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Around the world, Beijing is investing heavily in diplomatic, security, cultural and economic ties in a bid to increase its global influence, strengthen its ability to protect and promote its national interests, attract support in multilateral forums and international institutions, and fracture the global consensus on key issues that it considers unfavorable to its geopolitical ambitions. The Pacific Islands region – defined as the vast expanse of the Pacific Ocean between the coastal waters of Asia in the west, Guam in the north and Hawaii in the northeast, and Australia and New Zealand in the south and southwest – was no exception.

An Emerging Arena of Strategic Competition

Over the past decade, the People’s Republic of China has become the leading trade and investment partner of Pacific island nations and a major provider of foreign assistance and loans, including through the Belt and Road Initiative, the global strategy for developing infrastructure in China, which now has projects in 10 countries in the region. On the diplomatic front, China has increased its presence in regional organizations, intensified high-level visits, increased professional diplomatic staff at its embassies, and deepened security and law enforcement partnerships. To see also : US B-52 bombers fly over Middle East amid tensions with Iran. The COVID-19 pandemic has given China an opportunity to build additional goodwill by donating vaccines and personal protective equipment and funding economic recovery efforts.

Chinese officials have not publicly stated that the Pacific Islands region is an area of ​​greatest strategic interest, but the benefits to Beijing of greater engagement with the region are clear. Perhaps to a greater extent than any other geographic area, the Pacific Islands offer China a low-investment, high-reward opportunity to achieve symbolic, strategic, and tactical victories in pursuit of its global agenda. The generally low levels of economic development among Pacific Rim nations and the limited engagement, often perceived in local capitals as neglect, they have received from other regional powers – including Australia, Japan, New Zealand and the United States – have created a geostrategic void that China sought to fill in using the playbook it honed in other parts of the world: foreign assistance, private sector investment and borrowing, sustained, high-profile diplomacy, and, in some cases, elite capture tools such as corruption and economic coercion. These tools allowed China to make progress on key lines of geostrategic effort in the Pacific that proved more difficult to pursue in other, more contested regions.

China’s growing influence in the Pacific Islands poses a challenge to US interests that should be viewed with concern but not alarm. The United States enjoys a strategically advantageous position in the region thanks to its advanced presence and long history of involvement with local partners. In addition to the state of Hawaii and territories of American Samoa, Guam, and the Northern Mariana Islands, the United States also maintains special relations with three sovereign countries in the North Pacific—the Federated States of Micronesia (FSM), the Republic of Palau, and the United States. Republic of the Marshall Islands (RMI).

In the 1980s, the United States negotiated Covenants of Free Association (COFA) with each of these countries, now called Freely Associated States (FAS). The Compacts established each FAS as a sovereign state entitled to self-determination and self-government. All three give the United States full responsibility for the security and defense of the FAS, which includes strategic denial over land, airspace, and territorial seas; this is the right to deny third countries access to or use of FAS territories for military purposes and the right to establish US defense bases and facilities in the FAS. In exchange for the substantial strategic security and military value that the security provisions provide, the FAS receives important benefits, such as the right to move freely and work in the United States and its territories, as well as economic assistance and access to some US federal resources. . program services.

This mutually beneficial set of obligations and responsibilities anchors US-FAS ties and creates interdependence, but this does not mean that Compact relationships are purely transactional. On the contrary, FAS societies have become deeply intertwined with American society through decades of economic, educational, and interpersonal ties, which include a high proportion of FAS citizens serving in the US military. These close connections help to explain the durability and reinforcing character of the free association model at the heart of the Pacts, whose economic parts are in the process of renegotiation and renewal before expiring in 2023 and 2024.

