By Patrick Decloitre, RNZ Pacific correspondent French Pacific desk
An emergency 231 million euro (NZ$428 million) French aid package for New Caledonia has been reduced by one third because of the French Pacific territory’s current political crisis.
The initial French package was endorsed in early December 2024, in an 11th-hour vote at the French National Assembly, minutes before French Prime Minister Michel Barnier and his government fell in a motion of no confidence.
The “end of management 2024” bill amounted to 231 million euros, specifically to allow New Caledonia’s essential public services to keep operating in the next few weeks.
But the financial package was pre-conditioned to New Caledonia’s Congress endorsing reforms before the end of the year.
Out of the three tranches of the total aid, the Congress managed, during its December 23, 2024, sitting, to endorse two.
Then, on Christmas Eve, New Caledonia’s government fell, due to a resignation by one of its members, Calédonie Ensemble.
Domino effect
Since the government led by Louis Mapou was toppled on Christmas Eve, pro-independence MPs at the Congress refused to take part in further votes.
They did not turn up on the Boxing Day sitting on Thursday, December 26.
This made it impossible for Congress to endorse the third and last tranche of the reforms, which were a precondition to the last third of the French aid package.
Letter from Bayrou and Valls
In a letter received by New Caledonia’s MPs at the weekend, both new French Prime Minister François Bayrou and his new Minister for Overseas Manuel Valls explained the failure for New Caledonia’s Congress to endorse the last third of the demanded reform package.
It means the whole package of 231 million euros will not be paid in full, and that one third of the total will have to wait until this year.
The confirmed amount, for the time being, is now 154 million euros (NZ$285 million) which will go towards New Caledonia’s Provinces and municipalities (125 million euros — NZ$231 million).
The remaining 29 million euros (NZ$54 million) will be paid and used for the payment of New Caledonia’s unemployment benefits and to allow the French Pacific territory’s power company, ENERCAL, which is on the brink of collapse without immediate assistance.
77 million euros withheld
“The last third of the initial 231 million euros package for New Caledonia (77 million euros [NZ$143 million]) will be released in 2025, once the pre-condition as stipulated in the initial agreement, regarding a reform of the TGC (General Consumption Tax, a local equivalent of a VAT) is adopted by (New Caledonia’s) Congress. Failing that, it will not,” Bayrou and Valls explained in the same letter.
They further wrote that those reforms were “indispensable” to ensure “visibility and stability” for New Caledonia’s “economic stakeholders and more generally to all of New Caledonians at a time when a dialogue is supposed to take place on its institutional future.”
The bloc resignation from Calédonie Ensemble entails that the whole government of New Caledonia is deemed to have resigned and acts in a caretaker mode until the inception of a new government.
New Caledonia’s Congress has been convened for a special sitting next week on 7 January 2025 to elect a new government, under the principle of proportional representation and a spirit of “collegiality”.
One particular point of contention was Mapou’s efforts to secure a loan of up to 1 billion euros from France, under a ‘PS2R’ (reconstruction, refoundation and salvage) plan to rebuild New Caledonia after the riots’ damage (estimated at some 2.2 billion euros) and the subsequent thousands of job losses.
This article is republished under a community partnership agreement with RNZ.
Article by AsiaPacificReport.nz
