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US, Marshall Islands finally seal a new deal under COFA

Updated: Oct 18, 2023

The Marshall Islands and the United States signed new agreements under the Compact of Free Association at the East-West Center in Honolulu HI. Pictured from left, Carmen Cantor, assistant secretary of insular affairs; Joseph Yun, presidential envoy to compact negotiations; Jack Ading, RMI’s trade and foreign affairs minister; and Phillip Muller, RMI’s chief negotiator. Photo courtesy of RMI Port Authority via Facebook

By Mar-Vic Cagurangan

After months of thorny negotiations that almost broke down at certain points, the United States and the Marshall Islands have finally signed a new 20-year agreement to renew the economic provisions of the Compact of Free Association.

Under the new deal, the Marshall Islands stands to receive nearly $2.3 billion over the next two decades, including $700 million that is earmarked for the "extraordinary needs" of the Marshallese who were affected by the U.S. nuclear testing program.

“The total of this agreement is four times what U.S. departments initially insisted would be the maximum,” said Phillip Muller, chief negotiator for the Marshall Islands.

The compact package for the Marshall Islands forms part of the $7.1 billion pledged by the Biden administration to the freely associated states, including Palau and the Federated States of Micronesia.

While both the FSM and Palau sealed the separately negotiated terms much earlier, the completion of the Marshall Islands’ deal was drawn out due to the unresolved conflicts over the United States' nuclear liability and the Marshall Islands' fiscal autonomy.

“Negotiations have been long and difficult, as any negotiated agreement involves compromises on methods, but not on principles,” Jack Ading, the Marshall Islands' trade and foreign affairs minister, said in his remarks during the agreement signing with his U.S. counterpart, Joseph Yun, at the East-West Center in Honolulu on Oct. 16.

“There have been times when communications had almost broken down entirely, but through mutual perseverance, we have succeeded,” Ading said,

The Marshall Islands and the U.S. negotiating teams initially signed a memorandum of understanding on the renewal of the expiring compact provisions on Jan. 12.

However, during a hearing at the Senate Committee on Natural Resources in July, Yun told senators that the Marshall Islands backed out of the $2.3 billion deal it had initially agreed to receive.

“There are many things that the Marshallese people and government have demanded be addressed as we worked to extend the compact and that has often meant disagreement over contentious issues, but we have finally arrived at an agreement,” Ading said.

One of the key sticking points that stalled the negotiations pertained to nuclear reparations. Marshall Islanders are still plagued by the health and environmental effects of 67 U.S. nuclear bomb tests from 1946 to 1958.

“Many issues needed to be considered when entering this new relationship as our very young government negotiated with the mightiest Superpower on earth, and succeeded in forming a new relationship that was to be accepted by the people of the Marshall Islands and thereby recognizing our sovereignty throughout the world in the upcoming years,” he added.

Muller said the most difficult compromise had to do with the priority of addressing the lingering impacts of the U.S. nuclear testing and waste disposal, including those from the Nevada test site.


"This is an issue that the U.S. inadequately addressed in negotiating the original Compact of Free Association and wrongfully and mistakenly refused to discuss in amending it in 2003," Muller said.

"One of the most important improvements through this negotiation is replacing the ill-advised ideas that the RMI would let the U.S. continue to exercise a fundamental aspect of its sovereignty without continuing to receive assistance and that the trust fund established in 2003 could replace this assistance," Muller said.

Under the new agreement, basic financial assistance would increase from $28 million to $50 million, adjusted for inflation for 20 years.

The annual assistance intended for an expanded list of public services would be supplemented by $28 million this fiscal year, plus $8 million for the next 19 years for health needs and $22 million this year for education.

The agreement also includes $15 million to educate Marshall Islanders about nuclear activities, while $132 million is set aside this year for the needs of people who live on Kwajalein.

Also for this year, there will be $20 million for a joint effort to obtain additional assistance for the impacts of global warming and another $30 million for other environmental programs.

1n addition to current U.S. domestic programs, U.S. military veterans in the Marshall Islands would be able to receive veterans' healthcare in the country and travel to obtain care if needed.

Education and job training programs that were replaced in 2003 would be restored and new assistance would be provided for preschoolers with special needs.

Marshall Islands citizens living in the U.S. would again be eligible for social programs from which they were excluded in 1996.

The proposed package requires enabling legislation from the U.S. Congress and ratification by the Marshall Islands Parliament before they can be brought into force.


Besides the renewal of economic provisions, the negotiating teams also signed two separate agreements to amend the fiscal procedures and repurpose the Trust Fund.

The new fiscal procedure agreement requires the establishment of committees that will ''review and approve" the compact budgets, while the new Trust Fund pact will allow the Marshall Islands to “specifically address priorities set by the government.”

“The signing of these three agreements reflects the strong and historic cooperation between our nations and affection between our people,” the State Department said in a statement.

The compacts with the Marshall Islands, Palau and the FSM give the U.S. the right to deny potential adversaries access to the territory, airspace and territorial waters of the freely associated states, essentially keeping China at bay.

“The U.S.-RMI compact continues to underpin our special relationship that is deep and enduring, and that furthers the U.S. commitment to a Pacific that is secure, free and open, and more prosperous," the State Department said.

“The conclusion of these agreements affirms the close and continuing partnership between the United States and the Marshall Islands,” the State Department said.

The compact’s economic provisions for the Marshall Islands and the Federated States of Micronesia expired on Sept. 30. Palau’s economic package under the compact won’t expire until Sept. 0, 2024, but the U.S. has agreed to renew the provisions a year ahead.

Without a new statute officially renewing the compact agreements past their expiration, the Marshall Islands and the FSM continue to receive U.S. programs and services under a continuing resolution-- a stopgap measure that averted a federal shutdown, which would have occurred due to the U.S. Congress failure to enact a 2024 budget.

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