Watching a PNG quagmire

A mutiny reportedly carried out at the behest of former Papua New Guinean Prime Minister Michael Somare ended January 26. The mutiny is the latest incident of a nearly yearlong political crisis in the island nation. Australia has several economic interests in Papua New Guinea, including natural gas and mineral resources. We can expect Canberra to closely monitor the crisis, lest it threaten to undermine Australian interests, and continue its calls for resolution.

Papua New Guinean Prime Minister Peter O'Neill announced the end of a mutiny that began early January 26. Led by former Colonel Yaura Sasa, some 30 soldiers placed Brigadier General Francis Agwi under house arrest after taking control of his barracks. Sasa then gave the government a one-week ultimatum to fix a political deadlock that has persisted in the country since August 2011, when former Prime Minister Michael Somare was officially voted out of his post. It was Somare who reportedly ordered Sasa to assume control of the army.

Papua New Guinea does not lend itself to political stability. Its ethnic, tribal, cultural and environmental diversity prohibits cohesiveness. In fact, no single party has ever won enough parliamentary seats to secure a government; each of the country's governments has been a coalition. As such, many of Papua New Guinea's neighbours, particularly Australia, saw the country as a political liability in the lead-up to its independence in 1975. But Papua New Guinea sits in the strategically important southwestern Pacific Ocean, and due to its huge mining assets and liquefied natural gas reserves, Australia has tried to bring the island nation back under its sphere of influence. Prolonged political instability in Papua New Guinea could undermine Australian interests.

Though the parliament officially vacated Somare's post in August 2011, the current political quagmire in Papua New Guinea dates back to April 2011, when a leadership tribunal issued Somare a two-week suspension for misconduct. After the suspension, Sam Abal was appointed acting prime minister, after which Somare left the country for medical treatment in Singapore. In a news release announcing his sick leave, Somare said Abal would continue to serve as acting prime minister until otherwise indicated. Shortly thereafter, disagreements between Abal and Foreign Minister Don Poyle crippled the government. But it was Abal's decision to move O'Neill from his position as the treasurer to the Works Ministry – a demotion – that led the parliament to vacate Somare's post in August and hold a no-confidence vote. O'Neill emerged from the parliamentary vote as the prime minister, while Abal went to the political opposition.

While Papua New Guinean lawmakers had hoped O'Neill's margin of victory in the August referendum – a 70-24 win – would give him a clear mandate, several parties challenged the legality of O'Neill's election, and in December the Supreme Court ordered the reinstatement of Somare as prime minister. Despite the order, O'Neill remained in his post with the support of the civil service, police, armed forces and most lawmakers. (Following the court ruling, Agwi recognized O'Neill as the legitimate prime minister.) According to Australian media, more than 68 percent of Papua New Guinean lawmakers have voted repeatedly for O'Neill, who faces another election in July.

Meanwhile, Australia likely has been following the situation in Papua New Guinea closely. The two countries are close geographically and have many historical links. For Canberra, O'Neill is a welcome alternative to Somare. O'Neill is staunchly pro-business and is the son of a former Australian magistrate. Moreover, he reportedly maintains ties with Australian lawmakers and represents a departure from usual Papua New Guinean politics. Since he came to power, relations between the countries have warmed, and Australia has been trying to regain its strategic foothold in Papa New Guinea.

This is mostly because Papua New Guinea has massive LNG resources. Australia and the United States own most of the island nation's LNG, with ExxonMobil, Santos and Oil Search holding the majority of shares. Talks between Papua New Guinea and Australia are under way for a new LNG project worth about $13 billion. Canberra would much rather deal with O'Neill, who may reciprocate Australian business interests, than Somare, who has accused Australia of trying to discredit him.

It comes as no surprise that Canberra repeatedly has called for a resolution ever since the current political crisis in Papua New Guinea began. An ineffectual government would put Australian economic interests at risk. This is especially true if the crisis turns violent.

Stratfor.com Reprinted with permission of STRATFOR.