By Nick Squires

BBC, Nauru

There are not many countries you can bicycle around before breakfast. One of the very few is Nauru, a Pacific island nation halfway between Australia and Hawaii. The island of Nauru is the world's smallest independent republic Dubbed Pleasant Island in the 18th Century by the captain of a passing British ship - it is the world's smallest independent republic, a coral speck dwarfed by the vastness of the Pacific Ocean. On most assignments, one of the first tasks is to hire a car. On Nauru, it didn't really seem worth the bother, I opted instead for a battered mountain bike. It took me about an hour and a half to cycle the narrow coast road, sweating profusely beneath the fierce equatorial sun. Before I knew it, I was back where I started. I had just circumnavigated the entire country. Nauru may be little, but it once enjoyed enormous wealth. In fact Nauruans were among the richest people, per capita, in the world. Hardly anyone thought of investing the money. Dollar notes were even used as toilet paper

A quirk of nature means that their island consists of some of the world's purest phosphate - the legacy of millions of years of sea bird droppings reacting with an uplifted coral. Spending spree From independence from Britain and Australia in 1968, until the 1990s, Nauru earned a fortune exporting its phosphate for fertiliser. Islanders are returning to fishing now the money has run out The decades of mining left the once-lush interior a bleak moonscape of strange, grey coral spikes - all that is left once the phosphate-rich top soil is scooped out of the ground - but Nauruans did not care. They gave up their jobs, brought in migrants from other Pacific islands to do the hot, dirty work of digging and sat back waiting for the royalty cheques to drop into their hands. They then went on an extraordinary spending spree. Families who had never left the island would charter aircraft to take them on shopping expeditions in Hawaii, Fiji and Singapore. Sports cars were imported, despite the fact that Nauru has only one paved road and the speed limit is 25mph. A police chief memorably bought a sleek yellow Lamborghini, only to find he was too portly to fit in the driver's seat. "We just didn't know how to handle it all," a barefoot islander told me as he played his guitar beneath a tree. "Hardly anyone thought of investing the money. Dollar notes were even used as toilet paper," his friend told me. "It's true," he insisted seeing my look of disbelief. "It was like every day was party day." The Nauraun children are still hopeful for the island's future A procession of conmen and carpetbaggers persuaded successive governments to invest in a string of bizarre schemes, including a West End musical about the life of Leonardo da Vinci. Nauru amassed a property portfolio of hotels and office blocks around the world. But corruption and downright incompetence took their toll and by the early part of this century, most of the assets had to be sold off to pay for the country's mounting debts. Now all the money is gone. Angry islanders Signs of Nauru's former wealth are few and far between. Homes are dilapidated, with holes punched through their walls. An area known as Location is one of the most squalid slums I have come across in the South Pacific, a concrete ghetto of smashed windows, stray dogs and graffiti. We're doing our best to climb out of it. It won't be like in our heyday, but at least we'll be comfortable

Marcus Stephen, Nauru president The brand new cars which islanders bought are rusted wrecks smothered in tropical undergrowth. Last week a mob of angry islanders burnt down Nauru's only prison in what the government said was politically motivated unrest orchestrated by a former president. Now comes another blow to this Micronesian micro-nation. A refugee detention centre, set up by Australia seven years ago, will close down at the end of this month. It was built by the government of Prime Minister John Howard at a time when hundreds of boat people were trying to reach Australia. It proved a huge vote-winner, but Mr Howard was turfed out in November and his successor, Labour Prime Minister Kevin Rudd, swiftly moved to shut it down. Nauruans are distraught - the facility brought much-needed jobs and hundreds of big-spending contractors, police and officials. Phosphate mining has resumed in on the island of Nauru Despite all these trials, Nauru is determined to get back on its feet. A new reformist government is hatching plans to establish the island as a pit-stop for international tuna boats to refuel and repair. A mining company hopes to extract precious metals from the surrounding sea-bed. Phosphate mining has resumed with the government claiming there is another 30 years of reserves up in the scarred interior. Hangover "We find ourselves in a big hole," concedes newly-elected president and former weight-lifting champion, Marcus Stephen. "We're doing our best to climb out of it. It won't be like in our heyday, but at least we'll be comfortable." Nauruans realise that the party is well and truly over. Now comes the hangover and then, with luck, some sort of recovery. But it will take squeaky clean governance, hard work and rock-solid investments for Pleasant Island to once again live up to its name. It may not yet be paradise lost, but it is most definitely paradise postponed.



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