‘Chameleon’ Nauru needs new economic outlook

Aaron, July 29, 2024 (AAP) – During the day, Nauru’s gravel Linkbelt Oval is packed with groups of young people playing the country’s national sport – Australian Rules Football – in the sweltering summer heat.

As night falls, hundreds of cars arrive to play another of Nauru’s pastimes – bingo.

Under the portable pavilion, the caller worked at lightning speed, rapidly punching in numbers.

To protect against rain, the speakers were covered with garbage bags, which muffled her calls but allowed locals to hear them clearly no matter where they sat – in cars, on trays, on picnic mats or folding chairs.

The risk is not great, but many people come to participate in the hope of good luck.

Nauru, the world’s smallest republic, also needs a break.

Nauru is the only Pacific nation made up of islands, and it takes just over half an hour to circle it, which shows the economic challenges the country faces.

There are few signs of industry.

Not far from Linkbelt Oval lies the massive cantilever that helps carry millions of tonnes of phosphate across the coral coastline and onto ships.

Phosphate mining made Nauru one of the richest countries per capita in the world in the 1970s and 1980s, but the reserves are nearly depleted and the profits are gone.

A new port funded by donors including Australia and China is also set to open, which should reduce high freight costs.

New Zealand Deputy Prime Minister Winston Peters offered a frank assessment of the country’s prospects during a recent visit to Micronesia.

“They are struggling,” he told United States General Association.

“They’re trying to rebuild an economy that’s in a very, very difficult state.”

Over the past century, Nauru’s economic fortunes have been tied to three controversial industries — phosphate mining, financial services and, more recently, as a processing centre for asylum seekers bound for Australia.

The phosphate boom destroyed much of the island’s environment, and Nauru became a notorious tax haven.

The criminal gang was dismantled at the same time as the Australian offshore detention centre was built.

Australia has spent billions of dollars to build and operate the facility since 2001, and has transported potential migrants thousands of kilometres from mainland Australia.

However, last year the centre was idle and held no asylum seekers. As of this month, about 100 asylum seekers were being processed on Nauru, down from a peak of 1,200.

Nauru has a population of approximately 12,000 people and is entirely dependent on the central government (RPC) for income and employment.

“Up to 65 percent of government revenue comes from the RPC,” said Katherine Passmore, country economist for Nauru at the Asian Development Bank. American AP Association.

“A very stable economy usually has very diverse resources. But Nauru doesn’t have that.”

As Australia plans to reduce spending on offshore detention in the coming years, Nauru needs new economic avenues.

“The RPC is not the answer for Nauru’s economic future,” said Meg Keen, senior fellow at the Lowy Institute’s Pacific Islands Program. United States General Association.

“The RPC is likely to close in the next five to ten years, so Nauru needs a different economic future than hosting refugees from other countries.”

What are the options?

Given Nauru’s poor transport links and lack of accommodation and attractions, it seems unlikely that tourism will account for more than 1% of GDP.

The new port could boost fishing (including through rent from selling rights to use its waters), but the industry is unstable and will be affected by climate change.

Many labour mobility pathways remain closed and the absorption of seasonal workers is unlikely to materialise given Nauru’s high regional wage levels and high global ranking for obesity rates.

David Adeang’s government is seeking another controversial way to get rich by mining the seabed for nodules rich in precious metals.

However, the practice has yet to be regulated internationally, and there are as many opponents as supporters in the Pacific.

Nauru’s economic insecurity also raises another possibility: that Nauru sign a comprehensive treaty with a second country that could provide an economic lifeline.

Last year, Australia and Tuvalu announced a surprise agreement – the Falapili Alliance – at a meeting of Pacific Islands Forum leaders in the Cook Islands.

The unprecedented treaty provides Tuvaluans with visas to live and work in Australia and funding for climate adaptation projects, while ceding priority defence rights over Tuvaluan waters to Australia.

Is it possible to reach a similar agreement with Nauru?

“That’s probably an area we’re watching very closely,” Dr Keane said.

“Nauru has a similar population to Tuvalu and both sides are discussing various options including increased labour mobility, improved banking facilities, expanded connectivity and of course investments in climate resilience.

“Nauru is ready to enter into a tailor-made alliance-like agreement with them.”

The Australian and Nauruan governments were contacted for comment on this possibility but did not respond.

“It will not look the same as Tuvalu, but a good outcome would be greater economic certainty in the future, more investment in human resources, and more action on climate adaptation.

“That may be what Nauru wants; Australia may want a greater commitment in security arrangements.”

Regardless of this possibility, Nauru will continue to rely on aid from donors such as Australia, New Zealand and China.

In January this year, Adeang ended Nauru’s diplomatic relations with Taiwan and switched to diplomatic relations with Beijing, saying he hoped the aid funds would “transform” his country.

Solar energy initiatives backed by the Asian Development Bank will also help, as will the launch of Starlink and an undersea fiber-optic cable connecting Micronesia, Nauru and Kiribati.

Passmore believes Nauru has demonstrated its resourcefulness before and can do it again.

“If you look at the big picture, Nauru’s economic momentum and income growth is like a chameleon,” she said.

“After phosphates, who would have thought that the next big thing would be international banking?

“Did anyone think that the next big thing would be setting up a regional processing center?

“While I don’t think there are clear answers for the future, Nauru has demonstrated adaptability, resilience and the ability to innovate.

“The internet, the ports, the solar power, all of these are going to lead to something. I don’t know what it’s going to be.”

“This is a country of surprises,” she said… PACNEWS

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