[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]
COMPACTS OF FREE ASSOCIATION WITH THE MARSHALL ISLANDS, FEDERATED
STATES OF MICRONESIA, AND PALAU
=======================================================================
JOINT OVERSIGHT HEARING
before the
COMMITTEE ON RESOURCES
and
SUBCOMMITTEE ON ASIA AND THE PACIFIC
of the
COMMITTEE ON INTERNATIONAL RELATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
SECOND SESSION
OCTOBER 1, 1998, WASHINGTON, DC
__________
Serial No. 105-117
__________
Printed for the use of the Committee on Resources and Subcommittee on
Asia and the Pacific, Committee on International Relations
Available via the World Wide Web: http://www.access.gpo.gov/congress/house
or
Committee address: http://www.house.gov/resources
U.S. GOVERNMENT PRINTING OFFICE
51-943 WASHINGTON : 1998
------------------------------------------------------------------------------
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
COMMITTEE ON RESOURCES
DON YOUNG, Alaska, Chairman
W.J. (BILLY) TAUZIN, Louisiana GEORGE MILLER, California
JAMES V. HANSEN, Utah EDWARD J. MARKEY, Massachusetts
JIM SAXTON, New Jersey NICK J. RAHALL II, West Virginia
ELTON GALLEGLY, California BRUCE F. VENTO, Minnesota
JOHN J. DUNCAN, Jr., Tennessee DALE E. KILDEE, Michigan
JOEL HEFLEY, Colorado PETER A. DeFAZIO, Oregon
JOHN T. DOOLITTLE, California ENI F.H. FALEOMAVAEGA, American
WAYNE T. GILCHREST, Maryland Samoa
KEN CALVERT, California NEIL ABERCROMBIE, Hawaii
RICHARD W. POMBO, California SOLOMON P. ORTIZ, Texas
BARBARA CUBIN, Wyoming OWEN B. PICKETT, Virginia
HELEN CHENOWETH, Idaho FRANK PALLONE, Jr., New Jersey
LINDA SMITH, Washington CALVIN M. DOOLEY, California
GEORGE P. RADANOVICH, California CARLOS A. ROMERO-BARCELO, Puerto
WALTER B. JONES, Jr., North Rico
Carolina MAURICE D. HINCHEY, New York
WILLIAM M. (MAC) THORNBERRY, Texas ROBERT A. UNDERWOOD, Guam
JOHN SHADEGG, Arizona SAM FARR, California
JOHN E. ENSIGN, Nevada PATRICK J. KENNEDY, Rhode Island
ROBERT F. SMITH, Oregon ADAM SMITH, Washington
CHRIS CANNON, Utah WILLIAM D. DELAHUNT, Massachusetts
KEVIN BRADY, Texas CHRIS JOHN, Louisiana
JOHN PETERSON, Pennsylvania DONNA CHRISTIAN-GREEN, Virgin
RICK HILL, Montana Islands
BOB SCHAFFER, Colorado RON KIND, Wisconsin
JIM GIBBONS, Nevada LLOYD DOGGETT, Texas
MICHAEL D. CRAPO, Idaho
Lloyd A. Jones, Chief of Staff
Elizabeth Megginson, Chief Counsel
Christine Kennedy, Chief Clerk/Administrator
T.E. Manase Mansur, Republican Professional Staff
John Lawrence, Democratic Staff Director
Marie Fabrizio-Howard, Democratic Professional Staff
COMMITTEE ON INTERNATIONAL RELATIONS
BENJAMIN A. GILMAN, New York, Chairman
WILLIAM GOODLING, Pennsylvania LEE HAMILTON, Indiana
JAMES A. LEACH, Iowa SAM GEJDENSON, Connecticut
HENRY J. HYDE, Illinois TOM LANTOS, California
DOUG BEREUTER, Nebraska HOWARD BERMAN, California
CHRISTOPHER SMITH, New Jersey GARY ACKERMAN, New York
DAN BURTON, Indiana ENI F.H. FALEOMAVAEGA, American
ELTON GALLEGLY, California Samoa
ILEANA ROS-LEHTINEN, Florida MATTHEW G. MARTINEZ, California
CASS BALLENGER, North Carolina DONALD M. PAYNE, New Jersey
DANA ROHRABACHER, California ROBERT ANDREWS, New Jersey
DONALD A. MANZULLO, Illinois ROBERT MENENDEZ, New Jersey
EDWARD R. ROYCE, California SHERROD BROWN, Ohio
PETER T. KING, New York CYNTHIA A. McKINNEY, Georgia
JAY KIM, California ALCEE L. HASTINGS, Florida
STEVEN J. CHABOT, Ohio PAT DANNER, Missouri
MARSHALL ``MARK'' SANFORD, South EARL HILLIARD, Alabama
Carolina BRAD SHERMAN, California
MATT SALMON, Arizona ROBERT WEXLER, Florida
AMO HOUGHTON, New York STEVE ROTHMAN, New Jersey
TOM CAMPBELL, California BOB CLEMENT, Tennessee
JON FOX, Pennsylvania BILL LUTHER, Minnesota
LINDSEY O. GRAHAM, South Carolina JIM DAVIS, Florida
JOHN McHUGH, New York LOIS CAPPS, California
ROY BLUNT, Missouri
KEVIN BRADY, Texas
RICHARD BURR, North Carolina
Richard J. Garon, Chief of Staff
Michael H. Van Dusen, Democratic Chief of Staff
------
Subcommittee on Asia and the Pacific
DOUG BEREUTER, Nebraska, Chairman
JAMES A. LEACH, Iowa HOWARD L. BERMAN, California
DANA ROHRABACHER, California ENI F.H. FALEOMAVAEGA, American
PETER T. KING, New York Samoa
JAY KIM, California ROBERT E. ANDREWS, New Jersey
MATT SALMON, Arizona SHERROD BROWN, Ohio
JON FOX, Pennsylvania MATTHEW G. MARTINEZ, California
JOHN M. McHUGH, New York ALCEE L. HASTINGS, Florida
DONALD A. MANZULLO, Illinois ROBERT WEXLER, Florida
EDWARD R. ROYCE, California LOIS CAPPS, California
Mike Ennis, Subcommittee Staff Director
Richard Kessler, Democratic Professional Staff Member
Dan Martz, Counsel
Alicia O'Donnell, Staff Associate
C O N T E N T S
----------
Page
Hearing held October 1, 1998..................................... 1
Statement of Members:
Bereuter, Hon. Doug, a Representative in Congress from the
State of Nebraska.......................................... 8
Christian-Green, Hon. Donna M., a Delegate in Congress from
the Virgin Islands, prepared statement of.................. 49
Duncan, Hon. John J., Jr., a Representative in Congress from
the State of Tennessee..................................... 1
Prepared statement of.................................... 3
Faleomavaega, Hon. Eni F.H., a Delegate in Congress from
American Samoa............................................. 4
Miller, Hon. George, a Representative in Congress from the
State of California, prepared statement of................. 7
Underwood, Hon. Robert A., a Delegate in Congress from Guam.. 9
Prepared statement of.................................... 10
Statement of Witnesses:
Campbell, Kurt M., Deputy Assistant Secretary of Defense for
Asian and Pacific Affairs.................................. 15
Prepared statement of.................................... 55
Kyota, Hersey, Palau Ambassador to the United States......... 39
Prepared statement of.................................... 63
Muller, Phillip, Minister of Foreign Affairs and Trade,
Republic of the Marshall Islands; Tony DeBrum, Republic of
the Marshall Islands, Ambassador to the United States...... 36
Prepared statement of.................................... 59
Roth, Stanley, Assistant Secretary for East Asian and Pacific
Affairs, U.S. Department of State.......................... 12
Prepared statement of.................................... 52
Stayman, Allen P., Director, Office of Insular Affairs, U.S.
Department of the Interior................................. 16
Additional material submitted by......................... 19
Takesy, Hon. Asterio R., Executive Director, Joint Committee
on Compact Economic Negotiations, Federated States of
Micronesia, accompanied by Jesse Marehalau, Federated
States of Micronesia, Ambassador to the United States...... 33
Prepared statement of.................................... 56
Additional material supplied:
Briefing Paper--Compacts of Free Association................. 52
de Brum, Banny, Ambassador, Embassy of the Republic of The
Marshall Islands, prepared statement of.................... 77
DeBrum, Oscar, Chairman, Nuclear Claims Tribunal, prepared
statement of............................................... 68
Nitijela of The Marshall Islands, Resolution................. 72
JOINT OVERSIGHT HEARING ON: COMPACTS OF FREE ASSOCIATION WITH THE
MARSHALL ISLANDS, FEDERATED STATES OF MICRONESIA, AND PALAU
----------
THURSDAY, OCTOBER 1, 1998
House of Representatives, Committee on Resources,
and Subcommittee on Asia and the Pacific,
Committee on International Relations,
Washington, DC.
The Committees met, pursuant to notice, at 2 p.m., in room
1324, Longworth House Office Building, Hon. John J. Duncan, Jr.
[acting chairman of the Committee on Resources] presiding.
Mr. Duncan. [presiding] The joint hearing will now come to
order.
The Committee on Resources and the International Relations
Subcommittee on Asia and the Pacific is meeting today to hear
testimony on the Compacts of Free Association with the Republic
of the Marshall Islands, the Federated States of Micronesia,
and the Republic of Palau.
Under rule 4(g) of the Committee rules, any oral opening
statements at hearings are limited to the chairman and the
Ranking Minority Member. This will allow us to hear from our
witnesses sooner and help members keep to their schedules.
Therefore, if other members have statements, they can be
included in the hearing record under unanimous consent. After
my opening statement, I will recognize Chairman Bereuter for
any statement he may have. I will then recognize the Ranking
Minority Member of the Committee as well as the Subcommittee on
Asia and the Pacific for any statement.
STATEMENT OF HON. JOHN J. DUNCAN, JR., A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TENNESSEE
Mr. Duncan. Let me, first of all, commend Chairman Bereuter
of the International Relations Subcommittee on Asia and the
Pacific, and Chairman Don Young of the Committee on Resources
for their continuing mutual oversight efforts which began
during the last Congress with a similar joint hearing on the
Compacts of Free Association with the Republic of the Marshall
Islands, the Federated States of Micronesia,and the Republic of
Palau. Our current free association relationship with these
three separate sovereign republics is unprecedented in U.S.
history, and warrants the continued review by the Congress.
In 1984, President Ronald Reagan proposed a new status for
the trust territories of the Pacific through negotiated
Compacts of Free Association. Congress then conducted over 30
hearings and the Reagan Administration responded to various
concerns through implementation agreements which were
ultimately required in the legislation approving the new status
for the islands. The Congress approved free association
relationships with these areas with the enactment of Public
Laws 99-239, 99-658, and 101-219 in 1985, 1986, and 1989. As
separate sovereign nations, these areas have their own
nationality and citizenship, are members of the United Nations,
and have full diplomatic relations based on the Vienna
Convention on Diplomatic Relations.
Certain economic provisions of the compact with the
Marshall Islands and the FSM are set to lapse at the end of 15
years. By law, the administration is to begin negotiations on
those provisions next year. The 15-year lease of the U.S.
missile testing facility at Kwajalein in the Marshall Islands
is also up for renewal at the same time.
While not a perfect arrangement, the Compact of Free
Association has served the United States interests well by
providing the framework for transition from the United Nations
trusteeship to separate national sovereignty for the Republic
of the Marshall Islands, the Federated States of Micronesia,
and the Republic of Palau. The freely associated states have
had their share of successes and failures as part of the
growing pains of separate sovereigns. However, in many respects
there has been better fiscal accountability by the free
associated state governments under the compact than there was
under the trusteeship bureaucracy. This seems to be underscored
by the lack of Federal oversight of grants and programmatic
assistance in the freely associated states. In 1989, Congress
directed the Secretary of the Interior to station at least one
person in the U.S. offices in the Marshalls, the FSM, and
Palau. Apparently it is only recently that just one individual
has been stationed in the islands for all three of the freely
associated states.
This oversight hearing provides a chance for the Congress
to evaluate the progress of the compacts toward realizing
President Reagan's goal of an internationally recognized
separate sovereign free association relationship based on
decades of close friendship between the people of the former
trust territory of the Pacific Islands. We have an opportunity
today to meet with members of the Committees on Resources and
International Relations to jointly review the policy embodied
in the compact and subsidiary agreements.
I think we can be proud of the Compacts of Free
Association, which contributed to a significant United States
leadership initiative that moved relations with the concerned
islands out from the shadows of cold war international politics
and recognized the special bonds that had formed between our
government and the peoples of the trust territory. Our
experience since enactment of the compact vindicates the policy
of President Reagan that self-government, based on the choices
made by the people of the islands, would represent improvement
and progress in our relations with the peoples of the former
trust territory.
I again wish to thank Chairman Bereuter of the Subcommittee
on Asia and the Pacific and his staff for their cooperation
with this hearing. I also want to acknowledge the support and
interest of Full Committee Chairmen Benjamin Gilman and Don
Young regarding U.S. freely associated state matters, who have
introduced House concurrent resolution 92, emphasizing U.S.
interests in Micronesia. I look forward to joint efforts
between our respective committees to ensure that the United
States interest is protected as the U.S. consults with the free
associated state governments regarding compact provisions. The
views of the witnesses today from the administration and the
three freely associated states will help the Congress in
understanding the progress to date with the existing
relationship, and provide a basis for review.
[The prepared statement of Mr. Duncan follows:]
Statement of Hon. John J. Duncan, Jr., a Representative in Congress
from the State of Tennessee
Let me begin by commending the Chairman Bereuter of the
International Relations Subcommittee on Asia and the Pacific
and Chairman Don Young on the Committee on Resources for
continuing mutual oversight efforts, which began last Congress
with a similar joint hearing on the Compacts of Free
Association with the Republic of the Marshall Islands, the
Federated States of Micronesia, and the Republic of Palau.
These Micronesian islands were part of the United Nation's
Trust Territory of the Pacific Islands which the United States
administered after World War II as a strategic trusteeship. Our
current free association relationship with these three separate
sovereign republics is unprecedented in U.S. history and
warrants the continuing review by the Congress.
In 1984, President Ronald Reagan proposed a new status for
the trust territories of the Pacific through negotiated
Compacts of Free Association. Many questions were raised about
the new status concept of full self-government as a separate
sovereign in free association. Congress conducted over 30
hearings and the Reagan Administration responded to various
concerns through implementation agreements which were
ultimately required in the legislation approving the new status
for the islands.
The Congress approved free association relationships with
these areas with the enactment of Public Laws 99-239, 99-658,
and 101-219 in 1985, 1986 and 1989. As separate sovereign
nations, these areas have their own nationality and
citizenship, are members of the United Nations, and have full
diplomatic relations based on the Vienna Convention on
Diplomatic Relations. All three maintain embassies in
Washington, DC, and similarly, the U.S. has embassies in the
three freely associated states with either resident
ambassadors, or in the case of Palau, a charge, the with
ambassador being accredited out of Manila, Philippines.
The U.S. and these islands each have entered into
agreements through their respective Compacts, to provide
certain rights of obligations to the other party. Most
significantly, the U.S. has exclusive military rights and a
legal defense veto over third party use of any of the land,
ocean, or airspace of the islands (this oceanic exclusive
economic zone comprises an area larger than the continental
U.S.), as well as access and use of certain specified land,
harbor, an airport facilities in various parts of the freely
associated states, and the islands have free transit into the
U.S. to work, study, or reside. The FAS also use U.S. currency
and are synchronized with the U.S. postal system rates. The
Compacts also provide for economic and programmatic assistance
for the FAS are varying rates.
Compacts for the Marshall Islands and the Federated States
of Micronesia began on respectively on October 24 and November
3, 1986 while Palau's Compact did not start until October 1,
1994. Certain economic provisions of the Compact with the
Marshall Islands and the FSM are set to lapse at the end of 15
years and by law, the Administration is to begin negotiations
on those provisions in 1999. The 15 year lease of the U.S.
missile-testing facility at Kwajalein in the Marshall Islands
is also up for renewal at the same time.
While not a perfect arrangement, the Compact of Free
Association has served the United States interest well by
providing the framework for transition from the United Nations
trusteeship to separate national sovereignty for the Republic
of the Marshall Islands, the Federated States of Micronesia,
and the Republic of Palau. I also believe it is fair to say
that these new associated republics are doing a better job
managing internal and external affairs than the Department of
Interior was able to do as the trusteeship relationship became
increasingly anachronistic in the 1970's and 1980's.
The freely associated states have had their share of
successes and failures as part of the growing pains of separate
sovereigns. However, in many respects there has been better
fiscal accountability by the free associated state governments
under the Compact than there was under the U.S. trusteeship
bureaucracy. This seems to be underscored by the lack of
Federal oversight of grants and programmatic assistance in the
freely associated states. In 1989, Congress directed the
Secretary of the Interior to station at least one person in the
U.S. offices in the Marshalls, the FSM, and Palau. Apparently,
it is only recently that just one individual has been stationed
in the islands for all three of the freely associated states.
There is considerable interest in determining the progress
of the islands toward economic self-sufficiency, one of the
primary underlying objectives of the Compact. The U.S. has a
vested interest in seeing the islands achieve economic self-
sufficiency and adequate employment opportunities as the
citizens of the freely associated states have the right to
freely enter, reside, study, or work in the U.S. More people
will leave the islands and live in the U.S. if the quality of
life does not improve.
This oversight hearing provides a chance for the Congress
to evaluate the progress of the Compacts toward realizing
President Reagan's goal of an internationally recognized
separate sovereign free association relationship based on
decades of close friendship between the people of the former
Trust Territory of the Pacific Islands. We have an opportunity
today to with Members of the Committee's on Resources and the
International Relations to jointly review the policy embodied
in the Compact and subsidiary agreements which was intended by
Congress to:
1. Preserve unique strategic partnerships with the Marshall
Islands, Palau and the Federated States of Micronesia;
2. Establish relations under bilateral treaties and with full
self-government for the islands based on U.S. fulfillment of
its commitment to respect self-determination, rather than
continuing non-self governing status under the United Nations
trusteeship; and
3. Advance economic self-sufficiency through Federal grants,
programmatic assistance, infrastructure development like the
Babeldaob circumferential road, tax, trade, postal,
telecommunications, and other areas of mutual cooperation; and
4. Complete trusteeship responsibilities including the long-
term effects of the nuclear testing program in the Marshall
Islands, prior service benefits, and infrastructure defects.
I think we can be proud of Compacts of Free Association, which
contributed to a significant United States leadership initiative that
moved relations with the concerned islands out from the shadows of Cold
War international politics and recognized the special bonds that had
formed between our government and the peoples of the trust territory.
Our experience since enactment of the Compact vindicates the policy of
President Reagan that self-government based on the choices made by the
people of the islands would represent improvement and progress in our
relations with the peoples of the former trust territory.
I want to thank Chairman Bereuter of the Subcommittee on Asia and
the Pacific for his cooperation with this hearing. I also want to
acknowledge the support of Full Committee Chairmen Benjamin Gilman and
Don Young regarding freely associated state matters, who have jointly
introduced House concurrent Resolution 92, emphasizing U.S. interests
in Micronesia. I look forward to joint efforts between our respective
committees to ensure that the United States interest is protected as
the U.S. consults with the free associated state governments regarding
the expiration in 2001 of those Compact provisions which were limited
to fifteen years. The views of the witnesses today from the
Administration and the three freely associated states will help the
Congress in understanding the progress to date with the existing
relationship and provide a basis for the future.
Mr. Duncan. I now will recognize the Ranking Minority
Member, my good friend Mr. Faleomavaega, for any statement that
he wishes to make at this point.
STATEMENT OF HON. ENI F.H. FALEOMAVAEGA, A DELEGATE IN CONGRESS
FROM AMERICAN SAMOA
Mr. Faleomavaega. Thank you, Mr. Chairman. I commend you
for calling this joint oversight hearing between the Resources
Com-
mittee and the Committee on International Relations
Subcommittee on Asia and the Pacific. I am a member of both
committees and it is indeed a pleasure to participate in
today's hearing focusing on a very timely subject in the
Pacific, the Compacts of Free Association with the Republic of
the Marshall Islands, the Federated States of Micronesia, and
the Republic of Palau.
Mr. Chairman, I welcome to the distinguished panel of the
administration witnesses to testify before our committees
today. In particular, I would thank Assistant Secretary of
State for East Asian and Pacific Affairs, Secretary Stanley
Roth, for appearing before us. When Secretary Roth was with the
House Foreign Affairs Committee, for years we worked closely on
policy issues crucial to the Pacific region, resulting in the
issuance of a committee report entitled Problems in Paradise. I
know from personal experience, Mr. Chairman, that few
individuals in Washington possess the knowledge, the skills and
the depth of experience as Secretary Roth has in the affairs of
the Pacific. As a matter of fact, Mr. Chairman, as far as to my
knowledge, I believe Secretary Roth is probably the only
Assistant Secretary of East Asian and Pacific Affairs who has
ever had any understanding or real sense of appreciation and
sensitivity to the problems of the Pacific region. I want to
personally welcome Mr. Roth here in our committees.
I would also note and extend a very warm welcome to the
second panel, the distinguished diplomats who have appeared to
testify on behalf of the governments of the Marshalls, the
Federated States of Micronesia, and Palau. I also welcome my
good friend, Al Stayman, the director of the Office of Insular
Affairs in the Department of the Interior.
Mr. Chairman, as part of the trust territory of the Pacific
Islands, the islands in Micronesia were placed under the
trusteeship of the United States after World War II. Under the
United Nations trust agreement, it was the obligation of the
United States to promote the development of the inhabitants of
the trust territory toward self government or independence, as
may be appropriate to the particular circumstances of the trust
territory and its people and the freely expressed wishes of the
people's concern.
Mr. Chairman, accepting the trusteeship was not an
altruistic gesture on the part of the United States. Let's be
quite plain about this. We were careful to use the region for
military purposes and continue to do to this day. Nevertheless,
substantial progress has been achieved in developing the island
groups toward greater self governance. Today there is no longer
a trust territory of the Pacific Islands.
The early 1980's brought compact agreements among the
United States and the different island groups of the trust
territory. In 1994, with the approval of Palau's Compact of
Free Association, trusteeship came to an end.
Mr. Chairman, I want to especially note the tremendous
contributions and keen foresight of the late Congressman Phil
Burton, who participated during the negotiations process which
culminated in our government's approval of the Compacts of Free
Association with the FSM, the Marshalls and Palau. In fact, Mr.
Chairman, to my personal knowledge, many of the social and
educational programs that were provided for the three nations
were due largely to Congressman Burton's strong belief that
these programs were critical to the social and economic
advancements of these nations.
Mr. Chairman, as we near the end of the initial compact
term in the year 2001 with the Republic of the Marshall Islands
and the Federated States of Micronesia, it is an appropriate
time to assess the state of affairs with these governments.
Before we begin with our witnesses, I have a few observations.
I note first that the initial negotiations in the compacts,
such as with the Marshall Islands, took over a decade and a
half. Because of the complexity of the issues covered by these
agreements, the time necessary for their negotiations, I
strongly recommend, Mr. Chairman, that renegotiation of the
contract begin as soon as possible rather than delaying matters
until late next year.
