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SUVA, Fiji Islands (June 20, 2000 - IPS)---Fiji's economy is approaching the start of a downturn following economic sanctions, job losses and political unrest in wake of the May 19 overthrow of the country's democratically-elected government.

The country's economy, dependent on sugar exports and tourism, is at its worst in two decades.

Experts say if a democratic government is not put into place at once, Fiji’s economy is likely to collapse.

Whatever the outcome, Fiji will feel its economic impact for some time to come.

On Friday, a group from the Commonwealth nations urged Fiji -- which was only allowed to return in 1997 in the wake of yet another coup -- to ''return to democracy.''

Fiji's military has been in dialogue with coup leader George Speight, who claims he launched the overthrow on behalf of all ethnic Fijians who feel discriminated against by the elected Indo-Fijian-led government.

On Monday, Speight said he and the military -- which took control on May 29 or 10 days after the coup -- had agreed on former Vice President Ratu Josefa Iloilo, an indigenous Fijian, to be the next president.

''This doesn't bear thinking about,'' one economic expert said of the economic toll of the political crisis, requesting anonymity because of the tense situation in the country.

''The effect on the economy depends on how long the political crisis will last and its outcome. Tourism will suffer as travel agents are obliged to advise potential travelers against visiting Fiji and this will devastate the economy,'' he said.

Apart from tourism, sugarcane has been rotting in the fields during Fiji's crisis. Fiji had been expecting to earn some 4.36 billion U.S. dollars from sugar exports this year, most of it under special privileges to the European Union.

Congress campaigns director Tim Noonan said ''millions of dollars of trade preferences and development assistance'' was at risk during the political standoff.

The Commonwealth delegation received an assurance from the military that Fiji would return to democratic rule within two years, and that changes to the 1997 Constitution would address the interests of all multi-racial groups in Fiji. That constitution is a multi-ethnic one and was the basis for the election that Chaudhry won last year.

Australian Foreign Minister Alexander Downer said Fiji's future relations with the international community would depend on how soon the hostages were released and the speed at which the country returned to democracy.

Already, unions in key trading partners like Australia, New Zealand and elsewhere are lobbying the EU to suspend trade benefits and aid to Fiji. The move is aimed at pressuring Speight to release Chaudhry and 30 other people his group has been holding hostage in Parliament since the coup.

On trade sanctions, Phill Goff said: ''There is only one person who has been heavy-handed in this and that is George Speight. He is holding 31 people hostage in fear for their lives (and) he is a terrorist.

''Australia and New Zealand intend to impose smart sanctions targeted at the terrorists,'' Goff said a day before a New Zealand immigration ban on Speight, his adviser Jo Nata, and about 83 others linked to the coup leader.

''There has also been fundamental damage to the class structure of Fijian society,'' the economist added in the interview with IPS. ''Fiji is now moving into the classic Melanesian model of society which undermines the traditional system of rule and governance and a collapse of law and order.

''The best scenario at this stage would be a two-year deep recession with devaluation. Devaluation of the dollar would have to occur in order to attract tourists who would otherwise have no incentive to visit Fiji,'' he added.

''Even if it all ends tomorrow Fiji would still be suspended from the Commonwealth for two years,'' the analyst added.

Fiji has been suspended from the ministerial meetings of the Commonwealth. Many people here, however, believe it could just be a matter of time Fiji will be kicked out of the meetings.

''The effects of this coup are much worse than those of the two military coups of 1987 -- this is not the Cold War anymore and the international community will put its foot down hard on Fiji. This has indelibly marked the country. Why would potential investors want to come here?'' he asked.

Experts say Fiji made a faster recovery after the 1987 coup, which was also launched due to ethnic tensions. That recovery was due to the opening up of the garment markets with Australia, which in turn caused an industry boom. However, damage to the garment industry this time could be permanent and catastrophic.

The effects of that coup and subsequent trade bans have left more than 4,000 people in this country of 700,000 people jobless. The biggest layoffs hit the tourism and garment sectors.

Recently, the European Union warned Bainimarama that it would stop buying sugar from Fiji if Speight or any of his supporters were included in an interim administration.

If the EU goes ahead with its threat, this would mean a permanent 20 percent shortfall in the economy. Economists say current decision-makers are aware of the crippling implications any further trade bans or punitive sanctions would have on the economy.

On June 15, the current military administration announced an expected shortfall of $200 million (U.S.) in government revenue due to the current political impasse.

Bainimarama said that if public consumption were not reduced, the deficit of the current 2000 budget would balloon to eight percent of GDP or close to $250 million.

The military has thus approved preparation of a mini-budget to cover the five months from August to December, aimed at reducing expenditure by at $ 2 million, including the deployment of budgetary resources to core government services and key economic sectors.

The coup has been blamed on differences between the Fijians and the Indo-Fijians, the abrasive style of leadership of Chaudhry, his soft spot for the country's largely Indo-Fijian cane farmers, and what some deem his lack of sensitivity for the Fijian ''cause.''

Speight has said he launched the coup on behalf of all ethnic Fijians, saying the government led by Chaudhry was not addressing their plight. Ethnic tensions fester in a country where the Indian community -- which makes up 43 percent of Fijians -- plays a key economic role. Speight has been saying they should be denied any political role.

Indo-Fijians are descendants of indentured laborers brought here by the British in the 19th century to work in the sugarcane plantations they established in the islands.

Meantime, debate continues on how many of Fiji's indigenous population support Speight's cause.

In a controversial interview with Fiji TV One, political commentator Jone Dakuvula said only about 1,500 of the country's 400,000 indigenous Fijians seem to think so.

''George Speight is a two-day wonder who just decided to champion indigenous rights for his own personal reasons in a matter of two days . . . he has no real track record of fighting for indigenous rights,'' he said.

''I don't know where people got the idea that the majority of Fijians support this coup. We only have about 1,000 people sitting at Parliament - there are 400,000 Fijians,'' added Dakuvula.

''It's very simplistic to use words like 'majority' and 'minority' because you can't actually base it on any real knowledge of what people out there in the rural areas feel. Most ordinary people are just watching and observing what's happening -- they're not active participants in this coup,'' Dakuvula explained.

But active participants or not, the reality is that the country's economy is in tatters, thousands have lost their jobs through economic and trade sanctions and cane farmers have boycotted harvesting until Chaudhry and his government are released.

Fiji has also lost its bid to host the signing of the successor Lomé Convention trade and aid agreement this month.

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