Solomon Islands Country Brief - May 2009
Introduction
Solomon Islands is an archipelagic state situated in the South West Pacific Ocean, approximately 2,000 kilometres to the north-east of Australia. Its land mass of 28,400 square kilometres extends over nearly one thousand islands comprising nine main island groups. The capital, Honiara, is located on Guadalcanal, which is the largest island.
Australia has a deep and longstanding relationship with Solomon Islands. During the Second World War, Australians were involved in the struggle to liberate the islands from Japanese occupation. In the post-war period, people and business links with Solomon Islands have grown steadily and there are now estimated to be around 700 Australians resident in Solomon Islands, mainly in Honiara.
Since ethnic conflict first broke out in the late 1990s, Australia has been heavily involved in working to promote stability and growth in Solomon Islands, most recently through strong support for the Regional Assistance Mission to Solomon Islands (RAMSI). The depth of our commitment to this mission reflects the importance of a peaceful and prosperous Solomon Islands to Australia.
Political Overview
Background
The population of Solomon Islands, estimated to be around 510 000, is predominantly Melanesian (about 95%) although there are also smaller Polynesian, Micronesian, Chinese and European communities. There are 63 distinct languages in the country, with numerous local dialects. English is the official language of Solomon Islands but Solomons Pijin is the lingua franca for the majority of people.
Solomon Islands first contact with Europeans was in 1568, when the Spanish explorer Mendana visited the islands. Whaling boats and traders began to visit the archipelago during the nineteenth century, followed closely by missionaries.
In 1893, the British Government established a protectorate over the eastern group of islands with Germany controlling most of the west. Following the Anglo-German agreement of 1899, the British protectorate was extended to all nine main island groups now part of the nation of Solomon Islands, while Buka and Bougainville became part of German New Guinea (later incorporated into Papua New Guinea). The Solomon Islands was the scene of some of the bloodiest land, sea and air battles of World War II from 1942 to 1945.
Britain granted Solomon Islands internal self-government in 1976, followed by independence on 7 July 1978. At independence, Solomon Islands joined the Commonwealth with Queen Elizabeth II as its Head of State, represented by a Governor General. The unicameral National Parliament comprises fifty members, elected for a four-year term under a "first past the post" voting system. The Prime Minister is elected by a simple majority of Members of Parliament. Party structures in Solomon Islands are fluid. In addition to the national government, there are nine provincial assemblies, each led by a premier.
Although ethnic tensions have ebbed and flowed for many years, they escalated on Guadalcanal Island in December 1998. Many Guadalcanal people resented the influence of settlers from other islands and their occupation of land. The settlers, mostly from Malaita, were drawn to Honiara and its environs by economic opportunities. Violent clashes involving rival militant groups destabilised the Solomon Islands government and undermined national institutions and coherence. This situation persisted for more than four years.
Regional Assistance Mission to Solomon Islands (RAMSI)
In April 2003, the Solomon Islands Prime Minister wrote to the then Australian Prime Minister requesting Australian assistance. Following consultations between the governments of Solomon Islands, Australia and New Zealand, a comprehensive package of strengthened assistance to support the Solomon Islands Government – the Regional Assistance Mission to Solomon Islands (RAMSI) – was proposed and unanimously endorsed by a meeting of the Foreign Ministers of the Pacific Islands Forum. RAMSI was debated and unanimously endorsed by the Solomon Islands Parliament, welcomed by the President of the UN Security Council, commended by then UN Secretary-General Kofi Annan, and supported by the Commonwealth Ministerial Action Group and then Secretary-General McKinnon.
RAMSI is a long-term commitment aimed at helping create the conditions necessary for a return to stability, peace and a growing economy. Further information is available on the RAMSI website.
Recent Political Developments
On 5 April 2006, Solomon Islands held its first national elections since RAMSI's arrival. The peaceful elections were monitored by 44 international observers, including 10 Australians. The observers judged that the election was conducted in an orderly and lawful manner.
On 18 April 2006, former Deputy Prime Minister, Snyder Rini, was elected Prime Minister by the newly-constituted Solomon Islands Parliament. The announcement of Rini as Prime Minister triggered an outbreak of civil unrest in Honiara. This unrest resulted in significant destruction of property, including the burning and looting of shops, hotels and vehicles. Police and military from Australia and other regional partners in RAMSI worked together with the Solomon Islands Police Force to restore calm in the capital.
On 26 April 2006, Snyder Rini resigned as Prime Minister. On 4 May 2006, Manasseh Sogavare was elected by members of the Solomon Islands Parliament, and sworn in as Prime Minister. Mr Sogavare was consistently critical of Australia and of RAMSI, and relations during his term as Prime Minister were difficult. Following the defection of a large number of government MPs to the Opposition, Sogavare lost a vote of no confidence in Parliament on 13 December 2007. On 20 December 2007, Parliament elected the Opposition’s candidate (and former Minister for Education) Derek Sikua as Prime Minister, with 32 votes to 15. Dr Sikua has emphasised his commitment to rural development, reconciliation and re-engaging with donors. On 8 August 2008, Dr Sikua easily defeated a no-confidence motion brought forward by the Opposition by 39 votes to eight. National elections are due to be held in April 2010.