In particular, Mr. Chairman, the administration should
immediately enter into compact renegotiations, discussions with
the Marshall Islands. This is warranted because of the unique
nuclear legacy that exists between our nations, and the
continuing security contributions to the United States that the
Marshall Islands makes through Kwajalein Atoll. One of the
greatest challenges confronting the Marshall Islands government
is the need to address the lingering medical and environmental
problems resulting from radioactive explosions caused by the
U.S. nuclear testing program.
The legacy of our 67 nuclear weapons detonations has
resulted in a nightmare of health problems for the Marshallese
people. Including elevated rates of thyroid cancer, cervical
cancer mortality rates 60 times the U.S. rate, breast cancer
mortality rates five times greater than in the United States,
and reproductive complications involving high rates of
miscarriage and deformed babies that are stillborn.
Mr. Chairman, the same is also true for environmental
contamination problems in the Marshalls. Temporary storage
facilities are leaching radionuclides into the marine ecosystem
around Enewetok and Bikini. Portions of at least four atolls
remain off limits to human beings. Mr. Chairman, addressing the
nuclear legacy left by the United States has exhausted the
limited resources allocated to the Marshallese people and
profoundly affect the ability of the Marshall Islands to
achieve a greater sense of self sufficiency as envisioned in
the compact.
Despite decades of U.S. Government involvement, Mr.
Chairman, the Marshall Islands are no closer to caring for its
radiation problems today than it was when the U.S. testing
program began. We must never forget that the sacrifices of the
Marshallese people significantly contributed to America's
nuclear deterrence program, facilitating our victory in the
cold war.
Mr. Chairman, even in the post cold war era, however, the
Marshall Islands continues to be of strategic value to the
United States, and will be for the next several decades because
of the U.S. arms ballistic missile and anti-ballistic missile
testing facilities at Kwajalein Atoll. Given the increasing
danger posed by international terrorism and rogue nations such
as North Korea, Libya, Iran and Iraq, it is good that both the
administration and Congress have committed to accelerate
national missile defense research and development programs.
Kwajalein Atoll is one of only two U.S. strategic missile
defense test sites authorized under the Anti-Bal-
listic Missile Treaty. Moreover, as a buffer between Hawaii and
Asia, Kwajalein Atoll acts as a U.S. intermediary to potential
political, economic, and military adversaries such as China and
the Pacific region. Kwajalein Atoll also serves U.S. interests
by providing a NASA tracking center and satellite launching
sites.
Mr. Chairman, in calling for early compact renegotiations,
I would further recommend that the discussions take place in
the Pacific at the East-West Center in Hawaii. Since its
formation in 1960 by an Act of Congress, the East-West Center
has distinguished itself as the region's most respected
institution for furthering U.S. relations with the nations of
the Asia Pacific region. It is my understanding that the center
would welcome the opportunity to host these important compact
discussions. It provides an ideal forum, conveniently located
for all parties concerned.
Concluding, Mr. Chairman, it is important that the compact
renegotiations occur in an atmosphere of good faith, free of
negativism and disrespect. I find it very disturbing, Mr.
Chairman, that some representatives of the U.S. Government may
not share this point of view and have gone out of their way to
show lack of respect for our compact partners, even to the
point of interfering with domestic political affairs such as in
the Marshall Islands. Such behavior, if true, Mr. Chairman, is
highly unprofessional and beneath the dignity of our relations
with these nations, and they should be stopped.
Thank you, Mr. Chairman, for holding this hearing to
provide members of both committees the opportunity to determine
the status of the commonwealths of the freely associated
states. America has never walked away from her allies in their
times of need. As we enter this important period for compact
negotiations, I am confident that our Nation will do what is
right and fair for our friends throughout the island nations of
Micronesia. I thank you, Mr. Chairman.
Mr. Duncan. Well, thank you. I mentioned in my opening
statement and thanked a couple of times Chairman Bereuter
because this is, as I mentioned, a joint hearing between our
Committee and the subcommittee that he chairs, the
International Relations Subcommittee on Asia and the Pacific. I
would like to call on my good friend and one of the most
respected members of this body, Chairman Bereuter, for any
statement he wishes to make at this time.
Mr. Bereuter. I thank you very much, Chairman Duncan. Thank
you for your kind words.
Mr. Faleomavaega. Will the chairman yield? I would also
like to ask unanimous consent if the statement of the gentleman
from California, Mr. Miller, be made part of the record.
Mr. Duncan. We'll make that part of the record.
[The prepared statement of Mr. Miller follows:]
Statement of Hon. George Miller, a Representative in Congress from the
State of California
Mr. Chairman. I'm pleased this hearing is being held today
in order for us to look at how well the compacts of free
association with the Republic of the Marshall Islands,
Federated States of Micronesia, and Palau are working. I want
to thank you for bending to the will of the Democratic members
and permitting representatives of the Pacific nations to join
us here today and testify as to their experiences with compact
implementation. I understand the concern for time limitation
and the de-
sire to focus on the administration, however, since these
compacts are bilateral agreements, it makes sense to have all
parties present.
This afternoon we will hear from the agencies responsible
as to the various provisions of the compacts to determine if
the intended goals are being met and promises kept on all
sides. This hearing will help us prepare for negotiations next
year with the Federated States of Micronesia and the Republic
of the Marshall Islands on the economic provisions. The stated
goal of Title II is ``to assist the FAS in their efforts to
advance the economic self-sufficiency of their peoples.'' This
is a tall order and one that requires hard work, sacrifice, and
flexibility by all the nations.
We have a very unique and close relationship with the
freely associated states and their people. I believe we have a
special responsibility to nurture and assist these developing
governments in an area of the world where the U.S. has, at
times, had a checkered history. Recently, the House passed a
bill dealing with higher education which would have ended
eligibility to certain education programs for FAS students
attending college in the U.S. This language was put in by the
Majority party on the Education and Workforce Committee because
of their view that as foreign nations the FAS shouldn't have
access to U.S. programs. I disagree with this notion and firmly
believe that assisting FAS students in gaining access to U.S.
universities will only enhance the likelihood of the mutually
agreed goals of the compacts. As I believe all here are aware,
we were able to have that language removed from the final
product but it is a stark reminder of what we will be facing
when renegotiations begin next fall.
I want to thank all of the witnesses for being here this
afternoon--those that traveled a few blocks and those who
traveled many time zones.
STATEMENT OF HON. DOUG BEREUTER, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF NEBRASKA
Mr. Bereuter. I just have a few words I would like to say
preliminarily. First of all, one, I appreciate the opportunity
to hold this joint hearing with the Resources Committee, Mr.
Chairman. I think it is appropriate now that we examine the
state of affairs with the Freely Associated States and
peripherally I would say with the Northern Marianas, that opted
for a commonwealth status.
When I was a junior Member of Congress, I served in this
Committee room on the Interior Committee and on what was called
the Insular Affairs Subcommittee. I have visited several parts
of all four of our former trust territories in the Pacific, and
followed with considerable attention what has happened in those
areas since that time. I think as we examine these issues
today, we ought to look at how well the objectives we attempted
to achieve in negotiating the compacts with three of the four
Pacific trust territories are working out. The assistance of
course for the Marshalls and Micronesia, the Federated States
of Micronesia, will last until 2001. Assistance to Palau,
because of a later start will continue to 2009.
The annual grant funding for the Federated States of
Micronesia started out in 1986 at $60 million. Although that
figure has declined somewhat since 1991, other program funding
has added approximately $50 million a year. The Republic of the
Marshall Islands will over the 15-year length of the compact
receive approximately a very generous $900 million. For its
part, Palau is scheduled to receive $517 million through the
compact from 1995 through 2009.
What will happen when the compact with the Marshalls and
the FSM expire in 2001 I think will depend greatly on actions
taken now in the next few years by both the United States and
the Freely Associated States. I would think that our hearing
today might attempt to draw attention to issues that will
ensure that when 2001 arrives, we will be well prepared, and
therefore, to look at this hearing at the purposes of the
compacts themselves. We hope to learn if the early hopes in the
U.S. and the Freely Associated States have been realized. We
are interested in learning what issues we and our friends in
the Freely Associated States need to address before the
compacts expire.
For example, what programs do the compacts fund, and how
are these programs administered? To what extent have payments
under the compact promoted economic development, especially
self-sufficiency? Also, what additional obligations arise from
the compact? I know, for example, that the obligations to
provide Pell Grants and other educational assistance to the
Pacific Islands' students have come under close scrutiny in
recent months. What other obligations are there, and what is
the cost to the American taxpayer?
The gentleman from American Samoa mentioned the issue of
nuclear waste. I must say I was very disturbed to learn in a
visit to Taiwan that negotiations at some stage of
sophistication were underway, at least exploration for Taiwan
to ship its nuclear waste to one of the Freely Associated
States, something that I thought was a very disturbing
development, inconsistent with all of the suffering that the
people in that region had been through.
I would also say very candidly that when I was in the
Marshall Islands and in the Federated States of Micronesia and
Palau and the Northern Marianas, at least in one or more of
those locations, I saw endemic corruption that was very
troublesome. I would hope that that corruption has been
reduced, and hopefully eliminated. Certainly it was diverting a
significant amount of the resources that ought to have gone to
the people of the region from them. I think, candidly, we need
to look at whether or not those corruption problems are healed
or reduced. That is not a blanket condemnation because I saw
great variation between and among the various Pacific trust
territories at that time. I hope since they have taken on a
responsibility for their own self governance, except for
foreign policy and national security, that those problems have
declined or been eliminated.
Mr. Chairman, I look forward to the testimony of our
distinguished witnesses and the subsequent panel. I thank you.
Mr. Duncan. Thank you very much, Chairman Bereuter. Now I
would like to call on for an opening statement my good friend
Robert Underwood, who is the Congressman from Guam.
STATEMENT OF HON. ROBERT A. UNDERWOOD, A DELEGATE IN CONGRESS
FROM GUAM
Mr. Underwood. Thank you, Mr. Chairman. I too want to
extend my congratulations to the chairman of the Subcommittee,
Mr. Bereuter, and Chairman Young for holding this hearing. I
also want to extend my own words of welcome to the first panel,
especially Stanley Roth, who has been so instrumental in making
the compacts go, as many of us who are familiar with these
events fully recognize.
I have a statement that I would like entered into the
record.
Mr. Duncan. Yes.
Mr. Underwood. Just to say a couple of comments. I just
want to state that certainly of all the areas that are
represented in the U.S. House, I think the place I represent is
most directly affected by the nature of the compacts as well as
the implementation of the compacts. I want to state for the
record that the people of Guam certainly endorse the idea of
continuing whatever kind of assistance can be given to the
Freely Associated States in order to advance their economies,
because not only is it good in the fulfillment of an obligation
to the peoples of the former trust territories, but it also
helps our own economic development on Guam as well. We are all
tied together by various connections, cultural, historical, and
of course geographical. We all maintain ties that far exceed
and go beyond and sometimes have to go around existing ties
that exist between the United States and these freely
associated governments as separate entities.
The compacts are certainly interesting and provide for a
different kind of set of international relations. Although
these states are fully sovereign, I prefer to think of them as
ongoing partnerships and very close partnerships between the
United States and the Freely Associated States. We do have our
share of problems of implementation of the compacts, which have
had some negative effects on Guam, and certainly I am very
happy for the opportunity to state some of those in my prepared
remarks, as well as the process that we're entering into in
order to state them to members of the administration, so that
as they prepare for the negotiations with the Freely Associated
States, that these concerns might be raised in one way or
another.
The problems associated with the migration of large numbers
of people to Guam have been stated repeatedly over and over,
including an obligation by the Federal Government to help the
government of Guam recover from some of those costs,
financially as well as making sure that we have a full
understanding of the meaning of the term habitual resident. I
also want to stress my concern about the implementation of
programs that are designed to help the Freely Associated States
grow economically, but at some point in time as well, that they
might have some not very happy circumstances in Guam, happy
fallout on Guam.
One of the issues that the people on Guam continually raise
is the issue of tuna transshipment and how in some of the
compact states they require the tuna to be transshipped out of
their own areas rather than being transshipped through Guam. Of
course that has some negative effect on us.
I remain fully confident that we can work many of these
problems out. I certainly hope that we will. I also look
forward to hearing the comments about the continuing strategic
value of these areas as we move from what was formerly the only
strategic trusteeship under the U.N. system to the concept of
strategic denial and to what we have today, which remains
rather unclear to me. Thank you.
[The prepared statement of Mr. Underwood follows:]
Statement of Hon. Robert A. Underwood, a Delegate in Congress from the
Territory of Guam
Chairman Young and Chairman Bereuter:
I thank you and, the members of the Resources Committee and
the International Relations Subcommittee on Asia and the
Pacific for inviting the panels we have before us today. It is
very prudent to begin a dialogue on the Compacts of Free
Association in anticipation of renegotiations, and to discuss
developments between American-FAS relations since the Compacts
were originally agreed to in 1986.
More often than not, I find myself educating my colleagues
and other Congressional staff not only about the FAS, but also
about Guam's unique history and our unique relationship with
the FAS. As former trust territories and currently as nations
in free association, the Federated States of Micronesia, the
Republic of the Marshall Islands and the Republic of Palau are
involved in a mutually-beneficial relationship with the United
States in areas such as defense, the economy and education. And
as the closest American territory to the FAS, Guam is affected
by this special relationship. I would like to take this
opportunity to discuss some of Guam's concerns regarding the
upcoming Compact renegotiations.
Like any dynamic relationship, Guam and the FAS agree on
many aspects, but we also have issues of contention. As some of
my colleagues may know, the FAS are great transhipment centers
for fish products, most notably tuna. Guam also has the
infrastructure and means for becoming such a center. However,
due to restrictive regulations requiring fishing fleets who
fish in FSM waters to transship only through the FSM, Guam's
potential in this industry has been effectively stifled. I
understand that it is within international law for the FSM to
promulgate such restrictions, however, I see the renegotiation
of the Compacts as an avenue for revisiting this issue.
The current economic crisis which began in Asia has already
caused numerous lay-offs and business shut-downs on Guam. Our
economy relies heavily on Asian tourists and without economic
diversification, such as one which tuna transshipment can
provide, the people of Guam will continue to suffer the whims
of an economy dependent on a single industry.
Another issue I would like to raise is FAS migration into
Guam. The Compacts allowed for the free migration of FAS
citizens to the United States and its territories for the
purpose of education and employment.
Because of Guam's proximity to the FAS, we have experienced
a surge of FAS migration in recent years and house a great
number of ``habitual residents,'' the technical classification
for these FAS citizens. Despite the Federal Government's
limited reimbursement, Guam's social and welfare services are
strained beyond capacity. Recently, the Immigration and
Naturalization Service (INS) issued preliminary regulations
governing and defining the classification of habitual
residents. I believe the renegotiation of the Compacts will
also be an advantageous platform to discuss FAS migration.
While the original intent of the Compacts was to provide a
manner by which FAS citizens could seek higher education and
employment through migration, I believe Guam's experiences as a
result of this regulation deserves greater inspection. I know
that the people of Guam are very willing to work with the
Administration and the FAS on this issue.
Guam's strategic location at the ``spear head'' in the
Western Pacific, permits a dynamic responsibility as well as
opportunity. During the Cold War, the United States was the
guarantor of peace and stability within the region. This
assertion is no less true today, except that the international
security environment is more complex and perhaps more urgent.
The U.S. military has a responsibility to protect and defend
our interests in the Western Central Pacific, the gateway to
Asia. But at the same time, we must be cognizant that entire
civilizations reside in these strategic waters and we must
respect and acknowledge their historical sacrifices and
commitment to advance U.S. security.
With this in mind, I express Guam's support that the U.S.
take into consideration the economic disadvantages that
characterize the Pacific Islands. We have been a cornerstone
for U.S. defense, and will continue to be, but there are
concrete economic necessities which need Federal assistance,
not as a handout but as hand up. I am hopeful that in the
upcoming renegotiations, consideration of extending all
necessary and appropriate Federal programs to stimulate and
advance the economies of the FAS will be thought through
carefully and judiciously.
Again, I thank the Chairmen for convening this hearing, and
I thank the panelists for taking the time to educate us further
on the impact of the Compacts since their inception. I hope my
colleagues will use this opportunity to educate themselves on
the importance of our special relations with the FAS, I know I
will.
The Compacts are not perfect agreements, and there will be
room for improvement. I am confident that we can look at the
renegotiation of the Compacts not as the end of a few programs,
but as the beginning of improved agreements which will carry
our relationship to a higher level as we enter the new
millennium.
Mr. Faleomavaega. Will the chairman yield?
Mr. Duncan. Thank you very much. Yes.
Mr. Faleomavaega. Mr. Chairman, I ask the Chair's
indulgence in a unanimous request. The poor people have been
sitting there for 100 hours. I would like to ask if it is
possible that they can sit over here since we have a lot of
space for members to come, if it's all right with the chairman.
Mr. Duncan. It's fine with me.
Mr. Faleomavaega. You can all come sit in the dais here, if
you like or you can stand there. You can come right over here
and sit down.
Mr. Duncan. All right, I would like to go ahead and
introduce the first panel. The first panel consists of the
Honorable Stanley Roth, who is Assistant Secretary for East
Asian and Pacific Affairs of the U.S. State Department, the
Honorable Kurt M. Campbell, Deputy Assistant Secretary of
Defense for Asian and Pacific Affairs, and Mr. Allen P.
Stayman, Director, Office of Insular Affairs of the U.S.
Department of the Interior.
Let me remind the witnesses that under our Committee rules,
they must limit their opening oral statements to 5 minutes. We
generally proceed in the order the witnesses are listed on the
call of the hearing. That means that Mr. Roth, you would go
first, followed by Mr. Campbell, and then Mr. Stayman.
Mr. Roth, you may begin your statement.
STATEMENT OF STANLEY ROTH, ASSISTANT SECRETARY FOR EAST ASIAN
AND PACIFIC AFFAIRS, U.S. DEPARTMENT OF STATE
Mr. Roth. Thank you very much, Mr. Chairman. Let me also
begin by commending the two committees for undertaking this
hearing. It is so easy, with all the other big issues on the
plate in the Asia Pacific region and with all the issues you
have on the Interior Committee to put this one aside,
particularly when we have not yet started the renegotiations.
Taking the trouble to do this in advance speaks well for both
committees.
Let me also thank Congressman Faleomavaega and Congressman
Underwood for their particularly warm welcomes. I wish all my
hearings began that way.
I will be brief, not only because of the 5 minute rule, but
because many of the points I had intended to make were already
made in the opening statements by the members of the two
committees. What I tried to do in my statement was to lay out
the broad framework, for the Compact renegotiation: where we
started, where we are, where we are going. Many of the specific
details and particularly the programmatic details are the
responsibility of the Interior Department, which provides the
Compact funding. So I suspect that most of the questions will
go in that direction.
Let me start off with the big picture. First, where we
started from has already been very well covered in the
introductory remarks. We started off from a dual perspective.
One, what were our legal and moral obligations under the
trusteeship? One of our obligations was to provide for the
self-determination of the peoples in the trust territory. That
was a major issue in the 1980's. It's easy to forget now in the
post cold war period that this was not then an obscure issue,
but in fact was a major issue. In the United Nations it had a
high ideological profile. It was in a sense an anachronism from
the Second World War. It was a big deal for us to fulfil our
obligations, not only for the peoples of Micronesia, but for
our international standing as well.
The second issue which has been mentioned briefly and will
be discussed more by Dr. Campbell, is defense. In the cold war
period again, there were huge defense issues at stake. We have
forgotten some of those. Of course there was the one that
Congressman Underwood mentioned: strategic denial. This means
taking a vast stretch of the Pacific and maintaining the U.S.
military control and ensuring that we could deny access to the
ships of other countries. This was not a theoretical issue in
the last decade. As you'll recall, the Russian navy was
starting to make significant inroads in the Pacific, including
in the South Pacific, in the 1980's. So there was very real
concern at the time we were doing the Compact negotiation about
Russian agreements with Island countries under the guise of
fishing agreements, which could have given the Soviet Union
direct access to the territorial waters of some of these
countries. So obtaining strategic denial in Miconesian waters
was a major plus for us.
Second, during the cold war, continued access to military
bases in the Philippines was a major worry. As a contingency,
we wanted to have a place to pull back to. That was one of the
considerations with respect to the Palau Compact which has now
dropped off the strategic map but was huge back in the 1980's.
Third, another consideration that's been mentioned that
still applies is the vital strategic significance of Kwajalein.
So you had all these defense interests, combined with our legal
and moral interests from the trusteeship.
How has it all worked? Where are we now? I think the answer
would have to be in some senses it's worked fabulously well. I
think in terms of fulfilling our legal and moral obligations
under the Compact, we have done a good job. The entities are
now all fully up and running as independent states. They are
well accredited internationally. There is great stability. In
that sense, I think we have accomplished a lot of what we set
out to do.
I think on the security side, the world has changed a lot
more. I think that in fact with the cold war over and with
Philippine bases no longer an issue, for one thing, that issue
has dropped off. The question of strategic denial has changed a
bit, but I would argue, and I think my Defense colleague will
argue even more strongly, has not vanished. While there is no
navy comparable to the Russian navy today in the Pacific, I
would not want to stake my career that there will never be one.
The ability to have strategic denial for such a large region
has to be important as we think about the future and into the
next century. So strategic denial, if not as urgent as during
the cold war, is still a very real interest.
Of course Kwajalein does remain as important as ever
because of the various missile programs that we have underway
and the scarcity of facilities to test missiles. So we do have
strategic interests.
Now how well have we done on our economic goals? I think
here the picture is mixed. Frankly, as someone who had worked
inten-
sively on the Compact at the time, I would have hoped we would
be further along today in self-sufficiency for all the entities
of Micronesia. The truth is we're not there yet. We can do a
lot of fingerpointing and point out mistakes that have been
made, whether it's by the Freely Associated States themselves
or whether it's by us, and ``us'' I think would include both
the executive branch and the Congress. But the reality is that
there has been some progress. I recently returned to Pohnpei in
the Federated States of Micronesia after almost 10 years
absence, and I certainly saw significant signs of economic
development. So we've made some progress, but they are not
ready to go it alone.
The painful truth is, if the Congress and the
Administration were to cutoff funding today or when we
renegotiate, then in fact I think we would have a very hard
time in these entities. There would be great depravation for
the people in these entities, and that there would be a
question as to whether we were being consistent with our
historical relationship, indeed, our special relationship with
these entities. So I think this is a factor that we do have to
continue to look at.
There has been a great emphasis recently on reform, working
with the Asain Development Bank. Since the light is on, I won't
go into detail. In my statement, I've addressed our concerns
about how some of the funds have been utilized. We have real
concerns, but we are trying to address them. We think they can
be addressed and we think there can be more progress.
In terms of where we go from here, first let me commend
you, Mr. Chairman, for stating the issue accurately. A lot of
people talk about renegotiating the Compact. That is not
accurate. The Compact stands. There are certain provisions of
the Compact which do have to be renegotiated after 15 years and
the negotiations have to start after 13 years. Those are the
provisions we're talking about today. We're not talking about a
fundamental renegotiation of the Compact. We are in the late
stages of trying to select a high level negotiator to undertake
this effort for the U.S. Government, but I don't have a name
for you today.
