Panuelo: 'The compact isn’t a charity but a fair trade between two sovereign nations'
By Mar-Vic Cagurangan
The Federated States of Micronesia has called on the United States to let the Pacific nation manage its own financial responsibilities under the Compact of Free Association, noting that the funds provided by the treaty are part of diplomatic arrangements rather than largesse. “Our country is a sovereign nation that practices the rule of law and accountability, and we need to be treated that way,” FSM President David Panuelo said in a statement after a meeting with Carmen G. Cantor, assistant secretary for the U.S. Department of the Interior's Office of Insular & International Affairs. “The compact isn’t a charity but a fair trade between two completely sovereign nations with the closest alliance that can never be found elsewhere, as our Micronesian men and women die for the same freedoms as any other American in the U.S. Armed Forces,” Panuelo said. The FSM and the U.S. are in the middle of negotiating the renewal of the compact’s economic provisions, which are set to expire next year. The latest round of talks took place in August.
While both negotiating teams have reported that they have made progress in the past months, details of the discussions have not been made public. The spending procedures seem to have emerged as a sticking point.
“The bottlenecks to our infrastructure programming need to be eliminated,” Panuelo said.
Under the compact, the FSM receives economic assistance from Washington in exchange for the U.S. military's access to the former trust territory's land, air and waters.
Designated as part of U.S. homeland, the FSM has emerged as a critical component of the Pentagon's Indo-Pacific strategy, giving the Micronesian country some strong bargaining chips.
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Cantor paid a courtesy call to Panuelo and Vice President Aren B. Palik in Pohnpei last week to update the FSM leaders about the outcome of the JEMCO meeting held from Nov. 3 to 6. FSM and U.S. representatives discussed the status of the FSM’s health, education and infrastructure sectors. Panuelo asked the U.S. to remove the bureaucratic barriers that impede the execution of COFA-funded projects. “I believe that Compact I was too loose and Compact II was too rigid. I believe Compact III can and must find a way that appeals to the public’s interest that every dollar of compact-related funding be used responsibly, while also ensuring that essential projects and programs are not unnecessarily delayed due to excessive bureaucracy," Panuelo said.
“I’m very much hopeful, and I believe this has already been discussed, that our respective compact negotiators' teams agree with the premise that it is in our mutual interest to amend our various financial or fiscal procedures agreements,” he added.
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According to a press release from the FSM government, the Panuelo administration was particularly interested in the “efficient and timely, yet well-managed and accountable, implementation of the Kosrae State Hospital and Chuuk State Hospital projects.”
JEMCO was established to strengthen management and accountability with regard to assistance provided under the compact and to promote the effective use of funding. The joint committee also "consults with the providers of U.S. federal grant programs; reviews audits as called for in the compact; reviews performance outcomes and other reported data; reviews and approves grant allocations, performance objectives, and, where appropriate, assessment tools; reviews and approves changes proposed by the FSM to the sectors that receive economic assistance under Title Two of the Compact; evaluates progress, management problems, and shifts in sector priorities; reviews quarterly Compact Trust Fund investment reports; and several other related tasks," the FSM government said.
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