Today, the US-FAS relationship offers substantial benefits to the United States and has the potential to offer much more. Despite its small land mass, the FAS plays an important role in US defense planning, force posture, maritime operations, and power projection in the Indo-Pacific region and beyond. The FAS’s vast territorial seas, which span much of the northern Pacific, are an important strategic buffer between US defense assets in Guam and Hawaii and the coastal waters of East Asia. The US right of strategic denial in FAS territorial seas unites the US forward presence in the region and serves as a bridge for US engagement with other Pacific nations. In addition, the US missile defense proving ground at Kwajalein Atoll in the Marshall Islands is critical to US space and missile defense capabilities. As the US military expands its force posture in the region, US defense rights in the FAS present unique opportunities for the development of new dual-use facilities and ports and airfields. Strong US-FAS connections mean that a deterioration in FAS economic or security conditions would have knock-on effects on US states and territories. Finally, two of the three FAS, Palau and the Marshall Islands, maintain diplomatic ties with Taipei, strengthening Taiwan’s international space at a time when it is under relentless pressure from Beijing.

The unique relationship between the United States and FAS, based on the Compacts, gives Washington a valuable strategic advantage in the Pacific Islands region. As China seeks to expand its influence in the Indo-Pacific and become a major maritime power capable of projecting force far beyond Asian coastal waters, the United States should seek to leverage its relationship with the FAS to meet China’s growing assertiveness. To that end, Washington has an important opportunity in the ongoing Compact negotiations to strengthen its bilateral ties with the FAS and demonstrate a commitment to addressing its core interests to advance US national interests and peace and security throughout the region.

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Findings

Beijing sees Pacific Island nations as a low-investment, high-reward opportunity for China to achieve symbolic and tactical victories on its global agenda. Over the past few years, evidence has accumulated that China views the Pacific Islands as an area of ​​significant strategic interest. Beijing has increased its diplomatic and economic engagement and demonstrated more ambitious efforts to play a more significant security role in the region. In April 2022, China and the Solomon Islands signed a secret agreement – ​​which was leaked to the regional press – establishing a security partnership that could open the door to a Chinese military presence in the South Pacific country. Foreign Minister Wang Yi traveled to the Pacific Islands in May and June. In addition to strengthening China’s bilateral ties in the region, he proposed a broad economic and security pact that affirmed China’s regional ambitions. The proposal was withdrawn because most Pacific island countries did not sign it, but China’s desire to play a more central role is clear.

By deepening its involvement and influence with the Pacific Islands, Beijing is positioning itself to advance several of its foreign policy goals, many of which run counter to US interests: Read also : BEA releases new data on foreign direct investment in the US.

As Beijing seeks to expand its influence among Pacific Rim nations, strengthening the US-FAS relationship will be essential to securing US interests in the region. Chinese strategists have claimed that the deployment of new People’s Liberation Army Navy aircraft carriers means the first island chain – referring to the first line of large archipelagos off the mainland coast, which includes Japan, Taiwan and the northern Philippines. — is no longer a significant constraint on China’s maritime power, signaling China’s ambition to project strength beyond Asian coastal waters. As Beijing seeks to develop a true blue-water navy (one capable of operating globally), the US right of strategic denial in FAS territorial seas and the forward presence permitted by US defense facilities and adjacent to FAS territories will will become more important in restraining China. projection of forces and maintenance of free and open maritime corridors in the Indo-Pacific. Furthermore, although the three Freely Associated States have different views on China, they share with Washington the desire to avoid excessive Chinese influence in the region in order to supplant the role of traditional international partners, and represent an important brake against efforts to Beijing to create an alternative regional architecture favorable to its geopolitical agenda.

Compact relationships are rooted not only in shared respect and deep cultural and economic ties between FAS and the United States, but also in mutually recognized benefits and obligations. Ties are multifaceted and complex. Through the Compacts and the long history that preceded them, the United States and FAS developed social connections that are one of the main reasons for the durability of the free association model at the heart of Compacts, which should not be seen as purely transactional arrangements, but rather as expressions of shared democratic values ​​and decades of history. Today, many FAS citizens have close personal and economic ties to the United States, including family members who live and work in US states and territories. FAS citizens enlist in the US military at a higher rate than US citizens and are more likely to seek educational opportunities in the United States than in any other country. FAS citizens also predominantly consume American media and buy American brands.

