Our parlous region

Australia's policy in the South Pacific is obsessed with security concerns and market-driven solutions to the problems of poorer nations, write Shahar Hameiri and Toby Carroll.

THE recent release of a commissioned progress report into the largest Australian-led state building program in recent history demonstrates the need for a qualitatively new approach to assisting the Pacific. After three years of extensive involvement through the Regional Assistance Mission to Solomon Islands, the report paints a disturbing picture.

Although the security situation has thankfully improved under RAMSI, the same cannot be said for the economy, with Solomon Islanders suffering prohibitive prices for basic goods and low employment prospects.

Unfortunately, the Australian Government's approach to the Pacific region is constrained by a lack of imagination that does little to improve the development prospects of our neighbours or advance Australia's long-term security interests.

Indeed, not a day has gone by in the past year without news of political and social unrest in the Pacific. In some circles, the island states to Australia's north and east have acquired the dubious moniker of the "Arc of Instability".

Important questions relating to the nature of this instability, as well as to Australia's approach to ameliorating it, need to be raised. This is because the fundamental reading in Australia of the Pacific quagmire is biased in favour of promoting stopgap measures that are difficult to implement and, when implemented, can amplify the root causes of the problem.

Crucially, the Australian Government's short-term interests are with curbing immediate regional security threats in the form of migrant outflows, international crime and breeding grounds for terrorists.

In the long-term, the Government's plan is to stabilise the region and implement so-called "good governance" programs, which are seen as the bedrock of market-led development. Market-led development, in turn, is seen as generating stable societies, thereby guaranteeing Australia's security.

The short-term concern for stability goes some way towards explaining the Howard Government's recent decision not to intervene in Fiji after the military coup — preferring the use of diplomatic sanctions and other softer measures. In sum, the existence of a capable Fijian military, while detrimental to democracy, is congenial to Australia's immediate security interests, as perceived by the Australian Government.

In the Solomon Islands, the situation has been very different. In the Solomons, before the Australia-led intervention, no such circuit-breaker existed to control unlawful elements. This meant that the Australian Government had a more elemental interest in stabilising the security situation as a precursor to governance and economic reforms.

The problem with the Government's approach in the Pacific is that it almost never works. Even in the Solomon Islands, where the intervention was initially lauded as a great success, devastating riots and increasing tensions reversed this appraisal drastically, as the report suggests. In Fiji, where Australia is a leading donor, we also see the limits of "good governance" programs.

A report such as the RAMSI one can lead to knee-jerk reactions from those who are already sceptical of the utility of Australian aid. We should be clear that we do not advocate reducing or eliminating Australia's efforts in the Pacific. We do, however, argue for a qualitatively different framework.

Pacific states are geographically small and widespread, have limited natural resources and face significant environmental challenges — especially those associated with climate change.

The problems of the Pacific cannot be solved with the logic of comparative advantage, so critical to market-led development approaches. For example, in the Solomon Islands, deforestation has created massive social and environmental problems, making the industry unsustainable and divisive.

There are many possible policy alternatives to those being promoted by Australia and other major donors.

First, there should be a stronger shift away from "boomerang aid" that often ends up in the pockets of Western companies and consultants. Rather than playing a Keynesian-style role in developing local economies, this form of aid has very little impact on kick-starting domestic markets.

While critics might be concerned about corruption in the process of financial distribution, this should not preclude considering such policies in tandem with suitable checks and balances.

This is because corruption has both played a part in the development of Western economies and actually continues to play a role in promoting Western economic interests in developing countries. To focus on corruption as the primary cause for development failure is to miss the bigger picture.

A second measure has been endorsed by the Labor Party's foreign affairs spokesman, Robert McClelland, and the World Bank. This involves opening up Australia's labour market to temporary workers from the Pacific. At present, Australian employers in seasonal industries, such as agriculture and hospitality, cannot meet staffing demands. In the Pacific, on the other hand, we see a "youth bulge" and massive unemployment. In the Solomon Islands, for example, the median age is just under 19, whereas in Australia it is about 37.

The final policy option relates to a combination of tax concessions to promote Australian foreign direct investment in the Pacific, controlled transfer of technology associated with productive output, and preferential trading arrangements for Pacific states.

But preferential trading should not take the form of free trade agreements, which invariably give preference to the most powerful party.

New trading regimes should nurture budding industries and protect them from competition, where appropriate, within a regional framework.

The World Trade Organisation is a potential barrier here, but the present international trade regime is part of the problem that needs to be tackled.

Far from radical, some of the policies were flagged in 2003 by a report of the Senate Foreign Affairs Committee. But the report's recommendations have found little expression within Australian Government policy.

The present approach of the Australian Government is not only tight-fisted, it is inefficient in generating outcomes congenial to regional stability.

The debate on regional engagement needs to be expanded beyond its ideologically and politically constrained boundaries.

Shahar Hameiri and Toby Carroll research regional economic development and security issues at the Asia Research Centre, Murdoch University.


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