The U.S. Department of the Interior’s Office of Insular Affairs (OIA) has provided $5 million in funding to Marshall Islands as provided by Congress for tax and trade economic compensation due to adverse financial and economic impacts under the Compact of Free Association.
Nikolao Pula, OIA director, chairman of the Compact Trust Funds and acting assistant secretary, said the fresh funds will bolster the Trust Fund corpus and supports the goals under the Compact of Free Association agreement between the U.S. and Marshall Islands.
Made available through the Consolidated Appropriations Act of 2021, Public Law 116-260, the funds will be deposited to the Compact Trust Fund as required by law and supplements an earlier payment of $5 million authorized by Congress in January 2020 for the same purpose.
The U.S. and Marshall Islands are in the process of renegotiating the economic provisions of the Compact, which are set to expire in 2023.
U.S. officials noted that although China’s influence in the Southwest Pacific is growing, its engagement in the Marshall Islands is relatively limited due to the U.S. economic and security presence in the Compact states and to the China's lack of diplomatic relations with the Pacific island nation.
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As provided for under the Compact of Free Association agreement, the Compact Trust Fund was established to contribute to the economic advancement and long-term budgetary self-reliance of the people of the Republic of the Marshall Islands when annual grant assistance under the Compact expires at the end of fiscal year 2023. Bilateral discussions are currently ongoing related to certain expiring provisions of the Compacts of Free Association between the United States and each of the freely associated states.
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