[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]






                      U.S. POLICY IN THE PACIFIC: 
                   THE STRUGGLE TO MAINTAIN INFLUENCE

=======================================================================


                                HEARING

                               BEFORE THE

                  SUBCOMMITTEE ON ASIA AND THE PACIFIC

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 23, 2016

                               __________

                           Serial No. 114-176

                               __________

        Printed for the use of the Committee on Foreign Affairs

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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         BRAD SHERMAN, California
DANA ROHRABACHER, California         GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio                   ALBIO SIRES, New Jersey
JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
TED POE, Texas                       BRIAN HIGGINS, New York
MATT SALMON, Arizona                 KAREN BASS, California
DARRELL E. ISSA, California          WILLIAM KEATING, Massachusetts
TOM MARINO, Pennsylvania             DAVID CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina          ALAN GRAYSON, Florida
MO BROOKS, Alabama                   AMI BERA, California
PAUL COOK, California                ALAN S. LOWENTHAL, California
RANDY K. WEBER SR., Texas            GRACE MENG, New York
SCOTT PERRY, Pennsylvania            LOIS FRANKEL, Florida
RON DeSANTIS, Florida                TULSI GABBARD, Hawaii
MARK MEADOWS, North Carolina         JOAQUIN CASTRO, Texas
TED S. YOHO, Florida                 ROBIN L. KELLY, Illinois
CURT CLAWSON, Florida                BRENDAN F. BOYLE, Pennsylvania
SCOTT DesJARLAIS, Tennessee
REID J. RIBBLE, Wisconsin
DAVID A. TROTT, Michigan
LEE M. ZELDIN, New York
DANIEL DONOVAN, New York

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

               Jason Steinbaum, Democratic Staff Director
                                 ------                                

                  Subcommittee on Asia and the Pacific

                     MATT SALMON, Arizona Chairman
DANA ROHRABACHER, California         BRAD SHERMAN, California
STEVE CHABOT, Ohio                   AMI BERA, California
TOM MARINO, Pennsylvania             TULSI GABBARD, Hawaii
JEFF DUNCAN, South Carolina          ALAN S. LOWENTHAL, California
MO BROOKS, Alabama                   GERALD E. CONNOLLY, Virginia
SCOTT PERRY, Pennsylvania            GRACE MENG, New York
SCOTT DesJARLAIS, Tennessee





















                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Mr. Matthew J. Matthews, Deputy Assistant Secretary for 
  Australia, New Zealand, and the Pacific Islands, Senior 
  Official for APEC, Bureau of East Asian and Pacific Affairs, 
  U.S. Department of State.......................................     4
Ms. Gloria Steele, Senior Deputy Assistant Administrator, Bureau 
  for Asia, U.S. Agency for International Development............    15

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Mr. Matthew J. Matthews: Prepared statement......................     8
Ms. Gloria Steele: Prepared statement............................    17

                                APPENDIX

Hearing notice...................................................    34
Hearing minutes..................................................    35
The Honorable Matt Salmon, a Representative in Congress from the 
  State of Arizona, and chairman, Subcommittee on Asia and the 
  Pacific: Material submitted for the record.....................    36
 
