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Tuesday, December 11, 2007

A $5 Trillion island

The Billion-Dollar Shack
By JACK HITT


In a ferocious tropical heat, I stood a few feet from the front door of the building -- a shack, really -- that some say brought Russia to its knees and destroyed it as a modern nation. There is no plaque commemorating this achievement, and I may have been the first to make this pilgrimage. After all, there are only two flights a week out of Brisbane, Australia, that will even take you here -- here being the nation of Nauru, a tiny island 1,200 miles east of New Guinea in the Pacific Ocean, just south of the Equator. It may be about as far away from everywhere as you can get and still be somewhere.

Nauru is not a place you just visit. The beaches are raked with razorlike coral formations, and there is no natural harbor. Foreigners, who land on the airstrip left by Japanese conquerors in World War II, are confined mainly to Australian engineers who work at the island's nearly depleted phosphate mines.

Although this island is one of the most obscure places on the planet, Nauru has lately gained a name for itself in Western international-finance circles. Amid the recent proliferation of money-laundering centers that experts estimate has ballooned into a $5 trillion shadow economy, Nauru is Public Enemy No. 1.

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