Finally, in my statement I close, Mr. Chairman, with some
of the questions we're going to have to look at. We are going
to have to work with both of your committees because the issues
involve congressional actions. There are the questions
concerning what type of funding we provide. How much, and under
what terms? Do we continue to provide funds with the full faith
and credit of the U.S. Government? Does it require annual
appropriations? Do we continue to provide all Federal programs,
some Federal programs, or no Federal programs, and, if so, on a
reimbursable or non-reimbursable basis. For what duration do we
provide funds? There are many questions. Frankly, we are not
ready to answer them quite yet.
I think the first thing we have to do is get a negotiator
and formulate our internal U.S. position. That has to be done
in close cooperation with the Congress. I fully share the
sentiment expressed by one of your colleagues, that we don't
want this negotiation to last 15 years. If we don't start right
now with close consultations with the Congress, we are going to
repeat the mistakes of the past and have a long negotiation.
But you have my commitment today that we will work closely
with the Congress to try to come up with an original package
that is acceptable and doesn't have to be legislatively
renegotiated over many painful years. Thank you very much, Mr.
Chairman.
[The prepared statement of Mr. Roth may be found at end of
hearing.]
Mr. Duncan. Thank you, Mr. Roth.
Mr. Campbell?
STATEMENT OF KURT M. CAMPBELL, DEPUTY ASSISTANT SECRETARY OF
DEFENSE FOR ASIAN AND PACIFIC AFFAIRS
Mr. Campbell. Thank you very much, Mr. Chairman. Also in
the interests of time, I would ask that my full statement be
presented on the record.
I also would like to associate myself with the comments of
Mr. Faleomavaega and Mr. Underwood concerning Stanley Roth. It
is well recognized in the U.S. Government his leadership role
he has played throughout the Pacific, and particularly on these
issues. I think his framework that he has just presented gives
us an outstanding way to proceed.
If I may, Mr. Chairman, let me just make four quick points.
First, Mr. Chairman, I like very much the way you began your
statement about talking about these islands, critical to our
history and to our future. And to our present, how they are
emerging from the shadow of the cold war. I think some of the
things that we have to remind ourselves, that although that in
fact is the case, that just because the cold war is over does
not mean our security and our strategic interests go away. They
simply changed. That is why it is so important for us as we go
forward to be able to define, redefine our interests as we go
forward.
The second issue, to Mr. Underwood's point, and again, also
relating to Stanley Roth's questions about the security issues.
I would prefer and I think you'll see in our report that we'll
be producing early next year on what we think are the enduring
security interests that we believe apply to the Freely
Associated States, that rather than thinking about this
strictly in a negative sense in terms of strategic denial,
frankly we are beginning to think about our presence in Asia,
particularly in the current context, in the positive sense.
That U.S. presence currently in Asia, a region that is
experiencing tremendous uncertainty, is the big C, is the big
constant in the region, amongst a tremendous number of
variables.
If I can, and I apologize to other friends who have heard
this story before, I must give you a European analogy which I
think has some relevance for the Asian Pacific region. In the
1980's, Secretary General of NATO, Lord Carrington, a fine
British statesman, was sitting in a room listening to some
senior British, German, Italian NATO partners criticizing the
United States, saying you know, right, they are here in Europe.
Of course they play an important role, but they are difficult
to work with, they don't coordinate very well sometimes.
Sometimes they can be clumsy. It's just very difficult. After
listening for about 20 minutes, Lord Carrington said, ``Ah,
alas, they are the only Americans we have.'' That role is
remarkably consistent in Asia today.
As we look around the region and we see tremendous
uncertainty on the economic front, with the rise and fall of
great nations, instability of the kind that we have already
talked about on the Korean Peninsula, then one of the most
important things to keep in mind is the U.S. presence. This
constant will be critical, not just for this century, not just
in the post cold war world, but in the next century as well.
I would be happy, Mr. Underwood, to elaborate on those
themes as we go forward.
Then just to my friend Mr. Faleomavaega, on the whole
question of Kwajalein, I like very much the way he amplified on
the question of the important role the islands will play as we
go forward in terms of theater missile defense testing. I think
as you know, the recent missile test in North Korea has sent
shock waves through the region. I think those shock waves are
well understood in Washington. As we go forward, you are right
to say that there are only two sites in the United States that
really can be used both legally and operationally for the
testing of complex theater missile defense systems. But in
practice, there's really only one that is critical. I think
you'll see us referring to this specifically as we go forward.
The last point I just want to underscore is that we will be
working very closely in partnership with Stanley Roth, my
friend and colleague, as we appoint a senior negotiator that
will represent our government in these negotiations. We also
believe that it is in the best interests of the United States
and the Freely Associated States that we begin these
discussions prudently and we conclude them as rapidly as
possible. We think that is the best way for both of our peoples
to proceed.
Again, let me just conclude by suggesting that the security
interests of the United States still apply, and they will
continue to apply into the future as we go forward.
Thank you very much.
[The prepared statement of Mr. Campbell may be found at end
of hearing.]
Mr. Duncan. Thank you, Mr. Campbell.
Mr. Stayman?
STATEMENT OF ALLEN P. STAYMAN, DIRECTOR, OFFICE OF INSULAR
AFFAIRS, U.S. DEPARTMENT OF THE INTERIOR
Mr. Stayman. Thank you, Mr. Chairman. I ask that my full
statement be entered into the record. I will summarize.
Mr. Duncan. It will be so entered.
Mr. Stayman. On title II of the compact for which the
Department of the Interior is responsible, is composed of three
elements, financial assistance, program assistance, and tax and
trade investment incentives. With respect to the financial
assistance, the U.S. will provide nearly $3 billion over the
15-year life of the compacts. This financial assistance, which
is mostly guaranteed, is provided with maximum flexibility to
the Freely Associated States. Tables displaying the estimates
of the value of the 15 years for this assistance is attached as
an addendum.
With respect to the program assistance, under section 221,
the United States agreed to provide the Freely Associated
States with services of the Weather Service, FEMA, the Postal
Service, FAA. These services are also listed in the chart at
the back. But in addition, section 224 of the compact provided
that additional U.S. program assistance could be extended from
time to time by Congress. This provision has been used
extensively to establish over a dozen additional programs.
It is important to note that the compacts as originally
negotiated anticipated that all domestic programs would be
budgeted under section 221 and through the Department of the
Interior. When Congress extended these additional programs,
however, it did not direct that the additional programs be
budgeted and administered through this unified approach, and
would instead be administered by each separate agency. This has
eased program administration, but it has at the same time made
it difficult to track such programs.
The third element in title II, the tax and trade investment
incentives, were designed to stimulate private sector
development and complement the financial and program
assistance. However, the tax-writing committees of the Congress
eliminated this third and perhaps most important element of the
compacts' economic development strategy. This fundamental
policy change de-emphasized the private sector's role in
economic development and undoubtedly weakened the potential of
the policy.
A second point to be made in assessing title II of the
compact is that the Freely Associated States did not have
extensive economic planning experience. In 1993, the incoming
administration responded to these problems with two
initiatives. First, we began the annual bilateral economic
consultations which were called for in the subsidiary
agreements of the compact, but for the first 7 years had never
been held. Second, we contracted with the Asian Development
Bank to provide economic planning expertise to the FAS. These
new elements in the economic development policy have been
successful in enhancing FAS economic planning capabilities and
decisionmaking.
Chairman Young in his letter of invitation stated his
desire to focus on several specific issues. Let me briefly
address those which I have not already touched on. First,
exclusive economic zone enforcement. Under the compact, the
United States provides funding for enforcement of laws
regulating the exclusive economic zones. These enforcement
funds are used to operate and maintain patrol boats that were
donated to the FAS by the government of Australia. This
combination of the United States and Australian aid has
significantly enhanced the ability of the FAS to regulate
fisheries.
Two, the migration of FAS citizens. Guam, the Northern
Mariana Islands and Hawaii have all expressed concern about the
numbers of FAS citizens in their jurisdictions and the burdens
they have placed on the governments. Moreover, they believe
they should be reimbursed, pursuant to the compact
authorization. Guam, the destination of the majority of these
migrants, is currently receiving $4.6 million annually to help
compensate for this impact. Additionally, the Immigration and
Naturalization Service is developing regulations that would
limit habitual residents of FAS citizens in United States
territories. This should significantly reduce the burden of
compact migration as well.
A third issue, the resettlement of certain Marshall Island
atoll communities. The peoples of the four nuclear-affected
atolls in the Marshall Islands are in very different
circumstances. The peoples of Enewetak and Utrik have mostly
returned to their islands. The people of Rongelap, who signed a
resettlement agreement in 1996, are now able to return to
Rongelap Island. Their restored airfield is now in use, and
public facilities and homes are currently under construction.
A delegation representing the people of Bikini visited
Secretary Babbitt this April seeking a guarantee from the U.S.
Government that their atoll is safe for resettlement. The
secretary responded that the department supported the September
1996 International Atomic Energy Agency Advisory Group Report
on Radiological Conditions at Bikini. The IAEA found that
Bikini Island was ready for permanent habitation as long as
certain remedial measures were fully implemented, especially
the application of fertilizer to the soil and the use of
imported food. Should such remedial steps be implemented,
radiation doses for people living on Bikini Island would be
acceptable according to international standards, and their
health would be protected against radiation exposure.
Four, construction of the Babeldaob Road in the Republic of
Palau. The NEPA process is nearly complete and the final design
of this road is complete. The Army Corps of Engineers has
solicited price bids, and the price proposals are due on
October 10, that is in just 10 days. We expect the bids will be
very competitive due to the state of Asian Pacific economies.
If there is a clearly superior bid, it may be possible to award
the construction contract as soon as December.
Finally, compact renegotiation plans. This past July the
Inter Agency Group on Freely Associated State Affairs began a
process of outlining the IAG's renegotiation objectives.
Interior is aware that the FSM and Marshall Island governments
will continue to need some level of assistance after the years
2001 or 2003. The administration looks forward to continuing
discussions with the Congress as the United States position for
these negotiations is developed.
Thank you. I would be pleased to answer any questions.
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Mr. Duncan. Thank you very much, Mr. Stayman. First, I
would like to just mention that we are honored to have in the
audience our U.S. Ambassador to the Marshall Islands,
Ambassador Joan Plaisted. Ambassador, we are certainly pleased
to have you with us.
I would like to yield for questions at this time to
Chairman Bereuter.
Mr. Bereuter. Thank you, Chairman Duncan. I think I ought
to focus on the security end of foreign policy issues since
those are particularly within the jurisdiction, in part at
least, of the International Relations Committee. Secretary
Roth, welcome, glad to see you in this venue. What level of
involvement has there been in Palau by the U.S. Ambassador to
the Philippines?
Mr. Roth. He travels there. He takes it seriously as part
of his beat. When he comes back on home leave, for example, he
talks to me about Palau. I think he is very conscious that it
is part of his jurisdiction and job.
In the meantime of course, we keep a permanent presence on
Palau itself. We have a charge there and several other
employees. So it is not as if we have abandoned Palau when Tom
Hubbard, our current Ambassador to the Philippines, is not
there.
Mr. Bereuter. We have a U.S. Ambassador to the Marshall
Islands that's accredited to Kiribati. How is that working out,
Mr. Secretary?
Mr. Roth. Let me start with the big picture and then get to
the narrow picture. The big picture is that in a different
world with more budgetary resources, I would prefer to have
many more Ambassadors throughout the South Pacific. One of my
own priorities has been to try to reopen a post that was closed
several years ago, which was in the Solomon Islands. I think by
definition it's not ideal when you have countries represented
out of other countries. At the same time, given the enormous
constraints on the State Department budget, given the new
expenditures that we are going to have to have on security, it
would be utterly unrealistic of me to suggest that we're going
to be able any time soon to open a lot of posts in what are, in
the final analysis, very small island countries in the Pacific
region. So we are going to have to live with this situation for
a while and deal with it as best we can.
Given that, I think the situation has worked reasonably
well. Obviously if you ask the people of Kiribati, would they
prefer to have a full-time resident Ambassador, I am sure they
would say yes. But in the meantime, we are not getting deluged
with complaints about the current situation.
Mr. Bereuter. Secretary Campbell, in the Compact with
Palau, we have reserved the right to establish military bases
there, I think in large part it reflected the fact we were
pulling out of Subic Bay and Clark Air Force Base at the time.
Has there been any discussions about that? Is there any
likelihood in the near future that we will attempt to exercise
that option?
Mr. Campbell. Mr. Chairman, the assessment of our CINCPAC,
Admiral Prueher, and most of our senior military command, and
that's backed up by the civilian Department of Defense, is that
we have all the permanent military facilities in Asia that we
currently require, and that we are primarily placing our
emphasis on in-
creasing access, increasing training with a host of countries
and places in the Asian Pacific region. I think that is where
we stand today.
Mr. Bereuter. Thank you. Mr. Stayman and Secretary Roth,
has the administration spoken out or does it have a policy with
respect to the prospect that the Marshall Islands would propose
as a part of its economic development to store nuclear waste on
one of its atolls?
Mr. Roth. Yes. This frankly is going right back to the
negotiation on the Compact legislation itself more than 10
years ago. At that time there was concern that countries under
financial pressure might seek financial arrangements to store
garbage or nuclear waste or other toxic materials, thereby
endangering their own environment. I think it's been the very
clear intent of Congress, and it's supported by various
Administrations since then, not to see this happen. We believe
it was a mistake. We have opposed efforts by Taiwan to have
nuclear waste disposal programs with North Korea. We have
opposed that in the South Pacific as well.
Mr. Bereuter. We may have to speak on that issue once more.
Mr. Stayman, do you have anything to say on that subject?
Mr. Stayman. I don't really have anything to add except
reiterate the strong opposition of the administration to such
proposals.
Mr. Bereuter. Mr. Stayman, thank you. I'm on my yellow
light here, so I'll try to crowd in one more question. Since
Palau, the Rock Islands have such a unique ecological system,
truly unique in the world in some respects with flora and
fauna, what if anything has Palau done to try to assure that
its ecological system is protected? What role is there for the
United States, if any, in the way of technical assistance that
has been requested?
Mr. Stayman. To begin with, under the Compact itself Palau
must agree to have essentially mirror environmental standards
as the United States. We think that we are providing technical
assistance, not just to the government, but to NGO's to develop
their capability to establish such laws and regulations and
enforce them.
With respect to the road in particular, that is probably
going to be the single largest construction project that the
U.S. has ever conducted in Micronesia. It's 150 millon----
Mr. Bereuter. But the road doesn't affect the so-called
Rock Island area directly, does it?
Mr. Stayman. It will affect reefs off Babeldaob, you're
right, but not the Rock Islands. What they are doing in the
Rock Islands is establishing marine reserves along models
similar to that in the United States. They have I believe one
in the Rock Islands. There is one at the north end in Kayangel,
and under the road for the purpose of conservation areas. We
expect them to establish two more. So at this point we are
confident that they are very committed to protection of their
unique environment.
Let me just add that they are very sensitive to the role
that the Rock Islands and their reefs and their natural
environment play in economic development. I don't think they
are going to kill the goose that's going to lay the golden egg.
Mr. Bereuter. Mr. Chairman, if you could just indulge me
for one quick followup.
Have they requested World Heritage designation?
Mr. Stayman. I am not aware at this time.
Mr. Bereuter. Thank you, Mr. Chairman.
Mr. Duncan. Thank you.
Mr. Faleomavaega?
Mr. Faleomavaega. Thank you, Mr. Chairman.
Secretary Roth, you had mentioned earlier that the thing
good about the renegotiations process is that only certain
provisions of the Compact are subject to renegotiations, so
we're not starting from scratch again. I had recently discussed
the matter of renegotiation with President Nena of the FSM.
They are willing to abide by the current dating, which will not
start until sometime next year.
However, in my recent meetings with President Kabua of the
Marshall Islands, they are very concerned, Mr. Secretary. They
feel that because of the sensitivities and problems unlike the
FSM or Palau, they feel that it's really necessary that the
negotiations with the Marshalls should commence at the earliest
possible date. What is your position on that?
Mr. Roth. I was a little bit surprised to hear that in your
opening remarks because there is a provision of the Compact
that takes into account the needs of the Marshalls. I'm
referring to the ``changed circumstances'' provision, which we
understand is being looked at very carefully. In other words,
while the nuclear settlement provisions were supposed to be a
final settlement, there was included in the legislation itself
very specifically a safety net clause which said that if there
are ``changed circumstances,'' that a report can be submitted
to the Administration and will be considered. So there is a
means even in advance of Compact renegotiations to deal with
issues relating to the nuclear ones. So one way or another, I
think we can address the Marshallese concerns. I think we have
an obligation to address the nuclear concerns. It is in law,
but I think also we feel it as a matter of policy.
In terms of starting earlier, frankly by the time we get
the negotiator appointed and get our own internal coordination
amongst all the interested agencies of the U.S. Government, and
I hope have some intensive consultations with the Hill, it is
not going to be very much earlier than the 1999 date that is
set in the legislation itself. If we can do a little bit
better, we'll try to do so. But I am particularly concerned
that we start off from a realistic base, which means that I
think we have to do a very good job in consultations with the
Congress, particularly these two committees on the House side
before we sit down to engage in negotiations so we don't end up
with a 15 year fiasco.
Mr. Faleomavaega. I think the concern that I raised on the
question of renegotiation is the fact that it's not one shoe
that fits all. The problems dealing with FSM is certainly not
the same as the Marshalls. The fact that our nuclear presence
in the Marshalls is a lot more apparent than we are with the
FSM or Palau, for that matter, it seems that some of these
issues are a lot more poignant and really needs to be addressed
as soon as possible, in my humble opinion.
Mr. Stayman, you mentioned that Congress had eliminated the
tax and trade investment provision in development of the
compacts. Can you explain to the Committee why this was done?
Is it because of our fear that we don't want to allow these
countries to negotiate with foreign countries that may not be
in our national interest?
Mr. Stayman. I am hesitant to speak for the congressional
tax writing committees this many years later, but as you know,
I was working for the Senate at the time. My understanding was
that generally the Treasury Department did not favor the use of
these kinds of tax and trade provisions, which were essentially
the same provisions available to the U.S. territories. As you
know, since that time the Congress has gone forward and
eliminated these programs for all U.S. territories.
So my understanding was that their very fundamental policy
tendency was toward eliminating these special provisions in the
tax and trade codes. They have gone ahead and eliminated such
things as the possession's tax credit.
Mr. Faleomavaega. I am not an economist, but you know, on
the one hand we're saying that these islanders be more self-
sufficient economically. On the other hand, we cut the left
hand by trying to promote trade investments and have some kind
of an internal tax structure so that they can be more self-
sufficient. This doesn't make any sense to me at all.
Mr. Stayman. In hindsight, I think most people would
recognize that a de-emphasis on private sector incentives and
an increasing of public sector subsidies is not going to help
develop the private sector and get economic self sufficiency in
any renegotiation. This is an area we hoped to work much more
closely with Congress. This is one of the examples which Mr.
Roth talked about that had their been better communication,
this might not have happened, so that we can have a more
appropriate balance between the private sector and the public
sector.
Mr. Faleomavaega. Mr. Chairman, may I ask one more
question?
Have you had a fellow by the name of Alex Copson come visit
your office, Mr. Stayman? I want to see his face. This guy is
going around selling the idea of a nuclear storage waste
facility in any of the islands in the Pacific, a multi-billion
dollar proposal with some Russian outfit and some admiral being
involved in this issue. Then the next thing I hear now, there's
a Taiwan outfit with Babcock and Wilcox. Is this an American
company? They want to propose also a nuclear storage. I think
the last time I heard, Mr. Copson was at Wake Island that he
wanted to do this.
What is the latest development on this nuclear storage
thing?
Mr. Stayman. We have heard a variety of proposals. I have
not met Mr. Copson personally, but I have met others who are
interested in some of these proposals. They have been made with
respect to several islands. But generally our response is
always the same. We are against it.
Mr. Faleomavaega. It's all right to store nuclear waste in
these islands--it's not all right, but it is OK to transport
nuclear waste between points, like the French and the Japanese
are doing now. Is that considered a real guaranteed safe for a
process? Mr. Campbell, maybe I could ask you. You are the
defense expert here.
Mr. Campbell. I'm sorry. I didn't really understand the
question.
Mr. Faleomavaega. It's not OK to store nuclear waste
material basically as a matter of policy. I support that. But
it is perfectly OK to transport nuclear waste on surface
transportation, like what is happening now between Japan and
France?
Mr. Campbell. Let me try to answer just the security
dimension. I'll let my friend from Interior answer the first
part of that. Let me just say that when there are transfers by
ship by their nuclear fuel for reactors or nuclear waste
issues, this is one of the issues that the United States tracks
and looks at very carefully. We do have security concerns
associated with the movement of nuclear materials on the high
seas. Yes, indeed.
Mr. Faleomavaega. No thought or danger that these ships are
subject to any storms, that one day that they are going to end
up just like we said in one to a million chances that the
Valdez situation would not have ever happened, what had
happened?
Mr. Campbell. Again, if you asking do you think that the
United States views these from a variety of perspectives with
some concern, but from the perspective of a potential terrorist
attack or some kind of major storm, I think the answer to that
question is yes. These are not interactions that the U.S.
Government is itself involved in. We have been in
communication--I don't know of the communications with France,
I do know of the communications with Japan. We consult with
them and we have in the past on safety issues associated with
this.
Mr. Faleomavaega. Thank you, Mr. Chairman.
Mr. Duncan. Thank you.
Mr. Underwood?
Mr. Underwood. Thank you, Mr. Chairman. I would, spinning
off of that statement on the environment made by Mr. Stayman
that Palau tries to follow exactly the same or approximately
the same environmental regulations that the U.S., I would like
to note with some envy that they can catch and eat sea turtles
and fruit ants. People in Guam can't.
[Laughter.]
I am particularly interested in the issue of strategic
denial. One of the reasons that I raise that issue is because I
want to know what is the emerging consensus on what is the new
situation regarding the strategic environment in which
Micronesia plays in not only the Asia Pacific situation, but
even worldwide.
I know, Dr. Campbell, you mentioned that the United States,
the constant is the big C in the area and that it adds a
certain level of stability. You also mentioned that the United
States desires to maintain a presence in the area. Could you
describe and perhaps Secretary Roth would like to participate
in this as well, what if any activities engaged in by the
Freely Associated States would contribute to the erosion of the
strategic situation or eroded in any way?
Mr. Campbell. Let me begin and answer, and then ask Stanley
to continue, Assistant Secretary Roth to continue if I can. On
the first point about the concept of strategic denial, you will
note that when the United States talks about the Asian Pacific
region, by and large we try to talk about it as not a region in
which sort of great power politics are afoot. We do not see a
situation in Asia that is in any way relevant to the cold war
world in which we were involved in a global strategic standoff
or competition with the Soviet Union.
Our relations with major powers is complex. We believe that
the best way both to engage major powers and to hedge against
the possibility that things do not go in directions that are
potentially in U.S. interests, is to maintain a presence. So
our presence in the Asian Pacific region both acts as an
ability to shape the environment with which we desire to live,
and also it is a hedge in case things go badly.
