Political Economy of China’s Economic Reform: Lessons for PNG Vision 2050

By Francis Hualupmomi
In this article, I draw some interesting lessons from China’s Economic Reform. I hope it provides some insights to drive Vision 2050. Today, China boasts the second largest world economy superseding Japan in 2010. China’s remarkable economic success was driven by its post-Mao economic reform. The question is: What factors stimulate its economic success? Is there a lesson for PNG?
China’s Economic Reform and Its Characteristics
Reform
Sacks and Woo (2003) accentuate that China is now in the midst of three historic economic transformations and transition from a planned economy to a market economy, economic development from a largely subsistence peasant economy to an industrialized economy with a modern service sector, and economic globalization from autarky to an important node within the global production network. The economic reform of China begins in 1979 under Deng Xiaoping. Deng pursued an “Open Door Policy” from Mao’s “Isolation Policy” employing a hybrid model of socialist free market. The reform focuses on international trade and privatization of all state-owned enterprises.
In 1990, six special economic zones were established including Shanghai Pudong zone specifically designed for attracting foreign capital. The government supported agriculture through creation of contract responsibilities. In this special arrangement, farmers could sell their commodities abroad with an aim to finance China’s modernization agenda.
Between late 1980s and early 1990s, the focus was on creating a pricing system using dual tracking system and increasing the role of state in resource allocation. The government diversified the market economy of private enterprises and foreign capital by reducing state monopoly. The market economy was left to invisible hands to influence economic pattern in driving the economy.
By late 1990s, the government focuses on reforming unprofitable state enterprises and banking system insolvency. State-owned enterprises and banks underwent a rapid transformation promoting effectiveness and efficiency. In the beginning of 21st century under Hu Jintao, focus was on domestic economic development to ensure a harmonious society.

Types of Business Enterprises Reform
There are four main types of enterprise reform that stimulated China’s economic success. The first is the privatization of state-owned enterprise managed by the Bureau of Managing Council. In this new arrangement, workers do not own shares but only receive salary based on performance. The Bureau employs mostly Chinese western-graduate nationals and homegrown nationals to manage the enterprises with an objective to give confidence to their own nationals.
Second, the stock companies were converted from state control to private control. In this arrangement, enterprises earn some shares whilst the rest go to state. Managers are also legally allowed to hold some shares.
Third, the government promoted a market-oriented private business protected by the government. All Banks provide low interest loans to variety of business to facilitate economic modernization. Final and last is the conversion of foreign fund enterprises (joint ventures and wholly foreign-owned enterprise).
Special Chinese Characteristics of the Economic Reform
The Chinese economic reform constitutes some distinct characteristics which play an important role in driving the economy.
• State-led policies
• Decentralization of state powers to different individuals, groups, and business in decision making and management of the market economy
• A socialist free market
• Development of special economic zones
• Diversification of state banks to meet private business needs at a low interest rates

• Employ highly educated nationals
• Combination of chinese characteristics and modern management skills
• Encourage modern management and technological innovation
• Chinese are great learners and hardworking – Work to live philosophy
• Non-state led enterprise reform
• International trade focusing on agricultural areas as the economic base
• Convert state-owned entities into private business or enterprises


Success of the Economic Reform
The reform was successful for over 3 decades. The outcome from three processes of economic transformation was astounding proving a sustainable average annual GDP growth rate of 8% from 1979–2011. Industrialization, open organization and internationalization extremely drive the shift towards market economy.
Since the reform in 1979 the economy has grown rapidly. In 2004, China was ranked 6th in world economy. The GDP per capita was about US$ 1267. In the same year, the IMF reported an increase in GDP by 9.5% up to US$ 1.647 trillion. In 2011, China’s economy is expected to grow by 8% despite slow recovery in 2008 economic crises (Mussa, 2010).
The reform overwhelmingly attracted foreign investment, for instance, in 2004, 45% export was produced by foreign funds and enterprises. China was ranked as the third biggest trading country after US and EU. More than 20% of foreign trade came from china as reported by IMF.
Interestingly, free market under invisible hand had played an important role in the economy. In 2001, the central command was replaced by market and economic forces with entry of China in WTO. Decisions were decentralized. Chinese management of business was also successful with a combination of Chinese culture and modern management skills. Chinese were more eager to learn by experience and apply management innovation and technological innovation.
What are the Lessons for PNG?
Drawing from significant lessons in China’s economic reform, PNG can drive Vision 2050 by:
1. Diversifying the market economy into special economic zones:
• Agriculture as the backbone of international trade in some highlands and coastal regions
• Encourage more banking system through the country, more ICT Business, competition in state-owned enterprises and stock markets
1. State playing an important role in creating a conducive environment for economic take-off through sound economic policies
2. Combine indigenous knowledge with modern innovative management skills and technological skills
3. People being eager to learn and hardworking – PNG must strive to ‘work to live’ rather than ‘live to work’

