Nauru 2016 Country Review http://www.countrywatch.com Table of Contents Chapter 1 1 Country Overview 1 Country Overview 2 Key Data 3 Nauru 4 Pacific Islands 5 Chapter 2 7 Political Overview 7 History 8 Political Conditions 9 Political Risk Index 19 Political Stability 33 Freedom Rankings 49 Human Rights 60 Government Functions 63 Government Structure 63 Principal Government Officials 66 Leader Biography 68 Leader Biography 68 Foreign Relations 70 National Security 72 Defense Forces 73 Chapter 3 75 Economic Overview 75 Economic Overview 76 Nominal GDP and Components 78 Population and GDP Per Capita 79 Real GDP and Inflation 80 Government Spending and Taxation 81 Money Supply, Interest Rates and Unemployment 82 Foreign Trade and the Exchange Rate 83 Data in US Dollars 84 Energy Consumption and Production Standard Units 85 Energy Consumption and Production QUADS 86 World Energy Price Summary 87 CO2 Emissions 88 Agriculture Consumption and Production 89 World Agriculture Pricing Summary 91 Metals Consumption and Production 92 World Metals Pricing Summary 94 Economic Performance Index 95 Chapter 4 107 Investment Overview 107 Foreign Investment Climate 108 Foreign Investment Index 110 Corruption Perceptions Index 123 Competitiveness Ranking 135 Taxation 144 Stock Market 144 Partner Links 144 Chapter 5 146 Social Overview 146 People 147 Human Development Index 148 Life Satisfaction Index 152 Happy Planet Index 163 Status of Women 172 Global Gender Gap Index 175 Culture and Arts 184 Etiquette 185 Travel Information 186 Diseases/Health Data 195 Chapter 6 200 Environmental Overview 200 Environmental Issues 201 Environmental Policy 203 Greenhouse Gas Ranking 204 Global Environmental Snapshot 215 Global Environmental Concepts 227 International Environmental Agreements and Associations 241 Appendices 265 Bibliography 266 Nauru Chapter 1 Country Overview Nauru Review 2016 Page 1 of 278 pages Nauru Country Overview NAURU Nauru is a tiny Pacific island country with a population of only 10,000. The island was annexed by Germany in the 1880s. Its phosphate deposits began to be mined early in the 20th century by a German-British consortium. Following the outbreak of World War I, Australian forces captured the island in 1914. After the war, the League of Nations assigned a joint trustee mandate over the island to Britain, Australia, and New Zealand. During World War II Japan occupied Nauru, and after the war the island became a United Nations Trust Territory under Australia, in line with the previous League of Nations mandate. It became an independent republic in 1968. Nauru’s economy depends almost entirely on exports of phosphates, but the reserves of phosphates are near depletion. The country's long-term economic future will depend on measures to convert the mineral wealth into alternative sources of income. Nauru Review 2016 Page 2 of 278 pages Nauru Key Data Key Data Region: Pacific Islands Population: 9540 Climate: Tropical; monsoonal; rainy season (November to February) Nauruan (official) Languages: English Currency: 1 Australian dollar ($A) = 100 cents Holiday: Independence Day is 31 January (1968), Angam Day is 27 October Area Total: 21 Area Land: 21 Coast Line: 30 Nauru Review 2016 Page 3 of 278 pages Nauru Nauru Country Map Nauru Review 2016 Page 4 of 278 pages Nauru Pacific Islands Regional Map Nauru Review 2016 Page 5 of 278 pages Nauru Nauru Review 2016 Page 6 of 278 pages Nauru Chapter 2 Political Overview Nauru Review 2016 Page 7 of 278 pages Nauru History Nauru maintained an indigenous culture free from any European contact for a longer period of time than many other islands in the Pacific. The earliest Westerners to arrive came in the late 18th century. For a time, Nauru was known as "Pleasant Island," the name given to it by a British sea captain, John Fearn. German traders active in the region brought it under that nation's control in 1851. In 1886, Germany was granted the island under the Anglo-German Convention. The introduction of firearms and alcohol led to considerable internal strife. A combination of fighting and disease contributed to the deaths of nearly half of the native population by the late 19th century. Ultimately, alcohol was banned and some arms were confiscated. Germany relinquished de facto control of Nauru to Australia in 1914, when World War I broke out. In 1919, after the war, Germany formally renounced any claim to the island and the League of Nations placed Nauru under a three-way trusteeship of Australia, Britain, and New Zealand. However, Nauru was functionally administered by Australia. During World War II, Nauru was subject to significant damage from both Japanese and Allied forces. From 1942 to 1945, Japanese forces captured 1,200 Nauruans to work under extremely harsh forced labor conditions in Micronesia; only 700 of this group survived to return home. Wartime life for Nauruans staying on their island was difficult as well, due to severe shortages of food and other vital supplies. After the war, the United Nations reinstated the