Bougainville's future weighs on PNG's political stability

Bougainville's future weighs on PNG's political stability

Originally published on The Economist Intelligence Unit


What's happened?

Papua New Guinea's parliament is yet to vote on the status of Bougainville, after the province voted overwhelmingly in favour of independence in a referendum in 2019. While the national government is currently undertaking consultations, the outcome of this process remains uncertain and political tensions are rising. The Autonomous Bougainville Government (ABG) is committed to resolving the issue before the 2027 national election.

Why does it matter?

The national government's position appears to be hardening, which risks conflict. Government ministers appear to be calculating that the Bougainville residents might be dissatisfied but will ultimately accept a negative outcome. If parliament outright rejects independence for the province, without at least offering more powers to the ABG, EIU would anticipate localised conflict and heightened tensions across Bougainville as well as the neighbouring Solomon Islands. Bougainville could make a unilateral declaration of independence, and an associated appeal to the UN and international community for recognition and UN membership.

An independent Bougainville would not be economically viable, suggesting independence would lead to considerable disruption. The ABG generated only Kina3m (US$805,430) in goods and services tax in 2022 but ran expenditures amounting to Kina420m. The ABG is pinning most of its hopes on the Panguna mine: it holds a majority stake in the operator, Bougainville Copper Limited (BCL), after Australia-based Rio Tinto gifted its stake to the ABG and the national government in 2019. While BCL is planning to approach industry partners about operatorship, the mine has now been closed for 35 years, suggesting it does not represent a reliable source of potential revenue for the ABG. Rio Tinto's current activities on Bougainville are limited to supporting a joint assessment (with the ABG and Panguna stakeholders) of the mining operation's human rights, social and environmental legacy.

What next?

EIU expects PNG's parliament to vote against Bougainville's independence in 2024. What alternative form of autonomy is voted for Bougainville remains uncertain. There has been some progress in promoting alignment among local Panguna stakeholders for the mine to be reopened, but consensus on this point remains fragile and our forecasts assume that a resumption of operations will not occur in 2024‑28.



Areas of expertise: Economics and politics in Papua New Guinea and the Pacific; trade policy; economic history