Britain urged to help pay off 'cheated' islanders: Nauru is pursuing compensation for mining blight, writes Robert Milliken in Sydney

BARELY a dot on the atlas, the tiny South Pacific island of Nauru has some of the world's most unusual claims to fame. Its total land mass, not much bigger than central London, is composed almost entirely of ancient bird droppings, built up around a coral atoll. After Nauru's independence 25 years ago, phosphate exports turned its 10,000 inhabitants into the world's richest people, measured by per capita income. But the good news ended there.

Britain will now be asked to pay pounds 16m towards the rehabilitation of Nauru from a legacy of phosphate mining over more than 70 years which has left the island physically devastated and the Nauruans facing a bleak future. The proposed payment forms part of a settlement which Paul Keating, the Australian Prime Minister, announced in Nauru last week in an attempt to close one of the 20th century's more bizarre chapters in colonial exploitation. Britain, Australia and New Zealand were joint partners in the British Phosphate Commissioners (BPC), a quasi-autonomous body that allowed them to strip mine Nauru's phosphate as cheap fertiliser for their farms. The BPC was the commercial offshoot of an international mandate under which the three countries jointly administered Nauru from 1920 until its independence in 1968, with the main administrative power vested in Canberra.

Today, the Nauruans are confined to the palm-fringed coast of their island. Its central plateau has been rendered an environmental disaster from mining, devoid of trees, birds and animals. Exposed coral pinnacles, from which phosphate has been ripped out, and now bleached by the sun, have left about 80 per cent of the island looking like a moonscape.

For a decade after independence, equipped with royalties and their own mining income, the Nauruans made large property investments abroad, the most conspicuous of which is a Melbourne skyscraper, Nauru House, which Australians refer to as 'birdshit tower'. But the investments have turned sour. Air Nauru, the fledgeling national airline, has been plagued by problems; Leonardo, a West End musical, into which Nauru poured about pounds 2m, was a flop; and Nauru House has developed 'concrete cancer' which is costing millions to repair.

Unable to grow traditional fruit and vegetables on their mined-out land, and forced to rely on imported processed foods, the Nauruans have been hit by a health crisis. They now have one of the world's highest rates of diabetes and heart disease and one of the lowest life expectancies. Obesity is rife. Their sole livelihood, the remaining phosphate deposits, is due to run out in two years.

The Nauruans have always accused the former colonial powers of cheating them of royalties by selling the pre-independence phosphate below market value and of forcing them to pay pounds 10m for the BPC's mining assets at independence, assets which, they argue, rightfully belonged to them. The 1988 report of an independent inquiry, commissioned by the Nauru government, said of the behaviour of Britain, Australia and New Zealand: 'Entrusted by the world community . . . with this 'sacred trust of civilisation', the three powers concerned failed to act in accordance with that trust and acted for their own benefit rather than for that of the people in their case.'

That report triggered Nauru into launching a case in the International Court of Justice at The Hague in 1989 against Australia, as the principal colonial power, claiming compensation to restore the island to a state where food can be grown again. Australia argued that Nauru had waived such claims at independence. But the International Court ruled a year ago that Canberra had a case to answer.

When Mr Keating flew to Nauru last week to attend the annual South Pacific Forum heads of government meeting, he surprised everyone by announcing a settlement with his host country worth Adollars 107m ( pounds 48m), not much less than the sum Nauru had claimed. Bernard Dowiyogo, Nauru's 46-year-old President, pronounced the offer 'generous' and said rehabilitation work could start straight away.

But it may not be so simple. Australia has always maintained that any settlement must involve all three colonial powers, and has advised Britain and New Zealand that it will ask both countries to contribute one-third each. London and Wellington, which had no foreknowledge of Mr Keating's offer in Nauru, both said they were reserving their positions.

The Nauruans could yet find that their celebrations dissolve into despair as their former colonial masters wrangle over their fate.

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