Nauru and its investment program should serve as cautionary tale for the Philippines
The island country of Nauru, a raised coral island located in the southwestern Pacific Ocean 25 miles south of the equator, is known for what it does not have or has little of. With a land area of only 8.1 square miles, it is the smallest country in the world after Vatican City and Monaco. Its population of about 10,000 makes it the world’s smallest republic, as well as the smallest island nation. It has no rivers or streams and virtually all of its water, food, and manufactured goods have to be imported. There are no harbors or protected anchorages, and no sizable arable land fit for farming. Nauru has no official capital. Because of its heavy dependence on financial aid from Australia, Nauru is considered by some sources as a client state of Australia.
What Nauru once did have plenty of was found inland, on a plateau 30 to 65 meters above sea level, which was largely composed of rock phosphate, leached from guano or bird droppings that accumulated over thousands of years. This high-grade mineral deposit used to cover more than two-thirds of the island.
Phosphate has been mined on Nauru since 1907, and for decades was its sole export and economic resource. Before its independence in 1968, the phosphate industry was owned by a corporation jointly managed by the British, Australian, and New Zealand governments. It was only in 1970 that Nauru gained full control of mining operations.
In the 1980s, Nauru was one of the richest countries in the world in terms of gross domestic product per capita, earning for it the sobriquet “Kuwait of the Pacific.” A major portion of its earnings from mining phosphate was invested abroad by means of a sovereign wealth fund. The envisioned economic well-being of the country depended on the success of this investment program.
Unfortunately, its public officials irresponsibly exploited and abused Nauru’s trust funds for decades. Fund assets were even used as collateral to finance the budget deficit. Because of mismanagement and depredation of capital, high government expenditures, fraud, and risky investments in real estate, shipping, and air services, the fund lost much of its value.
By 1990, its phosphate deposits had been depleted and Nauru experienced a severe drop in earnings, leading to bankruptcy in the early years of the 21st century. To generate income, Nauru became a tax haven, an offshore banking center, and a conduit for the illegal money laundering activities of organized crime groups and terrorist organizations.
Since 2001, Nauru has been accepting aid from Australia in exchange for its hosting an offshore Australian refugee processing facility.
As if the economic downturn is not enough, Nauru is slowly sinking back into the ocean from whence it came, a result of rising waters brought about by climate change. In the last 10 to 15 years, there has been an acceleration in the rates of both temperature rise and sea-level rise. There has also been a general escalation in the frequency and intensity of the tropical cyclones that visit Nauru regularly.
Already sinking as we are in a very real sense—many of our coastal towns and cities remain flooded even during the dry season—why can’t we see the writing on the wall, the omen in the water? Deeply mired as we are in rampant and runaway corruption in all aspects of our daily lives, be it political, social, cultural, or moral, why then are we blind to the clear and present danger of the Philippines going the wrong way of the islands of Nauru and Sri Lanka? Corruption is like the Hydra—cut off one head and another immediately grows back to replace it.
What is it that gentlemen wish? What would they have? When shall we be stronger? Will it be when we are totally disarmed and our enemies shall have bound us hand and foot? When all the phosphate shall have been extracted and extruded from out of the bedrock of our souls? When all our aquatic, marine, forest, mineral, and human resources shall have been exhausted and depleted, pillaged and plundered by our own local as well as foreign governments?
This is a cautionary tale about islands adrift in parlous tide and perilous time, going south, going, gone. There’s a smell of something not quite right, something soiled and dirty, something very evil, about the business of the proposed Maharlika Sovereign Investment Fund.
Antonio Calipjo Go,
