Today we conclude Ben Bohane’s feature on Bougainville in the lead up to the much-anticipated referendum
Continued from yesterday… Economic viability
Bougainville is well endowed with mineral resources, but these – and specifically the Panguna mine – have been the cause of enormous conflict in the past, and the prospects of reinstating a large-scale mining industry are uncertain.
Reopening Panguna would involve revisiting the same issues that triggered the conflict in 1988.
While pragmatists advocate its reopening now, to position the economy better for independence, others insist that mining issues should be left alone until after Bougainville becomes independent.
Under President Momis, the ABG has given mixed signals as to its position on mining.
After a failed bid by BCL to restart exploration on Bougainville, Momis initially supported a moratorium on mining at Panguna to prevent reigniting old conflicts.
The moratorium was put in place in early 2018, but the ABG now appears to favour mining across the island as a means to generate income and underwrite independence.
In an urgent bid in January 2019 to raise funds for the referendum, the ABG proposed controversial new legislation abolishing landowners’ rights granted in the 2015 Mining Act.
At the same time, it allocated “near monopoly” rights to one company – the little-known Australian Caballus Mining – over all mining and exploration on Bougainville.
This legislation has now been rejected by ABG’s legislative committee, but illustrates the escalating competition for mining rights on Bougainville.
Feasibility studies to reopen the Panguna mine are underway, but even if the moratorium were lifted now, the earliest the mine could reopen would be 2025, given the substantial work and investment needed to make it operational.
An estimated US$4–6 billion (Kbil) in construction costs would be required, and such an investment would involve substantial sovereign risk given the uncertainty of Bougainville’s future.
However, the buried wealth – estimated at 5.3 million metric tons of copper and 19.3 million ounces of gold, and worth about US$58 billion (K197bil) at today’s prices – remains attractive. Apart from mining, Bougainville has other potential sources of income, including fisheries and cocoa production.
One estimate has 30 per cent of PNG’s fish catch coming from Bougainville waters, worth between 30 and 100 million kina per year.
Bougainville has also been an exporter of high-value marine products such as beche-de-Mer (dried sea cucumber), an industry that has been recently revived.
Bougainville’s large cocoa plantations are increasingly being sourced by chocolate makers at home and abroad. Small-scale gold-mining has also been an important source of income. These are resources that could make some contribution to economic self-reliance over time.
However, given Bougainville’s small size, fractious internal relations and the difficult history of the exploitation of its most valuable resource, self-reliance would, at best, be years away. Therefore, in the event of an independence vote and a negotiated settlement on independence reached with PNG, Bougainville would require substantial assistance from both PNG and external partners such as Australia in making the transition to independence and fiscal self-reliance.
Indonesia is watching the referendum process closely.
With tensions erupting in West Papua, Jakarta will be concerned about the potential demonstration effect of an independence vote on the people of West Papua.
Meanwhile, China’s already active diplomacy and investment in the region could extend to assisting an independent Bougainville, enlarging China’s presence in the Pacific.
The Pacific Islands have long been the subject of intense competition between China and Taiwan for diplomatic recognition, and an independent Bougainville would likely be courted by both.
The Solomon Islands has its own history with Bougainville and needs to be included in any analysis. Breakaway movements have surfaced periodically in Solomons’ Western province, including at the time of the Solomons’ independence in 1978.
During the Bougainville conflict, the western Solomons provided refuge for many displaced Bougainvilleans, and in the early 1990s PNG accused the Solomons Government of allowing the BRA to operate from Solomons territory.
In June 2019, however, Honiara appears less likely to welcome Bougainville’s independence.
Solomons Prime Minister Manasseh Sogavare suggested in early June that the referendum be deferred until Bougainville had resolved its internal differences.
Australia is a valuable aid partner to Bougainville, providing around 12 per cent (A$50mil – K116mil – per annum) of Bougainville’s bilateral aid programme, the highest of any donor.
It has positioned itself as the partner of choice for Pacific nations, particularly after the “step up” commenced in 2017.
Given its complicated history on Bougainville together with its investment in the peace process and since, Australia is in a difficult situation.
Before 2000, Australian policy was based on the principle that Bougainville was part of PNG.
This shifted following a turning point in peace negotiations between PNG and Bougainvillean leaders in 2000, when Foreign Minister Alexander Downer announced that “Australia will accept any settlement negotiated by the parties”.
This position has not been altered since. Most Bougainvilleans believe that Australia opposes independence, because Canberra has made no overt indication of its views.
When Foreign Minister Marise Payne briefly visited Bougainville in June 2019 with PNG’s newly appointed Minister for Bougainville Affairs, she said Australia was “not (focused on) forming a view one way or another about the outcome of a referendum in another country, but importantly, supporting (the referendum) where we can, to ensure a credible and a peaceful and inclusive process”.
