Does one swallow herald a Melanesian Spring?

THE Spring Carnival in Melbourne may be months away, but in PNG the political horse trading has begun. The Opposition has openly invited deposed party leaders William Duma and Don Polye to defect from government. While both men have remained in government, is Polye the swallow that heralds a Melanesian Spring? By Wantok

Wantok's use of the phrase Melanesian Spring may be analogous to both the Arab Spring and the Melbourne Spring Carnival (in terms of political horse trading).

The probability of either or both occurring has increased with the recent moves taken by Don Polye.

Don Polye is the Member for Kandep and Leader of the Triumph Heritage Empowerment Party (THE), and until recently, was the treasurer in the O'Neill government.

Yesterday, Polye addressed the nation live on talkback radio. He said that his sacking as treasurer was linked to his refusal to sign instruments related to the $A1.2 billion UBS loan.

The government of PNG has taken out a $1.2 billion loan in order to take out a 10.1% stake in Oil Search. Polye told listeners on radio that the loan was not in the best interest of the nation. His key arguments hinge upon the legal advice he had received from the state solicitor.

This includes the constitutional requirement that Parliament approve such large public expenditure, as well as the need to manage debt within the parameters of the Fiscal Responsibility Act.

Prime Minister O'Neill, however, has described the Oil Search equity buy as the "best deal for PNG". In a full page advertisement, O'Neill said bidding for the loan was conducted independently by the Central Bank.

He added that once finance was secured the PNG government approached IPIC to buy back the government's shares in Oil Search, but the offer was turned down. Following this, the government entered into negotiations with Oil Search to purchase shares directly.

O'Neill brushed aside concerns about an increase in national debt by arguing that the transaction would be kept off the government accounts by vesting it with Petromin.

The political fallout over the UBS loan has been quite large. With O'Neill's former treasurer now opposed to him, the Opposition has attempted to capitalise on the situation. Following Polye's appearance on radio, Opposition Leader Belden Namah called a press conference where he called on the Prime Minister to step down. Namah also called on other Members of Parliament to join the Opposition in forming a new government.

Meanwhile, the Ombudsman Commission has weighed in on the UBS saga. Chief Ombudsman Rigo Lua and Ombudsman Phoebe Sangitari held a press conference on Monday announcing the Commission had issued directives on March 14, freezing any further execution of the deal.

Prime Minister O'Neill has welcomed the interest shown by the Commission and has stated that the government will cooperate with the ombudsman.

The UBS loan has galvanised the entire nation. The Student's Representative Council of the University of Papua New Guinea recently took out a full page advertisement opposing the deal. This was followed by a commentary from leading researchers from the National Research Institute, opposing the loan arrangement.

Perhaps as an indication that the tide has changed against O'Neill, police in the nation's capital approved a public forum in relation to the matter.

Activists who had previously been barred by police from holding public gatherings were allowed to do so.

The reasons for the public's negative response to the government may be varied, but the economic arguments are becoming too visible for ordinary people.

The government is being seen as a poor manager of the economy. With the PNG Kina now trading at US33c, Papua New Guineans are bracing themselves for increases in the cost of living.

This has played into the hands of those who oppose the UBS deal. Even Polye highlighted the risks of inflation on radio.

Wantok has previously highlighted that the current UBS arrangement is actually similar to the IPIC exchangeable bond that was taken out by the Somare government. Then, just as now, no parliamentary approval was given. The key political players, Namah, O'Neill and Polye, were all once part of the Somare cabinet.

Circumstances have now changed such that Namah and Polye now find themselves potentially deposing O'Neill and forming a new government. While O'Neill may have a 32 month Constitutional protection from a vote of no confidence, he knows how his own unconstitutional actions removed Somare from power. Given the fast-evolving political scene, O'Neill's political karma may be catching up with him sooner rather than later.

The straw that breaks the proverbial camel's back in this recent political development may actually be the case involving K71.2 million paid to the law firm Paraka layers.

Polye was asked by a caller on national radio whether the letter from the Prime Minister authorising the payment was authentic. Polye said that he had checked out the authenticity of the letter prior to making the payment to the law firm.

This revelation has sparked renewed interest in the matter given that the Prime Minister has consistently maintained that he did not sign the letter. It will be interesting to see what sort of evidence Polye will present in relation to the current court proceedings related to the Paraka case.

Polye's sacking may actually be the beginning of the unravelling of the O'Neill government if the former treasurer continues hanging out the government's dirty laundry.

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