R 060806Z MAR 09
FM AMEMBASSY PORT MORESBY
TO SECSTATE WASHDC 5433
INFO CDR USPACOM HONOLULU HI
HQ USPACOM HONOLULU HI
JOINT STAFF WASHINGTON DC
AMEMBASSY CANBERRA 
AMEMBASSY WELLINGTON 
AMEMBASSY SUVA 
AMEMBASSY PORT MORESBY

C O N F I D E N T I A L PORT MORESBY 000030 
 
 
DEPT FOR EAP/EX AND EAP/ANP 
 
E.O. 12958: DECL:  3/6/2019 
TAGS: PGOV PREL BP
SUBJECT: SOLOMON ISLANDS FEELING THE ECONOMIC CRISIS 
 
CLASSIFIED BY: Leslie V. Rowe, Ambassador, U.S. Embassy Port 
Moresby, U.S. Department of State. 
REASON: 1.4 (b), (d) 
 
¶1. (C) SUMMARY: Solomon Islands (SI) is beginning to feel the 
effects of the current global economic crisis.  Donors view the 
situation as serious.  SI leaders are looking for options to 
replace logging revenues that are quickly disappearing due to a 
drop in demand caused by the current economic crisis and 
diminishing forests.  The situation on the ground does not lend 
itself to relieving tensions that still remain and SI is still a 
long way from full national reconciliation.  However, the 
Regional Assistance Mission to Solomon Islands (RAMSI) is 
keeping the country stable and is strongly supported by the 
current government.   National  elections are coming up in 2010 
with a clear possibility that Prime Minister Sikua may not run 
for Prime Minister again.  END SUMMARY. 
 
¶2. (U) Ambassador Rowe, DATT, and POLOFF visited Solomon Islands 
February 23-26 and met with a number of officials including 
Prime Minister Derek Sikua, Foreign Minister William Haomae, 
Leader of the Opposition Manasseh Sogavare, Health Minister 
Johnson Koli, Minister of Environment Gordon Darcy Lilo and key 
members of the donor community.   They discussed a wide variety 
of topics including the impact of the international economic 
crisis in SI, the situation in Fiji, RAMSI,  the recent flood 
disaster, U.S. assistance programs to SI, and the upcoming 2010 
elections. 
 
---- 
FIJI 
---- 
 
¶3. (C) Both Prime Minister Sikua and Foreign Minister Haomae 
were pleased with the united outcome of the January Pacific 
Island Forum (PIF) meeting in Port Moresby although disappointed 
that Bainimarama was not present.  According to Sikua, 
Australian Prime Minister Rudd had pushed to immediately suspend 
Fiji from the Forum, but he and other leaders pushed back to 
give Bainimarama more time to respond on moving forward with 
democratic elections.  Sikua met with Papua New Guinea PM Somare 
and Vanuatu PM Natapei prior to the Forum meeting to discuss 
options. 
 
¶4. (C) Sikua could not predict how Bainimarama will eventually 
act, saying "I have a feeling he wants to talk to see if he can 
wiggle his way out - but none of them [the Pacific Island 
leaders] are talking to him at the moment."  The Melanesian 
Spearhead Group (MSG) may meet with Bainimarama in April.  The 
MSG countries want to give him time, but if Bainimarama does not 
want to abide by the Forum decision then the MSG will look at 
other options.  Bainimarama will need to go to Australia to 
explain his position at the next Forum meeting in August.  In a 
separate meeting, Foreign Minister Haomae stated that 
Bainimarama is trying to divide the Forum - Australia and New 
Zealand against the Pacific Island countries - but the Forum is 
united. 
 
¶5. (C) Pacific Island leaders feel it is very important that 
Bainimarama attend the next meeting and present his case to the 
other leaders.  According to Sikua, "We'll listen to him, but he 
has to turn up.  Everyone is willing to assist him in getting on 
with reforms and election registration.  We will plead with him 
to adhere to the Forum decision.  Everyone is getting tired of 
the Fiji situation, we have other problems to look at.  We [the 
Pacific Island leaders] are all thinking about what is the best 
exit strategy for him [Bainimarama].  The more he disappoints 
the Forum, the less likely we are to be concerned about that." 
Sikua suggested that there may be some options for Bainimarama 
in the Forum itself, but they would "have to see." 
 
