Australian and New Zealand diplomacy has failed Fiji, former Prime Minister and World Trade Organisation Director-General Mike Moore said yesterday.

Australian Foreign Minister Stephen Smith defended his country's approach on TV One's Q and A show over Fiji, which is under the military rule of Commodore Frank Bainimarama's regime.

"Well they should be treated like pariahs, this is effectively a military dictatorship, this is a regime that has taken Fiji away from democracy."

Mr Smith said Fiji's economy was in a "very precarious" situation, in danger of "falling over", and it had started talks with international financial institutions.

Australian sanctions were not to blame for the situation, he said. "We have never imposed or contemplated sanctions which would have an adverse impact on the Fijian economy, on the contrary."

Mr Moore said one of the international financial institutions Mr Smith referred to was likely to be the World Bank.

"This represents a huge diplomatic failure by New Zealand and by Australia over several decades," he told Q and A.

"Foreign policy is projecting and protecting your interests and promoting your values and building up over many years those values and those interests. We have failed."

Mr Moore said "a game changer" was needed to look at the problems rather than take a critical approach.

"There has to be a game changer there, and to allow people to move, keep their dignity and keep their faith."

After talks last week, Mr Smith and Foreign Minister Murray McCully said they would continue to put pressure on the United Nations over using Fijian peacekeepers.

The UN decided last year not to use Fijian peacekeepers for any new missions but it has continued to deploy those already engaged.

Former New Zealand First MP Ron Mark told the show the UN struggled to find quality defence forces.

"One of the greatest difficulties the United Nations has is getting credible defence forces from credible countries that aren't corrupt...

"It's one thing for New Zealand and Australia to be saying we want the United Nations to drop Fiji from its list of preferred countries [and another to find replacements]."

- NZPA