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Panuelo: US aid will continue even if Compact talks are not done on time

FSM President David W. Panuelo poses with Chuuk Gov. Alexander R. Narruhn, Vicar Rosendo Rudolf, Secretary Elina Akinaga, Senate President Arno Kony, and Speaker of the House Lester Danny during the Second Resources & Development Conference in Weno Jan. 24, 2022. Photo courtesy of FSMIS

By Mar-Vic Cagurangan

Any delay in the completion of talks on the expiring provisions of the Compact of Free Association will not push the Federated States of Micronesia into the fiscal cliff, FSM President David Panuelo said.

“If the negotiations are not completed by 2023, the U.S. will simply extend financial support until the negotiations are completed,” Panuelo said Monday, keynoting the Second Resources & Development Conference in Chuuk.

The economic packages provided by the United States to FSM under the treaty are set to expire in 2023, but the renegotiation, which began during the Trump administration, has been moving at a snail’s pace.

However, Panuelo said the U.S. has made “a crucial promise” that the stream of compact funding will not be disrupted.

“To say it another way: fiscal year 2024 will look identical to fiscal year 2023 if the negotiations are still ongoing," the president said.

He said the U.S. has guaranteed that "the financial provisions of the compact’s Title 2 will absolutely continue; we are simply negotiating the details on those provisions."

Title 2 defines the United States' economic relations to FSM and Marshall Islands. The U.S. provides a total of $3.6 billion in economic assistance to the FSM and Marshall Islands, spread over 10 fiscal years from 2004 through 2023.

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On top of direct cash support, both freely associated states-- along with Palau, whose economic provisions will expire in 2024 -- also have access to several U.S. programs and services.

In November 2021, DOI announced $61 million in compact funding earmarked for FSM’s government operations.

“Bilateral discussions that began in the last administration are continuing in the Biden-Harris administration,” the U.S. Department of the Interior said in a press statement last year.


U.S. congressional leaders, however, urged the Biden administration to pick up the pace of the discussion.

“The current approach to (compact) talks has only put the U.S in a weaker position, and while we know the FAS would prefer to continue their special relationship with the United States, China is all too ready to step in and provide the desperately needed infrastructure and climate resiliency investment that is sought by these long-time partners,” members of the U.S. House of Representatives said in a letter sent in November to Jack Sullivan, President Joe Biden’s national security advisor.

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