| Corporate Australia's plunder of our region |
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| Liz Walsh 04 February 2010 |
 Mining waste pouring into the Fly River system This is underscored by a damning report published by the anti-poverty group Jubilee Australia in December 2009. The report, “Risky Business”, shines a spotlight on the history and recent activity of Australia’s export credit agency – the Export Finance and Insurance Corporation (EFIC). This is no independent entity, but an arm of government. Its role is to provide loans or “political risk insurance” to assist Australian companies win investment and export business overseas. Its financing decisions are based solely on two criteria – commercial viability and what advances Australia’s strategic interests.
With the drying up of international private finance as a result of the global financial crisis, the role of export credit agencies (ECA) in the global economy has been greatly elevated. “Risky Business” estimates that ECA-backed exports and investments account for around 80 per cent of direct intervention by industrialised countries in developing countries annually. However, despite playing such a decisive role, the operations of ECAs have largely flown under the radar.
This contrasts sharply with the World Bank and IMF, which have both come under severe criticism and sustained public pressure for sponsoring unsustainable or illegitimate debt and imposing Western corporate interests on the developing world. The ECAs generate nowhere near the same outrage despite being a larger contributor to official debt than the World Bank and IMF over the past decade.
According to Jubilee Australia, ECAs are “the least transparent and least accountable agents in the global economic system.” In Australia, none of EFIC’s decisions are subject to public disclosure under the FOI Act because of that perennial excuse – “commercial in confidence”.
Overwhelmingly, Australia’s export credit agency has financed large-scale invasive resource extraction projects in the South Pacific, from the Panguna (Bougainville) copper mine in PNG to the Gold Ridge gold mine in the Solomon Islands. In December 2009, desperate to secure Australia’s role in the largest development project in the history of the Pacific region, EFIC announced it had committed $US500 million in loans to help finance the new $US15 billion Liquefied Natural Gas (LNG) project, whose corporate sponsors include US energy giant Exxon-Mobile and Australian companies Oil Search and Santos.
When the deal was signed there was a veritable media circus, with claims that the LNG project would be a “game changer” for PNG, doubling the nation’s GDP over the 30 year life of the project and dragging its traditional communities into modernity.
“Risky Business” hoses down this hyperbole, pointing out that despite other resource booms over the past 20 years, in which Australian companies and the PNG elite have made a killing, the average person in PNG has slipped deeper into poverty. In 1996, according to the World Bank, 37.5 per cent of the population lived in poverty. In 2003, this had risen to about 54 per cent.
“Risky Business” sounds other ominous warnings about the LNG project, which will involve large-scale deforestation and enormous risks associated with dredging the seabed, by revealing the grave environmental and social costs for the people of PNG that have invariably resulted from EFIC-backed projects.
EFIC funding was vital to financing the notorious Ok Tedi copper mine, which has become synonymous with corporate environmental disasters. The mine, owned until recently by BHP Billiton, has discharged approximately 80 million tonnes of tailings and waste rock into the Ok Tedi and Fly River systems every year since the 1990s. The toxic sludge poisoned the waterways, killing fish, plants and the wildlife upon which tens of thousands of people depend for survival, leading local landowners to pursue a $4 billion compensation claim against BHP Billiton. Dr Doug Holdway, an expert on the ecology of river systems, describes Ok Tedi as “probably one of the dirtiest, one of the absolutely foulest mining situations that exists on this earth.”
EFIC financing has also supported Oil Search’s petroleum operations in the Lake Kubutu region, which resulted in toxic pollution leaking into a wetland of international significance, once again contaminating water and fish reserves and causing skin irritations, blistering, illnesses and the death of one child.
These are just two examples on an extensive list of environmental disasters that the Australian government has financially underwritten on behalf of Australian corporate interests.
