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During a visit in August to the Federated States of Micronesia, Secretary of State Mike Pompeo gushed about the beauty of the tropical island of Pohnpei.
“I would encourage everyone to come, bring your family, spend money,” Pompeo said at a press conference with newly elected FSM President David Panuelo and top officials from the Republic of Palau and the Republic of the Marshall Islands.
“You will love to meet the wonderful people of these great friends of the United States.”
It was the first time a U.S. Secretary of State ever officially visited the Pacific nation even though it is among America’s closest allies.
Pompeo was there to announce the beginning of renegotiations of three strategic agreements with the FSM, Palau and the Marshall Islands that give the U.S. military control over the countries’ land, airspace and surrounding waters.
The treaties, known as the Compacts of Free Association, date back to the Reagan era. The U.S. fought the Japanese in the region during World War II and for years afterward, administered the islands as a Trust Territory through the United Nations. When the Marshall Islands, Palau and a group of islands that became the Federated States of Micronesia voted to be independent nations, the U.S. decided to sign the compacts to retain military control over the highly strategic region.
Today, the Pacific nations receive millions of dollars each year to support critical educational, infrastructure and health services along with the right to live and work visa-free in the U.S. In return, the U.S. military controls the region — including the Ronald Reagan Ballistic Missile Defense Test Site in the Marshall Islands — a crucial buffer between the U.S. and Asia that cements the U.S. as a Pacific power.
But the money is set to run out, and if the U.S. doesn’t extend the funding, China looks prepared to swoop in. Hoping to deter China, the Trump administration is ramping up its focus on the region.
“Your small islands are big strongholds of freedom,” Pompeo said. “Just as we did during World War II, we will oppose any larger nation’s attempt to turn the Pacific Islands into footholds for regional dominance.”
Along with Guam and the Commonwealth of the Northern Mariana Islands, the compacts ensure the U.S. controls more than 3 million square miles in the western Pacific — an area comparable to the size of the continental U.S.
But under the treaties’ terms, the flow of money for the FSM and the Marshall Islands stops in 2023. For Palau, it ends in 2024. While trust funds have been set up to help fill the void, they won’t generate enough money to keep the fragile economies afloat.
In short, without continued assistance, the economies of the three island nations — particularly the FSM — may crumble. There won’t be enough money for schools. There won’t be enough funding for the few existing health services. Even the post office will have to decide whether to continue delivering mail.
So far, President Donald Trump’s administration seems to be paying attention.
The president invited the heads of the Marshall Islands, Palau and the FSM to the White House for a historic visit last April, and has even created a new position on the National Security Council: director for Oceania and Indo-Pacific Security.
Since Pompeo’s visit, however, there has been little in the way of actual negotiations. The FSM has assembled a team of people to handle negotiations, including a lead negotiator. But the U.S. has yet to do so.
Negotiations will be led by the State Department and include the Indo-Pacific Command, which is based out of Hawaii. The U.S. Department of the Interior is involved too — although the compacts are considered international agreements, the Interior is in charge of disbursing funds to the region.
Only the financial aspects of the compacts are ending, but it’s possible other topics could be on the table, says Douglas Domenech, assistant secretary for insular and international affairs at the Department of the Interior.
A recent Los Angeles Times investigation into U.S. nuclear tests in the Marshall Islands found the U.S. dumped previously undisclosed nuclear waste from Nevada in a concrete dome there that appears to be cracking open. The FSM raised concerns earlier this year about alleged human trafficking in Iowa. And all three nations are increasingly worried about climate change.
“There has not been a discussion of the elements of negotiating so I suppose that all that could be on the table, especially if it’s important to the individual countries,” Domenech said. “I think in many ways the U.S. would be fine if we could extend the compact as it is for the next 20 years. That would be a great end state but that might not be acceptable to the countries.”
Leadership turnover could complicate talks. The Marshall Islands is in the midst of elections and Palau will choose a new leader next year.
Trump is facing potential impeachment in the House and is actively campaigning to keep his seat in 2020. In the FSM, Chuuk State is planning a March vote on potential secession, potentially creating another window for China to gain a foothold in Micronesia.
Although the U.S. has held a series of listening sessions in the region, Domenech doesn’t expect any negotiations to start formally until 2020. But he hopes they don’t drag out. Congress is already in the process of figuring out the 2021 budget. In just two years, the 2023 budget proposal will be on the table.
“My biggest worry is trying to get everybody to agree to something soon,” Domenech says.
So far, officials from all three Pacific nations have said they want to extend the compacts. None of their D.C. embassies replied to requests for comment for this story. But James Naich, a former deputy ambassador for the FSM, said that just like the U.S., the FSM has a lot at stake.
“Seen at a very basic level, some people might say that’s a good thing, two big guys fight and we take benefit from that. I’m not sure if it’s that simple,” he said. “We have to be mindful and protective of our sovereignty … we have to be sure we aren’t squeezed by the big boys.”