When you ask about what steps that could be undertaken that
could potentially undercut peace and stability in the region,
again, I would turn that to the positive. Our goal by our
presence in the region, our goal with our close association
with the Freely Associated States is to shape an environment
which prevents the emergence of threats or challenges to peace
and stability in the Asian and Pacific region. We think that is
the enduring rationale for U.S. strategic involvement, not only
in the Pacific, but in the Asia and Pacific as a whole.
Mr. Underwood. But is there any kind of specific activity
engaged in by the Freely Associated States which you are
monitoring very carefully which may erode or may undercut some
of this like fishing agreements or I don't know, maybe the
nuclear waste storage or other issues aside from the
environmental dimensions? That's what I am getting at.
Mr. Campbell. Let me just say that we track a variety of
developments in the region. We look at migration patterns. We
look at fishing. We look at some of the things that Assistant
Secretary Roth has talked about in terms of. We have heard
about sort of groups traveling through the night with nuclear
proposals in their suitcases. We try to track all of that.
Again, I think the United States has fairly strong views on all
of these issues.
Mr. Roth. Let me just add that I think it is worth getting
the perspective right. Strategic denial isn't something done to
the Freely Associated States. It is not per se something we are
doing to restrict their behavior. It is, in a sense, a benefit,
since, as you know, under the Compact we are completely
responsible for their defense and are obligated to defend them
as if they were part of the U.S. So anything we do in terms of
denying military access to other countries to this region,
presumably it's for the same benefit of the Freely Associated
States as it is to us. I am not aware that there has been a
single instance where we have ever had to tell one of the
Freely Associated States no, you can't do something because it
will be bad for the strategic interests of the U.S. I don't
believe we have exercised strategic denial.
Mr. Campbell. That is perfectly said, what Assistant
Secretary Roth has said. I know of no incident in which we have
had to say no, those activities are contrary to the interests
of the United States.
Mr. Underwood. Though in each and every instance in your
experience, they have fully complied with the intent and
purposes of the Compact in that regard?
Mr. Roth. Yes.
Mr. Campbell. I would agree with that.
Mr. Underwood. If I could just ask one brief question on
EEZ because Mr. Stayman raised it. The United States has the
obligation and takes on the obligation to help enforce the
exclusive eco-
nomic zone. The irony for the people of Guam is that our
country, of which Guam is a part, is enforcing this EEZ,
particularly with regard to fishing agreements. Then the
benefits, the potential benefits of some of those fishing
agreements, i.e. transshipment through Guam, are being denied
by one of the FAS states.
I am just wondering, is that going to be taken into
consideration somewhere in the thinking about how we continue
to implement these Compacts?
Mr. Stayman. Yes. I think that first off, they have these
resources but we don't have direct U.S. program involvement in
that surveillance. You know, in Guam you have the Coast Guard
would provide that. What has happened here is we're simply
giving them money to essentially run Australian boats.
Nevertheless, your point about the impact of transshipment
highlights the dilemma we have, that both Micronesia and Guam
are looking to fisheries for development. It is in the
interests of the FAS and FSM in particular to get as much of
those benefits within their borders as they can. That in fact
is the policy of the United States under our fisheries laws, to
force as many operations within our borders as possible and
maximize the economic benefit.
I would suggest that the way to start resolving this
problem so that there is a balance between the interests of
Guam and the interests of FAS in extracting the maximum amount
of economic benefit is through a regional dialogue. Fisheries
in the Pacific have generally been addressed most effectively
through some kind of regional dialogue. As you may know, let's
see in November, we expect to have many members of the
Micronesian Chief Executives and the Pacific Basin Development
Council gathered in Guam. I think this is the kind of issue
that's going to be at the top of their agenda, is how do we
take the Micronesian region and keep folks from competing over
a very important resource like fisheries and try to strike a
balance where the strengths of Guam will complement the
strengths of the FSM and the RMI.
Mr. Underwood. I'm glad to hear then, I am glad to hear
that there's appreciation of that in the administration because
obviously much of the enforcement of the EEZ activities that
the United States engages in actually come directly out of
Guam. It seems a great irony to the people of Guam that our own
government is not in a sense working against the interests of
Guam, but perhaps not as mindful as they could be.
Thank you, Mr. Chairman.
Mr. Duncan. Thank you, Mr. Underwood.
I did spend about a week in the Northern Mariana Islands a
little over a year and a half ago, but I really am the new kid
on the block here as far as these issues in the Pacific go. I
was just asking Mr. Mantz here, I know we have programs with
the State Department, the Interior Department, the Defense
Department, and other agencies, and I was wondering what the
total expenditures were from the Federal Government. But he
says that he has just provided me with information that this
Fiscal Year, we are spending $40,533,000 in the Marshall
Islands, $78.9 million in the Federated States of Micronesia,
and $21,221,000 in Palau. Do your all's figures agree with
that? Is that basically accurate?
Mr. Stayman. Yes. Those are the numbers I believe off the
addendum in my testimony. Those reflect the funds provided
under the compacts. There may be other amounts, but not that
significant, particularly you know--let me just go back. For
the Freely Associated States, that fairly represents everything
we are providing under the compacts. Again, there may be some
small stuff not caught up in that. Let me just give an example
which has recently been very important, that's Pell Grants.
Pell Grants were extended outside of the compact. They
obviously have a substantial value. But that is a payment made
to individuals so that does not track here. If for example,
someone happened to be a veteran, payments to individuals would
not be reflected.
Mr. Duncan. So payments to individuals are not in those
figures?
Mr. Stayman. Right.
Mr. Duncan. And yet I understand from the staff that your
department projects an increase in these outlays at the end of
the 15 year compact period. I also understand that as far back
as 1947, we said it was a goal of the United States or we were
committed to self sufficiency. Yet they tell me that
particularly in the Marshall Islands, that per capita income is
$1,600, factoring in compact payments, but only $200 to $600
without it. Is self-sufficiency a realistic goal? Are some of
these people in areas becoming more dependent? Why the increase
that you project?
Mr. Stayman. First, that issue, the increase in the last 2
years is a consequence of a provision of the compact itself
which provides a separate formula for funding in what are
essentially the two contingency years. We had a formula which
covered the 15 year term. Then there is a 2-year contingency
period if the negotiations should not be concluded. The formula
for funding in those 2 years is tied to the average for the
preceding 15 years, which was in fact a declining amount. So
simply the provisions of the compact provide for a step-up in
the last 2 years. That was the way it was negotiated.
Your more fundamental point about self sufficiency I think
is an important one. I for one believe that complete self
sufficiency is not a realistic goal. We have to recognize that
these are small resource poor countries in very remote regions
of the earth. There will either always be a need for some kind
of outside subsidy, that doesn't necessarily mean a U.S.
subsidy, and there will probably be a continuing pattern as we
see throughout the region, of out-migration. There is simply
not enough land or enough jobs to provide the opportunity for
all of the people.
Having said that, one of the goals that I would like to
establish in renegotiation is to the extent we can use U.S.
money as efficiently as possible and achieve the maximum level
of self sufficiency, we should do that. But we have to be
cognizant of the fact that by emerging as independent nations,
the Freely Associated States can now tap into other sources of
funding and programmatic assistance. They have not been as
aggressive as they could be in doing that. I mentioned briefly
in my statement developing the linkages with ADB. I think it's
important to recognize that the U.S. isn't the only provider of
assistance.
Mr. Duncan. Let me ask you very quickly about a couple of
other things. In some of the materials provided to me I saw
that the re-
quirement for essential air service has ended and that the
flights to the Marshall Islands have been reduced to two a
week. I know that most of the people in these areas are heavily
dependent on air travel. Is that going to be a problem or is
there work being done to try to get more air service to these
islands?
Mr. Stayman. Let me say it is not only going to be a
problem, it is a problem. The two primary opportunities
available for economic development are fisheries and tourism.
It is hard to find tourists who are going to go to an area
where there are only two flights a week. This is one of the
areas of economic development that I think we should look at
very carefully as we approach the renegotiations. Because if
you believe that you have to maximize the benefits from
fisheries and tourism, you really have to resolve this problem.
It is already affecting our ability to deliver mail in a timely
manner. Again, businesses don't like to be confronted with
problems like that. It makes it extremely difficult to get
outside investment.
Mr. Duncan. Mr. Campbell, let me ask you this about
defense. We have been closing bases around the world. You
stressed the strategic importance of some of these areas. What
are our security obligations to them? You stated how valuable
they were to us. What are our security obligations to these
islands? Also, do you foresee a point at which we would need to
build some type of military base or facility in the Pacific
some place and use one of these areas?
Mr. Campbell. Thank you, Mr. Chairman. I think Assistant
Secretary Roth stated it very succinctly, and it's in my
statement as well. Our security and defense commitment to the
Freely Associated States is absolutely unique. It is deeper and
more profound than we have made to any other alliance,
including NATO. We protect and secure, we take steps to do so
in the Freely Associated States as we would defend a piece of
U.S. territory, continental U.S. territory. We believe that
that is a fundamental commitment that will endure in our
relationship as we go forward.
On the question of, as you can imagine, Mr. Chairman, the
question of bases in Asia is a very sensitive topic. Chairman
Bereuter has had a number of hearings on this. What we tried to
do, given the fact that there are often difficulties and
sensitivities associated with the creation of major permanent
facilities in the Asia and Pacific region, and again, and we
also suffer from the tyranny of distance and costs associated
with the maintenance of these bases. We put more stake and
influence emphasis now on patrols, on deployments, on temporary
and short-term deployments than we do on permanent basing of
facilities.
We have major military facilities, permanent major military
facilities in Asia now in only two countries, in Japan and
South Korea. However, we have increased substantially our
training and our deployments throughout the Pacific and the
Southeast Asian region over the last 4 or 5 years. I expect
that will continue.
So to answer succinctly your question, I believe that our
access and our training will continue and perhaps even increase
in the immediate future. I can not state here that I foresee a
period in the future where we will want permanent military
facilities in the FAS. No, I can not.
Mr. Roth. This is a big change from 15 years ago, when we
were contemplating the possibility that we might want to do
something. In fact, we were doing actions in several places,
leasing land in Tinian negotiations, the whole Compact
arrangement with Palau because we were worried about possibly
losing access to the Philippines. So this is a major change in
the situation.
Mr. Duncan. All right. Well, thank you very much,
gentlemen. We want to move onto the second panel, but thank you
very much for being with us. It's been a great honor and
privilege to have you here.
We will call forward at this time panel No. 2. The second
panel consists of the Honorable Asterio R. Takesy, executive
director, Joint Committee on Compact Economic Negotiations of
the Federated States of Micronesia. He is accompanied today by
the FSM Ambassador to the United States, the Honorable Jesse
Marehalau. The second panelist is the Honorable Phillip Muller,
who is minister of Foreign Affairs and Trade, Republic of the
Marshall Islands. He is accompanied today by the Marshall
Islands minister of finance, Tony DeBrum. Also in the audience
is RMI Ambassador to the United States, the Honorable Banny
DeBrum. The third panelist will be the Honorable Hersey Kyota,
Ambassador of the Republic of Palau, who is also accompanied by
other Palau embassy officials in the audience.
Let me welcome all of the witnesses, and say to you that we
are honored to have you here with us today. I will remind all
of the witnesses that we do limit the witnesses to 5 minutes,
the 5 minute opening statements. I will call on the witnesses
as listed in the call of hearing. That means that the first
witness will be the Honorable Asterio R. Takesy, who is the
executive director of the Joint Committee on Compact Economic
Negotiations.
Mr. Takesy?
STATEMENT OF HON. ASTERIO R. TAKESY, EXECUTIVE DIRECTOR, JOINT
COMMITTEE ON COMPACT ECONOMIC NEGOTIATIONS, FEDERATED STATES OF
MICRONESIA, ACCOMPANIED BY JESSE MAREHALAU, FEDERATED STATES OF
MICRONESIA AMBASSADOR TO THE UNITED STATES
Mr. Marehalau. Mr. Chairman, my name is Jesse Marehalau,
the FSM Ambassador to the United States.
Mr. Duncan. Are you going to give the statement?
Mr. Marehalau. He will. I am just introducing him, sir.
Mr. Duncan. Right. Oh, OK. Thank you very much.
Mr. Marehalau. I would like to introduce Mr. Takesy, former
secretary of development and resources, former secretary of
foreign affairs, and now currently serving as the executive
director for the Joint Committee on Compact Economic
Renegotiations, who will present our testimony.
Mr. Duncan. Well, thank you very much, Mr. Ambassador.
Certainly we are pleased to have you here with us today.
Mr. Takesy. Thank you, Mr. Chairman. First I want to thank
you very much for holding this hearing to give us an avenue to
relate to you what we have done under the compact. Mr.
Chairman, my written statement is just a little over 5 minutes,
so to adhere to your rules, I will summarize.
Mr. Duncan. That's fine. Go right ahead, if it runs
slightly over.
Mr. Takesy. Mr. Chairman, first I would like to thank you
very much for the assistance that you have given us in the work
on the Pell Grants, which are very, very essential to the well-
being and for the education of our young people. We thank you
very much for that.
Second, I want to bring to you as my president has been
here earlier in the week, in the month rather, he was here to
express to you, to the government, at the very highest level to
underscore the value that we attach to the compact. It is an
expression of collective interest, of mutual interests between
our two countries. We certainly want to underscore that to you
in these hearings.
The FSM views the success of the compact in other ways. The
cornerstone of course of our relationship is in the security
and defense areas. We have over the 10 years or so, have
adhered very strictly and have carried out our responsibilities
under the compact. For instance, at the United Nations, we have
allied ourselves very closely with the United States in its
voting on very critical issues at the United Nations such as on
the Middle East, on Israel, and we have elected to abstain from
joining organizations or conventions that the United States has
viewed as contrary to its interests, and therefore our
interests, such as the Nuclear Free Zone of the Pacific, and
the Land Mines Treaty Convention.
Our annual meetings between our two countries on military
affairs have had a very smooth holding. The presence of the CAT
teams in Micronesia are very much appreciated, and a
demonstration of the good will between our two countries. The
meetings that we have had are of course done either in our
country or in Honolulu. We appreciated this because it gives us
an avenue to see firsthand the security setup and the world
situation that we periodically receive from SINCPAC.
As you know, Mr. Chairman, there is an elaborate conflict
resolution clauses under the compact. They were negotiated over
long periods of time and very acrimonious at times. I
personally was involved in that and I spent quite a number of
weeks here in Washington, DC, in climates that are not very
conducive to my thin blood from the Pacific. But not once have
we resorted to these articles. The relationship we have carried
out. Where we have some differences we were able to resolve
them amicably without resorting to any conflict provision.
The defense arrangement under title III, Mr. Chairman, is
something that we are very satisfied with and are fully
committed to for our own interests as well as for the United
States and security of the region. We are very happy to
contribute to that. My president in his meeting with Assistant
Secretary of Defense, Mr. Kramer, reiterated our offer for
prepositioning of military forces in the lagoons of our waters.
I would like to address a point that was raised by my good
friend from Guam, Congressman Underwood, on the fisheries issue
because it has been a point of some contention between us. The
point of the matter is, Mr. Chairman, it is one of the very few
resources we have, and we have approached it in as responsible
and as economic a manner as we can.
Let me just point out some statistics for this Committee so
there is expected. The income that is generated in the
territory of Guam as a consequence of the transshipment of
fisheries that are generated not only from the FSM but from
Marshalls and Palau, is some $240 million. Now, Mr. Chairman,
what we receive in my country by way of fee for licensing these
vessels, and they are fishing in our waters, not necessarily in
Guam's water, is some $20 million. Now what we are doing is
instituting arrangements to maximize and to increase the income
from these resources. We would like to continue to work with
our friends from Guam in seeing how best we can mutually
together benefit from these resources.
Mr. Chairman, the important cornerstone of our relationship
from our viewpoint is of course economic self-reliance. That is
going to be sometime, Mr. Chairman, to come. As has been
pointed out by previous speakers, we are a resource-poor
country. We have tremendous constraints that must be overcome.
We are very far from markets. We are geographically scattered
and dispersed. We have great distances to cover, even within
our own country. We have 1,800 miles across and most of our
territories are under water.
The funding that we have gotten under the compact
admittedly has not been put to the best use as one would
expect, including us. But having reviewed what we have and
seeing that what we started were not so well-thought-out, we
have begun 3 years ago to take a re-look at things and
reorient. So we have begun a restructuring and reform. I am
happy to report, Mr. Chairman, that that exercise is well along
its way. We hope to be able to accomplish that sometime next
year.
As a matter of example, the state of Chuuk, as many of you
know, was in very deep trouble in terms of deficits. Today it
is paying its debt and there is no reason to expect that it can
not continue. In fact, they have just appropriated additional
funds last week. This money will be used to pay out its foreign
debts as well as domestic, so that by June of next year, Chuuk
will be in the black.
Mr. Chairman, the assistance that we are receiving in our
restructuring is done by an independent group that is funded by
the United States, Japan, and the Asian Development Bank. It is
being administered by the bank. It is a two-pronged approach.
That is to produce an environment for private sector growth,
and at the same time, reduce costs and downsize the public
sector. As you well know, it is the biggest employer in the
country.
Now it is going to take some time for this exercise to
produce some positive results, but presently we are encouraged
by what has happened. More importantly, there is political will
behind it. The people have warmed up to it and there is wide
consultation among ourselves as to the wisdom and the suffering
that we must undertake in order to produce some positive
results.
As an example, we have actually downsized the public sector
some 20 percent. We have laid off about 1,200 people from the
payroll. We have reduced the wage by some 20 percent. We have
also frozen increases, promotions, and we are attempting to
privatize or corporatize many of our utilities and other
services and activities by the government.
We are also attempting to improve our tax structure. Next
month our Congress will tackle that. We have improved its
administration. I am happy to report that there has been some
marked increase in the revenue.
Mr. Chairman, the 15 years of funding under the compact is
of great value to the FSM. But as I have stated earlier, it is
not going to be enough for us to achieve the measure of self
reliance that we had anticipated. In fact, there is relevance
and reference in the compact itself, acknowledging that fact so
that the renegotiations are built in, because we did not and
could not envision that in 15 years we would achieve a level of
self reliance or economic development that can generate total
revenue for needed public services.
Mr. Chairman, let me summarize for you what we are doing to
prepare for these negotiations. Last year this month, we
organized a Joint Committee on Compact Economic Negotiations,
consisting of members from across the nation, at state and
national level, from executive and legislative. The chairman of
this group is the Honorable Petrus Tun, who is our former vice
president, the first vice president. It is served by a full-
time secretariat that is headed by me. We are served by an
attorney, economists, and other consultants on areas that are
of concern in the next--in renegotiations.
Mr. Chairman, I would like to end by stating that some in
your country have viewed the funding under the compact as
foreign aid. Others have described it as rental for defense
purposes. Some have labeled it other ways. But for us, we view
this is as this the mutually beneficial relationship. This is
the unique cornerstone for us. We view this as a partnership in
development for self-reliance and security.
Mr. Chairman, I thank you very much for allowing me to
appear before this Committee. We in the FSM welcome this
dialogue. We would like to provide this Committee, including
the administration, information that they may wish from us. We
look forward to the renegotiation.
[The prepared statement of Mr. Takesy may be found at end
of hearing.]
Mr. Duncan. Thank you very much, Mr. Takesy.
The next witness as listed in the call of the hearing is
the Honorable Phillip Muller.
Mr. Muller?
STATEMENT OF PHILLIP MULLER, MINISTER OF FOREIGN AFFAIRS AND
TRADE, REPUBLIC OF THE MARSHALL ISLANDS; TONY DEBRUM, REPUBLIC
OF THE MARSHALL ISLANDS AMBASSADOR TO THE UNITED STATES
Mr. Muller. Thank you, Mr. Chairman. Mr. Chairman, I wish
to request that the full text of my statement be made a part of
this proceeding.
Mr. Duncan. The full statement of all the witnesses will be
placed in the record.
Mr. Muller. Let me begin by stating that my government
remains fully committed not only to preserve, but to strengthen
our close friendship with the United States. At this time I
would like to discuss with the Committee three major points
that are of great interest to the Marshall Islands.
First, the value the RMI places on our bilateral
relationship. Second, U.S. Government concerns about fiscal
management in the Marshall Islands. Third, difficulties the RMI
is facing in implementing certain provisions in the compact.
The RMI provides tangible concrete commitments to support
the United States military interests. We provide U.S. strategic
denial rights over one million square miles of the Central
Pacific. We extend this right to the U.S. in perpetuity. We
provide land for new launch sites when requested. Our
Marshallese citizens serve in every branch of the U.S. armed
forces. In exchange, the U.S. provides generous levels of
social and economic assistance to the RMI.
The point I want to stress here is that we can not examine
the compact program by program or to dissect it into separate
pieces. The compact has to be seen as a whole package of
corresponding military, economic and social assistance. I find
one particular passage in the Mutual Security Agreement, the
subsidiary agreement of the compact, to reflect this principle
particularly well. This passage reads as follows: ``The
Government of the United States and the Government of the
Marshall Islands recognize that sustained economic advancement
is a necessary contributing element to the mutual security
goals expressed in this agreement.''
I have attached resolution 67 to my written testimony, a
resolution that Nitijela passed on February 5, 1998. This
resolution serves as another example of the RMI's concrete
commitment to its bilateral relationship with the United
States. It expresses the importance the RMI government
attributes to our strategic partnership. I was extremely
pleased to see that these same elements and sentiments were
reflected in the joint resolution introduced by the chairman of
both committees holding this hearing, as well as our good
friend, Congressman Faleomavaega.
We understand that some people in the U.S. Government have
concerns about fiscal management in the RMI. We acknowledge
that there have been a number of problems with our financial
management and budget execution. We would like to put this
discussion in context.
During the trusteeship, the Marshall Islands was deemed a
secure area by the U.S. administrators. Until 1968, outsiders
could not visit the Marshall Islands without first obtaining
permission from the U.S. Navy. Until 1973, no foreign
investment of any sort was allowed in the Marshall Islands.
Most of the compact money we now receive goes to pay debts from
loans that were necessary to create as well as to upgrade the
economic infrastructure we inherited from the trust territory
government.
After devoting our attention to infrastructure, we moved to
economic development projects. Some of our efforts have worked,
such as our ship registry program, the National
Telecommunications Authority, and the Marshalls Energy Company.
Still other projects were admittedly over ambitious or as we
found out inappropriate for the Marshall Islands. In 12 years
time, however, we can not be expected to achieve the economic
development that U.S. strategic interests and trusteeship
policies intentionally thwarted for decades.
As for financial management, we had to struggle to improve
a system of accounting we inherited from the trusteeship that
consisted primarily of pencils and papers. Because we had no
system to properly audit expenditures, we could not effectively
assure accountability. Consequently, some moneys in the compact
were not used as effectively and efficiently as they could have
been.
The Auditor General's office, together with Deloitte and
Touche, has been working steadily over the years to improve our
audit and reporting system. We are seeing improvement. For
example, I am now happy to report that satisfactory
arrangements have been made to complete the important Ebeye
Hospital construction project.
Like the U.S., we also have concerns about aspects of the
compact related to the implementation of programs. Problems
have emerged when essential provisions, such as the Immigration
and Labor Rights, are constrained and compromised by laws or
regulations passed without considering the special rights that
the compact provides to each of our nations.
