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12/02/2003: Nauru Nauru

The Nauru Solution
from The Australian

"Nauru needs sensible financial management, not aid, to emerge from a mess
of its own making, suggests Helen Hughes"

Not your average left wing "we-need-to-help-these-poor-opressed-people" tirade.


Copyright 2003 Nationwide News Pty Limited
The Australian

April 8, 2003 Tuesday All-round Country Edition


LENGTH: 888 words

HEADLINE: Way out for poor little rich island - THE NAURU SOLUTION


BYLINE: Helen Hughes

Nauru needs sensible financial management, not aid, to emerge from a mess
of its own making, suggests Helen Hughes

NAURU -- an island of 22sqkm, lying near the Equator, thousands of kilometres
from the nearest large Pacific island group -- was named the Happy Isle by early
European explorers for its mix of Micronesian, Melanesian and Polynesian people.

Nauru came to Germany in the 19th-century colonial carve-up of the Pacific.
The German administration discovered that the barren inland consisted of marine
phosphate forced up among coral pinnacles and began to mine it with imported

After World War I, Nauru became a Trust Territory administered by Australia
on behalf of an Australian, British and New Zealand triumvirate whose farmers
benefited from low-priced phosphate mined by the British Phosphate
Commissioners. The Japanese used Nauru as an aircraft carrier in World War II,
deporting most of the 5000 Nauruans to Truk in the Marianas, where all but 500
people starved to death.

After 1945 the Australian administration returned and the British Phosphate
Commissioners resumed mining with workers from the Gilbert and Ellice Islands
(Kiribati and Tuvalu) and Hong Kong.

In the early 1960s, when the repatriated population had recovered to about
5000 people, Hammer de Roburt, then chief of the local government council,
engaged the assistance of the ACTU's Bob Hawke to raise wages for Nauruan public
servants. This was followed with help to raise the price of Nauru phosphate from
10 shillings to the world price of 30 shillings a ton (distributed to individual
landowners and Nauru Trust funds).

Independence (with a communally agreed constitution) was won and celebrated
in 1968. The guns fired a salute when president de Roburt made an official visit
to Canberra. The British Phosphate Commissioners were nationalised so that the
full benefit of phosphate mining would accrue to Nauru.

In 1968 it was clear that phosphate mining had only about 20 years to run
and that the (always) uninhabitable centre of the island could not be
rehabilitated because the coral pinnacles were porous. But at that time each
Nauruan woman, man and child was worth $500,000 ($3.5 million in today's money).

During the next decade phosphate prices rose, with huge income flows giving
Nauruans the highest per capita income in the world. A Sydney consulting firm
was advising Nauru commercially; it started a conservative investment program in
securities and built Nauru House on Collins Street in Melbourne to house Nauru's
phosphate business.

If Nauru as a country and Nauruans individually had kept to conservative
financial advice, investing in sound financial instruments, each member of the
population -- now 8000 -- would have at least $15million and would be able to
live in luxury on Nauru or anywhere else in the world.

Instead, Nauru refused sound professional advice, and publicly and privately
wasted its income. It became, and still is, the victim of the shadiest
financial, legal and academic operators in the world. Nauru invested in dubious
real estate, being taken to the cleaners by rogue operators from Melbourne to
Boston and throughout the Pacific. It funded a musical in London that failed
after four nights -- after the government had chartered a large jet to fly from
Nauru to London for the premiere.

There is an extremely dubious proposal for turning the island into a casino
in return for 50 per cent of the profits going to the triumvirate of sponsors.
Nauru would supply the investment funds and the island. The national airline,
often grounded, ran losses of $40million annually for years. The Nauru offshore
financial centre became a focus of terrorist money laundering. Nauru
complemented this by the sale of passports. These activities have finally been
halted under US anti-terrorist legislation that will hopefully also deter Nauru
from the casino project, which could bring gangsters to the island.

Nauru has shocking levels of health, with high diabetes and and heart
disease. Uncontrolled diabetes has led to a high incidence of amputations.
Alcoholism is high. The death rate peaks on Friday afternoon when drunk driving
results in motor accidents. Only Nauruans who have moved to Australia have high
living standards.

Nauru does not need aid. If it accepts sound financial advice, it can pay
its debts and marshal its investments so that Nauruans can live in comfort and
health. Nauruans could implement sensible policies. Norfolk Island, for example,
has almost double Australia's per capita income. It does not throw away money,
however, on artificially swollen government, representation in New York or a
national airline.

Nauru is unfortunately only an extreme example of the waste of resource
incomes in the Pacific, and of Australia's neglect of the Pacific's descent into
destitution and chaos. A debate on how Australian taxpayers' funds are used in
the Pacific is long overdue.

Helen Hughes is a senior fellow at the Centre for Independent Studies in
Sydney. From 1963 to 1968 she helped Nauru to negotiate with the British,
Australian and New Zealand governments to raise phosphate prices to world
levels, to gain ownership of phosphate mining, to gain independence, and to find
sound commercial and financial advice.

LOAD-DATE: April 7, 2003