June 25, 2019
Papua New Guinea
Overview
PNG’s largest export markets. Only about 13% of Papua
Papua New Guinea (PNG) lies in a region of the Southwest
New Guineans have access to electricity.
Pacific known as Melanesia. It is the most populous Pacific
Island nation with about 7 million residents belonging to
Figure 1. Papua New Guinea in Brief
hundreds of tribes speaking over 800 local languages and
dialects. It gained independence in 1975 from an
Australian-administered U.N. trusteeship. PNG is a member
of the Pacific Islands Forum and the Melanesian Spearhead
Group.
The United States has in the past played relatively minor
economic and security roles in PNG, although it has some
important interests including investment in natural gas
production, and cooperation on tuna fishing. China’s
expanding influence in PNG and the region is leading to
increasing engagement by the United States with PNG,
including in coordination with Australia.
Politics

The Independent State of Papua New Guinea is a
U.S. Relations and Assistance
constitutional monarchy with a parliamentary democracy.
James Marape, the son of a Seventh Day Adventist pastor
The United States established diplomatic relations with
and a leader of the Huli people of PNG’s highlands, was
Papua New Guinea in 1975, when PNG became
made prime minister following the resignation of former
independent. According to Department of State official
Prime Minister Peter O’Neill in May 2019. Marape led a
statements, PNG, as the most populous Pacific Island
series of defections from the O’Neill government that
country, “is important to peace and security in the Asia-
prompted his resignation, and defeated O’Neill’s chosen
Pacific region” and the two countries “have enjoyed a close
successor in a subsequent leadership vote of 101-8. Marape
friendship” which includes a “cooperative security
has called for a review of PNG’s resource laws and some
assistance relationship.”
key investment projects, including a recently concluded
LNG project with Total and ExxonMobil. Marape also has
The Department of Defense 2019 Indo-Pacific Strategy
stated PNG does not need foreign companies operating in
seeks to revitalize U.S. engagement across the Pacific
the timber export sector and that he wants PNG to be “the
Islands including providing a total of $7 million in Foreign
richest black Christian nation.” Marape has discussed plans
Military Financing (FMF) for PNG, Fiji, and Tonga in
to shift away from traditional partners and engage
2018. The U.S. government also provides International
Indonesia, Philippines, and Singapore “in a bigger way.”
Military Education and Training (IMET) assistance to PNG
amounting to about $200,000 annually, focused on
Economy
promoting democratic values and peacekeeping capabilities
Papua New Guinea is richly endowed with natural
in the PNG defense force.
resources, including precious metals, natural gas, timber,
and fisheries. The country’s real Gross Domestic Product
Other U.S. assistance includes HIV/AIDS prevention, care,
(GDP) growth rate was 1.6% in 2016, 2.5% in 2017, and is
and treatment, and Pacific Islands regional programs of
estimated to have been 0.3% in 2018. It is projected to grow
which Papua New Guinea is a member or recipient. These
to 3.4% in 2019 as the negative impact of a February 2018
include the Coral Triangle Initiative on Coral Reefs,
earthquake fades. PNG ranks poorly on the United Nations
Fisheries, and Food Security (CTI-CFF), which aims to
Development Program’s Human Development Index, which
sustain marine and coastal resources in the region, and the
measures per capita gross national income, life expectancy,
multilateral South Pacific Tuna Treaty (SPTT). The SPTT,
and educational attainment (it is 153rd out of 187 countries).
established in 1988, provides access for U.S. tuna fishing
PNG has a serious HIV/AIDS problem and a weak health
vessels to fishing areas in the region, which supplies one-
system. Obstacles to PNG’s economic development include
third of the world’s tuna. In exchange, the American
destructive weather, poor infrastructure, lack of government
Tunaboat Association pays licensing fees to the 14 Pacific
capacity, official corruption, inadequate supply of skilled
Island parties to the SPTT, and the United States provides
workers, and unstable commodity prices. Australia (20.1%),
economic assistance to the Pacific Island parties totaling
Singapore (17.7%), China (17.3%), and Japan (13.4%), are
$21 million annually. In 2018, at the Asia Pacific Economic
Cooperation (APEC) Leaders Meeting in Port Moresby,
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Papua New Guinea
Vice President Mike Pence and the leaders of PNG,
Initiative (BRI) in June 2018. China’s investments in PNG
Australia, Japan, and New Zealand announced plans to
reportedly exceed $1.9 billion. China has also reportedly
collaborate on improving access to electricity through the
offered $4 billion in financing for the construction of a
Papua New Guinea Electrification Partnership, which has a
national road network in PNG. Some observers believe
goal of providing electricity to 70% of PNG’s population
China is willing to extend more credit than some borrowing
by 2030.
nations can afford, raising questions about the development
value of some Chinese-financed projects and about whether
The Trump Administration has proposed a new Pacific
China could use economic leverage to exert political
Islands Regional foreign assistance program under the
influence over borrowing nations.