Revisiting Manus Detention Diplomacy

Francis Hualupmomi
Last week Australia’s Immigration secretary Andrew Metcalfe and Pacific parliamentary secretary Richard Marles had quietly travelled to Port Moresby to revisit the closed Manus detention center raising heated controversy in Australia and PNG. Whilst the ‘Manus Detention Diplomacy’ may obviously not be in PNG’s national interest, it however, may also be used as an opportunity to maximize outstanding national interest should government favors it.
It appears obvious now that the struggling Labor government is contradicting its own manifestos and perhaps compromising national interest by returning to Howard’s ‘hands on’ policy in the region – a slap in the face of its constituencies. Even Gillard contradict herself during campaign in emphasizing East Timor and Malaysia as an alternative choice. Manus detention centre as a Pacific solution under Howard’s regime was dismantled by former Prime Minister Kevin Rudd in settling rough diplomacy with Pacific Islands especially PNG.

Since end of colonization, Australia continues to exercise “hands on” and “ignoring politics” in her external relations with PNG. Canberra continues to assume PNG as its colonial periphery to exploit and impose what it perceives as a testing ground. Australia has an attitude problem in dealing with not only PNG but the rest of the Pacific island countries – she has not learnt her mistakes, for instance with Fiji.
Meanwhile, several political issues remain unsolved between PNG and Australia until Kevin Rudd’s regime. Gillard has misunderstood Labor’s policy towards PNG which Rudd has set in precedence. Australia-PNG bilateral relations under Howard regime was a mass, a repeat of it will not be in the best interest of Australia’s tax payers and PNG government. Most Australian feels that Gillard is too pushy and incapable of handling internal pressure of flooding of unwanted refuges.
The proposal of revisiting Manus detention centre has advantages and disadvantages. PNG government may expect incentives if it accepts the proposal. Whilst the choice of refusal of proposal is in national interest, PNG however, may think of employing it as a leverage to influence policy outcomes with outstanding bilateral issues.
An advantage is that Manus local economy will be serviced by investments as a part of the promise package. PNG may use this proposal as an important opportunity to push for equal regional trade agreements discerning Temporary Workers scheme and others. There is no logic in Canberra being too ignorant in honoring this trade proposal yet ‘telling us what to do’. PNG cannot be blinded by this conservative attitude. If Gillard thinks PNG is a dumping yard, she is probably constructing a mistake as PNG is no longer a sleeping pill let alone her rise in the region. The government should strongly push for Australia to reconsider the scheme and other trade agreements. More so, PNG should negotiate for support on sinking atolls problems in Manus.
Politically, Canberra has continued to calculate NA under Somare-led regime as militant given his past radical anti-colonialism sentiments. Controversially, the politically motivated Motigate saga compounded with other governance issues led by civil societies and the current proposal suggest that PNG should advice Gillard to embrace a “hands off-policy”.
As far as Australia’s national interest is concerned, Gillard should concentrate in dealing with changing dynamics of geopolitical shift in the region. With global shift in power from the West to East with the rise of China constructing a new reconfigured multipolar system, instead Canberra should be playing the Pacific cards to win hearts and minds of PNG. Australia is slowly losing PNG – this is the greatest concern and conundrum. PNG by now is very assertive in its regional approach and has some form of economic power to influence policy outcomes should Australia fail to honor her commitments.
Treating PNG as colonial backyard may not work for Australia. Australia should by now pay some respect for PNG as the leader of Pacific islands nations. One may argue the Pacific archipelago is no longer Canberra’s conventional playing ground. With changing pattern in Pacific politics, Pacific is a contestable theatre where non-zero sum game once pursued by Canberra will be trade-off with new wave of interdependence. Hence Canberra may expect different political outcomes in PNG diplomacy.
On the contrary, in essence, Manus province at the first instance may not service the policy. Manus is also facing the dilemma of sinking atolls which PNG should pay close attention to. Whilst this is the major issue in the island nations, there is an escalation of social discontent and fear among people with Islamism migrants with respect to terrorism and religious fundamentalism. Some argue that there could be a sense of disparity in living standards between refugees and local populous in Manus.
Dealing with refuges from Asia, especially boat people and Middle East has been a problem in Australia. Australia has had a hard time managing it. This trend will continue and Gillard has to deal with it adequately. Given coming elections, this will be a test for her and the Labor party. Australia’s tax payers are counting on her leadership in dealing with soft and hard politics.
More so with late recent death of Osama Bin Laden, it may also be postulated that Australia may find herself in dark shell pondering the infiltration of refuges as potential threats. Increase in Muslim asylum seekers only proliferate threat perception.
The approach under which it (detention centre) has been processed earlier suggest lack of less coherence and pure ignorance as evidenced in the way Australian foreign officials behave towards PNG’s officials. Nonetheless, Australia’s push to have PNG as a regional facility centre is a slap in the face. PNG should refuse in total such scheme as it only paints Australia’s conventional interventionist (neocolonialism) approach.
In my view, Gillard proposal is not in the best of interest of PNG. This is an internal problem which Canberra, as the middle power, has the capacity to deal with it. PNG cannot be used as a dumping ground for exercising external policies. However, should PNG consider this proposal, then it must strongly push for Australia to accommodate PNG’s national interest.

