(Archived document, may contain errors)

No. 34 August 28, 1985

.THE -SOUTH PACIFIC ISLANDS: NEW FOCUS NEEDED FOR U.S. POLICY:

INTRODUCTION

For many Americans, mention of the South Pacific still evokes images only of World War II battles or idyllic tropical vacation retreats. Today, however, the South Pacific is becoming increasingly important to the U.S. for strategic, pol.itical, and economic reasons. And for these same reasons the region also is attracting Moscow's attention. As such, Washington no longer can afford a policy of benign neglect toward the 4.7 million inhabi- tants of the nations and territories formed by the South Pacific's more than 1,300 islands and atolls.

The current generation.of Pacific Islands leaders generally favors the U.S.; they are, moreover, solid pragmatists not likely to be swayed by leftist ideologies that could imperil their citizens, national interests. Yet this leadership generation is aging. Its successors will have no recollection of being pro- tected or liberated by the U.S. during and after World War II. Subjected to different influences, the new leaders could.be wooed by Moscow or might be tempted to join the Third World political bloc.

Washington thus must devise policies to encourage the Pacific nations to support the U.S. in Pacific region matters and at such international bodies as the United Nations. In the face of Third World radical propaganda, more effort should be made to present the U.S. viewpoint. The island nations should be discouraged from going the way of New Zealand, which is jeopardizing its security and alliance with the U.S. by barring U.S. nuclear- powered or armed naval vessels from New Zealand ports.

In fact, Pacific islanders are far more concerned with the issues of fishing, nuclear'testing, and dumping than with global geopolitical matters. And for this reason, Washington must move geopolitical matters. And for this reason, Washington must move quickly to address such island concerns. By law, the U.S. does not recognize any national jurisdiction over tuna beyond terri- torial waters. This angers the islanders, who claim jurisdiction over tuna up to 200 miles from their shores. Quick completion of the regional fisheries agreement that the U.S. and the island states have been negotiating since 1983 will go far to meet islanders' concerns that they are not benefiting from resources they perceive as their own. However, additional fishing fees resulting from the agreement will not meet their economic needs. The U.S. thus should be prepared to offer assistance that will enable the islanders to establish a regional fishing capability and the necessary infrastructure to better sustain their econo- mies. More frequent visits by U.S. officials and possibly more diplomatic posts would be helpful. In addition, the U.S. should accord greater recognition to island leaders sympathetic to U.S. concerns.

THE SOUTH PACIFIC ISLANDS--OVERVIEW

When World War II ended, six colonial powers--Australia, France, New Zealand, the Netherlands, the United Kingdom, and the U.S.--weke administering the Pacific island dependencies. Today, all the islands are independent with the exception of: American Samoa, which is self-governing but supervised-by the U.S.; the French territories of French Polynesia, New Caledonia, and Wallis and Futuna; the Pitcairn dependency, whose 63 inhabitants are governed by Britain; Tokelau, a New Zealand territory; and Niue and the Cook Islands, which are self-governing but associated with New Zealand.

The independent South Pacific states-range from Papua New Guinea with three million inhabitants and Fiji with 588,000 inhabitants to Nauru and Tuvalu each with fewer than 8,000 inhabitants on a territory of about 10 square miles. In total, the Pacific states, islands, and atolls cover roughly 5.6 million square miles, of which 70 percent is ocean. Papua New Guinea (PNG) comprises 70 percent of the total population and Fiji 14 percent (see Appendix). Unemployment on the islands is high and subsistence agri- culture is a major source of employment. Nauru, however, has grown rich on phosphates, while PNG possesses huge copper deposits. On the other hand, many small islands possess nothing beyond meager copra production to sustain them. With burgeoning populations, most of the islands face the problem of unemployed urban youth. The Cook Islands, Niue, Tonga, Tuvalu (formerly the Ellice Islands), and the Samoas are ethnically Polynesian. In small, remote Nauru, the Micronesian, Melanesian, and Polynesian strains are mixed, with Polynesian predominating.- New Caledonia, PNG, the Solomon Islands, and Vanuatu (formerly the New Hebrides) are Melanesian. Fiji lies in the Melanesian area, but indigenous Fijians are a mixture of Polynesian and Melanesian. Fiji's Indian population, descendants of indentured sugar cane laborers, now outnumbers the indigenous Fijians. Kiribati (formerly the Gilbert Islands) is part of Micronesia. The Pacific Islands' leaders often provide religious as well as political leadership. Fundamentally they are pro-Western, but mounting economic problems.may prompt them to accept Soviet aid offers. The younger island generation, largely ignorant of Soviet actions in distant Poland and Afghanistan and uninformed about the growing Soviet military force in the Pacific, has little hesitation about dealing with Moscow. The U.S., on the other hand, being much more visible in the Pacific, is blamed for many problems and castigated for an allegedly poor record in American Samoa and for intervention in Grenada.

