The Billion Dollar Shack

Nauru, a tiny little belly button nation in the vast emptiness of the Pacific Ocean, is the most interesting island you've never heard of.

In recent years, it has become a cliché to note that the world has become more interconnected. We get it: globalization has changed everything.

But most stories about connectivity focus on hubs rather than spokes, places that are hives of activity set to the soundtrack of the buzzing hum of densely populated cities. I’ve felt a visceral feeling of connection standing in the financial center of the City of London, near the polluting factories of Guangzhou, China, gazing up at the skyscrapers of Manhattan, or marveling at the sprawling port of Singapore.

However, the world has now grown so connected, so intertwined, that you can also now make a striking case for astonishing interdependence in the most unlikely places.

One of those places is an island that’s arguably one of the most interesting countries in the world, even though few people have heard of it. It’s home to just 11,000 people. And it’s an extraordinary microcosm of globalization.

The Belly Button of the Pacific

“If you look at a map of the Pacific, there's hundreds of islands scattered throughout,” the writer Jack Hitt tells me. “But right there in the center, like a little bellybutton, a little omphalos of the globe, is Nauru.”

Surrounded by vast, empty ocean, the island is one of the most isolated countries on the planet. It’s also one of the smallest. Manhattan is three times larger. It’s an almost perfect circle, an atoll created millions of years ago by volcanic activity deep beneath the ocean. Rich coral reefs formed, and over time, some were shoved upward by the gradual forces of geology, until they soared high above the encompassing sea. As they eroded, parts of the limestone dissolved, creating fissures, sinkholes, and vast empty cavities of rock.

Over tens of thousands of years, exhausted seagulls, eager for a land-based pit stop during long flights, filled those cavities and sinkholes with their guano. Eventually, that guano calcified, leaving phosphate in its place.

Unexpected Riches

(Photo: An aerial view of Nauru; Wikimedia Commons)

Three thousand years ago, humans first arrived. For three millennia, they lived a mostly isolated existence, subsisting on a diet of raw tuna served in coconut milk, fruits, and root vegetables. On the tiny, unknown island cut off from the rest of the world, the pace of human change was as slow as the forces that shaped the atoll itself.

When Europeans first encountered the island on long sailing voyages, they started to trade, exchanging liquor and rifles for coconuts, fish, fruits and vegetables, and fresh drinking water. Soon, guns were in most homes, and alcoholism was rife. A civil war broke out, no mean feat for an island with just 2,000 inhabitants.

A Royal Navy vessel that visited the island transmitted news of the war. “An escaped convict is king,” the captain reported. “All hands constantly drunk: no fruit or vegetables to be obtained, nothing but pigs and coconuts.” A century of radical change had begun.

In the early 20th century, an Australian prospector named Albert Ellis picked up a rock that was being used as a doorstop in his office, a rock that he knew had come from Nauru. At first glance, Ellis thought it was petrified wood. But as he studied the rock more carefully, Ellis realized what it really was: some of the densest, purest phosphate that had ever been seen on the planet.

As Jack Hitt explains, “that awakened in everyone's imagination the idea that Nauru might be this goldmine of what was then a much sought-after chemical for farming.” It was white gold for rich countries thousands of miles away. Over the next few decades, most of the surface of Nauru was strip mined and shipped away, leaving a desolate wasteland in its place. Paradise was no more.

(Limestone pinnacles after phosphate mining stripped the island mostly bare; photo by Lorrie Graham/AusAID)

But the Nauruans, who had lived a sustainable subsistence lifestyle for millennia, were suddenly rich. They bought big, luxury cars, even though the tiny island had only one road. With their own land destroyed, they started to import processed, sugary food from factories in Australia to replace their diet of coconuts and fresh seafood. It wasn’t long before Nauru had the highest rate of Type 2 diabetes in the world, afflicting forty percent of the population. (Today, ninety-seven percent of Nauruan men are obese).

