If a bill being considered by the U.S. Senate becomes law, the Pacific Ocean nation of Palau stands to receive $137 million from the U.S. government.
The money would be used for assistance with education, health and infrastructure, and it would settle a dispute between the Congress and Palau, one of three Micronesian nations that are parties to the Compact of Free Association treaty with the U.S.
That treaty has more financial impact on Hawaii than any other state. In 2014, Hawaii spent $163 million for education, health and other services for COFA residents living in the islands.
The financial assistance would be paid out in fiscal years 2017 through 2024 would include an initial contribution of $20 million to a trust fund intended to help Palau in later years.
The financial estimate comes from a report by the nonpartisan Government Accountability Office, which testified on Senate Bill 2610 before the the Senate Energy and Natural Resources committee last week.
The bill was introduced by Sen. Lisa Murkowski, the Republican from Alaska who chairs the committee. Co-sponsors include Democrat Mazie Hirono of Hawaii.
Murkowski’s bill seeks to have Palau and the U.S. reach agreement on COFA spending that was worked out in 2010 but not finalized.
COFA requires the U.S. to provide payments to the Micronesian nations in exchange for U.S. defensive control of the region. It is 2 million square miles in size and includes a U.S. military base in the Marshall Islands.
Under the agreement, COFA citizens are allowed to travel to and live in the U.S. and its territories without a visa and labor certification requirements.
Because of that, it’s estimated that as many as 75,000 COFA citizens — or one-third of the total population — have left their home islands.
But the U.S. does provide a lot of money to the COFA nations.
The Republic of the Marshall Islands and the Federated States of Micronesia receive nearly $200 million every year from the U.S. under an arrangement that will expire in 2023.
Palau was budgeted a total of $216 million from 2011 through 2024, but because Congress has not implemented the COFA agreement, it has only been paid $79 million.
In related testimony, the GAO said the Federated States and the Marshalls still “face challenges to achieving the compact goals of economic growth and self-sufficiency.”
The agency previously found that neither country has made significant progress on reforms, while compact implementation “has been characterized by unreliable performance data and by accountability and oversight challenges.”
In the GAO’s latest report, those same problems are identified.
Palau has a strong tourism economy and is not as dependent on the federal funds as the Marshalls and the Federated States.
But repeated critical reports by the GAO on how those two nations account for spending U.S. money will almost certainly be on the minds of members of Congress should negotiations ever begin to extend COFA support beyond 2023.