Albanese wants to China-proof the Pacific, but Nauru is driving a hard bargain

The Albanese government hopes to end the year with a major foreign policy victory by signing a landmark pact with Nauru aimed at preventing China from gaining a security foothold in the Pacific.

The deal with Nauru, home to Australia’s offshore detention centre, comes after months of secretive talks with the tiny Pacific nation, which has been known to drive a hard bargain in negotiations with Australia.

Nauru President David Adeang with Prime Minister Anthony Albanese in June.Credit: Alex Ellinghausen

Prime Minister Anthony Albanese is working to finalise the deal with Nauru and another Pacific nation before Christmas, as he prepares to next week make the long-awaited announcement that a team from Papua New Guinea will join the National Rugby League.

The dual announcements highlight the importance the government has placed on strengthening ties with the Pacific since the Solomon Islands alarmed policymakers in Canberra in 2022 by striking a wide-ranging security pact with Beijing.

The government believes that including a PNG team in the NRL team from 2028, through a deal expected to cost Australian taxpayers around $600 million over a decade, will help entrench Australia’s influence in the Pacific at a time of intense geostrategic competition between China and Western democracies.

PNG Prime Minister James Marape is planning to travel to Australia next week and is scheduled to speak at an investment conference in Sydney.

Sources familiar with the planned pact with Nauru, who were not authorised to speak publicly, said it would be similar to the Australia-Tuvalu Falepili Union, which was announced with much fanfare last year.

Under that treaty, which was ratified by both nations earlier this year, 280 people a year will be allowed to migrate from Tuvalu to Australia on a special visa while Australia has the right to essentially veto any security agreement signed between Tuvalu and a third country, such as China.

“Nauru has been a tough negotiator and typically extracts a high price for signing up with Australia,” a source familiar with the negotiations said.

“Some DFAT officials have spent all year trying to get this over the line.”

Pacific Minister Pat Conroy visited Nauru in January and Nauruan President David Adeang travelled to Australia for a low-key visit in May.

Adeang alarmed Australian officials in January by suddenly switching Nauru’s diplomatic allegiance from Taiwan to China in a coup for Beijing.

Taiwan’s Central News Agency reported in January that Nauru had asked Taiwan for $125 million to “cover a financial shortfall left by the temporary closure” of the immigration detention centre.

Taiwan’s Foreign Ministry laid the blame on the Australian-run detention centre for the rupture in diplomatic ties, but the Australian government rejected those claims as the centre had not closed and funding arrangements with Nauru remained in place.

Anthony Bergin, an expert associate at the Australian National University’s National Security College, said at the time that Nauru’s diplomatic switch was a “bloody big win for China”.

“Australia would be mad not to try to strike a similar deal to the Australia-Tuvalu Falepili Union with Nauru,” Bergin said.

China has actively wooed Nauru, and Beijing mouthpiece the Global Times reported in January that there were opportunities for the island under the superpower’s mega-billion-dollar “Belt and Road Initiative”.

Foreign policy sources said they expected an Australian deal with Nauru to focus on economic co-operation with the cash-strapped nation, rather than climate issues that dominated the treaty with Tuvalu.

Nauru will be keen to gain greater access to the Australian labour market and increase financial support while Australia has been focused on security questions, the sources said.

The government has been seeking to convince a major Australian bank to set up operations in Nauru to stop it from potentially becoming dependent on Chinese banking services.

Nauru signed a memorandum of understanding with the Bank of China in April “to explore solutions and options to its banking issues” after Bendigo Bank departed the island. Bendigo Bank has delayed its exit from Nauru by six months to June 2025.

Albanese locked in support from Pacific leaders in August for a far-ranging $400 million policing pact designed to counter China’s growing security presence in the region.

Meanwhile, the government on Tuesday celebrated the complete return to “business as usual” for Australian exporters to China after the final two meat processors barred from shipping produce to China were granted re-entry on Friday.

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