                      U.S. POLICY IN THE PACIFIC: 
                   THE STRUGGLE TO MAINTAIN INFLUENCE

                              ----------                              


                        THURSDAY, JUNE 23, 2016

                       House of Representatives,

                 Subcommittee on Asia and the Pacific,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The subcommittee met, pursuant to notice, at 2:12 p.m., in 
room 2172, Rayburn House Office Building, Hon. Matt Salmon 
(chairman of the subcommittee) presiding.
    Mr. Salmon. The subcommittee will come to order.
    Members present will be permitted to submit written 
statements to be included in the official hearing record.
    Without objection, the hearing record will remain open for 
5 calendar days to allow statements, questions, and extraneous 
materials for the record subject to the length limitation in 
the rules.
    The Pacific Island region, far from both the mainland 
United States and the core of Asia, is perhaps the most 
overlooked region of the Asia-Pacific. This cluster of 14 
sovereign states, although home to only 9 million people, 
nevertheless deserves the United States' attention for the 
important roles that they play in regional security, as 
participants in international organizations, and as the 
neighbors to our own U.S. territories of American Samoa, Guam, 
and the Commonwealth of the Northern Mariana Islands in the 
Pacific.
    I welcome the Delegates to Congress from the U.S. Pacific 
territories who have joined the hearing today. Thank you for 
coming. We appreciate your attendance.
    Many of us remember the Pacific Island countries for the 
role they played during World War II. Following the war, the 
United States administered a number of the Pacific Islands 
under an arrangement with the United Nations. This included 
three now independent nations, Palau, the Marshall Islands, and 
Federated States of Micronesia, with signed a Compact of Free 
Association with the United States of America.
    The United States maintains a specific relationship with 
these three countries today, including important military ties. 
The Marshall Islands, for example, hosts the vital Ronald 
Reagan Ballistic Missile Defense Test Site, which provides 
regional radar centers and launch sites. Our strategic planners 
following World War II also recognized the importance of the 
Pacific Islands to regional security, developing the island 
chain defense theory where our U.S. territories and compact 
states form the second island chain defensive line.
    The Pacific Island states are also of economic interest, 
especially for the U.S. fishing industry and as the South 
Pacific supplies roughly one-third of the world's tuna. For the 
past 28 years, the U.S. tuna fleet has gained access to these 
rich fishing grounds under the South Pacific Tuna Treaty, which 
exchanged fishing rights for licensing fees and $20 million in 
U.S. aid. Earlier this year, the United States suspended the 
treaty as the terms were ``no longer viable.'' The treaty is 
now under renegotiation, and I look forward to hearing from our 
witnesses about our efforts to support U.S. business and jobs 
in this important treaty negotiation.
    We are not alone in recognizing the importance of the 
Pacific Island nations. Our friends in Australia and New 
Zealand play an active role as major donors and in promoting 
peace and security in the Pacific Islands region as they work 
to maintain a good relationship with their neighbors.
    France, which also maintains territories in the South 
Pacific, plays an active role in the region as well. But not 
all new activity in the Pacific Island region is aligned with 
our interests. Five years ago, the Secretary of State Hillary 
Clinton testified to Congress that the United States was in 
direct competition for influence in the Pacific Island region. 
But very little seems to have been done since then to bolster 
our position. Beijing, on the other hand, has made significant 
advances. It has opened new Embassies in the Pacific Islands, 
provided an average of $150 million per year in economic 
assistance and established a strategic partnership with eight 
Pacific Island countries. China has started providing military 
training and equipment to some Pacific Island countries, and 
the People's Liberation Army frequently refers to the island 
chains in their own planning documents.
    Chinese trade with the Pacific Island states is nearly 10 
times larger than the United States. China has targeted the 
Pacific Islands in its diplomatic efforts. Vanuatu, a country 
that qualified for U.S. Millennium Challenge Corporation 
compact in 2006, is one of only eight countries to publicly 
back China's position that arbitration in the South China Sea 
is illegitimate. Although China is working to gain ground in 
the Pacific, the United States and its friends still maintain 
solid relationships there.
    I do want to recognize the Pacific Island nations of 
Kiribati, the Marshall Islands, Nauru, Palau, the Solomon 
Islands, and Tuvalu for maintaining full diplomatic relations 
with Taiwan. That, to me, is very, very important and near and 
dear to my heart. In light of this competition between the 
United States and China in the Pacific, how is the United 
States faring as it struggles to maintain its longstanding 
influence in this important region? Have we devoted adequate 
resources to the Pacific Islands as part of the 
administration's rebalance?
    I look forward to hearing from our witnesses on these 
issues, and I am going to refer, first of all, to the other 
member on the committee before I go to our guest today, so, Mr. 
Perry, did you have an opening statement you would like to 
make?
    Mr. Perry. Thanks, Mr. Chairman. I really don't. I didn't 
want to waste the time of everybody so I want to hear from the 
witnesses, but I appreciate the opportunity.
    Mr. Salmon. Okay, well, great. We have a couple of guests 
today, and I will first turn to Congressman Sablan. It is 
customary to recognize the other sides of the aisle in the next 
statement, so we welcome any opening statements you would like 
to make.
    Mr. Sablan. Well, thank you very much, Chairman Salmon. I 
got promoted to ranking member just like this in probably my 
second invitation to this committee.
    But, Chairman, thank you very much for inviting me to 
participate in today's hearing on the struggle to maintain 
United States influence in the Pacific. Before I continue on, I 
would like to recognize in the room the presence of the Dean of 
the Diplomatic Corps, the Ambassador of the Republic of Palau 
to the United States, Ambassador Kyota.
    Ambassador, welcome.
    Mr. Chairman, you could say that I am a Member of Congress 
today because of America's decision over half a century ago to 
maintain its influence in the Pacific. After World War II, the 
United Nations created a Trust Territory of the Pacific Islands 
out of islands that the United States had fought the Japanese 
for and the United States took responsibility for incorporating 
those islands into our Nation or giving them a path to 
independence.
    The people of the Northern Mariana Islands voted to join 
the United States in 1976 and became U.S. citizens 10 years 
later. And as of 2009, the people of the Northern Marianas are 
represented alongside other Americans here in this House of 
Representatives, the seat I now hold. So America's influence in 
the Marianas, part of the Pacific, an area the size of 
California and Oregon combined, by the way, is secure. The 
people of the other three districts of the trust territory, 
however, chose independence. These new independent nations were 
created in free association with the United States. If we want 
to maintain influence in the Pacific, I believe then it is 
particularly important to focus on keeping those existing 
relationships with America strong. And I am very concerned 
about the relationship with one of those nations, the Republic 
of Palau.
    The relationship is based on a Compact of Free Association, 
which established Palau's existence as an independent nation. 
The compact also pledged United States' economic support for 
the new republic and gave the United States exclusive military 
rights in the land and waters of Palau. The original compact, 
negotiated in 1994, also calls for a renewal of the agreement 
after 15 years. And, in 2010, the U.S. Representatives signed 
the renewal updating and extending the provisions of the 
compact for another 15 years.
    Unfortunately, however, 6 years later, that agreement to 
extend the compact has not been approved by Congress. So, 
instead of giving Palau the assurance of a long-term 
commitment, we have been sending assistance to Palau on an 
installment basis, year by year. From the point of view of the 
Republic of Palau, you can imagine how this appears. It seems 
as though the United States is not good for its word. From my 
point of view, the people of Palau are very patient people. But 
patience has its limits. From the point of view of Palau's 
neighboring nations, imagine how America's unfulfilled promise 
appears? This is no way for our Nation to maintain influence on 
what is becoming, every day, a more strategically important and 
contested area of the world.
    To address our unfulfilled promise, I introduced 
legislation in this Congress to approve the 15-year extension 
of America's compact with Palau. My legislation would make up 
to Palau for the financial assistance that it would have 
received under the extension agreement but which it has lost 
because of the Congress' inability to act. And to further push 
for resolution, in December, a group of Members from the 
Pacific--Ms. Bordallo of Guam, Ms. Gabbard and Mr. Takai of 
Hawaii and I--asked the Defense Department to support including 
the compact extension in the 2017 National Defense 
Authorization Act. And I understand the Defense Department has 
now reached out to both the House and Senate Armed Services 
Committees supporting resolution of the Palau issue in this 
year's NDAA. Hawaii Senator Mazie Hirono was also able to 
include in the Senate-passed defense bill this month a sense of 
Congress statement calling for resolution of the Palau issue.
    The Defense Department sent letters, and Senator Hirono's 
amendments are important signals that we may be ready to get 
the congressional approval of the Palau Compact extension, but 
we have to get to the finish line in this Congress. And I am 
glad to report the chairman Bishop of the Natural Resources has 
agreed to hold a hearing on my bill approving the compact 
extension on July 6. And the hearing today, shining a light on 
America's struggle to maintain influence in the Pacific, can 
also help us reach our goal.
    Mr. Chairman, I congratulate you for your decision to hold 
this hearing, and again, I thank you very much for inviting me 
to be here.
    And I yield back my time.
    Mr. Salmon. Thank you. We are very grateful to be joined 
today by Mr. Matt Matthews, the Deputy Assistant Secretary for 
Australia, New Zealand, and the Pacific Islands, as well as 
senior official for APEC in the State Department's Bureau of 
East Asian and Pacific Affairs--welcome--and Ms. Gloria Steele, 
the Senior Deputy Assistant Administrator in the U.S. Agency 
for International Development's Bureau for Asia.
    And we thank the panel for joining us today to share their 
experience.
    We will start with you, Mr. Matthews.

