New Caledonia

Politics:

• Analysis

  New Caledonia politics: Quick View - France's minister for overseas territo

  Event

  France's minister for overseas territories, Victorin Lurel, is to visit New Caledonia later this week to prepare for newly announced talks on the Noumea Accord that will take place in Paris on December 6th.

  Analysis

  The Noumea Accord sets the timetable for the transfer of powers to New Caledonia from France, and provides for a referendum on self-determination some time between 2014 and 2019. Mr Lurel said that the talks on the accord would be held under the leadership of French prime minister, Jean-Marc Ayrault, and would focus on preparations for the potential transfer of power, as well as on the problem of the territory's high cost of living. Other contentious issues, such as the ongoing dispute over New Caledonia's flag and its future name, will have to wait until after the territory's next parliamentary election in 2014.

  Although the talks are part of the regular preparations for changes under the accord, they come at an interesting juncture in New Caledonian politics. Anti-independence politicians have been outraged by Mr Lurel's use of "Kanaky" to refer to New Caledonia in August. Meanwhile, the anti-independence Caledonie ensemble (CE) party, led by Philippe Gomès, has once again threatened to bring down the government, as it said it would four times in 2011.

  Once again, the flag issue-the flying of the Kanak flag alongside the French tricolore-is behind the threat, but so are rivalries among anti-independence politicians. Mr Gomès (whose appeal against a corruption conviction earlier this year, for which he received a suspended prison sentence, is currently being heard in New Caledonia's courts) feels that his party's success in the French National Assembly elections earlier this year should give it a bigger role in the territorial government, which is led by Harold Martin of Avenir ensemble, another pro-French party and a bitter rival to Mr Gomès.

  Mr Martin naturally disagrees. The dispute between the two men deepened following a speech by Mr Martin to the UN Decolonisation Committee in New York in October, in which he criticised the CE's stance on the flag issue and lambasted them as troublemakers. Meanwhile, pro-independence forces, perhaps encouraged by Mr Lurel's perceived views on New Caledonia and by divisions in the anti-independence camp, watch and wait.

  November 19, 2012

• Background

  New Caledonia: Key figures

  Harold Martin

  President of the territorial government and leader of the Avenir Ensemble party.

  Pierre Frogier

  President of the Territorial Congress and leader of the Rassemblement-UMP party. Mr Frogier is a deputy to the French national assembly.

  August 27, 2008

• Structure

  New Caledonia: Political structure

  Official name

  New Caledonia

  Form of state

  A French overseas territory, largely autonomous except in areas such as foreign relations, defence, justice, currency and credit. The Nouméa Accord, signed in 1998, provides for the devolution of power to New Caledonia. A referendum on complete independence is due to be held some time between 2014 and 2019

  The executive

  The French high commissioner for New Caledonia and Wallis and Futuna, Albert Dupuy

  Head of state

  The president of France, Nicolas Sarkozy

  Territorial legislature

  The 54-seat Territorial Congress, comprising the combined elected membership of the three provincial assemblies (15 members from the North Province, 32 from the Southern province and seven from the province of the Loyalty Islands). Members are elected by universal suffrage for terms of five years. The president of the territorial government is elected by the members of the Territorial Congress

  Local government

  Three provincial assemblies, plus 33 basic local government units, known as communes

  Legal system

  The French system, augmented by mandatory consultation with the Advisory Council on Customs (Conseil coutumier territorial, comprising 40 members drawn from eight areas) in matters of customary and land law. Magistrates preside over the decentralised lower courts. The Court of Appeal is based in the capital, Nouméa, and there is access to the higher appeal court of France for certain matters

  Territorial elections

  Provincial assembly elections determine the composition of the Territorial Congress, which in turn elects an 11-member Ministerial Cabinet, the executive. The last provincial polls were held in May 2009; the next elections are scheduled for May 2014

  Territorial government

  Since February 2011 the president of the territorial government has been Harold Martin of Avenir ensemble (AE), an anti-independence party. He succeeded Philippe Gomès of Calédonie ensemble (CE), which split from AE in 2008. Together, the anti-independence parties-which, in addition to CE and AE, include the Rassemblement-union pour un mouvement populaire, or R-UMP-hold seven positions in the territorial government. The pro-independence grouping, the Front de libération nationale kanak socialiste (FLNKS), holds four government posts

