Albanese in Vanuatu: China delivers diplomatic setback for PM at beginning of Pacific Islands tour

One of Australia’s closest Pacific neighbours has delayed signing a crucial security and economic agreement with the Albanese government, citing concerns the draft $500 million deal could limit its ability to receive infrastructure funding from China.

On Tuesday Prime Minister Anthony Albanese flew into Vanuatu for talks with his counterpart Jotham Napat aimed at finalising the sweeping and long-awaited “Nakamal Agreement”.

Ahead of this week’s Pacific Islands forum, Mr Albanese had hoped to sign the deal which would provide millions towards Vanuatu’s economic, security and climate needs, while locking in Australia as its main security and development partner.

Speaking following their talks in Vanuatu’s capital Port Vila, both leaders acknowledged more work was needed to address concerns about sovereignty, before the document was ready to be signed.

Asked whether he was worried the draft Australian deal could limit his country’s ability to get funding from other countries for much-needed critical infrastructure, Vanuatu’s Prime Minister responded “yes”.

Pressed on whether members of his government believed the current wording in the document could curtail Vanuatu’s ability to cooperate with China, Prime Minister Napat acknowledged some angst among his coalition partners.

“I had to allow this Nakamal Agreement to go to different stages within the coalition partners. And some of my Ministers and my MPs, they feel that it requires more discussions to, particularly on some of the specific wordings in the agreement,” he said. Over recent years Beijing has made significant progress enhancing security ties with Vanuatu, including sending Chinese police experts and equipment to the country in 2023.

“It’s important that processes be respected and I respect the (Vanuatu) Prime Minister’s processes. We have our own, respectively,” Mr Albanese told reporters following his meeting.

“This is an agreement that will also importantly respect sovereignty of Vanuatu, but one as well that respects sovereignty of Australia. This is in the interests of both of our nations and is a very positive agreement going forward.”

Mr Albanese would also not be drawn on what conditions or expectations Australia had of Vanuatu under the Nakamal Agreement, but declared his government wanted to promote economic development for an important Pacific neighbour.

“We want to see economic development here in Vanuatu. We want to see an upskilling of the workforce here. We want to see infrastructure investment here,” Mr Albanese said, as he stood next to his Vanuatu counterpart.

Just last month Defence Minister Richard Marles, Foreign Minister Penny Wong and Pacific Minister Pat Conroy travelled to Vanuatu for a ceremony to mark the conclusion of negotiations on the Nakamal Agreement.

Vanuatu owes China an estimated $US100m ($151.5m) in public debt, around 20 per cent of its GDP, and many of the country’s elites have close ties to Beijing.

Director of the Pacific Islands Program at the Lowy Institute, Mihai Sora, says security relationships are considered very sensitive in Vanuatu, which historically sees itself as a non-aligned nation.

He describes the proposed agreement with Australia as a “domestic political football” in Vanuatu and warns that Canberra is right to be wary of Port Vila’s growing security cooperation with China.

Fears over China’s ambitions to gain a security foothold in the Pacific, including the risk of establishing a military presence, have been heightened since Beijing stunned the region in 2022 by striking a security agreement with the Solomon Islands.

To counter China’s regional influence, the Albanese Government has signed fear-reaching deals with Tuvalu and Nauru, giving Australia a veto over any other security agreements the two nations might want to strike with other countries.

It has also unveiled a $200 million deal to train thousands of new police officers in Papua New Guinea and announced a $190 million fund to establish a new Royal Solomon Islands Police Force training centre to help curb Beijing’s security presence.

Following their talks in Port Vila, Vanuatu’s Prime Minister will hitch a ride on Mr Albanese’s Royal Australian Air Force plane as both men head to the Solomon Islands to join other regional leaders for this week’s Pacific Islands Forum (PIF) in Honiara.

Australia’s regional rivalry with China has been recently highlighted in the Solomon Islands by competing gifts of vehicles to be used by delegates during the PIF event.