R 050631Z NOV 08
FM AMEMBASSY PORT MORESBY
TO CDR USPACOM HONOLULU HI
HQ USPACOM HONOLULU HI
SECSTATE WASHDC 5332
INFO JOINT STAFF WASHINGTON DC
AMEMBASSY CANBERRA 
AMEMBASSY SUVA 
AMEMBASSY WELLINGTON 
AMEMBASSY PORT MORESBY

C O N F I D E N T I A L PORT MORESBY 000222 
 
 
PACOM FOR ADMIRAL KEATING 
DEPT FOR EAP/EX 
DEPT FOR EAP/ANP 
 
E.O. 12958: DECL:  11/5/2018 
TAGS: MARR MOPS PREL PGOV PP
SUBJECT: CORRECTED COPY: PAPUA NEW GUINEA SCENESETTER FOR THE VISIT 
OF ADMIRAL KEATING, NOVEMBER 2008 
 
REF: PORT MORESBY 219 
 
CLASSIFIED BY: Leslie Rowe, Ambassador, U.S. Embassy Port 
Moresby, Department of State. 
REASON: 1.4 (a), (b), (d) 
 
 
/ / / / / / / / THE FOLLOWING CABLE IS A CORRECTED VERSION OF 
PORT MORESBY 219.  IT HAS BEEN CORRECTED FOR CONTENT, AND TO 
INCLUDE SECTIONS THAT WERE DROPPED IN THE ORIGINAL TRANSMISSION. 
/ / / / / / / / 
 
¶1. (SBU) SUMMARY: Embassy Port Moresby looks forward to 
welcoming you to Papua New Guinea (PNG).  Your visit presents an 
opportunity to follow up on the success of Pacific Partnership 
2008 and to review where the PNG's potential engagement in 
international PKO.  Though it is increasing ties to Asia, PNG 
sees itself as a Pacific nation and potentially the most 
important one.  The lack of true political parties and of 
leaders with a national outlook has undercut governance and 
steadily eroded the delivery of services.  Your visit also 
provides a chance to reinforce the Mission's priorities of 
democracy, good governance and commitment to providing 
humanitarian assistance. END SUMMARY 
 
----------------- 
CURRENT U.S. ROLE 
----------------- 
 
¶2. (SBU) Given the U.S. position in the world, and the fact that 
we are not seen as self-interested, the USG is in a position to 
reinforce democratic efforts through modest engagement.  PNG's 
recent foreign policy thrust has been to move out from under 
Australia's shadow, exemplified by increasing links with China. 
 
¶3. (SBU) A stable and relatively prosperous PNG is 
extraordinarily important for stability in the South Pacific. 
For the medium term however, PNG will be beset by numerous 
difficulties - including an emerging HIV epidemic which rivals 
those in some of the hardest hit African countries.  Through the 
President's Emergency Plan for Aids Relief, USAID has increased 
its program here by 700 percent.  The Centers for Disease 
Control has also established a technical assistance program. 
 
¶4. (U) Pacific Partnership 2008 has proven to be the most 
important, effective humanitarian mission and public diplomacy 
goodwill event mounted by any nation in Papua New Guinea in the 
past year.  It moved U.S. interests forward in dramatic fashion, 
and the joint assistance efforts by Pacific Partnership 
personnel from the U.S., Papua New Guinea, Australia, Canada, 
Chile, India, Korea and New Zealand substantively enhanced 
regional security cooperation.  The mission opened doors, cured 
ills, saved lives and gave hope to thousands in Port Moresby, 
Central and Oro Provinces.  Even six weeks after the USNS Mercy 
weighed anchor and departed Port Moresby, Pacific Partnership 
2008 still reverberates in the form of sustained media coverage 
and continuing expressions of appreciation in Papua New Guinea. 
 
