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Monday the 26th of April, The Federal Capital Press of Australia Pty noted:

Copyright 2004 The Federal Capital Press of Australia Pty
Limited
Canberra Times (Australia)

April 25, 2004 Sunday Final Edition

SECTION: A; Pg. 31

LENGTH: 911 words

HEADLINE: Paradise lost as island sinks into bankruptcy

BODY:

A USTRALIA is a second home to Rene Harris, Presidentof the tiny Pacific
island of Nauru. In the past, he often travelled here for medical treatment or
to feast his eyes on his country's portfolio of grand properties.Last week, his
visit had a more urgent purpose: to seek funds to keep his country afloat. With
Nauru on the verge of bankruptcy, Harris went with cap in hand to Foreign
Minister Alexander Downer and outlined his island's desperate financial
plight.The meeting ended with the Australiangovernment signing a treaty with
Nauru to help it out of the crisis as American financial giant General
ElectricCapital Corporation moved to recover debts of more than $230 million
with receivers taking over the island's Australian assets, including a shopping
centre and hotels in Sydney and Melbourne.Downer said that under the treaty, the
Australian government would providea senior treasury officer and officials from
the finance department to help Nauru reorganise its finances.Management - or
rather, mismanagement- helps explain the downwardspiral of Nauru, once one of
the world's wealthiest countries but now a basket case in a region of struggling
Pacific island states.Nauru, home to 10,500 people, grew wealthy on the back of
phosphate mining and in the early 1970s boasted the world's second-highest per
capita income, after the oil-rich United Arab Emirates. But royalties were
wasted on extravagant projects, hare-brained schemes and failed investments,
while the mined interior of the 20sqkm island became a barren wasteland. Only
the coastal fringe is now habitable.The island state has lurched from one
financial crisis to the next in recent years, and has only survived because of
millions of dollars of aid given to reward it for housing Australia's unwanted
asylum-seekers.But the handouts have not solved the country's fundamental
problems, which include shortages of water and fresh vegetables as well as
chronic power failures. Last year, its telephone system collapsed and Nauru -
situatedhalf way between New Zealand and Hawaii - was cut off from the outside
world for weeks. Its single-plane airline has been intermittently grounded for
safety reasons or lack of fuel.To make matters worse, the nation is in the grip
of another of the political power struggles that have repeatedly paralysed it in
recent years. Parliament has not had a Speaker since last May, which means no
Bills can be passed, and the legislature - in which the government and
opposition control nine seats apiece - is deadlocked. Harris failed to get the
budget passed last week.Nauru is the island that took the Afghan aslyum-seekers
aboard the Norwegian freighter, the Tampa, who were refused entry to Australia
in September 2001. Nearly 300 people are still incarcerated in the country's two
detention camps, out of sight of prying eyes because the government - at
Australia's bidding - has banned all unauthorised visits. But letters and
e-mails from detaineestell of poor food, lack of fresh water, disease and
distress. Mental illness is said to be widespread.The Australian Government has
promised Nauru an extra $22.5 million in aid this year in exchange for
maintaining the camps until June 2005.From a historical perspective,
Australiashares some responsibility for the situation in which Nauru finds
itself, as do Britain and New Zealand. First discovered in 1898 by the captain
of an English whaler, who called it Pleasant Island, Nauru's population was
decimatedby alcohol and diseases introducedby white settlers.It became a German
possession, but was seized by Australia during World War I after it was found to
have the world's richest phosphate deposits. So excited was Australia's then
prime minister, Billy Hughes, by this discoverythat he proposed annexing Nauru
at the end of the war.Instead, it was mandated by the League of Nations to
Britain, Australia and New Zealand, which formed the British Phosphate
Commission and set about stripping the island of phosphate.The material was
shipped to Australia and New Zealand, where it was sold at nominal prices and
became the main agricultural fertiliser.During World War II, the Japanese
occupied Nauru and took 1200 of its 2000 inhabitants into slavery. The 793
survivors returned in 1946. When the country gained independence in 1968,
two-thirds of its surface had already been mined and the interior resembled a
bleak moonscape. An independent commission of inquiry subsequently found that
Australia, Britain and new Zealand had violated international law by failing to
restore it to "usable condition". Sadly, Nauru itself proved staggeringly
incompetent - and corrupt- when it came to managing its own affairs. The Nauru
Phosphate Royalties Trust bought showpiece properties around the world which
ended up mortgaged to the hilt. Under the founding president, HammerDeRoburt,
travellers risked being stranded for days on the island, because he and his wife
would commandeerAir Nauru's sole plane for shopping excursions to Hong Kong.In
the 1990s Nauru became a major money-laundering centre for Russian criminal
organisations and at one point had 400 offshore banks, all registered to one
government mailbox.A decade ago, Kinza Clodumar, the then finance minister,
said: "Nauru was once a tropical paradise, a rainforesthung with fruits and
flower, vines and orchids. Now, thanks to human avarice ... and
short-sightedness, our island is mostly a wasteland."- The Independent

LOAD-DATE: April 24, 2004