Features

New Caledonia’s Unrealized Legacy

New Caledonia’s role in the South Pacific has been largely ignored. But both strategically and economically it could be a key player.

By Nick Floyd for

Unlike earlier in its eventful history, New Caledonia today rarely captures public and media attention—whether Australian or international—except perhaps as a tourist destination. Yet ignoring it would be a mistake, as even a cursory look at the islands’ potential underscores the territory’s varied strategic importance to the region.

A country’s strategic importance tends to be measured in several ways. Political elements are often considered, including military potential and capacity. However, while these are important considerations, in the future, factors such as the levels and diversity of resources a region or territory possesses will become increasingly important. Placing more weight on such considerations will be especially vital in the coming decades, where sustainability and supporting growing human populations will be of paramount importance to human survival.

Chrome, iron, cobalt, manganese, silver, gold, lead, copper and particularly nickel dominate New Caledonia’s mineral resource portfolio. Over 25 percent of the world’s nickel ore reserves lie here, and although price fluctuations in the world market have recently been volatile, there’s no question that this metal will remain—if not increase—as a staple of industry, including for the production of vehicles, construction materials and components for electrical goods and machinery.

Just how valuable these minerals will become, and the extent to which New Caledonia will develop to refine and export these resources, remains to be seen. New Caledonia’s mineral export partnerships are, however slowly though, shifting, and will likely continue to do so as the industrial thirst of Asia’s developing economies grows. If this occurs, future competitive tensions with fellow mineral export giant Australia can’t be discounted. But while the land down under may boast its own mineral resources, having New Caledonia’s nearby and secured might actually be a positive for Australia in the foreseeable future.

But there are potential problems ahead for the territory. Although New Caledonia’s per capita GDPis larger than New Zealand’s, its imbalanced economy poses a serious challenge to its political future. Currently, it’s being kept afloat and protected by France’s own economic trade portfolio. However, what would happen if New Caledonia were no longer part of this type of larger trade framework? Its economy would need full restructuring to avoid vulnerability in its key trade sectors, and it would have to swiftly find new trading partners.

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One of its most vulnerable sectors is energy. Energy is the lifeblood of New Caledonia’s mineral wealth, as its home-grown energy resources are modest and hydroelectricity remains a problematic alternative to a heavy dependence on imported fossil fuels.  The vast quantity of energy that mineral extraction consumes also leads to another problem—one of the highest per capita carbon footprints in the Pacific.

To counter this, New Caledonia’s nascent renewable energy sector is growing, and presently supplies 16 percent of the country’s domestic needs, notably from wind generation, but also using solar and other energy sources. Like the rest of the Pacific Islands, New Caledonia presents a challenging, but promising investment opportunity for Australian and other investors in the renewable energy sector.

New Caledonia’s living resources should also be considered. The archipelago boasts a diversity of terrestrial animals, plants and bird life unmatched in such a comparatively small area, and it is considered one of the most important areas of biodiversity in the world. Sitting astride the East Australian current as it approaches Australia from the Equator, New Caledonia may play a significant role in food chains and life cycles of species throughout the South Pacific. Since the collapse of one marine ecosystem may irrevocably affect fish stocks in neighbouring countries, New Caledonia, Australia and other Pacific neighbours must not only work to protect marine resources, but also more broadly share information on maritime security.

New Caledonia’s sea-life assets are not its only marine resources. Its Economic Exclusion Zone (EEZ) area is 1,740,000 kmsquare—bigger than metropolitan France and its EEZ combined. France has recently secured a dramatic increase in New Caledonia’s offshore territory, through its successful 2009 Extended Continental Shelf (ECS) submission to the Commission on the Limits of the Continental Shelf.  The resources that lie beneath the sea will become ever more valuable as humankind continues to consume the world’s terrestrial resources, and as exploration and extraction technology improves.  The ZoNéCo (Zone Économique de Nouvelle-Calédonie) project currently underway seeks to map and understand the under-seabed resources within its EEZ and the ECS claim, and in time will reveal the true richness of their potential.

New Caledonia’s resources alone are sufficient to deserve regional and global consideration. However, its very presence in the South Pacific is equally significant.

Beyond its land mass, New Caledonia’s EEZ flanks those of Australia, Fiji, Vanuatu and the Solomon Islands, with New Zealand, Papua New Guinea and the Polynesian and Micronesian island countries’ EEZs nearby. New Caledonia therefore assumes a regional centrality that makes it a logical staging base for all trans-Pacific endeavours. This strategic advantage strongly influenced France’s decision to annex the territory in 1853, and remains a key factor in the tripartite France-Australia-New Zealand (FRANZ) agreement for cooperative maritime surveillance, disaster responses and humanitarian assistance in the Pacific.

All this means that it’s unquestionable that New Caledonia is—and will remain—a fundamental element of Pacific strategic affairs. Whether it remains part of France, given greater autonomy or is even granted independence, New Caledonia must continue to develop and deepen ties with its Pacific neighbours and its South-east Asian trade partners. Attaining full membership of the Pacific Islands Forum and representation at peak bodies such as the Melanesian Spearhead Group provide New Caledonia will offer a vital opportunity to engage important forums and foster mutual trust, confidence and understanding.

In addition, New Caledonia’s ongoing and active participation within organisations such as the Secretariat of the Pacific Community and the Forum Fisheries Agency adds significant cohesion to the Pacific hemisphere.

That said, fostering regional ties is a two-way street, and there needs to be an equal effort on the part of both New Caledonia and its neighbours to acknowledge and encourage potential mutual benefits.

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Nick Floyd is a Chief of Army Visiting Fellow at the Lowy Institute for International Policy.