Located 4,023 kilometers (2,500 miles) southwest of Hawaii, the island of Nauru has an area of 21 square kilometers (8.11 square miles)—about six times the size of New York's Central Park. In 2004 the population was estimated to be 12,809. At one time it was perhaps the world's richest nation on a per capita basis. In the mid-1970s, Nauru's per capita income was about $50,000 per person; however, in 2001, it was estimated at about one-tenth that amount, or $5,000—about the same as that of Macedonia, Peru, Lebanon, and China.

Nauru's great wealth came from mining the huge phosphate deposits that covered the center of the island, and the decline in its wealth came from the depletion of these deposits, the apparent failure of the investment strategy Nauru developed to compensate for the inevitable exhaustion of the phosphate deposits, and the inability of the country to develop effective alternative economic ventures. Ninety years of...