Prime Minister Jotham Napat hosts a press conference with Australia's Deputy Prime Minister Richard Marles, Minister for Pacific Island Affairs Pat Conroy Foreign Minister Penny Wong in Vanuatu (DFAT)

Australia pays premium price for Pacific partnership

Vanuatu has just shown how small states can rewrite the rules – and the cheques – on their own terms.

Mihai Sora

13 August 20253 min read

How can you put a price on shared values? If you guessed “around $500 million”, you’d be spot on. That’s how much the new “Nakamal Agreement” between Australia and Vanuatu is reportedly costed at.

A high-level Australian delegation has flown into the small island of Tanna in Vanuatu this week to meet with Prime Minister Jotham Napat and close a new deal on security, economic and development cooperation between the two countries. The Australian side featured Deputy Prime Minister Richard Marles, Foreign Minister Penny Wong, and Pacific Island Affairs Minister Pat Conroy.

Upon coming into power in early 2025, Napat scrapped the existing bilateral security agreement with Australia, signed in 2022, on the grounds that it did not reflect his country’s priorities, specifically climate change and increased mobility for its citizens.

Napat further upped the ante in July when he demanded visa-free access for ni-Vanuatu citizens travelling to Australia, otherwise “the deal [was] off”.

This was a tough ask for Australia, made even more difficult by Vanuatu’s notorious “Golden Passports” scheme, which grants Vanuatu citizenship to anyone for a fee, including potentially international criminals.

But today an announcement of a new Nakamal Agreement was made, even though the details of the agreement are still under wraps.

At the time Napat made the call for a visa waiver, it was unclear if he intended to scupper the security pact with Australia altogether, noting the fast progress China has been making in embedding itself as a key security partner for Vanuatu, or whether it was better seen as an indicator of just how much leverage Vanuatu and other Pacific countries have at this moment, given the strategic stakes in the region.

With the new Nakamal Agreement now set to be signed by Napat and his Australian counterpart Anthony Albanese in September, perhaps in the margins of the next Pacific Islands Forum Leaders Meeting in Honiara, we may not glimpse any further details for some weeks.

If you read between the lines, you can see what Australia is up against as it tries to elevate its ties to the “Pacific family”.

Australia has been able to get Vanuatu to “initial” the new deal and is understandably anxious to lock-in the progress. This is especially after its recent experience watching years of hard diplomatic work get swept away by the winds of domestic political change in Vanuatu’s dynamic parliamentary system.

To be frank, holding a press conference to celebrate the initialling of what was billed as a “significant” agreement, with three senior ministers flanking Vanuatu’s PM, without disclosing any information about the contents, is a bit surreal. Even for 2025.

Marles stressed multiple times just how “significant” an agreement it is. Wong and Conroy both called it “transformational”.

We’ll just have to take their word for it.

What’s clear is that against the backdrop of intense geopolitical competition between Australia and China in the region, Napat has been able to effectively leverage the value of closer security relations with his country to tear up and renegotiate what was a perfectly serviceable agreement to begin with.

No doubt this is a huge achievement for Canberra – the product of intense diplomacy over the past year. And once again, it came with a hefty price tag. But if you read between the lines, you can see what Australia is up against as it tries to elevate its ties to the “Pacific family”.

About the author

Mihai Sora

Mihai Sora is Director of Research at the Lowy Institute, where he leads the Institute’s research agenda across programs spanning geopolitics and security, the Indo-Pacific, China, the United States, global economics, aid and development, and the international order.

Topics

Australia Pacific Islands Vanuatu