As of: February 19, 2024, 5:48 a.m
From: Foreign Policy
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The tiny island state of Nauru has tried everything in its search for money.
His latest project is explosive.
Voices warn internationally.
Colonial powers left the island state of Nauru largely exploited, meaning the island had to repeatedly stay afloat with the support of other states.
Recently, Nauru turned its back on Taiwan because Chinese support seemed more promising.
The island nation's latest project is deep-sea mining of minerals, which climate researchers warn about.
This article is available for the first time in German - it was first published by
Foreign Policy
magazine on February 11, 2024 .
If an apocalypse were to strike Earth, Sam Bankman-Fried – the billionaire tech entrepreneur behind the United States' most explosive cryptocurrency scandal – would not be willing to die.
Like any responsible doomsday preparer, the now convicted FTX founder hatched a survival plan.
According to a memo between his brother and an FTX executive, Bankman-Fried planned to buy the Pacific island nation of Nauru and build a bunker to which he could retreat if a catastrophic event wiped out at least half of the world's population.
Of course, Nauru – a sovereign country – was never really for sale.
Nauru was the “richest little island in the world” – then things went downhill
A tiny island whose future could be threatened by climate change may seem like a strange doomsday haven.
With an area of just 8.1 square miles, the country has little fertile land or fresh water—a far cry from the lush haven that Bankman-Fried may have imagined.
With few domestic options, the island's nearly 13,000 residents must import more than 90 percent of their food, and childhood obesity rates have risen to one of the highest levels in the world.
All of these problems represent a surprising turnaround for a country that once had the second-highest GDP per capita in the world.
Nauru is the “richest little island in the world,” proclaimed the
New York Times
in 1982, the result of a decades-long mining spree for the island’s phosphate deposits.
But when the mining boom collapsed, so did the money.
Nauru embarked on a quest for money that has seen it launder money for the Russian mafia, effectively detain refugees seeking asylum in Australia and, most recently, abandon its long-standing ties with Taiwan in favor of Beijing.
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Controversial mining planned in the seabed – long history of exploitation behind it
None of these measures brought the desired success.
Now Nauru is making one of its most controversial bets to date: It wants to search the seabed for the mineral resources that will drive the global energy transition.
A move that has sparked alarm and mistrust given the island's checkered history.
But the many contradictions in Nauru's journey to get there are as much a twisted story of exploitation and extraction as a story of what a nation is willing to do to survive.
Nauru is “one of the most unique and unusual countries in the world,” said John Connell, a professor at the University of Sydney who studies the South Pacific.
“This country has produced all sorts of strange things, and the case of Sam Bankman-Fried is just the latest in a chain of strange activities,” he added.
“Not an easy lot”: wealth in raw materials attracted colonial powers and brought exploitation
Bird droppings may not be a sought-after resource, but they are rich in phosphate, a fertilizer that supports the world's agricultural systems - and Nauru's land was once covered in the stuff, which accumulated and solidified over millions of years.
This natural wealth has long attracted a steady stream of colonial powers - namely Australia, Britain and New Zealand, which were named trustees for Nauru after World War II - who rapidly mined and then shipped the country's phosphate.
Only a tiny fraction of the profits were distributed to the people of Nauru.
Nauru “didn’t get an easy ride.
It has been exploited in many ways by a number of larger powers,” said Cleo Paskal, Indo-Pacific expert at the Foundation for Defense of Democracies.
After independence: Phosphate mining continued even without colonial powers
Nauru finally gained independence in 1968.
Previously, the three powers had exploited the country's phosphate deposits so thoroughly that Canberra, then in charge of administering the country, proposed in the early 1960s that the Nauruans be relocated to an Australian island.
The Nauruans rejected this plan and instead opted in 1967 to buy back control of their phosphate industry and continue mining;
They later took Canberra to the International Court of Justice over the looting.
To date, according to the United Nations, more than 70 percent of the country has become uninhabitable due to phosphate mining.