Notwithstanding these considerations, the Pacts are also based on a mutually understandable strategic logic in which the United States provides economic assistance and access to domestic programs in exchange for the right to use FAS territories for defense activities and deny competitors access to territorial seas. of FAS, land, and airspace for military purposes. Recognizing this strategic logic does not demean the US-FAS relationship, but it reinforces the interdependence between the United States and the FAS. This interdependence has provided tangible and lasting benefits for both sides and provides a compelling rationale for renewing Compact funding on terms deemed fair and reasonable to all parties.

The health of the US-FAS relationship is a crucial barometer of the durability of US alliances and partnerships and regional democratic norms. The range of services and privileges the United States offers FAS citizens is unparalleled anywhere else in the world; no other sovereign country gives Washington as much control and oversight of its defense as the FAS. This interdependence means that the strength of US-FAS ties and the well-being of FAS societies are of great importance in foreign assessments of the value and credibility of US commitments. For US treaty allies, especially those in East Asia, a deterioration in US-FAS ties can be seen as an indicator of a lack of US commitment to the region. South Pacific island nations also see the strength of the US-FAS relationship as an indicator of Washington’s commitment to the Pacific Islands region as a whole.

The US-FAS relationship is strong, but failure to reach a mutually satisfactory solution to the Compact negotiations would be a major setback for US interests and regional security. In virtually every domain—from diplomatic relations to economic ties to cultural and educational connections—the United States is by far FAS’s most important international partner. But the strength of the bond should not be taken for granted. The main provisions of the Compacts are due to expire within the next two years. If negotiations stalled or produced results that FAS governments found unfair or disrespectful, the basic logic of the Pact relationship would be called into question. FAS governments may be asked to look to other states, such as China, to make up the funding shortfall. A failed negotiation could also lead to the fragmentation of the Federated States of Micronesia – comprising Chuuk, Kosrae, Pohnpei and Yap (see map on page 5) – into several smaller states, which would increase opportunities for foreign influence in the region and undermine the US efforts to promote peace, security, and stability in the wider Pacific.

China has not focused on FAS in its influence-building efforts in the Pacific to the extent that it has focused on South Pacific nations, but is nevertheless positioning itself to take advantage of any deterioration in US-FAS relations. Over the past decade, China has mounted an aggressive effort to increase its influence in the Pacific Islands region through diplomatic engagement, humanitarian assistance, overseas investment, people-to-people connections and increased trade. The FAS has not been as big a focus for these efforts as the rest of the region, largely because Palau and the Marshall Islands continue to recognize Taiwan and because of the close U.S. military and defense relationship that helped prevent an incursion. significant Chinese influence. This situation, however, can easily change. Beijing views the US security architecture in the Pacific as a barrier to its development as a major maritime power and would likely seek to exploit a deterioration in US-FAS relations. The risk of Beijing securing such an unexpected strategic gain is one of the main reasons why Washington should invest in its relations with FAS governments.

FAS leaders want the United States to place greater emphasis on the issues most important to FAS citizens. They prioritize personal relationships, building consensus through sustained engagement and gestures of mutual respect. Rightly or not, they worry about US abandonment and neglect and that the US doesn’t take their concerns seriously. The appointment of a Special Presidential Envoy for Compact Negotiations was warmly welcomed as a positive step towards keeping the US-FAS relationship on track and demonstrating that Washington really does take the negotiations seriously. A joint statement by the United States and the Marshall Islands following the special envoy’s first trip to Majuro in June 2022 expressed optimism about a speedy conclusion to the Compact’s funding renegotiations, suggesting that this gesture helped spur dialogue. FAS leaders are also seeking affirmation that Washington understands and supports FAS policy priorities such as climate resilience, addressing the perceived micromanagement of Compact economic assistance, increased foreign direct investment (FDI), and strengthened economic oversight and development from key sectors such as fisheries. The Marshall Islands is also heavily focused on seeking to resolve the legacy of US nuclear tests on the Enewetak and Bikini atolls. The economic arrangements renegotiations provide an opportunity for Washington to demonstrate its commitment through conversations on issues important to FAS.