Their small, sometimes miniscule, size plus their distance from each other and from important centers make the independent island nations economically vulnerable. Low foreign exchange reserves and unfavorable balances of payment are common. The smallest states are dependent on outside aid to reach minimum standards of health, housing, and water supply. Such natural disasters as cyclones periodically devastate parts of the region.

Fiji The most developed South Pacific nation is Fiji. It has a fairly high living standard, a life expectancy of 70 years, an educated, skilled*workforce,-and a good infrastructure. It is building an excellent road system and rural electrification network. Modern development depends on imported oil, and this accounts for the increasing trade deficit. Agricultural diversi- fication is being encouraged to reduce dependency on sugar and ginger exports. Agriculture and tourism are beginning to attract foreign investment, while fishing, aquaculture, shipbuilding and repair are being developed. The visit to Washington last November of Prime Minister Ratu Sir Kamisese K.T. Mara demonstrated Fiji's importance. He spoke of U.S. aid as an effective guarantee of peace and stability. He shares U.S. concerns about the European Common Market's subsi- dized sugar exports that are undercutting the world market. Fiji wields influence because it is an active member of the United Nations. Some U.N. regional agency headquarters are situated in Suva, Fiji's capital. Suva is also the site of the University of the South Pacific, where the youth of the islands come together. President Reagan expressed his appreciation.to Ratu Mara for Fiji's responsible role in world affairs-in contributions to U.N. peacekeeping forces in Sinai and Lebanon, leadership in condemning the Soviet invasion of Afghanistan,.support for U.S. actions in Grenada, and permitting the visits of U.S. Navy ships. For this reason, the U.S. has implemented a military aid program with Fiji that includes money for training assistance and funds to be applied to the purchase of a new Fijian Army standard rifle--the U.S. M-16A2. Total FY 1985 military assistance was $400,000, and the same is being proposed for FY 1986. While Fiji remains nonaligned, well-equipped Fijian forces would contribute greatly to regional stability.

Papua New Guinea

Papua New Guinea has great development potential. It boasts one of the Pacific Islands' most heterogeneous populations, autonomous'communities who speak discrete languages and are separated by difficult terrain. Market sectors, based on mineral exploitation and tropical crops, exist alongside a subsistence economy.

Though susceptible to commodity price fluctuations, Papua New Guinea's economy has performed well in recent years, posting 4.9 percent GNP growth in 1984. Fishing and industries that require small initial investment, such as clothing, furniture, jewelry, food, and beer, are being developed. But all forms of development--social, political, and economic--are hindered by transportation problems.

THE SOUTH PACIFIC FORUM

The South Pacific Forum was established in 1971 as a vehicle for political discussions among Pacific leaders, including those from Australia and New Zealand. The Forum has'supported the creation of various regional organizations such as the Pacific Forum Line, the South Pacific Bureau of Economic cooperation, and the South Pacific Fisheries Agency.

