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Nauru Island: Far Side Of Paradise

by Joshua Samuel Brown

"It is ghastly. Absolutely horrible!"
Nauru Among travelers, a certain etiquette prevails: Always try to say something nice about their homeland. "You're from Holland? Lovely tulips." Or, "Eritrea? Nice job on that independence from Ethiopia thing." But what do you do when the person calls your polite little bluff? "I hear it's a lovely island," I said to the man from Nauru, who laughed sadly and made a gesture that said that the tiny island nation in the South Pacific was anything but. It was an awkward moment -- particularly because the man was the country's acting head of state.

"Beautiful?" repeated the President incredulously. "Not a word we hear much in Nauru nowadays. Perhaps the coast is beautiful. But have you seen pictures of the area we call 'Topside'? It takes up most of my island, and makes the place look like a vision from Dante's Inferno. It is ghastly. Absolutely horrible!"

Naturally, I asked for an interview and a week later, I was sitting across from Acting President Remy Namaduk in Beijing. In the meantime, I did some research into the island of Nauru, discovering that 'Topside' -- the area that Namaduk has described as "ghastly" -- referred to the inland area of Nauru, encompassing 80 percent of the island's total land mass, strip-mined by a series of phosphate hungry exploiters -- first the British, then by the Australians, and finally, after Nauru achieved independence in 1968 (when by local figures, 3/5 of the island had already been destroyed), by the Nauruans themselves. The pictures of Topside I found on the Internet showed a moonscape of cratered rock, devoid of vegetation, with massive chunks of stone jutting forth at weird angles.

Nauru topside
The moonscape of Topside
During Nauru's post independence salad days, few on the island had reason to complain. For a while, Nauru was the richest per capita nation in the South Pacific and the envy of its larger neighbors. But dwindling phosphate resources and years of economic mismanagement had turned the place economists once called "the Kuwait of the South Pacific" into the Flint, Michigan of the tropics. So the government of Nauru, stuck with an ugly environmental legacy and empty coffers, scrambled to find a new economic model. This opened up a new chapter of troubles on the island sailors once called "Paradise Island."

Finally, I discovered that Remy Namaduk was not, technically speaking, "President" of Nauru, but only the "Acting President", with the title of "Actual President" belonging to Rene Harris, who, it was rumored, had been at death's door for nearly a year. (Harris would later be replaced by Bernard Dowiyogo, who promptly died. More on this later.) Still, the opportunity to interview a head of state -- even an acting head of state -- seemed too good an opportunity to pass up, and I showed up at the appointed time, freshly shaved and ready to dazzle the subject with my knowledge of his nation.

Offshore banking

Today it is the specter of money laundering -- not the decades of colonial exploitation, broken promises, and impending doom from global warming -- that comes to mind when the name "Nauru" is mentioned in polite circles from Melbourne to Manhattan.

But with phosphate revenues dying and nothing in the way of natural resources, off shore banking seemed a custom fit answer to Nauru's financial needs. Free of coups, insurrections and other petty annoyances that make finance minded people lose sleep, Nauru set itself up as an offshore banking center, a tax haven for those with money whose sources they'd rather not reveal. And make no mistake: a lot of money went through Nauru banks -- in 1998, some $70 billion was deposited just by Russians seeking to hide money as their economy collapsed.

It wasn't just tax cheats and Tony Soprano-types that used offshore banks in Nauru, the Bahamas, Dubai and elsewhere. These "banks" -- usually little more than a post office box and a special telephone number for wire transfers -- were key to the Enron scam, with at least $10 billion of corporate red ink turned into "profits." (MORE on Enron and offshore banking.) Other fans of offshore banking were ringleaders in the shadowy world of al Qaeda, such as Osama bin Laden.

The Bush administration initially opposed efforts to tighten up offshore banking rules, following the pattern set by Congressional Republicans during the Clinton years. Both Treasury Secretary Paul O'Neill and chief economic adviser Lawrence Lindsey opposed legislation proposed under Clinton (MORE information), but after 9/11, the White House abruptly reversed course; the USA PATRIOT Act included the reforms sought by the Democrats.

The State Department said that all/nearly all of Nauru's 400 banks were shell banks for money laundering and called for reform. In December 2002, the U.S. called Nauru and Ukraine "uncooperative," and began procedures for economic sanctions against the countries.

Also placing Nauru on the State Dept. blacklist is its side business of selling passports for $15-35,000 each. The U.S. is concerned that passports could have been issued to members of militant Islamic groups from Indonesia.

"If you are going to write an article about Nauru, I suppose you'll want to talk about the banking scandals. You know, the press hasn't been kind to my country in this matter. I hope that you will be kinder than most journalists have been. What magazine do you work for?"