Human Capital and Power Projection: Economic and Strategic Choices

By Francis Hualupmomi
Human capital is one of the most important factors in power projection in a world driven by knowledge-based economy. For PNG to project power in the region given its current economic growth rate, economizing human capital in strategic positions will incur high dividend returns.
It appears that the most important events coinciding with the current economic boom are human capital development and national security. Theoretically, economic and military are the most important intertwined factors in projecting power of the state and its co-existence in the international system govern by ‘rule of the jungle’. Economic and military are both opposite functions of state. That simply means military protect economic wealth and economic wealth build military power, hence projecting power of the state. However, this does not preclude the role of internal security (Police). Police also play an important supporting role in national security.
There are several important scenarios projected in human capital development, however, in this article I intend to focus on economic and strategic (security) scenarios consistent with current economic boom and Vision 2050.
PNG is currently experiencing an economic boom as a result of an unprecedented mining and petroleum activity compounded with construction industry, which will continue in the next 30-50 years. There is also a growing global demand of energy supply by industrialized countries, especially in Asia and Europe consolidated with high domestic demand for human capital in particular, blue collar supply. In my projection security personals and diplomats in the mining and petroleum industry are also important in the next 5-10 years.
The LNG projects and other mining projects will be the engine of economic growth which will require a comprehensive massification of human capital. It is forecasted that a supply of 50,000 human capital within the first 5 years is necessary to develop and operationalise the high impact projects coming on stream. Specialists are required to implement these projects. Specialized fields in science and technology should be the driving force.
With PNG gaining prominence in global market economy, international political economy of trade will become important. In a world of complex interdependence driven by positive zero-sum and non-zero sum games, PNG needs specialized trained diplomats to strategically position its national interest in geoeconomic markets. In addition, strategic thinkers will play an important role in analyzing geopolitical and geostrategic implications in positioning our interest in global market economy.
There is also a need to protect economic benefits in the LNG projects and other mining projects over the coming years. Recently, the Japanese government warned PNG to beef up its security system in order to maximize the opportunities projected from mining and petroleum projects. Protection of economic wealth is necessary to sustain the current continuous rapid growth.
However, the current situation is that there is ‘deficiency’ in human capital supply in these specialized fields. In a state of defunct, both public and private universities and colleges lack capacity to meet demand and supply due to lack of past governments support. There is weak security system to protect the economic benefits – “A new garden without a fence is vulnerable to wild animals”. The LNG projects and other mining projects depend on thinkers and implementers. In order to project power in the region some strategic choices have to be made by the government:
Economic scenario
1. Upgrade public universities and technical colleges;
2. co-opting few private institutions in consistent with international quality assurance best practices;
3. design designated specialized science and technological programs as national projects with the assistant from external sources;
4. establish cross border training and education partnership with key institutions;
5. Increase international scholarships in research, science and technology in prestigious colleges and universities;
6. industry alliance – government through Office of Higher Education coordinates graduates placement in industries;
7. establish diplomatic corps training centre in University of PNG (UPNG) or Public Administration College or a separate entity managed by Foreign Affairs and Trade; and
8. international training in diplomacy in strategic countries.
Strategic and Security Scenario
1. Modernize defence force capacity and capability through increase of defence personal ratio and modernized assets with precision to mend and fend of real or potential threats;
2. establish an Institute of International Security and International Studies (ISIS) designated in providing timely and quality policy advice to government. This could be either situated within UPNG or National Research Institute or a an independent entity of state;
3. introduce military cadet program in secondary schools and existing national high schools;
4. establish and continue to maintain security and strategic ties with key regional partners in capacity building;
5. modernize police force;
6. reintroduce police program in universities;
7. reintroduce direct Police Cadet Training with focus on University Graduates’ and;
8. National Intelligence Organization should be strengthened and modernized.
Although it may be an expensive exercise, in the long run will it pays a massive dividends in return.
In sum, PNG can project power in the region if it can utilize its economic wealth to increase investment in specialized human capital in science and technology and build strategic and security capacity and capability.

