AUSTRALIA'S hardline policies are driving Fiji's economy towards collapse while failing in their objective of bringing an end to the country's military rule, according to leaked US diplomatic reports.
The reports reveal that Australian policymakers and diplomats have been ''deeply frustrated'' with the lack of success of Australia's efforts to isolate the regime controlled by Commodore Frank Bainimarama, but see no viable policy alternatives.
They also reveal that former parliamentary secretary of Pacific island affairs Duncan Kerr (pictured above) last year broke ranks with the then Rudd government and privately sought to encourage the US towards diplomatic re-engagement with Suva - despite the abrogation of Fiji's constitution and Commodore Bainimarama's decision to defer elections until 2014.
Leaked US embassy cables released by WikiLeaks and provided to The Sunday Age report that, at a meeting at his Parliament House office on August 12 last year, Mr Kerr told a senior American diplomat that Australia was ''close to exhausting its diplomatic options on Fiji to little apparent effect''. The embassy reported that he ''appeared sympathetic towards re-engaging with Fijian military strongman Bainimarama''.
Mr Kerr, who has extensive experience of South Pacific politics, believed ''Bainimarama cannot give up power as he would end up at the mercy of his enemies, and suggested that the international community should find a safe way for him to step down … or we'll have to do business with him''.
Mr Kerr was described as being pessimistic about Fiji, highlighting the severe deterioration in its political, economic, and social conditions, and the potential costs for Australia in the event of economic collapse.
''[Mr Kerr] said, 'We've made a cabinet-level decision that we don't want to see Fiji move to a social and economic collapse,' '' the embassy reported to the State Department in Washington.
''Calling it the worst possible outcome, he said that Australia would be responsible for picking up a failed state, at a cost much higher than the [Australian government's] intervention in the Solomon Islands, while seeing Australia's progress in strengthening weak Pacific Island nations undermined by Fiji's collapse.''
He said Fiji verged on ''economic disaster'' and Australia would support intervention by international financial institutions. He expressed concern that after Fiji had been expelled from the Pacific Islands Forum and the Commonwealth, Australia would have exhausted its diplomatic arsenal with no clear next step.
But he said the ''diplomatic momentum and effort invested in punishing Fiji is difficult to stop, and a decision to change course must ultimately come from Prime Minister Rudd''.
Mr Kerr encouraged the US to explore new approaches to Fiji, and ''stressing that he was speaking personally, Kerr said that it may be useful for the US to ask us the obvious questions on what happens if and when Fiji has been suspended from the Commonwealth without showing any moderation in the regime's behaviour''.
The embassy said Mr Kerr's approach was ''an attempt to spur re-evaluation'' of policy towards Fiji while the Australian government was on ''cruise control toward increasing disengagement with Fiji, without achieving any desired effect''.
But his attempt to stimulate new thinking was undercut by senior Australian diplomats who reaffirmed the government's hardline policy of isolating the Fijian regime.
In September last year, Department of Foreign Affairs and Trade assistant secretary Geoff Tooth told US diplomats that Fiji had enough foreign currency reserves to last another 12 to 18 months before it faced a balance of payments crisis and ''the inevitable fall''.
A year later Australia's policy of seeking to diplomatically isolate Fiji is unchanged but has come under more pressure as China has stepped up its economic and political ties with Fiji. The US has also moved to rebuild diplomatic contacts in Suva.