Chapter 7: Economic Development and Challenges

Let's take a moment to reflect

Post-Conflict Economic Reconstruction

The aftermath of the Bougainville Civil War presented significant economic challenges. The conflict had devastated the island's infrastructure, displaced thousands of people, and severely impacted the local economy.

Destruction of Infrastructure and Human Capital

The war resulted in the widespread destruction of physical infrastructure, including roads, bridges, and essential services. Human capital was also severely affected, with many skilled workers either displaced or having left the island during the conflict.

Economic Activity Post-Conflict

In the immediate post-conflict period, economic activity was largely limited to subsistence farming. The closure of the Panguna mine in 1989 had a catastrophic impact on the economy, leading to the loss of 10,000 direct jobs and the collapse of associated industries. The mine's closure meant that the economy could not return to its pre-conflict state without its reopening, a highly contentious issue.

Revitalizing the Mining Sector

The Panguna mine, once the backbone of Bougainville's economy, remains a sensitive and complex issue.

Reopening the Mine

The question of reopening the Panguna mine is fraught with challenges. While it is essential for reviving the economy, it is also a source of significant controversy due to environmental concerns and local opposition. The mine's reopening is uncertain, and even if it were to happen, attracting investment would be difficult due to the legacy of conflict.

Alternative Economic Activities

Given the uncertainty around the mine, there has been a focus on diversifying the economy. Smallholder agriculture, particularly cocoa production, has become a significant sector. Bougainville is PNG's largest cocoa producer, and efforts have been made to support this industry through aid programs and capacity-building initiatives.

Economic Aid and International Support

International aid has played a crucial role in supporting Bougainville's economic recovery.

Donor Support

Organizations such as AusAID (now part of the Australian Department of Foreign Affairs and Trade) have provided substantial support. The Bougainville Microfinance Scheme (BMFS), supported by AusAID, has offered small-scale savings and loans services to conflict-affected communities since 1998. This program has focused on training and capacity-building for program staff and aims to shift towards a commercial footing with donor "seed funds".

New Zealand's Contributions

New Zealand has also been a significant player in supporting Bougainville's development. Their investments include law and justice support, subnational empowerment, and economic empowerment. Programs like the Bougainville Healthy Communities Program and support for the Bougainville Police Service have been instrumental in rebuilding the island's social and economic fabric.

Challenges and Setbacks

Despite these efforts, several challenges persist.

Fiscal Constraints

The Autonomous Bougainville Government (ABG) faces severe fiscal constraints. The government relies heavily on grants from the national government and international aid, generating only a few million dollars of its own revenue annually. This dependency on external aid hampers the government's ability to achieve fiscal self-reliance.

Corruption and Mismanagement

Corruption and mismanagement are significant challenges in economic development projects. These issues can undermine the effectiveness of aid programs and hinder sustainable development.

Environmental Concerns

Environmental concerns, particularly related to mining and climate change, pose long-term challenges. Bougainville's outlying islands are vulnerable to sea level rise and coastal erosion, which can impact economic activities such as fishing and agriculture.

Future Prospects

As Bougainville looks towards the future, there are several key areas of focus.

Diversification of Economy

Efforts to diversify the economy beyond mining and subsistence farming are crucial. Industries such as cocoa, fishing, and small-scale mining hold potential, but they require sustained support and investment.

Education and Infrastructure

Enhancing educational opportunities and investing in infrastructure are essential for long-term economic development. Addressing the needs of the "lost generation" impacted by the conflict through education and vocational training can help build a more resilient and skilled workforce.

International Cooperation

International cooperation, including support from countries like the United States, Australia, and New Zealand, will be vital in addressing the ongoing challenges. Initiatives such as peacebuilding, reconciliation efforts, and support for unexploded ordnance removal can complement economic development programs.

Conclusion

Bougainville's economic development is a complex and multifaceted challenge. While progress has been made, the island still faces significant hurdles, including fiscal constraints, environmental concerns, and the need for economic diversification. International support and cooperation will be crucial in helping Bougainville achieve sustainable economic growth and move towards full independence.

Visual Aids and Timeline

• Photographs: Include photographs of post-conflict reconstruction efforts, agricultural activities, and mining sites.

• Maps: Show the location of key economic activities such as cocoa plantations and fishing areas.

• Timeline:

• 1989: Panguna mine closes.

• 1998: Bougainville Microfinance Scheme (BMFS) initiated.

• 2001: Bougainville Peace Agreement signed.

• 2015-2020: Referendum period on independence.

• 2019: Independence referendum held.

• 2027: Target year for potential independence.