Security Dimension of Transfer of Land Rights: Policy Implications and Strategic Choices

By Francis Hualupmomi
The debate on transfer of land rights from state to landowners by some political elites, elites, landowners and the populous provoke interesting security implications for PNG. Martin Namarong in his recent article “Land: questions of ownership & sovereignty” on April 26, 2011 in PNG Attitude provides us a logical yet most critical analysis on this issue. I expand his scope of analysis focusing on security dimension and its policy implications.
Some critiques observed that land rights which is normatively considered as a natural birth right of citizens given the traditional heritage in Melanesian society is being politically exploited by competing interests. In quest for modernization and economic imperatives state leadership in the governance of redistribution of wealth has been compromised with external interests provoking suspicious and mutual distrust in the society. The proponents of transfer of land rights argue that the state under a social contract to prudently manage national interest, i.e. landownership in resources, on behalf of its citizens appears contradictory and unwarranted to some extent of mismanagement as exclusively witnessed in unequal benefits-sharing in Panguna Mine, followed by LNG and others.
The issue at hand though, as argued by several legalists and politicians is equal distribution of resources between state and MNCs and landowners. Whilst this may sound welcoming for landowners, there are adverse implications to national security of the state should critical thoughts are not well conceptualized.
First, Sovereignty of the state will be compromised and systematically undermined under the Westphalia system. Sovereignty of the state alludes to the notion of legitimacy, the ‘right to rule’ by the ‘rule of law’ through a social contract. State on behalf of the mass through social contract expressed through election is mandated to prudently manage individual interest legally binded as a collective interest. On this premise, the major argument is that state as a ‘rational man’ is the only legal entrusted custodian possessing legitimate capacity and capability to manage natural resources on behalf of the landowners.
Second, we expect a most likely rebellion by landowners given prolong unsatisfactory perceptions on the government’s management of redistribution of resources. several mini scale rebellion against the state and MNCs such as threats of plant closure, clash with security personals (both state and non-state) to name a few since the operation of MNCs in PNG indicate a tendency of proliferation of near future large scale rebellion.
More over, mining and petroleum in highlands region suggest Mercenary-like military-build over time with given aggregate of monitory incentives through loyalties and dividends. The Singirok Gun Summit report proves threatening and worrisome. The full transfer of landownership rights to land owners is a dangerous and most risky exercise. Legitimizing power on the hands of landlords would most likely convert them into power maximisers constructing real threats to state, MNCs and populous.
As situation reached its full peak the worst case scenario is a mini scale foreign military intervention. Energy is an important economic and strategic interest of any state which if under any circumstances is threatened will instruct military intervention to protect its citizens and socio-economic infrastructures. The Sandline crises, East Timor, Libya, Iraq, Kosovo, Georgia, are some cases in point. A large scale clash between landowners and state and private security personnel is yet to trigger. Recently it was also reported that few southern highlanders had clash with G4S security personals.
The landowners lack capacity and capability to manage resources should the rights are legally transferred. In my view, it would be quite impossible for landowners to manage resources. There are a lot of issues associated with this view. First, we expect unwise spending by landowners in inferior good and services, such as gambling and prostitution in expensive corridors in city lights domestically or overseas. Economic implications may include capital flight and at some point inserting monitory pressure on the economy such as inflation, etc. We also expect increasing social problems such as domestic martial affairs, spread of incurable disease and proliferation of prostitution, transnational crimes, etc.
Nevertheless, the call for autonomy is too early and may not be in the best interest of PNG. Such calls will only provide precedence for autonomization by other provinces and regions. Most provinces lack capacity to administer this process. Finally, transfer of land rights may construct a resource bias in development. Some provinces lack resources and monopoly of resources may not be equally distributed in PNG in aggregate terms.
Given these security implications on the transfer of land rights some strategic choices have to be rationally calculated to maximize national interest to avoid unexpected security challenges:
1. Rectify the legal parameters defining the legitimacy of land rights with state still having some legitimacy over management of resources;
2. Borrow Brunei’s model of state-landowner partnership- state should partner with landowners by providing them monitory incentives through loan to establish national companies without external influence. The state-national companies must employ highly qualified expatriates including nationals with full social protection;
3. The state based on social contract as a legitimate custodian should renegotiate for an absolute gain to attain a 50-50% share, .i.e. a break up of state 30%- landowners 30% and MNCs 40%; and
4. Autonomy is not in the best interest of PNG given the lack of political and administrative capacity.
In sum, absolute gain through equal wealth redistribution must be the national interest in resource sectors.