¶6. (C) In another meeting, Opposition Leader Manasseh Sogavare 
told the Ambassador that the Forum is punishing Bainimarama and 
the people of Fiji.  He said that Forum leaders did not ask 
Bainimarama the right questions nor show him respect.  Sogavare 
does not believe that Bainimarama will go to Cairns for the next 
Forum meeting.  He stated that a small group (such as the MSG) 
using the "Pacific approach" should meet with Bainimarama to 
discuss the situation.  The MSG needs to meet with him to 
address the issues one by one.  Sogavare stated that the Forum 
went straight to the ideal and jumped too quickly.  "Putting 
sanctions on Fiji is the last thing that should have been done." 
 Additionally, Sogavare stated he did not think the United 
Nations or Commonwealth efforts would be useful because "they 
are not asking the right questions or doing the right thing." 
 
¶7. (C) Sogavare stated that the Forum is very complicated and 
that while the members respect that is important to return Fiji 
to democracy one day, the issue must be addressed very 
sensitively.  One way to address the situation is to ask the 
people of Fiji what they think and what they want.  According to 
Sogavare, Bainimarama is a proponent of Fiji for all Fijians, 
unlike previous coup leaders.  Sogavare told the Ambassador 
there is a large population of Solomon Islanders in Fiji who 
were living in swamps and treated as "less than third class 
citizens" by previous leaders.  Bainimarama recognizes the 
Solomon Islanders in Fiji and respects their human rights. 
However, he will not be in power forever.  This would be 
unacceptable of the long term to Solomon Islands and other 
Pacific Island countries. 
 
--------------- 
ECONOMIC CRISIS 
--------------- 
 
¶8. (U) The current economic crisis is beginning to impact 
Solomon Islands.  According to the SI Chamber of Commerce, in 
2008 logging accounted for 60% of SI exports but demand from 
China and other countries has dropped dramatically over the last 
year.  According to FM Haomae, the impact is greatest in the 
urban areas.  The effects of the crisis have yet to hit rural 
areas where 80-85% of the population lives on subsistence 
farming and fishing. 
 
¶9. (SBU) The SIG is looking at reprioritizing and reducing 
expenditures.  Minister for Environment Lilo stated that "the 
crisis is an opportunity to change the future economic direction 
of this country."  Alternative revenue resources are fisheries, 
gold mining (would take at least 10 years to re-open 
production), eco-tourism (lacking solid infrastructure), and the 
development of new industries such as copra and the export of 
coconut oil.  However, all of these measures require long-term 
planning and investment.  In the short-term there are few viable 
options to make up for lack of logging revenues that are 
projected to ease and eventually disappear over the next five 
years. 
 
¶10. (SBU) The International Monetary Fund is currently in SI to 
advise the SI government which reportedly has just over two 
months of foreign exchange reserves available.  One diplomatic 
contact noted that with 2010 elections approaching, 
parliamentarians will soon be seeking funding from the 
government to campaign.  It will be difficult for the SIG to 
hold money back even if there are cash flow problems. 
 
--------------- 
DISASTER UPDATE 
--------------- 
 
¶11. (SBU) The emergency phase of the recent flooding disaster is 
over and SI is currently conducting assessments for long term 
rehabilitation of the affected areas.  Northeast Guadalcanal and 
southern Malaita were hardest hit and 2,5000 - 3,000 people 
remain homeless.  Ten people died, and ten remain missing.  PM 
Sikua thanked the Ambassador for the USD$50,000 in disaster 
assistance provided to Solomon Islands through the SI Red Cross. 
 Sikua and numerous other officials said that the flooding was 
in fact caused by left over debris from logging.  Logs were 
washed down rivers during the heavy rains which caused dams to 
be formed.  When the dams broke, flash flooding occurred further 
downstream.  Logging companies have not commented on this 
speculation or contributed to any disaster assistance.  Minister 
for Environment Lilo (who has logging interests) claimed that 
the disaster was due to record rains and climate change rather 
than logging. 
 
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RAMSI 
----- 
 
¶12. (SBU) Australian diplomat Graham Wilson, who arrived in 
January, is the new head of RAMSI.  RAMSI continues to enjoy 
strong support from the SI government and people of Solomon 
Islands.  The SIG is pushing RAMSI to provide assistance in 
rural development but this goes beyond RAMSI's mandate and would 
duplicate efforts by other donors.  RAMSI's current priorities 
are strengthening the machinery of government, law and justice, 
and the economy. 
 
¶13. (C) One key diplomatic contact told the Ambassador that if 
RAMSI left "It would take about a week for trouble to break out 
since none of the underlying issues (which caused the 2001 
ethnic violence) have been addressed."  There are still people 
out in communities who have not been brought to justice for 
atrocities committed during the ethnic conflict.  These 
incidents and the economic tensions (i.e. Malaitans not being 
allowed to work on Guadalcanal and Western Province for the 
large employers) continue to fester.  Additionally, there are 
increased numbers of Malaitans in Guadalcanal settlements who 
cannot return to their villages because they no longer have 
rural skills (gardening, etc).  Malaita has twice the population 
of Guadalcanal (the second biggest province) and there are 
problems on Malaita with land owner issues that are preventing 
industry and donors from investing and creating opportunities on 
Malaita.  On February 27, the SIG held a ceremony to launch a 
new oil palm plantation after resolving years of disputes with 
landowners.  If successful, the plantation could generate 
several thousand jobs for Malaitans and would be a huge step 
toward relieving ethnic tensions. 
 