    STATEMENT OF MR. MATTHEW J. MATTHEWS, DEPUTY ASSISTANT 
SECRETARY FOR AUSTRALIA, NEW ZEALAND, AND THE PACIFIC ISLANDS, 
  SENIOR OFFICIAL FOR APEC, BUREAU OF EAST ASIAN AND PACIFIC 
               AFFAIRS, U.S. DEPARTMENT OF STATE

    Mr. Matthews. Thank you, Mr. Chairman.
    Mr. Chairman, Ranking Member Sherman, and members of the 
subcommittee, thank you for the opportunity to testify on U.S. 
public policy toward the Pacific Island countries and for your 
leadership on these issues. The Pacific Island region has been 
free of great power conflict since the end of World War II, and 
we have enjoyed friendly relations with all of the Pacific 
Island countries. This state of affairs, however, is not 
guaranteed. Our partnerships and engagement in the region 
matter very greatly. Today, we partner together on a number of 
issues of global importance from standing together for human 
rights in the U.N. and contributing to global security through 
peacekeeping operations to combating climate change and 
illegal, unreported, and unregulated fishing.
    The Pacific Islanders punch above their weight, and the 
United States must continue to encourage them through our 
support for their sustainable and inclusive development. 
However, it is equally important that we do not take Pacific 
goodwill for granted. Our relationship with our Pacific 
partners are unfolding against the backdrop of a shifting 
strategic environment where emerging powers in Asia and 
elsewhere seek to exert a greater influence in the Pacific 
region through development and economic aid, people-to-people 
contacts and security cooperation. There is continued 
uncertainty in the region about the United States' willingness 
and ability to sustain a robust forward presence that has been 
a hallmark of much of the 20th century and that has contributed 
to peace, stability, and prosperity in the region. To 
counteract this uncertainty, the administration continues to 
ensure that the Pacific piece of the rebalance to the Asia-
Pacific is not forgotten. The United States has always been a 
friend and partner to the Pacific Islands, providing the region 
with significant levels of foreign assistance. Under the 
rebalance, we have stepped up our level of engagement, 
including expanding our staffing and programming and increasing 
the frequency of high-level meetings with the Pacific Island 
leaders.
    In 2011, President Obama met with Pacific Island leaders on 
the margins of APEC, and in 2015, he met with the leaders of 
the Marshall Islands, Kiribati and Papua New Guinea at the COP-
21 climate meetings in Paris. In 2012, Secretary Clinton became 
the first Secretary of State to attend the Pacific Islands 
Forum, the key policy body of the region. Since then, we have 
continued to engage Pacific Island leaders at high levels 
through the annual Pacific Islands Forum leaders' forum, most 
recently with the visit of Deputy Secretary of State Heather 
Higginbottom to the forum in 2015.
    U.S. engagement at the Pacific Island Forum provides an 
opportunity to press issues of concern with Pacific Island 
leaders and for the U.S. to be responsive to the region's needs 
for assistance and economic development. The Pacific continues 
to look to the United States for leadership and support, 
including on fostering sustainable economic development, 
enhancing maritime security and combating climate change. The 
United States has provided over $350 million in Fiscal Year 
2014 in its engagements with the region through 15 U.S. 
departments and agencies.
    U.S. assistance includes $21 million annually provided to 
the Pacific Island parties to the U.S.-South Pacific Tuna 
Treaty. As we speak, the United States is in active 
negotiations over the future of this nearly 30-year-old treaty. 
As we deepen our longstanding engagement with the region, the 
United States partners closely with Australia and New Zealand, 
which like us, share a strong interest in ensuring the peace 
and prosperity of our Pacific neighbors. In recognition of the 
leading role Australia and New Zealand play in the Pacific, we 
frequently consult with them on our strategic and development 
issues. And we work to ensure our assistance to the region is 
complementary, advances our common objectives to promote 
sustainable and inclusive development.
    While Australia and New Zealand frequently play a lead 
assistance role in the South Pacific, the United States and the 
countries of the North Pacific share especially close 
relationships. In particular, the Freely Associated States of 
the Republic of Palau, the Republic of the Marshall Islands, 
and the Federated States of Micronesia are an important 
component of the U.S. position in the Pacific. Through our 
respective Compacts of Free Association, the United States has 
maintained extraordinarily close relations with the FAS. In 
Fiscal Year 2014, we provided over $200 million in assistance 
primarily administered by the Department of the Interior to 
support their governance and economic advancement.
    In the United Nations, the FAS have some of the highest 
voting coincidence with the United States. For example, in 
2014, Palau had the second highest voting coincidence with the 
United States. Despite an increase in assistance from others 
interested in enhancing their engagement with the region, Palau 
has not only supported the United States on Israel- and Cuba-
related votes but has been at the forefront of actively helping 
garner support of others.
    Palau has supported U.N. resolutions seeking to combat the 
spread of weapons of mass destruction and joined in efforts to 
address systemic human rights abuses in North Korea, Syria and 
Iran.
    Our relationship with not only Palau but with other FAS 
states allows the United States to guard its long-term defense 
and strategic interest in the region. We have full authority 
and responsibility for security and defense matters in and 
relating to each of the FAS, and we have the right of denial of 
third-country military access to them. Admissible FAS citizens 
have the right to work and live in the United States as non-
immigrant residents. While the FAS does not maintain their own 
military forces, their citizens are eligible to serve in the 
U.S. Armed Forces. Citizens of FSM, RMI, and Palau volunteer to 
serve in the U.S. military at high rates, and we are grateful 
for their sacrifices and dedication to promoting peace 
worldwide.
    In February, I accompanied Assistant Secretary Russel, U.S. 
Pacific Fleet Commander Admiral Swift, and U.S. Coast Guard 
District 14 Commander Rear Admiral Atkins to several Pacific 
Islands. One of the countries we visited was Palau. As 
Assistant Secretary Russel said, our commitment to the 
development and self-determination of the people of Palau will 
always endure because it is built on common history and values. 
We are united by the sacrifices of the thousands of Marines and 
other U.S. servicemembers who were killed or wounded liberating 
Palau during World War II, and we appreciate the Palauans who 
serve in the U.S. Armed Forces today.
    The original process that led to our compact with Palau and 
the subsequent review was based on a solemn promise to help 
them achieve self-governance and long-term economic 
advancement. The assistance package within the agreement as set 
forth in the administration's February legislative proposal is 
designed to reduce Palau's dependence on U.S. direct economic 
assistance as it continues to grow and reform its economy.
    In addition to U.S. assistance, the terms of the agreement 
commit Palau to a range of economic reforms designed to help 
increase fiscal transparency, sustain progress achieved under 
compact funding, and create a stronger foundation for economic 
self-sufficiency. After nearly 6 years and multiple endeavors 
by the administration and Congress, we have as yet been unable 
to secure the funding necessary to bring the Compact Review 
Agreement into force. But bringing the agreement into force 
will demonstrate to Palau and our partners across the region 
that our commitments are not empty promises.
    Mr. Chairman, in conclusion, I wish to reiterate the 
Pacific region's strategic importance to the United States. Our 
identity as a Pacific power was affirmed on the beaches of the 
Pacific during World War II. And since that time we have built 
positive and multifaceted partnerships with these countries. 
Our engagement in this region is about our long-term strategic 
interests. We will continue to work constructively with our 
partners in the region to maintain peace and foster 
sustainable, inclusive development. But we will also need the 
support of Congress, not only to secure funding for the Palau 
Compact but also to continue to support our engagement efforts 
across the Pacific. Thank you for the opportunity to testify 
before this committee.
    [The prepared statement of Mr. Matthews follows:]
    
    
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    Mr. Salmon. Thank you, Mr. Matthews.
    The Chair recognizes Ms. Steele.

