SUVA - Fiji's economy is seeing the start of a downturn following economic
sanctions, job
losses and outbursts of tribalism, provincialism, and mayhem that have come
to the fore
following the overthrow of the country's democratically-elected government on
May 19.
Now, the country's economy, heavily reliant on sugar exports and the tourism
industry for
precious income, is at its worst in two decades.
Experts add that if universally acceptable democratic processes and an interim
administration
and are not put in place at once, there is every likelihood of an entire economic
collapse which
would see the small Pacific nation going the way of Africa.
Fiji's military has been in dialogue with coup leader George Speight, who claims
he launched
the overthrow on behalf of all ethnic Fijians who feel discriminated against
by the elected
Indo-Fijian-led government, on the formation of a civilian administration that
will not include
Speight. On Monday, Speight said he and the military - which took control 10
days after the
coup - had agreed on a former vice president, indigenous Fijian Ratu Josefa
Iloilo, to be the
next president.
Whatever the crisis's outcome - the military and the coup group are in a standoff
over the
composition of a new civilian administration - Fiji will feel its economic impact
for some time
to come. ''This doesn't bear thinking about,'' one economic expert said of the
economic toll of
the political crisis, requesting anonymity because of the tense situation in
the country. ''The
effect on the economy depends on how long the political crisis will last and
its outcome.
Tourism will suffer as travel agents are obliged to advise potential travellers
against visiting
Fiji and this will devastate the economy.''
Apart from tourism, sugarcane has been rotting in the fields during Fiji's
crisis. Fiji had been
expecting to earn some $4.36 billion from sugar exports this year, most of it
under special
privileges to the European Union. But unions in key trading partners like Australia,
New
Zealand and elsewhere are lobbying the EU to suspend trade benefits and aid
to Fiji, to
pressure Speight to release Chaudhry and 30 other people his group has been
holding
hostage in Parliament since the coup.
''The best scenario at this stage would be a two-year deep recession with devaluation.
Devaluation of the dollar would have to occur in order to attract tourists who
would otherwise
have no incentive to visit Fiji,'' the anonymous economist added.
''Even if it all ends tomorrow Fiji would still be suspended from the Commonwealth
for two
years,'' the analyst added. Fiji has been suspended from the ministerial meetings
of the
Commonwealth, but has not yet been kicked out. Many people here, however, believe
it could
just be a matter of time.
''The effects of this coup are much worse than those of the two military coups
of 1987 - this
is not the Cold War anymore and the international community will put its foot
down hard on
Fiji. This has indelibly marked the country. Why would potential investors want
to come
here?'' he asked.
The European Union has already warned Bainimarama that it would stop buying
sugar from
Fiji if Speight or any of his supporters were included in an interim administration.
If the EU
goes ahead with its threat, this would mean a permanent 20 percent shortfall
in the economy,
although economists say current decision-makers are aware of the crippling implications
any
further trade bans or punitive sanctions would have on the economy.
On June 15, the current military administration announced an expected shortfall
of $200
million in government revenue due to the current political impasse. Bainimarama
said that if
public consumption were not reduced, the deficit of the current 2000 budget
would balloon to
8 percent of GDP or close to $250 million. The military has thus approved preparation
of a
mini-budget to cover the five months from August to December, aimed at reducing
expenditure by at least $182 million, including the deployment of budgetary
resources to core
government services and key economic sectors.
The coup has been blamed on differences between the Fijians and the Indo-Fijians,
the
abrasive style of leadership of Chaudhry, his soft spot for the country's largely
Indo-Fijian
cane farmers and what some deem his lack of sensitivity for the Fijian ''cause''.
Speight has said he launched the coup on behalf of all ethnic Fijians, saying
the government
led by Chaudhry was not addressing their plight, but debate continues on how
many of Fiji's
indigenous population support Speight's cause. ''Most ordinary people are just
watching and
observing what's happening - they're not active participants in this coup,''
political
commentator Jone Dakuvula explained.
But active participants or not, the reality is that the country's economy is
in tatters, thousands
have lost their jobs through economic and trade sanctions and cane farmers have
boycotted
harvesting until Chaudhry and his government are released.
(Inter Press Service)
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