Unkept Promises



from Inter Press Service

"The United States has pulled off a virtual coup in the tiny South Pacific island republic of Nauru. Dangling aid to the virtually bankrupt country in exchange for anti-terror measures, then, Nauru officials say, backtracking on what it promised."

Click for the rest of the article

More

Copyright 2003 Inter Press Service
Inter Press Service

April 15, 2003, Tuesday

LENGTH: 1040 words

HEADLINE: NAURU: TINY ISLAND NATION SAYS U.S. RENEGES ON PROMISED AID

BYLINE: By Kalinga Seneviratne

DATELINE: SYDNEY, Apr. 15

BODY:
The United States has pulled off a virtual coup in the tiny South Pacific
island republic of Nauru -- dangling aid to the virtually bankrupt country in
exchange for anti-terror measures, then, Nauru officials say, backtracking on
what it promised.

In the last few months, the U.S. government has persuaded Nauru to close
offshore banks, scrap a passport-selling scheme and agree to host a U.S. spy
base, in return for $ 250 million of aid Washington Nauru officials were
expecting.

The closure of offshore banks and an end to the passports scheme for
foreigners were in an executive order signed on Feb. 27 in Washington by Nauru's
President Bernard Dowiyogo, before he died of a heart attack a few days later.

But U.S. officials now deny that they promised financial aid to Nauru.

"We have been given the riot act by the United States," Nauru's former
finance minister Kinza Clodumar told 'The Australian' newspaper. "And we feel
our sovereignty has been compromised - no doubt about that."

He added that Nauru was very unhappy with the deal it signed and "we came
back with no piece of paper about aid, only promises".

Replying to questions by 'The Australian', the State Department said that it
is "not currently developing a financial assistance package for Nauru". Clodumar
says the U.S. has still made no concrete offers of aid to Nauru.

Nauru's offshore banking scheme was a target and of special interest to the
United States -- after the Sept. 11 terrorist attacks. It has also been
criticized for some time by the Financial Action Task Force, a group of 29
nations that coordinates the global fight against money laundering.

Nauru was known to be popular with groups like the Russian mafia and the
Chinese triads, who used offshore banks with top secrecy conditions and only a
post box address to move millions of dollars around the world. Many Chinese
syndicates were also believed to have bought Nauru passports to use for their
criminal activities.

But its offshore banking character is also a major foreign currency earner
for Nauru, whose phosphate deposits which in the eighties gave it the world's
biggest per capita income -- have virtually been exhausted.

Media reports have long talked about how international syndicates had cheated
the nation of millions of dollars in the 1990s, and how it had been swindled
after taking advice from shady financial, legal and academic advisers mainly
from Australia.

"What they offer is anonymity and secrecy," said Rick Donnel, head of the
Asia-Pacific Group on Money Laundering secretariat. "Criminals can misuse and
have often misused it for money laundering and for some terrorist financing
transactions".

Donnel told 'Radio Australia' that the United States has paid attention to
Nauru because "if there are any gaps in the chain, then those people who want to
hide their transactions... will go to that place".

Public servants in Nauru, a country of 11,000 people, have not been paid for
months. Its international debts total $ 130 million.

So when the U.S. 'offer' came, Nauru officials thought they saw a lifeline.

Through secret deals negotiated through non-government officials since the
Oct. 12 bombing in Bali, Indonesia, the Bush administration has been successful
not only in getting Nauru to pass laws outlawing offshore banking and scrapping
the sale of Nauru passports to foreigners.

It also got Nauru to sign the 'Article 98' agreement that obliges Nauru not
to allow U.S. citizens to be brought to the International Criminal Courts for
war crimes.

However, the most controversial aspect of Nauru's capitulation to U.S.
pressure is the agreement to allow Washington to set up a spy station in the
north central Pacific island of 21 square kilometers. The U.S. government will
set up a listening post, a satellite tracking station and a shortwave radio
broadcasting center for central Pacific.

As detailed in a three-page expose in 'The Australian' newspaper early this
month, the behind-the-scenes negotiations done over six months by three men
tells an astonishing as the David and Goliath of world affairs thrashed out the
deal.

To make the story more astonishing, the reports say, the agreements signed by
Nauru make these three men - Steven Ray, a U.S. intelligence operative, Jack
Sanders of the neo-conservative U.S. think tank Hudson Institute and Thomas
Richards, a Canadian attorney - senior representatives or advisers to the Nauru
government.

Before he died, Dowiyogo agreed to appoint Ray as Nauru's honorary consul in
Washington, Sanders as charges d'affairs in Beijing and Richards as special
legal counsel to the president.

After his death, Nauru's ambassador to the United Nations Vinci Clodumar
said: "I have no doubt in my mind that president Dowiyogo signed the Feb. 27
executive order under duress."

The Bush administration used a carrot-and-stick method during the
negotiations leading up to this agreement.

The carrot it offered was a 10-year, $ 250 million aid package to get the
bankrupt nation on its feet. The stick included a threat to impose economic
sanctions on Nauru under the U.S. anti-terrorism legislation passed last year as
the Patriot Act that would have virtually shut down the tiny country's economy.

These sanctions were due to be imposed at the end of April, and the Nauru
parliament passed the necessary legislation in late March.

Meantime, Nauru continues to the subject of strange proposals like one last
month from a group of Australian financial advisers one of whom faces fraud
charges that urges the Nauru government to turn the country into a new tax haven
and casino. The proceeds, they said, could be split 50-50 with them.

Looking back, Helen Hughes, a senior fellow at the Sydney-based Center for
Independent Studies, says that if the country had maintained and nurtured the
wealth it earned from its phosphate resources in the 1980s, each Nauruan would
be worth $ 15 million today.

But Hughes argues that in truth, Nauru does not need aid. "If it learns to
accept sound financial advice, it can pay its debts and marshall its investments
so that Nauruans can live in comfort and health" she said.

LOAD-DATE: April 16, 2003

posted by prof_booty | 04:01 PM