Nauru Dumped on again Apr 24th 2008 From The Economist print edition Amid political deadlock and

economic ruin, will Nauru's luck ever turn?

shady banking nameplates. Its services were reputedly much in demand among the Russian mafia. And it made friends with Taiwan, a generous donor to its dwindling band of diplomatic partners. The abrupt end to the detention-centre business may throw Nauru again on the mercy of international donors. It will help if the election produces a functioning government. The lack of a government majority in the 18-seat parliament has stalled investment projects and the passage of a budget. The election was prompted by a row between Mr Stephen and the parliament's speaker, David Adeang, who last month sought to bar from office two cabinet members who hold dual Australian and Nauruan citizenship. The Supreme Court ruled against the ban. But Mr Stephen decided enough was enough. Many Nauruans would agree. But they change their governments often, without ever seeming to change their luck.

IF COUNTRIES were traded like books, Nauru, one of the world's smallest, would long ago have ended up on the remaindered shelf. The tiny remote speck in the Pacific is an economic shipwreck. Since last August, when an election left parliament deadlocked, it has also suffered utter political paralysis. A snap election called for April 26th by the president, Marcus Stephen, may at least produce a government capable of making decisions. But it will not provide a solution to the country's biggest economic headache: the collapse of its most recent business ventureacting as an immigration holding-pen for Australia. Among the many changes wrought by Kevin Rudd (see article) was the closure last month of the detention centres on Nauru for people seeking asylum in Australia. The centres dated from 2001, when John Howard, prime minister of the then ruling conservative coalition, offered the cash-strapped islanders financial grants, debt write-offs and free fuel in return for building them and keeping the asylum seekers far from Australian soil while their applications were processed. So delighted were the islanders with the windfall that the first would-be refugees were greeted with songs and flowers. The centres became a lifeline for the island's 13,000 people, employing about one-tenth of them directly. Their closure follows a string of commercial mishaps for an island that was, improbably (and briefly), among the world's richest places in terms of income per head in the 1970s. Its bounty was the lucrative product of millennia of seagulldroppings on coral: phosphates, for fertiliser. As the money rolled in many islanders chose to remain unemployed, cashing the royalty cheques while foreign workers dug out the deposits. Nauruans literally grew fat on their earnings; rates of obesity and diabetes soared. But strip mining has left the island a barren, jagged wasteland. The wealth it generated was squandered in a number of disastrous investments, as Nauru tried its hand as an early sovereignwealth fund, and got its fingers burnt. It tried to reinvent itself as an offshore tax haven, and took to hosting all manner of