Australia to Gain Veto Power Over Pacific Island’s External Security Deals

The deal will cost Australia $100 million to support Nauru’s struggling budget, and an extra $40 million for policing and security.

Australia's Prime Minister Anthony Albanese is pictured during the group photo after attending the meeting on Sustainable Development and Energy Transition at the G20 Leaders' Meeting in Rio de Janeiro, Brazil, on Nov. 19, 2024. Mauro Pimentel/AFP via Getty Images

Australia will gain significant oversight of Nauru’s security agreements under a new treaty aimed at bolstering the Pacific nation’s security and economy amid ongoing competition from Beijing.

Under the pact, over a five year period, Australia will provide $100 million (US$63.8 million) to support the tiny Pacific Island’s government budget, and an extra $40 million for policing and security.

Nauru has a population of just 12,000 people and covers 21 square kilometres with an exclusive economic zone of 370 kilometres. It is one of 20 different governments in the region.

The agreement, announced on Dec. 9, requires mutual consent from both governments if Nauru considers entering into agreements with other nations for security, banking, and telecommunications.

While the practical implementation of the mutual security clause is yet to be seen, the terms suggest Australia will effectively have veto power over Nauru’s external agreements, marking a significant shift in bilateral cooperation.

Australia’s Largest Bank to Setup Shop in Nauru

Starting in 2025, Australia’s largest bank, Commonwealth Bank, will replace Bendigo in providing banking services, ensuring financial stability in Nauru.

This banking transition aligns with Australia’s efforts to maintain a Pacific presence and prevent China from filling any gaps in regional financial services.

Prime Minister Anthony Albanese praised the treaty as a milestone for regional stability.

“The treaty reflects our shared commitment to Pacific-led security,” he said during a joint press conference in Canberra.

“This is a good day for Australia, Nauru, and the security and resilience of the Pacific region.”

Nauru’s President David Adeang welcomed the agreement, emphasising the nation’s vulnerabilities.

“We appreciate Australia’s steadfast support as we address our unique development challenges,” Adeang said.

The treaty is set to take effect in 2025, following domestic approvals in both nations.

Millions in Deals to Ward Off Beijing

The latest treaty with Nauru comes amidst Australia’s broader efforts to counter Beijing’s growing influence in the Pacific.

One of the most prominent examples occurred in April 2022, when Beijing and the Solomon Islands leadership signed a security pact to allow the Chinese Communist Party to station troops, weapons, and naval vessels in the island.

Democratic nations have responded by increasing their aid programs and diplomatic efforts.

Late last year, Australian authorities signed a similar “veto” deal with the tiny nation of Tuvalu, while also promising to streamline visa approvals amid climate change concerns.

This week, the Australian government is expected to announce a $600 million taxpayer-backed initiative to establish a rugby league team in its northern neighbour Papua New Guinea (PNG).

Deputy Prime Minister Richard Marles framed the project as part of Australia’s long-standing partnership with PNG, describing the country as a “security partner of choice.”