13 February 2014

If Bougainville wants Independence it must challenge the economic orthodoxy

‘Until the ABG can raise more of its revenue internally, we will continue to be dictated to by others … It is for this reason that my government in 2010 not only endorsed the previous governments decision to negotiate the reopening of the Panguna mine, but also accelerated [preparations] in the last three years’. President Momis, 31/12/2013

A prophesy on high rotation in the media and social media, claims that Bougainville’s independence and economic resuscitation is directly dependent on the reopening of the Panguna mine, and the possible construction somewhere down the line of a second major mine-pit.

What has not been given much attention by media pundits or academic ‘experts’, is an alternative hypothesis, that has much greater historical evidence to support it.

Rather than facilitating independence – in the sense of Bougainvilleans determining the course of their own economic and political future – mining on Bougainville is the most direct path to dependency.

A large scale mine will, first of all, demand a significant body of industrial materials, and a highly-skilled labour force to operate them. Combined, these necessary inputs will cost many billions to purchase. Although rich in other forms of wealth, no one on Bougainville currently commands the billions in money-wealth needed to buy and manage these assets. Accordingly foreign investment from those who do, will be a necessity.

To woo foreign investors, Bougainville will need to surrender some of its independence. We have already witnessed this. While landowners believe they are the true custodians of the land and all that lies beneath it, the Autonomous Bougainville Government (ABG) has had to draft legislation which assures investors that it, not the people, will be the ultimate one to determine how and when minerals will be used.

Once the investment arrives, it will spark something of construction boom. It is unlikely this will have lasting effects for budding Bougainvillean entrepreneurs. Like with the PNG LNG project, foreign companies with the engineering skills and resources will obtain the lion share of contracts, while a small trickle will go to Bougainvilleans, more out of symbolism than anything else.

The growth of the mine, and mining town, will have a substantial gravitational effect on the formal economy. Those industries that do develop will centre on servicing the mine and its labour force. This happened prior to 1989, as a result when the mine closed Bougainville’s formal economy collapsed, and the much neglected informal economy proved the vital safety net, supplemented to an extent by cash-cropping.

So the reopening of the mine, will give foreign investors direct control over the minerals, and indirect control over the character and fate of the formal economy.

There may be, as some promise, relatively large revenues generated by the mine in the form of taxation and royalties. The ABG will grow in size accordingly, but its growth will be centred on maintaining a governing apparatus that supports the mine and the mine-centric formal economy. Accordingly the ABG will primarily service the interest of a minority, rather than the majority, whose needs will remain serviced by the informal economy and the export of cocoa/copra.

With the ABG financially dependent on the mineral extraction economy, its potential to make independent political decisions will be constrained. Instead it will need to make decisions that suit its foreign bankrollers, to the point where the latter is able to dictate conditions to the ABG. We witnessed this in 1989, as a reluctant PNG state slaughtered its own citizens to appease Rio Tinto, who provided a quarter of the government’s revenues.

This is a very rough alternative hypothesis that challenges the unsupported wisdom currently being championed in the media and by ABG officials, who seem to have drunk the kool-aid supplied by Rio Tinto and the Australian government.

So what is the alternative? First, the tail should not be wagging the dog. The ABG claims it requires a substantial increase in revenues to pay for its existence and only mining can cultivate such revenues.

What about changing the government to suit the economy, not vice versa! Why should the economic structure of Bougainville be taken hostage in order to support a state whose organisational features mimic foreign state-structures, rather than the customary political structures of Melanesia.

Over the next ten years, rather than sacrificing Bougainville’s sovereignty to foreign investors – whether they be of Anglo or Asian origins – perhaps attention could be devoted to inventing a new state structure that harnesses informal sources of political authority, to produce a stable and secure Bougainville, that is less dependent on large sums of taxation.

In order to support the invention of this Melanesian state, attention will need to be devoted to the economic resources Bougainvilleans can command to support its more modest and culturally appropriate structures – i.e. their land, environment, cultural knowledge and labour.

Consideration also needs to be given to the precise economic configurations that could unite these resources – i.e. mixes of agriculture, tourism, and services – so that on the one hand the economic structure of Bougainville is largely owned and managed by Bougainvilleans, while still being buoyant enough to support a Melanesian state structure that could oversee basic forms of social planning and service provision.

Imaginative thinking is clearly needed. Sadly it is not being encouraged. Instead the path to dependency is being advertised in the deceptive garb of mine-fuelled independence, whose true character will become abruptly clear once mining begins, by which time averting course will be impossible without violent upheaval, an outcome nobody wants.