Other provisions in the compact have never been
implemented. Some programs are not provided because U.S.
agencies lack proper understanding of their obligation to
extend services we are eligible for. We also believe that loss
of certain economic trade and tax provisions prevents both U.S.
and Marshallese companies from opportunities to jointly expend
our economic interests. After the Marshallese electorate
overwhelmingly approved the compact, a number of economic
incentives were unilaterally removed by Congress. Just
yesterday the essential air services provision, an integral
part of the compact, expired. This provision ensured an
adequate level of air service between the Marshall Islands and
the United States. This arrangement should continue.
Mr. Chairman, if you would bear with me, I think the most
important part of my testimony I am going to provide at this
time.
Mr. Duncan. Go ahead.
Mr. Muller. This is on the section 177 agreement. Thank
you. Section 177 of the compact has proven to be manifestly
inadequate. Section 177 fails to recognize the full scope of
radiation injury in the Marshall Islands. The United States
conducted 67 nuclear tests, yet only people exposed to one of
these tests, the Bravo shot, are considered ``exposed'' to
radiation. As a result, only 174 people are defined as exposed
and eligible to participate in a Department of Energy medical
program.
The Nuclear Claims Tribunal lacks the funds to pay personal
injury claims that are awarded. Because personal injury awards
have depleted available funds for awards, the tribunal will
have no funds for land damage awards.
There are also problems with the 177 health care program.
Unlike other programs in the compact, there is no inflation
adjustment. The program's ability to provide much needed
medical care to four of our atoll populations is also hampered
by over enrollment. Eligibility is a complex issue, however,
because of land claims and limited health services care. We
wish to study this issue and report back to Congress and the
administration.
There is also a gross inequity in the way the U.S.
Government deals with downwinders in the United States and
people affected by radiation in the Marshall Islands. The
cumulative yield of the testing in the Marshall Islands is 100
times greater than the yield of the U.S. tests in Nevada. Yet
the area in the United States considered exposed by radiation
from the Nevada tests is four times as great as the legally
defined exposed area in the Marshall Islands. American citizens
also receive a one-time full award for their radiation
injuries. Marshallese often die before they receive the
majority of their award. I would like to ask your support, Mr.
Chairman, in securing an immediate ex gratia payment consistent
with the compact for the victims dying of radiation related
illnesses.
Fortunately there is a provision in the compact that allows
Congress to work within the purview of the existing bilateral
framework to respond to shortcomings in U.S. efforts to address
problems resulting from the U.S. nuclear weapons testing
program. This provision, the changed circumstances provision,
require that there be one, new and additional information, two,
that additional information was not known during the
negotiations of the compact, and three, that the new
information renders section 177 manifesting inadequate.
We believe it is in the best interests of both nations to
deal with problems in the existing framework of the compact.
This issue can not wait for renegotiation because these are
current obligations under the existing compact.
Finally, Mr. Chairman, I am confident that the upcoming
negotiations with the United States of certain elements of the
compact will provide the constructive process to reflect our
shared commitment to the relationship. We hope these
discussions will commence as soon as possible.
Thank you, Mr. Chairman. My colleague Mr. DeBrum and I will
be prepared to answer any questions you may have. Thank you.
[The prepared statement of Mr. Muller may be found at end
of hearing.]
Mr. Duncan. Thank you very much, Mr. Muller.
Our next witness will be Ambassador Kyota. Mr. Ambassador?
STATEMENT OF HERSEY KYOTA, PALAU AMBASSADOR TO THE UNITED
STATES
Ambassador Kyota. Thank you, Mr. Chairman. Good afternoon
to all the distinguished members of the Committee. It is indeed
a pleasure and a privilege for me to testify today on behalf of
our President Nakamura and the government of Palau.
Before I proceed, Mr. Chairman, I believe it is worth
noting that today, October 1, 1998, the Republic of Palau
celebrates the fourth anniversary of its Compact of Free
Association with the United States. On this special day for
Palau, it is only fitting and appropriate that I express our
gratitude and appreciation to the Congress for passing the
original compact legislation in 1986, and also a special
gratitude and appreciation to former President Ronald Reagan,
for signing the measure into law, which really set the stage
for our independence. Also appreciation and gratitude is due to
President Bill Clinton for signing the bill in 1994 to
specifically put the Compact of Palau into effect. Of course
the bottom line is to thank the U.S. Congress for working so
hard and patiently to make our dream a reality.
Mr. Chairman, the relationship that exists between our
countries is the greatest gift to Palau, or any country for
that matter. We are grateful, Mr. Chairman, not only for the
many benefits extended to Palau in the Compact of Free
Association, but even more so for the countless assistance that
has been so generously provided to Palau for many, many years
since the end of the war. Because of the assistance and the
special relationship that exists, Palau considers itself as a
member of the American family.
I would like to analyze that in a Palauan way. Based on our
strong culture and traditional values, if one family offers
help, generous help and assistance to another family, the
normal thing for that beneficial family is to wrap itself to
the circle of the providing family. That way, the family who
benefited can reciprocate within its means necessary to nurture
and foster the relationship.
In our relationship, Mr. Chairman, U.S. extended economic
assistance to Palau in exchange for military land use rights,
services of our people in the armed forces of the United
States, and our continuing support to the United States in the
United Nations, in other international organizations and forum.
Mr. Chairman, I hope that explains why 4 years into our
independence, our people still believe and consider Palau as a
member of the American family.
Mr. Chairman, I must thank you and your colleagues for
passing the Higher Education Act the other day which includes
extension of FAS students eligibility for Pell Grant assistance
until the year 2004. While I welcome and appreciate this
extension, I am a bit disappointed as I fail to see the
rationale for ending the eligibility of Palauan students in the
year 2000, when in fact Palau would still have 5 years
remaining in our compact economic assistance. I hope, Mr.
Chairman, that the facts surrounding this issue will be
carefully reviewed so that a fair and equal treatment may be
extended to Palauan students for the duration of our compact
economic assistance. I think, Mr. Chairman, a 15 year
assistance in eligibility for Pell Grants is all we need and
ask for today.
Of the compact, we are very grateful for this Committee and
the Congress for assisting us to improve specifications and
quality standards of our Babeldoab Compact Road. As you know,
Mr. Chairman, the original road in the compact was of poor
quality, way below standards. But because of members like
yourself and others in the Congress who worked very hard for
this compact road, Palau will be the proud owner of a much
better, bigger, and high quality concrete asphalt road that
will last for a long time.
Now to further ensure the quality and safety standards of
the road, our government requests your government in funding a
team of highly qualified professionals to oversee all aspects
of the road construction on our behalf. We initially planned to
fund this team, but due to unexpected and unfortunate collapse
of the Koror Bridge in 1995, we don't have the means or the
resources adequate enough to fund this team. We sincerely ask
for your support in this request.
We ask also this Committee to assist in securing the
necessary funding for the International Coral Reef Center in
Palau. As you may know, this project is a tripartite
undertaking as a result of U.S.-Japan common agenda on global
environmental issues. Palau was chosen as a site for the
center. Under the memorandum of understanding signed between
the three nations, each nation must bear a responsibility for
this center. To date, Palau and Japan have fulfilled their
obligation. Unfortunately the United States has not committed
any funding or financial assistance toward this project. Mr.
Chairman, I think this is a worthwhile project. We ask your
assistance for this project.
We ask, Mr. Chairman, that also a representative from your
government and our government meet sometime soon to review and
reassess the importance and needs of certain Federal programs
and assistance that have been phased out or terminated pursuant
to the terms in the compact. As you, Federal programs have been
the backbone of the success of our institutions in Palau. I
would ask the representative to meet to assess this Federal
program in order to determine whether they should continue or
not.
Mr. Chairman, another very important issue which still
remains unresolved is the U.S. Government financial obligation
to the former trust territory prior service trust fund. The
Congress, as you may be aware, appropriated initial funding of
$8 million for this program, with a remaining balance of $19
million to be appropriated later. The U.S. Government has not
fulfilled this obligation yet after numerous requests from the
government of the former TPI. The program, as you can imagine,
is experiencing problems in meeting regular payments to the
beneficiaries. I understand, however, that some Members of
Congress have indicated their willingness to fulfill this
obligation over a period of several years. We welcome that, Mr.
Chairman.
Mr. Chairman, I believe these requests are reasonable and
well within the scope and boundaries of the compact. I ask that
you take the lead in resolving or funding them. I thank you,
Mr. Chairman, for inviting us to share our views on a number of
important issues. Thank you.
[The prepared statement of Ambassador Kyota may be found at
end of hearing.]
Mr. Duncan. Thank you very much, Mr. Ambassador, for your
testimony. I want to thank all of the witnesses.
I want to turn now at this time to Chairman Bereuter for
any comments or questions that he might have.
Mr. Bereuter. Thank you, Chairman Duncan. Thank you very
much, gentlemen, for your testimony. I have a couple of very
specific questions which may surprise you a bit.
To the representatives of the Federated States of
Micronesia. Tell me the age, the relative age of the hospital
that exists on Pohnpei. What would be your guess?
Mr. Takesy. Mr. Chairman, the hospital is approximately 15
years old.
Mr. Bereuter. The question I would ask for any one of you
who wishes to respond to this question, to what extent are
capital facilities, buildings now being built with compact
funds from the United States? Is this still ongoing and
occasionally there will be a construction project for a
specific building? Is this exclusively the decision of the
Federated States or the Marshall Islands or Palau or is it a
mandate?
Mr. Takesy. Mr. Chairman, speaking for the Federated
States, the compact calls for a 60-40 split in the funding in
the current account and capital account.
Mr. Bereuter. And who makes the decision about what
buildings will be constructed? Is that a decision that you
would make, for example, in the Federated States?
Mr. Takesy. That is correct, sir. The choice of what
buildings to build are actually decisions reserved to the
states within the Federation and at the national capital where
the capital complex is. It is in compliance with a development
plan that we have developed and submitted to the U.S. for
approval.
Mr. Bereuter. Now when you were a trust territory, and that
hospital was built for example, were the plans for that
hospital prepared by a consultant, engineer, architect chosen
by the Interior Department or by the Federated States, which
didn't exist at that point?
Mr. Takesy. They were done by the trust territories.
Mr. Bereuter. I recall seeing a development plan for the
Federated States that called for a very elaborate capital
structure. I was concerned about what a large part of the
resources you were going to be devoting potentially to that
project. What happened? Does it exist today? What can you tell
me?
Mr. Takesy. I am happy to report that the capital was built
under budget. Unfortunately the construction company that bid
the project actually was a Korean company and I think they lost
money on the deal, but the project has been completed and I am
happy to report that it is being complimented by many people
within the area as conducive to the environment and meeting the
needs of the nation.
Mr. Bereuter. Generally I am very discouraged with the way
that construction projects and plans were let during the period
when the Interior Department was in charge, because I felt that
there were a variety of disreputable companies that were
pursuing energy development projects in particular, which I
thought were not very cost effective, and probably not a very
good business deal. I was concerned when I saw the hospital of
Pohnpei, for example, that had been designed almost as if the
tropic environment did not exist. Relatively speaking, the
Japanese and even before them the Germans, given the advance in
building technology were building more tropically sensitive
buildings than were being built and turned over to you. So that
is one of the reasons I am raising this question.
If I could just ask a couple questions to representatives
of the Marshall Islands. Chairman Duncan mentioned before what
a large part of the per capita income seems to come from
compact payments or government, and questions about what this
does to the potential self-sufficiency of the Marshall Islands.
I understand that increasingly people outside the Marshall
Islands are moving there to do much of the private sector work.
That would seem to have implications that the Marshall
Islanders could be a minority in their own country. What would
you say about that issue?
Mr. Muller. Mr. Chairman, let me try to answer that in a
couple of ways. First, I think it is important for us to make a
distinction with the fundings that come under the compact to
the Mar-
shall Islands because a number of those fundings are earmarked
for payments for the use of lands that the military uses and
also payments to victims of the nuclear testing program. I
think sometimes there is a misconception that all that money
comes to the government for its spending. Those moneys go to
the individual families and persons to compensate----
Mr. Bereuter. Yes. I do understand that. But tell me about
the allegation that much of the private sector work today in
the Marshall Islands is being conducted by non-islanders, non-
Marshall islanders, and the result is that the private sector
can not become competitive as long as government pays so much
more than the private sector.
Mr. Muller. Mr. Chairman, let me answer that question by
saying that when our government came into existence, most of
our training of the labor force was very minimal. At the
beginning of the compact, we needed assistance from outside
labor to assist in our development, economic development.
I am happy to say that we have been undergoing a number of
programs to train and to retrain a lot of our young people to
be able to get into the private sector programs and services.
Still at the same time, we look to outside assistance,
especially in specialized training to assist us, especially in
construction and fisheries areas and technology. But there is a
conscious effort on our part to provide as much training to
allow for our people to get into the labor market.
Mr. Bereuter. Mr. Chairman, if I could have unanimous
consent for one more question, I would appreciate it.
I had the misfortune of visiting Ebadon in the Marshall
Islands when I was there. It has, at that time it had at least
the highest per capita per square mile, I should say the
highest population per square mile in the Pacific. I was
ashamed to see that area under the American flag at that time.
I understand that families were attracted there, extended
families because of the higher wages being paid at Kwajalein.
But still the conditions there were so bad for the population
that I was ashamed to see American flags over it. I hope that
conditions are improved there now. If not, I would like your
suggestions about what the United States Government's
responsibilities are through the DOD, which is the major source
of employment for at least the breadwinner on Ebi.
Mr. DeBrum. Mr. Chairman, first let me say that we agree
with Chairman Bereuter on his assessment that too many of the
projects, construction in the past were designed by outside
engineers not familiar with the needs and the climate
conditions in our area. For that reason, many of the original
infrastructure built by the trust territory had to be replaced
by early compact funding.
On the specific question of Ebi, yes, Ebi has and continues
to be a problem. Although we try our best to make sure that we
alleviate the problems associated with housing, with sewer and
water, and with power, there's still a limited availability of
the basic power and water requirements. We are still trying to
deal with a hospital construction project that went awry not
too long ago. We are hopeful that we can complete that very
soon.
Putting 15,000 to 18,000 people on 56 acres of land is
extremely difficult to do and does cause problems, as the
chairman described. There are also problems associated with
people being moved from the mid corridor and the military areas
of Kwajalein onto Ebi with promises of housing, electrical and
water supplies, for which the DOD was originally responsible,
but have not committed money or services provide. We are trying
to work with the military and with DOD to solve that problem
now.
But under the new administration and government, we are
also concentrating a great deal more money and more attention
to Ebi to deal with this problem.
Mr. Bereuter. Thank you, Mr. Chairman.
Mr. Duncan. Thank you, Chairman Bereuter.
Mr. Faleomavaega?
Mr. Faleomavaega. Mr. Chairman, at this time I would like
to defer to my friend from Guam.
Mr. Duncan. Mr. Underwood?
Mr. Underwood. Thank you, Mr. Chairman. I want to extend my
warmest greetings to all my fellow Micronesians. Thank you very
much for your testimony.
It's just a general question. I have one general question
to ask all three governments. That is that there has been a
great deal of discussion about the nature of compact assistance
which is after all, primarily the basis for any renegotiation
as what kind of assistance will be given. In general, as I
understand it, it's been characterized, much of the assistance
that has been given has been characterized as being ineffective
because it was tied quite often to specific domestic U.S. type
programs, and perhaps there is more interest in trying to give
more general assistance or perhaps some kind of novel approach
to any level of future assistance. Perhaps I would just like to
hear some of your thoughts on that.
Maybe we'll start with the FSM.
Mr. Takesy. Thank you. Congressman, as you well know, these
Federal programs are of course conceived in the country for
needs that are specific to an urban and very elaborate program.
As you well know, in our areas, they vary even from the state
centers to the rural areas. Dealing with these programs are
very costly for us from an operational viewpoint, because it
takes special expertise to even apply and to execute these
programs and then account for them. So that is one side of it
that we are finding difficult to live with. The standards are
of course based on this country's standards, and they don't at
times don't quite fit into our area.
But having said those specific problems, the impact of
Federal programs on the well-being of the Federated States has
been quite positive. On the whole, it has been positive. The
area that I think can be improved is perhaps in the
administration and streamlining of some of the regulations and
administration of these programs.
Mr. Underwood. Thank you very much.
Mr. DeBrum?
Mr. DeBrum. We see a continuation of U.S. programs such as
FEMA, Farmers Home Administration, Rural Electrification, some
of those projects to be very well worth it. The rate of success
in these programs have been very high. In education, both
secondary and post-secondary education provision of
scholarships, we mentioned earlier Pell Grants and other U.S.
grants, have been very useful in bringing up the level of
education to our country. We think that this will continue to
help.
Of course we can not go back to some of the original
provisions that were taken out by Congress because as you know,
they have been taken out for the territories as well. But we
need to sit down and figure out ways to attract American
business to the islands. I think that a marriage of economic
interests may be the best way to be self sufficient within the
island.
Of course we have had increase from China and Korea and
Japan about investment, but we believe that associating ourself
with American business is probably the best way to self
sufficiency.
Let me add just one more comment here. The entry
provisions, immigration and labor provisions that I know that
some of our colleagues from Guam are concerned about as well,
have allowed for entry not only for education, but for labor as
well to the United States. Some communities of people from the
Marshalls in the Northwest and in Arkansas and Kansas and
Oklahoma have been very successful. We have entered not for
Medicare or for social welfare, but for jobs, and are
providing, citizens are providing to the advancement of those
communities in which they reside. But if they only send back 20
or 30 percent of their income to people at home, that is a
major part of our income.
Mr. Underwood. Thank you.
Ambassador Kyota. Thank you, Congressman. Since we are only
beginning the fifth year of our compact, we are still awaiting
a lot of programs in our area. But I would like to take this
opportunity to report that beginning today, a number of Federal
programs are going to phaseout in this fiscal year. They total
up to like $6 million. As you know, that translates into many
jobs and many essential services that would be lost for our
people.
But if the renegotiation for our economic assistance is
going to be held let's say next year, I'm sure we have lived
more than 5 years, I'm sure we will be in a better position to
give you some of the programs that we want them to continue.
That's why in my oral statement I requested that
representatives of the U.S. Government and our representative
commence a meeting sometime next year to evaluate and to
reassess the needs of those programs that are being phased out.
I know that's not asking too much because it is in the
provision of the compact that we will review those programs in
order to determine whether they should continue or not. Thank
you.
Mr. Underwood. Thank you. So next time I get in my office
citizens from your area asking me to continue eligibility for
certain programs, I will refer them back to you.
Mr. Duncan. All right. Thank you very much.
Mr. Faleomavaega?
Mr. Faleomavaega. Thank you, Mr. Chairman. I want to again
thank our distinguished guests here before the Committee and
their fine testimonies.
I guess at the height of the cold war, by some assessment
of the officials of our government, we have decided that
approximately $2 billion was supposed to be the base in terms
of the kind of economic assistance as it was part of the
compact agreements that were made with the FSM as well as with
the Marshalls and ulti-
mately also with Palau. I suspect also, gentlemen, that the
question of assistance is going to be probably the soul of the
negotiations that will be forthcoming in the coming months.
My question is, I make the presumption that the last or the
projection of the first 15 year period, that the vast majority
of this $2 billion has been primarily for purposes of
infrastructure development and now I suspect that perhaps
another important phase of these renegotiations. Do you
suspect, gentlemen, that it's going to be less than $2 billion
for the next 15 years or going to be more?
You know, I make an observation, every year we give $6
billion to Egypt and Israel to maintain stability in the Middle
East. Now that may not be any relation to the situation that we
have in Micronesia, but I can rest assured, gentlemen, that at
the height of the cold war, Micronesia was very, very critical
as far as the Department of Defense was concerned. In fact, the
entire compact during the negotiation period, Tony, you know,
and Asterio, was practically done by the Department of Defense.
I can also say as a matter of statement that the
negotiations was very much an unequal on the basis that the
people that you had to deal with were not exactly very
friendly. If I would put it more nicely, to the extent that it
was almost like take it or leave it. Thank God we had a Phil
Burton there that had to constantly beat on the administration
to tell them that these are human beings. These are not just
some mechanical toys that you can play with. I still remember
the classic statement that Henry Kissinger made concerning
Micronesia. I'll repeat it again. ``Well, hell, there's only
90,000 of them. Who cares?''
That was the kind of attitude that you had to deal with 15
years ago, when we talk about compact renegotiations. I
sincerely hope, and I'm sorry that the administration is not
here, that we will not have a repeat of that.
My question, gentlemen, I find it very strange that we are
trying to promote economic self-sufficiency in these three
entities, and at the same time, you are restricted to do
certain things. My question is, would you have been better off
if you were never involved with the United States in terms of
where we are now? Could you have done it on your own? Go out
and negotiate with other countries of the world and do your own
thing without being colonized after 400 years? First it was the
Spaniards, then it was the Japanese.
I mean the problem is, gentleman, is that many Members here
in the Congress have no concept, no idea where you were and how
you got to where you are now. It is a sad situation. I don't
fault my colleagues. But that is the reality in fact that we
deal with here in Washington. I wish every Member of Congress
could understand and appreciate what the Micronesians have had
to endure in the last 400 years. I am sad to say I would say
probably--well, look at here. Again, I don't fault my
colleagues. This is the reality that we deal with here in
Washington.
My question, gentlemen, what is your best shot, give us
your best shot in terms of how we should improve on the compact
when renegotiate in the coming months? FSM?
I'll say one thing. I'm sorry. I didn't mean to interfere.
You know, we have the same problems even in insular areas as
you do right now. We talk about self sufficient the last 100
years, and we're still not self sufficient. We export national
football players now. I understand there are 1,000 Marshallese
working for Tysons Chicken in Arkansas making more money there
than they would if they were in the Marshalls. What's wrong
with inviting the Micronesians to come and work here to be more
self sufficient, make more money, and the export it back to the
islands? Every other country in the world does that, with the
exception maybe of our own country here. The Philippines, a
classic example. Of the 500,000 Filipinos that work outside of
the country, they bring in $8 billion plus in remittances. That
has tremendously assisted that country to stay above water, if
you will. We even have Samoans who work in the logging
companies up in Montana. So I think it's possible.
My basic concern, and I want to ask my friends here from
Micronesia, I have always advocated strongly that the salvation
of our island people lies in the ocean. But I am sorry to say
that we have not even gone near, we can't even get the Law of
the Sea Treaty approved. We have some very serious problems
with that. So I would like your suggestions on how this
Committee, how the Congress could be helpful when you begin the
renegotiation process.
Asterio? Jesse?
Mr. Takesy. Thank you, Mr. Chairman. You have asked some
very profound and difficult questions, so I hope you can bear
with me. In the FSM, we view the compact as a critical
component of our effort at building an economy that will be
sustainable and one that will support our people, not only now
but in the future. In point of fact, we have begun an exercise
within the JCN itself to assess where we are in cooperation
with the entire government, where we are economically, where we
hope to be, and what it's going to take to get us there.
