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Thank you Mr. President for those kind words of welcome and for your invitation for me to address this august gathering.

The Pacific leaders, as you are well aware, have recently completed their annual meeting of the South Pacific Forum in the Cook Islands. This meeting is held on rotation at a different venue each year. As members of the South Pacific Forum, the Prime Ministers of both Australia and New Zealand were present. Also, the summit meeting in Tokyo with the Government of Japan has recently concluded. Before commenting on an outcome of those meetings, I shall say just a few words about the Forum itself.

The South Pacific Forum was formed because it was the view of the South Pacific leaders of the day, that is, of the new nations, that a political forum for debate on the future of the region was needed, and this was precluded specifically under the arrangements of the South Pacific Commission, which had been formed earlier in 1947 with strong support by Australia but was a functional rather than a political body controlled largely by the colonial powers of the Pacific area, together with Australia and New Zealand. In fact, the Conference of the South Pacific Commission has only last week-end celebrated the 50th anniversary of the South Pacific Commission in Canberra. But useful as this body is, it did not fulfill the political requirements or aspirations of the new emerging states of the South Pacific.

Nauru, Australia and New Zealand were all foundation members of the South Pacific Forum when it was formed in 1971. Some South Pacific leaders of the day believed it was important that the two metropolitan states situated in the area should participate and play major roles in the development of the Forum.

Since 1971, the South Pacific Forum has grown in size as new island states have become independent and been admitted to the Forum. Eventually, one imagines, as New Caledonia and other French territories achieve independence, they too will join. This will mean that all the states of the Central and South Pacific, embracing a sizable portion of the globe, will be members of this international organization.

The economic strength of Australia and New Zealand may appear overpowering, but no single power, in the climate of the Forum, can afford to exercise untoward economic muscle upon the others. In any event, it is my view that two of the world powers who have displayed a major constructive interest in the area, France and Japan, should be encouraged to be members of the Forum. Neither Australia nor New Zealand have recently displayed the sort of real and substantial commitment to the area that should allow them a monopoly of developed country presence in the affairs of the Forum.

The single most important issue for Pacific island countries is climate change induced by greenhouse gas emission. Scientifically credible estimates indicate that by 2100 an Earth warming by 4.5 degrees Celsius with a consequent rise in sea-levels by one metre. Therefore, arresting such global warming becomes essential to the continued survival of several of the Pacific Island countries, including Nauru through flooding. There is a need for all of us to make adjustments and take concerted action now.

The position is critical. The forthcoming conference at Kyoto in December is vital for Pacific island countries for their very physical existence is at stake in these negotiations. I am not impressed when Mr. Howard openly scorns the critical nature of the situation in order to bow to the will of the fossil fuel industry.

The Forum Communiqué which emerged at the end of the meeting was extremely bland and was painted by Australia, certainly by its officials and Mr. Howard himself, as something of a victory. I would class it rather as a disaster. It is fair to say that many of the small island states were aghast at the treatment meted out to them. Nauru, however, which has a long history of negotiating with Australia, going back to 1920, was not all that surprised, and certainly would have preferred a different outcome even a communiqué which did not include Australia. But the nature of the Pacific Way demanded otherwise even though it was, to my mind, a devastating result.

The fact that all states in the area agreed to a communiqué on a wide variety of matters including a specific settlement on climate change says very little, except that it is the practice of the Forum to at least agree to a communiqué even if it represents the lowest common denominator. What was most evident was the disappointment felt almost universally at the lack of sensitivity shown by Australia to the position of the small island nations. I notice that this has well been brought out in Pacific Report for September 26 one of whose editors is your President. In some ways, the contents of this communiqué were absurd, when one takes into account that it was engineered largely by Australia, which now stands almost one out from the rest of the world on this issue.

Undoubtedly, the main purpose of the third conference of the parties to the U.N. Framework convention on climate change is to agree to legally binding targets and protocols or other instruments for reductions in greenhouse gas emissions.

It is patently clear that, in Australia, an efficient energy policy will require industrial restructuring. Every day Australia is requesting restructuring amongst our South Pacific nations - why should Australia itself be so immune to the process? It does need, certainly, a major redirection but where is the will and the leadership? I feel sure that, if this structural change were required in the European Union or in Japan, you would soon see it implemented.

In my view, the bland communiqué at the South Pacific Forum was disastrous and by no means is the last word. Rest assured matters will be otherwise at Kyoto. The world cannot accept unchecked climate change - even the Australian Department of Foreign Affairs and Trade in a recent report admits to the remarkable changes that could occur in Australia by 2070 if we proceed unchecked, which will affect lifestyle, a number of industries, the rural economy and tourism. I would, therefore, humbly request Australia to exercise vision and accept the inevitable damage that its place would produce, both to itself and its Pacific neighbours.

