Clinton warns of "resource curse" in Papua New Guinea

PORT MORESBY (Reuters) - Secretary of State Hillary Clinton on Wednesday offered to help Papua New Guinea create a sovereign wealth fund to manage its resource revenue and avoid a “resource curse” which could fuel conflict and corruption.

During her four-hour stop-over en route from Asia to New Zealand, Clinton stressed that the South Pacific island nation needed to manage its energy windfall, while preserving its diverse environment.

“There is a phrase ‘resource curse’ where countries with an abundance of natural resources like oil and gas or gold or minerals, if they are not handled right can actually (make) a country poorer instead of richer,” Clinton told a news conference in the capital Port Moresby.

PNG is a resource-rich nation with reserves of gold and gas.

U.S. oil giant Exxon Mobil is the majority stakeholder in a new $15 billion liquefied natural gas (LNG) project in PNG due to come on stream in 2014.

But many in PNG fear the windfall from the country’s biggest ever resource project could fuel corruption and violence.

Clinton said the United States wanted to provide whatever help it could, including assisting with the creation of a sovereign wealth fund, to help PNG manage its energy revenues.

“We know that Papua New Guinea wants to do this right and we want to provide whatever technical assistance and help that they would need,” said Clinton.

PNG and the adjacent Indonesian province of West Papua account for the world’s third-largest expanse of tropical rainforest after the Amazon and Congo, the United Nations says.

But Greenpeace last week said PNG’s efforts to protect its rainforests were being hindered by corruption and lack of political leadership. It said widespread logging had left only 55 percent of PNG’s forests intact.


Bare-chested dancers beating drums greeted Clinton when she arrived in Port Moresby on a visit during which she focused on the environment, climate change and women’s rights in talks with PNG Prime Sir Minister Michael Somare.

Rising sea levels and more frequent storm surges, blamed on climate change, are already threatening several Pacific island nations, forcing people to abandon coastal villages.

“As sea levels rise and storms increase, the very existence of countries in the Pacific are at risk,” Clinton said after watching two students plant mangrove trees along the shore of the capital.

Nations like PNG are trying to create barriers to the sea by planting mangroves along their shores and are shifting farms away from the coast to stop seawater inundation.

“We have no time to lose to take meaningful, measurable actions to limit greenhouse gas emissions and adapt to the impacts of climate change,” said Clinton.

Villagers on PNG’s remote Cateret Islands became the first climate change refugees two years ago when they started abandoning their tiny coral atoll because of rising sea levels.

U.N. talks on a new climate pact have largely stalled over a split between rich and poor nations over sharing the burden in cutting greenhouse gas emissions. The United Nations has played down expectations of any major breakthrough at climate talks that begin in Mexico in less than a month.


Clinton also called for an end to violence against women in the jungle-clad mountainous island nation, which has one of the world’s highest incidence of rape.

“If a woman or a girl can not be safe in her own home or safe in her own family or safe in her own community then that woman or girl will not have the chance to make the most out of her life,” she said.

An Australian AusAID report ranks PNG as 123 out of 136 nations for violence against women.

The group said the high rate of sexual violence against women in PNG added to the risk of contracting HIV, which was now an epidemic spreading across the general population.

Clinton said the U.S. government, Exxon and local groups would set up a mentoring program “aimed at ending the culture of violence against women and girls in Papua New Guinea.”

Writing by Michael Perry; Editing by Alex Richardson