  Main political organisations

  The main groupings are the R-UMP, AE, CE, the FLNKS and Union calédonienne (UC). The R-UMP is affiliated with the Union pour un mouvement populaire (UMP) in France. The FLNKS comprises the UC, the Parti de libération kanak (Palika), the Rassemblement démocratique océanien, the Union progressiste mélanésienne and the Union nationale pour l'indépendance. The Libération kanak socialiste is strong in the Loyalty Islands but has seen its support eroded by the Parti travailliste

  Key ministers

  President of the territorial government: Harold Martin (AE)

  Vice-president of the territorial government: Gilbert Tyuienon (UC)

  President of North province: Paul Néaoutyne (FLNKS)

  President of South province: (vacant)

  President of the Loyalty Islands: Hnepeune Neko (UC)

  Deputies to the French National Assembly:

  Sonia Lagarde (CE)

  Philippe Gomès (CE)

  Representative to the French Senate: Simon Loueckhote (R-UMP)

  October 15, 2012

Economy:

• Background

  New Caledonia: Economic background

  Gross domestic product
  	2002	2003	2004	2005	2006
  Total (CFPfr m)
  At current prices	n/a	n/a	563,100	599,500	647,000
  Per head (CFPfr '000)
  At current prices	n/a	n/a	2,448	2,558	2,713
  Source: Institut de la statistique et des etudes economiques.

  Download text file (csv format)

  The economy is highly dependent on the nickel industry and payments from the French government. Nickel production accounts for around 10% of GDP and about 93% of total export earnings. Approximately 80% of transfers are spent on health, education and the payment of civil service salaries, with the remainder funding development schemes, mainly in the Northern and Loyalty Islands provinces. Other industrial activity is mostly in the small- and medium-sized business sector. However, transport and communications, other services (including tourism) and commerce account for around 70% of GDP. Formal economic activity is largely confined to the main island.

  August 27, 2008

• Structure

  New Caledonia: Economic structure

  Economic structure: Annual indicators

  	2008a	2009a	2010a	2011b	2012b
  GDP at market prices (CFPfr bn)	756.3	784.7b	796.3b	822.6	845.4
  GDP (US$ bn)	9.0	10.3	10.1	9.9	10.6
  Real GDP growth (%)	0.6	0.4b	1.5b	1.9	2.2
  Consumer price inflation (av; %)	3.0	0.9	2.7	2.4a	1.8
  Population (m)	0.2	0.2	0.3	0.3	0.3
  Exports of goods fob (US$ m)	1,299.7	993.3	1,483.4	1,717.1	–
  Imports of goods fob (US$ m)	-3,233.1	-2,574.3	-3,312.6	-3,698.7	–
  Exchange rate (av) CFPfr:US$	81.50	82.70	89.94	85.74a	93.53
  a Actual. b Economist Intelligence Unit estimates.

  Download the numbers in Excel

  Origins of gross domestic product 2009	% of total	Components of gross domestic product 2009	% of total
  Agriculture	2.0	Private consumption	65.3
  Industry	26.1	Government consumption	26.6
  Manufacturing	16.1	Fixed investment	26.8
  Services	71.8	Stockbuilding	0.0
  Statistical discrepancy	0.1	Exports of goods & services	16.9
  		Imports of goods & services	35.5
  Principal exports fob 2007	US$ m	Principal imports cif 2007	US$ m
  Ferro-nickels	1,251.50	Electrical machinery	626.8
  Nickel ore	531.3	Minerals incl petroleum products	471.2
  Nickel & nickel products	306.1	Vehicles & spare parts	467.9
  Fish & crustaceans	28.6	Foodstuffs	349.3
  Main destinations of exports 2007	% of total	Main origins of imports 2007	% of total
  Japan	24.1	France	26.6
  EU excl France	20.4	EU excl France	16.1
  France	15.6	Singapore	13.6
  Taiwan	13.0	Australia	10.7
  China	12.1	China	5.5

  Download the numbers in Excel

  Download text file (csv format)

