Security ties, banking help on the agenda for high-stakes Nauru visit

Australia will move to tighten its security ties with Nauru and help it tackle a looming crisis with its banking system in a high-stakes visit to the island nation after it switched diplomatic recognition from Taiwan to China.

Minister for the Pacific Pat Conroy will arrive in Nauru on Tuesday on a mission to help the country deal with the closure of its only bank and discuss more defence co-operation at a time of growing Chinese influence across the region.

Pacific Minister Pat Conroy has sent a strong signal that he will discuss a stronger security agreement with Nauru following its diplomatic switch.Credit: James Brickwood

In a diplomatic push on another front, Conroy will also visit Timor-Leste to finalise a new police agreement and assure it of Australian support for the development of the Greater Sunrise gasfield in the Timor Sea, a vital project in its plans for economic self-reliance.

The visits come as Australian officials monitor the outcome of an election in Tuvalu on Friday that could install new leaders and renew debate on whether the country switches its recognition from Taiwan to China.

The Australian government is acting on advice that China is ramping up its efforts in the Pacific after learning from mistakes in the past when it offended some of the region’s leaders, with Chinese agencies using police and security agreements to strike closer ties.

Nauruan President David Adeang said on January 15 that the switch to recognising China was in the best interests of his country, but authorities in Taipei claimed Nauru had asked for $125 million to fill a funding shortfall in its agreement with Australia to run an asylum seeker detention centre.

Conroy is expected to assure Nauru that the 2021 agreement to fund the centre continues unchanged. The Home Affairs Department said last year that maintaining the facilities would cost at least $350 million a year.

An immediate challenge in Nauru is the closure of its only bank – operated by Bendigo Bank – and the urgent search for another provider that could add the nation to existing operations in other Pacific countries, making Westpac and ANZ the logical choices to fill the void. Nauru uses the Australian dollar as its currency.

“We’re the largest development partner for Nauru and one of the topics in my meetings with the leaders of Nauru will be how we support them to retain banking services in some form,” Conroy told this masthead.

“This is a challenge throughout the Pacific, and the Australian government is working with banks like Westpac and ANZ, which have a Pacific presence.

“Economic sovereignty is critical to every nation and resolving these banking issues is a key challenge.”

Anthony Bergin, an expert associate at the Australian National University’s National Security College, earlier this month said Nauru’s diplomatic switch was a big win for China and meant Australia should move quickly to strike a security deal similar to its recent pact with Tuvalu.

Solomon Islands changed its diplomatic recognition from Taiwan to China in 2019 and sealed a defence agreement with China three years later, sparking a dispute in Australia about whether the Morrison government had seen the deal coming.

The concerns about Nauru, however, have not reached a similar level in part because opinions about the recognition of China are sometimes held by those who have tightened security ties with Australia.

A key figure in Australia’s security agreement with Tuvalu, Finance Minister Seve Paeniu, told Reuters this week that he expected the issue of diplomatic ties with China “will feature once again” after the elections on Friday. Tuvalu recognises Taiwan. Paeniu supported the defence agreement with Australia announced last November.

Conroy sent a strong signal that he would discuss a stronger security agreement with Nauru following its diplomatic switch, amid calls on the Australian government to negotiate a deal similar to the one with Tuvalu.

“We’ve already got decades of defence co-operation with Nauru, and we’ve made it very clear that we’re happy to work together to meet Nauru’s security priorities,” he said.

Conroy noted that Nauru was a member of the Pacific Islands Forum and that the regional forum had issued a statement in 2022 that countries should “look to the Pacific first” to fill any gaps in their security.

Timor-Leste approved a plan last November for gas companies Woodside, Timor GAP and Japan’s Osaka Gas to do a concept study on the Greater Sunrise project with a preference for building a liquefied natural gas facility onshore to create local jobs.

Conroy will meet Timor-Leste Prime Minister Xanana Gusmao and noted that his visit to Timor-Leste came after two earlier visits by Foreign Minister Penny Wong.

“The most important thing here is that we turn up and listen and act on their priorities,” Conroy said.

“And we’ve been very public in our support for their economic development and their desire for greater economic resilience, including the development of the Greater Sunrise gasfields.”

Gusmao visited Beijing last September to meet Chinese President Xi Jinping and agree to a “comprehensive strategic partnership”, but he told news agency Nikkei during a visit to Tokyo last month that this did not mean “the door is only open to China and not to other countries” in developing Greater Sunrise.

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