----------------- 
PNG DEFENCE FORCE 
----------------- 
 
¶5. (C) Legislation authorizing PNGDF participation in 
peacekeeping operations will not happen this calendar year. 
Referred to in the press as the "International Obligations 
Bill," the PKO legislation is currently in committee undergoing 
amendments and revisions.  It may be part of a larger 
legislative package calling for the establishment of a PNG 
military reserve force, which could pose further delays.  The 
best-case consensus on the timing of authorizing PKO legislation 
is now February-March 2009. 
 
¶6. (C) Civilian political leaders have called for a rapid PNGDF 
expansion from 2,000 to as many as 5,000 personnel.  The current 
PNGDF training intake capacity is limited at 200 personnel every 
six months, or 400 per year.  The ability of PNGDF to increase 
the introductory training capacity is not expected to happen 
soon.  PNGDF leadership recently recommended to the government 
that PNGDF personnel not exceed 3,200 in the near term.  PNG has 
five female officers (doctors and legal officers).  As part of 
its expansion plan, the PNGDF will increase its number of female 
soldiers, specifically as office support personnel and as 
drivers. 
 
---------- 
BACKGROUND 
---------- 
 
¶7. (SBU) Papua New Guinea is by far the largest Pacific Island 
nation and, with abundant resources, potentially the richest 
one.  The government depends largely on mining and forestry 
revenues, bolstered by income tax revenues from largely 
Australian expatriate businesses.  Together, these have served 
more to enrich the political elite than to provide social 
services or infrastructure.  There are no large-scale local 
businessmen, but numerous politicians are relatively well off. 
Since independence in 1975, PNG has suffered from a series of 
shifting coalitions and rotating governments.  As senior civil 
service jobs are filled through patronage, this has undermined 
continuity of policy and services. 
 
¶8. (SBU) The nation began in 1975 with a well-trained civil 
service and an effective police force adequately funded through 
the tax base and substantial mining revenues.  This hopeful 
situation pertained for some time, but substantial deterioration 
became obvious by the early '90s.  Assertion of traditional land 
ownership rights cut into mine revenues and exploration.  With 
inadequate resources, training and leadership, the police force 
became ineffective, corrupt and often abusive.  Growing 
unemployment and migration from traditional villages fed a 
steady rise in violent crime.  The government civil service 
remained relatively well funded, though undercut by patronage. 
Eventually, lower revenues and rapid population growth 
overwhelmed government services, including education and health. 
 
------- 
ECONOMY 
------- 
 
¶9. (U) Currently high commodity prices, together with two years 
of prudent fiscal management under former Finance Minister Bart 
Philemon have helped to shore up the economy after a decade of 
deterioration.  Changes in royalty and corporate tax rates have 
increased mineral and hydrocarbon exploration, though it will be 
some years before this can translate into production.  The IMF 
projects growth rates for the next five years of just under 4%, 
which should reverse years of steady per-capita income loss due 
to the 2% population growth. 
 
¶10. (SBU) Exxon Mobil, as the largest shareholder with 41% 
ownership, will develop and operate the PNG-LNG project, a USD 
10-13 billion investment to be expended between now and the 
project's completion in early 2014.  The investment is by far 
the largest in PNG's history and has the potential to propel 
PNG's economy, currently dependent on foreign aid, to complete 
independence, with revenues to the GPNG and landowners expected 
to exceed USD one billion per year for the thirty year projected 
life of the project.  A major concern is transparency and 
whether corruption in the government would prevent these 
revenues from reaching local health and education sectors where 
it could make the greatest impact. 
 
-------- 
POLITICS 
-------- 
 
¶11. (U) With the exception of the courts, western political 
institutions have had difficulty taking root in PNG soil. The 
country is formed from several thousand traditional communities 
speaking over 800 distinct languages.  Previously, with 109 
members of Parliament and a first-past-the-post electoral 
system, MPs were generally elected with the support of only 
their close communities.  Often in the past, an MP had the 
support of less than 20% of his electorate and did not consider 
the other 80% as constituents.  Election reform brought a 
limited preferential voting system to PNG for the 2007 
elections, which were far less violent and more representative 
than any since independence. 
 
