The Sad Truth behind Nauru’s diplomatic switches

The world’s third smallest nation has broken off ties with Taiwan and forged diplomatic relations with China for the second time. While cash and coercion from Beijing is cited as the real reason, what many overlook is the unfortunate condition that Nauru finds itself in.

Switching allies

Lai Ching-te was yet to wind up celebrations of his Presidential victory when Taiwan woke up to the news of Nauru breaking off diplomatic ties with Taipei and recognising Beijing.

The 21 sq km island nation ensconced in the Southwest Pacific Ocean announced that it would no longer hold “any official relations or contacts” with its former aid provider Republic of China (aka Taiwan) and henceforth recognise the territory as an “inalienable part of the People’s Republic of China” under the “One China Principle”. Beijing requires nations forging diplomatic ties with itself to officially break off all relations with Taiwan (which it sees as its “Special Administrative Region”) and recognise the One China Principle (一个中国原则) which notes, “there is only one China in the world and the only legal government representing the whole of China is the Communist Party of China-led People’s Republic (and not the Republic of China)” and “Taiwan is an inalienable part of China”. The “One China Principle” differs from the “One China Policy” followed by the United States which is more ambiguous and recognises the presence of only one China but does not comment on who should rule Taiwan.

The announcement, which comes just two days after Taiwan got its new President, has compelled Taipei to link it directly to Beijing’s “retaliation against democratic values and blatant challenge to the international order”. Deputy Foreign Minister Tien Chung-kwang announced that Taipei too would withdraw its diplomatic mission from Nauru with “immediate effect”. He has explicitly blamed Beijing for “actively inducing a diplomatic shift” by approaching political figures and promising financial aid not just under the current President David Adeang but also under former President Russ Joseph Kun. Tien also noted that Nauru reached out to Taiwan for a hefty financial assistance which surpassed the amount generally granted to allies. The negotiations ended with the Pacific island nation informing Taipei of its decision to switch to Beijing on Sunday, a day after the executive and legislative election results were declared. It is noted that China is unhappy with Lai’s victory, whom it sees as a “troublemaker” and “die-hard secessionist”. Lai, whose electoral victory made Democratic Progressive Party the only political party in Taiwan’s democratic history to have been elected to power thrice, described himself as a “pragmatic worker of Taiwan’s independence” but soon softened the discourse and promised to not seek independence and continue with former President Tsai Ing-wen’s foreign policy. Taiwan has also noted that the switch is influenced by Australia’s decision to scale back on the budget allocations to Nauru for the asylum seeker processing centre.

Since former President Tsai got elected in 2016, Taiwan has lost 9 diplomatic allies to Beijing, leaving it with only 12 nations that formally recognise it as a sovereign nation. The number is now reduced to 11.

Rumblings across the globe

Beijing has welcomed Nauru’s decision as an “independent sovereign nation” which  “once again shows that the one-China principle is where global opinion trends and where the arc of history bends”. China noted that it is ready to “open new chapters” of bilateral ties with the Pacific island nation. The news however has not been welcomed elsewhere.

The United States described the decision as a “sovereign but disappointing” one and warned against PRC’s “promises in exchange for diplomatic relations” that “ultimately remain unfulfilled”. While reiterating its support for the One China Policy, the United States seeks to expand cooperation with Taiwan and encourages other nations to do so in order to “support democracy, good governance, transparency, and adherence to the rule of law”. Beijing has expressed its “strong dissatisfaction and firm opposition” to the statement, defining it to be Washington’s “utmost efforts to smear and slander China’s diplomatic efforts”.

Australia has defined the decision as Nauru’s “sovereign” choice which it “respects”. It has also denied Taiwan’s claims about its decision of scaling back the budget and stated that Nauru had not approached Canberra with any demands for grants. Strict border policies in Canberra have resulted in agreements being inked with Nauru for hosting the refugees. Financially supported by Australia, these centres have been called out for the “appalling abuse and neglect of refugees” by human rights organisations. While describing the decision as entirely Nauru’s choice, Senator Simon Birmingham has questioned the Albanese government, asking for more transparency on an issue “relevant to Australia’s security interests”.

Nauru’s decision once again points to the dangerous developments in the Pacific which finds itself increasingly caught amid great power politics, a threat that the Pacific Islands Forum’s 2019 State of Regionalism Report strictly warned against.