PNG’s Strategic Culture and Its Policy Implications in 21st Century

By Francis Hualupmomi
Since Sandline crises followed by 9/11 PNG’s strategic culture remains static. The prime purpose of the state as a “rational strategic man” in its strategic interaction under the organizing principle of anarchy is to maximize strategic choices in consistent with national preferences – guarantee our security and survival in the new multipolar world.
There is compelling plausible why PNG’s strategic culture remains unchanged and under question or threat. To analyze this strategic scenario, we need to understand PNG’s strategic culture. Three questions worth answering: What is PNG’s strategic culture? Has it changed? What are the policy implications?
Strategic culture is a new concept in strategic studies and international relations borrowed from anthropology, sociology and less on psychology and historicism to understand how culture shapes strategic behavior and outlook of states under different conditions. Understanding strategic culture helps the state to rationally maximize strategic choices. This concept is complex but it can be defined within its own context. For this article’s sake, I refer to it as “shared beliefs, attitudes, ideas, norms, traditions that shape strategic behavior of state over a period of time under given conditions”. In this logic culture is not static but is dynamic, i.e. culture changes under different conditions. Hence, I define PNG’s strategic culture as benign in nature yet remain static despite rapid changes in internal and international environment.
There are several factors which physically and psychologically shape strategic culture: economy, geography and demography, history, culture, generational change, and technology. For instance, through the lens of strategic culture influenced by these factors we can calculate why Australia and PNG Defence Force behave differently or why Australian Defence Force is more advanced than PNG Defence Force? Premise on this definition, I attempt to define factors shaping PNG’s strategic culture in post-Sandline Crises.
First, economy is the most important element in shaping states behavior and outlook. Economy fundamentally influence the way actors may behave in its strategic interaction given the size of its economic power. For instance, a simple analogy of state as an abstraction of a rich man may use his economic power to want what he wants. State A with an economic power can use coercive force or non-coercive (normative) force over state B to want what it wants in consistent with its national preferences. Economy and military cannot be separated. Economic power is the function of military power projection. With economic wealth a state can project strategic capacity and capability. Without economic power a state is weak. For instance, China’s military modernization is shaped by its current economic power. PNG’s economic power can also shape its future strategic outlook in the region.
Second, geography and demography plays an important role in shaping strategic behavior of a state. The size, climate, topography, resources, ethnicity and population are important elements in considering strategic choices. PNG is the second biggest island apart from Australia in the Western Pacific theatre. Its location is geo-strategically and geo-economically important given its territorial and maritime positioning and abundance of natural resources. The nature of geography proliferate internal and external threats such as natural disasters, terrorism, transnational crimes and power competition over resources by big powers and complex ethnic rivalries. Population in a given state also makes a difference in which a state may behave towards others in its strategic interaction. PNG although small in population in world index, may still be the largest populated state in the region apart from Australia. Population determines the strategic capacity of the state.
Third, historical factor helps shape strategic behavior. History constitutes a continuous process of past social events which may explain why a state as a rational strategic man behaves over time, space and distance. For instance, East Sepik and Highlanders are warriors based on historical evidence. The pattern of historical social facts can help us understand why Sepiks and Highlanders are aggressive. Such behavior can shape individual perceptions in leadership to maximize national interests given strategic choices. For instance, based on historical evidence we can calculate why Somare is nationalistic and anti-colonialist or why Chan mishandle Sandline crises.
More over, cultural norms, beliefs and traditions also shape strategic behavior of state. PNG has a complex unique culture with more than 800 different languages and ethnicities which play an important role in shaping its strategic interaction in the international system. For instance, PNG’s strategic behavior can be defined as benign rather than benevolent due to its Melanesia culture of communalism, although some form of real-politic or realism metaphor exist in tribal warfare in different regions. Hence, we can argue that PNG’s non-intervention and non-interference in Fiji coup signifies how cultural norms constraint her strategic reaction. Culture therefore is a strategic constraint in PNG’s strategic interaction in regional politics. Culture also plays an important role in external relations. For instance, by understanding China’s culture we can calculate whether China is or will be a threat in the region. Cultural Identity can also help us construct our common enemy or friend in international relations, for instance, China and US threat perception in the region.