Since Nauru gained independence in 1968, the island nation's supporters have often changed © IMAGO/xinhua/Chen Guolong
The advantage was that money flowed into Nauru, catapulting the country's per capita GDP to the second highest in the world at one point, as phosphate revenues peaked at 1.7 billion Australian dollars (about 1.1 billion dollars in the United States). achieved.
“The phosphate industry was booming, and as a side effect, all that revenue flowed into the country,” said Connell.
“Unfortunately, most of their investment strategies were wrong.”
Prestige and corruption instead of economic policy – Nauru quickly becomes bankrupt
In the money rush, mismanagement and corruption were rampant as officials bragged about flashy projects, including funding a failed London musical that fictionalized the life of Leonardo da Vinci, briefly owning one of Melbourne's largest buildings at the time ("birdshit tower." '" says Connell) and the creation of a disproportionately large new airline, whose passenger planes were later forcibly confiscated by creditors.
Soon there was no more money.
“With the island all but bankrupt, there were no other viable industries to continue,” said Julia Morris, a professor at the University of North Carolina Wilmington and author of Asylum and Extraction in the Republic of Nauru.
Australia offers a solution: Nauru as an internment center
In 2001, Australia offered Nauru a crucial - and controversial - life prospect: Canberra would pay the island to accept and process asylum seekers arriving in Australia by boat, effectively turning the island nation into Australia's own detention center.
In return, Nauru would receive a huge sum of money, ultimately accounting for two-thirds of the country's GDP.
In 2021, for example, Canberra would pay the island around 40 million Australian dollars (about US$26 million) per month to operate the facilities.
However, the plan came at a heavy human cost, and revelations about the catastrophic conditions at the facility sparked a global outcry, leading Amnesty International to describe Nauru as an “open-air prison.”
Global pressure against mistreatment of refugees – Australia keeps Nauru as an “emergency plan”
Following the facility's brief closure between 2008 and 2012, the
Guardian
published a series of leaked documents in 2016 that shed light on the abuses and abuses in the system;
another report found that nearly 90 percent of children held in Nauru had medical conditions.
Over the years, several refugees have sewn their mouths shut to protest Canberra's policies.
Facing immense global pressure, Australia has again suspended its activities on Nauru, although some asylum seekers are still being held on the island, and Canberra continues to pay hundreds of millions of dollars to maintain facilities on Nauru as a "contingency plan".
For Nauru, that money, along with revenue from leasing its waters for fishing, has helped prop up its faltering economy while it looks for other options.
“The prison camp is basically their cash cow,” says Grant Wyeth, a Melbourne-based political analyst specializing in Australia and the Pacific.
“It’s the thing that keeps them alive.
A close connection between Nauru and Taiwan – two islands support each other
“You are my bread when I am hungry;
you are my protection from troubled winds;
you are my anchor in the ocean of life,” then-Nauruan President Baron Waqa sang to Taiwanese President Tsai Ing-Wen in 2019, while gently strumming a ukulele that Tsai had given him.
“But most of all, you’re my best friend.”
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It was a touching scene that seemed emblematic of the enduring bond between the two islands - a bond that Waqa's successor, President Lionel Aingimea, even compared to that of a family.
Another sign of Nauru's loyalty to Taipei was the harsh tone with which Waqa insulted the Chinese delegate to the 2018 Pacific Islands Forum: he accused him of being a "tyrant" and "impudent" after he spoke during a speech another country “demanded to be heard”.
“They are not our friends.
They only need us for their own purposes,” Waqa said of the Chinese government.
“I'm sorry, but I have to be strong in this matter because no one can come and dictate things to us.”
He added: "We see a lot of big countries coming and sometimes buying their way through the Pacific, some being extremely aggressive, even to the point of trampling us."
Nauru switches sides: China's support replaces friendship with Taiwan
But just over five years later, that would all change.