Climate change is among FAS’s top security concerns. China’s status as the world’s biggest emitter of greenhouse gases undermines its involvement in the region, but Washington must not be complacent in its own role. As the FAS grapples with rising sea levels, migration, particularly to US communities, is likely to increase and exacerbate security, economic, and social issues. China has positioned itself as a responsible global actor in the fight against climate change in its engagement with Pacific island nations. This strategy, along with external assistance aimed at increasing climate resilience, won the goodwill of regional governments and spurred Beijing’s efforts to attract Taiwan’s few remaining diplomatic partners in the region. In practice, however, China’s commitments to reduce emissions to meet the targets set by the 2015 Paris Agreement on climate change remain insufficient. Furthermore, China’s global energy and infrastructure investment footprint is heavily weighted towards fossil fuels and carbon-intensive industrial activity. So far, the United States and its partners have largely refused to criticize Beijing for its hypocrisy or offer a counter-narrative that highlights its climate ambitions.

US involvement with the FAS is currently defined by an extensive and decentralized set of bureaucratic activities that undermine US national security interests and weaken bilateral relations. This situation is in part a result of the scope and complexity of the Compacts, which involve the operations and responsibilities of various US federal agencies. Diffusion of responsibilities and channels of communication has meant that FAS governments have often seen the lack of any clear or consistent mechanism for engaging the United States on the many issues that affect them. This dynamic unnecessarily strains bilateral ties at a time when Washington should seek to strengthen and elevate relations and work constructively with FAS to shape the regional security environment in the Pacific Islands.

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Recommendations

Elevate US engagement with the FAS and other Pacific island nations to better reflect the greater importance of the region, while being sensitive to regional concerns about being caught up in great power rivalry. China has made clear its intention to fill what it perceives as a strategic void in the Pacific Islands region. Beijing’s ambition was facilitated in part by Pacific Island governments’ perceptions that regional actors have de-prioritized and neglected them. See the article : US EXCLUSIVE weighs China sanctions to deter Taiwan action, Taiwan pressures EU. Such perceptions have some basis in fact: the United States has historically devoted only limited diplomatic resources to the FAS and even less to other Pacific island nations. On the other hand, China has consular officers and frequent work and senior-level engagement with all Pacific island nations with which it maintains diplomatic relations.

Even a modest increase in diplomatic resources is likely to be met with enthusiastic reception by regional officials. In addition, ongoing travel restrictions for Chinese nationals and onerous quarantine requirements for travelers arriving in China have significantly restricted the scope of Chinese engagement with Pacific Island actors. Washington should seize this opportunity to raise its profile in the region.

Coordinate with FAS governments to counter China’s efforts to increase its influence in the Pacific Islands region. The message for Beijing should be that the region does not welcome efforts to displace existing diplomatic and security ties or increase rivalry with the United States. These efforts must be carefully calibrated to ensure that FAS does not feel that it is being asked to oppose all Chinese involvement in the Pacific Islands region. Rather, the objective should be defined as preventing a level of Chinese influence that would destabilize regional institutions and exacerbate divisions among Pacific island states.

Help the FAS defend against Chinese elite capture vectors while working constructively with FAS governments to build rule of law and resilience. Beijing has a well-honed playbook for using economic power tools, such as debt dependence and corruption, to increase its influence and influence in emerging economies that lack strong accountability and oversight mechanisms. The United States must help build FAS’s capacity to safeguard the integrity and transparency of its markets and political institutions and close governance gaps. At the same time, it must invest in its own ability to investigate and prosecute violations of US law that occur within the FAS or have ties to FAS territories and persons.

Simplify and streamline US engagement with FAS. The complexity and substantive breadth of the Compacts has resulted in the management of US-FAS relationships that involves multiple agencies and touches on a broader set of actions than other bilateral relationships. The multifaceted nature of ties should be a source of strength in the relationship rather than a liability. To that end, the United States must strive to speak with one voice—or at least in a well-coordinated manner—in its engagement with FAS governments.

