The real resources curse for PNG is not necessarily economic in nature. As an immature nation still struggling to achieve modernity, it is possible that the intra-national conflict fuelled by competition for the considerable monetary spoils of the resources boom will threaten the very political existence of PNG as a nation....

By Susan Merrell* 

Like a wet blanket amidst the excitement being generated by the resources boom in Papua New Guinea (PNG), Hillary Clinton during her visit to the Pacific last year gloomily warned of an unwanted potential consequence known as ‘the resources curse’.

A well-documented phenomenon, it points to negative possible outcomes for a national economy that is heavily dependent on resources. 

It is what caused Sheik Ahmed Yamani, a minister from the oil-rich Saudi Arabian government, to lament: “All in all, I wish we had discovered water.”

Negative consequences of the curse include inflation, revenue volatility and its effects on excessive (good time) borrowings, lack of diversification of the economy, the creation of circumstances conducive to corruption and a draining of human resources away from other areas into the more lucrative resources sector. 

And PNG is already experiencing some of the aforementioned negative socio-economic effects—like shortage of teachers—some having been wooed into the resources sector by better wages. 

Inflation is also evident, with the price of scarce real estate, especially in the capital Port Moresby, soaring from increased demand. Hotel rooms too are at a premium costing upwards of K800 per night, or approx 200 man/hours at minimum wage. 

However, the real resources curse for PNG is not necessarily economic in nature. As an immature nation still struggling to achieve modernity, it is possible that the intra-national conflict fuelled by competition for the considerable monetary spoils of the resources boom will threaten the very political existence of PNG as a nation.

I’ve been told: “you don’t mess with a Western Highlander;” it was good advice given their reputation for ferocity. 

Equally, these same Highlanders are reportedly entrepreneurial and adept in business matters, which is quite remarkable given that it wasn’t until the 1930s when the Leahy brothers were prospecting for gold in PNG that the Highland tribes were discovered. And it was a mutual discovery; it was their first encounter with a white man too.

Fast-forward to 2011 and you’ll find many Western Highlanders, just two generations removed from their primitive forebears, inhabiting a very sophisticated western-style world and doing it with aplomb. 

Wait—there’s more!

The learning curve must have been exponential. Exponential learning curves seem to be the order of the day for the whole of PNG, for it was just 40 short years later (1975) that the country was granted independence from colonisers who had first imposed an alien nation-state structure on one of the most culturally diverse countries in the world—a country with over 800 distinct languages and a similar number of equally distinct tribes.

It’s now just over 35 years since the declaration of independence. In all, we’re only talking just over 75 years from when Western Highlanders saw their first white man to them inhabiting, along with many other discrete ethnic groups in PNG, a sophisticated, highly industrialised western-style democracy based on the British Westminster-style of government.  

Yet, there’s growing evidence that the socio-economic transformation has been too rapid. For while many tribesmen and women have made the transition, many have not. 

Indeed, over 80% of the country still subsists and live in their traditional villages clinging to a culture that is often at loggerheads with the goals of a modern nation-state especially when their first loyalty lies, not with their country but, as tradition dictates, with their tribespeople or ‘wantoks’.

Bougainville: an early indicator

When independence was granted to PNG in 1975, one of the underlying assumptions was that the Panguna gold and copper mine on the outlying island of Bougainville would provide a sound economic platform for the nascent nation. The assumption was wrong.

Bougainville is an island, discrete from mainland PNG, where its inhabitants are more ethnically and culturally attuned to the nearby Solomon Islands. Nevertheless, when the arbitrary boundaries of the state were drawn, Bougainville was attached to PNG. The attachment was legal and notional; it held little popular support. 

Taking these factors into consideration and further factoring in the benefits flowing from the mine, that ethnic fighting broke out resulting in a civil war is hardly surprising. 

Traditionally, Bougainvillean society is matrilineal, mainland Papua New Guineans marrying Bougainvillean women threatened the ethnic makeup of the island and the distribution of the benefits flowing from its cash cow: Panguna. 

