While flying over the ocean, the Air Pacific magazine assures me that, despite what German scientists may say, kava will most probably not give me liver cancer. Universal respect for the local vice of choice – the very alcoholic, somewhat hallucinogenic kava – is one of the many things that unites the islands of the South Pacific region. Indeed, despite their historical, social and political variations, these islands are remarkably alike. So while I focus on New Caledonia and Fiji, a visit to any of the other islands in the South Pacific will be very similar. There will be kava, Japanese tourists and sunshine whichever island you chose to visit.
Ask anyone of their idea of the South Pacific and the answer will almost certainly be based on images from TV shows and films like ‘Lost’ and ‘Blue Lagoon’. Unlike almost any other tourist destination, the South Pacific actually lives up to this stereotype. Beautiful white sand beaches of crystal clear water, fringed by palm trees, scattered with coconuts, dotted with brightly coloured flowers, bathed in eternal sunshine – all this is surprisingly close to the truth. Fiji is home to some of the loveliest beaches in the world, not to mention the stunning tropical forests of the interior, while New Caledonia is full of natural marvels; coral reefs and lagoons, of course, but also vast mountain ranges and an island solely covered with pine trees (the imaginatively named Île des Pins). You can’t help getting the sense that the theologians must have got it wrong somewhere- if there ever was a Garden of Eden, it would have been in the South Pacific. Essentially, when it comes to this area of the world, believe the hype.
The South Pacific is not only unique in its tropical beauty, but also in its cultural experiences. As a department of France over 16000 miles away from the mainland, New Caledonia is a melting pot of indigenous Melanesian, or Kanak, heritage, French colonial influences and, thanks to more recent immigration trends, South-East Asian culture. Noumea, the self-titled “Paris of the South Pacific”, is frankly extraordinary in its resemblance to the mainland. I was able to re-live almost all my favourite, distinctively French experiences in this island capital; spending too long in Champion’s enormous wine section, reading Paris Match and having five course meals of classic French cuisine. Adding an abundance of French flags and Renaults to the mix, the result is truly bizarre. Imagine Paris, with real beaches.
Like Paris, Noumea is also a thriving centre of racial segregation. While there are many instances of French and Kanak culture complementing each other, even the most unobservant traveler cannot ignore the uncomfortable relationship between les Métros from the mainland and the Kanaks. Indeed, while this is a regrettable aspect of life in New Caledonia, I must admit that it is also one of the most fascinating. France initially used New Caledonia as an oversized jail for political prisoners and then took full advantage of the island’s wealth of natural resources. At the moment, the island’s native population are overrepresented in the all the wrong socio-economic categories. The Kanaks, for the most part, openly resent their position in society and French rule, while the French tend to take the view that New Caledonia would be worse off without European influence. It’s the classic clash between imperialist and subject, and New Caledonia is one of the few places left in the world where you can see the colonial story still unfolding.
While most of the other islands in the South Pacific are no longer under colonial rule, almost all exhibit a mix of French or British and native Islander culture. Fiji is no exception. English is an official language and beer (Fijian Bitter, of course) comes second only to kava. Like New Caledonia, the mix of cultures often has bizarre results. Suva, Fiji’s capital and largest metropolis, has its very own hip hop scene, where rappers mix Fijian with the ghetto slang of south central LA and East London. If tropical paradise isn’t your thing, then it’s worth the trip just to hear MCs claim to be “too busy pimpin’ at Suva Bus Station to be on Fiji 1 News, blud”.
Boundless tropical beauty and a kaleidoscope of culture – it seems like the South Pacific really is a traveler’s paradise. It does however have one major drawback. As the only holiday destinations within a bearable flight away from Australia and New Zealand, the islands of the South Pacific have become reliant on tourism as their principle source of income. Both are well-orientated towards presenting foreigners with a somewhat artificial view of the islands- tropical cocktails on the beach, guided tours of nominally authentic villages, dancing in grass-skirts and so on. This manufactured tourist experience is hard to stomach. The islands are poor, those working in the tourist industry are heavily underpaid, and their political institutions are precarious. There are only so many overpriced Blue Hawaiians you can order, so many fire dances you can watch, before you start to feel sorry for those who live beyond the resorts and hotels which dominate the islands. Sorrow which soon turns to a feeling of guilt, justified or not, when you are constantly faced with reminders of the region’s colonial past.
Despite the overabundance of tourists and artificial tourist experiences, the South Pacific has much to offer, especially for those who haven’t traveled to post-colonial areas or beyond Europe. I, for one, was ready to follow Marlon Brando’s example after a week in the region; marrying a local and purchasing a Tahitian island seemed like an excellent life path. Or maybe that was just the kava talking.
A Brief History
The South Pacific region is made up of a variety of islands such as Vanuatu, Tahiti, Fiji, Tonga, Samoa and New Caledonia. The original inhabitants of these islands, the Melanesians, are thought to be the ancestors of the present day Papuan-speaking people, who traveled to the islands from New Guinea tens of thousands of years ago. The next group of settlers were the Polynesians, who arrived in New Caledonia in the 11th Century and Fiji in 500BC. The intermarriage between Melanesians and Polynesians gave rise to the modern-day indigenous populations on the islands.
From this point onwards, the islands of the South Pacific begin to develop more distinct historical paths as they are discovered by different European explorers in the 17th Century and later colonized, predominantly by France and Britain. Fiji was explored by the Dutch and British in the 17th and 18th Centuries, with missionaries and traders arriving in the first half of the 19th Century. The unrest caused by the conflict between Europeans and the native population prompted Fijian chiefs to cede Fiji unconditionally to the British in 1874. The British commenced large-scale sugar cane cultivation in the 1880s and introduced tens of thousands of indentured Indian workers to the island. Fiji declared independence from Britain in 1970. Since then, Fiji has experienced a politically tumultuous history, with conflict between Indians and ethnic Fijians resulting in four coups since 1987.
