Australian Prime Minister Retains Party Leadership

AUSTRALIAN Prime Minister Bob Hawke has survived a difficult political challenge from one of his colleagues, Paul Keating, the treasurer and deputy prime minister. The leadership fight, which was resolved yesterday, has left Mr. Hawke and the Australian Labor Party (ALP) staggering. The ALP, which is split into factions, gave Hawke a comfortable but not overwhelming endorsement to continue his fourth term as prime minister. Mr. Keating, the ALP's best parliamentary debater, says he will not challenge Hawke again.

The battle has been difficult for Labor politicians who felt a sense of loyalty to Hawke but were concerned about the political future of the party. "It's pretty painful for all of us," says Neal Blewett, minister for trade and overseas development.

Hawke canceled a visit to Europe yesterday to begin the "task of healing the wounds." As a first step, he named Brian Howe, a member of the left faction, as his deputy, but did not immediately name a new treasurer. Financial markets in Australia showed little reaction. The Australian dollar dropped slightly yesterday compared with the United States dollar.

The political battle started last Thursday when Keating told Hawke he would challenge him for the party leadership. Then a television report revealed that Hawke had signed an agreement in 1988 to step aside after the 1990 election and allow Keating to take over. Hawke later denied there had been such an agreement, and both the party and the public seemed unaware of any such promise.

Labor's leadership woes

The dispute has been brewing beneath the surface for some time, however. In an off-the-record interview late last year with Canberra journalists, Keating said Labor had had no great leaders since World War II. He later apologized to Hawke, who, according to some critics, apparently decided this insult was grounds to break his secret agreement with Keating. Hawke then decided to run for a fifth term in 1993.

But some Labor politicians are concerned that an aging Hawke could be a liability in the next election.

"Here's Hawke - 63 to 64 years old - going up against a man in his mid-40s. How's that going to go with people in their 40s?" asks George Gear, the parliamentary whip and a Keating supporter.

In a television interview Sunday, Keating said he would have differentiated himself from Hawke on foreign policy matters, especially concerning the US. He said he would have a more independent policy and that the Hawke administration needs new ideas. And, Keating added, his candidacy offered "direction, strategy, esprit de corps, enthusiasm and, dare I say it, where necessary, a touch of excitement."

Australian voters, however, have never been too excited over Keating. In polls both before and after his challenge, Keating has rated very low in public opinion.

ALP's Gear, however, maintains that Keating is "one of the best communicators out there." But "the public has never seen this side of him, because he is always giving them news on dry economic issues."

Hawke also has his problems with voters. The most recent Morgan Gallup poll showed Hawke and the ALP down 18 points compared to the opposition Liberal Party. Only 36 percent of the 3,114 voters polled approved of Hawke's performance, compared with 49 percent for the opposition leader, John Hewson.

The opposition was quick to take advantage of ALP's disarray. Mr. Hewson, said the secret agreement between Hawke and Keating was a betrayal of public trust. "They have lied to the people of Australia and they have lied to each other. They are yesterday's men," he claimed.

Critical issues ahead

The internal strife comes at a time when the government is trying to resolve some critical issues. It must decide whether to allow gold mining in Kakadu Park, which is situated in the Northern Territory. BHP Proprietary Limited has already spent about A$20 million (US$15.4 million) exploring a site known as Coronation Hill. But a local aboriginal tribe says the mining would disturb a religious being called Bula. The mining industry says a decision against allowing mining would send a negative message to

future ventures.

The Hawke government must also decide at the end of the month whether to allow more uranium mining in Australia. Currently, the Labor Party has a policy of only allowing uranium to be mined at three sites. But there is domestic pressure on Labor to open up new mines that would help reduce the country's A$15 billion (about US$ 11.5 billion) balance-of-payments deficit.

In addition, the government is preparing its 1991-92 budget, which will be presented in August. Because of the recession, Keating says the government may run a deficit of A$4 billion for the new fiscal year, beginning July 1.

"Keating will be very much missed during the next budget session. He is a very efficient politician," says Gerard Henderson, executive director of the Sydney Institute, a think tank.

As a treasurer, Keating has generally received high marks for his stance on inflation.

"He was tougher than other members of the Cabinet," says Stephen Miller, senior economist at Bankers Trust Australia. But he says it is unlikely that economic policy will change significantly and the markets have no cause for "undue nervousness."