A highly-respected annual meeting between leaders of the world has just ended in Papua New Guinea (18/11). Those who live in Papua, Pacific, or anywhere nearby might forget how important the economic conferences such as Asia Pacific Economic Cooperation (APEC) can be. The presence of big countries in the region has made West Papuan separatist movement an even more interesting issue.

Attended by Indonesia, United States, China, and Pacific Islands nations, the 2018 APEC conference in Papua New Guinea contains crucial economic diplomacy for the newly developing region.The summit was a milestone to measure the strength and potentials of Papua and Indonesian economy. Indonesia stood strong as one of the biggest developing economy in Southeast Asia and Pacific, but the summit posed several challenges as well as opportunities for Papua.

During the conference, there was several important moments where big economic powers crossed each other in order to have trade deals done with Papua, PNG, and other Pacific nations. APEC 2018 has shown the potentials of Papua and how big the future development is going to be. Papua New Guinea was the first actor who got approached by the big guns, while the interesting highlight from Indonesian delegation is that Indonesia was seen to remain neutral, amidst the heat of aggressive investment proposals.

APEC Competition and The Potentials of Indonesian Economy in Papua

While the competition looks rather rude and somewhat scary, APEC is a place where developing countries can speak up and protect their national interests. When big economies get faced with competitions, smaller countries will have better bargaining position and more options on what kind of trade deals they really want to make.

What is highly likely to have happened is that other countries such as Vanuatu, Tuvalu, and other Pacific countries did not manage to utilize the momentum of APEC to build an economic relationship with either Indonesia, or bigger Pacific economies. Solomon Islands for example, just like other Pacific island countries, does not have as much natural resources as other APEC members. Even when compared to Papua New Guinea, it seems clear that Pacific island nations are the ones who actually need trade deals and investments the most.

Indonesia, however, is seen as a gateway for Pacific island countries like Solomon Islands to start bigger businesses with the ASEAN countries. As the biggest market in ASEAN (also strong in military power), newly emerging economies in the Pacific will see Indonesia not only as a market, but as a partner who gives the invitation to ASEAN meetings. With so many regional communities like ASEAN+3, ASEAN-China Free Trade Area, a good relationship with Indonesia is seen as lucrative.

The Absence of Free West Papua Supporters

Prior to the meeting, some Free West Papua supporters threaten to hold demonstration involving 200 people, including “security personnels”. In the end, the demonstration did not happen, as the Papua New Guinean authority did not authorize them.

Interestingly, the Free West Papua movement did not publish any analysis regarding the summit. On the contrary, the separatist groups always seemed to shy away from complicated discussions, albeit being very active on social media. Nonetheless, they took this chance to accuse Indonesia of “selling out Papua for foreign investments”, although Indonesian president Joko Widodo did not sign anything in regards of investment in Papua, till the end of the summit.

The Battle for Influence

Tensions have overflowed at the summit after a group of Chinese officials were accused of trying to force their way into a Minister’s office. Four Chinese officials reported to have barged into the office of Papua New Guinea’s Foreign Minister Rimbink Pato on Saturday afternoon after being denied a meeting. Mr Rimbink Pato gave a remark later on, that the ‘incident’ was not disruptive at all, and that both countries are managing a healthy relationship.

The Chinese delegation has been accused of “bullying” PNG officials, and this was not the first instance. In response, Chinese official has stated that China believed PNG has done “a very good work” in APEC 2018. He believed that, for China, the conference has been nothing short of success. These ‘incidents’ are only casual banters caused by the competition between superpowers in offering the most sustainable investment packages for the developing nations.

Geopolitical tensions have been overshadowing this year’s APEC summit, with the United States, Australia and China all battling for influence in the region. US Vice-President Mike Pence and Chinese President Mr Xi Jinping traded jabs during speeches on Saturday, with Mr Pence accusing Beijing of debt-trap diplomacy and Mr Xi warning the US against protectionism. Mr Xi took the opportunity to promote the trillion-dollar Belt and Road Initiative, trying to penetrate the pacific market for investments.

The Impact towards Papua

It is extremely important for the Papuans, and also Indonesians in general, to realize that an ‘independent’ West Papua will be prone to foreign influence, without counter-influence from Jakarta. The position of Indonesia as an instrumental trade route, along with its influence as a gateway to ASEAN (Southeast Asian countries) serve as a bargaining power which protects West Papua from rampant foreign investments. Meanwhile, countries Solomon Islands, Tuvalu, Vanuatu, and other Pacific island nations only need to sit and wait until such offers start coming for them.

