Will Nauru Get a Second Chance?

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There's a whisper of hope on the stricken Pacific island of Nauru these days, and it's coming from a 35-year-old Harvard graduate named David Adeang. Since becoming Finance Minister in the new government of President Ludwig Scotty, the popular Adeang has been fighting to revive what was once one of the world's wealthiest countries. As a young boy, Adeang used to watch the country's fleet of new planes roll up and down the island's runway, and its cargo ships race in and out of port. Now Nauru can only afford to pay him and his fellow ministers, including the nation's president, $A100 a fortnight. Even the minister must rely on relatives catching fish to feed him and his family. It's a sorry fall from the 1960s and '70s when phosphate exports brought the 21-sq. km republic wild riches. Now the wealth, and most of the phosphate, is gone, squandered in poor investment decisions, mismanagement and corruption. An overseas property portfolio once worth

$A2 billion has been liquidated, including the shock sale of the nation's proudest status symbol, the 51-storey Nauru House tower in central Melbourne. Receivers appointed to recover a $A263 million debt to the General Electric Corporation sold the property last month. Adeang, one of several young, well-educated reformers in the government elected in an October landslide, says most of Nauru's 10,000 residents have finally accepted that change must happen: "We have said there is no other way but reform."

Adeang's recent budget foreshadows the pain to come, although there will be funding gains for education and health. The "most difficult budget any government on Nauru has ever had to deliver to Parliament," according to Adeang, it will impose big spending cuts and new fees, including a 10% customs duty on all but basic food imports. The aim is to end successive budget deficits by 2005-06 - an ambitious goal that will depend on finding new revenue sources. Secondary mining of phosphate deposits may be possible, but delayed trials have never gone ahead. To make matters worse, the government was last week told that the island's neglected mooring facilities require substantial repair. The only economic cheer comes from the asylum-seeker processing center set up by Australia, which has the island's hotel fully booked with staff and migration officials. Criticized in Australia, the center is supported by the Nauruan government, which this year received $A22.5m in funding from Canberra. The center serves three meals a day, and many Nauruans feel the asylum-seekers are better fed than they are.

Classrooms on Nauru need pens and books, the hospital is short of equipment and there are fears the electricity supply could collapse when Australian-donated fuel runs out in March. About 1,300 public servants are now receiving the $A100 a fortnight salary, but thousands of Nauruans who work for state-owned enterprises haven't been paid for months. Adeang constantly has to explain to people queueing at his office why the government can't give them the $A30 they need for a bag of rice. "There are so many expectations on us to come up with some solutions." Money is not the only problem: most food is imported, and last week Adeang learnt that the cargo ship due to arrive this week with supplies of flour, rice and sugar has decided to skip the island because of the meager volume, and won't be back until January. "There will be food shortages around Christmas," he says.

His country, Adeang says, is "at rock bottom," and it may be years before it achieves a solid economic footing. In the meantime, the help of friends is vital. Australia's parliamentary secretary for Foreign Affairs and Trade, Bruce Billson, says Nauru's largest neighbor welcomes the budget measures and is optimistic that the Scotty government will abandon the financial recklessness of the past: "There has never been such a sense of shared purpose." An Australian finance team is in Nauru helping to audit its messy dealings, while two Australian Federal Police members have arrived to assist the local force. The presidential penthouse in Melbourne's business district is gone, and consulate staff have moved into more modest premises. Other neighbors are being called on too, with a regional donors' meeting to be presented next year with a request for help. There's no going back to the riches of old for Nauru, and not even a guarantee that it will one day be able to survive without outside help. But, for the first time in many years, Nauru's leaders have admitted their plight, and that, so it's said, is the first step toward a cure.