Research report

Changing geopolitical dynamics for Papua New Guinea

6 Dec 2017
Description

The new O'Neill government faces a rapidly changing external environment as it struggles to manage a significant domestic economic downturn and unprecedented pressures on the national budget. Australia remains Papua New Guinea's closest foreign partner; by far its largest bilateral aid partner, trading partner and foreign investor, but its influence is diminishing as that of other actors is growing. China is an increasingly important player - as a trade partner, investor in infrastructure and source of foreign loans, as well as in the small to medium business sector. Relations with other Asian nations are expanding. Large foreign companies are exerting more influence on government policy than most nation state development and trade partners of Papua New Guinea can hope to exercise. These relationships are likely to come into sharper focus over the next year, as the PNG government prepares to host APEC in 2018. It is not clear that the new PNG government has the capacity to pursue the national interest abroad while it is preoccupied with a complex set of challenges at home.

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