The Forum has been increasingly successful in finding solu- tions to regional problems and has become a powerful regional voice. In response to Forum protests, for example, Japan post- poned its plan to dump low-level nuclear waste in an ocean trough 550 miles southeast of Tokyo. Despite the many nationalities of the South Pacific, the Fokum has avoided racial friction. Its activities are characterized by discussion and consensus. -

The Sixteenth South Pacific Forum, which convened early this month in Raratonga, the Cook Islands,'produced a treaty declaring the South Pacific a nuclear free zone. It prohibits the acquisi- tion, manufacturing, testing, or stationing of nuclear weapons in the region. However, the treaty allows for the transit of nuclear-armed and nuclear-powered warships and allows individual states to determine port access policies for such vessels. The treaty has been signed by eight Pacific nations, including Australia and New Zealand. There are three protocols. The first invites the U.S., France, and Great Britain to "apply provisions of the treaty" to their South Pacific territories. The second and third invite the five nuclear powers (Britain, The People's Republic of China, France, the USSR, and the U.S.) to pledge not to use or threaten to use nuclear weapons against parties to the treaty, and not to test nuclear weapons within the zone.

The island states intensely oppose French nuclear testing at Mururoa, but are divided on the issue of banning nuclear-armed or nuclear-powered ships. Fiji and Papua New Guinea understand the U.S. requirement for nuclear-powered and armed ships and welcome a U.S. naval presence. New Zealand, on the other hand, though nominally allied with the U.S., bans U.S. Navy nuclear ships.' Vanuatu and New Zealand both favor a nuclear free zone that would ban the presence of nuclear-armed or powered ships. Australia insists, however," that nuclear-armed or powered ships must have the right of passage through the area.

REGIONAL ECONOMIC ASSISTANCE

Historical and regional interests have made Australia, New Zealand, Britain, and France the main outside economic forces in the*South Pacific. Multilateral donors such as the Asian Development Bank, European Economic Community, and U.N. Development Program account for a smaller proportion of economic assistance. The U.S. contribution is very small; this year it comprises only one percent of total aid to the region. A U.S. development assistance effort has been active in the South Pacific since 1978. The Agency for International Develop- ment (AID) has active programs in the Cook Islands, Fiji, Kiribati, Niue, Papua New Guinea, Solomon Islands, Tonga, Tuvalu, Vanuatu, and Western Samoa. Total U.S. economic assistance to the island states thus far has been about $65 million. AID's FY 1986 request is for $5 million, a 15 percent decrease from FY 1985. About 70 percent of the AID money budgeted for the South Pacific is administered through private voluntary organizations (PVOs) and the Peace Corps. Major PVOs include the Foundation for the People of the South Pacific, YMCA, and Red Cross. Currently, there are about 290 Peace Corps volunteers in the island states.

Starting with FY 1986, Fiji will be the recipient of the region's first direct U.S. bilateral assistance program. The initial request fo'r $1.5 million in Economic Support Funds is a result of Reagan's offer to Fijian President Ratu Mara during his November 1984 visit. This offer was made in recognition of Fiji's strong pro-Western stance on several regional and global issues, its contributions to U.N. peacekeeping forces, and its allowing the visits of U.S. Navy ships. The U.S. program concentrates on rural self-help development projects with the major focus on improved agriculture and health services. Managerial training is a major component of U.S. aid. Except for Fiji, there is a serious shortage of nationals with

See Dora Alves, "The U.S. and New Zealand: Trouble Down Under," Heritage Foundation Asian Studies Center Backgrounder No. 18, November 14, 1984. managerial skills. The largest AID program is a $7.7 million FY 1980 to 1986 agricultural development grant for upgrading facil- ities at the University of the South Pacific (USP) and training educators in the U.S. USP has also received $1.1 million for FY 1978 to 1986 to install a satellite communication system allowing the simultaneous teaching of classes in eight island nations. PVOs are planning to receive ahd implement the use of $20 million between FY 1984 and 1986. Their programs include Agricultural Cooperative Development International, which has received U.S. support to encourage marketing and a vanilla bean industry in Tonga. International Human Assistance Programs have installed solar-powered lighting equipment in the Cook Islands, Solomon Islaftds, and Papua New Guinea. The YMCA and Catholic Relief Services conduct craft training and primary education classes on Fiji and Western Samoa. The Foundation for the Peoples of the South Pacific conducts AID-assisted fishing and marketing pro- grams in Fiji, Solomon Islands, Papua New Guinea, Kiribati, and Tonga.