¶14. (SBU) There have been some reconciliations along the 
Guadalcanal coast and some on Malaita, but no provincial 
reconciliations.  SI is still a long way from national 
reconciliation, but continues to make progress.  Bishop Tutu is 
reportedly scheduled to visit SI April 27-29 to share his 
experience on the reconciliation process. 
 
------------------- 
PACIFIC PARTNERSHIP 
------------------- 
 
¶15. (U) Pacific Partnership 2009, a Navy humanitarian assistance 
mission, will visit Solomon Islands in early August 2009.  A 
pre-deployment site survey team met with officials and donors to 
coordinate the mission and ensure that donor efforts are not 
duplicated.  The mission is slated to visit the islands of 
Guadalcanal, Malaita, and possibly Makira to provide medical, 
dental, and veterinary community assistance programs.  In 
addition to locating sites for these programs, the team is also 
identifying small engineering assistance projects that could be 
completed during a two-week timeframe. 
 
¶16. (U) The news of the Pacific Partnership 2009 mission was 
welcomed by all.  PM Sikua stated there will not be a shortage 
of people coming forward for medical assistance, and asked for 
as much publicity as possible to raise awareness and to give 
people time to prepare for the visit.  FM Haomae assured the 
Ambassador that SI would make certain the visit is successful. 
 
------------------------- 
CORAL TRIANGLE INITIATIVE 
------------------------- 
 
¶17. (U) The Coral Triangle Initiative (CTI), a $40-million USAID 
regional program focused on preserving coral reefs, fisheries, 
and food security, will hold its third meeting in Papua New 
Guinea in March.  Minister for Environment Lilo will be leading 
the SI delegation to the Ministerial in Port Moresby.  He stated 
that Solomon Islands is an active participant and that CTI comes 
at the right time.  Solomon Islands is phasing out unsustainable 
development and must involve the people to change from income to 
livelihood and sustainable development.  He is looking at CTI as 
an opportunity to generate interest in SI communities.  Lilo 
said SI declared parts of Western Province marine protected 
areas last year.  Currently less than 1% of SI waters are marine 
protected areas. 
 
-------------- 
2010 ELECTIONS 
-------------- 
 
¶18. (C) The next SI national elections will be held in April/May 
¶2010.  In past SI elections, only 50% of the MPs have been 
re-elected.   Several of our contacts speculated that PM Sikua 
will not run again for Prime Minister.  Sikua was a compromise 
candidate after former PM Sogavare fell in the December 2007 
vote of no-confidence.  Sikua is smart and wants to move the 
country forward, but appears to have little "fire in the belly" 
to tackle the imminent economic problems Solomon Islands will 
face in the next few years.  Although drunk driving charges 
against him were dropped in a recent court hearing, Sikua also 
continues to have problems with alcohol, and being Prime 
Minister undoubtedly adds to his stress.  Other leading 
contenders are Deputy Prime Minister Fred Fono, Minister of 
Planning Steve Abana, Minister of Education Matthew Wale, and 
Minister of Environment Gordon Darcy Lilo. 
 
¶19. (C) Waiting in the wings is Opposition leader Manassah 
Sogavare, who is in the process of reinventing himself, 
professing to RAMSI officials and other diplomats that he was 
"poorly advised in the past."  In a meeting with the Ambassador, 
he sounded remarkably like the old Sogavare, particularly in his 
opinions on RAMSI and the need for Solomon Islands to maintain 
its sovereignty.  Sogavare acknowledged that RAMSI is playing a 
crucial role in maintaining the security and stability of the 
country.  In the long run, SI must move toward building its 
capacity to govern itself and develop its economy and foreign 
investments.  Reiterating a long-standing conflict with RAMSI, 
 
Sogavare said that immunity for RAMSI officials must be removed. 
 
¶20. (C) COMMENT: The economic crisis is at the forefront of 
everyone's mind in SI, and concerns range from the impact on 
daily life to potential security situations.  RAMSI maintains 
stability and SI continues to look for opportunities for foreign 
investment.  PM Sikua will probably not return in the next 
national election, and contenders are already gearing up for 
campaigning.  While SI is stable now, it remains fragile.  The 
upcoming change in leadership and downturn in the economy 
portend an uncertain future for the country.  END COMMENT. 
 
 
ROWE