Gaurav Sodhi: Tonga Monarchy Needs Modernity

As yet another Pacific crisis brews, this time in Fiji, the Pacific, rather than being famous for blue waters and sandy beaches, is fast gaining a reputation for hosting corrupt, ineffective governments and dysfunctional economies. Papua New Guinea, the Solomon Islands, Vanuatu and further afield, East Timor, have all faced serious political and economic destabilization in recent years and the region boasts few real success stories.

Tonga, with a population of 100,000, could be one.

The recent death of the long reigning monarch, King Tupou IV, is an opportunity for Tonga to move from being one of the last absolute monarchies in the world to a modern state.

Tonga boasts a long tradition of political stability and functioning institutions of law and order. Employment opportunities are few, but emigration as a result of good health and education outcomes has become a safety valve, supporting the remaining population with remittance income from abroad. Agriculture and tourism have potential for future growth.

With these positives, the islands should be booming. Yet something is rotten in the Kingdom of Tonga.

Since 1991, GDP has fallen 1.1% per year, compared to a growth rate of 3.1% in Samoa during the same time. The reason for this difference is straightforward; Samoa has taken some steps to reform its economy and government, while Tonga has not. So as living standards in Samoa have steadily risen, they have declined in Tonga.

The potential of the Tongan economy has been wasted by a monarchy and ‘nobility’ who have become wealthy by retaining a feudal social structure while the majority of the population has emigrated into economic exile in the United States, New Zealand and Australia. At least 80% of Tongans now reside overseas.

The death of King Tupou IV has not diminished the dominance of the Royal family. The King still appoints the Prime Minister, the Deputy Prime Minister and Judges in the Supreme Court and the Appeals Court. In a Cabinet of 14 members, 10 are lifetime appointments made by the King.

Popular support for democracy and economic reform has steadily gained momentum, culminating in a public service strike in late 2005 and the appointment of a commoner as Prime Minister. In an act of appeasement, public sector wages were raised by up to 80%, threatening macroeconomic stability. As a result, the Finance Minister claims Tonga ‘is teetering on the edge of an economic crisis’.

The imminent crisis is an opportunity to carry out long neglected political and economic reforms.

The Royal family continues to dominate economic life, owning strategic monopolies and crowding out the private sector. The newly appointed King Tupou V controls Tonga’s electricity generation, its beer company, half its unexplored oil supply, one of its mobile phone companies, a cable TV company, and the rights to Tonga’s internet domain name, earning a multi-million dollar income annually. The new King’s enterprise instincts are so insatiable that in 2000, he tried to sell the genetic information of his subjects to an Australian biotech company. King Tupou V should honour commitments to divest his business interests.

Agricultural output has fallen below its 1980 level, a combination of remittances and concentrated land ownership stifling incentives to production. Arbitrary rules and licences, such as export licences for squash, also restrict growth.

The economy cannot grow without changes to land tenure. Three quarters of land is owned by the ‘nobility’ and much of the rest lies idle. Until recently, women could not inherit land unless they had no brothers and could prove their celibacy. Squash exports to Japan have been the only agricultural success; a glimpse of what would be possible with private property rights and long term leases.

Land policy and government regulation keep out foreign investment, which is needed to expand tourism- up to now an industry that has been ignored. The Vava’u group of islands is one of only two places in the world where tourists can swim with whales, yet only a trickle of tourists currently visits.

If the government’s tourist targets were met with current infrastructure, every room in Tonga would have to be filled with seven people every day of the year. New investment is badly needed.

The monarchy and nobility should no longer resist the demands for political and economic change. Current suggestions presented to Parliament by the National Committee for Political Reform, while encouraging, are inadequate. The King could continue to play a useful role as a constitutional head of state.

Growth generating reforms have now become an economic necessity and a political possibility. With reform, Tonga could be somewhat of a rarity; a Pacific island country known for its beaches and coconut trees rather than its economic and political dysfunction.

Gaurav Sodhi is a Policy Analyst at The Centre for Independent Studies.

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