Description: The Australian Department of Foreign Affairs and Trade had stated that it was reviewing a previously signed agreement with the Pacific Island country of Nauru amid speculations regarding the entry of Chinese private business interests in the island. Australia signed the Nauru agreement in Dec but has failed to ratify it because the country’s parliament has been dissolved over the national elections in the country, held earlier this year. Nauru has recently announced that a mysterious Chinese company called China Rural Revitalization Development Corporation (CRRDC), was interested in investing over $1 billion in the island’s infrastructure, renewable energy, fisheries, water supply, agriculture, transportation and health sectors. Nauru is a small Pacific Island home to approximately 12 thousand people, and investment sums such as $1 billion seemed farfetched and in contempt with Nauru’s agreement concluded with Australia. The agreement between Nauru and Australia allowed Australia veto power over Nauru’s decisions regarding its security, telecom regulations and investments and broader powers in the banking sectors. The Australian Parliament was reportedly reviewing the agreement with Nauru and ensuring that there was not conflict of interest or collusion between CRRDC and the Chinese government.
Impact: Nauru’s relative geographical proximity to Australia’s mainland makes the small island country a key strategic point in the Pacific where threats ranging from military bases to digital cyber centers and naval capacities could be developed by China. The islands surrounding Australia are key in ensuring the country’s favorable security resilience in the region as plenty of small island countries such as Nauru could be exploited in threatening Australia’s security. The mysterious Chinese company hedging to invest in Nauru is almost certainly connected to the Chinese government which has a history of developing economic ties globally in return for access to key strategic access points. China concluded a similar security deal with the Solomon Islands in 2022 and would aim at devising similar agreements with other island countries surrounding geopolitical adversaries such as Australia. Australia would most likely start to ramp up bilateral ties with other island countries offering security and economic development provisions in return for strategic allegiance as a counter measure to growing Chinese influence.