Marshall Islands President Hilda Heine, middle, at her inauguration flanked by FSM's President Welsey Simina, left, and Palau's President Surangel Whipps Jr, right, in January. Photo: Facebook / Office of the President, Federated States of Micronesia
China is knocking in the North Pacific as the United States (US) are slow to pass a major strategic agreement.
The Compacts of Free Association (COFA) give the US military access to the Federated States of Micronesia (FSM), the Marshall Islands and Palau, which in return are given financial assistance and the right to work in the US.
The previous 20-year funding arrangement for FSM and RMI expired on 30 September last year and Palau's expires this year. The hope of the Freely Associated States (FAS) was originally for funding to have started again on 1 October.
Palau and the FSM signed off on the agreements mid-last year while the Marshall Islands signed off in October - delayed due to their nuclear legacy issue.
The US Congress passed an interim resolution which allows funding at the previous level and federal programmes in existence to continue, but this expires next month.
Palau's President Surangel Whipps Jr said the country was relying on the new compacts to pay off debt and is now gearing up to borrow more.
Whipps Jr said nation's debt is equal to its GDP, which is between US$200 to US$300 million.
"At a certain point, when our friends don't give us any more loans then we will have to think about our options," he said.
"But we don't need to take on more loans and get more debt and pay off more interest if the agreement follows through in a timely manner."
Whipps Jr said COFA would also address high inflation, allow the nation to hire more teachers, and police officers.
"Everybody leaves to America because of the lack of opportunities at home," he said.
Palau, Marshall Islands and the FSM in a letter penned to the United States Senate on 6 February said the delay "has resulted in undesirable opportunities for economic exploitation by competitive political actors active in the Pacific".
Another letter dated on 9 February to the US Senate from President Whipps said: "Every day it is not approved plays into the hands of the CCP (Chinese Communist Party) and the leaders here (some of whom have done 'business' with the People's Republic of China who want to accept its seemingly attractive economic offers - at the cost of shifting alliances, beginning with sacrificing Taiwan.
"The PRC has already offered to 'fill every hotel room' in our tourism-based private sector - 'and more if more and built' - and $20 million a year for two acres for a 'call center.'
"The legislation is critical for both of our democracies and a free and open Indo-Pacific."
Some want 'relations with China'
Speaking to RNZ Pacific, Whipps Jr said he is not entertaining China's offers but some people in the country want Palau to switch diplomatic ties.
"There are people in Palau, that say, 'we don't want the US missiles in Palau, we should consider relations with China', fortunately, at this point in time they're still a minority.
"That's why it's so important that this relationship with the United States is further strengthened and enhanced when the compact is passed in a timely manner.
"What we're asking US Congress to do is don't forget about us. We're small islands but we're an important partner, just like Israel, just like Ukraine."
Prioritise deal - Simina
FSM President Wesley Simina said his nation is "barely hanging on" without the new tranche of funding.
"We're really worried that without approval of the Compact to make our funding more permanent, then we are facing that fiscal cliff."
The reality of doing so would be disastrous, he said.
"That would create both economic and social instability and not to mention political uncertainty, and that's what's worrisome to leaders in our nation."
Simina said 70 percent of revenue in the four states that make up the FSM comes through compact funding.
"[The US] have just celebrated the second anniversary of their Indo Pacific strategy and we are very much part of that.
"The FAS countries are just as much part of the Indo-Pacific strategy as other partners they have in this region, so we would just ask the US congress to continue its prioritisation of the approval of the compact of free association agreements."
The FSM shares diplomatic ties with both the US and China, but Simina said "instability might create opportunities for different bad actors".
When asked who he was referring to, Simina said it was mentioned in the joint letter and "we don't name names".
Congress need to "get their act together'
RNZ Pacific's Marshall Islands correspondent Giff Johnson said the delay risks the US losing influence in the region, calling the FAS the "bellwether for US involvement".
"If the US government can't take care of its best allies and best friends, how's it going to deliver on promises to Tonga, Solomons, Tuvalu and their second and third level allies?"
Johnson said the US Congress has been unable to find a legislative vehicle to pass the compacts.
He said Congress has been unable to pass the compact legislation for a variety of reasons, which is to do with their own internal process and not the Pacific.
"It really doesn't have so much to do with the compacts because the various committees have all endorse it.
"This is all about mechanics and the dynamics with the US Congress and they can't get their act together.
"The fact is, they're not finding a way to deliver on the compact promise."
