A few clicks south of the Equator about 1,400 miles off the northern coast of Fiji, the island of Nauru is only eight square miles in land area — an oval-shaped slab that is located in the epitome of no man’s land. Its closest neighbors (in clockwise order) are the Marshall Islands, Kiribati, Tuvalu, Vanuatu, the Solomon Islands, and the Federated States of Micronesia. The smallest independent country on Earth, Nauru has a story that is seemingly fitted to occupy an obscure section in Ripley’s Believe It Or Not!
Flash back 50 years. Nauru is enjoying its newfound independence, and it’s going well. Maybe too well. The island’s population of 9,000 is filthy rich due to phosphate, second only to the oil kings of Saudi Arabia in terms of per capita wealth. Nauruan residents don’t have to work too much, as their government has set up a trust fund that has managed the phosphate profits and will give them a large safety net for years to come. Most residents go fishing, play Aussie rules football, ride the main island road on their motorcycles, buy boats and cars for their family members, and drink beer with friends until the sun sets.
Now flash forward 50 years. Nauru is broke — quite literally. Since the country’s bank shut down, Nauru is using the Australian dollar exclusively, and with only one ATM on the island, the vast majority of transactions are in cash only. The government’s phosphate trust went belly-up roughly a decade ago, resulting in the almost complete collapse of the nation’s economy. Due to lack of funds, the island’s schools shut down for nearly three whole years in the early 2000s. The national airline had its Boeing repossessed, and the once-prosperous phosphate mines were abandoned.
Modern-day Nauru and its inhabitants are in bad shape, in more ways than one. The island’s interior is irrevocably scarred from the strip mining, with 80% of it now uninhabitable and unsuitable for agriculture; nearly all Nauruans live around the coast. Due to the lack of island vegetation and over-reliance on imported processed foods, Nauru’s citizens are some of the most obese on the planet, with the world’s highest per capita rates of diabetes and heart disease.
The country’s private sector is practically non-existent outside of a general store, two hotels and a few restaurants. With one exception: a so-called “offshore processing centre” run by the Australian government on and off since 2001, in order to deter would-be asylum seekers from navigating Australian waters.
Other than these enterprises, the island has a 90% unemployment rate, and some adult residents, if they’re able and willing to work, earn a mere AUS$70 per week. With no personal income taxes and no way of paying off their debts, Nauru’s government is insolvent and almost completely reliant on foreign aid, mostly from Australia.
So what the hell happened?
Part 1: The good times
Originally christened Pleasant Island by English sea captain John Fearn, Nauru was inhabited by a dozen tribes of Micronesian and Polynesian stock. They were strong-bodied, excellent fishermen, and known as good-humored by the few people in the Pacific who knew they existed (in the early 19th century, this was mostly confined to Asian sea merchants and the odd Australian escaped convict).
A civil war broke out on the normally peaceful island in 1878 following a domestic dispute. This dragged on for a decade, exacerbated by the presence of firearms previously supplied by merchants and whalers. The conflict only ended when German merchants arrived and the war-weary Nauruan chief pleaded with them to establish a protectorate over the island so that the fighting could stop. They obliged, and Nauru was proclaimed a German protectorate in 1888.
Nauru was relatively autonomous under German oversight, and the people were Christianized by missionaries from their nearest neighbors in the Gilbert Islands. But in 1900, British prospector Albert Ellis was visiting Nauru and he surprised many when he found something.
You see, Nauru was about as far removed as any island could be (4,300 miles from Singapore, 2,500 from Sydney, and 3,000 from Tokyo). The island was also surrounded by a coral reef, prohibiting construction of a major port. And as Mr. Ellis found, Nauru had very few natural resources over the space of eight square miles, with no indigenous animals, rivers or lakes.
What they did have was phosphate. Lots of it.
Phosphate is made up of guano (fossilized bird droppings) and is a valuable ingredient in fertilizers and explosives. At the turn of the 20th century, with the industrial revolution still going, it proved to be a potentially valuable commodity for basically every first-world nation on the planet. Mr. Ellis established the Pacific Phosphate Company in order to conduct strip mining operations on Nauru, as well as the two other nearby phosphate islands Makatea (modern-day French Polynesia) and Banaba (Gilbert Islands).
