New Caledonia

Politics:

• Analysis

  New Caledonia politics: Quick View - R-UMP appears to be on verge of splint

  Event

  A major split has opened up in New Caledonia's pro-French Rassemblement-Union pour un mouvement populaire (R-UMP) party, underlining the fractured nature of the territory's anti-independence camp.

  Analysis

  The crisis in the R-UMP began in late February, when the party's leader, Pierre Frogier, suspended his deputy, Gael Yanno, and the party's acting secretary-general, Sonia Backes. In mid-March it was reported that Mr Yanno was considering forming a new party, adding to the three existing (and competing) pro-French parties: the R-UMP; Avenir ensemble, led by Harold Martin, New Caledonia's president; and Calédonie ensemble (CE), led by Philippe Gomès, who was president between 2009 and 2011.

  Following the R-UMP's poor showing in elections in 2009, and in order to head off Mr Gomès, his bitter rival, Mr Frogier pursued a de facto alliance with pro-independence forces in the run-up to the implementation of the 1998 Nouméa Accord, which sets the timetable for the transfer of powers from France and stipulates that New Caledonia must hold a referendum on self-determination at some point between 2014 and 2019. The terms of the alliance included the proposal that both the French and Kanak flags be flown over public buildings. Mr Gomès' staunch opposition to this measure saw the territorial government collapse four times in 2011, with the result that Mr Martin was elevated to the presidency.

  However, 2012 saw a resurgence of support for Mr Gomès' more hardline stance, when CE defeated the R-UMP in the election for the territory's two seats in France's National Assembly (the lower house of parliament); the R-UMP had previously held the seats for 25 years. Since then, internal disquiet within the R-UMP, led by Mr Yanno (who had held one of the French National Assembly seats), has grown. A split was narrowly avoided at the party's congress in December 2012, but it finally broke open two months later, when Mr Frogier accused the rebels of wanting to take the party backwards.

  Although the split will strengthen Mr Gomès and CE, it highlights the divisions in the pro-French camp and the failure of repeated French attempts to reunite it. The addition of a fourth anti-independence party will hardly help in forging a unified approach as the implementation of the Nouméa Accord-as well as the next territorial election, due in 2014-gets closer.

  March 14, 2013

• 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, François Hollande

  Territorial legislature

  The 54-seat Territorial Congress, comprising the combined elected membership of the three provincial assemblies (15 members from North province, 32 from South 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 (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

  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: Cynthia Ligeard (R-UMP)

  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)

  January 08, 2013

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	823.0	844.4
  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	1.7
  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	92.95
  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	1,251.5	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 2011	% of total	Main origins of imports 2011	% of total
  Japan	19.7	France	33.8
  France	18.6	Singapore	19.2
  Australia	13.0	Australia	11.9
  South Korea	10.6	China	4.4

  Download the numbers in Excel

  Download text file (csv format)

  January 08, 2013

• Outlook

  New Caledonia: Country outlook

  New Caledonia: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  OVERVIEW: Politics 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 expiry of a ban on no-confidence votes means that politics could become volatile again in the 2013-14 forecast period. Protests about the cost of living and the environmental impact of mining in New Caledonia are highly likely in 2013-14 and could turn violent. The territory's nickel-dependent economy will be supported during the period 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 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 endured a volatile two-year period in 2010-12 that saw four governments collapse before the current administration, led by a pro-French president, Mr Martin of the Avenir ensemble (AE) party, was able to exert a degree of calm. Nevertheless, there are weak points in his government that 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 vulnerability. 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 11-member Ministerial Cabinet (the executive) 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 (the 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 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 also led to the election of a CE member, Gerard Podaja, as president of the legislature for a fixed 12-month term, replacing a pro-independence politician, Roch Wamytan. Moreover, the CE's leader, the previous 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 New Caledonian 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 protection afforded to Mr Martin's government by this grace-period rule expired at the end of 2012, and 2013-14 could therefore see more aggressive destabilising moves by non-aligned politicians. Protests relating to the cost of living (as seen in mid-2011 on the island of Maré) and the environmental impact of mining in New Caledonia are likely to recur in 2013-14 and could turn violent, particularly if the government and the companies involved are not seen to be actively addressing the grievances of conservation groups and local residents. The government's considered response to the process means that measures to reduce the cost of living-such as subsidised air travel between the territory's provinces and reductions in some healthcare costs-will be introduced in 2013-14. However, given the economy's reliance on nickel exports, we expect the mining industry to continue to exert a strong influence over policy in the territory.

  INTERNATIONAL RELATIONS: At the root of the recent political turmoil has been the question of New Caledonia's potential future independence from France, and this will remain the biggest issue in the next two years. 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. In spite of the more moderate stance of the French president, François Hollande, on the issue, occasional protests against French rule by the pro-independence parties and their supporters will take place. However, it is unlikely that such demonstrations will become violent or will interfere with the operations of government or businesses.

  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$1,620) in 2013, while price controls on around 100 consumer-goods items were implemented in 2010. Further changes have been introduced since the violent protests on Maré in mid-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 global commodity prices and government moves to bring down local prices mean that we expect inflation to remain low on an annual average basis in 2013-14. We forecast that nickel prices will continue to fall rapidly in 2013, following an estimated tumble of almost 25% in 2012. We expect prices to average US$6.3/lb in 2013 and US$7.7/lb in 2014. Weakening demand from China and a rise in global supply (which we believe will result in global surpluses of refined nickel in 2013-14) are behind the current decline in international 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 global 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 2012-13, 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 25% in 2012, and a forecast for a similar fall in 2013, global nickel prices will remain fairly strong by historical standards on average in 2013-14. This will help to support economic activity in nickel-dependent New Caledonia, through higher government revenue and the opportunity for 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 finally began production in September 2011 (although the firm endured a year hampered by technical problems in 2012), while the Koniambo project is set to come on stream in the first quarter of 2013. Global economic uncertainty will manifest itself in the shape of a fall in the number of high-spending visitors to New Caledonia, clouding prospects for the tourism sector. GDP growth will remain sluggish in 2013-14, at 2.2% a year on average, following a similar pace of expansion in 2012. New Caledonia's geographical isolation from the euro zone will provide some insulation from the 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: The 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 country 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.

  January 09, 2013

View detailed map

Country Briefing

Land area

19,103 sq km

Population

249,000 (2011 World Bank estimate)

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:EUR1). 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 1st (Easter Monday); May 1st (Labour Day); May 8th (1945 Victory Day); May 9th (Ascension Day); May 20th (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)

January 08, 2013