The story of Christmas – and how it was ruined by Australia

Christmas Island was once called the Galapagos of the Indian Ocean. But a detention centre for asylum-seekers is threatening its rare crabs – and enraging the locals. Kathy Marks reports from Flying Fish Cove

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Until September 2001 Christmas Island, an Australian external territory in the Indian Ocean, was known only for its annual migration of native red crabs. Then John Howard's right-wing government deployed the SAS to prevent the Tampa, a Norwegian tanker, from docking with its cargo of shipwrecked asylum-seekers, and the island became a symbol of Australia's refugee crackdown.

Eight-and-a-half years on, a Labor government is in charge, but Christmas Island – the rugged tip of an extinct volcano, 1,600 miles north-west of Perth – is in the spotlight again. An immigration detention centre built there after the Tampa scandal is overflowing following a flurry of boat arrivals, and with an election due later this year, the former British colony finds itself once more a political football.

Last week the Immigration Minister, Chris Evans, closed the door to Sri Lankans and Afghans, announcing that no new refugee claims would be processed for three to six months. He cited improved security in the two countries; however, cynics noted the timing of the move, which followed the interception this year of 38 boats in Australian waters, and revelations that Christmas Island is full.

The isolated tropical island, an Australian possession since 1958, was once known as the Galapagos of the Indian Ocean because of its profusion of endemic species. Now it has a darker reputation, to the dismay of its 1,200 residents. Some locals – outnumbered nearly three to one by asylum-seekers and Immigration Department staff – can no longer afford rents. The price of food has skyrocketed.

At Flying Fish Cove, the main bay, children bodyboard in the shallow, crystal clear waters as giant frigate birds wheel overhead, waiting to swoop down on a fishermen's catch. It's an idyllic scene – apart from the Australian Navy ship just offshore and the blue-shirted security staff waiting on the jetty for the latest batch of gaunt-looking men, women and children plucked from crowded boats.

Residents – mostly descendants of indentured workers brought over from China and South-east Asia in the late-19th century to work in the island's phosphate mines – have grown accustomed to the almost daily ritual enacted at the cove.

The unscheduled visitors are transported to shore by barge, then transferred to school buses on the jetty and whisked to one of two detention centres. The main facility – situated on a bleak plateau, surrounded by jungle, at the island's north-west extremity – is for single men. Women and children are held in a separate, unfenced camp.

The island, a 45-minute flight from Jakarta, is the centrepiece of an immigration policy described by Australia's Prime Minister Kevin Rudd as "tough but humane". Soon after coming to power, he jettisoned Mr Howard's more extreme measures, including dispatching asylum-seekers to the Pacific nations of Nauru and Papua New Guinea for processing, and granting refugees five-year rather than permanent visas.

However, as a sop to public opinion, and to dispel the impression of being "soft" on border protection, the government has continued to keep boat people off the mainland. Everyone picked up in Australian waters is taken to Christmas Island. It's an expensive sop: the main detention centre, North West Point, cost A$400m (£242m) to build, and, according to Oxfam, it costs A$1,830 a day to keep a detainee there, compared with A$238 in Sydney.

Locals have come to accept the prison camps, but many remain unhappy. "This is an incarnation of Christmas Island I don't approve of," says Simon Prince, who runs a dive operation. "But we don't get a say. My opinion is that these are people needing our help. I've been involved in rescues [at sea] in the past, and generally they've got a tragic story to tell."

North West Point, a 20-minute drive from residential areas, was supposed to accommodate at most 800 people; currently more than 2,000 are held on the island, with the overflow in prefabricated huts and air-conditioned tents. The facility is surrounded – for reasons that are unclear, in such a remote spot – by a tall metal fence. Islanders call it "that place" or "the dark side".

"Look," says Gordon Haye, Christmas's one taxi driver, swerving to avoid a red crab, "here's the A$50m recreation centre they built as a bribe to put that monstrosity [North West Point] up there." His figures might be inflated – the centre actually cost about A$8m – but there is no mistaking his bitterness towards the Australian government.

Mr Haye says the price of everything has shot up, thanks to the presence of 800 immigration officials, security guards, interpreters and medical staff. "My brother and his son are living in a little shed because they can't afford a house," he says. "I know of a family with two kids living in a laundry at the back of someone's house." Staff at the small hospital are struggling to cope, and waste and sewage services are overloaded.

Sighted on Christmas Day 1643 by a British naval captain, William Mynors, the island was not settled until 1888, when the British realised it contained rich phosphate deposits. Today its three principal residential precincts – Poon Saan (mainly Chinese), Kampong (mainly Malay), and Settlement (mainly European) – reflect its mixed ethnic heritage, as do the Buddhist and Taoist temples, the bright green mosque and the signs in three languages.

Phosphate is still the biggest employer, but mining has been on the wane for years, and an application for new leases – which would involve the destruction of pristine rainforest – is expected to be rejected.

The search is on for something to fill the gap, but Christmas has a history of grand projects that, for a while, seemed to offer economic salvation. A casino popular with Indonesian high-rollers, including cronies of Tommy Suharto, the dictator's son, closed in 1998 after just five years. Plans for a satellite launch pad never got off the ground, and the site has since been swallowed by jungle. Some believe eco-tourism represents the future of the island, which has one roundabout, one set of traffic lights and, instead of a newspaper, a blackboard on which public notices are scrawled – until a tropical downpour washes them away.

For now, though, the industry is tiny, and Linda Cash, marketing manager of the tourism association, sighs when asked about the challenges of promoting the place. "Most people in Australia have got a very skewed view of Christmas Island," she says.

So, for the moment, the refugee business is keeping Christmas afloat. "We have a detention economy on the island," says Gordon Thomson, president of the shire council. "It employs more than 100 people here, so it's our second largest employer."

The staff from outside, flown in at considerable expense to Australian taxpayers, are disliked locally not only for driving up prices, but also for killing native crabs. As well as the red crabs which carpet roads and beaches during their migration from the rainforest to the ocean, Christmas is home to 20 other species, including the robber or coconut crab – the world's largest land invertebrate.

Eaten to extinction, or close to, in many places, the outlandishly sized robber crabs – some as big as small dogs – are protected on Christmas. However, 190 of them have been killed by cars this year, and residents blame outsiders speeding up and down the road to North West Point.

The Tampa crisis is credited with helping Mr Howard to win the 2001 election. Mr Rudd is widely expected to be re-elected, with or without a crackdown. But his new hardline stance will doubtless help – although the numbers of people seeking asylum in Australia are minuscule compared with those in Europe, and 90 per cent arrive by air, not boat.

On Christmas, some yearn for more innocent times. "Everyone thinks of detention now when they think of Christmas Island," says Mr Prince, the dive operator. "I would like the place to be known for what it's best for: as a pristine wilderness, both above and below the water, and as one of the last frontiers of nature."

The island by numbers

2,800 Immigration officials, guards and asylum-seekers on the island

1,200 Estimated permanent population

190 Rare robber crabs to be hit by cars on the island's roads this year, a toll local people blame on outsiders

£242m Estimated cost of construction for the main detention centre

£1,100 Daily cost of holding a detainee on Christmas Island, according to Oxfam

£143 Daily cost of holding a detainee in Sydney

1,600 Distance in miles from the island to Perth, the closest Australian city

13,507 Visas granted by the Australian government to refugees in 2008-09. Of those, 11,010 were granted to those held offshore