  October 15, 2012

• Outlook

  New Caledonia: Country outlook

  New Caledonia: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: Politics in New Caledonia will remain dominated by the issue of independence from France. A referendum on the issue is to be held some time between 2014 and 2019. Politicians will continue to align themselves with either the pro- or the anti-independence camp. There is a risk that progress on other issues could be stymied by increasing partisanship on independence. The government led by the president, Harold Martin, has proved more durable than its short-lived predecessors, but the imminent expiry of a ban on confidence votes means that politics could become volatile again in the 2013-14 outlook period. Protests about the cost of living and the environmental impact of mining are highly likely in 2013-14 and could turn violent. The territory's nickel-dependent economy will be supported in 2013-14 by production at two large new projects, one in South province and the other in North province. The Economist Intelligence Unit forecasts that the economy will expand by 2.1% in 2013 and 2.3% in 2014, following an estimated growth of 2.2% in 2012. The current-account deficit is expected to narrow in 2013-14, in line with an expansion in nickel production. However, surpluses on the transfers and income accounts will fail to offset the deficit on trade in goods and services.

  DOMESTIC POLITICS: New Caledonia's political scene has endured a volatile 18 months that has seen four governments collapse before the current administration, led by the pro-French Mr Martin-of the Avenir ensemble (AE) party-was able to exert a degree of calm. There are nevertheless weak points in Mr Martin's administration which mean that it is unlikely to remain intact until the next general election in the territory, scheduled for 2014. Internal political wrangling is one such vulnerable spot. In particular, the pro-French opposition party, Calédonie ensemble (CE), the second-largest party in the Territorial Congress (the legislature), has enjoyed a resurgence in recent months that will see it re-emerge as a force in New Caledonian politics. The CE lost its representation in the New Caledonian executive (the 11-member cabinet) in 2011, following a dispute over the adoption of a new flag, but it has since won both of New Caledonia's seats in the French National Assembly (lower house) at that country's parliamentary election in May 2012. The CE's success resulted in the resignation of the president of South province, Pierre Frogier, in late August to focus on rebuilding the Rassemblement-Union pour un mouvement populaire party (whose candidates were defeated by their CE opponents in the election to the French legislature). It has also led to the election of a CE member, Gerard Podaja, as the president of Congress for a fixed 12-month term, replacing a pro-independence politician, Roch Wamytan. Moreover, the CE's leader, a former president of New Caledonia, Philippe Gomès, has spoken assertively about the need for his party to regain representation in the cabinet-a development that would be unlikely to bring down the government, but which would probably distract from policymaking. However, the stability of the current administration and its successors has been boosted by the passage of a bill in the French parliament introducing an 18-month grace period in the territory during which the withdrawal of a single party's members from the cabinet will not trigger the automatic dissolution of the government. The previous system, whereby a dissolution did take place following such a withdrawal, was intended to foster a sense of collegiality but was exploited by politicians who preferred to cause political deadlock rather than concede a point to their opponents. Nevertheless, the protection afforded to Mr Martin's government by the grace-period rule expires at the end of 2012, and 2013-14 could therefore see more aggressive destabilising moves by non-aligned politicians.

  INTERNATIONAL RELATIONS: The next few years will be an important period in the development of the debate over the territory's relationship with metropolitan France. The 1998 Nouméa Accord on devolution of power to New Caledonia provides for a referendum on independence from France, to be held some time between 2014 and 2019. The government will attempt to demonstrate the advantages of continued French rule. The split between pro-independence politicians and those who remain loyal to France is wide, although divisions also exist within the pro-French camp, and notably between AE and CE. The defeat of Nicolas Sarkozy by François Hollande in the French presidential election in May 2012 will boost the pro-independence camp, as Mr Sarkozy was keen for New Caledonia to remain part of France. But despite Mr Hollande's more moderate stance on the issue, occasional protests against French rule by the pro-independence parties and their supporters will probably occasionally take place.

