Australia and Vanuatu have announced a 10-year, A$500 million (US$328m) security and economic agreement aimed at strengthening bilateral ties and countering China’s influence in the Pacific region. The ‘Nakamal agreement’ marks a significant upgrade in relations between the neighboring nations, with funding allocated for security cooperation, climate resilience, and digital infrastructure development.
Who: The agreement was negotiated by Australian Deputy Prime Minister Richard Marles and Foreign Minister Penny Wong with Vanuatu’s Prime Minister Jotham Napat. Both countries’ leaders emphasized the familial bonds between their nations during the announcement.
What: The comprehensive package includes funding for two large data centers in Port Vila and Santo, climate change adaptation programs for the low-lying island nation, and enhanced security cooperation. Though visa-free travel provisions discussed earlier were deferred to a future subsidiary agreement, the deal represents Australia’s largest Pacific commitment this year.
When: Announced on August 14, 2025 during a joint press conference on Tanna island, with formal signing scheduled for September. This follows months of negotiations after a previous attempt at a security pact collapsed in 2022 over Vanuatu’s sovereignty concerns.
Where: The agreement centers on Vanuatu’s 80-island archipelago in the South Pacific, with particular focus on developing infrastructure in the capital Port Vila and largest island Santo. The announcement was symbolically made beside an active volcano on Tanna island.
Why: Australia seeks to bolster its regional influence amid China’s growing Pacific presence, while Vanuatu gains critical funding for climate resilience and economic modernization. PM Napat characterized it as a ‘win-win’ that acknowledges shared security challenges between neighbors.
How: Through diplomatic channels established under Australia’s Pacific Step-Up policy, the deal redirects existing regional development funds into targeted infrastructure projects. The ABC reports it includes A$120m for data centers, A$150m for climate adaptation, and A$230m for security cooperation.
Impact: The agreement transforms Australia’s relationship with its closest Pacific neighbor, creating new economic opportunities while addressing strategic concerns about Chinese influence. It sets a precedent for Australia’s ‘climate-first’ security approach in vulnerable island nations.
What’s Next: Both nations will negotiate subsidiary agreements including visa arrangements by year’s end. Australia plans similar pacts with Tonga and Fiji, building on recent security deals with Solomon Islands, Tuvalu and Papua New Guinea.