Albanese Flies to Vanuatu as Signing of $500 Million Deal Draws Closer

Australian Prime Minister Anthony Albanese will fly to Vanuatu to meet with the island nation’s leader Jotham Napat as negotiations around a $500 million (US$335 million) pact between the two are hashed out.

The visit comes prior to Albanese travelling to the Pacific Islands Forum in the Solomon Islands, and it will be the first time the leader has flown to Vanuatu as prime minister.

It remains unclear whether the “Nakamal” agreement, the $500 million deal to secure economic ties and security, will be finalised.

The Albanese told ABC Radio he thinks the deal is more likely to make progress than be signed during this trip.

“We have committed to working towards upgrading our relationship,” he said. “There’s still some work to do, but we’re making good progress.”

In August, Foreign Minister Penny Wong, Defence Minister Richard Marles, and Pacific Minister Pat Conroy also travelled to Vanuatu to meet with Napat for discussions on the agreement.

As part of the agreement, Australia would support Vanuatu by supplying around $120 million for two data centres and around $110 million for climate change initiatives.

Funding will also be allocated to security as well as digital and cultural initiatives.

Some parts of the plan remain under wraps, particularly in regard to security.

“We want to enter into good faith discussions, and one way that you do that, of course, isn’t just by talking on the phone, it’s by having a face-to-face discussion,” Albanese said.

“What we’re looking for is to build on the relationship, to be able to both benefit from shared prosperity.”

The move follows similar shows of support to other Pacific nations, including funding a $600 million rugby league team for Papua New Guinea and last year’s announcement of $110 million in support for Tuvalu.

Since 2017, Australia has supplied $800 million in aid to the Solomon Islands.

Albanese is set to visit the island nation of Papua New Guinea later in the month.

Race for the Pacific

Australia is the largest donor to the Pacific Islands, with China coming in second place, as a post-pandemic race to be the favoured partner in the Pacific intensifies.

A 2024 Lowy Institute report into Pacific aid found that Beijing signed record project commitments in the Solomon Islands and Vanuatu in 2022 and 2023.

Projects include a $75 million digital television project in Papua New Guinea, a $66 million mobile phone tower in the Solomon Islands and a $120 million roads package in Vanuatu.

The Solomon Islands and Vanuatu projects comprised the single largest commitments from Beijing.

The Lowy Institute also found that Beijing was targeting its focus to winning influence in specific strategic locations, providing more community-level support, and switching from loans to grants.

Grant-based projects now comprise close to two-thirds of China’s engagement, a stark comparison to pre-pandemic trends.