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Could the APEC summit be a PNG white elephant?

International Convention Centre
Interior of the new International Convention Centre in Port Moresby, built by a Chinese contractor with Beijing money

BHAVAN JAIPRAGAS | South China Morning Post

HONG KONG - With weeks to go before the annual Asia-Pacific Economic Cooperation (APEC) summit – this year in Papua New Guinea - the Pacific nation is putting the final touches on its preparations to host the likes of Chinese president Xi Jinping and United States vice-president Mike Pence.

World leaders had contended that holding the summit on 18 November in Port Moresby with the help of extensive grants would enable one of Asia’s least developed nations to bask in the international limelight as it seeks foreign direct investment.

It is the first time the former Australian colony has hosted the event – and with Xi attending and expected to host a meeting on the sidelines with leaders of Beijing-friendly Pacific nations, all eyes have been on whether prime minister Peter O’Neill’s government would be able to pull off the event without a hitch.

While for the most part it has, the bad press it attracted last week was clearly not part of the plan.

On Friday, public anger at the government’s management of funds that were meant for the summit escalated dramatically as tens of thousands of government workers staged a one-day strike.

Their main gripe? Port Moresby’s decision to buy 40 luxury Maserati cars, valued at around US$300,000 each, and later three Bentleys, to ferry around the likes of Xi and Pence – who will be deputising for President Donald Trump.

The government said the cars were justified and would be sold after the summit. But critics have scoffed. They say the country is wasting precious resources as it rebuilds after a devastating earthquake in February and an ongoing polio outbreak.

“Two things coincidentally happened that sparked the protest,” said Martyn Namorong, a well-known critic of O’Neill’s government and one of the protest organisers. “First, our teachers haven’t been paid their salaries and we don’t have drugs in our clinics and hospitals, even in our national capital.

“All of these things are happening and we are seeing the government splurging on luxury cars, people are really upset about government priorities,” Namorong said.

The episode even had some observers wondering whether hosting the summit of the 21-nation bloc will be a net benefit for PNG.

Port Moresby agreed to host the summit in 2013 ahead of what it thought would be a boom in natural gas revenue that would accompany the set-up of ExxonMobil’s US$19 billion liquid nitrogen operation in the country.

Energy prices, however, have slid dramatically in recent years.

“We will see some benefits flowing from APEC, but whether it is worth the cost, you will have to look at the huge effect on the government budget, and the allocation of development resources to Port Moresby rather than other areas that need it more,” said Rohan Fox, a PNG researcher at the Australian National University.

Terence Wood, another expert on the Pacific nation from the same university, concurred.

“The economic activity around the summit and associated events, as well as the impetus to improve the infrastructure in Port Moresby, will bring some gains,” he said.

“However, the summit itself will impede other ongoing business in PNG, and this will bring costs.”

Beyond gripes over domestic governance and corruption, the likes of Namorong say the summit will offer a glimpse into another difficult question for the country: its foreign policy alignment.

Long neglected by major powers because of its far-flung location and dependency on former colonial ruler Australia for aid, the country is finding its geostrategic importance as the US-China rivalry intensifies.

China in recent years has stepped up its interest in PNG, and the summit itself has seen heavy Chinese involvement.

The main convention centre that will host the event was built by a Chinese contractor with a Beijing grant, while six-lane boulevards leading up to it were constructed with cheap Chinese financing.

The Pacific nation in June signed up to Beijing’s trillion-dollar ‘Belt and Road Initiative’ that seeks to enhance sea and land trade routes between the Middle Kingdom and Eurasia.

At the same time, ties with Australia have turned a little testy.

While Port Moresby benefits from over US$350 million in aid from Canberra annually, the relationship has seen some strain because of the controversial, now-closed detention centre run by Australia on the remote Manus Island owned by PNG.

Activists such as Namorong worry that the government could turn away from its stalwart and closest ally Australia and towards the likes of China because of the financial benefits.

“I think PNG really needs to redefine foreign policy. At the moment the national leadership is going for whoever has the bag of money to throw at this country and that’s unfortunate,” said Namorong.

But the big-power play could yet be of benefit, according to Shane McLeod, project director of the Australia-Papua New Guinea Network at the Lowy Institute in Sydney.

Said McLeod: “The increased interest by China in the region can be a positive, particularly when it comes to development assistance. The key for Pacific countries is to make sure they get value for money and the best possible results from projects and financial resources.”

“If the activities of China are a catalyst for countries like Australia developing a more sophisticated approach to the region, then that should be a net positive,” he added.

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