Fiji and the Donald…..????

We thought it was time to take a break from domestic “navel gazing’ and focus instead on Fiji and its position in the world post Donald Trump taking power.

Following our return to real democracy the world has been beating down our doors. This was very visible last year when members of the Coalition Government struggled to resist all foreign junkets that were on offer. It seemed everyone wanted a piece of us as we played the “China card” as discretely as possible.

In particular we saw a surge in the presence of the good old USA in Suva. For a long time, they had forgotten about us leaving responsibilities for ‘managing’ the region to Australia and New Zealand. Suddenly they realised, with China looming, that wasn’t good enough and over the last two years we have seen a surge in donor support from USAID and various American funded agencies.

The biggest impact was in Suva particularly after USAID plus those fore mentioned agencies decided to set up regional offices. The Suva economy depends heavily on its position as a regional hub and the American “invasion” set off a scramble for property and talent. The immediate result was a massive rise in high end rentals and wages in the donor/aid industry.

To explain, the arrival of highly paid expatriates is great news for the coffee shops of Suva, but the biggest impact was the inflated wages paid to local support staff. This came on top of the post COVID net migration of talent in 2022/23 to Australia and New Zealand. Six figure salaries became the norm for many as the various agencies competed for experienced local staff.

But that was not all, Suva and its various NGOs and not for profits were suddenly awash with new US cash and we were just getting used to it, when along came Donald!! The immediate announcement of a 90-day suspension in spending caught many in a difficult spot. It was overnight and, in some cases, funded workshops had to stop mid-stream, spending that had been committed to on the promise of US funding halted and of course recently arrived USAID officials sat nervously awaiting recall.

The spin off effects rippled across town. Hotel bookings dropped, conference venues emptied, and restaurants struggled.

But that’s not all, the post Donald world is a complicated and erratic one and the consequences of all these sudden dramatic moves are difficult to predict. But in fairness it isn’t all about Trump. There were already signs that the ‘China fever” that had driven donor spending from the western world in the Pacific had peaked. The change in Government in New Zealand started a process of cutting back that now has extended to the UK and European Union as they look to increase defence spending with aid funds the first to go.

There were fears this “conservative” swing might spread to Australia with a change in Government looking possible. Canada, in the process of reestablishing a Pacific presence, also looked vulnerable. BUT thanks to Donald’s tariff wars and general unpleasantness it now looks like incumbent Governments in both places will return to power.

On the trade front, the initial news was alarming. A 35% tariff on Fiji exports is potentially devastating. Fiji suffered because of Trump’s mystifying formula that penalises the fact that Fiji does not import that much directly from the USA, unless we are buying Boeing jets, but exports

lots of water and increasingly kava and turmeric. Hopefully, post this current “suspension”, logic is restored, and we don’t find ourselves the highest “tariffed” country in the South Pacific region.

The biggest impact would be on Fiji Water. This is a premium product and so we can assume that a 10% tariff won’t be an issue but 35% would place it at a severe disadvantage to imported water from other countries.

Another consequence rises from the aggressive approach taken by US border immigration officials. Horror stories are now a regular feature in Australian and New Zealand media and are apparently influencing travel to the USA. That might be good news for Fiji tourism keeping Aussies and Kiwis holidaying closer to home, but YB wonders what the impact will be on Fiji Airways transpacific traffic.

This has become increasingly important to our national airline as anyone who has experienced the early morning crush in the transit area at Nadi Airport can confirm. This traffic has driven the opening of new routes up and down eastern Australia linking to the west coast of North America and now Dallas.

Finally, there is the issue of the US$ which is currently declining in value against world currencies. Good news in terms of oil imports valued in USD, not so good for sugar exports, also traded in USD.

Who knows where this will end up, but we are guaranteed an “interesting” four years!!