Most of its economy has been based on mining phosphate, which has been exported to Australia and New Zealand for fertiliser. However, with the phosphate deposits rapidly being mined out, and few other natural resources, Nauru has turned to other methods of raising revenue.
In what is cynically known as The Pacific Solution, Australia hastily established an internment camp on Nauru for a large number of asylum seekers after the container ship Tampa rescued several hundred boat people from a sinking Indonesian people smuggling boat and attempted to deliver them to Australian territory. In exchange for providing this service, Nauru was provided with extra aid by Australia.
Naru is small enough to be a single destination in its own right.
Nauru's phosphate deposits, which occupied about 90% of the island, began to be mined early in the 20th century by a German-British consortium. During World War I, the island was occupied by Australian forces and became a dependent Australian territory. Nauru achieved independence in 1968 and joined the UN in 1999. Nauru is the world's smallest independent republic. Although other island states may be smaller, they are all dependent territories of other countries.
The climate is tropical, with a monsoonal rainy season between November and February. Sandy beaches rise to the inhabited fertile ring around raised coral reefs. The central portion of the island is the exposed phosphate plateau.
Revenues of this tiny island have come from exports of phosphates, but reserves are expected to be exhausted within a few years. Phosphate production has declined since 1989, as demand has fallen in traditional markets and as the marginal cost of extracting the remaining phosphate increases, making it less internationally competitive. While phosphates have given Nauruans one of the highest per capita incomes in the Third World, few other resources exist with most necessities being imported, including fresh water from Australia. The rehabilitation of mined land and the replacement of income from phosphates are serious long-term problems. In anticipation of the exhaustion of Nauru's phosphate deposits, substantial amounts of phosphate income have been invested in trust funds to help cushion the transition and provide for Nauru's economic future.
The government has been borrowing heavily from the trusts to finance fiscal deficits. To cut costs the government has called for a freeze on wages, a reduction of over-staffed public service departments, privatization of numerous government agencies, and closure of some overseas consulates. In recent years Nauru has encouraged the registration of offshore banks and corporations. Tens of billions of dollars have been channeled through their accounts. Few comprehensive statistics on the Nauru economy exist, with estimates of Nauru's per capita GDP varying widely.
Nauru has started receiving "aid money" from the Commonwealth of Australia in exchange for hosting nearly 1000 asylum seekers on the island. The asylum seekers were attempting to gain entry into Australia to seek Asylum from Afghan warlords but Australia has refused them entry. Having nowhere else to send them, the Australian government chose a policy of indefinite detention resulting in nearly 1000 men, women and children now being detained on Nauru in exchange for large sums of Australian taxpayers money. This is known in Australia as "The Pacific Solution".
Nauru has an international airport. Air Nauru is the national carrier.There are flights from the Fiji, Manila, Guam, New Zeland and Australia.
Nauru is also a seaport.
A 19km road circles the island. There is a regular bus service around it. Hire cars and taxis are also available.
Nauruan is the official language. It is a distinct Pacific Island language. English is widely understood, spoken, and used for most government and commercial purposes.
Nauru accepts the Australian dollar as its trading currency.
Water supply in Nauru is dependent on roof-top rain collection and a desalination plant. Drinking water is often imported from Australia.