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By Robert Keith-Reid

SUVA, Fiji (Islands Business, February) – Corruption and short-sighted policies cost Pacific Islanders hundreds of millions of dollars annually in lost fishing license revenue, according to the head of the University of the South Pacific's Institute of Advanced Studies in Development and Governance, Professor Ron Duncan.

He says islanders are being "screwed" by Asian fishing nations that badger islands government leaders into accepting fees at rates that are less than one-third of the 16 percent of catch values collected by African nations.

At a time when the Pacific tuna fishery catch is growing, the average revenue from the catch is moving down from a poor 4 percent to 3 percent, he told Islands Business.

A 16 percent return would bring the islands' revenue to around US$320 million given that the annual catch of around one million tons of fish is estimated to have a market value exceeding US$2 billion.

The Pacific Islands Forum Fisheries Agency (PIFFA) estimates that its 14 islands members receive about US$70 million, a figure quoted for some years.

According to an Asian Development Bank/PIFFA/World Bank study in 1999, the six main beneficiaries received a total of US$57 million in fees, ranging from US$21.6 million for Kiribati to US$3.4 million for Nauru.

Annual revenue fluctuates with world prices for fish and catches volumes.

Duncan says Kiribati is the Pacific country most dependent on fishing fees.

During 1991-2001 Kiribati received an average of A$23 million ranging for A$6.2 million in 1996 to A$46.6 million in 2001. Revenue ranged from 9.9 percent of total revenue in 1996 to 54 percent in 2001.

"It is extraordinarily difficult to have good fiscal management when the revenue of the budget is so unstable," he says, writing in the latest edition of the Australian National University's Pacific Economic Bulletin.

He told Islands Business that the low return the islands get from tuna caught in their 200-mile economic zones by Asian fishing fleets can be attributed mainly to corruption involving high level Pacific islands government politicians and officials participating in fishing fee negotiations.

"Pacific Islands nations just get screwed," he said. "All sorts of side payments are made."

He's also critical of such giveaways as lower license fees conceded to fishing companies in return for investment in shore fish factories.

"Even trans-shipment is a waste of money," he says.

Some islands governments require foreign fishermen to transfer fish to fish carriers in their ports rather than at sea so as to generate port revenue and some jobs.

Since the cost of extra fuel used to move to trans-shipment ports is a factor that affects fishing revenue, what the recipient countries receive is merely "residual," he says.

Writing in the Pacific Economic Report, Duncan suggests that islands governments copy Botswana, which protects its diamond mining revenue by holding it in an independently managed offshore trust account.

Fishing revenue should be similarly managed, he says, "thus making it harder for politicians to get at."

"It is no accident that Botswana has been one of the fastest growing countries in the world for many years.

He says islands governments could lessen the risk of the volatility of fishing license fee revenue by negotiating with fishing nations for multi-year contracts for a fixed yearly payment over the term of the contract and by auctioning quota rights for access to fishing grounds.

"By forcing fishing firms to bid against each other through an auction, they have to be more 'truthful' about their likely catch and the expected fish prices."

The auction, of say, five-year contracts would maximize revenue and minimize under-reporting of catches and illegal fishing.

Islands governments would know in advance what their fishing license revenue would be with stabilizing benefits for their budgets.

With about 1300 vessels from up to ten countries fishing the South Pacific, "it is hard to imagine that the bidding process cannot be made competitive."

"Indeed, the auction system can be used to introduce much greater competition than the existing system, with its accompanying suspicion of side payments to ensure the allocation of licenses to particular interests."

February 11, 2005

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