On December 9, 2024, Australia and Nauru signed a significant treaty aimed at strengthening economic and security ties while countering China's influence in the Pacific.

The treaty comes in response to concerns raised by a 2022 security agreement between China and the Solomon Islands, which heightened fears of a potential Chinese naval base in the South Pacific.

The Nauru-Australia Treaty grants Australia a veto over Nauru's agreements with third countries, including China, reflecting Australia's strategy to limit foreign influence in the region.

Nauru's President David Adeang emphasized that the treaty is a 'historic milestone' that will bolster the nation's economy and enhance mutual security, addressing challenges such as debanking and promoting inclusive growth.

The deal includes a financial commitment of 140 million Australian dollars over five years, with specific allocations for education, health, social services, and enhancing policing and security.

Nauru, with a population of approximately 13,000, is the third smallest nation in the world and has been vulnerable to external influences.

Despite allegations of corruption involving Nauru's leadership and Australian businessman Amit Gupta, President Adeang stated that no charges have been filed to date.

This agreement follows a similar pact with Tuvalu established last year, which also included consultation requirements for security arrangements.

As part of the agreement, the Commonwealth Bank of Australia will establish a branch in Nauru next year, replacing Bendigo Bank, which is exiting the market.

Prime Minister Anthony Albanese highlighted that the treaty recognizes the interconnected security interests of Australia and Nauru, requiring joint agreements on foreign engagements in key sectors.

Meg Keen from the Lowy Institute noted that Nauru compromised its ability to negotiate security and infrastructure deals with China in exchange for increased Australian funding.

Earlier this year, Nauru shifted its diplomatic recognition from Taiwan to Beijing, prompting Australia to reinforce its role as Nauru's primary security partner.