Aside from serious environmental destruction, many projects EFIC has financed have trampled on indigenous land rights. Over 97 per cent of PNG land and inshore fisheries are “customarily” owned, forcing potential investors to come to a benefits-sharing agreement not only with the PNG state but with entire communities. However, many of these agreements have involved elements of coercion and corruption.
The PNG LNG project exhibits many of these problems. Sixty thousand landowners are estimated to be directly affected by the project. In the week before the Final Investment Deadline (FID), most had not signed the benefits-sharing agreement. On the day of the FID, with the largest block of landowners having signed the deal only the day before, the remaining 40 per cent of landowners finally relented, claiming they had been pressured to sign after the PNG government threatened to invoke a ministerial loophole to sign the deal on their behalf. They feared that this would be a worse outcome. Clearly, the project sponsors and the PNG government were determined to close the deal with or without the local landowners’ consent. In their eyes, the rights of landowners are merely obstacles for corporations and local elites to plough through.
Furthermore, “Risky Business” warns that the lack of transparency in the negotiation process, with the project sponsors removing independent observers for the last six months of the negotiations, could lead to Bougainville-style violent conflict over the inequitable distribution of compensation.
Indeed, there has been a recent history of resistance by local landowners angry about inadequate or absent compensation. In August 2009, local landowners occupied the Hides Gas Project to show their dissatisfaction with the Australian company Oil Search and the PNG government for failing to compensate them for the past 19 years.
This resistance follows significant protests in 1995 and 2001 against attempts to commercialise PNG’s land through “land reform” pushed by World Bank and PNG’s own elites. The Australian government’s aid body, Ausaid, has also pushed this agenda by pouring in millions of dollars to “make land work”, illustrating the way Australian government aid is merely another mechanism for pursuing Australia’s economic and strategic interests.
To strengthen grassroots landowner resistance, several Melanesian community groups formed the Melanesian Indigenous Land Defence Alliance (MILDA) in June 2009 to coordinate efforts in the region to help traditional families maintain control over their own land. Unsurprisingly MILDA is hostile to Ausaid, along with the World Bank, for collaborating with the companies that have their eyes on their customary land.
This is imperialism
What drives the decision-making of Australia’s export credit agency and Ausaid is the government’s determination to maintain its strategic domination of the South Pacific. In its economic competition with rival nations, the Australian government is prepared to sponsor environmental destruction and attacks on indigenous land rights in the region. Their approach is to support domestic business at any cost in the fierce world of export competition.
The Australian elite is alarmed by the growing trade relationships between China, Malaysia, Taiwan and other powers with South Pacific nations, which threaten Australian capitalism’s supremacy in its so-called “backyard”. China in particular has stepped up its investment in PNG, as represented by the development of the $1 billion Ramu nickel mine in Madang province, the first major Chinese investment in PNG’s lucrative natural resources sector. That 50 per cent of the Solomon Islands exports go to China is another example of China’s growing economic importance to the region.
The tight relationship between Australian capital and the Australian state is one face of imperialism. The other face of course involves guns and soldiers. Backing up the economic power of Australian corporations is the Australian military. It is in this light that we should view Australia’s military exploits in the Solomons in July 2003, when 2,000 Australian troops invaded the island to deal with “instability” that was making doing business there impossible. Six years on, Australian troops continue to patrol Honiara to ensure that it is Australian companies that control its rich timber, mining and other resources.
This too is the framework for understanding the Australian government’s attempts to impose 250 police on PNG in 2004, as well as Australia’s continued occupation of East Timor which has secured Australian control over the prized oil and gas reserves in the Timor Gap, as well as a myriad of other commercial contracts. Finally, the Rudd government’s decision to massively escalate military spending, with plans to spend an extra $130 billion on the military over the next 20 years, should also be understood as an aggressive signal to its economic rivals in the region.
Australia is a middling-sized imperialist power that creates a path of devastation wherever it intervenes, just like all imperialist powers. Its actions, whether led by the export credit agency or the Australian military, need to be opposed by people who stand for economic and social justice.
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