This means hard economic reviews and analysis. We are not
done, Mr. Chairman. But I am happy to report that we are
assisted, as I have stated earlier, by an independent team of
economists funded by this country, Japan, and the Asian
Development Bank. We hope to be able to come to produce a
picture that can give our decisionmakers options----
Mr. Faleomavaega. Let me give you an example, Asterio. Look
don't be so nice about this, Asterio. You are my brother. Look,
these fishing countries take out in excess of $1 billion worth
of tuna from our waters. What do we get in return? Pittance. I
would say that if our own island countries could even gross at
least maybe $300 to $400 million out of that $1 billion that is
taken out. I am frustrated, Asterio, help me on this. We could
get the ships. They even had the gall to say the Samoans didn't
want to go fishing because they don't know how to go fishing.
We are fishing now the Albacore and grossing $700 million a
year, and we are just starting. You don't need to go into
pursanders that cost $12 million. We can start small. I don't
know. I am frustrated because the resources are there. But
maybe I'm wrong, Asterio. Help me on that.
Mr. Takesy. No. You are quite right. We have embarked on
that. But unfortunately, we embarked with the government
actually directly involved in it. We are correcting that. As
Tony pointed out, there needs to be some adjustment to attract
foreign investors from this country.
Under the treaty that allows for an organ fleet to fish in
our zones, the entire fleet, the whole United States fleet is
allowed to come in under the treaty. It's a very preferential
treaty. Not only that, but as you well know, under the compact,
we have a 10 percent duty free processed tuna coming into this
country. To this day, we have not been able to take advantage
of that. In looking back, we can only say that perhaps this is
not an attractive area for such investors as Heinz and Starkist
and Bumblebee. But the best way for us to get into the fishing
business and to reap the most from it is to catch the fish
ourselves.
Mr. Faleomavaega. You've got the market, Asterio. I have
the largest tuna cannery operation now in the world on my
island.
Mr. Takesy. So we need to learn how to catch. It takes
capital and it takes training, and it takes high tech to do it.
As you well know, the pursanders are the most efficient, but
unfortunately, they cost a lot of money to upgrade and to
purchase. But we are getting there. We are beginning with long
lining in accessing the high sashimi market in Japan.
Mr. Faleomavaega. Thank you, Asterio.
Tony?
Mr. DeBrum. If I might, Mr. Chairman, we want to associate
ourselves with Asterio's comments. We think tuna has a
potential and we think that the way to do it would be for the
United States to help us develop it, along with the other
territories and the other island countries that live off of
tuna.
But if we go onto the other areas, in tourism, for example,
we have some of the best tourist destinations in the world. But
those are hampered when, for example, Minister Muller mentioned
earlier, when the essential air service terminated yesterday.
We can not be sure to attract investment in the tourism
business when we don't have control or we don't have any real
idea what the future looks like in air travel. Air transport
also plays into the tuna market. If we don't have freight
service out of the Marshalls, there can be no sashimi market
advantage taken.
Also, because of the lack of infrastructure, water and
power, tourism begins to be a difficult area to enter. However,
we can go into ecotourism. We can go into aspects of tourism
that are good for the country, good for the environment, and
affordable. But again, transport and support from investors and
those people that know how to market and know how to handle
tourist facilities is needed.
The United States mentioned earlier that they have embarked
on a program to enlist ADB support for training and for
business development in the Marshalls and for working to reduce
the size of government. Mr. Chairman, as we have said before,
we don't think governments can run business. But that works a
little bit to the other way around also. We don't think
business can run government. Sometimes we bring in experts in
business from ADB who try to chop off services in government
that are still essential. We can not continue to reduce
government services in health and education in the Marshalls
just in the interest of reducing the numbers to what ADB says
those numbers ought to be.
Also expertise from ADB consists largely of international
civil servants from such places as Sudan, Bangladesh, Sri
Lanka, Paki-
stan. Although some of these people are highly trained, I have
not been able to see projects from those countries or exported
by those countries that have worked in the Marshalls. We think
that our real future in economic development is with United
States business. United States business can also talk to their
Congressmen. We can't, except for occasions like this for which
we are thankful.
I think the ideas to attract American business, keep them
going in our area, and they are welcome, and we can do that
very well. Thank you very much.
Mr. Duncan. Thank you very much, Mr. Faleomavaega. We have
been joined by Ms. Christian-Green, and I would like to turn to
her for any comments or questions at this time.
Ms. Christian-Green. Thank you, Mr. Chairman. I would like
to ask unanimous consent to enter for the record an opening
statement.
Mr. Duncan. Yes, ma'am.
[The prepared statement of Ms. Christian-Green follows:]
Statement of Hon. Donna M. Christian-Green, a Delegate in Congress from
the Virgin Islands
I thank you Mr. Chairman for holding this hearing today. I
want to welcome my colleagues from the International Relations
Subcommittee on Asia & the Pacific, especially Chairman
Buereuter and Ranking Democrat Berman. I might add that our own
Resources Committee colleague and fellow Pacific Islander
himself, the Honorable Eni Faleomaveaga is a member of the Asia
& Pacific Subcommittee as well.
Mr. Chairman this is an important hearing today, if for no
other reason than the fact that the Compacts we are discussing
today are historic in their differences from the other
relationships that the United States has with its other non-
state entities. As a representative of one of these areas, our
political status as a unincorporated territory is often
determinative of much of our political and economic growth.
Because of our status, no U.S. citizen resident of an
unincorporated territory or Commonwealth has the right to vote
for President of the United States, even though the President
can order our children to go to war to defend the nation. Also,
because we do not have representation in the Senate, we are
limited in our ability to prevent the application of various
laws which because of size and other factors, would severely
impact us negatively.
At the same time, we are prohibited in forming the kinds of
international economic alliances which could possibly enhance
our economic development. And for many of us, the opportunity
for enhancing our status to statehood is viewed as not
available, at this time.
In part because of the limitations of the various
territorial statuses, the idea of a Compact of Free Association
with the United States is at times viewed as appealing by many
from the offshore areas. In some sense, the status of Free
Association can be seen as a possible solution to the problems
of full citizenship and sovereignty which I described in the
current U.S. Territorial statuses.
And so I look forward to hearing from the witnesses today,
so that I can learn how these Compacts have worked over the
last fifteen years and where we are in the process of their
renegotiation. I welcome the witnesses to that are here with us
today, especially those from the Marshall Islands and the FSM
who have traveled a very long way to get here. Thank you.
Ms. Christian-Green. I want to begin by apologizing for not
being here at the beginning of the testimony because I had gone
to the White House for an event which went longer than I had
anticipated. But I wanted to welcome our panel this afternoon.
I know you came a long way, but it is very important that you
are here this afternoon to give your testimony. I will be
reviewing the record so that I don't miss anything. But I can
already hear from your responses to some of the questions and
from some of the questions actually that a lot of the areas of
concern, a lot of the issues that we all have are very, very
similar. It makes me wonder what is the difference between
being an unincorporated territory and have a compact with Free
Associated States status.
But I would like to maybe, since I don't have a specific
question, give you an opportunity--as a new member, I still
need to be educated somewhat on the process that you are going
through. Maybe there might be one particular issue that you
have not had a chance to really focus on that you might want to
bring out at this time that would help me also to understand
the process of the negotiations that you are going through that
you feel is of critical importance to each of the areas.
Mr. Muller. Mr. Chairman, if I may start. I think as I
mentioned in our statement, it is very important that we
continue to address the legacy and the outstanding issues that
surround the continued injuries that had been caused by the
nuclear testing program of the U.S. I think to the Marshall
Islands, that is one of the main points that we would like to
see that it be fully addressed and that judged and fair
compensation be finally brought to a successful conclusion.
Mr. Duncan. Let's go to Ambassador Kyota for his major
problem or issue.
Ambassador Kyota. Thank you, Mr. Chairman. I did not have
an opportunity to answer to the Congressman from Samoa,
questions about fisheries and some of the most important
things. So if I may, I would like to respond to that before I--
--
Mr. Duncan. Sure.
Ambassador Kyota. Right now we in relation to fishing, we
have two active companies doing long line fishing in Palau. The
Congress in Palau, the legislator there is now considering or
evaluating whether to extend their fishing agreement or to stop
them when they expire. They are looking into a new, another
means of getting the most money out of the water. That is the
sports fishing aspect, you know, like since Palau and the rest
of the Micronesian islands are gaining popularity in tourism,
becoming one of the world's tourist destinations, we'll get
into the sports fishing. Although the money is not as big as
the fishing company, but at least the money is given directly
to the people rather than using this big fishing company which
pollutes the water, pollutes the land, and the return is very
small, is very small there.
Mr. Duncan. All right. Thank you. Let's go to Mr. Takesy.
Mr. Takesy. Thank you very much, Mr. Chairman. Mr.
Chairman, in our view, the one aspect of the compact that we
thought was not emphasized enough and in hindsight we're seeing
is that there is no attention to the private sector development
aspect. In our view, this is where we should be going. In our
review now, as advised by the team of economists and in our own
evaluation, attention should be paid to this area.
In that connection, Mr. Chairman, the human resources to
move the private sector needs to be trained, not only trained
but specifically catered to the areas that have promise for
potential, such as my colleagues have pointed out, tourism,
fisheries, and agriculture for the FSM. This is where I
thought----
Mr. Duncan. Thank you very much.
Ms. Christian-Green, anything else?
Ms. Christian-Green. Thank you, Mr. Chair, for the
opportunity to ask the questions. I really do find that a lot
of the issues are very, very similar for all of us who have
been in one status or another as territories to the United
States. Thank you.
Mr. Duncan. Well, thank you very much. I think this has
been a very valuable and informative hearing. I want to thank
all of the witnesses for their testimony and the members for
their questions. The members of the Committee on Resources and
the Subcommittee on International Relations may have additional
questions for the witnesses. We will ask you to respond to
those in writing. The hearing period will be held open for
these responses.
If there is no further business, the chairman again thanks
the members of the Committee and the subcommittee and our
witnesses, particularly those who traveled from Micronesia to
participate. The joint hearing stands adjourned.
[Whereupon, at 4:30 p.m., the committees were adjourned,
subject to the call of the Chairs.]
[Additional material submitted for the record follows.]
BRIEFING PAPER--COMPACTS OF FREE ASSOCIATION
The Congress approved unprecedented free association
relationships with these areas with the enactment of Public
Laws 99-239 and 99-658 in 1985 and 1986. As separate sovereign
nations, these areas have their own nationality and
citizenship, are members of the United Nations, and have full
diplomatic relations based on the Vienna Convention on
Diplomatic Relations. All three maintain embassies in
Washington, DC, and similarly, the U.S. has embassies in the
three freely associated states with either resident
ambassadors, or in the case of Palau, a charge, with the
ambassador being accredited out of Manila, Philippines.
The U.S. and these islands each have entered into
agreements through their respective Compacts, to provide
certain rights of obligations to the other party. Most
significantly, the U.S. has exclusive military rights and a
legal defense veto over third party use of any of the land,
ocean, or airspace of the islands (this oceanic exclusive
economic zone comprises an area larger than the continental
U.S.), as well as access and use of certain specified land,
harbor, airport facilities in various parts of the freely
associated states, and the islands have free transit into the
U.S. to work, study, or reside. The FAS also use U.S. currency
and are synchronized with the U.S. postal system rates. The
Compacts also provide for economic and programmatic assistance
for the FAS at varying rates.
Compacts for the Marshall Islands and the Federated States
of Micronesia began respectively on October 24 and November 3,
1986 while Palau's Compact did not start until October 1, 1994.
Certain economic provisions of the Compact with the Marshall
Islands and the FSM are set to lapse at the end of 15 years and
by law, the Administration is to begin negotiations on those
provisions in 1999. The 15 year lease of the U.S. missile-
testing facility at Kwajalein in the Marshall Islands is also
up for renewal at the same time.
The hearing will focus on the oversight of the Compacts of
Free Association for the Republic of the Marshall Islands, the
Federated States of Micronesia, and the Republic of Palau, with
regards to government-to-government relations, including mutual
cooperation on defense, exclusive economic zone enforcement,
transit of residents, and Federal oversight in the islands of
Federal grants and programmatic assistance. In addition, the
hearing will focus on the progress of economic self-sufficiency
in the freely associated states, radiological rehabilitation
and resettlement of certain Marshall Island atoll communities,
construction of the Babeldaob circumferential road in Palau,
and Compact renegotiation plans.
STAFF CONTACT: T.E. Manase Mansur, x67400.
------
Statement of Hon. Stanley O. Roth, Assistant Secretary of State for
East Asian and Pacific Affairs
Mr. Chairman, thank you for the invitation to discuss one
of the United States' most unique relationships: our
relationship with the Freely Associated States (FAS). Though
poorly understood and often overlooked, U.S. ties to the three
FAS (the Federated States of Micronesia (FSM), the Republic of
the Marshall Islands (RMI), and the Republic of Palau) have a
long history and are an important part of our posture in the
Pacific. I personally devoted many years of my life to this
issue in the mid 1980s, when, as Staff Director of the House
Asia and Pacific Affairs Committee, I worked to get the
Compacts of Free Association legislation through Congress. This
process, as you know, Mr. Chairman, was long and arduous, in
part because Congress had not been adequately consulted from
the outset of negotiations. I thus welcome the opportunity to
open a dialogue with Committee members on the state of U.S.-FAS
relations and to consult with you regarding the upcoming
renegotiation of certain provisions of our Compact with the FSM
and the RMI.
My testimony today will be divided into two sections.
First, I will give a brief overview of the Compacts of Free
Association, laying out the parameters which guide these unique
relationships. Second, I will reexamine what the United States
had hoped to accomplish with these Compacts of Free Association
and evaluate our success in meeting those goals.
Compacts of Free Association
The Freely Associated States were formerly part of the
Trust Territory of Pacific Islands (TTPI), a group of islands
administered by the United States after 1947 under a U.N.
Strategic Mandate. In 1969, the United States entered into
discussion with representatives of the various islands on their
future political status, a process which had different outcomes
for the four island groupings in the Trust Territory.
The people of the Northern Mariana Islands opted for an
association with the United States that made them U.S.
citizens. In January 1978, the United States began
administering the Northern Mariana Islands under provisions of
the negotiated and Congressionally approved Commonwealth
Covenant. On November 3, 1986, the Northern Mariana Islands
became a Commonwealth in political union with the United
States.
The FSM, RMI and Palau, on the other hand, chose to become
sovereign nations in free association with the United States.
On this date sixteen years ago (October 1, 1982), the United
States and the FSM agreed to a Compact of Free Association,
some provisions of which will expire fifteen years from the
date of its entry into force. In June, 1983, we reached a
similar agreement with the RMI. These Compacts were approved
and enacted into law by Congress in January 1986, and endorsed
by the U.N. later that year. Our Compact with the RMI thus
officially went into effect on October 21; while that with the
FSM started on November 3. The Republic of Palau opted for a
longer 50-year Compact which did not go into effect until
October 1, 1994 due to multiple delays in ratification in
Palau.
A Unique Relationship
These Compacts established unique relationships between the
United States and these former trust territories, elaborating
bilateral arrangements unprecedented in the history of U.S.
diplomatic relations. While each of the states is now sovereign
and our dealings with the FAS are no longer internal but rather
foreign policy matters, our relationship with the Freely
Associated States differs from those with other nations in
several fundamental ways: we provide the people of the FAS
access to direct services of over forty U.S. Federal domestic
programs and to U.S. Government funding at a per capita rate
greater than any other foreign government; we take
responsibility for the security and defense of each of the
island states in return for denial of third-country access to
the FAS for military purposes; and we give FAS citizens the
right to work and live in the United States as nonimmigrant
residents within the parameters laid out in the Compacts.
Towards Renegotiation
We are rapidly approaching the 12th anniversary of our 15
year provisions of our Compact with the FSM and the RMI, and so
these elements of the agreement will soon be up for
renegotiation. Under the terms of both Compacts, negotiations
should open two years before the 15th anniversary in the fall
of 2001, putting us just a year away from the start of this
process. The Administration is fully cognizant of the
significance of this upcoming exercise, and we are in the
process of trying to identify the best negotiator for the job.
As we move towards the 1999 deadline, it is important that
we reevaluate where we have come from and where we now stand
with the FAS. The United States entered into Compacts of Free
Association with these former trust territories for two basic
reasons. First, as the administrator of the U.N. mandated Trust
Territories, the United States was obligated, and I quote, ``to
promote the development of the inhabitants of the trust
territory toward self-government or independence as may be
appropriate to the particular circumstances of the trust
territory and its peoples, and the freely expressed wishes of
the peoples concerned.'' In accordance with these
responsibilities, the United States moved the various island
groupings toward self-governance, and having achieved
statehood, the people of the FSM, RMI and Palau elected a
relationship of free association with the United States.
Second, in the Cold War environment of the mid-1980s, the
United States was keen to bolster its security posture in the
Pacific. For much of the post-World War II period, the United
States had had unrivaled influence in the Pacific. This
position was challenged in the mid-80s as the Soviets undertook
an aggressive campaign to increase their presence in the
region, concluding a fishing agreement with Kiribati and
opening diplomatic relations with Vanuatu. At the same time,
consultations with the Filipinos had already begun to cast
doubt on the future of U.S. bases at Subic, Clark and other
facilities in the Philippines. For the first time in almost
three decades, then, our supremacy in the Pacific appeared to
be in jeopardy.
The Compacts with the FAS alleviated this problem in three
ways. First, the principle of strategic denial elaborated in
the agreements with each of the three FAS guaranteed the United
States exclusive military access to these countries and their
surrounding waterways. Second, our agreement with the RMI
ensured continued access to the Kwajalein military facility.
Third, our agreement with Palau included the right to develop a
military base should the United States need an alternative to
the Philippines. Combined, these three components of the
Compacts served to safeguard our long-term military interests
in the region.
As we move towards renegotiation, it is of course useful to
reassess both our continued interests in, and obligations to,
the FAS. First, on the strategic side. Geo-politics have
changed significantly since the mid-1980s, as the Cold War is
over and the Soviet threat is no more. Nonetheless, the FAS
continue to be of strategic significance to the United States.
The thousands of islands of which the FAS are composed cover
vast stretches of ocean and sit astride vital sea lanes. The
United States has a clear interest in keeping these sea lines
of communication open.
Moreover, the FAS are located between U.S. positions in
Hawaii and Guam. U.S. defense relationships in the Asia Pacific
form an arc from South Korea and Japan, through Thailand, the
Philippines and on to Australia. Guam is the forward military
bridgehead on U.S. ground, from which we can leap, if
necessary, not only to Asia and the Pacific but also on to the
Persian Gulf--a point aptly demonstrated during the 1995 U.S.
military action in support of U.N. sanctions on Iraq. To
protect the forward presence in Guam and beyond, the United
States has a strong interest in maintaining friendly
governments and denying potentially hostile forces access to
these sea lanes. While there is currently no direct threat to
these vital waterways, we can not assume that this will remain
the case.
As mentioned above, the RMI is also home to the U.S. Army
Kwajalein Atoll (USAKA)/Kwajalein Missile Range (KMR).
According to a DOD assessment, the USAKA/KMR is a ``national
asset,'' currently the only facility in the world with an arena
suitable for full-scale testing of long-range missiles. The
study also determined that Kwajalein is uniquely situated for
intelligence gathering and provides important support for our
space programs. We have, over time, invested upwards of $4
billion dollars in this facility, and relocating would be a
difficult and costly proposal. Our lease of the Kwajalein base
expires in 2001, though if we choose to renew, our Compact with
RMI provides automatic renewal rights for an additional 15
years.
On the obligation side of the coin, our position is more
complicated. The United States has clearly fulfilled its
responsibility under the U.N. Mandate to prepare these
territories for self-governance. The new states have become
self-governing and responsible for their own foreign affairs.
They have exchanged diplomatic representatives with other
nations besides the United States and have become members of
international organizations including the U.N., the IMF and the
World Bank, as well as regional organizations like the South
Pacific Forum, the Pacific Community and the Asian Development
Bank.
Still, while our legal obligation to the FAS can be said to
have been fulfilled, our moral obligation to the people on the
ground is ongoing. In the original Compact legislation, the
United States pledged to help each of the three FAS move toward
economic self-sufficiency. However, despite generous financial
assistance from the United States, progress toward attainment
of economic self-sufficiency has been slow. Since our Compact
with Palau will not be on the table in this round of
negotiations, I will focus my remarks on the FSM and the RMI.
For years both the FSM and the RMI seemed hopelessly
dependent on our provision of aid and services, unwilling and/
or unable to undertake the reforms necessary to transform their
economies. Recently, the Federated States of Micronesia has
begun to make headway with economic reform, working with us,
the IMF and the Asian Development Bank to restructure its
economy, downsize the national government, and privatize many
governmental functions.
In accordance with IMF recommendations, the FSM Government
formulated a structural reform program which has been under
implementation since 1995. Considerable progress has been made
under the reform program in the past two years, including the
recent National Government Restructuring, which downsized the
public sector, and the new Foreign Investment Act, which
streamlined the foreign investment approval process, devolved
discretionary power to the States and created a more
competitive environment for the attraction of foreign
investment. Other new initiatives have included a reform of the
tax code designed to increase customs revenue, and financial
sector reform, such as liberalization of interest rates.
Even with these reforms, however, there is still much to be
done. Private sector development of agriculture, fisheries and
tourism is crucial for the FSM's future viability. Growth of
the private sector will require a consistent regulatory
framework, reform of the land-tenure system, continued
simplification of foreign investment policy, and further
reforms to the taxation system. At the same time, a
comprehensive reform of the education system will be essential
if Micronesians are to attain the knowledge base and skills
training they need to move forward with reform. While the
Micronesians are on the right economic path, their ability to
carry through with such reforms might be undermined by
termination of our economic assistance.
The RMI is not as far along the reform path as its
neighbor. A swollen and inefficient public sector continues to
swallow a substantial percentage of the budget; debt-servicing
requirements are greatly constraining fiscal policy; and high
population growth rates, rising unemployment, and declining per
capita income are placing serious strains on the nation's
social services. The government, meanwhile, has exhausted its
financial holdings and borrowing capacity and has not created a
climate attractive to foreign investment. There is also
controversy surrounding the RMI's management of funds
established to provide compensation for claims related to the
1946-1958 U.S. Nuclear Testing Program, with critics contending
that manipulation of the criteria by which claimants are
determined eligible for programs supported by these funds has
led to an unsustainable ballooning of the subscriber base. The
Government of the RMI, moreover, has not released required
annual audits on the Fund.
Having said all that, let me stress that not all is gloomy
in the economic management of the RMI. The Marshallese have
undertaken a Public Sector Reform program in conjunction with
the ADS, and some progress has been made, including a 25
percent reduction in civil service staff since January 1996,
termination of subsidies to Air Marshall Islands, and a public
sector wage freeze. Other notable initiatives have included the
tariff structure rationalization carried out in FY96 and the
amalgamation of ministries which helped minimize redundancies
and reduce the range of services provided by the government.
Still, I think the record shows that it is not yet clear
whether or not the RMI government is committed to genuine
economic reform.
In short, Mr. Chairman, our provision of Federal aid and
services has had only partial success in fostering economic
self-sufficiency. The question is, having set the FAS on a path
of economic reform, can we abandon them before their reforms
are finished? Terminating most or all of our assistance
programs would likely devastate these fragile economies, and
historical ties compel us to consider the impact that severance
of aid and/or services would have on the ground. That is not to
say that we must continue to provide the FAS with more funding
per capita than any other nation in the world; our obligation
to U.S. taxpayers dictates that even historical bonds must be
reexamined in light of changed global conditions and new fiscal
realities.