island's de factoadministration by Australia. Nauru remained a U.N. Trust Territory under Australian administration until it received independent status. Throughout the 1960s, negotiations were undertaken to increase local participation in the island's administration, and the Nauruans practiced a large measure of self-government by the mid- 1960s. In 1968, Nauru became an independent republic and a special (i.e., non-voting) member of the British Commonwealth. In 1999 it became a full member of the Commonwealth, and a member of the United Nations. The outstanding physiographic and economic fact about Nauru is its mineral endowment of phosphates, used for fertilizer. Phosphate mining has given the Nauruans one of the Pacific region's highest per capita incomes, but also caused substantial environmental damage. Nauru is Nauru Review 2016 Page 8 of 278 pages Nauru now on the verge of a post-phosphate era, as its phosphate reserves by most estimates would be exhausted in the coming few years. In the early 1960s, Australia attempted to negotiate a relocation of the islanders to Curtis Island, but the Nauruans refused this offer. After further negotiations, the Nauruans purchased control over phosphate operations in the country and formed the Nauru Phosphate Corporation. They hope to negotiate settlements with entities that previously profited from phosphate extraction and apply these to the restoration of the island when mining comes to an end. Note on History: In certain entries, open source content from the State Department Background Notes and Country Guides have been used. A full listing of sources is available in the Bibliography. Political Conditions Nauru's economic viability has rested upon phosphate reserves. Phosphates -- in actuality a resource derived from a 1,000-year cycle of bird droppings -- have been mined on the island since 1906. In the last century, the small Pacific island country has generated healthy revenues from this lucrative -- but finite -- resource. The phosphate supply is reaching levels of extinction in recent years and as such, the future of the people of Nauru is uncertain, and the challenge for the country's policy makers will be to determine a path of continued economic prosperity, without the benefits of this resource. In this regard, the government has tried to develop the island into an offshore financial center, imitating the success of the Bahamas and other island nations around the world that have emerged as major offshore banking centers. The government has invested in property on other islands and is attempting to develop offshore banking services. Over the course of recent years, however, offshore banking institutions and instruments have come under increasing scrunity by international bodies seeking to make international finance a more transparent system. Nauru, as a result, has been a casualty of this movement. In December 1999, four major United States banks banned dollar transactions with four Pacific island states, including Nauru. The United States Department of State issued a report identifying Nauru as a major money laundering center, used by narcotics traffickers and Russian organized crime figures. Nauru Review 2016 Page 9 of 278 pages Nauru Offshore banking aside, the last few years have seen repeated changes of government. Nauru's unsettled political situation never led to civil disturbances; the transitions were always sanctioned by parliament and occurred peacefully. President Bernard Dowiyogo took office in April 2000 for his fourth and, after a minimal hiatus, fifth stints as Nauru's top executive. Dowiyogo first served as president from 1976 to 1978. He returned to that office in 1989, and was re-elected in 1992. A vote in parliament, however, forced him to yield power to Kinza Clodumar in 1995. Dowiyogo regained the presidency when the Clodumar government fell in mid-1998. In April 2000, Rene Harris, former chairman of the Nauru Phosphate Corporation, became president as he briefly assembled support in parliament. Harris' attempt to put together an administration lasted for only a few days of parliamentary maneuvering. In the end, Harris proved unable to secure parliament's confidence, and Dowiyogo returned yet again to the presidency by the end of the month. Rene Harris was finally able to claim power as the president of Nauru in March 2001 when he was elected to the presidency by the parliament; his term was to last three years, presumably ending in 2004. The issue of the phosphate supply will likely be one of the most important considerations for the government in the next few years as the supply was forecast to be exhausted by 2003. Since Nauru imports almost everything it consumes -- including food, water and fuel -- the need to diversify the economy and to generate other sources of revenue is of paramount importance. As noted above, offshore banking has been one arena into which Nauru has traversed, however, the rewards are limited by growing concern about the ethical parameters of this business.