By Matt Siegel
SYDNEY (Reuters) - Australian Foreign Minister Julie Bishop on Friday took a major step towards resetting frayed relations with Fiji, lifting the final sanctions against the country during the most senior visit by an Australian diplomat since a military coup eight years ago.
Fiji, a tropical archipelago about 3,200 km (2,000 miles) east of Australia, has suffered four coups since 1987, the latest in 2006 led by former army chief Voreqe "Frank" Bainimarama, whose Fiji First Party holds a wide majority in the new parliament.
Bainimarama was sworn in as prime minister last month after winning the first elections in almost a decade with a landslide 60 percent of the vote, an outcome welcomed by Australia and New Zealand.
The region's economic and diplomatic power houses have been eager to welcome Fiji back to the fold of normal relations after eight years of isolation, and Bishop's visit to the capital, Suva, signals that process is moving quickly ahead.
"As I depart for a two-day visit to Fiji, the first by any foreign minister since the elections in September, I announce the Australian government has lifted all remaining sanctions against Fiji," Bishop said in a statement.
"It demonstrates our commitment to normalise our bilateral relations."
Fiji sits near the centre of a vast swathe of the South Pacific crisscrossed by vital shipping lanes, and controls huge maritime and mineral resources, importance that is recognised by the United States and its regional allies.
Australia is Fiji's largest trading and commercial partner in the region and is the biggest investor in Fiji, according to data from the Australian Department of Foreign Affairs and Trade.
Two-way trade between the South-Pacific neighbours is worth over A$1.8 billion ($1.58 billion) annually. Around 300,000 Australians visit Fiji each year, comprising over half of the arrivals for Fiji's tourism-focused economy.
Fiji has in recent years forged stronger ties with new partners, in particular China, which is establishing an ever greater presence across the Pacific and runs a bauxite mine in Fiji, raising concerns for the region's traditional powers.
Bainimarama seized on a long-simmering rivalry between indigenous Fijian nationalists and minority ethnic Indians, the economically powerful descendants of labourers brought by the British to work sugarcane fields, to justify his coup in 2006.
In 2000, ethnic Fijians held the first Indo-Fijian prime minister hostage in parliament for 56 days, in a coup that began with deadly riots in the streets of Suva.
Five of the opposition parties that stood in the election signed a letter alleging fraud and corruption, but the Electoral Commission rejected them and Australia praised the conduct of the poll and its outcome.
(US$1 = A$1.1357 dollar)
(Reporting by Matt Siegel; Editing by Nick Macfie)