R 210756Z SEP 09
FM AMEMBASSY PORT MORESBY
TO SECSTATE WASHDC 5627
INFO AMEMBASSY CANBERRA 
AMEMBASSY WELLINGTON 
AMEMBASSY SUVA 
AMEMBASSY PORT MORESBY 
HQ USPACOM HONOLULU HI
CDR USPACOM HONOLULU HI
JOINT STAFF WASHINGTON DC
ASEAN REGIONAL FORUM COLLECTIVE
CIA WASHDC

C O N F I D E N T I A L PORT MORESBY 000180 
 
 
STATE FOR EAP/ANP AND INR/B 
AID FOR ASIA/EAA CHERYL JENNINGS 
BANGKOK FOR USAID/RDMA 
 
E.O. 12958: DECL:  9/21/2019 
TAGS: PREL PGOV EAID PP
SUBJECT: PAPUA NEW GUINEA: FORMER PM FEARS 'SOCIAL IMPLOSION' IF LNG 
FUNDS MISSPENT 
 
CLASSIFIED BY: Paul Berg, Charge d'Affaires, Embassy Port 
Moresby, Department of State. 
REASON: 1.4 (b), (c) 
 
¶1. Summary.  Leader of the Opposition and former Prime Minister 
Sir Mekere Morauta told us he fears a `social implosion' if 
Government proceeds from Exxon Mobil's LNG project flowing into 
Government-supervised trust accounts is misspent.  He said 
current PM Somare, who served briefly as Foreign Minister during 
Mekere's time as Prime Minister, is weak and does not know what 
steps to take next on allocating trust account monies.  He said 
the Somare Government's inability to provide adequate guidance 
and coordination to foreign donors forces them to make 
assistance decisions unilaterally.   Mekere said Somare would 
welcome advice from foreign donors if provided `gently' rather 
than forced down his throat, and in this regard urged creation 
of a Friends Of PNG group overseas comprising major 
international donors such as Australia, People's Republic of 
China (PRC), World Bank, Asian Development Bank (ADB), New 
Zealand, UK and U.S.   End summary. 
 
 
PM Somare `Weak Leader Who Doesn't Know Where To Begin' 
 
¶2. Papua New Guinea's current Leader of the Opposition and 
former Prime Minister (1999-2002) Sir Mekere Morauta, 63, 
lamented the shortcomings of the current Prime Minister, Sir 
Michael Somare, 73.  `I know Sir Michael well; he was my Foreign 
Minister (briefly in 1999.)  His first problem is leadership. 
He is simply not a strong leader.  His other problem is that he 
does not know where to begin work on solving Papua New Guinea's 
problems.' 
 
¶3. Mekere opined that a Prime Minister of Papua New Guinea 
enjoys greater powers than a President of the U.S. or Prime 
Minister of Australia.  In Australia and the U.S., he explained, 
there are well-developed political parties, including organized 
factions within ruling parties, which limit a leader's power. 
In PNG, he said, everything depends on the Prime Minister, 
making him in practice `close to a dictator,' especially given 
new laws Mekere passed during his term to promote political 
stability, reducing the frequency of votes of confidence and 
parliamentary challenges which had kept PNG politics volatile 
and unpredictable in preceding years.  He said these very laws 
had enabled Somare to remain in office since 2002, adding that 
`political stability alone has not been enough to guarantee 
development.' 
 
 
Principal Donors Should Jointly Provide `Gentle' Guidance 
 
¶4. Mekere turned to the most urgent issue facing the Government 
of Papua New Guinea, how to spend the billions in U.S. dollars 
expected to flow into government-overseen trust accounts from 
Exxon Mobil's construction of a liquid natural gas (LNG) 
project.  `The Government doesn't know which steps to take first 
with the money,' said Sir Mekere.  `Somare does not know what to 
do; the whole Government needs some gentle advice from the 
outside.'  He paused, took a moment to reflect, then added, 
`they want your advice, they want advice from the donors, but 
they do not know how to ask for it.  Your advice must be given 
gently.  You must -- gently -- take us by the hand.  We do not 
want to feel we are being dictated to.' 
 
¶5. Mekere acknowledged it would be awkward for any one foreign 
country or institution to apply pressure on PNG unilaterally. 
`You should not do it alone,' he said.  Instead, he suggested 
that major foreign donors form an informal Friends Of Papua New 
Guinea group overseas to coordinate recommendations.  `It should 
include all the major donors: U.S., Australia, China, World 
Bank, ADB, New Zealand, and the U.K.,' he suggested.  Ideally, 
he said, the Prime Minister himself would ask donors to form 
such a group. 
 
 
Papua New Guinea At Risk Of `Social Implosion' If LNG Funds 
Misspent 
 
¶6. Stressing the urgency of his proposal, Mekere said that PNG 
would `implode' if the trust account funds are not spent wisely. 
 Popular expectations are high; ordinary citizens expect the 
inflow of revenue to the Government treasury will improve their 
daily lives.  He said he fears the social consequences if rising 
expectations are dashed, if a few get rich but the rest get 
poorer. 
 
¶7. Mekere scored the Government's lack of coordination, proper 
planning or practical understanding of next steps.  `Right now,' 
he said, `AUSAID is out of control.  I don't mean that Australia 
is being naughty.  What I mean is that, out of desperation over 
lack of Government direction, they are funding projects of their 
own choosing.  The Government cannot truly be said to be in 
charge of how and where foreign assistance is spent. `  He said 
the PRC's assistance, too, is `out of control.'  Note:  Papua 
New Guinea receives more AUSAID assistance than any other 
country, approximately USD 337,000,000 in overseas development 
assistance (ODA) during the 2008-2009 period, concentrating on 
governance, economic growth, improved service delivery and 
HIV/AIDS.  PRC non-military assistance is considerably less but 
difficult to ascertain with precision; according to the PRC 
Embassy, it is not provided in the form of ODA but rather as 
`soft assistance,' often as exchange.  We nevertheless speculate 
PRC's total non-military assistance could amount to as much as 
USD 15-20 million, based on our conversations with the PRC 
Ambassador.  U.S. assistance during the same period totals 
something under USD 3,000,000, primarily for HIV/AIDS and the 
Coral Triangle Initiative.  End note. 
 
¶8. As an example of poorly planned assistance, he cited money 
spent on various infrastructure projects such as road building, 
new schools and hospitals.  `Our problem is not a need for new 
infrastructure.  At this point, we cannot even maintain the 
infrastructure we have. Instead of building new hospitals, we 
need to maintain the ones we have. Instead of new roads, we must 
repair the ones we already have.  Many are next to impassible at 
present.  Yes, we must treat some of the symptoms of our 
underlying ills, such as strengthening law enforcement to deal 
with crime.  But it's even more important that we address the 
long-term causes.' 
 
¶9. Comment: Younger opposition Members of Parliament have 
expressed their frustrations over dealing with Mekere's party 
leadership.  They admire his intelligence and respect his 
experience but find him far too reflective and diplomatic 
towards the Somare Government when they would like to go on the 
attack.  He struck us, too, as circumspect and diplomatic, no 
firebrand, but we find his analysis compelling. He has 
designated two trusted colleagues, MP Sam Basil and MP Paru 
Aihi, to discuss his Friends proposal with us in further detail. 
End comment. 
 
 
BERG