Vanuatu

The year 2000 was generally stable for the Vanuatu government, especially when compared to the governance situation in neighboring Melanesian countries. Somewhat surprisingly perhaps, given the previous instability in Vanuatu politics and the difficulty of successfully operating a coalition government, the five-party coalition formed at the end of 1999 under the leadership of Barak Sope has remained in power. Various rumors circulated that a change in parliament would occur. These included rumors that ministerial posts would be reallocated in contravention of the coalition memorandum of agreement (VW,22 Jan 2000; TP,14 June 2000), that a motion of no-confidence action was to be tabled by the opposition (VW, 7 Oct 2000), and that the Vanua'aku Party had offered to form a coalition with the Union of Moderate Parties and thereby change the government (VW,2 Sept 2000). However, none of the rumors amounted to anything and no changes to parliament occurred. There was some factionalism and infighting within the major parties, but none of the wrangling has had any significant impact on Vanuatu's political scene.

Although the government was largely stable, progress on the Comprehensive Reform Program has been somewhat erratic. A number of review boards were established in key areas, including decentralization and land administration. The Decentralization Review Commission, whose role is to "ensure that the fruit of CRP is shared down to the rural areas," has been actively engaged in consultation throughout Vanuatu since July and is expected to make recommendations on decentralization by mid-2001 (VW,22 July 2000). Land dispute administration has long been a problem due to inactive and inappropriate island courts and an appeal structure that brings customary disputes to the Supreme Court. After two months of consultations in mid-2000, the team responsible for reviewing the land dispute system has recommended the creation of a dispute resolution system that is more appropriate to custom than is the current system. Draft legislation has been written, and, if passed, will see the creation of village-level lands tribunals, composed of people who are recognized as being knowledgeable about custom (VW, 28 Dec 2000).

A third area where review began in 2000 is revenue collection. The Revenue Strategy Committee was established in November and will, in accordance with the Comprehensive Reform Program, primarily consider options for widening the tax base (VW,11 Nov 2000). However, this revenue review seems to be driven more by concern about Vanuatu's tax-haven status than by concern for achieving the targets established by the Comprehensive Reform Program. Recent agitation by the Organization for Economic Cooperation and Development (OECD) on unfair competition from tax havens (a seemingly hypocritical attack on competition by countries who usually champion competition in the form of free trade) is creating considerable pressure on countries to reconsider their revenue bases (PIR,13 Mar 2000). While Vanuatu's tax base has not yet been modified in the face of OECD pressure, it is a member of a joint Commonwealth and OECD Working Group on cross-border tax issues that has been set up because of concerns about tax havens(Samoa Observer,30 Jan 2001). It remains to be seen whether the outcomes of the Revenue Strategy Committee are in any way influenced by international anti-tax-haven pressures.

These anti-tax-haven pressures are at least in part driven by fears that small open economies such as Vanuatu's may be used for money laundering.Vanuatu has responded to accusations that its open economy can be misused for money laundering by passing the Financial Transactions Reporting Act, which establishes a Financial Intelligence Unit.This act requires that all suspicious transactions involving foreign currency be reported to the new Financial Intelligence Unit who can then investigate reports or share information with the relevant authorities (VW,26 Aug 2000).

Other significant acts passed in 2000 include the Nurses Act, which requires the establishment of a Nurses Council to regulate the profession in...