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.

• READ MORE: ‘Bloc’ resignation over riots recovery plan topples New Caledonia’s government
• Valls hopes to tackle New Caledonia in Rocard-style ‘spirit of dialogue’
• Other Kanaky New Caledonia crisis reports

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.

The New Zealand government has rejected claims by Solomon Islands Prime Minister Manasseh Sogavare that it has withheld financial support promised to the country.

On Monday, soon after landing back in Honiara from his official visit to Beijing, Sogavare told local media the Australian and New Zealand governments had promised budget support but “changed their position and delayed their assistance”.

Sogavare, as first reported by ABC, said the decision of its “traditional donors” to pull funding support had pushed Solomon Islands to lean on China, who agreed to “fill the gap”.

• READ MORE: Other Solomon Islands and China reports

“Some of our donor partners who have committed to providing budget support to us this year have since changed their position and delayed their assistance for us and we are struggling to finance the 2023 budget,” he said.

“This has left this country and people in a predicament. But I am delighted to announce, the People’s Republic of China has really stepped up to provide this budget support needed for 2023.”

Australia had promised $12 million while and New Zealand promised $15 million in budget support, according to Sogavare.

When asked later in the media conference to expand on this statement, he responded in Solomon Islands Pidgin saying that prior to his departure to Beijing cabinet had heard that budgetary funding expected this year from several donor partners including New Zealand, Australia, Japan and the World Bank had been delayed for various reasons.

‘That is how it is’
“So, we have analysed that in different ways. But that is how it is,” he said.

“It is their money; we respect them and their taxpayers if they want to help us or not help us that is how it is. But because of that it has put a little bit of pressure on the budget especially our priority to fund the Pacific Games.”

The prime minister eventually conceded that some of this funding was expected to arrive in government coffers this month.

But he insisted his country would need all the help it could get to deliver on its main priority for this year which is to deliver the Pacific Games in Honiara in November.

“We need to have enough resources there in terms of our revenue. I am sure it will pick up already,” he said.

“Maybe the money that our friends have mentioned probably it has already come because they said it would be by mid-July or towards the end of July it should come. Once it comes that is great. We really need to have some resources there to successfully host the Pacific Games.”

‘NZ has honoured its commitments’
However, a Ministry of Foreign Affairs and Trade (MFAT) spokesperson told RNZ Pacific: “We have not withheld or delayed any budget support to Solomon Islands.”

“Aotearoa New Zealand remains committed to our development partnership, and over the past year has provided around NZ$10.1 million budget support to Solomon Islands including for education, economic reform and Pacific Games support,” the spokesperson said.

“Our development partnership with Solomon Islands is one of our most significant by breadth, depth and value — now at approximately NZ$150m for 2021-2024. This includes budget support as well as funding for specific activities.

“The New Zealand High Commissioner in Honiara has been tasked to set the record straight with the Solomon Islands government, confirming New Zealand has honoured its budget support commitments.”

The Australian government had earlier told ABC it had not backtracked on any formal commitments.

“Australia has delivered on our budget support commitments to Solomon Islands this year,” a Department of Foreign Affairs and Trade (DFAT) spokesperson told ABC.

“This support has been provided across numerous sectors in Solomon Islands including health, education and elections,” they said.

“We continue to discuss development and budget support needs with the Solomon Islands government.”

‘Unneighbourly claim
Sogavare has also questioned the “unneighbourly” and “coercive diplomatic approach” of targeting China-Solomon Islands relations and labelled it as “foreign interference” into the internal affairs of Solomon Islands.

He has also hinted at Solomon Islands intentions of establishing its own military due to the limited capacity of the Solomon Islands Police Force.

Sogavare said he had had this conversation with the Australian Deputy Prime Minister Richard Marles earlier this year.

The New Zealand government did not respond to RNZ’s question on whether it had had any conversations about such intentions at any time this year, and if it would support such plans of the Solomon Islands government.

RNZ Pacific’s attempts to get comments from Sogavare have been unsuccessful so far.

This article is republished under a community partnership agreement with RNZ.