Foreign Correspondent: New Hebrides

Competing governments?


REASON Editor Robert Poole recently vacationed in the South Pacific island group known as the New Hebrides, a tax haven which has the distinction of being the world's only country with two competing governments. His report on developments there provides interesting data on this unique arrangement.

Vila, New Hebrides. The New Hebrides is a group of islands in the southwestern Pacific, about 500 miles west of Fiji. Known for the past decade as a tax haven (there are no taxes on incomes, property, inheritance, or sales; only import and export duties, and fees for various services), the New Hebrides also is a testing ground for the idea of competing governments. The first thing a new resident or investor must decide is which legal system—French or British—he wishes to adopt. Unfortunately, the competition between the two government systems is what is known as oligopoly (or shared monopoly): no other governments are permitted, and a person's (or company's) choice is irrevocable, i.e. brand-switching is impossible. Nonetheless, the New Hebrides still offers a fascinating example of the advantages and disadvantages of choice among governments.

This unique system dates back to 1914 when France and Great Britain drew up a Protocol calling for joint administration of the island territory which neither wished to relinquish to the other. The system established by the Protocol has endured, with only minor changes, to this day—though for reasons discussed below, it appears unlikely to last much longer. There are two completely separate legal systems, based on entirely different traditions (English common law vs. the Napoleonic Code), plus the natives' own common law, which is recognized in a third system, complete with Native Courts.

The differences between the systems make for some interesting problems. In regard, for example, to beachfront property rights—if a piece of land is registered under British law, the property extends down to the mean high tide line; under French law, it extends only to the maximum high tide line; while under the native system, the landowner's property is considered to extend out into the water to the point where the bottom is no longer visible. There are separate courts for the British, French, and native systems, as well as a Joint Court which hears appeals from the others, deals with cases involving natives vs. whites, and handles most land cases. The Joint Court is one appendage of the Condominium government—the central government that has developed to deal with services common to both the British and French administrations (roads, postal service, radio station, ports, etc.).

The economy of the New Hebrides is still largely colonial, depending principally on copra (dried coconut meat, an important ingredient for making soap and other household products). And the copra trade is dominated by two giant trading companies—typically, one British (Burns-Philp) and one French (Companie Francaise Nouvelle Hebrides). Both B.P. and C.F.N.H. operate copra ships and bring in food and household products to the various islands, as well as hold most of the franchises and dealerships for insurance, automobiles, tires, airlines, shipping lines, travel agencies, etc. The New Hebrides is thus much like a company town. The electric company serving Vila, the capital, has a 50-year exclusive franchise; it charges 47¢ per kilowatt hour (vs. about 4-5¢ in the U.S.) and $91 to begin service! But times are changing. Since 1969, when the New Hebrides began to gain fame as a tax haven, thousands of companies have incorporated here; some 800 companies are nominally located in a single two-story law office building in Vila. Some 55 banks are represented in Vila. With the new money from these companies has come a building boom, new hotels, restaurants, gas stations, and the beginnings of a real tourist business.


The reputation of the New Hebrides as a tax haven and tropical paradise is starting to tarnish, however, as a result of changes in the past few years. The Condominium government has increasingly developed a life and momentum of its own, passing Joint Regulations (including gasoline rationing, price controls, censorship, and land use controls) without any sort of constitutional limitation. There is no Constitution and no legislature; the British and French Resident Commissioners are appointed by their home countries, and the Condominium staff consists of hordes of hired civil servants. The District Agents appointed by the Commissioners serve on the Joint Courts in each District, thereby providing only a token kind of judicial review of the Commissioners' policies.

One of the most ominous developments occurred in 1971. An American land developer, Eugene Peacock, developed a large residential complex in Santo, and sold lots to Americans. In October of that year, after most of the lost were sold, the Condominium government issued several "retroactive laws" to limit subdivisions, which it then charged Peacock with not having complied with. As a result, the Condominium has refused to register the land titles of those who have bought the lots. Peacock is fighting the ruling in the British courts, with the case expected to be heard this June. His lawyers are prepared to appeal to the High Court of the Pacific, and if necessary to the Privy Council. Meantime, other foreign developers are biding their time, awaiting a new land tenure law that has been promised for this year. Local developers continue unharassed and apparently unworried.

But the most far-reaching development concerns the prospect of independence for the New Hebrides, now considered likely within the next five years. The British have wanted out for some years, but not at the expense of turning the country over to the French. So they have quietly encouraged the growth of indigenous political forces which are advocating complete, immediate independence. The leading political group is the 3-year-old National Party, headed by 32-year-old Father Walter Lini, a native and an Anglican priest on leave from his church duties. Lini's rhetoric has overtones of antiwhite racism and anticapitalism. He claims to be in favor of economic development, but is hostile to the immigration of job creators. "With immigration laws as they are, anybody can come in, buy land, and set up their own business, leaving[?] New Hebrideans to work as servants or office workers. We realize that these people are contributing to the development of the country, but unfortunately the biggest piece of the cake is going to them." Lini calls for an "independent government which must control the economic, political, and social aspects of New Hebridean life," and adds ominously, "As far as we are concerned, the tax haven can disappear tomorrow." The National Party has called all land titles held by whites "invalid," has demanded independence by 1977, and has sent Lini to the U.N. to ask that body to take over from the French and British if these two countries do not move fast enough to implement his program.

An opposition to Lini's forces is coming into being, based on a new coalition among two smaller French-oriented parties—M.A.N.H. and U.C.N.H.—together with the native political group Na-Griamel, led by charismatic Jimmy Stephens of Santo. Although Stephens once had an antiwhite reputation, in the past few years his views have changed as he has come to realize the value of economic development that can be brought about by foreign investment and immigration. Like U.C.N.H. and M.A.N.H., Na-Griamel now takes a generally free enterprise stand. These parties also favor independence, but on a slower, more realistic timetable than the National Party.

Although much of the push for independence stems from resentment against the imposed colonial rule, and people's lack of a voice in the government, a good part of the resentment is directed against the dual system of government. Having to deal with two (or sometimes three) governments to get things done has proven to be much more troublesome and time-consuming than dealing with only one. When changes in the system are needed, or important decisions must be made, it can take years before anything is accomplished. In one sense this may be good (in terms of delaying or preventing bad laws) but it makes it equally hard to remove or change bad laws and policies, and to get approval to do things. Equally frustrating for many people has been the necessity to deal with two official languages (plus Pidgin), two currencies, two police forces, two school systems, etc. Being able to choose your government may be nice, but many people have found it to be not worth the trouble.


The Condominium's days appear to be numbered. In November the British and French held a conference in London, attended by the two Resident Commissioners. The conference agreed to set up a new system of elected local governments on the islands, to create a legislative assembly before the end of this year, to unify the legal system (combining French substantive law with British procedural law), and to develop a unified land tenure system. The legislative assembly will include 12 members appointed by the British and French, 3 selected by the native chiefs, and 26 elected members. For the New Hebrideans, it will mark their first national elections, and for many natives, their first experience in voting. Universal suffrage has been promised, without regard to literacy or other qualifications. To underscore the importance of these steps, the two governments sent their chief overseas ministers to Vila in January for a series of public meetings. Interestingly, the ministers never once used the word independence, but reaffirmed their support for the tax haven status of the New Hebrides.

All is not lost for these islands. It is by no means certain that the leftist National Party commands a majority, and the French and British are still firmly in control. The other parties have barely begun to fight, and could well turn things around before the New Hebrides goes the way of many fledgling nations—headlong into a disastrous socialism. Most observers think it will be five years or more before independence, plenty of time for things to go in either direction.