    STATEMENT OF MS. GLORIA STEELE, SENIOR DEPUTY ASSISTANT 
 ADMINISTRATOR, BUREAU FOR ASIA, U.S. AGENCY FOR INTERNATIONAL 
                          DEVELOPMENT

    Ms. Steele. Chairman Salmon, Ranking Member Sherman, 
members of the subcommittee, thank you for the opportunity to 
testify on USAID's role in advancing U.S. foreign policy 
interests, including the Asia-Pacific rebalance in the Pacific 
Islands. The Pacific Island nations may appear as tiny and 
scattered dots on the globe, but they are as central to global 
security today as they were during the Second World War. Their 
strategic position in the Asia-Pacific make them more vital 
than ever to the global economy. A vast proportion of the 
world's shipping passes through Pacific waters on which 
millions of people depend for food and income. Many of these 
nations, however, are threatened as never before by the 
depletion of their natural resources by health threats such as 
HIV, TB, and the Zika virus, and especially by natural 
disasters. While typhoons and cyclones have long plagued the 
region, they are becoming more frequent and more intense.
    Rising seas threaten the very existence of low-lying 
nations such as the Marshall Islands, the Tuvalu, and Kiribati. 
Ocean acidification and rising sea temperatures are damaging 
coral reefs and fisheries, posing major threats to food 
security. At USAID, our mission is to end extreme poverty and 
promote resilient democratic societies while advancing security 
and prosperity of the United States. Key to achieving success 
in the Pacific Islands is helping nations cope with the 
changing environmental conditions. Our development assistance 
across 12 Pacific Island nations helps people improve their 
lives while building a more sustainable, equitable future for 
all.
    Next, I will provide brief overviews of our primary 
assistance areas. First, on adapting to changes in climatic 
conditions: The people of the Pacific Islands depend primarily 
on tourism, fisheries, forestry, and agriculture for their 
livelihoods, all of which are highly sensitive to changing 
climatic conditions. In 2015, we supported over 280 communities 
across 12 Pacific Island nations to mitigate the negative 
impacts of natural disasters. With an emphasis on women's 
participation, we are also providing grants and training civil 
society organizations to help communities adapt to changing 
climate while also addressing related community needs such as 
improving livelihood and food security. At the same time, USAID 
is focused on increasing regional cooperation and coordination 
on climate change and on strengthening intra- and 
intergovernmental capacity at the national level to address 
issues related to climate change. When disasters do occur, 
USAID delivers humanitarian assistance to help with basic 
needs. For example, in response to the drought in the Marshall 
Islands, which is affecting nearly 40 percent of the 
population, we are helping to provide supplemental food 
assistance, hygiene supplies, and safe drinking water. In the 
Marshall Islands and in Federated States of Micronesia, we also 
assist in post-disaster reconstruction. To help reduce the need 
for disaster assistance in the first place, we support 
communities in effectively preparing for, responding to, and 
mitigating the impacts of natural disasters. Assistance 
includes programs to develop early warning systems, train 
volunteers on first aid, and climate-proof water sources and 
community infrastructures.
    On fisheries, it is estimated that more than 200 million 
people in the Asia-Pacific region are dependent on fisheries 
for food and income, yet illegal, unreported and unregulated 
fishing poses a major threat. In support of sustainable 
fisheries management, USAID is helping to develop an electronic 
traceability system to ensure that fish and other marine 
resources are legally caught and properly labeled. Currently, 
we are piloting this system in Indonesia and the Philippines, 
and once operational, we plan to expand it to other countries, 
including the Pacific Island nations. We are also working with 
the Government of Papua New Guinea on a new bilateral 
assistance agreement to improve sustainable management of 
natural resources and biodiversity. In health, we are helping 
to address Papua New Guinea's HIV/AIDS epidemic and related 
gender-based violence. We are responding to the government's 
recent request for assistance in addressing its multidrug-
resistant TB crisis. And, finally, in democratic governance, 
USAID has targeted efforts to address trauma and other social 
issues in post-conflict Autonomous Region of Bougainville in 
Papua New Guinea. We are also helping to increase awareness of 
and preparation for its referendum on full independence that is 
slated to take place in 2019. USAID provided election support 
in Fiji during the run up to the country's 2014 elections, the 
first to be held since the 2006 coup.
    Mr. Chairman, USAID's investments in the Pacific Islands 
are a critical part of the United States' vision for a 
peaceful, prosperous and stable Asia-Pacific. Our support for 
the region's sustainable inclusive development contributes to 
stronger U.S. diplomatic, commercial, and people-to-people 
relations with the Pacific Island countries, helping to advance 
our own security and prosperity. I appreciate the opportunity 
to testify today and look forward to your counsel and 
questions. Thank you.
    [The prepared statement of Ms. Steele follows:]
    
