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Taking Back PNG: Is Australian aid obsolete in a China world?

Boniface Kaiyo
Boniface Kaiyo - 'James Marape faces key challenges including the failure of Australia’s aid assistance to PNG'


PORT MORESBY - Papua New Guinea is in a region at a crossroads. One road takes it towards open markets, inclusive growth and a dynamic economy. The other takes it backwards towards protectionism, exclusion and regional economic slowdown.

Sandwiched in between is foreign aid. In the more than four decades since independence, aid and international development have had a decisive role to play in creating a platform for the country’s e future.

Now, the challenges facing Australia’s aid to PNG have emerged more starkly in light of China’s increasing presence and competition with the US in the region.

Since recently assuming office as PNG’s eighth prime minister, James Marape has made no bones of what he intends to do.

He’s said he will “tweak” the country’s resource laws, a change which seems set to affect the interests of international actors including foreign direct investors. This is in the context of PNG’s resource owners, who have been left waiting for a promised kina windfall which has remained far out of reach.

One view of Marape’s statement is that he is placing PNG’s Chinese connection more highly than his predecessor Peter O’Neill. But Marape must be careful to promote PNG’s national interest. This seems to be a clear gamble.

Foreign aid is the voluntary transfer of resources from one country to another. It is an important vehicle for development in less-developed countries around the globe where it can have a substantial effect in improving living standards.

After World War II, there was a surge of anti-imperialism and anti-colonialism in Asia, Africa and Latin America. To protect their positions, the colonising powers were forced to change their relationship with former colonies.

In reality, Western countries still strongly influenced the politics and economics of developing countries and a new theory emerged which posited that, to develop, developing countries must attract foreign investment, aid and expertise.

It was a theory almost purpose-designed to perpetuate Third World Countries as neo-colonies.

It may be pointed out that PNG is a neo-colony of Western imperialism. The slavish reliance on foreign investment and aid over many years has perpetuated a neo-colonial model where PNG has become a target for exploitation that benefits outsiders much more than it does Papua New Guineans.

James Marape has broached a response to this difficult issue.

His ‘Take Back PNG’ catchcry is about putting foreign investment and aid under the microscope. And the first country demonised is Australia which has been PNG’s closest ally and economic partner with a connectivity tracing back to the 19th century, before both countries achieved nationhood.

After 44 years of independence, the economic rationale of foreign aid has not met the expectations of PNG. The aid has been there, but the desired outcomes have not come.

Of course, there were advantages in the aid: humanitarianism; improving Australia’s international image; maintaining influence and a positive relationship; and promoting the conditions for peace and stability.

But now the world facing imminent economic meltdown and it seems that PNG has been an early entrant in this dismal trend. Against this background, the former O’Neill government hoped APEC would provide a circuit breaker.

For PNG, the significance of the APEC summit was assessed against a country in recession and caught in a debt trap. China's rise and growing influence as a global power and the decline of the US inclined PNG to tap into the superpower rivalry in the south-west Pacific region.

Many people see a closer connection with China as the best option for PNG. Otherwise, there are clear prospects that the PNG economy will collapse.

But the significance of a China and PNG partnership is both confronting and polarising.

Late last year, PNG hosted the APEC summit 2018 for the first time. It cost K400 million, which included plenty of assistance from both China and Australia.

PNG’s agenda was that the summit would bring to fruition progress in a number of areas: reducing inequality; stimulating growth in the economy; and contributing to APEC’s goals to promote balanced, inclusive, sustainable and secure growth.

It was a big burden for a short conference to bear but it was a sign that PNG had embraced APEC. And China also embraced APEC. China’s president Xi was there; US president Trump was not.

The argument for a stronger PNG-China connection is for PNG to reinvent itself after years going down Australia’s path and now facing a debt crisis. China is no longer ‘catching up with the times’ but ‘leading the times’ in its modernisation drive.

It seems that China has grasped an historic opportunity to be a leader in science, technology and industry as well as providing its wisdom and solutions to the world.

Furthermore, Australia’s position as a neo-colonialist has become an embarrassment. As an active partner in international development, China appears to have outgunned Australia, whose aid has left many issues unsolved including governance, law and order, health, education and population growth as well as an over-reliance on extractive industries and an under-emphasis on agriculture.

This confronts James Marape with some key challenges, and points to the failure of Australia’s aid assistance to PNG.

Foreign aid did not ultimately promote faster growth. It appears to have increased the gap between rich and the poor. Much of it was spent unproductively. And it was conducive to the tendency of Australia to interfere in the economic and political activities of the PNG, the Manus asylum detention issue falling into this category.

The government’s catchcry to ‘take back PNG’ is certainly emotive but does it also infer that PNG will look at Western market economics differently and take advantage of the rise of China?

The Chinese connection must make a difference. James Marape must somehow satisfy the people’s demands for material goods.

Maybe Australia pushed the wrong model of international development for too long. Foreign aid may simply be obsolete.


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Boniface Kaiyo

Yes, trade is the way to go based on comparative advantage in which neo-classical economics talks about the 'trickledown' effect or invisible hand of God.

The problem with PNG perhaps is the trickledown came in drips and drabs, and now may be nothing.

It is a difficult topic but prime minister James Marape has broached it. The slavish reliance on foreign investment over many years since the 1800s has only perpetuated the neo-colonial set-up in the country.

Any development for the masses will be constrained because the country’s resources and people are exploited to the maximum by the same players before, and after independence.

It begs the question as to the uses of foreign aid. China appeared on the scene both as friend and foe. It is a matter of definition.

Paul Oates

Boniface, its been said many times before. The real answer is trade, not aid.

Aid should only be short term and targeted at creating trade, not dependency. Nearly 50 years is a long learning period but the lessons are now there for all to see. All it takes is understanding what's on offer and to make discerning choices.

Trade doesn't have to be in material or monetary terms or in loans that must be paid back or lose your national assets.

Trade can be in experience, education and the transfer of social capital, all of which don't have to be paid for and are always on offer between friends.

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