Our nearest neighbour, New Caledonia, has a very different political economy. Will it vote for full independence from France in 2018 – also leaving the European Union? 

New Zealand shares a continent with the European Union. Admittedly 93 percent of Zealandia is submerged beneath the Pacific Ocean but at its most north-western are the islands of New Caledonia with a total area about half the size of Canterbury. Technically the country is a department of France and so is the closest part of the EU to us.

There appears to have been no human contact between New Zealand and New Caledonia before the arrival of Europeans. Their tangata whenua are Melanesians; extraordinarily the 40 odd percent of the population who describe themselves as ‘Kanak’ – about 100,000 souls of the 270,00 who live in New Caledonia – had at least 28 (Wikipedia say 40) languages which, so I am told, are ‘mutually unintelligible’. This makes French the unquestionable lingua franca of the islands. In contrast, the Maori language was universal – although there were regional dialects – and even so, it is struggling to survive. But it gives an indigenous unity which neither New Caledonia nor Australia has.

French political theorists talk about ‘colonies of settlement’ in contrast to ‘colonies of exploitation’. New Zealand would be an example of the former, and the British Raj an example of the latter with a handful of Brits governing millions of Indians, exploiting the economy for their and Britain’s benefit.

New Caledonia straddles the two categories. The economy is driven by vast nickel resources – they have about a quarter of the world’s reserves. It is estimated that GDP per head is higher than New Zealand’s, but I suspect – I could not find a comprehensive economic data base – that it is important here to distinguish GDP from GNP. GDP is the value of domestic production in a country’s region; GNP (a.k.a. GNI) is the market incomes of those (‘nationals’) who live in the region. The difference between the two in New Caledonia’s case would be that most of the profits from the nickel sector go offshore.

In any case the ranking may be misleading because the world price of nickel has collapsed since the Global Financial Crisis. The French government is pouring huge subsidies into the sector in addition to giving budget support – some 15 percent of GDP so it is said. Presumably the support is the source of the generous public facilities I saw in Noumea, the capital where two-thirds of the population live.

The very strong nickel sector discourages other tradeable sectors flourishing. Much of the land is unsuitable for agriculture; food accounts for about a fifth of imports (we make a tidy profit here). Tourism is underdeveloped. Aside from the usual Pacific attractions it is a good place to practise your French. I found it expensive.

While foreigners may exploit the nickel, the islands have 70,000 odd who are of French origin and another 20,000 plus who describe themselves as ‘Caledonians’ (much as Pakeha might give their ethnicity as ‘New Zealander’ or ‘Kiwi’ ). There are also about 20,000 who are of ‘mixed race’; the remainder are other Melanesians, Tahitians and some Asians. Many of those of French or Caledonian ethnicity were born in New Caledonia.

New Caledonia is not an independent nation like, say, Samoa but is a department of the French Republic sending two senators and two deputies to the French assembly and voting for the French president. There is considerable devolution but France controls the military and foreign policy, immigration, police and the currency.

Following severe agitation from Kanaks demanding independence, the 1998 Noumea Accord led to constitutional changes which gave the Kanaks greater political control over their lives and set a referendum for 2018 to determine whether the territory remains within the French Republic. That is only two years away.

It is a bit like our approach to Samoa in which, rather than giving them immediate independence, we worked with them to develop the civil institutions which would provide the stable independence they desired. (After our dreadful treatment of their independence movement in the inter-war period, I reckon our postwar record with Samoa was not too bad.)

But the demographics are very different; Samoa’s population is almost entirely Samoan; New Caledonia's is much more diverse. Will New Caledonia choose independence in 2018? Those of French origin I spoke to do not expect the country to vote that way. (However, only those who were living in the territory in 1998 can vote, which dilutes 'French' support.) Many Kanaks take a different view seeing the Noumea Accord as codifying a decolonisation process. I am left with the uneasy feeling that whichever way the vote goes it will be close and leave much unresolved. (A bit like Brexit.)

Does it matter to us? Of course we have goodwill to all, but it is also our nearest Pacific neighbour and we hardly want instability in our backyard.