The American and Chinese investment packages are proofs that these parts of the world is serious regarding their commitment to invest and influence Pacific countries. There has been a surge in American companies investing in the Asia’s infrastructure, said Mike Pence, citing a range of examples from power plants in Bangladesh to solar panels in Vietnam and innovation centres in Singapore. The US has stepped up development financing programmes and doubled its financing capacity to nearly US$60 billion to drive private sector investment in the region.

Following the speeches, Mr Pence announced plans for the US, Australia and PNG to redevelop a joint naval base on Manus Island, PNG. In response, Indonesia is currently considering to build a new military base in Papua, to protect the region from any possible leaks and infiltrations. The move by US was described by some analysts as a “significant pushback” against China’s strategic ambitions in the Pacific region. After the feud regarding freedom of navigation in South China Sea, China pits itself against US and the pacific allies once again, and Papua is bound to be affected.

In the aftermath of APEC 2018, Australian prime minister Scott Morrison met briefly with the Chinese president, and Xi Jinping is also due to meet Donald Trump, who skipped the gathering in Port Moresby at the G20 meeting later in the month. Australia is another place where the fundings of West Papuan separatist movements are flowing from, as there are considerable amount of separatism supporters there.

Papua and The Competition in Pacific Asia

Papua is a region relatively untouched by investments from the likes of Russia and China. Following vast development programs in Papua by the current Joko Widodo administration, the Indonesian president does not appear to be in a hurry to open the gate of foreign investments in Papua and West Papua. On the other hand, had the government let their guard down, the issue of West Papuan independence could become highly exploitable, in the prospect of foreign companies gaining quick profit over natural resources investments.

The importance of West Papua is increasingly undeniable for the Pacific countries, and even more so for those who are the least and newly developing in economy. Regarding the position of Indonesia, Papua and West Papua province alone are enough to outperform the rest of Pacific islands nations, with US$20 Billions of Gross Regional Product nominal in 2017.

The developing Asia-Pacific economies are estimated to have sustained a relatively high economic growth rate of 5.8 per cent in 2017 compared with 5.4 per cent in 2016. About two thirds of the regional economies, accounting for more than 80 per cent of the region’s GDP, achieved faster economic growth in 2017 than in the previous year.

The Role of Indonesian Government

Papua and West Papua have been enjoying the benefit of Indonesia’s vast economic growth in the last 3 years, and are expecting to continue for years to come. The steady growth has enabled Indonesian government to build the Trans Papua road. Right now, Trans Papua roads in West Papua Province has been built entirely, which is 1,071 km long. Not only Trans Papua roads, the government made valiant effort in ensuring the sustainability of economy in Papua, by opening access to valuable industries and its assets.

In July 12th 2017, Indonesia, via PT Indonesia Asahan Alumina (INALUM), officially acquired 51% of Freeport’s shares, the gaining control over one of the biggest copper mine in the world. In January 12th 2018, 10% of Indonesian government’s shares were handed over to the government of West Papua; 3% was given to the West Papuan provincial government, while 7% went to the district government of Mimika. That number is approximately equal to 10% of additional annual budget for government spending in both provinces. The way Papuan government spends the fund is going to affect, and improve, the lives of West Papuans directly.

Compared to Papua, the least developed countries in the region grew by 6.8 per cent, the fastest in a decade, supported by stronger trade and investment flows. The recent recovery in global manufacturing, investment and trade is providing a tailwind to the already steady expansion of economic output in the Asia-Pacific region.

However, this upturn – the fastest global output expansion in five years – comes after an extended period of weak investment and low productivity growth. Thus, there is an element of uncertainty in terms of continuation of these trends. Within a few years, it is predicted that only Papua, as a part of Indonesian economy, will be able to sustain a healthy growth.

In line with the Pacific region’s growing purchasing power, domestic private consumption is likely to remain the major source of economic growth. However, in nearly half the countries in the region, consumption of the bottom 40 percent of the population, already substantially low, grew at a slower pace than that of the average household. Papua and West Papua are fortunate to have the access towards a big domestic market in other populous islands in Indonesia, especially Java and Sumatra. Without this domestic consumption, it will be difficult for Papua to continue developing the local economy.

The role of the government is not only to provide a market of domestic consumption, but also maintaining sustainability of development, in regard of environment and employment. Indonesian government plays a crucial role in wage-control, wealth distribution, as well as preserving the nature of Papua. Indonesia will not be the same without Papua, and Papua will be vulnerable without Jakarta.

The importance of Asia Pacific cooperation is undeniable for the Pacific countries, and even more so for those who are the least and newly developing in economy.