Economic Overview
RAMSI has assisted economic recovery in Solomon Islands since 2003. This follows a severe economic contraction over the period of the ethnic tensions (1999-2001) and stagnation in 2002. The economy has grown at over five per cent per annum since 2004 and grew at 10 per cent in 2007, one of the highest rates of growth in the region, although growth eased over 2008 and is estimated to have been around 7.3 per cent for the calendar year. The recovery can be attributed to the return of business investment and an increase in export receipts (from rapidly expanded exports of timber and more favourable terms of trade for other export commodities), supported by the arrival of RAMSI, which has improved the outlook for the economy. Fiscal policy has delivered consistent budget surpluses since 2003 due to higher government revenues and better expenditure management.
Despite this strong recent growth, the Solomon Islands economy continues to face a number of challenges. The majority of the population is involved in subsistence/cash crop agriculture with less than a quarter of the population involved in any paid work. Exports remain commodities based and include timber, fish, cocoa and copra. Current logging rates are unsustainable. The very high level of population growth in Solomon Islands (2.8 per cent per annum) means it will be difficult to continue to achieve real GDP per capita growth as the logging industry declines over the next few years. The servicing of external public debt levels represents a significant fiscal burden and high inflation is impacting on the formal economy. The global economic crisis has depressed demand for commodities from Solomon Islands, reducing revenue and leading the government to announce a number of austerity measures in April 2009.
Bilateral Relationship
Australia maintains a close business relationship with Solomon Islands. Shipping and air services connect Solomon Islands with Australia, and financial links are close, with two Australian commercial banks (ANZ and Westpac) operating in Solomon Islands. A number of Australian legal and accounting firms are represented directly or in association with local firms. Many of the 700 Australians resident in Solomon Islands are engaged in small businesses and missionary work.
Two-way trade between Australia and Solomon Islands fell from $95 million in 1997 to $54.5 million in 2004. During the same period, Australian exports to Solomon Islands dropped from $91 million to $49 million. From 1997 to 2002, Solomon Islands exports to Australia fell from $4 million to $1.4 million, but these have subsequently rebounded. Two-way trade in 2007-08 totalled $74 million, comprising Australian exports of $68 million and $6 million in imports from Solomon Islands.
Recognising the scope and scale of the challenges confronting Solomon Islands, Australia continues to provide significant levels of development assistance to the country. Total Australian Official Development Assistance (ODA) in 2008-09 is estimated at $236.4 million. This includes an Australian Agency for International Development (AusAID) country program estimate of $105.5 million (approximately $40 million in bilateral funding and the remainder through RAMSI). The total ODA estimate also includes projected expenditure from other Australian Government agencies working in Solomon Islands. Further information on Australia’s development assistance in Solomon Islands can be found on the AusAID website.
High Level Visits
The Minister for Home Affairs, the Hon Bob Debus MP, visited Solomon Islands from 5-9 April.
The Minister for Trade, the Hon Simon Crean MP, visited Solomon Islands on 2-3 April, accompanied by the Hon Bob McMullan MP, Parliamentary Secretary for International Development Assistance to discuss a range of trade and development issues including the prospective PACER Plus regional free trade agreements.
The Minister for Defence, the Hon Joel Fitzgibbon MP, travelled to Solomon Islands on 9-10 September 2008 to visit Australian troops and discuss Australia’s contribution to RAMSI.
The Minister for Foreign Affairs, the Hon Stephen Smith MP, visited Solomon Islands on 16-17 July 2008 to attend the Pacific Islands Forum Ministerial Standing Committee (FMSC) meeting on RAMSI. Mr Smith had previously visited Solomon Islands on 21-22 February 2008 to participate in the inaugural meeting of the FMSC. Mr Smith was accompanied on his February visit by Mr McMullan and the Parliamentary Secretary for Pacific Island Affairs, the Hon Duncan Kerr SC MP. The Minister for Defence Science and Personnel, the Hon Mr Warren Snowdon, also visited Solomon Islands on 21-22 February.
Mr Kerr visited Solomon Islands on 7 July 2008 to attend the Solomon Islands 30th anniversary of independence celebrations.
The Prime Minister, the Hon Kevin Rudd MP, visited Solomon Islands on 8 March 2008. Mr Rudd was accompanied by the Parliamentary Secretaries Mr Kerr and Mr McMullan.
Australia’s former Governor-General, Major General Jeffery AC CVO MC, visited Solomon Islands in December 2004.
Solomon Islands Prime Minister, the Hon Dr Derek Sikua MP, and Minister of Foreign Affairs and International Trade, the Hon William Haomae MP, visited Australia on 22-23 January 2008.