Europe and Australia say Fiji sanctions to remain

CANBERRA, June 25 (Reuters) Fiji's military coup leader Frank Bainimarama would need to show solid progress towards restoring democracy before Australia and the European Union would lift sanctions, Australian and EU ministers said today.

Bainimarama has called for Australia and the EU to restore normal ties after his military-backed government on June 19 gave ''in-principle'' backing for elections in Fiji by early 2009.

European Commissioner for External Relations Benita Ferrero-Waldner discussed Fiji with Australian Foreign Minister Alexander Downer during talks in Canberra today, with both saying it was too early to relax sanctions.

''The most important thing is to see whether the commitment will materialise,'' Ferrero-Waldner told reporters after talks with Downer.

The EU has said more than F0 million (250 million dollar) worth of aid to Fiji would be either delayed or put at risk because of Bainimarama's bloodless coup on Dec. 5, 2006, when he seized power and toppled elected prime minister Laisenia Qarase.

That puts in doubt the EU's F274 million dollar support for Fiji's sugar industry between 2007 and 2013, to help it cope with lower world prices and modernisation, and designed to lower prices for Fiji sugar exports to Europe.

An ongoing suspension would be devastating for Fiji's vulnerable economy, which relies almost entirely on tourism and the traditional mainstay, sugar.

The Pacific island country's sugar industry is uneconomic at present low world sugar prices and greatly in need of reform, with labourers still cutting cane by hand using machetes.

Australia has also suspended part of its aid programme to Fiji and imposed travel bans on Bainimarama and members of his government. Defence cooperation was also suspended.

Downer and Ferrero-Waldner said they were willing to offer financial and expert help for Fiji to hold its elections, but both said the future of aid commitments relied on firm moves to restore democracy.

''We want to see the principle turned into practice and see in practice how this would happen,'' Downer said.

''We should retain the good and strong positions that Australia, New Zealand and the European Union have ... in relation to Fiji until we see some real practical results in terms of a return towards democracy.'' A former British colony of about 900,000 people, Fiji had its Commonwealth membership suspended after the coup, as it did after two similar upheavals in 1987, and a third coup again in 2000.

REUTERS GP PM1430