Datacenter Diplomacy: Australia Commits To Help Vanuatu Build Bit Barns

Australia will help to fund the development of two datacenters in the Pacific island nation Vanuatu, an example of tech infrastructure becoming an important diplomatic consideration.

Vanuatu is around 2,000 kilometers from Australia’s east coast. The country is home to around 320,000 people, and its GDP is just over $1 billion.

Despite Vanuatu’s small size, Australia has courted the nation and others in the Pacific because China is doing likewise. The Middle Kingdom’s diplomacy often includes proposals to create facilities that its navy could use, sweetened by offers to build submarine cables or mobile networks.

Australia does not want China gaining access to Pacific ports, or influence in the region. Japan and the USA support that policy and when Chinese entities expressed an interest in acquiring the biggest mobile carrier in the Pacific – Digicel – helped to fund a takeover by Australian carrier Telstra. Once Telstra took control of Digicel, it ripped out Huawei gear over fears it could enable espionage.

In 2022, Australia and Vanuatu negotiated a Bilateral Security-Agreement that kept the Pacific nation in Australia’s sphere of influence. Earlier this year, Vanuatu’s new prime minister Jotham Napat scrapped the 2022 deal and sought another.

On Wednesday, he got his wish as Australia and Vanuatu signed a new security pact called the “Nakamal Agreement” that will see the land down under fund A$500 million ($330 million) of projects in Vanuatu in coming years. One of those projects is a pair of datacenters valued at A$120 million ($79 million) that Vanuatu’s government announced last year as part of a strategy to develop an e-commerce industry and ensure the nation can connect to the global digital economy.

Australia’s regional diplomacy is therefore tied to a pair of datacenters.

Vanuatu and Australian officials sign the Nakamal Agreement on the rim of active volcano Mount Yasur - Click to enlarge

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For what it’s worth, Australia struck a similar deal with Papua New Guinea (PNG) that included funding for a team that will play in Australia’s National Rugby League competition. One of Australia’s conditions for funding the team was PNG not forming a security arrangement with China.

Australia promised to spend A$600 million ($393 million) on the Rugby team. Vanuatu’s datacenters are cheap by comparison, according to think tank The Lowy Institute, “Vanuatu has just shown how small states can rewrite the rules – and the cheques – on their own terms.” ®