Get Rich Quick

Like a sugar high that wears off with a crash, the phosphate eventually ran out. It would take thousands of years to replenish it. But Nauru didn’t have thousands of years. The island quickly went broke. They were rescued, temporarily and unexpectedly, by the collapse of the Soviet Union and the rise of oligarchs in a lawless new Russia. Fantastic quantities of money changed hands in the years after the Iron Curtain fell. Some of it was illicit cash, and it needed to be stored, hidden away from prying eyes. Nauru spotted an opportunity.

Other countries were developing sophisticated mechanisms for secretive, offshore bank accounts. But there was still a risk: someone else’s bank could someday be forced to disclose its crooked accounts to investigators. Nauru decided to one-up the offshore accounts and offer corrupt kingpins the privilege of an offshore bank instead. For $25,000, anyone on the planet could set-up their own entirely independent financial institution, housed in a server on Nauru.

When Hitt visited the island, he tracked down the illicit servers, housed in a ramshackle building with air conditioners sprouting out of every possible opening. Hitt dubbed it “The Billion Dollar Shack.” When he arrived outside (in the island’s only taxi), nobody was there except for a woman sweeping the floors with a broom. “So I did meet the cleaning lady of the emerging global economy,” Hitt says with a smirk.

Nauru’s political leadership realized that someday, someone else would come knocking on the door of that shack, and it was more likely to be criminal investigators than a good-natured writer like Hitt. To hedge their bets, they embarked on a series of other doomed investments, each a product of a globalized world.

With their bird dropping dollars, the island bought a stake in an Australian rules football team. They created an international airline. And, perhaps most intriguingly, Nauru’s president paid a man named Duke Minks $7 million to compose a musical about Leonardo Da Vinci falling in love with the Mona Lisa. It flopped. Nauru, again, went bust.

Next, they tried selling passports, to anyone who would hand over a bag containing $15,000. That raised funds for a few years, until terrorists from Saudi Arabia based in Afghanistan flew airplanes into buildings in New York City, prompting worries that Al-Qaeda operatives would buy documents from a faraway, forgotten island.

Facing international sanctions, Nauru cleaned up its banking and passport businesses, and again went bust. But as 9/11 took away from Nauru, it also gaveth. The ensuing refugee crisis from America’s invasions of Afghanistan and Iraq produced a surge of people fleeing their homes, with unprecedented numbers of migrants trying to reach Australia by boat.

The Australian government paid Nauru to house refugees in bleak immigration detention centers on the island. In 2007, voters in Australia again changed Nauru’s fates, as a newly-elected prime minister deemed the Nauru strategy to be inhumane. The centers were closed. Then in 2012, after a vegetable vendor in Tunisia set himself on fire, sparking the Arab Spring and a civil war in Syria, demand surged, Australia changed tack, and Nauru, yet again, cashed in.

Sinking Under the Tides of Globalization

Nauru was mostly unchanged for 3,000 years, a country as isolated as it is possible to be in a fundamentally intertwined world. Then, in the span of one century, the lives of ordinary Nauruans were radically transformed by distilleries in Scotland, industrialized farming in North America, Russian mobsters in Moscow, theatregoers in Covent Garden, terrorists in Afghanistan, federal agents in Washington, processed food manufacturers in China, refugees in the Middle East, people smugglers in Indonesia, voters in Australia, and now, climate activists in Sweden.

Nauru’s fresh problems come from Chinese coal plants belching out smoke, cows in Brazil, and Americans commuting in fleets of gas-guzzling SUVs. The island is being submerged due to sea level rise, as the volcanic blip that gradually emerged from the ocean, is now being reclaimed by it, this time, in a geological blink.

Nauru tried to surf on the tides of the globe’s newfound interconnectedness — and now, it is sinking beneath them.

Thank you for reading The Garden of Forking Paths. If you enjoy my writing, please consider upgrading to a paid subscription. If you’re interested in the story of Nauru, I also covered it on my podcast, Power Corrupts, with an episode called “The Billion Dollar Shack.”