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O'Neill flexes his muscles as Abbott flies in

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21 March 2014 10:58

Tony Abbott flew in to Port Moresby last night for his first prime ministerial visit to Australia's nearest neighbour. Karl Claxton has foreshadowed some of the major themes of the visit over at The Strategist.

Despite the range of issues on the agenda and whatever the expected results of the visit, the most important outcome for Tony Abbott will be the establishment of a friendly relationship with his counterpart.

Prime Minister O'Neill

The two leaders had an unfortunate start to their relationship before the Australian federal election, with O'Neill taking then Opposition Leader Abbott to task for misrepresenting his remarks in relation to the Refugee Resettlement Arrangement. But both leaders are pragmatic and will be anxious to demonstrate they have moved on with a positive meeting today, during which they are due to sign an Economic Cooperation Treaty, setting out a framework for bilateral cooperation in trade, investment, business and development cooperation.

It would be tempting for Abbott to leave the management of bilateral relations to his capable foreign minister, Julie Bishop, who has already built positive relationships with PNG ministers. Australia's relations with Papua New Guinea, however, require prime ministerial attention. The relationship has thrived and dived on personal contacts between prime ministers in the past and the range and depth of current bilateral activities means that Tony Abbott needs to take overall responsibility for the relationship. To do that, he needs to understand the character and motivations of his counterpart.

Abbott's visit comes after a period of rapid change in Papua New Guinea's cabinet. In the last month O'Neill has sacked four ministers: Treasurer Don Polye, Petroleum and Energy Minister William Duma, Industrial Relations Minister Mark Maipakai and Higher Education Minister David Arore. While political volatility is not unusual in Papua New Guinea, Peter O'Neill's time as prime minister has been characterised by his dominance and commitment to stability, so the rush of sackings was surprising.

But what looks like political chaos is really evidence of further consolidation by O'Neill.

O'Neill moved early after the 2012 elections to consolidate his leadership. He has legislated to extend the grace period during which he is protected from a motion of no confidence from 18 to 30 months. He has reduced the number of sitting days parliament is required to meet each year from 63 to 40 and he has built a governing coalition numbering 105 out of 111 seats in parliament, a majority any prime minister in a Westminster-style system would envy.

O'Neill's sacking of Don Polye, who was widely respected as treasurer, was the most controversial of his recent reshuffle. While O'Neill claimed Polye was causing instability in his government, the real reason for his sacking was Polye's refusal to sign loan agreements worth A$1.2 billion to enable the PNG Government to re-acquire a 10.1% share in Oil Search. Polye believed the purchase of Oil Search shares was a bad decision and claimed no due diligence was done on the transaction.

Peter O'Neill's credo is to ensure PNG has a stake in its own development. He is under pressure to deliver the benefits of Papua New Guinea's impressive resources boom not only to the elites who support him but also to the constituents who vote for him and his coalition. There is a perception among a number of O'Neill's supporters that it is mainly foreign companies which benefit from the global demand for PNG's resources, and that they are taking their profits out of the country.

If O'Neill is to stay in power over the long-term – always a difficult proposition in Papua New Guinea – he must be seen to fulfil his promises and increase the ownership of the state or PNG-owned companies in major resources projects, investments and even the Australian aid program.

This mission influenced O'Neill's controversial decision to nationalise Ok Tedi and attempt to seize control of PNG Sustainable Development Program , his willingness to sack Polye to effect the purchase of the shares in Oil Search and his intention to revise media ownership laws to favour local investors. His negotiation of the Joint Understanding between Australia and Papua New Guinea on further bilateral cooperation on health, education and law and order, under which PNG acquired greater say in how the additional aid package associated with the Refugee Resettlement Arrangement was spent, is also evidence of O'Neill's interest in asserting PNG's stake in flagship national projects.

Meanwhile, Abbott, with a few exceptions, has refused to commit taxpayer funds to private companies owned by foreign investors in order to rescue them or influence them to remain in Australia. And Assistant Treasurer Arthur Sinodinos has just stood aside while he gives evidence to the Independent Commission Against Corruption in New South Wales.

In PNG, O'Neill has just appointed a Treasurer, Patrick Pruaitch, famous for his alleged corrupt dealings as Treasurer and later Forestry Minister in the Somare Government. The difference in approach is obvious.

Prime Minister Abbott is accompanied on his trip to PNG by nine senior business figures from Australia, who support the Government's objective to expand economic ties with Papua New Guinea. This is a great initiative and O'Neill, who is practised at telling foreign audiences what they want to hear, will welcome this evidence of commitment to PNG from Australian business.

If Abbott wants to build a good personal relationship with O'Neill, he should encourage O'Neill's commitment to foreign investment in line with the Treaty they are signing. But he should also demonstrate that he understands PNG's desire to have a greater stake in its own future. It may be too early to have a frank discussion about how PNG can do that without risking alienating new foreign investors, but if the prime minister of PNG's largest source of trade, investment and aid wants to have that conversation, he needs to build trust first.

Photo courtesy of Wikipedia.

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