Australia will get an effective veto right over Nauru entering a security agreement with another country under a pact that will prop up the Pacific nation’s budget.
The two countries will have to mutually agree to any engagement in Nauru’s security, banking and telecommunications sectors and consult on outside engagement in other critical infrastructure.
While it is yet to be seen how the mutual security clause might work in action, the wording suggests Australia has to sign off on any external agreements.
It essentially locks out a policing agreement with China as Australia pushes back against Beijing’s moves to gain a security foothold in the region after it signed a pact with the Solomon Islands.
In exchange, Australia will provide $100 million (US$63.95 million) for Nauru’s budget and $40 million (US$25.58 million) for policing and security, both over five years.
Commonwealth Bank will provide banking services in the small island nation from 2025 after Bendigo Bank departs.
Australia has been working with major banks to keep a Pacific presence amid fears China could use any vacuum to ingrain itself in regional financial services.
The Nauru-Australia treaty was in the best interests of both countries, Prime Minister Anthony Albanese said.
“The treaty also reflects our shared commitment to Pacific-led security,” he told a joint press conference in Canberra on Monday after the agreement was signed.
“This is a good day for Australia, this is a good day for Nauru and it is a good day for the security and resilience of the Pacific region.”
Nauru was the Pacific’s most vulnerable nation, President David Adeang said as he welcomed Australia’s backing.
“We appreciate Australia’s steadfast support as we try to address our unique development challenges,” he said.
The treaty will come into force in 2025 following domestic requirements for both nations.