You would wish, I am sure, that I should make some comment upon the much publicised leaked Cairns document, which most of you present here today will have read. Whilst I fully accept that it does not represent Australian policy, it was compiled - presumably with care - to influence such policy considerably.

The document is an odd mix of fairly straightforward and uncontroversial economic statements, rumour, political judgements and curiously unsophisticated economic assessments.

I recently perused a document drafted this year relating to the conglomeration of Caribbean States, who represent the other major group of the world island micro-states. It was conceived and developed at a summit between the Caribbean States and the United States, and was entitled ‘Partnership for Prosperity and Security in the Caribbean’. No-one could imagine greater disparity in economic terms than between the economies of these Caribbean States and that of the United States. But what struck me was that it was a document of both hope and promise, and positive in context, featuring a plan of action for trade, development, finance and the environment. I mention this only to compare the approach.

On the other hand, two impressions arise from the Cairns document: first, that Australia is dealing with incompetent leadership and poor administration in the Pacific, and second, a negative feeling that Australia is unfortunate to have such problems to deal with.

The Cairns document draws attention to the fact that many of these states, for one reason or another, are faltering economically. The situation, of course, is well known and also widespread among small island states around the world. The Third World and small states for the most part are suffering. The World Bank, with its major concerns for sub-Saharan states, is working overtime on the problem.

The Pacific states realize only too well that with their limited resources and increasing population, major restructuring is called for.

There are certain constraints to such restructuring. To an extent, the Cairns paper recognized this, but in the stereotypical manner of economic rationalism, suggested that the limited horizons of Pacific politicians would simply prevent the tough decisions being made.

I am sure that you would want me to say something of Nauru, which in the infamous Cairns paper was described as being at "the bottom of the heap."

I made a remark earlier that neither Australia nor New Zealand had demonstrated the sort of commitment towards the Pacific nations that one would have associated with somewhat exclusive membership of the Forum. Let me illustrate this with an incident that has occurred only this year between Australia and Nauru. Australia has maintained diplomatic representation in Nauru since Independence in 1969. However, recently it was announced by Australia that for reasons of economy, it was closing the Australia High Commission in Nauru. The High Commission had a staff of about three, two rented houses and an office. Nauru, which has not only been administered by Australia in the past and has an airline serving directly Brisbane and Melbourne twice a week, besides shipping services, was now told that all future arrangements, should be conducted through the Australian Embassy, now High Commission, in Fiji.

Where is the Australian national interest in this? Nauru currently has investment in Australia worth about $490 million. It directly employs approximately four hundred Australians within its investments, and in consular and statutory organizations. It is engaging in a major construction in Sydney where employment is a further 200. Along with all of this it makes use in Australia of the services of Australian lawyers, architects, accountants and other professionals. Nauru uses Australian teachers and technical staff on Nauru to the number of 80 and each year imports from Australia some $30 million worth of produce and materials. This does not include the sundry services each year provided for the airline in maintenance and fuel.

I just ask, what criteria did Australia apply in deciding to withdraw its High Commission from Nauru? Nauru has a greater investment in Australia than any other of the Pacific Islands. It was, in the view of the Nauru Government, a most extraordinary decision of Australia and certainly not one that gave my Government confidence in the Australian connection which had been developed assiduously by us over the years, with substantial investment particularly in Victoria. It has, of course, created difficulties for Nauru not having direct access to Australian representation, not only in day to day maters such as visas and business links, but, with the major upcoming rehabilitation arrangements which were concluded with Australia. Nauru now has a real concern whether it will be fruitful to engage the substantial engineering and other services required from Australia rather than tender elsewhere. Perhaps I should take comfort in the fact that the cost cutting exercise by the Australian government is not only aimed at Nauru, but also at a wider section of the Australian community.

Perhaps it is for Australia a case of "penny wide and pound foolish". On top of this, Australia cleanly misread the Pacific attitude on the global warming issue which has not endeared us to the Australian Government's current policies.

During 1995/96 in Nauru, there were a number of political changes and that produced some instability. There is no doubt that Nauru is passing through a very difficult period with mounting economic problems. These problems were caused initially by a sharp fall in the demand for Nauru phosphate in Australia and New Zealand in the early years of this decade which , in turn, resulted in substantial budget deficits.