The South Pacific is extremely dependent on aid. In 1980, total aid per capita was $970 in Niue, $573 in Tuvalu, $520 in the Cook Islands and $325 in Vanuatu (see Appendix for total GDP per capita), compared with $16 per capita for the Sudan and $4 for Zaire in 1983. In Papua New Guinea, direct Australian aid accounts for 30 percent of the total PNG government budget. Large amounts of aid are needed because of low levels of develop- ment, high transportation costs, and salaries for foreign assist- ance personnel.

FISHING AND MARITIME CONCERNS

Areas of the South Pacific are very rich in fish. It is a key cash crop as well as a food staple. The Pacific nations complain, however, that the U.S. does not appreciate their re- liance on fishing. Most nations, including the U.S., declare maritime Economic Exclusion Zones (EEZ) in which they reserve the exclusive right to all economic resources. The U.S. takes the position, as stipulated in the 1976 Magnuson Act, that EEZ rules do not apply to migratory fish species, such as tuna. The South Pacific nations disagree; they assert that they should have exclusive fishing rights to fish, including migratory species, within their EEZs. This entitles them, they claim, to charge fees for tuna fishing within their EEZs. U.S. and Japanese tuna boat owners balk at this and hitherto have been reluctant to cooperate with the South Pacific Forum Fisheries Agency. Paying fees to various states for migrating fish would take the profit out of their operations. Avoiding the fees is not difficult, for tuna boats are often faster than the island boats patrolling their EEZs.

The island nations feel that the U.S. Congress has taken a position supporting the fishing industry against the Pacific islands. specifically, the islanders point to the 1967 Fisheries Protection Act, which penalizes countries that confiscate U.S. fishing vessels by imposing an embargo on all fish products from these countries. In addition, U.S. fishermen are compensated by the U.S. government for the loss of fishing time and the seizure of their fishing boats.

In June 1984 the Solomons seized the U.S. tuna boat Jeanette Diana. The U.S. was forced to invoke the Fisheries ProteFt-ion Act and embargo all Solomon Island fish products from U.S. markets. The Solomons government attempted to sell the boat on the open market, but after long negotiations agreed to "sell"the boat back to its owner--who will be reimbursed by the U.S. as stipulated in the Fisheries Protection Act. This will cost U.S. taxpayers about $3.5 million. Even more costly will be the political damage to the U.S., compounded by hostile propaganda.

Hostility over the fish issue soon may ease. Since 1983 the U.S. has been trying to negotiate a Regional Fisheries Agreement. This would impose a single fee on U.S. tuna boats entering the region, which the island states would split according to the amount of fish caught in their individual zones. If the fees were sufficient, this treaty could satisfy islanders who have felt that they are not benefiting from their own resources. Eliminating the multiple fees, on the other hand, should please U.S. tuna boat owners.

The islands are very vulnerable because they lack adequate communications and vessels for coastal surveillance. To help remedy this, Papua New Guinea, the Solomons, To4ga, Vanuatu, and Western Samoa are taking part in Australia's Pacific Patrol Boat Project. The project resulted from Australian Prime Minister Bob Hawke's offer to build a simple and economical EEZ zone patrol boat to assist the islanders and to demonstrate Australia's determination to give practical support in the South Pacific.

The islanders also lack adequate inter-island transport. Many states would like to establish national shipping lines, but this would be-impractical. This is a field where aid from Western nations could play an extremely helpful role and keep Soviet initiatives at bay.

THE ISLANDS' STRATEGIC ROLE.

