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The very next day, Chinese Vice Foreign Minister Yang Jiechi lodged a "strong protest," urging the Papua New Guinea government to "correct its erroneous decision," or suffer "the serious consequences arising from this." The next day, July 7, Papua New Guinea Prime Minister Bill Skate resigned after almost two years in office, because of pressure over the recognition flap as well as a flaccid economy. The Papua New Guinea government rapidly sought to assure Taiwan that it would not back out on its deal. Foreign Minister Roy Yaki assured a news conference that it was "a commitment which is not turning back." China agreed to wait until the next parliamentary government was formed before taking action.
One week later, on July 14, Sir Mekere Moruata (a former central banker for his country) became the new Prime Minister of Papua New Guinea, in a 99-5 parliamentary vote. In addition to promising a more stable currency, an improvement of the tax system, and a continuation of negotiations with the IMF and World Bank, Moruata promised an immediate review of the Taiwan recognition decision.
On July 21, just 16 days after announcing recognition for Taiwan, Papua New Guinea revoked its recognition, claiming that "normal procedures for opening diplomatic relations with other countries, which have applied since independence, were not properly followed in the case of Taiwan," in the words of Moruata himself. Papua New Guinea would stick to the "One China" policy it had maintained previously, and there would be no diplomatic ties with Taiwan. In the end, Papua New Guinea could not give up its trade with China, principally a US$100 million annually in timber sales.
One could pass off the whole recognition imbroglio as simply another of Bill Skate's flights of fancy. As The Economist reports, in 1997 he told Australian television viewers, "If I tell my gang members to kill, they kill.... I'm the godfather." Later, by way of explanation, he told the public that he was drunk at the time, and thus talking "bullshit." (At least it was more honest than "It depends on what the definition of 'godfather' is.") At any rate, Skate is no stranger to rash proclamations, and some believe his recognition of Taiwan may have been just that.
China was not alone in disapproving of the recognition. Australia, the colonial power in Papua New Guinea until 1975, also pressured the island nation to recognize China alone. While
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