New Caledonia was sighted by James Cook in 1774, who gave it the Latin name for Scotland (Caledonia) due to its apparent resemblance to that country. The 19th Century saw the rise of sandalwood trading in the archipelago, with Europeans introducing a variety of diseases to the native population. When sandalwood trading had diminished, it was replaced by the slave trade. Native Kanaks were taken from New Caledonia to work in sugar cane plantations in Fiji and Australia. In 1853, the islands were annexed by France. The period up till 1922 saw the arrival of 22,000 French convicts, many of whom were political prisoners, followed by European settlers and Asian workers. In 1946, the archipelago joined Guadeloupe and Martinique to become a DOM-TOM, a French overseas territory.
However, agitation by separatist groups, primarily the Front de Liberation Nationale Kanak Socialiste, began in 1985. The troubles led to an agreement on increased autonomy for the islands in 1988. Most importantly, the Noumea Accord of 1998 was granted in an effort to calm tensions. The Accord provides for local Caledonian citizenship and official Caledonian symbols, as well as stating that there will be a referendum on the issue of independence from France sometime after 2014.
5 Minute Tute – The US Bailout
WHAT HAPPENED THIS WEEK?
The US Congress passed the Emergency Economic Stabilization Act. The $700 billion (£394 billion) government plan to rescue the US financial sector had been rejected in a previous form by the House of Representatives on September 29th. This defeat led to the Dow Jones industrial average dropping 777.68 points in a day, losing $1.2 trillion in market value. A new version was drafted, which increased the value of bank deposits protected by the Federal Deposit Insurance Corporation to $250,000. This passed the Senate by 74-25 on October 1, then being approved by the House in a 263-171 vote two days later. It was then signed into law by President Bush. The law’s passing calmed the financial markets, but its long-term consequences remain uncertain.
WHAT IS THE CURRENT DEBT SITUATION?
On September 30, the US national debt hit the landmark figure of $10 trillion. President Bush signed legislation in July raising the debt ceiling to $10.615 trillion, and the bailout plan raises it further to $11.315 trillion. The gross national debt as a percentage of GDP has, under the Bush Administration, hit a 50-year high at around 70%, with the FY2009 budget recording a near-record deficit of $407 billion (excluding $700 billion spent on the bailout and $900 billion already spent on rescues of financial institutions).
HOW DID THIS PROBLEM EMERGE?
Professor John Cochrane of the University of Chicago explains the problem to be as follows: Many banks hold a lot of mortgages and mortgage-backed securities, the values of which have fallen below the value of money that the banks have borrowed. Credit market problems are a symptom of this underlying problem. Nobody really knows which banks are in trouble or how badly, nor when these troubles will lead to a sudden failure. As a result these banks do not want to lend more money. It is a problem that many believe can only be solved by recapitalizing banks that are in trouble, or even allowing orderly failures, whilst providing liquidity to short-term credit markets.
HAS THIS HAPPENED BEFORE?
In Sweden, mid-1980s deregulation sparked a great deal of risky lending and led to an overheated real estate market. The bubble burst in 1991, and Sweden’s GDP fell by 4.4% over two years, with abuot 600,000 companies filing for bankruptcy. Housing prices fell by 19%. The government spent $10 billion on blanket guarantees for credits and depositors, whilst buying two failing banks and setting up an asset management firm to assume bad loans and the collateral behind them. The plan’s swift action, bipartisan cooperation and transparency won public support. Much of the government’s costs were recouped when assets were sold. In Japan, financial institutions bet that real estate prices would continue to rise in the 1990s. But when values plunged, borrowers were unable to repay loans, which then became harder to obtain. Inaction and deceit in the financial system exacerbated the problem as institutions hid bad debts. In 1999, the government set up the Resolution and Collection Corp to handle the disposal of nonperforming loans at a cost of $168 billion. This has now been largely recouped by reselling collateral, although the stock market still has not returned to its pre-crash peak. The government was blamed for waiting too long to act to resolve the crisis.
WHAT EXACTLY IS A ‘CREDIT CRUNCH’?
A ‘credit crunch’ is the danger to the economy brought about by this situation. Banks need capital to operate. In order to borrow another dollar and make a new loan, a bank needs an extra, say, 10 cents of its own money (capital) – so that if the loan declines in value by 10 cents, the bank can still pay back the dollar it borrowed. If a bank does not have enough capital – due to declines in asset values which wiped out the 10 cents from the last loan – it cannot make new loans, even to credit-worthy customers. When all banks are in this position, we have a credit crunch. People want to save and earn interest; other people want to borrow to finance houses and businesses; but the banking system is no longer able to do its match-making job.
SO CAN THE US GOVERNMENT AFFORD THIS?
Former Treasury Secretary Lawrence Summers stated in the Financial Times that the US does not necessarily need to cut back spending on other areas such as healthcare, energy, education and tax relief. He claimed that the $700 billion should be viewed as an investment in purchasing assets, buying equity or making loans and not a give-away. Secondly, the budget deficit will not crowd out other more productive investments or force greater foreign dependence with an increased issuance of government debt. Professor Summers argued further that government intervention in the form of a fiscal stimulus is necessary due to the ineffectiveness of monetary policy. The key is to preserve fiscal sustainability.