CANBERRA – Australia and Vanuatu are set to formalize a landmark A$500 million ($326.50 million) strategic partnership, deepening cooperation on economic development and security over the next decade in a significant move amid growing regional competition.

The comprehensive agreement, known as the Nakamal Agreement, is in its final stages of negotiation, with senior officials from both nations expected to endorse the pact this week. Vanuatu's Prime Minister, Jotham Napat, and Australia's Prime Minister, Anthony Albanese, are anticipated to officially sign the deal in the coming month, solidifying what Mr. Napat has described as a "win-win" for both countries.

This new pact aims to enhance collaboration across a range of critical areas, including trade benefits, labour mobility, infrastructure, and climate resilience. The agreement comes as Australia seeks to reaffirm its role as Vanuatu's primary partner for development and security. The move is viewed as a strategic response to China's increasing influence in the Pacific, where it stands as Vanuatu's largest external creditor.

Australia's Deputy Prime Minister, Richard Marles, underscored the deal's focus on tangible development, highlighting projects like data centers as "pivotal" for Vanuatu's human and economic progress. The agreement builds upon a long-standing relationship, reinforcing a shared commitment to a stable and prosperous "Blue Pacific."

The Nakamal Agreement follows a bilateral security agreement signed in December 2022, which aimed to formalize security cooperation. However, the ratification of that earlier pact faced delays after a change in government in Vanuatu. In September 2023, then newly elected Prime Minister Sato Kilman expressed a desire to review the security deal, citing a need for broader political consultation to ensure it aligned with Vanuatu's national interests.

Australia's commitment to its Pacific neighbour has also been demonstrated through practical and timely assistance. Following a devastating earthquake in Vanuatu in December 2024, Australia dispatched search and rescue teams to aid in relief operations. In February 2025, it further pledged an additional A$3.2 million in direct budget support to assist with the nation's recovery efforts.

The economic ties between the two nations remain a cornerstone of the relationship. During a visit to the region in May 2025, Australian Foreign Minister Penny Wong reaffirmed her country's commitment to maintaining tariff-free access for goods from Pacific Island nations, providing a crucial assurance for economies like Vanuatu's, especially in a global climate of reduced aid.

Together, the new strategic agreement, ongoing disaster relief, and robust trade cooperation paint a picture of a strengthening partnership, with Australia and Vanuatu working collaboratively toward shared regional goals.