    
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    Mr. Salmon. Thank you.
    The Chair recognizes Mr. Sherman.
    Mr. Sherman. Thank you, Mr. Chairman, for a chance to 
deliver an opening statement. We had a markup and a hearing 
scheduled at various times, and I am glad that we have started 
this hearing.
    I want to thank you for holding this hearing on countries 
with 9 million people living in a dozen countries. These 
islands, as has been noted, play an important role in U.S. 
history over the last 75 years, particularly during World War 
II. I believe these islands will be more important this century 
than perhaps they were last century because they, you know--I 
want to get testimony on this from our witnesses--they control 
an enormous amount of economic zone ocean floor and fish 
resources. The ability of our species to exploit the ocean and 
its floor are going to increase. Our need for natural resources 
is going to increase. And 200 miles around every inhabited 
island adds up to a tremendous portion of the Pacific.
    I will also be asking our witnesses, and they may or may 
not know this, whether an island that has previously been 
uninhabited acquires a 200-mile radius economic zone when one 
family chooses to live there. Many of these islands, as noted, 
were important in World War II. They were important during the 
cold war, and we get support from most of these countries when 
issues come before the United Nations.
    The Compact of Free Association that we have with 
Micronesia, the Marshall Islands and Palau, represent our 
recognition of our international partnership with these 
countries over the years and our joint interests. One issue 
that needs particular attention is the Palau Compact review. 
This agreement was designed to help people of Palau achieve 
self-governance and economic self-sufficiency. The United 
States should abide by its commitments. I know we have had 
difficulty securing the funds necessary to bring the Palau 
Compact review fully into force, and I look forward to working 
with the administration and our colleagues to achieve that.
    As to climate change, the nations of the Pacific are the 
most vulnerable, along with the other island nations in the 
Indian and Atlantic Oceans, to climate change. Climate change 
is already impacting the everyday lives of residents through 
sea level rise, more frequent storms, et cetera. Assistance in 
responding to these impacts often constitutes a large part of 
our aid and our other relations with Pacific Island countries. 
Extreme climate events have also impacted water, coastal, and 
marine resources and agriculture. I will point out that there 
are some on the right who will say we shouldn't talk about this 
because there couldn't be any global warming, and then there 
are some on the left who say you cannot talk about remediating 
or preparing for global warming either because you should not 
admit that that is a possible thing to do or because anything 
that diminishes the harm of global warming diminishes our 
incentive to deal with it. The fact is we need to be practical. 
There is global warming. We will not fully stop it in the 
decade to come, and helping our friends of the Pacific deal 
with it is one of the best uses of our USAID budget.
    I would like to hear specific details from USAID of efforts 
to help these countries deal with critical climate affected 
needs. What programs have worked and what countries have been 
most capable of working with us?
    Finally, I want to address a legal matter involving Tonga. 
Two families in the San Fernando Valley were among the victims 
of an investment fraud scheme where the alleged fraudster 
absconded to Tonga. For the past several years, efforts to 
extradite him to face trial in the Central District of 
California, where he has been indicted, have moved, shall we 
say, slowly through the Tongan courts. A lower Tongan court 
recently determined that the U.S. Tongan fraud laws were too 
dissimilar to warrant extradition under the treaty, a decision 
that appears highly questionable.
    The application of dual criminality that is at the 
extradition law concept--the alleged criminal activity must be 
a crime in both countries in order for it to be an extraditable 
offense--has been applied, but it should be applied to lead to 
extradition. In this fraud matter, it would be a violation if--
and obviously, the defendant has not been convicted--but the 
crimes set forth in the indictment would constitute a crime in 
every country of the world that maintains as reasonable rule of 
law system. So now that decision is being appealed by the 
Tongan Government with the expectation that the appeal will be 
heard in September. And I for one will be looking to see 
whether the rule of law and reasonable decisionmaking is taking 
place in Tonga.
    The life savings of my constituents were wiped out. There 
is an indictment of an American suspected of having defrauded 
them and others. The activities for which the individual is 
wanted in the United States would be a crime in every country, 
and he ought to be extradited as soon as possible. And keep in 
mind, this is an American suspect. There is no argument that 
somehow a Tongan is going to be discriminated against in the 
United States court system.
    I urge the State and Justice Departments to work closely, 
and I know our witnesses, whether they choose to comment on 
this case right now, I know that the State Department will be 
focused on this.
    I yield back.
    Mr. Salmon. We will now go to the questions.
    I would like to ask the first question. The U.S. still 
hasn't completed a long-term solution to the Tuna Treaty 
stalemate. Voices within the U.S. tuna industry continue to 
view the treaty as obsolete, irresponsive to market conditions, 
and economically unfeasible. How would the U.S.' withdrawal 
from the South Pacific Tuna Treaty affect the diplomatic 
relationships between the United States and the Forum Fisheries 
Agency member countries, Mr. Matthews?
    Mr. Matthews. Mr. Chairman, if in fact it comes to the 
point where there is no way to bridge differences over the key 
elements of extending the Tuna Treaty and we do, in fact, 
complete withdrawal, I believe that the United States' 
relationship with Pacific Island nations are sufficiently broad 
and deep that we can find ways to sustain our close cooperation 
and the important relationships that we have today. I believe 
there are many ways in which we are providing assistance and 
development aid, that our cooperation on capacity building and 
in areas of security will continue. That said, the Tuna Treaty 
and the work that has been done under it has been very helpful 
in maintaining our position, so we do continue, even as we 
speak, to work during a fifth round of negotiations that are 
currently being conducted in Auckland in hopes that some 
workable path forward can be found.
    Mr. Salmon. Thank you very much.
    My next question is regarding Taiwan. And, Mr. Matthews, 
you were just there so maybe it would be appropriate. It would 
probably be appropriate for either one of you, but of the 22 
nations that maintain full diplomatic relations with Taiwan, 
six are Pacific Islands region: Kiribati, the Marshall Islands, 
Nauru, Palau, and Solomon Islands and Tuvalu. With tension 
between President Tsai's new administration and the government 
in Beijing, some experts are worrying about a return to dollar 
diplomacy and efforts to change recognition ending a multiyear 
truce. Are we concerned about such efforts in the Pacific? Are 
we taking steps to encourage countries in the Pacific to 
maintain the status quo? Would you like to take a first stab, 
Mr. Matthews?
    And, Ms. Steele, I would love to hear you thoughts, if you 
have any, on that.
    Mr. Matthews. Thank you, Mr. Chairman.
    Ms. Steele. No, I would defer to my colleague on this.
    Mr. Matthews. The United States has a longstanding policy 
of supporting the maintenance of international space for 
Taiwan. We do that through a number of different venues. Of 
course, we support Taiwan's participation in any international 
organization that does not require sovereignty. And those 
organizations that do require sovereignty, we still seek 
meaningful participation for Taiwan, and we also have 