Ironically, the civil war caused the closing of the mine, which has, thus far, never reopened (although there has been talk lately about that possibility). 

The peace process involved the granting of political autonomy to Bougainville and the very real possibility of future secession.  

And so the political entity of PNG starts to break down and break up—the catalyst: the resource industry. 

Wait—there’s more!

New Ireland, also discrete from mainland PNG is the host to the world-class gold mine ‘Lihir’. The benefits that flow to Papua New Guinea from this mine are considerable. Are New Irelanders happy sharing this wealth with other Papua New Guineans? No they’re not. 

Many New Irelanders consider they’d be economically better off if they seceded and a significant secessionist movement has grown up. 

It is said that New Irelanders are tired of ‘their’ money being used to fund other projects that benefit people other than themselves—like the PNG Liquified Natural Gas (LNG) project and the rest of the people of PNG who are, in actuality their compatriots but who are more often viewed as an alien other: ‘them’.

Just recently, Sir Julius Chan, a former Prime Minister of Papua New Guinea and now Governor of New Ireland Province in response to a cyanide spill from the Simberi Mine owned by Australian company Allied Gold said he wanted the owners of the mine out of the province. 

He also made clear his attitude towards the PNG government saying: “Enough is enough. New Ireland does not need Waigani [the seat of the PNG government] or foreign miners dictating its future.”

An ominous warning from another potential chip off the block—catalyst: the resources industry.

On the Mainland

The LNG project, an investment by the American corporate giant Exxon-Mobil has been welcomed with an almost messianic fervour in PNG. It is costing upwards of $15 billion and is set, on its own, to double the Gross Domestic Product (GDP).

Still in its infancy and not expected to be fully operational until 2014, nevertheless, as early as January 2010, a skirmish broke out between a gang of villagers from Erave district and a neighbouring clan. Eleven people were fatally shot. A dispute over profits from the PNG LNG project was the cause.

Moreover, earlier this year the LNG plant in Hides in the Southern Highlands of PNG was closed when villagers attacked the plant and workers over non-payment of their dues under the agreement.

It seems that the resources boom is not only pitting the tribes against each other but is pitting the government of PNG against its own people too - hardly an ideal nation-building exercise. 

In the courts in the seaside town of Madang there is more evidence of this. In an action against the largely Chinese-owned Ramu Nickel Mine, the traditional landowners are litigating to stop the dumping of the detritus from the mine, known as tailings, into the sea in a controversial practice known as Deep Sea Tailings Placement (DSTP).  

The PNG government, on the other hand, has sought to stymie the court action by legislating it away with a rushed through amendment to the Environmental Act that would indemnify any company which had been granted a mining licence from any future litigation for pollution etc.  

None of this augurs well for creating the ‘we’ feeling necessary to build a functioning nation—to build Papua New Guinea.

The Paradox

An expert on nationalism, Ernest Gellner, pointed out that the modern industrial world is bound to create a nation/state in most cases. And that makes sense.  

In the case of PNG, without the state to negotiate and organise on behalf of its people, mining and the extraction of oil and gas from its territory would be so cumbersome as to make a project impossible. One large project would mean negotiating separately with thousands of stakeholders—it couldn’t be done.

But be that as it may, the spoils available from the resources boom is not a unifying national phenomenon but the opposite, fuelling competition between rival entities that have yet to embrace the idea of collective nationhood.

And, lately, the stakes have been ramped up further.

In a letter prepared by lawyers representing landowners and delivered to both the Japanese and Australian government early last month, warning that Australian and Japanese companies must respect landowners rights, the lawyers stated: “…our country comprises more than 800 languages and nations (emphasis added)…” 

If each discrete tribe of PNG starts to self-consciously declare itself to be a nation then all paradigms shift—in the main, nations believe they have the right to self-determination.  

Under these circumstances, will the nation/state of Papua New Guinea survive the resources boom?  Now there’s a question.