By Charlotte Greenfield
WELLINGTON (Reuters) - New Zealand said on Thursday it was cutting NZ$1.2 million ($762,500)in aid to Nauru, slashing its budget for helping the island nation by more than half over concern about a growing crackdown on human rights.
Nauru, a tiny Pacific island with just 10,000 citizens, has been plagued by allegations of corruption, rights abuses and a crackdown on press freedoms under the leadership of President Baron Waqa.
Nauru's economy has been heavily reliant on foreign aid since its rich phosphate mines were depleted in the 1980s.
"The government has decided to place a hold on the funding we provide to the Nauru justice sector until such time as we see some positive movement in the situation there," New Zealand Foreign Minister Murray McCully said a statement.
New Zealand, Nauru's second largest donor after Australia, ramped up pressure on it in July following the arrest of two outspoken opposition lawmakers.
Australia, which runs an A$2 billion ($1.4 billion) immigration detention center on Nauru, has also asked for assurances that Nauru would uphold the rule of law.
Australia's offshore immigration detention system, which involves intercepting refugee boats and moving people to islands outside Australia for processing applications for protection visas, has earned the criticism of the United Nations because of near-nonexistent access for outside observers.
Critics have accused Australia, the region's diplomatic powerhouse, of not exerting pressure on Nauru because it is worried it could lose the detention center there.
Transfield Services Ltd, which operates the Australian camps in Nauru and on Manus Island in Papua New Guinea, has also come under fire recently from investors concerned about allegations of abuse at the facilities.
The ability of asylum seekers detained in Nauru to get access to a judicial process was also a factor in New Zealand's concerns, McCully said.
"A functioning justice sector in Nauru is critically important, not just for the people of Nauru, but also for their role as an offshore processing center for asylum seekers," he said in a July statement to which a spokesman referred reporters to in relation to Thursday's announcement.
New Zealand would continue to send about NZ$1 million in aid to fund education programs in Nauru, a foreign ministry spokesman told Reuters.
The government of Nauru did not immediately respond to requests for comment.