Vanuatu's new government makes investors nervous

By Marc NeLL-lanes

Tlm Vaaoota government led by Donald Kalpokas has boon forced oat and replaced by a foar-party coalition with a very narrow majority. The coalition is led by Barak Sope off the Melanesian Progres sive Pali and backed by the late Fr Waller UnKs political party NUP.

The change of government comes after months of instability and statements by the opposition that they had the numbers to overthrow the government.

When a proposed Motion of No Confidence motion was announced by the opposition, Kalpokas chose give more time to his coalition partner, Willy Jimmy, to get more backbenchers in to support the government. He opted against forming government with the NUP whom they had already sacked once from the government in favour of Jimmy’s UMP faction.

The opposition seized the chance. On the day of the proposed Motion of No Confidence, November 26, the two Jon Brum members were persuaded to cross the floor in return for retaining the ministry of health portfolio. With the opposition having 28 and the government 24, Donald

Kalpokas resigned.

Kalpokas had caused concern with his party over his refusal to follow the request by his executive to form government with NUP. His resignation spells the demise of his political career as the party President Edward Natapei has now taken control of the party and is the new leader of the

opposition.

The VP-led government was supported by many investors in Vanuatu. It was the first government to effectively tackle

public spending which had gradually

ballooned out of control, and it had reduced the civil service by 10 per cent.

They had introduced wide ranging structural reform aimed at improving a shoddy government track record of mal administration and corruption.

Government transparency was the key to the Comprehensive Reform Program. The government introduced vat that spread the tax base over the population instead of through the business community in the

past.

The new government has made investors very nervous because of bad publicity surrounding critical reports by former Ombudsman Marie Noelle Patterson on Sope. These were over the infamous Bank Guarantee scheme that could have bankrupted the nation if SIOO million dollars worth of guarantees from the Reserve Bank of Vanuatu had been cashed in. Australian Peter Swanson, who had sold the idea of the scheme to Sope when he was Minister for Finance was subsequently jailed after he was found guilty and lost his appeal.

Barak Sope has had a long but controversial political career. Despite being educated at Essendon Grammar school in Australia, he has long been a vocal critic of Australian interference in Vanuatu affairs.

He caused concern in Canberra in 1987 with his close ties with Libyan Colonel Gaddaffi. He was jailed in 1988 following land riots in Port Vila and the mutiny when an attempt was made to overthrow the government.

Relations between Sope and Canberra were not helped over the publicised leaked

intelligence report by the Australian government foreign affairs office in 1997 on Pacific island leaders which described Sope as “corrupt, spurns due process and advice and attracts carpetbaggers. Seeks office for personal gain and is distrusted.”

Sope has denied all allegations.

Along with Sope, there has been unfavourable Ombud reports on the new lands minister and former prime minister, Maxime Carlot Korman. The allegations were misuse of cyclone emergency relief funds for personal use. New foreign affairs minister and another former PM, Serge Vohor, was alleged to have misappropriated funds with sale of passports.

Barak Sope advised, “I have always said that the allegations made by the Ombudsman are not proven until they go to court. The Ombudsman has a job to do and can produce reports but it is their opinion only.” The new government is effectively controlled by the National United Party(NUP), the former party of Fr Walter Lini that is now run by controversial businessman Dinh Van Than.

NUP have the biggest bloc and should have had the position of PM but the party felt that its MP’s were not experienced enough to handle the top position. They gave it to Barak Sope in return for control of the main ministries. NUP control Internal Affairs, Judiciary, Police, Public Works, Trade and Industry, Transport and Shipping, Ni Vanuatu Business Affairs and Infrastructure/Public Works.

Than has been criticised in the past for

using politics and NUP’s position in

government to help further his business interests. This he vehemently denies.

However, he has already been vocal about putting a halt to a British company awarded the tender for a major road works improvement worth nearly $5 million that is much needed.

His company, SMET, involved in road works, has a case in court “put in on 7th July against the government who awarded the tender to British firm Lagan Holdings

Vanuatu's new prime minister Barak Sope

as we bid $1 million less than Lagan who have subcontracted it back to a local company. We will let the court decide.”

Than has also said there needs to be protection for local manufacturers, including his Saef tinned meat company, from cheap imports of cheap tinned meat from PNG and Fiji through the MSG trade agreement. Both he and Sope have described the agreement as “unbalanced and unfair and damaging Vanuatu industry which provides employment”.

This view is supported by other manufacturers in Vanuatu.

The new government is aware of the heavy criticism but is confident that they can improve investor confidence. They have launched a major PR offensive through the media to highlight changes they will implement to attract investment.

“We must get investor confidence back as a priority as nothing is happening. We want to make it easier for people to invest here. We will concentrate on three main areas. Tourism, Trade and Industry and Agriculture,” Sope says.

“As a priority, this government will look at a new International airport built that can land bigger aircraft. This will open up tourism more and attract more hotels. We

will get the government involved in some investments to ensure they can get set up without problems. We must make it easier for people to invest here.

“In agriculture we will be looking closely at the whole operation of the Vanuatu Commodity Marketing Board to see if they are doing the best job in helping our own people or bring in competition.

Vanuatu must open up.

“We will also look at resurrecting the Development Bank or an Agricultural Bank to help develop the rural areas. It will be controlled properly unlike before when

politicians got loans and almost bankrupted it.” Many investors are keeping a close eye on the situation.

Barak Sope is a very charismatic, intelligent and quick-witted leader who will fight hard to get investment going. He could get things moving - provided controversy is avoided and he puts his business interests on hold.

If he cannot do that, many people believe the government is likely to fall and a Vanuaaku Pati-NUP alliance take its place. With Vanuatu politics however anything can happen. ■

The new government is effectively controlled by the Notional United Party(NUP), the for mer party of Fr Walter Uni that is now run by controversial businessman Dinh Van Than