A Nauru Airlines jet on the tarmac in Nauru unloading passengers (Wang Shen/Xinhua via Getty Images)

Nauru is unlike typical refugee resettlement countries; it lacks a substantial domestic economy, welfare systems, and developed infrastructure (Wang Shen/Xinhua via Getty Images)

Nauru’s latest deportee deal with Australia repeats old mistakes

As a mono-economy shifts from phosphate to people, the pattern of boom and bust continues unchanged.

Sheridan Ward

17 November 20254 min read

Australia and Nauru have announced another deal for Australia to deport non-citizens to Nauru – with a twist.

This latest deal isn’t focused on detention, but it will enable Australia to deport non-citizens whose visas have been stripped due to criminal activity or failed character tests. These are people who have no other country they could be returned to.

This deal targets the so-called “NZYQ” cohort, a group of 358 people who were released from long-term detention following a 2023 High Court ruling that deemed indefinite detention unlawful. Many of these deportees are violent offenders, with at least one confirmed convicted murderer.

Although the details of the deal remain opaque, Australia made a first payment of $408 million upon the arrival of the first deportee on 21 October, with $20 million paid to the Nauruan government for set-up costs and the remaining $388 million lodged in a jointly managed trust fund. Depending on how many people are transferred, up to $70 million will be paid annually, injecting as much as $2.5 billion into the Nauruan economy over the next 30 years.

With this, Nauru is entering yet another cycle of dependence on an unsustainable industry. Nauru came close to effective bankruptcy as phosphate mining on the tiny Pacific island collapsed. Now, processing refugees and accepting deported offenders may deliver the country a short-term financial boon but leave Nauru vulnerable to potential action in support of the human rights of those deported from Australia, and could cause compounding policy headaches in the years ahead.

What Nauru needs is genuine long-term economic planning and expansion into new sectors. Nauru has seen far sharper rises and falls in economic stability than most in the Pacific. In 1975, Nauru had a per capita gross domestic product of $50,000, ranking it the second wealthiest nation after Saudi Arabia. By 2024, its equivalent GDP was $13,400. Nauru’s tendency to operate as a mono-economy has left the nation volatile, pushing it to accept deals other states would refuse. From exportation of phosphate to importation of refugees, Nauru’s economy has been anything but stable.

The entire country of Nauru seen from above, an island surrounded by coral reef (Getty Images Plus)

In 1900, unusually high-grade phosphate was discovered in Nauru. Following the First World War, the British Phosphate Commission mined and exported phosphate significantly below market value, with a deal to export 42% to Britain, 42% to Australia, and 16% to New Zealand – leaving Nauru itself excluded. In 1967, a new agreement granted Nauru control of the industry, raised prices to global levels, and established several trust funds and overseas property investments to secure future capital.

The industry boomed. From 1968 to 2001, Nauru exported 43 million tonnes of phosphate, earning $3.6 billion. However, financial mismanagement, overspending, corruption, crude banking schemes and bad investments depleted this finite wealth.

As phosphate reserves dwindled, Nauru borrowed heavily to maintain the expenditures of the 1970s income boom. In the 1990s, it had to mortgage its investment portfolio, and by the early 2000s, Nauru had defaulted on a $236 million loan. Its property assets and planes were repossessed, and Nauru became increasingly dependent on foreign aid.

Nauru has a long history of involvement in questionable financial choices.

This paved the way for the 2001 “Pacific Solution”, which saw the Howard government commence offshore processing of asylum seekers coming to Australia by boat. The program was closed by the Rudd government in 2008 although it reopened under the Gillard government in 2012 due to increases in boat arrivals to Australia and sustained political pressure. Concerns about human rights abuses dogged the operation of the processing centre. The last asylum seekers were removed from the facility in 2023, however, the number of detainees had increased again to 100 by June 2024.

Nauru’s mono-economy, shifting from phosphate mining to the commodification of refugee mobility, is unsustainable. This latest deal papers over Nauru’s fiscal difficulties and broader challenges. The country comprises of only 21 square kilometres of land, making it one of the world’s smallest nations. Phosphate mining has rendered up to 80% of its territory uninhabitable and unfertile, and up to 90% of food on Nauru is imported. Meanwhile, sea-level rise threatens coastal communities.

Nauru is unlike typical refugee resettlement countries; it lacks a substantial domestic economy, welfare systems, and developed infrastructure. Although Australia’s Home Affairs Minister Tony Burke has confirmed that the deportees are given 30-year visas with working rights in Nauru, scant information has been provided on criminal rehabilitation, social integration, or ongoing support. Advocates are especially concerned about deportees being barred from returning to Australia should they require medical care.

Nauru has a long history of involvement in questionable financial choices. Recent allegations that a security contract for detainees in Nauru involved members of an outlaw motorcycle gang are just the latest in a long list of concerns. For Australia, this new arrangement Nauru marks another chapter in an exploitative foreign policy.

With limited land, a small population, and an ongoing brain drain for higher paying jobs overseas, what Nauru needs is an innovative switch towards industries that enhance the country, rather than relying on deportee deals with Australia.

About the author

Sheridan Ward

Sheridan Ward is a researcher on non-militarisation and countries without sovereign military institutions.

Topics

Pacific Islands Naoero