“Wait a minute, there was an explosion,” exclaims Philippe Martin. On the phone, the director of continuing professional training in New Caledonia continues: “I live in a neighborhood that is always a little tense.” This economic manager has been teleworking for two weeks. Located on the top floor of a building in the Ducos industrial zone, its offices burned down in the riots that have shaken the area since May 13. With its 3,000 companies, the peninsula, located northwest of Nouméa, is the industrial heart of the archipelago. “This is the area that was most affected by the damage,” he observes. According to initial estimates, almost 80% of the neighborhood was destroyed.
Roads blocked, shops and companies looted, buildings burned, premises ransacked: by the head of state’s own admission, the damage from the riots triggered after the vote in the National Assembly on the reform of the electoral body is “colossal”. The total cost of the damage would be around billion euros according to the New Caledonia Chamber of Commerce and Industry. Between “6,000 and 8,000 jobs” were destroyed, explains Philippe Martin: “On an archipelago with 270,000 inhabitants, this is anything but trivial”. To repair, the insurance contribution will be essential. That of the State too. “The most immediate problem now is how to pay salaries for the month of May,” underlines Thomas Govedarica, first advisor to the territorial chamber of accounts of New Caledonia.
The cost of anger
A challenge, when Cafat, the territory’s social security organization, is not able to absorb such a shock. “Paris will probably have to support businesses and the social protection system,” believes Philippe Martin. How high ? For the moment, no one knows – senior officials from Bercy have set foot on Caledonian soil in order to estimate the sums that the State will have to pay to support the archipelago. The latest devastating episode, the riots aggravate the situation of a territory with an economy in difficulty due to the nickel crisis, and whose public finances are very fragile.
Even outside of a crisis situation, Paris disburses aid each year which represents between 16 and 18% of its gross domestic product. “On average, the State pays between 1.3 and 1.5 billion euros per year to the territory. This number varies little from year to year,” explains Jocelyn Beneteau, lecturer in public law at the University Aix-Marseille, who directed a work on Public finances in Oceania. This envelope includes the financing of the “regular” activities of the State – the police, justice, defense or higher education for example – but also of skills supposed to have been transferred to the New Caledonian government, such as the salaries of secondary school teachers. . “This is a particularity of the territory, which may surprise uninformed jurists: the State always finances salaries for skills supposed to have already been transferred to Nouméa. New Caledonia has a great deal of autonomy, but this autonomy remains relative, in any case from a budgetary point of view”, points out Manuel Tirard, lecturer in public law at the University of Paris Nanterre, who was responsible for the management of New Caledonia facing the public finance crisis.
State aid
Benefiting from state aid to pay some of its civil servants, Nouméa also had to turn to Paris to complete its budget during the health crisis. Between 2020 and 2022, it owed more than 400 million euros in debt to the French Development Agency (AFD). Result: at the end of 2022, the territory’s debt rate stood at 201%. The following year, it benefited from a new envelope amounting to 37 million euros, again from the AFD, in order to “avoid a break in payment of pensions and allowances paid to people with disabilities and dependence.
In exchange for this big boost, the State asked for tax reforms to clean up the accounts. Under pressure from Paris, the pro-independence government, which took over from the loyalists in July 2021, finally announced a battery of measures in October: tax on real estate capital gains, on petroleum products, mining royalties, etc. The adoption of these texts by the Caledonian Congress, the local parliament, provoked a wave of demonstrations. Before the riots of May 13, filter dams had already been put in place at the start of the year, forcing the government to postpone its proposed fuel tax until June.
Every sector will be affected by the riots
New Caledonia is, however, up against the wall. In its 2022 report, the territorial chamber of accounts did not hesitate to speak of a “structural imbalance in public finances”. “Among many New Caledonian actors, there is the idea that the State will come to the rescue anyway,” regrets Hervé Mariton, former Minister of Overseas Territories and president of the Federation of Overseas Companies. To the point of wiping some slates clean. In 2013, the former Minister of Economy and Finance Jean Arthuis, then senator, was surprised to have seen the disappearance, in “silence”, of a debt contracted by New Caledonia in the amount of 289.4 million euros, and for which it “made only one reimbursement, in 1989, to the amount of 23.3 million euros”. A way to help a territory in difficulty for the government of the time. “Largesse”, seen as a way of buying peace on the archipelago for the most severe. “Nothing encourages elected officials to be responsible, to the extent that each time a difficulty arises, it is enough to reach out to the French government,” says Mathias Chauchat, associate professor of public law and professor at the University of New Caledonia. This one is ready for any financing, as long as it allows the maintenance of French Caledonia. The elected officials therefore have no interest in managing the country sparingly.
They must take care of a territory facing multiple difficulties. Since 2019, 18,000 people have left, “driven by the institutional crisis and the lack of economic prospects”, according to David Guyenne, president of the local chamber of commerce and industry. Because New Caledonia is facing the tremors which are affecting the nickel sector. “However, since the 1980s, the archipelago has lived on a double income: that of transfers from the State, and that of the mining industry,” remarks Pierre-Yves Le Meur, research director at the Research Institute for Development. Expensive energy and collapsing prices – the ore lost half its value between January 2023 and February 2024 – weigh heavily on the economy, while nickel represents almost a quarter of private employment and 20%. of its GDP. After “more than 700 million euros in public aid” paid to the sector since 2016, Bercy has developed a “nickel plan” with sector players to try to recover the sector. But the text encountered the refusal of part of the Congress of New Caledonia and remained on the table.
Nearly 1,000 jobs destroyed could add to unemployment already present in the archipelago, particularly among young people. “Around 22,000 people are looking for jobs in New Caledonia, all sectors combined,” explains Philippe Martin. “This represents 11% of the total population of New Caledonia, with a particularly high prevalence of unemployment among young people.” Among those under 30, the number of unemployed rises to 26.2% of the active population. “These figures date from 2022, before the nickel crisis,” he continues. “We are in the process of compiling those from last year, and we realize that they have deteriorated further.” Efforts made for reintegration in the region are struggling to reach the bulk of the unemployed – “1,100 people” have entered the continuing professional training system in 2022, according to Philippe Martin.
A drop in the ocean, when every sector will be affected by the riots. Tourism, for example, which is embryonic in New Caledonia – it represents 4% of its GDP – is today at a standstill, threatening nearly “5,000 direct jobs”, according to Julie Laronde, general director at Nouvelle-Calédonie tourisme , agency of the Caledonian government. If the sector was rather preserved by the riots, it will suffer – like the others – the effects. She therefore calls on the State “above all not to forget tourism in the reconstruction effort”. “Financial aid”, including a “solidarity fund” of unknown amount, are among the measures announced by Emmanuel Macron during his visit to Nouméa on May 23. Whatever the outcome of the crisis, one thing is certain: the presence of Paris, at least financially, is not about to disappear.
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