In August, the minister stated: “The outcome is entirely a matter for Bougainvilleans and PNG…We will do anything we can to (assist) in ensuring that (the) referendum takes place in (an) appropriate fashion.”
Dealing with the consequences
There are three possible outcomes of the referendum vote: a vote against independence, a sharp division, or a clear result in favour of independence. All indications are that the probable outcome is a decisive vote for independence.
If the result is a sharp division on independence within the Bougainville population, PNG will likely press for the status quo (keeping Bougainville within PNG under the “greater autonomy” option) and attempt to contain the consequences of the referendum vote.
If the result is strongly in favour of independence, it will be harder for PNG to press for the autonomy option. Having honoured the BPA process, PNG will face the unenviable choice of asserting its wishes or working with Bougainville on a transition to independence.
Australia will be unable to avoid dealing with the consequences of that result. Critical to its interests is averting another security crisis in the region for which it is the primary security guarantor and principal development partner.
Australia should, therefore, do whatever it can to encourage and support a credible process of consultation between PNG and the ABG in pursuing a post-referendum settlement under the BPA.
Throughout the process it should reiterate its neutrality as to whether Bougainville ultimately proceeds to independence or not.
If PNG, Indonesia or Australia were to attempt to deny or persuade against Bougainville independence after the poll, there is a strong possibility the Bougainville administration would issue another unilateral declaration of independence that some countries in the Pacific – and China – might recognise.
In that scenario, the potential for another serious security crisis in the region is real.
Under either possible result of the referendum, Bougainville will at the very least move to a “greater autonomy” status within PNG, and will need to develop its economic self-reliance and institutional capacity. In the context of Australia’s Pacific “step up”, the history of its relations with Bougainville and China’s increasing presence in the region, Australia will be keen to preserve its role as trusted partner to both Bougainville and PNG.
Australia should step up its aid and trade programme to stimulate the local economy through non-mining businesses and, post-referendum, establishing vocational centres to help recruit and train up a civil service, if invited. If the final outcome of the referendum and BPA process is Bougainville’s independence, its development needs as a fledgling nation will be acute. Given the lure of its mineral wealth and the evolving strategic significance of the region, there are likely to be potential development partners other than Australia.
As both PNG’s and Bougainville’s principal aid partner, Australia should take the lead in providing support.
An Australian leader, at prime minister or governor-general level, should visit Bougainville – with PNG officials – after the referendum.
An Australian leader should take part in a reconciliation ceremony in which Australia’s history in Bougainville is acknowledged, including its involvement in the Bougainville conflict. This would go a long way to restoring the image of Australia in local eyes and fit with the Morrison government’s Pacific “family” approach to relations.
A genuine gesture of reconciliation – known as sori bisnis, or to break bows and arrows – would help position Australia as a trusted partner, overturning the prevailing perception that Australia continues to work with PNG to deny Bougainville independence.
This may help nudge PNG towards a peaceful resolution of this long-running discord by allowing Australia to shoulder some of the responsibility for the past.
Despite facing numerous obstacles, it is expected that the key elements will be in place for a legitimate referendum to be conducted in November 2019.
Australia, New Zealand, and the United Nations have stepped in to assist with finance and organisational assistance in light of PNG’s previous unwillingness to do so.
The Marape government’s quick release of the final budgeted funding for the referendum is encouraging.
Election monitors from a number of Pacific nations as well as representatives from regional organisations such as the Melanesian Spearhead Group and Pacific Islands Forum will be on the ground.
The electoral roll is still being finalised, but is expected to be satisfactory by the time of the vote.
There is a slight possibility of disruption from Noah Musingku’s faction, but his support base is small and unlikely to create any real problems for the vote.
In the event of a strong vote for independence in the referendum, the momentum towards independence will be difficult to restrain.
A major policy question is, therefore, what a transition to independence might look like.
It could be rapid, or managed over several years, such as the UN-assisted, three-year transition of Timor-Leste to full sovereignty.
PNG and the ABG would need to assess whether UN assistance for the process should be requested, and what an acceptable time frame would be, including for hardliners seeking a short transition.
Australia can offer a range of assistance as long as it is mindful of the historical baggage it carries from its support for PNG during the conflict. Despite this, there remains much general goodwill towards Australia, particularly from the role it played with New Zealand in supporting the peace process which is now widely regarded as a global model for conflict resolution.
The larger question is whether Bougainville itself is ready for independence.
The short answer is no, but most Bougainvilleans see no alternative to independence, despite the obstacles.
– Lowy Institute
- If you’d like to read this piece in full, go to https://www.lowyinstitute.org/publications/bougainville-referendum-and-beyond