In January, the island abruptly severed its longstanding ties with Taiwan in favor of Beijing, dealing a major diplomatic blow to Taipei after recent presidential elections and further isolating the country on the world stage.
In a world where governments often covet international recognition more than cash or military supplies, Nauru's shifting loyalties reflect that one of its most valuable assets is its diplomatic relationships.
It is not the first time that the country has made use of this instrument.
In 2009, the island announced that it would recognize two Russian-backed breakaway provinces in Georgia, Abkhazia and South Ossetia, in return for a $50 million aid package from Moscow.
Reconciliation with Taiwan only short-term: Australia is causing financial problems
But the change did not last long: just a year later, Nauru closed its embassy in China, and by 2005 the two islands had become closer again.
The following year, Taiwan financed the purchase of a new Boeing 737 aircraft for Nauru's national airline after the previous aircraft - the only one the airline owned at the time - was confiscated.
And the
Brisbane Times
reported in 2011 that Taipei secretly paid 5,000 Australian dollars ($3,200) a month to senior Nauruan officials, including then-President Marcus Stephen and then-Foreign Minister Kieren Keke, to ensure Nauru's continued support.
But as Canberra closed its offshore detention camps, Nauru desperately needed more money.
Before announcing its recognition by Beijing, the island reportedly asked Taiwan for around $83.23 million to make up the financial deficit caused by the cut in funding for the Australian facility, according to Taiwan's Central News Agency.
The Nauruan government reportedly broke off relations before Taipei responded with its decision.
China's long-standing influence: Only a few states support Taiwan
"China has long actively courted Nauru's political leadership and used economic incentives to bring about a change of direction in the country's diplomacy," Taiwan's Foreign Ministry said, later adding that it was "deeply saddened."
The Nauruan government did not respond to Foreign Policy's request for comment.
Nauru's switch in loyalty is the latest success in China's long-standing strategy of using checkbook diplomacy to win friends and gain influence.
Across the Pacific, 17 nations now support Beijing - leaving behind the three Pacific states that still recognize Taiwan - a loyalty that China often cultivates by providing large sums of money.
Solomon Islands and Kiribati benefit - hope for China's support for Nauru
As the Solomon Islands and Kiribati joined Beijing's ranks in 2019, China increased its lending and investment in the two countries, although its financing in the Pacific as a whole has declined since 2016, according to the Lowy Institute.
In both the Solomon Islands and Kiribati, "significant new funding from China has displaced existing support from Taiwan," according to the Lowy Institute in 2022. "China has not given up on using development assistance to cement important relationships." .
Nauru's cash-strapped government has high hopes for this new chapter in its relations with Beijing.
This change is “in the best interests” of the country, the government said, and represents “an important first step in the development of Nauru.”
Nauru's next independence project: mining minerals on the seabed
If all goes according to plan, Nauru's next big moneymaker will be as mining companies venture into a remote area few have ever reached: the deep sea.
Thousands of meters below the ocean's surface, the ocean floor hosts an untapped wealth of polymetallic nodules, or rocks, rich in minerals that are driving the energy transition.
And with demand for these minerals set to explode in the coming decades, Nauru is desperate to get in – and fast.
“This mining project is absolutely critical to Nauru's economic survival,” said Peter Jacob, a former chief of staff in the Nauru president's office who now works at the Metals Company (TMC), a Canadian company that has been among the loudest supporters of deep-sea mining .
(Private companies seeking to exploit the riches of the deep sea must first secure the support of a country; TMC has partnered with Nauru, Kiribati and Tonga.)
While countries are free to explore their own waters, their activities on the high seas, i.e.
H.
in the waters beyond the countries' exclusive economic zones.
Mining in particular will remain banned in international waters until the International Seabed Authority (ISA), the governing body created by the UN Convention on the Law of the Sea, finalizes the industry's regulatory framework - a massive undertaking that involves a whole range of environmental, regulatory and... - and financial problems to be overcome.
Deadline loophole allows mining to start: application will be submitted soon
In 2021, Nauru and TMC got tired of waiting.