"I'm strictly a freelancer." I answered, cursing the fact that I was still thinking like a travel writer, and wishing that I had read more about the banking scandals that, even as we spoke, were threatening to bring down his government. "The progressive media in America, that sort of thing."

At this, the fat man's eyes lit up.

"Progressive!" he said, "Do you mean like Michael Moore?"

"Something like that" I said, and he began laughing, the sofa quivering beneath him.

"Did you read 'Stupid White Men?' Man, that book really cracked me up!"

"It's on my to-read list." I told him "Michael Moore's stuff is hard to come by in China."

Then the conversation turned away from satire entirely, as the outsized semi-head of state explained to me why his little basket-case of a nation was currently playing the role of bad guy on the international stage. What misdeeds had been committed on Nauru that would prompt the Organization for Economic Cooperation and Development to threaten it with sanctions? The answer: Offshore Banking (see sidebar).

"The United States is not only is responsible for the majority of the world's Co2 output, but has refused to sign the very treaty which might have slowed the rate of global warming and prevented my nation from being submerged." President Namaduk said. "That your government should condemns our business practices while stories of American corporate and governmental malfeasance grows by the day...this is very..."

The President fished for a suitable word, and I scribbled in anticipation: Insulting? Vulgar? In the end, he chose a more diplomatic term. "It is disturbing." He said softly.

We switched to the topic of environmental rehabilitation. Were there plans for importing topsoil to fill up the mined-out areas? "We are looking into the feasibility of this." said President Namaduk "The amount of topsoil that would be needed to fill in the mined out areas is huge, but not impossibly so. The question is how to get it to Nauru? The logistics of such an operation...the ships involved, the fuel. It would take many years to rehabilitate the damage. In the meantime, we are still experiencing environmental fallout. Mining is a dirty business."

So the possibility of Nauru becoming the next escape for Hollywood's A-list seems remote at best. "Our beaches are beautiful." The president told me "If you come, you will find it very peaceful...beautiful sunsets. But three days is enough. I don't think that tourism is in itself a viable economic plan for Nauru."

"How's the snorkeling?" I asked, switching back into travel-writer mode.

"It would be better if most of our coral reefs hadn't been killed by mining run-off."

Recently, Nauru has played host to visitors of a different sort, people not known for their love of snorkeling.

For the last few years, Australia has used the island to house a number of Afghan boat people who, seeking a better life in Australia, found the nation closed to them. Australia's policies on illegal immigration involve intercepting Oz bound refuge seekers at sea and shipping them elsewhere. "Out of sight, out of mind" is the way an Aussie friend described the policy. But if the president felt any such bitterness towards his great southern neighbor, he didn't express them to me. "The problem of refugees is a humanitarian crisis, and not one that belongs simply to one nation or another. We are glad to be able to do our part. Besides, there are not many Afghans left on Nauru. Most went home after the Taliban fell."

on broken promises by U.S.

Most of Nauru's recent woes spring from get-rich-quick schemes that leaders hoped would rescue the nearly bankrupt nation (see sidebar above). The fallout of these shady operations was that Nauru ended up on the short list of nations that Washington accused of aiding and abetting terrorists; shape up, the U.S. demanded, or face stiff sanctions. So it surely great good news for Nauru when president Rene Harris opened a letter with an amazing offer: If Nauru could please help smuggle top scientists and other leaders out of North Korea, the U.S. would probably drop Nauru off its blacklist.

The covert operation -- code named "Operation Weasel" -- was detailed in the April 19 edition of The Weekend Australian. Officials in Washington quickly said there was no truth at all to the story, but the article, written by two respected journalists, has more than enough details to sound plausable, and the reporters name all important sources used. Here is an overview of the deal:

Early in 2002, unnamed U.S. officials began constructing a plan to hide North Korean defectors at embassies of a dozen southeast Asian nations that were "a discreet distance from the U.S. Government." The embassies would be used as temporary safe houses after agents had smuggled out the defector.

The invitation to join Operation Weasel came from a Washington D.C. lawyer, who assured Harris that he had contacted "highest levels of the U.S. Government," who verified the offer was real. President Harris immediately sent a delegation to Washington, where they met a pair of men that they believed to be senior intelligence agents for the U.S. and New Zealand. The American reportedly told them that he had "a direct line to Dick Cheney" and both of them claimed to be friends with Iran-Contra posterboy (and convicted felon) Oliver North. The Nauruans also told the reporters that they met with Michael Horowitz, a senior fellow and director of the right-wing Hudson Institute.

The plan was that "private institutions" would fund a Nauru consulate in Washington and an embassy in Beijing to be staffed by American and New Zealand "diplomats" that would run the smuggling operations. In a hypothetical example of how Nauru would benefit by aiding with the escape of a North Korean nuclear scientist, a member of the Nauru delegation was told that their country would be given $1 million.