additional venues for helping Taiwan maintain international 
space, and that includes a cooperation framework that I 
participated in just a few days ago in Taiwan, the Global 
Cooperation Training Framework, where we work together with 
Taiwan to bring international players to Taiwan where Taiwan's 
expertise and the United States' expertise can be used jointly 
to help promote development and dissemination of important 
knowledge. That last session that we had was on energy 
efficiency, and it not only had participation from India and 
Southeast Asia, but also from Pacific Island nations.
    So I think there are a number of venues by which we are 
able to assure that Taiwan does have international space. I 
won't say that there is not any concern that there might be 
some, you know, future stress placed on their international 
space, but it is clear that the United States is there to help 
support and maintain it.
    Mr. Salmon. I thank the gentleman.
    I am going to recognize Mr. Bera.
    Mr. Bera. Thank you, Chairman Salmon, and thank the 
witnesses.
    You know, let me ask my first question.
    Ms. Steele, as, you know, the administration pivots to 
Asia, you know, we often talk about China, Japan, Korea, South 
Asia, you know. With regards to the pivot to Asia and the 
Pacific Islands, specifically, you know, could you give us how 
the administration is viewing the potential for Pacific Islands 
and what their focus there is?
    Ms. Steele. Thank you, Mr. Bera. Just as soon as then 
Secretary Clinton announced the pivot to Asia, within a month, 
we opened up a USAID satellite office in Papua New Guinea, and 
within 6 months, we started implementing climate change 
programs. These are very important to the people of the 
Pacific, as I have mentioned earlier. They are among the most 
disaster-prone countries in the world, and we are helping to 
mitigate the impact of the natural disasters and helping them 
to be prepared for those impacts.
    And in Papua New Guinea itself, we have set up programs to 
address HIV/AIDS and TB. They are suffering from multidrug-
resistant TB right now and the related gender-based violence in 
those countries. And in the runup to the elections in Fiji, we 
also provided assistance, which has resulted in contributing to 
the drafting of their Constitution of 2013 and a very 
successful election in 2014, the first one since 2006.
    Mr. Bera. Great, thank you, Ms. Steele.
    Either Mr. Matthews or Ms. Steele, you know, the ranking 
member touched on climate change. He touched on preparations 
for climate change. If you were to quantify, you know, how big 
a threat climate change and rising oceans is going to be and 
then also how the islands are preparing. I don't know if you 
want to start, Mr. Matthews, or----
    Mr. Matthews. Well, I think it is commonly recognized that 
particularly Pacific Island nations that are atoll nations and 
who have very little space to deal with in terms of the high 
points above sea level--some nations have a maximum of 3 meters 
above sea level is their highest point. And these Pacific 
Islands, like the Marshall Islands, like Kiribati, are 
particularly vulnerable. They are vulnerable to the potential 
impacts of sea rise, but they are vulnerable already to major 
climatic storms and sea surges, and they already suffer 
problems and do, in fact, require remediation. As Congressman 
Sherman mentioned, remediation is a necessary aspect of the 
work we do with them, and we are, in fact, already engaged in a 
number of programs. But we are also, under the new Paris 
Agreement, going to be ensuring that we provide access for 
Pacific Island nations to funding that will be a part of the 
global fund, and we are actually initiating programs to help 
them learn how to go about doing that and to do it effectively 
and efficiently.
    Ms. Steele. If I may add, Mr. Bera.
    Mr. Bera. Yeah.
    Ms. Steele. The Pacific Islands, as I mentioned earlier, 
bear a lot of the brunt of natural disasters. Just look at 
statistics, when we first opened their operations there, 
emergency assistance was at $175,000 for the entire year. Last 
year, in 2015, it was $13.3 million. The frequency and the 
intensity of the disasters have become very obvious. The 
strongest typhoon hit Micronesia in 2015, and then in Fiji in 
2016. And so it is an issue because these countries depend 
largely on natural resources, tourism, fisheries, agriculture, 
and forestry.
    Mr. Bera. In the last minute that I have, in terms of 
preparation to deal with sea rise and the increasing frequency 
of these natural disasters, what do you think it will take, and 
what is our timeline like?
    I don't know, Ms. Steele or Mr. Matthews, whatever.
    Ms. Steele. It will take a significant amount of effort and 
collaboration and cooperation among the different parties 
involved, from the communities to civil societies to 
governments and regional institutions. There is a lot of work 
that needs to be done, measures that need to be taken at the 
household and the community levels, and proper planning and 
policymaking at the national level.
    Mr. Bera. And do you see that taking place right now, the 
framework of that?
    Ms. Steele. Yes, Mr. Bera. All of the donors are 
coordinating and working very closely, leveraging each other's 
resources to support the different countries in the 12 Pacific 
Island nations.
    Mr. Bera. Great. Thanks.
    My time has expired. I will yield back.
    Mr. Salmon. Thank you.
    Mr. Sherman.
    Mr. Sherman. Oh, you don't have a----
    Mr. Salmon. We actually go to the noncommittee members 
after all of the members have asked their questions.
    Mr. Sherman. Tulsi, you want to go now, or do you want me 
to go now?
    Ms. Gabbard. Either way.
    Mr. Sherman. Why don't we go to the gentlelady from Hawaii?
    Mr. Salmon. Great. We will.
    Ms. Gabbard. Thank you, Mr. Chairman, Ranking Member, thank 
you both for being here today.
    I wanted to ask you about Vanuatu. According to a recent 
report from the Center for Strategic Studies' Maritime 
Transparency Initiative, they added Vanuatu--or Vanuatu is on 
the list of countries that publicly stated the South China Sea 
arbitral tribunal under the U.N. Convention on the Law of the 
Sea is illegitimate. I am wondering if you could share your 
thoughts on why they have taken this position and where you 
think other Pacific Island nations stand on the Philippines v. 
China tribunal case.
    Mr. Matthews. I believe, you know, China has been reaching 
out to Pacific Island nations over the past year seeking their 
support. I believe, to date, Vanuatu is the only Pacific Island 
nation that has spoken out in support of Beijing's position on 
the arbitral panel's future decision. The other Pacific Island 
nations, I believe, like us, believe that the outcome of the 
arbitral decision is going to be any member of the UNCLOS 
treaty is subject to it and that they should abide by the 
outcome of that.
    They also believe that--and they have not agreed to China's 
claims to the South China Sea. Most recently, there were 
statements from Beijing that Fiji, in fact, had agreed to 
Beijing's position, and the Prime Minister Bainimarama 
specifically spoke out to say, no, that was not the case and 
that they did not take a position on among claimants and that 
they stood for international law applying to the resolution of 
those decisions.
    So I think, in general, we are in a very good place. Once 
our new Ambassador to Vanuatu, who is resident in Port Moresby 
in Papua New Guinea, is able to present her credentials, she 
will be reaching out to the government there to engage on this 
issue.
    Ms. Gabbard. With respect to Fiji and our relationship with 
Fiji, given the strain that occurred after their military coup 
and the democratic elections that followed, can you speak to 
what the status of our relationship is and, you know, kind of 
what you see as the path going forward, both with Fiji but also 
looking to see how we can strengthen our relationship with 
these other Pacific Island nations?
    Mr. Matthews. In the case of Fiji, we do, in fact, welcome 
the return to democracy in 2014. And since that time, we have 
been increasing our interaction with them, both on the 
diplomatic side but on the security side as well.That process 
