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By Alan Boyd

SYDNEY, Australia (January 3, 2002 – Asia Times)---Of all the leaders who will guide the Pacific's destiny during 2002, perhaps none faces a greater challenge than Sir Mekere Morauta of Papua New Guinea.

In July voters will pass judgment on 12 months of tough institutional reforms that must work if the country is to stave off a poverty crisis and prevent the collapse of its key government institutions. So critical is the looming general election that international development agencies are ready to pronounce an economic and social catastrophe if the next government fails to display the same resolve.

Morauta's personal integrity rests on an ability to turn the poll to his own advantage by jettisoning soiled cabinet ministers and assembling a team that can deliver. He should win a new mandate. But the only certainty in this country of dueling personality cults is that opposition parties, rejuvenated by the return of former premier Sir Michael Somare, will use any means to nullify the respected Morauta.

Somare, hauled back from the political wilderness to replace corruption-dogged Bill Skate, has promised Morauta a rough ride as he rushes through legislation to tether the reforms. Like many of the old political guard, Somare is suspicious of Morauta's efforts to impose more discipline on the ailing civil service by overhauling its ad-hoc system of cash disbursements. Making bureaucrats accountable will also, by definition, subject politicians to more scrutiny, thus answering one of the key criticisms of the World Bank and other aid donors that effectively keep Papua New Guinea afloat in a billowing sea of debt.

The donors contend that bad governance has been eroding standards of public management for a decade or more, a period that unfortunately coincided with a slump in economic activity and a corresponding drop in living standards. More cynical observers trace the decline right back to the formative years following the end of Australia's colonial administration in the mid-1970s, when suppressed tribal interests re-emerged.

But while this may explain the mounting social discord, the causes of the economic malaise go far deeper. Like most other Pacific nations, Papua New Guinea simply doesn't make enough public revenues to underwrite the infrastructural improvements needed to diversify and attract foreign capital. Royalties from oil and mineral exports and generous aid from Australia helped to paper over administrative cracks through the 1980s and 1990s. But the oil began to run out several years ago, and the two biggest mines were blockaded by insurgents and environmental lobbies, collectively removing as much as 30 percent of the revenue base. One now faces a legal ambush in New York.

Backed by World Bank funds, Morauta is gambling that the revamp of the bureaucracy, including the introduction of performance-oriented personnel gradings and a strengthening of oversight agencies, will draw investment in manufacturing and services. Most of the current budget has been devoted to development works, especially infrastructure, and primarily at the expense of social and communal investments that are deemed equally necessary.

It is a strategy that can only work in an accommodating political climate, and with a fair measure of public sympathy. Morauta will not be assured of either as the poll draws near. Opposition pressure has already railroaded attempts to clean out the city administration in Port Moresby that had comprised the first test of the governance reforms. Skate and Somare secured a court ruling in October against the validity of a new law that would have stripped administrative powers from politicians in the capital -- including Skate -- on the grounds that funds were being misused. Corrupt provincial councils that would have suffered the same fate were also reprieved, though the pending civil service reforms will eventually achieve the same purpose through a more circuitous route.

Public sentiment is divided, with many applauding Morauta's efforts but ambivalent on his cozy relationship with the World Bank, which has long been targeted for its heavy-handed development plans. The influential middle classes are generally hostile towards the structural reforms, while deteriorating social conditions, especially in rural areas, will erode grass-roots support in the poll campaign.

Somare, the figure most likely to displace Morauta, would be a popularist leader and has already shown his contempt for the reforms with the Moresby debacle. He might keep the spirit of the World Bank package intact, but has even fewer people in his lineup than Morauta with the integrity and sense of purpose to see the process through.

Rarely has so much been riding on the actions of one individual. Most monitoring agencies believe Papua New Guinea will self-destruct within a decade unless it grasps this opportunity. Even with the reforms, it still faces a long period of rebuilding, possibly of a similar duration.

Papua New Guinea's progress will be followed with interest from a wider regional perspective, as other aid-dependent nations will soon have to grasp the nettle of change if they are to evade the poverty net. The least they can do is to lend their support to Morauta in his country's darkest hour.

For additional reports from the Asia Times, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/Asia Times Online: Oceania.

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