In a strategic move, Australia has announced funding for the construction of two datacenters in the Pacific island nation of Vanuatu. This decision underscores the growing importance of technology infrastructure in international diplomacy. Situated approximately 2,000 kilometers from Australia’s east coast, Vanuatu is a nation with a population of around 320,000 and a GDP slightly over $1 billion. The country has become a focal point in the Pacific as China also seeks to extend its influence in the region.
Efforts by China to establish military facilities have been accompanied by offers to build submarine cables and mobile networks. To counteract this, Australia, with the backing of Japan and the USA, has aimed to keep Chinese influence at bay. A notable instance was Australian telecommunications company Telstra’s acquisition of Digicel, a major Pacific mobile carrier, ensuring the removal of Huawei technology to mitigate espionage risks.
In 2022, Australia and Vanuatu entered into a Bilateral Security Agreement, which was later revised by Vanuatu’s current Prime Minister, Jotham Napat. On Wednesday, a new security arrangement known as the Nakamal Agreement was signed, committing Australia to fund A$500 million ($330 million) in projects in Vanuatu. Among these is the development of datacenters valued at A$120 million ($79 million), part of Vanuatu’s agenda to establish an e-commerce sector and integrate into the global digital framework.
This initiative reflects Australia’s strategic deployment of economic resources to foster relationships within the Pacific, as exemplified by a similar agreement with Papua New Guinea centered around investment in a sports team, contingent on not engaging in security deals with China. According to the Lowy Institute, Vanuatu has positioned itself advantageously by setting terms favorable to smaller states, while leveraging international competition for influence in the region. Australia’s current diplomatic efforts are thus intertwined with digital infrastructure investments, aiming to maintain sway over the Pacific arena.