  POLICY TRENDS: New Caledonia's high cost of living will remain a contentious issue. The government that was formed following the most recent election, in 2009, led by Mr Gomès, introduced a number of measures to reduce the burden on households: the Territorial Congress passed legislation to raise the monthly minimum wage by around 20% over a three-year period, to CFPfr150,000 (US$1,600) in 2013, while price controls on around 115 consumer-goods items were implemented in 2010. Further changes have been introduced since the violent protests on Maré in August 2011, including measures to improve the transparency of pricing, close tax loopholes, limit travel prices and control the prices of hundreds of other products. Since 2009 wages have risen faster than consumer prices, but policies such as raising the minimum wage carry the risk of inducing a wage-price spiral. Nevertheless, the forecast moderation in international commodity prices and government action to bring down local prices mean that we expect inflation on an annual average basis to remain low in 2013-14. We forecast that nickel prices will continue to fall in 2013, following an estimated tumble of almost 20% in 2012. We expect prices to average US$7.3/lb in 2013 and US$8.2/lb in 2014. Weakening demand from China and a rise in global supply are behind the current fall in prices. Given that nickel-mining is New Caledonia's main industry and that sales of the metal account for around 90% of the territory's export receipts, such a substantial decline in the international price of the metal is likely to reduce the government's tax take significantly. However, a considerable part of the increase in global supply of nickel will come from New Caledonia itself, with four projects either expanding or beginning production in 2012, and the increase in the volume of the commodity produced in the territory is likely to offset fully the impact of its falling global price in terms of tax revenue. In addition to tax revenue from nickel, the territory should continue to benefit from its association with France, as it receives considerable budgetary support from the French Treasury.

  ECONOMIC GROWTH: Despite falling by close to 20% in 2012, global nickel prices will remain fairly strong by historical standards on average in 2013-14, and this will help to support economic activity in nickel-dependent New Caledonia through higher government revenue and improved wages for mine workers. Moreover, two major new nickel plants, a development in South province run by Vale Nouvelle-Calédonie (the local subsidiary of Vale of Brazil) and the Koniambo project in North province, will provide a significant fillip to GDP growth, having already boosted economic expansion during their construction phase. The Vale project has overcome delays and began production in September 2011, while the Koniambo project is set to come on stream in the first quarter of 2013. However, global economic uncertainty will also manifest itself in the shape of a fall in the number of high-spending visitors to New Caledonia, clouding prospects for the tourism sector. We expect the rate of GDP growth to remain sluggish, at 2.2% a year on average in 2013-14, following a similar rate of expansion in 2012. New Caledonia's geographical isolation from the euro zone will provide a degree of insulation from the expected turbulence in Western economies, but the French Pacific franc's peg to the euro means that the territory will not be entirely divorced from events in Europe.

  EXTERNAL ACCOUNT: New Caledonia's current-account deficit is expected to narrow in 2013-14, in line with an expansion in the territory's nickel-producing capacity. There is also the possibility that the territory will continue to benefit from an increase in tourism receipts following its successful hosting of the Pacific Games in 2011, although this will be contingent on the economic health of the territory's main tourism markets, namely France, Japan, Australia and New Zealand. However, surpluses on the current transfers and income accounts will fail to offset much larger deficits on trade in goods and services.

  October 30, 2012

View detailed map

Country Briefing

Land area

19,103 sq km

Population

245,580 (2009 census)

Major islands

New Caledonia island (la Grande-Terre), 16,750 sq km; and the Loyalty Islands (principally Lifou, Maré, Ouvéa and Tiga), 1,981 sq km

Capital

Nouméa: population 97,579 (2009 census)

Climate

Tropical

Weather

Average annual temperature of 23°C with little variation. Cyclones can occur in  the wet season, November-April. Average annual rainfall in Nouméa is 1,000 mm

Languages

French (official language); many local languages also in use

Measures

Metric

Currency

CFPfr (the French Pacific franc—Comptoirs Français du Pacifique; since 1999 pegged to the euro at a rate of CFPfr119.3:€1). Average exchange rate in 2011: CFPfr85.7:US$1

Fiscal year

Calendar year

Time

11 hours ahead of GMT

Public holidays

January 1st (New Year's Day); April 8th (Easter Day); April 9th (Easter Monday); May 1st (Labour Day); May 8th (1945 Victory Day); May 17th (Ascension Day); May 28th (Whit Monday); July 14th (Bastille Day); August 15th (Feast of the Assumption); September 24th (New Caledonia Day); November 1st (All Saints' Day); November 11th (Armistice Day); December 25th (Christmas Day); December 31st (New Year's Eve)

July 03, 2012