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  • New Caledonia
  • Mathias Chauchat (bio)

The year 2017 was said to be the last useful year to promote a calm and consensual completion of the Nouméa Agreement before the 2018 referendum on independence. It has indeed seemed to be a transitional year. The previous year of 2016, which was a preelection year in metropolitan France, revealed some key events related to the collapse of the nickel price, which put the three nickel plants in New Caledonia—the Le Nickel Society (sln) in Nouméa, Vale in the South, and the Northern Province plant of Glencore—and the upstream mining activity at risk. The nickel industry accounts for a quarter of private-sector employment in the country and 90 percent of its exports (Delamarche 2016c). The country is footing the bill for the increase in building costs and low local competitiveness. During his trip to New Caledonia, French Prime Minister Manuel Valls announced a €200 million loan for the Société Territoriale Calédonienne de Participations Industrielles (stcpi, the holding company run by the three provinces of New Caledonia, which holds a 34 percent minority share of the sln) (Delamarche 2016a). (€1 million = us$1.2 million.) In November, Prime Minister Valls announced strong financial support for the Vale Plant, as he had done in April 2016 for the sln. To prevent its possible closure, Valls pledged a €200 million loan and an additional financial guarantee for €220 million (Delamarche 2016b). The situation of the Northern plant was still to be resolved. In November 2016, the French government announced that [End Page 501] Glencore would not have to reimburse a €200 million tax exemption, the same amount the other two plants had received. In total, €600 million was lent to the three plants, the repayment of which is assessed as unlikely. Offering job subsidies is a classic strategy in French politics. The aid was most welcome because it allowed the country to pursue its dream of wealth and avoid any reform of the French Overseas way of life. It had the huge advantage of enabling the French government to be the savior of New Caledonia. The primary disadvantage was that this meant that important economic decisions could be postponed.

The year 2017 was strongly influenced by 2016. The country's financial situation has remained on standby, waiting for the recovery in commodity prices and impending political deadlines. There was also a strong message from the French government to the local one to make a "Keynesian" budget deficit in order to stimulate the economy. Nonetheless, 2017 has been a year of economic slowdown and budgetary restraint, obscured by the increasing public debt of the country. Local tax exemptions for the building industry have fostered the illusion of economic boom, which has been paid for with massive budget deficits and increasing inequalities (Gorohouna 2017). The government's economic strategy since 2008 has been a mix of "Keynesian" voluntary public spending and trickle-down economics (Chauchat 2017). A "wait and see" attitude seems to have prevailed. Nevertheless, 2017 has not been a wasted year, as the New Caledonian government has not foregone all change.

The Government of New Caledonia has been trying to curb health-care costs as it has strived to balance its welfare budget. Health-care expenditure, which has doubled in the last ten years, has risen at a faster rate than the growth of the gross domestic product. The economic system has exhausted all of its funds, while at the same time New Caledonia has built new health-care infrastructure and facilities—a brand-new hospital in the South, a private polyclinic in Nouméa, and a new Northern hospital—which are oversized for the population of the island. Without any major decisions being made by the government, Valentine Eurisouké, the member of the government in charge of health care, has begun to push this issue with a view to achieving a successful outcome by saving on costs and seeking new revenue streams. Working under pressure, the government has increased alcohol and tobacco taxes.

Finally, in December 2017, the Congress of New Caledonia accepted the names of the members of the new Competition Authority, which will enforce antitrust law. The...

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Additional Information

ISSN
1527-9464
Print ISSN
1043-898X
Pages
pp. 501-511
Launched on MUSE
2018-08-10
Open Access
No
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