Nauru hosted some 800 refugees and asylum seekers at the end of 2001. The vast majority were Afghans and Iraqis whom the Australian government had brought to Nauru as part of a new Australian policy toward asylum seekers known as the "Pacific Solution."

The island nation of Nauru is one of the world's smallest republics. Just 25 miles (41 km) south of the equator, Nauru has a population of less than 12,000 and a land mass of 12.6 square miles (32.6 square km), much of which is dedicated to phosphate mining, the country's major industry.

In late August, Australia refused to allow the entry of more than 400 persons – most of whom were Afghans – aboard a Norwegian freighter, the Tampa, that had rescued the group at sea and attempted to bring them to Australia's Christmas Island. The incident sparked international attention and caused a stalemate based on varying interpretations of international maritime law.

On September 1, a break in the stalemate occurred. Nauru offered to house the asylum seekers while their refugee claims were being processed, and Australia agreed. New Zealand said it would take up to 150 of the asylum seekers, assess their claims, and permanently admit those found to be refugees.

Nauru, which is not a party to the UN Refugee Convention, asked the UN High Commissioner for Refugees (UNHCR) to screen the asylum seekers taken there, and the agency eventually agreed. Australia said it would meet all of Nauru's costs for transportation and housing.

Australia subsequently agreed to provide Nauru with an aid package worth the equivalent of nearly $10 million to help improve power, communications, and medical services on the island, in return for allowing up to 800 asylum seekers to enter.

On September 3, Australia transferred the Tampa's passengers to one of its troopships, the Manoora, which arrived at Nauru on September 17. By that time, the Manoora had picked up more than 200 other persons, most of whom were Iraqi (and some others Palestinian), who had also attempted to reach Australia.

Some 100 of the asylum seekers, mostly Afghans, disembarked onto Nauru two days later, setting foot on dry land for the first time in nearly a month. Residents of Nauru greeted the arrivals with a traditional welcome of songs and dances, handing flowers to each asylum seeker. The Afghans held a sign thanking Nauru "for giving protection and shelter for Afghan refugees." A bus took the asylum seekers to a makeshift refugee camp (known as Topside) built by Australian troops in Nauru's barren interior. Shortly after, UNHCR began screening the applicants.

Another 120 asylum seekers soon left the Manoora, and Australian officials planned to unload similar numbers each day, as facilities on Nauru became available. On September 21, however, more than 200 Iraqis and Palestinians refused to disembark, insisting they be taken to Australia. The standoff lasted nearly two weeks, until October 4, when Australian authorities offloaded the last of the Manoora's passengers. Earlier that week, Australian soldiers had forcibly removed 12 Iraqis, despite initial statements by Nauruan officials that they would accept only voluntary arrivals. Those removed immediately launched a sit-in on the bus, and the entire operation was suspended at the insistence of the Nauru government. The situation was resolved only after further negotiation.

In mid-standoff, Australia flew 131 Afghans from Nauru to New Zealand, leaving nearly 500 asylum seekers on Nauru.

On September 23, Australia transferred the passengers of two more boats to the Australian naval ship Tobruk. Six days later, Australia announced that they, like the Manoora passengers, would go to Nauru, which had agreed to accept the additional 260 asylum seekers – mostly Afghans and Iraqis – for processing. (The decision reportedly surprised and angered many Nauruans, including members of the parliament.) The Tobruk passengers arrived on Nauru on October 13.

However, UNHCR, which had only reluctantly agreed to process the Manoora asylum seekers, said it would not process the Tobruk group. Australia sent its own immigration officials to screen the new arrivals – under the minimal requirements of the UN Refugee Convention, rather than under Australian law.

On December 6, Amnesty International issued a report describing Australia's "Pacific Solution" as "unsustainable and inhumane," and described conditions at the Nauru camp as "hellish."

At year's end, 800 asylum seekers remained on Nauru (with more than 300 others scheduled to be transferred to Nauru from Christmas Island soon after the New Year). By that time, Nauru and Australia had amended their agreement to increase the number of asylum seekers on Nauru at any one time to 1,200, in exchange for the equivalent of an additional $5 million in aid.

Although UNHCR, which was screening 529 of the asylum seekers on Nauru, had indicated for several weeks that it would soon announce the approval figures, the agency had not done so by year's end. An unresolved question was the fate of the approved refugees, because Australia had indicated that it would take its "fair share," but that it expected other resettlement countries to do the same.

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