President Trump met with Marshall Islands President Hilda Heine, FSM President David Panuelo and Palau President Tommy Remengesau at the White House on May 21, 2019. Photo courtesy of the White House.
It seemed like a typical multilateral meeting. But the three tiny Pacific nations leaders’ meeting with U.S. President Trump in May was nothing less than a historic event. Of course, not so far in the background, China looms large.
FSM President David Panuelo, Palau President Tommy Remenegsau and Marshall Islands President Hilda Heine flew to Washington amid the U.S. strategic planners’ concerns about China’s growing influence in the region. With Beijing wooing — and pressuring — Pacific islands with investments, aid and trade initiatives, the reemergence of Washington’s attention to these island nations is inevitable.
The three nations, which have Compacts of Free Association with the United States, are deeply dependent on U.S. economic aid and funding grants that are set to expire in 2023.
Yap, a state of FSM, for example, receives half of its GDP from Compact grants. Yap is also being targeted by Chinese investment that could radically alter not only the economy, but the very identity of the small island state.
While China’s economic influence on Yap may reduce the island state’s dependence on the U.S., it would trade one big brother for another. The total costs to the Yapese people, culture and way of life would be high. As reported by the Pacific Island Times in 2018, China has already sought to undermine Yapese fishing rights by targeting local leaders for deals.
IMF reported that as of 2018, Pacific island nations have a debt of $1.6 billion to China. It’s clear that while having strong economic ties with China brings benefits, it also comes with risks. While it may be tempting to see these events as part of the ongoing Chinese-Pacific Island relationship, it must be looked at in a much larger global perspective.
Pacific island economies may be small but both the U.S. nor China recognize their strategic significance.
It’s impossible to ignore the rapid rise and total size of China’s economy in the last 40 years. No other nation in history has risen to be so rich so fast. There are many metrics to evaluate China’s growth and economic power. But to put it in perspective, the total GDP of China, according to the IMF, was $13.4 trillion in 2018. The U.S. GDP was $20.5 trillion.
With Beijing wooing — and pressuring — Pacific islands with investments, aid and trade initiatives, the reemergence of Washington’s attention to these island nations is inevitable.
China is undertaking a massive $3 trillion infrastructure investment across 152 counties known as the “Belt and Road Initiative.” The Micronesian region is only one part of this. The Chinese have sought stronger relations with other Pacific island nations such as Vanuatu.
In 2017, they provided investment for a large wharf in the port raising concerns in Australia and New Zealand that Beijing is seeking to open a future military base in the South Pacific nation.
While both China and Vanuatu vehemently denied this, it does provide China with a friendly nation that has the infrastructure to support future potential military expansion. One only needs to look at how quickly and completely China built and occupied artificial islands from reefs in the South China Sea over the last several years. In those cases, too, China initially denied plans for military bases.
On the north side of the Pacific, China has upped military pressure in recent years on the disputed Senkaku islands, which are currently administered by Japan, but claimed by China. Then there is a big and long-standing issue of Taiwan.
One China, two nations? It’s pretty clear from all the evidence that China is going to be a major player, along with the United States, in the entire region going forward. In any U.S. policy in the entire Indo-Pacific, China looms large.
The big question is, how do small Pacific nations with so much to gain and lose, navigate effectively between the giants while maintaining sovereignty, security and unique cultural identity?
But as China becomes more powerful and more assertive, it becomes more imperative for the U.S. to up its game and sweeten the deal. The White House meeting shows the new leverage gained by the Compact nations. It might be the first, but it probably won’t be the last.
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Joseph Meyers is a pilot, who calls himself an "armchair commentatos." He is a longtime Guam resident.