The South Pacific island states play an important strategic role in Australian and New Zealand security. Largely because of Australian and New Zealand commitments and their'economic assis- tance to the islands, the Forum has backed the Australian-New Zealand-U.S. policy of refusing Soviet offers of assistance in improving fishing methods or developing oceanographic studies. Acceptance of the offers would give Moscow a foothold in the South Pacific.

The U.S. also has important security interests in the South Pacific. The sea routes from the U.S. West Coast to U.S. trading partners in the Asian Pacific region are affected by the situation in-the South Pacific. In world War II the importance of the vital route from the Pacific through the Tasman Sea and Bass Strait to the Indian Ocean became evident to the allies defending India and the Mideast when the Japanese conquest of the Malay barrier cut off the north and central Pacific to U.S. naval forces.

Should the U.S. be forced to give up its bases in the Philippines and to relocate in Guam or possibly Australia, sea control of the South Pacific and the southern passage to Australia would be of paramount importance. In addition, the U.S. has a ballistic missile testing station on the Kwajalein Atoll on the Marshall Islands, an important facility for Strategic Defense Initiative research.

SOVIET INTERESTS

Soviet military forces in the Pacific have a growing amphi- bious capability and increasing numbers of long-range weapons systems, nuclear submarines, and attack aircraft. Soviet ships call more and more frequently at the Cambodian port of Kompong Song'and the Vietnamese ports of Da Nang and Cam Ranh Bay, where the USSR has established a permanent facility. As a result, the Soviets are now 2,200 miles closer to the Indian Ocean than they were a decade ago. They are capable of interdicting American and allied sea lanes of communication in the South China Sea.

For years the Soviets have sought ports of call in the Pacific island nations. In exchange, Moscow has offdred to promote fishing and canning projects, oceanic research, and port and airstrip improvement. So far, no substantial Soviet proposal has been accepted. Yet the Kremlin remains interested because the island states' economic and political vulnerability presents a likely target for subversion. Pro-Soviet themes receive wide propagation within the Pacific states through the politically important trade unions. one active conduit has been the Pacific Trade Union Forum, which is led by pro-communist factions from the Australian and New Zealand labor unions. It has growing representation in island unions, is well funded, and thus far has held three regional conferences.

In late May, Kiribati initialed a fishing agreement that gives Moscow access to Kiribati's EEZ for $2 to $3 million. With a population of 60,000, little indigenous industry, and a national budget of only $18 million, this Soviet aid will be a significant boost to Kiribati's economy. It is expected that Tuvalu and other island states will be tempted to make similar -deals with the Soviets. Kiribati rejected Soviet requests for onshore support facilities--it does not grant such facilities to any fishing fleet. And, further, widespread practice of Christianity dampens communism's appeal. The legitimization of Moscow's presence through fishing agreements may prompt future island leaders to accept even greater Soviet economic assistance as a way to alleviate some of their economic difficulties. Dividends for Moscow could be substantial. Example: Soviet support facilities for their fishing fleet in Kiribati's capital of Tarawa would ease Soviet reconnaissance of the U.S. ballistic missile testing station in the Kwajalein Atoll, 600 miles away. Aid projects also would allow Moscow a chance to place agents of influence on the islands.

In the South Pacific, the U.S. aims to promote political and economic stability, to secure air and naval passage, and to check the expansion of Soviet influence. To achieve this, Washington quickly must take concrete steps to demonstrate that it appre- ciates the region's strategic importance and is sympathetic to its economic problems.

Fishing is the most important pplitical and economic issue the U.S. must confront. As long as the 1976 Magnuson Act remains in force, there will be a jurisdiction problem over tuna. Currently, the U.S. tuna fleet is under great economic strain. Prices are in a slump, and as many as one-quarter of the West Coast tuna boat owners are nearing bankruptcy. By contrast, Moscow is under no such contraints if it makes the South Pacific a strategic priority. If Washington were to reach a regional fisheries agreement quickly, however, the islanders would be assured of benefiting from fish caught within their EEZs, while an unfair burden on U.S. fishing boat owners would be avoided.