How much of this James Bond tale is true? The authors say that Operation Weasel ran only for about six months, and sneaked out up to 20 top-level North Koreans with the help of about a dozen countries. One defector was Kyong Won-ha -- described as the father of the country's nuclear program -- who escaped with the help of Spanish officials.

But the Nauru connection was dropped a few months after the offer was made, according to the reporters. China balked at recognizing a New Zealander as Nauru's charges d'affairs, and the State Dept. similarly did not recognize the American as Nauru's honorary consul designate.

With the phosphate finished and their banking operations threatened with shutdown, Nauru is looking at other means of survival, and other ways to finance the colossal bill that even a partial reclamation of the once-pristine environment will require. "Our government is building fisheries, which will bring much needed income" The president told me "Nauru sits in the middle of major pacific fishing grounds. Because we are such a small nation, we do not require massive make-work projects to maintain a good standard of living. "

Looking towards a future without phosphate mining -- indeed, a future in which the damage caused by phosphate mining can be rectified -- is one of the reasons that Nauru is building closer relations with the People's Republic of China. In exchange for fishing rights, perhaps Beijing would assist Nauru in starting up a fish processing industry on the island.

Nauru grocery
Shoppers in Nauru are spared the anxiety of having to make too many choices
Nauru needs all the friends it can get. There isn't enough arable land to feed its own tiny population, and the rusty desalination plant can't be counted on to produce enough water. The nation is nearly bankrupt. Its telephone link with the outside world was down for two months earlier this year, and Nauru's one and only airplane is at risk of being repossessed. Food and other basic goods imported by ship are down to a trickle because of unpaid debts. Desparate, the island's government increasingly has turned to bizarre schemes: a cloak-and-dagger mission straight out of James Bond (see sidebar) and a proposal by a consortium that wants to take over the island and transform it into a casino.

Namaduk spoke optimistically about his vision for Nauru's future."If Beijing can help us to repair our environment, perhaps we can become a little Singapore in the South Pacific."

But problems loom on the horizon. Global warming hangs over Nauru like the veritable Sword of Damocles. Whether Nauru aims to be a mini-Singapore or merely a mini-Saipan, such fanciful goals will amount to little should even the most moderate of predictions about seal level rise come to pass. Nauru sits high on the sea, being the tip of an undersea mountain. Still, with a circumference measuring a mere 12 miles, and the only habitable land left on the coast, even the slightest rise in global sea levels could well spell the end to a nation already teetering on the brink of extinction.

Despite his uncertain future, Namaduk was still the acting president at the time of our interview, and eager to present his nation in a good light. "As a tiny Island nation, we have tried to use our seat in the United Nations to bring the plight of global warming to the forefront of worldwide debate.

"You know, my country, with all of its terrible environmental damage, may well be like a canary in the coal mine, who by dying warns the miners to quickly reverse course. If anyone doubts the outcome of the unchecked taking of natural resources from the earth, they have but to visit Nauru and see for themselves."

Namaduk remained acting president for only a few weeks after our visit. In January, Bernard Dowiyogo was named president -- but died two months later. Namaduk is currently the Finance Minister of Nauru, the job of president having passed into the hands of Derog Gioura pending Nauru's May 3rd election.

But before dying March 9 in a Washington D.C. Hospital, then-president Dowiyogo signed an executive order closing Nauru's offshore banking operations, scrapping its passport-for-sale scheme, and agreeing to host a U.S. "listening post." Some in Nauru say that Dowiyogo signed under duress, being offered vague promises of future financial aid for his country (see related story).

Nauru landscape Treasury Dept. spokesman Danny Glaser says that there was no deal with Nauru.

"The executive order issued by Dowiyogo was basically a joke, just a commitment to take future action," says Glaser.

Nauru also passed legislation to eliminate all offshore banking within six months, but the U.S. remains skeptical. "We are concerned that Nauru will simply move to another offshore sector, such as managed funds or Internet casinos. The second concern is that Nauru's revoking the licenses isn't enough. The shell banks will still be out there, functioning beyond jurisdiction. To offer an analogy, if you paid for an international driver's license in Nauru that allowed you to drive in any country and Nauru then stamped void on the application, you'd still be able to use the license to drive in Mexico."

As things stand, the U.S. has still made no concrete offers of aid to Nauru, and the country has not yet been removed from the U.S. Treasury Department's blacklist. It will be illegal for any U.S. financial institution to deal directly or indirectly with any Nauru bank after May 15.

Photos courtesy Jane Resture   Visit for more background on Nauru

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Albion Monitor April 26, 2003 (

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