Nevertheless, generational change is also considered as important. Perceptions change behaviors with time, space and distance. The way generation thinks and act will affect strategic behavior. New ideas and culture shift perceptions of leaders, elites and ordinary populous in shaping strategic behavior and outlook. We expect clash of strategic thinking between orthodox western based thinkers and new eastern based thinkers, especially Chinese thinkers in PNG (Machiavellian versus Tsen Su). For instance, PNG’s strategic interaction highly depends on new ideas, norms or culture hence we may expect different future outcome, whether PNG will become a realist (belligerent) or liberalist (benign) power in the region is still unknown, let alone time, space and distance foretold.
Finally, since the end of Cold War with the triumph of capitalism over socialism (communism) the world has undergone a complex new wave of globalization driven by transportation, information and communication technology and innovation in technologies. The world has shrunk into a small porous international community. Technology has socially constructed an imagine community of real and potential threats never experienced before, for instance, terrorism, transnational crimes, cyber crime, spread of biological disease, etc. The new reconfigured international security community has extremely shaped how states develop new highly sophisticated strategic capability to project power with precision and speed in military modernization in what is called as “star wars”. PNG located within this new system is more vulnerable to real and potential threats.
Given these strategic factors, I argue that PNG’s strategic culture although has remained static since post-Sandline Crises is more benign due to its own strategic cultural constraint. The state has played a minimal role in securitizing threats perception with changes in internal and international environments. PNG’s strategic culture is still too conservative. What it needs though is to seize the current economic opportunity to rebuild its new strategic culture by modernizing defence force, police force and other state security apparatus. Defence doctrines and structure should be redefined with shift in global power from West to East and diffusion of global power from state to non-state actors driven by globalization and civic demands.
In summative, the internal and external threats suggest new strategic thinking in shaping PNG’s strategic outlook. The lost pride in strategic culture must be restored in a smart fashion. A new-look smart PNGDF supported by well advanced police and intelligence or strategic research organizations is the prime target if PNG is to attain a “harmonious, wealthy, wise and smart nation by 2050”.

PNG LNG Project and its Security Implications in Western Pacific Region

By Francis Hualupmomi
The PNG LNG project is prone to potential real security threats if necessary mechanisms are not set by the government before 2014.
In this edition, I specifically focus on potential real threats from internal and external environments pose to affect PNG LNG projects and western Pacific region. I begin by highlighting a brief background on geopolitics of energy security.
Energy is one of the most important geo-strategic and economic interests of any state to co-exist in the international system. Energy contributes to both economy and military power projection in order for a state to exercise its powers to “want what it wants”. In simple, it guarantees the security of a state to survive. For instance, in 1914, Lord Admiral Winston Churchill of British Navy use coercive force as a means to have control and access to Persian Oil to project strategic advantage over Germany.
In Defence Economics history, world wars and conflicts are fought over “who should own and have complete access” to energy sources. For instance, in World War II, Japan’s attempt to establish Great Asian Sphere of Influence with a strategic motive and intent to have control and access over material resources in Asia Pacific blindly led to invasion of Hawaii.
In modern times, the continuous competition, tensions, conflicts and wars by big powers, especially from West demonstrate the significance of energy. One must know that energy is a scarce resource and states have to compete antagonistically through use of coercive force or normative force to maximize their interests. The Gulf Wars, Libya invasion, Kosovo and Georgia crises, to name a few, are all cases of energy competition.
More interestingly, the fight against western imperialism or sometimes referred to as clash of civilization from terrorist groups mostly from Middle Eastern countries is continuous and will remain for the next century. With developments in transportation, communication and information technology, and innovative sophisticated technologies driven by the complex process of globalization, modern terrorism and transnational criminal organizations have mushroomed with more complex capacity to infiltrate borders to maximize their interests.
Given this historical trend and new developments in security in 21st century, is PNG LNG project safe to project economic power in the region?