Use all available tools to ensure stability and fiscal accountability while promoting economic development in the FAS, starting with the terms of the newly funded Compacts, but extending to external assistance, promoting FDI by regional partners, and strengthening oversight of key sectors. Washington needs to have a clear vision of FAS governments’ paths to economic development and treat the economic assistance elements of Compacts as part of a broader strategic partnership rather than a means to FAS self-reliance. A significant increase in funding would also be important for both symbolic and practical reasons. At the same time, Washington should encourage and support the efforts of FAS governments to meet their economic development goals and help build international partnerships in support of those goals. To this end, FAS governments must maintain and update development plans and be open to mutually acceptable audits and reporting.

Invest in Compacto relationships. The United States’ unique relationship with the FAS should be seen as the cornerstone of its broader strategy in the Pacific Islands region. The healthier the ties, the more effective the United States will be in securing its regional goals. To that end, the United States should seek to continue to build trust and goodwill with FAS officials and deepen connections with FAS communities, even when these efforts are not tied to an immediate strategic reward. As China’s ambitions in the Indo-Pacific theater grow, the Compact’s enduring relationships will only value and likely benefit in ways that are not obvious today.

Following the conclusion of negotiations between the US Special Presidential Envoy and the FAS governments, the US Congress should seek rapid ratification of the Pact’s third set of economic assistance provisions. US officials, including lawmakers, should not hesitate to offer constructive, workable, and mutually beneficial suggestions to strengthen the agreements, and should encourage their peers to do the same. US messages and actions must reflect the enduring and inherent importance of the US-FAS relationship, regardless of the current geopolitical environment.

Washington must continue to prioritize improving the health and education of FAS citizens through a grant-based system. Healthy, well-educated populations are vital to FAS’s economic success, and these programs benefit the United States when FAS citizens choose to move to the United States.

Washington must seek to reliably and visibly fulfill all of its obligations under the Compacts, but especially those commitments that carry outsized symbolic value, such as providing medical care to FAS military veterans through the Veterans Affairs system and to impoverished and vulnerable under Medicaid. The United States should seek to increase the understanding in the FAS that its economic and programmatic assistance stems from the Compact, funded by the US Congress, to prevent China (or other foreign investors) from distorting local perceptions of who is contributing to the general good. -be of the FAS companies.

Federal and state authorities, as well as representatives of higher education institutions, should seek to expand the availability of educational opportunities for FAS citizens. Person-to-person connections of the kind fostered through study abroad are critical in forming elite networks that link business and political leaders along national lines. The United States currently funds scholarships for FAS citizens who are eligible for Pell Grants. However, FAS citizens are not eligible for study and work programs at US colleges and universities. Going forward, US institutions should invest in developing more opportunities for FAS citizens by funding more scholarships and expanding their access to US programs.

The legacy of the US nuclear tests in the Marshall Islands remains a fraught and challenging topic for both US and Marshallese officials that, more than any other issue, threatens to soured US relations with one of the Freely Controlled States. associates. The official US position has been that the legal issue of compensation is resolved and access to US courts is closed, while Marshall Islands leaders feel strongly that the compensation provided by Section 177 of the current US-RMI Covenant was inadequate. Negotiation can provide an opportunity to bring the two parties closer to a common position on this difficult topic. To maintain a cordial and productive bilateral relationship with Majuro, US officials must recognize that a conversation about nuclear tests will need to take place.

Washington should try to mitigate the adverse impact of Compact programs on US territories in the region and US states. Between 2004 and 2018, Hawaii, Guam and the Northern Mariana Islands estimated $3.2 billion in costs to provide services to COFA migrants, but received $509 million in federal grants. Compact impact costs reported in Hawaii and Guam have increased, with the majority of funds being spent on educational, social and health services in Hawaii. Micronesians living in Guam and Hawaii face high rates of homelessness and poverty. Failure to adequately address these impacts undermines positive personal connections between the US and FAS and can contribute to negative perceptions of the US and its ability to deliver on its commitments.

