Nauru: Australia-China competition for South Pacific influence likely to increase

On 9 December, Australian Prime Minister Anthony Albanese signed a $140 million budget and security treaty with Nauru’s President David Adeang. The agreement grants Australia effective veto powers over national security decisions in Nauru, including compulsory agreement on access of third-party countries to Nauru’s security and critical infrastructure sectors. It was also announced that the Commonwealth Bank will establish a branch in Nauru, following the exit of Bendigo Bank in 2025.

Assessment: Australia’s security and economic treaty seeks to limit areas that China can leverage for influence in Nauru. Nauru switched diplomatic recognition from Taiwan to China early in 2024, followed quickly by Bank of China representatives seeking to replace Bendigo Bank. Financial and economic resources are a major strength and favoured approach for China to build influence with local politicians. Australia signed a similar deal with Tuvalu in August 2024, which almost certainly aims to prevent China from persuading Tuvalu to switch recognition from Taiwan through economic incentives. No pushback from other Pacific leaders regarding an encroachment on sovereignty or “neo-colinialism” has occurred to date. These narratives could be used by China, including through other Pacific leaders, to disrupt Australia’s competitive strategy. Furthermore, China is likely to expedite efforts in other Pacific island countries to strengthen its influence in the broader region, including access to critical transport, telecommunications, and economic infrastructure before more agreements are made by Australia or other Western countries.

Sources:  “Australia inks treaty with Nauru locking out growing Chinese influence,” ABC News, December 9, 2024; “Nauru-Australia Treaty,” Department of Foreign Affairs and Trade, December 9, 2024.