino. The difficulties of going into business in the Solomons’ highly regulated commercial sector were overcome by experienced local Chinese shopkeepers who attracted immigrants from Taiwan , Hong Kong and mainland China . Inevitably, they were accompanied by Triad interests that unite the three. China and Taiwan courted politicians with ‘aid’. The gangs’ focus on Chinese business as the beneficiaries of the skewed economy, with the burning down of the casino, were predictable.
Australian Treasury staff succeeded in stabilizing macro-economic policy as they also have in Papua New Guinea and other Pacific states. But for standards of living to rise, agricultural production must increase and that means land reform to overcome the shortages of farming land that were a principal cause of the civil unrest. Palm oil and other crops could then flourish. Tourism is a source of employment. Others would emerge if the impediments to growth were swept away. A few well placed expatriates can not remove the barriers to growth. Australia will have to help to create an environment conducive to rapid growth if it wants to be able to pull its soldiers and policemen out of the Pacific.
Professor Hughes is a senior fellow of the Centre for Independent Studies.