Then World War I broke out. With Germany preoccupied on the western front, the Allies collectively seized most of the German possessions and protectorates in the Pacific, and Nauru was no exception. Following the war, the newly-established League of Nations entrusted Nauru to Britain, Australia, and New Zealand, but only after they were allowed to use the island as a phosphate mining operation with the Nauru Island Agreement.
While the strip mining was a successful operation for both Nauru and Britain, there was no effective way to rehabilitate the land from the mining, which left behind jagged rock pinnacles and no arable land suitable for agriculture. The South Pacific was also hit hard by the worldwide flu epidemic of 1918-1920, and the Nauruan people suffered dramatic mortality rates accordingly (at least 230 deaths).
Part 2: Japanese occupation
The mining continued until December 1940, when two Nazi ships sank four merchant ships off the Nauruan coast and shelled the phosphate mines, cutting off the supply to Australia and New Zealand. Understandably, Nauru immediately faced an economic crisis amid the encroaching Japanese threat. The Japanese invaded in August 1942, enslaving the Nauruans. Some were forced into labor on their homeland, building an airfield for the Japanese to use. Others were deported to the Chuuk Islands in Micronesia, a few thousand miles away. Some were literally shipped off the coast in a boat that the Japanese torpedoed in order to send a message.
As Allied forces slowly but surely reclaimed Papua New Guinea, Guadalcanal, Indonesia, Guam, and the Philippines, the Nauruans were left high-and-dry. A month after Japan surrendered, the Royal Australian Navy finally arrived and reclaimed Nauru. Out of the 1,200 Nauruans kidnapped and enslaved, a mere 737 survived. The island became an Australian mandate again, this time under the UN, in 1947.
Part 3: Independence (and more good times)
Australia managed Nauru (and its phosphate) for a good two decades following the end of WWII. By 1966, Nauru achieved autonomy, and two years later, they were fully independent, writing up a constitution and electing Hammer DeRoburt as the island’s first president.
At the risk of stating the obvious, one of the first things the new Nauruan government did was purchase the British Phosphate Company’s assets and rename it the Nauru Phosphate Corporation (NPC). Irritated with Australia over what they viewed as chronic mismanagement of the phosphate, the government would manage the exports and then transfer the profits to Nauruans themselves.
As mentioned previously, this resulted in the islanders becoming exceedingly rich and enjoying the benefits of being exceedingly rich. The island got their own airline, Air Nauru, buying a jet that could almost fit the country’s whole population inside. The government built a golf course on Nauru and bought high-rise hotels and other real estate in Manila, Melbourne, Sydney, Guam, and Honolulu, among others. Nauru was sitting pretty, and people were taking notice of the island paradise. But soon that paradise would be lost.
Part 4: Panic time
Here’s where it gets weird.
By the late 1980s and early 90s, the phosphate was beginning to run out. Therefore, Nauru’s government needed a backup plan. One of the country’s financial advisers, an Australian man named Duke Minks, came up with a strange idea — fund and sponsor a West End musical. Minks had connections in London prior to his banking days and decided to co-write and produce a musical based on the life of Leonardo da Vinci. Nauru’s then-president, Bernard Dowiyogo, jumped at the idea.
Leonardo the Musical: A Portrait of Love debuted in June 1993 and was a massive critical flop, becoming one of the biggest bombs in West End history. The cost to the Nauruan taxpayers? Seven million dollars.
You can’t make this stuff up.
Nauruan citizens were getting disgruntled. Phosphate was no longer a viable industry, and the people knew it, with their shrinking bank accounts staring them in the face. With the advent of the internet in the early 90s, Nauru’s government jumped at the chance to purchase ads on the World Wide Web. They posted several, offering anyone with $20,000 the chance to open up a bank on Nauru.
You can probably see where that was going. In 2000, it was revealed that the Russian mafia laundered $70 billion through Nauru in one year alone. Increasingly desperate for money, Nauru even began selling passports to anybody who wanted one and started playing diplomatic musical chairs, recognizing Taiwan, then Communist China, then Taiwan again in exchange for lucrative foreign aid packages to upgrade their own decrepit infrastructure.
Part 5: Australia, the Godfather
Only a month before 9/11, a boat carrying a few dozen refugees and asylum seekers capsized in the Indian Ocean. Many of them were Afghan, Pakistani, or Sri Lankan and were fleeing their home countries due to religious persecution, political persecution, or both. Most were trying to get to Christmas Island, an overseas territory of Australia near the maritime border with Indonesia, when the boat capsized. A Norwegian cargo freighter, the Tampa, rescued the refugees, but were promptly stopped and ordered to turn back by the Australian Defence Force.
