Australia will invest A$500 million into Vanuatu over the next decade under a new deal between the two countries, as China seeks to expand its influence in the Pacific.
The Nakamal Agreement has been initialed by Australian and Ni-Vanuatu cabinet officials and will be ratified in September. It will replace a 2022 security pact.
“What this does is acknowledge our shared history,” said Australian Deputy Prime Minister Richard Marles. “It acknowledges our shared economic connection. It makes clear that it is core business for Australia to be engaged in the human development of Vanuatu.”
“The agreement covers a wide range of bilateral issues, including infrastructure planning, economic development, and climate resilience initiatives in light of the devastating December 17th earthquake of 2024,” wrote Vanuatu’s Ministry of Justice and Community Services.
The Nakamal Agreement comes amid China’s efforts to court Vanuatu as an economic and security partner. China’s government funded the construction of a $31 million presidential palace in Vanuatu’s capital last year.
Marles, Foreign Minister Penny Wong, and Pacific Minister Pat Conroy joined Vanuatu’s Deputy Prime Minister Johnny Koanapo, Internal Affairs Minister Andrew Napuat, and Climate Change and Energy Minister Ralph Regenvanu to initial the agreement on Vanuatu’s Tanna Island.
Australia and Vanuatu have yet to release the full details of the agreement, though it includes a commitment from Australia to build two data centres in Vanuatu.
These data centres will be built in Port Vila, Vanuatu’s capital, and on its Espiritu Santo island. Vanuatu plans to use the facilities to bolster its internet infrastructure and advance its strategy to develop its economy through e-commerce.
Vanuatu’s Prime Minister Jotham Napat had previously said that Vanuatu would not sign a deal unless Australia agreed to visa-free travel between the two countries. Napat said this would be an “agenda item” in the Nakamal Agreement, though he indicated that there would be a subsidiary agreement on visa-free travel that the countries would continue to negotiate.
Australia will invest over $110 million to help Vanuatu address the effects of climate change, the ABC reported.
Another $100 million will be provided for security assistance, and $55 million for budget support. Australia will also invest in improving Vanuatu’s labour mobility and digital infrastructure, as well as build cultural connections.
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