As a part of my preparation for my trip, I read the relevant chapter in Pacific Ways: Government and Politics in the Pacific Islands edited by Stephen Levine. (The second edition is just out.) Curiosity led me to read others of the 28 country studies. What struck me was the extraordinary variety of governing arrangements. History, colonial experience, demography, geography and the economy have led to diverse governing arrangements. That led me to conclude that is going to take a lot of goodwill to resolve New Caledonia’s future peacefully. Bonne chance!

Comments (7)

by James Green on July 31, 2016
James Green

Sounds like they have a serious case of Dutch disease.

Always good to hear about our non-Australian neighbours anyway. I hope they go for independence, I would love to see a confederation of Oceanian states in the future.

Vanuatu has an even higher density of native languages I believe.

by Murray Grimwood on July 31, 2016
Murray Grimwood


As always, any 'economy' which relies on extraction of a finite resource, is doomed to regress at some predictable point. Grow the extraction exponentially, and that point is the top of the Gaussian. As always.

The question (it never goes away) is whether they - and we, for that matter - can find a sustainable level of existence post-peak?

And into that must be factored what kind of tailings nightmare they'll be left with. Every one of us who has a nicad battery is responsible for that pollution - but we'll leave it to them, I suspect.

Cuba is the bench-mark against which all about-to-go-it-alone-along-with-energy-depletion nations should be compared; North Korea is what happens when you get colder weather and lesser-calibre leadership.

by Charlie on July 31, 2016

Murray, your link on Nickel depletion is utterly ridiculous.

It ignores all the evidence of vast nickel reserves right around the world. It is also incorrect in the uses of Nickel - most of it actually goes to making stainless steel.

NewCal is only the fifth largest nickel producer, coming well behind the Philippines Canada, Russia and Australia.

In fact there is such an abundance of nickel (the Earth's mantle is made of the stuff), that we will likely never see a shortage and we recycle about half of what we produce. There are untapped laterite resources right around the world, from Madagascar, though India, Indonesia, Myanmar, Central Africa to South America and the Caribbean. We've barely scratched the surface.

 The Nickel price has collapsed in recent years because of over supply - too much mining expansion and either demand has to go up or mining shut down to stabilize the price. Meanwhile LME stocks remain stubbornly close to record highs. 


by Foo Man on August 01, 2016
Foo Man

"Our nearest neighbour, New Caledonia" is a bit of a snub to our nearest neighbour, Norfolk Island (Australia), isn't it?


by Murray Grimwood on August 01, 2016
Murray Grimwood

Charlie - who are you a tout for?

Exponential growth is recorded in terms of 'doubling-time'. The last global 50% of any finite resource is the last doubling-time. at 3% growth, that's a mere 24 years. I'm assuming you think (?) that growth - and probably supply - of all things can go on indefinitely? Is that the party line?

What's to be gained by prolonging the hoodwink? By whom? For how long, exactly?

by Charlie on August 07, 2016

Murray, I only speak to the facts.

The earth's core is thought to be made of nickel. We know the mantle contains a significant percentage of nickel. Most current mining development is in lateritic rocks which are 'ultramafic'. This term means they are mantle thrust to the surface.



At the moment the glut in nickel is threatening closure of some mines and many projects have been put on hold. We know of deposits right around the world where tropical conditions have weathered ultramafic rocks to form laterite with limonite and saprolite precipitates. There is certainly no foreseeable shortage of nickel for hundreds of years! 

As regards apportioning the 'guilt' involved in using nickel, if you have a stainless sink in your kitchen, stainless utensils and stainless steel saucepans, you're one of the chief culprits. ;-) 

by Brian Easton on August 08, 2016
Brian Easton

Foo Man. Ooops, I stand corrected.

James Green: Correct. I very much had the 'Dutch disease'  (a.k.a 'the Gregory effect') when I wrote the sentence.

For those not as informed as James, any sector which strongly generates foreign exchange (such as nickle mining in New Caledonia) drives up the real exchange rate and squeezes out less productive foreign exchange earning (or saving) sectors (such as tourism). That may well be fine; for instance just over a hundred years ago, the  expansion of refrigeration suppressed the growth of import substituting manufacturing. However, if the sector is not sustainable (such as mining a depletable resource), when it declines the remaining foreign exchange/saving sectors are underdeveloped and unable to cover the loss. This also applies if the downturn is temporary, as in the case of the current nickle price decline. 

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