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Resources curse, a corrupt elite & landowners with no hope

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"The promises contained in the landowner benefit sharing agreements with the PNG government began to languish, and frustrations simmered"

MICHAEL MAIN | East Asia Forum

CANBERRA - Two recent reports on the massive ExxonMobil-led PNG LNG project have brought renewed attention to the undesirable economic and social impacts of Papua New Guinea’s largest-ever resource extraction enterprise.

This research shows that PNG LNG has hurt, rather than grown, PNG’s economy and that it has inflamed violence and tensions in the PNG highlands region. Papua New Guinea’s so-called ‘resource curse’ has hit local communities the hardest.

Violent conflict in the PNG highlands, certainly among the Huli landowners of Hela Province where PNG LNG is based, has been an almost constant feature since before first contact with colonial forces in the 1930s.

Levels of violence have fluctuated markedly in response to historical conditions. The 1970s and 1980s were relatively peaceful, as PNG transitioned from Australian administration into the early independence years.

But local political frustrations combined with the introduction of guns led to high rates of violence in the highlands around the 1992 elections.

Since that decade, Papua New Guinea’s government services have been in constant decline.

A new generation of Huli has emerged that is less educated than the generation of its parents — Huli who were educated between the 1960s and 1980s are more literate and fluent in English than those who were of school age from the 1990s onwards.

Health has deteriorated with a decline in health services and the introduction of store-bought processed food.

By the late 2000s, when the PNG government was promoting the PNG LNG project as a looming economic miracle for the country, the Huli population was desperate for a project that they believed would raise them from the state of poverty and neglect that had gradually descended upon them since independence.

During the first few years of the PNG LNG project’s construction, it looked as if all its grand promises were being fulfilled.

ExxonMobil and its partners invested US$19 billion — a staggering amount for a country whose GDP was a little over US$8 billion in 2009 (just before construction began).

Cash was everywhere in the project’s area, and this cash was accompanied by plentiful jobs and shiny new LandCruisers. Large machines and heavy equipment were flown into a purpose-built international airport in one of the remotest and most neglected parts of Huli territory.

During these construction years there were significantly lower levels of violent conflict in Huli society. People were living in conditions of hope, and they felt that the material conditions of their lives were undergoing much-desired change.

Fighting men had things to do with their lives other than fight. Huli children now expected to grow up to experience a higher standard of living than their parents. In short, Huli society became oriented towards the future, and its history of warfare was part of a social logic that was no longer relevant.

In 2014 construction of the PNG LNG project finished and production of liquefied natural gas began. Jobs disappeared and money dried up, revealing a corrupt elite that had little concern for the impoverished landowners.

Crucially, the landowner beneficiaries of the project had not been identified prior to construction, despite urgings from the companies’ own consultants for them to do so. This has meant that no landowner royalties have been paid.

Nothing has come to replace the money that was flowing in during the construction phase — a large portion of which had been invested in the expectation that the new airport would bring in tourist dollars.

Guest houses and eco-tourism lodges were built, but the airport remained in the private and exclusive hands of ExxonMobil, guarded by ExxonMobil-funded PNG Defence Force personnel and police. The promises contained in the Landowner Benefit Sharing Agreements with the PNG government began to languish, and frustrations simmered.

By 2016 it was clear that ExxonMobil and the PNG government were systematically breaking these promises and there was a widespread view that the state had little interest in fulfilling its obligations to the Huli landowners.

Since 2016 there has been a steady increase in levels of violent conflict across Huli society.

In February 2018, a magnitude 7.5 earthquake devastated communities in the PNG highlands, including those in the PNG LNG project area.

This disaster has only compounded frustrations, especially as the PNG government has little capacity to distribute aid and the project’s operator is perceived as being more concerned with protecting its assets than assisting affected communities.

Aggravating the situation is the fact that most locals are of the belief that the PNG LNG project itself was the cause of the earthquake.

Hopelessness, frustration and intense anger at the unfulfilled promises of the project’s owners and the government have combined with an ever-growing arsenal of military-style weapons in Hela Province.

The viability of the PNG LNG project itself, and along with it the economic viability of Papua New Guinea as a whole, are at risk.

Michael Main is a PhD candidate at the School of Culture, History and Language in the Australian National University. He is co-author of the report On Shaky Ground: PNG LNG and the consequences of development failure’, published by the Jubilee Australia Research Centre in May 2018

Comments

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Peter Salmon

Keith, I may be wrong but I think that Michael Main would be referring to the Komo airstrip not Moro as thought by Peter.

Komo a purpose built airstrip to receive the largest freighters in the world flying in equipment for the LNG project infrastructure in the area mainly the Hides Gas conditioning plant, the Antonov 124-100, 69.1 metres long, 73.3 metres wide, etcetera.

There was a humorous story running around many years ago that during negotiations with the Komo people over a totally unrelated matter well before the time of the LNG project, that the people as part of their initial ambit claim, demanded that an international airport be built at Komo.

They were told that no way in the world would an International airport ever be built at Komo.

Google "Komo airport pictures" it's an eye opener.

Peter Sandery

I have just realised Mr Main might have been referring to Komo Airstrip in which case my initial remarks in my earlier piece were incorrect. I can but blame senility if that is the case and apologies all round.

Peter Sandery

I assume the airport Mr Main refers to is Moro airstrip adjacent to Lake Kutubu. Anyone, apart possibly from a rabid imperialistic minded Huli, would try to tell the world that the land comes under the purview of Huli traditional ownership mores.

The Foe and Fasu people would be extremely upset about such a comment.

Whilst not disputing the general tenor of Main's proposition, both Chevron and ExxonMobil as well as Oil Search made it quite clear in all their publications of the approximate manpower requirements of the various stages of exploration, construction and development and production.

These were explained to local and provincial government representative, and also to landowners, at least in the early stages by what became known as Landowner and Community Relations Officers who were based first in the Kikori, Pimaga and Kaipu area and later at Mendi and Kerema.

These officers were, therefore much closer to the landowners at that stage than later in the project when the Kerema and Mendi offices and the other camps were abandoned with staff moving behind the security fence at the main Moro and Ridge Camps.

The poorly thought out management decision which resulted in the movement of all community affairs staff behind the Moro and Ridge Camp security fences resulted in less meaningful contact between the developers' reps and landowners and provincial and local level authorities in the field and also paved the way for shysters and cardsharps to represent themselves to developers' reps in Moresby as representing landowners.

Many things about this project have been criticised and for very good reason, not the least being the national government's lack of understanding of the ramifications of its constitutional role and the rather novel situation of having said government being a shareholder in an industry that it is supposed to regulate.

I have heard nothing, however about the LACROs being brought onto the other side of the fence and, if the comments of the latest flare-up in Mendi in relation to electoral matters are anything to go by, the old field administration adage of setting yourself down in the middle of the problem and talking to both sides, preferably before a spark becomes a bushfire, still has it's place in PNG.

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