GOVERNANCE BE DAMNED! ITS AN ELECTION YEAR

C O N F I D E N T I A L PORT MORESBY 000144

SIPDIS

SIPDIS

FOR EAP/ANP

E.O. 12958: DECL: 4/4/2016
TAGS: PGOV PREL PP
SUBJECT: GOVERNANCE BE DAMNED! ITS AN ELECTION YEAR

REF: A) 05PORT MORESBY 430 B) 05PORT MORESBY 370 C) 05PORT MORESBY 143

CLASSIFIED BY: Robert Fitts, Ambassador, AMB, STATE.
REASON: 1.4 (b),(d)



1.(C) SUMMARY: With just over a year to go to the next
elections, Prime Minister Somare has sidelined the three most
effective Cabinet Ministers, those that could be expected to
resist irresponsible moves to pass out favors. Though
disappointing, he follows precedent. Each election since
independence 30 years ago has seen a sharp deterioration in
government fiscal practices. To not mince words, the pork has
hit the fan. Getting business done near an election is always
hard. The silly season is just starting a little earlier. END
SUMMARY.


2.(C) The PM's steps, announced April 3, were all in the wrong
direction. The setback was alleviated only in that each of the
capable ministers was kept in the cabinet, albeit in lesser
portfolios.

3.(C) Finance Minister/Treasurer Bart Philemon was relegated to
just Treasury. The internationally respected Philemon's tight
grip at Finance had been primarily responsible for the decreased
budget deficit that had been a much-claimed achievement of the
Somare government. Compounding the loss, Philemon was replaced
at Finance by Forestry Minister Pruaitch who has served as the
government's chief bagman for the corrupt forestry industry.

4.(C) Intergovernment Relations Minister Peter Barter was moved
to the Health Ministry. Barter had been notably working with
Philemon to bring under control government outlays to the
notoriously corrupt provincial governments. Former Health
Minister Pep was moved into the Intergovernment slot. Pep's is
mostly remembered for his insistence last year that he was just
a politician and therefore could not be held responsible for the
fact that the country's hospitals had run out of medicines while
his ministry was still flush with cash.

5.(C) Internal Security Minister Kimisopa was switched to the
less important Justice Ministry. Kimisopa was noticeably direct
in admitting the faults and working to reform PNG's corrupt and
ineffective Police (ref C). He was replaced by a political
non-entity, who has made no mark in his Parliamentary career.

6(U) In making the announcement, Somare made few bones about his
motives. He noted that the first four years of his government
had seen improvements in cash flow, administered by Finance, but
that he had campaigned on promises of major projects. "Now we
have a sound basis for implementing policies, putting our money
in areas where it will have the best returns for us." Aptly put.


7.(C) COMMENT: Thus, Somare has freed himself from inconvenient
checks on his ability to wheel and deal. Pruaitch, in addition
to lucrative Forestry and influential Treasury posts, also will
serve as Planning Minister and thus be in a position to move
projects forward for the boss unhindered. Pep will hardly be a
factor, certainly not even a speed bump in the PM's way.

8.(C) The single most pressing problem facing PNG is the almost
total collapse of the police force. So it is doubly
disappointing that the effective Kimisopa was pushed aside. The
portfolio has little control over expenditure. But his focus
likely discomforted Somare and his cronies for the same reasons
they worked to scuttle a large-scale Australian package which
threatened to dramatically improve police performance (ref B).

9.(C) All is hardly lost. These events just confirm that PNG's
political institutions are still a long way from producing
national leaders with incentives to work in their nation's
interest (ref A). The fiscal balance will likely slip for a bit
until the elections, particularly if commodity prices stumble.
But, it is always harder to get serious business done near an
election. It just seems that this year, in PNG, silly season
starts early.

FITTS