Fiji

Fiji comprises a group of volcanic islands in the South Pacific lying about 4,450 km (2,775 mi.) southwest of Honolulu and 1,770 km (1,100 mi.) north of New Zealand. Its 322 islands range in size from the large--Vitu Levu (where Suva and 70% of the population are located) and Vanua Levu--to much smaller islands, of which just over 100 are inhabited. The larger islands contain mountains as high as 1,200 meters (4,000 ft.) rising abruptly from the shore. Heavy rains (up to 304 cm or 120 inches annually) fall on the windward (southeastern) side, covering these sections of the islands with dense tropical forest. Lowlands on the western portions of each of the main islands are sheltered by the mountains and have a well-marked dry season favorable to crops such as sugarcane.

More than half of Fiji's population lives on the island coasts, either in Suva or in smaller urban centers. The interior is sparsely populated due to its rough terrain.

Indigenous Fijians are a mixture of Polynesian and Melanesian, resulting from the original migrations to the South Pacific many centuries ago. The Indo-Fijian population has grown rapidly from the 60,000 indentured laborers brought from India between 1879 and 1916 to work in the sugarcane fields. Thousands more Indians migrated voluntarily in the 1920s and 1930s and formed the core of Fiji's business class. The native Fijians live throughout the country, while the Indo-Fijians reside primarily near the urban centers and in the cane-producing areas of the two main islands. Nearly all of the indigenous Fijians are Christian, with more than three-quarters being Methodist. About 80% of the Indo-Fijians are Hindu, 15% are Muslim, and the rest mostly Sikh, with a few Christians.

Kava. Made from ground root, when mixed with water this horrid concoction becomes the Fijian's local "Alcoholic" drink.

Melanesian and Polynesian peoples settled the Fijian islands some 3,500 years ago. European traders and missionaries arrived in the first half of the 19th century, and the resulting disruption led to increasingly serious wars among the native Fijian confederacies. One Ratu (chief), Cakobau, gained limited control over the western islands by the 1850s, but the continuing unrest led him and a convention of chiefs to cede Fiji unconditionally to the British in 1874.

The pattern of colonialism in Fiji during the following century was similar to that in many other British possessions: the pacification of the countryside, the spread of plantation agriculture, and the introduction of Indian indentured labor. Many traditional institutions, including the system of communal land ownership, were maintained.

Fiji soldiers fought alongside the Allies in the Second World War, gaining a fine reputation in the tough Solomon Islands campaign. The United States and other Allied countries maintained military installations in Fiji during the war, but Fiji itself never came under attack.

In April 1970, a constitutional conference in London agreed that Fiji should become a fully sovereign and independent nation within the Commonwealth. Fiji became independent on October 10, 1970. Post-independence politics came to be dominated by the Alliance Party of Ratu Sir Kamisese Mara. The Indian-led opposition won a majority of House seats in 1977, but failed to form a government out of concern that indigenous Fijians would not accept Indo-Fijian leadership. In April 1987, a coalition led by Dr. Timoci Bavadra, an ethnic Fijian supported by the Indo-Fijian community, won the general election and formed Fiji's first majority Indian government, with Dr. Bavadra serving as Prime Minister. Less than a month later, Dr. Bavadra was forcibly removed from power during a military coup led by Lt. Col. Sitiveni Rabuka on May 14, 1987.

After a period of deadlocked negotiations, Rabuka staged a second coup on September 25, 1987. The military government revoked the constitution and declared Fiji a republic on October 10. This action, coupled with protests by the Government of India, led to Fiji's expulsion from the Commonwealth of Nations and official nonrecognition of the Rabuka regime from foreign governments, including Australia and New Zealand. On December 6, Rabuka resigned as head of state and Governor General Ratu Sir Penaia Ganilau was appointed the first President of the Fijian Republic. Mara was reappointed Prime Minister, and Rabuka became Minister of Home Affairs.

The new government drafted a new constitution that went into force in July 1990. Under its terms, majorities were reserved for ethnic Fijians in both houses of the legislature. Previously, in 1989, the government had released statistical information showing that for the first time since 1946, ethnic Fijians were a majority of the population. More than 12,000 Indo-Fijians and other minorities had left the country in the 2 years following the 1987 coups. After resigning from the military, Rabuka became prime minister under the new constitution in 1993.

Tensions simmered in 1995-96 over the renewal of land leases and political maneuvering surrounding the mandated 7-year review of the 1990 constitution. The Constitutional Review Commission produced a draft constitution that expanded the size of the legislature, lowered the proportion of seats reserved by ethnic group, and reserved the presidency for ethnic Fijians, but opened the position of prime minister to all races. Prime Minister Rabuka and President Mara supported the proposal, while the nationalist indigenous Fijian parties opposed it. The reformed constitution was approved in July 1997. Fiji was readmitted to the Commonwealth in October.