I believe that following the General Elections last February these matters have been addressed and my Government has taken steps to resolve the pressing problems. We are increasing phosphate sales and restructuring our property investments. One of our main industries for the future will be fishing in Nauru’s Exclusive Economic Zone. My government has passed extensive legislation on marine resources and set up a marine resources authority. Productive exploitation of the Nauru EEZ is high on the agenda of my government, and we are also looking to increased payments from multilateral and bilateral fishing agreements. We have also developed new markets for our phosphate in South Korea, Indonesia, India and the Philippines.

Owing to the fact that phosphate mining has rendered nearly 80% of the land presently unusable, it is vitally necessary that Nauru carries out extensive rehabilitation. To complete such work will take more than a generation. It will be tackled on a priority basis and the Government has established a Rehabilitation Authority to direct this. Finance from this will come largely from Nauru’s Rehabilitation Fund, and the compensation paid by Australia arising from the settlement in the International Court of Justice case. Associated with such plans for rehabilitation, the Japanese Government, now playing an increasing role in the North, Central and South Pacific, is assisting in the construction of a new boat harbour, a long standing need for Nauru.

Whilst Nauru will continue to have a debt problem that will require further restructuring, it is fortunate, in that the extensive public infrastructure on Nauru is in place and debt free.

The Asian Development Bank has recently completed a Technical Assistance Project analysing our current economic and budgetary problems. My Government is currently reviewing the recommendations. The Asian Development Bank has expressed willingness to provide further technical assistance to implement a number of these recommendations along the lines of the Cairns action plan.

But what of the future?

Small states in this world have a hard road to hoe. None more so than those of the South Pacific, with their fragile economies. Like the Third World, the small micro-states need to join together so that their common problems are given more prominent airing. However, small states are beginning to organise and I would hope besides such regional organisations as the South Pacific Forum they will be able to band together in such a world forum as the United Nations and meet more regularly under the small island states banner.

Nauru, like other island states, will not collapse tomorrow, but all will need cooperative assistance and understanding. Such assistance must be based on sensitive and sensible planning carried out between each state and those providing assistance. Obviously rough and crude advice lacking specificity is unhelpful. The Asian Development Bank, now a long time in the field and yet hard-nosed in its assessments, fully understands this point and, I believe, goes out of its way to be helpful and constructive, as illustrated in their recent Technical Assistance Project in Nauru. I would also expect major world powers, such as Japan and France now showing renewed interest in the Pacific, to play a significant role in the future.

Already, Nauru has introduced new measures to increase Government revenue and put curbs on government spending. As a result, there should be a significant reduction in the budget deficit in this and later years.

At the same time, Nauru faces a major task in having its population gainfully employed. A Nauruan population of around 3,800 in 1969 has grown to around 10,000 in 1997. Demographically, it is a young population and employment is at a premium. On such an issue, islands differ considerably. The Cook Islands and Niue have ready access to New Zealand, where substantial numbers live and work permanently. A major economic reconstruction in the Cook Islands may result in unemployment, but the effect will be to transfer the population, at least for the time being, to New Zealand. The situation is otherwise on Nauru. Australia is not presently open to Nauruans for employment, despite the relatively large investments in Australia I have referred to earlier.

Meantime, Nauru looks for space. It must proceed with its rehabilitation programme to achieve:

* land for housing, schools and a hospital;

* an area for a natural dam to enhance water supply dependent presently on a desalination plant and roof catchment;

* land for light and export industry; and

* restoration of forest areas to enhance the environment.

The necessary legislation has now been passed for that rehabilitation. The rehabilitation programme will present Nauruans with their greatest challenge since independence - the recovery of their home and country.

Mr. President, Ladies and Gentlemen,

In conclusion, let me once again thank you for the privilege of addressing you on the issues currently confronting Nauru: the economy and the environment - the two issues for us are one and the same for we in the Pacific know full well that the economy is merely the way that we create sustenance and wealth from our environment. Without a healthy environment there is no economy and unless the family of nations can address the issues of climate change and rise of sea levels effectively in the upcoming Kyoto conference, nothing else matters for us. The very survival of several Pacific Island nations depends upon arresting global warming immediately.

We all know what this requires. Those nations that are significant emitters of greenhouse gases must curb their emissions, with countries in our region, like Australia and Japan, taking the lead. I believe that in doing so they can not only reduce emissions significantly, but also profit from it through energy savings and the development of markets for renewable energy sources. The proposal by the Association of Small Island States (AOSIS) for a 20% reduction by the year 2005 is within reach. I hope you will take this opportunity to reach it together.

Thank you.

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