In August 2001, after conditions in Fiji were deemed too unstable, Nauru was selected to host the thirtieth Pacific Forum, a meeting of Pacific nations. Officials from the nations planning to attend were concerned, since Nauru was reportedly out of money, with government employees unpaid and supply ships refusing to unload because of the government's unpaid bills. Government leaders traveling to Nauru brought some limited provisions, including fresh water, with them.
In April 2002, the United Nations (UN) granted refugee status to some asylum-seekers currently being detained on Nauru. The largest number of asylum-seekers, however, were Hazara Afghans, whom the UN did not consider refugees after the ouster of the Taliban government and the installation of a Hazara-led government in Afghanistan. The UN was seeking permanent resettlement for the refugees, but it remained to be seen whether Australia would accept any of the refugees, or whether they would encourage them to remain on Nauru. This part of the plan Australia called the Pacific Solution.
Nauru's climate may appear to be ideal for housing refugees; however, the country has few accommodations and in 2002 the refugees were living in tin sheds hastily constructed on denuded sites of former phosphate mines. Some Western observers speculated that the refugees exhibited symptoms of post-traumatic stress disorder. In June 2002, Harris declared Australia's Pacific Solution was a "Pacific Nightmare," because Australia had not kept its promise to provide A $30 million in goods and services to Nauru as part of the deal.
In July 2002, Harris recognized China as the sole legitimate Chinese government and that Taiwan was part of China. For 22 years, Nauru had had diplomatic ties to Taiwan, but the July reversal of official state recognition followed a promise by China to offer Nauru US $137 million in aid and debt relief. Harris had recently requested that Taiwan provide US $10 million to Nauru, and Taiwanese officials labeled the change in diplomatic relations "money diplomacy." Taiwan subsequently severed its ties to Nauru.