The stability of the Bainimarama regime has been questioned following public statements by ex-Fiji Royal Military Force chief of staff Lieutenant Colonel Ratu Tevita Uluilakeba Mara, who fled to Tonga after being charged with sedition.
Fiji Prime Minister Commodore Voreqe (Frank) Bainimarama, who came into power following a coup in 2006, has declared the former army commander a fugitive and is seeking to have him extradited from Tonga.
Speaking to media this afternoon, Mr Key said he was comfortable with New Zealand's current approach to Fiji.
"If we put greater sanctions on Fiji the risk that we run is that has great implications for everyday Fijians," Mr Key said.
"As we've seen in countries like Zimbabwe and other countries around the world, economic sanctions can last a long time before they have any great impact but they have a dramatic impact on the plight of everyday citizens in that country."
The travel bans New Zealand had in place were frustrating the regime, Mr Key said.
"This is a balancing act between trying to make sure that pressure goes on the Fijian regime to hold democratic elections, but, at the same time, trying to make sure that the plight of everyday Fijians is preserved as much as we can."
The bans would remain hard and fast for the Rugby World Cup.
"We certainly know that they will want to come, and that will be also true of the test match that the All Blacks are playing in the new stadium in Dunedin, but the Government's view is that the travel bans we have on members of the regime are totally appropriate, we have no intention of changing that and we won't be softening it for the Rugby World Cup," Mr Key said.
Meanwhile, Fiji police have reportedly been interviewing a New Zealand surfing instructor accused of helping Lt Col Mara to escape Fiji.
Tim McBride, who is the husband of Lt Col Mara's niece, was suspected of helping him leave to the island of Kadavu to board a waiting Tonga navy boat last week.
In an interview posted in the Fijian blog Coup Four and a Half, Lt Col Mara said Fiji police were looking in the wrong direction by interviewing Mr McBride.
"My statements and my presence here in Tonga is a big slap in the face of the regime. Bainimarama needs to save face and the only way they can do that is by framing someone as an accomplice to my escape.
"As I said I went fishing by myself and I got into difficulties and I was rescued by a Tongan Navy vessel. I am a military officer and I am perfectly capable of organising a fishing trip."
The Bula Tribune, a California-based Fiji publication, reported Lt Col Mara's sister Adi Ateca Mara-Ganilau was visited by six soldiers, making her the fourth member of the family to be harassed.
Mr McBride's wife Adi Koila Ganilau was also picked up, and was forcibly taken to her Pacific Harbour home two days ago before her house was ransacked.
Lt Col Mara's wife Dolores was questioned a few days ago and has since been released.
Mr Key said the latest information was that Fijian authorities were not holding any New Zealanders.
"But we're constantly and continually checking that information."
