Fijian Army Controls Suva, Stops Government From Operating

Dec. 5 (Bloomberg) -- Fiji's army took control of the capital, Suva, as Prime Minister Laisenia Qarase said he was powerless to prevent the military staging a coup.

``Effectively I am isolated,'' Qarase said in an interview with Australian Broadcasting Corp. radio, adding he could only speak with his ministers by mobile phone. ``If they want to carry out the coup, they have all the freedom to do it now.''

Military commander, Commodore Voreqe Bainimarama, has demanded Qarase resign, accusing his administration of corruption. The U.S. said it may cut assistance to the Pacific island nation if the government that was reelected in May is ousted.

Repercussions from a coup will harm Fiji's economy, one of the most developed among Pacific nations, because of its dependence on tourism and sugar production. The country has between 300,000 and 400,000 visitors annually and its sugar industry creates about one-third of industrial activity.

The European Union said it will sever relations and withdraw its $422 million aid package for the sugar industry if a coup takes place. Fiji, a 332-island archipelago located 3,240 kilometers (1,950 miles) northeast of Australia, has experienced three coups in the past 19 years, the most recent in 2000.

``At the last coup we saw about a 7.7 percent drop in GDP in one year,'' said Ron Duncan, a professor at the University of the South Pacific in Suva. Tourism, the country's biggest direct employer and earner of foreign exchange, is the industry that has made the quickest recovery from past coups, he said.

Two Options

Qarase told ABC radio that Fiji's President Ratu Josefa Iloilo had given him two options: either resign or agree to Bainimarama's demands, which include scrapping an amnesty for perpetrators of a coup six years ago.

``I cannot do either of those,'' he said. ``I am not prepared to resign voluntarily or even by force.''