The first legislative elections held under the new constitution took place in May 1999. Rabuka's coalition was defeated by the Fiji Labor Party, which formed a coalition, led by Mahendra Chaudhry, with two small Fijian parties. Chaudhry became Fiji's first Indo-Fijian prime minister. One year later, in May 2000, Chaudhry and most other members of parliament were taken hostage in the House of Representatives by gunmen led by ethnic Fijian nationalist George Speight. The standoff dragged on for 8 weeks--during which time Chaudhry was removed from office by the then-president due to his incapacitation. The Republic of Fiji military forces then seized power and brokered a negotiated end to the situation. Speight was later arrested when he violated its terms. In February 2002, Speight was convicted of treason and is currently serving a life sentence.

Former banker Laisenia Qarase was named interim prime minister and head of the interim civilian administration by the military and Great Council of Chiefs in July. The Supreme Court reaffirmed the validity of the constitution and ordered the Chaudhry government returned to power in March 2001, after which the President dissolved the Parliament elected in 2000 and appointed Qarase head of a caretaker government until elections could be held in August. Qarase's newly formed Soqosoqo Duavata ni Lewenivanua (SDL) party won the elections. The SDL declined to include the largely Indo-Fijian Fiji Labor Party (FLP) in the Cabinet on a legal technicality. The 1997 Constitution states that any party receiving 10% or more of the seats in Parliament must be given an opportunity to be represented in the Cabinet in proportion to its numbers in the House of Representatives. The FLP has taken the SDL government to court over the issue; Fiji's Supreme Court is expected to rule on this case in mid-2003.

Fiji is one of the most developed of the Pacific island economies, although it remains a developing country with a large subsistence agriculture sector. The effects of the Asian financial crisis contributed to substantial drops in GDP in 1997 and 1998, with a return to positive growth in 1999 aided by a 20% devaluation of the Fijian dollar. According to the Asian Development Bank, the economy contracted by 4.7% in 2000, but recovered quickly and grew by an estimated 5.1% in 2001. The Government of Fiji reported that growth was driven by a recovery in the tourism industry as well as by improved performance in mining, the harvesting and processing of mahogany, and fresh fish exports.

Tourism has expanded rapidly since the early 1980s and is the leading economic activity in the islands. Nearly 400,000 people visited Fiji in 2002, excluding cruise ship passengers. About one-third came from Australia, with large contingents also coming from New Zealand, the United States, the United Kingdom, and Japan. More than 58,000 of the tourists were American, a number that has steadily increased since the start of regularly scheduled nonstop air service from Los Angeles. The number of U.S. tourists declined somewhat in the wake of September 11, but Fiji experienced a record number of visitors in February 2002. In 2002, Fiji's gross earnings from tourism were about $330 million, an amount exceeding the revenue from its two largest goods exports (sugar and garments). Gross earnings from tourism continue to be Fiji's major source of foreign currency.

Fiji runs a persistently large trade deficit, although its tourism revenue yields a services surplus, which keeps the current account of its balance of payments roughly in balance. Australia accounts for between 35% and 45% of Fiji's trade, with New Zealand, the United States, the United Kingdom, and Japan varying year-by-year between 5% and 15% each. Fiji's two largest exports are sugar and garments, which each accounted for about one-quarter of export revenue in 2002--roughly $130 million each. The potential collapse of Fiji's sugar industry, due to quality concerns, poor administration, and the phasing out of a preferential price agreement with the European Union in 2007, also poses a major threat to Fiji's already uncertain economic well-being. The Fijian garment industry has developed rapidly since the introduction of tax exemptions in 1988. The industry's output has increased nearly ten-fold since that time, but the lower labor costs of Chinese competitors and the softening of a trade preference agreement with Australia have resulted in largescale closures of garment factories in the country.

Other important export crops include coconuts and ginger, although production levels of both are declining. Fiji has extensive timber reserves, but forestry has become important as an export trade only since the mid-1980s. Fishing is important as an export sector and for domestic consumption. In the mining and manufacturing sectors, gold and silver are exported. A major expansion of production at the Emperor Mine at Uatakoula is planned for 2004. The most important manufacturing activities are the processing of sugar and fish. Since 2000 the export of still mineral water, mainly to the United States, has expanded rapidly. By mid-2003, it was more than $40 million per year.

Since the 1960s, Fiji has had a high rate of emigration, particularly of Indo-Fijians in search of better economic opportunities. This has been particularly true of persons with education and skills. The economic and political uncertainty following the 1987 and 2000 coups added to the outward flow by persons of all ethnic groups. In recent years, indigenous Fijians also have begun to emigrate in large numbers, often to seek employment as home health care workers. Unemployment is high, and wages are very low. Advertised white-collar job openings often attract hundreds of applicants, many of whom are well-qualified. More than 200,000 people, about 25% of the total population, participated in the U.S. 2002 Diversity Visa program, which awards U.S. immigrant visas through a lottery draw system.

Other long-term economic problems include low investment rates and uncertain property rights. Investment laws are being reviewed to make them more business-friendly, including a relaxation of work permit requirements. Investor confidence in Fiji dropped significantly due to the recurrence of political instability in 2000. However, in April 2002, Moody's Investor's Service upgraded its Ba2 sovereign rating of Fiji from negative to stable, noting that despite continuing domestic political uncertainties, the country's external financial position had weathered the past 2 year's volatility without significant deterioration. External liquidity remained adequate.