FY2020 budget request for foreign operations, which refers
to the region as “… a priority area under the
Prime Minister Marape has reportedly stated “We engage
Administration’s Indo-Pacific Strategy.” The regional
the Chinese Government as long as it’s fair and friendly to
program would expend $20.5 million in FY2020 and
us on our terms.” He added, “Whether it be China, New
include activities related to disaster preparedness and the
Zealand, Australia, Philippines, Indonesia, I intend to
environment, good governance, democracy, and civil
maximize foreign relations in the economy especially trade
society, trade and investment, energy, and information and
and commerce, not only politics.”
communications technology. The program would support
conservation and natural resource management initiatives in
The United States, Australia, New Zealand, and Japan are
PNG to reduce the primary threats to the country’s
responding to China’s efforts to expand its influence in
biodiversity. Australia, Japan, and New Zealand are PNG’s
PNG. This is being done with increased infrastructure and
principal providers of foreign assistance. Many of China’s
capacity building efforts in PNG, as well as by efforts by
assistance activities do not meet the standards of “official
Australia and the United States to support PNG’s
development assistance” as defined by Organization for
development of the Lombrum naval facility. The United
Economic Cooperation and Development (OECD).
States first established a base at Lombrum, on Manus Island
north of the PNG mainland, in 1944 during WWII. Some in
Bougainville Autonomy
the media have described the move to develop Lombrum as
Between 1988 and 1997, an armed secessionist movement
seeking to head off Beijing’s interest in Manus Island. It
in the island province of Bougainville, located in eastern
was reported that China expanded its deep-water scientific
PNG, battled the PNG Defense Forces, resulting in 15,000-
surveys and oceanographic research near Manus Island
20,000 deaths. In 1997, a cease-fire was brokered and, in
shortly after the U.S. announced its plans to help PNG to
1998, the PNG government and Bougainville leaders signed
develop the Lombrum facility.
a peace agreement. A regional truce monitoring group
consisting of peacekeepers from Australia, New Zealand,
APEC 2018
Fiji, and Vanuatu and United Nations observers helped to
PNG hosted the APEC Leaders Meeting in Port Moresby
enforce the peace while an interim government was set up.
on November 17-18, 2018. The meeting was attended by
In 2001, the PNG government and Bougainville leaders
both Vice President Pence and China’s President Xi. Vice
agreed upon the establishment of the Autonomous
President Pence made several references to PNG in his
Bougainville Government in 2005 and the terms of a
speech to the APEC gathering. He first pointed to the
referendum on independence. A referendum vote scheduled
importance of American investment in PNG including $19
for October 2019 is expected by some observers to favor
billion by ExxonMobil. Pence also spoke of forging new
independence. This may lead to a deterioration of the
security partnerships with PNG and Australia on their joint
security situation if PNG fails to recognize and implement
initiative at Lombrum Naval Base adding, “We will work
such a result.
with these nations to protect sovereignty and maritime
rights of the Pacific Islands as well.”
Observers say that while there is support for independence,
the economic viability of Bougainville as an independent
The Environment
nation is still in doubt. The reopening of the Panguna
PNG is environmentally very biodiverse with habitats as
cooper mine, one of the largest in the world until it was shut
varied as tropical heaths and grasslands, cloud forests,
down in 1989, could potentially provide a key source of
savannas, mangroves, swamp forests and diverse marine
income for Bougainville. However, many questions remain
environments. It also has glaciers and mountains over 5,000
regarding its ownership and revenue sharing between PNG
meters high as well as rare species including birds of
and Bougainville.
paradise, tree kangaroos and flightless cassowaries. PNG’s
forests and animals are being threatened by mining, logging
China and PNG
and land clearing for palm oil plantations. The World
China’s strategic interest in Pacific island countries has
Wildlife Fund estimates that between 1972 and 2002, 24%
been growing in recent years as has its naval capabilities.
of rainforests were cleared or degraded through logging or
This has led to growing concern by some in the United
subsistence agriculture.
States, Australia, and the region. China is expanding its
presence and influence in PNG. China and PNG established
Bruce Vaughn, Specialist in Asian Affairs
a comprehensive strategic partnership in 2016. Former
Thomas Lum, Specialist in Asian Affairs
Prime Minister O’Neill reportedly met with Chinese
President Xi Jinping more than a dozen times and was the
IF11255
first Pacific leader to sign on to China’s Belt and Road
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Papua New Guinea


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