Derek Grossman, a senior defense analyst at the RAND Corp. and a co-author of a recent report on the compacts, says that policymakers should understand any country can exit the treaties at any time — there’s no guarantee the U.S. will maintain control over the region.
The U.S. Interior’s involvement suggests “we’re looking at it in terms of colonial relationships but they’re not,” Grossman says. “These are free countries that are voluntarily in these relationships.”
“It’s really, really important those compacts of free association are renewed at least at the current funding levels if not at higher funding levels in the future.”
Even if negotiations are successful, the compacts still need to be approved by Congress. It’s the first time these talks are subject to the budgetary rules that require offsets for federal spending.
Extending the compacts’ funding is a priority for the Trump administration and there seems to be bipartisan support in Congress.
Still, Hawaii Congressman Ed Case said quick visits and photo-ops don’t show a level of seriousness that’s needed to ensure the U.S. maintains its standing in the region.
“I have no problem with any of that, and I praise them for it,” Case said of the Trump administration’s recent efforts. “However, was it all just for show? What’s been the follow up? Because it was preceded by neglect and now is succeeded by neglect. Neglect catches up with you out in the world.”
In many ways, the U.S. is playing catch up.
Over the past several years, Chinese grants helped build homes for FSM government officials, purchase ships for interisland travel and offer scholarships for islander students, the RAND report says. China proposed building two casinos in the FSM and even rolled out the red carpet for the nation’s president in a 2017 visit to Beijing.
Elsewhere in the Pacific, China successfully persuaded the Solomon Islands and Kiribati to recognize Beijing instead of Taipei this fall, part of an aggressive effort to expand its diplomatic ties in the region.
Meanwhile, year after year, the Trump administration has zeroed out funding traditionally used to build relationships in the Indo-Pacific region, from scholarship and educational exchange programs to funding organizations, such as the East-West Center in Honolulu.
Congress keeps putting the money back in the budget, Case said, but it still sends the wrong message to our allies in the Pacific.
Even the Peace Corps announced it was leaving Palau and the FSM, which only adds to the U.S. soft power void, he added.
It’s not just the money or the people either, Case said.
The fact that Trump wants to pull the U.S. out of the Paris Climate Agreement indicates to Case that he’s not all that concerned with how warming oceans and rising tides might affect the island nations.
“China is the challenge of our generation,” Case said. “As goes China, it will directly impact us in Hawaii, and whether we’re going to be a safe, secure, stable and peaceful part of our country or whether we’re going to be on the front lines of a broader conflict.”
But Case isn’t on board with extending the compacts unless Hawaii gets more money to offset the cost of providing public education and social services to migrants who move to Hawaii under the treaties.
Along with Rep. Tulsi Gabbard and lawmakers from U.S. territories, Case sent a letter to the Trump administration last week saying they are unlikely to support extending the compacts unless Hawaii gets more funding to help defray the costs of providing public benefits to people who move from the freely associated states.
Each year, the U.S. federal government gives Hawaii and U.S. territories a fraction of those estimated costs, which Hawaii estimates as nearly $200 million.
That figure doesn’t take into account any tax benefits the state receives from migrants who pay income, property and general excise taxes. The figure also doesn’t count economic or other contributions. But local policymakers like Case are worried costs will continue to rise as more people move to Hawaii.
Officials from Guam have also been vocal about getting more federal funding.
“That’s where I’m going to be involved the most,” Case said. “Fundamentally, it is unfair to Hawaii to be asked to bear that level of financial burden for a national interest that is an extension of the compacts.”
Another challenge with extending the compacts is that not many members of Congress know where or what Micronesia is. Congressman Brad Sherman, a Democrat from California, says the lack of awareness makes it hard to convince some that this issue is important.
Sherman is a member of the House Foreign Affairs Committee and chairman of the Subcommittee on Asia, the Pacific and Nonproliferation. In September, he led a joint hearing with the House Natural Resources Committee to highlight the importance of the U.S.’s close relationship with FSM, Palau and the Marshall Islands.
He’s also a member of the Pacific Island Caucus, a bipartisan coalition that was formed in July along with Case and Republicans Don Young of Alaska and Ted Yoho of Florida.
“There’s a tendency to regard these as tiny little countries instead of take a map and look at the economic zone of each of these countries and realize that they’re bigger than Europe,” Sherman said in an interview with Civil Beat.
The Pacific Island Caucus recently held an informational briefing with Maj. General Suzanne Vares-Lum of U.S. Indo-Pacific Command, and the military announced a new health care initiative to address major health disparities in the Pacific. At the health care launch in Honolulu, top military officials acknowledged the significance of climate change and its potential impact on island nations.
Sherman also led a recent congressional hearing to help educate his colleagues about the region. He said that if he surveyed other members of Congress about the compacts he doubts it would make their “Top 100” list of priorities. He said he hopes to change that.
“The importance of the Pacific islands should never be understated,” he said.
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