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Brexit: What lessons are there for PNG and the Pacific?

BrexitBUSA JEREMIAH WENOGO | The Informal Economist | Edited extracts

EUROPE is in shock as Britain votes to pull out of the European Union in what is now termed the ‘Brexit’.

Britain is important to the EU because it is its second largest economy, and the world’s fifth largest. Thus her exit is raising fears that a domino effect could follow with other countries leaving the union. Questions are now being asked if the EU will survive.

There is evidence indicating that right wing ‘nationalists’ in other countries are now pushing for an exit from the EU. One could argue that this is rather premature given Britain and the EU have not yet seen the full extent of the Brexit outcome.

Three million Britons have petitioned the government to revoke the decision and parliament had yet to address the outcome of the referendum.

More importantly for the United Kingdom, Brexit is already raising questions of independence for Scotland and the reunification of Ireland. So Britain’s exit could lead to other important developments that could re-shape her own and Europe’s future.

While the pro-Europeans are in tears; the Eurosceptics who have longed seen the arrangement as repressive and wanted their country to choose its own destiny are enjoying their victory.

In Europe, as in Britain, more and more people are demanding that their own governments take a tougher stance against immigration. Britain’s exit is the Eurosceptics’s finest hour and their call for protecting national borders is echoing across Europe.

The Brexit is creating a ripple effect around the world. Already stock markets have been pummeled and the pound sterling has seen its worst drop in a very long time. For us in the Pacific, the result seems likely to hit our shores sooner rather than later.

In 2007, the EU concluded an interim partnership with PNG and Fiji, paving the way for eventual formal implementation.

The EU is currently negotiating a comprehensive economic partnership agreement with all 14 island states in the south Pacific. The comprehensive agreement will cover trade in goods and services, development cooperation, food health and safety, agriculture, sustainable development and competition.

The Brexit looks as though the EU might put a temporary halt to this negotiation. Britain, for its part, is going to have to negotiate an exit strategy with the EU which seems likely to have effects in this part of the world including a renegotiation of the terms of the economic partnership agreement.

The interim agreement provided PNG with duty free access into the British and European markets; a renegotiation could potentially turn this around and affect PNG’s economy – especially its foreign reserves which are already under pressure.

This would spell disaster for PNG given its current economic condition where problems in the foreign reserves have forced the government to pursue extraordinary borrowing measures.

The decision by Britain to hold a referendum to decide its future in the EU has brought to the forefront the important question of whether the Pacific could emulate a similar economic union.

There is merit for such a set-up to facilitate trade and labour mobility – and it is an issue that has recently gained recognition.

There is also a need to establish a common security policy to address terrorism, illegal fishing, transnational crime, human smuggling and border protection. Most Pacific Island nations have just a tiny military to protect their borders or exclusive economic zones.

The Melanesian Spearhead Group also needs a common voice to address West Papua’s push for independence from Indonesia.

Unlike Europe, the Pacific countries have limited resources to be able to stand up individually to negotiate trade and security issues. Through a collective arrangement, the more powerful Pacific island countries like PNG might, in time, be able to support economically depressed countries of the region.

The Pacific islands nations could explore introducing a common currency. However, as we have seen with the Greek crisis, such an option is not presently viable in a region which is prone to global market shocks.

Nevertheless, having a common currency could ease payments for trade in raw materials and reduce transaction costs to boost tourism.

Comments

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Ross Howard

There is a lot of hype around Brexit, especially from those vested interests which stand to lose some advantage. It is no secret that multinationals poured millions into the Remain campaign. Multinationals have an established cartel in the EU which keeps out competition and innovation, and makes the world’s goods 8 % more expensive for the British people. Furthermore, the EU is the only shrinking trade bloc in the world. In 1973 the EU comprised some 36% of the world’s economy, but last year that was down to 17%. 10 years ago the EU took 55% of British exports, but last year it took only 45%. Yet Britain is tied to this shrinking trade bloc that prohibits member nations from pursuing their own trade deals. While there may be some short-term pain for Britain, freed from the shackles of the EU, there will undoubtedly be long-term success. Countries like Australia which lost much trade with Britain in 1973 can now look to establish new trade deals. PNG should do the same.

Peter Kranz

Maybe the world needs to revisit Bretton Woods?

https://en.wikipedia.org/wiki/Bretton_Woods_Conference

Philip Fitzpatrick

The basic food stuffs is a good argument Robin. You could perhaps include water in that equation too. Both commodities that will be in high demand in the future.

And yet O'Neill is still fixated on minerals?

