Fijian Economy Is Held Hostage by Crisis

The first thing you notice about the United Apparel factory is its size--bigger than most airplane hangars, with fluorescent lights and white ceiling fans dangling from green girders that stretch the length of two city blocks.

Then you notice the noise--the high-speed stutter of sewing machines, the hiss of steam presses, the shouts of workers trying to be heard above the din.

Soon, perhaps in a matter of weeks, this factory on the outskirts of Fiji’s capital may stand silent and empty, a casualty of the hostage crisis that has gripped the South Pacific nation for three weeks.

Ever since gunmen took the prime minister and much of his government hostage May 19, the economy has been sputtering toward a standstill. Fiji’s largest industry, tourism, was the first to feel the effects. Now the troubles threaten the other two leading industries: sugar processing and garment manufacturing.

“Potentially, the economic consequences are extraordinarily severe,” said Jonathan Fraenkel, a professor of economic history at the University of the South Pacific here in Suva, the capital.

The impact is being felt in different ways in different industries. Tourists are staying away out of fear. Sugar-cane farmers are refusing to harvest their fields, protesting the dissolution of the captive government. Australian trade unions have refused to handle shipments to or from Fiji, crippling the garment industry’s ability to receive fabric or send finished goods to its primary market.

The situation could get far worse for this nation’s 813,000 people. Numerous countries have threatened to impose sanctions if, for instance, the military government that seized power last week allows hostage-taker George Speight or his supporters to have a role in a new civilian administration. The military says it won’t allow that, but it was negotiating just such an arrangement with Speight only days ago.

Country Faces Threat of Sanctions

Sanctions also are threatened if the military government refuses to quickly return power to civilians or if, as appears likely, it agrees to a new constitution that is discriminatory toward Fiji’s large minority of ethnic Indians.

Speight and six gunmen--soldiers from a special forces unit trained to prevent coups in Fiji--stormed Parliament last month, proclaimed a civilian coup and seized Prime Minister Mahendra Chaudhry and most of his Cabinet.

Since then, the hostages have been held at the Parliament compound while Speight has been negotiating an ever-shifting list of demands designed to give indigenous Fijians, who make up 51% of the population, a guarantee of political power.

Ethnic Indians, whose ancestors were brought to Fiji as indentured servants during British colonial rule, hold an overwhelming share of the economic power in the country but had never run the government until Chaudhry was elected last year.

The military government, which took control when Fiji’s elected president appeared powerless to deal with the situation, has been sympathetic to Speight’s aims but not his methods. Negotiations have been intermittent, and there appears to be little hope of a speedy resolution.

In that environment, businesses are languishing.

For the most part, Fiji’s trading partners have been vague--at least publicly--about what form sanctions might take. The biggest sticks are wielded by Australia, Fiji’s largest trading partner, and the European Union, which buys 70% of Fiji’s sugar at a subsidized rate of as much as five times the going price on world markets.

In a speech this week, the nation’s new leader, Commodore Frank Bainimarama, said he had been warned by the EU that it would stop the subsidy if Fiji allowed Speight or his followers a role in the government. Largely on the strength of that, Bainimarama said he had stopped discussions with Speight on the makeup of a new civilian administration, though talks have continued between the hostage-takers and influential tribal chiefs.

Australia’s top diplomat in Fiji, High Commissioner Susan Boyd, has said her country is considering a wide range of sanctions, including the cessation of social and humanitarian aid, estimated to be about $13 million a year in U.S. currency, and military assistance. She would not discuss trade sanctions but has warned that “any wholesale application of sanctions would have a very serious effect on Fiji’s economy.”

Tourism industry officials--who have watched as the number of tourists arriving has plunged from 1,500 on the day before the hostage crisis began to a daily rate of 250--say they are optimistic that their business will bounce back once the hostage crisis is resolved. But sugar and garment company executives say they are not sure that their industries will survive.

On the western side of Fiji’s main island, Viti Levu, the feathery plumes of mature sugar cane plants are swaying in the wind, a sign that the crop--more than 4 million tons of it nationwide--is ready to be cut. The fields are tended by 26,000 farmers, mostly ethnic Indians who are now refusing to harvest until the hostages are released.

But it is the threat of the EU cutting subsidies that really worries executives at Fiji Sugar Corp., the descendant of the old Colonial Sugar Co. established by the British. Sugar and its products make up about a third of Fiji’s total exports, which were valued at more than $650 million in 1996, the most recent figures available.

The industry has been trying to institute reforms that would make it more efficient, company spokesman Mohammed Mushtaq Ali says. “But given our circumstances, we would have needed some protection,” he said. “I cannot see how we could become as efficient as Australia or Brazil or other countries that depend on economies of scale.”

Garment Work May Shift to Other Nations

The situation in the garment industry is equally dire, executives say. The industry, which employs about 20,000 people, is relatively new and was rapidly expanding, in part because of trade protections from Australia. But Ramesh Solanki, the owner of United Apparel, says customers will quickly switch to manufacturers in such countries as Indonesia, China and the Philippines if shipments from Fiji don’t begin arriving soon.

“If this trade ban is not resolved in the next week or 10 days, we’ll have to shut the plant,” he said. Once shut, he says, it might never reopen. Other garment manufacturers have issued similar warnings.

Out on the factory floor, workers say they are worried. Solanki, who usually employs 1,300 people, has laid off 70 and reduced the hours of those who remain. Finished products--men’s suits, mostly--are stacking up in the factory, awaiting shipment when the ban is lifted.

Shakuntala Devi operates a sewing machine and uses her $60 a week in income to help support her family and send her three children to school. She doesn’t see how they can continue their education if she loses her job, and she blames Speight.

“It’s not good for us, eh?” said the ethnic Indian. “He’s not doing anything good for us.”

Elsewhere on the factory floor, Noame Sagoa, an indigenous Fijian, is inspecting trousers. As she finishes each pair, she affixes a sticker assuring future buyers that Inspector QC2 has given their pants the once-over.

Sagoa is divorced and fearful about what the future could bring for herself and her four children, who rely solely on her income of about $58 a week. “This is our bread and butter,” she said. “We have no other source.”

Asked about Speight, she thought for a moment. “I do agree with him,” she said. “But what I’m looking at now is for the benefit of my family. I’m really praying hard for the government to settle things. For us, it’s really, really bad.”