The document presented to the Prime Minister by the BPC was in the form of a draft agreement ready for his own and BPC President Joseph Kabui's signature. It outlined two main provisions:
(i) a referendum on independence for Bougainville at a time of the BPC's (or its successor's) choosing – with the result binding on the State; and
(ii) that Bougainville could achieve 'immediate and effective self-government', in which the Bougainville government 'shall assume responsibility for a full range of powers and functions of Government save for agreed essential powers reserved primarily' for the national government.
The draft agreement called for the treaty to be subject to change only with the consent of the people of Bougainville. Significant aspects of the proposal came as a surprise to the Prime Minister's party. The language employed (which resonated with issues raised and widely regarded as resolved before independence) added to their concern. In a passionate speech, the Prime Minister made clear that Bougainville would achieve a separate state 'only over Bill Skate's dead body.' But he promised to bring the paper to the NEC for consideration.
Officials from Bougainville travelled to Port Moresby to work with the national government on a document explaining the agreed terms on which the BPC's proposals were being presented to the NEC. The Hutjena Minute, the first agreed paper since Lincoln to address the substance of 'the political issue' in the long term, was the result. While it accepted that Bougainville should be able to 'exercise the powers of government with the exception of certain powers to be negotiated that shall be retained by the Government of Papua New Guinea', it promised no more on the question of a referendum than advice that 'the Government would be prepared to consider the proposal.'
The commitment to take the proposal to the NEC was honoured shortly before the Prime Minister resigned in the face of an imminent vote of no-confidence and a new government was formed. In his very first statement on coming to office in July, the new Prime Minister, Hon. Sir Mekere Morauta, made clear that furthering the Bougainville peace process was one of the new government's five main policy objectives. The terms in which he did so made plain that the existing bipartisan approach would be maintained. Determined to give priority to the progressive political settlement, the Prime Minister initially decided to keep the Bougainville Affairs Ministry for himself, until he transferred it in August to Rt Hon. Sir Michael Somare.
In October, the BPC and the four Bougainville MPs met at Nehan and agreed to pursue the 'highest form of autonomy for Bougainville', as well as a binding referendum on Bougainville's political future. They subsequently came up with a more detailed 'Joint Negotiating Position', which they presented to the national government in December. The two main issues promoted in the new paper were immediate autonomy – which was described as 'the highest level of self-government short of independence', with the transfer of all functions and powers of government exclusive to Bougainville, other than those on a list agreed to be 'essential' to the national government – and a referendum among Bougainvilleans on independence, the result of which would be legally binding. The Minister's response was contained in the Hutjena Record, which reported agreement to negotiate the terms of 'the highest possible Autonomy' for Bougainville, and to present the Bougainville proposals on referendum to the NEC for consideration.
Early in 2000, the national government then strengthened its bipartisan approach to the Bougainville peace process by setting up a National Committee on Bougainville including both government ministers and Opposition MPs. In Bougainville, the BPC and the Leitana Council of Elders met and agreed to cooperate in future political talks.
In March 2000, the National Committee went to Bougainville and presented its proposed 'Framework for Developing Autonomy in Bougainville' to a combined Bougainville delegation, which immediately rejected them 'unanimously and unreservedly'. Follow-up talks were then held in Port Moresby, the first occasion that many Bougainville leaders and ex-combatants had been willing to come there since the crisis began. Both delegations then developed their positions.
The Loloata Understanding recorded the progress made in reaching agreement. Some of that progress was very clear, for example the agreement to the phased transfer of functions and powers to a Bougainville government which would have its own constitution – significantly – within the Papua New Guinea Constitution. Some was more subtle, such as the inclusion of the term 'national government' and the commitment to Bougainville being able 'to express and develop both its own identity and its relationship with the rest of Papua New Guinea' – the first time since the truce that some of the Bougainville parties agreed to a document which openly acknowledged Bougainville as part of Papua New Guinea. When it came to the Bougainville proposal of a referendum, the parties agreed only to address the issue.
The Loloata Understanding also recorded the growth in understanding and cooperation that had been occurring among the Bougainville parties, and the arrangement through which the Bougainville Interim Provincial Government had agreed to consult with the BPC and Councils of Elders before making important decisions.
At intervals over the next few months, the parties held meetings in Port Moresby, Rabaul and Bougainville to develop the details of autonomy for Bougainville and reach agreement on the referendum issue. Progress was more readily achieved on autonomy than the referendum question, on which divisions remained deep, especially over the Bougainville delegation's insistence that independence should be an option in the referendum and the result should be legally binding on the State.
Agreements produced along the way included: the Gateway Communiqué of 9 June, in which the national government delegation agreed to refer more detailed proposals prepared by the Bougainville delegation to the NEC and the Agreed Record of Outcome issued on behalf of the parties by the United Nations Observer Mission in Bougainville (UNOMB) at the conclusion of further political talks in Rabaul on 6 September.
Meanwhile, as the issues, including differences, in the political talks became clearer and centred on details and technical aspects, the composition of both delegations changed. Bougainvilleans with particular interests as well as advisers and officials from various national government agencies participated in talks on subjects where they had special expertise or responsibilities. Political leaders increasingly left officials to meet and work through outstanding issues on their own, returning mainly when further policy direction or formal approval was required.
In October 2000, the officials developed a Composite Draft Agreement on Autonomy that included both agreed text as well as the stated positions of both delegations where there were significant differences. Though the Composite Draft was not formally accepted on the Bougainville side, parts of it were eventually used as a basis for the emerging Bougainville Peace Agreement.
But, even as progress was subsequently being made, misunderstandings, frustrations and even some modest confrontations arose, particularly over the referendum issue. The Bougainville delegation increasingly saw it as necessary to resolve this issue before going on to develop the details of autonomy for Bougainville. At one point in December, during a series of meetings held in the National Parliament, the Bougainville delegation responded to a paper on the referendum issue prepared by Sir Michael Somare by walking out.
Then, shortly before Christmas, the Australian Minister for Foreign Affairs and Trade, Hon. Alexander Downer, visited Buka and Port Moresby, and floated a compromise position – a constitutional guarantee of a deferred and conditional referendum, in 10-15 years time, with the outcome subject to ratification (which was subsequently defined as subject to the 'final decision-making authority') by the National Parliament. His proposal embodied options that had been previously considered and discussed by both sides – but not then agreed. However, as the Australian Minister observed when briefing the national government on his previous visit to Buka, it is sometimes not what is said but who says it that counts. Both Bougainville and national government leaders now seemed to accept the proposal.
Hon. Moi Avei (now, Sir), who succeeded Sir Michael Somare as Minister for Bougainville Affairs, followed up on Downer's consultations by flying to Bougainville early in the new year. The compromise was confirmed at an informal meeting in Buka between the Minister and key Bougainville leaders.