will continue in a step-by-step fashion, and we are continuing 
to encourage the Government of Fiji to create greater space for 
civil society and for their opposition consistent with their 
commitment to democracy. And as that happens, I think you will 
find the pace of our relationship speeding up and 
strengthening.
    For other Pacific Island nations, I mean, we have ongoing 
warm and close relationships with all Pacific Island countries, 
and I fully anticipate that will continue to be the case.
    Ms. Gabbard. Were there any specific hard actions that were 
taken by the United States against Fiji or anything withheld 
after the military coup took place?
    Mr. Matthews. Well, there was a cessation of military 
exchanges and training, and that is beginning to come back into 
play as a part of the Pacific Command's general process of 
reengaging. And I think that is fully appreciated by the 
Fijians.
    Ms. Gabbard. Okay. Thank you.
    Thank you, Mr. Chairman.
    Mr. Salmon. Thank you. Mr. Sherman, did you----
    Mr. Sherman. No, absolutely.
    The briefing materials for this hearing basically indicate 
that, for the area, we are providing $233 million per year in 
aid and elsewhere say that China may be doing $150 million, but 
the $150 million is really just loans similar to what our Ex-Im 
Bank would do; that is to say promoting their own economy by 
giving concessionary financing for the export of their goods 
and services.
    If we want to compare apples to apples, aid dollars, here 
is money to benefit you, you get to keep, are we at 233, and 
what is China at?
    Mr. Matthews. The figures I have, Congressman, are that our 
total package of assistance in 2014 was actually $350 million. 
That is in addition to aid. There is a lot of direct 
government--U.S. Government agency assistance to the Pacific 
Islands. There are over 30 different government agencies and 
departments that actually do contribute. And that is real 
substantial assistance.
    For China, I actually don't know what the split is between 
actual grant amounts and the actual loan amount. I would be 
happy to go find that information out for you and get back to 
you on that.
    Mr. Sherman. Okay. The information I had included 
development assistance, economic support fund, global health 
programs, international military education and training, and 
regional development mission to Asia plus the South Pacific 
Tuna Treaty. In addition to those that did add up to 233, what 
are the ones that are missing from our briefing materials?
    Mr. Matthews. There is other assistance that is provided. 
The FAA provides assistance for aviation authorities in the 
Pacific Island states. I believe in the case of Palau, there 
was over $30 million provided over the past couple of years to 
help upgrade their airport and other associated facilities. 
Health and Human Services provides assistance, and I would have 
to go back through, but there are--it is actually pretty 
substantial.
    Mr. Sherman. Good. And, yet, we still are not in compliance 
with the agreement with Palau.
    Mr. Matthews. To the extent, you know, all of the aid I 
have noted is really important, but as many people have already 
spoken up to say, if we can fulfill our obligation under the 
2010 treaty to fund Palau, we will be in a far better place. It 
is incumbent on us to do that and the sooner----
    Mr. Sherman. Is there any aid we are providing to Palau 
that doesn't qualify under the treaty and if we just gave money 
for this rather than for that, without increasing our total 
expenditures, we would be in greater--we would be closer to 
compliance?
    Mr. Matthews. I think we actually have to take this 
specific action to fund the agreement, and there is--the other 
thing I would say about this is that we want to be able to fund 
the agreement for the long term to actually fulfill our promise 
and to signal to the region that our commitment is real.
    Mr. Sherman. Well, then, let me move on to another 
question. Papua New Guinea has agreed to allow the Bougainville 
regional government to hold a referendum on self-determination. 
The date could be in mid-2020 or even a target date of June 
2019. Is this referendum actually likely to occur by the end of 
2020? And how is it likely to turn out? Are we about to see the 
birth of a new nation?
    Mr. Matthews. Well, first of all, we really welcome Papua 
New Guinea's decision to move forward on this. They are 
obligated to do so, but now they are actually clearly signaling 
that they are prepared to move forward on this, and it is very 
possible. Well, we don't know what the outcome of that 
referendum vote will be, but it is possible that it would lead 
to the creation of a new state.
    Mr. Sherman. What would be the population of the new state, 
or what is the population of the regional government's area?
    Mr. Matthews. Bougainville, I am not sure. It is going to 
be under a million in any case. The total population of Papua 
New Guinea is a little over 7 million.
    Mr. Sherman. Got you.
    Ms. Steele. If I may.
    Mr. Sherman. Yes.
    Ms. Steele. We are currently helping the Autonomous Region 
of Bougainville by working with their civil society, raising 
awareness, and getting dialogue going about the meaning of the 
referendum that is coming, so that they are well aware of what 
this means to them, what the implications are when they go and 
vote, if and when they go and vote.
    Mr. Sherman. And you have a world structure that is based 
on a sovereign state being a much larger entity than that. I 
realize there are exceptions in the islands of the Pacific. I 
would hope that just in terms of defining what it is to be an 
independent sovereign state, that various regions that had a 
population of just a million or so could be suitably federated 
parts of or autonomous regions within states. When you start 
going to the United Nations General Assembly and meet people 
who represent fewer folks than I do, one wonders why the San 
Fernando Valley doesn't have at least one vote in the United 
Nations.
    And I yield back.
    Mr. Salmon. Thank you.
    Mrs. Radewagen, did you have any questions?
    Mrs. Radewagen. Thank you, Mr. Chairman.
    I want to thank you and the ranking member for inviting me 
here to be at this hearing. The Pacific Island nations are near 
and dear to my heart because I have lived in the Marshall 
Islands as well as the Northern Mariana Islands. I have been 
all over those islands, and so I am very understanding of the 
compacts, as well as the Palau Compact, which I fully support.
    However, I am here today because of the importance of 
fishing in my home district of American Samoa. So I have a 
couple of questions here, Mr. Matthews. I understand that the 
U.S. Tuna Treaty negotiations, which are going on right now, 
are reaching a critical stage. I trust you realize how 
important the successful conclusion of these negotiations is to 
American Samoa. The treaty is vital for fishing access by 
United States vessels, many of which land their fish in 
American Samoa. I would appreciate assurances that the State 
Department is doing all it can to finalize a new treaty, which 
provides a viable future for the U.S. fishing fleet. And I 
understand that an agreement on minimum days has been reached 
or is close. But how companies contract for extra fishing days 
may be subject to Department of State approval. What is the 
reason for that?
    Mr. Matthews. First of all, I can assure you that we are 
making every effort possible to reach what we believe, in 
consultation with the U.S. fishing industry, which also 
includes representatives from American Samoa--they have been 
participants in all four rounds, and I believe they are 
participating now--that we will reach an agreement if we can 
reach a sustainable economically viable outcome. That requires 
understanding on fishing days, charges for fishing days, 
certainty of how elements under the agreement will be dealt 
with to make sure that the American fishing fleet gets proper 
clarity on what its obligations are and how those will be 
executed for the period of the agreement and that the agreement 
will be for a substantial period of time to provide the 
industry with a clear path forward to know how to invest, how 