If PNG persists with cutting down all its trees to sell to the Malaysians at rock bottom prices why not plant broad scale food crops for export with a nice smattering of smallholder blocks for local consumption on the cleared land. Lots of employment opportunities there. That is, after all, what the SABLs were designed to do. Instead they plant a mono-crop of oil palm.

No vision I think.

`Robin Lillicrapp

A common currency might indeed strengthen the hands of Pacific neighbours in their struggle to beat the odds.
But what currency fits that purpose?
Is it one that pegs to the Dollar, Yen, Euro or Pound?
They are Fiat currencies subject to the "whims" of the global reserve banking system with all its reliance upon printed money to bolster value etc.

As the world moves further toward financial chaos, even former Fed' chair, Alan Greenspan, openly advocates a return to the gold standard: http://www.silverdoctors.com/gold/gold-news/was-bix-weir-right-alan-greenspan-calls-for-return-to-the-gold-standard-brexit-cable-crashes/

Such a dramatic alteration might be considered impossible to achieve given the power of the Banking elites grip on global affairs.
What has been brewing in the background though, is the rise to prominence of the BRICS group of nations who've so far established a rival system of economic reform with ability and purpose to adopt a "gold-standard" albeit combined with an audit of assets and resources allowing each nation to enter a status of Asset-backed, Market based by which they may trade in the global market place without resource to accessing Fiat currency to complete their business.
The new CIPS clearance software allows for transaction payments and receipts to clear within seconds unlike the week long delay under the traditional SWIFT system.
BREXIT has only seen the UK exit the EU. Essentially their gripes against the Union are not necessarily Union-centred but ultimately founded upon overriding UN charters and treaties to which most of the world's nations are subject. There is no visible movement afoot to separate from the UN.
The reasons for membership in that body are apparent or we would have bitterly complained long ago.

For instance,Cecil Rhodes, over a century ago, foresaw world governance dividing into 10 regions with Britain as the head. The Britain part, later into the 20th century, morphed into the UN as the head.
The vision of the Technocrats of the early 20th century is undiminished.
They intend for the world to become aligned with Science and Technology.
This process will and already does have a host of unintended consequences many of which are playing out in PNG's economy and culture, and other nations too.

BREXIT is a grand scheme for unhinging subservience to traditional reliance on global banking and dominant currencies. Other withdrawals from the EU are likely with continued uncertainty and tumult in the markets.

All of that helps to precipitate a needed devaluation in overpriced currencies, and foment a realisation of need to adopt a more stable and manageable currency system. The Yuan (China) is soon to be officially integrated into the SDR basket of currencies by which International currency values are established. This is likely influenced by China's gold holdings.
As the push toward establishing a New World Order consolidates, the old must give way to the new. The old Illuminist mantra ever was: Ordo-Ab-Kaos; order out of chaos.
The management of a NWO is only achieved when the world financial streams are governable from a centralised point of control. As the world's citizens are being edged toward a completely digitised money system, it is possible to see the real-time oversight and collection / disbursement of governmental revenues from a centralised head-office, so to speak.

The question might be asked, who among world leaders is familiar with this scenario, and what effect is it having on the practice of government?
Does PM O'Neill have insight? Did/does Hawke, Beasley, Abbot, Turnbull (all Rhodes Scholars) have insight into these matters. They are obviously schooled in those precepts.

My opinions, re financial matters, be as they may matter little in terms of relieving the stress of PNG citizenry amid the turmoil of life and times. One of PNG's signal strengths has been the ability to grow and harvest basic foodstuff from home grounds. That is the stuff of "common currency" that perhaps needs to permeate the Pacific conscience before any heady aspirations to leadership and grand plays on the world stage be entertained.
What think ye?.

Philip Fitzpatrick

A common currency is an interesting idea. You don't necessarily have to create a new coinage just arrange parity between all the Pacific currencies. It would still have to be anchored to the US$ because the other options, the Kina and AU$ are too flaky.

Wonder how long it will be before O'Neill starts sprouting the need for stability like the pollies down here.

Peter Kranz

Marvellous! Iceland beat the UK at football, but they are a leading UK retailer! And their banner? "The Moment We Met Iceland"

https://www.iceland.co.uk/

Sorry for the Poms, but we have to get some satisfaction after the rugby disaster.

Yes it should be 'Iceland beat England', but remember where the best UK footballers come from?

Ian Rush (Wales)

George Best (Ireland)

Kenny Dalgleish (Scotland)

Peter Kranz

The idea of a South Pacific Economic Community has merit. But I think it would need to include Australia and New Zealand and maybe Indonesia and the Philippines to have enough clout. Perhaps the minnows need to band together to stand up to the sharks.

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