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COFA talks and peace in the Pacific

By Mar-Vic Cagurangan

China’s persistent threats to take over Taiwan underscore the risk of escalating geopolitical conflicts besetting the Pacific island region. While Guam is considered a main launching pad to respond to any potential contingency, the island nations that are affiliated with the United States play a crucial role in deterring China’s incursion into the region. Washington’s security game plan is tethered to its Compacts of Free Association with Palau, the Federated States of Micronesia and the Marshall Islands.

As the clock ticks before the compacts’ economic provisions expire, Washington is now just a few steps away from closing its deals with the three freely associated states.

The U.S. Department of State last month inked separate memorandums of understanding with Palau and the Marshall Islands pledging to renew the expiring economic provisions of the compacts. The packages for the FSM remained under negotiation, but President David Panuelo announced that he has “shaken hands” with Joseph Yun, the White House’s chief negotiator, sealing a preliminary agreement on the proposed provisions that his nation stands to receive.

While skipping details of the proposed packages— which require a congressional review and subsequent approval— the U.S. State Department issued a generic statement, confirming “our shared vision for a strengthened and lasting partnership that will continue to benefit both nations and the entire Pacific region.”

Island officials provided sketchy details, announcing that the U.S. has agreed to boost the economic assistance to Palau, the Marshall Islands and the FSM.

According to the Office of the President of Palau, the value of the economic package "is more than twice the 2020 package.” Absent concrete details, the proposed package is subject to speculation. Palau is projected to get at least $800 million, based on previous reports that the U.S. provided $400 million that year.

In his state of the nation address, Panuelo said the FSM would receive $140 million in annual sector grant assistance, representing more than $50 million per year over current assistance levels.


Kitlang Kabua, the Marshall Islands' chief negotiator, declined to specify the agreed amount. The Civil Beat reported that the new funding — which would cover a 20-year period — would be nearly four times more than what the country received between 2004 and 2023.

During that period, U.S grants and trust fund infusions to the Marshall Islands totaled nearly $1 billion, according to the Civil Beat’s report.

The compacts’ economic provisions end in September this year for the FSM and the Marshall Islands and September 2024 for Palau.

According to the Government Accountability Office’s February 2022 report, the U.S. compact grant and trust fund contributions to FSM and RMI amounted to a total of $2.6 billion for the FSM and the Marshall Islands from fiscal 1987 through fiscal 2003. In the 2003 amended compacts, the assistance packages were projected to total $3.6 billion—around $2.1 billion for FSM and $1.4 billion for RMI. The U.S. Department of the Interior is scheduled to have provided, in total, $3.7 billion to FSM and $2.5 billion to RMI by 2023 and $803 million to Palau by 2024.

As for the fresh deals, Congresswoman Uifa’atali Amata Coleman Radewagen said the U.S. Congress ought to know ahead of time what the pledges entail. She urged the State Department to promptly share with the U.S. Congress the details of packages contained in the proposed new provisions of the compacts with the freely associated states.

"The more open communication there is about compact renewal between the administration and Congress now, the more productive the oversight hearing can be on the president's budget and legislative proposals to implement the compact renewal agreements," the American Samoa delegate said.

The increased assistance packages, of course, have strings attached to them. They come in exchange for the Pacific nations’ broader role in regional security ceding their air space and territorial waters to the U.S.

"Of paramount importance is that our nation’s citizenry be informed in advance when U.S. fighter jets fly over the State of Yap, for example, or when the U.S. practices firing anti-aircraft missiles from the ground," Panuelo said in his state of the nation address.

In an interview with the Civil Beat, Kabua noted that the U.S is exercising key sovereign rights of the Marshall Islands, the strategic control over the country’s land, water and airspace, which include the Ronald Reagan Ballistic Missile Defense Test Site on Kwajalein Atoll.

In Palau, the security arrangement is sealed. The Naval Facilities Engineering Systems Command Pacific has awarded a $118.36 million contract to Gilbane Federal to build the reinforced concrete pads and foundations that will support the installation of the tactical mobile over-the-horizon radar equipment in Koror.

The radar will be used primarily to monitor China's movement in the region, where Beijing has been conducting ballistic missile tests and amplifying its threats to take over Taiwan.

The most salient aspect of the compacts is the United States’ “strategic denial rights” over the three nations’ surrounding waters and airspace to keep China at

This is a particularly fragile concern for the FSM, which has a cozy relationship with Beijing.

Nevertheless, observers say that a solid compact renegotiation will set the stage for continued American strategic advantage in the region.

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