The Sad reality of Nauru

Discussions over great power politics however overshadow the sorry state Nauru finds itself in. While the decision by all means is a sovereign one that must in all cases be respected, it is important to understand the reason behind it for it is the second time Nauru has broken off ties with Taiwan to recognise China. The two instances which are 22 years apart—the first in 2002 (Nauru resumed ties with Taiwan in 2005) and now in 2024— have been described as being chiefly guided by promises of financial grant.

A New York Times article published in 1982 described Nauru as the “world’s richest little isle”, whose per capita income was higher than “any oil-rich Arab nation”. The Pacific island nation was so rich that every child was granted a scholarship to study in nearby Australia and if found necessary, any patient requiring medical treatment not available in the island was flown to Australia– all at the government’s expenses. However, Nauru’s economy kept declining and in recent years it became so financially dependent on foreign nations that an Australian economist described it as a “beggar state” that cannot run on its own. The founder of the crypto exchange FTX had even planned to buy the country. The question arises– what caused this riches to rags condition?

A simple answer lies in what made Nauru rich– Phosphate. The mineral, most commonly used in fertilisers, is mainly concentrated in what the Nauruans call the “Topside” and was soon discovered by the British, Germans and Australians. Many mining companies from across the world smelled the mineral in the waters and found their way to the island. When Nauru became independent in 1968, it emerged as the richest independent democracy. The small  island nation had so much phosphate that Paul Dauvergne in his book Environmentalism of the Rich noted, “If garbage trucks could fly, this amount of phosphate could fill enough trucks to connect them, bumper to bumper, from New York to Tokyo and back”. 

But decades of mineral exploitation has  degraded 90% of the land. The Phosphate reserves are now virtually exhausted. Cash-strapped, Nauru soon resorted to turning itself into a tax haven and has even tried to get some cash by selling citizenship and hosting refugee detention centres. Today, it suffers through several capacity limitations and most of its markets are isolated. If reports are to be believed, foreign aid (that influences its foreign policy) is another way of putting together the economy that lies in shambles.

Foreign aid for long has been used as a tool by technologically, economically and militarily advanced nations to influence the foreign policies of independent smaller nations. While China has been widely cited as leading a “debt trap” (a term coined in 2017 in the context of BRI) by using its deep pockets to influence other nations so as to suit its foreign policy goals, detailed studies of use of foreign aid note that it has rarely remained divorced from politics and has also been true for many Western nations in varying degrees. In the case of Nauru, the government, which has ignored a sustainable approach for decades, cannot entirely be left off the hook. However, it is equally true that decades of exploitation at the hands of foreign powers, from  colonisation by Western powers right to this day, small Pacific island nations have been relegated to a MIRAB status where they have been highly dependent on Migration, Remittances, Aid and Bureaucracy for sustenance. Despite being COVID free, Nauru (which has been heavily reliant on food imports) has been severely hit by disruptions in supply chains, making food insecurity a major national security concern. It is also heavily susceptible to external shocks in global food and energy supplies and prices. Nauru’s “special case” is aggravated by the lack of availability of freshwater reserves. Its heavy dependence on fisheries to meet its food demands make it highly vulnerable to climate change. Though compensation from Australia after a three decade-long legal battle has helped and the small Pacific Island nation has prioritised sustainable development, much remains to be achieved. Sadly, Nauru is just one of the many  such cases.

Scholars have presented diverse views on China’s use of coercive practices to influence foreign policies; with the most widely accepted opinion being that an authoritarian China is projecting the illiberal nature of its political institutions on the international stage as it engages closely with the global economy and assumes an active role. Scott Kennedy in his 2017 book Global Governance and China: The Dragon’s Learning Curve has quite an interesting view to offer. Kennedy argues that the situation is more complex than what meets the eye. The liberal international global order continues to be marred with ambiguities on several aspects and has many loopholes that let nations tweak laws according to their national interests and even allow many a leeway without a slight sliver of accountability. According to Kennedy, China is projecting this illiberal nature of the liberal international order as it integrates with the global economy and tries a hand at global governance. Be that as it may, an introspection on the functioning of the  global system and attempts to bring in reforms that allow all nations, big and small, not to be influenced by cheque books and to thrive and prosper with dignity deserves a thought.

Cherry Hitkari
Cherry Hitkari
Non-resident Vasey Fellow at Pacific Forum, Hawaii. Cherry Hitkari is an Advisory Board member of 'Tomorrow's People' at Modern Diplomacy. She holds a Masters in East Asian Studies specialising in Chinese Studies and is currently pursuing an advanced diploma in Chinese language at the Department of East Asian Studies, University of Delhi, India.