From a strategic calculus, the LNG project is highly vulnerable and will attract potential real threats in PNG and western Pacific theatres. Several strategic scenarios are posited. In first scenario, terrorists groups, in particular political terrorism pose a potential threat given the fact that the project is a U.S led. Terrorists’ main target is U.S-allies strategic and economic theatres. The LNG project is no exception. Terrorists employ and deploy smart tactics to destroy strategic points such as physical infrastructures, shipping routes and civilians. In this scenario, we expect Port Moresby, Kutubu, Kopi and Juha Plants as credible threats (see PNG LNG map).
In second scenario, transnational crimes such as piratism, illegal gun smuggling, and illegal immigrants in maritime and continental border is most likely to further proliferate and worsening the scenario. In third scenario, Australia and New Zealand are credible targets of terrorism. Both countries, strong allies of U.S in the region will be targeted by terrorists from Middle East and Asia. As strategically positioned in the map, terrorists groups can use PNG as a strategic transit point via borders to attack Australia and New Zealand.
In fourth scenario, resource owners’ rebellion will continue to expand in scope as their demands are not met by the government and the investors. The Singirok GUN SUMMIT REPORT exposed the existence of gun, especially in highlands region as a potential real threat in the country. We expect a mercenary-like-military to be projected by resource owners to challenge the status quo. The bad side of the coin with resource owners rebellion is a possibility of small scale foreign military intervention should the national interest of the investors and state are under threat. The Bougainville and East Timor Civil crises are classic cases.
In the final scenario, miscalculation by PNG and U.S with potential investors such as China, Japan and other western countries may lead to geostrategic competition. We expect strategic maneuvering of warlike-games and proxy wars to escalate into tensions and conflict, however, grand scale war is unthinkable due to complex web of interdependence. Given these emerging new security challenges, what can PNG do?
• The government should seriously implement the Gun Summit Report;
• Modernize military power capacity and capability power projection;
• PNGDF military doctrines and structures should be realigned;
• Increase maritime, airspace and continental constant surveillance;
• Police capacity should be modernized in smart fashion to deal with these new challenges;
• Strengthen the National Intelligence Organization;
• Resource Owners issue should be managed cautiously; and
• Asia-Pacific Security Cooperative Framework should be strengthened.
Whilst more concentration is focused on economic aspects, security and strategic considerations are necessary to mend and fend off potential real threats. The success of LNG project to transform PNG into a modern middle income economy by 2050 and stability of the Western Pacific region depends on its national security arrangement and positioning.

Is Pan-Melanesian Spearheading Group Concept Viable?

