Administrative Centre: Yaren District
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Introduction Nauru is the world's smallest republic. Mining of phosphates made it the richest nation in the Pacific, but financial mismanagement has led the tiny nation to the brink of bankruptcy. Ninety percent of the country has been mined and phosphate reserves are fast running out. The extensive mining has left the country in great need of environmental rehabilitation.
Issues
History Polynesians moved to Nauru centuries ago, coming from islands including Chuuk, the Marshalls and Kiribati. The islanders were divided into clans. In 1798 Britain's Captain John Fearn was the first European to spot the island, naming it Pleasant Island. Traders began travelling to the island from the 1830s. But by the 1870s increasing concern over clan warfare prompted German traders to ask that the island be incorporated into the German Marshall Islands. Between 1888 and 1914, Nauru was administered by Germany. In 1899 a British company discovered Nauru had the world's richest reserves of phosphate and by 1906 mining operations began under an agreement signed by the Pacific Phosphate company and the German government. In 1914, following the declaration of World War I, Germany surrendered Nauru to Australian forces sent to take possession of the island. In 1919, after Germany's defeat, the island was placed under the joint administration of Great Britain, Australia and New Zealand. The three countries formed the British Phosphate Commission, and shared profits from phosphate mining. The Nauruans were paid a pittance for their phosphate. The Japanese invaded Nauru in 1942. In 1945, at the end of World War II, it was made a United Nations Trust Territory under Australian administration. Nauru was granted independence in 1968 and took control of its phosphate industry in 1970. In 1992, the International Court of Justice ruled that Australia must pay Nauru compensation for damage caused by phosphate mining before independence. Australia protested but eventually agreed to pay more than $US75 million in an out of court settlement. In 2001, Nauru agreed to help out Australia with its so-called "Pacific Solution", accepting a request from the Australian government to host and process asylum seekers. In return, Australia agreed to give Nauru $US7.4 million worth of infrastructure support. As part of the Pacific Solution, detention centres needed to be built in Nauru to process the asylum seekers wanting to live in Australia. Despite the funding from Australia, Nauru is still standing on the brink of bankruptcy and in 2004 the country's Australian property portfolio was sold after receivers took control of the buildings on behalf of Nauru's debtors. As a result of Nauru's dire financial situation, Air Nauru's 737-400 jet, which was Nauru's sole airlink to the outside world, was repossessed by creditors, Exim Bank of the US, in December 2005. However, in March 2006, the government of Taiwan assisted Air Nauru with the purchase of a new Boeing 737, which went into service in September, 2006. In late 2005, a world body set up to fight money-laundering removed Nauru from its list of uncooperative states. Government Nauru has a national parliament with 18 members, each elected by popular vote for a three year term. Voting is compulsory for all citizens aged over 20. After each election, parliament chooses a president who is also the head of state. The president chooses his cabinet of four or five ministers. In recent years the Nauru government has suffered significant instability due to voter discontent over poor financial management, resulting in a number of motions of no confidence in parliament. Since November 1996, there have been at least thirteen changes in government, most have been from parliamentary motions of no-confidence. Four of those changes took place in 2003. Economy Phosphate mining is the country's main source of income. Most of the phosphate is exported to Australia, New Zealand, Japan and South Korea. But deposits are running down and the industry is not expected to survive beyond 2015.. In an effort to secure Nauru's financial future beyond the collapse of the mining industry, the government has invested part of its phosphate revenue in long-term trust funds. But bad investment decisions and budget problems have seen the value of those trust funds decline. The Nauru government has also tried developing other industries, including offshore fishing, financial services and tourism. There is little agricultural land on Nauru which means the country has to import a lot of its food. In 2001, Nauru agreed to help out Australia with its so-called "Pacific Solution". Nauru accepted a request from the Australian Government to host and process asylum seekers. In return, Australia agreed to give Nauru $US7.4 million worth of infrastructure support. As part of the Pacific Solution, detention centres needed to be built in Nauru to process the asylum seekers wanting to live in Australia. The Australian government covered all the costs of setting up and maintaining the centres. In 2002, Australia gave Nauru an extra $US4.8 million in emergency aid because it was in a dire financial situation. However, the country still stands on the brink of bankruptcy. In 2004 receivers took control of Nauru's property investments in Australia, due to the country's outstanding $US165 million debt to America's General Electric Capital Corporation. The properties were sold in October 2004. On top of the Pacific Solution funding, Australia agreed to additional assistance under a Memorandum of Understanding (MOU), signed in New York in September 2005. The MOU is part of a four-year commitment by the Australian government to help Nauru to restore essential infrastructure and services and regain financial sufficiency. Nauru is also expected to begin secondary phosphate mining early in 2007. |
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