to prepare, and to know that they will have an economically 
viable future.
    All of these elements are critical. We certainly understand 
the great importance of American fishing to American Samoa and, 
particularly, to providing fish for the canneries that are 
there, and we will be making every effort to make sure we have 
an economically viable outcome. If we do not reach an 
agreement, if that does not happen, the American fishing fleet 
will still have the ability to negotiate with the relevant 
states on their own, and we will be working to make sure, 
though, that if there is any possible way to get to a viable 
outcome under the treaty itself, then that will be our first 
order of approach.
    Mrs. Radewagen. Thank you. One of the key elements of the 
treaty and, even more importantly, of the United States' 
position at the Western and Central Pacific Fisheries 
Commission, the other international mechanism governing U.S. 
fishing access in the region, is the matter of fishing on the 
high seas. I am sponsoring legislation intended to ensure that 
the WCPFC regulation of fishing by United States vessels, 
especially on the high seas, is science-based and establishes a 
level playing field relative to fishing by other flag fleets. I 
hope that the Department of State and other U.S. Government 
agencies will support this legislation.
    Mr. Matthews. Thank you, Congresswoman.
    I just want to say that we are committed to ensuring that 
the U.S. Pacific fleet does, in fact, fish in a sustainable way 
in a manner which is consistent with laws and requirements, and 
we believe that their behavior over time has been exemplary. 
And we hope that other fishing fleets in the Pacific will 
follow similarly sustainable approaches.
    Mrs. Radewagen. Thank you, Mr. Chairman.
    I yield back.
    Mr. Salmon. Thank you.
    The Chair now recognizes Mr. Sablan for any questions he 
might have.
    Mr. Sablan. Yes, thank you very much, Mr. Chairman.
    Mr. Matthews and Ms. Steele, thank you very much for 
joining us today and also for your service to our country.
    I am the only Micronesian in Congress, having been a 
citizen of the Trust Territory of the Pacific Islands. And 
growing up, of course, I heard stories about World War II. Just 
to set the facts straight--and this is in no way intended to 
disparage anyone--Guam was indeed liberated by the United 
States. The rest of the Pacific Islands were caught in a war 
between the United States and Japan, just to set the record 
straight.
    But let me ask if--I have been on two trips to Australia 
and New Zealand, actually booking on flights, one with Natural 
Resources, and the other one with Foreign Affairs. But, Mr. 
Matthews, how much do we rely on Australia to form our view of 
what is going on in the South Pacific?
    Mr. Matthews. Actually, Congressman, Australia and New 
Zealand are both important partners for us and have extensive 
involvement in the South Pacific and provide a substantial 
amount of aid to Pacific Island nations in the South Pacific 
whereas we probably are the more, you know, critical partner in 
the North Pacific.
    Mr. Sablan. I understand, but in terms of----
    Mr. Matthews. In the South Pacific, they are very important 
partners across the board, and we do, in fact, rely on them for 
a lot of our understanding about what is happening there, sir.
    Mr. Sablan. Okay. And so when we are going--the difference 
between our treatment of Australia and New Zealand, there still 
remain some differences, I think, in the level of treatment. Is 
there any time in our foreseeable future where the Prime 
Minister of Australia would be welcome to the United States--
and I don't know what they call it--have a state dinner, maybe 
address a joint session of Congress? Are we getting close to 
that?
    Mr. Matthews. For Australia?
    Mr. Sablan. For New Zealand.
    Mr. Matthews. Oh, for New Zealand. Well, we have a very 
close and growing partnership with New Zealand. The 
relationship between President Obama and Prime Minister Key is 
very close, very warm. They get together on the margins of 
international meetings, and Prime Minister Key has, in fact, 
visited Washington. And so whether or not there will be a state 
dinner planned, I can guarantee you that this is a relationship 
on an upward trajectory.
    Mr. Sablan. That is what I would like to hear. I hope it 
continues to go upward----
    Mr. Matthews. It will.
    Mr. Sablan [continuing]. And what has happened in the past 
will, you know, eventually be water under the bridge.
    Let me go back to my specific interest here. Does the 
administration believe that Palau is of strategic importance to 
the United States because of its geography and proximity to 
countries potentially unfriendly to the United States?
    Mr. Matthews. We absolutely believe that Palau has enormous 
strategic value, not just Palau in isolation but Palau as part 
of the larger Freely Associated States. They represent a vast 
swath of the Pacific where the United States, under the compact 
agreements, has specialized defense rights, and its 
geographical location is in fact quite critical, and it is 
among the various reasons that we really ought to do everything 
we can to fund the Palau Compact as soon as possible.
    Mr. Sablan. With no disrespect, but I am running out of 
time. There are 12 Pacific Island nations. And three have 
compacts with the United States, including Palau, of course. As 
for the other nine, China is trying to establish a foothold in 
the area. Cuba has actually established through a medical 
program in the Solomon Islands that relationship. Now, even 
Russia has engaged in Fiji. We have transfers of military 
equipment. The general population in the region is friendly 
toward the U.S., but if the U.S. does not follow through on its 
commitments to a compact state, that sends a bad signal to 
other states in the region.
    And you keep saying that you continue to engage with the 
different countries, but continuing to have conversations when 
you reach an agreement and then, for 5 years, not approve that 
agreement, not enacted it into law, that doesn't send a good 
signal, does it, Mr. Matthews?
    Mr. Matthews. Well, I agree with you totally, Mr. 
Congressman. But, actually, everything has been done to put 
that agreement into force, except the funding.
    Mr. Sablan. Well, no, no, not everything has been done.
    Mr. Matthews. The funding.
    Mr. Sablan. Yeah, I don't argue whether it is a problem 
with helium gas or U.S. passports, the cost of U.S. passports, 
but for the people of Palau, they are looking to the United 
States and saying, what happened to the piece of document we 
signed, we negotiated, we agreed? Why is the issue of helium 
gas and passports becoming their problem?
    Mr. Matthews. All I can say is the sooner we can fund the 
agreement, the sooner it will enter into force.
    Mr. Sablan. Then why did we enter into an agreement that we 
couldn't fund?
    Mr. Matthews. I have to refer that question back to 
Congress. It is up to Congress to decide how to go about 
funding it.
    Mr. Sablan. Congress didn't sign the agreement. With no 
disrespect, I am just trying to iron it out.
    Mr. Matthews. Sure. I appreciate it.
    Mr. Sablan. Thank you very much.
    Mr. Matthews. Thank you.
    Mr. Sablan. Mr. Chairman, I yield.
    Mr. Salmon. I thank the gentleman.
    And I thank the witnesses today. It has been a great 
hearing. We appreciate all your hard work on behalf of the 
islands and the region. And I thank the ranking member for his 
support for this hearing today.
    And, without objection, this hearing will stand adjourned.
    [Whereupon, at 3:07 p.m., the subcommittee was adjourned.]

                                     

                                     

                            A P P E N D I X

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                   Material Submitted for the Record
                   
                   
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   Material submitted for the record by the Honorable Matt Salmon, a 
  Representative in Congress from the State of Arizona, and chairman, 
                  Subcommittee on Asia and the Pacific


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