Australia and Vanuatu agree to $328m security and business deal

Australia and Vanuatu have agreed to a 10-year deal, aimed at strengthening security and economic ties, worth A$500m ($328m; £241m).

The so-called Nakamal agreement – the result of months of negotiations – will transform Australia’s relationship with its Pacific neighbour, leaders from both countries said on Wednesday.

“We are family,” Australia’s deputy prime minister Richard Marles said, adding, “Our future is very much bound together”. Vanuatu’s leader Jotham Napat described the deal as “win-win situation” for both nations.

The deal, to be officially signed in September, comes as Australia tries to grow its influence in the region, to counter China’s increased spending and power.

While the Australian government did not provide further details of the deal, the Australian Broadcasting Corporation (ABC) reports it will provide funds to build two large data centres in the capital, Port Vila, and Vanuatu’s largest island, Santo.

Millions will also be poured into helping the low-lying island to deal with the impacts of climate change, as well as building up its security.

In earlier stages of the negotiations, visa-free travel for citizens of Vanuatu was also discussed and considered a key part of the deal. However, Napat told the media on Wednesday that this issue would be covered in a “subsidiary” agreement, yet to be confirmed.

It is unclear what, if any, commitments Vanuatu has given Australia as part of the deal.

A similar agreement fell through in 2022, after Vanuatu’s previous prime minister pulled out at the last minute over security concerns, according to the ABC.

At a press conference on the side of a volcano on Tanna island, one of 80 plus in the Vanuatu archipelago, Marles emphasised the “shared destiny” of the two countries.

“[The deal] acknowledges that as neighbours, we have a shared security environment and a commitment to each other,” he said.

Australia’s Foreign Minister added that the deal was about the long-term future.

“The most important thing [about the deal] is where we will be [in] three and five and ten years,” Penny Wong said.

Vanuatu’s prime minister Napat said the agreement will bring “a lot of great benefits between the two countries, whether it be the security agreement, economic transformation, with some specific focus on the mobile labour mobility and financial support”.

This week’s Vanuatu deal comes after Australia signed similar pacts with several of its other Pacific neighbours in recent months.

Canberra struck a new A$190m security deal with the Solomon Islands last December, with similar agreements also in place with Tuvalu and Papua New Guinea.