Most Americans don’t spend a lot of time thinking about the Marshall Islands, Micronesia and Palau. But although these countries have less than 1 million residents put together, they make up hundreds of islands that span a strategic and increasingly contested part of the Pacific Ocean. Their importance was demonstrated during World War II, when U.S. troops fought to free them from Japanese control. After they became independent, they struck agreements with Washington, called Compacts of Free Association, whereby the United States gives them economic assistance and provides for their defense.
The Biden administration wisely negotiated renewals of these COFA agreements last year. But Congress has yet to appropriate the roughly $2 billion needed to fulfill the terms of the new 20-year deals — and by September, all three of the previous agreements will have expired (two have expired already). Ambassador Joseph Yun, who led the negotiations as a special envoy for the State Department, told me the delay is undermining U.S. relationships there at the worst possible time.
“For all three of them, they know the benefits of having a relationship with us, they want the relationship with us, but they are quite frustrated,” Yun, now retired, said in an interview. “Every day we don’t do this, our credibility takes a hit.”
Meanwhile, China is expanding its influence in the Pacific islands using various tactics, such as financing local politicians, offering military support and pushing development projects with strings attached. Last year, Beijing signed a security cooperation agreement with the Solomon Islands. In January, China convinced Nauru to dump its diplomatic recognition of Taiwan. Just this week, Chinese police were reportedly spotted operating in Kiribati, one of the Pacific islands closest to Hawaii.
“China has been very aggressive in the Southern part of the South Pacific … and now they have started playing in our backyard,” Yun said. “We must not take our eyes off of what we are trying to do in the Indo-Pacific. Our attention is drifting.”
The president of Palau told senators this month that China is eagerly waiting for Washington to stumble. The Chinese government has promised to “fill every hotel room” in the country and provide other financial incentives, if Palau switches allegiances. When economic incentives fail, Beijing turns to uglier tactics. The president of the Marshall Islands wrote to senators that after his previous stance to oppose Chinese encroachment, Beijing bribed members of his parliament to attempt to topple his government.
This funding has broad bipartisan support in Congress. Forty-eight members of the House wrote last week to Speaker Mike Johnson (R-La.), urging him to include the funding in the next possible legislative vehicle. “Failing to ratify these agreements negotiated in good faith would be the most self-destructive gift the United States could give to the PRC in the Pacific,” the letter said.
The Pentagon’s top Asia official, Ely Ratner, said this month that securing COFA funding was one of the most important things the U.S. government must do this year in the region. “This is something that matters,” he said. “We just have to get it done.” The Australian and New Zealand ambassadors to Washington also wrote to congressional leaders last week, warning that failure to pass the funding “would have severe consequences” in the region.
If everyone in the U.S. government and both congressional parties agrees that this is important, what explains the delay? Conversations with several lawmakers, administration officials and congressional staffers revealed an all too familiar story of Washington bureaucratic intransigence.
The administration initially tried to add the money to the emergency supplemental bill now slowly moving through Congress, which already has billions of dollars earmarked for the Indo-Pacific. But Republicans wanted the money to come from the regular appropriations part of the budget and wanted it offset by other spending reductions. The standoff persisted for months.
Now, as Congress scrambles to avoid another government shutdown, supporters of the funding are working behind the scenes to include it in whatever legislation emerges from negotiations. If that doesn’t work, it could mean months more of delay.
Democrats and Republicans both supposedly agree that the strategic competition with China is the United States’ top long-term priority, but examples like this show a lack of follow-through where the rubber meets the road, according to Michael Sobolik, senior fellow at the American Foreign Policy Council.
“The burden of proof is on Washington to demonstrate that our system is actually better,” he told me. “Failing to renew economic assistance and services to COFA partners in the Pacific does the opposite.”
Without swift action, Congress risks abandoning long-standing partners, weakening the U.S. strategic position in Asia and inviting Beijing to expand its influence. In short, Washington will have done Xi Jinping’s work for him.
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