Immigration had been an ongoing issue in Australia in the past few years leading up to this event, and the government’s policy was never to allow anyone who came by boat. But regardless of ones feelings about admitting would-be boat people, this incident triggered a full-blown crisis for Australia, its Parliament, and then-Prime Minister John Howard. Norway wasn’t happy. Neither were the refugees.
Howard refused to let any of the refugees into Australia, but didn’t want to deal with a permanent solution for them either. Instead, his government came up with the so-called Pacific Solution and passed the buck to — you guessed it — Nauru, offering lucrative amounts of foreign aid in exchange for temporarily housing the asylum seekers. In other words, Australia became Don Corleone: they made Nauru an offer they couldn’t refuse.
This proved to be a double-edged sword for both countries. First, Nauru couldn’t exactly say no (their bills weren’t going to pay themselves). Secondly, Australia’s government didn’t want refugees and certainly did want to provide an effective deterrent to any others that tried to come. And thirdly, none of the refugees were actually processed at the offshore Nauru centre; they were simply left there, given their papers, and conveniently forgotten.
Seeking to protect their new source of income, Nauru closed off the processing centre to outside observers and began charging outrageous prices (AUD$8,000) for media visas. Concurrently, Australia passed strict anti-whistleblower legislation in the hopes that no one would find out about the processing centre and its grim conditions. It was the perfect storm.
When Australia’s government changed hands in 2007, they temporarily shut down the Nauru centre, but it re-opened in 2012 under Prime Minister Julia Gillard, and continues to have broad bipartisan support in Parliament. Men, women, and children alike were once again shipped off to the depleted phosphate island as they faced an uncertain future.
Part 6: The Aftermath
Nauru continues to deal with the consequences of the past five decades. Corruption is almost as widespread in Nauru as obesity: this is a country that changed heads of government an astonishing 17 times in 14 years (including three presidents in 1996 alone) and whose presidents would routinely commandeer the Air Nauru planes on weekends, leaving paying customers stranded on the tarmac.
Way back in 1962, the Australian government, including then-Prime Minister Robert Menzies, understood the potential ramifications that generations of phosphate mining could have on Nauru and its people, who were getting ready to become fully independent at the time. Menzies even went so far as to hire a Director of Nauruan Resettlement, whose job was to scour the Pacific and/or the Australian coast for a suitable island for Nauruans to move to once their home was completely ruined. Nauru balked at the idea, arguing that moving the whole island’s population would diminish their own culture and ruin their lives. They stayed put.
In the early 2000s, after Nauru’s dubious transactions with the Russian mob were well-documented, The Economist wrote a non-flattering piece about the island’s ecological state:
Seen from the air, Nauru resembles an enormous moth-eaten fedora: a ghastly grey mound of rock surrounded by a narrow green brim of vegetation. On the ground, this unlovely impression is confirmed. Strip mining has turned Nauru into a barren, jagged wasteland. The once-dense tropical vegetation has been cleared.
And its rampant corruption:
Greed, phosphate, and gross incompetence in a tropical setting….the citizens of Nauru, to their credit, have not taken all this lying down….rare visits from international dignitaries have been disrupted by placard-wielding protesters, demanding to know where their money has gone. It is a melancholy sign of the islanders’ desperation that the idea of simply buying another island and starting afresh is once again under discussion. But who in his right mind would let the Nauruans get their hands on another island?
In 2018, Nauru will celebrate its 50th anniversary of independence, although I’m sure few people feel like celebrating. Essentially, Nauru is back where it started — heavily dependent on Australia — only this time, with no more valuable mineral resources to give. They’ve become the archetypal client state, beholden to a larger power while Australia holds all the cards in the deck 3,000 miles away.
While many Nauruans try to stay positive and do all they can to work with what they have, this story was never going to have a happy ending. For better or worse, Australia and Nauru are forever intertwined, if only by a handful of refugees. And as far as Nauru’s decline goes, sadly, the writing was on the wall. One easily exploitable resource plus chronic fiscal mismanagement equals collapse.
Or, as Vlad Sokhin of the World Policy Institute puts it, “Nauru is a cautionary tale of what happens when the music stops. Or, more to the point, what happens when the single commodity on which an economy rests runs out.”