On September 9, 2025, what was meant to be a day of diplomatic celebration in the South Pacific instead became a moment of careful pause. Vanuatu, a small but strategically important island nation, delayed finalizing a landmark security and development pact with Australia, citing concerns that the agreement might restrict its ability to secure infrastructure funding from other partners—most notably, China. The move, widely reported by outlets such as the Associated Press, Reuters, and StratNews Global, underscores the delicate balancing act Pacific nations face as they navigate the competing interests of regional powers.
The deal in question, known as the Nakamal Agreement, was expected to be signed during Australian Prime Minister Anthony Albanese’s visit to Vanuatu’s capital, Port Vila. The proposed A$500 million (approximately $330 million) pact was designed to strengthen economic and security ties between the two countries. It was also part of Australia’s broader push to counter China’s growing influence in the Pacific, a region that has become a geopolitical chessboard in recent years.
But just hours before the planned signing, Vanuatu’s Prime Minister Jotham Napat stood before the press and made it clear that his government was not ready to proceed. “Some members of the Vanuatuan government feel it requires more discussions, particularly on some of the specific wordings in the agreement,” Napat explained, according to the Australian Broadcasting Corporation. When asked directly if there were concerns that the pact could limit Vanuatu’s ability to get funding from other countries for critical infrastructure, Napat replied simply: “Yes.”
This hesitation did not come out of nowhere. China is Vanuatu’s largest external creditor, having extended significant loans for the construction of key infrastructure—everything from the nation’s parliament and presidential office complex to roads and wharves. As Meg Keen, head of the Australian National University’s Pacific Research Program, told the Associated Press, “It’s a delicate political navigation that the prime minister of Vanuatu is having to take, and he’s got to bring his political supporters along with him if he wants to sustain the deal.”
The delay caught some in Canberra off guard. Albanese had hoped to sign the agreement during his visit, but he remained optimistic in his public remarks. “This is an agreement that will importantly respect the sovereignty of Vanuatu, but one as well that will respect the sovereignty of Australia,” he told reporters, as cited by Reuters. He emphasized that Australia’s goal was to promote economic development, upskill Vanuatu’s workforce, and support further infrastructure projects. “The prime minister and I confirmed our commitment to keep working towards the upgrade of our relationship through a new treaty-level agreement. We’ve made good progress towards that goal today,” Albanese added, according to the Associated Press.
For Vanuatu, the stakes are high. The country’s leaders are acutely aware of the need to maintain strong ties with Australia, a major aid donor and regional security partner. At the same time, they are wary of jeopardizing access to alternative streams of funding—particularly from Beijing, whose deep pockets have financed much of Vanuatu’s recent development. The current government’s coalition partner reportedly raised concerns that the Nakamal Agreement could limit Vanuatu’s flexibility in seeking infrastructure support from other countries, a point that led directly to the delay.
This episode is the latest in a series of diplomatic maneuvers reflecting the broader power struggle playing out across the Pacific. Australia’s security outreach to its island neighbors intensified after China signed a security pact with the Solomon Islands in 2022, a move that alarmed policymakers in Canberra and Washington alike. Australia has since redoubled efforts to shore up its relationships in the region, offering substantial financial packages and new defense treaties to partners including Vanuatu and Papua New Guinea.
Yet, as Meg Keen pointed out, Pacific leaders like Napat are keen to avoid being forced to choose sides. “Vanuatu wanted to maintain its close relationship with Australia without excluding China,” Keen said, according to the Associated Press. This sentiment is echoed throughout the region, where many governments see value in playing larger powers off against one another to maximize their own developmental gains.
The delay of the Vanuatu-Australia pact is not unprecedented. In 2022, a previous security agreement between the two countries was blocked after failing to win sufficient domestic political support in Vanuatu. The latest postponement reflects both the complexity of coalition politics in Port Vila and the broader regional context, where infrastructure needs are pressing and sources of funding are few.
Meanwhile, Albanese’s Pacific tour continues. On September 10, he traveled with Napat to the Pacific Islands Forum in the Solomon Islands, an annual gathering of 18 member states that provides a crucial venue for regional diplomacy. There, Albanese is expected to reiterate his message that “Pacific security needs to be undertaken within the Pacific family,” as reported by StratNews Global. The symbolism of traveling together was not lost on observers, but the absence of a signed agreement underscored the unresolved tensions.
Looking ahead, Australia is set to announce a new bilateral security deal with Papua New Guinea around the country’s 50th anniversary of independence from Australia on September 16, 2025. This upcoming agreement is part of a broader Australian strategy to reinforce its standing as the Pacific’s preferred security partner. However, the Vanuatu episode serves as a cautionary tale: even generous financial packages and close diplomatic ties are not always enough to overcome the intricate realities of Pacific politics.
For Vanuatu, the decision to delay is as much about domestic consensus as it is about international relations. The coalition government must ensure that any pact with Australia does not inadvertently close off other avenues of support. As Napat’s careful language and the need for “more discussions” suggest, this is a government keenly aware of both its opportunities and its limitations.
For Australia, the challenge is to reassure its neighbors that security partnerships do not come with hidden strings attached. Albanese has repeatedly emphasized respect for sovereignty and mutual benefit, but the perception—fair or not—that such agreements might restrict a nation’s choices lingers in the background.
As the Pacific Islands Forum unfolds and new treaties are negotiated, the region’s future will likely be shaped by leaders’ ability to manage these competing pressures. For now, the Nakamal Agreement remains unsigned, a symbol of both the promise and the complexity of Pacific diplomacy in an era of great power rivalry.
Whether the deal is eventually inked or not, one thing is clear: the Pacific’s small states are determined to chart their own course, leveraging the interests of larger powers to serve their own needs. And in that ongoing balancing act, every word—and every delay—matters.