In the heat of the moment, Nauru invoked a little-known provision that gave the ISA a two-year deadline to establish regulations for the emerging industry.
Since the ISA missed this deadline in 2023, countries can now apply for mining licenses in lieu of official guidelines;
TMC plans to submit an application in July 2024.
“The Nauruan government is in a pretty tough financial situation and so it's trying to find another long-term industry,” said Morris, a professor at the University of North Carolina.
“I think it's quite attractive because they're not mining from their land, as in phosphate mining, or from people held on their land, as in asylum.”
“Like smoking against stress”: Scientists warn of environmental damage and species extinction
However, the decision to explore an area of the planet that is still largely untouched and unexplored has alarmed hundreds of scientists.
They warn of irreversible damage to an environment teeming with life and thousands of species yet to be discovered.
Concerned about the environmental risks, more than 20 countries as well as several major car manufacturers - which rely on the minerals in question to power their electric vehicles - have called for a moratorium until more information is available;
others question the financial and technical viability of mining in such unforgiving underwater conditions.
“Mining the deep sea to solve the climate crisis is like smoking for stress: for very short-term gain, you do major long-term damage,” said Diva Amon, a marine biologist involved in the Deep-Ocean Stewardship Initiative.
“The ocean is our greatest ally in the fight against the climate crisis.
It absorbs heat, it binds carbon and it is critically important.
Metals Company not discouraged – $31 billion at stake
TMC is not discouraged, with around $31 billion in revenue at stake over the next 25 years.
The company has poured at least $100 million into environmental impact assessments, arguing that deep-sea mining is essential to the energy transition and less damaging than land-based mining - despite strong opposition.
The company has played an aggressive, if controversial, role in leading the race while its murky relationships with both the ISA and Nauru have come under scrutiny.
“For a small country like Nauru with a relatively small annual government budget, this will be transformational,” said Corey McLachlan, head of stakeholder engagement at TMC.
“We anticipate that when we become fully operational we will likely be the largest contributor to Nauru’s GDP.
According to McLachlan, the island will receive a fixed payment for each tonne of tubers obtained from mining, in addition to its current annual management fee.
TMC subsidiary Nauru Ocean Resources Inc. has also committed to paying Nauru's corporate income tax, which currently stands at 25 percent.
Mining revenues will flow into a seabed minerals fund, which the Nauruan government is committed to transparently managing,” he said.
Nauru's mining plans divide Oceania: "We don't want to be guinea pigs"
Elsewhere in the Pacific, where climate change threatens the survival of low-lying islands, Nauru's push has proven divisive.
While Tonga and the Cook Islands are also calling for mining to begin, a growing number of nations - including Palau, Fiji, Vanuatu, the Solomon Islands, Papua New Guinea, Samoa and the Federated States of Micronesia - are pushing for more time.
“How can we in our right mind say, ‘Let’s do mining,’ without knowing what the risks are?” asked Palau President Surangel Whipps Jr. in June 2022.
“This is the cradle of life and we don’t want to be guinea pigs,” French Polynesia President Moetai Brotherson told Islands Business.
“We were guinea pigs for nuclear testing, and we don’t want to be guinea pigs for deep-sea mining when it is carried out on a large scale before the technology is mature.”
However, Nauru believes it has nothing left to lose.
“Without deep-sea mining, we see no way for us to develop economically,” said Jacob, the former chief of staff who now works at TMC.
While some other countries have plans to relocate residents to other countries such as Australia or New Zealand, Jacob said, Nauruans "do not have that option."
“We’re staying here,” he said.
About the author
Christina Lu
is a reporter at Foreign Policy.
Twitter (X): @christinafei
We are currently testing machine translations. This article was automatically translated from English into German.
This article was first published in English in the magazine “ForeignPolicy.com” on February 11, 2024 - as part of a cooperation, it is now also available in translation to readers of the IPPEN.MEDIA portals