Additional fishing fees will not solve the islands' long-term economic needs. As such, the U.S. should be prepared to offer economic assistance enabling island states to establish their own -fishing capability. This should include additional oceanographic assistance to help the states assess their fish resources. A regional fishing industry, moreover, would help develop regional shipping lines that would facilitate needed inter-island transport.

The nuclear free zone treaty produced at the recent meeting of the South Pacific Forum meets U.S. requirements for transit of warships. However, the treaty prohibits the stationing of nuclear weapons within the proposed zone. Should the U.S. lose its bases in the Philippines, access to Australian bases might become critical to the defense of U.S. and Australian interests in Southeast Asia and in the Middle East. Moscow is expanding its capability to project power from Vietnam, Ethiopia, and Yemen, which presumably do not restrict Soviet stationing of nuclear weapons. In the U.S. view, U.S. ability to station nuclear weapons in Australia could, in certain scenarios, be critical for the maintenance of regional security. Before signing the nuclear free zone treaty, the U.S. will need to clarify with Australia those aspects that might affect U.S.- Australian defense cooperation. Washington must do a better job of explaining to the people of the South Pacific why nuclear-armed and powered ships are essential to the U.S. Navy and why port visits in the South Pacific are essential to the region's security. Washington must counter New Zealand and Vanuatu campaigns to create a nuclear free zone that in effect would ban U.S. Navy ships. The U.S. could increase the exchange of scholars and U.S. officials with the University of the South Pacific in Fiji, and it should expand its diplomatic presence in the region. Currently, the U.S. has embassies in Fiji and Papua New Guinea. Consulates should be opened in Honiara, the Solomons, and Noumea, in New Caledonia. The U.S. should assist those island states that support U.S. naval port visits and demonstrate a pro-Western stance on regional and global issues. Such rewards could include increased U.S. training of the larger islands' armed forces and of the smaller states' police and coastal surveillance forces. The U.S.-also should consider inviting to Washington Papua New Guinea's Prime Minister Michael Somare. The successful visit last November of Fiji's President Ratu Mara created a good impression of the U.S. in the South Pacific. Somare supports a strong U.S. regional presence, and responsible Melanesians would react favorably to U.S. recognition of one of their most accom- plished leaders.

CONCLUSION The U.S. must end its benign neglect of the South Pacific states. The World War II generation of island leaders is being succeeded by a younger generation, whose concern with economic development and anger over perceived U.S. insensitivity make them susceptible to Soviet offers of economic assistance, as well as to pleas by Third World radicals to join the Third World bloc in its anti-West, anti-U.S., and anti-free market policies. Kiribati's recent fishing deal with Moscow could lead other island states to follow suit. The Soviets eventually might be able to establish an on-shore presence in some of the island nations. At 'a minimum, the Soviets will gain valuable facilities from which to conduct better reconnaissance of U.S. military facilities and naval forces. With luck, Moscow one day could find itself with an ally among the South Pacific nations as useful as Grenada was in the Caribbean. It is not too late to prevent this. -Washington still has a chance to pay some attention to the South Pacific and to take the steps that would end regional perceptions of U.S. as insensitive and would ensure proper representation of U.S. views in the

island states. A more active U.S. policy in the South Pacific would also show Australia and New Zealand that the U.S. is deter- mined to remain an active partner in the region's defense. completion of a regional fisheries agreement must be the top priority for U.S. policy makers, followed closely by U.S. economic assistance toward more profitable fishing industries and an increase in the U.S. diplomatic presence. These steps will demonstrate U.S. concern for the island states, help reduce their dependence on all types of foreign aid, and show the island nations that they need not opt for Soviet economic assistance. Prepared for The Heritage Foundation by Dora Alves, Former Specialist on Australia, New Zealand, and Pacific Georgetown University Center for Strategic and International Studies

Heritage Foundation Research Associate Richard D. Fisher, Jr., contri- buted valuably in the preparation of this study.