Australia and Vanuatu agree to $328m security and business deal

Australia is trying to grow its influence in the Pacific region, to counter China's increased power.

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The so-called Nakamal agreement - the result of months of negotiations - will transform Australia's relationship with its Pacific neighbour, leaders from both countries said on Wednesday.

"We are family," Australia's deputy prime minister Richard Marles said, adding, "Our future is very much bound together". Vanuatu's leader Jotham Napat described the deal as "win-win situation" for both nations.

The deal, to be officially signed in September, comes as Australia tries to grow its influence in the region, to counter China's increased spending and power.

While the Australian government did not provide further details of the deal, the Australian Broadcasting Corporation (ABC) reports it will provide funds to build two large data centres in the capital, Port Vila, and Vanuatu's largest island, Santo.