The government's slow response to a devastating cyclone has once again highlighted the Solomon Islands' economic crisis. A relief boat was delayed because the government could not afford fuel, and officials argued with the crew about wages. The Solomon Islands, a snaking archipelago 2,400 kilometers northeast of Australia, is almost bankrupt after years of ethnic fighting and poor administration. These South Pacific Islands are part of what Australian officials have called an "arc of instability" stretching through Melanesia from Papua, New Guinea to Fiji. The Solomon Islands' economic collapse coincided with the rise in ethnic tensions, which escalated on the main island of Guadalcanal in 1998. The fighting lasted for two years and claimed more than a hundred lives.

Johnson Honimi is the general manager at the Solomon Islands Broadcasting Corporation. He blames years of government neglect for the country's problems, which were exacerbated by the conflict. "People were saying it was the social tension, ethnic war, but this thing was coming. Basically, it's leadership, management of this country's finances," he says. "We need leaders to have this country at heart and will put in measures that will help."

Honiara is a busy and dusty city, dotted with markets and small shops. Unemployment is high and most people struggle to make ends meet. Few taxi drivers are willing to travel out of the city for fear of being robbed by gangs.

"Many students have no opportunity to have education," says Sallis, a 19 year old student speaking of her frustration at her country's decline.

The ethnic war between natives of Guadalcanal and settlers from the neighboring province of Malaita was fought over land rights and jobs. It led to a coup that toppled the government. A peace deal brokered by the Australians required the two sides to give up their weapons, although according to one shopkeeper in Honiara, many guns have not been surrendered. "I still see many people holding guns. Sometimes when tension's in the streets, sometimes people come out with guns, you feel a little frightened," he says.

One of the biggest headaches for the government is Harold Keke. He has a private army with around two-thousand fighters, which controls the remote Weather Coast on southern Guadalcanal. Mr. Keke, a former policeman, has refused to sign the peace accord. For him and his followers, the war goes on.

It has been a tough year in office for Allan Kemakeza, the prime minister who is battling to restore a failed economy and law and order. Mr. Kemakeza, who recently paid off extortionists who fired guns at his official residence, insists the economy is slowly beginning to recover, with fishing and mining leading the way.

A new police commissioner has been recruited from Britain as part of a restructuring of the country's security forces, parts of which were involved in the coup three years ago.

The prime minister says he is confident the country's law and order problems are being addressed. "The involvement of some members of the Royal Solomon Island police during the ethnic tension brought the morale of the police to its knees," says Mr. Kemakeza. "However, the government is working very closely with Australia and New Zealand on the institution strengthening area."

More than two years after the peace deal, this mostly Melanesian country of 400,000 people still bears the economic and social scars of war. Diplomats think only an immediate improvement in law and order can stop further decay. Caroline Hall, the deputy British high commissioner in Honiara, says the country remains in a perilous position. "The government itself has had a pretty rocky time since the coup in June 2000," she says. "They are gradually beginning to get themselves together and are talking about things like youth unemployment but as yet we haven't seen anything sort of concrete coming out."

Despite the problems here, and there are many, there is a sense that the Solomon Islands are recovering. Paul Tavoa, who heads the National Peace Council, thinks progress toward stability has been made. "The signing of the Townsville Peace Agreement has cleared a way for the warring factions to come together. Now that is a beginning," he says. "Of course, peace is not completely one-hundred percent on the ground but there is a slow process and I am very, very optimistic about the whole process."

Still, the New Zealand government has warned the Solomons face a long period of instability. One senior Australian diplomat said recently that Canberra's policy objective here in the South Pacific was simple, to carefully manage trouble.