By Francis Hualupmomi, in P.R of China.
The Pacific region has witnessed a new political reconfiguration in the 21st century with regionalism as the strategic roadmap to drive its modernization agenda. The Melanesian Spearhead Group’s (MSG) new concept of constructing a Pan-Melanesian Economic Union signifies the new shift in economic globalization and confirms the rise of developing countries in a U.S-led liberal order. The question worth asking is: Is it viable?
Defining the Concept of Pan-MSG Economic Union within the Conceptual Framework of Regionalism
The concept of PAN-MSG ECONOMIC UNION is one of the species of the overarching concept of Regionalism. In order to understand the new strategic thinking in MSG, explaining regionalism is necessary. Regionalism is a concept driven by globalization. The complex web of interdependence propelled by transportation and information and communication technology (ICT) has shrunk the world into a global community providing both opportunities and challenges to especially, developing countries. In a nutshell, developing countries such as Brazil, China, India, and others have seized globalization as a political and economic means to pursue their national interest through bilateral and multilateral relations or regionalism respectively.
Regionalism may appear in different forms and size depending on the nature and scope of the interest of regional countries. The most common forms of regionalism are economic and strategic regional blocs, for instance, APEC, ASEAN, PIF, and others. The most advanced form of regional bloc is the European Union with its own parliament, constitution and currency. Most regional blocs have also expanded the scope of the concept into Trans or pan regional groupings such as Trans American Conference, Pan African, and others. For the sake of MSG, deriving lessons from developing countries such as Africa and Asia is highly recommended.
Regionalism appears to be one of the most important concepts in driving economic modernization in the 21st century. It was reported on Post Courier on Monday, 4th April, 2011 that the Solomon Island’s Minister for Foreign Affairs and External Trade, Peter Shanel, called on the 18th meeting of the MSG of countries – Fiji, Papua New Guinea (PNG), Vanuatu and FLNKS/New Caledonia – to form a Pan-Melanesian Economic Union. Given the geographic constraints, demographic challenges, lack of economic capacity, economic exploitation by external forces and lack of technological innovation and developments, MSG’s concept sounds viable to facilitate cooperation through economic integration. Today, economic globalization is the operative terminology in which global economies strategically maneuver the playing field to maximize their national interest. For developing economies such as in MSG, reducing systematic and persistent challenges is fundamentally imperative.
With PNG recently becoming the economic engine driving the Pacific economies, the construction of Pan-Melanesian Economic Union will require coherent strategic plans in translating its thoughts. The Minister patriotically, calls for member countries to further enhance their trade and economic interests, attract foreign direct investment and have post-summit dialogue with interested development partners to pursue their interest.
Advantages and Opportunities
The advantages of such an economic union are immense if managed prudently. The Pan-African Economic Community suggests a good case for MSG strategic planners to consider. The concept will enhance collaboration and collective cooperation in economic issues affecting member countries through integration. Small island member economies can cooperate in enhancing their interest with larger member economies. And most importantly, the union will have autonomy in pursing collective interest in major mega regional blocs such as APEC, ASEAN, EU, etc.
Given the history of colonialism and emergence of nationhood, the MSG member countries have seen slow progress of modernization. Both internal and external forces play an important role in shaping their slow progress. In general, governance issues, and overexploitation of resources by external forces through neocolonialism and imperialism remains systematic. The MSG countries cannot be isolated and blindly led astray by these forces. Given the magnitude of untapped natural resources, it is timely that this concept must be fully developed and given prominence. MSG is driving in the right direction to shape regional political landscape with PNG already gaining prominence in global economy.
The MSG bloc can cooperate within or externally to pursue their interest. With PNG being the biggest economy with vast natural resources, other member small economies such as Vanuatu and Solomon Islands can mutually benefit through economic and trade specialization. For instance, with PNG LNG, the MSG bloc can construct a regional Energy Cooperation Agency to safeguard its economies during fuel crises or it can use this agency as a leverage to influence geopolitics of energy summit.
Challenges
While increasingly rapid economic globalization brings ashore incalculable benefits under such an arrangement, MSG must not also ignore the bad sides of it. Since MSG, in my view has not yet matured, given its life span compared to others, managing and financing the union may be an issue. Establishing and sustaining it requires full members’ technical advice and financial support. Developing economies appear to be the losers in most cases with lack of experience. However, this does not preclude the construction of the union. The experience of similar arrangements in other developing countries such as in Asia, South America and Africa proved otherwise. MSG can do it as there is already a shift in power from East to West with Asia leading the way. The 21st century is the honeymoon of developing countries as witnessed by the world yet denied by the West.
Some Strategic Considerations
A concept has already been developed by Solomon Islands Government however it still requires more comprehensive thoughts. In my view, the framework should constitute these key objectives as the driving force:
• Achieve greater unity and solidarity between MSG countries;
• Defend the sovereignty, territorial integrity and independence of its Member States;
• Accelerate rapid political and socio-economic integration;
• Promote and defend MSG Positions on issues of interest;
• Eradicate all forms of neocolonialism or imperialism;
• Diversify cooperation with fast emerging mega regions such Asia with the rise of China, South America with Brazil and Africa;
• Consider Australia and New Zealand as important economic partners with no influence;
• Accommodate China, U.S and EU as key economic partners with no influence;
• PNG should take the lead in providing technical advice;
• West Papua Issue should be comprehensively considered in future; and
• Establish a Republic of Pan-Melanesia in the future to project power if possible.
Conclusion
The concept is timely and PNG should take the lead as the leading economic power in MSG. China, U.S and EU must not be ignored as important partners. Australia and New Zealand should be considered without influence. In order for it to work, MSG must protect its autonomy against external influence. Learning from past experiences from PIF should provide some lessons as the way forward.
The author is a Papua New Guinean currently studying a Master of Arts in International Relations at the Institute of International Studies, Jilin University, China. f.hualupmomi@yahoo.com. The views expressed here are part of author’s scholarly work and does not necessarily represent any organization or person.