As we move towards negotiations, then, Mr. Chairman, the
Congress and the Administration must answer a number of tough
questions. First, should the United States continue to provide
financial assistance and/or government services to the FAS? If
so, how much? For how long? And under what terms? Should aid
continue to be provided with the full faith and credit of the
U.S. Government? Or should aid be provided as an annual
appropriation as it is with U.S. Government assistance to other
countries? It goes without saying, Mr. Chairman, that any
future provision of assistance must serve to help the FSM
complete its reforms and compel the RMI to adopt and implement
more wide-ranging reforms. Past policy failures must therefore
be addressed if future aid is to improve economic performance.
Finally, Mr. Chairman, let me add one thought about our
unique financial obligations to the RMI relating to nuclear
claims. While the implementation agreement of the Compact with
the RMI constituted the full settlement of all claims, past,
present and future, related to nuclear testing, it does provide
that the RMI may submit a request for additional compensation
to the Congress under certain provisions. RMI representatives
have said that additional atolls should be considered affected
by the nuclear program, and that compensation for all the
affected atolls should be increased. I understand that the
Marshallese are hard at work preparing a case for additional
compensation and we will of course give their materials full
consideration in accordance with our legal obligations.
Before I conclude, Mr. Chairman, I would like to emphasize
that I take my obligation to consult with Congress during this
process seriously. I again thank you and the members of the
Committee for the opportunity to discuss the Compacts of Free
Association today. I look forward to getting your feedback this
afternoon and to continuing this dialogue as we move towards
negotiations next year.
------
Statement of Hon. Kurt M. Campbell, Deputy Assistant Secretary of
Defense for Asian and Pacific Affairs, International Security Affairs
The Department of Defense has a deep appreciation of the
current significance and past history of our special
relationship with the Freely Associated States; the Republic of
the Marshall Islands, the Federated States of Micronesia, and
Palau. We cannot, and should not, forget the price we paid in
liberating these islands from Imperial Japan in World War II
and the role some of the islands and peoples played in
developing crucial U.S. defense programs in the 1950s and
1960s. Our relationship is founded upon the unique role of U.S.
defense responsibilities to the sovereign nations of the Freely
Associated States under the terms of the Compact of Free
Association.
The Compact and subsequent agreements obligate the United
States to provide for the defense of the Freely Associated
States in perpetuity, unless mutually agreed upon to terminate
the arrangement. We are committed to provide security to these
nations and their peoples ``as the United States and its
citizens are defended.'' This level of defense commitment goes
beyond any other U.S. treaty or alliance. In return for this
fundamental security guarantee and other DOD obligations, we
retain the right for certain military uses and access, as well
as the right to veto access to third countries.
In the absence of the Compact or the Security and Defense
Relations Title of the Compact, the Mutual Security Agreement
still provides for defense obligations, military access, and
denial of military access by third countries. Although it may
appear that the termination of the Compact would result in
little change, it is clearly in the best interests of the U.S.
to maintain the full range of military access and security
engagement options the Compact provides. One of the most
important aspects of the Compact is the foundation it provides
for our day-to-day working relationship with the people of the
Freely Associated States.
In preparation for the upcoming Compact renewal
negotiations, the Department of Defense has conducted a study
to determine our defense interests in the Freely Associated
States for the post-2001 era. This study, which will be
finalized in early 1999, has considered many issues of mutual
concern, such as continued access, current and future threats,
and roles the Freely Associated States may play in future
scenarios.
The overriding defense interest in the negotiations will be
continued use of the Kwajalein Missile Range and the facilities
on Kwajalein Atoll. The requirements of our missile defense and
space surveillance programs combined with the uniqueness of
Kwajalein's location, infrastructure investment, and real world
treaty restrictions, make this an issue of the highest
priority.
Under the Military Use and Operating Rights Agreement,
negotiated subsequent to the Compact, the United States retains
the right to automatically extend the use of Kwajalein for an
additional fifteen years to 2016. However, the Compact and use
of Kwajalein are not that easily separated. While the
agreements may be negotiated separately, proviso's of the
Compact help provide the basis for the support of the
Marshallese, who in turn provide not only much of the labor
force, but also a positive local environment which is critical
for continued success at Kwajalein.
If the goal of the Compact is to maintain a unique
relationship with the Freely Associated States while helping
them become financially self-sustaining democracies, then a
renegotiated Compact, in some form, is in the best interests of
the United States and the Freely Associated States. It will
help the Freely Associated States continue to work toward their
national goals, while serving our national defense interests.
------
Statement of Hon. Asterio R. Takesy, Executive Director, Joint
Committee on Compact Economic Negotiations, Government of the Federated
States of Micronesia
Mr. Chairman:
The Government of the Federated States of Micronesia (FSM)
is very grateful for the opportunity to appear before you today
to discuss the Compact of Free Association and the upcoming
renegotiation of certain of its provisions. We agree with the
Committee Members that it is none too early to begin sharing
with you our assessment of the Compact experience thus far, and
our tentative views on what may lie ahead.
First, I should refer to the visit to Washington last month
by our President, His Excellency Jacob Nena, who came with the
intention of conveying to the United States Government
personally, and at the highest possible levels, the strength of
our people's ongoing commitment to the Compact relationship.
Today I would like to concentrate on the points that he made in
a very successful series of meetings with Administration
officials and with Members of Congress. He also had the
fortunate opportunity to discuss these matters at some length
in a conversation with President Clinton.
The most important point that was stressed by President
Nena, which I want to emphasize to you today, is the profound
gratitude of the people and the Government of the FSM for the
assistance that the United States has extended to us over many
decades--throughout the forty years of the Trusteeship, and
under the Compact. Those of us in the current generation of
government in the FSM, along with our people, have grown up and
lived in an emerging country that remembers past colonial rule,
but has known throughout our lives the faithful encouragement
of the people and Government of the United States. We realize
that from your perspective this is only a small part of your
global concern, but we ask that you not overlook the
appreciation felt by the FSM people for our good fortune in
having the opportunity to model our political, social and
economic development after the example of the greatest Nation
in the world.
More particularly, the FSM remains grateful for the strong
support given by the United States, from the very beginning of
our Compact relationship, to the FSM's emergence into full
sovereign statehood within the international community. This
consistent support has played a significant role in what we
believe to be the Compact's great success, and in the fact that
the relationship of Free Association remains strong.
One indication of the strength of the relationship is that
the FSM has steadfastly supported the positions advanced by the
United States at the United Nations and elsewhere in the
international community, even when our positions have
occasionally placed us at odds with our developing country
partners and some of our fellow Pacific Island countries.
Another is that despite the presence within the Compact of
elaborate dispute and claims resolution procedures, which were
forged out of months of intense debate during the original
Compact negotiations, there has not been a single instance when
any difference of views between our governments could not be
resolved through informal discussions. This is testimony to the
dedication of all our respective officials who have worked
under the Compact through the years, and to the fact that the
guiding document is a sound expression of common interests.
We are keenly aware that strategic and security
considerations are the cornerstone of our free association
relationship with the United States. Thus, we have worked hard
to give more than just lip service to the responsibilities we
assumed in the Compact. The FSM has been strictly supportive of
United States defense and security policy in the Region, such
as, for example, by refraining from joining its neighboring
island countries in the South Pacific Nuclear Free Zone Treaty
(SPNFZ), and by refraining from signing the Convention against
Land Mines. Our consistent support for the State of Israel,
while motivated in part by internal considerations, has also
been with an eye toward supporting U.S. policy in this
important security area. Our regular direct contact with the
Department of Defense through the annual meetings of the Joint
Committee on Military Affairs has been a highly useful channel
of communication. In addition, we regard the service of the
Civic Action Teams as invaluable to our people at the community
level and a constant reminder of our close relationships.
As you know, Mr. Chairman, the Compact as a whole has no
termination date, and was envisioned to create a long-term
relationship. However, Section 354 ofthe Compact says that the
defense provisions are ``binding . . . for fifteen years . . .
and thereafter as mutually agreed. . . .'' This provides the
opportunity during our renegotiations for any needed
readjustment. For its part, the FSM remains satisfied with and
committed to Title Three and to that end would like to remind
the United States of the availability of locations within the
FSM for Defense activities such as the propositioning of
forward deployment supply ships (a matter that was reiterated
by President Nena with Assistant Secretary Kramer at the
Department of Defense during his Washington visit).
It is the FSM's view that despite the end of the Cold War
the uncertainties in Asia necessitate a long-term U.S. security
umbrella throughout the former Trusteeship area. It was the
consensus view of the original Compact negotiators, and remains
our view, that continued economic progress and stability within
Micronesia serves that security interest.
The fifteen years of economic support provided in the
Compact was never envisioned to produce full self-sufficiency
within that time period, and in fact, the Compact reflects an
awareness that some level of continuing assistance will be
needed. While the FSM today still has a long way to go in terms
of economic development, we feel that from the standpoint of
due diligence, the progress made in the relatively brief time
so far, together with our currently building momentum,
justifies an appropriate level of continued economic assistance
by the United States, beyond the first fifteen years.
Mr. Chairman, about five years ago, we in the FSM, as well
as our friends in the United States and elsewhere, began to
realize that the impressive improvements in infrastructure made
possible by Compact funding were not being accompanied by the
degree of economic growth we had hoped for. The long-term
implications of this situation were quite ominous, and
something obviously had to be done. With the help of the Asian
Development Bank, the United States, Japan and other donors, an
FSM-wide economic self-analysis was commenced. National and
State economic summit meetings were held to clarify and
redefine our economic goals. Then, three years ago, the FSM
began making serious and painful course-corrections to reform
its governmental structure, downsize its governmental workforce
and energize its private sector. The process, known as
``structural adjustment,'' is well-advanced, but will be
ongoing for some years to come. It includes efforts to improve
efficiency and to develop our own indigenous statistical and
planning capabilities, including our capability to evaluate and
measure economic progress.
This is a two-pronged program that involves, on one hand,
Government and Public Enterprise reforms, and on the other,
Private Sector reforms. On the government side, we are
reorganizing and downsizing our institutions and improving our
tax structure, in order to move along the adjustment path to
sustainable finances and rational service levels. On the
private sector side, our reforms are designed to improve the
economic environment for private sector growth, especially in
those productive activities that earn dollars from abroad. This
means, among other things, reducing the role of Government in
productive activities, and restructuring our legal and
regulatory environment to encourage private sector activity and
investment, especially foreign investment.
It is still somewhat early to project results, but we are
encouraged by tangible actions taken thus far that have been
quite difficult, politically.
We have restructured governments at the National and
State levels.
We have reduced the size of the Government workforce--
in all we have so far eliminated over 1,200 positions, or
almost 20 percent.
We have frozen wage increases and even reduced the
salaries of most government employees by some 10-20 percent.
All of our public utilities and many other former
government activities have been either commercialized or
privatized.
We have improved the structure of our tax system and
have thus increased the share of Government revenues raised
from domestic sources.
One State-specific example is worth noting. Many of you will be
aware that our largest State--the State of Chuuk--faced a financial
crisis of great magnitude starting in 1995. I will not burden you with
the details of measures that have been taken, but I am happy to report
that the crisis has been overcome. The arrears that Chuuk built up
through domestic and offshore debts have been fully acknowledged and
partially repaid. Based on current and credible projections, Chuuk's
operating deficit will become a growing surplus and creditor debts will
be paid in full by June of 1999.
Mr. Chairman, it is only natural that in approaching the question
of the future of our free association with the United States we must
take stock of the Compact experience during the first fifteen years.
This includes the development of the world security picture and its
outlook, but it also includes the need to account for how the Compact
has worked from the standpoint of its developmental goals, and what
changes might need to be made in the Compact arrangements.
To that end, for over a year now, the FSM, on its own initiative,
has mounted a major undertaking to identify its reasonable and
appropriate needs for ongoing United States assistance after the first
fifteen years, taking into account the structural adjustment, the
outlook for other sources of assistance and its internal capacity for
revenue generation. This undertaking is being conducted by a
representative body constituted by law, known as the Joint Committee on
Compact Economic Negotiations, chaired by former FSM Vice President,
Petrus Tun. The Committee is supported by a full-time Secretariat
headed by myself as its Executive Director, with the assistance of
development economists, an attorney, and other expert consultants as
needed. We expect this endeavor to be completed prior to the opening of
the renegotiations late next year.
Mr. Chairman, recalling my earlier remarks expressing appreciation
for all that the United States has done, I would like to close by
saying that the FSM does not approach the question of continued United
States assistance as asking for ``foreign aid,'' nor do we assert an
entitlement, but rather, we respectfully suggest that such assistance,
should it be forthcoming, will continue to be a key aspect of a unique
and mutually beneficial partnership between our two nations--a
Partnership in Development for Self-Reliance and Security.
I thank you once again for inviting us to appear today. We in the
Federated States of Micronesia look forward to continuing our dialogue
with the United States Government, including with the Congress of the
United States, from this day forward.
______
Statement of Hon. Phillip Muller, RMI Minister of Foreign Affairs and
Trade
Mr. Chairmen and Distinguished Members of the House Resources and
International Affairs Committees:
It is an honor for me to appear before your Committees today on
behalf of his Excellency Imata Kabua, President of the Republic of the
Marshall Islands (RMI). Thank you for allowing me to share the
perspective of the RMI Government at this important and welcome
oversight hearing. I see this hearing as an opportunity to present and
discuss challenges in the Compact before negotiations to extend certain
of its provisions commence next year.
For the purposes of today's hearing, I will focus my remarks on
three major points. First, I will discuss the value the RMI places on
our bilateral relationship. Second, I will address some of the specific
issues the U.S. Government has raised concerning fiscal administration
in the RMI. Finally, I will identify some of the difficulties the RMI
is experiencing with the existing Compact.
The value the RMI places on the bilateral relationship:
Let me begin by expressing that the Government of the Republic of
the Marshall Islands remains fully committed to not merely preserving
but to strengthening its close friendship with the United States.
Having moved successfully from colonial status to full national
sovereignty and self-government, the Republic of the Marshall Islands
stands, by choice, as a friend and ally of the United States. We share
commitments to world security, democracy, and disarmament. We have a
friendship shaped by a shared history, and shared goals; a relationship
characterized by transparency, and cooperation; a successful
relationship which has allowed for the decolonization of the Marshall
Islands, and a special, close and continued relationship which extends
indefinitely under the Compact of Free Association.
The Compact of Free Association and its subsidiary agreements
embody the strategic alliance that evolved during the Trusteeship and
continues in perpetuity in accordance with the Compact. These mutual
security arrangements include the U.S. Army Missile Range at Kwajalein
Atoll which the Marshall Islands is proud to host. As the site
specifically named in the Anti-Ballistic Missile Treaty for the U.S.
Government to test its missile defense systems, Kwajalein Atoll helps
provide security to the United States, the Marshall Islands, the
Pacific region, and the world. On several occasions, the RMI Government
has accommodated Department of Defense requests to utilize additional
islands for its programs. We believe the present arrangement is in the
best interest of both our nations, and contributes to our shared
commitments to world security. Furthermore, the Marshall Islands
provides a permanent buffer zone between the United States and
potential threats from Asia, and extends U.S. military access to
approximately l million square miles of the Pacific Ocean where no
other foreign military can enter.
The strategic nature of our partnership continues to be of
tremendous mutual importance to our nations. I was extremely pleased to
see these same sentiments reflected in the Joint Resolution introduced
by the Chairmen of both committees holding this hearing, as well as our
good friend, Congressman Faleomavaega. The Marshall Islands appreciates
these expressions and hopes that the resolution will continue to move
forward. I am also pleased to inform the Committees that the Nitijela
passed its own resolution on February 5, 1998, conveying the RMI
Government's commitment to its bilateral relationship with the United
States. The text of the Nitijela resolution, which recognizes the
importance of continued friendly relations and the maintenance of long-
term military alliance and strategic partnership, is attached as a
supplement to my statement.
In recognition of the strategic partnership between the RMI and the
United States, the Mutual Security Agreement signed by our governments
reflects the understanding that economic assistance to the Marshall
Islands is not foreign aid, but an integral aspect of creating the
stability necessary to augment our mutual defense goals, provided in
exchange for important strategic denial and defense rights that the
U.S. enjoys in the Marshall Islands. The words ``mutual'' and
``security'' are meant to reflect how each of our countries benefit
from our relationship; the United States secured its defense interests
and the Marshall Islands secured its economic and social interests,
thereby creating a mutually beneficial alliance based on four decades
of Trusteeship. Relations between military and economic security is a
recognition of the conditions required to promote international peace
and prosperity. This principle is expressly stated in the Mutual
Security Agreement:
``The Government of the United States and the Government of the
Marshall Islands recognize that sustained economic advancement
is a necessary contributing element to the mutual security
goals expressed in this agreement.'' (Agree-
ment Between the Government of the United States and the
Republic of the Marshall Islands Regarding Mutual Security
Concluded Pursuant to Section 321 and 323 of the Compact of
Free Association.)
In this respect, I would like to extend my sincere gratitude to the
Members and Administration representatives who argued that the Pell
Grant, an economic and social program consistent with the strategic
nature of our friendship, is an integral component of the overall U.S.
interest in the Marshall Islands. Our youth who are pursuing their
higher education, as well as Marshallese serving in all branches of the
U.S. armed forces, will enhance the economic and strategic goals
embodied in the Compact. No country receiving conventional foreign aid
has a relationship with the U.S. including the special legal, military,
political, economic and social mutual undertakings that exist between
our governments by treaty and law. That is why the RMI is not a foreign
assistance recipient.
We look forward to continuing to strengthen our friendship, and
therefore, are confident that the upcoming negotiation with the U.S. of
certain elements of the Compact will provide a constructive process to
reflect our shared commitment to the relationship. We are likewise
confident that in due course the U.S. will select a person of integrity
to lead the U.S. team. This will give us confidence that both sides are
committed to ensuring that our relationship continues to work in the
best interest of both our nations.
U.S. Government concerns about fiscal management in the RMI:
We understand that some people in the U.S. Government have concerns
about fiscal management in the RMI. We acknowledge that there have been
a number of problems with our financial management and budget
execution. I would like to put some of our financial faltering into
perspective, however.
During the Trusteeship, the Marshall Islands was deemed a secure
area by the U.S. Administrators. Until 1968, outsiders could not visit
the Marshall Islands without first obtaining permission from the U.S.
Navy. Until 1973, no foreign investment of any sort was allowed in the
Marshall Islands. The public works department was established to create
government jobs for Marshallese people as a means to distribute U.S.
money. Most of the Compact money we now receive goes to pay debts from
loans that were necessary to upgrade the dilapidated infrastructure we
inherited from the Trust Territory Government. I raise these points
only to note that although we have made mistakes--some of our
investments were admittedly overambitious, some were questionable, and
still others were sound--we have made a bona fide effort to develop our
economy. In 12 years time, however, we cannot achieve the economic
development that U.S. strategic interests intentionally thwarted for
decades during the Trusteeship.
In retrospect, we acknowledge that monies were not used as
effectively and efficiently as they could have been. For the most part,
our infrastructure has been built, but the costs have been higher than
they should have been. Unfortunately, we did not effectively enforce
financial reporting from individuals and companies who expended funds.
In the case of the Ebeye Hospital, we have made arrangements with the
ADB to help recoup funding to complete the project sponsored by the
U.S. Government. ADB has responded positively to our request for
assistance. I think it will be in both our nations' best interest to
build accountability mechanisms into the next phase of Compact
assistance.
Despite our growing pains, the RMI Government is committed to meet
the challenges necessary in order to install rigid systems of financial
management and to operate within our financial means. We are
undertaking democratic institutions building to improve deficiencies in
the financial system that we inherited.
Concern has also been expressed about the over-enrollment of the
177 Health Care Program. We made the mistake of not requiring
eligibility criteria for enrollment in the program. As a result,
everyone with land claims to those atolls, and not just those requiring
medical attention as a result of the testing program, enrolled in the
program. This is a mistake that my government acknowledges. In
response, my Ministry has drafted eligibility criteria for the Cabinet
to consider. We are working with the 4 atoll leadership to help them
understand the absolute necessity of getting enrollment in this program
under control and in accordance with the original intent of the
Compact. I expect the eligibility criteria to be established in the
near future.
I would also like to point out that the RMI Constitution provides
for an independent Auditor General to audit all public accounts. The
Auditor General's Office has hired an internationally recognized
auditor, Deloitte & Touche, to conduct annual audits in the RMI. The
very fact that we know what our budget management problems are
demonstrates that the audits ensure accountability. Over the years, the
Auditor General's Office has been introducing progressively more of the
sophisti-
cated financial systems necessary to properly manage accounts. Please
keep in mind that the RMI inherited a financial management system from
the Trust Territory that consisted primarily of pencils and papers. We
are doing our best, however, to create first-class financial management
systems in the Marshall Islands.
In recognition of the fiscal management problems we have had, the
RMI Government has committed itself to a vigorous reform program. I
would like to briefly describe some of our fiscal reform measures. Many
of these reforms have been painful both in political and practical
terms as they affect the lives of all Marshallese people: The RMI
Government worked closely with the Asian Development Bank (ADB) to
develop a Public Sector Reform Program (PSRP). With a $12 million loan
from the ADB, the Reform Program is downsizing our public sector which
became overinflated during the Trusteeship. We have determined,
however, that we will not allow our downsizing efforts to compromise
the RMI's Constitutional mandate to provide essential health care and
education services to the population; We have launched a Private Sector
Investment Program (PSIP) that aims to develop strategies in each of
the sectors which make best use of the country's resources within the
overall fiscal and budgetary constraints; A Private Sector Unit has
been established to formulate and implement a strategy and a program
for the privatization of state-owned enterprises and service
departments. The Private Sector Unit is also tasked to create a
competition and regulatory policy framework to ensure that the eventual
privatization of those state-owned enterprises having monopolies in
their sectors, such as the national airline and the public utilities,
do not unfairly infringe on the public good; Our Foreign Investment
Advisory Service (FIAS) has prepared draft legislation for the
Government to consider ways to promote a comprehensive investment
program; An Office of the Economic Policy Advisory Services &
Statistics provides the budget framework based on macroeconomic factors
facing the country which can be addressed through fiscal policy; and
the RMI has adopted a set of principles that requires that the
recurrent and capital budgets are closely integrated and visibly linked
to national and sector development goals and objectives.
I would also like to point out that the RMI Government has reduced
government expenditure from over $105 million in fiscal year 1995 to a
projected $75 million in fiscal year 1999. The reduction in expenditure
has been achieved by a curtailment of capital spending, by a 27 percent
decline in established civil service posts, by a reduction in
government subsidies (especially by the national air carrier), by a
lowering of wages of elected of finials and civil servants in both real
and monetary terms, and cuts in the operating costs of line ministries
(including the elimination of 4 ministries). At the same time, we are
providing training to the individuals whose public jobs have been
terminated so they can become productive members of the private sector.
Difficulties in the existing Compact:
Like the U.S., we also have concerns with the existing Compact
which we would like to bring to your attention. These problems exist
primarily with the economic development incentives and Section 177 of
the Compact. Because of the complex nature of the Compact, it is often
difficult to interpret its intent. When attempts are made to deny
special rights or privileges specified in the Compact we often face
problems in our implementation of the Compact's provisions. Problems
have emerged when essential provisions in the Compact, such as the
immigration and labor rights, are constrained and compromised by
misinterpretations of the Compact's intent. Our relationship cannot be
categorized like other countries when it is unique.