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Dissenting Opinion

Despite reaching consensus within the group on the relevant issues and necessary actions for US officials, a member of the study group questioned whether relations between the United States and the Freely Associated States were sufficiently friendly and mutually beneficial. to justify the appropriation of diplomatic and economic resources recommended in this report. This dissenting opinion held that the pacts of Free Association relationships created economic dependence and exaggerated expectations on the part of FAS governments, which in turn contributed to the difficulty of negotiating renewed economic arrangements over the past two years. From this perspective, it would have been preferable to assess the importance of Compact relationships against other US Indo-Pacific relationships in terms of their strategic costs and benefits and use that lens to make resource recommendations. Using such a lens would mean not recommending the use of superlatives to describe US-FAS ties.

Dissenting opinion felt that the FAS governments’ approach to Compact negotiations over the past two years sometimes lacked sincerity and that the recent call to replace the US negotiating team with a special presidential envoy was intended to secure a more favorable outcome than it would have been otherwise. reasonable or justified. The dissenting view held that, as in any negotiation, both sides of the Pact’s relations have results. The dissenting opinion regrets that this basic message has been absent from the negotiations so far and from this final report.

Senior Study Group Members

Admiral (retired) Philip Davidson, co-chair, former commander, US Indo-Pacific Command Brigadier General (retired) David Stilwell, co-chair, former Assistant Secretary of State, Bureau of East Asian and Pacific Affairs Robert Underwood, co-chair, former Guam delegate to the House of Representatives; Former President of the University of Guam

David Cohen, former US Representative to the Pacific Community; Former Deputy Assistant Secretary of the Interior for Island Affairs Gerard “Jerry” Finin, Adjunct Professor, Center for Australia, New Zealand and Pacific Studies, Georgetown University Lori Forman, Development Consultant and Professor, Daniel K. Inouye Center Asia-Pacific Pacific for Security Studies; Former Assistant Administrator for Asia and the Near East, US Agency for International DevelopmentCarla Freeman, Senior Specialist, US Institute of PeaceMary Therese Perez Hattori, Interim Director, Pacific Island Development Program, East-West CenterElizabeth Havice , professor at the University of North Carolina at Chapel HillFrancis X. Hezel, director of the Micronesian Seminary Kenneth “Ken” Kuper, assistant professor at the University of GuamSatu Limaye, vice president of the East-West CenterBonny Lin, director of the China Power Project and member senior at the Center for Strategic and International StudiesJames Loi, partner and COO of The Asia Group; former Deputy Assistant Secretary of State for Australia, New Zealand and the Pacific Islands Jonathan G. Odom, Commander of the US Navy; military professor of international law, George C. Marshall European Center for Security Studies, Andrew Scobell, Distinguished Fellow, US Institute of Peace Vikram J. Singh, Senior Advisor, US Institute of Peace; former Deputy Assistant Secretary of Defense for South and Southeast Asia Allen Stayman, former professional staff of the Senate Energy and Natural Resources Committee; former deputy assistant secretary of the interior for territorial and international affairs; former special negotiator, Office of Compact Negotiations, US Department of State Alan Tidwell, professor of practice and director, Center for Australian, New Zealand and Pacific Studies, Georgetown University

Project Director: Brian Harding, Senior Specialist, US Peace Institute Series Executive Director: Jennifer Staats, East and Southeast Asia Program Director, Researcher and Principal Writer, US Peace Institute: Trevor Sutton, Fellow senior, Center for American Progress Research and administrative support: Nicole Cochran and Camilla Pohle-Anderson, United States Institute of Peace

Senior members of the Study Group express their support for the overall conclusions and recommendations reached by the group, but do not necessarily endorse every statement or judgment in the report. They participated in the study group in their personal capacities; the views expressed are their own and do not necessarily represent the views of their institutions or employers.

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