Australia and Vanuatu agree to $500m deal, but details remain scarce

Australia Broadcast Center

2 days ago

Senior ministers from Australia and Vanuatu have trooped to the top of an active volcano on the island of Tanna for a ceremony to celebrate a major new pact between the two countries.
Foreign Minister Penny Wong, Deputy Prime Minister Richard Marles and Pacific Minister Pat Conroy joined their counterparts from Vanuatu on the top of Mount Yasur to "initial" the landmark Nakamal Agreement ahead of formal signature by prime ministers next month.
Australia is set to funnel some $500 million into Vanuatu over a decade under the pact, which will supplant a bilateral security agreement that was effectively scrapped by the Pacific nation after it was signed in 2022.
While most of the details in the agreement are not yet public, Australia has labelled it "transformational", and Mr Marles said it reflected the two nations had a "shared destiny".
"What this agreement really does is, for the first time, acknowledge what has always been the truth, and that is that as two nations, we are family, and that our future is very much bound together," Mr Marles said.
The Prime Minister of Vanuatu Jotham Napat declared the deal a "win-win" for both countries.
"The agreement that has entered today will transpire into a lot of great benefits between the two countries, whether it be the security agreement, economic transformation, with some specific focus on the mobile labour mobility and financial support," Mr Napat told journalists in Tanna.
Under the agreement, Australia is expected to funnel funding into a host of areas, including climate resilience, key infrastructure, security support, labour mobility and budget support.
There were some last-minute negotiations to secure an in-principle agreement ahead of the ministers' arrival, with officials from Vanuatu telling the ABC that both sides had to make some late concessions in order to secure the pact.
Mr Marles would not be drawn on exactly what financial commitments Australia had made, but said the Nakamal Agreement "acknowledges our shared economic connection".
He added it "makes clear that it is core business for Australia to be engaged in the human development of Vanuatu".
It is also not clear if the arrangement will make it easier for Ni-Vanuatu to travel to Australia.
Ahead of the agreement, Mr Napat declared he would not sign unless Australia agreed to introduce "visa-free" travel for his country's citizens, an arrangement which Australia has never introduced for any Pacific island nations.
When asked whether Australia had offered any concessions on this front, Mr Napat said there would be an "agenda item" on visa-free travel in the Nakamal Agreement, but also suggested the subject was still being discussed — saying Australia "would get back to us on that".
While Australia has not outlined its position publicly, the ABC has been told that while a "visa free" arrangement was not on the table, the government was willing to discuss liberalising broader travel requirements for citizens of Vanuatu.
Griffith Asia Institute Adjunct Associate Professor Tess Newton Cain said the question around travel was a "real issue for the Vanuatu government and for the prime minister personally".
"He has said that this is a 'must have' as far as he is concerned and he knows that if it doesn't transpire, it will reflect badly on him," Dr Cain told the ABC.
She also said other Pacific nations would be watching the discussions between Vanuatu and Australia closely.
"If, and it's a big if, Australia does grant some degree of visa-free access, for example, for Vanuatu officials, it will be very significant because we would expect to see pressure from other Pacific island countries for the same," she said.
The agreement comes as Australia pushes back against China's efforts to embed itself as a major commercial and security partner for Vanuatu.
Vanuatu has leaned heavily on Chinese institutions to fund major infrastructure projects and Beijing recently gifted it a sprawling new presidential palace, which was estimated to cost $31 million.
China's police training teams have also been playing an increasingly visible role in the Pacific island nation.
Vanuatu is not expected to hand Australia any "veto" rights over security partnerships with outside countries under the Nakamal Agreement, as both Nauru and Tuvalu have done in their strategic pacts with Canberra.
But federal government officials nonetheless hope the substantial commitments on security within the pact will help enshrine Australia's position as Vanuatu's top security partner.
Dr Cain suggested the Nakamal Agreement would likely have greater staying power than the 2022 bilateral security agreement signed by former Prime Minister Ishmael Kalsakau, which first stalled in parliament before being effectively dumped by Mr Napat.
"The process is the main difference — this has been signed off by both the National Security Council and the Council of Ministers, which did not happen in 2022," she said.
"It also is being designated as much broader than simply a security agreement with commitments made across several domains, including climate resilience, economic development and budget support."