Australia-PNG refugee deal could lead to violence if not managed: Analysts

CANBERRA (REUTERS) - A new refugee deal between Australia and Papua New Guinea (PNG) could lead to disorder and violence in PNG if not well managed, with opponents of the agreement warning of potential resentment and hostility.

Australia on Friday announced a dramatic shift in refugee policy, with all asylum seekers who arrive by boat to be sent to neighbouring PNG for assessment and eventual resettlement.

But analysts warn the move could backfire on PNG, a volatile South Pacific nation which struggles to maintain law and order and where around 80 per cent of the 6.5 million residents lead a subsistence life in villages, with little access to health and education services.

"There is a risk there could be resentment towards a group of outsiders, foreigners, who could be seen to be eating up resources which could be used on Papua New Guineans themselves," said Australian National University analyst Sinclair Dinnen.

Similar resentment against Chinese immigrants boiled over into attacks on Chinese-owned shops in 2009 and forced the PNG government to ban foreigners from owning the small businesses.

The new agreement is Australia's latest bid to stop a wave of refugee boats from Indonesia ahead of national elections in which refugee policy is a heated issue. More than 15,000 asylum seekers have arrived in Australian territory this year.

PNG has no welfare payments, land sales are tightly restricted due to customary land ownership, and city housing is largely unaffordable to ordinary residents who often rely on support from clan links, known as "Wantoks".

PNG is a deeply Christian Melanesian country which is going through a resources boom, including a US$15.7 billion ($19.9 billion) Exxon Mobil gas export project, due to start production in 2014 and expected to boost gross domestic product by around 20 per cent.

It is also fighting entrenched poverty, unemployment and law and order issues and this year reinstated the death penalty and repealed sorcery laws after a string of gruesome "witch" killings and gang rapes.

Politicians in PNG have been quick to criticise the agreement, signed by Prime Ministers Kevin Rudd of Australia and Peter O'Neill of PNG.

PNG opposition spokesman Tobias Kulang said his country had no capacity to deal with refugee settlements and said Australia had decided to "dump" asylum seekers.

Governor of Oro Province Gary Zuffa said the plan could fuel hostility.

"If Australia is going to finance that resettlement, then that's going to create a bit of hostility from the local population, because these people will be given funds to start a new business, a new life," governor Zuffa said.

Ms Jenny Hayward-Jones, head of the Melanesian programme at the Lowy Institute foreign policy think-tank, said the plan had the potential to be destabilising, particularly if it diverted crucial public services away from pressing domestic demands.

"If a number of refugees are settled and social services have to be made available to them, if those services are in any way superior to those available to the general population, then there is a potential for there to be a problem," she said.

Dr Dinnen, however, said the refugee plan was likely to face legal challenges in the PNG courts, where it could be thrown out on constitutional grounds.