¶12. (U) Political parties in PNG were also unlike their western 
counterparts.  They tended to be coalitions of MPs already 
elected in their own right.  Though some figures emerged as 
relatively dominant, they could not enforce party discipline or 
personal loyalty. Party affiliation meant little to election 
prospects and members had little reason to work together to 
boost party chances in the future.  Limited preferential voting 
is changing the political landscape; following the July 2007 
elections, Michael Somare's National Alliance Party (NA) invited 
as many newly-elected MPs as it could entice and sequestered 
them with party loyalists at a party retreat. 
 
¶13. (U) Sir Michael Somare was elected Prime Minister in August 
2007, becoming the longest-serving parliamentarian in the 
Commonwealth.  PM Somare was the first to complete a five year 
term since independence and he hopes to complete a ten year 
term.  Somare celebrated his 40th year in politics in March 2008. 
 
¶14. (U) The historical political system has produced many 
members of parliament designated as national leaders, but with 
little incentive to have a national outlook.  This goes a long 
way to explain the factional political squabbling that often 
consumes Port Moresby while government services and national 
infrastructure steadily deteriorate.  The literate public has 
deservedly low expectations of government, and the government 
has been notoriously impervious to pressure from the electorate. 
 
¶15. (U) Australian think-tanks regularly produce reports 
labeling PNG as a failed state.  PNG faces many challenges, but 
it is no failed state.  The government may not be able to 
deliver services, but the country does not harbor large forces 
opposed to the government and there is little prospect of the 
mass deprivation, large-scale refugee flows and sheltering of 
foreign terrorists that form the modern nightmare of the failed 
state. 
 
----------------- 
THE ROLE OF CHINA 
----------------- 
 
¶16. (C) PNG has recognized the People's Republic of China since 
¶1976.  China is working with the PNGDF on military training 
programs.  A Chinese Defense Attachi is expected to join the 
resident DATT group (Australia, New Zealand, Indonesia) in 2009. 
 
¶17. (C) China publicizes its aid program widely, emphasizing the 
fact that it is given without governance performance conditions. 
 While dwarfed by the size of the Australian aid program, the 
People's Republic of China is now reported to have the second 
largest foreign aid program in Papua New Guinea.  As more 
Chinese citizens move to PNG legally and illegally, largely for 
economic opportunity, the Chinese government has also increased 
its presence and visibility. 
 
¶18. (C) In recent years, China has provided funding and 
technical assistance for high visibility construction projects, 
including an indoor sports complex in Port Moresby.  China is 
increasing its support for agricultural development projects. 
The Chinese government also funded a USD7 million cold fish 
storage facility in Lai in 2006, and broke ground on the USD one 
billion Ramu Nickel mine.  It is estimated that more than 80% of 
PNG's log exports go to China.  Bilateral trade between China 
and Papua New Guinea approached USD500 million in 2006.  China 
also provides a small number of scholarships to PNG citizens for 
study in China. 
 
¶19. (C) Given the significant exports of raw materials to China 
and the scale of Chinese investments in PNG, recognition of 
China by PNG and the PNG-China relationship appears to be 
stable.  There are no political parties or other factions 
advocating a change in recognition status. 
 
------------------- 
WHAT YOU CAN EXPECT 
------------------- 
 
¶20. (SBU) You can expect your interlocutors to be articulate and 
well informed.  They will be supportive and interested in 
working cooperatively with the U.S.  Your visit will continue to 
reinforce the Mission's priorities of democracy and good 
governance, as well as strengthening our defense and security 
relationship. 
 
¶21. (SBU) We look forward to your visit and stand ready to do 
everything we can to make your time in Papua New Guinea as 
productive as possible. 
 
 
ROWE