Vanuatu Approves Updated Pacts with Australia and China

Vanuatu's Council of Ministers has approved updated versions of agreements with both Australia and China, as the Pacific nation seeks to maintain a non-aligned foreign policy. Simultaneously, Australia has announced plans to purchase three second-hand submarines from the United States and provided $30 million in budget support to Fiji. These developments occur against a backdrop of ongoing strategic competition in the Pacific region.

Nakamal Agreement (Australia)

Vanuatu's Council of Ministers approved an updated version of the Nakamal Agreement with Australia on Thursday, according to government sources. The agreement now requires final approval from the Australian government.

Prime Minister Jotham Napat had withdrawn from signing the pact in September, citing concerns from coalition ministers over sovereignty. The updated version was renegotiated to address those concerns.

According to a Vanuatu government source, the updated Nakamal Agreement does not include the same limitations on Chinese investment in critical infrastructure and sensitive sectors in Vanuatu that were present in earlier versions. However, the source stated the agreement still designates Australia as Vanuatu's main security partner and prohibits the militarization of critical infrastructure, without restricting Vanuatu from engaging with other partners, including China.

"The agreement designates Australia as Vanuatu's primary policing partner."
— Prime Minister Jotham Napat

The original Nakamal pact, initialled by senior ministers from both countries at Mount Yasur in 2023, committed Australia to invest approximately half a billion dollars in Vanuatu over a decade for development and security priorities.

A spokesperson for the Australian Department of Foreign Affairs and Trade said: "Australia continues to work with Vanuatu to finalise the Nakamal Agreement."

Namele Agreement (China)

Vanuatu's Council of Ministers also approved the Namele Agreement with China. Prime Minister Napat described the agreement as focused on "strategic cooperation" and stated it contains no security elements.

The Chinese embassy in Vanuatu stated that claims of a security agreement are "untrue" and that cooperation focuses on infrastructure development and capacity building.

Climate Change Minister Ralph Regenvanu described the Namele Agreement as a "strategic partnership agreement" comparable to Nakamal. He stated the agreements help Vanuatu maintain a non-aligned position.

Vanuatu's Stance

Prime Minister Napat stated that reports of a security pact with China are "grossly misguided and inaccurate." He described the proposed agreement with China as a "comprehensive development cooperation agreement."

Napat criticized both Australia and China, stating that development partners are "using their interests to try to undermine us." He reiterated Vanuatu's non-aligned stance:

"Friends to all, and enemies to none."

In a separate statement, Napat said: "Vanuatu will decide what is good for Vanuatu. We will not be dictated to. Our foreign policy is guided by our national interests, not by external speculation or pressure."

Vanuatu's parliament passed legislation in 2024 reinforcing its non-aligned status and restricting military use of critical infrastructure.

Australia Announces Purchase of Three Second-Hand Submarines

Australia plans to buy three second-hand Virginia-class submarines from the United States, Defence Minister Richard Marles announced. This replaces the previously considered mix of one new and two second-hand submarines.

Marles stated that AUKUS deal has "no changes" and remains the same arrangement. He said the government is focused on building Australian submarines as soon as possible, which reduces the need for additional US submarines beyond the three.

"The shift was announced by Marles and his US and UK counterparts. The sale requires US approval contingent on improving submarine production rates."

All submarines will undergo mid-life sustainment before transfer and have sufficient service life, according to Marles.

The opposition has raised concerns about the change and plans to examine it at Senate estimates. Analysts questioned the disappearance of previous language referring to three to five submarines.

Australia Provides $30 Million in Budget Support to Fiji

Australia announced $30 million in budget support to Fiji to address rising fuel prices. The announcement was made by Australian Foreign Minister Penny Wong and Pacific Minister Pat Conroy during meetings with Fiji's Prime Minister Sitiveni Rabuka in Suva.

Senator Wong stated that the support is for "targeted budget support" to help Fiji cope with the price shock and reinforce its role as a supply and storage hub for the Pacific.

Fiji and Australia are nearing completion of negotiations on the "Vuvale Union" strategic pact, which will include pillars on security, economy, and people.

Australia will also provide additional funding for Fiji to acquire a border management system and assist in tackling drug smuggling through intelligence sharing. Minister Conroy described drug smuggling as a shared threat and affirmed Australia's support to Fiji in eliminating it.

Pacific economies face rising oil prices and potential fuel shortfalls starting around July. The Strait of Hormuz closure contributed to fuel price increases in Fiji. Pacific leaders plan to formally invoke the Biketawa Declaration, the region's crisis response mechanism, to coordinate a response to supply shocks.