With regard to the aspects of the Compact intended to stimulate
economic development in the Marshall Islands, there are certain
provisions in the Compact that were never implemented. For example, we
would have liked to take advantage of the National Health Service Corps
in Section 105(k) or the technical assistance envisioned in 105(1). For
the programs available on a reimbursable basis, we do not have the cash
flow assumed to pay for the services up front.
The RMI Government also demonstrated that it lost key economic
benefits under Section 111(d) of the Compact. The RMI lost these
benefits when the U.S. made unilateral changes to the Compact that the
Marshallese electorate decidedly approved. We thank Congress for
recognizing the economic loss as a result of the U.S. removal of the
economic incentives. Yet, we have only received 1/10th of the amount
for which we established a U.S. commitment under Section 111(d). We ask
that you revisit the loss of economic benefits with us, Mr. Chairmen.
We are also concerned about the limited nature of the Essential Air
Services Agreement in the Compact. On September 30th of this year, the
Essential Air Services provision of the Compact will expire. This
provision, which ensures that U.S. air carriers provide flights
adequate to promote economic development, is vital to every aspect of
our efforts to promote economic development. It is my hope that the
Administration and Congress will work with us on this matter and that
your Committees, Mr. Chairmen, can support the Essential Air Service
provision that is a vital component of the path to economic self-
sufficiency that both of our nations envision for the Marshall Islands.
The other major area of RMI concern about the Compact is Section
177, the section which defines U.S. responsibility for and efforts to
address the consequences of the nuclear testing program. Like people
throughout the world, the Marshallese found great relief and assurance
in the end of the Cold War. We, in the Marshall Islands, like the
United States, played an important role in helping the United States
actualize its national, and global defense goals and in protecting the
world from the threats of nuclear war.
Although we share in the relief that the Cold War has ended, our
countries together bore a disproportionate amount of the burden and
suffering in reaching this goal. People in the Marshall Islands
continue to die and suffer from the debilitating health effects of
radiation exposure. The expense and breadth of radiation illnesses
experienced in the Marshall Islands has overburdened our health care
system and depleted scare economic resources. As you will see from the
attached statement of the Chairman of the Nuclear Claims Tribunal,
Oscar deBrum, the funding for the Nuclear Claims Tribunal is inadequate
to cover even the personal injury claims brought before the Tribunal.
It troubles me to report that the Tribunal's Chairman has had to make
emergency allocations of just a few hundred dollars to radiation
victims dying in the hospital and the families of the awardees to
provide a contribution to the costs of death ceremonies.
The Tribunal has not awarded a single environmental claim despite
the fact that the Compact intended for the Tribunal to distribute both
personal injury and land damage claims. Although the Tribunal has not
yet adjudicated the land damage claims, it is clear from evidence
presented that loss of use for the affected atolls and the cost of
remediation to restore the atolls to U.S. cleanup standards is
substantial.
As for the 177 Health Care Program, there is no inflation
adjustment although inflation adjustments exist for almost every
program in the Compact. Because of rising health care costs and
inflation, even if we substantially reduce our eligibility, which I
promise we will do, the 1998 value of the $2 million amount envisioned
during Compact renegotiations amounts to approximately $90O,000 a year.
This is grossly inadequate to provide for the expensive care of this
uniquely exposed population needs. The program is further hampered by
the great expense of transporting and housing tertiary patients off-
island due to a lack of medical facilities and trained personnel in the
islands. It is also expensive to maintain health care facilities at
multiple, scattered locations. Furthermore, we are forced to employ
outsiders to assist with health care delivery as 42 years after the end
of the testing period there still is not a single Marshallese trained
in radiation science or radiation medicine.
While we are proud of our strategic partnership with the United
States, it saddens us that Marshallese citizens who suffer from
radiological illnesses are not compensated in one, full payment the way
U.S. radiation victims are. Because I was one of the RMI's Compact
negotiators, I know we were led to believe that awardees would receive
a one-time payment for their radiological illnesses and that market
earnings would lead to annual increases of the fund of 15 to 18
percent. Furthermore, we were told that the interest from the fund
alone would be adequate to make our awards and that the fund would
remain untouched so it could serve as an intergenerational fund to
provide long-term financial stability. None of these assumptions have
proven to be true. This inequity of the awards process leads to great
suffering and discomfort in the Marshall Islands.
As you are aware, the Marshall Islands agreed to put to one side
the nuclear-related claims it presented to U.S. Federal courts while we
determine the effectiveness and adequacy of the programs and
allocations in Section 177 addressing the adverse consequences of the
testing program. In our 12th year of the Compact and Section 177
claims, it disturbs me to report to you, Mr. Chairmen, that Section 177
of the Compact is inadequate to the point of becoming dysfunctional.
While the U.S. Federal courts accepted our decision to put these claims
before the RMI Nuclear Claims Tribunal, that decision was based on the
presumption of adequacy of the remedy. That presumption is now being
seriously undermined, and called into question.
In addition to the inadequacy of funds for the Nuclear Claims
Tribunal, the Compact fails to provide adequate health services to
populations affected by radiation and it fails to recognize the full
scope of radiation injury. The United States conducted 67 atomic and
thermonuclear tests in the air, on the land, and in the seas
surrounding our islands. Seventeen of these tests were in the megaton
range far exceeding the size of the bomb the U.S. dropped on Hiroshima.
Yet, the Compact defi-
nition of exposure, which determines which populations are eligible for
medical care, is based on exposure to just 1 of the 67 tests conducted,
the ``Bravo'' test. What about the radiation effects of the other 66
tests? What about the cumulative radiation effects of all 67 tests? As
a result of this extremely narrow definition of radiation exposure,
only 174 people in the nation are legally eligible in Section 103(h)(1)
to participate in a U.S. provided radiological health care program.
Furthermore, only 4 atolls covering 22,500 square miles, including the
two ground zero test sites, are legally defined as affected by
radiation. In comparison, I find it interesting that the United States
considers the Nevada land area affected by radiation to extend over 3
million square miles despite the fact that the total tonnage detonated
in the Marshall Islands was almost 100 times greater than the total
yield of weapons tested in Nevada.
Fortunately, there is a provision in Section 177 of the Compact,
the changed circumstances provision, that allows Congress to work
within the purview of the existing bilateral framework to address
shortcomings of the U.S. programs designed to address the problems
resulting from radiation exposure. We believe that it is in the best
interest of both our nations to deal with problems in the existing
Compact framework. This issue cannot wait for renegotiation of the
second Compact. People are dying now. People are suffering now. Medical
expenses are beyond our means. We lack the medical care and the money
to finance their awards.
Thanks in great part to the Committee on Resources' efforts to see
that Department of Energy documents relating to the U.S. Nuclear
Weapons Testing Program in the Marshall Islands were declassified and
released to the RMI, we now know that the extent of damage caused by
the nuclear testing is much greater and much broader than either the
U.S. or Marshallese negotiators of the Compact understood at the time.
Based on this new information, we are compelled to act, and the Compact
provides the framework for taking action. I would like to ask you, Mr.
Chairmen, to convene hearings on the changed circumstances after you
receive our petition. Changed circumstances hearings would provide us
an opportunity to present our findings to you, and hopefully, to lay
out a pathway for providing medical care and assistance to all of those
people who have truly suffered as a result of our shared strategic
interests.
I would like to ask your support, Mr. Chairmen, in securing an
immediate ex gratia payment for the victims dying of radiation-related
illnesses for which there are no means to pay for. The Compact allows
for ex gratia payments under Section 1O5(c)(2). We request your
assistance in convincing the Appropriations Committee of the importance
of this allocation which the Compact provides for.
______
Statement of His Excellency Hersey Kyota, Ambassador Extraordinary and
Plenipotentiary, Palau Ambassador to the United States of America
Mr. Chairman and distinguished members of the Committee on
Resources and the Committee on International Relations Subcommittee on
Asia and the Pacific, it is indeed an honor and privilege for me to
testify, on behalf of President Nakamura and the government of the
Republic of Palau, before this joint committee. Thank you, Mr. Chairman
for the opportunity.
As manner of introduction and background information, allow me Mr.
Chairman to briefly explain for the record the relationship and
camaraderie that first began during World War II between Palau and the
United States. I believe that such camaraderie between our people
encouraged and paved the way in the establishment of our countries
current relationship. Because of its location, Palau quickly became one
of the most important areas in the Pacific for strategic purposes
during and after the war, for that matter. As a result, some of the
fiercest battles in the Pacific during the war took place in our
islands. Thousands of Americans, Japanese and native Palauans lost
their lives in those battlefields. Palau, undoubtedly played a major
role in the U.S. victory in the Pacific during World War II.
Immediately after the war, the United States established its
administration under the Department of the Navy. In 1946, the United
Nations formally placed Palau and the rest of the Micronesia Islands
under the U.N. Trusteeship Council directly under the administering
authority of the United States. Palau and the rest of the islands of
Micronesia became known as the Trust Territory of the Pacific Islands.
For many years preceding independence, Palau was administered by the
Department of the Interior. During that time, the Government of the
United States established self government, provided Palauan people with
education and health care programs, and nurtured democratic
institutions, which guarantee human rights, protect freedom of speech,
and preserve the rule of law in Palau. Although independent, Palau will
always remain a member of the American family by virtue of its long
friendly tie and its present special relationship under the Compact of
Free Association between our two countries.
Before I continue, Mr. Chairman, I believe it is worth noting that
today, October 1, 1998 is the fourth anniversary of the Republic of
Palau's independence in free association with the United States of
America. As you know, the original Compact legislation for the three
Freely Associated State governments was passed by the U.S. Congress in
1986. On behalf of the people of Palau, I would like to gratefully
acknowledge former President Ronald Reagan, whose beliefs in freedom
for all mankind and whose vision of sovereignty for islands of the
Pacific Trust Territory led him to sign the compact legislation into
law, thus setting the stage for Palau's independence. We are also
grateful to President William Jefferson Clinton for signing into law an
enabling legislation passed by the Congress in 1994 putting into force
the specific Compact of Free Association between Palau and the United
States, which came into effect on October 1, 1994. October First is now
our Independence Day and a national holiday in Palau. As we begin our
fifth year of independence under the Compact agreement, Palauans
everywhere proudly celebrate this day and the special relationship that
exists between our two nations. The feeling of respect and admiration
on the part of the Palauan people toward this great nation and its
people for giving us our independence will continue throughout the term
of this special relationship and beyond.
This special relationship, as embodied in the Compact of Free
Association, extends to Palau the privilege of military and defense
protection of the most powerful nation in the free world. As a mutual
partner and member of the American family, Palauan citizens may
voluntarily serve in the Armed Forces of the United States. The
Republic of Palau receives the benefit of a variety of Federal grants
and program assistance, particularly in the fields of education and
health care. Our citizens also enjoy the freedom of migration and
unrestricted access to the United States and its territories. At the
same time, Palau enjoys complete independence and sovereignty. These
benefits and freedom given to Palau are not entirely free. Under the
Compact, as you know, the United States provides these benefits and
economic assistance in exchange for military land use rights.
Mr. Chairman and members of this joint committee, while minor
disputes and questions exist with regards to interpretations of certain
terms and provisions of the compact, I am happy to report that the
relationship that exists between our governments is functioning
effectively and efficiently. These disputes should not, in anyway,
interfere or affect the normal government to government relations
between our two republics. In fact disputes and minor disagreements are
regarded as a normal aspect of a healthy, working relationship. As long
as lines of communication and continuing dialogue remain open and
sincere, I am confident that all issues can be resolved pursuant to the
provisions of the Compact, and, indeed, this oversight hearing serves
as an important step in this process.
Mr. Chairman, during this fiscal year which begins today, our
government will lose approximately six million dollars in U.S. Federal
programs and grant assistance, due to the compact five-year phase out
schedule requirement. In addition, the compact operation fund that
Palau receives annually for the first fifteen years is drastically
reduced from twelve million dollars to seven million dollars, a five
million dollars reduction. This loss of Federal programs and reduction
in operation fund, totaling eleven million dollars, translates to loss
of many jobs and valuable services to our people. While the effect of
these reductions was anticipated, the reality as to how much they would
affect our budget was not fully comprehended until the Olbiil Era
Kelulau (Palau National Congress) began its 1999 fiscal year
appropriation process this past summer. Mr. Chairman, eleven million
dollars may represent a tiny fraction of the U.S. budget, but in Palau,
it represents over twenty percent (20%) of our total annual budget.
This will not only hinder our ability to deliver essential services to
our people, but more importantly, it will also affect our economy.
U.S. Federal grants and program assistance had helped many Palauans
of all ages. These Federal grants and programs have been the backbone
behind the success of our education, health care and social
institutions. Although, some of these Federal grants and program
assistance have been terminated or phased out pursuant to the terms of
the Compact, other Compact provisions stipulate that Palau may request
for continuation of various grants and program assistance and the
United States may consider the request. I ask this Committee to
consider this, as our request for your representatives and ours to
revisit those sections of the compact dealing with Federal grants and
program assistance in order to discuss and assess the need for
continuation.
Mr. Chairman, one of the most important Federal grants that has
truly helped many Palauan citizens is the Pell Grant. Without this
grant, hundreds and hun-
dreds of Palauan students graduating from high schools would not have
been able to attend colleges and universities in the United States,
regardless of their academic standing. I understand that the House and
the Senate conferees were able to agree on compromised language on H.R.
6 to extend the termination of freely associated states students Pell
Grant eligibility from the year 2001 to 2004. I want to take this
opportunity, Mr. Chairman, to extend my appreciation and gratitude to
your colleagues in the House of Representatives and the Senate who
expressed strong support for our students' eligibility, and to
especially thank you for your direct and persistent involvement in
addressing our request.
Allow me, then, Mr. Chairman to point out one minor fact that may
have been overlooked during your specific deliberation on the FAS Pell
Grant eligibility provision in H.R. 6. While it is certainly the
prerogative of the Congress to legislate on any issue it sees fair and
appropriate, I feel that Palauan students are being short changed by
terminating Pell Grant eligibility for all three freely associated
states at the same time. Palau, as I mentioned at the outset, is
celebrating its fourth anniversary today. We are ten years away from
2009, the year in which our compact economic assistance terminates. The
Compacts for the Federated States of Micronesia and the Republic of the
Marshall Islands, however will terminate in the year 2001, giving their
students full eligibility during and possibly beyond the terms of their
first fifteen years of their Compacts. As a matter of policy, I
strongly believe that the Congress should be consistent and fair in its
treatment to the freely associated states. Mr. Chairman, to end or
sunset the Pell Grant eligibility for all three FAS in the year 2004
would not be fair for Palauan students. Palauan students should remain
eligible for Pell Grant assistance until the termination of our compact
economic assistance in year 2009 and three years thereafter to be
equitably fair. After all, section 124 of Palau's compact stipulates
that the United States will extend similar benefits and treatment
extended to FSM and RMI to Palau. While this may have been simply an
oversight, Mr. Chairman, I respectfully request your Committee to look
into this matter in a fair and equitable manner.
As an island nation, Palau is surrounded by a vast ocean. Our
exclusive economic zone extends to two hundred miles from our shores
and traditional baselines. With limited technology and government
resources, it is extremely difficult to patrol our waters; as a result,
a variety of ocean resources, particularly tuna stock and other highly
migratory species, are harvested in our waters by poachers often using
illegal fishing methods. We certainly need assistance in this area.
Without consented efforts and mutual cooperation among the freely
associated states and other Pacific islands and, certainly the
assistance of the United States, we will not realize the full economic
benefit of our ocean resources. In this connection, I request this
Committee and the Congress to assist us in this endeavor.
Palauan culture is greatly influenced by the ever-present
interaction between our people and the surrounding sea. As you know,
Palau's Coral Reefs are blessed with perhaps the richest diversity of
marine life in the entire world. And now, as a newly independent
nations seeking long-term economic stability, we look to our coral
reefs as the resources which can attract and sustain our emerging
tourism industry. The establishment of the Palau International Coral
Reef Center could provide immeasurable support for our efforts to
rehabilitate, maintain and conserve Palau fragile reef system and serve
as an ideal research base for the preservation of other reef systems
the world over. This project is a tri-partite undertaking by the United
States, Japan and Palau which was advanced within the framework of the
Japan-U.S. common agenda. Both Japan and the United States have been
focusing on the preservation of coral reefs since 1994 as part of their
cooperation for addressing global environmental problems. Through a
services of tri-partite discussions, we have developed a Basic Design
Study in which the Republic of Palau has agreed to make available land
for the site and to clear it in preparation for construction. Recalling
the many years of Compact negotiations with respect to land issues, I
know you can appreciate the significance of Palau gesture to provide
this land at no cost to the Center. Under the proposed plan, the
Government of Japan will begin construction of the Center during the
first half of next year. As for the United States role in supporting
the Center, we have yet to see any significant commitment of funding to
ensure the successful startup of the Center operations. In discussions
on technical cooperation held in April of this year, U.S. delegation
members pointed to the Federal Funds and programs committed to the
Republic of Palau during the fifteen year life-span of the Compact of
Free Association. I wish to make one point very clear. The Palau
international Coral Reef Research and Conservation Center was not part
of Compact negotiations and, as a project arising from the bilateral
cooperation between Japan and the U.S. under the Common Agenda, should
not be funded with existing Compact funds. Reasonably, additional funds
should be made available for this project whether under the Compact or
otherwise.
Mr. Chairman, I would like to commend you for your strong support
for House Congressional Resolution 131 which encourages the
Administration to identify opportunities to take substantive actions to
advance the exploration of the ocean and the appropriate use of ocean
resources and for your endorsement of the Coral Reef Conservation Act.
Palau also views that June 11, 1998, Executive Order on Coral Reef
Protection as a further indications of the U.S. Government's commitment
to international cooperation on the protection of coral reef species
and the implementation of appropriate strategies and actions to promote
conservation and sustainable use of coral reef resources worldwide.
Our record of discussion of June 7, 1996 on Palau Coral Reef
Project, signed by then Charge d'affaires, Mr. Richard Watkins,
indicates that the United States considers the proposed Center to be
thought of as an integral part of the larger International Coral Reef
Initiative. The recent Executive Order specifically calls for expanded
collaboration with other International Coral Reef Initiative Partners
to implement through its framework for Action. We would like to suggest
that technical cooperation in the form of startup support for the
initial five years of operation of the Palau International Coral Reef
Center would be the one most significant gesture that the United States
could make in the area of global coral reef protection. Whether under
the Coral Reef Conservation Act or through existing Federal programs
under the Department of State, Department of Interior, Department of
Commerce, and the Agency for International Development, we urge the
United States to seek available means for supporting the Palau
International Coral Reef Center Project as a truly tri-partite
endeavor. In this regard, Palau stands ready to assist in advancing the
ideas of the Japan-United States common agenda.
The largest single and certainly the most important project ever to
be built in Palau, in terms of funding, magnitude, development and
economic value, is the Babeldaob Compact Road. This project, as you
know, is financed by the Government of the United States as part of the
economic assistance package under the Compact of Free Association
between Palau and the United States. The U.S. Army Corps of Engineers
is charged with the responsibility to manage and oversee the
construction of the road project, on behalf of the United States
Government. The Palau Presidential Task Force on Babeldaob Road and the
U.S. Army Corps of Engineers, have had many meetings in the last three
years to discuss essentially all aspects of the road project. As a
result, most of the preliminary work relating to plans and designs,
surveys, land easements, environmental assessment study and
environmental impact statement are completed. The actual ground
breaking for the project is scheduled to commence at the end of this
year or very early next year.
Palau Government had planned to play an active role during the
actual construction of the project, as announced by President Nakamura
on several occasions during the initial discussions of the project. To
demonstrate his seriousness and desire to be part of the ``team'' and
to really engage in all aspects of the road project, President Nakamura
created a task force, which was responsible to oversee all aspects of
the project, including minimizing impact and damage to the environment.
The plan was for the Government of Palau to unilaterally fund the task
force with sufficient budget to hire and employ professionals in the
fields of engineering, environment and others to assist the task force
in their task. Due to the unexpected collapse of the Koror-Babeldaob
Bridge in the late 1995, much of Palau's financial resources were
directed to the bridge relief effort, leaving virtually no funding for
this much desired professional team of experts to oversee the
construction of the Babeldaob Road Project. Having no other options,
the President submitted an application to the Department of the
Interior requesting for technical assistance, in the form of grants, to
fund the professional U.S. under the Common Agenda, should not be
funded with existing to oversee all aspects of the road project and
report to the Government of Palau. This team will represent the
Government of Palau to ensure (1) that contractors meet design
specifications and work quality standards; (2) that the environmental
impact statement and requirements are complied with to minimize damages
to the environment; and (3) that the interests of the Government of
Palau are addressed and considered. Palau's request for technical
assistance from the Department of the Interior amounts to $525,000.00.
I believe this is a reasonable request and, with the blessings of this
Committee, I would like to ask the Department of the Interior to
approve our application in an expeditious manner.
Needless to say, Mr. Chairman the completion of this important
project will play a major role in shaping our development, economic
opportunity and self sufficiency and prosperity to our young nation.
The island of Babeldaob, often referred to as the ``Big island,'' has
great potential for development in the areas of agriculture, poultry,
aquaculture, cattle ranches and tourism among others.
The last thing I wish to report to you today, but certainly not of
least importance, is the status of our Compact Trust Fund. As you may
recall, in 1994 and 1995 Palau received the sum of sixty six million
dollars and four million dollars, respectively as trust fund. These
funds are part of our economic package under the Compact of Free
Association with the United States. Under the terms of the compact,
investment of these funds is restricted to U.S. securities and
financial instruments and should be invested for at least five years
before the Government of Palau can withdraw any interest from the
principle investment. Mr. Chairman and members of the Committee, I am
happy to report to you that the investment of our trust fund is doing
exeptionally well. In just five years time, our investment has grown to
a sizable sum. We have been very fortunate in the sense that our
investment firms and money managers have not suffered any major
financial setbacks, thanks to healthy economic conditions of the United
States. Our Government can now withdraw funds from the investment to
supplement our budget shortfall, however, we are mindful of the fact
that Palau, unlike FSM and RMI, is not eligible for FEMA and other
Federal relief programs, thus the leadership is reluctant to exercise
that option. Unless it is absolutely essential, particularly in time of
major disaster or emergency, the general feeling among the leaders in
Palau is to leave the fund untouched for another five years.
Mr. Chairman, these matters and issues I bring to your attention
today are certainly within your grasp to address, consider and resolve
expeditiously and fairly. While minor disputes and differences exist, I
am confident that this Congress and this Administration, like Palau,
will focus on positive accomplishments that we have achieved in just
four short years of our special relationship. The Government of Palau
realizes the importance of maintaining open dialogue and lines of
communication on a regular basis, and welcomes oversight hearings such
as this one, and Congressional or inter agency meetings in the future.
Again, Mr. Chairman, on behalf of Palau President Kuniwo Nakamura and
the people of Palau, I thank you for this opportunity to appear and
testify before you and your distinguished colleagues.
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